ANNUAL REPORT
AND ACCOUNTS
2020/21
INTRODUCTION
A focused hotel group
Our unique, vertically-integrated, approach has
enabled Premier Inn to grow at a significantly faster
pace than the market, deliver a consistently superior
customer experience and generate a strong return
on capital for shareholders.
As we emerge from the COVID-19 pandemic,
Whitbread is well positioned in the UK and
Germany, both of which are structurally
attractive budget hotel markets with significant
growth opportunities.
Whilst the pandemic had a significant impact
on our markets throughout the financial year,
our robust operating model allowed us to take the
necessary actions to steer the business through
the crisis, while staying true to our Force for Good
beliefs, leaving us in a strong position as we look
forward to better times ahead.
Our business at a glance
COVID-19
Chairman’s statement
Chief Executive’s review
Our investment case
Strategic report
2
4
6
8
11
12 Market review
16 Our business model
18 Our strategy at a glance
20 Strategic update
36 Group Finance Director’s review
42 Group HR Director’s review
48 Force for Good
56 Stakeholder engagement
58 Non-financial information statement
59 Section 172 statement
62 Principal risks and uncertainties
67 Viability statement
Governance
68 Chairman’s introduction to
corporate governance
72 Board of Directors
74 Executive Committee
75 Corporate governance
80 Audit Committee report
85 Nomination Committee report
88 Remuneration report
90 Remuneration at a glance
92 Remuneration policy
97 Annual report on remuneration
109 Directors’ report
114 Directors’ responsibility statement
Independent auditor’s report
115
Consolidated accounts 2020/21
130 Consolidated income statement
130 Earnings per share
131 Consolidated statement of
comprehensive income
132 Consolidated statement of
changes in equity
133 Consolidated balance sheet
134 Consolidated cash flow statement
135 Notes to the consolidated financial
statements
Whitbread PLC Company accounts 2020/21
192 Company balance sheet
193 Company statement of changes in equity
194 Notes to the Company financial statements
Other information
205 Glossary
206 Alternative performance measures
210 Shareholder services
Financial performance
REVENUE
£590m
2019/20: £2,072m
MARKET SHARE1
11%
2019/20: 7%
ADJUSTED OPERATING (LOSS)/PROFIT†
STATUTORY OPERATING (LOSS)/PROFIT
(£487m)
2019/20: £487m
(£839m)
2019/20: £409m
ADJUSTED (LOSS)/PROFIT BEFORE TAX†
STATUTORY (LOSS)/PROFIT BEFORE TAX
(£635m)
2019/20: £358m
(£1,007m)
2019/20: £280m
ADJUSTED BASIC (LOSS)/EARNINGS PER SHARE†
STATUTORY BASIC (LOSS)/EARNINGS PER SHARE
(288p)
2019/20: 166p
NET DEBT†
(£47m)
2019/20: (£323m)
WE HAVE SET NEW
AMBITIOUS FORCE FOR
GOOD TARGETS FOR
THIS YEAR.
We are aware of the material impact,
both positive and negative, that our
business activities can have on the
planet, our communities and the
customers we serve. We began this
year with a portfolio of new, ambitious,
stretching targets that were set to really
make a difference.
Read more – pages 48 to 55
(482p)
2019/20: 125p
OPERATING CASH FLOW†
(£489m)
2019/20: £555m
CASH AND CASH EQUIVALENTS
£1,256m
2019/20: £503m
TOTAL CASH CAPEX UK†
£132m
2019/20: £320m
TOTAL CASH CAPEX GERMANY†2
£99m
2019/20: £268m
† See pages 206 to 209 for definitions of alternative performance measures.
1 STR data, revenue share of total UK market.
2
Includes Middle East and business combinations.
1
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21
OUR BUSINESS AT A GLANCE
A unique approach
OUR AMBITION
OUR PURPOSE
To be the world’s
best budget hotel brand
OVERVIEW
To provide quality, affordable hotels
for our guests to help them to live
and work well and to positively impact
the world around us. With no barriers
to entry or limits to ambition, we will
provide meaningful work, skills and
career development opportunities
for our teams
UNITED KINGDOM*
Read more – pages 20 to 25
GERMANY
Read more – pages 26 to 31
At Premier Inn, we’re here to help the nation rest easy, whether
it's a choice of rooms across our 800+ hotels, comfy beds that
guests won’t want to leave or food to fuel the start and end of
every day.
Germany provides a significant opportunity for Premier Inn to
grow long term and replicate its UK success, with the German
market sharing many of the attractive characteristics we see
in the UK.
We’ve got a range of flexible rates to suit everyone, friendly
team members who genuinely care and a level of consistency
that ensures everyone knows exactly what they’re going to
get. It’s comfort that everyone can count on.
We continue to grow at pace in Germany, with 30 operational
hotels and a committed pipeline of 42 hotels. This progress
now gives Premier Inn a national footprint and brings us closer
to our goal of becoming the number one budget hotel brand
in Germany.
NUMBER OF ROOMS1
78,718
+0.2%
2019/20: 78,547
NUMBER OF ROOMS
IN PIPELINE1
12,256
(5.8)%
2019/20: 13,011
NUMBER OF ROOMS1
NUMBER OF ROOMS
IN PIPELINE1
4,880
+349.8%
2019/20: 1,085
8,420
(3.3)%
2019/20: 8,709
Includes one site in each of Jersey, Ireland and the Isle of Man.
*
1 As at year-end 25 February 2021.
1 As at year-end 25 February 2021.
2
Whitbread Annual Report and Accounts 2020/21 OUR VALUES
OUR BRANDS
GENUINE
REALLY CARING ABOUT
OUR CUSTOMERS
CONFIDENT
STRIVING TO BE THE BEST
AT WHAT WE DO
COMMITTED
WORKING HARD FOR
EACH OTHER
At Premier Inn we pride ourselves on comfort and quality,
so whether you’re staying for business or leisure, you’ll always
enjoy a warm welcome from our friendly teams, as well as
comfortable king-sized beds, ensuite bathrooms, a TV with
Freeview and Wi-Fi in every room.
We have innovated to develop two new hotel brands to cater
for different market segments. Contemporary style combined
with great connectivity makes hub by Premier Inn the UK’s
most space-efficient digitally-advanced hotel. Meanwhile,
at ZIP by Premier Inn, our idea is simple. Do the essentials
brilliantly, then take away everything else. You get a small
room, a simple stay and, best of all, a price to match.
All our hotels have a bar and restaurant, either within the hotel
or just next door, offering a wide selection of meals and hearty
eat-as-much-as-you-like full English and continental
breakfasts. Beefeater is one of the UK’s best-loved and most
well-known restaurant brands and has been welcoming guests
for over 40 years. Our newest restaurant brand Cookhouse &
Pub is a great place to get together and offers freshly
prepared dishes and delicious drinks, with a friendly service
and great value. Bar + Block Steakhouse is an informal, all-day
dining restaurant with a focus on high-quality steaks and
Thyme is Premier Inn’s in-house restaurant with
a contemporary British menu.
OPPORTUNITY
COMMUNITY
RESPONSIBILITY
A team where everyone
can reach their potential
– no barriers to entry and
no limitations to ambition
We will be for everyone,
championing inclusivity
across the organisation and
improving diversity
Information on our
sustainability programme,
Force for Good, is integrated
throughout the report and
can be found by looking
for the logo above
We will have industry-leading
training and development
schemes
Team member wellbeing will
be considered in everything
we do
Making a meaningful
contribution to the customers
and communities we serve
Always operating in a way
that respects people and
the planet
We will make a positive
contribution to the
communities we serve
Working collaboratively with
our teams and supply chain,
we will support our charity
partners to meet their mission
We will support the wellbeing
of our customers
We will source responsibly
and with integrity
We will reduce our
environmental impact
We will always do business
the right way
3
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 COVID-19
Robust response to COVID-19
Our sure-footed response to the
COVID-19 pandemic has focused on
looking after the health, safety and
wellbeing of our teams and customers,
while taking quick and decisive action
to protect the business and position
it for recovery and long-term success.
PROTECTING HEALTH, SAFETY
AND WELLBEING
The COVID-19 pandemic has hit the hospitality sector
particularly hard. Our restaurants were closed for large
periods of the year and our hotels in the UK were in some
cases closed and in other cases only allowed to open for
essential business travellers and key workers. Changes to
the rules have often been announced at short notice and
our teams have had to be extremely agile in their response
in order to comply with the latest requirements. The situation
in Germany has closely mirrored the UK.
During this period, we have prioritised the health, safety
and wellbeing of our teams and customers. This included the
introduction of Premier Inn CleanProtect, our enhanced hotel
hygiene promise to help guests stay with confidence. It further
enhanced our already stringent hygiene standards* with new
procedures in line with both the World Health Organisation
and the European Centre for Disease Control recommendations.
Throughout this report, there are examples of actions we have
taken in this regard, from adapting our hotels and restaurants
to be safer environments and rapidly providing Personal
Protective Equipment (PPE) for our teams, to looking after
the wellbeing of our teams by topping up the Government’s
Coronavirus Job Retention Scheme.
OUR COVID-19 FRAMEWORK
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BOARD OVERSIGHT
EXECUTIVE COMMITTEE
COVID-19 WORKING GROUP
MEMBERSHIP, SENIOR LEADERS
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The COVID-19 Working Group was established to identify
applicable COVID regulations throughout the UK and Ireland,
and ensure effective operation within those constraints.
One of its core activities is determining which hotels and
restaurants will open or close, and when, and also how
best to manage restrictions. The Working Group has
representation from all areas of the business and
meets on a weekly basis or more often as required.
Where required, key decisions are sought from the
UK Management Team and Executive Committee.
Similar arrangements were established in Germany.
At a corporate level, decisions in relation to financing and
dividends have been taken at Executive Committee and Board
level, while decisions relating to executive remuneration were
taken by the Remuneration Committee.
* Premier Inn hotels have long been recognised for consistently achieving excellent
cleanliness and hygiene standards – as demonstrated by the scores from over
a million post-stay guest surveys which were announced as part of Whitbread’s
FY 19/20 results.
4
Whitbread Annual Report and Accounts 2020/21
TAKING CARE OF OUR COLLEAGUES
SUPPORTING OUR CUSTOMERS
POSITIONING THE COMPANY
FOR LONG-TERM SUCCESS
The last year has been an incredibly difficult period and we
recognise that our teams up and down the country, in both the
UK and Germany, will have been impacted significantly by the
pandemic. Many will have been concerned about the physical
and mental health of both themselves and their loved ones.
Of course, it is imperative that people feel safe when going
to work and, during this last year, that has never been
more important.
With this in mind, we took quick and decisive action to
make our hotels, restaurants and offices safe places to work.
We rapidly sourced PPE for our teams and adapted our
operating procedures so that our teams could feel as safe
as possible.
Unfortunately, we had no option but to close a number
of our sites at various points throughout the year. This
action necessitated the use of the UK Government’s Job
Retention Scheme and, with the wellbeing of our teams at
the centre of our decision making, chose to top up these
payments during the first lockdown period so that colleagues
were receiving their full salaries. Similar arrangements were
made in Germany. More details can be found in the HR
Director’s review on pages 42 to 47.
Premier Inn is a trusted brand and behaving responsibly
towards our customers was extremely important to us as
we navigated the pandemic. This meant that we needed to
be flexible in our approach to bookings and understanding
of our customers’ needs. Many of our loyal customers had
booked stays with Premier Inn on non-flexible terms, but as
the pandemic developed they were unable to stay with us.
In this situation we chose to relax booking terms and allow
customers to cancel with a full refund. It was the right thing
to do, both for our customers in the short term and for
Premier Inn’s long-term reputation.
Many of our hotels have remained open to essential business
guests during the more recent lockdowns and we were also
largely open for all guests during the summer. It was vital that
our customers felt safe staying with us, or indeed eating in our
restaurants, when they have been able to open. We therefore
implemented a number of physical changes to our hotels and
restaurants to allow for social distancing and introduced an
enhanced housekeeping service to ensure that bedrooms
were thoroughly sanitised prior to the arrival of new guests.
We have also introduced new flexible rate classes.
Throughout the COVID-19 crisis, we have taken quick and
decisive action to protect the business and to position
it for long-term success. This included the rapid closure
of our businesses in March, the immediate postponement
and cancellation of all non-critical spend and accessing
Government schemes to secure the liquidity of the business,
followed by the £1bn rights issue that will help successfully
position the business in the medium term. In February 2021,
we announced two Green Bonds and the extension of our
revolving credit facility. The issuance of Green Bonds was
made possible by the success of Whitbread’s Force for Good
programme, which has delivered results we can be proud
of throughout the pandemic.
The combination of these actions, together with Premier Inn’s
strong financial performance, leave the Company well
positioned to succeed as we emerge from the pandemic.
More information on Whitbread’s positioning for future
success can be found throughout this report and more details
on the Green Bonds can be found in the Force for Good
section on pages 48 to 55.
5
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 CHAIRMAN’S STATEMENT
A clear strategy
The actions we have
taken to navigate the
COVID-19 pandemic
leave us in a strong
position as we look
to better times ahead.
When I wrote to you this time last year, we were in the early
stages of the COVID-19 pandemic and the 12 months that
followed have been extremely challenging for everyone.
Whitbread is in one of the worst hit sectors and we are the
largest operator in it. I explained then that Whitbread was well
placed to withstand the crisis, with a strong balance sheet and
access to significant liquidity. I also explained that we were
determined to come out of the crisis in a competitively-
advantaged position.
While we are not out of the woods yet, I am confident that the
actions we have taken over the last year were the right ones;
our balance sheet is secure and we have gained market share,
which will put us in a position to succeed over the long term.
Our management team has done a great job in extremely
difficult circumstances, and I would like to thank them for all
their hard work this year.
As I said, the year has been challenging for everyone and
our team members up and down the country have not
been immune to that. Sadly, we have lost some Whitbread
colleagues to the virus and many of our team members will
have lost loved ones. I am sure that many of our shareholders
will also have suffered losses, and I would like to offer our
condolences to the families and friends of those that are
sadly no longer with us.
From a business perspective, we have been required to
close a significant proportion of our businesses for large parts
of the year, while our open hotels have been operating at
much reduced occupancy. This has meant that we needed to
furlough many of our team members, both in our hotels and
restaurants and in our Support Centre. We made sure that we
did this in a responsible way and, for the first lockdown period,
we topped up the pay for those furloughed above the amount
we were able to claim from Government.
Our teams have needed to demonstrate great agility as we
have closed, reopened and again closed sections of our estate
as Government guidance has changed. I would like to thank
them all for their great commitment to Whitbread as well as
for their adaptability.
Perhaps most pleasing has been our commitment to
continue to invest in the business through the crisis. This has
seen us grow market share in the UK and we have been able
to acquire small portfolios in Germany at attractive prices,
in order to build an even stronger platform in this structurally
attractive market.
Lastly, I am convinced that our strategy of focusing on being
one of the world’s leading economy/midscale hotel brands,
well positioned in structurally attractive markets, is the right
one. We have clear strategy, and a strong team to deliver it.
Performance
The Group’s financial performance reflected the closure of
the vast majority of the business in the first half of the financial
year. In the second half, after operating throughout August
and September with occupancy levels of over 50% in the UK,
we saw market demand fall significantly from November
onwards, as increasingly severe COVID-19 restrictions were
implemented. Statutory revenue for the year was down 71.5%,
resulting in an adjusted loss before tax of £635.1 million and
a statutory loss before tax of £1,007.4 million. The business
retains a strong balance sheet and liquidity position, enhanced
by the successful rights issue completed in June 2020, the
Green Bond issuance in February 2021. At the end of the
financial year, the business had access to £1,256.0m of cash
and cash equivalents.
Force for Good
In such a difficult year, it would have been easy to lose
focus on our commitment to be a Force for Good. However,
I’m proud to say that this has remained at the forefront of our
minds. In fact, enabling people to live and work well, which is
the core ambition of our Force for Good programme, has been
at the centre of our response to the pandemic. As well
as topping up the pay of furloughed workers as I mentioned
earlier, we kept 39 hotels open during the first lockdown for
use by key workers, donated over 500,000 meals to charity
partners and continued to raise significant funds for Great
Ormond Street Children’s Hospital. In addition, significant
progress has been made on our diversity and inclusion goals.
We have reconfirmed our ambitious targets, such
as eliminating all unnecessary single-use plastic from our
business and halving our food waste, but we have also
accelerated some, including our drive to net zero carbon
emissions to 2040 from the previous target of 2050.
In February 2021 we issued £550m of Green Bonds,
which was only possible because of the industry-leading work
we have been doing to become a more sustainable business.
6
Whitbread Annual Report and Accounts 2020/21 £550m
GREEN BONDS
ISSUE
£1.0bn
RIGHTS ISSUE
72
OPEN AND
COMMITTED HOTELS
IN GERMANY
The proceeds will be used to fund existing and future
sustainable projects across our business. Further details can
be found on pages 48 to 55.
Rights issue
This time last year we announced our intention to raise £1.0bn
via a fully underwritten rights issue. The rights issue, which
offered existing shareholders the opportunity to purchase one
new share for every two held at a price of £15 per share, was
very well supported and successfully delivered. Thank you to
those of you that took part. As well as protecting the business
during a period of cash outflow, a key reason for our decision
to go ahead with the rights issue was that the proceeds raised
would allow us to invest with confidence. This will enable
us to take advantage of the long-term structural growth
opportunities in our sector as we emerge from the pandemic.
We have already made progress on this objective, with the
acquisition of 13 hotels in Germany in late 2020, taking our
open and committed pipeline in Germany to 72 hotels.
Annual general meeting
Last year, we were unable to hold the usual face-to-face AGM in
London. Instead Alison and I held the meeting in our Boardroom
in Dunstable and we certainly missed seeing the familiar faces
of many long-standing shareholders. Shareholders were invited
to send in questions in advance of the meeting and all voting
was by proxy. I hope those of you that submitted questions were
able to listen to the recording of the meeting on our website
and were happy with the answers we provided.
The rules around public gatherings in June are still uncertain
and it currently looks like, once again, we will not be able to
hold the face-to-face meeting that we would like. However,
we have had more time to prepare this time around and we
want to provide for a higher level of engagement with our
shareholders. We therefore intend to hold the AGM via
webcast, with the opportunity to submit or ask questions
and vote in real time. The meeting will take place at 2.00pm
on Thursday 17 June 2021 and details of how to access it will
be included in the Notice of Meeting.
While we might not be able to meet in person, I hope that you
will be able to join the meeting and that this more interactive
format is a good step in the right direction. We will, of
course,continue to review Government guidance and will
announce any changes to our plans via the Regulatory News
Service and on our website.
The Board
Since this time last year, there have been two new additions to
the Board. Meanwhile two directors have stepped down from the
Board. We have also announced that Louise Smalley will retire
from Whitbread and step down from the Board on 31 August
2021. I will say more about Louise in next year’s report.
Firstly, I would like to welcome both Kal Atwal and Fumbi
Chima to the Board as independent non-executive directors.
Both Kal and Fumbi joined us on 1 March 2021 and they bring
an invaluable mix of skills to the Board, including in the
technology sector, in digital transformation, in marketing and
in general management, gained from a range of businesses.
As Whitbread faces into the next phase of its growth, they
will add huge value to the Board.
Kal Atwal is an experienced general manager, with over 13
years' executive committee experience at BGL Group Limited,
where she played a central role in driving the strategic growth
and scaling of the brands within the Group, in particular as
the founding Managing Director of comparethemarket.com.
Kal is also Board Adviser to SimplyCook Ltd and serves as
a non-executive director of Royal London Group and WH Smith.
Fumbi Chima is a Global Chief Information Officer, adept at
digital transformation strategy in high-growth environments
across a range of industries. She is currently Executive
Vice-President and Chief Information Officer at BECU, having
previously served as Chief Information Officer at adidas, Fox
Network Group, Burberry, Walmart Asia's business operations
and American Express global corporate technologies.
Deanna Oppenheimer and Susan Taylor Martin stepped
down from the Board on 31 December 2020 and 22 April 2021
respectively. I would like to thank both Deanna and Susan very
much for their significant contribution to Whitbread.
Executive remuneration
In such a challenging year it has been a complex job for the
Remuneration Committee to achieve the fine balance between
fairly rewarding the significant effort and achievement of
management in steering the Company through this period while
also considering the interests of a broad range of stakeholders.
I believe that the Committee has succeeded in this aim and
I was particularly pleased to see that team members across
the organisation will receive special recognition payments to
reward their effort and contribution over this difficult period.
Details of the remuneration actions taken can be found in the
remuneration report on pages 88 to 108.
Looking forward
Here in the UK, at the time of writing, there are reasons to
be more optimistic as we look ahead. So far, the Government’s
roadmap to reopening is on track and we very much hope
that will continue to be the case. We hope to have the great
majority of our UK business open again by 17 May 2021.
The position isn’t quite so positive elsewhere in Europe at the
moment, but I hope that things will soon be looking brighter
for our colleagues in Germany too.
Adam Crozier
Chairman
26 April 2021
7
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 CHIEF EXECUTIVE'S REVIEW
Well placed to drive long-term value
We will continue to
invest to enhance
our market-leading
position, creating
further significant
value for all our
stakeholders.
Throughout the year we have endeavoured to act responsibly
in this time of crisis. The safety of our colleagues and guests
has been of paramount importance, and during the first UK
lockdown, when we operated 39 hotels for key workers, we
developed and implemented rigorous hygiene protocols to
minimise the risk of COVID transmission. These measures
included social distancing signage and protective screens,
use of PPE, and enhanced cleaning standards. We were able
to use what we learned from operating in this environment,
to implement our estate-wide ‘CleanProtect’ and ‘Generous
Serving of Safety” programmes upon reopening our hotels
and restaurants at the start of July 2020. During the first
lockdown we also provided full cash refunds to our customers
for all cancelled bookings, regardless of the terms and
conditions. We subsequently launched a new range of booking
conditions providing guests with greater flexibility to amend
and cancel bookings, which have proved very popular.
Our hotel and restaurant teams have been fundamental in
enabling us to navigate this very difficult period, and we are
extremely mindful of the fact that this has been an incredibly
challenging year for them. Where possible, we have taken
action to support our teams and try to make things easier.
Examples include paying the additional 20% of salaries on top
of the Government furlough credit during the first lockdown
and making national minimum wage increases for our hourly
paid staff. We have also launched a wide-ranging employee
support programme centred around a clear wellbeing
communication plan, aimed at continually supporting the
mental and physical wellbeing of our employees across
the business.
In addition to making rooms available to NHS staff and other
key workers, we also supported the community and national
effort by passing fleet delivery capacity to supermarkets and
donating over 500,000 meals to charities. Our fundraising
programme for our charity partner Great Ormond Street
Hospital has also continued despite the challenges posed
by COVID restrictions, raising almost £900,000 during
the year.
The last financial year was one of the most challenging in
our 279-year history, as we operated under significant COVID
restrictions which had many implications for our businesses,
our customers and our people. Our business model enabled us
to respond rapidly to the changing restrictions and to quickly
adapt our operations as required, prioritising the health and
safety of our colleagues and our customers. This response
was possible due to the efforts of colleagues in our hotels,
restaurants and support centre, who continue to work
tirelessly to maintain our very high operating standards,
customer service and health and safety. I am extremely
proud of, and grateful for, their incredible hard work and
commitment in this most difficult year.
React, Protect and Restore: Taking rapid and decisive action
The start of the financial year saw the COVID pandemic develop
rapidly, culminating in the first UK national Iockdown on
23 March 2020. All our hotels and restaurants were closed, with
the exception of 39 hotels that were kept open to support the
national effort by providing accommodation for NHS staff and
other key workers.
Given the material impact of the lockdown restrictions
on revenues, we focused on immediate actions to reduce
cash outflows to help protect our liquidity. These actions
included the elimination of all discretionary spend and the
postponement of investments. We placed the majority of
our employees on temporary furlough, and reduced capital
expenditure to essential hotel maintenance, core IT spend
and the rebranding and refurbishing of the recently acquired
Foremost hotels in Germany. Voluntary pay cuts were taken
by the Board and senior management team, and dividend
payments were suspended. We utilised UK Government
support schemes during the year including the business
rates holiday and the Job Retention Scheme, and equivalent
schemes and grants in Germany, with a total benefit to the
Group of around £270m.
As the year progressed, further action was taken to ensure
our cost base reflected the significantly lower levels of
demand, and to give us greater flexibility to adjust to demand
changes in the future. This included reducing our head office
and hotel headcount and implementing changes to our hotel
and restaurant labour model to provide greater flexibility to
flex hours in line with demand.
8
Whitbread Annual Report and Accounts 2020/21 Growing market share in the UK
Following the Government advice that hospitality venues
could reopen, we were able to reopen our UK estate quickly
and safely. Our unique business model enables us to make a
contribution to fixed costs at very low levels of occupancy,
meaning we were in a good position to open up the majority
of our hotel and restaurant estate in July and into August.
Occupancy levels recovered to above 50% in September and
October driven by relatively strong leisure demand in tourist
locations and demand from tradespeople who need to be
physically present to work. However, the implementation of
tiered restrictions in October and the subsequent tougher UK
wide lockdown that followed from Christmas to beyond the
end of the financial year, saw occupancy levels reduce to
below 30% in January and February.
Despite these very difficult circumstances, Premier Inn
continues to be consistently rated as the strongest hotel brand
in the UK. The success of our customer proposition is based
on the provision of a high-quality customer offer across the
Premier Inn hotel network, which drives market-leading brand
and customer scores, and underpins our high levels of direct
digital distribution.
The advantages of our unique operating model, the strength of
the Premier Inn brand, and our market-leading direct distribution
model, has enabled us to continue to deliver strong market share
gains in the UK. Throughout the period from August 2020
onwards, Premier Inn has significantly outperformed the
Midscale and Economy market. Our exposure to the faster
recovering budget sector, our resilient customer mix, and the
enhanced structural opportunities that the COVID crisis has
created, positions us well to continue this outperformance.
The Government restrictions have had a greater impact
on the operations of our restaurants, with the national
lockdowns forcing full closures at the start and end of the
financial year and, restrictions in the highest tiers impacting
us in the Autumn. Trading in the period from July 2020 to
December 2020, when on average 70% of our restaurants
were open, was helped by the national “Eat Out to Help
Out Scheme” in August, however overall demand remained
subdued and we had reduced capacity in each restaurant
due to social distancing restrictions.
Accelerating growth in Germany
In Germany, the pattern of COVID restrictions largely mirrored
the UK, albeit in a more complex framework of national and
federal restrictions. Customer demand and occupancy levels
were higher in tourist locations, and lower in locations with
a greater business mix and COVID restrictions have had a
material impact on total sales. However, the pandemic has
provided an opportunity to accelerate the expansion of our
estate in Germany.
We entered the financial year with just six hotels, and ended
it with 30 hotels, with a presence in most major towns and
cities. Our total open and committed pipeline now stands at 72
hotels. In addition, we were able to use the time that the hotels
were closed to refurbish and rebrand 13 of the acquired
Foremost hotels, reopening them in May 2020.
In December, the Group completed the acquisition of 13
hotels from the Centro Group, of which six were operational,
and seven pipeline, demonstrating the enhanced structural
opportunities that exist for Whitbread in Germany. Given
ongoing restrictions and subdued demand, we have temporarily
closed the six acquired operational hotels, to accelerate their
refurbishment and rebranding to Premier Inn.
The scale of our growing network, the accelerated
refurbishment and rebranding programmes, and the pressure
on the independent sector, will provide a strong platform for
growth in Germany as restrictions begin to be lifted and the
market recovers.
Financial performance and outlook
Overall, full year statutory revenues were down 71.5% year-on-
year reflecting the impact of COVID restrictions on the business.
The significant decline in revenue resulted in an adjusted loss
before tax of £635.1m. Statutory loss before tax of £1,007.4m
includes a non-cash impairment charge of £348.0m relating to
goodwill on German acquisitions, property, plant and equipment
and right-of-use assets, as a result of the ongoing COVID
situation. The cash outflow for the year, before shareholder
receipts and debt issuance and repayments was £704.6m,
driven by the significant decline in revenue, despite the
extensive mitigating actions that have been taken.
However, our balance sheet and liquidity position, remains
strong, enhanced by the successful £1bn Rights Issue completed
in June 2020, and the £550m Green Bond issuance in February
2021. At the end of the financial year, the business had access
to over £1.25bn of cash and cash equivalents and an undrawn
Revolving Credit Facility of £950m. Part of the Green Bond
proceeds provided liquidity to repay £200m of private
placement debt early in March 2021.
Our strong balance sheet, supported by our freehold
properties, gives Whitbread significant financial flexibility
and is a real competitive advantage, enabling us to invest
in our strategy in a market where others will be constrained.
In terms of the outlook for the year ahead, the German market
is particularly challenging at this point in time with occupancy
levels below 15%. Tight restrictions, the slow roll-out of the
vaccine and the current political environment is giving
greater uncertainty to the pace of recovery.
The majority of our hotels in the UK are currently open but
only for guests staying for essential business travel, whilst
the majority of our restaurants remain closed for indoor
dining. The expectation is that overnight stays for leisure
travel will be permitted from 17 May 2021, along with the
full reopening of restaurants.
We anticipate strong leisure demand during the summer
in coastal and other tourist locations, which represent
around 15% of our hotel estate. Whilst this “leisure bounce”
is expected to be significant, a full recovery in leisure demand
will need the return of events, including sporting events,
weddings, and all other leisure activities. Business demand
from tradespeople has remained resilient throughout the
crisis, albeit still some way below pre COVID levels, and we
expect to see a continued gradual recovery. Our expectation
is that office-based business demand will not start to recover
until offices reopen in earnest in the autumn. Our strong
domestic focus means we expect to benefit from faster
recovery of domestic, leisure and business demand, compared
to international demand which is likely to be slower to return.
9
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 Driving long-term value
Despite the challenges that the pandemic has brought to the
hospitality industry, Whitbread’s strategy to drive long term
value remains compelling. As a result of the crisis, we expect
many of our competitors to face financial constraints. This is
likely to lead to a slowdown in rooms growth and investment,
and a potential acceleration in the decline of the large
fragmented independent sectors, in both our key markets.
Whitbread’s strong balance sheet, good liquidity and flexible
financial position means that we have the confidence and
ability to continue to invest with discipline and focus, to
capitalise on the enhanced structural growth opportunities
that will exist, and deliver strong long-term returns.
In the UK, we will continue to grow and optimise our large
network of hotels and leverage the powerful competitive
advantages of our brand, our market-leading direct distribution,
our best-in-class operating model and our broad customer reach.
In Germany, we have a compelling opportunity to replicate our
UK success story, and our aim is for Premier Inn to be the number
one budget hotel operator. We will continue to invest in growing
our pipeline through both organic and inorganic investment.
Whitbread is a strong and much-loved business that has
successfully navigated numerous turbulent periods during its
long history. The strength of its people, excellent brands, unique
business model and broad customer reach provides a strong
platform for future growth and we will continue to take action to
ensure that we exit the pandemic as a leaner, stronger and more
resilient business. As a result, we will continue to enhance our
market leadership position, increase market share, support our
colleagues, guests, suppliers and communities, whilst creating
further significant value for shareholders.
Alison Brittain
Chief Executive
26 April 2021
CHIEF EXECUTIVE'S REVIEW CONTINUED
Investing to win next year
We continue to take actions to ensure that we exit the crisis
as a leaner, stronger and more resilient business, and the next
phase of our long-standing efficiency programme will target
an additional £100m of cost savings over the next three years.
We will continue to invest in our commercial plan in the
UK to ensure that we harness the pent-up demand for domestic
leisure travel during the summer, alongside the ongoing recovery
of business demand. At the forefront of our response, is a major
integrated marketing campaign, ‘Rest Easy’ featuring the voice of
Sir Lenny Henry, who has become synonymous with the Premier
Inn Brand. This campaign launched in April, and will help deliver
front-of-mind consideration with existing and new customers.
A new Premier Inn website is driving higher conversion rates,
while an improved ‘business booker’ proposition and increased
use of Travel Management Companies will help drive business
demand and broaden our reach to business customers.
We will also continue to invest in our room refurbishments,
ensuring that our hotels offer a great guest experience, as well
as recommencing the roll-out of ‘Premier Plus” rooms.
In Germany, we are executing our strategy to drive long-term
value through the acceleration of our expansion, and investing
to build a platform of scale, both organically and through the
acquisition of assets at good prices. The ongoing impact of
the COVID restrictions, which will delay the sales maturity of
our operating hotels by 12-18 months, will suppress short-term
performance, meaning that losses will increase in 2021/22 and
continue into 2022/23. However, the progress we have made
to grow the estate in Germany since the start of the pandemic
will mean that we are strategically very well-placed when
restrictions are relaxed and market demand recovers.
A Force for Good
Whitbread’s ambitious sustainability programme, Force for
Good, ensures that being a responsible business is integrated
throughout the way Whitbread operates and keeping our
Force for Good commitments and ambition central to our
response to the global pandemic has been very important
to us.
Diversity and Inclusion was an area of focus for our strategy
this year and we have now published eight commitments to
drive meaningful progress in this area. We also took this year
to focus on driving forward our target to cut food waste, and
having set up a partnership to ensure surplus food does not go
to waste, we have donated over half a million meals to support
those in need.
Despite the challenges of COVID, we did not stand still on our
carbon related targets, and in fact, took the opportunity to
stretch and reinforce them. In 2018, Whitbread set a science-
based target to reduce carbon emissions intensity by 50% by
2025 and 84% by 2040. We have already achieved a reduction
of nearly 40% and so we are well on our way to achieving the
first target. However, this year, we wanted to go further and
have now updated our carbon target to aim for net-zero
carbon emissions by 2040, which is a full decade earlier than
the original plan. We know this is a huge task, but it is one
that is vitally important for our business and the battle against
global climate change. Our carbon strategy was externally
recognised this year as we improved our Carbon Disclosure
Project (CDP) Climate Change score to A-, putting us in the
Leadership category, granted only to those seen to be
implementing best practices on sustainability.
10
Whitbread Annual Report and Accounts 2020/21 OUR INVESTMENT CASE
Three compelling reasons
to invest in Whitbread
Best placed to capitalise on the recovery
opportunity and reinforce our market-leading
position, using our unique model for sustainable
value creation
1
3
LONG-TERM STRUCTURAL
GROWTH OPPORTUNITIES
› Attractive long-term structural growth
opportunities in the UK and Germany
› Highly fragmented markets with
declining independent hotel share,
exacerbated by the effects of COVID,
with the budget hotel sector having
grown faster than the rest of the
market over the last ten years
2
BEST-IN-CLASS
OPERATIONAL
PERFORMANCE
› Winning customer proposition and
broad appeal
› End-to-end control delivers best-in-
class operational performance
› Scale ensures we can deliver high
quality at value for money
› Number one UK hotel brand with
direct distribution model
UNIQUE MODEL
FOR SUSTAINABLE
VALUE CREATION
› Vertically integrated model enables
a superior customer proposition and
growth at good returns
› Proven investment model which can
be replicated over the long term
› Allows us to respond rapidly,
particularly as demand recovers
as we only need to rely on our own
operations to mobilise
11
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 MARKET REVIEW
Structural growth opportunities
THE UK MARKET1
67m
POPULATION
701k
HOTEL ROOMS
11%
PREMIER INN
MARKET SHARE
OF ROOMS
48%
INDEPENDENT HOTELS
MARKET SHARE
OF ROOMS
1 Source: Company data and estimates, data is 2019; the impact of COVID-19
means that 2020 is not a representative year, and is therefore excluded from
the date range.
Premier Inn has an integrated business
model that delivers an unrivalled mix
of quality and value to millions of
customers and offers a significant
competitive advantage in the budget,
domestic, short-stay market. This,
alongside our strong fundamentals,
conservative capital structure and
disciplined capital allocation, provides
a strong platform for long-term
growth and will ensure we exit the
COVID-19 crisis as a leaner, stronger
and more resilient business.
Despite the significant impact of COVID-19 on our markets
our review of the market is written for the long term and we
remain excited about the potential. It is especially important
in times like this to operate a vertically integrated model like
we do; by owning all of the value chain, from developing and
building the hotels right through to managing the brand, the
operations and the direct distribution, we are best positioned
to access the structural growth opportunities and continue
to create value for our shareholders over the longer term.
In the UK, we are focused on continuing to grow and
innovate with growth delivered through our existing pipeline.
With our strong brand and winning customer proposition,
we are confident that we will be able to continue winning
market share.
Furthermore, the budget market in which we operate
experiences higher growth than other hotel sectors and
tends to outperform those other sectors in downturns.
During this current COVID-19 crisis budget branded hotels
have outperformed the market in every year since 2008,
including a material outperformance during and after the
financial crisis, and we are seeing evidence of that once again.
In Germany, we are focused on replicating our UK success,
with the ambition to be the number one budget hotel operator.
We have significant headroom to grow, both organically and
through careful and considered mergers and acquisitions
(M&A) activity.
Germany presents an exciting opportunity given it has
remarkably similar characteristics to the UK. Both markets
are characterised by long-term migration from independents
to budget branded hotels, and we have seen clear signs
of distress and a weak independent segment decline.
The COVID-19 crisis will likely accelerate the pressures on
independents through demand weakness and increased
cost pressures, and we expect this to worsen as Government
support schemes are reduced. We also expect a decrease in
new branded hotel supply, leaving an opportunity for Premier
Inn to grow market share further.
12
Whitbread Annual Report and Accounts 2020/21 We remain very excited about the
potential in our core UK market.
Although this year has presented
us with a number of unprecedented
challenges and obstacles with
COVID-19, our long-term strategy
remains unchanged.
The actions we have taken over the course of the year to
protect our team, our guests and our business as a whole
mean we are well placed to exit the COVID-19 crisis in
a position of strength. The structural characteristics of the
UK market remain, and we have ensured that Premier Inn
is able to capitalise on the opportunities as a result of
structural market changes, particularly the distress felt
by smaller operations in the market as a result of the
COVID-19 pandemic. There will inevitably be a constrained
competitor set where there will be less opportunity for
others to invest.
The UK is densely populated, which drives domestic short-stay
travel, and post COVID-19, we expect the overall market to
continue growing over the long term. Over the last decade,
we have seen all consumer indices show an increasing
expectation for value for money. We are seeing a generational
impact, as younger people have a greater demand for leisure
and travel in general. As a result, the UK travel market is
a great core market for us to be in and Premier Inn is the
clear market leader on every important measure.
The UK market remains highly fragmented from both
a demand and supply standpoint, with around 48% of the
supply provided by the independent sector. Whilst Premier Inn
achieves high occupancy levels, we still represent a relatively
low share of supply.
The vast majority of our rooms are sold to domestic
travellers, compared to around 60% for the total market.
Domestic short-stay travellers have a higher frequency of visit
and, as a result, a greater likelihood of wanting to stay with us
again if we meet their needs. This domestic skew also means
we are better protected from any structural changes and
effects on international travel that will arise as a result
of COVID-19.
We also have a good mix of business and leisure travellers.
This balance ensures, in a non-pandemic world, that we
achieve consistently high levels of occupancy at around
76%. Furthermore, our business customers include
a significant proportion of manual trades workers (those that
need to be physically present to perform their jobs), while
our office-based workers are from a wide variety of sectors.
This means we are less exposed to potential structural shifts
in working patterns, such as permanent flexible working.
Premier Inn also under-indexes on group business bookings
and we have very limited conference facilities so we believe
we are less exposed to those areas of business travel that may
see a structural shift to virtual meetings.
Since 2010 we have increased our market share of rooms
from 6% to 11%, achieved through an ambitious network
expansion programme.2 The rest of the budget branded
sector has increased its market share by a similar amount
to Premier Inn. However, the budget branded sector growth
has been fragmented, with a long tail of smaller competitors.
We see an attractive ongoing opportunity to continue
investing in new capacity and win further market share gains.
This means that we can continue to grow our total sales
ahead of the market and our plans are not wholly contingent
on short-term conditions.
With our strong network and value for money, only 1% of our
customers book using online travel agents, reducing the cost
of customer acquisition vs the rest of the market. We can also
leverage our scale to find ways to improve our efficiency to
partially offset the inflationary cost increases, whilst smaller
operators will, of course, struggle to do that. Post COVID-19,
the pressure on the independents will only grow, creating an
ongoing structural opportunity, which we are best placed to
capture. We expect our additional new, efficient and superior
hotel capacity to continue to provide domestic short-stay
guests with a superior mix of quality, service and price,
therefore allowing Premier Inn to win share in the UK.
2 Source: Company data and estimates, data is 2010-2019; the impact of
COVID-19 means that 2020 is not a representative year, and is therefore
excluded from the date range.
13
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 MARKET REVIEW CONTINUED
THE GERMAN MARKET1
83m
POPULATION
993k
HOTEL ROOMS
1%
PREMIER INN
MARKET SHARE
OF ROOMS
72%
INDEPENDENT HOTELS
MARKET SHARE
OF ROOMS
We remain incredibly excited by the
opportunities in Germany and strongly
believe it offers a compelling structural
long-term growth opportunity. The
structure of the German market
is such that, once the COVID-19
crisis has passed, there is significant
potential to grow, and our aim remains
to replicate our UK success and to
become the number one budget hotel
operator in Germany.
1 Source: Company data and estimates, data is 2019; the impact of COVID-19
means that 2020 is not a representative year, and is therefore excluded from
the date range.
14
Whitbread Annual Report and Accounts 2020/21 We have materially grown our pipeline in Germany over the
year, with 30 operational hotels and an open and committed
pipeline of 72 hotels. This network now gives us a national
footprint, with a presence in many major German cities.
The German market is around 42% larger than the UK,
at almost one million hotel rooms. Pre COVID-19, RevPAR in
the budget branded sector in Germany had also been growing
at a faster rate to the UK, at around 2.3% CAGR between 2015
and 2019 vs 1.3% in the UK.
Furthermore, the German market is even more fragmented
than the UK, with independent hotels making up around
72% of the supply, and more domestic travel-oriented than
the UK at around 77% of the total. This high proportion of
domestic travel is a long-term output of Germany’s geography
and history.
Germany is significantly more regionally dispersed than the
UK due to its history and federalised political and industrial
structure. This geographic dispersion drives greater demand
for short-stay travel, particularly business-led. Therefore, there
is a greater frequency of travel by the type of customer that
Premier Inn excels at serving.
Structural barriers to entry exist as a result of the nature
of the property market. With limited large property financing
structures, such as Real Estate Investment Trusts (REITs),
and greater opportunities in the four- and five-star sector for
asset-light models, there has been limited new capacity added
in the budget sector, which is considered to be the hardest
sector in which to earn a return. This has meant that the
international asset-light operators have struggled to find
franchisees to operate appropriate new hotel sites. In fact, the
only hotel businesses that have delivered meaningful growth
adopt a similar owner-operator model to Premier Inn. In order
to add sufficient capacity in the budget sector, an operator
needs to be willing to develop freehold, sign long leases or buy
out existing operators.
Post COVID-19, these structural elements make the
opportunity even more attractive to us over the longer
term. Even in the depths of the pandemic, we have seen
opportunities come our way. We announced an acquisition
in December, where we were able to select 13 hotels in key
German cities at an attractive price. Our ability to very
carefully deploy capital, when others will be constrained,
provides an opportunity for us to continue investing in or
acquiring assets with attractive long-term returns. We are
seeing real signs of distress in the German market and expect
the independents to continue to fall out of the market,
creating an opportunity for Premier Inn to fill the gap.
MARCH 2020
GERMAN PORTFOLIO
FEBRUARY 2021
GERMAN PORTFOLIO
2
2
Hamburg
Hamburg
5
5
Hamburg
Hamburg
Hannover
Hannover
1
1
Frankfurt
Frankfurt
1
1
Freiburg
Freiburg
2
Munich
2
Munich
1
1
1
1
Braunschweig
Braunschweig
1
1
Berlin
Berlin
Essen
Düsseldorf
Düsseldorf
Essen
1
1
Wuppertal
1
1
Wuppertal
3
1
1
3
Cologne
Cologne
2
2
Frankfurt
Frankfurt
Saarbrucken
Saarbrucken
1
Leipzig
Dresden
1
Leipzig
Dresden
1
1
2
2
2
1 Heidelberg
1 Heidelberg
2
Nuremberg
Nuremberg
1
1
Stuttgart
Stuttgart
1
1
Freiburg
Freiburg
1
Passau
4
Munich
4
Munich
1
Passau
6 OPEN/46 PIPELINE HOTELS
30 OPERATIONAL/42 PIPELINE HOTELS
15
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 OUR BUSINESS MODEL
Our business model
OUR RESOURCES
AND RELATIONSHIPS
HOW WE CREATE VALUE
PURPOSE:
To provide quality, affordable hotels for our guests
to help them to live and work well and to positively
impact the world around us. With no barriers to
entry or limits to ambition and to provide meaningful
work, skills and career development opportunities
for our teams.
1
2
BRAND STRENGTH
We own our brand and provide a consistent
customer offering of quality and value. We are
the UK’s strongest hotel brand, and first choice
for travellers. We have market-leading
consumer metrics, with stand-out customer
brand scores that are increasing year-on-year.
MARKET-LEADING DIRECT
DIGITAL DISTRIBUTION
We have a market-leading direct
digital distribution model, with low-cost
customer acquisition and retention.
3
PROPERTY FLEXIBILITY
Controlling and funding our property
development enables us to get the right hotels
in the right locations. Our flexible approach to
property ownership improves our ability to
manage our property and make decisions to
optimise the estate.
4
SCALE/NETWORK
We have the largest UK network, with an estate
comprising 857 hotels and 768 restaurants
across the UK, Germany and the Middle East.
We have superior network access and access
to economies of scale as a result. Scale ensures
we can deliver quality, value for money and
a good return on capital employed (ROCE).
5
6
BEST-IN-CLASS OPERATIONAL
PERFORMANCE
We have an end-to-end operation, with
consistent execution at high standards
and at low cost, driving a winning customer
proposition. Our flexible model enables a rapid
response to returning demand and is a long-
term sustainable competitive advantage.
EVERYDAY EFFICIENCY
We have efficient operating structures,
with a standardised model and rooms.
Our lean, agile and right-sized cost
base enables a superior value for money
offering, with an ongoing opportunity
to drive efficiency further.
7
FORCE FOR GOOD
We work hard to ensure we are tackling our most material sustainability issues. Reducing our
environmental impact, sustainably sourcing our products and making a positive contribution to the
communities we serve, we are setting up the business to benefit from sustainable and responsible growth.
WINNING TEAMS
Our 29,000 team members make everyday
experiences special for our customers.
BROAD CUSTOMER BASE
Our flexible model caters to a wide range
of customer types. Our diversified customer
mix is resilient and will hold us in good stead.
We are over-indexed on domestic customers
in the regions, we expect the regions to recover
quicker than London, and we expect that
domestic demand will recover far quicker
than international.
FINANCIAL STRENGTH
Disciplined capital management and good
returns. Our strong balance sheet provides
offensive and defensive flexibility and is
bolstered by our freehold property.
TECHNOLOGY
Scalable platforms, creating a centre of digital
excellence and embedding data insight across
the business.
INSIGHT AND MARKET KNOWLEDGE
Our deep insight and market knowledge allow
us to stay ahead of market trends.
SUSTAINABLE APPROACH
Our approach to sustainability through our
Force for Good programme is embedded
throughout everything we do.
UNDERPINNED BY:
OPPORTUNITY
A team where everyone can reach
their potential – no barriers to entry
and no limitations to ambition.
COMMUNITY
16
Whitbread Annual Report and Accounts 2020/21 HOW WE MAKE MONEY
THE VALUES WE SHARE
REVENUES
OUR CUSTOMERS
With an estate comprising 857 hotels and
768 restaurants, across the UK, Germany
and the Middle East, we are one of the
largest budget branded hotel chains in the
world. Our unique model and leading market
position in the UK puts us in a strong
position to continue to grow and optimise in
the UK and to grow internationally. We focus
on maintaining market-leading guest scores,
and this, alongside our dedication to
excellent customer service, ensures we rank
very highly amongst our competitors in
terms of both the value and quality we
provide*. Our hotel pricing algorithms enable
us to optimise our occupancy and rate mix
across the booking curve, while our food and
beverage offering is a core part of our
customer proposition. We are also increasing
revenue by optimising our revenues in
individual catchments more effectively.
* YouGov BrandIndex Quality & Value scores
as at 3 March 2021 based on a nationally
representative 52-week moving average
We welcome millions of customers to our
hotels and restaurants every year and making
a meaningful contribution to those we serve
is key. We constantly respond to the changing
needs and lifestyles of our customers and
ensure our offering is inclusive for all.
We strongly believe in helping our customers
make informed choices for a healthier life, and
working closely with Public Health England,
we continue to monitor our menus to ensure
we offer an excellent choice of healthy options,
and great quality, responsibly sourced,
affordable food and drink.
We also feel passionately about the health
and safety of our guests. All our staff are
fully trained to ensure our hotels are safe
environments for our guests, and that in
the case of an emergency, our guests are
in safe hands. More so than ever, this has been
incredibly important. We responded incredibly
quickly at the very start of the pandemic, with
the health of our team members and guests
paramount. We purchased PPE, invested
a considerable amount in social distancing
signage and protocol, trained our team
members on health screening and illness
response procedures, and enhanced our
cleaning standards across the entire estate.
Our operating and ownership model ensures
that these standards and ways of working
can be rigorously enforced across the estate.
OUR SHAREHOLDERS
Our focus on consistent returns from
an expanding capital base, combined
with ambitious growth milestones, create
substantial shareholder value. We have three
priorities: to grow and innovate in our core
UK businesses; to focus on our strengths to
grow internationally; and to enhance the
capability and infrastructure to support
long-term growth. Our long-term growth
will be delivered through disciplined capital
spending, and this financial strength and
flexibility is key to deploying our strategy.
HOW PROFITS CONVERT TO CASH
OUR PEOPLE
Our business is highly scalable, with a large
proportion of incremental sales converting
to cash in a normal year. This drives a high
cash conversion rate meaning we generate
a good level of discretionary free cash
flow each year. This allows us to invest
in attractive opportunities for Premier Inn,
both in the UK and in Germany.
CAPITAL REINVESTMENT
Capital allocation discipline is one of our
core pillars. We invest in new hotels for the
long term, while also deploying capital on
maintenance and product improvement to
ensure we continue to provide Premier Inn’s
consistent quality, and to enhance and
optimise our hotels. We invest through
cycles, optimising the timing of our
investments to ensure we are always
well positioned to weather any storm.
Germany remains our core international
focus, with £376m of capital committed
for future openings, taking the open and
committed pipeline network to 72 hotels.
As one of the UK’s largest employers,
operating across communities in the
UK, Germany and the Middle East, we are
passionate about recruiting, training and
retaining great people so that they are
empowered to grow and develop long-term
careers within our business. We have best-in-
class development programmes, industry-
leading training schemes, and a successful
apprenticeship programme, ensuring team
member wellbeing is at the centre of
everything we do. In light of COVID-19,
we successfully launched a clear wellbeing
communication plan to support mental and
physical wellbeing for our team members.
We are also committed to removing barriers
to entry and creating an environment where
everyone feels valued and is supported to grow.
Whitbread is an inclusive employer, strongly
believing that everyone is unique and there
should be no limits to ambition. We champion
inclusivity and improving diversity across the
entire organisation and we have set eight
diversity and inclusion targets to ensure our
teams feel supported and engaged.
OUR COMMUNITIES
You'll find our hotels and restaurants in
hundreds of communities the length and
breadth of the UK. We are often a key part of
these communities, and therefore have a big
part to play in making them great places to
live, work and do business. We put a huge
amount of energy and passion into fundraising
for charities, finding new ways to serve the
communities we operate in, as well as putting
in hours of community support.
with Deliveroo to serve them food, we donated
more than 500,000 surplus meals to charities,
and we continued to raise almost £882,000
for Great Ormond Street Hospital despite site
closures. We also diverted distribution capacity
to supermarkets to help retailers feed the
nation, topped-up furlough salaries, and
launched a wellbeing communication plan
to support the mental and physical wellbeing
of our colleagues.
Moreover, we remained a Force for Good
throughout the pandemic, for both our
communities and our teams. We kept 39 hotels
open for NHS staff and key workers, partnering
Our Force for Good programme is embedded
across our business and in everything we do;
operating responsibly and sustainably
underpins our strategy.
Making a meaningful contribution
to the customers and communities
we serve.
RESPONSIBILITY
Always operating in a way
that respects people and the planet.
17
UNDERPINNED BY:
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 OUR STRATEGY AT A GLANCE
Our strategy is to provide
sustainable long-term value
We put the customer at the heart of everything we do.
Our strategy is to provide sustainable long-term value
for our shareholders by growing our successful Premier Inn
and restaurant brands in structurally attractive markets,
whilst delivering a good return on capital.
In the current COVID-19 environment, and following the
closure of our hotels and restaurants on Government advice,
we have had to re-prioritise our near-term actions, to focus
on the health and safety of our guests and teams as well as
the Company’s cash flow, capital discipline and strong balance
sheet. This will ensure Whitbread is well placed to exit the
pandemic in a position of strength, and will be able to
capitalise on the enhanced structural opportunities in both
the UK and German markets.
Our three clear strategic priorities
INNOVATE AND GROW
IN THE CORE UK MARKET
Whitbread has a current UK estate of 78,718 rooms, with
a committed pipeline of 12,256 rooms and line of sight
to 110,000 rooms. By increasing the size of our estate,
but also optimising our existing network and through
innovation, we will continue to be one of the largest
branded budget hotel chains in the world.
Read more – pages 20 to 25
FOCUS ON PREMIER INN’S
STRENGTH TO GROW
IN GERMANY
Our aim is to leverage the strengths and capabilities
of the UK business to create the number one budget
brand in the structurally attractive German hotel market.
Read more – pages 26 to 31
ENHANCING WHITBREAD’S
CAPABILITIES TO SUPPORT
LONG-TERM GROWTH
Our successful efficiency programme, unique vertically
integrated model, brand strength, product innovation and
high-quality direct distribution underpins the consistent
quality and competitive advantage enjoyed by Premier Inn.
The next stage of our efficiency programme, targeting an
additional £100 million of cost savings over the next three
years, will ensure we retain our lean and agile cost base.
Our balance sheet strength with freehold backing, and our
conservatively managed business will ensure we exit the
crisis in a position of strength. The successful completion
of the £1 billion rights issue in June 2020 ensured we
protected ourselves further.
Read more – pages 32 to 35
18
2020/21 performance
Force for Good
FY22 priorities
Market risks and opportunities*
KPIs
› Total UK revenue at £577.4m
› Technological innovation driving reduced
› Hotel and restaurant profit recovery
› Adjusted operating loss
£415.7m
costs, such as the continued rollout of more
efficient chargrills
› Strong balance sheet and
significant liquidity headroom,
backed by a valuable
freehold estate
›
100% renewable electricity powering our
hotels and restaurants
› Menus continuing to deliver a reduction in
salt, sugar and calories
› Market outperformance for
the year +3.7%1
› Strong customer scores
› Supporting our estate, our teams and our
guests through our COVID-19 response
having Force for Good at the heart
› New ambitious target to net zero carbon
by 2040
› Adjusted operating loss
› Aligning and implementing our Force for
› Build network across key cities in order to increase
Risks
£38.8m
› Material acceleration in
network growth in Germany
› Open and committed pipeline
now stands at 72 hotels
› Leading customer scores
› Ready to brand-build
upon reopening
› Efficiency programme
continuing to deliver
material savings
› Only 1% of customer booking
are via online travel agents
›
Improving customer scores
Good approach in Germany, ensuring that
our Force for Good goals are delivered with
core focus on efficiency, industry-leading
responsible sourcing, and the training and
development of our teams
› Updating and futureproofing our policies
and business practices on supply chains to
integrate ethical and environmental risk into
wider supply chain risk in order to mitigate
reputational, operational and supply
chain risk
› Support environmental solutions in new
products and services both in Germany
and the UK (German warehouse efficiency)
› Embedding our sustainability credentials
into our finances through the issue of Green
Bonds relating to long-term environmental
projects in our business
› Our industry-leading responsible sourcing
programme ensures that the products and
services we source are produced ethically
to deliver security of supply and strong
supplier relationships
› Supporting our future pipeline of talent
through team wellbeing, training and
development, and diversity and inclusion
to ensure a strong, efficient and diverse
future workforce
1 STR data FY21, full inventory basis, M&E excludes Premier Inn.
› Continued market share gains
› Optimise UK network
› Expand the number of Premier Plus rooms
› Maintain excellent guest scores
› Focus on pricing algorithms to enable us to optimise
our occupancy and rate mix across the booking curve,
and across individual catchments
› Sustain a strong balance sheet and liquidity, including
maximising our cash flow
› Prepare the business to exit the crisis in a position
of strength
› To continue to ensure the safety and health of all our
customers and guests, in addition to keeping the
mental health and wellbeing of our team members
front-of-mind
critical mass
› Build brand awareness in Germany
› Continue to explore options to further accelerate
growth through a mix of freehold property
development, leasehold sites and acquisitions
of small to medium existing hotel portfolios
› Health and safety
›
Integration of newly acquired hotels
Risks
› COVID-19
› UK economic recovery and other
macroeconomic factors
Total revenue (£m)
2020/21
2019/20
Opportunities
› Potential decline in competition from
independent sector, exacerbated by
the effects of COVID-19
› Low new hotel supply
Direct booking
2020/21
2019/20
577
2,050
99%
97%
› COVID-19
› German economic recovery
2020/21
30 (4,880)
Number of operating hotels
(number of rooms in brackets)
2019/20
6 (1,085)
Opportunities
› Potential decline in competition from
independent sector, exacerbated by
the effects of COVID-19
› Low new hotel supply
› Scope for mergers and acquisitions (M&A)
› Hotel and restaurant profit recovery
› Continued market share gains
Risks
› COVID-19
› Continue with our conservative approach to our
›
Inflationary pressures
balance sheet
› UK economic recovery and other
› Build on our everyday efficiency programme
macroeconomic factors
›
Improve technology capabilities, including the
› Cyber security
preparatIon for replacement of the CRM system
Efficiency programme/
cost savings
Whitbread has a strong track
record of delivering material cost
efficiencies, with over £235m of
savings delivered between FY17
and FY20.
› Continued investment in health and safety for
Opportunities
UK customer scores†
hotels and restaurants
› Cyber security compliance
› Retention and engagement of teams
› Technology to enable efficient and
› Development of cost effective
renewable energy
lower cost operations
2020/21
2019/20
2020/21
2019/20
39.6
41.9
26.8
27.6
Whitbread Annual Report and Accounts 2020/21 INNOVATE AND GROW
IN THE CORE UK MARKET
Whitbread has a current UK estate of 78,718 rooms, with
a committed pipeline of 12,256 rooms and line of sight
to 110,000 rooms. By increasing the size of our estate,
but also optimising our existing network and through
innovation, we will continue to be one of the largest
branded budget hotel chains in the world.
Read more – pages 20 to 25
› Adjusted operating loss
£415.7m
costs, such as the continued rollout of more
efficient chargrills
› Strong balance sheet and
significant liquidity headroom,
›
100% renewable electricity powering our
hotels and restaurants
backed by a valuable
› Menus continuing to deliver a reduction in
freehold estate
salt, sugar and calories
› Market outperformance for
› Supporting our estate, our teams and our
the year +3.7%1
› Strong customer scores
guests through our COVID-19 response
having Force for Good at the heart
› New ambitious target to net zero carbon
by 2040
FOCUS ON PREMIER INN’S
STRENGTH TO GROW
IN GERMANY
Our aim is to leverage the strengths and capabilities
of the UK business to create the number one budget
brand in the structurally attractive German hotel market.
Read more – pages 26 to 31
£38.8m
› Material acceleration in
network growth in Germany
› Open and committed pipeline
now stands at 72 hotels
› Leading customer scores
› Ready to brand-build
upon reopening
Good approach in Germany, ensuring that
our Force for Good goals are delivered with
core focus on efficiency, industry-leading
responsible sourcing, and the training and
development of our teams
› Updating and futureproofing our policies
and business practices on supply chains to
integrate ethical and environmental risk into
wider supply chain risk in order to mitigate
reputational, operational and supply
chain risk
› Support environmental solutions in new
products and services both in Germany
and the UK (German warehouse efficiency)
ENHANCING WHITBREAD’S
CAPABILITIES TO SUPPORT
LONG-TERM GROWTH
Our successful efficiency programme, unique vertically
integrated model, brand strength, product innovation and
high-quality direct distribution underpins the consistent
quality and competitive advantage enjoyed by Premier Inn.
The next stage of our efficiency programme, targeting an
additional £100 million of cost savings over the next three
years, will ensure we retain our lean and agile cost base.
Our balance sheet strength with freehold backing, and our
conservatively managed business will ensure we exit the
crisis in a position of strength. The successful completion
of the £1 billion rights issue in June 2020 ensured we
protected ourselves further.
Read more – pages 32 to 35
continuing to deliver
material savings
into our finances through the issue of Green
Bonds relating to long-term environmental
› Only 1% of customer booking
projects in our business
are via online travel agents
› Our industry-leading responsible sourcing
›
Improving customer scores
programme ensures that the products and
services we source are produced ethically
to deliver security of supply and strong
supplier relationships
› Supporting our future pipeline of talent
through team wellbeing, training and
development, and diversity and inclusion
to ensure a strong, efficient and diverse
future workforce
Customer Heartbeat
Our business performance is measured by our balanced
scorecard, illustrated by our Customer Heartbeat model.
Force for Good
2020/21 performance
Force for Good
FY22 priorities
Market risks and opportunities*
KPIs
› Total UK revenue at £577.4m
› Technological innovation driving reduced
› Hotel and restaurant profit recovery
› Continued market share gains
› Optimise UK network
› Expand the number of Premier Plus rooms
› Maintain excellent guest scores
› Focus on pricing algorithms to enable us to optimise
our occupancy and rate mix across the booking curve,
and across individual catchments
› Sustain a strong balance sheet and liquidity, including
maximising our cash flow
› Prepare the business to exit the crisis in a position
of strength
› To continue to ensure the safety and health of all our
customers and guests, in addition to keeping the
mental health and wellbeing of our team members
front-of-mind
Risks
› COVID-19
› UK economic recovery and other
macroeconomic factors
Total revenue (£m)
2020/21
2019/20
Opportunities
› Potential decline in competition from
independent sector, exacerbated by
the effects of COVID-19
› Low new hotel supply
Direct booking
2020/21
2019/20
577
2,050
99%
97%
› Adjusted operating loss
› Aligning and implementing our Force for
› Build network across key cities in order to increase
Risks
critical mass
› Build brand awareness in Germany
› Continue to explore options to further accelerate
growth through a mix of freehold property
development, leasehold sites and acquisitions
of small to medium existing hotel portfolios
› Health and safety
›
Integration of newly acquired hotels
Number of operating hotels
(number of rooms in brackets)
› COVID-19
› German economic recovery
2020/21
30 (4,880)
Opportunities
› Potential decline in competition from
independent sector, exacerbated by
the effects of COVID-19
› Low new hotel supply
› Scope for mergers and acquisitions (M&A)
2019/20
6 (1,085)
› Efficiency programme
› Embedding our sustainability credentials
› Hotel and restaurant profit recovery
› Continued market share gains
Risks
› COVID-19
› Continue with our conservative approach to our
›
Inflationary pressures
balance sheet
› UK economic recovery and other
› Build on our everyday efficiency programme
macroeconomic factors
›
Improve technology capabilities, including the
preparatIon for replacement of the CRM system
› Cyber security
Efficiency programme/
cost savings
Whitbread has a strong track
record of delivering material cost
efficiencies, with over £235m of
savings delivered between FY17
and FY20.
› Continued investment in health and safety for
Opportunities
UK customer scores†
hotels and restaurants
› Cyber security compliance
› Development of cost effective
renewable energy
› Retention and engagement of teams
› Technology to enable efficient and
lower cost operations
2020/21
2019/20
2020/21
2019/20
* Full disclosures of risks can be found on pages 62 to 66.
† YouGov BrandIndex overall Index score, an average of Impression, Value, Quality, Reputation, Satisfaction and Recommend, at 3 March 2021 on a nationally
representative 52-week moving average.
39.6
41.9
26.8
27.6
19
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 STRATEGIC UPDATE
Grow market share in the UK
PREMIER INN UK
Premier Inn is best placed
to capitalise on the recovery
opportunity and reinforce
its market-leading position.
Compelling structural growth opportunities
The UK hotel market is characterised by long-term migration
from independent to budget branded hotels. Between 2010
and 20192 independent hotels’ market share fell 9 percentage
points in the UK, while Premier Inn’s market share of total
rooms in the market grew from 6% to 11%. Despite this decline,
the independent sector still represents 48% of the UK market.
The COVID crisis is expected to accelerate the decline in
independents’ share of the market, as demand significantly
weakens and structural cost pressures persist. We are already
seeing clear signs of distress in both the independent sector
and the budget branded sector, and we expect to see
competitors begin to exit the market as the impact of the
Government’s financial support schemes begin to lessen.
Premier Inn is well-placed to capitalise on the expected
contraction in competitor supply and to take market share.
Budget branded sector is structurally advantaged
The budget branded hotel sector is the highest growth
segment in the hotel market and has proved more resilient
in previous downturns. Budget branded demand (total rooms
booked) has grown faster than the rest of the sector in every
year from 2009 to 20192 including material outperformance
between 2009 and 2011. The midscale and economy segment
is also outperforming in the current COVID-19 crisis, with total
sales change around 13.7pp3 ahead of the rest of the market
from the start of August 2020 to the end of February 2021.
Premier Inn is the strongest hotel brand in the UK with the largest network. We have consistently outperformed the
competition on a range of metrics, including value and quality, and with a growing lead year-on-year. In this environment,
the trust this brings has never been more important.
STANDOUT CUSTOMER BRAND SCORES IN THE MARKET1
YouGov BrandIndex metric
Satisfaction
Impression
Value
Likelihood-to-recommend
Quality
41.7
40.8
41.5
37.6
27.6
Premier Inn Variance 1st to 2nd
18.7
1st
1st
1st
1st
2nd*
11.1
15.0
19.9
(5.1)
1 Source: YouGov BrandIndex Satisfaction, Impression, Value, Recommended & Quality scores as at 3 March 2021 based on a nationally representative 12 week
moving average.
* First place is held by a four-star competitor.
20
Whitbread Annual Report and Accounts 2020/21 2020
2019
Premier Inn
2018
improvement YOY
in both metrics
YOUGOV BRANDINDEX – QUALITY SCORE1
Hilton
Marriott
Crowne Plaza
e
r
o
c
s
y
t
i
l
a
u
Q
35
30
25
20
15
10
5
0
0
Holiday Inn
Best Western
Holiday
Inn Express
Ibis
Airbnb
Travelodge
5
10
15
20
25
30
35
40
45
Value score
Broad customer reach
Premier Inn’s UK customer base is very broad with a roughly
even split of business and leisure customers. Around half of our
business customers are manual professions i.e. those workers
who need to be physically present to perform their jobs, while
our office-based guests tend to be travelling for business-to-
business reasons. In a post COVID-19 world, it is highly likely that
the need for these guests to travel will remain. Premier Inn also
under indexes on Group business bookings (e.g. conferences)
and is therefore less exposed to those areas of business travel
that may see a structural shift to virtual meetings.
Our leisure guests travel for a very wide range of reasons,
from those that are event-driven (e.g. weddings, sporting
events, theatre breaks) to weekends away with friends, visiting
friends and family, to short weekend breaks with the family
and through to those taking longer holidays in our tourist
destinations. The strong leisure demand evidenced during
the summer of 2020 demonstrates that people’s propensity
to travel for domestic leisure, when allowed, remains high.
Our geographic spread, with over 80% of our rooms sold in
the UK regions, combined with our domestic focus (90% of
guests are based in the UK) means that we are exposed to
the areas that are, and will, recover quickest.
Strong brand
Premier Inn is consistently rated as the strongest hotel brand in
the UK. Unlike the majority of other large-scale hotel operators,
who operate franchise models, ownership of the Premier Inn
brand enables the provision of a consistently high-quality
customer offering across the entire Premier Inn hotel network,
which drives market-leading brand and customer scores. In the
most recent YouGov hotel brand index survey4, Premier Inn was
voted number one for customer satisfaction, impression, value
and likelihood-to-recommend. The strength of the brand makes
Premier Inn the first choice for more travellers.
Direct distribution
Premier Inn’s direct digital distribution model, with only 1%
of bookings delivered through third party online travel agents
(OTAs), is industry-leading and ensures that Premier Inn’s
gross RevPAR is similar to net RevPAR achieved after cost
of sales, unlike independents or most other brands, which pay
high commission rates to third parties. Direct distribution also
provides complete ownership of the customer relationship
driving significantly lower acquisition and retention costs.
Best-in-class operating model
Premier Inn’s unique operating model provides a clear
competitive advantage, enabling the delivery of a winning
customer proposition that will have a strong appeal to customers
in both the current and post pandemic environments. The key
components of the model that drive our competitive advantage,
combined with our leading brand and direct distribution, are:
Scale advantage: Our vertically integrated model provides
increased control of network planning and property development
aspects of our hotel operations. This means we can efficiently
access locations where we see opportunities to expand, which
has enabled Premier Inn to almost double its number of rooms
in the UK since 2010 to become the UK’s largest hotel network.
We therefore have more hotels in locations where our customers
want to stay, and we are able to drive economies of scale to keep
unit costs low and by rationalising management overheads.
Operational control: Ownership of all aspects of our
hotel operations ensures greater control over the customer
experience, resulting in a high quality offering delivered
on a relentlessly consistent basis throughout the estate.
The offering is also continually evolving through innovative
new products such as hub and Premier Plus. The operating
model delivers best-in-class operational performance, as
evidenced by high staff retention levels and the very high
customer satisfaction scores the business regularly achieves.
1 YouGov BrandIndex Quality & Value scores as at 3 March 2021 based on a nationally representative 52-week moving average.
2 YouGov BrandIndex Satisfaction, Impression, Value, Recommended & Quality scores as at 3 March 2021 based on a nationally representative 12 week moving average.
21
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21
GROW MARKET SHARE IN THE UK CONTINUED
All of our hotels have a bar and restaurant, either within the
hotel or next door. Our restaurant brands include Beefeater,
Brewers Fayre, Whitbread Inns and Bar+Block, while our
in-hotel restaurants are branded Thyme. Our restaurant
offering, including the promise of a good value cooked
breakfast, form a core part of our overall customer
proposition, helping drive higher RevPAR in our hotels.
Property flexibility: A willingness to be flexible with respect
to freehold or leasehold acquisitions ensures new sites are
in the best locations and have the optimal size and format.
Ownership of around 60% of the hotel estate gives Premier
Inn control over the initial development of the hotel, and
subsequently how it is maintained, extended, or re-developed.
Further opportunities remain to optimise the network by
individual asset, as well as more broadly through catchment
optimisation creating a more optimal portfolio of assets.
Whitbread’s asset-backed balance sheet also supports
a strong financial covenant, which means that in competitive
bid situations for new leasehold developments, Premier Inn
is often the preferred tenant and can secure more favourable
lease and rental terms. Our freehold ownership reduces
earnings volatility in the current downturn and provides
Whitbread with a flexible source of funding in the event
of further cash requirements for investments or to further
protect our liquidity.
These components combine to deliver a winning
customer proposition, providing the customer with more
choice, value for money, outstanding product quality, excellent
customer service and consistently high hygiene standards.
Going forward, this offering positions us very well to take
market share, as customers are likely to seek value, quality,
and the familiarity of their most trusted brands.
Business review
Premier Inn UK statutory revenue was down 71.8% year-on-
year reflecting the significant COVID-19 restrictions that were
in place for the majority of the year. Total accommodation
sales were down 70.4% and total food and beverage sales
were down 74.4%.
Our hotel and restaurants were temporarily closed, in-line
with Government guidance, from the end of March until the
start of July, with the exception of 39 hotels which were kept
open to provide accommodation for NHS staff and other key
workers. During this first lockdown period, total revenue was
down 99%. From 4 July, hotels in the UK were permitted to
accept non-key worker guests, and restaurants were allowed to
reopen. Our operating model, whereby revenues contribute to
fixed costs at low levels of occupancy, as well as our learnings
from the 39 hotels kept open during the first lockdown, ensured
we were able to reopen quickly and ahead of the market.
Post reopening, occupancy levels steadily grew through
the summer, reaching 51% in August and 58% in September.
Demand was strong in seaside and tourist areas, with
occupancy levels of almost 80% during August and September
in those locations. During this period, restaurant sales were
boosted by the Government’s Eat Out to Help Out Scheme
which contributed towards the price of meals on every
Monday, Tuesday and Wednesday throughout August.
During October, the UK Government began to reimpose
restrictions, with the initial introduction of a tiered system
followed by a second lockdown in England from 5 November
to 2 December that prohibited all leisure and non-essential
travel. The impact of these restrictions saw occupancy levels
fall from 52% in October to 35% in November. December saw
increased tiered restrictions followed by a third UK lockdown
that commenced at the beginning of January, resulting in our
hotels again only being permitted to accommodate essential
business stays, and all our restaurants being closed.
UK OUTPERFORMANCE VS MIDSCALE & ECONOMY MARKET
PI total sales outperformance (YoY)1
PI market share2
PI market share gains pp (YoY)2
Aug
5.2%
10.8%
+3.6pp
Sep
7.9%
10.7%
Oct
8.4%
11.0%
Nov
10.4%
13.6%
Dec
10.5%
11.7%
Jan
4.8%
13.7%
Feb
5.2%
14.7%
+3.6pp
+3.7pp
+6.2pp
+5.3pp
+6.5pp
+6.9pp
1 STR data, full inventory basis, 31 July 2020 to 25 February 2021, M&E excludes Premier Inn
2 STR data, revenue share of total UK market, 31 July 2020 to 25 February 2021
PREMIER INN UK OCCUPANCY LEVELS
First
lockdown
starts
%
0
4
Lockdown
restrictions
eased
National
restrictions
introduced
Second
lockdown
Third
lockdown
%
1
5
%
8
5
%
2
5
%
1
%
2
%
3
%
4
2
%
5
3
%
1
3
%
3
3
%
9
2
%
3
2
Mar 20
Apr 20
May 20
Jun 20
Jul 20
Aug 20
Sep 20
Oct 20
Nov 20
Dec 20
Jan 21
Feb 21
Mar 21
22
Whitbread Annual Report and Accounts 2020/21 PREMIER INN UK1
£m
Statutory revenue
Other income (excl rental income)2
Operating costs before depreciation, amortisation and rent
Adjusted EBITDAR†
Net turnover rent and rental income
Depreciation: IFRS 16
Depreciation and amortisation: Other
Adjusted operating (loss)/profit†
Interest: IFRS 16
Adjusted (loss)/profit before tax†
1
Includes one site in each of: Jersey, Ireland and the Isle of Man.
2
Includes Government support – see Note 9 for further details.
† See pages 206 to 209 for definitions of alternative performance measures.
Despite these restrictions, resilient trades business demand
resulted in around 80% of our hotel estate remaining open,
with occupancy levels of 23% in January and 29% in February,
in what are traditionally lower occupancy months.
Throughout the period from August 2020 to February 2021,
Premier Inn total UK accommodation sales growth was
consistently ahead of the Midscale and Economy market, driving
very strong market share gains, and demonstrating the strengths
of our brand, direct distribution model and our winning customer
proposition. Customer scores have also remained very strong
during the year, despite the operational disruption.
Other income increased to £142.5m from £13.6m, reflecting
the £138.3m benefit from the UK Job Retention Scheme.
Operating costs reduced by 32.2% to £861.7m, in-line with
guidance, and driven by a reduction in revenue related
PREMIER INN UK1 KEY PERFORMANCE INDICATORS
FY21
577.4
142.5
(861.7)
(141.8)
4.5
(109.9)
(168.5)
(415.7)
(117.1)
(532.8)
FY20
2,050.3
13.6
(1,270.2)
793.7
2.1
(103.2)
(163.2)
529.4
(115.1)
414.3
Change
(71.8)%
947.8%
32.2%
(117.9)%
114.3%
(6.5)%
(3.2)%
(178.5)%
(1.7)%
(228.6)%
variable costs (primarily food and beverage costs of sales),
the £117.8m benefit of the Government’s business rates
holiday, and the impact of cost initiatives including the
postponement and cancellation of all non-essential costs.
