Annual Report and
Accounts 2021/22
REST EASY WITH
PREMIER INN
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INTRODUCTION
A focused hotel group
Whitbread has emerged from the COVID-19 pandemic in
a position of strength, bouncing back strongly in the year
and returning to profitability.
Our unique vertically integrated operating model gives us
a sustainable platform to outperform in the structurally
attractive markets in which we operate, built on our scale,
brand strength, direct distribution and our leading customer
offering. We have a long track-record of generating a strong
return on capital for our shareholders, all the while staying
true to our Force for Good ambitions.
Our trading momentum in the UK is strong, and we are rapidly
expanding our footprint in Germany. We enter the year ahead
in a strong position to succeed.
Why we do it
Our Force for Good sustainability programme
focuses on enabling people to live and work
well, whilst having a positive impact on the
world around us
From booking to bed, we're here to help you
rest easy
https://www.premierinn.com/gb/en/home
Our business at a glance
Doing more for our people
Doing more for our guests
Doing more for the planet
Strategic report
2
4
6
8
10 Chairman's statement
12
Chief Executive's review
16 A clear investment proposition
20 Market review
22 Our business model
24 Our strategy at a glance
26 Strategy in action
30 Chief Financial Officer's review
34 Chief People Officer's review
36 Force for Good
48
Task Force on Climate-Related
Financial Disclosures
Stakeholder engagement
50 Section 172 statement
51
55 Non-financial Information statement
56 Principal risks and uncertainties
61
Viability statement
Corporate governance
Governance
62 Corporate governance at a glance
64
68 Board of Directors
70 Executive Committee
76 Culture at Whitbread
78
Q&A with non-executive
director Kal Atwal
80 Audit Committee report
84 Nomination Committee report
87 Remuneration Committee report
90 Remuneration at a glance
92 Directors' remuneration policy
101 Annual report on remuneration
112 Directors' report
118 Directors' responsibility statement
119 Assurance statement
121
Independent auditor's report
135
Consolidated accounts 2021/22
133 Consolidated income statement
133 Earnings per share
134
Consolidated statement
of comprehensive income
Consolidated statement
of changes in equity
136 Consolidated balance sheet
137 Consolidated cash flow statement
138
Notes to the consolidated
financial statements
Whitbread PLC Company accounts 2021/22
193 Company balance sheet
194
Company statement of changes
in equity
Notes to the Company
financial statements
195
Other information
206 Glossary
207 Alternative performance measures
211 Shareholder services
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Whitbread Annual Report and Accounts 2021/22 1
FINANCIAL PERFORMANCE
Revenue
UK Market share1
£1,703m
10%
2020/21 £590m
2020/21 11%
Adjusted operating
profit/(loss)†
Statutory operating
profit/(loss)
Operating cash and
cash equivalents
£153m
£227m
£1,132m
2020/21 (£487m)
2020/21 (£839m)
2020/21 £1,256m
Adjusted (loss)
before tax†
Statutory profit/
(loss) before tax
Total cash
capex UK†2
Total cash capex
Germany†3
(£16m)
£58m
£171m
£90m
2020/21 (£635m)
2020/21 (£1,007m)
2020/21 £132m
2020/21 £99m
Adjusted basic
(loss)/earnings
per share†
Statutory basic
earnings/(loss)
per share
Final dividend per
share
(2.5)p
21.1p
34.7p
2020/21 (287.6p)
2020/21 (481.9p)
2020/21 0.0p
Net cash/(debt)†
Operating cash flow†
£141m
£404m
2020/21 (£47m)
2020/21 (£489m)
† See pages 207 to 210 for definitions of alternative
performance measures
1 STR data, revenue share of total UK market
2 FY22 includes £1.8m loans advanced to joint ventures
3 FY22 includes £36.3m payment of contingent
consideration (FY21: £3.8m) and £1.4m capital
contributions to joint ventures (FY21: £1.3m)
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Strategic reportGovernanceFinancial statementsOther information Our Business at a Glance
2
Overview
UNITED
KINGDOM*
Read more on
pages 26 and 27
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.
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.
Number of rooms1
82,286
2020/21: 78,718
Number of rooms
in pipeline1
8,332
2020/21: 12,256
I
H
C
A
O
R
P
P
A
E
U
Q
N
U
A
Our ambition
To be the world’s best budget hotel brand
Our 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, we will provide meaningful work,
skills and career development opportunities
for our teams
GERMANY
Read more on
pages 28 and 29
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 continue to grow at pace in Germany, with 37
operational hotels and a committed pipeline of 41 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
5,875
2020/21: 4,880
Number of rooms
in pipeline1
8,454
2020/21: 8,420
*
Includes one site in each of Jersey, Guernsey and the Isle of Man and two sites in Ireland
1 As at year end 3 March 2022
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Whitbread Annual Report and Accounts 2021/22
3
Our values
Genuine
Really caring about
our customers
Confident
Striving to be the
best at what we do
Committed
Working hard
for each other
Our hotel brands
OPPORTUNITY
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
We will have industry-leading training and
development schemes
Team member wellbeing will be considered in
everything we do
Read more about our opportunity pillar on pages 4 and
5 and pages 40 to 43
COMMUNITY
Making a meaningful contribution to the customers
and communities we serve
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
Read more about our community pillar on pages 6 and
7 and pages 44 and 45
RESPONSIBILITY
Always operating in a way that respects people
and the planet
We will source responsibly and with integrity
We will reduce our environmental impact
We will always do business the right way
Read more about our responsibility pillar on pages 8
and 9 and pages 46 and 47.