IFRS 16 depreciation was £109.9m and IFRS 16 interest was
£117.1m with cash rent paid of £173.0m including the impact
of a c£25m deferral of 50% of the December quarterly rent.
During the year, five new hotels were opened and eight hotels
permanently closed, of which three were sold, bringing the
estate total to 817. The committed pipeline of 12,256 rooms
underpins our opportunity to take market share in the UK
in the medium to long-term as competitor supply contracts.
Adjusted loss before tax in the UK was £532.8m reflecting
the significant decline in statutory revenues as a result of
the COVID-19 restrictions that have been in place during the
financial year.
Number of hotels
Number of rooms
Committed pipeline (rooms)
Direct booking
Occupancy
Average room rate†
Revenue per available room†
Sales growth:
Accommodation
Food and beverage
Total
Like-for-like† sales growth:
Accommodation
Food and beverage
Total
1
Includes one site in each of: Jersey, Ireland & the Isle of Man
2
Includes Government support – see Note 9 for further details
† See pages 206 to 209 for definitions of alternative performance measures.
FY20
820
78,547
13,011
97%
76.3%
£61.50
£46.91
Change
(0.4)%
0.2%
(5.8)%
200bps
(4,690)bps
(24.9)%
(71.1)%
FY21
817
78,718
12,256
99%
29.4%
£46.16
£13.57
(70.4)%
(74.4)%
(71.8)%
(70.9)%
(74.7)%
(72.3)%
23
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 STRATEGY IN ACTION
GROWING RESPONSIBLY
IN THE UK
STRATEGY IN ACTION: INNOVATE AND GROW IN THE CORE UK MARKET
We are determined to
continue to innovate and
grow in the core UK market
despite the ever-growing
challenges presented by
the COVID-19 pandemic.
NEW SITE OPENINGS
Our commitment has been demonstrated by our continuation
and completion of projects over the past year, such as the new
site in Central Milton Keynes due to be opened 11 June 2021
and our new London flagship hotel in Southwark which opened
3 December 2020.
Milton Keynes, Avery Boulevard
The new Premier Inn comprises a ten-storey building boasting
180 newly fitted rooms and features a brand-new Bar + Block
restaurant. It is the ideal location for guests to explore the city
centre, being a short distance from leisure activities such as
Milton Keynes theatre district and sports Stadium MK. It also
provides affordable accommodation for business guests, with
a number of large employers being located in the Milton
Keynes area.
The impact of COVID-19 resulted in a pause of construction on
the site in March 2020, but as a result of on-site measures and
protective working practices the site was completed June 2020.
The Cut, Southwark
Our new London flagship is an exciting new development in
broadening our network growth in strategic locations where
our brands are underrepresented but there is an opportunity
for long-term growth. The hotel consists of 274 rooms divided
between two buildings which are connected by a glass bridge,
and a brand-new Bar + Block restaurant. The site is a great
location for leisure and business guests, as it is located just
100m from Southwark underground station and walking
distance to theatres, bars and restaurants.
In addition to this, as part of construction a new public park
and courtyard were created for the local community to enjoy.
24
BEST VALUE HOTEL BRAND IN UK
Premier Inn has been rated YouGov
BrandIndex ‘Best Value Hotel Chain’
for the 10th year running*.
BUDGET HOTEL SECTOR
IS IN HIGHER GROWTH
The sector has proven more resilient
in previous downturns, and has grown
faster than the rest of the hotel market
in every year from 2009 to 2019.1
100% RENEWABLE ELECTRICITY
IN ALL OUR OWNED UK SITES
Every hotel and restaurant we own is now
powered by 100% renewable energy, with
solar panels on 20% of our hotels.
* YouGov BrandIndex Value scores as at 3 March 2021 based
on a nationally representative 52-week moving average.
1 Source: Company data and estimates; the impact of
COVID-19 means that 2020 is not a representative year,
and is therefore excluded from the date range.
Whitbread Annual Report and Accounts 2020/21 PLUGGED INN
This year we announced that, from 2021, we
will be introducing the GeniePoint Network
of high-powered electric vehicle chargers at
Premier Inn hotels across the UK. This will be
the biggest rollout of high-powered electric
charging points in the UK’s hospitality sector.
Together with ENGIE, we aim to install up to
a thousand GeniePoint Network rapid charging
points, with 600 committed over the next three
years. Our goal is not only to satisfy increasing
demand for electric charging points, but also to
aid in reducing our environmental impact in line
with our net zero goal for 2040. Aligning with
the Government’s Ten Point Plan towards
a greener UK, which emphasises the importance
of accelerating the transition to electric
vehicles, we hope this exciting rollout will
be great news to both business and leisure
travellers alike.
Whitbread Annual Report and Accounts 2020/21
25
25
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 STRATEGIC UPDATE
Grow at scale in Germany
PREMIER INN GERMANY
A compelling opportunity
to replicate Premier Inn’s
UK success.
Premier Inn’s aim is to be the number one budget hotel
operator in Germany, by leveraging the strengths and
capabilities of the UK business. We believe all of the six UK
success factors detailed previously are either already present
in Germany, or, in the case of “strong brand” and “direct
distribution model” there is a compelling opportunity for
Premier Inn to develop those characteristics as the business
grows in scale. Our current open and committed pipeline of
13,300 rooms in Germany equates to around 1% share of the
market in 2019 (compared to c.11% in the UK). We continue to
grow our German pipeline and believe we have a long-term
line of sight to over 60,000 rooms, which would equate to
around 6% market share, still only around half of that achieved
in the UK. This growth will be achieved through both organic
and inorganic investment.
The German operating model will replicate that used so
successfully in the UK, built on operational control and
a flexible approach to property, driving a winning customer
proposition that appeals to both business and leisure
customers. Direct distribution is already well over 90% in our
German business, and, when open, our organic hotels have
received very high customer satisfaction scores.
PREMIER INN GERMANY
£m
Statutory revenue
Other income (excl rental income)1
Operating costs before depreciation, amortisation and rent
Adjusted EBITDAR†
Net turnover rent and rental income
Depreciation: IFRS 16
Depreciation and amortisation: Other
Adjusted operating loss†
Interest: IFRS 16
Adjusted loss before tax†
† See pages 206 to 209 for definitions of alternative performance measures.
26
FY21
11.5
11.5
(43.9)
(20.9)
3.9
(16.4)
(5.4)
(38.8)
(6.1)
(44.9)
FY20
11.8
0.3
(23.9)
(11.8)
0.8
(0.8)
(1.6)
(13.4)
(0.2)
(13.6)
Change
(2.5)%
3733.3%
(83.7)%
(77.1)%
387.5%
(1950.0)%
(237.5)%
(189.6)%
(2950.0)%
(230.1)%
Whitbread Annual Report and Accounts 2020/21 PREMIER INN GERMANY KEY PERFORMANCE INDICATORS
Number of hotels
Number of rooms
Committed pipeline (rooms)
Direct booking†
Occupancy
Average room rate†
Revenue per available room†
Sales growth:
Accommodation
Food & beverage
Total
Like-for-like† sales growth:
Accommodation
Food & beverage
Total
FY20
6
1,085
8,709
91%
58.3%
£69.47
£40.53
Change
400.0%
349.8%
(3.3)%
800bps
(3580)bps
(42.2)%
(77.7)%
FY21
30
4,880
8,420
99%
22.5%
£40.17
£9.02
4.8%
(34.4)%
(2.5)%
(71.0)%
(81.2)%
(72.7)%
1
Includes Government support – see Note 9 for further details.
† See pages 206 to 209 for definitions of alternative performance measures.
The German hotel market has many attractive characteristics
that play to the strengths of our business model. The market
is a third larger than the UK and even more fragmented, with
almost three-quarters of the market still consisting of small
independent operators, which are experiencing a structural
decline to the benefit of branded hotels. Despite this, the
branded budget hotel sector still only represented 10% of the
total market in 2019, compared to 29% in the UK, as franchise
operators have historically struggled to expand with limited
property financing options available. Consequently, Premier
Inn’s vertically integrated model and willingness to invest
capital in expansion provides a clear advantage in the budget
market, supported by replicating the leading quality and value
credentials from the UK.
As in the UK, the impact of COVID-19 is highly likely to
accelerate the decline of independents and other budget
branded operators, presenting greater opportunities to invest
in or acquire assets that will deliver strong returns in the
long-term. The acquisition of 13 hotels from the Centro Group
in December 2020 is evidence of the stress in the market, with
the total investment for the deal amounting to c£40m, mainly
driven by the investment required to refurbish and rebrand the
hotels to Premier Inn. The hotels were selected according to
our Premier Inn property criteria and are a good fit with the
existing estate, with all occupying prominent locations across
Tier 1 and Tier 2 cities and towns.
27
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 GROW AT SCALE IN GERMANY CONTINUED
Whilst COVID-19 restrictions have significantly restricted our
ability to operate our hotels throughout the year, we have used
this period to materially accelerate the growth of our hotel estate
in Germany. During the year we grew our operational estate from
six hotels to 30 hotels by the end of the year. The total open and
committed pipeline in Germany now stands at 13,300 rooms
across 72 hotels, including the acquisition of 19 hotels from the
Foremost Group and 13 hotels from the Centro Group.
We also took advantage of these restrictions and the resultant
subdued demand to refurbish and rebrand our acquired hotels,
a process that was completed in May for the hotels acquired
from the Foremost Group, and commenced in January for
those hotels acquired from the Centro Group.
Our significantly enlarged estate now provides us with a very
strong platform from which to grow our brand presence when the
German hotel market reopens and demand returns. We have
a presence in most major towns and cities, meaning the Premier
Inn brand can be seen across Germany. As the estate continues
to grow, we can turn our focus to brand-building, with nationwide
marketing campaigns and new B2B corporate relationships
supplementing effective localised brand campaigns. The quality
of the hotel and room offering, which is driving very high customer
scores, is also a key component in driving brand awareness.
To date we have committed close to £870m of capital to the
German market. Given the scale and characteristics of this
market, and despite the significant impact COVID-19 has had
on the sector, we remain focused on continuing our expansion
in Germany and delivering on our ambition to be the number
one budget hotel operator in that market.
Business review
Total statutory revenue in Germany was down 2.5%, with the
impact of COVID-restrictions offsetting the material growth in
the size of the hotel estate. Germany has been subject to similar
restrictions as the UK, albeit in a more complex framework of
national and federal restrictions, with limited business travel
and no leisure travel permitted for large parts of the year.
We entered FY21 with six operational hotels, that were trading
well, ahead of the enforced lockdown at the end of March.
During the lockdown period, we took the opportunity to
refurbish and rebrand 13 of the Foremost hotels that were
acquired in February 2020, meaning that when permitted by the
German Government in May, we were able to reopen a total of
19 hotels. Following this reopening, performance in Germany was
stronger in tourist-led locations such as Hamburg and Freiburg
and weaker in those locations with a traditionally higher business
mix. The increased size of the open estate helped drive total sales
growth in September of 58%. However, as in the UK, increasingly
onerous restrictions were implemented from October and
through to the end of the financial year, resulting in very low
occupancy levels across the market, and occupancy in Premier
Inn reducing to 9.9% in Q4. In December we completed the
acquisition of 13 hotels from the Centro Group, and have
subsequently taken advantage of the low demand environment
to accelerate their refurbishment and rebranding to Premier Inn.
Operating costs increased by £20.0m to £43.9m due to the
investment in the business and the increased estate size, and
IFRS 16 depreciation costs increased by £15.6m to £16.4m,
reflecting the fact that all new opened properties are leasehold.
Combined with other depreciation and amortisation costs of
£5.4m, and IFRS 16 interest costs of £6.1m, the adjusted loss
before tax for the period increased by £31.3m to £44.9m.
Cash rent paid for the year was £21.9m.
We materially accelerated our German hotel pipeline during
the year, and the total open and committed estate now stands
at 72 hotels, of which 30 are operational, and over 13,000
rooms. Going forward we will continue to assess both organic
and inorganic opportunities to exploit the enhanced structural
opportunities that exist in Germany.
28
Whitbread Annual Report and Accounts 2020/21 Whitbread Annual Report and Accounts 2020/21
29
Strategic reportGovernanceFinancial statementsOther information STRATEGY IN ACTION
EXPANDING IN THE
GERMAN MARKET
STRATEGY IN ACTION: FOCUS ON PREMIER INN’S STRENGTHS TO GROW IN GERMANY
“ We are strongly
committed to this
market and want to
achieve a powerful
presence as quickly
as possible.”
CHRIS-NORMAN SAUER
ACQUISITIONS DIRECTOR
GERMANY
CREATING OPPORTUNITY
It is important that Whitbread continues to expand and develop
in Germany, even through the obstacles and challenges
presented by the COVID-19 pandemic. The Company decided
to invest £40 million of the funds raised from the 2020 rights
issue into the Centro Group acquisition and the conversion
of the hotels acquired to the Premier Inn brand.
In December 2020, a deal was made for Premier Inn Germany
to take over 13 hotels from the Centro Group. This includes
four hotels which are expected to open in spring 2021 in
Heidelber, Saarbrücken, Wuppertal and Braunschweig and
a further two hotels in Stuttgart and Passau due to open in
summer 2021. This was an exciting acquisition, that allowed
Whitbread to continue to grow Premier Inn's presence in
Germany and brings us a step closer to becoming Germany's
most popular hotel brand.
Force for Good
We are developing an implementation plan for delivering our
sustainability strategy across our German business this year,
ensuring the key targets such as net zero by 2040 are
delivered across our operation.
30
GREAT LOCATIONS
We have secured 72 locations with 13,000
rooms in more than 30 German cities.
But we are still on the lookout for more.
FUNCTIONAL SPACES FOR
BUSINESS GUESTS
Our high-quality rooms offer a professional
workplace with plenty of power sockets,
and the multi-functional lounge offers
a relax zone and designated work areas.
TRAVELLERS' CHOICE AWARD
Premier Inn Frankfurt Messe and
Hamburg Hammerbrook both received
the Tripadvisor Travellers’ Choice Award
in 2020.
Whitbread Annual Report and Accounts 2020/21 SUSTAINABLE
BUILDINGS FIT
FOR THE FUTURE
Premier Inn Hamburg
Our Premier Inn Hamburg St. Pauli is an
outstanding site with great architecture and
interior design. We were delighted to ensure
that the building meets high sustainable
property standards which meant it received
a DGNB Gold Standard certificate. DGNB is the
German Sustainable Building Council that
evaluates the overall performance of a building
and promotes the implementation of holistic
quality in planning, construction and operation.
31
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 STRATEGIC UPDATE
Enhance Whitbread’s capabilities
to support long-term growth
Our evolving efficiency
programme includes
a new target to deliver
around £100m of cost
efficiencies over the next
three years.
Lean and agile cost model
Whitbread has a long track record of delivering material
cost efficiencies, with £235m of savings delivered between
FY17 and FY20. Since the start of the pandemic, Whitbread’s
approach to generating efficiencies adapted in response to
the low demand environment. Our initial priority was to secure
cash savings through the cancellation or deferral of non-
discretionary spend to help improve the liquidity position of the
business. We also reduced our head office headcount by c13%
during the year. As we entered the “Restore” phase of our
strategy, our focus shifted to ensure that the business model
has the flexibility to respond to changes in demand, and that
our overall cost-base reflects the current demand environment.
As part of this plan, we reduced headcount in our hotels and
restaurants, achieved through a combination of voluntary
redundancies and not replacing leavers, combined with
reductions in contracted hours.
We also continue to drive efficiencies through developing our
international sourcing capability, investing in our technology
platforms to enable both marketing and labour scheduling
effectiveness, and optimising the UK estate. These actions will
underpin our evolving efficiency programme, the next phase
of which is expected to deliver around £100m of cost
efficiencies over the next three years.
Around 9% of Premier Inn’s rooms are in hotels smaller than
60 rooms. The opportunity remains for hotel catchment areas
to be optimised, by managing existing demand in certain
locations through a smaller number of extended or new, larger
hotels, driving a more cost-efficient estate. Three smaller
hotels were disposed in FY21, however the opportunity for
a larger programme of optimisation will exist when the
post-COVID supply and demand environment is clearer.
Financial flexibility
Whitbread’s balance sheet and liquidity position was further
enhanced by the £1bn Rights Issue successfully completed
in June 2020, and the £550m Green Bond issuance in
February 2021. Our Revolving Credit Facility was extended
until September 2023 with covenant waivers in place until
March 2023. Covenant waivers were also agreed with our
private placement lenders and the Whitbread Pension Fund
meaning that the existing covenants are next tested in March
2022 and replaced by temporary covenants until that date.
These actions, together with the backing of Whitbread’s
freehold properties, give us the financial flexibility to protect
our liquidity and pursue our strategy of both organic and
inorganic growth when the time is right.
32
Whitbread Annual Report and Accounts 2020/21 S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
This financial flexibility also enables the Group to continue
to invest in the Premier Inn proposition when others will
be constrained. We continue to invest in our IT platforms,
helping further enhance our digital capability, including
a new CRM platform that will be introduced in the coming
years. Product innovation has been a key part of Premier Inn’s
success in recent years, and we will be recommencing the
rollout of our Premier Plus rooms in FY22, after a temporary
pause in FY21. These upgraded rooms are targeted especially
at business customers and provide an even more comfortable
stay at great value for money. The initial roll out of 500 rooms
in FY20 was successful, delivering good returns in that year,
and a total of over 2,000 Premier Plus rooms are expected
by the end of this year.
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SUPPORTING
OUR SUPPLIERS
Griffiths Family Farms Whitbread Egg Supplier:
“We were one of the first suppliers to go through
Whitbread’s responsible sourcing and audit
programme and we approached it with total
transparency. There were a number of areas
that needed addressing, but rather than issue
ultimatums and demand immediate corrections,
the Whitbread team worked with us, really got
to understand our business and have provided
great support across a number of levels over
the last three years. We have made major
investment in new personnel and operational
changes throughout our business, resulting
in a cultural step change and
significantly higher levels of staff
engagement. This process has had
a very positive impact across our
business and Whitbread have
played a major supporting role.”
33
Whitbread Annual Report and Accounts 2020/21
STRATEGY IN ACTION
PLATFORM FOR
SUCCESS
STRATEGY IN ACTION:
ENHANCE WHITBREAD’S CAPABILITIES TO SUPPORT LONG-TERM GROWTH
“ The recent Green
Bonds issue is
a testament to our
industry-leading
work towards
becoming a more
sustainable business.”
CHRIS VAUGHAN
GENERAL COUNSEL
FINANCIAL STRENGTH
As Whitbread entered the 2020/21 financial year and with
the COVID-19 pandemic in its early stages, the Company was
well positioned to withstand the crisis, with a strong balance
sheet and access to significant liquidity.
The Board and management team were keen to ensure that
not only would Whitbread be able to withstand perhaps the
most difficult trading year in living memory, but also that the
Company would emerge from the crisis in a strong position
to take advantage of structural growth opportunities in its
key markets.
With this in mind, in the summer of 2020, the Company
carried out a fully underwritten rights issue. This gave existing
shareholders the opportunity to purchase one new Whitbread
share for every two shares already held at a price of £15 per
new share and was very well supported by shareholders.
Gross proceeds of £1.0bn were raised via the rights issue.
The success of the rights issue has enabled us to protect
our balance sheet, continue to invest with confidence, despite
the turbulent conditions this year and, in December 2020, we
completed the acquisition of 13 hotels in Germany. More details
on this acquisition can be found on pages 26 to 31.
Whitbread remains in a competitively advantaged position
as the Company emerges from the pandemic and looks
forward to delivering on its strategic growth ambitions
in the years ahead.
34
FIRST BATTERY POWERED HOTEL
Our Edinburgh Gyle site was the UK’s first
battery powered hotel. We continue
to invest in innovation to tackle climate
change and hit our target of net zero
by 2040.
100% RENEWABLE ENERGY
We continue to buy renewable energy
for our owned UK estate to ensure we are
driving down our scope 1 and 2 emissions.
SOLAR PANELS
We've been investing in solar panels for
nine years, covering over 20% of our hotels.
Whitbread Annual Report and Accounts 2020/21 GREEN BOND
In February we issued £550m in Green Bonds,
an endorsement of the industry-leading work
we are already doing to be a more sustainable
business. Our Green Bonds will enable us to
use our scale and size to make an increasingly
positive difference, whilst ensuring our available
debt remains broadly the same. The proceeds
from the bonds will be used to fund existing
and future green projects across our business
including using 100% renewable energy
across our estate, building our hotels to high
environmental standards and continuing
to ensure our supply chains are certified
as sustainable by independent, globally
recognised sustainability standards.
35
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 GROUP FINANCE DIRECTOR’S REVIEW
Financial performance
NICHOLAS CADBURY
GROUP FINANCE DIRECTOR
FINANCIAL REVIEW
› The Group’s FY21 financial performance reflected the
closure of the vast majority of the business in the first
half of the financial year, followed by a second half that,
after operating throughout August and September with
occupancy levels of over 50% in the UK, saw market
demand fall significantly from November onwards, as
increasingly severe COVID-19 Government restrictions
were implemented in both the UK and Germany
› Consequently, total statutory revenue was 71.5% behind
the prior year
› The significant decline in revenue resulted in an adjusted
loss before tax of £635.1m. Statutory loss before tax of
£1,007.4m includes a non-cash impairment charge of
£348.0m relating to goodwill on acquisitions in Germany,
property, plant and equipment and right-of-use assets, as
a result of impairment reviews triggered by the COVID-19
situation and its impact on current and future growth rates.
The financial results benefited from c£270m COVID related
Government support schemes, including the UK Job
Retention Scheme and from the UK business rates relief
36
› Operating cash outflow was £488.5m
› The business retains a strong balance sheet and liquidity
position, enhanced by the successful £1bn Rights Issue
completed in June 2020, and the £550m issuance of
Green Bonds in February 2021. At the end of the year,
the business had access to £1,256.0m cash and cash
equivalents, and to an undrawn Revolving Credit Facility
of £950.0m. Net debt of £46.5m compared to net debt of
£322.9m at the end of the previous year. The Green Bond
proceeds also provided liquidity to repay £200m of private
placement debt early in March 2021.
Whitbread Annual Report and Accounts 2020/21 FINANCIAL HIGHLIGHTS
£m
Statutory revenue
Transitional service agreement revenue
Adjusted revenue†
Other income (excl rental income)1
Operating costs before depreciation, amortisation and rent
Adjusted EBITDAR†
Net turnover rent and rental income
Depreciation: IFRS 16
Depreciation and amortisation: Other
Adjusted operating (loss)/profit†
Net finance costs (excl IFRS 16)
Interest: IFRS 16
Adjusted (loss)/profit before tax†
Adjusting items
Statutory (loss)/profit before tax
Tax credit/(expense)
Statutory (loss)/profit after tax
1
Includes UK and German Government support – see Note 9 for further details
† See pages 206 to 209 for definitions of alternative performance measures.
Statutory Revenue
Statutory revenues were down 71.5% year-on-year reflecting
the impact on the business of the COVID-19 restrictions that
resulted in the closure of our hotels and restaurants for
significant periods during the year, and when reopened,
resulted in significantly reduced market demand.
Adjusted EBITDAR
Other income of £154.0m includes £138.3m of benefit
recognised in respect of the UK Job Retention scheme.
Operating costs of £937.8m were 29.1% lower than last year
driven by the reduction in revenue-related variable costs,
primarily food and beverage costs of sale, combined with the
postponement or deferral of all non-essential spend, and the
£117.8m benefit of the UK Government’s business rates holiday
and other various COVID related government grants in the
UK and Germany. As a result of the impact of the COVID-19
restrictions on our business throughout the year, Adjusted
EBITDAR was a loss of £194.9m.
Adjusted operating loss
The leasehold estate grew by 4 sites in the UK and by 21 sites
in Germany. This resulted in a £22.3m or 21.4% increase in IFRS
16 depreciation charges to £126.3m. Other depreciation and
amortisation charges increased by £9.1m to £173.9m, driven by
new hotel openings. The adjusted operating loss of £486.7m
compared to a profit of £486.8m in the prior year.
Net finance costs
Net finance costs (excluding IFRS 16) were £25.2m
(FY20: £13.2m). This was £12.0m higher than the prior year
due to the prior year charge being net of interest received on
the cash balance held from the proceeds from the sale of the
Costa business. IFRS 16 lease interest of £123.2m was £7.9m
above last year primarily driven by the opening of 21 leasehold
sites in Germany.
FY21
589.4
0.5
588.9
154.0
(937.8)
(194.9)
8.4
(126.3)
(173.9)
(486.7)
(25.2)
(123.2)
(635.1)
(372.3)
(1,007.4)
100.9
(906.5)
FY20
2,071.5
9.4
2,062.1
13.9
(1,323.3)
752.7
2.9
(104.0)
(164.8)
486.8
(13.2)
(115.3)
358.3
(78.3)
280.0
(62.1)
217.9
Adjusting items
£m
Non-cash items:
Impairment – goodwill
Impairment & write offs – property, plant and
equipment, right-of-use assets and other
intangibles
Impairment – investment in joint ventures
Impairment – share of loss of joint ventures
Aborted acquisition costs
Costa separation
Loss on disposal, property & other provisions
Guaranteed Minimum Pension
Cash items:
Insurance proceeds
Reimbursement of property remedial works
TSA income
TSA costs
UK restructuring costs
VAT settlement
Finance costs – early debt repayment charge
Total
Change
(71.5)%
(94.7)%
(71.4)%
1007.9%
29.1%
(125.9)%
189.7%
(21.4)%
(5.5)%
(200.0)%
(90.9)%
(6.9)%
(277.3)%
(375.5)%
(459.8)%
262.5%
(516.0)%
FY21
(charge)/
credit
(238.8)
(109.2)
(8.2)
(1.7)
(12.4)
6.4
5.0
(1.1)
(360.0)
1.8
13.4
0.5
(0.5)
(12.1)
5.8
(21.2)
(12.3)
(372.3)
37
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21
GROUP FINANCE DIRECTOR’S REVIEW CONTINUED
Total adjusting items before tax were £372.3m, including
a non-cash charge, primarily as a result of COVID-19, of
£348.0m in respect of impairments of goodwill on German
acquisitions, property, plant & equipment and right-of-use
assets. In the Group’s FY20 full year annual report and
accounts, the Group stated in note 34 (Events after the
balance sheet date) that the assumptions used at the year
end were no longer appropriate and that the impacts of
COVID-19 would result in further indicators of impairment
across the Whitbread business.
Subsequently, and in respect of the ongoing COVID-19
situation, impairment reviews were conducted as part of
the H1 FY21 and full year FY21 reporting process, resulting
in charges of £238.8m relating to goodwill arising upon
acquisition of the Foremost Hospitality Hiex GmbH and
£109.2m relating to property, plant and equipment, right-of-
use assets and other intangibles. The quantum of the
impairment charges is primarily driven by:
›
›
A reduction in anticipated cashflows in the UK and Germany,
as the market recovers
An increase in the discount rate that is based on the
Weighted Average Cost of Capital (WACC) of a typical
market participant. The discount rate has increased since
the end of FY20, reflecting market volatility in the spot
risk-free rate and equity risk premium inputs used in the
Group’s WACC calculation
› Sites where the Group has decided not to proceed with
the project
Further adjusting item charges driven by the COVID-19
pandemic include an impairment review on our UK joint
venture (“Pure”) resulting in a non-cash charge of £8.2m, the
completion of a colleague restructure programme incurring
£12.1m of costs to achieve, and the decision not to proceed
with a call option on a proposed acquisition in Germany,
resulting in a charge of £12.4m.
Other adjusting items include a £21.2m charge incurred
in respect of the early repayment of the 2017 US private
placement notes following the successful issuance of Green
Bonds in February 2021. A credit of £16.7m was recognised in
respect of the reimbursement of cladding remedial costs from
property developers and the release of cladding remedial
costs that are no longer expected to be incurred.
Taxation
A tax credit of £100.9m was recognised in the year primarily
due to the losses incurred. The effective tax rate was negative
10.0% for the year compared to the statutory rate of 19.0%,
with the difference primarily driven by £241m gross impairment
charges not being tax deductible, the impact of the previously
announced UK corporate tax rate change from 19% to 17%
being annulled, Germany losses not being recognised for tax
purposes, and a prior year adjustment relating to the true up
of deferred tax on historic items. The adjusted tax credit for
the year was £94.1m (FY20: £69.1m charge) representing an
adjusted effective tax rate of negative 14.8 % (FY20: 19.3%).
Further detail can be found in note 10.
Statutory loss after tax
Statutory loss for the year was £906.5m, compared to a profit
of £217.9m last year, due to the significant decline in revenue
driven by the COVID-19 crisis, and impairment charges
recognised as a result of COVID-19, partly offset by the tax
credit recorded in the year.
Earnings per share
Adjusted basic (loss)/
earnings per share†
Statutory basic (loss)/
earnings per share
FY21
FY201
Change
(287.6)p
166.3p
(272.9)%
(481.9)p
125.3p
(484.6)%
1 Restated to include the impact of the Rights Issue completed in June.
† See pages 206 to 209 for definitions of alternative performance measures.
Adjusted basic loss per share of 287.6p and statutory basic
loss per share of 481.9p reflect the adjusted and statutory
losses reported in the period.
Earnings per share figures for the comparative period have
been restated following the Rights Issue completed in June,
in accordance with IAS 33 Earnings per Share. Full details are
included in note 11 of the accompanying financial statements.
Dividend
Whitbread’s dividend policy is to grow the dividend broadly
in-line with earnings across the cycle. However, dividends will not
be paid during the current Revolving Credit Facility covenant
waiver period, which lasts until March 2023, as a condition
agreed with Whitbread’s lenders and pension trustees, or until
the original covenant tests are passed. The Board hopes to return
to paying dividends again following the normalisation of the
Group’s financial position and performance.
38
Whitbread Annual Report and Accounts 2020/21 Cash flow
£m
Adjusted EBITDAR†
Change in working capital
Net turnover rent and rental income
IFRS 16 interest and lease repayments
Operating cashflow†
Interest (excl IFRS 16)
Corporate taxes
Transaction and separation costs
Pension
Capital expenditure: maintenance
Capital expenditure: expansionary
Cash flows on acquisitions¹
Disposal proceeds
Other
Cashflow before shareholder returns/receipts and debt repayments†
Dividends
Shares purchased through buyback programme & tender offer
Proceeds from Rights Issue
Repayment of long-term borrowings
Proceeds from green bond
Net cash flow
Opening net (debt)/cash†
Repayment of long-term borrowings
Issuance of debt (green bonds)
Closing net (debt)/cash†
FY21
(194.9)
(99.8)
8.4
(202.2)
(488.5)
(20.8)
19.1
–
(14.8)
(69.9)
(159.6)
(1.1)
2.6
28.4
(704.6)
–
–
981.0
(75.1)
546.8
748.1
(322.9)
75.1
(546.8)
(46.5)
FY20
752.7
(13.0)
2.9
(187.4)
555.2
(19.9)
(8.5)
(51.0)
(288.4)
(153.5)
(241.9)
(192.3)
11.9
(29.5)
(417.9)
(159.9)
(2,328.4)
–
–
–
(2,906.2)
2,583.3
–
–
(322.9)
1 FY21 includes £1.4m cash receipt on Fox acquisition, £1.3m cash receipt on aborted acquisition and £3.8m payment of deferred and contingent consideration.
† See pages 206 to 209 for definitions of alternative performance measures.
Total net cash inflow for the year was an increase of £748.1m
after accounting for the £981.0m net proceeds of the Rights
Issue that completed in June 2020, the £546.8m Green Bonds
net proceeds in February 2021, and the repayment of £75.1m of
US private placement notes in August 2020. Net cash outflow
before shareholder receipts and debt issuance and repayments
for the period was £704.6m, reflecting the significant decline
in revenue as a result of COVID-19 restrictions and subsequent
subdued market demand, and the continued investment in
the business.
The £99.8m working capital outflow was primarily due to
a £71.2m net movement on customer deposits reflecting
the refunding of deposits at the start of the lockdown period,
partially offset by the subsequent receipt of customer
deposits for bookings received by the end the financial year.
£14.0m of the movement was driven by outstanding amounts
due from the Government in respect of the Job Retention
Scheme, and £15.5m representing the reduction in the VAT
creditor driven by the reduced revenue levels and reduced
VAT rate.
Operating cash outflow was £488.5m, in-line with previous
guidance. During FY21, the Group’s operational cashflow
breakeven, after Government support, was at levels of
around 55% occupancy and a 20% year-on-year fall in price.
These levels were surpassed, and the Group had positive
operational cashflow in the period from late August 2020
through to October 2020.
A corporation tax rebate relating to FY20, combined with the
anticipated lower profits in FY21 driving a reduction in FY21
corporation tax payments on accounts, resulted in a net tax
cash inflow of £19.1m.
Maintenance capital expenditure of £69.9m and expansionary
capital expenditure of £159.6m was in-line with guidance, with
these reduced levels reflecting the decision to postpone or
defer all non-essential spend. IFRS 16 interest and lease
repayments increased by £14.8m to £202.2m driven by the
higher number of leasehold properties entering the estate,
particularly in Germany. Rent cash payments were £194.9m
and reflect the impact of the deferral of c£25m rent payments
from the December quarter payment in the UK.
The £28.4m other inflow is driven by £14.0m timing of
insurance proceeds, the reversal of non-cash charges of
£12.4m representing the write off of a deposit paid in relation
to an acquisition, £12.7m share-based payments including the
employee sharesave scheme and long term incentive plan
(LTIP) and £7.7m share of loss from joint ventures, offset by
payments against provisions of £24.4m.
39
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 GROUP FINANCE DIRECTOR’S REVIEW CONTINUED
Debt funding facilities and liquidity
£m
US private placement notes
US private placement notes1
US private placement notes
Revolving Credit Facility
Revolving Credit Facility
Revolving Credit Facility
Bond
Green Bond
Green Bond
Cash and cash equivalents
Total facilities utilised, net of cash1
Net debt†
Net cash and lease liabilities†
Lease debt†
Facility
(25.0)
(58.5)
(200.0)
(100.0)
(125.0)
(725.0)
(450.0)
(300.0)
(250.0)
(2,233.5)
Maturity
2021
2022
Repaid in FY22
2021
2022
2023
2025
2027
2031
Utilised
(25.0)
(58.5)
(200.0)
0.0
0.0
0.0
(450.0)
(300.0)
(250.0)
(1,283.5)
1,256.0
(27.5)
(46.5)
(3,278.1)
(1,827.5)
1
Includes impact of hedging using cross currency swaps and excludes unamortised fees associated with debt instrument.
† See pages 206 to 209 for definitions of alternative performance measures.
Whitbread entered the financial year with a strong balance
sheet, low leverage and good liquidity. In response to the
COVID-19 situation, the Group executed a £1bn Rights Issue
in June 2020 to help protect its balance sheet, replace the
expected cash outflow whilst Government restrictions were in
place, and provide liquidity to invest in the business during the
recovery. The Group further enhanced its financial position
through a £550m Green Bond issuance in February 2021, the
proceeds of which provide funds to invest in Whitbread’s ESG
programme, with the cash also providing liquidity to repay the
outstanding US Private Placement notes.
During the year, the Group was confirmed as an eligible issuer
under the UK Government’s Covid Corporate Financing Facility
(CCFF), with an issuer limit of £600.0m. The Group’s strong
liquidity position meant this facility was not required, and the
Group’s eligibility has subsequently expired. The business is
also backed by a valuable freehold property estate.
The Group announced in May 2020 that an 18-month waiver
for debt and interest related covenants had been accepted by
lenders for the Revolving Credit Facility and the US private
placement debt, meaning that existing covenants would next
be tested in March 2022. Subsequent to this, Whitbread
reached an agreement with its relationship banks in February
2021 to extend the final maturity date of its Revolving Credit
Facility from September 2022 to September 2023, and to
extend the covenant waiver period by 12 months, meaning the
financial covenants will not now be tested until March 2023, at
which point new covenant targets will be introduced, being:
Group demonstrates compliance with the original covenant tests,
being Net Debt2/EBITDA2 < 3.5x and EBITDA2/Interest2 >3.0x.
During the period, £75.1m of US private placement notes
that matured in August 2020 were repaid, and the Group
announced its intention to repay the 2021 and 2022 notes
(£25m and $93.5m respectively) on their scheduled maturity
dates of 6 September 2021 and 22 January 2022. Following the
successful issuance of £550.0m Green Bonds in February 2021,
the £200m 2027 US private placement notes were repaid early
on 26 March 2021 incurring £21.2m make-whole costs.
Following the Rights Issue and the debt financing, at the year
end the Group had £1,256.0m of cash on deposit and was
undrawn on the £950m Revolving Credit Facility. The Group’s
strong balance sheet, with access to over £2bn of liquidity, and
the potential to access funding through our freehold estate
means the Group has financial flexibility, with good headroom
to the temporary covenants.
Capital investment
£m
UK maintenance and
product improvement
New/extended UK
hotels
Germany and
Middle East¹
Total
FY21
FY20 Last 2 years
68.6
63.2
98.8
230.6
144.8
213.4
166.6
229.8
276.3
587.7
375.1
818.3
› March 2023: Net Debt2/EBITDA2 < 5x, EBITDA2/Interest2 >2.0x
1
Includes net cash flows on acquisitions of £1.1m in FY21.
› August 2023: Net Debt2/EBITDA2 < 4.5x EBITDA2/Interest2
>2.0x
The Revolving Credit Facility facility size, which is currently
£950.0m, will step down to £850.0m at 29 December 2021
and to £725.0m at 7 September 2022.
The additional requirements outlined in the original waivers
announced on 21 May 2020, including an obligation to retain
£400m liquidity headroom, no more than £2bn of net debt and
to not declare or pay dividends, will remain for the duration of
the extended waiver period to March 2023. However, these
additional waiver period requirements can be removed if the
Total capital expenditure in the year was £230.6m, in-line with
expectations, and reflecting the postponement or deferral of
all non-essential capital expenditure. Maintenance and product
improvement spend was limited to only the essential upkeep
of our estate, health and safety and IT development. Hotel and
restaurant refurbishments were deferred, alongside spend on
hotel extensions and new hotels in the UK wherever possible.
In Germany, the acquisition and refurbishment of 13 hotels
from the Centro Group, which completed in December 2020,
is expected to require c.£40m of capital expenditure of which
£11.4m was incurred in FY21.
2 Pre IFRS 16.
40
Whitbread Annual Report and Accounts 2020/21 Property backed balance sheet
Freehold/leasehold mix
Premier Inn UK
Premier Inn Germany
Group
1 Open + committed pipeline.
Open estate Total estate1
55%:45%
61%:39%
28%:72%
21%:79%
59%:41%
50%:50%
The current UK estate is 61% freehold and 39% leasehold,
a mix that will change to 55% freehold and 45% leasehold as
the existing pipeline is delivered. The higher leasehold mix in
Germany reflects the start-up nature of the business, where
securing optimal site location, particularly in city centres, to
help build brand strength, is key.
Ownership of around 60% of the hotel estate gives Premier
Inn control over the initial development of the hotel, and
subsequently how it is maintained, extended, or re-developed.
Whitbread’s asset-backed balance sheet supports a strong
financial covenant, which means that in competitive bid
situations for new leasehold developments, Premier Inn is often
the preferred tenant and can secure more favourable lease and
rental terms. Our freehold ownership reduces earnings volatility
in the current downturn and provides Whitbread with a flexible
source of funding in the event of further cash requirements for
investments or to further protect our liquidity.
Return on Capital
Despite the losses we have incurred this year, we remain
confident in our ability to deliver long-term sustainable returns
on incremental investment:
› We believe our ability to capitalise on the enhanced
structural opportunities that are likely to exist, combined
with the competitive advantage of our ownership and
operating model, and ongoing initiatives including
segmentation and site optimisation, will help offset the
adverse impact of a weaker macro-economic environment
on demand over the long-term
› Sector-wide cost headwinds can be countered by the
benefits of both organic and inorganic growth and an
efficiency programme that will ensure the cost base of
the business reflects demand.
These factors will enable the business to perform well in the
UK and take market share, and to capitalise on the material
growth opportunity in Germany. These strong fundamentals,
combined with an appropriate capital structure, will enable
Whitbread to drive long-term value.
Events after the Balance Sheet date
Following the year end there were a number of post balance
sheet events:
› The UK Government announced a number of support
measures in its Budget on 3 March 2021. These included an
extension of Business Rates Relief in England to 30 June 2021,
a Restart Grant scheme for the hospitality and accommodation
sector, an extension of reduced VAT rates, an extension of the
Job Retention Scheme until September 2021, and an increase
in the main rate of UK corporation tax to 25% with effect from
1 April 2023. Further details can be found in note 34
› The removal of a turnover cap in relation to state aid in
Germany was announced on 4 March 2021, meaning that
the Group is now eligible for German Government aid,
capped at £10.4m, which will be claimed and become
recognisable in FY22
› The Group’s access to the Covid Corporate Financing
Facility (CCFF) expired on 22 March 2021, the facility having
remained undrawn
› The £200m 2027 US private placement notes were repaid
early on 26 March 2021, incurring £21.2m make-whole costs
Pension
The Group’s defined benefit pension scheme, the Whitbread
Group Pension Fund (the "Pension Fund"), had an IAS19 surplus
of £188.0m at the end of the year (FY20: £190.3m), with the
lower funding position primarily driven by asset performance
being lower than the discount rate and an increase in the
assumed rate of future inflation, which was partially offset by
an increase in corporate bond yields resulting in an increase in
the discount rate used to value liabilities, changes to mortality
assumptions and both inflation and membership experience
being more favourable than expected. Annual contributions of
approximately £10m are paid to the Pension Fund through the
Scottish Partnership arrangements.
The Pension Fund’s triennial actuarial valuation as at
31 March 2020 is currently being carried out, with the results
expected later this year. As identified in note 32, the Fund had
a Technical Provisions deficit at the date of the last valuation
on 31 March 2017.
In May, Whitbread announced that it had reached an
agreement with the Pension Fund Trustee for a covenant
waiver period for the existing EBITDA related covenant
which will now not be tested until March 2022. On this testing
date, in the event of a breach of the original EBITDA related
covenant, a cash payment would be required to improve the
funding position to the value of the Secondary Funding Target.
If Whitbread did not settle this contribution, the Trustee could
realise the equivalent value through the security it holds over
£450m of Whitbread’s freehold property. New covenants have
been introduced during the period of the waiver in-line with
those given to Whitbread’s lenders described above, including
an obligation to retain £400m liquidity headroom, no more
than £2bn of net debt and to not declare or pay dividends,
for the duration of the extended waiver period to March 2022.
An additional £50.0m of security has also been given to the
Trustee for the duration of the covenant waiver period.
Nicholas Cadbury
Group Finance Director
26 April 2021
Notes:
† The Group uses certain APMs to help evaluate the Group’s financial performance,
position and cash flows, and believes that such measures provide an enhanced
understanding of the Group’s results and related trends and allow for comparisons
of the financial performance of the Group’s businesses either from one period to
another or with other similar businesses. However, APMs are not defined by IFRS
and therefore may not be directly comparable with similarly titled measures
reported by other companies. APMs should be considered in addition to, and
are not intended to be a substitute for, or superior to, IFRS measures. APMs used
in this announcement include adjusted revenue, like-for-like sales, revenue per
available room (RevPAR), average room rate, direct bookings/distribution,
adjusted operating (loss)/profit, adjusted (loss)/profit before tax, adjusted basic
earnings per share, net debt, net debt and lease liabilities, operating cashflow,
adjusted EBITDA (pre IFRS 16) and adjusted EBITDAR. Further information can
be found in the glossary and reconciliation of APMs at the end of this document.
41
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 GROUP HR DIRECTOR’S REVIEW
Caring for our teams during
an unprecedented year
2020/21 has been a year where
worldwide events have had a real
and profound impact on society;
our teams, our guests and our
suppliers. Remaining a Force for
Good has been at the heart of
our response.
LOUISE SMALLEY
GROUP HR DIRECTOR
VOICE OF THE TEAM MEMBER FRAMEWORK
E
M M
A
E
T
S
R
M B E
LIS
T
E
N
I
N
G
C
H
A
N
N
E
L
S
COMMUNICATION
FLOW
S
H
A
PING DECISIO N M A K I N
G
TEAM MEMBERS
› Employee experience is measured
› We understand our teams;
as individuals
› There is trust and confidence
in leadership
› Everyone in Whitbread feels listened
to on a regular basis
LISTENING CHANNELS
› Our Voice – Employee Forum
› Exit surveys
› Listening groups
› Project-focused listening
SHAPING DECISION MAKING
› Business decisions are balanced and
informed through strong, consolidated,
people insights
› Managers use insights to curate
positive local employment experiences
42
Whitbread Annual Report and Accounts 2020/21
Remaining a Force for Good has been at the heart of our
response and we are continuing to engage, support and care
for our 29,000 strong workforce across the UK, Germany, the
Middle East and China. Enabling all of them to live and work
well as we recover from the pandemic will continue to be
vitally important to us.
Alongside a global pandemic, 2020 will also be known as
the year that generated a call for businesses like ours to
take a stronger stance on equality, diversity and inclusion.
Black Lives Matter has been a profound movement across
the world during the last year. It has impacted our people
personally and professionally and made us all think about
sustaining significant commitments to change across
our business.
The safety of our teams is always our priority
Ensuring our teams feel safe and equipped to carry out their
work has been imperative throughout this pandemic, for both
our site operational teams and those in our Support Offices
across our international markets.
With swift and comprehensive support from our expert
safety & security team, we implemented a combination of risk
assessments, additional training and rapid procurement of PPE
to keep our teams safe, adapting to the guidance as it changed
across the early stages of the pandemic. We also learnt a huge
amount from our committed managers and teams who kept
39 hotels open for key workers throughout the first lockdown.
Their feedback was instrumental in shaping the approach we
took to reopening all our hotels and restaurants.
Prior to reopening our sites, we set up dedicated COVID-19
Forums, with a team member appointed from each site,
to give us feedback on the implementation of COVID-secure
standards and equipment. This allowed us to understand what
we were getting right and where we needed to reconsider
our approach. This demonstrated to our teams that we were
committed to ensuring that they had a safe workplace within
which to serve our guests.
Our teams completed enhanced training online before
returning to work, making sure we were COVID-safe and
secure, and our team members felt safe. We have also invested
in additional team member hours across our sites, and for
those working in our key worker hotels or caretaking duties
we provided temporary enhanced pay rates.
Everyone cares and feels cared for
I am personally very proud of our COVID-19 response across
Whitbread, particularly in terms of decisions we made to care
for our teams and their response to our plans. Throughout the
complexities of lockdown and furlough, we have continued to
focus on the wellbeing of our team members, and they have
demonstrated tremendous care for one another.
In light of the closure of most of our hotels and all of our
restaurants as a result of the COVID-19 pandemic, we started
furloughing a significant number of employees from late
March 2020. As of 30 April 2020, c27,000 of the Group’s
UK employees were furloughed. In Germany, the Kurzarbeit
provided similar levels of support, with 53% of teams enrolled
in June 2020.
Recognising the importance of financial wellbeing for our UK
teams, we topped up the Coronavirus Job Retention Scheme
contribution, to keep all employees on 100% (full) pay through
to the end of July, and we also followed a top-up principle in
our German business. Since August 2020 we have continued
to have an uncapped approach to 80% of salary for all UK
employees whilst on furlough. We also awarded annual
incentives that had been achieved for the 2019/20 financial
year, which concluded before the pandemic impacted our
business, to all eligible employees in June 2020.
One of the things that makes our business so special is the
care our teams show for one another at every level and in
every market we operate. Our line managers have been
instrumental in supporting the wellbeing of our teams.
They have helped us take a personalised approach to support
those on furlough, those who have worked in our sites, and
those who have worked flexibly and remotely throughout the
last year. Recognising that all personal circumstances could
be unique and challenging in different ways has demonstrated
great care.
As a business we had a strong suite of support available to
our teams, particularly through our long-standing relationship
with Hospitality Action, who we partner with to provide our
Employee Assistance Programme. We have ensured that our
teams have known what expertise and support is available
when they have needed it. A new initiative, ‘Wellbeing
Wednesdays’, provided a platform to highlight further internal
support and wider external partnerships, useful resources and
content, and has now become a trusted place to share peer
stories. The regularity and visibility of this approach has
created momentum through the business, with our teams
regularly posting their own stories through our social channels
on how they have faced their personal challenges and looked
after their own wellbeing to inspire and support their colleagues.
43
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 GROUP HR DIRECTOR’S REVIEW CONTINUED
We will be for everyone, championing inclusivity
and improving diversity
Creating an inclusive environment for our teams continues to
be fundamental to how we want to behave at Whitbread. It has
never been more important for organisations to commit to
change, and we are incredibly focused on bringing this to life.
Throughout 2020/21, despite the external context of COVID-19
and the business disruption we have experienced, we have
taken positive steps towards our aspiration to be the most
inclusive hospitality business:
› Despite making many efficiencies across our Support
Centre, we have created a new, dedicated Diversity and
Inclusion Centre of Excellence
› We have thoughtfully created eight ‘Commitments to
Change’ which have been a focus for our leadership teams
across the second half of the year
› All our 200 most senior leaders, including our Executive
Committee, have attended two development programmes
designed to educate and inspire this community to ‘Lead
in an Inclusive World’, focusing on bias, conscious inclusion
and being an ally to minority groups. Despite the impact
of COVID-19 on our financial performance, we have invested
significantly in this opportunity to grow and develop,
delivered in partnership with INvolve
› We have launched our first Race, Religion and Cultural
Heritage network, allowing our ethnic groups to have
an amplified voice and drive greater inclusion
› We have celebrated more cultural events of importance than
ever, including International Women’s Day, Black History
Month, Trans Awareness Week, Race Equality Week and
LGBTQ+ History Month
*
13% of employees who have chosen to disclose their ethnicity.
44
SHANNA MILLS
Multi-Site Hotel Manager
Premier Inn Birmingham & West Bromwich
"Being a part of the Whitbread Race, Religion and Cultural
Heritage Network Steering Committee means a lot to me,
because it gives me the perfect opportunity to help shape
and guide an area which I am extremely passionate about.
Being a female and of Caribbean heritage I want to be
a voice and an ally to those that may see me as
a representative of their culture.
It also gives me the opportunity to learn and educate myself
about other people's cultures and backgrounds which can
only be a positive. Having a diverse workforce can only
mean great things for an organisation and I believe together
we can make great changes.
I am extremely proud Whitbread have made inclusivity
such a massive part on their agenda. My daughter is
mixed heritage and I want her to be proud of me but, most
importantly, to be proud of who she is and understand
that her Caribbean heritage is recognised and celebrated
just the same as her white heritage".
Our commitments to change
Our eight commitments are designed to accelerate our diversity
through our recruitment and talent practices, whilst creating an
even more inclusive environment through our continued education,
celebration of events and championing of all our networks.
Across our workforce, 13% of our employees identify as Black,
Asian or Mixed Ethnic*, 65% of our employees are female,
along with women representing 34% of our leadership
population, and we are led by a female CEO. Our recent 2020
Gender Pay Gap Report, published in February 2021, shows
a mean pay gap of 11.65%, reduced from 13.23% in 2019.
Our gender pay gap is driven by the structure of our
workforce. We have a significantly higher mix of women
within our hourly paid population and we have higher male
representation in our highest paid roles, mainly within our
senior leadership population. Our commitment to diversity
will support reducing this pay gap in the next two years.
In addition to our gender pay gap, we will also complete our first
ethnicity pay gap analysis in 2021. As part of our commitments,
we will be sharing our findings internally with our colleagues.
Despite tremendous progress this year in challenging conditions,
we know we have much more to do. Our commitments to
change will continue to drive progress in both our representation
levels of minority groups, and our continuing to make
Whitbread even more inclusive.
Whitbread Annual Report and Accounts 2020/21 GENDER SPLIT –
HAMPTON ALEXANDER METHOD
Directors (PLC Board)
OUR COMMITMENTS
TO GREATER DIVERSITY
1. Have greater diversity in our leadership population,
with targets of 8% ethnic minority and 40% female
representation in our top 100 by the end of 2023
2. Have targets for greater ethnic diversity in our middle
management population through stringent recruitment
practices that mitigate individual biases
3. Invest more in our diverse talent pipeline to ensure
we can promote our diverse talent equitably
58%
42%
Executive Committee
25%
4. Complete an ethnicity pay gap analysis and share our
results and findings with all our colleagues in 2021
75%
OUR COMMITMENTS
TO CHAMPIONING INCLUSIVITY
5
Female
7
Male
2
Female
6
Male
1. Equip all our leaders to be fluent around diversity and
inclusion, through mandated development
Direct Reports to ExCo
(excluding administrative support staff)
2. Amplify the voices of all our minorities, through the
sponsorship of networks and forums
3. Review our organisational policies to make sure they
are inclusive of all minority groups
4. Celebrate key cultural events throughout the year
Prioritising development for our teams through the pandemic
In addition to the dedicated safety training our teams have
completed to keep our teams and guests safe over the last
year, we have continued with our commitment to excellent
learning and development through our apprenticeship
programmes. Throughout 2020, 95% of our apprentices
continued their learning during furlough, supported by online
sessions and tutoring with our partners Lifetime Training.
This has benefited our apprentices by continuing their learning
and enhancing their skills prior to returning to work.
In September 2020, it was very positive to be externally
recognised for the continued support we have given our
apprentices and our response to COVID-19 whilst our
colleagues were on furlough, through winning the prestigious
Macro Employer East Midlands Apprenticeship award,
alongside being recognised as a National Finalist.
55%
45%
22
Female
27
Male
Whitbread all employees
36.6%
63.4%
17,975
Female
10,360
Male
Data correct as at 1 March 2021
* Whilst we do not have the data to show this, we recognise that a percentage
of our employees will not identify as male or female.
45
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 In the UK, we used our 39 key worker sites that were open
throughout the first wave as an opportunity to learn and adapt
our approach to being COVID secure. We set up a formal
listening programme to listen to our team members and
managers, before rolling out the reopening programme
more widely.
Across the summer, when all our UK sites were open, we
wanted to understand the perspective of team members in
our sites who had returned after significant periods of furlough,
who were now operating with new processes and equipment
to ensure their safety, and who were experiencing significant
levels of demand as our guests returned to enjoy a seasonal
break or participated in the Eat Out to Help Out scheme.
It was pleasing to see that our team members were
enthusiastic to return to serving our guests and working as
a team and they were proud of the way that Whitbread had
responded to the challenging environment.
We continue our commitment to listening to our team
members through survey-based programmes and will start
a formal programme of pulse surveys across all parts of the
business this year. The experience of the last year has shown
the importance of gathering views regularly as the internal and
external environment shifts.
We will also continue our ‘All Ears' programme to help
us unlock operational ideas and efficiencies. All Ears is our
operationally led listening programme, sponsored by Simon
Ewins – Managing Director of UK Hotels & Restaurants.
This programme takes the insights from surveys and takes
a deeper dive into particular job roles within our hotels or
restaurants to understand where we can make changes that
help us to put the customer at the heart of everything we do.
Hearing the ‘Voice of the Team Member’ through our
Employee Forums
In the UK, the elected Representatives who participate in our
Employee Forum, which we call ‘Our Voice’, have helped shape
our approach to the organisational change programmes that
were necessary in the autumn, as we adjusted our cost base
in response to the challenging market conditions in both our
Support Centre and our sites.
Through meaningful and effective collective consultation, we
were able to understand the concerns and questions that our
teams had about the proposals. We were also able to check
that we were approaching processes in a fair and considered
way through the insights shared by the Representatives.
Outside of formal consultation processes we have regular
meetings with Our Voice Representatives, connecting senior
leaders to the views and experiences of our front-line teams
through a two-way conversation. Across the coming year we
are committed to ensuring that Our Voice Representatives
help us understand the effectiveness of our Force for Good
programme, with a focus on the Opportunity commitment;
no barriers to entry and no limits to ambition.
With Representatives right across the UK and within the
Support Centre, they are well placed to help us ensure
that we work effectively together as one business; collectively
focusing on putting the customer at the heart of everything
we do, despite the remote nature of work at the current time.
We will start this work at our next Pan-Whitbread Forum
scheduled for May, chaired by Alison Brittain.
GROUP HR DIRECTOR’S REVIEW CONTINUED
BETH WILSON
Front of House Team Member
Cookhouse & Pub, Skegness
"I grew up in Skegness and while it is a great town it is very
difficult to find a job. I lived in sheltered accommodation and
like many others I unfortunately faced additional barriers
to progression.
I can honestly say my interview with Whitbread changed my
life. The company took a chance on me and from that day
forward it’s been onwards and upwards all the way. There’s
a huge sense of pride every time I put my uniform on and the
company supports me every step of the way. The opportunity
to work in a job I love has not only given me stability but has
also improved me as a person. There’s nothing better than
working as a team to do a great job for our guests and as you
can imagine there’s never a dull day working in one of the
most popular seaside spots in the UK.
I’ve had the chance to come out of my shell and feel confident
to take on team leadership responsibilities, knowing I will
have support and training when the time is right. Getting the
keys to my own house has been the latest stage of my
journey. I’ve had the chance to come a long way in a short
period and there’s no looking back".
In Germany, a significant induction training programme took
place, supporting our 339 new team members who joined
Premier Inn following the acquisition of Foremost Hospitality.
Due to the pandemic, this was delivered completely online
between March and June 2020, delivering all the skills training
to make sure our new team members were trained in our
Premier Inn processes, and felt confident in their new roles
with us.
We have listened to our teams more than ever
We know that we can learn a huge amount from each other
at Whitbread, and it is our intention to ensure that everyone
feels listened to. This has been a vital part of our approach
to navigating the pandemic as we have needed to close and
reopen hotels and restaurants at an unprecedented pace and
scale. Dialling up our listening activities in response to the
pace of change and level of restrictions has ensured everyone
remains engaged in our approach.
We have had to adapt some of our engagement plans for the
year given the impact of the pandemic but we have listened
to our teams, both in the UK and Germany, throughout the
pandemic at key moments through pulse surveys. This has
helped us with the effectiveness of our operational measures
as well as engagement and wellbeing.
46
Whitbread Annual Report and Accounts 2020/21 SHARON MOORE
Team Member
Premier Inn Whitley Bay
SITSKE DE ROO
Hotel Manager
Premier Inn Cologne South
"As an Our Voice Representative, being there for our team
and guests during tough times is a privilege. Boosting team
morale, listening to them and being there is all just part
of my job; it’s just natural for me to care.
"I started as Sales Manager five years ago in the Germany
Support Centre when the team was still new and small.
With Premier Inn I have been given the chance to develop
myself further and follow my dream to lead a hotel one day.
Being part of Our Voice has been amazing. While there
were tough times during the consultation, I felt listened to
by senior management, which made me realise Whitbread
do care, we are listened to and our wellbeing matters.
After some time in Operations, during 2020, I supported
the integration of the Foremost Hospitality hotels during
the pandemic. My main priorities were operational,
supporting the team on the floor, being flexible and agile.
I can only speak for myself when I say what I do isn’t just
a job, it’s a way of life. Walking through our hotel doors
each shift I feel proud and I enjoy every moment".
We continue to adjust, adapt and grow
The agility demonstrated by our teams across all our locations
as we have needed to stand sites up and then down again,
and flex our operations to navigate the various phases of the
pandemic has been immense. For example, in the UK in April
2020, all our restaurants and hotels except 39 hotels were
closed. By contrast, in the summer, restaurants were busy due
to the Eat Out to Help Out scheme and coastal hotels were
busy with holiday makers. Our teams adapted and flexed, with
some of our hotel teams moving from London to the South
Coast during the summer peak.
In the UK, we have also had to adjust our cost base due to
the challenging market conditions, and this has involved
people change projects across both our Operations and
Support Centre. Through meaningful and effective collective
consultation in late 2020, we made every effort to reduce
the number of redundancies, with many Operations team
members choosing to adapt hours instead of leaving
the business.
In navigating a year of complexity and volatility it has been
important to take the time to recognise our managers and
leaders, who have led our teams throughout the pandemic.
This has been demonstrated through our pulse surveys where
74% of our UK Operations team members, and 85% of our UK
Support Centre team members felt they were getting the
support and communication they needed from their manager.
88% of German colleagues said they felt connected to their team
(September 2020).
In Germany, whilst navigating similar restrictions and flexing
operations in similar ways, there have also been opportunities
to acquire new hotels. Through these acquisitions, our German
team has continued to grow throughout 2020 and into 2021.
With the increase in the number of sites, the team size has also
increased by 190% over the last 12 months.
In May I became the new Hotel Manager at Premier Inn
Cologne South, the largest hotel in Germany. Together with
my team (because without them there is no purple heart) we
are facing the challenges of the pandemic together – holding
monthly Zoom sessions, and contacting each other, asking
“How are you?” I am looking forward to getting back to
normal very soon and welcoming many, many guests!".
External accreditation – Top Employer 2021
Once again, Whitbread has been recognised as a ‘Top Employer’
in the UK by the Top Employers Institute. This marks an incredible
11 consecutive years of achieving this external accreditation.
Only organisations considered to have the highest standards
of excellence qualify as a Top Employer. The accreditation
involves a detailed review of all our people practices across
our Operations and Support Centres. These are carefully
assessed and validated by the Top Employers Institute and
benchmarked against other organisations. We carefully review
these findings to understand where we can continue to evolve
and improve, which is part of the reason we keep evolving the
promise to our people and retaining this recognition.
Being a Top Employer also helps us attract Genuine, Confident
and Committed people to join our winning team. As we focus
on the future and the opportunity to be operating without
restrictions, attracting great people to join our Whitbread
family will be important. We intend to take full advantage of
opportunities to develop in the UK and Germany as confidence
returns and we are able to welcome more guests back to enjoy
our hospitality. These opportunities will come, and as the
market leader in our sector, we’ll be ready.
I am immensely proud to be part of an organisation where
we believe that everyone can reach their potential, with no
barriers to entry and no limits to ambition. Receiving this
award at this time is great recognition of everything we
have achieved together over the last 12 months.
Louise Smalley
Group HR Director
26 April 2021
47
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 FORCE FOR GOOD
Sustainability is at
the core of what we do
CHRIS VAUGHAN
GENERAL COUNSEL
As the executive sponsor for our
sustainability programme, Force for
Good, I am incredibly proud to present
our approach to environmental,
social and governance (ESG)
issues through our Force for Good
sustainability strategy.
We have an industry-leading programme, with a range of
stretching targets, and not only do we have a history of taking
action to tackle sustainability issues, but we also have a bold plan
for the coming years to enable all our people to live and work well.
This year has been an incredibly difficult year for us all.
Throughout it, remaining a Force for Good has been at the heart
of our response, keeping a very keen eye on the impact we have
had on our staff, our customers, the communities we operate in,
and the world around us. During the March 2020 UK lockdown
we kept 39 hotels open to provide essential support to NHS staff
and key front-line workers, throughout 2020 we donated over
500,000 meals to charity partners, we topped up the pay for all
of our staff if they were furloughed and our teams responded
magnificently to the challenges of the pandemic. We continued to
fundraise for Great Ormond Street Hospital despite site closures,
hitting a staggering £18m since our partnership began in 2012.
We have also taken this year as an opportunity to stretch some
of our sustainability targets, for example on carbon emissions,
and reinforce others. And we capped off the year with a Green
Bond, a further endorsement of our industry-leading
sustainability programme.
Our Force for Good sustainability programme is embedded
across our business, enabling us to utilise all the skills and
expertise of our teams to help deliver our objectives in
everything we do. As further evidence of this commitment,
we were pleased to further embed our sustainability credentials
through our financing through the issuance of our Green
48
Bonds, a first for the sector in the UK and a testament to the
work we have already done, and will continue to deliver, to be
a Force for Good, whilst remaining a strong and resilient
business for the long term.
Find out more about our Green Bond on page 35.
We have already achieved a lot, but we know there is a lot
more to do. That’s why setting stretching targets is essential
and gives us something to measure ourselves against.
Last year, we announced new strategic targets such as:
eliminating unnecessary single-use plastic by 2025, cutting
food waste in half by 2030 and raising £20m for Great
Ormond Street Hospital. This year we took this one step
further in our carbon emissions target to aim for net zero
by 2040.
Find out more on our targets on pages 52 to 55.
Our commitment to deliver industry-leading training and
development did not cease during the pandemic. Our team
members undertook over one million online training sessions,
we were voted the number one provider of apprenticeships
in hospitality and for the 11th consecutive year we were listed
as a Top Employer.
We already have a strong track record in reducing our emissions.
In 2018, Whitbread set a science-based target to reduce carbon
emissions intensity by 50% by 2025 and 84% by 2050. Last year
we reported a reduction of 39.8%. This year, we wanted to go
one step further and have since updated our carbon target to
aim for net zero carbon emissions by 2040. We know this is
a huge task, but it is one that is vitally important for our business
and the battle against global climate change.
We were really proud to be scored an A- this year for
our climate change submission to CDP, putting us in the
leadership category, an accolade awarded to those seen to
be implementing best practices on sustainability. We also
managed to achieve a B- for our water submission and were
placed on the 2020 CDP Supplier Engagement Leaderboard
as we were assessed to be in the top 7% for supplier
engagement on climate change.
This year, we have begun working hard on our target to cut
food waste in half by 2030, having set up a partnership to
ensure any surplus food at our distribution centres does not
go to waste. This has enabled us to donate over half a million
meals to charity partners in 2020 to support those in need.
Our target to eliminate unnecessary single-use plastics by
2025 is not going to be easy, as many of our supplies are
delivered to us in plastic packaging. We have begun this
journey and will be working closely with all of our suppliers
to achieve this difficult target.
Diversity and inclusion was a theme that gained much-needed
global and national attention in 2020 through the Black Lives
Matter movement. This has translated into our own commitments
and recognition that to be a Force for Good we need to be
representative and inclusive. We have now published eight
commitments to drive meaningful progress in this space that
can be found on page 45.
Finally, we have also stepped up our game in relation to
the reporting of our ESG credentials, launching our first dedicated
ESG document. We are pleased to announce that we have
published our first report against the Sustainability Accounting
Standards Board (SASB) standard, aligning our performance
with internationally recognised sustainability metrics for our
sector, and look forward to reporting expenditure relating to our
Green Bond programme against the key categories of eligible
Whitbread Annual Report and Accounts 2020/21 projects which we set out in our Green Bond Framework.
To access the ESG, Green Bond Framework and SASB
documents, please go to our website www.whitbread.co.uk
We have also set out a clear plan to report in accordance with
TCFD requirements, the detail of which can be found on page 51.
We have the business structures, the ethos, the skill and the
commitment from our team members required to meet our
Force for Good objectives. These goals are not only good
for people, our communities and our environment, but they
enable our business to reduce costs and operate in a more
agile way moving forward, they differentiate us from much
FORCE FOR GOOD IN 2020/21
of the competition, and further enhance our ability to deliver
strong, consistent returns for investors.
We look forward to taking learnings from this unprecedented
year to remain a Force for Good in all parts of our business.
Chris Vaughan
General Counsel
26 April 2021
Our strategy is split into three pillars…
OPPORTUNITY
A team where everyone can reach
their potential – no barriers to entry
and no limitations to ambition.
COMMUNITY
RESPONSIBILITY
Making a meaningful contribution
to the customers and communities
we serve.
Always operating in a way
that respects people and the planet.
Which helps us to do business in the right way supporting our…
Teams
› Championing inclusivity
and improving diversity
› Industry-leading
training and
development
› Team member
wellbeing is considered
in everything we do
Environment
› Science-based targets
to reduce our carbon
emissions intensity
› Eliminating
unnecessary
single-use plastics
› Reducing food waste
Communities
Suppliers
› Sourcing responsibly
and with integrity
› Respecting the human
rights of everyone in
our supply chain
› Ensuring our suppliers
are paid on time
› Supporting our
communities’
economies
› Supporting our
charity partners to
meet their mission
› Community
engagement e.g.
volunteering schemes
Allowing us to…
Guests
› Improving the
nutritional value
of our menus
› Ensuring the highest
levels of safety
› Developing an
environmentally friendly
customer proposition
Attract more customers
Lower energy consumption
Increase productivity
Benefit local communities
Motivate our workforce
Adapt our business model
Source responsibly
Reduce waste
Enabling us to drive growth at good returns and deliver long-term value
49
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 FORCE FOR GOOD CONTINUED
Supporting our team members: Ashleigh's story
"My name is Ashleigh. I’ve worked at Premier Inn around a year and a half, because
I needed a more flexible job around my three-year-old son.
Customer service has always been my biggest passion. I have always wanted to go
back to college or study to do better for myself and my son. I honestly assumed
I was too old to study again.
I was offered a hospitality apprenticeship in March 2020 by Whitbread. I was
definitely nervous at first but then I met my trainer, who put me at ease and has
supported me in every way possible.
Since starting the apprenticeship it has given me so much more confidence in myself
as well as my work. It has given me the push I needed to further my career instead
of thinking it was too late.
I’m not 100% on where I want to be in my future career. However, I do know I want to
spend it in customer service".
Supporting our charity partner: Great Ormond Street Hospital Children’s Charity
Great Ormond Street Hospital Children’s Charity is as much a part of the Whitbread
family as our brands. Whitbread has proudly supported Great Ormond Street
Hospital Children’s Charity since 2012 through repeated team member vote.
We have now hit over £18m raised since the partnership began with £10m of this
fundraising dedicated to supporting the development of the brand-new Sight and
Sound Centre, supported by Premier Inn, a specialist outpatient facility tailored to
the needs of children with sight and hearing loss which is due to open in 2021.
In 2019, we rallied the team members across our business to take part in the RBC
Race for the Kids for Great Ormond Street. Over 600 team members and their
families took part, running, walking, crawling or scooting 5k around London. In 2020,
we took Race for the Kids virtual, joining forces to run the race from wherever our
teams were based and we raised a huge £30,000.
Healthier children’s food: We are a Peas Please Pledger
Whitbread has always supported the five-a-day principle, encouraging adults
and children alike to eat more fruit and vegetables through our long-standing
participation in the Soil Association’s Out to Lunch survey. Last year we reported
we’d hit our target of 20% sugar reduction across all relevant categories and this
year Brewers Fayre is proud to announce we are a Peas Please Pledger, working hard
to continue to offer two portions of vegetables with every main meal. Our children’s
menu not only supports our Peas Please Pledge but also supports sustainable
sourcing of key ingredients such as Marine Stewardship Council (MSC) certified
fish and beef from Red Tractor Assured British and Irish farmers.
We’re committing to net zero!
Carbon emissions continue to be a huge focus for our business and reducing
emissions is an ethical and economic imperative. Last year we announced
our targets to reduce carbon emissions intensity across our direct business, aiming
to reduce our scope 1 and 2 carbon emissions intensity by 50% by 2025, and an 84%
reduction by 2050. We went one step further this year and are proud to report we
have updated our target further and are committed to reaching a net zero carbon
position by 2040.
I
Y
T
N
U
T
R
O
P
P
O
I
Y
T
N
U
M
M
O
C
I
Y
T
N
U
M
M
O
C
Y
T
I
L
I
B
I
S
N
O
P
S
E
R
50
Whitbread Annual Report and Accounts 2020/21 To find a full update on how we’re supporting our teams
to live and work well, please go to pages 42 to 47.
Y
T
I
L
I
B
I
S
N
O
P
S
E
R
Y
T
I
L
I
B
I
S
N
O
P
S
E
R
Cutting our food waste in half by 2030
Last year, we announced our target to cut food waste by 50% by 2030. The first step
towards meeting this was to undertake a forensic analysis of where and why we have
food waste across our business. We completed this analysis this year, we now have
clarity on what needs to be done to reduce the 14,000 tonnes we do have and have
begun work to reduce it immediately where possible. This has involved adapting
our current menu offerings to maximise the usage of committed stock, both in our
freezer stores and with our suppliers, and opening our restaurants in July with
a reduced menu to maximise usage of ingredients within our current store cupboard.
Not only this, but in 2020, we donated over 500,000 meals to charity partners
across the UK where we had surplus food.
Sustainable cotton
In 2020 we became the first UK budget hotel chain to be a Better Cotton Initiative
(BCI) member. This year, we have worked with our laundry suppliers to create
an industry-leading mass-balanced model that can support sustainable cotton
procurement. This is a unique model created in partnership with BCI. We are aiming
for 100% of the linen procured via laundry services for Premier Inn to be BCI
accredited by the end of 2021. This is not an easy task, but we know that working
with our dedicated suppliers we will be able to progress industry-wide change
for sustainable cotton in the hospitality industry.
THE TASKFORCE FOR CLIMATE-RELATED
FINANCIAL DISCLOSURES
Whitbread welcomes the introduction of the Taskforce for
Climate-related Financial Disclosures (TCFD) and recognises
the impetus this will provide for companies and stakeholders
to understand relevant climate-related risks and to ensure
the appropriate management processes are in place to
mitigate them.
The introduction of TCFD is an important step in tackling
global climate change and we look forward to sharing our
first full disclosure in next year’s Annual Report. As part
of this process, the Group has spent this year developing
its understanding of its exposure to climate change risk.
The initial review highlighted that the Group already fulfils
many of the TCFD’s recommendations, including:
› executive member accountability for climate change;
› risk assessment process and management structure
in place for climate change-related issues; and
› environmental targets that are reported in mainstream
financial reports, with scope 1 and 2 intensity emissions
being reported to an approved methodology.
However, there is more to do to be fully compliant and
this will be a key focus for the Force for Good programme
this coming year. After undertaking a Group-wide analysis,
a number of top-level risks and mitigation activities
were identified.
Examples of potential actions include:
›
›
investment in efficiency measures and technology (such
as Building Management Systems and PV installation) used
as a mitigation measure against increasing costs of utilities
driven by emerging regulation;
installation of site flood protection measures and an
early warning flood evacuation system where flood risk
is substantial; and
› alternative contingency supply in place for the supply
of critical commodities due to disruption, such as changing
climatic conditions and extreme weather events.
Next steps include developing our understanding of, and
quantifying, those risks, introducing specific targets and
mitigating actions where relevant. This will be achieved
through the development of a Climate Risk Framework,
enabling the Group to consider its resilience under different
climate scenarios, and to embed climate change risk into
its long-term business strategy and financial planning
processes. A plan is in place to deliver against each of
these tasks.
More information on the Group’s TCFD progress can be
found on our website, www.whitbread.co.uk
51
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 FORCE FOR GOOD CONTINUED
2020/21 ANNUAL REPORT
SUSTAINABILITY TARGETS
We at Whitbread are aware of
the material impact, both positive
and negative, that our business
activities can have on the planet,
our communities and the customers
we serve. We are also aware of our
opportunity to shape that impact,
ensuring we drive positive change
and create value, while mitigating
any negative impact our operations
might have. We must ensure
that our approach to social and
environmental issues continues to be
ambitious, working to resolve global
challenges if we are to continue to
be a successful business.
We began this year with a portfolio of ambitious, stretching
targets that positioned us to really make a difference.
While we’ve been faced with unprecedented challenges, we’re
proud to report our progress towards meeting those targets
has not stood still. While at times having to shift our focus,
responding to new and immediate obstacles caused by the
COVID-19 pandemic, we have still managed to move forward
with meeting our key sustainability targets, at times even
accelerating our trajectory towards our goals. Our targets
and our progress against them can be found on the
following pages.
52
* The nature of the restrictions placed on our operations due to COVID-19
in 2020 has impacted our ability to provide an appropriate measure of our
progress in these areas this year.
Whitbread Annual Report and Accounts 2020/21
OPPORTUNITY
A team where everyone can reach
their potential – no barriers to entry
and no limitations to ambition.
TARGET
PROGRESS AGAINST
TARGETS IN 2020/21
FORCE FOR GOOD
UPDATE 2020/21
Full information on our progress in the Opportunity
pillar of our Force for Good programme can be
found in the Group HR Director’s review.
Our people will feel
represented and
respected, no matter
how they identify
We will actively seek
to break down all
barriers to entry
and be an inclusive
and representative
prospective employer
Through our
apprenticeship
programmes we will
support people to
find and develop their
hospitality careers
We aim to promote
internal succession
above external
recruitment and will
support our teams
in this endeavour
We will be bold about
broadening career
opportunities,
supporting cross-
functional and
meaningful career
development
We will listen genuinely
to our teams, ensuring
their views help inform
decision making
We will support the
physical and mental
wellbeing of our teams
In progress
Improving diversity and championing inclusivity is a key priority for Whitbread,
and we have taken steps in 2020 through our commitments to make us more
diverse and more inclusive, including setting targets that we will start to report
against from the next financial year. Seeking feedback from our colleagues
throughout 2021 will form part of our plan.