Information on our sustainability programme, Force for
Good, is integrated throughout the report and can be
found by looking for the logo above
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.
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, you
get a small room, a simple stay and, best of all, a price to match.
Our food and beverage brands
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 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.
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information OPPORTUNITY
OPPORTUNITY
4
WE VALUE
DIFFERENCE AT
WHITBREAD
This year we have accelerated our progress against
our eight Diversity and Inclusion commitments, which
launched in autumn 2020. There is more detail on this
on page 41.
DOING
MORE
PEOPLE
FOR OUR
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Whitbread Annual Report and Accounts 2021/22 5
Listening to our teams has been a
crucial part of our COVID-19 response
We have continued to listen to our teams
throughout this year, ensuring their safety
and wellbeing is our priority.
Read more on page 35
We have invested in operational
team pay and reward
This investment into pay recognised the
significant effort of our teams throughout
an operationally challenging year.
Read more on page 34
At Whitbread, our people are
at the heart of what we do, and
this has really been demonstrated
throughout the COVID-19 pandemic
Recognised as a Top Employer
by the Top Employers Institute
for the 12th consecutive year
Ranked 24th in the Financial
Times Diversity Leaders Index
Rachel Howarth
Chief People Officer
Received a Gold Award for
Excellence in the Stonewall
Workplace Equality Index 2022
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information COMMUNITY
COMMUNITY
6
SIGHT AND
SOUND CENTRE
FOR CHILDREN
In July the doors of the Great Ormond Street Hospital
Sight and Sound Centre, supported by Premier Inn,
opened. This is the UK’s first dedicated medical facility
for children with sight and hearing loss and was made
possible by the fundraising of team members and supply
chain partners. Read more on page 45
DOING
MORE
GUESTS
FOR OUR
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Whitbread Annual Report and Accounts 2021/22 7
Supporting local charities through
food donation
We have continued our partnership with charities
such as FareShare to donate food where we have
a surplus. Not only does this provide much needed
assistance to those in need, but it also minimises
the generation of food waste.
Supporting local economies
through new openings
We donate volunteer hours to community
projects with each new site opening and
track the number of jobs each new site creates.
Read more on page 45
£20 million raised for Great
Ormond Street Hospital Children’s
Charity over ten years
Peas Please Pledgers
We have been working hard over the year to
reduce the sugar and calories in our meals,
and are pleased to retain our Peas Please status.
Read more on page 44
784 new jobs created
through new site openings
Over 620,000 meals
donated to local charities
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Whitbread Annual Report and Accounts 2021/22
8
RESPONSIBILITY
RESPONSIBILITY
ACCELERATING
OUR NET ZERO
AMBITION
This year we committed to reduce our carbon
faster! In the run up to COP26 we signed up to the
Race to Zero pledge and pulled our net zero target
for scope 1 and 2 forward from 2050 to 2040, which
is aligned to a 1.5 degrees pathway. We also set new
targets for our scope 3 emissions and will be working
with our suppliers to reduce emissions by 50% by 2035
and 64% by 2050.
DOING
MORE
FOR THE
PLANET
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9
Green Bond allocation
We have allocated over £404 million of the
Green Bond, which we issued last year. An industry
first, the proceeds have been allocated against
our green energy, sustainable procurement and
green building projects.
Read more on page 47
Task Force on Climate-Related
Financial Disclosure
We have published our first full report against
TCFD guidelines, helping us to understand the
key risks, opportunities and potential impacts
of climate change.
Read more on pages 48 and 49
32.3% reduction in food waste
We have continued to reduce food waste across
the business and have now reduced it by 32.3%
against our baseline year. This is a result of
increased efficiencies as well as donating
surplus food to charity.
Read more on page 47
We have reduced our
carbon emissions by 50.1%
since our baseline year
Scope 3 carbon target
set across supply chain
99.9% of our UK operation's
waste diverted from landfill
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Chairman’s statement
10
STRONG
DELIVERY
Adam Crozier
Chairman
£20m
Raised for
Great Ormond Street
Hospital Children's
Charity
In my report to you this time last year,
I concluded by saying that we were optimistic
for a better year ahead and that we hoped our
business would be fully reopened by May 2021.
Looking back, I am pleased to report that we
were right to be optimistic and that, for much
of the year, we have been able to operate
with a good level of normality. However, as
we all know, it has still been a bumpy ride,
with differing levels of restriction being
implemented in the four countries of the
UK and, of course, in Germany.
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Whitbread Annual Report and Accounts 2021/22 Against this difficult backdrop, Whitbread produced an excellent
performance, outperforming the competition and moving back
to profitability. Whilst we are optimistic now that we may have
seen the last of the lockdowns here in the UK, significant
challenges remain and we continue to navigate both supply
chain issues and inflationary headwinds.
Once again, our teams across the UK and Germany have done
a magnificent job in trying circumstances. They have remained
adaptable to constant change and continued to deliver an
excellent service to our guests. I am delighted that we have
been able to reward them with both a summer bonus and an
increase in hourly pay by a minimum of 5%. As well as giving
team members a well-earned reward this has, of course, enabled
us to remain attractive in a very competitive labour market.