This has not been
measured in 2020
due to COVID-19
We remain committed to providing opportunities with no barriers to entry and
have taken steps in 2020 to review our recruitment processes in line with our
Diversity and Inclusion commitments.*
222
total completed
through this period
Supporting our teams’ development is core to our Force for Good agenda.
Continuing this through COVID-19 was vital for us to ensure development was
not stunted for our staff. We have continued with 95% of our apprenticeships
throughout COVID-19.
This has not been
measured in 2020
due to COVID-19
We remain committed to providing opportunities throughout Whitbread for our
internal teams to develop and grow their careers, with no limits to ambition or
barriers to entry. This year, due to the closure of our estate, we were unable to
measure internal succession but will look to review this in the coming year.*
This has not been
measured in 2020
due to COVID-19
Cross-functional development is one of the reasons our teams love Whitbread;
it enabled growth and development within a business they know. We remain
committed to providing these opportunities throughout Whitbread for our internal
teams; however, during the previous year we were unable to measure this. We will
be reviewing this in the coming year.*
In progress
Listening to our colleagues has been fundamental to our COVID-19 response.
Dialling up our listening activities in response to the pace of change and level
of restrictions has ensured everyone remains engaged in our approach.
More detail on how we've engaged our teams this year can be found in the
Group HR Director’s review.
In progress
Supporting our colleagues’ wellbeing has never been more important than in
the context of COVID-19. See the Group HR Director’s review for more detail.
53
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21
FORCE FOR GOOD CONTINUED
COMMUNITY
Making a meaningful contribution
to the customers and communities
we serve.
PROGRESS AGAINST
TARGETS IN 2020/21
FORCE FOR GOOD
UPDATE 2020/21
TARGET
For every new site
we will donate our
time to actively
supporting local
community activity
We will raise £20m
for GOSH
100
hours
Number of
approximate hours
donated across 5 sites
£18.3m+
Total raised to date
Due to the pandemic only limited community activity could take place for the
five new sites opened, hitting 100 hours for this year.
Due to restricted movement across the country we paused our physical
community activities at new site openings. However, we have channelled that
community spirit into our response to COVID-19 across our estate; donating
hundreds of tonnes of foods to those in need from our sites and distribution
centres and supporting essential workers at our hotels.
In 2020/21 we experienced a challenging year, much like everyone else. However,
through our generous guests and team members we were still able to raise
a significant amount of money for Great Ormond Street Hospital Charity.
Team members across the country undertook a number of activities to support
our charity partner; from running marathons up and down closed hotel and
restaurant corridors and climbing the equivalent of Everest in hotel stairs to fun
runs outside.
We are proud to be a Peas Please Pledger and will be working hard to continue to
offer two portions of vegetables with every main meal, through a number of ways;
through complete vegetarian dishes, a choice of two vegetable sides and/or
‘hidden’ or additional portions of veg incorporated into the main meal.
In progress
We will strive to
be a leader in our
sector for delicious,
appealing and healthier
children’s food
Public Health England
20% Sugar Reduction
31.2% and 33.9%
achieved in applicable
categories
We are delighted to have achieved an average of 31.2% sugar reduction in
puddings in Beefeater and a 33.9% reduction in Brewers Fayre against a baseline
of 2015 as part of Public Health England’s sugar reduction programme. We will
continue to do more work to make further reductions as part of the holistic
reformulation programme.
Whitbread’s critical
commodities
accredited against
robust standards
100%
for fish, whole shell
eggs and beef
We were thrilled to have reached our whole shell egg target (100% cage free
status on all whole shell eggs by the end of 2020) two years early and are
working hard to meet our ingredient egg target by 2025 with 22% of our 2020/21
ingredient egg requirement sourced from cage free hens. 100% of our raw beef
range is produced to a recognised farm assurance scheme in its country of origin
such as Red Tractor.
In addition, we have retained our MSC 100% status for 2021 and our Business
Benchmark on Farm Animal Welfare (BBFAW) 2020 tier 2 rating.
We are delighted to have become BCI members this year, creating a unique
partnership to support our laundered cotton. This year we will be working hard
to ensure 100% of our cotton is supporting sustainable farming through the
BCI platform.
Last year, we became Roundtable on Sustainable Palm Oil (RSPO) members
to support our journey to sustainable palm oil. We require all suppliers of ours
to support sustainable palm oil and will be continuing this journey this year.
100% of our suppliers
risk assessed against
Force for Good criteria
100%
of supplies risk
assessed
We have a robust responsible sourcing programme that is integrated in how we
manage our supply chain. This ensures that no suppliers can work with Whitbread
without completing our risk assessment questions on Force for Good on our
supplier management system.
54
Whitbread Annual Report and Accounts 2020/21
RESPONSIBILITY
Always operating in a way
that respects people and the planet.
TARGET
PROGRESS AGAINST
TARGETS IN 2020/21
FORCE FOR GOOD
UPDATE 2020/21
We will eliminate
unnecessary* single-
use plastic by 2025
In progress
We will cut food waste
by 50% by 2030
63.4%
reduction
This year we have had to focus on ensuring the safety of our teams and our guests
during the pandemic, and this includes preventing the spread wherever possible.
Like many industries we recognise that this has meant, in some cases, an increase in
single-use plastic where it is necessary and safer to do so for our teams to prevent
the spread of COVID-19. However, this has not stopped us in the good work we are
continuing to do. We completed the mapping of single-use plastics in our business
and continue to seek out projects that reduce or remove unnecessary single-use
plastic. We’re unwavering on this ambition and continue to seek innovative ways
to do this in partnership with our operations team and our suppliers.
In 2020, we reduced our food waste by 63.4% from a 2018 baseline year.
Whilst this was not a typical year due to lockdown restrictions, we adapted our
menu offerings to maximise the usage of committed stock both in our freezer
stores and with our suppliers, and we opened our restaurants in July 2020 with
a reduced menu to maximise usage of ingredients within our current store
cupboard. Not only this, but we avoided over 300 tonnes of food waste generation
by donating to charity partners across the UK.
We will become net
zero† for carbon
emissions by 2040
61.2%
scope 1 and 2 intensity
reduction from the
2016/17 baseline year
During 2020, we focused on using our remote building management system (BMS)
control to enable energy reductions without the need to visit sites. Through this
control we reduced the runtime of assets in unoccupied sites, saving energy whilst
also extending the lifecycle of those assets. In addition, we used our energy
management software, during both trading and non-trading periods, to monitor
and target sites to optimise energy consumption. We have seen a reduction in our
scope 1 and 2 carbon intensity by 35.6% from the previous year due to site closures
and these efficiency measures. We have also reviewed our target and brought
forward our net zero commitment to 2040 from our original 2050 target.
In progress
We will minimise water
use across our business
and champion water
stewardship within
high-risk areas
During 2020, we have focused our efforts on gathering data to support risk
evaluation, to pinpoint reduction in high-risk areas in terms of total water
availability and ensuring equitable water use. This risk evaluation incorporates
data from rainfall, population change, together with instances of flood and
drought. In these areas we can then focus our championship of water stewardship.
We have continued to manage water responsibly by the installation of showers
instead of baths in new builds, along with low flow shower heads, dual flush toilets,
customer towel re-use messaging and increased data quality for leak detection
and fixes. The site closures due to the pandemic presented a great opportunity
to identify and resolve leaks we may not otherwise have found, which saved the
equivalent of over 11 Olympic size swimming pools of water.
We will not send
any waste to landfill 99.96%
of our total
operational waste
diverted from landfill
In these current, extraordinary times we unfortunately had no option but to
send a very small proportion (0.10%) of our non-recyclable waste to landfill.
This was due to a limited number of disposal points being open during the
pandemic. We expect this situation to improve once restrictions are gradually
lifted with sites becoming available once again.
* Whitbread defines unnecessary single-use plastic as that which is unnecessary for food safety purposes, which is used instantaneously as a one-off application and
whose removal would not lead to unintended negative environmental consequences, such as increased waste or CO2 emissions.
† Scope 1 and 2 emissions.
55
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21
STAKEHOLDER ENGAGEMENT
Engaging with our stakeholders
Stakeholder engagement
is a key focus for Whitbread,
and it’s something that runs
throughout the different
levels of the Group, not just
at Board level.
We ensure that we have open
communication with our
various stakeholder groups,
creating a mutually beneficial
relationship, and we use
information gained through
these relationships to make
informed judgements when
making key decisions.
This section provides some
insight into the different
stakeholder groups that
the Group engages with
on a regular basis, how we
usually engage with them,
and how that engagement
ensures that their interests
are considered in the Group’s
strategy and decision making.
EMPLOYEES
CUSTOMERS
Our team members are vital to
the successful operation of our
business, so it’s of vital
importance that the Group
regularly engages with them to
ensure we understand their needs
and to make sure they feel
confident and cared for.
We welcome millions of customers
every year, so it’s vital that we
constantly respond to their
changing needs and wants to
keep a strong relationship
with them.
INVESTORS/
SHAREHOLDERS
The Board is committed to
ensuring that there is sufficient
and effective communication
and engagement between the
Group and its investors.
SUPPLIERS
COMMUNITY
PENSION TRUSTEES
LENDERS
Supplier engagement is extremely
Whitbread has a key Force for Good
Whitbread is committed to
Whitbread keeps a regular
important to Whitbread to build
commitment to make a meaningful
maintaining its positive and
dialogue with our key lenders
relationships and ensure security
impact on our communities.
constructive relationship with the
on operational and strategic
of supply. We also undertake
Engaging communities and local
pension scheme Trustee and to
financing requirements.
significant due diligence on our
stakeholders when acquiring and
ensuring security of members’
The Board has identified our
supply chains to ensure suppliers
planning new sites is an important
benefits in the pension scheme.
key lenders as our syndicate of
are working in line with our
way to introduce the business to
minimum standards.
a community that may not know
our key values.
Key focuses
› Health and safety
› Mental wellbeing
› Diversity and inclusion
› Fair opportunities
› Pay and reward
› Development and progression
Key focuses
› Health and safety
› Healthier choices
› Cleanliness
› Competitiveness
Key focuses
› Long-term sustainability
of the Company
› Financial performance
and growth
Key focuses
Key focuses
Key focuses
Key focuses
› Compliance with our minimum
› For every new site we open,
› Pension scheme funding
› To engage with our lenders
we give each team member
›
Investment Strategy
regarding:
three dedicated hours to
› Communications to pension
– current performance and
standards, including our
Responsible Sourcing,
Animal Welfare and
environmental policies.
volunteer to a local community
scheme members
project of their choosing.
› Building supplier relationships
› We aim to raise significant funds
that nurture an open and honest
for the Great Ormond Street
environment to work
Hospital Charity.
collaboratively to deliver goods
› Providing healthier choices for
and services to our business.
our customers, with reduced salt,
› Security of supply through
sugar and calories in the dishes
robust supplier relationships.
we serve.
banks that participate within our
revolving credit facility, our Bond
holders, who hold our 2015 and
2021 Bonds and our private
placement note holders.
financing strategy;
– the nature and quantum
of debt and level of
liquidity and financing the
Company needs;
– the timing of any refinancing;
– the support and product
offerings that the lenders
and
provide.
› To align the Group's
financing activities with its
Green Framework.
How we engage at Board and
Executive Committee level
› Executive Committee members
How we engage at Board and
Executive Committee level
› Members of the Board and
chair the Employee and
Workplace/H&S forums which
allows them to hear the feedback
first hand.
› The Group HR Director provides
the Board with reports on
the key focus areas and
employee engagement.
› Executive-sponsored diversity
and inclusion programmes
How we engage across the Group
› Employee Forum – the forum was
established as a formal workforce
advisory panel to the Board.
It has acted as the formal
collective consultation partner
during organisational changes,
proposing changes and
alternatives where it thinks
it necessary.
› Workplace forum/COVID-19 H&S
forum – focuses on improving
the working environment and
ensuring it’s a safe place to work.
› Speaking Out lines – allow
employees to raise concerns
confidently and anonymously.
› Pulse survey – this allowed the
Company to get a sense of how
employees are feeling after
a turbulent year.
56
Executive Committee visit sites
and stay in our hotels in order to
gather real life feedback on how
customers feel about our hotels
and restaurants. We hope for this
to resume post COVID-19.
› The Board receives presentations
and monthly data on customer
feedback.
How we engage across the Group
› We review key customer and
How we engage at Board and
Executive Committee level
› The CEO and FD hold meetings
with institutional investors
following full-year and interim
results, and report back to
the Board.
› The Chairman, CEO, FD and
Company Secretary meet with
investors on request and as part
of a programme of engagement.
› The Board receives updates
on the views of major
shareholders from the
Company’s brokers.
brand performance metrics every
week to understand how our
guests are feeling about
our brands.
› We send Guest Satisfaction
› Full-year and interim results
presentations.
› The annual general meeting
and other general meetings.
› Consultations are held with
Survey emails to guests after
they have used our hotel brands
to ask specific questions on their
experiences. This enables us to
make changes to delight them
even more.
› The website is regularly reviewed
and updated, and investment is
made into strong advertising
campaigns to ensure our
guests are up to date with any
exciting news.
investors and major shareholders
when necessary.
How we engage across the Group
› The Whitbread website and
Annual Report and Accounts.
› Electronic communications with
shareholders.
› Online share portal.
› The Investor Relations team
holds regular investor meetings
and is in regular contact with
investors and shareholders.
› UK Shareholder Association
events.
How we engage at Board and
How we engage at Board and
How we engage at Board and
How we engage at Board and
Executive Committee level
› Attendance at the Annual
Executive Committee level
Executive Committee level
Executive Committee level
› The Company Secretary is head
› The Group FD attends a Trustee
› Once a year the CEO and FD
Whitbread Supplier Conference.
of the Force for Good
meeting annually to present, and
meet the key lenders within
programme, so regularly updates
answer questions on, the
the revolving credit facility to
the Board and Executive
Company’s annual results and its
discuss the annual results and
Committee.
ability to meet its obligations to
business performance.
the pension scheme.
› Quarterly or biannual meetings
How we engage across the Group
› The Group FD regularly interacts
How we engage across the Group
with key strategic suppliers.
› When acquiring new sites and
with the Chair of Trustees.
› The Group has introduced
How we engage across the Group
› Annual Whitbread Supplier
Conference.
› Continuous engagement
with strategic suppliers on
our Responsible Sourcing
programme.
planning permission we work
closely with the local Council
planning officers and expert
› A Company representative
How we engage across the Group
dialogue with our Bond
Holders with a fixed income
call after the 2021 annual
consultants. We also engage
attends the Trustee’s Benefit
results presentation.
with established groups, local
Sub-Committee and the Funding
› Our Director of Financial
residents and businesses, and
& Investment Sub-Committee
Reporting & Control is in regular
keep the neighbours updated
meetings. Attendance at the
contact with our banks’
on the construction progress.
latter enables an understanding
relationship teams, discussing
› When a new site is close to
completion we work with
of any investment changes
that are planned and can
Jobcentre Plus to communicate
provide a Company view
the new job opportunities to the
where appropriate.
local community.
› Fundraising for GOSH.
operational and strategic
financing requirements, and
our Treasury team engages
to manage the Group's
operational requirements.
› We continue to monitor and
discuss with the banks their
strategy and ability to lend
to the Group in the future and any
changes that may impact this.
Whitbread Annual Report and Accounts 2020/21 Our team members are vital to
We welcome millions of customers
the successful operation of our
every year, so it’s vital that we
business, so it’s of vital
constantly respond to their
importance that the Group
changing needs and wants to
regularly engages with them to
keep a strong relationship
ensure we understand their needs
with them.
The Board is committed to
ensuring that there is sufficient
and effective communication
and engagement between the
Group and its investors.
INVESTORS/
SHAREHOLDERS
and to make sure they feel
confident and cared for.
Key focuses
› Health and safety
› Mental wellbeing
› Diversity and inclusion
› Fair opportunities
› Pay and reward
› Development and progression
Key focuses
› Health and safety
› Healthier choices
› Cleanliness
› Competitiveness
Key focuses
› Long-term sustainability
of the Company
› Financial performance
and growth
How we engage at Board and
How we engage at Board and
How we engage at Board and
Executive Committee level
Executive Committee level
Executive Committee level
› Executive Committee members
› Members of the Board and
› The CEO and FD hold meetings
chair the Employee and
Executive Committee visit sites
with institutional investors
Workplace/H&S forums which
and stay in our hotels in order to
following full-year and interim
allows them to hear the feedback
gather real life feedback on how
results, and report back to
first hand.
customers feel about our hotels
the Board.
› The Group HR Director provides
and restaurants. We hope for this
› The Chairman, CEO, FD and
the Board with reports on
the key focus areas and
employee engagement.
to resume post COVID-19.
Company Secretary meet with
› The Board receives presentations
investors on request and as part
and monthly data on customer
of a programme of engagement.
› Executive-sponsored diversity
feedback.
› The Board receives updates
and inclusion programmes
How we engage across the Group
› We review key customer and
How we engage across the Group
on the views of major
shareholders from the
Company’s brokers.
› Employee Forum – the forum was
brand performance metrics every
› Full-year and interim results
established as a formal workforce
week to understand how our
presentations.
advisory panel to the Board.
guests are feeling about
It has acted as the formal
our brands.
› The annual general meeting
and other general meetings.
collective consultation partner
› We send Guest Satisfaction
› Consultations are held with
during organisational changes,
Survey emails to guests after
investors and major shareholders
proposing changes and
alternatives where it thinks
it necessary.
they have used our hotel brands
when necessary.
to ask specific questions on their
experiences. This enables us to
How we engage across the Group
› Workplace forum/COVID-19 H&S
make changes to delight them
› The Whitbread website and
forum – focuses on improving
even more.
Annual Report and Accounts.
the working environment and
› The website is regularly reviewed
› Electronic communications with
ensuring it’s a safe place to work.
and updated, and investment is
shareholders.
› Speaking Out lines – allow
made into strong advertising
› Online share portal.
employees to raise concerns
confidently and anonymously.
campaigns to ensure our
› The Investor Relations team
guests are up to date with any
holds regular investor meetings
› Pulse survey – this allowed the
exciting news.
Company to get a sense of how
employees are feeling after
a turbulent year.
and is in regular contact with
investors and shareholders.
› UK Shareholder Association
events.
EMPLOYEES
CUSTOMERS
SUPPLIERS
COMMUNITY
PENSION TRUSTEES
LENDERS
Supplier engagement is extremely
important to Whitbread to build
relationships and ensure security
of supply. We also undertake
significant due diligence on our
supply chains to ensure suppliers
are working in line with our
minimum standards.
Whitbread has a key Force for Good
commitment to make a meaningful
impact on our communities.
Engaging communities and local
stakeholders when acquiring and
planning new sites is an important
way to introduce the business to
a community that may not know
our key values.
Whitbread is committed to
maintaining its positive and
constructive relationship with the
pension scheme Trustee and to
ensuring security of members’
benefits in the pension scheme.
Key focuses
› Compliance with our minimum
standards, including our
Responsible Sourcing,
Animal Welfare and
environmental policies.
› Building supplier relationships
that nurture an open and honest
environment to work
collaboratively to deliver goods
and services to our business.
› Security of supply through
robust supplier relationships.
Key focuses
› For every new site we open,
we give each team member
three dedicated hours to
volunteer to a local community
project of their choosing.
› We aim to raise significant funds
for the Great Ormond Street
Hospital Charity.
› Providing healthier choices for
our customers, with reduced salt,
sugar and calories in the dishes
we serve.
Key focuses
› Pension scheme funding
›
Investment Strategy
› Communications to pension
scheme members
How we engage at Board and
Executive Committee level
› Attendance at the Annual
Whitbread Supplier Conference.
How we engage across the Group
› Annual Whitbread Supplier
Conference.
› Quarterly or biannual meetings
with key strategic suppliers.
› Continuous engagement
with strategic suppliers on
our Responsible Sourcing
programme.
How we engage at Board and
Executive Committee level
› The Company Secretary is head
of the Force for Good
programme, so regularly updates
the Board and Executive
Committee.
How we engage across the Group
› When acquiring new sites and
planning permission we work
closely with the local Council
planning officers and expert
consultants. We also engage
with established groups, local
residents and businesses, and
keep the neighbours updated
on the construction progress.
› When a new site is close to
completion we work with
Jobcentre Plus to communicate
the new job opportunities to the
local community.
› Fundraising for GOSH.
How we engage at Board and
Executive Committee level
› The Group FD attends a Trustee
meeting annually to present, and
answer questions on, the
Company’s annual results and its
ability to meet its obligations to
the pension scheme.
› The Group FD regularly interacts
with the Chair of Trustees.
How we engage across the Group
› A Company representative
attends the Trustee’s Benefit
Sub-Committee and the Funding
& Investment Sub-Committee
meetings. Attendance at the
latter enables an understanding
of any investment changes
that are planned and can
provide a Company view
where appropriate.
Whitbread keeps a regular
dialogue with our key lenders
on operational and strategic
financing requirements.
The Board has identified our
key lenders as our syndicate of
banks that participate within our
revolving credit facility, our Bond
holders, who hold our 2015 and
2021 Bonds and our private
placement note holders.
Key focuses
› To engage with our lenders
regarding:
– current performance and
financing strategy;
– the nature and quantum
of debt and level of
liquidity and financing the
Company needs;
– the timing of any refinancing;
and
– the support and product
offerings that the lenders
provide.
› To align the Group's
financing activities with its
Green Framework.
How we engage at Board and
Executive Committee level
› Once a year the CEO and FD
meet the key lenders within
the revolving credit facility to
discuss the annual results and
business performance.
How we engage across the Group
› The Group has introduced
dialogue with our Bond
Holders with a fixed income
call after the 2021 annual
results presentation.
› Our Director of Financial
Reporting & Control is in regular
contact with our banks’
relationship teams, discussing
operational and strategic
financing requirements, and
our Treasury team engages
to manage the Group's
operational requirements.
› We continue to monitor and
discuss with the banks their
strategy and ability to lend
to the Group in the future and any
changes that may impact this.
57
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 STAKEHOLDER ENGAGEMENT CONTINUED
Non-financial information statement
As the UK’s largest hotel company, we have a responsibility to focus and lead on our most important people, social and
environmental issues which is why one of our Force for Good commitments is to ensure we always do business in the right way.
We aim to comply with the new non-financial reporting requirements contained in sections 414CA and 414CB of the Companies
Act 2006. The below table, and the information it refers to, is intended to help stakeholders understand our position on these
key non-financial matters. Further information on the various policies mentioned below and throughout the report can be found
on our website at www.whitbread.co.uk
Reporting requirement
Anti-corruption and anti-bribery
Policies and standards which
govern our approach
› Anti-Bribery Policy
› Code of conduct
Employees
› Gender Pay Gap Report
› Health and Safety Policy – Statement of Intent
› Speaking Out Policy
Corporate Social Responsibility
Sustainability reporting
› 2020/21 Environmental, Social & Governance
See for additional information
› Corporate governance, pages 78 and 79
› Group HR Director’s review, page 44
› Force for Good, pages 48 to 55, and sections
highlighted with Force for Good logos
› Audit Committee report, page 82
› Force for Good, pages 48 to 55, and sections
highlighted with the Force for Good logos,
in particular our Force for Good targets
› Group HR Director’s review, pages 42 to 47
› Force for Good, pages 48 to 55, and sections
highlighted with Force for Good logos
› Corporate governance, page 78
Report
› TCFD reporting
› SASB reporting
› CDP reporting
Environmental policies
› Premier Inn Environment Policy
› Restaurants Environment Policy
Responsible Sourcing Policy
› Responsible Sourcing – Soy Policy
› Responsible Sourcing – Cotton Policy
› Responsible Sourcing – Cocoa Policy
› Responsible Sourcing – Sugar Policy
› Responsible Sourcing – Meat Policy
› Responsible Sourcing – Palm Oil Policy
› Responsible Sourcing – Timber Policy
› Whitbread Responsible Sourcing – Packing Policy
› Whitbread Responsible Sourcing Policy 2020
Animal Welfare
› Egg Track Report 2020
› Dairy Policy 2020
› Laying Hen Policy 2020
› Lamb Welfare Policy 2020
› Poultry Welfare Policy
› Animal Welfare Policy
› Beef Welfare Policy
› Pig Meat Welfare Policy
› Fish Policy
› Human Rights Policy
› Disability Awareness
› Equal Opportunities
› Human Trafficking Positioning Statement
› Modern Slavery Statement 2019/2020
› Customer Privacy Policy
› Data Protection Policy
› Employee Privacy Policy
Human rights
Privacy
Social matters
› Gender Pay Gap Report
› Responsible Sourcing Policy
› Diversity and Inclusion statement
› Group HR Director’s review, pages 42 to 47
› Force for Good, pages 48 to 55, and sections
highlighted with Force for Good logos
Description of principal risks and impact of business activity
Description of the business model
Non-financial performance indicators
› Principal risks and uncertainties, pages 62 to 66
› COVID-19, pages 4 and 5
› Our business model, pages 16 and 17
› Our strategy at a glance, page 18 and 19
Diversity and Inclusion
As part of our diversity and inclusion commitments, we are undertaking regular reviews of our policies
across Whitbread to ensure they are inclusive, particularly of under-represented groups.
58
Whitbread Annual Report and Accounts 2020/21 Section 172 statement
In accordance with section 172 of
the UK Companies Act 2006, in its
decision making the Board considers
the interests of the Group’s employees
and other stakeholders.
The Board understands the importance of taking into account
the views of all stakeholders and considers the impact of the
Company’s activities on the communities in which Whitbread
operates, the environment and the Group’s reputation. In its
decision making, the Board also considers what is most likely
to promote the success of the Company for its stakeholders
in the long term.
Our directors understand the importance of their section 172
duty to act in good faith to promote the success of the
Company. When making decisions, the interests of any key
relevant stakeholders will always be considered, including
employees, suppliers, customers, investors, the community
and the environment.
Some examples of how the Board considers these groups
during Board meetings and discussions include the following:
› As part of the monthly Key Performance Indicators
(KPI) pack, the Board considers data relating to
customer feedback and team retention, as well as data
on shareholders.
› The Group Finance Director’s report gives details on
recent shareholder, lenders and Pension Trustees
discussions, and qualitative feedback on specific concerns.
› The Group HR Director’s report provides detail of relevant
employee-related matters.
› The General Counsel’s report contains an update of key
developments on the Force for Good agenda, including
work in the community, charitable fundraising, the
environment, plastics and food waste.
› The Chief Executive’s report gives details of any relevant
Government or supplier interaction.
› Board debate on possible mergers and acquisitions
include wider impact assessments, considering issues
such as integration with the current business, management
capabilities, and the ability of our supply chain to react
with the plan.
The Board also takes into consideration the long-term
consequences for both the Company and its stakeholders
when making these decisions, making sure the Company
conducts its business in a fair way, protecting its reputation
and external relationships.
This section provides some examples of decisions taken by
the Board this year, and how stakeholder views and interests,
as well as other section 172 considerations, have been taken
into account in its decision making.
Read more about our stakeholder engagement on pages
56 and 57
59
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 SECTION 172 STATEMENT CONTINUED
COVID-19
The Group’s response to the COVID-19 pandemic was the
Board’s biggest focus last year. There were a number of big
decisions made in relation to this, each affecting different
key stakeholders.
1
Shareholders
The rights issue
The Board agreed to undertake a fully pre-emptive rights
issue in order to help keep the Company’s balance sheet
strong and ensure that the Company emerged from the
pandemic strongly, in a position to make acquisitions where
opportunities arose. The long-term success of the Company
was a big focus of this decision, but so too were the
shareholders. The fact that it was a fully pre-emptive rights
issue allowed all shareholders to participate, including
retail shareholders, and this was an important part of the
decision to proceed in this way.
Full-year/half-year results
The Board ensured the full impact of COVID-19 on the
business and the Company response to the pandemic were
fully disclosed in the full- and half-year results.
Dividend payments
Unfortunately it has been necessary to temporarily stop
making dividend payments under the covenant waiver and
as the Company navigates the pandemic.
Long-term success of the Company Remuneration
The Board made a number of remuneration decisions to
help the Company’s financial position during the pandemic,
including director and management pay cuts, and agreeing
not to adjust profits for COVID-19 when reviewing
performance for the 2020/21 incentive payments.
Spending cuts
The Board supported significant cash management measures,
including the cutting of all discretionary spend and the removal
of the 2020 dividend payment, to keep the Company’s financial
position as strong as possible during uncertain times.
60
2
Employees
Job Retention Scheme payments
The Board supported the decision to top up payments
to furloughed employees above what the Company
could reclaim from the Government, because the Board
understood the importance of supporting our team members
through an extremely hard year for the hospitality sector.
Members of the Board and the Executive Committee agreed
to a temporary reduction in pay.
Health and safety measures
The Board was fully briefed on and supportive of the
Company’s increased hygiene and social distancing measures
during the reopening of the business, both at sites and the
Support Centre, to ensure the safety of our employees.
Welfare
The Board regularly discussed the welfare of our teams,
both the pressures on those working and the circumstances
of those on furlough, and ensured that support would be
provided where necessary. The Board also supported the
Group’s push on mental health wellbeing and awareness,
which was a big focus last year.
Restructures
During discussions on the possible restructuring of the
Support Centre and Operations, the Board carefully
considered the impact on affected staff.
'Our Voice' network
A network consisting of team members from across the
business who help to have a two-way conversation with
senior leaders about shaping business plans and
influencing decisions.
For more information, see pages 42 to 47.
3
Customers
Health and safety measures
The Board was fully briefed on and supportive of the Group’s
increased hygiene, cleaning and social distancing measures
during the reopening of the business to ensure the safety of
our customers when they visited our hotels and restaurants.
Refunds
The Board supported the decision to allow a full refund to
customers during the pandemic, regardless of which rate
they had booked, in order to ensure the Group’s good
relationship with customers continued.
Whitbread Annual Report and Accounts 2020/21 4
FORCE FOR GOOD
Whitbread’s Force for Good programme is regularly discussed
by the Board.
Community
NHS and key workers
The Board supported the decision to keep 39 hotels open
during the initial lockdown for NHS workers, to ensure the
Group was doing what it could to help with the direct
COVID-19 response. We have continued to keep hotels
open for NHS and key workers ensuring we align with UK
Government guidance, local restrictions and levels of demand.
5
Suppliers
Payments
The Board was mindful of the situation the Group’s suppliers
were in following the pandemic and also Brexit, and continued
prompt payments where possible to support them.
6
Lenders and Pensions Trustees
The Board was fully updated on the negotiations and the
support that it received from both the Pension Trustees and
our syndicate of Banks in reaching agreements around the
covenant waivers that existed on our Pension Fund and
revolving credit facility. Later in the year the Board was further
updated on the support provided by our Banks with the
refinancing and extension of the revolving credit facility and
issuance of Green Bond.
7
Government
Lockdown and Job Retention Scheme implications
Members of the Board worked closely with the UK Government
advisers, policy makers and regulators during the pandemic, and
actively contributed to decisions and debate on the implications
of lockdown and furlough on the hospitality industry.
1
Environment
During the year, the Board approved more ambitious Force for
Good targets, including a carbon reduction target of net zero
by 2040, together with targets to eliminate single-use plastics
and reduce food waste.
2
Community
The Board approved the donation of 500,000 meals to
food banks in the UK (via FareShare), and has continued the
Company’s relationship with GOSH, with significant sums
being raised year on year.
3
Opportunity
The Board has approved our eight Diversity and Inclusion
commitments, including a target to have greater diversity in our
leadership population, with targets of 8% ethnic minority and
40% female representation in our top 100 by the end of 2023.
Further information about our stakeholders and how
the Board has discharged its duties having regard to the
provisions of the UK Corporate Governance Code is available
throughout this report and, in particular, in the stakeholder
engagement section on pages 56 and 57, and the corporate
governance report on pages 70 to 79.
61
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 PRINCIPAL RISKS AND UNCERTAINTIES
Understanding and responding to risk
In the current environment an effective
and robust risk management process
is integral to our ability to achieve
our strategic priorities. Our success is
underpinned by our ability to identify,
manage and mitigate risk within
our business.
We understand that risk naturally arises from operational
and strategic decisions taken throughout the Group. It is
not something that we can avoid but it needs to be actively
managed and harnessed in pursuit of our business objectives.
The Board has ultimate responsibility for risk management
throughout the Group and determines the nature and extent
of the risks we are willing to take.
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.
Risk is managed proactively by the Executive Committee.
Our individual business units complete an annual review of
the risks relevant to the achievement of their strategic goals,
while also taking into account key operational risks, which
are updated regularly.
A robust top-down risk assessment is completed to capture
Board and Executive Committee views on the principal
risks facing the Group and our related risk appetite.
This enables us to keep up to date with changes in our risk
profile and adapt as necessary. Actions required to manage
these risks are monitored and reviewed on a regular basis.
Risk identification
We place high importance on the continual development and
versatility of our risk management process. This ensures that
we are able to effectively identify and evaluate risks which
may affect our ability to achieve our objectives and strategy,
and then introduce mitigations to reduce these to an
acceptable level.
Under revised working practices we have implemented
a new risk working group which takes feeds from across
the business, evaluates findings, and reports these directly to the
Executive and Audit Committees. All principal risks are assigned
to a member of the Executive Committee and this, combined
with our robust three lines of defence model, helps to reinforce
a tone of accountability throughout the business. Internal audit
construct a risk-based work plan aligned to the principal risk
register to provide assurance over our highest risk activities.
Risk appetite
Risk appetite is defined as the level of risk we are willing to
accept in pursuit of our strategic priorities. The level of risk
acceptable for principal and emerging risks is assessed
on an annual basis by the Executive Committee and Board
members who define their risk appetite against key indicators
including potential impact of risk, likelihood of risk and ability
to reduce risk through mitigation. This ensures alignment
between our view of acceptable risk exposure and the
strategic priorities of the Group.
62
The Executive Committee communicates the appetite for risk
to embed this within our ways of working. Risk appetite is
considered when making strategic or operational decisions
over new opportunities for the Group.
Emerging risks
Emerging risks are those which, while not immediate, have the
potential to materialise over a longer period of time causing
a significant impact on our business.
Emerging risks may be new risks not previously identified, or
changes to existing risks that are currently difficult to quantify.
In order to identify emerging risks at the earliest opportunity,
risk themes and trends from industry and professional bodies,
and peer networks, are collated and reviewed at least annually
by the Executive Committee and managed through the risk
management framework as appropriate.
The collective area of environmental, social and governance
(ESG) risk is considered an emerging risk for the Group.
Key topics include the impacts of climate change,
environmental management, working conditions, and
compliance with relevant laws and regulations. Recent years
have seen growing pressure and scrutiny across all sectors
from customers, investors and Governments for businesses to
behave in an increasingly sustainable manner, and to be more
transparent in doing so. For Whitbread this means increased
consideration as to how we can effectively and safely reduce
water and energy usage, including sustainability targets when
building and refurbishing properties, and maximising our
reduction of single-use plastics across sites. We are also
working towards publishing our first TCFD report on schedule
in 2022 with many of the recommendations already in practice
across the business see page 51 for details.
The last year has also highlighted the importance of social
justice both within our immediate reach and on a global
scale. We have an established diversity and inclusion
programme with working groups meeting regularly to
highlight any achievements or areas for improvement and
providing routine updates to the wider business in order to
ensure that these issues are at the forefront of our thinking
and embedded within our working practices.
COVID-19 response
COVID-19 has caused significant disruption to the operations
and trading activities of the Group. Through remaining alert
and responsive to the pandemic situation, both in the UK and
overseas, we have worked to minimise impact and mitigate
associated risk while at all times keeping the safety of our
teams and guests firmly at the forefront of our thinking.
Throughout the year we have had limited trading, having
temporarily closed and subsequently reopened our hotels
and restaurants numerous times and are still operation under
Government trading restrictions in both the UK and Germany.
Across the business we work tirelessly to make sure that we are
following up-to-date Government and best practice guidance,
providing safety and peace of mind to our guests and staff at
all times. Sites have robust existing hygiene standards that go
above and beyond Government requirements and we have
integrated COVID-19 standards into our regular health and
safety monitoring to ensure continued compliance. We have
updated our Support Centre sites to provide a COVID secure
workplace for those needing to work from the office.
When Government restrictions are removed, there is a risk of
supply chain disruption, especially around key product lines as
demand exceeds supply. This could result in potential delays
or inflationary pressures to secure products.
Whitbread Annual Report and Accounts 2020/21 From a business perspective we have taken swift and decisive
action, cutting all discretionary P&L spend, and restructuring
head office and site level operations to create a lower cost
base and more flexible operating model. Government support
has been utilised where applicable, such as the Coronavirus
Job Retention Scheme (‘furlough’), Eat Out to Help Out and
business rates holiday in the UK, and Kurzarbeit in Germany.
We have sought to strengthen our balance sheet. We have
extended and amended our revolving credit facility to
September 2023, securing covenant waivers until March 2023
at which point new flexed targets will be tested for leverage
and interest cover that taper down across the remaining
tenure. We have also issued Green Bonds of seven- and
ten-year duration which have no financial covenants, and have
repaid our 2017 dated US private placement notes. We have
similar waivers in place for an existing EBITDA-related
covenant with the pension scheme to March 2022. At this test
date if this covenant was breached Whitbread would be
required to make whole the secondary funding target deficit.
Despite the measures we have taken, the impact of the
COVID-19 pandemic on the global economy and the operating
activities of many businesses have resulted in a climate of
considerable economic uncertainty. It is therefore unclear as
to when our market, the business and its financial performance
will return to its pre-pandemic position.
We are closely following Government announcements
regarding reopening dates for hospitality in all our markets
and developing plans to align with these, while being mindful
that there is no certainty that these dates will not change.
There is a risk that there may be depressed demand for some
time and consumers may be reticent initially to return to public
spaces such as pubs, restaurants and hotels. This may also
include our team members, some of whom have been on
furlough for a significant period of time.
We recognise that going forward as COVID-19 mutates and
new variants emerge it is likely that the virus will become more
endemic in nature. We are confident in our ability to safely and
efficiently close and open sites as required, provide enhanced
communications and safety procedures, and our new flexible
resilient business model. We will harness the lessons learned
in the past year as we continue to navigate and evaluate the
ongoing impact of COVID-19, working to identify and mitigate
associated risks such as the structural shifts detailed in the
principal risk table that follows at the earliest opportunity.
It is this ability that will allow us to remain a resilient business
best placed to achieve our strategic goals.
Current COVID-19 associated risks and mitigations are
included within the principal risks table overleaf.
UK withdrawal from the European Union
The UK exited the EU on 31 January 2020 (‘Brexit’).
The influence of COVID-19 on current trading and operational
conditions means that the true impact of Brexit is unlikely
to have been realised at this point, including the impact on
restricted access to European labour resources, inflation and
the supply of goods. We anticipate that as sites reopen and
operational demand returns to normal there is likely to be an
increase in the Group’s logistical and administrative burden.
We have been proactive in seeking to address this early by
setting up a new warehouse in Germany giving us the option
to route products used for construction and operation of
hotels directly into the German market rather than via the UK.
Warehousing and local suppliers of food and drink produce
and consumables have also been sourced in Ireland and
Northern Ireland to help minimise delays and administrative
burden caused by additional requirements when exporting
from the UK.
RISK MANAGEMENT FRAMEWORK
BOARD
AUDIT COMMITTEE
I
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N
O
T
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S
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D
N
A
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R
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P
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T
N
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M
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G
A
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M
K
S
R
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Accountable for strategic risk management,
including the assessment of risk appetite, and
ensuring a sound system of internal control and
risk management is in place
Oversight and challenge of the
effectiveness of risk management and
mitigating controls
Read more – pages 72 and 73
Read more – pages 80 to 84
EXECUTIVE COMMITTEE
INTERNAL AUDIT
Review, challenge and approval of Group risks
Coordination and analysis
Read more – page 74
Read more – pages 82 to 83
I
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S
N
O
T
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U
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M
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N
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H
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63
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
PRINCIPAL RISKS
Strategic
priorities Risk
Pandemic
Reoccurring waves of COVID-19
infection with local or national
lockdowns, a move towards a more
endemic nature of the COVID-19 virus
with continued social distancing
measures and annual vaccinations,
or any new pandemic such events
could impact health and safety risks
to guests and employees. Increased risk
of greater tax burden following the end
of Government support packages.
Risk of longer-term decline in returns
and cash flow, pressures on Whitbread’s
balance sheet, including the value
of Whitbread’s property assets, the
revolving credit facility covenants tests,
requiring us to extend existing waivers
or arrange alternative funding, and the
pension covenant test requiring us to
extend existing waivers or make whole
the Pension funds secondary funding
target deficit.
Movement
vs prior
year
Risk
appetite Key mitigations
N/A
› Safeguarding our guests and team members is our
priority, with COVID-secure standards and related
training programmes implemented across all brands
along with regular monitoring to ensure compliance
with Government guidelines.
› We continue to optimise Government support packages,
taking advantage of the business rates holiday which has
saved the business c£120m in the year and will save c£40m
in the year ahead. We still have employees in the UK on
temporary furlough and have similar support available
in Germany under the Kurzarbeit scheme.
› We perform extensive scenario modelling to assess the
impact of the pandemic changes on our financial facilities,
borrowing costs and balance sheet. This allows us to make
informed decisions ahead of time to maintain headroom.
› Rigorous capital and cost controls are in place across the
business to ensure we can react to the level of demand in
the market.
› We have retained good liquidity through a rights issue in
June 2020, the issuance of a Green Bond in February 2021
and the extension to our revolving credit facility. Where our
financing arrangements contain financial covenants we have
obtained extended waivers, including with our pension fund,
as detailed above.
› No dividend has been declared in order to retain cash and
as a requirement of the financing covenant waivers.
Worsening economic climate
The continued economic decline in the
UK and Germany, including the impact
from Brexit, resulting in prolonged
downturn in demand, public and
consumer confidence, an increase in
cost base inflation and supply chain
disruption. In order to fund the potential
declining cash flows there would be
an increasing quantum and cost of
borrowing resulting in strain on our
balance sheet strength.
Increased
due to
economic
uncertainty
and
disruption
caused by
COVID-19.
N/A
› There is a rigorous business planning process in place which
considers many scenarios with appropriate responses.
› We have updated our supplier base to include more local
suppliers and opened new warehousing in Germany to
minimise supply chain disruption.
› We continue to make good progress with our
efficiency programme with discretionary spend and maintain
rigorous discipline over our capital and cost spend in the UK.
› We currently have a strong balance sheet with substantial
liquidity and a large freehold property base giving us the
option to enter into sale and leaseback agreements
if required.
Cyber and data security
Cyber and data security remains a key
risk as technology and third-party
cloud-based services continue to be
subject to the threat of cyber attacks.
A data breach or attack resulting in
operational disruption could reduce the
effectiveness of our systems. This in
turn could result in loss of income, loss
of financial, customer or employee data,
fines and/or reputational damage.
Low
› We have a specialist team and robust Information Security
Management in place with a wide range of proactive and
reactive security controls including up-to-date anti-virus
software across the estate, network/system monitoring and
regular penetration testing to identify vulnerabilities.
› A continuous security improvement programme is in place
with regular internal and independent external review of
control effectiveness and Information Security maturity.
› Our mature risk process and proactive threat modelling and
monitoring allow us to identify and address threats at the
earliest opportunity.
› We have solid compliance foundations across all countries
for data protection and effective collaboration between
Information Security and Data Protection teams to minimise
data risks and ensure compliance with GDPR.
1
2
3
1
2
3
64
Whitbread Annual Report and Accounts 2020/21 Strategic priorities
Movement vs prior year
1
2
3
Innovate and grow in our core UK businesses
Focus on our strengths to grow internationally
Enhance our capability to support long-term growth
Lower
Higher
Level
Strategic
priorities Risk
Movement
vs prior
year
Risk
appetite Key mitigations
1
2
3
2
1
2
3
New risk
N/A
Structural shifts
Following the lockdowns in the UK
and Germany and across the rest of the
world, there is uncertainty as to the
permanent or long-term structural shift
in working practices and reduction in
international travel. The pandemic has
accelerated the decline of retail with
a shift to online shopping resulting
in a change to demand led occasions
for travel and hotel stays. All of these
factors will potentially have a combined
negative impact on returns, cash flow,
and property asset valuations
particularly of sites located in
metropolitan areas.
› We perform extensive scenario modelling allowing us
to assess the impact of various structural shifts on the
business and enabling us to make informed decisions
going forward.
› To help offset potential structural shifts we are targeting
new customers and new distribution partners, such as
Travel Management Companies, and continually improving
our digital marketing to both leisure and business to
business customers.
› We are continually optimising the customer proposition
around our estate, upgrading rooms and churning suboptimal
sites. We are also taking a cautious approach to further
expansion, beyond our existing pipeline, slowing signing of
new sites in the UK until the environment is more certain, with
our focus shifting to lower-risk market share trading initiatives.
Germany growth
The risk is that international expansion
in Germany is impacted by a prolonged
downturn in the German economic
climate or a failure to achieve our
market growth, or cost assumptions
making it harder to achieve a level of
return in a time frame that satisfies
shareholder and analyst expectations.
There is some counterbalance identified
within the risk created by increased
opportunity to acquire sites due to
competitor weakness.
Increased
due to the
quantum
of capital
committed
and the
German
economic
climate/
COVID-19
High
› We are able to use the deep level of skills and experience
used to build the UK business, coupled with our strong
development team in country who are able to perform
detailed and ongoing assessments of the German
market and economic fundamentals at both a micro
and macro level.
› Focus is on developing our strong organic and mergers
and acquisitions (M&A) pipelines and reducing capital costs
through better buying power and harnessing efficiencies and
synergies with the UK business.
› A monthly Executive Meeting reviews the German business
in detail, including financial performance, customer feedback,
marketing and operations, and people, capital and
property plans.
Change delivery
The risk that we are unable to
successfully deliver major projects
particularly under time bound pressures
and realise benefits due to high volume
of change. This particularly refers to the
replacement of the legacy CRM system
in the next few years, other commercial
and IT transformation programmes, and
German expansion while embedding
new teams and ways of working.
Increased
due to
criticality of
changes for
this year
High
› To help ensure the successful delivery of change projects
we have 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.
› We have delivered a series of projects relating to the changes
required to separate Costa from Whitbread and technical
infrastructure moving on to new cloud services for our
financial systems. In addition we have managed agile and
efficient implementation of all the operational changes
required during the pandemic.
65
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Strategic
priorities Risk
Movement
vs prior
year
Risk
appetite Key mitigations
Leadership, succession and talent
hot spots
Decline in desirability of careers in the
hospitality industry due to the impact
of COVID-19 and transferability of
functional expertise, especially in
the IT and digital areas, could lead to
a potential reduction in our talent pool
and low levels of diversity in the senior
leadership team.
Increased
due to
internal
restructures
and the
potential
difficulties
in attracting
talent into
hospitality
in current
climate.
Third-party arrangements
Whitbread has several key supplier
relationships that help ensure the
efficient delivery of our multi-site and
Support Centre operations, including IT,
food and beverage, distribution and
laundry services. Withdrawal of services
for one or more of these suppliers or
provision of services below acceptable
standards, or reputational damage
as a result of unethical supplier
practices could cause significant
business interruption.
Health and safety
Adverse publicity and brand damage
due to death or serious injury as a result
of company negligence or a significant
incident resulting from food, fire or
another safety failure. This could be
due to a failure in safety standards,
building standards, supply chain
provenance, responsible sourcing
or poor hygiene standards.
Terrorism
Actual or threat of death or injury to
customers, employees or suppliers and
the consequent impact of a sudden or
prolonged downturn in demand in key
markets and locations due to being
directly targeted.
Medium › The success of our businesses would not be possible without
the passion and commitment of our teams.
› Team engagement is fundamental. We monitor this closely
through our annual engagement survey and invest in
ongoing development, wellbeing and engagement through
programmes such as ‘Leading in an inclusive world’.
› Team retention is a key component of our WINcard and
Annual Incentive Scheme with long-term incentive schemes
in place for senior team members and ongoing reviews
of high-risk areas such as IT and digital remuneration.
› We are working to recruit new resource directly, scaling up
employer brand proof points, leveraging social media where
appropriate and ensuring we access all Government schemes
to bridge displaced or disadvantaged people with
opportunities across our operations.
› We champion inclusivity across the organisation and are
looking to improve diversity. We have eight commitments
designed to drive greater diversity through our recruitment
and talent management, and to promote an even more
inclusive environment through continuing education and
sponsorship of relevant networks and forums.
Medium › 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 through our supplier
management arrangements.
Low
› The safety of our guests and employees is of paramount
importance. NSF, an independent company, undertakes
unannounced health and safety audits on sites covering food,
fire, COVID-19 and general health and safety requirements.
› We have robust fire safety policies, procedures, and
fire safety training for our team members. In addition,
we work closely with C.S. Todd & Associates Ltd, independent
fire safety consultants, regarding fire safety in our hotels.
› We have stringent food safety and sourcing policies with
robust traceability and testing requirements in place in
respect of meat and other products. We invest considerable
resources in employee training along with allergen
information which is also made easily accessible both online
and at sites.
› 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 Risk Working Group, the
Executive Committee and the Board.
N/A
› The safety and security of our customers, employees
and suppliers is of utmost importance. Failure to
prevent or respond to a major safety or security incident
could adversely impact our operations and financial
performance. We invest in ongoing 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 holds crisis management exercises
to ensure we are prepared for such events.
1
2
3
1
2
3
1
2
3
66
Whitbread Annual Report and Accounts 2020/21 Viability statement
The COVID-19 pandemic has resulted in the worst period
of trading for the travel and hospitality sector over the last
50 years. However, the Group’s conservative financial position
prior to the pandemic left it in a good position to manage
the challenging times. This position has allowed the Group
to agree covenant waivers and raise finance through both the
equity and investment grade credit markets. The impact of
the pandemic will cause structural changes in the leisure and
hospitality industry and the actions taken during the year put
the Group in a strong position.
The UK Corporate Governance Code 2018 requires that the
directors have considered the viability of the Group over an
appropriate period of time selected by them. The business
planning process reviewed by the Board, as part of the
strategic planning process, is over a three- and five-year
timeline, with the Board acknowledging that in a COVID-19
environment the certainty of those plans, the potential
fluctuations in the global economy, the impact on competitors
and customer behaviour in a post-COVID-19 world is far from
certain. Multiple scenarios were modelled through the process
and were reviewed by the Board.
The directors, in making the assessment that three years was
appropriate, considered the current financial and operational
position of the Group and carried out a robust assessment
of the principal risks and uncertainties facing the Group as
outlined on pages 62 to 66 of the Annual Report, focusing
specifically on the impact of COVID-19 and the future
performance, solvency and liquidity of the Group. In particular,
for the purposes of the viability assessment, the directors
considered a severe but plausible case scenario in which the
UK remains in lockdown for longer than the Government’s
current roadmap, further Government restrictions are placed
on the hospitality sector in winter 2021/22 and the Group
trading does not return to 2019/20 levels until 2023/24.
In the event the other risks and uncertainties identified
materialise independently of a pandemic, the Group would
retain sufficient liquidity throughout. Should the impacts of the
pandemic on trading conditions result in a severe but plausible
case scenario, or a combination of the severe but plausible
pandemic scenario and any of the other risks materialise
together, this viability statement would be dependent on
the Group’s ability to access additional liquidity.
Detailed consideration was given to the financing actions that
could be taken, noting the positive outcome of those actions
taken during the current year and the potential to raise finance
through the Group’s freehold properties. The directors believe
it is reasonable to expect that the Group would have access
to further financing and/or the ability to agree further
covenant amendments.
The business’s long-term strategy for value creation in the
UK and internationally remains unchanged. The combination
of compelling structural opportunities and the advantages
of our unique operating model should enable the business to
outperform in the UK and take market share and to capitalise
on the material growth opportunity in Germany. These strong
fundamentals, combined with an appropriate capital structure,
should drive long-term value.
Based upon this assessment, the directors confirm that they
have reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
over the three-year assessment period.
Longer-term prospects
The sections Market Review and Our Business Model in the
strategic report describe how the Board has positioned the
Group to take advantage of the growth opportunities in the
markets in which the business operates and how the Company
is positioned to create value for shareholders, over the longer
term, taking account of the risks described in this section of
the Annual Report.
The strategic report on pages 1 to 67
was approved by the Board and
signed on its behalf by Chris Vaughan,
General Counsel on 26 April 2021.
67
Strategic reportGovernanceFinancial statementsOther informationWhitbread Annual Report and Accounts 2020/21 CHAIRMAN’S INTRODUCTION TO CORPORATE GOVERNANCE
A strong governance structure
COVID-19 response
Since the World Health Organisation declared the COVID-19
virus a pandemic back in March 2020, the hospitality industry
has been presented with a unique set of challenges. During this
time, we have taken a number of steps to ensure the safety of
our customers and employees, while also supporting and
leading management as they seek to make rapid decisions
in an uncertain and challenging time in the industry.
It was important to the Board that the decisions made during
this time aligned with the Company’s purpose and values while
also supporting our long-term growth strategy and practising
good governance. In particular the Board closely reviewed
health and safety arrangements for teams and guests and
had a close involvement in the rights issue, the Green Bonds
issuance, changes to Whitbread's revolving credit facilities
and negotiations with the pension fund Trustee. The Executive
Committee began meeting daily by video conference and
twice a month for more formal meetings, also via video
conference. This ensured we were available to respond rapidly
to the ever-changing restrictions issued by the UK Government
at its daily press briefings. The Board was provided with
regular updates following these meetings.
In addition to this, the Company established the COVID-19
Working Group to ensure the effective operation of our
business within the constraints of the restrictions issued in the
UK and Ireland. The party consists of representatives from all
functions of the business and meets on a weekly basis.
The swift response from our Board, Executive Committee and
management team demonstrate the strength of the Group's
strategy, risk management and leadership, while also providing
an insight of our dedication to maintaining strong governance.
Further information on our overall response to the COVID-19
pandemic can be found on pages 4 and 5.
Our strong governance framework
The Board's primary objective is to create and maintain
a strong governance structure in order to support the long-
term success of the business and also generate lasting value
for all our stakeholders. At Whitbread, we are committed to
ensuring the Company's actions are in keeping with our culture,
values and strategic goals. This is achieved by understanding
the critical role that strong corporate governance plays.
In last year’s corporate governance report we provided our first
full review on our compliance with the 2018 Code. The new code
provided the Board with an opportunity to reassess what good
corporate governance meant to us and provides a new standard
against which we measure ourselves. We continue to focus our
governance on complying with the new provisions and applying
the new principles introduced in this code. We hope to
demonstrate throughout this report the Board’s emphasis on
issues such as Company purpose, culture, strategy and the
relationships with shareholders and stakeholders.
With the exception of one provision, which is explained in more
detail below, I am pleased to report that we have complied with
the Code throughout the 2020/21 financial year. In the pages
that follow we have set out how we have complied with the
principles set out in the Code.
ADAM CROZIER
CHAIRMAN
I am pleased to present the Board’s
report on the Company’s compliance
with the UK Corporate Governance
Code. This year has been an extremely
uncertain period as a result of the
COVID-19 pandemic. The Board
remains committed and focused on
driving forward a strong corporate
governance framework, while
also taking the necessary steps to
successfully navigate Whitbread
through these unprecedented times.
68
Whitbread Annual Report and Accounts 2020/21 The one provision that we cannot report full compliance with
this year is the new provision requiring that pension contribution
rates for executive directors should be aligned with those
available to the workforce. As discussed in last year’s report,
we are taking steps to bring us closer in line. The remuneration
policy, approved in December 2019, is phasing the pension
contribution of current executive directors by 10% from 25% to
15% over a period of three years. The provision for new executive
directors was also reduced to 10%, which aligns with the
workforce. We are committed to aligning contribution rates
and will further review at the end of the policy period.
On 1 March 2021 the Board was pleased to welcome Fumbi
Chima and Kal Atwal as new independent non-executive
directors fulfilling the need recognised in last year’s Board
evaluation for technology and digital experience. Fumbi is
skilled in digital transformation strategy in high-growth
environments, with a great understanding of overall strategic
planning and technology. Kal has a substantial amount of
digital and marketing experience; she played a central part
in driving strategic growth and scaling of the business in her
previous role. Fumbi and Kal bring an invaluable mix of skills
and will provide a breadth of knowledge to the Board.
Further information on our executive pensions can be found in
the remuneration report on page 89.
Culture and purpose
Whitbread’s culture is underpinned by ensuring that our
customers have a great experience, which we call the
‘Customer Heartbeat’, comprising:
› Winning Teams;
› Profitable Growth;
› Force for Good; and
› Everyday Efficiency.
This aligns with our purpose of providing sustainable long-
term value for our shareholders while delivering a quality and
value for money hotel experience to our customers. We aim to
follow Whitbread’s key values of being genuine, confident and
committed to reach our goal of becoming the best budget
hotel business in the world. This is accomplished by ensuring
our teams are happy and engaged through training and
progression opportunities and by continuing to develop
our sustainability programme under Force for Good with
the intention of enabling everyone to live and work well.
The Board usually assesses and monitors the Company’s
culture by making regular visits to Whitbread’s hotels and
restaurants and taking the opportunity to meet and speak to
team members. Unfortunately, this has not been possible this
year but the Board is excited to get back into the business
when it's safe to do so. The Board relies on the regular reports
from the executive team, particularly the Chief Executive and
the Group HR Director, both of whom are members of the
Board. The Group HR Director provides input specifically on
employee issues, employee satisfaction surveys, which include
questions on culture, and reports from the Employee Forum.
Culture is also addressed at the strategy day, and through
recruitment decisions to senior positions, including for the new
HR Director, where cultural fit was discussed by the Board.
The Board has re-committed to the purpose as being fit for
the current environment. Regular reports are produced for the
Board by functions across the Group to enable the Board to
satisfy itself that the purpose its being met.
The Board
The Board is committed to regularly reviewing the skills,
experience and knowledge that it has in place as well as those
that can be added. It is part of the Nomination Committee’s
role to regularly review the structure, size and composition
of the Board. This helps ensure there is a balance of skills,
knowledge, independence and diversity around the table.
In April 2021, Susan Taylor Martin retired from the Board after
completing nine years. Deanna Oppenheimer also stepped
down from the Board in December 2020.
As a Board, we believe we have put in place a strong non-executive
team with a wide range of skills, knowledge and experience to
help assist the Company in pursuing its strategic objectives.
Board evaluation
It was highlighted in last year's Board evaluation that directors
wanted to focus on succession planning and diversifying
Board experience. As mentioned above, there was exciting
progress in this area with the appointment of two new
non-executive directors joining the Board in March. However,
succession planning has become less of a priority during the
exceptional year we have experienced.
The Board and its main committees participated in an internal
evaluation during the current year. The results of the review
have produced some opportunities for improvement, and
a refocus of recommendations made in last year's evaluation:
› Further focus on succession planning for the CEO, executive
directors and wider senior leadership teams.
› Emphasis on training and development.
› Evolving the strategy for a post-COVID world and
exploration of how technology can be used to support this.
Overall, the results were very positive. They were reported to
the Board by the Company Secretary in March and discussed
thoroughly to ensure a full understanding.
Further information on the Board evaluation and areas for
focus in the year ahead can be found on page 76.
Our stakeholders
The Board has always ensured that it considers the impact of its
decisions on all our various stakeholders, but even more so now
following the recent focus on s172. It is important to understand
the views of our stakeholders in order to build constructive
relationships. For example, we consider the views of our wider
workforce through the use of the Whitbread Employee Forum
and 'Our Voice' representatives which gives our employees
an opportunity to shape strategic plans and major decisions.
In addition to this, as Chairman I hold governance meetings
each year with major shareholders to listen to their views and
any issues they may have.
Further information on our stakeholder engagement can be
found on pages 56 and 57.
Adam Crozier
Chairman
26 April 2021
69
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information CHAIRMAN’S INTRODUCTION TO CORPORATE GOVERNANCE
The UK Corporate
Governance Code 2018
The UK Corporate Governance Code
2018 is the standard against which we
measure ourselves. It is issued by the
Financial Reporting Council (FRC) and
is available to view on their website,
www.frc.org.uk
Further information on our compliance
with the Code can be found in the
table below:
Section 1: Board leadership and company purpose
See page
Section 3: Composition, succession and evaluation
See page
A Effective and entrepreneurial board to promote
the long-term sustainable success of the
company, generating value for shareholders
and contributing to wider society
B Purpose, values and strategy with alignment
to culture
C Resources for the company to meet its
objectives and measure performance.
Controls framework for management and
assessment of risks
D Effective engagement with shareholders and
stakeholders
E Consistency of workforce policies and practices
to support long-term sustainable success
Chairman’s statement
Strategic report
Board engagement with key stakeholders
Shareholder engagement
Audit Committee report
Conflicts of interest
Section 2: Division of responsibilities
F Leadership of board by chair
G Board composition and responsibilities
H Role of non-executive directors
I Company secretary, policies, processes,
information, time and resources
Board composition
Key roles and responsibilities
Information and training
J Board appointments and succession plans for
board and senior management and promotion
of diversity
K Skills, experience and knowledge of board
and length of service of board as a whole
L Annual evaluation of board and directors
and demonstration of whether each director
continues to contribute effectively
Board appointments and succession planning
87
Board composition
Diversity, tenure and experience
Board, Committee and director
performance evaluation
72 and 73
72 to 77
76
Nomination Committee report
85 to 87
Section 4: Audit, risk and internal control
See page
M Independence and effectiveness of internal
and external audit functions and integrity
of financial and narrative statements
N Fair, balanced and understandable assessment
of the company’s position and prospects
O Risk management and internal control
framework and principal risks company
is willing to take to achieve its
long-term objectives
6 and 7
1 to 67
56 and
57
56 and
57
80 to 84
78
See page
Audit Committee report
Strategic report
Fair, balanced and understandable
annual report
Going concern basis of accounting
72 and 73
Viability statement
80 to 84
1 to 67
81
113
67
71
77
Section 5: Remuneration
See page
P Remuneration policies and practices to support
strategy and promote long-term sustainable
success with executive remuneration aligned
to company purpose and value
Q Procedure for executive remuneration, director
and senior management remuneration
R Authorisation of remuneration outcomes
Remuneration report
88 to 108
70
Whitbread Annual Report and Accounts 2020/21 Board responsibilities
The Board is responsible for the
long-term success of the Company
and ensures that there are effective
controls in place which enable risk to
be assessed and managed. All Board
members have responsibility for
strategy, performance, risk and people.
The Chairman and Chief Executive have clearly defined roles
which are separate and distinct. The specific duties and
division of responsibilities between the Chairman and Chief
Executive have been agreed by the Board and are set out
below, together with information on the roles of the Senior
Independent Director, the executive directors, the non-
executive directors and the Company Secretary.
CHAIRMAN
› Leadership of the Board and setting its agenda, including
approval of the Group’s strategy, business plans, annual
budget and key areas of business importance
› Maintaining appropriate contact with major shareholders
and ensuring that Board members understand their views
concerning the Company, especially on governance
CHIEF EXECUTIVE
› Optimising the performance of the Group
› Day-to-day operation of the business
› Reviewing and proposing strategy
› Ensuring effective communication with shareholders
and employees
› Ensuring a culture of openness and debate around the
› The creation of shareholder value by delivering profitable
Board table
growth and a good return on capital
› Leading the annual evaluation of the Board, the
› Ensuring the Company has a strong team of high-calibre
committees and individual directors
› Ensuring, through the General Counsel, that the members
of the Board receive accurate, timely and clear information
executives, and putting in place appropriate management
succession and development plans
› Leading and motivating a large workforce of people
SENIOR INDEPENDENT DIRECTOR
EXECUTIVE DIRECTORS
› The Senior Independent Director provides a sounding
› The executive directors are responsible for the day-to-day
board for the Chairman and supports him in the delivery
of his objectives. The Senior Independent Director is
available to shareholders if they have concerns which the
normal channels have failed to resolve, or which would be
inappropriate to raise with the Chairman or the executive
team. He also leads the annual evaluation of the Chairman
on behalf of the other directors.
› The Senior Independent Director can be contacted
directly or through the General Counsel.
running of the business and for implementing the
operational and strategic plans of the Company
NON-EXECUTIVE DIRECTORS
› The non-executive directors play a key role in
constructively challenging and scrutinising the
performance of the management of the Company
and helping to develop proposals on strategy
COMPANY SECRETARY
At Whitbread the General Counsel is also the Company
Secretary. The duties performed in the Company Secretary
element of his role include the following:
› Advising the Board on legal matters, corporate governance
and Board procedures
› Arranging and minuting the Board and committee
meetings
› Providing support to the Chairman, the Chief Executive
and the Board Committee Chairs
› Enabling and supporting communication between
directors and senior management to the Board
and committees
71
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information BOARD OF DIRECTORS
We believe that it is vital for the Board to include a diverse range of skills,
backgrounds and experiences, to enable a broad evaluation of all matters considered
and to contribute to a positive culture of mutual respect and constructive challenge.
The mix of skills and experience represented on the Board is outlined below.
ADAM CROZIER
CHAIRMAN
N R
ALISON BRITTAIN
CHIEF EXECUTIVE
NICHOLAS CADBURY
GROUP FINANCE DIRECTOR
CHRIS KENNEDY
A N
KAL ATWAL
N R
DAVID ATKINS
A N R
INDEPENDENT NON-EXECUTIVE DIRECTOR
INDEPENDENT NON-EXECUTIVE DIRECTOR
INDEPENDENT NON-EXECUTIVE DIRECTOR
Date of appointment to the Board: April 2017
Date of appointment as Chairman: March 2018
Date of appointment to the Board: September 2015
Date of appointment to the Board: November 2012
Date of appointment to the Board: March 2016
Date of appointment to the Board: March 2021
Date of appointment to the Board: January 2017
Age: 57
Experience:
Age: 56
Experience:
Age: 55
Experience:
Age: 57
Experience:
Age: 49
Experience:
Age: 55
Experience:
Adam was Chief Executive of ITV plc from
2010 to 2017. Prior to that, Adam was former
Joint Chief Executive of Saatchi & Saatchi, Chief
Executive of the Football Association and then
Royal Mail Group. From 2017 to March 2020, Adam
was Chairman of Vue International, a multi-national
cinema company. From 2017 to March 2020, Adam
was Chairman of Vue International, a multi-national
cinema company.
Alison joined Whitbread from Lloyds Banking Group,
where she was Group Director of the Retail Division,
with responsibility for the Lloyds, Halifax and Bank of
Scotland retail branch networks, remote/intermediary
channels/products and the business banking and
UK wealth businesses. Prior to joining Lloyds Bank,
Alison was executive director at Santander UK PLC.
She previously held senior roles at Barclays Bank, was
a Member of the Prime Minister's Advisory Group and
non-executive director of Marks & Spencer Plc. Alison
was named Business Woman of the Year 2017 in the
Veuve Cliquot awards and was awarded a CBE in the
2019 New Year Honours list.
Nicholas joined Whitbread in November 2012 as
Group Finance Director. He previously worked at
Dixons Retail PLC, in a variety of management roles,
including Chief Financial Officer from 2008 to 2011.
Nicholas also held the position of Chief Financial
Officer of Premier Farnell PLC, which he joined in
2011. Nicholas originally qualified as an accountant
with Price Waterhouse.
Chris is Chief Financial Officer of ITV plc, which he
Kal has over 13 years’ executive committee
David was Chief Executive and executive director
joined in February 2019. Prior to this, Chris held roles
experience at BGL Group Limited, where she played
of Hammerson plc from 2009 to December 2020,
with Micro Focus International plc, ARM Holdings plc,
a central role in driving the strategic growth and
former Chairman and executive board member of
and easyJet plc, having previously spent 17 years in
scaling of the business, in particular as the founding
the European Public Real Estate Association (EPRA)
a variety of senior roles at EMI.
managing director of comparethemarket.com. Kal
and past President and a former committee member
serves as a non-executive director of Royal London
of Revo (formerly BCSC).
Group, WH Smith plc and Admiral Financial Services
Ltd and was also Chair of SimplyCook prior to its sale
to Nestlé, where she remains as a Board Adviser.
External appointments:
External appointments:
External appointments:
External appointments:
External appointments:
External appointments:
› ASOS (Non-executive Chairman)
› Great Ormond Street Hospital Discovery
› Prince’s Trust Council (Deputy Chair)
› Experian PLC (non-executive Director)
› Land Securities Group PLC (non-executive director)
Appeal (Trustee)
› Kantar Group (Chairman)
› Sony Corporation (non-executive Director)
› ITV plc (Chief Financial Officer)
› The EMI Group Archive Trust (Trustee)
› Admiral Financial Services Ltd (non-executive director)
› British Property Federation (committee member)
› Royal London Group (non-executive director)
› Reading Real Estate Foundation (director
› Great Ormond Street Hospital Trust (Trustee)
› WH Smith PLC (non-executive director)
and Trustee)
› SimplyCook Ltd (Board Adviser)
› OCS Group Ltd (non-executive director)
LOUISE SMALLEY
GROUP HR DIRECTOR
RICHARD GILLINGWATER
SENIOR INDEPENDENT DIRECTOR
N R
FRANK FISKERS
INDEPENDENT NON-EXECUTIVE DIRECTOR
R A N
FUMBI CHIMA
A N
HORST BAIER
A N
INDEPENDENT NON-EXECUTIVE DIRECTOR
INDEPENDENT NON-EXECUTIVE DIRECTOR
Date of appointment to the Board:
November 2012
Date of appointment to the Board:
June 2018
Date of appointment to the Board:
February 2019
Date of appointment to the Board:
Date of appointment to the Board:
Age: 53
Experience:
Age: 64
Experience:
Age: 59
Experience:
Louise joined Whitbread in 1995 and has held the
position of Group HR Director since 2007. During her
time at Whitbread, Louise has held a variety of key
transformation and HR roles across the Whitbread
businesses, including HR Director of David Lloyd Leisure
and Whitbread Hotels & Restaurants. She previously
worked in the oil industry, with BP and Esso Petroleum.
Louise is an alumna of the Cambridge Institute of
Sustainability Leadership and has experience of
leading timely evolutions to sustainability strategies.
Richard is Chairman of both Janus Henderson plc and
SSE plc and serves as a Governor to the Wellcome
Trust. Richard is a highly experienced executive and
has spent much of his career in corporate finance
and investment banking with Kleinwort Benson,
BZW and Credit Suisse First Boston, before he
moved out of banking and became Chief Executive
of the Shareholder Executive, and then Dean of Cass
Business School.
Frank is a highly experienced executive with a solid
background in the global hospitality industry. He has
held senior roles with The Radisson Hotel Group and
Hilton Hotels Worldwide, and was CEO of Scandic
Hotels for eight years, taking the company public
in 2015.
External appointments:
External appointments:
External appointments:
External appointments:
External appointments:
› DS Smith Plc (non-executive director)
› Janus Henderson plc (Chairman)
› SSE PLC (Chairman)
› The Wellcome Trust (Chair of the Investment
› Shurgard Self Storage SA (non-executive director)
› EQT (Industrial Adviser)
› RAK Hospitality Holding LLC (non-executive
Committee)
director)
March 2021
Age: 46
Experience:
November 2019
Age: 64
Experience:
Fumbi is a Global Chief Information Officer, adept
Horst is a highly experienced executive with more
at digital transformation strategy in high-growth
than 20 years’ background in the leisure industry.
environments across a range of industries. Fumbi
He was for eight years the Chief Financial Officer
is currently Executive Vice-President and Chief
of TUI AG, the London-listed Anglo-German leisure
Information Officer at BECU, having previously served
travel group until the end of September 2018. During
as Chief Information Officer at adidas, Fox Network
his time as board member of TUI AG, Horst played
Group, Burberry, Walmart Asia’s business operations
an important role in TUI’s transformation from a tour
and American Express global corporate technologies.
operator to a global provider of holidays operating
380 leisure hotels and 17 cruise ships.
› BECU (Chief Information Officer and Executive
› Bayer AG (member of the supervisory board)
Vice-President)
› DIAKOVERE GmbH (member of the supervisory board)
› Africa Prudential (Independent Director)
› Ecclesia Holding GmbH (member of the
› Women at Risk International Foundation (director)
supervisory board)
› The Azek Company (board member)
› Hotel San Francisco S.A. (Consultant)
› Riu Family (Consultant)
72
BOARD EXPERIENCE
Consumer/retail
Travel and hospitality
Digital
Corporate transformation
Financial
International
Commercial property
People
Corporate social responsibility
Number of
directors
6
6
6
7
9
5
4
8
6
Whitbread Annual Report and Accounts 2020/21 Key
A Audit Committee
N Nomination Committee
R Remuneration Committee
Chairman
Committee member
ADAM CROZIER
CHAIRMAN
N R
ALISON BRITTAIN
CHIEF EXECUTIVE
NICHOLAS CADBURY
GROUP FINANCE DIRECTOR
CHRIS KENNEDY
INDEPENDENT NON-EXECUTIVE DIRECTOR
A N
KAL ATWAL
INDEPENDENT NON-EXECUTIVE DIRECTOR
N R
DAVID ATKINS
INDEPENDENT NON-EXECUTIVE DIRECTOR
A N R
Date of appointment to the Board: April 2017
Date of appointment as Chairman: March 2018
Date of appointment to the Board: September 2015
Date of appointment to the Board: November 2012
Date of appointment to the Board: March 2016
Date of appointment to the Board: March 2021
Date of appointment to the Board: January 2017
Age: 57
Experience:
Age: 56
Experience:
Age: 55
Experience:
Adam was Chief Executive of ITV plc from
2010 to 2017. Prior to that, Adam was former
Joint Chief Executive of Saatchi & Saatchi, Chief
Executive of the Football Association and then
Royal Mail Group. From 2017 to March 2020, Adam
was Chairman of Vue International, a multi-national
cinema company. From 2017 to March 2020, Adam
was Chairman of Vue International, a multi-national
cinema company.
Alison joined Whitbread from Lloyds Banking Group,
Nicholas joined Whitbread in November 2012 as
where she was Group Director of the Retail Division,
Group Finance Director. He previously worked at
with responsibility for the Lloyds, Halifax and Bank of
Dixons Retail PLC, in a variety of management roles,
Scotland retail branch networks, remote/intermediary
including Chief Financial Officer from 2008 to 2011.
channels/products and the business banking and
Nicholas also held the position of Chief Financial
UK wealth businesses. Prior to joining Lloyds Bank,
Officer of Premier Farnell PLC, which he joined in
Alison was executive director at Santander UK PLC.
2011. Nicholas originally qualified as an accountant
She previously held senior roles at Barclays Bank, was
with Price Waterhouse.
Age: 57
Experience:
Age: 49
Experience:
Age: 55
Experience:
Chris is Chief Financial Officer of ITV plc, which he
joined in February 2019. Prior to this, Chris held roles
with Micro Focus International plc, ARM Holdings plc,
and easyJet plc, having previously spent 17 years in
a variety of senior roles at EMI.
Kal has over 13 years’ executive committee
experience at BGL Group Limited, where she played
a central role in driving the strategic growth and
scaling of the business, in particular as the founding
managing director of comparethemarket.com. Kal
serves as a non-executive director of Royal London
Group, WH Smith plc and Admiral Financial Services
Ltd and was also Chair of SimplyCook prior to its sale
to Nestlé, where she remains as a Board Adviser.
David was Chief Executive and executive director
of Hammerson plc from 2009 to December 2020,
former Chairman and executive board member of
the European Public Real Estate Association (EPRA)
and past President and a former committee member
of Revo (formerly BCSC).
a Member of the Prime Minister's Advisory Group and
non-executive director of Marks & Spencer Plc. Alison
was named Business Woman of the Year 2017 in the
Veuve Cliquot awards and was awarded a CBE in the
2019 New Year Honours list.
External appointments:
External appointments:
External appointments:
External appointments:
External appointments:
External appointments:
› ASOS (Non-executive Chairman)
› Great Ormond Street Hospital Discovery
› Prince’s Trust Council (Deputy Chair)
› Experian PLC (non-executive Director)
› Land Securities Group PLC (non-executive director)
Appeal (Trustee)
› Kantar Group (Chairman)
› Sony Corporation (non-executive Director)
› ITV plc (Chief Financial Officer)
› The EMI Group Archive Trust (Trustee)
› Great Ormond Street Hospital Trust (Trustee)
› Admiral Financial Services Ltd (non-executive director)
› Royal London Group (non-executive director)
› WH Smith PLC (non-executive director)
› SimplyCook Ltd (Board Adviser)
› British Property Federation (committee member)
› Reading Real Estate Foundation (director
and Trustee)
› OCS Group Ltd (non-executive director)
LOUISE SMALLEY
GROUP HR DIRECTOR
RICHARD GILLINGWATER
N R
FRANK FISKERS
R A N
SENIOR INDEPENDENT DIRECTOR
INDEPENDENT NON-EXECUTIVE DIRECTOR
FUMBI CHIMA
INDEPENDENT NON-EXECUTIVE DIRECTOR
A N
HORST BAIER
INDEPENDENT NON-EXECUTIVE DIRECTOR
A N
Date of appointment to the Board:
Date of appointment to the Board:
Date of appointment to the Board:
November 2012
June 2018
February 2019
Date of appointment to the Board:
March 2021
Date of appointment to the Board:
November 2019
Age: 53
Experience:
Age: 64
Experience:
Age: 59
Experience:
Louise joined Whitbread in 1995 and has held the
Richard is Chairman of both Janus Henderson plc and
Frank is a highly experienced executive with a solid
position of Group HR Director since 2007. During her
SSE plc and serves as a Governor to the Wellcome
background in the global hospitality industry. He has
time at Whitbread, Louise has held a variety of key
Trust. Richard is a highly experienced executive and
held senior roles with The Radisson Hotel Group and
transformation and HR roles across the Whitbread
has spent much of his career in corporate finance
Hilton Hotels Worldwide, and was CEO of Scandic
businesses, including HR Director of David Lloyd Leisure
and investment banking with Kleinwort Benson,
Hotels for eight years, taking the company public
and Whitbread Hotels & Restaurants. She previously
BZW and Credit Suisse First Boston, before he
in 2015.
worked in the oil industry, with BP and Esso Petroleum.
moved out of banking and became Chief Executive
Louise is an alumna of the Cambridge Institute of
of the Shareholder Executive, and then Dean of Cass
Sustainability Leadership and has experience of
Business School.
leading timely evolutions to sustainability strategies.
Age: 46
Experience:
Age: 64
Experience:
Fumbi is a Global Chief Information Officer, adept
at digital transformation strategy in high-growth
environments across a range of industries. Fumbi
is currently Executive Vice-President and Chief
Information Officer at BECU, having previously served
as Chief Information Officer at adidas, Fox Network
Group, Burberry, Walmart Asia’s business operations
and American Express global corporate technologies.
Horst is a highly experienced executive with more
than 20 years’ background in the leisure industry.
He was for eight years the Chief Financial Officer
of TUI AG, the London-listed Anglo-German leisure
travel group until the end of September 2018. During
his time as board member of TUI AG, Horst played
an important role in TUI’s transformation from a tour
operator to a global provider of holidays operating
380 leisure hotels and 17 cruise ships.
External appointments:
External appointments:
External appointments:
External appointments:
External appointments:
› DS Smith Plc (non-executive director)
› Janus Henderson plc (Chairman)
› Shurgard Self Storage SA (non-executive director)
› BECU (Chief Information Officer and Executive
› SSE PLC (Chairman)
› EQT (Industrial Adviser)
› The Wellcome Trust (Chair of the Investment
› RAK Hospitality Holding LLC (non-executive
Committee)
director)
Vice-President)
› Africa Prudential (Independent Director)
› Women at Risk International Foundation (director)
› The Azek Company (board member)
› Bayer AG (member of the supervisory board)
› DIAKOVERE GmbH (member of the supervisory board)
› Ecclesia Holding GmbH (member of the
supervisory board)
› Hotel San Francisco S.A. (Consultant)
› Riu Family (Consultant)
BOARD EXPERIENCE
Consumer/retail
Travel and hospitality
Digital
Corporate transformation
Financial
International
Commercial property
People
Corporate social responsibility
Number of
directors
6
6
6
7
9
5
4
8
6
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74
ALISON BRITTAIN
CHIEF EXECUTIVE
The Executive Committee meets on a fortnightly basis and
is chaired by Alison Brittain
It has authority to manage the day-to-day operations of
the Group’s businesses, with the exception of those matters
reserved for the Board, within the financial limits set by
the Board.
The Committee’s responsibilities include:
NICHOLAS CADBURY
GROUP FINANCE DIRECTOR
›
formulation of strategy for recommendation to the Board;
› management of performance in accordance with strategy
and budgets;
› talent and succession;
› risk management;
LOUISE SMALLEY
GROUP HR DIRECTOR
› capital investment decisions (where Board approval is
not required);
› cost efficiency, procurement and organisational design;
› reputation and stakeholder management;
› culture, values and sustainability;
› health and safety; and
› customer engagement and product development.
Nigel Jones is responsible for managing Whitbread’s supply
chain, leading the overall Whitbread transformation plan and
the IT department.
Mark Anderson has led the property function since 2008 and
is responsible for Premier Inn Germany.
Simon Jones has led on key initiatives such as product
development, network planning, pricing and marketing.
Simon Ewins has accountability for Whitbread’s largest UK
businesses and represents a very large proportion of the
Whitbread workforce.
Chris Vaughan has been General Counsel since joining
the Company at the end of 2015. He is also the Company
Secretary and has responsibility for the Group's sustainability
programme, Force for Good.
Biographical details for Alison Brittain, Nicholas Cadbury and
Louise Smalley can be found on page 72.
CHRIS VAUGHAN
GENERAL COUNSEL
SIMON JONES
MANAGING DIRECTOR FOR
PREMIER INN AND RESTAURANTS
UK AND GLOBAL COMMERCIAL
DIRECTOR
NIGEL JONES
GROUP OPERATIONS DIRECTOR
SIMON EWINS
MANAGING DIRECTOR, UK HOTELS
& RESTAURANTS
MARK ANDERSON
MANAGING DIRECTOR, PROPERTY
AND INTERNATIONAL
Whitbread Annual Report and Accounts 2020/21 CORPORATE GOVERNANCE
Board activities during the year
In advance of each Board meeting,
a set of Board papers, including
monthly financial and trading reports,
is circulated so that directors have
sufficient time to review them and
arrive at the meeting fully prepared.
The Chairman meets with the non-executive directors
without the executive directors present after Board meetings.
The Senior Independent Director meets annually with all
non-executive directors to discuss the performance of the
Chairman. A review of the Board was carried out during
the year.
There is a schedule of matters reserved exclusively to the
Board; all other decisions are delegated to management.
Those matters reserved exclusively to the Board include:
› approval of Group financial statements and the preliminary
announcement of half- and full-year results;
› changes relating to the Group’s capital structure, strategy,
the annual budget and the Group’s business plan;
› approving capital projects, acquisitions and disposals valued
at over the limit set out in the matters reserved to the Board;
› approval of interim dividends and recommendation of final
dividends; and
› establishment of Board committees.
The Board has a rolling forward agenda which sets matters
to be considered throughout the year ahead. One full day
every year is dedicated to strategy. Following these sessions,
the Board agrees the significant topics to be discussed at
its meetings during the year. The rolling agenda is then
updated to ensure that there is a structured approach to the
consideration of topics and that recurring issues are evenly
spread across the calendar. The Board gives its attention to
each area of the business in turn so that a strong understanding
of the entire Company is maintained. The rolling agenda is
regularly reviewed and updated and is circulated as part
of the General Counsel’s report before each meeting.
The agenda for each Board meeting is agreed with the
Chairman and the Chief Executive so that current events and
potential future issues can be discussed alongside the regular
reports. Standard items for each meeting are a review of
progress on action points, reports from the Chief Executive,
the Group Finance Director, the Group HR Director, and the
General Counsel, and a KPI pack. The General Counsel keeps
minutes of the meetings and produces a list of agreed actions
for each meeting.
At the meetings during the year, the Board discharged its
responsibilities and considered a range of matters as shown
in the table at the bottom of this page.
Board processes and topics to be discussed are continually
reviewed to ensure that the correct focus is given to the key
issues highlighted at the strategy day.
BOARD AGENDA 2020/21
Standing agenda items
› Chief Executive’s report
› Group Finance Director’s report
› Health and safety report (quarterly)
› General Counsel’s report
› HR Director’s report
› Approval of capital projects
› KPI pack
Q1
Q2
Q3
Q4
› Rights issue and
› Strategy day
› Operational
› Approval of
year-end
documentation
› Risk management
and insurance
› Succession
planning
› Premier Inn
performance
› Group valuation
and defence
considerations
year-end investor
feedback
› Premier Inn &
Restaurants
opening plan
› Current operating
environment
› Support Centre
reorganisation
› Commercial and
technology plan
› COVID-19 update
› Risk management
› Employee Forum
› Rights issue
update
› Operational
reorganisation
› 2020/21 Interim
results
› Premier Inn &
Restaurants
opening
update
› HR Strategy –
diversity and
inclusion
› Talent succession
› Green Bond issue
› Revolving credit
› Sustainability
facilities
› US private
placement
repayment
› Pensions
› Brexit
› Capital structure
and financing
› German
acquisition
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BOARD PERFORMANCE
EVALUATION
An evaluation of the Board, its
committees, individual directors
and the Chairman is carried out each
year. An externally facilitated Board
evaluation was carried out by Ffion
Hague on behalf of Independent
Board Evaluation in 2019, so the last
two years have been carried out
internally. Next year there will
be an externally facilitated
Board evaluation.
2019/20 INTERNAL EVALUATION
The internal evaluation last year highlighted the following areas:
Areas identified for improvement
2019/20
Progress made
in 2020/21
Board agendas – consider reducing the
number of items to allow for detailed
discussions on all topics.
There has been some progress on this but,
in a busy year, there is still more work to
do and will continue to be a focus this year.
Succession planning and Board experience
– review succession plans for Chief Executive,
and consider non-executive directors with
specific food and beverage and technology
experience in the future.
There has been positive progress with two
new NEDs joining the Board in March and
this will continue to be a focus going
forward, for both the CEO and the wider
executive leadership team.
BOARD AND COMMITTEE
REVIEW CYCLE
External trends and competition – receive
more updates on what competitors are doing
and more consideration of external trends.
Progress has been made on this, and
information on competitors is now included
in the KPI packs and monthly updates.
Year 1
(Financial year 2018/19)
Externally facilitated review
Link between technology and strategy –
improve the Board’s knowledge on technology
and the associated risks, and more alignment
of technology with the Company’s strategy.
There has been some progress, but it has
been raised again this year and will therefore
continue to be a focus for the year ahead.
Year 2
(Financial year 2019/20)
Internal review
Year 3
(Financial year 2020/21)
Internal review
Risk management – integrate risk discussions
with core decision making more, and improve
the Board’s understanding of risks in relation
to major initiatives and how they will
be managed.
This is an area which will always be a focus,
and may change slightly this year now
there is a new head of risk management.
Remuneration – greater monitoring of
performance against targets through the year,
and consider further ways to engage with the
workforce on remuneration matters.
The COVID-19 pandemic has caused this
to be a challenge this year and made some
of the targets redundant. The Board will
continue to monitor this going forward.
2020/21 INTERNAL REVIEW
Method
During the year, the Board conducted
the annual evaluation of its performance
and that of its three committees by
using an online evaluation tool provided
by Independent Audit Limited, an
independent company which has no
other links to Whitbread or its directors.
Each director completed a questionnaire
in respect of the Board and the
respective committees for which they
were a member. The General Counsel
collated the responses of the
evaluation, along with benchmarking
data from other boards that had used
the same evaluation questionnaires,
and the Chairman received an
executive summary, highlighting the
key outcomes, as did each of the
Committee Chairs. Separate reports
were then presented to the Board
and each committee for discussion.
The Chairman and the General Counsel
discussed the feedback and developed
an action plan for each area of focus.
Progress will be reported back to
the Board.
Recommendations
Overall, the results of the review were
positive, with no major concerns raised.
Although there has been some progress
on the areas flagged in last year’s
evaluation, it’s no surprise that given
the exceptional year we’ve had and
considering that the Board’s focus has
mainly been on dealing with the issues
caused by the ongoing pandemic, some
of the same issues have been flagged
again this year.
The results combined with the
benchmarking data provided by
Independent Audit, make it clear that
the Board has a strong and open
culture, has developed a clear strategy
which works for the Company, and
there is a solid relationship between
the executive directors and the
non-executive directors.
The evaluation found relationships
and Board culture to be very strong.
The Board works well as a unit, is
well chaired, and culturally the non-
executive directors feel able to
contribute their views in a constructive
and collaborative environment.
Benchmarking data suggests that
the Board is highly effective and
performing ahead of benchmarked
FTSE companies.
The review did also identify some
opportunities for improvement in the
year ahead, including the following:
› Succession planning for the CEO,
EDs and wider senior leadership team
› A check in on the current strategy
and how it might need to be evolved
to address a post-COVID world
› Technology and how it can be used
to support strategy
› Training and development post-COVID
› Reducing Board agenda items and
shortening Board papers
We will report our progress on these
points in the 2021/22 Annual Report.
76
Whitbread Annual Report and Accounts 2020/21 Length of tenure of directors (years)
Board meetings and attendance
The Board generally holds regular scheduled meetings
during the year and on an ad hoc basis as and when required.
During the year, 12 Board meetings were held and four of these
were additional as a response to the COVID-19 pandemic.
The attendance at meetings by the directors is set out below.
Members of the executive team attended Board and
committee meetings as appropriate.
David Atkins
Kal Atwal
Horst Baier
Alison Brittain
Nicholas Cadbury
Audit
Committee
4/4
Nomination
Committee
2/2
Remuneration
Committee
6/6
Fumbi Chima
Adam Crozier
David Atkins
Horst Baier
Alison Brittain
Nicholas
Cadbury
Adam Crozier
Frank Fiskers
Richard
Gillingwater
Chris Kennedy
Susan Taylor
Martin1
Deana
Oppenheimer
Louise Smalley
Board
12/12
12/12
12/12
12/12
12/12
12/12
12/12
12/12
12/12
10/10
12/12
Richard Gillingwater
Frank Fiskers
Chris Kennedy
Louise Smalley
4/4
–
–
–
4/4
–
4/4
4/4
-
–
2/2
–
–
2/2
2/2
2/2
2/2
1/2
1/1
–
–
–
–
6/6
6/6
6/6
–
–
4/4
–
Training and development
Investor relations and market updates are presented to the
Board, together with regular updates from the business.
‘Deep dive’ sessions were held on certain issues to improve
knowledge, including:
› German mergers and acquisitions (M&A) opportunities;
› cyber security;
› diversity and inclusion;
4.4
5.7
0.1
1.5
0.1
3.3
2.1
2.3
5.2
8.6
8.6
1 The one Nomination Committee meeting Susan Taylor Martin could not attend
was due to a conflict with a previously arranged meeting.
› commercial and technology strategies and tactics; and
Insurance cover
The Company has appropriate directors’ and officers’ liability
insurance in place. In addition to this, the Company provides an
indemnity for directors against the costs of defending certain
legal proceedings and generating claims over and above those
covered by insurance. These are reviewed periodically.
Board and committees
It is believed that the Board and its committees have
the appropriate balance of skills, experience, diversity,
independence and knowledge of the Company to enable them
to discharge their responsibilities effectively. After assessing
independence against the Code, the Board considers all
non-executive directors to be independent in judgement
and character, and also considered the Chairman to be
independent on appointment.
During the year, there have been a number of changes to the
Board. Deanna Oppenheimer stepped down from the Board
on 31 December 2020 to rebalance and spend more time
in North America, in light of the COVID-19 pandemic.
Fumbi Chima and Kal Atwal were appointed to the Board
on 1 March 2021 as independent non-executive directors.
Commitment
During the year all directors, including the non-executive
directors, committed significant additional time to the
Company, beyond that specified in their service contracts and
letters of appointment, in order to deal with exceptional items
such as the rights issue and the bond issue. On behalf of the
Board, the Nomination Committee has reviewed the extent
of other interests of the non-executive directors. The Board
is satisfied that the Chairman and each of the non-executive
directors commit sufficient time to their duties and fulfil
their obligations to the Company. No executive director
has taken on more than one non-executive directorship
in a FTSE 100 company.
›
information and security.
In addition, directors attend external training events to update
their skills and knowledge. This year directors have undertaken
training on a number of issues, including:
› climate change;
› environmental, social and governance;
› audit practice;
› remuneration developments
›
inclusive leadership; and
› governance.
All directors have access to independent professional advice
at the Company’s expense. Directors serving on the Board
and committees confirmed that they were satisfied that they
received sufficient resources to enable them to undertake
their duties effectively. Each director has access to the
General Counsel for advice on governance.
The General Counsel prepares a monthly report that
includes updates on secretariat and legal matters, along
with governance, compliance and insurance. This report
is presented and discussed at each Board meeting.
Induction process
On appointment, all directors receive a full and formal
induction that is tailored to their specific needs.
Fumbi Chima and Kal Atwal joined the Board as non-executive
directors in March 2021. As part of their induction, they had
meetings with a number of senior leaders from across the
business to get a better understanding of how the Company
is run, including the following:
› Chairman;
› Chief Executive;
77
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› Group Finance Director;
› Group HR Director;
› General Counsel;
› Group Operations Director;
› Managing Director, Property and International;
› Managing Director, Premier Inn and Restaurants UK; and
› Director of Investor Relations and Director of Secretariat
and Insurance.
Meetings were also held with Deloitte, the Company's auditor,
PwC as remuneration consultant and the Company's brokers.
Once we are post COVID-19, Fumbi and Kal will have an
introduction into the business by visiting our hotels and
restaurants around the UK and Germany to get to know the
different aspects of the Company.
Conflicts of interest
Directors are required to disclose any conflicts of interest
immediately as and when they arise throughout the year.
In addition, a formal process is undertaken in January each year
when all directors confirm to the Board details of their external
interests, including any other directorships which they hold.
These are assessed by the Board to determine whether the
director’s ability to act in the best interests of the Company
could be compromised. If there are no such potential or actual
conflicts, the external interests are authorised by the Board.
All authorisations are for a period of 12 months. No director
is counted as part of a quorum in respect of the authorisation
of his or her own conflict. It is recognised that all organisations
are potential customers of Whitbread and, in view of this, the
Board authorises all directors’ current external directorships.
The Board also assesses the commitments of all the directors
to ensure they have sufficient time to dedicate to Whitbread.
Privacy
Our data protection policies, guidelines and processes set
a globally applicable privacy and security standard for the
Company and regulate the sharing of information both
internally and externally. During the year, various privacy
enhancements were made to business processes and systems
to ensure the requirements of the General Data Protection
Regulation (GDPR) were met. Our data protection steering
group will continue to drive awareness and monitor GDPR
compliance through ongoing training and governance.
Anti-corruption and anti-bribery
Whitbread is strongly opposed to any form of corruption
and bribery. We recognise that it impacts societies in many
negative ways. Our reputation is built on trust: the trust of
our customers, our people, our partners and suppliers, our
investors and the communities we serve. Our anti-corruption
and anti-bribery policies apply our strict standards worldwide
and are reinforced through training and our day-to-day
conduct. We encourage all with concerns to speak out and
have facilitated this further through our Speaking Out
helplines, enabling reporting of concerns on a named
or anonymous basis.
Shareholder relations
In accordance with the Code, the Board recognises that it has
responsibility for ensuring that a satisfactory dialogue with
shareholders takes place and any major shareholders’ issues
and concerns are communicated to the Board through
the Chairman.
The Company communicates with both the institutional and
private shareholders through a number of different means.
Further information on shareholder engagement can be
found on page 56.
The annual general meeting
The AGM provides all shareholders with the opportunity to
communicate directly with the Board, which under normal
circumstance encourages their participation at the meeting.
Unfortunately, due to the current COVID-19 pandemic and the
uncertainty surrounding the rules on public gatherings, it is
likely that it will be impossible to hold a normal AGM and,
under the current restrictions, shareholders will be unable to
attend the meeting. However, the AGM will be a live meeting
held via webcast this year, which will allow shareholders to
submit their questions and vote in real time. We will, of course,
continue to monitor Government guidance and if our plans
change we will provide an update via the Regulatory News
Service and our website.
In accordance with the Code, the notice of AGM and related
papers are usually sent to shareholders at least 20 working
days before the meeting. The Company proposes a separate
resolution on each substantially separate issue including
a specific resolution to approve the Annual Report and
Accounts. For each resolution, proxy appointment forms
provide shareholders with the option to vote in advance
of the AGM. All valid proxy votes received for the AGM are
properly recorded and counted by Whitbread’s registrars.
Share capital
The information that is required by DTR 7.2.6 relating to the
share capital of the Company can be found within the
directors’ report on pages 110 to 111.
Statement of the directors in respect of the Annual Report
and Accounts
As required by the Code, the directors confirm their
responsibility for preparing the Annual Report and Accounts
and consider that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy. Further detail
on how this conclusion was reached can be found in the report
of the Audit Committee on pages 80 to 84.
Going concern
The directors’ going concern statement can be found in the
directors’ report on page 113.
Viability statement
The viability statement can be found on page 67.
Business model and strategy
Information on the Group’s business model and the strategy
for delivering the objectives of the Company can be found on
pages 16 to 19.
Board committees
The Board is supported by three committees; the Audit
Committee, the Nomination Committee and the Remuneration
Committee. Their terms of reference are reviewed regularly
and updated in line with best practice. They are available in full
on the Company’s website at www.whitbread.co.uk. A detailed
report from the Chairman of the Remuneration Committee
is set out on pages 88 to 108. Reports for the Audit and
Nomination Committees can be found on pages 80 to 87.
78
Whitbread Annual Report and Accounts 2020/21 › Management is responsible for ensuring the appropriate
maintenance of financial records and processes that ensure
that financial information is relevant, reliable, in accordance
with applicable laws and regulations and is distributed both
internally and externally in a timely manner.
› A review of the financial statements is completed by
management to ensure that the financial position and results
of the Group are appropriately reflected.
› All financial information published by the Group is subject
to the approval of the Audit Committee and the Board.
› An annual review of internal controls is undertaken by the
Board with the assistance of the Audit Committee.
Assurance
› The Audit Committee approves the audit programme which
ensures that the significant areas of risk identified are
monitored and reviewed.
› The programme and the results of the internal audits are
regularly assessed during the year.
› The Audit Committee reviews the major findings from both
internal and external audits.
›
Internal audits are carried out under the control of the Head
of Internal Audit. The reports are reviewed by the Audit
Committee and, on a monthly basis, by the Executive
Committee to ensure that the actions required to address
issues identified are implemented.
› The Head of Internal Audit reports annually to the Audit
Committee on the effectiveness of operational and financial
controls across the Group.
› Deloitte LLP, the Company’s external auditor, reviews and
reports on the significant issues identified in its audit report.
› An internal control evaluation process is overseen by the
management team which assesses the level of compliance
with the controls, policies and processes and the results are
reviewed and tested on a sample basis by the internal
audit team.
› Post-completion reviews of major projects and investments
are carried out and reported on to the Board.
ACCOUNTABILITY AND INTERNAL CONTROL
Internal control and risk management
The Board is responsible for the Group’s systems of internal
control and risk management, and for reviewing their
effectiveness. These systems are designed to manage rather
than eliminate risk of failure to achieve business objectives.
They can only provide reasonable, and not absolute, assurance
against material misstatement or loss.
The Board has established an ongoing process for identifying,
evaluating and managing the Group’s principal risks. This
process was in place throughout the 2020/21 financial year
and up to the date of this report. The process is reviewed by
the Board and accords with the internal control guidance for
directors in the Code. A report of the principal risks, together
with the viability statement, can be found on pages 62 to 67.
Risk analysis
› The Board identifies the principal risks of the Company
on a regular basis and throughout the year it reviews the
actions in place to mitigate the risks together with assurance
and monitoring activity. The analysis covers business and
operational risks, health and safety, financial, market,
operational and reputational risks which the Company may
face as well as specific areas identified in the business plan
and budget process.
› All major capital and revenue projects, together with
significant change programmes, include the consideration
of the risks involved and an appropriate action plan.
Controls
› The Company reviews and confirms its level of compliance
with the Code on an annual basis.
› The matters reserved to the Board require that
major projects and programmes must have specific
Board approval.
› Limits of delegation and authority are prescribed to ensure
that the appropriate approvals are obtained if Board
authority is not required to ensure appropriate segregation
of tasks.
› Group financial policies, controls and procedures are in
place and are regularly reviewed and updated.
› The Whitbread Code of Conduct, setting out required levels
of ethics and behaviour, is communicated to employees and
training is provided. An externally hosted whistleblowing
system is also available.
› The Code of Conduct makes reference to specific policies
and procedures which have to be followed.
› Employees are required to undertake tailored training on
risk areas including IS security, data protection, anti-bribery
and anti-trust law.
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Audit Committee report
CHRIS KENNEDY
CHAIRMAN, AUDIT COMMITTEE
MEMBERSHIP OF THE AUDIT COMMITTEE
AND MEETING ATTENDANCE
Name of director
Chris Kennedy (Chairman)
David Atkins
Frank Fiskers
Susan Taylor Martin
Horst Baier
Meetings attended
and eligible to attend
4/4
4/4
4/4
4/4
4/4
The Committee met four times in
2020/21. Meetings were attended by
all members of the Committee and,
by invitation, the Chairman of the
Board, the Chief Executive, the Finance
Director, the Head of Internal Audit,
the Director of Financial Reporting
& Control and other relevant people
from the business when appropriate.
The external auditor, Deloitte LLP, is also invited to meetings
except where discussion includes matters relating to its
own independence, performance, reappointment, fees or
audit tendering.
The Audit Committee was pleased to welcome Fumbi Chima
as a new member in March 2021.
Composition of the Committee
In accordance with the UK Corporate Governance Code 2018
(the ‘Code’), the Board has confirmed that all members of the
Committee are independent non-executive directors and have
been appointed to the Committee based on their individual
financial and commercial experience.
The Board has also confirmed that I, as Chairman of the
Committee, have recent and relevant financial experience
through my current appointment as Chief Financial Officer of
ITV plc and my previous appointments as Chief Financial
Officer of Micro Focus International plc and ARM Holdings plc,
together with my past role as group finance director of easyJet
plc.
As part of the Company’s annual compliance with the Code,
an evaluation was undertaken of the skills and experience of the
Committee. In accordance with the Code, the Board has agreed
that the Committee as a whole has the competencies relevant
to the sector in which the Company operates and the recent
evaluation report confirmed that the Committee operates
effectively. Through the external appointments that David
Atkins, Frank Fiskers, Susan Taylor Martin and Horst Baier have
held, they bring a depth of financial and commercial experience
that add to the strengths of the Committee. In addition, I would
like to thank Susan for her contribution across the years, as she
stepped down from the Committee on 22 April 2021.
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Whitbread Annual Report and Accounts 2020/21
Role and responsibilities of the Committee
The Board has delegated specific responsibilities to the
Committee in accordance with the Code. The key
responsibilities of the Audit Committee are to:
› monitor and review the integrity of the Group’s half-year
and full-year financial results, and the financial
reporting process;
› monitor the statutory audit of the parent company and
consolidated financial statements;
› review the Group’s internal controls and risk
management systems;
› review and monitor the independence and effectiveness
of the external auditor, in particular, the provision of
additional services;
› monitor and review the effectiveness of the Group’s
internal audit function; and
› have primary responsibility for the recommendations
to the Board in relation to the external auditor.
To aid its review, the Committee considers reports from the
Director of Financial Reporting & Control, the Tax Director,
the Head of Internal Audit and also reports from the external
auditor on the outcomes of its half-year review and annual
audit. The Committee looks for constructive challenge from
Deloitte as external auditor.
Impact of COVID-19
Although the Committee’s roles and responsibilities have not
changed, a number of areas have required increased levels
of scrutiny due to the impact of the COVID-19 pandemic and
the risks that arose as a result. As a priority, a review of the
Group’s risk management and internal control arrangements
were completed including the impact of increased levels of
remote working.
Significant matters in the financial statements
The key areas of judgement and estimates considered by the
Committee, in relation to the 2020/21 accounts and disclosed
in Note 2 to the consolidated financial statements on pages
146 and 147, were:
Adjusting items
The Committee challenged the appropriateness of the
presentation of adjusting items, giving consideration to the
nature and significance of each item classified as adjusting.
The Committee concluded that the items met the criteria
as defined by the accounting policy and that the policy had
been applied consistently across years.
Defined benefit pension
The Committee reviewed, considered and exercised
judgement on the assumptions used to calculate the fair
value of pension scheme assets and present value of
defined benefit obligations under IAS 19, to satisfy itself that
appropriate consideration and balance had been given to
all macroeconomic factors. The principal assumptions used
and the sensitivities around them were considered and the
consistency in approach from 2019/20 to 2020/21 was
assessed, concluding with the same estimates as reached
by management.
Impairment testing – property, plant and equipment, goodwill
and right-of-use assets
The Group’s impairment reviews require significant judgement
in estimating the recoverable amount of its cash generating
units. An impairment review was performed for the purpose
of the Group’s Interim Report resulting in impairments
of £238.8m of goodwill, £54.0m of property, plant and
equipment and £35.9m of right-of-use assets. The Committee
reviewed the approach taken to the impairment review.
The Committee challenged management’s approach, in
particular the methodology used to estimate both value in use
and fair value less costs of disposal for site level impairment
reviews and in calculating the impairment of the newly
acquired goodwill in Germany. The Committee also challenged
the inputs used in management’s model with a specific focus
on the impact of the COVID-19 pandemic on discount rates
and growth rates. The Committee reviewed a further paper
detailing management’s year-end impairment review which
resulted in the recording of further impairments of £7.2m of
property, plant and equipment and £0.8m of right-of-use
assets with a specific focus on the Group’s forecast recovery
as lockdown restrictions are eased. The Committee was
satisfied that the Group has appropriately performed the
impairment reviews, accounted for the impairments identified
and that the related disclosures were appropriate.
Coronavirus Job Retention Scheme Governance
As a result of the complex requirements of the Coronavirus
Job Retention Scheme and the value of claims made by the
Group, the Committee has reviewed the overall governance
arrangements in place. This included reviewing the
management controls over the data used in the claims
process and reviewing the results of an internal audit report
on the accuracy of the claims which was prepared with the
support of external specialists.
Fair, balanced and understandable
In order to confirm to the Board that the Annual Report and
Accounts, taken as whole is fair, balanced and understandable,
there has been a thorough verification and approval process
using the Committee’s knowledge of the Company, as
outlined below:
› the Annual Report and Accounts is drafted by the
appropriate senior management with overall coordination
by the Secretariat team to ensure consistency;
› comprehensive reviews of the drafts of the Annual Report
and Accounts are undertaken by management, the
Executive Committee and the Audit Committee Chairman;
› a final draft is reviewed by the Audit Committee prior to
consideration by a committee of the Board; and
›
formal approval of the Annual Report and Accounts is given
by a Committee of the Board.
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Going concern and viability
The Committee received regular updates on the steps taken
by management to secure liquidity for the likely duration of
the crisis and recovery period beyond. These steps include
the following:
› The covenant waivers agreed with the Group’s lenders and
pension fund Trustees in May 2020 covering the period to
March 2022.
› The June 2020 rights issue raising £1bn.
› The extension, agreed in February 2021, of the Group’s
revolving credit facility until September 2023 and further
extension of associated covenant waivers until March 2023.
› The Green Bond issue in February 2021 raising £550m
and subsequent early repayment of £200m of US private
placement loan notes in March 2021.
The Committee is satisfied that the increased liquidity risk
because of the impact of COVID-19 has been reduced by
these steps.
The Committee has reviewed the Group’s severe but plausible
scenario and is satisfied that this is appropriate in supporting
the Group as a going concern. The committee has also
reviewed the Reverse Stress Test scenario where the business
remains closed for the following 12 months due to COVID-19
and concluded that it is considered remote.
In addition, the Committee has reviewed the Group’s
assessment of viability over a period greater than 12 months.
In assessing viability, the Committee has considered the
Group’s position following the steps taken during the year
as listed above and the three-year plan recently approved by
the Board. The Committee considered the potential financial
impact of the Group’s principal risks and uncertainties and
the specific risks associated with Government restrictions
in response to the COVID-19 pandemic. The Committee has
concluded that these assumptions are appropriate.
Internal control and risk management
The Audit Committee monitors the systems of risk
management and internal control. In addition, the Committee
completes an annual review of the effectiveness of these
systems, assessing the risk management framework and
policy, management’s risk assessment and review process, and
the monitoring and reporting of risk. This review is completed
in conjunction with an internal control effectiveness review
from Internal Audit and Group Finance, and considers all
material controls, including financial, operational and
compliance controls. The system and processes were
considered to be robust and no significant weaknesses
were noted.
82
A robust assessment of the principal and emerging risks
facing the Company was carried out by the Board, considering
risk appetite, and each risk was assessed and the level of
assurance required was determined. Further details of the
principal risks identified and agreed by the Company can be
found on pages 62 to 66.
‘Speaking Out’ facility
In accordance with the Code, the Committee has continued
to review the Company’s whistleblowing function, known
as ‘Speaking Out’. The system is operated by two external
third-party providers, Hospitality Action in the UK and
Navex Global internationally, and allows employees to report
anonymously and in confidence. The Committee receives
annual reports from the General Counsel and reviews the
operation of this function and outcomes. The Committee is
satisfied that there are appropriate arrangements in place for
proportionate and independent investigations. Any significant
issues or risks raised through this process are escalated to the
Board, and the Board receives updates on the number and
types of reports throughout the year from the General
Counsel.
Internal audit
The internal audit function provides independent assurance
through reviewing the risk management processes and internal
controls established by management.
The Audit Committee monitors and reviews the scope, extent
and effectiveness of Whitbread’s internal audit function.
Regular presentations and updates are given to the Committee
by the Head of Internal Audit and complemented by private
discussions as and when necessary. The Committee has
approved the Group internal audit terms of reference, which
sets out the role, accountability, authority, independence,
and objectivity of the function. The Committee considers
matters raised through audit reports and the adequacy of
management’s response to them, including the time taken
to resolve any such matters. The main focus areas for internal
audit during the year included information security strategy
and programme, key financial controls for Support Centre,
COVID-19 health and safety across sites, the Coronavirus Job
Retention Scheme, Germany expansion and capital processes,
and significant systems and change programme assurance,
including the replacement of Whitbread's CRM system
over the next few years
The scope of activity of internal audit is monitored and
reviewed at each Audit Committee meeting. An annual plan
was agreed by the Committee in March 2021 which covers the
activities to June 2022. The internal audit plan is determined
based on the Audit Universe which sets out all auditable
areas of the business and assigns each area a risk level and
recommended audit frequency. The internal audit plan
is aligned to the Group’s principal risks which are formally
reviewed and agreed by the Executive Committee and Board
on a biannual basis against a standard set of risk assessment
criteria. The plan also considers areas of major change within
the business, recurring themes from previous audit results and
the views of management. Follow-up audits are also planned
in areas where past audits highlighted significant risks to
ensure remedial actions have been implemented and are
working effectively to reduce Whitbread’s risk exposure.
Whitbread Annual Report and Accounts 2020/21 Areas highlighted for audit on the current plan include systems
and processes to support Whitbread’s operations in Germany,
and an overall greater focus on centrally managed Premier Inn
and Restaurants operational and commercial risks including
repairs and maintenance, payroll, pricing and compliance with
the requirements of the Coronavirus Job Retention Scheme.
The in-house IT internal audit team provides assurance over
Whitbread’s information systems, and delivers integrated IT
audits, as well as coordinating assurance reviews to de-risk
Whitbread’s ongoing major change projects, including the
replacement of the Group’s CRM system.
Internal audit ways of working have been modified to
accommodate remote working. The overall approach has
remained the same and the underlying audit methodology
and processes are unchanged with audits still fully compliant
with best practice and internal audit standards.
External auditor
On behalf of the Board, the Committee oversees the
relationship with the external auditor. Deloitte was appointed
as the auditor of the Company in 2015 following a formal
tender process, and reappointed at the 2020 annual general
meeting. The current audit partner is Katie Houldsworth, who
was appointed in 2020 after Nicola Mitchell stepped down
from the role after holding it since Deloitte’s initial
appointment.
Audit effectiveness
The effectiveness of the external audit process is dependent
on appropriate audit risk identification at the start of the audit
cycle. We receive from Deloitte a detailed audit plan,
identifying its assessment of these key risks.
These risks were reviewed and they, together with the work
done by the auditor, were challenged to test management’s
assumptions and estimates around these areas, as well as
other areas reported upon. The effectiveness of the audit
process was assessed in addressing these matters through
the reporting we received from Deloitte at both the half-year
and year-end. In addition, feedback was sought from the
Committee, the Board and management on the effectiveness
of the audit process and targeted and tailored questionnaires
were completed.
An assessment of the effectiveness of Deloitte in respect
of the previous financial year was undertaken in July 2020.
Overall, it was noted that the audit team had adapted well
to the challenges of remote working and that the audit was
effective, executed to a high standard and that improvements
had been made on the prior financial year. However, it was
noted that there was still room for improvement in respect
of the planning and timeliness of audit requests.
As part of our review process for this financial year, the
Committee will be assessing the work of the year-end audit,
once finalised, and an effectiveness review for this financial
year will be undertaken and reported to the Audit Committee.
The FRC’s Audit Quality Review (AQR) team monitors the
quality of audit work of certain UK audit firms through annual
inspections of a sample of audits and related procedures at
individual audit firms. During the year, the FRC’s Audit Quality
Review Team (AQRT) reviewed Deloitte’s audit of the Group’s
financial statements for the year ended 27 February 2020
as part of its annual inspection of audit firms. The Committee
Chairman received and reviewed the final report from the
AQRT which indicated that there were no significant areas
of concern.
The Committee confirms that the Company has complied with
regard to the requirement of the provisions of the Statutory
Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014. The Group intends
to put the external audit out to tender every ten years in the
future, with the next tender expected to be in 2025.
Auditor independence
To safeguard the objectivity and independence of the external
auditor, the Committee’s terms of reference set out the policy
is respect of provision of services by the external auditor.
The Committee regularly reviews this policy for necessary
changes in response to changes in related standards and
regulatory requirements. This policy was updated in March
2020 to incorporate the Revised Ethical Standards issued by
the FRC in December 2019.
The policy defines prohibited services that are not to be
provided by the auditor because they represent a risk to the
external auditor’s independence. For certain services that are
not prohibited, because of the knowledge and experience of
the external auditor and/or for reasons of confidentiality, it can
be more efficient or prudent to engage the external auditor
rather than another party. This is particularly the case with
audit-related assurance services that are closely connected to
the audit function where the external auditor has the benefit
of knowledge gained from work already performed as part
of the audit.
For certain specified audit and audit-related services, the
Group can employ the external auditor without reference
to the Audit Committee, subject to a specified fee limit
of up to £250,000. For the services permitted in certain
circumstances, agreement must be sought from me, as
Chairman of the Committee, where fees are less than the limit
specified, or with full Audit Committee approval where fees
are anticipated to be greater than £250,000. A tender process
would be held where appropriate.
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Total non-audit fees amounted to £1.2m consisting of £0.1m
of audit-related services and £1.1m of other non-audit services.
Audit-related services are represented by the interim review.
Although this is considered to be a non-audit service, the
objectives of the review are aligned with the audit.
Details of other non-audit fees are as follows:
Services in relation to the June 2020 rights issue – £1.0m
Provision of reporting accountant services, including working
capital reports and comfort letters. The work was led by
a separate engagement team with services performed by
the audit team limited to routine letters whereby it is both
allowable and expected that the audit team and audit partner
are involved. These are subject to independent reviews.
Services in relation to the February 2021 Green Bond issue
– £0.1m
Provision of reporting accountant services including comfort
letters. The work performed was subject to independent
review from partners outside the audit team.
As a result of the level of non-audit fees incurred during the
year, Deloitte was required to obtain waivers from the FRC.
The waivers were accepted prior to commencement of the
non-audit services.
Following a review of the services provided by our external
auditor, Deloitte LLP, we can confirm that it continues to be
independent.
Chris Kennedy
Chairman, Audit Committee
26 April 2021
84
MAIN ACTIVITIES DURING THE YEAR
In 2020/21, the Audit Committee’s work covered internal
controls, risk management, internal audit, external audit
and financial reporting. The details of the matters
discussed at Committee meetings are shown below.
Through the year, the Committee has also covered the
quality and integrity of accounting policies and practices.
MARCH 2020
› Correspondence with FRC regarding irrevocable
buyback commitment
› External auditor – approval of remuneration, terms
of engagement and other fees, and controls update
›
Internal audit – approval of plan
› Risk and controls – review of risk management process,
approval of policy, update on financial control framework
and litigation review
› Review of Committee’s rolling agenda and terms of reference
› Review of the previous year’s Speaking Out reports
› Audit Committee evaluation report
APRIL 2020
› 2019/20 Annual Report and Accounts
› 2019/20 Deloitte external audit report
› Non-audit services and fees
›
Internal audit – review of 2019/20 report and terms of reference
› Compliance report
› Risk and controls – review of statements on risk management
› Payment practices reporting – review of full-year report
› Going concern and viability, including the impact of COVID-19
and the £1.0bn rights issue
JULY 2020
› Risk and controls – BART update, IS Strategy update,
assessment of effectiveness of audit process
› Compliance – treasury policy, financial control update
›
Internal audit – update on plan, procurement review update,
COVID-19 risk register
› Update on Coronavirus Job Retention Scheme
› Review of effectiveness of external auditor
OCTOBER 2020
› Review of FY21 Interim Results – judgements and estimates,
impairment and going concern
› External audit – half-year report, letter of representation,
UK Corporate Governance Code update, approval of terms
of engagement
› Risk and controls – litigation review, compliance report, controls
update, BART, PCI compliance update, procurement update
›
Internal audit – interim update
› Payment practices report
Whitbread Annual Report and Accounts 2020/21 CORPORATE GOVERNANCE
Nomination Committee report
ADAM CROZIER
CHAIRMAN, NOMINATION COMMITTEE
MEMBERSHIP OF THE NOMINATION COMMITTEE
AND MEETING ATTENDANCE
Name of director
Adam Crozier (Chairman)
David Atkins
Richard Gillingwater
Frank Fiskers
Chris Kennedy
Deanna Oppenheimer1
Susan Taylor Martin2
Horst Baier
Meetings attended
and eligible to attend
2/2
2/2
2/2
2/2
2/2
1/1
1/2
2/2
1 Deanna stepped down from the Board at the end of December and
therefore was no longer a Committee member for the January meeting.
2 The one meeting Susan was unable to attend was due to a conflict with
a previously arranged meeting.
This year we are pleased to welcome
Fumbi Chima and Kal Atwal to the
Board as new independent non-
executive directors and members of
the Nomination Committee. Fumbi will
also be joining the Audit Committee,
while Kal will become a member
of the Remuneration Committee.
Role of the Committee
The role of the Nomination Committee is to review the Board
composition and to plan for its refreshment as applicable.
The Committee is also responsible for evaluating the directors
on an annual basis, striving for a balance of skills, knowledge,
independence, experience and diverse representation to allow
for it to operate effectively, and ensuring there is no undue
reliance on any one individual.
Responsibilities of the Committee
The Committee has specific responsibilities on behalf of the
Board and these are detailed below:
› to regularly review the structure, size and composition
of the Board (including balance of skills, independence
and diversity), and make recommendations to the Board;
› to consider succession planning for the Board and to
determine the skills and experience required for future
Board appointments;
› to identify and nominate, for the approval of the Board,
candidates to fill Board vacancies as and when they arise;
› to evaluate the balance of skills, knowledge, experience
and diversity required prior to making an appointment to
the Board and, on the basis of this evaluation, to prepare
a role description outlining the capabilities required for
a particular appointment;
› to keep the leadership needs of the Company under review,
both for executive and non-executive directors with a view
to ensuring the continued ability of the Company to
effectively compete;
› to keep up to date with strategic issues and commercial
changes affecting the Company and the market in which
it operates;
› to ensure that, on appointment to the Board, non-executive
directors receive a formal letter of appointment setting out
the time commitment in respect of the role;
› to annually review the time required from non-executive
directors and to ensure that a performance evaluation is
undertaken to determine if non-executive directors are
spending sufficient time to fulfil their duties;
›
for the appointment of a Chairman, to prepare a job
description including the time commitment expected.
A proposed Chairman’s other significant commitments
should be disclosed to the Board before appointment
and any changes reported to the Board as they arise; and
› to review the results of the annual Board evaluation that
relate to the composition of the Board.
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NOMINATION COMMITTEE REPORT CONTINUED
Diversity and inclusion
The Board believes that diversity in many forms is critical
to the effectiveness of the Board and to the Group’s continued
success, which is why we have made a commitment to put
diversity at the core of our business agenda with an aim to
become the most inclusive hospitality business.
Our Executive Committee is a sponsor of Whitbread’s
approach to diversity and inclusion across Whitbread.
There is a Diversity and Inclusion (D&I) strategy now in place,
which was created in line with industry standards to ensure we
are focusing on the right areas. Whilst our current diversity
targets measure our progress relative to data which captures
gender and race, our actions focused on greater inclusion are
just as relevant to the inclusion of broader underrepresented
groups and those individuals who feel they are in a minority
due to their sexual orientation, gender identity, disability
or age and experience.
We have now invested in a Diversity and Inclusion Centre
of Excellence, responsible for leading the implementation
of the D&I strategy, guided by our new Commitments:
We have four commitments to greater diversity:
1. Have greater diversity in our leadership population,
with targets of 8% ethnic minority and 40% female
representation in our top 100 by the end of 2023
2. Have greater ethnic diversity in our middle management
population through stringent recruitment practices that
mitigate individual biases
3. Invest more in a diverse talent pipeline to ensure we can
promote diverse talent equitably
4. Complete ethnicity pay gap analysis, and share our results
and findings with our internal colleagues
We have four commitments to create an environment
of greater inclusion:
1. Equip all our leaders to be fluent around diversity and
inclusion, through mandated development
Female representation
Our 2020 Gender Pay Gap Report, released in February 2021,
highlights an 11.65% pay gap, reduced by 1.58 percentage
points from 2019. We have strong female representation
across Whitbread, with 66% of our hourly paid roles filled by
women, along with 34% of our female leadership population.
We are also proud to be one of currently six FTSE 100
businesses to have a female CEO.
Our focus continues to be driving female representation in
senior roles across all functions, remaining committed to the
recommendations outlined in the Hampton Alexander Review.
We recognise that senior level representation continues to
be a theme in our Gender Pay Reports, and are focused on
accelerating progress through our stretching targets, set out
in our commitments, in the next 12 months.
You can read our 2020 Gender Pay Gap Report and our
actions in more detail on our website, www.whitbread.co.uk
Ethnic representation
Whilst our D&I commitments focus on all underrepresented
groups, they also have specific relevance in increasing our
diversity of colleagues from ethnic minorities.
84% of our Board identify as White, 8% identify as Asian and
8% identify as Black. We are proud to have met the Parker
Review '1 by 21' target, but recognise that this by itself is not
enough, and there is more to do to increase the ethnic
representation across Whitbread.
Whilst 13%* of our colleagues identify as Asian, Black or Mixed
Ethnic, our representation of these groups at leadership level
is lower than we would wish and we recognise we have more
to do. We have set up a Race, Religion and Cultural Heritage
colleague network with executive sponsorship to partner
with our D&I Centre of Excellence and drive change. So far
they have amplified the voices of many of our minority groups,
celebrated key cultural events and reviewed and relaunched
key HR policies. The recent training all our leaders (including
our Executive Committee) attended included a module on
Race Allyship.
2. Amplify the voices of all our minorities, through the
sponsorship of networks and forums
We are committed to change, and over the next 12 months
are confident that we will accelerate our progress.
3. Review our policies to make sure they are inclusive
of minority groups
4. Celebrate key cultural events throughout the year
Our progress against these commitments is detailed in
the Group HR Director’s review on pages 42 to 47.
86
Setting targets
Our diversity commitments give us challenging internal
targets that reflect our ambition to be more diverse and
more inclusive. Our Executive Committee has individual
and collective targets relating to the diversity of its functional
leadership teams, alongside accountability to deliver the wider
D&I commitments.
We continue to be very committed to the recommendations
outlined by the Parker Review, particularly its target for all UK
FTSE 100 businesses to meet the ‘1 by 21’ target of at least one
ethnically diverse member of the board by 2021 and the
signalling of intent this brings to the wider business with
regard to leadership representation.
Our two recent Board appointments, Fumbi Chima and Kal
Atwal, are both highly talented individuals who bring valuable
executive experience and expertise to our Board from March
2021. Following these appointments, the Board now fully
meets the standards expected by the Hampton Alexander
Review on gender and the McGregor Smith Review
on ethnicity.
*
13% of colleagues who have chosen to enter their ethnicity data.
Whitbread Annual Report and Accounts 2020/21 Succession planning
The Committee annually evaluates the balance of skills,
experience, independence and knowledge on the Board,
preparing a description of the role and capabilities required
for a particular appointment. A matrix of the skills and
competencies of the current Board is mapped against the
skills and competencies the Committee believes will be
required in the future. The process, which is also used when
the Board is considering new appointments, of either
executive or non-executive directors, along with the Board’s
policies and Diversity and Inclusion Commitments, listed
opposite, help the Committee succession plan and develop
a diverse pipeline.
Following the 2020 Board evaluation, one of the Committee’s
focuses for last year was to consider the Board’s experience
in relation to consumer marketing and technology.
The appointment of Fumbi Chima and Kal Atwal brings
an invaluable mix of skills to the Board, especially in the
technology sector, digital transformation, marketing and
general management which has been gained from working in
a variety of businesses. They will add huge value to the Board.
We use external search consultants to engage and identify
a number of candidates, ensuring equal representation,
aligned with the role and capabilities required for the
appointment. For the appointment of Fumbi and Kal,
we partnered with Korn Ferry and Audeliss, both independent
consultancies which have no other links to Whitbread or
any directors.
Once a new director has been appointed, they receive
a tailored induction which helps introduce them to the
business. Following their appointment in March, Fumbi
and Kal met with a variety of senior leaders across the
business and intend to visit sites and meet team members
post COVID-19.
Further information on Fumbi and Kal’s induction process
can be found on page 77.
As part of our annual talent cycle, we review the long term
succession plan for our Executive Committee as standard.
In addition to this, we have robust emergency and medium
term succession plans in place for all our Executive
Committee. These have been revised this year as part of our
COVID contingency planning and Senior Leadership
succession planning.
Our approach to the annual re-election of directors
As required by the Code, all directors will be subject to
re-election at the next annual general meeting (AGM).
During the year, I completed the individual performance
review of each non-executive director in respect of their
contribution and time commitment to the Company.
All directors are proposed for reappointment at this
year’s AGM.
Details setting out why each director is deemed to be suitable
for reappointment, and how their contribution continues to
be important to the Company’s long-term success, will be
included with the AGM papers circulated to all shareholders.
Adam Crozier
Chairman, Nomination Committee
26 April 2021
MAIN ACTIVITIES DURING THE YEAR
In 2020/21, the Committee’s main activities have included:
›
the appointment of Fumbi Chima and Kal Atwal;
› Board succession planning;
› HR strategy including diversity and inclusion;
›
the re-election of directors at the 2020 annual general meeting;
and
› a review of the Committee’s effectiveness and its terms
of reference.
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Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information REMUNERATION REPORT
Remuneration report
FRANK FISKERS
CHAIRMAN, REMUNERATION COMMITTEE
When I took over as Chairman of the
Remuneration Committee in January
2020, none of us could have foreseen
the challenges that lay ahead.
However, by the time I wrote my first letter to you in last year’s
Annual Report, we were firmly in the midst of the COVID-19
pandemic and already taking a number of remuneration-
related actions in response.
These included steps such as:
› the directors waiving their May 2020 annual salary and
fee reviews;
› the executive directors taking a temporary three-month
30% reduction in base salary;
› the Chairman and non-executive directors taking
a temporary three-month 20% reduction in their base fees;
› annual incentive payments being settled wholly in shares;
and
› a commitment not to adjust the pre-pandemic profit targets
relating to the 2020/21 annual incentive and therefore to
lapse this element of the opportunity.
Subsequently, the Committee has determined that no
incentive payments will be made in 2021 to the executive
directors in relation to the 2020/21 financial year.
The Committee also closely considered how the pay of the wider
Whitbread workforce was being impacted during the crisis.
In particular, whilst a number of team members had been placed
on furlough during the year, the Company had topped up the
pay of furloughed team members beyond the level that could
be reclaimed under the UK Government’s Coronavirus Job
Retention Scheme.
88
A robust response
Since I last wrote to you, it has been quite a year. In one of the
hardest hit sectors, the executive directors have played an
outstanding role in taking decisive action throughout the
pandemic to protect their teams, their guests and the
continuity of the business. They have positioned the business
to emerge strongly in a way that is expected to maximise
long-term shareholder value. Since the start of the pandemic,
Premier Inn has consistently grown market share. In addition,
the team has delivered on its commitment to use rights issue
proceeds for growth initiatives with the acquisition of 13 hotels
in Germany and two in the UK. They have also continued to
deliver on broader stakeholder concerns on the ESG agenda
through the Force for Good programme. The executive
directors’ decisive action has been to the benefit of all
stakeholders and further details of what has been delivered
during the year can be found throughout the strategic report
on pages 1 to 67.
Clearly, though, despite this outstanding response to the
pandemic, much of Whitbread’s business has had no option
but to be closed for large parts of the year. We recognise
the context in which our remuneration decisions are made.
2020/21 has been a challenging year for all our stakeholders
and the payment of any variable pay must be considered in
this light. We must also recognise that, in navigating well
through this period, Whitbread has drawn on financial support
from Government and our shareholders, and we remain
intently focused on preserving the business’s cash position.
Taking this into account, no incentive payments will be made
to the executive directors in 2021.
As a result of our decisions, the total remuneration received by
the executive directors has fallen significantly when compared
to the previous year, with each of the executive directors
having a reduction in total remuneration of between 51% and
54% vs the prior year. This can be seen in the single total figure
of remuneration table on page 98.
2020/21 annual incentives
As the targets for the 2020 incentive scheme had been
established prior to the first COVID-19 lockdown coming into
force, it was clear from early in the year that the 50% of the
scheme relating to profit performance would not be payable
in 2021 and I explained this in my report last year.
The remaining 50% of the incentive was assessed against
an efficiency measure and individual strategic objectives.
Although the restrictions on the business made the efficiency
target more challenging, that element was achieved in full.
The Committee recognises the exceptional performance
shown by the executive directors in leading Whitbread through
a very challenging year while positioning the Company to
capture future growth. We therefore consider that the
formulaic outcome under the 2020/21 annual incentive plan,
with performance against these objectives resulting in overall
outcomes of between 48.6% and 48.9% of maximum for the
three executive directors, is a fair reflection of the personal
performance delivered over the year. Further details can be
found on pages 98 to 101.
To that end, and taking account of the context described
above, the Committee has determined that the fairest
outcome for all stakeholders is that no incentive payment
should be made this year, but incentives which have been
earned should be carried over to next year, at which point they
may be awarded subject to continued strong performance
in relation to the objectives for the year
Whitbread Annual Report and Accounts 2020/21 year were selected before the pandemic in November 2019
and are not considered appropriate for new awards to be
made this year. One will be a three-year cumulative cost
efficiency measure, while the other will be a balanced overall
assessment of performance and delivery against strategic
priorities. More details can be found on page 108.
We have not made any changes to the underpins for the 2020
RSP awards or any other in-flight awards but, as I explained in last
year's report, we are concerned that the impact of the pandemic
has put the 2020 RSP underpins beyond reach with significant
consequences for motivation and retention. We therefore intend
to evaluate performance in its full context at vesting. We will fully
disclose any decisions that we take in this regard.
We believe that the combination of targets we have set
appropriately incentivise the executives to deliver on the
Company’s objectives as we emerge from the pandemic.
Base salary and pensions
As stated above, all executive directors waived their
entitlement to base salary increases in May 2020. For 2021
the Committee has awarded a 2% salary increase to each
executive director, in line with the general increases in pay
for salaried employees across the organisation.
The current plan for pension provision was well considered
as part of the policy review in 2019 and in the context of other
changes to the policy. As explained in last year’s report, the
Committee will review the executive directors’ pension levels
further at the end of the three-year policy period in 2022.
The Committee continues to be committed to aligning the
executive directors’ pensions with the wider workforce who
are all currently able to choose to pay a contribution of up
to 10% matched by the Company.
We recognise that Whitbread regularly reviews the pay and
benefits for the wider workforce. If, at the end of the policy
period, the maximum contribution available to the wider
workforce is no higher than 10%, then executive directors’ pension
levels will phase down to 10% over the period to May 2024.
Group HR Director
As announced previously, our current Group HR Director,
Louise Smalley, will retire from the Board on 31 August 2021.
You will see later in this report that the Committee elected to
treat Louise as a 'good leaver' for share scheme purposes.
All of the remuneration treatment agreed in relation to Louise's
departure were in accordance with the approved policy.
Her successor has been appointed, but the position will no
longer be an executive director position.
A brighter future
With the announcement in February of the Government’s
roadmap to reopening society, I hope that we can all look
forward to a brighter future. While we won’t be able to meet
in person at the AGM this June, I will be available to answer
any questions you have at the interactive online meeting and
very much hope that, by 2022, we will be meeting in London.
Frank Fiskers
Chairman, Remuneration Committee
26 April 2021
ahead. Making payment contingent on a two-year view of
performance serves several purposes: it defers the payment
of the cash portion of the bonus in the context of continued
cash conservation; it creates a more retentive structure at
a time when the executives have very little retention arising
from long-term incentives; and it places a further incentive on
the coming year as Whitbread seeks to optimise its recovery.
The underpin on this deferred element will require strong
and sustainable performance against the executive directors’
strategic objectives over the course of the coming year. For the
underpin to be met satisfactory, performance must be delivered
on at least 50% of each executive's objectives. These objectives
will include managing the impacts of the COVID-19 pandemic,
growing our rooms in the UK and Germany, delivering property
cost savings, progressing technology development and
maintaining overhead cost efficiency disciplines. These will
all be clearly itemised with actual outcomes disclosed in the
2021/22 Annual Report in a similar way to pages 99 to 101
of this year’s Annual Report. If the underpin is met, 50% of
the award will be paid in cash at that point, and 50% will
be deferred in shares vesting in March 2024, i.e. three years
from when the award would have been paid under normal
circumstances. If the underpin is not satisfied, the award will
lapse in full. The entire award will be forfeited in the case of
an executive director leaving the Company within the 12-month
underpin period, except in exceptional circumstances and at
the discretion of the Committee.
For our most senior leaders, the approach will mirror that for
the executive directors, with no payments being made in 2021
and any future payment in relation to the 2020/21 financial
year being subject to stretching performance criteria.
The Committee is driven by the principle of fairness across the
organisation and was keen to ensure that team members around
the country are rewarded for their effort and contribution during
this difficult year. I am pleased therefore to say that team
members at all levels, other than the most senior levels, will
be receiving special recognition payments in May this year.
Rewarding delivery in 2021/22 and beyond
The Committee has also had to carefully consider how best to
structure the Annual Incentive Scheme for 2021/22, as well as
how to structure the underpins for the 2021 awards under the
Restricted Share Plan.
It is vital that there is an incentive in place for 2021/22 that
appropriately motivates the executives and rewards them for
delivery of what is in their control, in the context of a unique
environment and Government restrictions which significantly
affect our operations. Recognising that there remains
significant uncertainty because of the unpredictable external
environment, the Committee has had to take a different
approach to the setting of the profit target for the 2021/22
incentive. The profit target is sales adjusted enabling the
executives to be rewarded for profit conversion and sales
relative to the market. The strategic growth objectives and
the efficiency target have been set in the usual way and more
information can be found on pages 106 and 107.
The Committee believes this appropriately incentivises the
executives to steer the Company through the present crisis and
drive its recovery which aligns with the long-term interest of
shareholders. Whilst it is expected that this will drive an incentive
outcome that reflects overall Company performance, the
Committee has the discretion to override the formulaic measure
should it feel this is not the case. This approach has been taken
to address the current uncertainty and the Committee would
expect to revert to the usual approach next year.
We have also reviewed the underpins for the Restricted
Share Plan for 2021 and discussed our ideas with major
shareholders, who were supportive of setting underpins to
reflect Whitbread’s recovery plan. We have therefore elected
to select two new underpins for the awards to be made in
2021. This is on the basis that the underpins used in the prior
89
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information REMUNERATION REPORT CONTINUED
Remuneration at a glance
BUSINESS PERFORMANCE
FINANCIAL MEASURES
TOTAL SHAREHOLDER RETURN
£635.1m
ADJUSTED LOSS
BEFORE TAX1
£40m
EFFICIENCY SAVINGS
350
300
250
200
150
100
50
0
03 March
2011
01 March
2012
28 February
2013
27 February
2014
26 February
2015
03 March
2016
02 March
2017
01 March
2018
28 February
2019
27 February
2020
25 February
2021
Whitbread PLC
FTSE 100 Index
The chart looks at the value
over ten years of £100
invested in Whitbread PLC on
3 March 2011 compared, on
a consistent basis, with that of
£100 invested in the FTSE 100
index based on 30 trading day
average values. The FTSE 100
has been selected by the
Committee as an appropriate
comparator group due to
Whitbread’s position within
the FTSE.
1 See pages 206 to 209 for definitions of alternative performance measures.
No long-term incentives were due to vest based on performance in 2020/21.
90
Whitbread Annual Report and Accounts 2020/21
REMUNERATION OUTCOMES
TOTAL REMUNERATION (£’000)
ALISON BRITTAIN
CHIEF EXECUTIVE
2020/21
2019/20
2018/19
2017/18
1,032
1,110
1,069
1,032
1,032
830
317
2,257
772
869
470
2,371
Fixed pay
Annual incentive
Long-term incentive
3,747
5,588
SHARE OWNERSHIP
126,023
SHARES
57,092
VESTED, BUT UNEXERCISED,
SHARE AWARDS
593
% OF SALARY
MEETING
REQUIREMENT1
NICHOLAS CADBURY
GROUP FINANCE DIRECTOR
2020/21
2019/20
2018/19
2017/18
709
756
728
695
709
558
134 1,448
521
578
182
1,455
2,233
3,482
Fixed pay
Annual incentive
Long-term incentive
SHARE OWNERSHIP
55,267
SHARES
33,920
VESTED, BUT UNEXERCISED,
SHARE AWARDS
400
% OF SALARY
MEETING
REQUIREMENT1
LOUISE SMALLEY
GROUP HR DIRECTOR
2020/21
2019/20
2018/19
2017/18
472
472
504
486
464
365
89 958
341
1,476
2,303
375
128
967
Fixed pay
Annual incentive
Long-term incentive
SHARE OWNERSHIP
59,344
SHARES
26,962
VESTED, BUT UNEXERCISED,
SHARE AWARDS
663
% OF SALARY
MEETING
REQUIREMENT1
1 Details of shareholding requirements can be found on pages 102 and 103.
91
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information REMUNERATION REPORT CONTINUED
Remuneration policy
The remuneration policy was approved by shareholders at a general meeting in December 2019 and can be found
on the Company’s website at www.whitbread.co.uk. A summary of the directors’ remuneration policy is set out below.
Operation
Maximum potential value
Performance metrics
Policy table
Element
Base
salary
Purpose and
link to strategy
Base salaries are set to
be sufficient to attract
and retain the calibre of
executive talent needed
to support the long-term
interests of the business.
Salaries are reviewed
annually taking account of:
› the salary review across
the Group;
› trading circumstances;
› personal performance,
including against agreed
objectives; and
› market data for an
appropriate comparator
group of companies.
None.
None.
› Annual salary increases
would normally be in
line with the average
increases for employees
in other appropriate
parts of the Group.
› On occasion, increases
may be larger where the
Committee considers
this to be necessary.
Circumstances where
this may apply include
growth into a role,
to reflect a change
in scope of role and
responsibilities, where
market conditions
indicate a level of
under-competitiveness
and where the
Committee judges that
there is a risk in relation
to attracting or retaining
executive directors.
› Where the Committee
awards increases above
the average for other
employees, it will do
so in accordance with
policies applying across
the Group and the
resulting salary will not
exceed the competitive
market range.
› We do not anticipate that
the maximum payable
would exceed 10% of
salary. However, the
Committee may provide
benefits above this level
in certain situations
where it deems it
necessary. This may
include, for example, the
appointment of a director
based overseas or
a significant increase in
the cost of the benefits.
Benefits
› Benefits are intended
to be competitive in
the market so as to
assist the recruitment
and retention of
executive directors.
› Executive directors
›
are entitled to benefits
relating to a car or car
allowance and healthcare
or personal insurance.
In exceptional
circumstances, such
as the relocation of
a director, or for a new
hire, additional benefits
may be provided in the
form of a relocation
allowance and
benefits including
tax equalisation,
reimbursement of
expenses for temporary
accommodation, travel
and legal and/or
financial assistance.
92
Whitbread Annual Report and Accounts 2020/21 Element
Annual
Incentive
Scheme
(AIS)
Purpose and
link to strategy
› To provide a direct
link between annual
performance
and reward.
› To incentivise the
achievement of
outstanding results
across appropriate key
stakeholder measures.
› To align with the
long-term interests of
shareholders and help
participants build
a significant stake in the
business over time, by
awarding a material part
of the annual incentive
in deferred equity.
Operation
Maximum potential value
Performance metrics
› Targets for measures
set at the beginning
of the financial year.
› Cash awards paid
following the end
of the financial year.
› Deferred share awards
normally vest after
three years, subject to
continued employment.
› Malus provisions apply
to unvested deferred
shares and clawback
provisions apply to
cash awards.
› Up to 200% of base
salary (up to 50% of
maximum paid in cash
and the remainder
is paid in deferred
share awards).
› The maximum bonus for
2021/22 for the current
executive directors will
be 170% of base salary.
Any increase beyond
this level in future
years will only be
applied in exceptional
circumstances and will
be at the discretion
of the Committee.
› Awards are payable
based on a mix of
adjusted profit
performance, business
performance measures
and growth objectives.
Performance measures
under each area are
determined annually and
the Committee is able to
adjust the weighting of
the areas annually based
on prevailing business
needs. However, the
underlying profit
performance will
represent no less than
50% of the total award at
any time. Other measures
will be objective and,
when possible, externally
benchmarked leading
indicators of future
financial performance will
be used. Normally around
25% of the maximum
incentive is paid for
threshold performance,
with around 50% paid for
on target performance
and the full incentive
payment being paid
for delivering stretch
performance. These
vesting levels may
vary from year to year.
› The Committee may
at its discretion adjust
the outcome under
the formulaic measures
where it considers it
is appropriate to do so
to better reflect overall
Company performance.
93
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information REMUNERATION POLICY CONTINUED
Operation
Maximum potential value
Performance metrics
› Annual awards to
a maximum of 125%
of base salary in respect
of each financial year.
› The maximum grant for
2021/22 for the current
executive directors will
be 125% of base salary
for the CEO and 110%
of base salary for the
FD. Any increase
beyond this level for
the FD will only be
applied in exceptional
circumstances and will
be at the discretion of
the Committee.
› The first grant will be
made in Whitbread’s
2020/21 financial year.
› Awards normally vest
after a period of at
least three years,
subject to one or more
performance underpins
and continued
employment.
› After vesting there will
be an additional holding
period during which
vested shares cannot
be sold, such that the
combined underpin
measurement period
and holding period is
at least five years.
› Subject to clawback
and malus provisions
as set out below.
› Dividend equivalents
may be provided on
vested awards during
a holding period.
› Vesting will be subject to
two or more performance
underpins, which will be
disclosed at or around
the time of grant in the
DRR. Where there are
two underpins, if one of
the underpins is not met,
then up to 50% of the
award will lapse. If both
underpins are not met,
then up to 100% of the
award will lapse, subject
to the overall discretion
set out in the full policy.
› The Committee may vary
the underpins in future
years in order to align
with the Company’s
strategy, but will always
include objective
financial metrics,
which will be disclosed
prospectively at or
around the time of grant,
in the DRR.
It is anticipated that all
performance underpins
applicable to awards will
be equally weighted,
although the Committee
retains the discretion to
adjust the weighting of any
underpins in future years.
In addition, the Committee
will have general
discretion to determine
the most appropriate
vesting levels if it believes
this will better reflect the
underlying financial
performance of the
Company over the period
and such other factors
as it may determine.
›
›
Element
Restricted
Share Plan
(RSP)
Purpose and
link to strategy
› To enable the growth
strategy in both the
UK and Germany,
which requires
different strategies
and approaches.
› To promote long-term
value creation rather
than focusing on
specific targets at
a time when the
executive directors
need to balance
investment and growth.
› To retain executive
directors throughout
an important time for
the business to deliver
the growth strategy.
94
Whitbread Annual Report and Accounts 2020/21 Element
Sharesave
scheme
Purpose and
link to strategy
To encourage long-
term shareholding
in the Company.
Pension
Pension benefits are
provided in order to offer
a market competitive
remuneration package
that is sufficient to
attract and retain
executive talent.
Operation
Maximum potential value
Performance metrics
Consistent with prevailing
HMRC limits, currently
savings limited to £500
per month.
None.
› Annual invitation to all
employees, including
the executive directors.
› Option price calculated
by reference to the
market price
discounted by 20%
on the invitation date.
› Options granted subject
to participant agreeing
to save over a three-
and/or five-year period.
› Executive directors are
› 25% of base salary
None.
entitled to participate in
the Company’s pension
scheme (or other
pension arrangements
relevant to their location
if based overseas).
› Defined contribution
scheme.
› Can elect for cash in lieu
of pension contributions.
(maximum of 10% for
new joiners although
the actual level will be
determined based on all
relevant factors at the
time of appointment,
including having
regard to the pension
contribution rates
available to the majority
of the workforce).
› Contribution rates of
incumbent executive
directors will phase
down to 15% of base
salary over three
financial years, with the
first reduction in May
2020 to 21.5%. At the
end of the three-year
policy period, the
Committee will
review the pension
levels further.
95
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information REMUNERATION POLICY CONTINUED
Purpose and
link to strategy
To attract and retain
a Chairman and non-
executive directors
of the highest calibre.
Element
Chairman
and non-
executive
director
fees
Operation
Maximum potential value
Performance metrics
None.
The fees are reviewed
annually by the Board
(excluding the non-
executive directors),
taking into account
a range of factors
including the time
commitment required
of the directors, the
responsibilities of the
role and the fees paid by
other similar companies.
› The Chairman receives
an annual fee and the
non-executive directors
receive a base fee,
with additional fees for
acting as the Senior
Independent Director
or for chairing, or being
a member of, the Audit
or Remuneration
Committees or any
other Board committee
as may be constituted
from time to time.
› The Chairman and
non-executive directors
are entitled to claim all
reasonable expenses,
and the Company may
settle any tax incurred,
but do not receive
any other fees or
remuneration in
connection with their
roles at Whitbread.
96
Whitbread Annual Report and Accounts 2020/21 Annual report on remuneration
Remuneration Committee – membership
Name of director
Frank Fiskers (Chairman)
David Atkins
Adam Crozier
Richard Gillingwater
Deanna Oppenheimer¹
Meetings attended
and eligible
to attend
6/6
A significant proportion of an executive’s total reward is
linked to performance, with much of the reward achieved
being deferred. This helps to align the interests of executives
to investors.
6/6
6/6
6/6
4/4
Remuneration Committee – advisers
Internal advisers
Chris Vaughan – General Counsel and Secretary to the
Committee
Steve Jones – Reward, Pensions and Insight Director
1 Deanna stepped down from the Board at the end of December 2020 and
therefore was no longer a Committee member for the further three meetings.
Remuneration Committee – responsibilities
› Set the broad policy for the remuneration of the Chairman
and members of the Executive Committee, including the
executive directors.
› Within the terms of the agreed policy, determine the total
individual remuneration package (including incentive
payments, share awards and other benefits) of the Chairman
and each executive director.
› Monitor the structure and level of remuneration of Executive
Committee members.
› Approve the design of, and determine the targets for,
executive incentive schemes.
External advisers
PwC, one of the founding members of the Remuneration
Consultants Group Code of Conduct, was appointed
remuneration consultant by the Committee with effect from
September 2017 following a rigorous tender process and
adheres to this code in its dealings with the Committee.
PwC also provides international tax advice to the Group.
Fees paid to PwC in respect of advice received by the
Committee amounted to £124,400. These fees were charged
on a time and material basis.
The Committee is satisfied that the advice received is
independent and objective. The Committee is comfortable
that the PwC engagement partner and team that provide
remuneration advice to the Committee do not have connections
with the Company that may impair their independence.
› Approve awards to be made to executive directors and other
senior executives under incentive schemes.
Remuneration Committee agenda – 2020/21
› Approval of Annual Incentive Scheme and targets for
› Ensure that contractual terms on termination, and any
2020/21.
payments made, are fair to the individual and the Company,
that failure is not rewarded and that the duty to mitigate loss
is fully recognised.
› Approval of awards of cash-replacement shares and
deferred shares to executive directors under the Annual
Incentive Scheme for 2019/20.
› Review the alignment of incentives with the Company’s
› Executive directors’ salary review – no increases
wider culture.
were awarded.
› Obtain ideas and concerns from the wider workforce about
› Confirmation of the vesting percentage for the LTIP
reward and take into account workforce remuneration
across the Company and externally when setting
remuneration policy for the executive directors.
In carrying out its duties the Committee has taken into
account the principles outlined in the UK Corporate
Governance Code 2018. The Committee believes that the
Company’s remuneration structures are aligned to the
Company’s culture and values. Furthermore, the Company’s
remuneration structures are simple and clear, with executive
directors receiving base salary, an annual incentive and a
long-term incentive under the RSP.
Risk is managed, with both the Annual Incentive Scheme
and the RSP being subject to malus and clawback provisions.
In addition, a poor health and safety performance would lead
to a reduced payout under the Annual Incentive Scheme and
the underpins under the RSP provide protection against any
payment for failure.
Outcomes are predictable to the extent that the Company
achieves its targets over any given performance period.
awards made in 2017 and vesting in 2020.
› Approval of the 2020 awards made under the RSP.
› Approval of the 2020 remuneration report.
› Various remuneration-related actions necessary in the
light of the COVID-19 pandemic.
› Review of wider remuneration strategy across
the organisation.
› Review of RSP underpins.
› Review of executive director pension arrangements.
› Committee effectiveness evaluation.
› Review of the terms of reference.
97
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION CONTINUED
Single total figure of remuneration – executive directors (audited information)
Base salary
Benefits
Pension
Fixed pay
Director
Alison Brittain
Nicholas Cadbury
Louise Smalley
20/21
£’000
19/20
£’000
20/21
£’000
19/20
£’000
20/21
£’000
816
556
367
871
592
391
22
22
19
21
21
18
194
131
86
19/20
£’000
19/20
£’000
20/21
£’000
218 1,032
143
756
709
472 504
1,110
95
Annual
Incentive
Scheme
20/21
£’000
19/20
£’000
– 830
558
–
–
365
LTIP1
Variable pay
Total
20/21
£’000
19/20
£’000
–
–
–
317
134
89
20/21
£’000
–
19/20
£’000
20/21
19/20
£’000
£’000
1,147 1,032 2,257
709 1,448
692
–
958
– 454
472
1 The awards vesting under the Long Term Incentive Plan on 21 May 2020 have been re-stated to show their value on the vesting date, based on a price of 2,114.3p per share.
The value shown includes dividend equivalents. The awards were originally made in 2017 based on a share price of 3,822.2p per share, so none of the value shown for
2019/20 relates to share price appreciation.
Details of each of the elements included in the table above are as follows:
Base salary
Annual salary increases across the Group are usually effective from 1 May each year. However, the executive directors did not
receive an increase in base salary in 2020 and agreed to a temporary 30% reduction in their base salaries for a three-month
period in 2020 as part of our remuneration-related response to the pandemic.
Benefits
The benefits received by each executive director include family private healthcare and a cash allowance in lieu of a company car.
Annual Incentive Scheme
The Remuneration Committee recognises the exceptional performance shown by the executive directors in leading Whitbread
through a very challenging year while positioning the Company to capture future growth. The Committee considers that the
formulaic outcome under the 2020/21 annual incentive plan is a fair reflection of the personal performance delivered over
the year.
At the same time, we recognise the context in which any decision to award a payment is made. 2020/21 has been a challenging
year for all our stakeholders and the payment of any variable pay must be considered in this light. We must also recognise that
in navigating well through this period, we have drawn on financial support from Government and our shareholders, and we
remain intently focused on preserving the business’s cash position.