Performance
The statutory profit before tax of £58.2 million benefited from
£170.8 million of COVID-related Government support schemes
in the UK and Germany, and £74.0 million of adjusting items
credits (including £33.2 million profit from property disposals,
and £42.0 million of property impairment reversals).
The Group retains a strong balance sheet and liquidity position,
with a cash inflow before debt repayments of £80.3 million in
the second half. Net cash at the end of the year was
£140.5 million. This balance sheet position is enabling
investment in our comprehensive growth strategy.
As a result of this performance, the Board recommends a final
dividend of 34.7 pence per share. The final dividend will be paid
on 1 July 2022 to shareholders on the register on 27 May 2022.
The Dividend Reinvestment Plan will operate. Details of how to
participate in this plan can be found on the Company’s website.
Details of the Group’s dividend policy can be found in the Chief
Financial Officer’s review on page 31.
Force for Good
Force for Good continues to drive forward our social and
environmental agenda. This year we have been working hard
to deliver against our targets and continue to seek out new
opportunities to reduce our impact on the environment and to
ensure we are doing our best for our people and the communities
we operate in. As well as signing up to Race to Zero and bringing
forward our commitment to reach net zero carbon for our scope 1
and 2 emissions by ten years to 2040, we have also set our targets
to reduce our Scope 3 emissions. Another stand out for me has
been the external recognition of our diversity and inclusion work,
with awards from Stonewall, the Financial Times Diversity Index
and most recently the FTSE Women Leaders Index.
This year we also hit our £20 million target with our charity
partner, Great Ormond Street Hospital Children’s Charity (GOSH
Charity). This has been a big year for our partnership with
GOSH Charity, as we have also undertaken a charity review to
select our next charity partner, through a Company-wide vote.
Our teams told us they wanted to remain with GOSH Charity.
We are looking forward to continuing to work with them over
the coming years and supporting the world class care they
offer to some of the children who need it the most.
However, as we have seen the humanitarian crisis unfold in
Ukraine, we have taken the decision to divert all fundraising
activities towards the Disasters Emergency Committee (DEC) to
support this and help to raise funds for the many people who have
been impacted by this tragedy. From the end of March 2022, for
three months, we will ensure all funds raised go to DEC.
You can read more about the work that we do and our targets
in the Force for Good section on pages 36 to 49.
11
Annual general meeting (AGM)
It is three years now since we were able to gather in person for our
AGM, but I am pleased to say that, barring any unforeseen setbacks,
it is our intention to hold our AGM in person again this year.
Last year we worked hard to ensure that shareholders were fully
able to participate in our AGM electronically and the technology
worked well. We want to give as many of our shareholders the
opportunity to attend the meeting as possible and we therefore
intend to continue to offer the opportunity to attend electronically,
so that there is a choice as to how to attend.
The AGM will take place at 2.00pm on Wednesday 15 June 2022
at Whitbread Court, Porz Avenue, Dunstable LU5 5XE. I very
much look forward to seeing you there or, if you prefer, to your
attendance via the online platform.
The Board
On 31 August 2021, Louise Smalley retired from Whitbread and
stepped down from the Board after 26 years at the Company.
Louise held a variety of key transformation and HR roles across
Whitbread, including HR Director of David Lloyd Leisure and
Whitbread Hotels & Restaurants, before becoming Group HR
Director in 2007 and joining the Board in 2012.
Nicholas Cadbury stepped down from the Board on 21 March
2022 after nine years’ service as Group Finance Director. Nicholas
has played a key role in ensuring that we grew the Company
profitably and, in more recent times, he has helped us to emerge
from the pandemic strongly with a platform to succeed.
I would like to thank both Nicholas and Louise on behalf of the
Board for the significant contribution they made to Whitbread.
Joining the Board is our new Chief Financial Officer, Hemant
Patel. Hemant has been with the Company for the last three
years, he knows our business very well and brings a wealth
of experience to the role, with considerable commercial and
operational expertise. Since joining us, Hemant has made a
major contribution to the UK business and has worked skilfully
across multiple areas of responsibility. Hemant is also a non-
executive director and Chair of the Audit and Risk Committee
of the Department for Digital, Culture, Media and Sport.
Governance
Strong corporate governance is always vital to the success of
a company, but even more so during times of crisis. We have
continued to take our governance processes very seriously
throughout the pandemic and I believe this has stood us in
good stead as we come out the other side. In the governance
section of this year's report you will find a new section on how
we have monitored Whitbread's unique corporate culture at
Board level on pages 76 and 77.
It has been a particularly complex period for the Remuneration
Committee as it has balanced the need to incentivise and
appropriately reward the executives with the need to remain
mindful of the difficulties faced by our stakeholders and the
support received from Government. I believe this balance has
been achieved and Frank Fiskers explains more about this on
pages 87 to 89.
The year ahead
We go into the new financial year with renewed optimism.
Whilst 2021/22 was bumpy at times, we were able to make
excellent progress and we look forward to the year ahead
with confidence that we are well positioned to succeed.