To that end, the Committee has determined that the fairest outcome for all stakeholders is that no incentive payment should be
made this year, but the incentives which have been earned should be carried over to next year, at which point it may be released
subject to continued strong performance. Making payment contingent on a two-year view of performance serves several
purposes: it defers the payment of the cash portion of the incentive in the context of continued cash conservation; it creates
a more retentive structure at a time when our executives have very little retention coming from our long-term incentives; and
it places a further incentive on the coming year as we seek to optimise our recovery.
Strong and sustainable performance against the executive directors’ strategic objectives over the course of the coming year
will be required for the awards to be made. These objectives will include managing the impacts of the COVID-19 pandemic,
growing our rooms in the UK and Germany, delivering property cost savings, progressing technology development and
maintaining overhead cost efficiency disciplines. Further information can be found on pages 88 and 89. These will all be clearly
itemised with actual outcomes in the 2021/22 Annual Report. For the underpin to be met satisfactory, performance must be
delivered on at least 50% of each executive's objectives. If the underpin is met, 50% of the award will vest in cash at that point,
and 50% will be deferred in shares and vest in March 2024, in line with our normal deferral policy (i.e. three years from when the
award would have been made under normal circumstances). If the underpin is not satisfied, the award will lapse in full. The entire
award will be forfeited in the case of an executive director leaving the company within the 12-month underpin period, except in
exceptional circumstances and at the discretion of the Remuneration Committee.
As a result, no incentive payment is shown in the table above for the 2020/21 financial year.
Team members across the organisation will receive special recognition payments in May 2021 to recognise their effort and
contribution to Whitbread in such difficult circumstances.
Awards based on profit measure (50% of total award – maximum 85% of salary)
The profit target, which was agreed before the COVID-19 pandemic began, was set at £278.0m, with the threshold set at
£250.2m and maximum payout due at £305.8m. This target was not met and, as a result, no payment is due under the Annual
Incentive Scheme in relation to this element of the incentive.
Director
Alison Brittain
2019/20
Nicholas Cadbury
2019/20
Louise Smalley
2019/20
98
Total % of salary
0.00
18.13
0.00
18.13
0.00
18.13
Whitbread Annual Report and Accounts 2020/21 Awards based on efficiency target (25% of total award)
Total efficiency savings of £40m were achieved in the year which was in line with the incentivised efficiency target for 2020/21
of £40m. This was achieved despite restrictions on the business caused by COVID-19 making the target more challenging.
The savings achieved do not include any direct variable cost savings as a result of our reduced operations nor any benefit from
Government support schemes. As a result, the awards to be made based on the efficiency target are as follows (the prior year
comparison was a combination of WINcard and efficiency targets):
Director
Alison Brittain
2019/20
Nicholas Cadbury
2019/20
Louise Smalley
2019/20
Total % of salary
42.50
44.59
42.50
44.59
42.50
44.59
As explained on page 98, the payments outlined above are to be carried over until 2022 and are then only payable subject to the
achievement of a number of strategic objectives during the 2021/22 financial year.
Awards based on business objectives (25% of total award)
Each of the executive directors had a number of business objectives and 25% of the maximum incentive opportunity was linked
to performance against these objectives. A summary of each of the executive directors’ objectives, together with the incentive
outcomes, is shown in the table below.
Strategic growth objectives 2020/21 – outcomes
Alison Brittain, Chief Executive
Objectives
Group
projects
Measures
Evaluate Group options for strategic growth and
development
Actual outcome
Completed and presented to the Board
Achievement
per outcome
✓
Develop the property plan and assess strategic options
to enhance shareholder value
Completed
Produce savings from UK property costs
Complete the separation and delivery of key
infrastructure for Costa and remove the TSAs
Maintain investor engagement, regular investor
feedback to the Board across COVID-19 actions
and strategic and defence themes
Develop and execute a deep cost and capital
saving plan
Manage the
COVID-19
response:
Financial
Achieved, ahead of target
Completed as scheduled
Completed
Capital reduced by £200m
Prepare sale and leaseback options
Completed
Prepare cash and capital action plan ready
for execution
£1bn rights issue completed, £550m
Green Bonds issued, RCF extended and
covenants waived
Active management and communication with banking
partners, pension fund and investors
Completed
Manage the operational impact at sites
Completed through multiple lockdown
scenarios
Develop and implement new people policies to support
hours and pay management along with staff welfare
Completed
Manage the
COVID-19
response:
Operational
Manage supply chain to ensure continuity of supply
for essential goods and services
All essential supply protected and new PPE
supply chain established
Premier Inn
UK
Develop commercial plans including new network
channel
Completed, delivering revenue significantly
ahead of the market
Develop clear plan for optimising the property network Portfolio analysed
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
99
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION CONTINUED
Objectives
German
growth
Measures
Integrate the Foremost Hospitality acquisition across
all operations
Actual outcome
Completed
Complete the rebranding of the Foremost Hospitality
hotels and reopen
Completed
Manage the acom hotels and increase to three sites
Deliver agreed technology and upgrade and
remediation plan for Germany
Evaluate priority portfolio acquisition options
Open two organic sites plus one acom and one
Foremost
Completed and increased to three
sites with the addition of Stuttgart in
October 2020
Completed
Evaluation completed with first acquisition,
from Centro, completed
Three organic sites opened in Essen,
Hamburg and Leipzig in addition to
13 Centro Hotels and one Star Inn
Sign four organic sites to the pipeline
Five signed
Refurbish and rebrand acom sites to Premier Inn
Refurbishment delayed to conserve cash
with Foremost hotels prioritised
Achievement
per outcome
✓
✓
✓
✓
✓
✓
✓
✗
Total outcome
Achieved 95.45% of maximum = 40.57% of salary
Nicholas Cadbury, Finance Director
Objectives
Group
projects
Measures
Evaluate Group options for strategic growth
and development
Actual outcome
Completed and presented to the Board
Achievement
per outcome
✓
Develop the property plan and assess strategic options
to enhance shareholder value
Completed
Produce savings from UK property costs
Complete the separation and delivery of key
infrastructure for Costa and remove the TSAs
Achieved, ahead of target
Completed as scheduled
Triennial pension agreement
In progress
Plans in place for execution of payment strategy in 2021 Completed in readiness for scheduled
execution
Manage the
COVID-19
response:
Financial
Develop and execute a deep cost and capital saving plan Capital reduced by £200m and £40m
discretionary costs removed
Prepare sale and leaseback options
Completed
Prepare cash and capital action plan ready for execution £1bn rights issue completed, £550m
Green Bonds issued, RCF extended and
covenants waived
Active preparations and communication with banking
partners, pension fund and investors
Completed
Premier Inn
UK
Develop commercial plans including new channel
development
Completed, delivering revenue significantly
ahead of the market
Optimise the property network
German
growth
Integrate the Foremost Hospitality acquisition across
all operations
Complete the rebranding of the Foremost Hospitality
hotels and reopen
Integrate the acom hotels
Complete rebranding of acom sites and reopen
Evaluate priority portfolio acquisition options
Open two organic sites plus one acom and
one Foremost
Portfolio analysed
Completed
Completed
Completed
Refurbishment delayed to conserve cash
with Foremost hotels prioritised
Evaluation completed with first acquisition,
from Centro, completed
Three organic sites opened in Essen,
Hamburg and Leipzig in addition to
13 Centro Hotels and one Star Inn
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✗
✓
✓
Total outcome
Achieved 94.44% of maximum = 40.14% of salary
100
Whitbread Annual Report and Accounts 2020/21 Louise Smalley, Human Resources Director
Objectives
Group
projects
Measures
Progress the work plan for maintaining labour supply
post Brexit in the UK
Pay for Progression: Prioritise the most critical of the
planned spend ahead of Brexit to mitigate the risk of
talent shortages and apply best practice to Germany
hotels on opening
Actual outcome
Immediate implications of post-Brexit rules
managed through but net impact of
COVID-19 impact on labour supply vs net
migration still TBD
Pay for Progression priorities accelerated
through operations reorganisations
Manage the
COVID-19
response:
Strategic
Manage the
COVID-19
response:
Operational
Diversity and Inclusion: Deliver year 1 priorities of the
3-year plan
Targets, networks, education and visible
engagement plan
Complete the full separation and delivery of payroll
admin for Costa, mitigating the cost of retained services
Completed as scheduled, achieving net
reduction in stranded costs
Prepare people plan model for network optimisation
Completed
Develop and execute a deep overhead cost savings plan
considering implications of the decisions in relation to
team and guest service
Completed with Support Centre restructure
achieving £17m savings
Plan and execute the operational impacts at sites and
Support Centre
Completed at significant scale and high
volume sustained over multiple lockdowns.
Furlough optimised
Develop and implement new people policies to support
hours and pay management balancing welfare and
engagement priorities
Completed
Plan for immediate ability to flex up as required as
restrictions are lifted and execution of operations
restructure to optimise site labour hours
Completed, ensuring minimal risk of repeat
labour efficiency activity
German
growth
Deliver HR technology upgrade and mitigate risks
ahead of that
Establish overhead model, organisation structure and
capabilities for the business post integration for 2021,
prioritising key capabilities and cost
Short-term upgrade plan completed. IT
investment plan rephased to FY22 due
to COVID-19
Completed restructure with re-prioritised
future investment to critical roles
Integrate the Foremost Hospitality hotels
Integrate the acom and Centro hotels
Completed
Completed
Achievement
per outcome
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Total outcome
Achieved 94.23% of maximum = 40.05% of salary
Total awards
The maximum potential award was 170% of salary and the total incentive earned is as follows:
Director
Alison Brittain
2019/20
Nicholas Cadbury
2019/20
Louise Smalley
2019/20
% of salary
based
on profit
00.00
% of salary
based
on efficiency
target
42.50
% of salary
based
on strategic
objectives
40.57
Total %
of salary
83.07
00.00
42.50
40.14
82.64
00.00
42.50
40.05
82.55
Total
£’000
729
830
492
558
325
365
The amounts shown above are not included in the single figure table on page 98. As explained on page 98, any payment
of these awards has been carried over until 2022 and will then only be made subject to the achievement of strategic growth
objectives during the 2021/22 financial year.
101
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION CONTINUED
Long Term Incentive Plan
There was no LTIP award in 2018, therefore nothing was due to vest in 2021.
Pension
The percentage of salary or pension allowance received by the executive directors in pension contributions is shown in the
table below.
Director
Alison Brittain
Nicholas Cadbury
Louise Smalley
% of salary
21.50
21.50
21.50
The executive directors receive a monthly amount in cash in lieu of pension contributions. This reduced from 25% for
Alison Brittain and 24.17% for Nicholas Cadbury and Louise Smalley to 21.5% in May 2020. It will further reduce to 18% and
15% in May 2021 and 2022 respectively.
The current plan was well considered as part of the policy review in 2019 and in the context of other changes to the policy.
As explained in last year’s report, the Committee will review the executive directors’ pension levels further at the end of the
three-year policy period in 2022. The Committee continues to be committed to aligning the executive directors’ pensions
with the wider workforce who are all currently able to choose to pay a contribution of up to 10% matched by the Company.
The Committee recognises that Whitbread regularly reviews the pay and benefits for the wider workforce. If, at the end of
the policy period, the maximum contribution available to the wider workforce is no higher than 10%, then executive directors’
pension levels will phase down to 10% over the period to May 2024.
Single total figure of remuneration – Chairman and non-executive directors (audited information)
Director
Adam Crozier
David Atkins
Horst Baier
Frank Fiskers
Richard Gillingwater
Chris Kennedy
Deanna Oppenheimer
Susan Taylor Martin
Base fee
20/21
£’000
380
19/20
£’000
400
58
58
58
58
58
48
58
61
20
61
61
61
61
61
Senior Independent
Director fee
Fee as Chairman of
a Board Committee
Fee as a member of
a Board Committee
20/21
£’000
19/20
£’000
20/21
£’000
19/20
£’000
20/21
£’000
19/20
£’000
–
–
–
–
15
–
–
–
–
–
–
–
15
–
–
–
–
–
–
20
–
20
–
–
–
–
–
3
–
20
16
–
–
10
5
5
5
–
4
5
–
10
2
8
5
–
1
5
Total
20/21
£’000
380
19/20
£’000
400
68
63
83
78
78
521
63
71
221
72
81
81
78
66
1 Fees for part year. Deanna Oppenheimer stepped down from the Board on 31 December 2020 and Horst Baier joined the Board in November 2019.
Statement of directors’ shareholding and share interests (audited information)
The Committee believes that the shareholding requirements for executives play an important role in the alignment of the
interests of executives and shareholders and help to incentivise executives to deliver sustainable long-term performance.
When the new remuneration policy was approved in December 2019, we took the opportunity to bring our shareholding
requirements for the executive directors in line with market practice. We increased the requirement for the Chief Executive from
200% of salary to 300% of salary and the requirement for the other executive directors from 125% of salary to 200% of salary.
In addition, new post-cessation shareholding requirements have been introduced. These are subject to transitional arrangements
for the current executive directors. We have also made changes to the method of calculation, with unexercised share awards
no longer subject to performance testing being taken into account (adjusted for any deductions to be made at the point
of exercise). All of the executive directors are in compliance with the requirement.
The Chairman and the non-executive directors are each required to build a holding to the value of 100% of their annual fee over
a three-year period.
102
Whitbread Annual Report and Accounts 2020/21 The table below shows the holdings of directors as at 25 February 2021:
Director
Chairman
Adam Crozier2
Executive directors
Alison Brittain
Nicholas Cadbury
Louise Smalley
Non-executive directors
David Atkins
Horst Baier
Frank Fiskers
Richard Gillingwater
Chris Kennedy
Deanna Oppenheimer3
Susan Taylor Martin
Counting towards requirement
Performance vs requirement
Ordinary
shares
Share
awards1
Value based
on input
price
£’000
Value based
on market
price
£’000
Requirement
% of salary/
base fee
% of salary
based on
input price
% of salary
based on
market price
Share
awards not
counting
towards
requirement
7,500
–
255
237
100
64
59
–
126,023
57,092
55,267
33,920
59,344
26,962
5,197
2,383
2,610
4,936
2,314
2,326
300
200
200
2,137
1,600
2,115
2,000
2,250
1,600
2,235
–
–
–
–
–
–
–
67
72
63
70
73
66
61
67
76
67
63
71
51
71
100
100
100
100
100
100
100
593
400
663
109
118
104
114
119
108
100
563
388
591
110
124
109
103
116
83
115
46,297
27,673
18,295
–
–
–
–
–
–
–
1 The market price used was the average for the last quarter of the financial year (3,158.6p). The number of share awards shown is the full number, but the valuation of those
awards has been reduced to reflect deductions to be made at the point of exercise in respect of income tax and national insurance contributions. The awards include
deferred shares awarded under the Annual Incentive Scheme and vested, but unexercised, awards under the Long Term Incentive Plan. All share awards a structured as
nil-cost options on vesting.
2 Adam Crozier continues to build towards a 100% holding and intends to meet the requirement during the current financial year.
3 Deanna Oppenheimer stepped down from the Board on 31 December 2020, so the number of shares shown above reflect her holding at that date. Deanna actually held
6,400 ADRs in Whitbread PLC, each of which represent 0.25 of a Whitbread ordinary share.
With the exception of Deanna Oppenheimer, who was not entitled to participate due to her shares being held via ADRs, all of the
directors fully participated in last year's rights issue. There has been no other change to the interests in the tables shown on this
page between the end of the financial year and the date of this report.
Options exercised (audited information)
The following options were exercised by executive directors under the Company’s share schemes during the year.
Director
Alison Brittain
Nicholas Cadbury
Louise Smalley
Scheme
Number of
shares
Exercise
price
Exercise
date
Market price
on exercise
(p)
LTIP
AIS
PSP
LTIP
AIS
PSP
LTIP
PSP
14,275
10,596
97,408
N/A 19-Jun-20
2,435.0
N/A 19-Jun-20
2,435.0
N/A 05-Feb-21
3,238.0
5,275
7,132
N/A 19-Jun-20
2,435.0
N/A 22-Jun-20
2,385.0
58,063
N/A 05-Feb-21
3,238.0
3,699
38,384
N/A 19-Aug-20
2,328.0
N/A 05-Feb-21
3,238.0
Key
AIS: Awards of deferred shares under the Annual Incentive Scheme as a result of performance in the 2019/20 financial year.
RSP: Awards made under the Restricted Share Plan.
103
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION CONTINUED
Awards granted
No awards were granted during the year under the LTIP or PSP. During the year, awards were granted under the Annual
Incentive Scheme and the Restricted Share Plan as follows:
Director
Alison Brittain
Nicholas Cadbury
Louise Smalley
Scheme
Date of
award
Number of
shares
Market price
(£)
Total value
(£'000)
AIS
RSP
17.06.20
17.06.20
17,535
46,297
AIS
RSP
17.06.20
17.06.20
AIS
RSP
17.06.20
17.06.20
11,773
27,673
7,704
18,295
23.68
23.68
23.68
23.68
23.68
23.68
415
1,096
279
655
182
433
Key
AIS: Awards of deferred shares under the Annual Incentive Scheme as a result of performance in the 2019/20 financial year.
RSP: Awards made under the Restricted Share Plan.
Performance metrics
The deferred shares shown above made under the Annual Incentive Scheme have no further performance conditions and are
due to vest in June 2023. At the point of vesting they will convert to nil-cost options with an 18-month exercise period.
The awards made under the Restricted Share Plan will vest in 2023, subject to two underpins being met. They will then be
subject to a two-year holding period. The underpins were set as part of the directors' remuneration policy when it was approved
in December 2019. The first underpin is that the Company's average lease-adjusted net debt to funds from operations leverage
ration should be less than 4.5x. The second underpin is that Company's average return on capital for the UK business should
be at least equal to the weighted cost of capital plus 1%. These underpins are based on a three-year measurement period ending
at the end of the 2022/23 financial year and, if only one of the underpins is met, 50% of the awards will vest. No changes have
been made to the underpins for these RSP awards but, as explained in last year's report, the Committee is concerned that the
impact of the pandemic has put the 2020 RSP underpins beyond reach with significant consequences for motivation and
retention. The Committee therefore intends to evaluate performance in its full context at vesting. We will fully disclose any
decisions that we take in this regard.
Payments to past directors (audited information)
With the exception of regular pension payments and dividends on Whitbread shares and the exercise of share awards as
permitted under the rules of the Annual Incentive Scheme, the LTIP and the Savings-related Share Option Scheme, no other
payments were made during the year to past directors.
Remuneration terms for Louise Smalley's departure
In line with the approved remuneration policy, the Committee elected to apply ‘good leaver’ terms to Louise Smalley on her
retirement from the Company. In accordance with the policy: unvested deferred share awards earned in respect of annual
incentive schemes prior to 2020/21 will vest in full on their original vesting dates; the 2020 RSP award will vest on its original
vesting date and will be pro-rated based on service during the performance period; and Louise will participate in the 2021/22
Annual Incentive Scheme with the award pro-rated for service in the year. Louise’s award in respect of the 2020/21 Annual
Incentive Scheme will be made next year, subject to the underpin being achieved, in line with the other executive directors.
The terms do not include any pay in lieu of notice or eligibility to participate in the 2021 RSP. The post-employment shareholding
requirements will apply.
Chief Executive’s remuneration
Whitbread is in the hospitality business and has a large workforce of around 28,000 team members who are employed directly
by the business and the majority being in hourly paid customer-facing roles in our hotels and restaurants. We have an aligned
set of reward principles for all employees which includes a core principle to offer competitive pay rates at all levels reflecting
our position as a leading organisation in the hospitality sector. This enables us to attract and retain the right talented people for
our winning teams.
For our hourly paid team members, we benchmark other hospitality companies to ensure we are competitive when comparing
pay with similar organisations and we operate an approach to pay which increases pay for skills progression with clear and
transparent pay rates for each role that increase as new skills are developed. For our Chief Executive, we benchmark against
the FTSE 100 (removing any non-comparative industries such as Financial Services, Oil & Gas and Natural Resources which
include significantly higher levels of remuneration) and this allows us to have an appropriate comparison for this role in
our sector.
As noted last year, the Chief Executive has a high level of variable pay which impacts the ratio, and for 2020/21 this has led
to the median pay ratio reducing significantly from 143:1 to 53:1.
All three of the UK employee reference points compare our Chief Executive’s remuneration with that of hourly paid team
members in customer-facing roles in the operational outlets and again there is relatively limited difference in the outcomes
as shown below. Given this, we believe the median pay ratio is consistent with the reward policies for our UK employees.
Whitbread has continued to use Option A to calculate its ratio, as the data required is readily available and this option provides
the most accurate comparison as the figures are calculated on a like-for-like basis.
104
Whitbread Annual Report and Accounts 2020/21 The table below shows how the total pay of the Chief Executive compares to our UK employees at the 25th, median and
75th percentile:
Year
2020/21
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
Total pay (FTE):
£18,138
Total pay & benefits
(FTE):
£18,682
Pay ratio (Option A):
55:1
£18,970
£19,539
53:1
£20,218
£20,824
50:1
2019/20
Pay ratio (Option A):
150:1
143:1
134:1
The figures were calculated on 15 February 2021 (the ‘snapshot date’) and use the single figure methodology (salary, benefits,
annual incentive, LTIP, pension) and for the Chief Executive this is taken from the total single figure remuneration for 2020/21
on page 98 of £1,032m.
The following table shows the Chief Executive’s pay over the last ten years, with details of the percentage of maximum paid out
under the Annual Incentive Scheme and the LTIP vesting percentage for each year.
Year
2020/21
2019/20
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
2012/13
2011/12
Chief Executive
Alison Brittain
Alison Brittain
Alison Brittain
Alison Brittain
Alison Brittain
Alison Brittain
Andy Harrison
Combined CEO remuneration for
2015/16
Andy Harrison
Andy Harrison
Andy Harrison
Andy Harrison
Single total figure of
remuneration
£’000
% of maximum annual
incentive achieved
% of LTIP award vesting
1,032
2,636
5,588¹
2,336
2,509
634
2,423
3,057
4,554
6,374
3,432
1,444
49.7²
56.7
54.8
64.1
49.8
38.8
38.8
38.8
86.8
82.6
74.9
45.6
N/A
36.0
0.0
38.3
76.5
N/A
97.2
97.2
100.0
100.0
89.8
N/A
Includes £3.7m from the vesting of a one-off award under the PSP in relation to the sale of Costa. This award vested at 97.53% of maximum.
1
2 The % of maximum annual incentive achieved for the 2020/21 financial year has been deferred until 2022 and will only become payable in the event that Alison achieves
further strategic objectives during the 2021/22 financial year.
Annual percentage change in remuneration
Whitbread PLC has no employees, but for information purposes, the Chief Executive’s remuneration (including base salary,
benefits and annual incentive payment) decreased by 51.3% in the year, compared with an increase of 5.1% for the Group’s
employees as a whole.
Comparison of executive remuneration policy with wider employee population
This section of the report describes each element of the executive remuneration package and explains the extent to which
those elements are made available to the wider employee population. The Committee consulted with employees in relevant roles
and took account of feedback from the Employee Forum (see page 46 for more details) when developing the directors’
remuneration policy.
Base salary
All employees, including the executive directors, receive an annual review of base salary. Under normal circumstances the annual
increase in salary for an executive director will be in the same range as the increase for employees across the Group.
Benefits
Approximately 430 employees across the Group are entitled to a company car or cash in lieu of a company car. The executive
directors are no longer entitled to a company car under this scheme, but are entitled to receive cash in lieu of a car.
Approximately 1,600 employees are entitled to participate in the Group’s private healthcare scheme, with 600 of these,
including the executive directors, entitled to family cover.
All employees receive discounts on Company products, but the directors have waived their right to this benefit.
Whitbread’s Sharesave scheme is a standard HMRC approved SAYE scheme. It is offered to all UK employees, including the
executive directors, on equal terms.
Annual Incentive Scheme
Approximately 3,600 employees are eligible to take part in an annual incentive scheme linked to the achievement of profit and
other targets. Approximately 80 senior leaders are given individual strategic objectives in addition to the profit and WINcard
targets mentioned above. The maximum opportunity is dependent on the role.
105
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION CONTINUED
Approximately 45 employees, including the executive directors, are entitled to participate in the Annual Incentive Scheme,
with maximum payouts split between cash and deferred shares, ranging from 60% to 170% of salary.
Restricted Share Plan
Approximately 45 employees, including the executive directors, participate in the Restricted Share Plan. This scheme is not available
to the wider employee population, although the Sharesave scheme provides employees with a form of long-term incentive.
Pension
Like all employees, the executive directors are entitled to participate in the Company’s pension scheme. The scheme is
a defined contribution scheme. Employees below the executive level are able to choose a contribution rate of between 5%
and 10% and have this matched by the Company. Employees who do not choose to participate may be automatically enrolled
with contributions in line with the automatic enrolment regulations. Approximately 20 senior leaders, excluding the executive
directors, receive between 10% and 20% of basic salary from the Company, which can be allocated to pension or taken as cash.
The policy for newly appointed executive directors is to provide a contribution of 10% of base salary that can be allocated to
pension or taken as cash. The current executive directors receive a monthly amount in cash in lieu of pension contributions.
This reduced from 25% for Alison Brittain and 24.17% for Nicholas Cadbury and Louise Smalley to 21.5% in May 2020. It will
further reduce to 18% and 15% in May 2021 and 2022 respectively.
Relative importance of spend on pay
The graph below compares the change in total expenditure on employee pay during the year to the change in dividend
payments and share buybacks.
£m
2,500
2,000
1,500
1,000
500
0
2020/21
2019/20
£2,488.3m
£0m
Dividends and
share buybacks1
£612.5m
£581.6m
Employee
costs
1 The dividends and buybacks figure for 2019/20 includes the tender offer, which took place in July 2019.
Implementation of remuneration policy in 2021/22
Base salary
The executive directors waived their right to a salary review in 2020 due to the COVID-19 pandemic. They will each receive
a 2% salary increase in May 2021 in line with the general increases in pay for salaried employees across the organisation.
The base salaries of the executive directors with effect from 1 May 2021 will be as follows:
Director
Alison Brittain
Nicholas Cadbury
Louise Smalley
Base salary at
1 May 2021
£’000
895
608
402
Base salary at
1 May 2020
£’000
877
596
394
Benefits and pension
The benefits received by each executive director will continue to include family private healthcare, a cash allowance in lieu
of a company car and cash allowances in lieu of pension.
Annual Incentive Scheme
To be eligible to receive incentive payments there are ‘gateway’ requirements relating to leadership behaviour. Any incentive
payments will be at the discretion of the Remuneration Committee in the event that the health and safety score is red on the
WINcard. The expectation is that our leaders’ actions reflect Whitbread’s values and code of conduct, including our approach
to health and safety. Keeping our team and customers safe is not an incentive lever but a core responsibility that earns the right
to achieve incentivised rewards. The Committee has the discretion to amend formulaic outcomes.
In the light of the impact of the COVID-19 pandemic on the business, and in particular the fact that many of the Company’s
hotels and restaurants are not currently operating, the Committee determined that WINcard team and customer measures will
106
Whitbread Annual Report and Accounts 2020/21 not be included within the incentivised framework for 2021/22. Instead, as it did for 2020/21, the Committee agreed that the
50% of the incentive not based on profit be allocated between efficiency and business objectives.
The measures and weightings for the 2021/22 annual incentive are therefore as follows:
Measure
Profit performance
Business objectives
Efficiency
Scope
Group adjusted profit before tax
See below
Efficiency savings
Weighting
50%
30%
20%
Financial measures
The targets of the two financial metrics, which make up 70% of the annual incentive, are considered by the Board to be
commercially sensitive and, for that reason, are not disclosed in advance. The Committee intends to disclose the targets
retrospectively in the 2021/22 report. As explained on page 89, recognising that there remains significant uncertainty because
of the external environment, the profit target will be measured on a basis that adjusts for the level of actual sales. This enables
the executives to be rewarded for delivery of what is in their control: profit conversion; and sales relative to the market, and
eliminates the uncontrollable element of overall market demand, which will be driven largely by the lifting of restrictions on
the hospitality sector. The profit measure will therefore be assessed in two parts. To assess profit conversion the first element
measures the Whitbread profit against the expected profit given the actual Whitbread sales. Given the restrictions on trade
during 2021/22 are uncertain this enables the profit target to be sales-adjusted and remain appropriate if restrictions are more/
less onerous than expected.
To assess sales relative to market, the second element will measure Whitbread sales growth vs Market sales growth, using FY20
as a reference point, as a pre-COVID-19 reference point.
Business objectives
Each executive director also has business objectives linked to the Group’s strategic priorities. They will be eligible to receive up
to 30% of the maximum incentive opportunity based on the delivery of these objectives. Achievement of the approved objective
outcomes has been aligned to a payment level that would be recognised as stretch performance. The objectives are quantifiable
and linked to the business plan and future financial performance.
The table below shows a summary of the individual strategic growth objectives for each of the executive directors, together with
details on which of the three strategic priorities (see pages 18 and 19) each objective is linked to:
Objectives
Alison Brittain
Manage the impacts of the pandemic, to include financing options, health and safety, reopening plans, cost
efficiencies and the launch of a new brand marketing campaign
Premier Inn growth and optimisation, to include the opening of new hotels, the refurbishment of existing hotels,
the addition of new sites to the pipeline and the continuation of new product trials such as Premier Plus rooms
Growth of the German business, integration of acquired hotels and delivery of the commercial strategy
Group projects to include a full technical review of all commercial and data systems and a number of ESG
matters such as accelerated carbon reduction targets and progress on diversity and inclusion
Nicholas Cadbury
Growth of Premier Inn in the UK and management of the discretionary cost base as the business reopens
Growth of the German business to include a review of the market for appropriate mergers and acquisitions (M&A)
opportunities and a review of the operational cost model in order to maximise long-term margin opportunities
Capital structure and capital allocation projects, to include the finalisation of the pension triennial review and
embedding the Green Bond framework into the Company's capital discipline
Property optimisation to include an update to the UK network plan and the delivery of property cost savings
Group projects including the delivery of a secure payments system programme in the UK and Germany
Louise Smalley
Growth and optimisation to include plans for the post-pandemic operation of the Support Centres in the UK
and Germany, the maintenance of overhead cost efficiency discipline and the development of a training and
communications programme to reboot sites on reopening to accelerate recovery
Simplification, savings and service through technology, to include a review of the HR core IT platform for the UK
and Germany.
Creating the conditions to attract and hire diverse talent, to include the production of an ethnicity pay gap
report and the launch of the Gender Network
Strategic priority
1,2,3
1
2
1,2,3
1
2
3
1
3
1,2
3
3
The strategic growth objectives have been designed to incentivise the executive directors to steer the Group through the current
crisis, both operationally and financially, and to put it in a strong position to meet its strategic priorities as we reopen.
Cash awards will be made in May 2022, with deferred equity issued in April or May 2022 and due to vest in 2025, with no further
performance conditions applying.
107
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION CONTINUED
Restricted Share Plan
It is anticipated that the executive directors will receive awards under the RSP in May 2021. These will be based on 125% of salary
for Alison Brittain and 110% of salary for Nicholas Cadbury. Louise Smalley will be retiring on 31 August 2021 and, as such, will
not be eligible to receive an RSP award.
The awards will be subject to two underpins and, subject to these underpins being met, are expected to vest in 2024, after which
they will be subject to a two-year holding period.
The first of the underpins will be a balanced overall assessment of performance and delivery against strategic priorities.
The Committee will determine whether the underpin has been met based on the Group’s underlying performance and delivery
against its strategic priorities over the performance period that will drive long-term shareholder value. In doing so, the
Committee will take into account factors it considers to be appropriate in the round. Such factors may include the Group’s
financial performance, balance sheet strength, market share, response to the COVID-19 pandemic and recovery of shareholder
value and performance against environmental, social and governance priorities. The default should be that the underpin will
be met in the absence of clear evidence of management failure or significant underperformance. If there is evidence of clear
management failure or significant underperformance, the underpin will not be met.
The second underpin will be a cumulative cost efficiency saving of £60m over the three-year performance period.
In setting this underpin, the Committee is conscious that the environment remains highly unpredictable. Under the plan rules
and approved policy, the Committee may amend an underpin if it is no longer suitable, so long as the new condition is not
materially easier or more difficult to achieve than when the award was initially granted. It would be our intention to monitor
changes in the external environment and their effect on this underpin, and to consider adjustment if the Committee judges that
the underpin is no longer operating as intended.
Chairman’s fee
Adam Crozier’s fee as Chairman was set at £400,000 when he was appointed to the position in March 2018, with the fee to
be reviewed annually. Adam indicated that he did not wish to receive an increase in 2019 and, due to the COVID-19 pandemic,
again waived his right to an increase in 2020 as well as agreeing to a temporary 20% reduction in his fee. The Chairman received
a 2% increase in his fee with effect from 1 March 2021, taking his annual fee to £408,000.
Non-executive director fees
The base annual fee for non-executive directors increased on 1 March 2021 by 2% to £62,425. The fees for the chairmanship of
the Audit Committee and the Remuneration Committee are unchanged at £20,000. The fee for the Senior Independent Director
remains at £15,000 and the fees for membership of the Audit and Remuneration Committees are unchanged at £5,000.
Statement of shareholder voting
The current remuneration policy was put to shareholders for approval at a general meeting in December 2019 and, at the annual
general meeting in 2020, the advisory resolution to approve the annual report on remuneration was put to shareholders.
Both resolutions were passed.
The voting results were as follows:
Resolution
Remuneration policy
For
Against
64,495,817 (70.5%)
27,038,317 (29.5%)
Annual report on remuneration
107,891,324 (83.2%)
21,786,928 (16.8%)
Total
91,534,134
129,678,252
Withheld
178,635
12,389,877
108
Whitbread Annual Report and Accounts 2020/21 Directors’ report
Certain information required for
disclosure in this report is provided
in other appropriate sections of the
Annual Report and Accounts. These
include the corporate governance
and remuneration reports and the
Group financial statements and notes
to those financial statements, and
accordingly these are incorporated
into the report by reference.
The directors present their Report and Accounts for the year
ended 25 February 2021.
Results and dividends
Group adjusted loss before tax
Group loss before tax
Interim dividend paid on
Total dividend for the year
£635m
£1,007m
00.00p
00.00p
Details on the Group’s dividend policy can be found on page
38 in the Group Finance Director’s review.
In light of the covenant waivers and the impact of the
COVID-19 pandemic, the Board has decided not to declare
dividends for 2021.
THE BOARD
Board of Directors
The directors at the date of this report are listed on pages 72
and 73. Director changes throughout the year are shown on
page 77 of the corporate governance report.
Details of directors’ training are given in the corporate
governance report on page 77.
Directors’ service contracts
The key terms of the executive directors’ service contracts are
as follows:
› notice period – six months by the director and 12 months by
the Company;
› termination payment – details of the termination policy are
set out in our remuneration policy, which can be found on
the Company’s website (www.whitbread.co.uk);
› sickness – full salary for a maximum of 12 months in any three-
year period or for a maximum of nine consecutive months; and
› non-compete – for six months after leaving.
The dates of the executive directors’ service contracts are
as follows:
› Alison Brittain: 21 May 2015
› Nicholas Cadbury: 3 September 2012
› Louise Smalley: 25 October 2012
Non-executive directors are appointed by letters
of appointment and are subject to annual re-election.
Powers of directors
The business of the Company is managed by the directors
who may exercise all the powers of the Company, subject to
the Company’s articles of association, any relevant legislation
and any directions given by the Company by passing a special
resolution at a general meeting. In particular, the directors
may exercise all the powers of the Company to borrow money,
issue shares, appoint and remove directors and recommend
and declare dividends.
Appointment and replacement of directors
Directors shall be no fewer than two and no more than
20 in number. Directors may be appointed by the Company,
by ordinary resolution or by the Board of Directors.
In accordance with the UK Corporate Governance Code 2018
(the ‘Code’) all directors will stand for annual re-election at
each AGM.
The Company may, by special resolution, remove any director
before the expiration of his/her term of office.
Directors automatically stop being directors if:
› they give the Company a written notice of resignation
(at the date such notice expires);
› they give the Company a written notice in which they offer
to resign and the other directors decide to accept the offer;
› all of the other directors (who must comprise at least three
people) pass a resolution or sign a written notice requiring
the director to resign;
› they are or have been suffering from mental or physical ill
health and the directors pass a resolution removing the
director from office;
109
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information DIRECTORS’ REPORT CONTINUED
› they have missed directors’ meetings (whether or not an
alternate director appointed attends those meetings) for
a continuous period of six months without permission from
the directors and the directors pass a resolution removing
the director from office;
› a bankruptcy order is made against them or they make any
arrangement or composition with their creditors generally;
› they are prohibited from being a director under any
applicable legislation; or
› they cease to be a director under any applicable legislation
or are removed from office under the Company’s articles
of association.
Directors’ indemnity
A qualifying third-party indemnity provision was in force
for the benefit of the directors during the financial year.
In addition, a qualifying pension scheme indemnity provision
was in force for the benefit of Whitbread Pension Trustees
during the financial year.
Compensation for loss of office
There are no agreements between the Company and its
directors or employees providing for compensation for loss of
office or employment that occurs as a result of a takeover bid.
Directors’ share interests
Details regarding the share interests of the directors in the
share capital of the Company, including with respect to
options to acquire ordinary shares, are set out in the
remuneration report on pages 103.
SHARES
Share capital
Details of the issued share capital can be found in Note 27
to the accounts.
Holders of ordinary shares are entitled to attend and speak
at general meetings of the Company, to appoint one or more
proxies and, if they are corporations, corporate representatives
to attend general meetings and to exercise voting rights.
Holders of ordinary shares may receive a dividend and,
on a liquidation, may share in the assets of the Company.
Holders of ordinary shares are entitled to receive the
Company’s Annual Report and Accounts. Subject to meeting
certain thresholds, holders of ordinary shares may requisition
a general meeting of the Company or the proposal of
resolutions at AGMs.
Voting rights
On a show of hands at a general meeting of the Company,
every holder of ordinary shares present, in person or by
proxy, and entitled to vote, has one vote (unless the proxy is
appointed by more than one member in which case the proxy
has one vote for and one vote against if the proxy has been
instructed by one or more members to vote for the resolution
and by one or more members to vote against the resolution)
and on a poll every member present in person or by proxy and
entitled to vote has one vote for every ordinary share held.
Voting rights for any ordinary shares held in treasury are
suspended. None of the ordinary shares carry any special
rights with regard to control of the Company. Electronic and
paper proxy appointments and voting instructions must be
received by the Company’s registrars not later than (i) 48
hours before a meeting or adjourned meeting (excluding
non-working days), or (ii) 24 hours before a poll is taken,
if the poll is not taken on the same day as the meeting or
adjourned meeting.
110
Unless the directors decide otherwise, a shareholder cannot
attend or vote at any general meeting of the Company or at
any separate general meeting of the holders of any class of
shares in the Company or upon a poll or exercise any other
right conferred by membership in relation to general meetings
or polls if he or she has not paid all amounts relating to those
shares which are due at the time of the meeting.
Where a shareholder with at least a 0.25% interest in a class
of shares has been served with a disclosure notice in relation
to a particular holding of shares and has failed to provide the
Company with information concerning those shares, those
shares will no longer give that shareholder any right to vote
at a shareholders’ meeting.
Restrictions on transfer of shares
There are the following restrictions on the transfer of shares
in the Company:
› certain restrictions which may from time to time be imposed
by laws and regulations (for example, insider trading laws);
› pursuant to the Company’s share dealing code, the directors
and senior executives of the Company require approval to
deal in the Company’s shares;
› where a person with at least a 0.25% interest in a class of
shares has been served with a disclosure notice and has
failed to provide the Company with information concerning
interests in those shares;
› the subscriber ordinary shares may not be transferred
without the prior written consent of the directors;
› the directors can, without giving any reason, refuse to
register the transfer of any shares which are not fully paid;
› transfers cannot be in favour of more than four joint
holders; and
› the directors can refuse to register the transfer of an
uncertificated share in the circumstances set out in the
uncertificated securities rules (as defined in the Company’s
articles of association).
The Company is not aware of any agreements between
shareholders that may result in restrictions on the transfer
of shares or on voting rights.
B shares and C shares
Holders of B shares and C shares are entitled to receive an
annual non-cumulative preferential dividend calculated at
a rate of 75% of six month LIBOR on a value of 155 pence per
B share and 159 pence per C share respectively, but are not
entitled to any further right of participation in the profits of
the Company. They are also entitled to payment of 155 pence
per B share and 159 pence per C share respectively on
a return of capital on winding-up (excluding any intra-group
reorganisation on a solvent basis).
Except in limited circumstances, the holders of the B shares
and C shares are not entitled, in their capacity as holders
of such shares, to receive notice of any general meeting
of the Company nor to attend, speak or vote at any such
general meeting.
Both B and C shares represent significantly less than 0.01%
of the total share capital.
Whitbread Annual Report and Accounts 2020/21 Purchase of own shares
The Company is authorised to purchase its own shares in the
market. Approval to renew this authority will be sought from
the shareholders at the 2021 AGM. The Company did not
purchase and of its own shares during the year. At 25 February
2021 12.5 million shares were held as treasury shares
(27 February 2020: 12.5 million).
Employee share schemes
Whitbread does not have any employee share schemes with
shares which have rights with regard to the control of the
Company that are not exercisable directly by the employees.
Major interests
As at the end of the financial year, the Company had received
formal notification, under the Disclosure and Transparency
Rules, of the following material holdings in its shares (the
percentages shown are the percentages at the time of the
disclosure and have not been re-calculated based on the
issued share capital at the year-end):
Aberdeen Asset Management
BlackRock, inc
Longview Partners
MFS Investment Management
Vulcan Value Partners LLC
Number of
shares
9,155,869
9,105,321
9,046,346
8,855,756
6,698,606
% of issued
share capital1
4.99%
6.76%
4.48%
4.82%
4.98%
1 The % of issued share capital is taken from the date of the relevant notification
and changes to the voting rights since that date can cause higher numbers of
shares to have lower percentages and vice versa.
No changes to the above have been disclosed to the Company
in accordance with Rule 5 of the Disclosure and Transparency
Rules between the end of the financial year and 26 April 2021.
ADDITIONAL DISCLOSURES
Share capital
The table below sets out the location of information required
to be disclosed in the directors’ report (in accordance with
Listing Rule 9.8.4R, and otherwise) which can be found in
other sections of this Annual Report and Accounts and is
incorporated by reference:
Item
An indication of likely future
developments in the business
Financial risk management
objectives and policies
Research and development
Existence of branches
Section
Strategic report, pages 1 to 67
Financial statements, Note 24
N/A
N/A
Post balance sheet events
Financial statements, Note 34
Stakeholder and employee
engagement
Stakeholder engagement,
pages 56 and 57
Conflicts of interest
Statement of capitalised
interest
Corporate governance report,
page 78
Financial statements, Note 14
Long-term incentive schemes Remuneration report, pages
94, 102 and 108
Details on Whitbread's compliance with Disclosure Guidance
and Transparency Rules 7.2 can be found on this page.
MANDATORY GREENHOUSE GAS REPORTING
In order to comply with the requirements of the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018, we have amended our
environmental reporting accordingly.
We have considered the six main GHGs and report in CO2e
for our scope 1 (direct) and scope 2 (indirect) CO2 emissions.
We have used the GHG Protocol Corporate Accounting and
Reporting Standard methodology to calculate our emissions
as well as DEFRA and International Energy Standards GHG
Conversion Factors for Company Reporting.
Limited independent assurance has been carried out on
selected environmental and sustainability performance data
against DEFRA Environmental Reporting Guidelines, the GHG
Protocol Corporate Accounting and Reporting Standard and
the GRI Principles for defining report quality. This assurance
report can be found on the company website.
Scope 1 includes emissions from the fuels we use in our hotels,
restaurants and offices such as natural gas and liquid
petroleum gas. It also includes CO2e from business owned
vehicles which includes company cars and food logistics
vehicles as we own the lease arrangements. CO2e from
company cars is calculated using the manufacturers stated
performance multiplied by an uplift stated in the DEFRA
standards methodology paper.
Scope 2 relates to the indirect emissions associated with the
generation of the electricity consumed in our sites including
district heating.
111
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information DIRECTORS’ REPORT CONTINUED
Source of emissions
Gas (T CO2e)
LPG (T CO2e)
Fuel oil (T CO2e)
F-gas (T CO2e)
Business travel (T CO2e)
Electricity and district heating
(location based) (T CO2e)
Electricity and district heating
(market based) (T CO2e)
Gross emissions (location based)
Gross emissions (market based)
Floor area (m2)
Tonnes carbon per m2 floor area
(location based)
Tonnes carbon per m2 floor area
(market based)
Gas (kWh)
LPG (kWh)
Fuel oil (kWh)
Scope
Scope 1
Scope 1
Scope 1
Scope 1
Scope 1
2020/21
Rest of
the world
590
0
0
0
85
UK
35,954
2,594
0
3,921
3,110
Total
36,544
2,594
0
3,921
3,195
2019/20
Rest of
the world
112
0
0
15
38
UK
54,575
2,821
0
5,963
6,647
Total
Total %
change
54,687 -33.2%
2,821
-8.0%
0
0.0%
5,978 -34.4%
6,685 -52.2%
Scope 2
51,509
3,483
54,992
84,621
1,195
85,816 -35.9%
Scope 2
2,711
97,088
48,290
2,516,989
2,114
4,157
2,789
68,821
4,825
101,245
51,079
5,110
154,627
75,116
1,984
1,360
2,149
7,094 -32.0%
155,986
-35.1%
77,264 -33.9%
2,585,810
2,499,376
19,252
2,518,628
2.7%
0.0392
0.0198
0.0619 -36.8%
0.0307 -35.6%
195,542,009 3,205,701
11,263,465
0
0
0
198,747,710 296,844,457
13,115,428
11,263,465
0
0
607,835 297,452,291
-33.2%
0
0
13,115,428
-14.1%
0
0.0%
Business travel (kWh)
12,237,601
333,754
12,571,355
25,547,455
146,149 25,693,604
-51.1%
Electricity, district heating and EV
charging (kWh)
Self-generated electricity via solar
PV (kWh)
Total (kWh)
220,932,960 13,272,101 234,205,061
331,067,531 3,847,653
334,915,184 -30.1%
4,406,461
3,652,758
444,382,496 16,811,556 461,194,052 670,227,629 4,601,637 674,829,265
4,406,461
3,652,758
0
0
20.6%
-31.7%
When defining the scope of our data we do not report on
operations under Joint Venture agreements, or are fully
franchised, where we do not have operational control such as
Premier Inn (UAE). For reasons of materiality, small, one man,
offices in Australasia and the Far East have been excluded.
All other sites throughout the world are included.
Where possible we have reported billed or AMR data.
For those operations which are currently beyond our reporting
capabilities, we have used an estimation model based on
historic budgeted or billed usage.
In 2020/21 we have continued our strong track record on the
energy efficiency of our estate, with a focus around utilising
our remote BMS control to allow us to achieve reductions
without the need to visit sites. Through this control we reduced
the runtime of assets in unoccupied sites, saving energy whilst
also extending the lifecycle of the assets. In addition, we
utilised our energy management software throughout the year
during both trading and non-trading periods to monitor and
target sites to optimise energy consumption.
We have continued to trial cutting edge technologies that will
form the investment programmes of future years. For example,
we have installed smart controllers to improve the efficiency
of our space heating and cooling, and air source heat pumps
for efficient hot water generation to reduce carbon.
We continue to work with suppliers and technical experts
across a range of technologies to develop our options for
investment in sustainability that also have good paybacks
to support the business.
Environmental policies
Whitbread businesses depend upon the environment to
operate hotels and restaurants through the energy we use
and the services and products we provide to our customers.
Our main environmental impacts are from the use of natural
resources, water consumption and generation of residual waste
and from GHG emissions associated with energy and fuel use.
Whitbread’s strategic drive is provided by the corporate
responsibility Force for Good programme which includes
energy, water and waste reduction activities. We are
committed to minimising our impact on the environment,
preventing pollution and promoting good environmental
practices. Further details can be found on pages 48 to 55.
ADDITIONAL INFORMATION
Stakeholder engagement
Information on how the directors engage with Whitbread’s
different stakeholders, including shareholders, employees and
customers, and on how directors have regard to stakeholders’
interests and the need to foster stakeholder relationships
when making decisions can be found in the stakeholder
engagement section on pages 56 and 57.
Employment policies
Whitbread has a range of employment policies covering such
issues as diversity, employee wellbeing and equal opportunities.
112
Whitbread Annual Report and Accounts 2020/21 The Company takes its responsibilities to the disabled seriously
and seeks not to discriminate under any circumstances
(including in relation to training, career development and
promotion) against current or prospective employees
because of any disability or for any other reason. Fair and full
consideration is given to applications for employment made by
disabled persons, having regard to their aptitudes and abilities.
Employees who become disabled during their career at
Whitbread will be retained in employment wherever possible
and given help with rehabilitation and training.
Employee involvement
The importance of good relations and communications with
employees is fundamental to the continued success of our
business. Each of the Group’s operating businesses maintains
employee relations and consults employees as appropriate to
its own particular needs. In addition, our employee opinion
survey, YourSay, is conducted to provide insight into the views
of employees.
Our employees are actively encouraged to take part in our
Sharesave scheme, which is available to all employees and
offers an option price discounted by 20%.
An Employee Forum has been established to ensure that the
views of the workforce are properly represented. More details
can be found on page 46.
Regular internal communications are made to all employees
to ensure that they are kept well informed of the performance
of the Group and of financial and economic factors that may
affect the Company’s performance.
Further information on employee involvement can be found
on page 46.
Amendment of the Company’s articles of association
Any amendments to the articles of association of the Company
may be made in accordance with the provisions of the
Companies Act 2006 by way of special resolution.
Significant agreements
The Company’s facility, bond and private placement loan notes
agreements, details of which can be found in Note 20 to the
accounts, contain provisions entitling the counterparties to
exercise termination or other rights in the event of a change
of control of the Company.
Contractual arrangements
The Group has contractual arrangements with numerous third
parties in support of its business activities, none of which are
considered individually to be essential to its business and,
accordingly, it has not been considered necessary for an
understanding of the development, performance or position
of the Group’s business to disclose information about any
of those third parties.
Post balance sheet events
Information on post balance sheet events is provided in Note
34 to the accounts.
Political donations
The Company has not made any political donations during the
year and intends to continue its policy of not doing so for the
foreseeable future.
Auditor
Deloitte LLP has expressed its willingness to continue in office
as auditor of the Company and a resolution proposing its
reappointment will be put to shareholders at the 2021 AGM.
After proper consideration, the Audit Committee is satisfied
that Deloitte LLP continues to be objective and independent
of the Company. In coming to this conclusion, the Audit
Committee gave full consideration to any non-audit work
carried out by Deloitte LLP, and has concluded that certain
services will not be carried out by Deloitte LLP, as outlined
in the Committee’s terms of reference.
Disclosure of information to auditor
The directors have taken all reasonable steps to make
themselves aware of relevant audit information and to ensure
that the auditor is aware of that information. The directors
are not aware of any relevant audit information which has not
been disclosed to the auditor.
Going concern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position are
set out in the strategic report on pages 1 to 67. The financial
position of the Company, its cash flows, net debt and
borrowing facilities and the maturity of those facilities are set
out in the Group Finance Director’s review on pages 36 to 41.
In addition, there are further details in the financial statements
on the Group’s financial risk management, objectives and
policies (Note 24) and on financial instruments (Note 25).
The directors have outlined the assessment approach for
going concern in the accounting policy disclosure in Note 2
of the consolidated financial statements. Following that review
the directors have concluded that the going concern basis
remains appropriate.
The viability statement can be found on page 67.
Annual general meeting
The AGM will be held at 2:00pm on 17 June 2021 at Whitbread
Court, Houghton Hall Business Park, Porz Avenue, Dunstable
LU5 5XE. The Notice of Meeting is enclosed with this report for
shareholders receiving hard copy documents and is available
at www.whitbread.co.uk for those who have elected to receive
documents electronically. Due to the exceptional circumstances
of the COVID-19 pandemic, it is currently anticipated that
shareholders will not be able to attend the meeting. The meeting
will be held via webcast and shareholders will be able to fully
participate in the meeting by both asking questions and voting
remotely in real time. In the event that Government restrictions
change after the Notice of Meeting is mailed to shareholders,
we will announce any changes to the arrangements via the
Regulatory News Service and our website.
Approved by the Board on 26 April 2021 and signed.
Chris Vaughan
General Counsel and Company Secretary
Registered Office:
Whitbread Court
Houghton Hall Business Park
Porz Avenue
Dunstable
Bedfordshire LU5 5XE
Registered company number: 04120344
113
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information CORPORATE GOVERNANCE
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 accounting standards in
conformity with the requirements of the Companies Act 2006
and International Financial Reporting Standards (IFRS
Standards) adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union. The directors
have also chosen to prepare the parent company financial
statements in accordance with Financial Reporting Standard
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
Company for that period.
Responsibility statement
We confirm that to the best of our knowledge:
› the financial statements, prepared in accordance with the
relevant financial 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 taken 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.
In preparing the parent company financial statements, the
directors are required to:
This responsibility statement was approved by the Board
of Directors on 26 April 2021 and is signed on its behalf by:
› select suitable accounting policies and then apply them
consistently;
› make judgements and accounting estimates that are
reasonable and prudent;
› state whether applicable Financial Reporting Standard 101
Reduced Disclosure Framework has been followed, subject
to any material departures disclosed and explained in the
financial statements; and
Alison Brittain
Chief Executive
Nicholas Cadbury
Group Finance Director
› 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 Standards are insufficient
to enable users to understand the impact of particular
transactions, other events and conditions on the entity’s
financial position and financial 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.
114
Whitbread Annual Report and Accounts 2020/21 Independent auditor’s report
to the members of Whitbread plc
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit of the
financial statements section of our report.
We are independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as
applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the Group
and Parent company for the year are disclosed in Note 5 to the
financial statements. We confirm that the non-audit services
prohibited by the FRC’s Ethical Standard were not provided to
the Group or the Parent Company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Report on the audit of the financial statements
1. Opinion
In our opinion:
› the financial statements of Whitbread plc (the ‘parent
company’) and its subsidiaries (the ‘Group’) give a true
and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 25 February 2021 and of the
Group’s loss for the 52 weeks then ended;
› the Group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006 and International Financial
Reporting Standards (IFRSs) as adopted by the European
Union;
› the Parent Company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including
Financial Reporting Standard 101 “Reduced
Disclosure Framework”;
› the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
› the Consolidated income statement;
› the Consolidated statement of comprehensive income;
› the Consolidated and Parent Company statements of
changes in equity;
› the Consolidated and Parent Company balance sheets;
› the Consolidated cash flow statement;
› the related Notes to the consolidated financial statements
1 to 35, including the accounting policies; and
› the related notes to the Parent Company financial
statements 1 to 9.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law, international accounting standards in conformity with
the requirements of the Companies Act 2006 and IFRSs as
adopted by the European Union. The financial reporting
framework that has been applied in the preparation of the
parent company financial statements applicable law and
United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
115
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 3. Summary of our audit approach
Key audit matters The key audit matters that we identified in the current year were:
› Going concern;
›
›
› Presentation and valuation of the UK Coronavirus Job Retention Scheme claims.
Impairment of property, plant and equipment and right-of-use assets.
Impairment of goodwill relating to the Germany cash generating unit; and
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the Group financial statements was £16.0 million (2020: £16.9 million) which
was determined on the basis of 0.42% of net assets. In the prior year, we determined materiality on the basis
of 5% of adjusted profit before tax. We changed the basis year on year, and determined a lower materiality
overall, in order to reflect the impact of COVID-19 on the Group.
Scoping
We focused our Group audit scope primarily on all significant trading entities at Premier Inn in the UK and the
Group head office.
Significant
changes in our
approach
These locations represent the principal business units and account for 98% of the Group’s revenues, 93% of
the Group’s loss before tax and 87% of the Group’s net assets.
As noted above, we changed the basis for determining materiality compared to the prior year.
Our 2020/21 report includes two new key audit matters as set out below:
›
Impairment of goodwill relating to the Germany cash generating unit; and
› Presentation and valuation of the UK Coronavirus Job Retention Scheme claims.
We no longer report the following as key audit matters:
›
IFRS 16 Leases: Discount rate methodology – this matter was specific to the transition to IFRS 16 in the prior
period and the material balances that were recognised at that time.
› Share buy-back and tender offer – the audit procedures were not required in the current period as no such
transactions have occurred.
We have performed specified audit procedures on significant balances in the Germany operating segment
due to its growth in the period, following the acquisition of Foremost Hospitality Hiex GmbH and the 13 hotels
from Centro Hotel Group.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going concern
basis of accounting is discussed in section 5.1.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group's and Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
116
Whitbread Annual Report and Accounts 2020/21INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WHITBREAD PLC CONTINUED 5.1. Going concern
Key audit matter
description
As stated in Note 2 to the financial statements, the directors’ Report on page 113 and the Audit Committee
report on page 82, the consolidated financial statements have been prepared on the going concern basis.
The Board of directors has concluded that there are no material uncertainties which may cast significant
doubt over the Group’s and Company’s ability to continue as a going concern for at least twelve months
from the date of approval of the financial statements.
At 25 February 2021, the Group had cash and cash equivalents of £1,256 million and committed facilities of
£2,233 million, of which £1,302.5 million had been drawn down.
The impact of the COVID-19 pandemic has had a significant impact on the revenue, profits and cash flows
of the business over the last financial year. The future financial performance of the Group is dependent on
the wider market and its recovery from the pandemic. The current and ongoing restrictions in place to control
the virus spreading has heightened uncertainty in the Group’s assessment of these factors.
The Group has taken a number of actions to reduce cash outflows and maintain liquidity including, but not
limited to: the raising of £981 million through a rights issue; the issuance of £550 million of Green bonds;
the extension of the Revolving Credit Facility (“RCF”) to September 2023; and a number of cost reduction
measures (as set out in Note 2). Subsequent to the year end, the Group has repaid £200 million of the
US Private Placement (“USPP”) Notes due to mature in 2027.
Following the extension of the RCF, repayment (and planned repayment) of the USPPs, no covenants
associated with these facilities are required to be measured within the going concern period of assessment.
These have been replaced with temporary covenants, which require that net debt (excluding lease liabilities)
must be less than £2 billion and liquidity headroom to available facilities must be greater than £400 million.
The Group received covenant waivers associated with the defined benefit pension scheme in the prior year.
These will be tested in March 2022, and so will be tested within the going concern period.
As a result of this uncertainty, the Group has modelled three scenarios:
› Base case – operations recover in line with the UK Government’s four step road map;
› Severe but plausible – slower-than-expected easing of restrictions and further national restrictions during
winter FY22; and
› Reverse stress test – assumes near-zero occupancy.
Under the base case, the Group is not forecast to breach either the relaxed covenants related to the RCF
(agreed as part of the waivers received in the prior year) or the pension covenant. However, under the severe
but plausible scenario, the Group is forecast to breach the pension covenant to be tested in March 2022, which
would require a further payment to the Group’s pension scheme. There is judgement in assessing the valuation
of this payment which is based upon the prevailing market conditions at the time of calculation. However, the
Group has sufficient forecast liquidity to meet this additional requirement under the sensitivities modelled.
Making this payment would remove any impact of a breach in the pension covenant and has no cross-default
implications.
The reverse stress test assumes an extension of the current lockdown restrictions, with hotels operating
at near zero-occupancy. This shows that the Group would continue to have enough liquidity to meet its
obligations as they become due, for a period well beyond what is considered reasonable when taking into
account the past closure experience over the last 13 months.
As at the date of this report, the global outlook as a result of COVID-19 remains uncertain and the range of
potential outcomes is unknown. In particular, should the impacts of the pandemic on trading conditions be
more prolonged or severe than currently forecast by the directors, the Group’s going concern assessment
would be dependent on its ability to access additional liquidity.
As a result of the ongoing impact of COVID-19 on the Group and the uncertainties in the wider market and
road-map restriction, as well as the judgement surrounding the quantum of the pension payment, we
identified a key audit matter related to going concern.
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Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 5.1. Going concern
continued
How the scope
of our audit
responded to the
key audit matter
In responding to the identified key audit matter, we completed the following audit procedures:
› Obtained an understanding of the relevant controls relating to the Group’s budgeting and
forecasting process;
› Reviewed and assessed the RCF extension and Green Bond issuance documentation and terms of the early
repayment of the US private placements to understand the principal terms, related financial covenants and
associated waivers;
› Verified the mechanical accuracy of the models used to prepare the Group’s forecasts;
›
In conjunction with our pension specialists, assessed the procedures performed and assumptions used by
management’s experts in estimating the pension payment, alongside the related legal documents;
› Challenged, with reference to external data, recent performance and historic forecasting accuracy, the key
assumptions underpinning the Group’s forecasts;
› Performed further sensitivities to the severe but plausible scenario, with reference to external market data
and forecasts;
› Assessed the likelihood of the assumptions in the reverse stress test;
› Considered and challenged the mitigating actions available to the Group; and
› Assessed the sufficiency of the Group’s disclosure concerning the adoption of the going concern basis
of accounting.
Key observations The directors’ forecasts, as well as reasonably possible downside scenarios, indicate that the Group has
sufficient financial resources over the going concern period, including the ability to make a further payment to
the Group’s pension scheme to the extent the covenant is breached. We consider that the period over which
the reverse stress test assumes further closures is beyond what is considered reasonable.
Based on the information available at the date of this report and the current UK roadmap, we consider the
forecasts prepared by the directors and their underlying assumptions to be reasonable.
We have reviewed the disclosures prepared by the directors set out on pages 127 and 128 and consider them
to be appropriate.
118
Whitbread Annual Report and Accounts 2020/21INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WHITBREAD PLC CONTINUED 5.2. Impairment of property, plant and equipment and right-of-use assets
Key audit matter
description
As described in Note 15 (Impairment), Note 14 (Property, plant and equipment) and Note 22 (Lease
Agreements) of the financial statements, the Group held £4,213.1 million (2020: £4,232.0 million) of Property,
plant and equipment and £2.738.4 million (2020: £2,273.7 million) of Right-of-use assets at 25 February 2021.
Under IAS 36 Impairment of Assets, the Group is required to complete an impairment review of its site
portfolio where there are indicators of impairment. In the prior year, our risk was focused on maturing sites
where an impairment indicator had been identified, but no impairment recognised. In the current year,
a pervasive indicator of impairment has been identified, across all sites, as a result of the impact of the
COVID-19 pandemic on trading. The pandemic is expected to continue to impact the short-term cashflows,
which are a key assumption in the impairment assessment. The extent of this impact is inherently uncertain
and has led to an increase in the level of risk of material misstatement compared to the prior year.
An impairment of £89.9 million was recognised at the half year (27 August 2020) with a further £8.0 million
at the year end, a total of £97.9 million (2020 full year: £36.6 million).
Estimation is required in determining the recoverable amount of the Group’s portfolio of sites, particularly in
relation to sites which are not yet considered to be mature, where there is limited history to use as objective
evidence to support future plans and the recovery profile post COVID-19. There is a risk that the carrying
value of sites (including the Property, Plant and Equipment and Right-of-use assets) may be higher than the
recoverable amount. Where a review for impairment is performed, the recoverable amount is determined
based on the higher of ‘value-in-use’ or ‘fair value less costs of disposal’ (which is determined through the
use of either a discounted cash flow method using a market based discount rate or an industry valuation
methodology).
There are several judgements in assessing the appropriate valuation, which are set out below:
› Determining the cash-generating units (CGUs) that show indicators of impairment. A CGU is determined
to be each individual trading outlet;
› Calculation of the appropriate discount and long-term growth rates;
› Estimates of future trading and cash flow projections, including the recovery post COVID-19;
› Assessing the future growth profile of sites which have not yet reached maturity;
› Appropriateness of other valuation methodologies, as well as inputs to these; and
› Estimating a reasonable possible change in assumptions for the purpose of sensitivity analysis.
The Group’s accounting policy on impairment and key sources of estimation uncertainty in relation to
Impairment testing are set out in Note 2. In addition, Impairment testing – property, plant and equipment and
right-of-use assets is also a significant issue considered by the Audit Committee, as discussed on page 81.
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Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 5.2. Impairment of property, plant and equipment and right-of-use assets
continued
How the scope
of our audit
responded to the
key audit matter
In responding to the identified key audit matter, we completed the following audit procedures:
› Obtained an understanding of the key controls relating to the impairment review process and determination
of cash flow forecasts;
› Challenged the valuation methodologies adopted by management to identify impairment indicators,
including the consistency of these with the requirements of IAS 36 and IFRS 13 Fair Value Measurement;
› Tested the mechanical accuracy of the impairment models, with input from our analytics and modelling
specialists;
› Assessed the completeness of outlets displaying impairment indicators through challenging locations which
have been heavily impacted by COVID-19 and considering other risk factors;
› Assessed the appropriateness of the discount rates applied in conjunction with our internal valuation
specialists and compared the rates applied with our internal benchmarking data;
› Assessed the appropriateness of forecast revenue and EBITDA margin growth rates through comparison
to board approved plans with reference to historical forecasting accuracy, external market data (such as
industry forecasts); we worked with our industry specialists to help inform our challenge, particularly
focusing on the expected recovery for FY22 as COVID-19 restrictions are eased, and longer term
expectations;
› Performed testing on a sample of sites where impairment had been recognised or impairment indicators
identified, but no impairment recognised; we challenged the individual circumstances of these sites and
whether the rationale for management’s conclusion was appropriate. In order to perform this assessment,
we reviewed the trading history of the site, understood its current performance with reference to market
data and challenged the appropriateness of Group-wide forecasts being applied;
› Assessed the sensitivity analysis performed by management and challenged how this correlated with the
downside scenarios modelled by the Board (consistent with the going concern assessment); and
› Assessed the completeness and accuracy of disclosures within the financial statements in accordance with
IFRS, in particular Note 15.
Key observations Based on the audit procedures performed, we are satisfied that the impairment recognised throughout the
year and the carrying value of property, plant and equipment and right-of-use assets is appropriate. We
consider the disclosures, including the sensitivities in Note 15, to be appropriate.
120
Whitbread Annual Report and Accounts 2020/21INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WHITBREAD PLC CONTINUED 5.3. Impairment of goodwill relating to the Germany cash generating unit
Key audit matter
description
On 28 February 2020, the Group acquired 100% of the share capital of Foremost Hospitality Hiex GmbH for
consideration of £225.8 million. Goodwill of £224.2 million was recognised on acquisition, which was allocated
to the Germany CGU.
IAS 36 requires that goodwill be tested for impairment at least annually, but also when there is an indication of
impairment. As a result of the difficult trading conditions arising from the COVID-19 pandemic, an impairment
indicator was identified in respect of the Germany CGU. As set out in Note 15, an impairment of £238.8 million
(representing the total goodwill allocated to the Germany CGU, following foreign exchange movements since
the original acquisition) was recorded reflecting the impact of the pandemic on current and future growth
rates. No impairment has been recognised against the property, plant and equipment or right-of-use assets
in Germany.
There are inherent challenges in forecasting results due to the COVID-19 pandemic as well as the Group’s
current positioning in Germany, which is in its early phases.
The impairment test compares the carrying value of the goodwill to the higher of the value-in-use or the fair
value less costs of disposal (the ‘recoverable amount’). Developing a recoverable amount requires significant
management judgement; the key assumptions applied by management in the impairment model are:
› the sales and EBITDA forecasts for the Germany CGU in the next five years (the budget was prepared on
an individual site basis in earlier periods);
› the discount rate applied; and
› the long term growth rate.
There is significant judgement in assessing the current and future growth rates in Germany, particular as
a result of Covid-19 and the Group’s current position in the German market.
The assumptions used within management’s assessment and further detail on the impairment are set out
in Note 15.
We consider this to represent a key audit matter reflecting the inherent uncertainty in the forecasts and
estimation required in setting the assumptions.
In responding to the identified key audit matter, we completed the following audit procedures:
› Obtained an understanding of the relevant controls relating to the review and approval of the impairment
review, as well as the forecasting process for Germany;
› Understood the context of the acquisition, the Group’s current positioning within the German market and
wider strategic plans;
› Tested the integrity of the model and cash flow forecasts and assessed whether the methodology used was
consistent with IAS 36;
› Assessed the mechanical accuracy of the impairment model;
› With the involvement of our internal valuation specialists, evaluated the discount rate assumptions;
› Assessed the long term growth rate applied, with reference to external data sources;
› Challenged the cash flow projections through comparison to the German business plan, testing of individual
hotel assumptions (through an assessment of forecast occupancy and daily rates with reference to
competitor sites operating in the same region) and engaged our industry specialists to provide a view on
the overall assumptions used, including the growth trend for the next 3-5 years; this was performed with
reference to the ongoing COVID-19 restrictions and the forecast recovery thereafter; and
How the scope
of our audit
responded to the
key audit matter
› Assessed the appropriateness of disclosures within the financial statements in accordance with IFRS.
Key observations We are satisfied that the assumptions used by management in determining the impairment of the goodwill
allocated to the Germany CGU and the disclosures made are appropriate.
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Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 5.4. Presentation and accuracy of the UK Coronavirus Job Retention Scheme claims
Key audit matter
description
As described in Note 9 (Government grants and assistance) and the Audit Committee report on page 81,
during the year, the Group has received government support designed to mitigate the impact of COVID-19.
In the UK, the Government has provided funding towards the salary costs of employees who have been
‘furloughed’ through the Coronavirus Job Retention Scheme (“CJRS”). This funding meets the definition
of a government grant under IAS 20 Government Grants and a total of £138.3 million (2020: £Nil) has been
recorded within Other Income.
IAS 20 requires that government grants, including non-monetary grants at fair value, shall not be recognised
until there is reasonable assurance that:
(a) the entity will comply with the conditions attaching to them; and
(b) the grants will be received.
The application of the rules of the CJRS is complex, particularly the application of the rules in relation to
“CJRS2”, which provides employers with the flexibility to return employees part time under the flexible
furlough option. Additionally there is a risk that income is not recorded in the correct period (when the IAS 20
recognition criteria is met). Management has engaged external advisors to review a sample of the submitted
claims to assess the accuracy of the calculations and the application of the scheme rules.
Under IAS 20, there is a choice to account for the grant as Other Income or net of costs (offsetting payroll
expenses). Management has concluded that the clearest presentation is as Other Income.
Furthermore, as described in the Audit Committee report on page 81 and the Accounting Policies (Note 2),
the classification and presentation of income and costs as Adjusting items in the Income Statement (to derive
‘Adjusted profit before tax’ and other adjusted measures) is a judgement and not a requirement of IFRS.
Judgement is exercised by management in determining the classification of items as adjusting. Management
has determined that CJRS does not meet the definition as an adjusting item on the basis that the funding is
compensation for costs that form part of the normal operations of the business (salary costs). Additionally,
the salary costs have not been classified as adjusting and therefore the related income (CJRS income) has not
been classified as an adjusting item.
We consider the presentation and accuracy of the UK Job Retention Scheme to be a key audit matter.
In responding to the identified key audit matter, we completed the following audit procedures:
› Obtained an understanding of the relevant controls in place and the process that management followed in
calculating, accounting for and presenting the CJRS claims;
›
In understanding the process, reviewed the external advisor’s reports and evaluated any observations from
the reports and management’s responses to them;
› With input from our CJRS specialists, evaluated a sample of CJRS models and challenged the approach to
calculating claims and the application of the scheme rules;
› With input from our CJRS specialists, recalculated a sample of claims to assess whether conditions have
been met and the calculations are accurate;
› Traced a sample of claims to underlying payroll records and traced all cash received to support;
› Checked the mechanical accuracy of the CJRS models, with input from our analytics and
modelling specialists;
› Assessed whether the disclosure of the CJRS income is in line with IAS 20 Government Grants requirements;
› Challenged management on the judgement exercised in classifying the CJRS income as a non-adjusting
item; and
How the scope
of our audit
responded to the
key audit matter
› Evaluated the status of claims spanning the year end and whether these have been accounted for correctly
as at 25 February 2021.
Key observations Where management has applied judgement in the interpretation of the scheme rules, we are satisfied that the
judgments are reasonable. We consider the accounting for balances at the yearend to be reasonable. We are
satisfied that the valuation and presentation of the CJRS is appropriate.
122
Whitbread Annual Report and Accounts 2020/21INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WHITBREAD PLC CONTINUED 6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for
determining
materiality
Rationale for
the benchmark
applied
Group financial statements
£16.0 million (2020: £16.9 million)
Parent Company financial statements
£6.4 million (2020: £6.7 million)
We have determined materiality to be £16.0 million,
which represents 0.42% (2020: 0.45%) of net assets.
In the prior year, we determined materiality based
on 5% of adjusted profit before tax.
Materiality was determined on the basis of the Parent
Company’s net assets. This was then capped at 40%
of Group materiality.
The approach is consistent with the prior year.
In determining our benchmark for materiality we
considered the impact of COVID-19 on the financial
performance and position of the Group in the
current year, as well as the focus of the users of the
financial statements.
The entity is non-trading and contains an investment
in all of the Group’s trading components and as
a result, in line with prior year, we have determined
materiality on the basis of net assets for the
current year.
After due consideration, we determined that net
assets was the most appropriate benchmark to use,
and determined a lower materiality overall
compared to the prior year.
Net assets
£3,828m
● Net asset
● Group materiality
Group materiality £16m
Component materiality range
£6m to £15m
Audit Committee reporting
threshold £0.8m
123
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and
rationale for
determining
performance
materiality
Group financial statements
65% (2020: 70%) of Group materiality
Parent Company financial statements
65% (2020: 70%) of Parent Company materiality
In determining performance materiality for both the Group and the Parent Company, we considered the
following factors:
› Our risk assessment, including our assessment of the Group’s overall control environment;
› Our cumulative knowledge of the Group, including the nature, quantum and volume of corrected and
uncorrected misstatements in prior periods; and
› The impact of COVID-19 on the business, including the restructuring at both support centres and
operations, which has resulted in turnover of staff.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £0.8 million
(2020: £0.8 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the
financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls,
and assessing the risks of material misstatement at the Group level.
Components were selected to provide an appropriate basis for undertaking audit work to address the risks of material
misstatement. Based on our assessment, we have focused our audit on the UK business, which was subject to full audit
procedures, and performed specified audit procedures in the Germany business. This work was all performed by the Group
audit team.
At the Group level, we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that
there were no significant risks of material misstatement of the aggregated financial information of the remaining components
not subject to audit or specified audit procedures. We have also performed analytical review procedures on other wholly owned
and joint venture businesses.
All audit procedures were completed by the Group audit team in the UK.
Revenue
2%
Statutory loss before tax
Net assets
7%
1%
12%
98%
Full audit scope
Review at Group level
93%
87%
Full audit scope
Review at Group level
Full audit scope
Specified audit procedures
Review at Group level
124
Whitbread Annual Report and Accounts 2020/21INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WHITBREAD PLC CONTINUED Our consideration of the control environment
The Whitbread IT landscape contains a number of IT systems,
applications and tools used to support business processes and
for reporting. In line with our scoping of components (refer to
section 7.1) our work in relation to IT controls focuses on the
UK component. We perform an independent risk assessment
of the systems, applications and tools to determine those
which are of greatest relevance to the Group’s financial
reporting, including those that contain system configured
automated controls that host financially relevant data and
associated reports.
We performed testing of General IT Controls (“GITCs”) of
these systems, typically covering controls surrounding user
access management, change management and interfaces with
other systems relating to in scope IT systems (such as Oracle
Fusion) as well as controls over key reports generated from
the IT systems and their supporting infrastructure (database
and operating system).
In order to evaluate IT controls, we performed walkthrough
procedures of relevant controls in key business cycles,
including revenue, property, plant and equipment, intangible
assets, expenditure (processed through Oracle Fusion) and
IFRS 16 modifications to understand whether the purpose of
the control was effectively designed to address the IT related
risk. We then performed testing of the control across the audit
period, to determine whether the control had been
consistently applied as designed.
Our procedures enabled us to place reliance on IT controls, as
planned, in the audit approach across a number of business
cycles, where audit quality and effectiveness are enhanced by
doing so. Where control deficiencies were identified during
our testing, we were able to identify and test mitigating
controls. Based on the testing performed, we adopted a
controls reliance approach over the revenue, expenditure
(processed through Oracle Fusion), additions to property
plant and equipment and intangible assets processes.
8. Other information
The other information comprises the information included in
the annual report, being the strategic reports on pages 2 to 67
and the governance reports on pages 68 to 114, other than the
financial statements and our auditor’s report thereon.
The directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
125
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 11. Extent to which the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
11.2. Audit response to risks identified
As a result of performing the above, we identified Impairment
of property, plant and equipment and right-of use assets and
impairment of goodwill relating to the Germany CGU as key
audit matters related to the potential risk of fraud. The key
audit matters section of our report explains the matters in
more detail and also describes the specific procedures we
performed in response to those key audit matters.
11.1. Identifying and assessing potential risks related to
irregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
› the nature of the industry and sector, control environment
and business performance including the design of the
Group’s remuneration policies, key drivers for directors’
remuneration, bonus levels and performance targets;
› results of our enquiries of management, internal audit,
General Counsel and the Audit Committee about their own
identification and assessment of the risks of irregularities;
› any matters we identified having obtained and reviewed the
Group’s documentation of their policies and procedures
relating to:
In addition to the above, our procedures to respond to risks
identified included the following:
› reviewing the financial statement disclosures and testing
to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as
having a direct effect on the financial statements;
› enquiring of management, the Audit Committee and
in-house legal counsel concerning actual and potential
litigation and claims;
› performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
› reading minutes of meetings of those charged with
governance, reviewing internal audit reports and
correspondence with HMRC; and
in addressing the risk of fraud through management
override of controls, testing the appropriateness of journal
entries and other adjustments; assessing whether the
judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual
or outside the normal course of business.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement team
members including internal specialists, and remained alert to
any indications of fraud or non-compliance with laws and
regulations throughout the audit.
›
identifying, evaluating and complying with laws and
regulations and whether they were aware of any instances
of non-compliance;
›
› detecting and responding to the risks of fraud and
whether they have knowledge of any actual, suspected
or alleged fraud;
› the internal controls established to mitigate risks of fraud
or non-compliance with laws and regulations;
› the matters discussed among the audit engagement team
and relevant internal specialists, including tax, valuations,
pensions, IT, financial instrument specialists and industry
specialist regarding how and where fraud might occur in the
financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the
opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential for
fraud in the following areas: impairment of property, plant and
equipment and right-of-use assets and impairment of goodwill
related to the Germany CGU. In common with all audits under
ISAs (UK), we are also required to perform specific procedures
to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory
frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the
financial statements. The key laws and regulations we
considered in this context included the UK Companies Act, the
Listing Rules, UK corporate governance legislation, pension
legislation and UK and overseas tax legislation, including that
associated with government support schemes available as
a result of COVID-19.
In addition, we considered provisions of other laws and
regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental
to the Group’s ability to operate or to avoid a material penalty.
126
Whitbread Annual Report and Accounts 2020/21INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WHITBREAD PLC CONTINUED Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the
Companies Act 2006
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
In our opinion the part of the directors’ remuneration report
to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course
of the audit:
› we have not received all the information and explanations
we require for our audit; or
› adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
› the Parent Company financial statements are not in
agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report
if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the directors’ remuneration
report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the audit committee, we
were appointed by the members on 21 June 2016 to audit the
financial statements for the year ended 3 March 2016 and
subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments
of the firm is six years, covering the years ending 3 March 2016
to 25 February 2021.
15.2. Consistency of the audit report with the additional report
to the Audit Committee
Our audit opinion is consistent with the additional report to
the Audit Committee we are required to provide in accordance
with ISAs (UK).
› the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
› the strategic report and the directors’ report have been
prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the
Group and the Parent Company and their environment
obtained in the course of the audit, we have not identified
any material misstatements in the strategic report or the
directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors' statement
in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the
Group’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the financial statements and our knowledge obtained
during the audit:
› the directors’ statement with regards to the
appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified
set out on page 113;
› the directors’ explanation as to its assessment of the
Group’s prospects, the period this assessment covers
and why the period is appropriate set out on page 67;
› the directors' statement on fair, balanced and
understandable set out on page 81;
› the Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 82;
› the section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on page 82; and
› the section describing the work of the Audit Committee
set out on page 81.
127
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 16. Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than
the company and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Kate J Houldsworth FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, UK
26 April 2021
128
Whitbread Annual Report and Accounts 2020/21INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WHITBREAD PLC CONTINUED Consolidated accounts 2020/21
Contents
130
131
132
133
134
135
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated cash flow statement
Notes to the consolidated financial statements
129
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information Consolidated income statement
Year ended 25 February 2021
52 weeks to 25 February 2021
52 weeks to 27 February 2020
Before
adjusting
items
£m
Adjusting
items
(Note 6)
£m
Statutory
£m
Notes
Before
adjusting
items
£m
Adjusting
items
(Note 6)
£m
Statutory
£m
CONTINUING OPERATIONS
Revenue
Other income
Operating costs
Impairment of loans to joint ventures
OPERATING (LOSS)/PROFIT BEFORE
JOINT VENTURES
Share of loss from joint ventures
OPERATING (LOSS)/PROFIT
Finance costs
Finance income
(LOSS)/PROFIT BEFORE TAX
Tax credit/(expense)
(LOSS)/PROFIT FOR THE YEAR
3
588.9
4
161.8
5 (1,231.4)
–
16
0.5
6.3
589.4
168.1
(351.7) (1,583.1)
(5.8)
(5.8)
2,062.1
18.8
(1,592.0)
–
9.4
18.3
2,071.5
37.1
(105.6) (1,697.6)
–
–
(480.7)
(350.7)
(831.4)
488.9
(77.9)
411.0
16
8
8
3
10
(6.0)
(486.7)
(1.7)
(352.4)
(7.7)
(839.1)
(2.1)
486.8
(0.4)
(78.3)
(2.5)
408.5
(153.8)
5.4
(635.1)
(21.2)
1.3
(175.0)
6.7
(372.3) (1,007.4)
(144.4)
15.9
358.3
–
–
(78.3)
(144.4)
15.9
280.0
94.1
(541.0)
6.8
(365.5)
100.9
(906.5)
(69.1)
289.2
7.0
(71.3)
(62.1)
217.9
Earnings per share
(Note 11)
Basic
Diluted
52 weeks to 25 February 2021
pence
pence
pence
(287.6)
(287.6)
(194.3)
(194.3)
(481.9)
(481.9)
52 weeks to 27 February 2020
(restated1)
pence
166.3
165.4
pence
(41.0)
(40.7)
pence
125.3
124.7
1 Earnings per share figures for the comparative period have been restated to reflect the bonus element of the June 2020 rights issue (see Note 11).
130
Whitbread Annual Report and Accounts 2020/21 Consolidated statement of comprehensive income
Year ended 25 February 2021
(LOSS)/PROFIT FOR THE YEAR
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT:
Re-measurement (loss)/gain on defined benefit pension scheme
Current tax on defined benefit pension scheme
Deferred tax on defined benefit pension scheme
Share of other comprehensive loss of joint ventures
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME STATEMENT:
Net gain on cash flow hedges
Deferred tax on cash flow hedges
Net (loss)/gain on hedge of a net investment
Deferred tax on net (loss)/gain on hedge of a net investment
Exchange differences on translation of foreign operations
Deferred tax on exchange differences on translation of foreign operations
52 weeks to
25 February
2021
£m
52 weeks to
27 February
2020
£m
(906.5)
217.9
Notes
32
10
10
16
25
10
25
10
10
(16.3)
2.7
(2.4)
–
(16.0)
2.3
(0.6)
(8.5)
0.8
(6.0)
19.3
(1.5)
17.8
19.7
18.3
(19.6)
(2.8)
15.6
3.5
(0.6)
13.0
–
15.9
(12.1)
–
(12.1)
OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OF TAX
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OF TAX
(4.2)
(910.7)
19.4
237.3
131
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information Consolidated statement of changes in equity
Year ended 25 February 2021
At 1 March 2019
150.6
81.5
12.3
7,938.3
17.7
(2,547.7)
5,652.7
Share
capital
(Note 27)
£m
Share
premium
(Note 28)
£m
Capital
redemption
reserve
(Note 28)
£m
Retained
earnings
(Note 28)
£m
Currency
translation
reserve
(Note 28)
£m
Other
reserves
(Note 28)
£m
Total
£m
217.9
15.6
233.5
–
0.9
0.9
–
2.9
2.9
–
3.3
–
–
1.4
–
217.9
19.4
237.3
9.5
–
11.6
(4.1)
–
(159.9)
330.1
(315.8)
–
140.2
330.1
(315.8)
(2,012.6)
–
–
–
–
–
–
–
–
–
–
–
–
10.1
10.1
–
–
–
–
–
28.7
–
1.7
1.7
(906.5)
(4.2)
(910.7)
–
–
6.7
–
–
(2,377.2)
2.9
981.0
–
14.0
(1.9)
3,834.1
90.8
50.2
5,861.9
18.6
(2,385.6)
3,748.8
Profit for the year
Other comprehensive income
Total comprehensive income
Ordinary shares issued on exercise of employee
share options (Note 27)
Loss on ESOT shares issued
Accrued share-based payments (Note 31)
Tax on share-based payments
Reserves transfer
Equity dividends (Note 12)
Release of irrevocable commitment –
share buyback (Note 28)
Shares purchased in share buyback (Note 28)
Shares purchased under tender offer (Note 27)
Shares cancelled (Note 27)
AT 27 FEBRUARY 2020
Loss for the year
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
–
–
–
0.2
–
–
–
–
–
–
–
(31.0)
(6.9)
112.9
–
–
–
–
–
–
9.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3.3)
11.6
(4.1)
(1.4)
(159.9)
–
–
31.0
6.9
–
–
(2,012.6)
(140.2)
–
–
–
–
–
–
(906.5)
(16.0)
(922.5)
Ordinary shares issued on exercise of employee
share options (Note 27)
Ordinary shares issued on rights issue1 (Note 27)
Loss on ESOT shares issued
Accrued share-based payments (Note 31)
Tax on share-based payments
AT 25 FEBRUARY 2021
0.1
51.7
–
–
–
164.7
2.8
929.3
–
–
–
1,022.9
–
–
–
–
–
50.2
–
–
(6.7)
14.0
(1.9)
4,944.8
1 The share premium amount of £929.3m is net of £28.2m in relation to transaction costs associated with the rights issue.
132
Whitbread Annual Report and Accounts 2020/21 Consolidated balance sheet
At 25 February 2021
NON-CURRENT ASSETS
Intangible assets
Right-of-use assets – property, plant and equipment
Right-of-use assets – investment property1
Property, plant and equipment
Investment property
Investment in joint ventures
Derivative financial instruments
Defined benefit pension surplus
Trade and other receivables
CURRENT ASSETS
Inventories
Derivative financial instruments
Current tax asset
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
TOTAL ASSETS
CURRENT LIABILITIES
Borrowings
Lease liabilities
Provisions
Derivative financial instruments
Current tax liabilities
Trade and other payables
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Provisions
Derivative financial instruments
Deferred tax liabilities
Trade and other payables
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Capital redemption reserve
Retained earnings
Currency translation reserve
Other reserves
TOTAL EQUITY
25 February
2021
£m
27 February
2020
£m
Notes
13
22
22
14
14
16
25
32
18
17
25
18
19
14
20
22
23
25
26
20
22
23
25
10
26
27
28
28
28
28
28
159.1
2,738.4
65.0
4,213.1
21.6
37.3
6.6
188.0
–
7,429.1
12.1
8.2
–
74.2
1,256.0
1,350.5
19.0
8,798.6
312.0
112.1
30.5
2.4
1.8
316.5
775.3
990.5
3,119.5
9.0
–
44.6
25.6
4,189.2
4,964.5
3,834.1
172.8
2,273.7
–
4,232.0
20.3
54.8
28.6
190.3
5.1
6,977.6
13.7
9.0
14.9
292.8
502.6
833.0
14.9
7,825.5
84.0
79.9
40.8
2.2
–
440.0
646.9
741.5
2,540.7
7.6
2.2
137.8
–
3,429.8
4,076.7
3,748.8
164.7
1,022.9
50.2
4,944.8
28.7
(2,377.2)
3,834.1
112.9
90.8
50.2
5,861.9
18.6
(2,385.6)
3,748.8
1 Right-of-use assets – investment property represents leasehold sites which the Group acquired on the acquisition of Foremost Hospitality Hiex GmbH which are being
temporarily subleased to a third party (see Note 22).
ALISON BRITTAIN CHIEF EXECUTIVE
NICHOLAS CADBURY FINANCE DIRECTOR
26 April 2021
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Consolidated cash flow statement
Year ended 25 February 2021
CASH (USED IN)/GENERATED FROM OPERATIONS
Payments against provisions
Pension payments
Interest paid – lease liabilities
Interest paid – other
Interest received
Corporation taxes received/(paid)
NET CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property, plant and equipment and investment properties
Proceeds from disposal of property, plant and equipment
Investment in intangible assets
Acquisition of a subsidiary, net of cash acquired1
Cash flows on aborted acquisition2
Payment of deferred and contingent consideration
Capital contributions to joint ventures
Loans advanced to joint ventures
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
Proceeds from issue of shares on exercise of employee share options
Proceeds from issue of shares on rights issue, net of fees
Shares purchased in tender offer
Shares purchased in share buyback
Drawdowns of long-term borrowings
Repayments of long-term borrowings
Costs of long-term borrowings
Lease incentives (paid)/received
Payment of principal of lease liabilities
Dividends paid
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Opening cash and cash equivalents
Foreign exchange differences
CLOSING CASH AND CASH EQUIVALENTS
52 weeks to
25 February
2021
£m
52 weeks to
27 February
2020
£m
(227.0)
686.4
(24.4)
(14.8)
(123.2)
(22.0)
1.2
19.1
(391.1)
(217.4)
2.6
(10.8)
1.4
1.3
(3.8)
(1.3)
–
(228.0)
2.9
981.0
–
–
596.8
(125.1)
(5.5)
(7.3)
(71.7)
–
1,371.1
752.0
502.6
1.4
1,256.0
(20.1)
(288.4)
(115.3)
(31.9)
12.0
(8.5)
234.2
(372.7)
11.9
(20.7)
(179.5)
(12.8)
–
–
(2.0)
(575.8)
9.5
–
(2,012.6)
(315.8)
50.0
(50.0)
–
1.0
(73.1)
(159.9)
(2,550.9)
(2,892.5)
3,403.2
(8.1)
502.6
Notes
29
23
32
22
3
13
35
16
16
27
27
28
12
21
21
21
19
1 Cash consideration for the Group’s acquisition of Foremost Hospitality Hiex GmbH of £157.2m (see Note 35) was included in the consolidated cash flow statement for the
year ended 27 February 2020.
2 During the year ended 27 February 2020, the Group paid a deposit of £12.8m in advance of an acquisition which was subsequently aborted. In the consolidated cash
flow statement for the year ended 27 February 2020, this was included within cash paid in advance of acquisitions. During the year ended 25 February 2021, the Group
recovered £1.3m following settlement negotiations.
134
Whitbread Annual Report and Accounts 2020/21
Notes to the consolidated financial statements
At 25 February 2021
1 GENERAL INFORMATION AND AUTHORISATION OF CONSOLIDATED
FINANCIAL STATEMENTS
The consolidated financial statements of Whitbread PLC for the year ended 25 February 2021 were authorised for issue by the
Board of Directors on 26 April 2021. Whitbread PLC is a public company limited by shares incorporated in the United Kingdom
under the Companies Act and is registered in England and Wales. The Company’s ordinary shares are traded on the London
Stock Exchange. The address of the registered office is shown on page 113.
Whitbread PLC, its subsidiaries and joint ventures, operate hotels and restaurants, located in the UK and internationally.
2 ACCOUNTING POLICIES
Basis of accounting and preparation
The consolidated financial statements of Whitbread PLC and all its subsidiaries have been prepared in accordance with
international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial
Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments
that are measured at fair value at the end of each reporting period and the defined benefit pension scheme, as explained in the
accounting policies below.
The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest hundred
thousand except when otherwise indicated. The financial year represents the 52 weeks to 25 February 2021 (prior financial
year: 52 weeks to 27 February 2020).
Going concern
The Group’s and Company’s (the ‘Group’) business activities, together with the factors likely to affect its future development,
performance and position are set out in the strategic report on pages 1 to 67. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the financial review on pages 36 to 41. The principal risks of the Group
are set out on pages 62 to 66. In addition, Note 24 includes the Group’s financial risk management objectives, details of its
financial instruments and hedging activities, its exposure to liquidity risk and details of its capital structure. The directors have
considered these areas alongside the principal risks and how they may impact going concern.
The future financial performance of the Group is dependent upon the wider market in which it operates. The COVID-19
pandemic and the temporary measures put in place to control the virus spreading, including social distancing restrictions,
and both local and national lockdowns, has heightened the inherent uncertainty in the Group’s assessment of these factors.
The Group has implemented a number of mitigating actions to reduce cash outflows and maintain liquidity, as follows:
› Received covenant test waivers for the period to March 2023 for its revolving credit facility (RCF). Under the terms of the
waivers, the Group is required to maintain £400.0m cash and/or headroom under undrawn bank facilities and total net debt
must not exceed £2.0bn.
› Raised £550.0m through the issue of Green Bonds and, subsequent to the year-end, used £220.4m of the proceeds to make
an early repayment of the US private placement loan notes which were due to be settled in 2027. As a result, all of the Group’s
US private placement loan notes will have matured prior to the end of the covenant waiver period in March 2022.
› Received covenant test waivers for its defined benefit pension scheme such that the covenants will not be tested until
March 2022.
› Raised £981.0m net of fees through a rights issue.
› Significantly reduced the level of capital expenditure, limiting the outflows to only committed, work in progress compliance
and health and safety related spend, pausing all non-essential discretionary and variable spending.
› Did not declare a final dividend for FY20 and FY21. No dividends will be paid during the covenant waiver period unless the
Group complies with the waived covenants.
› Participated in Government initiatives to protect the viability of the business, including the Coronavirus Job Retention
Scheme, Eat Out to Help Out Scheme, Business Rates Relief and grants specific to the leisure and hospitality sector in the UK
and Germany.
› Completed a major restructuring programme of the Group’s Support Centre and site operations. In addition, the Board and
management team have taken voluntary reductions in remuneration.
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The Group has modelled two financial scenarios that reflect the impact of the COVID-19 pandemic on the rate of recovery
of the Group’s operations in the UK and Germany:
› A ‘base case’ in which the Group’s operations recover in line with the UK Government’s four-step roadmap.
› A ‘severe but plausible case’ which sensitises these forecasts for a slower than expected easing of restrictions and allows
for further national restrictions during winter FY22.
Under both the base case and severe but plausible scenarios, the Group can meet its funding needs through available
funds and is able to meet the relaxed covenants agreed as part of the waivers throughout the 12-month going concern
assessment period.
In the severe but plausible scenario, the Group would fail to meet the covenant associated with its defined benefit pension
scheme as at 3 March 2022, and as a result, a further variable payment, based upon the prevailing market conditions at the time
of calculation, would need to be made into the Group’s pension scheme. Under these variable payment scenarios the Group
would have sufficient liquidity to meet this additional funding need and continue to be in compliance with other covenants.
The long-term impact of COVID-19 remains uncertain and the impacts of the pandemic on trading conditions could be more
prolonged or severe than that which the directors have considered in the severe but plausible scenario.
A reverse stress test was performed to determine the market conditions in which the Group, without additional mitigating
action, would cease to be able to operate under its current facilities. The significant reduction in sales modelled was well
beyond what is considered reasonable taking into account the past, near zero occupancy, closure experience and current
economic forecasts for the Group.
The scenarios modelled do not make any allowance for further mitigations that are within the control of the directors, including
the sale of parts of the Group’s valuable freehold property estate, which would be subject to the prevailing market conditions.
After due consideration of the matters set out above, the directors are satisfied that there is a reasonable expectation that the
Group has adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the
date of signing these financial statements. For this reason, they continue to adopt the going concern basis in the preparation of
these financial statements.
Changes in accounting policies
The accounting policies adopted in the preparation of these consolidated financial statements are consistent with those
followed in the preparation of the consolidated financial statements for the year ended 27 February 2020, except for the
adoption of the new standards and policies applicable for the year ended 25 February 2021. The significant accounting policies
adopted are set out below.
The Group has applied the following standards and amendments for the first time for the annual reporting period commencing
28 February 2020.
Covid-19-Related Rent Concessions (Amendment to IFRS 16)
Covid-19-Related Rent Concessions (Amendment to IFRS 16) provides practical relief to lessees in accounting for rent
concessions occurring as a direct consequence of COVID-19, by introducing a practical expedient to IFRS 16. The practical
expedient permits a lessee to elect not to assess whether a COVID-19-related rent concession is a lease modification. A lessee
that makes this election shall account for any change in lease payments resulting from the COVID-19-related rent concession
the same way it would account for the change applying IFRS 16 if the change were not a lease modification.
The practical expedient applies only to rent concessions occurring as a direct consequence of COVID-19 and only if all of the
following conditions are met:
a) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than,
the consideration for the lease immediately preceding the change;
b) any reduction in lease payments affects only payments originally due on or before 30 June 2021 (a rent concession meets
this condition if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend
beyond 30 June 2021); and
c) there is no substantive change to other terms and conditions of the lease.
In the current financial year, the Group has applied the amendment to IFRS 16 (as issued by the International Accounting
Standards Board (IASB) in May 2020) in advance of its effective date.
Impact of adoption
As a result of early adopting these requirements, rent deferrals which would otherwise have been treated as lease modifications
have been accounted for as if the change was not a lease modification. The adoption of the amendments had no impact on the
consolidated income statement.
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Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 2 ACCOUNTING POLICIES CONTINUED
Amendments to IFRS 3 Definition of a Business
The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and
assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to
create output and clarifies that a business can exist without including all of the inputs and processes needed to create outputs.
Furthermore, it introduces an optional concentration test that allows a simplified assessment of whether an acquired set of
activities and assets is not a business.
Impact of adoption
As set out in Note 35, the Group has applied the clarifications to the definition of a business in determining that the acquisition
of Foremost Hospitality Hiex GmbH on 28 February 2020 is a business combination and has applied the concentration test in
determining that the acquisition of 13 hotels from Centro Hotel Group is an asset acquisition.
In addition, the Group has also adopted the following standards which have been assessed as having no financial impact or
disclosure at this time:
› Amendments to IAS 1 and IAS 8 Definition of Material
› Amendments to References to the Conceptual Framework in IFRS Standards
Standards issued by the IASB not effective for the current year and not early adopted by the Group
Whilst the following standards and amendments are relevant to the Group, they have been assessed as having minimal or
no financial impact or additional disclosure requirements at this time:
›
IFRS 17 Insurance Contracts (effective for periods beginning on or after 1 January 2023)
›
Interest Rate Benchmark Reform – Phase 2 (effective for periods beginning on or after 1 January 2021)
› Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current (effective for periods beginning on or after
1 January 2023)
› Amendments to IAS 16 Property, Plant and Equipment – proceeds before intended use (effective for periods beginning on
or after 1 January 2022)
› Amendments to IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract (effective for periods beginning on or after
1 January 2022)
› Amendments to IFRS 3 – Reference to the Conceptual Framework (effective for periods beginning on or after
1 January 2022)
› Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 – Sale or contribution of Assets Between an Investor
and its Associate or Joint Venture
› Annual Improvements to IFRS Standards 2018-2020 Cycle.
The Group does not intend to early adopt any of these new standards or amendments.
Basis of consolidation
The consolidated financial statements incorporate the accounts of Whitbread PLC and all its subsidiaries, together with the
Group’s share of the net assets and results of joint ventures incorporated using the equity method of accounting. These are
adjusted, where appropriate, to conform to Group accounting policies. The financial statements of significant trading
subsidiaries are prepared for the same reporting year as the parent company.
A subsidiary is an entity controlled by the Group. Control is achieved when the Company:
› has power over the investee;
›
is exposed, or has rights, to variable returns from its involvement with the investee; and
› has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control listed above.
Apart from the acquisition of Whitbread Group PLC by Whitbread PLC in 2000/01, which was accounted for using merger
accounting, acquisitions by the Group are accounted for under the acquisition method and any goodwill arising is capitalised
as an intangible asset. The results of subsidiaries acquired or disposed of during the year are included in the consolidated
financial statements from, or up to, the date that control passes respectively. All intra-group transactions, balances, income and
expenses are eliminated on consolidation. Unrealised losses are also eliminated, unless the transaction provides evidence of an
impairment of the asset transferred.
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Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred
by the Group, liabilities incurred by the Group to the former owners of the acquiree and any equity interest issued by the
Group in exchange for control of the acquiree. Acquisition-related costs are recognised in the consolidated income statement
as incurred.
When the consideration transferred by the Group in a business combination includes contingent consideration, the contingent
consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business
combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments
that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the
acquisition date) about facts and circumstances that existed at the acquisition date.
Changes in the fair value of the contingent consideration at subsequent reporting dates that do not qualify as measurement
period adjustments are recognised within finance costs in the consolidated income statement, unless the contingent
consideration is classified as equity.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts
are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected
the amounts recognised as of that date.
Goodwill
Goodwill arising on acquisition is capitalised and represents the excess of the fair value of consideration over the value of the
Group’s interest in the identifiable assets and liabilities of a subsidiary, at the date of acquisition. Goodwill is not amortised but
reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit
or loss on disposal.
Intangible assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired separately from a business are carried initially at cost. An intangible asset acquired as part of
a business combination is recognised at fair value, separately from goodwill if the asset is separable, or arises from contractual
or other legal rights, and its fair value can be measured reliably.
Amortisation of IT software and technology is calculated on a straight-line basis over the estimated life which varies between
three and ten years.
The carrying values are reviewed for impairment if events or changes in circumstances indicate that they may not
be recoverable.
Property, plant and equipment
Property, plant and equipment acquired separately from a business are stated at cost or deemed cost at transition to IFRS,
less accumulated depreciation and any impairment in value. Gross interest costs incurred on the financing of qualifying assets
are capitalised until the time that the assets are available for use. Property, plant and equipment acquired as part of a business
combination are recognised at fair value. Depreciation is calculated on a straight-line basis over the estimated useful life of the
asset as follows:
› freehold land is not depreciated;
› freehold and long leasehold buildings are depreciated to their estimated residual values over periods up to 50 years; and
› plant and equipment is depreciated over three to 25 years.
The residual values and estimated useful lives are reviewed annually.
Profits or losses on disposal of property, plant and equipment reflect the difference between net selling price and carrying
amount at the date of disposal and are recognised in the consolidated income statement.
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Investment property
Investment property assets, including properties which are owned by the Group and properties which are leased by the
Group, are carried at cost less accumulated depreciation and any recognised impairment in value. The depreciation policies
for investment property are consistent with those described for property, plant and equipment.
Leases
Right-of-use assets
The Group recognises right-of-use assets for hotel and restaurant properties which are used in the Premier Inn business and
other equipment at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date, less any lease incentives received. Unless the Group is
reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use asset is
depreciated over the shorter of its estimated useful life and lease term.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments and variable lease payments that depend on
an index or a rate less any lease incentives receivable. Variable lease payments that do not depend on an index or a rate
(e.g. turnover rent) are recognised as an expense in the period over which the event or condition that triggers the payment
occurs. The Group incurs service charges on property leases which are non-lease components of the contract under IFRS 16
and therefore these charges are recorded separately within operating costs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement
date if the interest rate implicit in the lease is not readily determinable. Incremental borrowing rates are determined quarterly
and depend on the country, currency and start date of the lease. The incremental borrowing rate is determined based on
a series of inputs including: the risk-free rate based on Government bond rates; a country specific risk adjustment; and a credit
risk adjustment based on the Group’s credit rating.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for
lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification or a change
in the lease term. Cash outflows relating to lease interest are recorded within net cash flows from operating activities and cash
outflows relating to principal repayments are included within net cash flows from financing activities in the consolidated cash
flow statement.
Rental income
The Group recognises rental income from leases on a straight-line basis over the lease term within other income in the
consolidated income statement.
Impairment of non-current assets
Property, plant and equipment and right-of-use assets
The carrying values of property, plant and equipment and right-of-use assets are reviewed for impairment whenever events
or changes in circumstances indicate that their carrying values may not be recoverable. For the purposes of the impairment
review, the Group considers each trading outlet to be a separate cash generating unit (CGU). Consideration is also given, where
appropriate, to the market value of the asset either from independent sources or, in conjunction with an accepted industry
valuation methodology. Any impairment in the values of property, plant and equipment and right-of-use assets is charged to
the consolidated income statement.
The Group assesses assets or groups of assets for impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. Individual assets are grouped, for impairment assessment purposes, at the
lowest level at which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets
(cash generating units or CGUs). If such indication of impairment exists or when annual impairment testing for an asset group
is required, the Group makes an estimate of the recoverable amount.
The recoverable amount of an asset or CGU is the greater of its fair value less costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate
largely independent cash inflows, the recoverable amount is determined with reference to the CGU to which the asset belongs.
Impairment losses are recognised in the consolidated income statement within operating costs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount.
Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated
to the units and then to reduce the carrying amounts of other assets in the CGU, on a pro-rata basis.
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An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such an indication exists, the CGU’s recoverable amount is estimated.
A previously recognised impairment loss is reversed only if there has been a change in the estimated future cash flows used
to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying
amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Such a reversal is recognised in the consolidated income statement. After such a reversal, the depreciation charge is adjusted
in future periods to allocate the asset’s carrying amount, less any residual value, on a straight-line basis over its remaining
useful life.
For the purposes of impairment testing, all centrally held assets are allocated in line with IAS 36 to CGUs based on
management’s view of the consumption of the asset. Any resulting impairment is recorded against the centrally held asset.
Goodwill
Goodwill acquired through business combinations is allocated to groups of CGUs at the level management monitors goodwill,
which is at an operating segment level. The Group performs an annual review of its goodwill to ensure that its carrying amount
is not greater than its recoverable amount. The recoverable amount is determined as the greater of fair value, less costs of
disposal and value in use. An impairment is then made to reduce the carrying amount to the recoverable amount.
Investments in joint ventures
The Group assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value
may not be recoverable. If any such indication of impairment exists, the carrying amount of the investment is compared with
its recoverable amount. Where the carrying amount exceeds the recoverable amount, the investment is written down to its
recoverable amount.
Assets held for sale
Non-current assets and disposal groups are classified as held for sale only if available for immediate sale in their present
condition and a sale is highly probable and expected to be completed within one year from the date of classification.
Such assets are measured at the lower of carrying amount and fair value, less the cost of disposal, and are not depreciated
or amortised.
In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the net results of discontinued
operations are presented separately in the consolidated income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated on the basis of first in, first out and net
realisable value is the estimated selling price less any costs to sell.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are discounted to present value, using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The amortisation of the discount is recognised as a finance cost.
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is
considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under it.
Restructuring costs
A restructuring provision is recognised when the Group has developed a detailed formal plan and has raised a valid
expectation, in those affected, that it will carry out the restructuring by starting to implement the plan or announcing its main
features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from
the restructuring which are those amounts that are both necessarily entailed by the restructuring and not associated with the
ongoing activities of the entity.
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Adjusting items and use of alternative performance measures
We use a range of measures to monitor the financial performance of the Group. These measures include both statutory
measures in accordance with IFRS and alternative performance measures (APMs) which are consistent with the way the
business performance is measured internally by the Board and Executive Committee. A glossary of APMs and reconciliations
to statutory measures is given on pages 205 to 209.
The term adjusted profit is not defined under IFRS and may not be directly comparable with adjusted profit measures used
by other companies. It is not intended to be a substitute for, or superior to, statutory measures of profit. Adjusted measures
of profitability are non-IFRS because they exclude amounts that are included in, or include amounts that are excluded from,
the most directly comparable measure calculated and presented in accordance with IFRS.
The Group makes certain adjustments to the statutory profit measures in order to derive many of its APMs. The Group’s policy
is to exclude items that are considered to be significant in nature and quantum, not in the normal course of business or are
consistent with items that were treated as adjusting in prior periods or that span multiple financial periods. Treatment as
an adjusting item provides users of the accounts with additional useful information to assess the year-on-year trading
performance of the Group.
On this basis, the following are examples of items that may be classified as adjusting items:
› net charges associated with the strategic programme in relation to the review of the hotel estate, excluding those relating
to financing;
› significant restructuring costs and other associated costs arising from strategy changes that are not considered by the Group
to be part of the normal operating costs of the business;
› significant pension charges arising as a result of the changes to UK defined benefit scheme practices;
›
impairment and related charges for sites which are underperforming that are considered to be significant in nature and/or
value to the trading performance of the business;
› costs in relation to non-trading legacy sites which are deemed to be significant and not reflective of the Group’s ongoing
trading results;
› profit or loss on the sale of a business or investment, and the associated cost impact on the continuing business from the sale
of the business or investment;
› acquisition costs incurred as part of a business combination or other strategic asset acquisitions;
› amortisation of intangible assets recognised as part of a business combination or other transaction outside of the ordinary
course of business; and
› tax settlements in respect of prior years, including the related interest and the impact of changes in the statutory tax rate, the
inclusion of which would distort year-on-year comparability, as well as the tax impact of the adjusting items identified above.
The directors believe that the adjusted profit and earnings per share measures provide additional useful information to
shareholders on the performance of the business. These measures are consistent with how business performance is measured
internally by the Board and Executive Committee.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into functional currency at the rates
of exchange quoted at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the initial transactions.
Day-to-day transactions in a foreign currency are recorded in the functional currency at an average rate for the month
in which those transactions take place, which is used as a reasonable approximation to the actual transaction rate.
Translation differences on monetary items are taken to the consolidated income statement.
A number of subsidiaries within the Group have a non-sterling functional currency. The financial performance and end position
of these entities are translated into sterling in the consolidated financial statements. Balance sheet items are translated at the
rate applicable at the balance sheet date. Transactions reported in the consolidated income statement are translated using an
average rate for the month in which they occur.
The differences that arise from translating the results of foreign entities at average rates of exchange, and their assets and
liabilities at closing rates, are dealt with in a separate component of equity. On disposal of a foreign entity, the deferred
cumulative amount recognised in equity relating to that particular foreign operation is recognised in the consolidated income
statement. All other currency gains and losses are dealt with in the income statement.
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Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange
for transferring goods or services to a customer. Consideration is net of discounts, allowances for customer loyalty and other
promotional activities and amounts collected on behalf of other parties, such as value added tax. Revenue includes duties
which the Group pays as principal.
The Group has analysed its business activities and applied the five step model prescribed by IFRS 15 Revenue from Contracts
with Customers to each material line of business, as outlined below:
Sale of accommodation
The contract to provide accommodation is established when the customer books accommodation. The performance obligation
is to provide the right to use accommodation for a given number of nights, and the transaction price is the room rate for each
night determined at the time of booking. The performance obligation is met when the customer is given the right to use the
accommodation, and so revenue is recognised for each night as it takes place, at the room rate for that night.
Sale of food and beverage
The contract is established when the customer orders the food or beverage item and the performance obligation is the
provision of food and beverage by the outlet. The performance obligation is satisfied when the food and beverage is delivered
to the customer, and revenue is recognised at this point at the price for the items purchased. Payment is made on the same day
and consequently there are no contract assets or liabilities.
Payment terms
Customers may pay in advance for accommodation, food and beverage. In this case the Group has received consideration for
services not yet provided. This is treated as a contract liability until the performance obligation is met. The Group has taken
advantage of the practical expedient in IFRS 15 to not adjust the consideration for the effects of a financing component as the
period between payment and the performance obligation is less than one year.
Payment terms for corporate customers are generally 30 days with amounts recorded in trade and other receivables once the
performance obligations have been met.
Consideration receivable from HM Revenue & Customs
Consideration received from HM Revenue & Customs under the Eat Out to Help Out Scheme is recognised within revenue from
sales of food and beverage.
Contract costs
The Group applies the practical expedient in paragraph 94 of IFRS 15 and consequently contract costs incurred related to
contracts with an amortisation period of less than one year have been expensed as incurred.
Variable consideration
The Group makes an estimate, based on historical information, of amounts that will be refunded to customers. The refund
liability represents variable consideration under IFRS 15 with revenue recognised reduced by this amount and a corresponding
liability recognised in other payables in the consolidated balance sheet.
Certain of the Group’s restaurants offer customer loyalty programmes whereby the customer can earn vouchers for historic
purchases which are redeemable as discounts on future purchases. The loyalty points issued by the Group are a separate
performance obligation providing a material right to a future discount. The sales price of goods is allocated to the loyalty points
and the goods sold based on their relative standalone selling prices, with the loyalty points standalone price based on the value
of the points to the customer, adjusted for expected redemption rates. The amount allocated to loyalty points is deferred as
a contract liability within trade and other payables. Revenue is recognised as the points are redeemed by the customer.
Finance income
Interest income is recognised as the interest accrues, using the effective interest method.
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Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred, except for gross interest costs incurred
on the financing of major projects, which are capitalised until the time that the projects are available for use.
Retirement benefits
In respect of the defined benefit pension scheme, the surplus recognised in the consolidated balance sheet represents the
fair value of scheme assets, reduced by the present value of the defined benefit obligation. Where the calculation results
in a surplus to the Group, the recognised asset is limited to the present value of any future available refunds from the plan.
The cost of providing benefits is determined using the projected unit credit actuarial valuation method. Re-measurements are
recognised in full in the period in which they occur in the statement of comprehensive income and are not reclassified to the
consolidated income statement in subsequent periods.
For defined benefit plans, the employer’s portion of the past and current service cost is charged to operating profit, with net
interest costs reported within finance costs. In addition, all administration costs, other than those relating to the management
of plan assets or taxes payable by the plan itself, are charged as incurred to operating costs in the consolidated income
statement. Net interest is calculated by applying the opening discount rate to the opening net defined benefit obligation,
taking into account the expected contributions and benefits paid.
On 20 November 2020, the High Court ruled that pension schemes will need to revisit and equalise guaranteed minimum
pensions for historic individual transfers. The ruling impacted the Group’s actuarial surplus as it will lead to an increase in
pension obligations. The Group recognised the increase in its defined benefit liability as a charge to the consolidated income
statement. See Note 32 for further details.
Curtailments and settlements relating to the Group’s defined benefit plan are recognised in the period in which the curtailment
or settlement occurs.
Payments to defined contribution pension schemes are charged as an expense as they fall due.
Government grants
During the year, the Group has received Government support. A Government grant is recognised in the consolidated balance
sheet within other receivables when there is reasonable assurance that it will be received and that the Group will comply with
the conditions attached to it. Grants are recognised within other income in the consolidated income statement at a point in
time to match the timing of the recognition of the related expenses they are intended to compensate. Where cash is received
in advance of the associated conditions being met, the grant is recorded within trade and other payables in the consolidated
balance sheet.
Share-based payment transactions
Equity-settled transactions
Certain employees and directors of the Group receive equity-settled remuneration in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares. The cost of these equity-settled
transactions is measured by reference to the fair value, determined using a stochastic model, at the date at which they are
granted. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions or non-vesting conditions are fulfilled, ending on the relevant vesting date. Except for
awards subject to market-related conditions for vesting, the cumulative expense recognised for equity-settled transactions,
at each reporting date until the vesting date, reflects the extent to which the vesting period has expired, and is adjusted to
reflect the directors’ best available estimate of the number of equity instruments that will ultimately vest. The income statement
charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that
period. If options are subject to market-related conditions, awards are not cumulatively adjusted for the likelihood of these
targets being met. Instead, these conditions are included in the fair value of the awards.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. Where an equity-settled award is forfeited, the related expense recognised
to date is reversed.
Where an equity-settled award is replaced by newly granted instruments, these are accounted for as a modification of the
existing award. When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date
fair value of the unmodified award, provided the original vesting terms of the award are met. An additional expense, measured
as at the date of modification, is recognised for any modification that increases the total fair value of the share-based payment
transaction, or is otherwise beneficial to the employee.
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Tax
The income tax charge represents both the income tax payable, based on profit for the year, and deferred income tax.
Deferred income tax is recognised in full, using the liability method, in respect of temporary differences between the tax base
of the Group’s assets and liabilities and their carrying amounts that have originated but have not been reversed by the balance
sheet date. No deferred tax is recognised if the temporary difference arises from the initial recognition of goodwill, or the initial
recognition of an asset or liability, in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss. Deferred income tax is recognised in respect of taxable temporary
differences associated with investments in joint ventures, except where the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow
all, or part of, the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.
Income tax is charged or credited to other comprehensive income if it relates to items that are charged or credited to other
comprehensive income. Similarly, income tax is charged or credited directly to equity if it relates to items that are charged or
credited directly to equity. Otherwise, income tax is recognised in the consolidated income statement.
Share buyback scheme and tender offer
Shares purchased for cancellation are deducted from retained earnings at the total consideration paid or payable.
Shares purchased and held by the Group (treasury shares) are deducted from the treasury reserve at the total consideration
paid or payable. On cancellation of treasury shares, the cost is transferred from the treasury reserve to retained earnings.
When treasury shares are issued at below cost, an amount representing the difference between the cost of those shares and
issue proceeds is transferred to retained earnings. No gain or loss is recognised in the consolidated income statement on the
purchase, sale, issue or cancellation of the Group’s own equity instruments.
Investments in joint ventures
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights
and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be
joint ventures.
The Group’s investments in joint ventures are accounted for using the equity method. Under the equity method, the investment
in a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the
Group’s share of net assets of the joint venture since the acquisition date. Goodwill relating to joint ventures is included in the
carrying amount of the investment.
The consolidated income statement reflects the Group’s share of the results of operations of the joint ventures. Any change in
other comprehensive income of those investees is presented as part of the Group’s consolidated statement of comprehensive
income. Unrealised gains and losses resulting from transactions between the Group and the joint ventures are eliminated to the
extent of the interest in the joint venture. When necessary, adjustments are made to bring the accounting policies in line with
those of the Group.
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Financial assets
Trade receivables and contract assets
Trade receivables and contract assets are initially measured at fair value. Subsequently they are measured at amortised cost as
the objective of the business model is to hold the assets to collect contractual cash flows and the contractual terms of the asset
give rise to cash flows on specified dates which are solely payments of principal and interest.
In line with the IFRS 9 Financial Instruments ‘simplified approach’, the Group segments its trade receivables and contract
assets based on shared characteristics, and recognises a loss allowance for the lifetime expected credit loss for each segment.
The expected credit loss is based on the Group’s historical credit loss experience, adjusted for factors that are specific to the
debtors, general economic conditions and an assessment of the current and forecast conditions at the reporting date.
Credit impaired financial assets
A financial asset is credit impaired when one of more events that have a detrimental impact on the estimated future cash flows
of that financial asset have occurred, such as significant financial difficulty of the debtor or default by the debtor. The Group
writes off a financial asset where there is no realistic prospect of recovery. Credit losses are recorded within operating costs
in the consolidated income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, cash in hand and deposits (including Money Market Funds) which are short
term, highly liquid and which are not at significant risk of changes in value.
Recognition and derecognition
The recognition of financial assets occurs when the Group becomes party to the contractual provisions of the instrument.
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
Derivatives and hedging
The Group enters into derivative transactions to manage its exposure to interest rate and foreign exchange rate risks.
Derivatives are recognised initially at fair value on the date the contract is entered into and subsequently re-measured to their
fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is
designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the
nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is
recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both the legal right
and intention to offset.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more
than 12 months and is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets
or current liabilities.
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk and interest rate risks
as fair value hedges and cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash
flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the
hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. The Group
documents whether the hedging instrument is effective in offsetting the hedged risk, by confirming that:
› there is an economic relationship between hedged items and the hedging instrument;
› the effect of credit risk does not dominate the value changes that result from that economic relationship; and
› the planned ratio of hedge: hedge item is the same as the actual ratio of hedge: hedge item.
The fair value change on qualifying fair value hedges is recognised in profit or loss.
The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges is recognised in other
comprehensive income and accumulated under the cash flow hedging reserve. Any gain or loss relating to the ineffective
portion of the hedge is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive
income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss,
in the same line as the recognised hedged item.
The Group discontinues hedge accounting when the hedge relationship ceases to meet the qualifying criteria, or when the
hedging instrument expires, is sold, terminated or exercised.
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Hedges of a net investment
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the
net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating
to the effective portion of the hedge are recognised in other comprehensive income while any gains or losses relating to the
ineffective portion are recognised in the statement of profit or loss. On disposal of the foreign operation, the cumulative value
of any such gains or losses recorded in equity is transferred to the statement of profit or loss.
The Group uses a cross currency swap as a hedge of its exposure to foreign exchange risk on its investments in foreign
subsidiaries. Refer to Note 25 for more details.
Financial liabilities
Debt and equity instruments are classified as financial liabilities or equity in accordance with the substance of the
contractual arrangements.
Financial liabilities are measured at amortised cost using the effective interest rate method unless they are required to be
measured at fair value through profit or loss or the Group has opted to measure them at fair value through the profit or loss.
The effective interest rate method calculates the amortised cost of a financial liability and allocates interest expense to the
relevant period.
Borrowings
Borrowings are initially recognised at the fair value of the consideration received, net of any directly associated issue costs.
Borrowings are subsequently recorded at amortised cost, with any difference between the amount initially recorded and the
redemption value recognised in the consolidated income statement using the effective interest method.
Contingent consideration
Contingent consideration, resulting from business combinations and asset acquisitions, is valued at fair value at the acquisition
date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is
subsequently re-measured to fair value at each reporting date. The determination of the fair value is based on discounted
cash flows.
Where the period between acquisition and payment is not significant, cash outflows for contingent consideration are
included within cash flows from investing activities. Where the period of deferral is significant, excess payments over the fair
value recognised at acquisition are recognised within cash flows from financing activities. None of the Group’s contingent
consideration is deemed to relate to post-acquisition remuneration.
Recognition and derecognition
The recognition of liabilities occurs when the Group becomes party to the contractual provisions of the instrument.
The derecognition of financial liabilities occurs when the obligation under the liability is discharged, cancelled or expires.
When the Group exchanges with the existing lender one debt instrument into another one with the substantially different
terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new
financial liability.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect
the amounts reported as assets and liabilities at the balance sheet date and the amounts reported as revenues and expenses
during the year. Although these amounts are based on management’s best estimates, events or actions may mean that actual
results ultimately differ from those estimates, and these differences may be material. These judgements and estimates and the
underlying assumptions are reviewed regularly.
Critical accounting judgements
The following are the critical accounting judgements, apart from those involving estimations (dealt with separately below) that
management have made in the process of applying the Group’s accounting policies and which have the most significant effect
on the amounts recognised in the financial statements.
Adjusting items
During the year certain items are identified and separately disclosed as adjusting items. Judgement is applied as to whether the
item meets the necessary criteria as per the accounting policy disclosed earlier in this note. This assessment covers the nature
of the item, cause of occurrence and the scale of impact of that item on reported performance. Reversals of previous adjusting
items are assessed based on the same criteria. Note 6 provides information on all of the items disclosed as adjusting in the
current year and comparative financial statements.
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Key sources of estimation uncertainty
The following are the key areas of estimation uncertainty that may have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
Defined benefit pension
Defined benefit pension plans are accounted for in accordance with actuarial advice using the projected unit credit method.
The Group makes significant estimates in relation to the discount rates, mortality rates and inflation rates used to calculate
the present value of the defined benefit obligation. Note 32 describes the assumptions used together with an analysis of the
sensitivity to changes in key assumptions.
Impairment testing – Goodwill, property, plant and equipment and right-of-use assets
The performance of the Group’s impairment review requires management to make a number of estimates. These are set
out below:
Identification of indicators of impairment
Where there are indicators of impairment, management performs an impairment assessment. The speed at which the Group’s
sites will recover from the impact of the COVID-19 pandemic is uncertain and, as a result, all of the Group’s sites have been
tested for impairment.
Inputs used to estimate value in use
The estimate of value in use is most sensitive to the following inputs:
› Five-year business plan – Forecast cash flows for the initial five-year period are based on actual cash flows for FY20 being
the period before the impact of the COVID-19 pandemic and applying management’s assumptions of the impact of the
pandemic and expected recovery period.
› Discount rate – Judgement is required in estimating the Weighted Average Cost of Capital (WACC) of a typical market
participant and in assessing the specific country and currency risks associated with the Group. The rate used is adjusted for
the Group’s gearing, including equity, borrowings and lease liabilities.
›
Immature sites – Judgement is required to estimate the time taken for sites to reach maturity and the sites’ trading level once
they are mature.
Methodology used to estimate fair value
Fair value is determined using a range of methods, including present value techniques using assumptions consistent with the
value in use calculations and market multiple techniques using externally available data.
Key estimates and sensitivities for impairment of assets are disclosed in Note 15.
3 SEGMENT INFORMATION
For management purposes the Group is organised into a single strategic business unit, Premier Inn, which provides services
in relation to accommodation, food and beverage both in the UK and internationally.
In previous years, the UK & Ireland and Germany Premier Inn segments have been aggregated on the grounds that the
Germany segment did not meet the thresholds of being a reportable segment. As a result of the increasing size of the German
operations, the Germany segment will be presented separately going forward. As the Group’s reportable segments have been
changed, the comparative information for 2019/20 has been re-presented.
Management monitors the operating results of its operating segments separately for the purpose of making decisions about
allocating resources and assessing performance. Segment performance is measured based on adjusted operating profit before
joint ventures. The UK & Ireland segment includes one site in each of Jersey and the Isle of Man. Included within central and
other in the following tables are the costs of running the public company, other central overhead costs and share of losses from
joint ventures.
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The following tables present revenue and profit information regarding business operating segments for the years ended
25 February 2021 and 27 February 2020.
REVENUE
Accommodation
Food, beverage and other items1
REVENUE BEFORE ADJUSTING
ITEMS
Adjusting revenue (Note 6)
REVENUE
Year to 25 February 2021
UK &
Ireland
£m
388.5
188.9
Germany
£m
10.2
1.3
577.4
11.5
Central
and other
£m
–
–
–
Total
£m
398.7
190.2
588.9
0.5
589.4
Year to 27 February 2020
Germany
£m
Central
and other
£m
UK &
Ireland
£m
1,311.6
738.7
9.8
2.0
2,050.3
11.8
–
–
–
Total
£m
1,321.4
740.7
2,062.1
9.4
2,071.5
1 Revenue from food, beverage and other items for the UK & Ireland segment includes £12.0m (2019/20: £nil) of consideration receivable from HM Revenue & Customs
under the Eat Out to Help Out Scheme.
(LOSS)/PROFIT
ADJUSTED OPERATING
(LOSS)/PROFIT BEFORE
JOINT VENTURES
Share of loss from joint ventures
ADJUSTED OPERATING
(LOSS)/PROFIT
Net finance costs
ADJUSTED (LOSS)/PROFIT
BEFORE TAX
Adjusting items before tax (Note 6)
(LOSS)/PROFIT BEFORE TAX
Year to 25 February 2021
UK &
Ireland
£m
Germany
£m
Central
and other
£m
Total
£m
Year to 27 February 2020
UK &
Ireland
£m
Germany
£m
Central
and other
£m
Total
£m
(415.7)
–
(415.7)
(117.1)
(38.8)
–
(38.8)
(6.1)
(26.2)
(6.0)
(480.7)
(6.0)
(32.2)
(25.2)
(486.7)
(148.4)
529.4
–
529.4
(115.1)
(13.4)
–
(13.4)
(0.2)
(27.1)
(2.1)
488.9
(2.1)
(29.2)
(13.2)
486.8
(128.5)
(532.8)
(44.9)
(57.4)
(635.1)
(372.3)
(1,007.4)
414.3
(13.6)
(42.4)
358.3
(78.3)
280.0
Adjusted operating (loss)/profit for the UK & Ireland segment includes the impact of Business Rates Relief provided by the
UK Government of £117.8m (2019/20: £nil) and income from the job retention schemes in the UK of £138.3m (2019/20: £nil).
Adjusted operating loss for the German segment includes £1.5m (2019/20: £nil) from the Kurzarbeit scheme and other
Government grants of £10.3m.
OTHER SEGMENT INFORMATION
Capital expenditure:
Property, plant and equipment and
investment property – cash basis
Property, plant and equipment and
investment property – accruals
basis (Note 14)
Intangible assets (Note 13)
Cash outflows from lease interest
and payment of principal of lease
liabilities
Depreciation – property, plant
and equipment and investment
property (Note 14)
Depreciation – right-of-use assets
(Note 22)
Amortisation (Note 13)
Year to 25 February 2021
UK &
Ireland
£m
Germany
£m
Central
and other
£m
Total
£m
Year to 27 February 2020
UK &
Ireland
£m
Germany
£m
Central
and other
£m
121.0
96.4
105.9
10.8
93.2
–
173.0
21.9
145.2
5.1
109.9
23.3
16.4
0.3
–
–
–
–
–
–
–
217.4
293.4
79.3
199.1
10.8
288.4
18.0
70.6
2.7
194.9
186.6
0.8
150.3
126.3
23.6
143.6
103.2
19.6
1.4
0.8
0.2
–
–
–
–
–
–
–
Total
£m
372.7
359.0
20.7
187.4
145.0
104.0
19.8
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Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 3 SEGMENT INFORMATION CONTINUED
Revenues from external customers are split geographically as follows:
United Kingdom
Germany
Other
Non-current assets1 are split geographically as follows:
United Kingdom
Germany
Other
1 Non-current assets exclude derivative financial instruments and the surplus on the Group’s defined benefit pension scheme.
4 OTHER INCOME
An analysis of the Group’s other income is as follows:
Rental income
Rates rebates relating to prior financial years
Government grants (Note 9)
Other
OTHER INCOME BEFORE ADJUSTING ITEMS
Insurance proceeds (Note 6)
Legal settlement (Note 6)
VAT settlement (Note 6)
OTHER INCOME
5 OPERATING COSTS
Cost of inventories recognised as an expense1
Employee benefits expense2 (Note 7)
Amortisation of intangible assets (Note 13)
Depreciation – property, plant and equipment and investment property (Note 14)
Depreciation – right-of-use assets (Note 22)
Utilities, rates and other site property costs
Variable lease payment (credit)/expense (Note 22)
Net foreign exchange differences
Other operating charges2
Adjusting operating costs2 (Note 6)
2020/21
£m
575.5
11.5
2.4
589.4
2020/21
£m
6,343.6
809.3
81.6
7,234.5
2019/20
£m
2,051.6
11.8
8.1
2,071.5
2019/20
£m
6,326.2
343.6
88.9
6,758.7
2020/21
£m
2019/20
£m
7.8
–
153.4
0.6
161.8
1.8
–
4.5
168.1
4.9
13.6
–
0.3
18.8
16.0
2.3
–
37.1
2020/21
£m
72.2
581.5
23.6
150.3
126.3
220.8
(0.6)
0.4
56.9
351.7
1,583.1
2019/20
£m
208.5
612.5
19.8
145.0
104.0
431.8
2.0
(0.2)
68.6
105.6
1,697.6
1 Cost of inventories recognised as an expense includes £14.6m (2019/20: £3.6m) of inventory write downs recorded during the year.
2 Adjusting operating costs includes a charge for impairments and write offs of £350.4m (2019/20: £67.0m), a credit of £9.0m (2019/20: charge of £41.1m) relating to other
operating charges and a charge of 10.3m (2019/20: credit of £2.5m) relating to employee benefit expenses (see Note 6).
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Fees paid to the Group’s auditor during the year consisted of:
Audit of the Group’s financial statements
Audit of the Group’s subsidiaries
TOTAL AUDIT FEES
Audit-related assurance
Other non-audit fees1
TOTAL NON-AUDIT FEES
INCLUDED IN OTHER OPERATING CHARGES
2020/21
£m
2019/20
£m
0.9
0.6
1.5
0.1
1.1
1.2
2.7
0.6
0.3
0.9
0.1
–
0.1
1.0
1 During 2020/21 the Group auditor performed permissible non-audit services in relation to the June 2020 rights issue and the issue of Green Bonds. See page 84 of Audit
Committee Report for further details.
6 ADJUSTING ITEMS
As set out in the policy in Note 2, we use a range of measures to monitor the financial performance of the Group. These
measures include both statutory measures in accordance with IFRS and APMs which are consistent with the way that the
business performance is measured internally. We report adjusted measures because we believe they provide both management
and investors with useful additional information about the financial performance of the Group’s businesses. Adjusted measures
of profitability represent the equivalent IFRS measures adjusted for specific items that we consider hinder the comparison
of the financial performance of the Group’s businesses either from one period to another or with other similar businesses.
ADJUSTING ITEMS WERE AS FOLLOWS:
Revenue:
TSA income1
Other income:
Insurance proceeds2
Legal settlement3
VAT settlement4
ADJUSTING OTHER INCOME
Operating costs:
TSA costs1
Costa disposal – separation costs and other costs5
Impairment – goodwill6
Impairment and write offs – property, plant and equipment, right-of-use assets and other
intangible assets7
Impairment – investment in joint ventures8
Guaranteed minimum pension9
Aborted acquisition costs10
UK restructuring11
Gains/(losses) on disposals, property and other provisions12
Employment tax settlement13
ADJUSTING OPERATING COSTS
Share of loss of joint ventures:
Impairment14
Finance (costs)/income:
Early prepayment charge (Note 20)15
VAT settlement4
ADJUSTING ITEMS BEFORE TAX
150
2020/21
£m
2019/20
£m
0.5
9.4
1.8
–
4.5
6.3
(0.5)
6.4
(238.8)
(109.2)
(8.2)
(1.1)
(12.4)
(12.1)
18.4
–
(357.5)
16.0
2.3
–
18.3
(8.9)
(15.2)
–
(67.0)
–
–
(2.4)
0.2
(9.3)
(3.0)
(105.6)
(1.7)
(0.4)
(21.2)
1.3
–
–
(372.3)
(78.3)
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
6 ADJUSTING ITEMS CONTINUED
Tax adjustments included in reported profit after tax, but excluded in arriving at adjusted profit after tax:
Tax on adjusting items
Impact of change in tax rates
ADJUSTING TAX CREDIT
2020/21
£m
2019/20
£m
19.3
(12.5)
6.8
7.0
–
7.0
1 Following the sale of Costa to The Coca-Cola Company, the Group entered into a Transitional Services Agreement (TSA) to provide certain services to facilitate the
successful separation of Costa from the rest of the Whitbread Group. This includes HR, IT and facilities services. The revenue has been earned since the completion of the
sale on 3 January 2019 and has now been concluded.
2 During the year the Group recognised insurance claim proceeds of £1.8m (2019/20: £16.0m) in other income covering property and loss of trade in relation to a fire at a site
in the prior year.
3 During the prior year, the Group received a legal settlement of £2.3m in relation to leases entered in prior periods.
4 In May 2020, HMRC confirmed it would not appeal the ruling of the Upper Tier Tribunal in the cases of Rank Group plc and Done Brothers (Cash Betting) Ltd that VAT
was incorrectly applied to revenues earned from certain gaming machines prior to 2013. The Group has submitted claims which are substantially similar and has received
a refund of overpaid VAT of £4.5m plus interest on this amount of £1.3m.
5 In the prior year the Group recognised a charge of £15.2m which included expected costs of £4.0m relating to the separation of Costa and £2.4m relating to the impact
of the disposal on the continuing business which the Group no longer expects to incur.
6 The Group has recorded a goodwill impairment charge of £238.8m in relation to its operations in Germany. The goodwill was recognised on the acquisition of Foremost
Hospitality Hiex GmbH (see Note 35) which the Group entered into in the year ended 1 March 2018 and has been impaired as a result of the impact of the COVID-19
pandemic on current and future growth rates.
7 As a result of the COVID-19 pandemic, the Group identified impairment indicators relating to assets held by the Group. An impairment review of those assets was
undertaken, resulting in a total impairment charge of £99.6m. This is made up of £61.2m relating to property, plant and equipment, £36.7m relating to right-of-use assets
and £1.7m relating to IT assets. In addition, following a review of early stage expansion projects, assets with a value of £5.7m were written off relating to sites where the
Group has decided not to proceed with the project, and an impairment charge of £3.9m was recorded in relation to assets classified as held for sale. Further information
is provided in Note 15. In the prior year, a total charge of £67.0m was recorded, made up of £36.6m of impairment losses on trading sites, £10.3m following a fire at a site,
£5.0m relating to assets classified as held for sale and £15.1m relating to the cancellation of significant IT projects.
8 As a result of the COVID-19 pandemic, the Group identified impairment indicators relating to its investment in its UK joint venture, Healthy Retail Limited. Following an
impairment review, a charge of £8.2m has been recorded within adjusting items. Further information is available in Note 16.
9 A High Court ruling in November 2020 confirmed that pension schemes should extend the equalisation of guaranteed minimum pension benefits for men and women to
those who transferred benefits to other plans after 1990. The cost of reflecting this decision in the obligations of the Whitbread Group defined benefit scheme at the year-
end was estimated at £1.1m, which has been recognised as a past service cost in the income statement in the current year. The treatment of this is consistent with the GMP
equalisation adjustment in FY18/19. Any future revisions to the estimate will be recognised in other comprehensive income.
10 At 27 February 2020, the Group had purchased a call option for an acquisition as part of the Group’s strategy for international growth. As a result of the COVID-19
pandemic, the Group decided subsequent to the year-end not to proceed with the acquisition. An amount of £1.3m was recovered following settlement negotiations
resulting in a charge of £12.4m, including fees, being recorded in the income statement. During the prior year, the Group incurred fees of £2.4m in relation to acquisitions
which did not proceed to completion.
11 During the year, the Group restructured its Support Centre and site operations resulting in redundancy and project costs of £12.1m. During the prior year, a provision for
restructuring of £0.2m was released to the income statement.
12 From FY18 to FY20, the Group established a provision for the performance of remedial works on cladding material at a small number of sites (see Note 23). During the
year, the Group has received reimbursements of those costs from property developers totalling £13.4m (2019/20: £nil) and has released costs of £3.3m which are no
longer expected to be incurred (2019/20: provided for costs of £14.5m). In addition, during the year, the Group made a loss on disposal of £1.1m (2019/20: gain of £5.2m)
and released other provisions of £2.8m (2019/20: £nil). Further details of the property and other provisions are included in Note 23.
13 During the prior year, the Group received an enquiry from HMRC into its historic PAYE Settlement Agreements and provided for the potential settlement in full.
The enquiry is ongoing and the provision is unchanged at 25 February 2021.
14 The Group recorded a cost of £1.7m (2019/20: £0.4m) representing its share of a site level impairment in the accounts of its Middle East joint venture, Premier Inn
Hotels LLC.
15 On 25 February 2021, the Group exercised an early repayment option associated with the Series A loan notes and Series B loan notes issued in 2017 and originally due for
repayment on 16 August 2027. As a result, an early repayment charge of £21.2m was incurred.
7 EMPLOYEE BENEFITS EXPENSE
Wages and salaries
Social security costs
Pension costs
2020/21
£m
2019/20
£m
531.1
38.9
11.5
581.5
559.9
41.6
11.0
612.5
The amounts above exclude adjusting items. Wages and salaries excludes a charge of £12.1m (2019/20: credit of £2.5m)
relating to the restructuring of the Group’s operations and a credit of £2.9m (2019/20: £nil) relating to costs associated with the
separation of Costa. Pension costs excludes £1.1m (2019/20: £nil) relating to a past service cost on the Group’s defined benefit
pension scheme (see Note 6).
Included in wages and salaries is a share-based payments expense of £12.7m (2019/20: £11.6m), which arises from transactions
accounted for as equity-settled share-based payments.
151
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 7 EMPLOYEE BENEFITS EXPENSE CONTINUED
Average number of employees directly employed
UK & Ireland
Germany
Employees of joint ventures are excluded from the numbers above.
Directors’ remuneration is disclosed below:
Directors’ remuneration
Aggregate contributions to the defined contribution pension scheme
Aggregate gains on the exercise of share options
Number of directors accruing benefits under defined contribution schemes
8 FINANCE (COSTS)/INCOME
FINANCE COSTS
Interest on bank loans and overdrafts
Interest on other loans
Interest on lease liabilities (Note 22)
Unwinding of discount on provisions (Note 23)
Unwinding of discount on contingent consideration (Note 26)
Interest capitalised (Note 14)
Impact of ineffective portion of cash flow and fair value hedges (Note 25)
FINANCE INCOME
Bank interest receivable
Other interest receivable
Impact of ineffective portion of cash flow and fair value hedges (Note 25)
IAS 19 pension finance income (Note 32)
ADJUSTED NET FINANCE COSTS
ADJUSTING NET FINANCE (COSTS)/INCOME
Early prepayment charge (Note 20)
VAT settlement (Note 6)
TOTAL NET FINANCE COSTS
Total finance costs
Total finance income
TOTAL NET FINANCE COSTS
2020/21
Number
32,190
313
32,503
2019/20
Number
35,862
172
36,034
2020/21
£m
2019/20
£m
3.0
–
7.3
3.3
–
1.5
2020/21
Number
2019/20
Number
2
2
2020/21
£m
2019/20
£m
(5.3)
(24.1)
(123.2)
–
(2.1)
0.9
–
(153.8)
1.2
0.8
0.4
3.0
5.4
(3.7)
(27.3)
(115.3)
(0.1)
–
2.2
(0.2)
(144.4)
11.6
0.3
–
4.0
15.9
(148.4)
(128.5)
(21.2)
1.3
(168.3)
–
–
(128.5)
(175.0)
6.7
(168.3)
(144.4)
15.9
(128.5)
Net finance costs includes £172.9m (2019/20: £144.1m) finance costs and £2.0m (2019/20: £11.9m) finance income in respect
of financial assets and liabilities that are measured at amortised cost using the effective interest rate method.
152
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 9 GOVERNMENT GRANTS AND ASSISTANCE
During the year, the Group has received Government support designed to mitigate the impact of COVID-19.
In the UK, the Government has provided funding towards the salary costs of employees who have been ‘furloughed’ through
the Coronavirus Job Retention Scheme. The scheme rules have evolved during the period and remain complex to interpret
and apply to the claims. This funding meets the definition of a Government grant under IAS 20 Government Grants and a total
of £138.3m (2019/20: £nil) has been recorded within other income. The related salary costs which are compensated by the
scheme are included within operating costs in the consolidated income statement.
In Germany, the Government provides enhanced benefits directly to individual employees with employers partially
compensated for continued social security payments under Kurzarbeit. Support provided directly to employees reduced the
Group’s operating costs by £0.9m and a total of £0.6m was recognised in other income relating to compensation for social
security payments.
The UK Government introduced a business rates holiday for retail, hospitality and leisure businesses for the 2020/21 tax year.
The relief has allowed the Group to reduce operating costs by £117.8m in the year. Subsequent to the year-end, an extension
to this relief of three months in England and one year in Scotland was announced.
The Group has recognised £10.3m within other income as amounts receivable from the German Government under the
November Support and December Support schemes. Subsequent to the year-end, the German Government removed
a restriction in place on the Bridge Aid scheme which will allow the Group to make a grant claim under this scheme.
This change is a non-adjusting post balance sheet event. As a result, the Group expects to make claims of £10.4m which
will be recognised in FY22 relating to the period from January 2021 to June 2021.
The Group registered with the Government’s Eat out to Help Out Scheme during August 2020, which provided Government
funding for 50% of food and non-alcoholic beverage purchases, capped at £10 per head. The Group has claimed £12.0m
(2019/20: £nil) as part of the scheme which has been recognised as revenue.
The UK Government provided grants to support businesses in the retail, hospitality and leisure section who had been forced
to close as a result of lockdown restrictions in January and February 2021. The Group has recognised £3.5m in other income
relating to these grants.
The Group was confirmed as an eligible issuer under the UK Government’s Covid Corporate Financing Facility (CCFF) with an
initial limit of £600.0m. The limit was reduced to £300.0m following the reduction in the Group’s credit rating to BBB-. The Group
did not draw down on the facility during the year or prior to its expiry on 22 March 2021. See Note 20 for more details.
The UK Government announced, on 8 July 2020, that a reduced rate of VAT would apply to certain supplies in the hospitality
and hotel accommodation sector and this was extended by the Budget in 2021. As a result, for the period from 15 July 2020
to 30 September 2021, the Group’s sales of accommodation, food and beverage (excluding alcohol) are charged at 5% VAT.
A new reduced rate of 12.5% will then be introduced which will end on 31 March 2022.
The Group has taken part in the COVID-19 VAT deferral scheme allowing it to defer VAT payments totalling £14.9m which
would ordinarily have fallen due during FY21 to FY22.
153
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 10 TAXATION
CONSOLIDATED INCOME STATEMENT – CONTINUING OPERATIONS
Current tax:
Current tax (credit)/expense
Adjustments in respect of previous periods
Deferred tax:
Origination and reversal of temporary differences
Effect of rate change
Adjustments in respect of previous periods
TAX REPORTED IN THE CONSOLIDATED INCOME STATEMENT
2020/21
£m
2019/20
£m
(10.7)
11.9
1.2
(109.4)
12.5
(5.2)
(102.1)
(100.9)
24.7
–
24.7
34.3
–
3.1
37.4
62.1
The adjustments in respect of prior periods arise primarily as a result of the decision to disclaim an element of prior year capital
allowances (impacting both current and deferred tax) and a reassessment of deferred tax on historic items.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME – CONTINUING OPERATIONS
Current tax:
Defined benefit pension scheme
Deferred tax:
Cash flow hedges
Tax on net gain on hedge of a net investment
Tax on exchange differences on translation of foreign operations
Defined benefit pension scheme
TAX REPORTED IN COMPREHENSIVE INCOME
2020/21
£m
2019/20
£m
(2.7)
(18.3)
0.6
(0.8)
1.5
2.4
1.0
0.6
–
–
19.6
1.9
A reconciliation of the tax (credit)/charge applicable to adjusted (loss)/profit before tax and (loss)/profit before tax at
the statutory tax rate, to the actual tax charge at the Group’s effective tax rate, for the years ended 25 February 2021 and
27 February 2020 respectively is set out below. All items have been tax effected at the UK statutory rate of 19%, with the
exception of the effect of unrecognised losses in overseas companies, which has been tax effected at the statutory rate in the
relevant jurisdictions with an adjustment to account for the differential tax rates included in the effect of different tax rates.
2020/21
2019/20
Tax on
adjusted
profit
£m
Tax on
profit
£m
Tax on
adjusted
profit
£m
Tax on
profit
£m
PROFIT BEFORE TAX AS REPORTED IN THE CONSOLIDATED INCOME
STATEMENT
(635.1)
(1,007.4)
358.3
280.0
Tax at current UK tax rate of 19% (2019/20: 19%)
Effect of different tax rates
Unrecognised losses in overseas companies
Effect of joint ventures
Tax credit on defined benefit pension scheme contribution
Expenditure not allowable
Adjustments to current tax expense in respect of previous years
Adjustments to deferred tax expense in respect of previous years
Impact of deferred tax being at a different rate from current tax rate
Other movements
TAX EXPENSE REPORTED IN THE CONSOLIDATED INCOME STATEMENT
(120.7)
(6.9)
14.7
0.3
–
10.0
9.0
(1.7)
–
1.2
(94.1)
(191.4)
(6.9)
17.0
0.3
–
59.1
11.9
(5.2)
12.5
1.8
(100.9)
68.1
(1.8)
5.4
0.1
(3.8)
2.1
–
–
(1.0)
–
69.1
53.2
(1.8)
5.4
0.1
(3.8)
6.9
–
3.1
(1.0)
–
62.1
154
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 10 TAXATION CONTINUED
Deferred tax
The major deferred tax assets/(liabilities) recognised by the Group and movement during the current and prior financial years
are as follows:
AT 1 MARCH 2019
Charge to consolidated income statement
Charge to statement of comprehensive income
Charge to statement of changes in equity
Arising on acquisitions
Foreign exchange and other movements
AT 27 FEBRUARY 2020
Charge to consolidated income statement
Charge to statement of comprehensive income
Charge to statement of changes in equity
Transfer
Arising on acquisitions
Foreign exchange and other movements
AT 25 FEBRUARY 2021
Accelerated
capital
allowances
£m
Rolled over
gains and
property
revaluations
£m
Pensions
£m
Leases
£m
Losses
£m
Other
£m
(53.4)
(0.9)
–
–
–
–
(54.3)
10.0
–
–
–
–
0.1
(44.2)
(63.0)
(1.4)
–
–
–
–
(64.4)
6.6
–
–
–
–
–
(57.8)
(4.1)
(32.6)
(19.6)
–
–
–
(56.3)
(3.8)
(2.4)
–
–
–
–
(62.5)
45.2
(1.9)
–
–
–
–
43.3
0.7
–
–
(4.7)
(3.5)
0.2
36.0
–
–
–
–
–
–
–
84.4
(0.7)
–
–
–
–
83.7
4.2
(0.6)
(0.6)
(4.4)
(4.9)
0.2
(6.1)
4.2
(0.6)
(1.9)
4.7
–
(0.1)
0.2
Total
£m
(71.1)
(37.4)
(20.2)
(4.4)
(4.9)
0.2
(137.8)
102.1
(3.7)
(1.9)
–
(3.5)
0.2
(44.6)
Total deferred tax liabilities relating to disposals during the year were £nil (2020: £nil).
The Group has incurred overseas tax losses of £84.8m (2020: £30.0m) which can be carried forward indefinitely and offset
against future taxable profits in the same tax group. The Group carries out an annual assessment of the recoverability of these
losses and does not think it is appropriate at this stage to recognise any deferred tax asset. Recognition of these assets in their
entirety would result in an increase in the reported deferred tax asset of £26.2m (2020: 10.0m).
At 25 February 2021, no deferred tax liability is recognised (2020: £nil) on gross temporary differences of £3.0m (2020: £3.1m)
relating to the unremitted earnings of overseas subsidiaries as the Group is able to control the timings of the reversal of these
temporary differences and it is probable that they will not reverse in the foreseeable future.
Tax relief on total interest capitalised amounts to £0.2m (2019/20: £0.4m).
Factors affecting the tax charge for future years
The Finance (No.2) Act 2015 reduced the main rate of UK corporation tax to 19%, effective from 1 April 2017. A further reduction
in the UK corporation tax rate to 17% was expected to come into effect from 1 April 2020 (as enacted by the Finance Act
2016 on 15 September 2016). However, legislation introduced in the Finance Act 2020 (enacted on 22 July 2020) repealed the
reduction of the corporation tax rate, thereby maintaining the current rate of 19%. Deferred taxes on the balance sheet have
been measured at 19% (2020: 17%) which represents the future corporation tax rate that was enacted at the balance sheet date.
The UK Budget 2021 announcements on 3 March 2021 included measures to support economic recovery as a result of the
ongoing COVID-19 pandemic. These included an increase to the UK’s main corporation tax rate to 25%, effective from 1 April
2023. These changes were not substantively enacted at the balance sheet date and hence have not been reflected in the
measurement of deferred tax balances at the period end. If the UK deferred tax balances that are expected to unwind at 25%
were remeasured at the balance sheet date at 25%, the Group estimates that this would result in an increase in the net deferred
tax liability, which could vary based on a number of factors and judgements, up to £22.0m.
155
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 11 EARNINGS PER SHARE
The basic earnings per share (EPS) figures are calculated by dividing the net (loss)/profit for the year attributable to ordinary
shareholders of the parent by the weighted average number of ordinary shares in issue during the year after deducting treasury
shares and shares held by an independently managed employee share ownership trust (ESOT).
The diluted earnings per share figures allow for the dilutive effect of the conversion into ordinary shares of the weighted
average number of options outstanding during the year. Where the average share price for the year is lower than the option
price, the options become anti-dilutive and are excluded from the calculation. There are 2.3m (2020: nil) share options excluded
from the diluted earnings per share calculation because they would be anti-dilutive.
Basic and diluted earnings per share figures for the comparative period have been restated for the bonus factor of 1.1640 to
reflect the bonus element of the June 2020 rights issue, in accordance with IAS 33 Earnings per Share. Amounts as originally
stated at 27 February 2020 were 145.9p basic earnings per share (145.0p diluted) and 193.6 basic adjusted earnings per share
(192.4p diluted).