Adam Crozier
Chairman
27 April 2022
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Chief Executive’s review
12
INVESTING
TO WIN
Alison Brittain
Chief Executive Officer
We invest in growth and innovation
Consistent, high quality customer offering
Germany
37
open Premier Inn
hotels1
6,339
total number
of rooms1
1 As of April 2022.
UK
30
new Premier Inn
hotels
1,645
new Premier Plus
rooms
#1
Travel brand for UK
consumers in the YouGov
Travel Brand & Destination
Rankings Report 2022
Winner of the YouGov "Best Value Hotel
Chain" for the 11th year running
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Whitbread Annual Report and Accounts 2021/22 Whitbread’s performance in the year was strong, with revenues
and profits recovering exceptionally well from last year. Our
hotels traded well ahead of the market in the UK driven by our
‘investing to win’ commercial initiatives and the strong appeal of
our customer offer. As restrictions eased after the first quarter,
high levels of leisure demand and improving business demand
helped drive UK accommodation sales ahead of pre-COVID levels
throughout the summer and into autumn, with sales remaining
resilient through the fourth quarter despite the emergence of the
Omicron COVID variant. As we move into the next phase of our
COVID recovery, this excellent performance, combined with
confidence in the Group’s outlook, means that the Board is now
proposing the reinstatement of dividend payments.
Our teams
Our teams are the most important part of our business, enabling
us to deliver our winning customer proposition and drive our
excellent business performance. A combination of very high
occupancy levels, supply chain issues, and market-wide labour
shortages made last year’s operational environment challenging.
I am extremely grateful to our teams who responded brilliantly
and delivered an outstanding performance, as evidenced by our
recovering revenues and our strong guest and brand scores.
We believe a talented, motivated and diverse team is critical
in delivering our very high levels of customer service and
experience. We have no barriers to entry when recruiting
new team members, and no limits to ambition when team
members progress through the business.
We are committed to supporting our teams in their mental,
physical and financial wellbeing. We have invested in our team
members' pay, including an additional pay increase in October
2021, and in an “end of summer” bonus for colleagues to thank
them for their efforts through our busiest period. We continue
to invest in our training and development programmes and
have expanded our wellbeing support, including the provision
of mental health first aiders and support services. We are
delighted that 85% of our employees are proud to work for
Whitbread and we have been recognised as a “Top Employer”
for the 12th year running.
13
Our customers
We put our customers at the heart of our business and
everything we do is aimed at providing them with a great
experience in our hotels and restaurants, while ensuring their
safety and comfort. We invest in new hotels in new locations,
and in new formats and services, to ensure that our offer remains
first choice for both our business and leisure guests. Our winning
customer proposition is built on choice, value, quality, service and
high hygiene standards, and our flexible booking policy provides
peace of mind, allowing customers to book with us in uncertain
times. We have very high guest scores, and market-leading brand
and value for money ratings. Premier Inn has a long track-record
of winning industry awards in recognition of our customer focus,
and we have also taken the top spot in some new awards for the
first time this year.
2021/22 financial performance – a return to profitability
2021/22 adjusted loss before tax of £15.8m compares to a loss of
£635.1m in 2020/21, largely reflecting the strong recovery the
business has delivered with 2021/22 statutory revenues 189%
ahead of the prior year.
Government restrictions remained in place into the start of
this financial year, with our hotels closed to all but essential
business guests for the vast majority of the first quarter.
However, following the relaxation of restrictions from mid May
2021, our subsequent revenue recovery was very strong, with
sales recovering to, and then exceeding, pre-pandemic levels
in the UK. Premier Inn’s total UK accommodation sales growth
also continued to outperform the midscale and economy market,
with 2021/22 total sales growth 14.8pp ahead of the market, and
17.3pp ahead in the second half.
Our winning customer
proposition is built on choice,
value, quality, service and
high hygiene standards.
Consistent, high quality customer offering
We value difference at Whitbread
Diversity and Inclusion continues to be an important
topic across society, and I am proud that over the last
12 months we have really accelerated our progress
against our eight Diversity and Inclusion commitments.
This has been demonstrated through our external
recognition by Stonewall, the Financial Times Diversity
Index and the FTSE Women Leaders Index.
These commitments have given us a tangible set of actions,
ensuring we are championing inclusion as well as driving
diversity. I’m encouraged by the progress we’ve made
over the last year and, as a business passionate about
being a Force for Good, we know there is more to do to
demonstrate that we value difference.
Read more about the progress we have made
against our D&I commitments on page 40
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Chief Executive’s review continued
This strong sales performance, combined with the benefit of
Government support and some adjusting items, has enabled the
Group to record a small statutory profit before tax in 2021/22, an
improvement of over £1 billion loss in the previous year. While this
is still behind 2019/20 pre-pandemic statutory profit before tax
of £280.0 million, the strength of our revenue recovery means we
are confident of a return to pre-pandemic UK profit levels and
profit margins, despite the inflationary cost headwinds that
we currently see in the market.
Total UK food and beverage sales were 163.4%1 ahead of 2020/21,
but 32.7%2 behind 2019/20 reflecting the fact that all restaurants
were closed from the start of the year until 12 April, when
outdoor service only was permitted in England. The estate
was largely re-opened on 17 May, with total food and beverage
sales improving to 13.3%2 behind 2019/20 levels in the second
half of the year, as the pub and restaurant value-sector sees a
slower return to pre-COVID levels.
Premier Inn Germany total accommodation sales were 176.5%1
ahead of 2020/21 reflecting the rapid growth in the size of the
estate. The German market operated under higher levels of
restrictions than in the UK, that acted as a significant drag on
market demand throughout the year. During the summer, when
restrictions were minimised, we saw good trading momentum,
especially in those destinations with a greater leisure exposure,
such as Berlin, Freiburg and Hamburg.
Optimistic outlook
As we move through the year in the UK, and in the absence of
further COVID restrictions, we expect international inbound
demand to increase, alongside recovering office-based corporate
demand, complimenting the already high levels of leisure and
business trade demand. We have good visibility throughout the
first quarter and somewhat into the second quarter, however the
short booking lead-time nature of our business means we have
much less visibility into the second half of the year.
In our restaurants, we anticipate that the rollout of new menus,
combined with targeted marketing initiatives, will help drive an
improvement in food and beverage sales as we move through
the year.
Well publicised cost inflation in 2022/23 is anticipated to be
above historic average levels at c.8-9%. We expect to be able
to offset some of these higher levels of inflation through our
extended cost efficiency programme, estate growth and
pricing opportunity.
Our ability to take market share through estate growth and the
increased pressures faced by competitors, and our wide-ranging
investment in commercial initiatives, will drive revenue growth
and operating leverage improvements. Our pricing power in an
inflationary cycle, the revenue uplift from our refurbishment
programme and investment in Premier Plus rooms, the higher
profitability of new hotels and our long-standing cost reduction
efficiency programme, combine to give a substantial profit
margin potential. We expect this to enable a return to pre-
pandemic UK profit margins in the medium term, and to drive
attractive returns on capital deployed.
In Germany, COVID restrictions have continued to act as a
headwind in the German hotel market into the new financial year.
While restrictions are reducing from the beginning of April 2022,
the market is still some way behind pre-COVID levels. The weaker
market will dampen our trading performance in the short term
and combined with the maturity impact of our new estate, will
adversely impact profits. As we move into summer, we expect
a rebound in leisure demand, and a steady build in business
demand, and there is no change in our very positive view of
the medium and long-term value creation opportunity for
Premier Inn in Germany.
1 Versus FY21 on a 52 week basis.
2 Versus FY20 on a 52 week basis.
14
Our teams are the most important part of the business.
Strong balance sheet and dividend restoration
The Group’s strong asset backed balance sheet, with net cash
of £140.5 million and accessible cash of £1,132.4 million at the
end of the year, enables the Group to invest in growth and the
Premier Inn proposition when others will be constrained. As the
business continues to recover, we also expect to return to
investment grade leverage metrics. We are “investing to win”
in new hotels, new room products, our IT platforms and in
marketing, helping to deliver sustained growth in both the UK
and Germany. Our strong balance sheet provides us with the
flexibility to execute acquisitions in Germany, further accelerating
our growth. At all times, we operate with capital discipline,
ensuring the optimal use of capital to drive the best returns
for shareholders.
The combination of the Group’s strong balance sheet,
encouraging trading and confidence in the outlook means
that dividend payments will now resume, with the Board
recommending a final dividend per share of 34.7p resulting
in a total dividend payment of £70m, payable in July 2022.
Clear and consistent strategy
We continue to execute a clear and consistent strategy
to grow and innovate in the UK, to focus on our strengths
to grow in Germany and to build the capabilities required
to support our growth over the long term.
The budget branded hotel sector in which we operate is
historically the highest growth segment in the hotel market.
It has proved more resilient in previous downturns and is also
outperforming the rest of the hotel market during this recovery
period. Premier Inn has historically been a net beneficiary from
consumers “trading down” in times when consumer spend has
tightened. Prior to the onset of the COVID pandemic, in 2019 the
independent sector still represented 48% of the UK market and
72% of the German market, but both were in long-term decline
as customers migrate from independent to budget branded
hotels. We now have evidence that the number of independents
exiting the market has increased significantly from historic levels,
undoubtedly as a result of the pandemic. The Group expects
that a heightened level of independent exits will continue for the
next 12-36 months, and that this pattern will also be evidenced
in Germany. Premier Inn is well-placed to capitalise on this
contraction in competitor supply and to take market share
in both these markets.
The Group has a long runway for growth in the UK, with detailed
network planning supporting a network target of at least 110,000
rooms, representing a growth opportunity of over 33% compared
to our current UK estate of over 82,000 rooms. We hold a uniquely
advantaged position in the UK market as the largest operator with
the strongest brand, alongside our direct distribution, best-in-
class operating model and broad customer reach. Furthermore,
backed by our strong balance sheet, we have invested through
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The Group's flexible
balance sheet has enabled
a programme of investment
in expansion and commercial
initiatives that are driving
market share gains.
Force for Good
Whitbread’s sustainability programme, Force for Good, is
embedded across our business functions, ensuring that being a
responsible business is integrated across our operations, which is
crucial to our long-term success. It is an ambitious programme,
with the overarching objective to enable everyone to live and
work well. Following another challenging year, we are proud to
have kept our Force for Good commitments and ambition central
to our response and how we rebuild after the global pandemic
has been of critical importance to us.
During the year we set further stretching targets, including
accelerating our net zero carbon target to be achieved by 2040,
and setting eight clear Diversity and Inclusion commitments,
including a target of 40% female representation in our senior
leadership roles, which we have already surpassed. We are
making good progress across our ESG agenda and have
worked hard to ensure it is fully embedded within the
operations of the business.
Continued focus
Whitbread celebrates being 280 years old this year and is a
strong and much-loved business, reaching a broad range of
customers with the largest network of hotels and restaurants.
We will continue to focus on our customers, colleagues, suppliers
and the communities we serve, as we continue to grow and
develop our Company.