The numbers of shares used for the earnings per share calculations are as follows:
Basic weighted average number of ordinary shares
Effect of dilution – share options
DILUTED WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
2020/21
million
188.1
–
188.1
2019/20
(restated)
million
173.9
0.9
174.8
The total number of shares in issue at the year-end, as used in the calculation of the basic weighted average number of ordinary
shares, was 214.4m, less 12.5m treasury shares held by Whitbread PLC and 0.4m held by the ESOT (2020: 147.0m, less 12.5m
treasury shares held by Whitbread PLC and 1.0m held by the ESOT).
The (losses)/profits used for the earnings per share calculations are as follows:
(LOSS)/PROFIT FOR THE YEAR ATTRIBUTABLE TO PARENT SHAREHOLDERS
Adjusting items before tax (Note 6)
Adjusting tax credit (Note 6)
ADJUSTED (LOSS)/PROFIT FOR THE YEAR ATTRIBUTABLE TO PARENT SHAREHOLDERS
BASIC EPS ON (LOSS)/PROFIT FOR THE YEAR
Adjusting items before tax (Note 6)
Adjusting tax credit (Note 6)
BASIC EPS ON ADJUSTED (LOSS)/PROFIT FOR THE YEAR
DILUTED EPS ON (LOSS)/PROFIT FOR THE YEAR
DILUTED EPS ON ADJUSTED (LOSS)/PROFIT FOR THE YEAR
2020/21
£m
(906.5)
372.3
(6.8)
(541.0)
2020/21
pence
(481.9)
197.9
(3.6)
(287.6)
2019/20
£m
217.9
78.3
(7.0)
289.2
2019/20
(restated)
pence
125.3
45.0
(4.0)
166.3
(481.9)
(287.6)
124.7
165.4
156
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 12 DIVIDENDS PAID
Final dividend, proposed and paid, relating to the prior year
Interim dividend proposed, and paid, for the current year
TOTAL EQUITY DIVIDENDS PAID IN THE YEAR
Dividends on other shares:
B share dividend
C share dividend
TOTAL DIVIDENDS PAID
2020/21
2019/20
pence per
share
£m
–
–
0.90
0.90
–
–
–
–
–
–
pence per
share
67.00
32.65
£m
116.3
43.6
159.9
0.90
0.60
–
–
159.9
As a condition agreed with Whitbread’s lenders and Pension Trustees, dividends will not be paid during the current covenant
waiver period which lasts until March 2023 unless the Group demonstrates compliance with agreed metrics, being net debt/
EBITDA < 3.5x and EBITDA/interest > 3.0x.
Dividends per share for the comparative period stated above are as declared and paid to shareholders in issue when dividends
were paid. Restating these amounts to take account of the bonus element of the June 2020 rights issue would result in final
dividends declared and paid of 57.56p per share and interim dividend declared and paid of 28.05p per share.
13 INTANGIBLE ASSETS
COST
At 1 March 2019
Additions
Assets written off
Foreign currency adjustment
AT 27 FEBRUARY 2020
Additions
Recognised on acquisition of a subsidiary (Note 35)
Assets written off
Foreign currency adjustment
AT 25 FEBRUARY 2021
AMORTISATION AND IMPAIRMENT
At 1 March 2019
Amortisation during the year
Amortisation on assets written off
AT 27 FEBRUARY 2020
Amortisation during the year
Impairment during the year (Note 35)
Amortisation on assets written off
AT 25 FEBRUARY 2021
NET BOOK VALUE AT 25 FEBRUARY 2021
NET BOOK VALUE AT 27 FEBRUARY 2020
IT software
and
technology
£m
Goodwill
£m
113.5
–
(2.2)
–
111.3
–
224.2
–
14.6
350.1
(3.0)
–
2.2
(0.8)
–
(238.8)
–
(239.6)
110.5
110.5
116.1
20.7
(27.9)
(0.1)
108.8
10.8
–
(9.7)
0.1
110.0
(51.0)
(19.8)
24.3
(46.5)
(23.6)
–
8.7
(61.4)
48.6
62.3
Total
£m
229.6
20.7
(30.1)
(0.1)
220.1
10.8
224.2
(9.7)
14.7
460.1
(54.0)
(19.8)
26.5
(47.3)
(23.6)
(238.8)
8.7
(301.0)
159.1
172.8
An impairment of £238.8m was recorded in relation to goodwill recognised on the acquisition of Foremost Hospitality Hiex
GmbH (see Note 35) reflecting the impact of the COVID-19 pandemic on current and future growth rates. Further details of the
impairment are included in Note 15.
Other than goodwill, there are no intangible assets with indefinite lives. IT software and technology assets, which are made
up entirely of internally generated assets, have been assessed as having finite lives and are amortised under the straight-line
method over periods ranging from three to ten years from the date the asset became fully operational.
Capital expenditure commitments
Capital expenditure commitments in relation to intangible assets at the year-end amounted to £0.5m (2020: £0.5m).
157
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 14 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY
COST
At 1 March 2019
Additions
Acquisition of a subsidiary (Note 35)
Interest capitalised
Movements to held for sale in the year
Disposals
Assets written off
Foreign currency adjustment
AT 27 FEBRUARY 2020
Additions
Acquisition of a subsidiary (Note 35)
Interest capitalised
Movements to held for sale in the year
Disposals
Assets written off
Foreign currency adjustment
AT 25 FEBRUARY 2021
DEPRECIATION AND IMPAIRMENT
At 1 March 2019
Depreciation charge for the year
Impairment (Note 15)
Movements to held for sale in the year
Disposals
Depreciation on assets written off
Foreign currency adjustment
AT 27 FEBRUARY 2020
Depreciation charge for the year
Impairment (Note 15)
Movements to held for sale in the year
Depreciation on assets written off
Foreign currency adjustment
AT 25 FEBRUARY 2021
NET BOOK VALUE AT 25 FEBRUARY 2021
NET BOOK VALUE AT 27 FEBRUARY 2020
Land and
buildings
£m
Plant and
equipment
£m
Total
property,
plant and
equipment
£m
Investment
property
£m
Total
£m
3,402.5
158.7
–
2.2
(10.1)
(1.0)
(10.2)
(4.0)
3,538.1
116.0
–
0.9
(11.2)
(0.2)
(8.1)
5.1
3,640.6
(174.6)
(18.0)
(32.3)
2.5
0.9
10.2
0.1
(211.2)
(16.1)
(63.8)
3.8
–
–
(287.3)
3,353.3
3,326.9
1,373.4
178.3
0.6
–
(3.0)
–
(12.8)
(0.5)
1,536.0
82.4
6.0
–
(2.5)
–
(104.1)
(0.2)
1,517.6
(511.3)
(126.9)
(2.6)
2.2
–
7.7
–
(630.9)
(134.1)
(0.6)
1.4
106.2
0.2
(657.8)
859.8
905.1
4,775.9
337.0
0.6
2.2
(13.1)
(1.0)
(23.0)
(4.5)
5,074.1
198.4
6.0
0.9
(13.7)
(0.2)
(112.2)
4.9
5,158.2
(685.9)
(144.9)
(34.9)
4.7
0.9
17.9
0.1
(842.1)
(150.2)
(64.4)
5.2
106.2
0.2
(945.1)
4,213.1
4,232.0
–
22.0
–
–
–
–
–
(1.6)
20.4
0.7
–
–
–
–
–
0.7
21.8
–
(0.1)
–
–
–
–
–
(0.1)
(0.1)
–
–
–
–
(0.2)
21.6
20.3
4,775.9
359.0
0.6
2.2
(13.1)
(1.0)
(23.0)
(6.1)
5,094.5
199.1
6.0
0.9
(13.7)
(0.2)
(112.2)
5.6
5,180.0
(685.9)
(145.0)
(34.9)
4.7
0.9
17.9
0.1
(842.2)
(150.3)
(64.4)
5.2
106.2
0.2
(945.3)
4,234.7
4,252.3
Included above are assets under construction of £289.9m (2020: £341.2m).
There is a charge in favour of the pension scheme over properties with a market value of £500.0m (2020: £450.0m). See Note
32 for further information.
Amounts relating to right-of-use assets under IFRS 16 are detailed in Note 22.
158
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 14 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY CONTINUED
Investment property
During the prior year the Group acquired a freehold site which is currently being leased to a third party and is recorded within
investment property. The Group intends to take over the operations of the hotel in due course at which point the asset will be
transferred to property, plant and equipment. The Group recognised rental income of £0.4m (2019/20: £0.2m) within other
income and £0.1m (2019/20: £nil) of direct operating expenses in relation to this property.
The Group has performed an internal appraisal of the value of the investment property and concluded that the fair value
approximates the carrying value. The fair value of the property was measured using a discounted cash flow approach taking
into account the forecast performance of the site once the Group has taken over the operations. This is a level 3 measurement
as per the fair value hierarchy set out in Note 25.
CAPITAL EXPENDITURE COMMITMENTS
Capital expenditure commitments for property, plant and equipment
for which no provision has been made
2021
£m
2020
£m
82.5
168.8
Capitalised interest
Interest capitalised during the year amounted to £0.9m, using an average rate of 2.9% (2019/20: £2.2m, using an average rate
of 3.3%).
Assets held for sale
During the year, seven property assets with a combined net book value of £9.1m (2019/20: four at £8.5m) were transferred
to assets held for sale. One property was transferred back to property, plant and equipment with a net book value of £0.6m
(2019/20: one at £0.1m). Three property assets sold during the year had a net book value of £3.9m (2019/20: three at £4.1m).
An impairment loss of £0.7m (2019/20: £1.6m) was recognised relating to assets classified as held for sale. By the year-end
there were 14 sites with a combined net book value of £19.0m (2020: 11 at £14.9m) classified as assets held for sale. There are no
gains or losses recognised in other comprehensive income with respect to these assets. Sites are transferred to assets held for
sale when there is an expectation that they will be sold within 12 months. If the site is not expected to be sold within 12 months
it is subsequently transferred back to property, plant and equipment.
Included within assets held for sale are assets which were written down to fair value less costs to sell of £11.4m (2020: £9.9m).
The fair value of property assets was determined based on current prices in an active market for similar properties. Where such
information is not available management considers information from a variety of sources including current prices for properties
of a different nature or recent prices of similar properties, adjusted to reflect those differences. This is a level 3 measurement as
per the fair value hierarchy set out in Note 25. The key inputs under this approach are the property size and location.
159
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 15 IMPAIRMENT
During the year, impairment losses of £348.8m (2019/20: £51.2m) and asset write offs of £7.4m (2019/20: £8.7m) were
recognised within operating costs. These impairments are primarily driven by a reduction in anticipated cash flows, particularly
over the next 12-24 months, and an increase in the discount rate reflecting increased market risk and volatility. The losses were
recognised on the following classes of assets:
IMPAIRMENT LOSSES
Property, plant and equipment – impairment review
Property, plant and equipment – site fire
Property, plant and equipment – transfer to assets held for sale
Intangible assets – goodwill
Right-of-use assets – impairment review
Investments in joint ventures
Assets held for sale
ASSET WRITE OFFS
Property, plant and equipment – early stage expansion projects
IT Assets
Other
TOTAL CHARGE FOR IMPAIRMENT LOSSES AND ASSET WRITE OFFS
The Group recognised impairment reversals during the year of £nil (2019/20: £nil).
2020/21
£m
2019/20
£m
61.2
–
3.2
238.8
36.7
8.2
0.7
5.7
1.7
–
356.2
21.9
9.6
3.4
–
14.7
–
1.6
–
8.4
0.3
59.9
Property, plant and equipment and right-of-use assets – impairment review
As a result of the COVID-19 pandemic, the Group identified indicators of impairment and as a result performed an impairment
assessment of all trading sites. This resulted in an impairment of £61.2m being recorded in relation to property, plant and
equipment in the UK and £36.7m being recorded in relation to right-of-use assets in the UK.
The Group considers each trading site to be a CGU. Where indicators of impairment are identified, an impairment assessment
is undertaken. In assessing whether an asset has been impaired, the carrying amount of the site is compared to its recoverable
amount. The recoverable amount is the higher of its value in use and its fair value less costs of disposal.
The Group calculates a value in use (VIU) for each site. Where the VIU is lower than the carrying value of the CGU, the Group
uses a range of methods for estimating the fair value less costs of disposal (FVLCD). These include applying a market multiple
to the CGU EBITDAR and, for leasehold sites, present value techniques using a discounted cash flow method. Both FVLCD
methods rely on inputs not normally observable by market participants and are therefore level 3 measurements in the fair
value hierarchy.
The key assumptions used by management in estimating value in use were:
Discount rates
The discount rate is based on the Weighted Average Cost of Capital (WACC) of a typical market participant, taking into
account specific country and currency risks associated with the Group. The average pre-tax discount rate used is 9.5% in the
UK, and 8.9% in Germany (2020: 7.1% UK and 6.2% Germany). The discount rate has increased reflecting market volatility in the
spot risk-free rate and equity risk premium inputs used in the Group’s WACC calculation.
Approved budget period
Forecast cash flows for the initial five-year period are based on actual cash flows for FY20 being the period before the
impact of the COVID-19 pandemic and applying management’s assumptions of the impact of the pandemic and expected
recovery period.
The key assumptions used by management in setting the board approved financial budgets for the initial five-year period were
as follows:
› Normalised trading: Actual results from FY20 have been used as a basis for the budget as they represent normalised trading
before the impact of COVID-19.
› Forecast growth rates: Forecast growth rates are based on the Group business plan which includes assumptions around the
timing and profile of the UK and German economies’ recovery from the COVID-19 pandemic.
› Operating profits are forecast based on historical experience of operating margins, adjusted for the impact of inflation and
cost-saving initiatives.
› Local factors impacting the site in the current year or expected to impact the site in future years. Key assumptions include
the maturity profile of individual sites, the future potential of immature sites and the impact of increasing or reducing market
supply in the local area.
160
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 15 IMPAIRMENT CONTINUED
Long-term growth rates
A long-term growth rate of 2.0% (2020: 2.0%) was used for cash flows subsequent to the five-year approved budget/plan
period. This long-term growth rate is a conservative rate and is considered to be lower than the long-term historical growth
rates of the underlying territories in which the CGUs operate and the long-term growth rate prospects of the sectors in which
the CGUs operate.
The key assumptions used by management in estimating the FVLCD were:
EBITDAR multiple
An EBITDAR multiple is estimated based on a normalised trading basis and market data obtained from external sources.
This resulted in a multiple in the range of 9 to 11 times.
Discounted cash flows
The key assumptions used by management in estimating the FVLCD on a discounted cash flow method were similar to those
used in the value in use assessment, modified to reflect estimated cost of disposal and lease payments. The inclusion of lease
payments is reflected in the discount rate, increasing WACC for the specific asset class from 9.5% to 11.0%.
Sensitivity to changes in assumptions
The level of impairment is predominantly dependent upon judgements used in arriving at future growth rates and the discount
rates applied to cash flow projections. The impact on the impairment charge of applying a reasonably possible change in
assumptions to the growth rates used in the five-year business plan, long-term growth rates, pre-tax discount rates and
EBITDAR multiple would be an incremental impairment charge in the year to 25 February 2021 of:
INCREMENTAL IMPAIRMENT CHARGE
Increase to impairment charge if discount rate increased by 2.0%
Increase to impairment charge if long-term growth rates reduced by 1%
Increase to impairment charge if EBITDAR multiple reduced by 10%
Increase to impairment charge if year one and year two cash flows were reduced on average by 33%
Total
£m
5.0
5.8
12.9
8.2
The above sensitivity analyses are based on a change in an assumption whilst holding all other assumptions constant.
In practice, this is unlikely to occur and changes in some of the assumptions may be correlated.
The impairment sensitivities above show the downside risk from a reasonable possible change in the modelled assumptions and
are in line with disclosure requirements. Given the current uncertainty that remains in relation to the timing and length of the
recovery from COVID-19 restrictions and the economic recovery, it may result in some of the impairments recognised during
the year reversing in the next 12 months.
The long-term impact of COVID-19 remains uncertain and the impact of the pandemic could be more prolonged or severe than
management has considered in the sensitivities presented.
Goodwill
Goodwill acquired through business combinations is allocated to groups of CGUs at an operating segment level, being the level
at which management monitors goodwill. An analysis of goodwill by operating segment is:
AT 1 MARCH 2019 AND 27 FEBRUARY 2020
Recognised on acquisition of a subsidiary (Note 35)
Foreign exchange
Impairment
AT 25 FEBRUARY 2021
UK
£m
Germany
£m
110.5
–
–
–
110.5
–
224.2
14.6
(238.8)
–
Total
£m
110.5
224.2
14.6
(238.8)
110.5
An impairment of £238.8m was recorded in relation to goodwill arising on the acquisition of Foremost Hospitality Hiex GmbH
(see Note 35) reflecting the impact of the COVID-19 pandemic on current and future growth rates.
The recoverable amount is the higher of fair value less costs of disposal and value in use using the same assumptions as
those used in the site level impairment reviews. The recoverable amount has been determined from value in use calculations.
The future cash flows are based on assumptions from the approved budget and cover a five-year period. These forecasts
include management’s most recent view of medium-term trading prospects. Cash flows beyond this period are extrapolated
using a 2.0% (2020: 2.0%) growth rate. The pre-tax discount rate applied to cash flow projections is 9.5% for the UK and 8.9%
for Germany (2020: 7.1% UK and 6.2% Germany).
161
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 15 IMPAIRMENT CONTINUED
As a result of the German goodwill being impaired in the period and the level of headroom within the UK segment, there is no
reasonably possible change that could result in a further material impairment of goodwill.
Investments in joint ventures
The COVID-19 pandemic has had a significant impact on trading and future forecasts for trading at the Group’s joint ventures.
As a result, an impairment review was carried out and an impairment charge of £8.2m has been recorded in the financial
statements relating to the Group’s investment in Healthy Retail Limited. This included £5.8m impairment relating to loans
advanced to joint ventures determined under IFRS 9. See Note 16 for details.
Property, plant and equipment – early stage expansionary projects and assets held for sale
As a result of the impact of the COVID-19 pandemic and the focused application of investment cash flows, the Group reviewed
its early stage expansion projects and decided not to proceed with certain sites resulting in a write off of costs of £5.7m that
had been incurred and capitalised.
During the period, seven hotels were transferred to assets held for sale, resulting in an impairment charge of £3.2m. In addition,
an impairment charge of £0.7m was recorded in relation to assets which had previously been classified as held for sale as
a result of a reduction in expected sales proceeds.
IT assets
An impairment review of IT intangible and tangible assets was carried out as a result of the COVID-19 pandemic which
identified a total of £1.7m of assets which are not expected to generate future economic benefits for the Group.
16 INVESTMENT IN JOINT VENTURES
Premier Inn Hotels LLC
The Group holds a 49% interest in Premier Inn Hotels LLC, a joint venture which operates Premier Inn branded hotels in the
United Arab Emirates. The investment forms part of the Group’s international growth strategy.
Premier Inn Hotels LLC holds a 49% investment in Premier Inn Qatar Limited. During the year, the Group subscribed for share
capital of £1.3m.
Healthy Retail Limited
The Group holds a 49% interest in Healthy Retail Limited, a joint venture which operates a chain of 20 stores in London trading
as ‘Pure’, that specialises in fresh, natural healthy meals. The impact of COVID-19 has had a significant impact on the company’s
trading and on 7 October 2020 Healthy Retail Limited entered into a Creditor’s Voluntary Agreement (CVA). Healthy Retail
Limited has also obtained a Coronavirus Business Interruption Loan Scheme facility which is in priority to the Group’s security
over loans advanced to the joint venture. The Group has impaired its investments and loans made to Healthy Retail Limited in
full, resulting in a charge of £8.2m.
The Group has an option to purchase the remaining 51% interest which expires on 30 June 2021. The Group continues to
account for the investment as a joint venture on the basis that the majority shareholders have an equal representation on the
investee’s board of directors who have control over the relevant activities of the business, and the potential voting rights under
the option to purchase are not considered to be substantive.
Premier Inn Kier Limited
The Group holds a 50% investment in this dormant UK entity.
Movement in investment in joint ventures
Opening investment in joint ventures
Share of loss for the year
Share of other comprehensive loss for the year
Foreign exchange movements
Impairment1
Interest on loans
Capital contribution
Loans advanced
CLOSING INVESTMENT IN JOINT VENTURES
1
Includes an impairment of loans advanced to joint ventures of £5.8m determined under IFRS 9.
162
2021
£m
54.8
(7.7)
–
(3.3)
(8.2)
0.4
1.3
–
37.3
2020
£m
56.6
(2.5)
(2.8)
1.5
–
–
–
2.0
54.8
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 16 INVESTMENT IN JOINT VENTURES CONTINUED
SUMMARY OF JOINT VENTURES’ BALANCE SHEETS
Current assets
Non-current assets
Current liabilities
Non-current liabilities
NET ASSETS
Group’s share of interest in joint ventures’ net assets
Premium paid on acquisition
Loans to joint ventures
Accumulated impairment
GROUP’S CARRYING AMOUNT OF THE INVESTMENT
WITHIN GROSS BALANCE SHEETS
Cash and cash equivalents
Current financial liabilities
Non-current financial liabilities
SUMMARY OF JOINT VENTURES’ INCOME STATEMENT
Revenue
Other income
Depreciation and amortisation
Impairment
Other operating costs
Finance costs
LOSS BEFORE TAX
Income tax
Loss after tax
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
GROUP SHARE
Loss after tax1
Other comprehensive income
2021
Healthy
Retail
Limited
£m
Premier Inn
Hotels LLC
£m
6.7
138.1
(11.4)
(57.2)
76.2
37.3
–
–
–
37.3
5.2
(3.6)
(56.8)
11.2
–
(5.9)
(3.5)
(11.2)
(2.6)
(12.0)
–
(12.0)
–
(12.0)
(5.9)
–
0.8
26.3
(14.1)
(19.3)
(6.3)
(3.1)
4.5
5.8
(7.2)
–
–
(10.9)
(19.3)
4.5
2.4
(4.5)
–
(6.1)
(1.2)
(4.9)
–
(4.9)
–
(4.9)
(1.8)
–
2020
Healthy
Retail
Limited
£m
Premier Inn
Hotels LLC
£m
6.7
159.9
(11.4)
(63.0)
92.2
45.2
–
–
–
45.2
3.8
(3.7)
(61.9)
22.5
–
(5.3)
(0.8)
(16.2)
(3.4)
(3.2)
–
(3.2)
(3.8)
(7.0)
2.8
29.3
(14.0)
(19.5)
(1.4)
(0.7)
4.5
5.8
–
9.6
2.5
(10.6)
(19.3)
26.0
–
(3.9)
–
(22.8)
(1.2)
(1.9)
–
(1.9)
(1.9)
(3.8)
Total
£m
9.5
189.2
(25.4)
(82.5)
90.8
44.5
4.5
5.8
–
54.8
6.3
(14.3)
(81.2)
48.5
–
(9.2)
(0.8)
(39.0)
(4.6)
(5.1)
–
(5.1)
(5.7)
(10.8)
(1.6)
(1.9)
(0.9)
(0.9)
(2.5)
(2.8)
Total
£m
7.5
164.4
(25.5)
(76.5)
69.9
34.2
4.5
5.8
(7.2)
37.3
5.2
(14.5)
(76.1)
15.7
2.4
(10.4)
(3.5)
(17.3)
(3.8)
(16.9)
–
(16.9)
–
(16.9)
(7.7)
–
1 The group share of loss after tax of Healthy Retail Limited has been recognised only to the extent that its share of losses equals its interest in the joint venture, following
the impairment recorded during the year.
At 25 February 2021, the Group’s share of the capital commitments of its joint ventures amounted to £0.1m (2020: £0.7m).
17 INVENTORIES
Finished goods held for resale
Consumables
2021
£m
7.5
4.6
12.1
2020
£m
12.5
1.2
13.7
The carrying value of inventories is stated net of a provision of £5.5m (2020: £nil).
Included within inventories at the year-end is £2.9m (2020: £nil) of personal protective equipment and other consumables
which are being used to comply with new COVID-19 protocols.
163
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 18 TRADE AND OTHER RECEIVABLES
Trade receivables
Prepayments and accrued income
Other receivables
Analysed as:
Current
Non-current
2021
£m
22.1
17.6
34.5
74.2
74.2
–
74.2
2020
£m
58.6
204.8
34.5
297.9
292.8
5.1
297.9
Trade and other receivables are non-interest bearing and are generally on 30-day terms. Trade receivables includes £16.0m
(2020: £55.2m) relating to contracts with customers. Other receivables include £14.0m (2020: £nil) in relation to grants and
other support receivable from the UK and German governments (see Note 9).
The allowance for expected credit loss relating to trade and other receivables at 25 February 2021 was £1.3m (2020: £0.7m).
During the year, credit losses of £0.7m (2019/20: £0.1m) were recognised within operating costs in the consolidated
income statement.
Prepayments includes an amount of £nil (2020: £169.0m) in relation to consideration paid in advance of the year-end for the
post-year-end acquisition of Foremost Hospitality Hiex GmbH (see Note 35) and a deposit of £nil (2020: £12.8m) in relation
to an acquisition which was written off subsequent to the year-end following the decision not to proceed with the acquisition
(see Note 6).
19 CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Money market funds
Short-term deposits
2021
£m
19.2
1,011.8
225.0
1,256.0
2020
£m
78.9
253.7
170.0
502.6
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash
requirements of the Group. They earn interest at the respective short-term deposit rates.
The Group does not have material cash balances which are subject to contractual or regulatory restrictions.
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the amounts as
disclosed above.
164
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 20 BORROWINGS
Amounts drawn down on the Group’s borrowing facilities are as follows:
Revolving credit facility
Private placement loan notes
Senior unsecured bonds
UK Government CCFF
Current
Non-current
2021
£m
–
312.0
–
–
312.0
2020
£m
–
84.0
–
–
84.0
2021
£m
–
–
990.5
–
990.5
2020
£m
–
295.6
445.9
–
741.5
Covenants
The Group has received covenant test waivers for its revolving credit facility covering the period to 2 March 2023. In addition
it has received covenant test waivers for its pension scheme and private placement loan notes for the period to 3 March
2022 meaning that the private placement loan note covenants will not be tested prior to maturity. Under the terms of the
waivers, the Group is required to maintain £400.0m cash and/or headroom under undrawn committed bank facilities and total
net debt must not exceed £2.0bn. Dividends will not be paid during the current covenant waiver period which lasts until March
2023 unless the Group demonstrates compliance with agreed metrics, being net debt/EBITDA < 3.5x and EBITDA/interest >
3.0x. There are no financial covenants associated with the Group’s senior unsecured bonds.
Revolving credit facility (£950m)
On 29 January 2021, the Group agreed to amend and extend its revolving credit facility (RCF). The new agreement gives total
committed credit of £950.0m which is available until 29 December 2021 and subsequently reduces to £850.0m available until
7 September 2022 and £725.0m available until 7 September 2023. The facility is multi-currency and has a variable interest rate
linked to GBP LIBOR or EURIBOR which will transition to SONIA following the discontinuation of IBOR.
At 25 February 2021, the Group had available £950.0m (2020: £950.0m) of undrawn committed borrowing facilities in respect
of revolving credit facilities on which all conditions precedent had been met.
Private placement loan notes
The Group holds loan notes with coupons and maturities as shown in the following table:
Title
Series C loan notes
Series D loan notes
Series A loan notes1
Series B loan notes1
Year issued
Principal value
Maturity
Coupon
2011
2011
2017
2017
US$93.5m
£25.0m
£100.0m
£100.0m
26 January 2022
6 September 2021
26 March 20211
26 March 20211
4.86%
4.89%
2.54%
2.63%
1 On 25 February 2021, the Group exercised an early repayment option associated with the Series A loan notes and Series B loan notes issued in 2017 and originally due
for repayment on 16 August 2027. As a result, the total repayment due of £220.4m, which includes a charge of £21.2m due to the noteholders as a result of the early
repayment is included within current liabilities as at the balance sheet date. This was settled subsequent to the year-end (see Note 34). The early repayment charge of
£21.2m has been recorded within finance costs in the consolidated income statement (see Note 8). On 25 February 2021, the Group also entered into an interest rate swap
and cross-currency swap to hedge interest rate risk and foreign currency risk associated with the early repayment charge.
On 13 August 2020, the Group repaid loan notes on maturity with a value of US$75.0m and £25.0m. As a result of fair value
hedges in place, the total cash outflow recorded by the Group was £75.1m.
The Group entered into a number of cross-currency swap agreements in relation to the loan notes to eliminate any foreign
exchange risk on interest rates or on the repayment of the principal borrowed. These swaps expire in line with the loan notes
and are discussed in Note 25.
Senior unsecured bonds
The Group has issued senior unsecured bonds with coupons and maturities as shown in the following table:
Title
Year issued
Principal value
2025 senior unsecured bonds
2027 senior unsecured green use
of proceeds bonds
2031 senior unsecured green use
of proceeds bonds
2015
2021
2021
£450.0m
£300.0m
£250.0m
Maturity
16 October 2025
31 May 2027
Coupon
3.375%
2.375%
31 May 2031
3.000%
The 2027 green use of proceeds bonds were issued on 10 February 2021. Interest is payable annually on 31 May. The bonds were
initially priced at 99.516% of face value and are unsecured.
The 2031 green use of proceeds bonds were issued on 10 February 2021. Interest is payable annually on 31 May. The bonds were
initially priced at 99.327% of face value and are unsecured.
165
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 20 BORROWINGS CONTINUED
On issue of these bonds, the Group received gross proceeds of £546.8m and incurred arrangements fees of £2.8m. The bonds
contain an early prepayment option which meets the definition of an embedded derivative. This was assessed to have a value
of £nil as at the year end.
Arrangement fees of £3.9m (2020: £1.3m) directly incurred in relation to the bond facilities are included in the carrying value
and are being amortised over the term of the facilities.
UK Government CCFF
The Group’s eligibility to issue commercial paper under the UK Government Covid Corporate Financing Facility expired
on 22 March 2021. The facility remained undrawn throughout the year. As at 25 February 2021, the Group’s issuer limit was
£300.0m, reduced from an initial limit of £600.0m following the reduction in Whitbread’s credit rating to BBB-.
21 MOVEMENTS IN CASH AND NET DEBT
YEAR ENDED
25 FEBRUARY 2021
Cash and cash equivalents
LIABILITIES FROM
FINANCING ACTIVITIES
Borrowings
Lease liabilities
Derivatives held to hedge
financing activities
Total liabilities from
financing activities
27 February
2020
£m
Cost of
borrowings
£m
Cash flow
£m
Net new
lease
liabilities
£m
Foreign
exchange
£m
Fair value
adjustments
to loans
£m
Amortisation
of premiums
and
discounts
£m
25 February
2021
£m
502.6
–
752.0
–
1.4
–
–
1,256.0
(825.5)
(2,620.6)
17.7
5.5
–
–
(471.7)
79.0
–
(686.9)
5.8
(3.1)
7.5
–
(24.1)
–
(1,302.5)
(3,231.6)
–
–
–
(11.9)
–
5.8
(3,428.4)
5.5
(392.7)
(686.9)
(4.4)
(24.1)
(4,528.3)
Less: lease liabilities
Less: derivatives held to hedge
financing activities
2,620.6
(17.7)
–
–
(79.0)
686.9
–
–
–
11.9
–
–
3,231.6
(5.8)
NET CASH/(DEBT)
(322.9)
5.5
280.3
7.2
7.5
(24.1)
(46.5)
Amortisation of fees and discounts includes an early repayment charge of £21.2m associated with the US private placement
loan notes (see Note 20).
2.7
3.1
–
–
1 March
2019
£m
Cost of
borrowings
£m
Cash flow
£m
Net new
lease
liabilities
£m
Foreign
exchange
£m
Fair value
adjustments
to loans
£m
Amortisation
of premiums
and discounts
£m
27 February
2020
£m
3,403.2
–
(2,892.5)
–
(8.1)
–
–
502.6
YEAR ENDED
27 FEBRUARY 2020
Cash and cash equivalents
LIABILITIES FROM
FINANCING ACTIVITIES
Borrowings
Lease liabilities
Derivatives held to hedge
financing activities
Total liabilities from
financing activities
(819.9)
(2,471.8)
10.6
(3,281.1)
Less: lease liabilities
Less: derivatives held to hedge
financing activities
2,471.8
(10.6)
–
–
–
–
–
–
–
73.1
–
(222.6)
(2.2)
0.7
(1.8)
(1.6)
(825.5)
(2,620.6)
–
–
5.5
1.6
17.7
73.1
(222.6)
4.0
(0.2)
(1.6)
(3,428.4)
(73.1)
222.6
(0.7)
–
–
2,620.6
–
–
–
(5.5)
(1.6)
–
(17.7)
(10.3)
(1.8)
(1.6)
(322.9)
NET CASH/(DEBT)
2,583.3
–
(2,892.5)
Net cash/(debt) includes US$ denominated loan notes of US$93.5m (2020: US$168.5m) retranslated to £66.6m
(2020: £131.3m). These notes have been hedged using cross-currency swaps. At maturity, £58.5m (2020: £108.6m) will be
repaid taking into account the cross-currency swaps. If the impact of these hedges is taken into account, reported net debt
would be £38.4m (2020: £300.1m).
166
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 22 LEASE ARRANGEMENTS
The Group leases various buildings which are used within the Premier Inn business. The leases are non-cancellable operating
leases with varying terms, escalation clauses and renewal rights, and include variable payments that are not fixed in amount
but based upon a percentage of sales. The Group also leases various plant and equipment under non-cancellable operating
lease agreements.
An analysis of the Group’s right-of-use asset and lease liability is as follows:
RIGHT-OF-USE ASSET
At 1 March 2019
Additions
Recognised on acquisition of a subsidiary (Note 35)
Impairment
Foreign currency adjustment
Depreciation
AT 27 FEBRUARY 2020
Additions
Recognised on acquisition of a subsidiary (Note 35)
Impairment
Foreign currency adjustment
Depreciation
Terminations
AT 25 FEBRUARY 2021
LEASE LIABILITY
At 1 March 2019
Additions
Recognised on acquisition of a subsidiary (Note 35)
Interest
Foreign currency adjustment
Payments
AT 27 FEBRUARY 2020
Additions
Recognised on acquisition of a subsidiary (Note 35)
Interest
Foreign currency adjustment
Payments
Terminations
AT 25 FEBRUARY 2021
Property
£m
2,139.1
205.6
45.8
(14.7)
(1.9)
(102.4)
2,271.5
427.7
193.3
(36.7)
2.9
(122.0)
–
2,736.7
Property
£m
2,469.6
206.6
14.8
115.2
(0.7)
(186.7)
2,618.8
419.9
193.3
122.0
2.5
(189.9)
(2.4)
3,164.2
Total
right-of-use
assets
£m
Investment
property
£m
2,141.7
206.8
45.8
(14.7)
(1.9)
(104.0)
2,273.7
428.7
193.3
(36.7)
2.9
(123.3)
(0.2)
2,738.4
–
–
–
–
–
–
–
15.4
51.9
–
0.7
(3.0)
–
65.0
Total
right-of-use
assets
£m
Investment
property
£m
2,471.8
207.8
14.8
115.3
(0.7)
(188.4)
2,620.6
420.9
193.3
122.1
2.5
(191.2)
(2.6)
3,165.6
–
–
–
–
–
–
–
16.0
51.9
1.1
0.6
(3.6)
–
66.0
Other
£m
2.6
1.2
–
–
–
(1.6)
2.2
1.0
–
–
–
(1.3)
(0.2)
1.7
Other
£m
2.2
1.2
–
0.1
–
(1.7)
1.8
1.0
–
0.1
–
(1.3)
(0.2)
1.4
Total
£m
2,141.7
206.8
45.8
(14.7)
(1.9)
(104.0)
2,273.7
444.1
245.2
(36.7)
3.6
(126.3)
(0.2)
2,803.4
Total
£m
2,471.8
207.8
14.8
115.3
(0.7)
(188.4)
2,620.6
436.9
245.2
123.2
3.1
(194.8)
(2.6)
3,231.6
1
Investment property represents leasehold sites which the Group acquired on the acquisition of Foremost Hospitality Hiex GmbH which are being temporarily subleased to
a third party (see Note 35).
During the year, the Group had non-cash additions to right-of-use assets and lease liabilities of £399.7m (2019/20: £129.3m)
relating to new leases and £36.8m (2019/20: £77.6m) relating to amendments to existing leases. The Group received cash
lease incentives of £2.7m (2019/20: £1.0m) and paid cash lease incentives of £7.6m (2019/20: £nil) on entering new and
amended leases.
A maturity analysis of gross lease liability payments is included within Note 24.
Amendments to IFRS 16: Covid-19-Related Rent Concessions
During the final quarter of the financial year, the Group underpaid lease payments with a total value of £22.7m and remains in
discussion with substantially all of the impacted landlords. As a result, the underpaid amount is included within lease liabilities
in the consolidated balance sheet. The Group has early adopted the requirements of Amendments to IFRS 16: Covid-19-Related
Rent Concessions during the year. As a result of early adopting these requirements, rent deferrals which would otherwise have
been treated as lease modifications have been accounted for as if the change was not a lease modification. The adoption of the
amendments had no impact on the consolidated income statement.
167
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information
22 LEASE ARRANGEMENTS CONTINUED
Amounts recognised in the Group income statement
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to low-value assets and short-term leases
Variable lease payment (credit)/expense
Impairment of right-of-use assets (Note 15)
Lease income
NET LEASE EXPENSE RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT
Amounts recognised in the Group cash flow statement
The Group’s total cash outflow in relation to leases was £201.8m (2019/20: £190.4m).
2020/21
£m
2019/20
£m
126.3
123.2
–
(0.6)
36.7
(7.8)
277.8
104.0
115.3
–
2.0
14.7
(4.9)
231.1
Future possible cash outflows not included in the lease liability
The Group has several lease contracts that include extension and termination options. Set out below are the undiscounted
future rental payments relating to periods following the exercise date of extension and termination options that are not
included in the lease liability.
Extension options expected not to be exercised
Termination options expected to be exercised
2021
£m
797.6
–
797.6
2020
£m
782.2
3.3
785.5
The Group uses judgement in determining whether termination and extension option periods will be included within the lease
term. The Group assumes that, unless a decision has been made to exit a lease, termination options will not be exercised as
a result of historic practices within the Group. At the outset of a lease, the Group assumes that it will not exercise extension
options. Due to the length of the Group’s leases, there is generally insufficient evidence that exercising an extension option
is certain.
Future increases or decreases in rentals linked to an index or rate are not included in the lease liability until the change in cash
flows takes effect. Approximately 73% of the Group’s lease liabilities are subject to inflation-linked rentals and a further 14% are
subject to rent reviews. Rental changes linked to inflation or rent reviews typically occur on an annual or five-yearly basis.
As at 25 February 2021, the Group was committed to leases with future cash outflows totalling £2,690.0 (2020: £1,774.4m)
which had not yet commenced and as such are not accounted for as a liability. A liability and corresponding right-of-use asset
will be recognised for these leases at the lease commencement date.
The Group as a lessor
The Group acts as a lessor in relation to a number of non-trading legacy sites and in subletting space within trading sites.
Rental income recognised by the Group during the year is £7.8m (2019/20: £4.9m). Future minimum rentals receivable under
non-cancellable operating leases at the year-end are as follows:
Within one year
After one year but not more than five years
More than five years
2021
£m
7.9
10.0
10.7
28.6
2020
£m
4.3
9.9
9.9
24.1
168
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 23 PROVISIONS
At 1 March 2019
Created
Unwinding of discount rate
Utilised
Released
AT 27 FEBRUARY 2020
Created
Transferred
Utilised
Released
AT 25 FEBRUARY 2021
Analysed as:
Current
Non-current
AT 25 FEBRUARY 2021
Analysed as:
Current
Non-current
AT 27 FEBRUARY 2020
Restructuring
£m
Onerous
contracts
£m
Property
costs
£m
11.6
–
–
(7.3)
(2.3)
2.0
5.8
–
(5.8)
(0.9)
1.1
1.1
–
1.1
2.0
–
2.0
15.3
1.1
0.1
(5.4)
–
11.1
4.9
–
(4.3)
(1.6)
10.1
8.3
1.8
10.1
3.5
7.6
11.1
23.1
14.5
–
(5.7)
–
31.9
–
–
(12.9)
(3.3)
15.7
15.7
–
15.7
31.9
–
31.9
Other
£m
5.3
–
–
(1.7)
(0.2)
3.4
5.8
6.8
(2.1)
(1.3)
12.6
5.4
7.2
12.6
3.4
–
3.4
Total
£m
55.3
15.6
0.1
(20.1)
(2.5)
48.4
16.5
6.8
(25.1)
(7.1)
39.5
30.5
9.0
39.5
40.8
7.6
48.4
Restructuring
A provision of £2.0m was carried forward in relation to the restructure of the Group announced following the disposal of Costa.
During the year, the Group utilised £1.1m of the provision and £0.9m was released to the income statement.
As a result of the COVID-19 pandemic, the Group recognised a provision of £5.8m for the restructure its Support Centre and
site operations. A total of £4.7m of costs were utilised during the period. The remaining costs are expected to be utilised within
one year.
Onerous contracts
Onerous contract provisions relate primarily to property and software licences where the contracts have become onerous.
Provision is made for property-related costs for the period that a sublet or assignment of the lease is not possible.
Onerous contract provisions are discounted using a discount rate of 2.0% (2020: 2.0%) based on an approximation for the time
value of money.
Property
The amount and timing of the cash outflows are subject to variation. The Group utilises the skills and expertise of both internal
and external property experts to determine the provision held. Provisions are expected to be utilised over a period of up to
12 years and £1.1m has been utilised in the period.
During the year, a new onerous property contract was recognised for £0.8m and an amount of £1.6m was released to the
income statement as the Group agreed to exit a number of leases earlier than expected.
Software
Certain software licence agreements were deemed to be onerous when, following the disposal of Costa, it was no longer
beneficial to the Group to use the software. At the year-end, a provision of £3.0m (2020: £5.1m) was held for future unavoidable
costs on such agreements, to be utilised over a period of up to three years. The software intangible assets associated with
these contracts have been fully impaired in previous financial years.
A provision of £1.1m was created in FY20 as a result of the cancellation of a contract relating to the supply of IT equipment.
At the year-end a provision of £0.4m was held in relation to this contract which is expected to be utilised within one year.
169
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 23 PROVISIONS CONTINUED
Property costs
From FY18 to FY20, the Group established a provision for the performance of remedial works on cladding material at a small
number of the Group’s sites. As a result, a provision of £31.9m was brought forward in relation to these costs. During the year
£12.9m of the provision has been utilised and £3.3m of costs have been released. The remaining provision is expected to be
utilised within one year.
In addition, the Group has received reimbursements of those costs from property developers totalling £13.4m which are
credited to adjusting operating costs (see Note 6). The Group continues to pursue further reimbursements which are not
recognised as the recovery is not certain.
The Group utilises the skills and expertise of both internal and external property experts to determine the provision held.
Other
During the year ended 25 February 2021, an amount of £6.8m, representing an estimate of the cost of future claims against the
Group from employees and the public was transferred from other payables to other provisions to better reflect the nature of
the liability. The claims covered typically relate to accidents and injuries sustained in Whitbread’s sites. During the year further
provisions of £2.1m were created and £1.8m of the provision was utilised.
In July 2016, the Group announced its intention to exit hotel operations in South East Asia. This resulted in the recognition
of a provision of £3.7m for risks arising from indemnity agreements. At 25 February 2021, £1.8m of the provision was still held
for risks arising from indemnity agreements. The remaining costs are expected to be utilised within one year.
A provision of £0.3m was carried forward and utilised during the year in relation to certain procurement contracts required
as a result of the Costa disposal.
24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments, other than derivatives, comprise bank loans, private placement loans, senior
unsecured bonds, cash, short-term deposits, trade receivables and trade payables. The Group’s financial instrument policies
can be found in the accounting policies in Note 2. The Board agrees policies for managing the financial risks summarised below:
Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s long-term debt obligations.
Interest rate swaps are used where necessary to maintain a mix of fixed and floating rate borrowings to manage this risk, in line
with the Group treasury policy. Although the private placement loan notes are US dollar denominated, cross-currency swaps
mean that the interest rate risk is effectively sterling only. At the year-end, £1,302.5m (100%) of Group debt was fixed for an
average of 5.3 years at an average interest rate of 3.0% (2020: £817.7m (99%) for 5.3 years at 3.5%).
In accordance with IFRS 7 Financial Instruments: Disclosures, the Group has undertaken sensitivity analysis on its financial
instruments which are affected by changes in interest rates. This analysis has been prepared on the basis of a constant
amount of net debt, a constant ratio of fixed to floating interest rates, and on the basis of the hedging instruments in place
at 25 February 2021 and 27 February 2020 respectively. Consequently, the analysis relates to the situation at those dates and
is not representative of the years then ended. The following assumptions were made:
› balance sheet sensitivity to interest rates applies only to derivative financial instruments, as the carrying value of debt and
deposits does not change as interest rates move;
› gains or losses are recognised in equity or the consolidated income statement in line with the accounting policies set out in
Note 2; and
› cash flow hedges were effective.
Based on the Group’s net debt/cash position at the year-end, a 1% pt change in interest rates would affect the Group’s profit
before tax by £12.5m (2020: £5.0m), and equity by £0.8m (2020: £2.0m).
Liquidity risk
In its funding strategy, the Group’s objective is to maintain a balance between the continuity of funding and flexibility through
the use of overdrafts and bank loans. This strategy includes monitoring the maturity of financial liabilities to avoid the risk of
a shortage of funds.
Excess cash used in managing liquidity is placed on interest-bearing deposit where maturity is fixed at no more than three
months. Short-term flexibility is achieved through the use of short-term borrowing on the money markets.
170
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
The tables below summarise the maturity profile of the Group’s financial liabilities at 25 February 2021 and 27 February 2020
based on contractual undiscounted payments, including interest:
25 FEBRUARY 2021
Interest-bearing loans and borrowings
Lease liabilities1
Derivative financial instruments
Trade and other payables
27 FEBRUARY 2020
Interest-bearing loans and borrowings
Lease liabilities1
Derivative financial instruments
Trade and other payables
On
demand
£m
Less than 3
months
£m
3 to 12
months
£m
1 to 5
years
£m
More than
5 years
£m
Total
£m
Carrying
value
–
–
–
–
–
221.8
54.6
–
71.2
347.6
On
demand
£m
Less than 3
months
£m
–
–
–
–
–
–
48.9
–
126.3
175.2
102.4
175.1
2.4
37.7
317.6
3 to 12
months
£m
101.0
147.9
2.2
4.4
255.5
573.7
925.5
–
26.8
1,526.0
609.3
4,513.4
–
–
5,122.7
1 to 5
years
£m
More than
5 years
£m
164.9
784.8
2.2
–
951.9
673.1
3,999.1
–
–
4,672.2
1,507.2
5,668.6
2.4
135.7
7,313.9
Total
£m
939.0
4,980.7
4.4
130.7
6,054.8
1,302.5
3,231.6
2.4
134.0
4,670.5
Carrying
value
825.5
2,620.6
4.4
130.7
3,581.2
1 Contractual undiscounted payments relating to lease liabilities due in more than 5 years includes £1,140.2m (2020: £932.3m) due between 5 and 10 years, £1,859.4m
(2020: £1,653.8m) due between 10 and 20 years and £1,513.8m (2020: £1,413.0m) due in more than 20 years.
Credit risk
Due to the high level of cash held at the year-end, the most significant credit risk faced by the Group is that arising on cash
and cash equivalents. The Group’s exposure arises from default of the counterparty, with a maximum exposure equal to the
carrying value of these instruments. The Group seeks to minimise the risk of default in relation to cash and cash equivalents
by spreading investments across a number of counterparties and dealing in accordance with Group Treasury Policy which
specifies acceptable credit ratings and maximum investments for any counterparty.
In the event that any of the Group’s banks get into financial difficulty, the Group is exposed to the risk of withdrawal of currently
undrawn committed facilities. This risk is mitigated by the Group having a range of counterparties to its facilities.
The Group is exposed to a small amount of credit risk attributable to its trade and other receivables. This is minimised
by dealing with counterparties with good credit ratings. The amounts included in the balance sheet are net of expected
credit losses, which have been estimated by management based on prior experience and any known factors at the balance
sheet date.
The Group’s maximum exposure to credit risk arising from trade and other receivables, loans to joint ventures, derivatives and
cash and cash equivalents is £1,327.4m (2020: £639.1m).
Foreign currency risk
Foreign exchange exposure is currently not significant to the Group. Although the Group has US dollar denominated loan
notes, these have been swapped into sterling, thereby eliminating foreign currency risk. Sensitivity analysis has therefore not
been carried out.
The Group monitors the growth and risks associated with its overseas operations and will undertake hedging activities as and
when they are required. In October 2019, the Group entered into a net investment hedge to manage the impact of movements
in the GBP:EUR exchange rate on the value of the Group’s investment in its business in Germany. See Note 25 for more details.
171
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Capital management
The Group’s primary objective in regard to capital management is to ensure that it continues to operate as a going concern and
has sufficient funds at its disposal to grow the business for the benefit of shareholders. The Group seeks to maintain a ratio of
debt to equity that balances risks and returns and also complies with lending covenants. See pages 36 to 41 of this report for
the policies and objectives of the Board regarding capital management, analysis of the Group’s credit facilities and financing
plans for the coming years.
The Group aims to maintain sufficient funds for working capital and future investment in order to meet growth targets.
The management of equity through share buybacks and new issues is considered as part of the overall leverage framework
balanced against the funding requirements of future growth. In addition, the Group may carry out a number of sale and
leaseback transactions to provide further funding for growth.
The Group has received covenant test waivers for its revolving credit facility covering the period to 2 March 2023. In addition
it has received covenant test waivers for its pension scheme and private placement loan notes for the period to 3 March
2022 meaning that the private placement loan note covenants will not be tested prior to maturity. Under the terms of the
waivers, the Group is required to maintain £400.0m cash and/or headroom under undrawn committed bank facilities and
total net debt must not exceed £2.0bn. The covenants which have been waived relate to measurement of EBITDA against
consolidated net finance charges (interest cover) and total net debt (leverage ratio, on a not-adjusted-for pension and property
lease basis).
The above matters are considered at regular intervals and form part of the business planning and budgeting processes.
In addition, the Board regularly reviews the Group’s dividend policy and funding strategy.
Interest rate benchmark reform
The Group has assumed that the interest rate benchmark on which the hedged risk or the cash flows of the hedged item
or hedging instrument are based is not altered by uncertainties resulting from the proposed interest rate benchmark reform.
The Group’s £50.0m interest rate swap in a cash flow hedge is an IFRS 9 designated hedge relationships that is impacted by
IBOR reform. The swap references six-month GBP LIBOR and uncertainty arising from the Group’s exposure to IBOR reform
will cease when the swaps mature in 2022. The Group has assessed the wider impact of IBOR reform on the business and
concluded that there are no further material impacts.
The Group’s RCF documentation contains transitional provisions so that borrowings entered into after the later of
(a) 31 December 2022 or (b) the relevant LIBOR tenor being replaced are linked to the agreed risk-free rate (SONIA).
172
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 25 FINANCIAL INSTRUMENTS
The carrying value of financial assets and liabilities at each reporting date are as follows:
AS AT 25 FEBRUARY 2021
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings
Lease liabilities
Derivative financial instruments
Trade and other payables
Contingent consideration
AS AT 27 FEBRUARY 2020
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings
Lease liabilities
Derivative financial instruments
Trade and other payables
Contingent consideration
Amortised cost
Fair value
Financial
assets
£m
Financial
liabilities
£m
Hedging
instruments
£m
Other
£m
Carrying
value
£m
56.6
244.2
–
–
–
–
–
93.1
248.9
–
–
–
–
–
–
–
(1,302.5)
(3,231.6)
–
(71.2)
–
–
–
(825.5)
(2,620.6)
–
(126.3)
–
–
–
–
–
12.4
–
–
–
–
–
–
33.2
–
–
–
1,011.8
–
–
–
–
(62.8)
56.6
1,256.0
(1,302.5)
(3,231.6)
12.4
(71.2)
(62.8)
–
253.7
–
–
–
–
(4.4)
93.1
502.6
(825.5)
(2,620.6)
33.2
(126.3)
(4.4)
Fair values
IFRS 13 Fair Value Measurement requires that the classification of financial instruments at fair value be determined by reference
to the source of inputs used to derive the fair value. The classification uses the following three-level hierarchy:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – Other techniques for which all inputs, which have a significant effect on the recorded fair value, are observable, either
directly or indirectly; and
Level 3 – Techniques which use inputs, which have a significant effect on the recorded fair value, that are not based on
observable market data.
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of each reporting period.
Financial assets and liabilities measured at amortised cost
The carrying value of trade and other receivables, cash and cash equivalents, and trade and other payables are considered to
be reasonable approximations of their fair values largely due to the short-term maturities of these instruments.
The fair value of the Group’s borrowings is estimated at £1,327.0m. The fair value of the Group’s borrowings is based on level 1
valuation techniques where there is an active market for the instrument and on level 2 valuation techniques otherwise
Financial assets and liabilities measured at fair value
FINANCIAL ASSETS
Derivative financial instruments – level 2
FINANCIAL LIABILITIES
Derivative financial instruments – level 2
– level 3
Contingent consideration
2021
£m
2020
£m
14.8
37.6
2.4
62.8
4.4
4.4
173
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 25 FINANCIAL INSTRUMENTS CONTINUED
During the year ended 25 February 2021, there were no transfers between fair value measurement levels. Derivative financial
instruments include £6.6m assets (2020: £28.6m) and £nil liabilities (2020: £2.2m) due after one year. Contingent consideration
includes £25.6m (2020: £nil) due after one year.
The fair value of derivative instruments classified as level 2 is calculated by discounting all future cash flows by the relevant
market discount rate at the balance sheet date.
The fair value of contingent consideration relating to acquisitions is classified as level 3. Details of the valuation are included
in Note 26.
Derivative financial instruments
Cash flow hedges
Interest rate risk
The Group is exposed to interest rate risk associated with drawdowns on the revolving credit facility during the year which incur
interest at a variable rate. The Group has interest rate swaps in place to swap a notional amount of £50.0m (2020: £50.0m)
whereby it receives a variable interest rate based on LIBOR and pays fixed rates of between 5.145% and 5.190% (2020: 5.145%
and 5.190%).
Foreign currency risk
The Group is exposed to foreign currency risk associated with the private placement bonds denominated in US$. The Group
has a cross-currency swap in place in relation to the interest and principal repayment whereby it receives a fixed interest rate
of 4.86% (2020: 4.86%) on a notional amount of US$93.5m (2020: US$93.5m) and pays an average of 5.22% on a notional
sterling balance of £58.5m (2020: 5.22% on £58.5m).
Fair value hedge
At 27 February 2020, the Group had a cross-currency swap in relation to private placement bonds denominated in US$.
These bonds were repaid during the year (see Note 20) and therefore the cross-currency swap is no longer held. The swap
was in place in relation to the interest and principal repayment whereby the Group received a fixed interest rate of 5.23% on
a notional amount of US$75.0m and paid a spread of between 1.715% and 1.755% over six-month GBP LIBOR on a notional
sterling balance of £50.1m.
Fair value and cash flow hedge effectiveness
There is an economic relationship between the hedged items and the hedging instruments as the terms of the interest rate and
cross-currency swaps match the notional amount and expected payment date of the hedged items. The Group has established
a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the instruments are identical to the hedged risk
components. To test the hedge effectiveness, the Group compares the changes in the fair value of the hedging instruments
against the changes in fair value of the hedged items attributable to the hedged risks.
The hedge ineffectiveness relates to foreign currency risk and arises from foreign currency basis spread. There is no hedge
ineffectiveness relating to interest rate risk. The ineffectiveness recorded within finance income in the consolidated income
statement for 2020/21 was £0.4m (2019/20: finance costs of £0.2m).
Hedge of net investment in foreign operations
In October 2019, the group entered into cross-currency swaps, whereby it pays an average fixed rate of 2.12% on a notional
amount of €521.0m and receives a fixed rate of 3.375% on a notional amount of £450.0m. These swaps are being used as a net
investment hedge to manage the impact of movements in the GBP:EUR exchange rate on the value of the Group’s investment
in its business in Germany. The swaps mature in October 2025.
There is an economic relationship between the hedged item and the hedging instrument as the net investment creates
a translation risk that will match the foreign exchange risk on the cross-currency swaps. The Group has established a hedge
ratio of 1:1 as the underlying risk of the hedging instrument is identical to the hedged risk component. The hedge ineffectiveness
will arise when the amount of the investment in the foreign subsidiary becomes lower than the nominal amount of the swaps.
The net investment hedges were assessed to be highly effective at 25 February 2021 and a net unrealised gain of £8.5m
(2020: gain of £13.0m) has been recorded in the translation reserve. The ineffectiveness recorded within finance costs in the
consolidated income statement for 2020/21 was £nil (2019/20: £nil).
174
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 25 FINANCIAL INSTRUMENTS CONTINUED
The impact of the hedging instruments and hedged items on the statement of financial position is as follows:
AS AT 25 FEBRUARY 2021
CASH FLOW HEDGES
Interest rate swaps
Notional
amount
£m
Carrying
amount
£m
Line item in statement
of financial position
£m
50.0
(2.4)
Derivative financial
instruments
Cross-currency swaps
58.5
8.2
Derivative financial
instruments
NET INVESTMENT IN FOREIGN
OPERATIONS
Change in fair
value used
for measuring
ineffectiveness
for the year
£m
(0.4)
(5.4)
Hedged item
£m
Revolving
credit facility
US$
denominated
loans
Cross-currency swaps
450.0
6.5
Derivative financial
instruments
Net investment
in foreign
subsidiaries
(8.5)
Change in
fair value
of hedged
item
£m
0.4
5.8
8.5
AS AT 27 FEBRUARY 2020
CASH FLOW HEDGES
Interest rate swaps
Cross-currency swaps
FAIR VALUE HEDGES
Notional
amount
£m
Carrying
amount
£m
Line item in statement
of financial position
£m
50.0
(4.4)
Derivative financial
instruments
58.5
13.7
Derivative financial
instruments
Cross-currency swaps
50.1
8.6
Derivative financial
instruments
NET INVESTMENT IN FOREIGN
OPERATIONS
Change in fair
value used
for measuring
ineffectiveness
for the year
£m
(0.8)
4.7
1.6
Change in
fair value
of hedged
item
£m
0.8
(4.7)
(1.8)
Hedged item
£m
Revolving
credit facility
US$
denominated
loans
US$
denominated
loans
Cross-currency swaps
450.0
15.3
Derivative financial
instruments
Net investment
in foreign
subsidiaries
13.0
(13.0)
The impact of the hedging instruments in the consolidated income statement and other comprehensive income (OCI) is
as follows:
2020/21
Interest rate swaps
Cross-currency swaps
2019/20
Interest rate swaps
Cross-currency swaps
Total hedging
gain/(loss)
recognised in OCI
£m
Amount
reclassified from OCI
to profit or loss
£m
Line item in
the consolidated
income statement
£m
Accumulated value
recognised in cash
flow hedge reserve
£m
(0.4)
(5.4)
(0.8)
4.7
2.4
5.7
2.2
(2.6)
Finance costs
Finance costs
Finance costs
Finance costs
(2.4)
0.1
(4.4)
(0.2)
175
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 25 FINANCIAL INSTRUMENTS CONTINUED
Impact of hedging on equity
Set out below is the reconciliation of each component of equity and the analysis of other comprehensive income:
At 1 March 2019
Change in fair value recognised in other comprehensive income
– Interest rate swaps
– Cross-currency swaps
Reclassified to profit or loss as hedged item effects profit or loss
– Interest rate swaps
– Cross-currency swaps
Foreign exchange arising on consolidation
Fair value movement on derivatives designated as net investment hedges
Reserves transfer
Deferred tax impact
AT 27 FEBRUARY 2020
Change in fair value recognised in other comprehensive income
– Interest rate swaps
– Cross-currency swaps
Reclassified to profit or loss as hedged item effects profit or loss
– Interest rate swaps
– Cross-currency swaps
Foreign exchange arising on consolidation
Fair value movement on derivatives designated as net investment hedges
Deferred tax impact
AT 25 FEBRUARY 2021
Cash flow
hedge
reserve
£m
Foreign
currency
translation
reserve
£m
(7.9)
17.7
(0.8)
4.7
2.2
(2.6)
–
–
1.4
(0.6)
(3.6)
(0.4)
(5.4)
2.4
5.7
–
–
(0.6)
(1.9)
–
–
–
–
(12.1)
13.0
–
–
18.6
–
–
–
–
19.3
(8.5)
(0.7)
28.7
Cash flow and fair value hedges are expected to impact on the consolidated income statement in line with the liquidity risk
table shown in Note 24. There have been no amounts reclassified to profit or loss as a result of the hedged cash flow no longer
being expected to occur. The foreign currency translation reserve includes an accumulated amount of £4.5m (2020: £13.0m)
relating to derivatives designated as net investment hedges.
26 TRADE AND OTHER PAYABLES
Trade payables
Other taxes and social security
Contract liabilities
Accruals
Other payables
Contingent consideration
ANALYSED AS:
Current
Non-current
2021
£m
24.2
26.5
41.3
140.3
47.0
62.8
342.1
316.5
25.6
342.1
2020
£m
55.5
42.6
110.0
156.7
70.8
4.4
440.0
440.0
–
440.0
Included with contract liabilities is £37.5m (2020: £106.5m) relating to payments received for accommodation where the
stay will take place after the year-end and £3.8m (2020: £3.5m) revenue deferred relating to the Group’s customer loyalty
programmes. During the year, £51.0m presented as a contract liability in 2020 has been recognised in revenue (2020: £105.4m).
The remaining balance was refunded to customers following hotel closures in response to the COVID-19 pandemic.
Trade payables typically have maturities up to 60 days depending on the nature of the purchase transaction and the
agreed terms.
176
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 26 TRADE AND OTHER PAYABLES CONTINUED
Contingent consideration
Opening contingent consideration
Recognised on acquisition of a subsidiary (Note 35)
Recognised on acquisition of assets (Note 35)
Unwinding of discount rate (Note 8)
Paid during the period
Foreign exchange movements
CLOSING CONTINGENT CONSIDERATION
2021
£m
4.4
56.3
1.9
2.1
(3.8)
1.9
62.8
2020
£m
–
4.4
–
–
–
–
4.4
The Group has contingent consideration in relation to 13 pipeline sites from acquisitions in the current and previous years which
is held at fair value. The amounts payable are fixed and become payable once development of the site is complete and the site
has been handed over to the Group, which is expected to occur within three years. The fair value is calculated by discounting
the future payments from their expected handover date using a risk adjusted discount rate. A 1% decrease/increase in the
discount rate would increase/decrease the value of contingent consideration by £0.6m.
Foreign exchange movements on contingent consideration are recognised within exchange differences on translation of
foreign operations in the consolidated statement of comprehensive income.
27 SHARE CAPITAL
ORDINARY SHARE CAPITAL
ALLOTTED, CALLED UP AND FULLY PAID ORDINARY SHARES OF 76.80P EACH
(2020: 76.80P EACH)
At 1 March 2019
Issued on exercise of employee share options
Cancelled
Tender offer
AT 27 FEBRUARY 2020
Issued on exercise of employee share options
Issued in rights issue
AT 25 FEBRUARY 2021
million
195.9
0.3
(9.0)
(40.2)
147.0
0.1
67.3
214.4
£m
150.6
0.2
(6.9)
(31.0)
112.9
0.1
51.7
164.7
Rights issue
In June 2020, the Group offered a fully underwritten rights issue to existing shareholders on the basis of one share for every
two fully paid ordinary shares held. The Company received acceptances in respect of 61,452,547 New Ordinary Shares,
representing 91.4% of the total New Ordinary Shares to be issued. The remaining 5,824,869 New Ordinary Shares for which
acceptances were not received were successfully placed at a price of 2,550p per New Ordinary Share.
As a result, a total of 67,277,416 ordinary shares with an aggregate nominal value of £51.7m were issued for cash consideration
of £1,009.2m. Transaction costs of £28.2m were incurred resulting in £929.3m being recognised in share premium and net cash
proceeds of £981.0m.
Employee share options
During the year, options over 0.1m (2019/20: 0.3m) ordinary shares, fully paid, were exercised by employees under the terms
of various share option schemes. The Group received proceeds of £2.9m (2019/20: £9.5m) on exercise of these options.
Tender offer
During the year ended 27 February 2020, the Group announced and completed a tender offer to purchase 40.2m ordinary
shares at a price of £49.72 per share, and an aggregate cost of £2,012.6m, including transaction costs of £12.6m. The shares
acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of £31.0m.
Share cancellation
During the year ended 27 February 2020, following the completion of the share buyback programme (see Note 28), the Group
cancelled 9.0m ordinary shares that were previously held as treasury shares, creating a capital redemption reserve of £6.9m
and transferring the cost of treasury shares of £140.2m to retained earnings.
177
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 27 SHARE CAPITAL CONTINUED
Preference share capital
ALLOTTED, CALLED UP AND FULLY PAID SHARES OF 1P EACH
(2020: 1P EACH)
AT 1 MARCH 2019, 27 FEBRUARY 2020 AND 25 FEBRUARY 2021
B shares
C shares
million
2.0
£m
–
million
1.9
£m
–
B shareholders are entitled to an annual non-cumulative preference dividend paid in arrears on or around 2 July each year on
a notional amount of 155p per share.
C shareholders are entitled to an annual non-cumulative preference dividend paid in arrears on or around 14 January each year
on a value of 159p per share.
Other than shares issued in the normal course of business as part of the share-based payments schemes, there have been no
transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these
consolidated financial statements.
28 RESERVES
Share premium
The share premium reserve is the premium paid on the Company’s 76.80p ordinary shares.
Capital redemption reserve
A capital redemption reserve was created on the cancellation of the Group’s B and C preference shares and also includes the
nominal value of cancelled ordinary shares.
Retained earnings
In accordance with IFRS practice, retained earnings include revaluation reserves which arose on transition to IFRS.
Currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries, other foreign currency investments and exchange differences on derivative instruments that
provide a hedge against net investments in foreign operations.
Other reserves
The movement in other reserves during the year is set out in the table below:
At 1 March 2019
Other comprehensive income – net gain on cash flow hedges (Note 25)
Other comprehensive income – deferred tax on cash flow hedges (Note 25)
Loss on ESOT shares issued
Reserves transfer
Release of irrevocable commitment – share buyback
Shares purchased – share buyback scheme (Note 27)
Shares cancelled (Note 27)
AT 27 FEBRUARY 2020
Other comprehensive income – net gain on cash flow hedges (Note 25)
Other comprehensive income – deferred tax on cash flow hedges (Note 25)
Loss on ESOT shares issued
AT 25 FEBRUARY 2021
Treasury
reserve
£m
684.8
–
–
(3.3)
–
(330.1)
315.8
(140.2)
527.0
–
–
(6.7)
520.3
Merger
reserve
£m
Hedging
reserve
£m
Total other
reserves
£m
1,855.0
–
–
–
–
–
–
–
1,855.0
–
–
–
1,855.0
7.9
(3.5)
0.6
–
(1.4)
–
–
–
3.6
(2.3)
0.6
–
1.9
2,547.7
(3.5)
0.6
(3.3)
(1.4)
(330.1)
315.8
(140.2)
2,385.6
(2.3)
0.6
(6.7)
2,377.2
178
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 28 RESERVES CONTINUED
Treasury reserve
This reserve relates to shares held by an independently managed employee share ownership trust (ESOT) and treasury shares
held by Whitbread PLC. The shares held by the ESOT were purchased in order to satisfy outstanding employee share options
and potential awards under the Long Term Incentive Plan (LTIP) and other incentive schemes.
The movement in treasury reserves during the year is set out in the table below:
At 1 March 2019
Exercised during the year
Release of irrevocable commitment – share buyback
Shares purchased – share buyback scheme (see Note 27)
Shares cancelled (Note 27)
Transferred
AT 27 FEBRUARY 2020
Exercised during the year
AT 25 FEBRUARY 2021
Treasury shares held by
Whitbread PLC
ESOT shares held
million
£m
million
15.6
–
–
6.5
(9.0)
(0.7)
12.5
–
12.5
677.2
–
(330.1)
315.8
(140.2)
(8.2)
514.5
–
514.5
0.5
(0.2)
–
–
–
0.7
1.0
(0.6)
0.4
£m
7.6
(3.3)
–
–
–
8.2
12.5
(6.7)
5.8
Following the completion of the sale of Costa Limited on 3 January 2019, the Group announced its intention to start a share
buyback programme to return £500.0m to shareholders. As at 1 March 2019, the Group had purchased shares with an
aggregate cost of £169.9m and recognised an irrevocable commitment for the remaining £330.1m. During the year ended
27 February 2020, the Group purchased 6.5m ordinary shares at an average price of £48.00 per share and an aggregate cost
of £315.8m including transaction costs of £3.1m under the share buyback programme. The remaining £14.3m, representing the
difference between the announced programme and the value repurchased, was released to other reserves.
Merger reserve
The merger reserve arose as a consequence of the merger in 2000/01 of Whitbread Group PLC and Whitbread PLC.
Hedging reserve
The hedging reserve records movements for effective cash flow hedges measured at fair value.
29 ANALYSIS OF CASH FLOWS GIVEN IN THE CASH FLOW STATEMENT
(Loss)/profit for the period
Adjustments for:
Tax (credit)/expense
Net finance costs (Note 8)
Share of loss from joint ventures
Depreciation and amortisation
Share-based payments
Impairments (Note 15)
(Gains)/losses on disposals, property and other provisions
Timing difference on insurance receipts
Other non-cash items
CASH (USED IN)/GENERATED FROM OPERATIONS BEFORE WORKING CAPITAL C
Decrease in inventories
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
CASH (USED IN)/GENERATED FROM OPERATIONS
2021
£m
(906.5)
(100.9)
168.3
7.7
300.2
12.7
356.2
(5.0)
14.0
26.1
(127.2)
1.5
27.8
(129.1)
(227.0)
2020
£m
217.9
62.1
128.5
2.5
268.8
11.6
59.9
9.3
(14.0)
3.8
750.4
0.9
(4.1)
(60.8)
686.4
Other non-cash items includes an inflow of £12.4m (2020: £nil) representing the write off of a deposit paid in relation to an
acquisition (see Note 6), an inflow of £9.2m (2020: £0.7m) as a result of net provision movements and an inflow of £3.8m
(2020: £2.2m) representing non-cash pension scheme administration costs.
179
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information
30 CONTINGENT LIABILITIES
There are no contingent liabilities to be disclosed in the year ended 25 February 2021 (2020: none).
31 SHARE-BASED PAYMENT PLANS
Long Term Incentive Plan (LTIP)
The LTIP awards shares to directors and senior executives of the Group. Vesting of all shares under the scheme will depend on
continued employment and meeting earnings per share (EPS) and return on capital employed (ROCE) performance targets
over a three-year period (the vesting period). Details of the performance targets for the LTIP awards can be seen in the
remuneration report on pages 88 to 108. The awards are settled in equity once exercised.
Deferred equity awards
Awards are made under the Whitbread Leadership Group Incentive Scheme implemented during 2004/05. The awards are
not subject to performance conditions and will vest in full on the release date subject to continued employment at that date.
If the director or senior executive of the Group ceases to be an employee of Whitbread prior to the release date, normally
three years after the award, by reason of redundancy, retirement, death, injury, ill health, disability or some other reason
considered to be appropriate by the Remuneration Committee, the awards will be released in full. If employment ceases for
any other reason, the proportion of awards which vest depends upon the year in which the award was made and the date that
employment ceased. If employment ceases in the first year after an award is made, none of the awards vest, between the first
and second anniversary, 25% vests and between the second and third anniversary, 50% vests. The awards are settled in equity
once exercised.
Performance Share Plan
The Performance Share Plan (PSP) is a one-off award incentivising the executive directors on the separation of Costa from
the Whitbread Group and replaced the 2018 and 2019 LTIP awards for the executive directors. Vesting of the awards under the
scheme was triggered by completion of the separation of Costa from Whitbread and dependent on continued employment
and meeting return on capital employed (ROCE), Total Shareholder Return (TSR) and Strategic Objectives performance
targets. The vested award is subject to a two-year holding period and then settled in equity once exercised.
R&R Scheme
The R&R Scheme enables Whitbread to make share awards periodically on a flexible basis. There are typically no performance
conditions but these can be imposed by Whitbread at time of grant. In 2018 a one-off award was made to Whitbread’s senior
leaders (excluding executive directors) vesting in two tranches (March 2020 and March 2021). During the year, 187,781 awards
previously made to employees under the Restricted Share Plan were replaced by 187,781 awards under the R&R scheme.
The awards issued are subject to being in employment at date of vesting with no performance conditions. If employment at
Whitbread ceases prior to the vesting date by reason of resignation or terminated for cause, all unvested shares will lapse.
If employment ceases for any other reason, any vesting will be at the discretion of the CEO and if granted will be on a pro-rated
basis to the leaving date. The awards are settled in equity once exercised.
Restricted Share Plan
At the general meeting held on 6 December 2019, it was agreed that the Restricted Share Plan would replace the Long-Term
Incentive Plan. Vesting of all shares under the scheme will depend on continued employment and meeting earnings per share
(EPS) and return on capital employed (ROCE) underpin targets over a period of at least three years. After vesting there is an
additional holding period such that the underpin measurement period and holding period is at least five years. The awards are
settled in equity once exercised. During the year ended 27 February 2020, 97,939 awards previously made to employees under
the LTIP were replaced with 69,191 awards under the Restricted Share Plan.
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Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 31 SHARE-BASED PAYMENT PLANS CONTINUED
Movements in the number of share awards are as follows:
52 WEEKS TO 25 FEBRUARY 2021
Long Term Incentive Plan
Deferred equity awards
Performance Share Plan
R&R Scheme
Restricted Share Plan
52 WEEKS TO 27 FEBRUARY 2020
Long Term Incentive Plan
Deferred equity awards
Performance Share Plan
R&R Scheme
Restricted Share Plan
Outstanding
at the
beginning
of the year
Granted
during the
year1
Replaced
during the
year
Exercised
during the
year
Expired
during the
year
Outstanding
at the end
of the year
Exercisable
at the end
of the year
342,422
178,210
162,627
234,035
69,191
986,485
36,848
151,615
31,228
352,824
239,533
812,048
–
–
–
187,781
(187,781)
–
(84,094) (145,488)
(6,248)
(81,417)
–
(193,855)
(13,135)
(108,654)
(14,256)
–
(468,020)
149,688
242,160
–
652,851
106,687
(179,127) 1,151,386
61,472
9,627
–
22,135
–
93,234
Outstanding
at the
beginning of
the year
635,923
219,977
162,627
337,533
–
1,356,060
Granted
during the
year
105,736
55,857
–
3,195
–
164,788
Replaced
during the
year
Exercised
during the
year
Expired
during the
year
Outstanding
at the end of
the year
Exercisable
at the end of
the year
(54,621) (246,677)
(97,939)
(2,693)
(94,931)
–
–
–
–
(37,635)
(69,058)
–
–
–
69,191
(28,748) (218,610) (287,005)
342,422
178,210
162,627
234,035
69,191
986,485
54,067
54,561
162,627
86,600
–
357,855
1 Awards granted during the year includes an adjustment of 138,563 shares as a result of the bonus factor of the rights issue which completed in June 2020.
Employee Sharesave scheme
The employee Sharesave scheme is open to all employees and provides for a purchase price equal to the market price on the
day preceding the date of invitation, with a 20% discount. The shares can be purchased over the six-month period following the
third or fifth anniversary of the commencement date, depending on the length chosen by the employee.
The weighted average exercise price (WAEP) of movements in the number of share awards are as follows:
Outstanding at the beginning of the year
Granted during the year1
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the year-end
2020/21
2019/20
Options
775,294
783,707
(111,796)
(307,230)
1,139,975
101,400
WAEP £ per
share
Options
WAEP £ per
share
32.25
25.68
25.37
27.53
26.59
27.23
1,059,297
305,458
(308,211)
(281,250)
775,294
64,335
31.81
32.48
30.99
32.24
32.25
30.33
1 Awards granted during the year includes an adjustment of 115,724 shares as a result of the bonus factor of the rights issue which completed in June 2020.
Outstanding options to purchase ordinary shares of 76.80p between 2021 and 2026 are exercisable at prices between £25.27
and £33.22 per share (2020: between 2020 and 2025 at prices between £29.42 and £38.66). The weighted average share price
at the date of exercise for options exercised during the year was £25.94 (2020: £46.20).