As we move into the next phase of our post pandemic recovery,
Whitbread is well-placed to enhance our market leadership
position further in the UK, to accelerate our growth in Germany,
and drive long-term value for all our stakeholders.
Alison Brittain
Chief Executive
27 April 2022
the cycle, in new hotels, Premier Plus rooms and high levels of
refurbishments, ensuring we maintain our stand-out customer
proposition in the budget sector. This, combined with the
evidence of an acceleration of supply contraction within the
independent hotel sector, presents Premier Inn with the
opportunity to accelerate its market share gains.
The hotel market in Germany is recovering at a slower pace than
the UK due to the higher level of Government restrictions which
have lasted longer. However, we have no reason to believe the
market won’t come back strongly in due course. With our open
hotel estate now standing at 37 hotels, all now branded Premier
Inn, with a further 41 hotels in the pipeline, the foundations of a
successful business are already in place. We have great quality
hotels in prime locations, appealing to a broad customer base,
and scoring highly with our guests. The opportunity for the
Group to create value in Germany remains compelling as we
look forward to being able to fully trade the estate, in the majority
of cases for the first time, in the absence of Government restrictions.
We will also continue to take opportunities to grow our German
estate and deliver attractive long-term returns.
The 'Rest Easy' multi-channel marketing campaign launched
in April 2021.
Investing to win
The Group’s flexible balance sheet has enabled a programme
of investment in expansion and commercial initiatives that are
driving market share gains. The “Rest Easy” multi-channel
marketing campaign launched in April 2021 helped to further
improve our already high brand recognition scores and drive
increased numbers of customers to the Premier Inn website.
Our investment in refurbishment will ensure that our hotel
estate remains well-invested, at a time when others will be
constrained. We now have over 2,000 Premier Plus rooms
and will roll-out a further 1,200 in the coming year. These
upgraded rooms were initially targeted at business customers,
but they have also proved popular with our leisure guests and
are delivering a good uplift in room rates. We are extending our
business customer reach through an improved business booker
portal and utilising a wider network of travel management
companies, and we will also continue to invest in our IT
platforms, helping further enhance our digital capability,
including a new customer relationship management platform
that will be introduced in the next two years
In Germany, we have invested in growth, with the estate growing
in a transformational way during the COVID pandemic. At the
start of the pandemic we had six open hotels, and through a
combination of bolt-on M&A activity and rapid organic growth,
our estate now stands at 37 open hotels, and a total open and
committed estate of 78 hotels.
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A CLEAR
INVESTMENT
PROPOSITION
Continuing to grow and innovate in the UK
Read more on pages 26 and 27
UK’s largest hotel chain
Premier Inn is the UK’s largest hotel chain, with over 82,000 rooms in 841 hotels located across
the UK, meaning that customers are never far from a Premier Inn. Our vertically integrated model
provides increased control of network planning and property development, meaning we can
efficiently access locations where there is opportunity to expand and ensure we have more hotels
in locations where our customers want to stay. We can also leverage our network to drive
economies of scale. With just over 35,700 employees across our UK hotels and restaurants,
we serve over four million customers every month.
UK’s favourite hotel brand and winning customer proposition
The Premier Inn brand is synonymous with good value, high-quality rooms in desired locations
and great customer service. Full ownership of the brand helps create a consistently high-quality
customer offering across our entire hotel network, helping drive market-leading customer scores.
In the most recent YouGov hotel BrandIndex survey1, Premier Inn was voted number one for
customer satisfaction, impression, value and likelihood-to-recommend. We are well positioned
to take market share as customers seek value, quality, and the familiarity of their most
trusted brands.
Best-in-class operations
Our unique operating model provides a clear competitive advantage. Ownership of all aspects
of our hotel operations ensures greater control over the customer experience and delivery
of a winning customer proposition, providing our guests with more choice, value for money,
outstanding product quality and excellent customer service. We are continually evolving our
estate through innovative new products such as hub by Premier Inn and Premier Plus, ensuring
supply meets changing customer demands. All of our hotels have a bar and restaurant, either
within the hotel or located next door. Our restaurants are core to our overall customer offering,
helping drive higher RevPAR in our hotels. The success of this operating model is clearly
evidenced by our high levels of internal promotions and excellent customer satisfaction scores.
1 Source: YouGov BrandIndex Satisfaction, Impression, Value, Recommended & Quality scores as at 3 March 2022 based on a
nationally representative 12 week moving average
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S
t
r
a
t
e
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c
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p
o
r
t
Industry-leading direct digital distribution model
Over 99% of Premier Inn's UK room reservations are booked directly with us. Direct distribution
provides complete ownership over the customer relationship and drives significantly lower
acquisition and retention costs, unlike many of our competitors, who incur high commission
rates to third parties.
Broad customer reach
Premier Inn’s UK customer base is very broad, with a roughly even split of business and leisure
customers, ensuring we are not over exposed to any one type of customer, and helping drive high
occupancy levels. Around half of our business customers are non-office based, i.e. those workers who
need to be physically present to perform their jobs, while our office-based guests tend to travel for
business-to-business reasons. Premier Inn has relatively few 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 and family, through to
those taking longer holidays in our tourist destinations. 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 have recovered quickest from the pandemic.
Regions vs London
Domestic vs inbound
Leisure vs business
Trades vs office-based
Premier Inn
Premier Inn
Premier Inn
Premier Inn
PI regions
PI London
83%
17%
PI domestic
PI inbound
90%
10%
PI leisure
PI business
50%
50%
PI trades
PI office-based
50%
50%
Market
Market
Market
Market
Market regions
Market London
71%
29%
Market domestic
Market inbound
63%
37%
Market leisure
Market business
56%
44%
Greater proportion of office-based
Source: PI data for the 12 months ending Feb 2022. Market for calendar year 2019, based on room nights sold.
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A Clear Investment Proposition continued
18
Growing at scale in Germany
Read more on pages 28 and 29
Replicate success of Premier Inn UK
Our aim is to be the number one budget hotel operator in Germany, by leveraging the strengths
and capabilities of our UK business. The German operating model replicates that used so
successfully in the UK, built on operational control and a flexible approach to property.
Ambition to be the leading budget hotel brand in Germany
The total open and committed pipeline in Germany stands at 14,329 rooms across 78 hotels, with
5,875 rooms open in 35 hotels at the end of the financial year (equivalent to 1% market share).
In Germany, we are growing at pace, investing in both organic and inorganic growth, and building
the Premier Inn brand proposition as we establish a nationwide footprint. As the estate continues
to grow, we are focusing on brand building, with nationwide marketing campaigns and new
corporate relationships supplementing effective localised brand campaigns. The quality of the
hotel and room offering, which is driving high customer scores, is also a key component in driving
brand awareness.
Significant headroom to grow
Premier Inn continues to grow its German pipeline and we believe that 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. We are pursuing an aggressive growth strategy in the German
market, both organically and inorganically, as we look to rapidly establish our footprint and are
confident of the opportunity to acquire assets at prices that will drive good returns.
February 2021 German portfolio
April 2022 German portfolio
30
Open
42
Pipeline hotels
37
Open
41
Pipeline hotels
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S
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p
o
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t
Enhancing our capabilities to support long-term growth
Read more on pages 30 to 33
Financial flexibility
The Group’s strong balance sheet, with net cash of £140.5 million and accessible cash of
£1,132.4 million at the end of the year, supports our investment grade leverage metrics and
enables us to invest in growth whilst others are constrained. We are ‘investing to win’ in new
hotels, new room products, IT platforms and marketing, helping to provide a platform for
sustained growth in both the UK and Germany. Our balance sheet also provides the flexibility to
execute bolt-on M&A deals in Germany, further accelerating our growth. At all times, we operate
with strict capital discipline, ensuring the optimal use of capital to drive the best returns.
Asset-backed balance sheet
The Group owns 56% of its hotel estate, with the remaining 44% operated through leaseholds.
Freehold ownership provides control over the initial development of the hotel, and subsequent
maintenance and redevelopment. Our strong balance sheet, high levels of liquidity and flexible
property portfolio provides a source of funding during periods of volatility. A flexible approach
to freehold or leasehold acquisitions also ensures new sites are in the best locations and have
the optimal size and format.
Lean and agile cost model
Whitbread has a long track record of delivering material cost efficiencies, with £315 million of
savings delivered between 2016/17, when the programme was launched, and 2021/22. Market-wide
inflationary pressures mean the focus on cost control has never been more important. Our three-
year £100 million cost saving programme, initially announced in April 2021 with a completion date
by the end of 2023/24, has now been extended to achieve £140 million (+£40 million) by 2024/25.
We are making good progress, with this target being achieved through developing our international
sourcing capability, investing in our technology platforms and embedding a flexible operating model.
The opportunity also remains for hotel catchment areas to be optimised, with around 8% of Premier Inn’s
rooms being in hotels smaller than 60 rooms. Managing existing demand in certain locations, through
a smaller number of extended or new, larger hotels, allows us to drive a more cost-efficient estate.
Operating responsibly and sustainably
Our long-established Force for Good programme covers large aspects of our ESG agenda
and ensures that doing the right thing is embedded in everything that we do. Force for Good
is a shared responsibility that operates across three key pillars: ‘opportunity’, ‘community’ and
‘responsibility’. The ambitions for this programme are illustrated by our stretching targets,
all of which hold us accountable for the change we seek to implement.
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20
MARKET REVIEW
We have a business
model that delivers an
unrivalled mix of quality
and value to millions of
customers and offers a
competitive advantage
in the budget, domestic,
short-stay market.
Premier Inn is emerging
from the COVID-19
pandemic in a position
of strength to take
market share.
Long runway for growth with
scale advantage
Prior to the COVID-19 pandemic, we
identified the potential for Premier Inn
to grow to 110,000 rooms across the UK.
Constraints amongst our competitor sets,
as a result of the COVID-19 pandemic,
mean this opportunity may be even
greater as competitor supply contracts.
Our scale in the UK allows us to leverage
our brand portfolio to ensure we have
the right hotel and restaurant offer by
location. Our new hotels are larger than
the estate average, more efficient to run,
and have better operating leverage.
THE UK MARKET1
67m
population
11%
713k
hotel rooms
48%
Premier Inn market
share of rooms
independent hotels market
share of rooms
Multi-year UK growth opportunity
678k rooms
713k rooms
6%
13%
24%
Premier Inn
Budget branded
Other branded
57%
Independents
2010
11%
17%
24%
48%
2019
UK hotel market is in long-term growth
We expect the UK hotel market to
continue to grow in the long term. Leisure
and travel are becoming more popular,
particularly amongst younger people, and
in the short term we continue to see the
release of pent-up demand following the
COVID-19 pandemic. The UK is densely
populated, driving domestic short-stay
travel for both business and leisure
purposes, making the UK a great core
market for Premier Inn.