The weighted average contractual life of the share options outstanding as at 25 February 2021 is between two and three years.
181
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 31 SHARE-BASED PAYMENT PLANS CONTINUED
The following table lists the inputs to the model used for the years ended 25 February 2021 and 27 February 2020:
Exercise
price
£
Price at
grant date
£
Expected
term
Years
Expected
dividend
yield
%
Expected
volatility
%
Risk-free
rate %
–
–
–
–
–
–
25.33
32.49
25.33
32.49
48.54
23.63
48.54
31.60
31.60
23.63
31.38
46.01
31.38
46.01
3.00
3.00
3.00
2.00
3.00
3.00
3.25
3.25
5.25
5.25
2.0
0.25
2.0
–
0.75
0.25
0.75
2.0
1.25
2.0
N/A
N/A
N/A
N/A
N/A
N/A
45.0
25.0
45.0
25.0
N/A
N/A
N/A
N/A
N/A
N/A
0.02
0.49
(0.08)
0.50
Grant date
01.03.2019
01.03.2020
01.03.2019
17.12.2020
17.12.2020
01.03.2020
23.12.2020
29.11.2019
23.12.2020
29.11.2019
Vesting
conditions
Non–market1,2,3
Service3
Service3
Service3
Service3
Non–market1,3,4
Service3
Service3
Service3
Service3
LTIP awards
Deferred equity awards
R&R awards – 2 years
R&R awards – 3 years
Restricted share plan
SAYE – 3 years
SAYE – 5 years
1 Return on capital employed.
2 Earnings per share.
3 Employment service.
4 Lease adjusted net debt.
The fair value of share options granted is estimated as at the date of grant using a stochastic model, taking into account the
terms and conditions upon which the options were granted.
Expected volatility reflects the assumption that historical volatility is indicative of future trends, which may not necessarily be
the actual outcome. The risk-free rate is the rate of interest obtainable from Government securities over the expected life of the
equity incentive. The expected dividend yield is calculated on the basis of publicly available information at the time of the grant
date which, in most cases, is the historic dividend yield. No other features relating to the granting of options were incorporated
into the measurement of fair value.
Employee share ownership trust (ESOT)
The Company funds an ESOT to enable it to acquire and hold shares for the LTIP. The ESOT held 0.4m shares at 25 February
2021 (2020: 1.0m). All dividends on the shares in the ESOT are waived by the Trustee.
TOTAL CHARGED TO THE CONSOLIDATED INCOME STATEMENT FOR ALL SCHEMES
Long Term Incentive Plan
Deferred equity
Performance Share Plan
R&R Scheme
Restricted Share Plan
Employee Sharesave scheme
EQUITY-SETTLED
2020/21
£m
2019/20
£m
0.7
2.7
0.1
4.7
0.1
4.4
12.7
1.7
2.5
(0.1)
3.2
1.0
3.3
11.6
Accrued share-based payments in the consolidated statement of changes in equity includes £1.3m relating to shares issued to
satisfy the prior year annual incentive scheme.
32 RETIREMENT BENEFITS
Defined contribution schemes
The Group operates a contracted-in defined contribution scheme under the Whitbread Group Pension Fund. Contributions
by both employees and Group companies are held in externally invested, trustee-administered funds.
The Group contributes a specified percentage of earnings for members of the above defined contribution scheme, and
thereafter has no further obligations in relation to the scheme. The total cost charged to the consolidated income statement
in relation to the defined contribution scheme in the year was £10.8m (2019/20: £11.0m). At the year-end, the Group owed
outstanding contributions of £1.7m (2020: £2.5m) in respect of the defined contribution scheme.
At the year-end, 20,985 employees (2020: 24,051) were active members of the scheme, which also had 48,152 deferred
members (2020: 45,485).
182
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 32 RETIREMENT BENEFITS CONTINUED
Defined benefit scheme
The defined benefit (final salary) section of the principal Group pension scheme, the Whitbread Group Pension Fund, was
closed to new members on 31 December 2001 and to future accrual on 31 December 2009. The Whitbread Group Pension
Fund is set up under UK trust law, registered with Her Majesty’s Revenue and Customs and regulated by the Pensions
Regulator. The Whitbread Group Pension Fund is governed by a corporate Trustee which operates the scheme in accordance
with the requirements of UK pensions legislation.
At the year-end, the scheme had no active members (2020: nil), 19,243 deferred pensioners (2020: 19,853) and 16,145 pensions
in payment (2020: 16,371).
The surplus recognised in the consolidated balance sheet in respect of the defined benefit pension scheme is the fair value
of the plan assets less the present value of the defined benefit obligation at the end of the reporting period. The IAS 19
pension cost relating to the defined benefit section of the Whitbread Group Pension Fund is assessed in accordance with
actuarial advice from, and calculations provided by, Lane Clark & Peacock, using the projected unit credit method. The present
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates
of high quality corporate bonds that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited
to equity in other comprehensive income in the period in which they arise. As the scheme is closed to future accrual, there is no
future service cost.
The surplus has been recognised as, under the governing documentation of the Whitbread Group Pension Fund, the Group has
an unconditional right to receive a refund, assuming the gradual settlement of the scheme liabilities over time until all members
and their dependants have either died or left the scheme, in accordance with the provisions of IFRIC 14 IAS 19 – The Limit on
a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.
The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 17.0 years
(2020: 18.0 years).
Funding
Expected contributions to be made in the next reporting period total £13.7m (2019/20: £13.3m). In 2020/21, contributions were
£13.0m with £2.7m from the employer, £10.2m from Moorgate Scottish Limited Partnership (SLP) and £0.1m of benefits settled
by the Group in relation to an unfunded scheme (2019/20: £286.5m, with £276.4m from the employer, £10.0m from Moorgate
SLP and £0.1m of benefits settled by the Group in relation to an unfunded scheme). In addition, Whitbread paid £1.8m
(2019/20: £1.9m) of investment manager expenses.
A scheme specific actuarial valuation for the purpose of determining the level of cash contributions to be paid into the
Whitbread Group Pension Fund was undertaken as at 31 March 2017 by Willis Towers Watson Ltd using the projected unit
credit method. The valuation showed a deficit of assets relative to technical provisions of £450.0m (31 March 2014: deficit
of £564.0m). A deficit recovery plan and some protection whilst the scheme remained in deficit had been agreed with the
Trustee. On completion of the sale of Costa Limited, the Group paid the Pension Scheme a cash contribution of £381.0m
following which there are no ongoing deficit recovery contributions, Costa Limited was released from its obligations to the
Pension Scheme and new protections were agreed by the Group and Trustee.
A scheme specific actuarial valuation of the scheme as at 31 March 2020 is currently being carried out and is expected to be
completed by June 2021.
In 2019, as part of the funding arrangement related to the sale of Costa Limited, two previous charges were released and
replaced with a consolidated charge in favour of Whitbread Pension Trustees securing properties totalling £450.0m that
would have reduced to £408.0m following completion of the 2020 actuarial valuation. In May 2020, the Group agreed with
the Trustee covenant waivers for the defined benefit pension scheme covering the period to March 2022. As a condition
of receiving these waivers, the charge was increased to £500.0m for the duration of the waiver and two further properties
were added to the charge. Following the end of the waiver period, the charge will revert to £450.0m and remain at that level.
The charge secures the obligations of various Group companies to make payments to the scheme.
The Group has received covenant waivers in relation to the defined benefit pension scheme and therefore the covenants
will next be tested at 3 March 2022. Under the terms of the waiver, the Group is required to maintain £400.0m cash and/or
headroom under undrawn committed bank facilities and total net debt must not exceed £2.0bn. In the event the Group would
fail to meet the covenant test as at 3 March 2022 , a further variable payment, based upon the prevailing market conditions
at the time of calculation, would need to be made into the Group’s pension scheme. The scenario in which this could apply is
outlined in the Going concern Note 2.
183
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 32 RETIREMENT BENEFITS CONTINUED
Investment in Moorgate SLP
The Pension Scheme will receive a share of the income, profits and a variable capital payment from its investment in Moorgate
SLP, which was established by the Group in the year ended 4 March 2010 (the share in profits is accounted for by the Group
as contributions when paid). The partnership interests in Moorgate SLP are held by the Group, the general partner and by the
Pension Scheme.
Moorgate SLP holds an investment in a further partnership, Farringdon Scottish Partnership (SP), which was also established
by the Group during 2009/10. Property assets with a market value of £221.0m were transferred from other Group companies
to Farringdon SP and leased back to Whitbread Group PLC and Premier Inn Hotels Limited. The Group retains control over
these properties, including the flexibility to substitute alternative properties. However, the Trustee has first charge over the
property portfolio and certain other assets with an aggregate value of £228.0m which is included in the charge of £500.0m
above. The Group retains control over both partnerships and, as such, they are fully consolidated in these consolidated
financial statements.
The Pension Scheme is a partner in Moorgate SLP and, as such, is entitled to an annual share of the profits of the partnership
over the next four years. At the end of this period, the partnership capital allocated to the Pension Scheme partner will,
depending on the funding position of the Pension Scheme at that time, be transferred in cash to the Pension Scheme up to
a value of £150.0m.
Under IAS 19, the investment held by the Pension Scheme in Moorgate SLP, a consolidated entity, does not represent a plan
asset for the purposes of the consolidated financial statements. Accordingly, the pension surplus position in these consolidated
financial statements does not reflect the £162.4m (2020: £162.4m) investment in Moorgate SLP held by the Pension Scheme.
Risks
Through its defined benefit scheme, the Group is exposed to a number of risks in relation to the IAS 19 surplus, the most
significant of which are detailed below:
Risk
Description
MARKET VOLATILITY
INFLATIONARY RISK
ACCOUNTING
ASSUMPTIONS
The value of the defined benefit obligation is linked to AA-rated
corporate bonds whilst the Scheme invests in a number of
different asset classes (including those denominated in foreign
currencies). These assets include equities, gilts, non-corporate
credit and cash. This exposes the Group to risks including those
relating to interest rates, equity markets, foreign exchange and
climate change. As a result, any change in market conditions
which impacts the value of the Scheme’s assets or the interest
rate on AA-rated corporate bonds will lead to volatility in the
Group’s net pension liability on the balance sheet, pension
expense in the income statement and re-measurement of
movements in other comprehensive income.
There is the potential for a period of heightened market
volatility due to the economic impact of the COVID-19
pandemic and Brexit.
Due to the link between the scheme obligation and inflation,
an increase in the expected future rate of inflation will lead
to higher scheme liabilities, although this is mitigated by the
Scheme holding inflation-linked assets which aim to match the
increase in liabilities.
The defined benefit obligation is calculated by projecting the
future cash flows of the scheme for many years into the future.
Consequently, the assumptions used can have a significant
impact on the balance sheet position and income statement
charge. In practice, future scheme experience may not be in line
with the assumptions adopted. For example, an increase in the
life expectancy of members would increase scheme liabilities.
Principal impact on assets and
obligation reconciliations
Return on plan assets
Actuarial movements in
financial assumptions
Actuarial movements in
financial assumptions
Discount rate: interest income
on scheme assets and cost
on liabilities
Mortality: actuarial movements
in demographic assumptions
Actuarial movements in
financial assumptions
184
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 32 RETIREMENT BENEFITS CONTINUED
The principal assumptions used by the independent qualified actuaries in updating the most recent valuation carried out as at
31 March 2017 of the UK scheme to 25 February 2021 for IAS 19 Employee Benefits purposes were:
Pre-April 2006 rate of increase in pensions in payment
Post-April 2006 rate of increase in pensions in payment
Pension increases in deferment
Discount rate
Inflation assumption
At
25 February
2021
%
At
27 February
2020
%
3.10
2.20
3.10
1.90
3.20
2.80
2.00
2.80
1.60
2.90
The mortality assumptions are based on standard mortality tables which allow for future mortality improvements.
The assumptions are that a member currently aged 65 will live on average for a further 20.5 years (2020: 20.8 years) if they
are male and for a further 23.1 years (2020: 23.3 years) if they are female. For a member who retires in 2041 at age 65, the
assumptions are that they will live on average for a further 21.5 years (2020: 21.9 years) after retirement if they are male and
for a further 24.3 years (2020: 24.5 years) after retirement if they are female.
The amounts recognised in the consolidated income statement in respect of the defined benefit scheme are as follows:
Net interest on net defined benefit surplus
Administrative expense
Past service cost (GMP equalisation reserve)
TOTAL EXPENSE/(INCOME) RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT
(GROSS OF DEFERRED TAX)
Amounts recognised in operating costs for past service costs or curtailment are £1.1m (2020: £nil).
The amounts taken to the consolidated statement of comprehensive income are as follows:
Actuarial (gains)/losses
Return on plan assets lower/(greater) than discount rate
RE-MEASUREMENT EFFECTS RECOGNISED IN OTHER COMPREHENSIVE INCOME
The amounts recognised in the consolidated balance sheet are as follows:
Present value of defined benefit obligation
Fair value of scheme assets
SURPLUS RECOGNISED IN THE CONSOLIDATED BALANCE SHEET
Changes in the present value of the defined benefit obligation are as follows:
Opening defined benefit obligation
Interest cost
Past service cost to recognise additional liability in respect of guaranteed minimum pensions
Re-measurement due to:
Changes in financial assumptions
Changes in demographic assumptions
Experience adjustments
Benefits paid
Benefits settled by the Group in relation to an unfunded pension scheme1
CLOSING DEFINED BENEFIT OBLIGATION
2020/21
£m
2019/20
£m
(3.0)
2.7
1.1
(4.0)
2.2
–
0.8
(1.8)
2020/21
£m
(130.2)
146.5
16.3
2019/20
£m
389.6
(409.3)
(19.7)
2021
£m
2020
£m
(2,804.3) (2,992.7)
3,183.0
2,992.3
190.3
188.0
2020/21
£m
2,992.7
48.7
1.1
30.5
(70.6)
(90.1)
(107.9)
(0.1)
2,804.3
2019/20
£m
2,643.2
67.4
–
401.9
–
(12.3)
(107.4)
(0.1)
2,992.7
185
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 32 RETIREMENT BENEFITS CONTINUED
Changes in the fair value of the scheme assets are as follows:
Opening fair value of scheme assets
Interest income on scheme assets
Return on plan assets (lower)/greater than discount rate2
Contributions from employer1
Additional contributions from Moorgate SLP1
Investment manager expenses paid by the employer1
Benefits paid
Administrative expenses
CLOSING FAIR VALUE OF SCHEME ASSETS
The major categories of plan assets are as follows:
2020/21
£m
3,183.0
51.7
(146.5)
2.7
10.2
1.8
(107.9)
(2.7)
2,992.3
2019/20
£m
2,523.6
71.4
409.3
276.4
10.0
1.9
(107.4)
(2.2)
3,183.0
Equities
Alternative assets
Bonds
Private markets
Liability driven Investments3
Cash and other4
2021
Quoted
and pooled
£m
Unquoted
£m
75.5
200.7
196.5
–
2,060.5
50.9
2,584.1
–
–
5.1
403.1
–
–
408.2
Total
£m
75.5
200.7
201.6
403.1
2,060.5
50.9
2,992.3
2020
Quoted and
pooled
£m
Unquoted
£m
125.4
340.0
205.3
0.1
2,122.6
39.0
2,832.4
–
–
7.2
343.4
–
–
350.6
Total
£m
125.4
340.0
212.5
343.5
2,122.6
39.0
3,183.0
1 The total of these items equals the cash paid by the Group as per the consolidated cash flow statement. ‘Contributions from employer’ include:
– Company deficit contributions;
– Company contributions towards an augmentation; and
– contributions to cover administration expenses.
2 Includes cost of managing fund assets.
3 Liability driven investments includes UK fixed and index-linked gilts, repurchase agreements and reverse repurchase agreements, interest rate and inflation (RPI) swaps,
gilt futures and cash.
4 Other primarily relates to assets held in respect of cash and net current assets.
The assumptions in relation to discount rate, mortality and inflation have a significant effect on the measurement of scheme
liabilities. The following table shows the sensitivity of the valuation to changes in these assumptions:
DISCOUNT RATE
1.00% increase to discount rate
1.00% decrease to discount rate
INFLATION
0.25% increase to inflation rate
0.25% decrease to inflation rate
LIFE EXPECTANCY
Additional one-year increase to life expectancy
(Increase)/decrease
in liability
2021
£m
2020
£m
421.0
(546.0)
467.0
(610.0)
(92.0)
90.0
(101.0)
98.0
(130.0)
(102.0)
The above sensitivity analyses are based on a change in an assumption whilst holding all other assumptions constant.
In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity
of the defined benefit obligation to significant actuarial assumptions, the same method (projected unit credit method) has
been applied as when calculating the pension liability recognised within the consolidated balance sheet. The methods and
types of assumptions did not change.
186
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
33 RELATED PARTY DISCLOSURE
The Group consists of a parent company, Whitbread PLC, incorporated in the UK, and a number of subsidiaries and joint
ventures held directly and indirectly by Whitbread PLC, which operate and are incorporated around the world. Note 9 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 32.
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
Sales to a related party
Purchases from a related party
Amounts owed by related party
Amounts owed to related party
Joint ventures
For details of the Group’s investments in and loans to joint ventures, see Note 16.
Compensation of key management personnel (including directors):
Short-term employee benefits
Post-employment benefits
Share-based payments
2020/21
Joint
ventures
£m
2019/20
Joint
ventures
£m
0.1
–
–
–
0.1
0.1
0.1
0.1
2020/21
£m
2019/20
£m
6.2
–
5.1
11.3
7.4
–
4.8
12.2
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 adjustment for expected credit loss relating to amounts owed by related parties has been made (2020: £nil).
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 Note 7.
187
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 34 EVENTS AFTER THE BALANCE SHEET DATE
Lockdown restrictions
As at the year-end, all of the Group’s restaurants were closed and although the majority of the Group’s hotels were open, they
were restricted to use by business customers only in line with the Government’s roadmap for easing restrictions in the UK and
similar restrictions in Germany. On 12 April 2021, the Group opened 65 restaurants where there is capacity for outdoor dining.
The Group expects to continue reopening in line with the roadmap meaning the majority of the Group’s restaurants will be
opened on 17 May and its UK hotels will open to leisure customers.
On 13 April 2021, the German parliament announced changes to the Infection Protection Act to further control the COVID-19
pandemic across the country. The change legally obligates consistent action across all states where infection rates exceed set
levels and will apply until 30 June 2021. This change is likely to lengthen the closure of the Group’s German sites.
Financing
As set out in Note 20, the Group provided an early repayment notice to holders of its US private placement loan notes.
On 26 March 2021, the Group repaid these loan notes and settled the associated hedge relationships resulting in total cash
outflows of £221.2m.
As at 22 March 2021, the Group had not drawn down the Covid Corporate Financing Facility (CCFF) and as a result this
facility expired.
Government support
On 4 March 2021, the German Government removed a restriction in place on the Bridge Aid scheme which allowed the Group
to make a grant claim under this scheme. This change is a non-adjusting post balance sheet event. As a result, the Group
expects to make claims of £10.4m which will be recognised in FY22 relating to the period from January 2021 to June 2021
(see Note 9).
The UK Government announced a number of support measures in its Budget of 3 March 2021. These included the following:
› An extension of Business Rates Relief in England to 30 June 2021.
› An extension of the Coronavirus Job Retention Scheme to 30 September 2021.
› A Restart Grant scheme for the hospitality and accommodation sector allowing the Group to claim up to £18,000 per site
restricted by State Aid allowances.
› An extension of reduced VAT rates. As a result, for the period from 15 July 2020 to 30 September 2021, the Group’s sales of
accommodation, food and beverage (excluding alcohol) will be charged at 5% VAT. A new reduced rate of 12.5% will then be
introduced which will end on 31 March 2022.
› An increase in the main rate of UK corporation tax to 25% with effect from 1 April 2023.
188
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 35 BUSINESS COMBINATIONS
Acquisition in 2020/21 – Foremost Hospitality Hiex GmbH
On 28 February 2020, the Group acquired 100% of the share capital of Foremost Hospitality Hiex GmbH for consideration of
£225.8m. The acquisition consists of 13 trading hotels which have been rebranded to Premier Inn as well as the leasehold for
a further six pipeline sites. The transaction forms part of the Group’s strategic priority of international growth.
Trading hotel leases
The Group has recognised right-of-use assets and lease liabilities in relation to the 13 hotels which have been rebranded.
Lease liabilities are recognised at the present value of future lease payments, using assumptions consistent with those of new
leases. Right-of-use assets have been valued at an amount equal to the lease liability as the lease arrangements are considered
to be at market rates.
Pipeline hotel leases
Three of the pipeline sites are open and will continue to be operated by a third party. The Group has acquired the headlease for
these sites and is subleasing them for a period of up to two years. The Group has recognised investment property and lease
liabilities in relation to these sites. Upon expiration of the sublease, the Group will take over the operations of these sites and the
investment property will be transferred to right-of-use assets.
The remaining three pipeline sites are still undergoing development with lease commencement tied to the completion of
this work. The Group has committed cash outflows in relation to lease payments for the sites in development of £76.3m.
Once development is complete and the sites are open, the Group will recognise the related lease liability and right-of-use assets.
Contingent consideration
Contingent consideration has been recognised at the date of acquisition and will be paid in instalments when the Group
takes control of the operations of the pipeline hotels. The amount payable of £62.6m is fixed and becomes payable once
development of the site is complete and the site has been handed over to the Group. The fair value is calculated by discounting
the future payments from their expected handover date using a risk adjusted discount rate.
CONSIDERATION TRANSFERRED
Cash
Deferred consideration
Contingent consideration
TOTAL CONSIDERATION
FAIR VALUE OF NET ASSETS ACQUIRED
Property, plant and equipment
Investment property
Right-of-use assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS ACQUIRED
Trade and other payables
Deferred tax liabilities
Lease liabilities
TOTAL LIABILITIES ACQUIRED
NET IDENTIFIABLE ASSETS ACQUIRED AT FAIR VALUE
Goodwill arising on acquisition
PURCHASE CONSIDERATION TRANSFERRED
£m
169.5
(0.6)
56.9
225.8
6.0
51.9
193.3
0.5
1.4
253.1
(2.8)
(3.5)
(245.2)
(251.5)
1.6
224.2
225.8
The goodwill acquired in the above transactions comprises certain intangible assets that cannot be separately identified.
This includes the skills and experience of the assembled workforce and the future growth opportunities the business
provides to the Group’s operations. None of the goodwill recognised is expected to be deductible for income tax purposes.
Subsequent to the acquisition, an impairment of the goodwill arising on acquisition has been recorded (see Note 15).
From the date of acquisition, the acquiree has contributed £6.3m of revenue and £26.8m of loss before tax.
189
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information
35 BUSINESS COMBINATIONS CONTINUED
Asset acquisition in 2020/21 – 13 hotels from Centro Hotel Group
On 1 December 2020, the Group completed the acquisition of 13 hotels from the Centro Hotel Group. The transaction has been
accounted for as an asset acquisition under IFRS 3 Business Combinations as the fair value of the assets is concentrated in
a single group of similar assets. The transaction consists of six open hotels and seven pipeline hotels which are due to open
between 2021 and 2023. On acquisition, the Group has recognised right-of-use assets of £84.9m and lease liabilities of £77.2m
in relation to the open hotels. The Group has also committed to lease commitments of £202.4m in relation to the pipeline
hotels. Contingent consideration of £1.9m will become payable once handover of the pipeline sites is complete.
Acquisition in 2019/20 – Acom Hotelbetriebs- und Verwaltungs GmbH
On 17 September 2019, the Group acquired 100% of the share capital of Acom Hotelbetriebs- und Verwaltungs GmbH from
a private individual operating under the brand ‘Acomhotel’ for consideration of £27.4m. The acquisition consisted of two
leasehold hotels that were open and trading and a further leasehold hotel which has opened during 2020/21. The acquisition
includes the right to purchase the freehold for two of the sites in six and 12 years respectively. The transaction forms part of the
Group’s strategic priority of international growth.
CONSIDERATION TRANSFERRED
Cash
Deferred consideration
Contingent consideration
TOTAL CONSIDERATION
£m
22.8
0.2
4.4
27.4
The contingent consideration became payable on completion of the construction of the remaining leasehold site and was paid
during the year.
FAIR VALUE OF NET ASSETS ACQUIRED
Property, plant and equipment
Right-of-use assets
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS ACQUIRED
Trade and other payables
Lease liabilities
Deferred tax liabilities
TOTAL LIABILITIES ACQUIRED
NET IDENTIFIABLE ASSETS ACQUIRED AT FAIR VALUE
Goodwill arising on acquisition
PURCHASE CONSIDERATION TRANSFERRED
£m
0.6
45.8
0.1
0.7
0.5
47.7
(0.6)
(14.8)
(4.9)
(20.3)
27.4
–
27.4
190
Whitbread Annual Report and Accounts 2020/21NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Whitbread PLC
Company accounts 2020/21
Contents
192
193
194
Company balance sheet
Company statement of changes in equity
Notes to the Company financial statements
191
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information Company balance sheet
At 25 February 2021
Company number 04120344
FIXED ASSETS
Investment in subsidiaries
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Debtors: amounts falling due within one year
Debtors: amounts falling due after more than one year
CURRENT LIABILITIES
Creditors: amounts falling due within one year
NET CURRENT ASSETS
NET ASSETS
CAPITAL AND RESERVES
Share capital
Share premium
Capital redemption reserve
Retained earnings
Treasury reserve
SHAREHOLDERS’ FUNDS
25 February
2021
£m
27 February
2020
£m
Notes
3
4
4
5
6
7
7
7
7
2,426.4
2,426.4
2,412.4
2,412.4
–
1,265.1
1,265.1
253.0
–
253.0
(11.5)
(11.5)
1,253.6
3,680.0
(6.2)
(6.2)
246.8
2,659.2
164.7
1,022.9
50.2
2,962.5
(520.3)
3,680.0
112.9
90.8
50.2
2,932.3
(527.0)
2,659.2
The profit and loss account of the parent company is omitted from the Company’s accounts by virtue of the exemption granted
by section 408 of the Companies Act 2006. The profit generated in the year for ordinary shareholders, and included in the
financial statements of the parent company, amounted to £22.9m (2019/20: £2,742.0m).
ALISON BRITTAIN CHIEF EXECUTIVE
NICHOLAS CADBURY FINANCE DIRECTOR
26 April 2021
192
Whitbread Annual Report and Accounts 2020/21
Company statement of changes in equity
Year ended 25 February 2021
At 1 March 2019
Profit for the year
Total comprehensive income
Ordinary shares issued on exercise of employee share options
Accrued share–based payments
Loss on ESOT shares issued
Equity dividends
Release of irrevocable commitment – share buyback
Shares purchased in share buyback
Shares purchased under tender offer
Shares cancelled
AT 27 FEBRUARY 2020
Profit for the year
TOTAL COMPREHENSIVE INCOME
Ordinary shares issued on exercise of employee share options
Ordinary shares issued on rights issue1
Loss on ESOT shares issued
Accrued share–based payments
Share
capital
(Note 6)
£m
150.6
Share
premium
(Note 7)
£m
Capital
redemption
reserve
(Note 7)
£m
Retained
earnings
(Note 7)
£m
Treasury
reserve
(Note 7)
£m
Total
£m
81.5
12.3
2,494.7
(684.8)
2,054.3
–
–
0.2
–
–
–
–
–
(31.0)
(6.9)
112.9
–
–
0.1
51.7
–
–
–
–
9.3
–
–
–
–
–
–
–
–
–
2,742.0
2,742.0
–
–
2,742.0
2,742.0
–
–
–
–
–
–
31.0
6.9
–
11.6
(3.3)
(159.9)
–
–
(2,012.6)
(140.2)
–
–
3.3
–
330.1
(315.8)
–
140.2
9.5
11.6
–
(159.9)
330.1
(315.8)
(2,012.6)
–
90.8
50.2
2,932.3
(527.0)
2,659.2
–
–
2.8
929.3
–
–
–
–
–
–
–
–
22.9
22.9
–
–
(6.7)
14.0
–
–
–
–
6.7
–
22.9
22.9
2.9
981.0
–
14.0
AT 25 FEBRUARY 2021
164.7
1,022.9
50.2
2,962.5
(520.3)
3,680.0
1 The share premium amount of £929.3m is net of £28.2m in relation to transaction costs associated with the rights issue.
193
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information Notes to the Company financial statements
At 25 February 2021
1 BASIS OF ACCOUNTING
The financial statements of Whitbread PLC for the year ended 25 February 2021 were authorised for issue by the Board of
Directors on 26 April 2021. The financial year represents the 52 weeks to 25 February 2021 (prior financial year: 52 weeks to
27 February 2020).
The financial statements are prepared under the historical cost convention and in accordance with applicable UK Accounting
Standards. The Company meets the definition of a qualifying entity under FRS 100 Application of Financial Reporting
Requirements as issued by the Financial Reporting Council (FRC). Accordingly, in the year ended 3 March 2016, the Company
underwent transition from reporting under UK GAAP to FRS 101 Reduced Disclosure Framework. The financial statements are
therefore prepared in accordance with FRS 101.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in
relation to share-based payments, non-current assets held for sale, financial instruments, capital management, presentation
of comparative information in respect of certain assets, presentation of a cash flow statement, standards not yet effective,
impairment of non-current assets and related party transactions.
Where required, equivalent disclosures are given in the consolidated financial statements of the Group.
Going concern
The directors have concluded that it is appropriate for the financial statements to be prepared on the going concern basis
(see Note 2 to the consolidated financial statements).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments
Investments held as fixed assets are stated at cost less provision for any impairment. The carrying value of investments are
reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
Share buyback scheme and tender offer
Shares purchased for cancellation are deducted from retained earnings at the total consideration paid or payable.
Shares purchased and held by the Group (treasury shares) are deducted from the treasury reserve at the total consideration
paid or payable. On cancellation of treasury shares, the cost is transferred from the treasury reserve to retained earnings.
When treasury shares are issued at below cost, an amount representing the difference between the cost of those shares and
issue proceeds is transferred to retained earnings. No gain or loss is recognised in the income statement on the purchase, sale,
issue or cancellation of the Company’s own equity instruments.
Critical accounting judgements and key sources of estimation uncertainty
In the opinion of the directors, there are no critical accounting judgements or key sources of estimation uncertainty in relation
to the parent company financial statements.
194
Whitbread Annual Report and Accounts 2020/21 3 INVESTMENT IN SUBSIDIARY UNDERTAKINGS
INVESTMENTS AT COST
Opening investments
Contributions to subsidiaries in respect of share-based payments
CLOSING INVESTMENTS
2021
£m
2,412.4
14.0
2,426.4
2020
£m
2,400.8
11.6
2,412.4
Significant trading subsidiary undertakings
Whitbread Group PLC
Premier Inn Hotels Limited
Principal activity
Hotels & Restaurants
Hotels
Country of
incorporation
Country of
principal
operations
% of equity
and votes
held
England
England
England
England
100.0
100.0
Whitbread Group PLC, in which the Company has an investment, 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 Whitbread Group PLC. The partnerships
were set up in 2009/10 as part of a transaction with Whitbread Pension Trustees. Further details can be found in Note 32 to
the Whitbread PLC consolidated financial statements.
Shares in Whitbread Group PLC are held directly by Whitbread PLC. Shares in the other subsidiaries are held directly or
indirectly by Whitbread Group PLC or its subsidiaries. A full list of subsidiaries and related undertakings is provided in Note 9.
4 DEBTORS
AMOUNTS FALLING DUE WITHIN ONE YEAR
Amounts due from subsidiary undertakings
Corporation tax receivable
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Amounts due from subsidiary undertakings
5 CREDITORS
AMOUNTS FALLING DUE WITHIN ONE YEAR
Unclaimed dividends
Corporation tax payable
2021
£m
–
–
–
2020
£m
251.2
1.8
253.0
1,265.1
1,265.1
2021
£m
6.1
5.4
11.5
–
–
2020
£m
6.2
–
6.2
195
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 6 SHARE CAPITAL
ORDINARY SHARE CAPITAL
ALLOTTED, CALLED UP AND FULLY PAID ORDINARY SHARES OF 76.80P EACH (2020: 76.80P EACH)
At 1 March 2019
Issued on exercise of employee share options
Cancelled
Tender offer
AT 27 FEBRUARY 2020
Issued on exercise of employee share options
Issued in rights issue
AT 25 FEBRUARY 2021
million
195.9
0.3
(9.0)
(40.2)
147.0
0.1
67.3
214.4
£m
150.6
0.2
(6.9)
(31.0)
112.9
0.1
51.7
164.7
Rights issue
In June 2020, the Company offered a fully underwritten rights issue to existing shareholders on the basis of one share for
every two fully paid ordinary shares held. The Company received acceptances in respect of 61,452,547 New Ordinary Shares,
representing 91.4% of the total New Ordinary Shares to be issued. The remaining 5,824,869 New Ordinary Shares for which
acceptances were not received were successfully placed at a price of 2,550p per New Ordinary Share.
As a result, a total of 67,277,416 ordinary shares with an aggregate nominal value of £51.7m were issued for cash consideration
of £1,009.2m. Transaction costs of £28.2m were incurred resulting in £929.3m being recognised in share premium and net cash
proceeds of £981.0m.
Employee share options
During the year, options over 0.1m (2019/20: 0.3m) ordinary shares, fully paid, were exercised by employees under the terms
of various share option schemes. The Company received proceeds of £2.9m (2019/20: £9.5m) on exercise of these options.
Tender offer
During the year ended 27 February 2020, the Company announced and completed a tender offer to purchase 40.2m ordinary
shares at a price of £49.72 per share, and an aggregate cost of £2,012.6m, including transaction costs of £12.6m. The shares
acquired under the tender offer were immediately cancelled, creating a capital redemption reserve of £31.0m.
Share cancellation
During the year ended 27 February 2020, following the completion of the share buyback programme (see Note 7), the
Company cancelled 9.0m ordinary shares that were previously held as treasury shares, creating a capital redemption reserve
of £6.9m and transferring the cost of treasury shares of £140.2m to retained earnings.
Preference share capital
ALLOTTED, CALLED UP AND FULLY PAID SHARES OF 1P EACH
(2020: 1P EACH)
At 1 March 2019, 27 February 2020 and 25 February 2021
B shares
C shares
million
2.0
£m
–
million
1.9
£m
–
196
Whitbread Annual Report and Accounts 2020/21NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED 7 RESERVES
Share premium
The share premium reserve is the premium paid on the Company’s 76.80p ordinary shares.
Capital redemption reserve
A capital redemption reserve was created on the cancellation of the Company’s B and C preference shares and also includes
the nominal value of cancelled ordinary shares.
Retained earnings
Retained earnings are the net earnings not paid out as dividends, but retained to be reinvested.
Treasury reserve
This reserve relates to shares held by an independently managed employee share ownership trust (ESOT) and treasury shares
held by Whitbread PLC. The shares held by the ESOT were purchased in order to satisfy outstanding employee share options
and potential awards under the Long Term Incentive Plan (LTIP) and other incentive schemes.
The movement in treasury reserves during the year is set out in the table below:
AT 1 MARCH 2019
Exercised during the year
Release of irrevocable commitment – share buyback
Shares purchased – share buyback scheme
Shares cancelled (Note 6)
Transferred
AT 27 FEBRUARY 2020
Exercised during the year
AT 25 FEBRUARY 2021
Treasury shares held by
Whitbread PLC
ESOT shares held
million
£m
million
15.6
–
–
6.5
(9.0)
(0.7)
677.2
–
(330.1)
315.8
(140.2)
(8.2)
12.5
514.5
–
–
12.5
514.5
0.5
(0.2)
–
–
–
0.7
1.0
(0.6)
0.4
£m
7.6
(3.3)
–
–
–
8.2
12.5
(6.7)
5.8
Following the completion of the sale of Costa Limited on 3 January 2019, the Company announced its intention to start a share
buyback programme to return £500.0m to shareholders. As at 1 March 2019, the Company had purchased shares with an
aggregate cost of £169.9m and recognised an irrevocable commitment for the remaining £330.1m. During the year ended
27 February 2020, the Company purchased 6.5m ordinary shares at an average price of £48.00 per share and an aggregate
cost of £315.8m including transaction costs of £3.1m under the share buyback programme. The remaining £14.3m, representing
the difference between the announced programme and the value repurchased, was released to the treasury reserve.
Distributable reserves
As at 25 February 2021, Whitbread PLC had distributable reserves of £2,271.9m (2020: £2,249.0m).
8 CONTINGENT LIABILITIES
Whitbread PLC is a member of the Whitbread Group PLC VAT group. All members are jointly and severally liable for the liability.
At the balance sheet date the Group liability amounted to £11.1m (2020: £24.0m).
197
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 9 RELATED PARTIES
Details of related undertakings are shown below:
Active related undertakings
Company name
AIRE HIEX Stuttgart Verwaltungs GmbH
Brickwoods Limited
Duttons Brewery Limited
Elm Hotel Holdings Limited
Farringdon Scottish Partnership
Healthy Retail Limited
Country of
incorporation
Germany8
England1
England1
England1
Scotland2
England18
Milton (SC) 2 Limited
Milton (SC) Limited
Milton 1 Limited
Moorgate Scottish Limited Partnership
PI Hotels and Restaurants Ireland Limited
Premier Inn (Bath Street) Limited
Premier Inn (Guernsey) Limited
Premier Inn (Isle of Man) Limited
Premier Inn (Jersey) Limited
Premier Inn (UK) Limited
Premier Inn Dortmund Königswall GmbH
Premier Inn Essen City Hauptbahnhof GmbH
Premier Inn Frankfurt City Ostbahnhof GmbH
Premier Inn Frankfurt Eschborn GmbH
Premier Inn Glasgow Limited
Premier Inn GmbH
Premier Inn Hamburg Nordanalstrasse GmbH
Premier Inn Holding GmbH
Premier Inn Hotels Limited
Premier Inn Hotels LLC
Scotland2
Scotland2
England1
Scotland2
Ireland3
Jersey5
Guernsey16
Isle of Man4
Jersey5
England1
Germany8
Germany8
Germany8
Germany8
England1
Germany8
Germany8
Germany8
England1
United Arab
Emirates6
Qatar7
Premier Inn Hotels Qatar
Premier Inn International Development Limited England1
England1
Premier Inn Manchester Airport Limited
England1
Premier Inn Manchester Trafford Limited
Germany8
Premier Inn Mannheim Quadrate T1 GmbH
Germany8
Premier Inn München Frankfurter Ring GmbH
Germany8
Premier Inn München Messe GmbH
(formerly Acom Hotel München-Haar GmbH)
Premier Inn Nürnberg City Nordost GmbH
(formerly Acom Hotel Nürnberg Nordost GmbH)
Premier Inn Ochre Limited
Premier Inn Rostock City Hafen GmbH
(formerly UNA 344. Equity Management GmbH)
Premier Inn Stuttgart Feuerbach GmbH
Premier Inn Verwaltungsgesellschaft Süd GmbH
(formerly: Acom Hotelbetriebs- und
Verwaltungs GmbH)
England1
Germany8
Germany8
Germany8
Germany8
198
% of class of
shares held
by the Group
(if different
from the
parent
company)
100.0
100.0
100.0
100.0
N/A
100.0
–
–
100.0
100.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
49.0
% of class
of shares
held by
the parent
company
–
–
–
–
N/A
–
–
–
–
–
–
N/A
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
% of
nominal
value
(where
applicable)
100.0
100.0
100.0
100.0
N/A
49.0
–
–
100.0
100.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
49.0
–
–
–
–
–
–
–
–
–
–
–
–
49.0
100.0
100.0
100.0
100.0
100.0
100.0
49.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Class of shares held
Ordinary EUR 50,000
Ordinary £0.25
Ordinary £1.00
Ordinary £0.10
N/A
A ordinary £0.01
B ordinary £0.01
C ordinary £0.01
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
N/A
Ordinary EUR 1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary £1.00
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary £1.00
Ordinary AED 1,000
Ordinary QAR 100.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary £1.00
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary EUR 50,000
Whitbread Annual Report and Accounts 2020/21NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED 9 RELATED PARTIES CONTINUED
Active related undertakings continued
Company name
Premier Inn Westminster Limited
Premier Travel Inn India Limited
PT. Whitbread Indonesia
PTI Middle East Limited
Silk Street Hotels Limited
St Andrews Homes Limited
Swift Hotels Limited
T.F. Ashe & Nephew Limited
UNA 312. Equity Management GmbH
UNA 352. Equity Management GmbH
Whitbread Asia Pacific Private Limited
Whitbread East Pennines Limited
Whitbread Group PLC
Country of
incorporation
England1
England1
Indonesia10
United Arab
Emirates11
England1
England1
England1
England1
Germany8
Germany8
Singapore12
England1
England1
Whitbread Hotel Company Limited
Whitbread International Sourcing Business
Services (Shanghai) Co., Ltd
Whitbread Properties Limited
England1
China9
England1
Whitbread West Pennines Limited
WHRI Development DMCC
WHRI Holding Company Limited
England1
United Arab
Emirates13
England1
Dormant related undertakings
Class of shares held
Ordinary £1.00
Ordinary £1.00
Ordinary USD 1.00
Ordinary AED 1,000
Deferred £1.00
Ordinary USD 0.01
Ordinary £1.00
Ordinary £1.00
Preference £5.00
Deferred £1.00
Ordinary £0.01
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary SGD 1.00
Ordinary £1.00
Ordinary £0.25
A ordinary £0.25
Ordinary £0.10
Ordinary RMB 1.00
5% non-cumulative
preference £0.50
7% non-cumulative
preference £0.25
Ordinary £0.175
Ordinary £1.00
Ordinary AED 1,000
Ordinary £1.00
Company name
Advisebegin Limited
Alastair Campbell & Company Limited
Archibald Campbell Hope & King Limited
Autumn Days Limited
Belgrave Hotel Limited
Belstead Brook Manor Hotel Limited
Brewers Fayre Limited
Britannia Inns Limited
Broughton Park Hotel Limited
Carpenters of Widnes Limited
Country of
incorporation
England1
Scotland15
Scotland15
England1
England1
England1
England1
England1
England1
England1
Class of shares held
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £0.01
Deferred ordinary £1.00
% of class of
shares held
by the Group
(if different
from the
parent
company)
% of class
of shares
held by
the parent
company
% of
nominal
value
(where
applicable)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
–
–
–
–
–
–
–
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
–
100.0
100.0
100.0
100.0
100.0
100.0
99.1
0.1
100.0
99.9
0.1
99.9
0.1
100.0
100.0
100.0
100.0
50.0
50.0
100.0
100.0
100.0
24.9
100.0
16.4
100.0
100.0
100.0
58.7
100.0
100.0
100.0
100.0
% of class of
shares held
by the Group
(if different
from the
parent
company)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
% of class
of shares
held by
the parent
company
–
–
–
–
–
–
–
–
–
–
–
% of
nominal
value
(where
applicable)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
199
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
Cherwell Inns Limited
Chiswell Overseas Limited
Chiswell Properties Limited
Churchgate Manor Hotel Limited
Country Club Hotels Limited
Cromwell Hotel (Stevenage)
Cymric Hotel Company Limited
Danesk Limited
David Williams (Builth) Limited
Dealend Limited
Delamont Freres Limited
Delaunay Freres Limited
Dome Restaurants Limited
Dragon Inns and Restaurants Limited
Dukes Head 1988 Limited
E. Lacon & Co., Limited
E.B. Holdings Limited
Evan Evans Bevan Limited
Finite Hotel Systems Limited
Country of
incorporation
England1
England1
England1
England1
England1
England1
England1
Scotland14
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
Fleet Wines & Spirits Limited
Forest of Arden Golf and Country Club Limited England1
England1
Gable Care Limited
England1
Goodhews (Castle)
Goodhews (Holdings) Limited
England1
Goodhews (Inns)
Goodhews (Restaurants)
Goodhews B. & S. Limited
Goodhews Enterprises
Goodhews Limited
Gough Brothers Limited
Grosvenor Leisure Limited
Hammock Limited
Hart & Co., (Boats) Limited
England1
England1
England1
England1
England1
England1
England1
England1
England1
Harveys Leisure Promotions Limited
England1
Hunter & Oliver Limited
J. Burton (Warwick) Limited
England1
England1
200
% of class of
shares held
by the Group
(if different
from the
parent
company)
% of class
of shares
held by
the parent
company
% of
nominal
value
(where
applicable)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.0
66.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
33.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
100.0
100.0
100.0
51.0
49.0
42.2
42.2
15.6
100.0
100.0
100.0
100.0
100.0
97.6
2.4
100.0
100.0
99.0
1.0
–
70.0
30.0
100.0
100.0
Class of shares held
A ordinary non-voting
£1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
B ordinary £1.00
W ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
A ordinary £1.00
B ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
A ordinary £1.00
Ordinary £1.00
A ordinary £1.00
B ordinary £1.00
C ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Deferred ordinary £.0.20
Ordinary £0.20
Ordinary £1.00
Ordinary £1.00
1% non-cumulative
preference £1.00
Ordinary £1.00
1% non-cumulative
preference £0.01
A ordinary £1.00
B ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Whitbread Annual Report and Accounts 2020/21NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED 9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
J. J. Norman and Ellery Limited
James Bell and Company Limited
Jestbread Limited
Kingsmills Hotel Company Limited
Lambtons Ale Limited
Latewise Limited
Lawnpark Limited
Leisure and Retail Resources Limited
Lloyds Avenue Catering Limited
London International Hotel Limited
Lorimer & Clark, Limited
Mackeson & Company Limited
Mackies Wine Company Limited
Maredrove Limited
Marine Hotel Porthcawl Limited
Marlow Catering Limited
Meon Valley Golf and Country Club Limited
Milton 2 Limited
Morans of Bristol Limited
Morris’s Wine Stores Limited
New Clapton Stadium Company Limited
Norseman Lager Limited
Pacific Caledonian Properties Limited
Percheron Properties Limited
Peter Dominic Limited
PI Hotels York Limited
Piquant Caterers Limited
Pizzaland Limited
Premier Inn Kier Limited
Premier Inn Limited
Premier Inn Troon Limited
Priory Leisure Limited
R.C. Gough and Co. Limited
Raybain (Northern) Limited
Raybain (Wine Bars) Limited
Respotel Limited
Rhymney Breweries Limited
S & S Property Limited
S.H. Ward & Company Limited
Salford Automatics Limited
Scorechance 1 Limited
Scorechance 12 Limited
Country of
incorporation
England1
England1
England1
Scotland17
England1
England1
England1
England1
England1
England1
Scotland15
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
Scotland14
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
Class of shares held
Ordinary £1.00
Deferred ordinary £0.25
Ordinary £0.01
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
3% non-cumulative
preference £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
5.6% non-cumulative
preference £1.00
Ordinary £0.05
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
A ordinary £1.00
B ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
% of class of
shares held
by the Group
(if different
from the
parent
company)
% of class
of shares
held by
the parent
company
% of
nominal
value
(where
applicable)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.0
100.0
100.0
100.0
100.0
100.0
53.4
100.0
99.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
96.2
3.8
100.0
100.0
100.0
53.4
100.0
99.6
50.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
5.4
94.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
201
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information 9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
Scorechance 17 Limited
Scorechance 25 Limited
Scorechance 8 Limited
Sheffield Automatics Limited
Shewell Limited
Silk Street Hotel Liverpool Limited
Small & Co. (Engineering) Limited
Small & Co. Limited
Country of
incorporation
England1
England1
England1
England1
England1
England1
England1
England1
England1
Spring Soft Drinks Limited
England1
Sprowston Manor Hotel Limited
England1
Square October 1 Limited
England1
Square October 2 Limited
England1
Square October 3 Limited
England1
St Andrews Homes (1995) Limited
England1
St Martins Care Homes Investments Limited
England1
Stoneshell Limited
England1
Stripe Travel Inn Limited
England1
Strong and Co. of Romsey Limited
England1
Summerfields Care Limited
England1
Sun Taverns Limited
England1
Sweetings (Chop House) Limited
England1
Swift (Lurchrise) Limited
England1
Swift Hotels (1995) Limited
England1
Swift Hotels (Management) Limited
England1
Swift Inns and Restaurants Limited
England1
Swift Profit Sharing Scheme Trustees Limited
England1
Swift Quest Limited
England1
Swingbridge Hotel Limited
Tewkesbury Park Golf and Country Club Limited England1
England1
The Barcave Group Limited
The Dominic Group Limited
The Four Seasons Hotel Investments Limited
England1
England1
Class of shares held
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
7% cumulative preference
£1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
7% cumulative preference
£1.00
Ordinary £1.00
Ordinary £1.00
8% cumulative preference
A £1.00
8% cumulative preference
B £1.00
Ordinary £1.00
Preferred ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £0.25
% of class of
shares held
by the Group
(if different
from the
parent
company)
% of class
of shares
held by
the parent
company
% of
nominal
value
(where
applicable)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
0.7
99.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
90.9
9.1
100.0
33.0
100.0
28.1
100.0
100.0
100.0
100.0
100.0
100.0
30.2
8.8
100.0
100.0
100.0
100.0
100.0
100.0
England1
England1
England1
England1
England1
Ordinary £1.00
The Four Seasons Hotel Investments
Management Limited
The Four Seasons Hotel Limited
The Oyster Spa Company Limited
The Portsmouth and Brighton United
Breweries, Limited
Thomas Wethered & Sons Limited
202
Whitbread Annual Report and Accounts 2020/21NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED 9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
Threlfalls (Liverpool & Birkenhead) Limited
Threlfalls (Salford) Limited
Trentrise Limited
Uncle Sam’s Limited
Virlat Limited
W. M. Darley, Limited
Country of
incorporation
England1
England1
England1
England1
England1
England1
W. R. Wines Limited
West Country Breweries Limited
Wentworth Guarantee Company Limited
Wheeler Gate Limited
Whitbread (Condor) Holdings Limited
Whitbread (G.C.) Limited
Whitbread Company Two Limited
Whitbread Developments Limited
Whitbread Devon Limited
Whitbread Directors 1 Limited
Whitbread Directors 2 Limited
Whitbread Dunstable Limited
Whitbread Enterprise Centre Limited
Whitbread Finance PLC
Whitbread Fremlins Limited
Whitbread Golf and Country Club Limited
Whitbread Golf Club Limited
Whitbread Guarantee Company Two Limited
Whitbread Healthcare Trustees Limited
Whitbread Hotel (Bournemouth) Limited
Whitbread Hotels (Management) Limited
Whitbread International Limited
Whitbread International Trading Limited
Whitbread Investment Company Limited
Whitbread Investment Company Securities
Limited
Whitbread London Limited
Whitbread Nominees Limited
Whitbread Pension Trustee Directors
Company Limited
Whitbread Pension Trustees
Whitbread Pub and Bars Limited
Whitbread Pub Partnership Limited
Whitbread Pub Restaurants Business Limited
Whitbread Quest Trustee Limited
Whitbread Restaurants (Australia) Limited
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
England1
Class of shares held
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Preference £1.00
Preferred ordinary £0.01
Deferred £1.00
Ordinary £0.01
Ordinary £1.00
N/A
Ordinary £1.00
Ordinary £0.0001
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £0.05
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
5% non-cumulative
preference £1.00
A ordinary £1.00
Ordinary £1.00
N/A
Ordinary £1.00
Ordinary £0.05
Deferred £1.00
USD 0.01
Ordinary £1.00
Ordinary £0.25
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
N/A
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £0.56
% of class of
shares held
by the Group
(if different
from the
parent
company)
% of class
of shares
held by
the parent
company
% of
nominal
value
(where
applicable)
–
–
–
–
–
–
–
–
–
–
–
N/A
–
-
–
–
–
–
–
–
–
–
–
–
–
–
–
N/A
–
–
–
–
–
–
–
–
–
–
N/A
–
–
–
–
–
–
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
49.8
49.8
0.4
99.0
1.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
45.0
55.0
100.0
N/A
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
–
100.0
203
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information % of class of
shares held
by the Group
(if different
from the
parent
company)
% of class
of shares
held by
the parent
company
% of
nominal
value
(where
applicable)
–
–
–
–
N/A
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.0
100.0
100.0
100.0
N/A
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
N/A
100.0
100.0
57.0
43.0
50.0
50.0
50.0
50.0
100.0
100.0
100.0
100.0
100.0
50.0
25.0
25.0
100.0
9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
Whitbread Restaurants Limited
Whitbread Scotland Limited
Whitbread Secretaries Limited
Country of
incorporation
England1
Scotland14
England1
Whitbread Share Ownership Trustees Limited
Whitbread Spa Company Limited
Whitbread Sunderland (1995) Limited
Whitbread Sunderland 2 Limited
England1
England1
England1
England1
Whitbread Sunderland Limited
England1
Whitbread Trafalgar Properties Limited
England1
Whitbread UK Limited
Whitbread Wales Limited
Whitbread Wessex Limited
White Cross Films Limited
Wiggin Tree Limited
Willhouse Limited
England1
England1
England1
England1
England1
England1
William Overy Crane Hire Limited
England1
Class of shares held
Ordinary £1.00
Ordinary £1.00
Ordinary £0.05
4% preference £0.05
N/A
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
5.6% non-cumulative
preference £1.00
Ordinary £5.00
Preference £5.00
A ordinary £1.00
B ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Ordinary £1.00
Deferred £1.00
Q ordinary £1.00
W ordinary £1.00
Ordinary £1.00
The registered office of the above companies is as follows:
1 Whitbread Court, Houghton Hall Business Park, Porz Avenue, Dunstable, Beds, LU5 5XE
2 4th Floor, Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EN
3 3rd Floor, Kilmore House, Park Lane, Spencer Dock, Dublin 1, Ireland
4 2nd Floor, St Mary’s Court, 20 Hill Street, Douglas, IM1 1EU, Isle of Man
5 4th Floor, St Paul’s Gate, 22-24 New Street, St Helier, JE1 4TR, Jersey
6 Ground Floor, Premier Inn Dubai Investment Park, P.O. Box 35118, Dubai, United Arab Emirates
7 3rd Floor, Tornado Towers, PO Box 34040, Doha, Qatar
8 Messeturm (12th Floor), Friedrich-Ebert-Anlage 49, 60308 Frankfurt am Main, Germany
9 Room 742, 968 West Beijing Road, Jing’an District, Shanghai, China
10 Gandaria 8 Office Tower, 19th Floor Unit A1, Jalan Sultan Iskandarmuda, Kebayoran Lama, 12240, Indonesia
11 TMF Services B.V., Nassima Tower, Office 1401, Sheikh Zayed Road, PO Box 213975, Dubai, United Arab Emirates
12 38 Beach Road, 29-11 South Beach Tower, Singapore 189767, Singapore
13 Almas 6C, Almas Tower, Jumeirah Lake Towers, Dubai, United Arab Emirates
14 4th Floor, 115 George Street, Edinburgh, EH2 4JN, Scotland
15 The Royal Scot Hotel, 111 Glasgow Road, Edinburgh, EH12 8NF, Scotland
16 11 New St, Guernsey GY1 3EG, Guernsey
17 Swallow Royal Scot Hotel, Glasgow Road, Edinburgh, EN12 8NF, Scotland
18 100 Moorgate, London, England, EC2M 6AB
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Whitbread Annual Report and Accounts 2020/21NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED Glossary
ADJUSTED PROPERTY RENT
OPERATING PROFIT
Total property rent less a proportion of contingent rent.
Profit before net finance costs and tax.
BASIC EARNINGS PER SHARE (BASIC EPS)
OTAS
Profit attributable to the parent shareholders divided by the
weighted average number of ordinary shares in issue during
the year after deducting treasury shares and shares held by
an independently managed share ownership trust (ESOT).
COMMITTED PIPELINE
Sites where the Group has a legal interest in a property
(that may be subject to planning/other conditions) with the
intention of opening a hotel in the future.
DIRECT BOOKINGS/DISTRIBUTION
Based on stayed bookings in the financial year made direct
to the Premier Inn website, Premier Inn app, Premier Inn
customer contact centre or hotel front desks.
FOOD AND BEVERAGE (F&B) SALES
Food and beverage revenue from all Whitbread owned pub
restaurants and integrated hotel restaurants.
IFRS
Online travel agents.
PROPERTY RENT
IFRS 16 property lease liability payments plus variable lease
payments adjusted for deferred rental amounts. This is used
as a proxy for rent expense as recorded under IAS 17 in
arriving at funds from operations.
RENT EXPENSE
Rental costs recognised in the income statement prior to the
adoption of IFRS 16.
TEAM RETENTION
The number of permanent new starters that we retain for the
first 90 days/three months.
WINCARD
Whitbread In Numbers – balanced scorecard to measure
progress against key performance targets.
International Financial Reporting Standards.
YOURSAY
LEASE DEBT
Eight times adjusted property rent.
OCCUPANCY
Number of hotel bedrooms occupied by guests expressed
as a percentage of the number of bedrooms available in
the period.
Whitbread’s annual employee opinion survey to provide
insight into the views of employees.
205
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information Alternative performance measures
We use a range of measures to monitor the financial performance of the Group. These measures include both statutory
measures in accordance with IFRS and alternative performance measures (APMs) which are consistent with the way that the
business performance is measured internally.
APMs are not defined by IFRS and therefore may not be directly comparable with similarly titled measures reported by other
companies. APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measures.
APM
Closest equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Definition and purpose
REVENUE MEASURES
Accommodation
sales
Revenue
Exclude non-
room revenue
such as food
and beverage
Premier Inn accommodation revenue excluding non-room income such as
food and beverage. The growth in accommodation sales on a year-on-year
basis is a good indicator of the performance of the business.
Reconciliation: Note 3
Adjusted*
revenue
Revenue
Adjusting items Revenue adjusted to exclude the TSA income.
Reconciliation: Consolidated income statement
Average room
rate (ARR)
No direct
equivalent
Refer to
definition
Accommodation sales divided by the number of rooms occupied
by guests. The directors consider this to be a useful measure as this
is a commonly used industry metric which facilitates comparison
between companies.
RECONCILIATION
UK Accommodation sales (£m)
Number of rooms occupied by guests ('000)
UK AVERAGE ROOM RATE (£)
Germany Accommodation sales (£m)
Number of rooms occupied by guests ('000)
2020/21
2019/20
388.5
8,415
46.16
10.2
255
1,311.6
21,327
61.50
9.8
141
GERMANY AVERAGE ROOM RATE (£)
40.17
69.47
UK like-for-like
revenue growth
Movement in
accommodation
sales per the
segment
information
(Note 3)
Accommodation
sales from non
like-for-like
Year over year change in revenue for outlets open for at least one year.
The directors consider this to be a useful measure as it is a commonly
used performance metric and provides an indication of underlying
revenue trends.
RECONCILIATION
UK like-for-like revenue growth
Contribution from net new hotels
2020/21
(70.9%)
0.5%
2019/20
(2.40%)
2.30%
UK ACCOMMODATION SALES GROWTH
(70.4%)
(0.10%)
Revenue per
available room
(RevPAR)
No direct
equivalent
Refer to
definition
Revenue per available room is also known as ‘yield’. This hotel measure
is achieved by dividing accommodation sales by the number of rooms
available. The directors consider this to be a useful measure as it is
a commonly used performance measure in the hotel industry.
RECONCILIATION
UK Accommodation sales (£m)
Available rooms ('000)
UK REVPAR (£)
Germany Accommodation sales (£m)
Available rooms ('000)
GERMANY REVPAR (£)
2020/21
2019/20
388.5
28,620
13.57
10.2
1,135
9.02
1,311.6
27,963
46.91
9.8
241
40.53
206
Whitbread Annual Report and Accounts 2020/21OTHER INFORMATION APM
Closest equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Definition and purpose
INCOME STATEMENT MEASURES
Adjusted*
operating loss/
profit
Loss/profit before
tax
Adjusting items
(Note 6), finance
income/costs
(Note 8)
Loss/profit before tax, finance costs/income and adjusting items
Reconciliation: Consolidated income statement
Adjusted*
operating loss/
profit (pre-IFRS
16)
Loss/profit before
tax
Refer to
definition
Operating loss/profit before adjusting items and after replacing right-of-
use asset depreciation with rent expense. The directors consider this to be
a useful measure to enable comparison between periods following the
adoption of IFRS 16.
RECONCILIATION
Adjusted operating (loss)/profit
Depreciation – right-of-use assets
Rent expense
ADJUSTED OPERATING (LOSS)/PROFIT (PRE-
IFRS 16)
2020/21
£m
(486.7)
126.3
(224.9)
2019/20
£m
486.8
104.0
(188.2)
(585.3)
402.6
Adjusted* tax
Tax charge/credit Adjusting items
(Note 6)
Tax charge/credit before adjusting items.
Reconciliation: Consolidated income statement
Adjusted* (loss)/
profit before tax
Loss/profit before
tax
Adjusting items
(Note 6)
Loss/profit before tax and adjusting items.
Reconciliation: Consolidated income statement
Adjusted* (loss)/
profit before tax
(pre-IFRS 16)
Loss/profit before
tax
Refer to
definition
Loss/profit before tax and adjusting items and after replacing right-of-use
asset depreciation and lease liability interest with rent expense. The
directors consider this to be a useful measure to enable comparison
between periods following the adoption of IFRS 16.
Adjusted* basic
EPS
Basic EPS
Adjusting items
(Note 6)
RECONCILIATION
Adjusted (loss)/profit before tax
Depreciation – right-of-use assets
Interest on lease liabilities
Rent expense
ADJUSTED (LOSS)/PROFIT BEFORE TAX (PRE-
IFRS 16)
2020/21
£m
(635.1)
126.3
123.2
2019/20
£m
358.3
104.0
115.3
(224.9)
(188.2)
(610.5)
389.4
Adjusted profit attributable to the parent shareholders divided by the
basic weighted average number of ordinary shares in issue during the year
after deducting treasury shares and shares held by an independently
managed share ownership trust (ESOT).
Reconciliation: Note 11
207
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information ALTERNATIVE PERFORMANCE MEASURES CONTINUED
APM
Closest equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Definition and purpose
BALANCE SHEET MEASURES
Net debt
Total liabilities
from financing
activities
Adjusted net
debt
Total liabilities
from financing
activities
Lease adjusted
net debt
Total liabilities
from financing
activities
Cash and cash equivalents after deducting total borrowings. The directors
consider this to be a useful measure of the financing position of the Group.
Reconciliation: Note 21
Net debt adjusted for cash, assumed by ratings agencies to not be readily
available. The directors consider this to be a useful measure as it is aligned
with the method used by ratings agencies to assess the financing position
of the Group.
RECONCILIATION
Net debt
Restricted cash adjustment
ADJUSTED NET DEBT
2020/21
£m
2019/20
£m
46.5
10.0
56.5
322.9
10.0
332.9
Adjusted net debt plus lease debt. The directors consider this to be
a useful measure as it forms the basis of the Group’s leverage targets.
RECONCILIATION
Adjusted net debt
Lease debt
LEASE ADJUSTED NET DEBT
2020/21
£m
56.5
1,771.0
1,827.5
2019/20
£m
332.9
1,490.0
1,822.9
Exclude lease
liabilities and
derivatives held
to hedge
financing
activities
Exclude lease
liabilities and
derivatives
held to hedge
financing
activities.
Includes an
adjustment for
cash assumed
by ratings
agencies to
not be readily
available
Exclude lease
liabilities and
derivatives
held to hedge
financing
activities.
Includes an
adjustment for
cash assumed
by ratings
agencies to
not be readily
available
CASH FLOW MEASURES
Discretionary
free cash flow
Cash generated
from operations
Refer to
definition
Funds from
operations
(FFO)
Net cash flows
from operating
activities
Refer to
definition
Lease adjusted
net debt to FFO
No direct
equivalent
Refer to
definition
Cash generated from operations after payments for interest, tax, payment of
principal of lease liabilities and maintenance capital expenditure. The directors
consider this to be a useful measure as it is a good indicator of the cash
generated which is available to fund future growth or shareholder returns.
Reconciliation: Group Finance Director’s review
Net cash flows from operating activities after deducting payment of
principal of lease liabilities and adding back changes in working capital,
adjusted property rent and cash interest.
While the Group covenant waivers remain in place, FFO is not considered
to be a key alternative performance measure.
Ratio of lease-adjusted net debt/(cash) compared to FFO.
While the Group covenant waivers remain in place, lease adjusted net debt
to FFO is not considered to be a key alternative performance measure.
208
Whitbread Annual Report and Accounts 2020/21 APM
Closest equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Operating cash
flow
Cash generated
from operations
Refer to
definition
Definition and purpose
Adjusted operating profit/(loss) adding back depreciation and
amortisation and after IFRS 16 interest and lease repayments and working
capital movement.
The directors consider this a useful measure as it is a good indicator of the
cash generated which is used to fund future growth and shareholder
returns and before tax, pension and interest payments.
RECONCILIATION
Adjusted operating (loss)/profit
Depreciation – right-of-use assets
Depreciation – property, plant and equipment
Amortisation
Adjusted EBITDA (post IFRS 16)
Interest paid – lease liabilities
Payment of principal of lease liabilities
Lease incentives (paid)/received
Movement in working capital¹
OPERATING CASH FLOW
2020/21
£m
(486.7)
126.3
150.3
23.6
(186.5)
(123.2)
(71.7)
(7.3)
(99.8)
(488.5)
2019/20
£m
486.8
104.0
145.0
19.8
755.6
(115.3)
(73.1)
1.0
(13.0)
555.2
Cash capital
expenditure
(cash capex)
No direct
equivalent
Refer to
definition
Cash flows on property, plant and equipment and investment property
and investment in intangible assets, adding net cash proceeds on
acquisitions and capital contributions to joint ventures.
OTHER MEASURES
Operating profit Refer to
definition
Adjusted*
EBITDA
(post-IFRS 16),
Adjusted*
EBITDA
(pre-IFRS 16)
and Adjusted*
EBITDAR
Return on
Capital
Employed
(ROCE)
No direct
equivalent
Refer to
definition
Adjusted EBITDA (post-IFRS 16) is profit before tax, adjusting items,
interest, depreciation and amortisation.
Adjusted EBITDA (pre-IFRS 16) is further adjusted to remove rent expense.
Adjusted EBITDAR is profit before tax, adjusting items, interest,
depreciation, amortisation, variable lease payments and rental income.
The directors consider these measures to be useful as they are commonly
used industry metrics which facilitate comparison between companies on
a before and after IFRS 16 basis.
RECONCILIATION
Adjusted operating (loss)/profit
Depreciation – right-of-use assets
Depreciation – property, plant and equipment
Amortisation
ADJUSTED EBITDA (POST-IFRS 16)
Variable lease payments
Rental income
ADJUSTED EBITDAR
Rent expense, variable lease payments and rental
income
ADJUSTED EBITDA (PRE-IFRS 16)
2020/21
£m
(486.7)
126.3
150.3
23.6
(186.5)
(0.6)
(7.8)
(194.9)
2019/20
£m
486.8
104.0
145.0
19.8
755.6
2.0
(4.9)
752.7
(216.5)
(411.4)
(185.3)
567.4
Adjusted operating profit (pre-IFRS 16) for the year divided by net assets
at the balance sheet date, adding back net debt, right-of-use assets, lease
liabilities, taxation assets/liabilities, the pension surplus/deficit and
derivative financial assets/liabilities, other financial liabilities and IFRS 16
working capital adjustments.
Return on capital is not disclosed and a reconciliation is therefore not included.
1 FY20 excludes £51.0m timing of one-off transaction and separation costs relating to the sale of Costa.
* Adjusted measures of profitability represent the equivalent IFRS measures adjusted for specific items that we consider relevant for comparison of the Group’s business
either from one period to another or with similar businesses. We report adjusted measures because we believe they provide both management and investors with useful
additional information about the financial performance of the Group’s businesses.
209
Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information Shareholder services
USEFUL CONTACTS
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
The website address is www.linkassetservices.com
For enquiries regarding your shareholding please telephone
+44 (0)344 855 2327. Alternatively you can email:
whitbread@linkgroup.co.uk
Registered office
Whitbread PLC
Whitbread Court
Houghton Hall Business Park
Porz Avenue
Dunstable
Bedfordshire LU5 5XE
General Counsel and Company Secretary
Chris Vaughan
Managing your shareholdings
You can manage your shareholdings by visiting
www.whitbread-shares.com. This is a secure online site
where you can:
› sign up to receive shareholder information by email;
› buy and sell shares via the Link Share Dealing Service;
› view your holding and get an indicative valuation; and
› change your personal details.
You will need to have your investor code to hand. This can be
found on the following documentation:
› share certificate;
› dividend voucher; or
› proxy card.
Please ensure that you advise Link promptly of any change
of address.
Share dealing service1
For Link Share Dealing Services you can telephone
+44 (0)371 664 0445. Calls are charged at the standard
geographic rate and will vary by provider. Calls from outside
the United Kingdom will be charged at the applicable
international rate. Lines are open between 8.00am and
4.30pm, Monday to Friday excluding public holidays in
England and Wales.
Private shareholder
Private shareholders are shareholders who hold their shares
in their own name on the Company’s Register of Members.
They have full voting rights and have the right to stipulate their
communication preferences and bank account preferences on
their own holding.
Nominee shareholder
Nominee shareholders are underlying beneficial shareholders
who hold their shares through a nominee company. The name
of the nominee company will appear on the Company’s
Register of Members. It will depend on the terms and
conditions of the nominee provider as to whether underlying
shareholders receive copies of the AGM documents and any
other Company documents that are mailed. Dividend options
may also be restricted by the nominee. If underlying
shareholders wish to receive Company mailings then they
have the right to request to be put on the beneficial holders’
information rights register, which can be arranged via their
nominee provider.
Corporate Sponsored Nominee
We worked with Link to establish the Whitbread Corporate
Sponsored Nominee (CSN). We did this because we know
that a number of shareholders prefer not to hold their
shares in certificated form, but still wish to receive documents
and benefits from the Company. This has been raised by
shareholders at previous AGMs. The new CSN allows
shareholders to hold their Whitbread shares via a nominee,
but also allows Whitbread to have direct access to the
underlying register, such that we can ensure that participants
receive the documents and benefits that they request.
If you would like to hold your shares in the new Whitbread
CSN, please log on to www.whitbread-shares.com. If you have
not registered before then you will need your Investor Code.
Your Investor Code is located on your share certificate.
On the portal you will find further information in relation to the
Whitbread CSN. The terms and conditions and various transfer
forms that you will need to review and complete are located
there. If you need any assistance with the forms or want any
additional support, please e-mail custodymgt@linkgroup.co.uk
outlining what you would like to do and they will email you
back with the relevant instructions.
Annual general meeting 2021
The 2021 AGM will be held at 2.00pm on 17 June 2021 at
Whitbread Court, Houghton Hall Business Park, Porz Avenue,
Dunstable LU5 5XE. Due to the COVID-19 pandemic, it is
currently anticipated that shareholders will not be able to
attend the meeting. The meeting will be held via webcast and
shareholders will be able to fully participate in the meeting by
both asking questions and voting remotely in real time. In the
event that Government restrictions change after the Notice
of Meeting is mailed to shareholders, we will announce any
changes to the arrangements via the Regulatory News Service
and our website.
1 These details have been provided for information only and any action you take is at your own risk. If you are in any doubt about what action to take, please consult your
own financial adviser. Should you not wish to use these services you could find a broker in your local area, on the internet, or enquire about share dealing at any high street
bank or building society. The availability of this service should not be taken as a recommendation to deal.
210
Whitbread Annual Report and Accounts 2020/21OTHER INFORMATION
Analysis of ordinary shares at 25 February 2021
Band
1-100
101-200
201-500
501-1,000
1,001-2,000
2,001-5,000
5,001-10,000
10,001-50,000
50,001-100,000
100,001-500,000
500,001-1,000,000
1,000,001-5,000,000
5,000,001-10,000,000
10,000,001-50,000,000
Total
Number of holders
19,959
% of holders
54.32
Number of shares
691,085
% of share capital
0.32
5,635
5,836
2,615
1,246
582
213
325
100
147
41
38
2
3
36,742
15.34
15.88
7.12
3.39
1.58
0.58
0.88
0.27
0.40
0.11
0.10
0.01
0.01
821,549
1,885,592
1,837,441
1,706,201
1,797,067
1,510,948
7,768,813
7,416,668
33,727,670
28,571,585
74,067,477
14,469,120
38,148,363
214,419,579
0.38
0.88
0.86
0.80
0.84
0.70
3.62
3.46
15.73
13.33
34.54
6.75
17.79
Capital gains tax
For further information on:
› the market value of shares in the Company as at
31 March 1982;
› the reduction of capital on 10 May 2001; and
› the special dividend and share consolidation in May 2005,
or if you require any further information on capital gains tax
allocations, please refer to the investors’ section of the
Company’s website: www.whitbread.co.uk
Dividend payments by BACS
We can pay your dividends directly to your bank or building
society account using the Bankers’ Automated Clearing
Service (BACS). This means that your dividend will be in your
account on the same day we make the payment. Your tax
voucher will be posted to your home address. If you would
like to use this method please ring the registrars on
+44 (0)344 855 2327.
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Whitbread Annual Report and Accounts 2020/21Strategic reportGovernanceFinancial statementsOther information
SHAREHOLDER SERVICES CONTINUED
Shareholder FAQs
Where can I find information about B and C shares?
As outlined in the original circulars, the Company made two
separate purchase offers for the B and C shares. There will be
no further purchase offers. The Company does have the right
to convert the B and C shares to ordinary shares, but there is
no current intention to do so. The B and C shares will continue
to attract an annual dividend payment.
How can I find the current share prices?
You can keep up to date with the current share price at the
Company’s website: www.whitbread.co.uk.
I have lost my share certificate, how can I get a replacement?
If you have lost your certificate please contact the Company’s
registrars, Link Asset Services, on the shareholder helpline
+44 (0)344 855 2327. They will be able to assist you in
arranging a replacement.
Am I entitled to shareholder benefits?
Shareholders with a holding of 64 shares or more are eligible
to receive a shareholder benefits card. Those shareholders
who have previously registered to receive the shareholder
benefits card should automatically have received the card
with the Annual Report and Accounts mailing. Shareholders
who wish to register for a card can do so by contacting Link,
whose contact details are shown on page 210.
Unsolicited mail
We are aware that some shareholders have had occasion to
complain of the use, by outside organisations, of information
obtained from Whitbread’s share register. Whitbread, like
other companies, cannot by law refuse to supply such
information provided that the organisation concerned pays the
appropriate statutory fee. If you are a resident in the UK and
wish to stop receiving unsolicited mail then you should register
with the Mailing Preference Service; you can register online:
www.mpsonline.org.uk
Shareholder warning
In recent years, many companies have become aware that
their shareholders have received unsolicited phone calls
or correspondence concerning investment matters.
These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out
to be worthless or high risk shares in US or UK investments.
There operations are commonly known as ‘boiler rooms’. These
‘brokers’ can be very persistent and extremely persuasive,
and a 2006 survey by the Financial Conduct Authority (FCA)
reported that the average amount lost by investors is around
£20,000, with around £200m lost in the UK each year. It is
not just the novice investor that has been duped in this way;
many of the victims had been successfully investing for several
years. Shareholders are advised to be wary of unsolicited
advice, offers to buy shares at a discount or offers of
free company reports. If you receive any unsolicited
investment advice:
› make sure you get the correct name of the person or
organisation;
› check that they are properly authorised by the FCA before
getting involved by visiting www.fca.org.uk and contact the
firm using the details on the register;
› report the matter to the FCA either by calling 0800 111 6768
or visit www.fca.org.uk/scams;
›
if the calls persist, hang up; and
› REMEMBER if it sounds too good to be true, it probably is!
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation
Scheme (FSCS) if things go wrong.
The FCA can be contacted by completing an online form at
www.fca.org.uk/scams or you can call the FCA Consumer
Helpline on 0800 111 6768 or Action Fraud 0300 123 2040
(www.actionfraud.police.uk).
Details of any share dealing facilities that the Company
endorses will be included in Company mailings.
More detailed information on this or similar activity can be
found on the FCA website, www.fca.org.uk/consumers.
212
Whitbread Annual Report and Accounts 2020/21 Consultancy, design and production
www.luminous.co.uk
Design and production
www.luminous.co.uk
Printed by Park Communications
on FSC® certified paper.
Park works to the EMAS standard
and its Environmental Management
System is certified to ISO 14001.
Whitbread Court
Houghton Hall Business Park
Porz Avenue
Dunstable
Bedfordshire
LU5 5XE
www.whitbread.co.uk/investors