Budget hotel market is
structurally advantaged
Within the UK hotel market, the budget
branded hotel sector is historically the
highest growth segment. It has proved
more resilient in previous downturns, and
is also significantly outperforming the
rest of the hotel market during the
post-pandemic recovery period.
Budget branded demand has grown
faster than the rest of the sector in
every year from 2009 to 2021.
Highly fragmented market and
accelerated independent decline
Between 2010 and 2019, Premier Inn
increased its market share of UK hotel
rooms from 6% to 11%, whilst over the
same period the independent sector
market share declined from 57% to 48%.
This illustrated the long-term customer
migration from independent to budget
branded hotels, from which Premier Inn
is well placed to capitalise. Initial signs
indicate that this contraction in
independent supply may have
accelerated as a result of the lower
demand for hotels throughout
the pandemic.
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THE GERMAN MARKET1
83m
population
1%
993k
hotel rooms
72%
Premier Inn market
share of rooms
independent hotels market
share of rooms
Significant structural barriers to entry
for asset-light operators
Limited new capacity has been added in
the budget sector in recent years as a
result of the structural barriers to entry
that exist in the German property market,
including fewer property financing
structures such as Real Estate Investment
Trusts (REITs). Greater opportunities in
the four- and five-star sector also exist
for asset-light models. Therefore
international asset-light operators have
struggled to find franchisees to operate
appropriate new hotel sites in the budget
sector. 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.
An even greater opportunity for
Premier Inn in Germany
As we exit the pandemic, the structural
opportunity for the Premier Inn brand in
Germany is even greater. We have been
able to invest and acquire assets at good
long-term returns to take our open and
committed pipeline to 78 hotels whilst
others have been constrained. There are
clear signs that the independent sector
is distressed, and we expect the
independent decline to be accelerated
across the next 18 to 24 months, allowing
us to take further market share. The
strength of our balance sheet and
covenant allows us to be agile and
undertake freehold, leasehold and
M&A deals as opportunities arise.
We believe the
opportunity to create
value in Germany
is significant and
our commitment to
this market will be
substantial.
Our investment in Germany will
allow us to continue to replicate
our UK success, enabling us to
become the number one budget
hotel operator in Germany and
deliver good long-term returns.
We have rapidly grown our
pipeline in Germany in the last
two years, with a network that
now stands at 37 hotels and
a total open and committed
pipeline of 78 hotels. This
network gives us a national
footprint, with a presence
across most major German
cities and towns.
Accelerated budget branded
RevPAR growth
The German market is around 40% larger
than the UK, providing plenty of room for
growth. Prior to the COVID-19 pandemic,
budget branded RevPAR had been
growing faster than the UK, at 2.3%
CAGR between 2015 and 2019
compared with 1.3% in the UK.
Independent market in
long-term decline
The German market is even more
fragmented than the UK, with
independent hotels making up 72%
of supply in 2019. As in the UK,
the independent sector is in long-term
decline as customers migrate from
independent to budget-branded hotels,
creating further opportunities for
market share gains.
Regional dispersion drives short-stay
domestic travel
Germany is more regionally dispersed
than the UK, due to its history and
federalised political and industrial
structure. This geographic spread drives
greater demand for short-stay domestic
travel, and is particularly business-led.
Therefore, there is a greater frequency
of travel by the type of customer that
Premier Inn excels at serving.
1 Source: Company data and estimates, data is 2019; the impact of COVID-19 means that 2020 & 2021 is not a representative year, and is therefore excluded from the date range.
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OUR BUSINESS MODEL
The UK’s biggest hotel brand
OUR PURPOSE
OUR VISION
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
To be the world’s best
budget hotel brand
THE VALUE WE CREATE
1
Brand strength
Premier Inn is regularly voted as the UK’s favourite hotel brand, with a consistent customer offering that is synonymous with
high quality, good value and great customer service.
YOUGOV BRANDINDEX1
Hilton
Marriott
Crowne Plaza
Best Western
Ibis
10
e
r
o
c
s
y
t
i
l
a
u
Q
35
30
25
20
15
10
5
0
05
2
Premier Inn
Holiday Inn
Airbnb
Holiday
Inn Express
Travelodge
15
20
25
30
35
40
45
Value score
3
Market-leading direct
digital distribution
Premier Inn has a market-leading direct
digital distribution model with 99% of
our bookings made directly through our
website. We have complete ownership
of the customer relationship and
therefore benefit from low customer
acquisition costs and high levels
of retention.
Property flexibility
By controlling and funding our property
development, we get the right hotels in
the right locations. Our flexible approach
to property ownership improves our
ability to manage our estate and make
decisions to optimise our network.
4
Scale/network
We are the UK’s largest hotel chain, with
an estate comprising of 841 hotels and
439 restaurants across the UK, 35 hotels
in Germany and 10 hotels in the Middle
East at the end of the financial year. Our
scale provides a diverse portfolio of
locations where our customers want to
stay and results in efficiencies through
economies of scale.
5
6
7
Best-in-class operational performance
We own all aspects of our hotel and
restaurant operations, ensuring greater
control over the customer experience.
We provide a high-quality offering at a
low cost and deliver this on a consistent
basis throughout the estate.
Lean and agile cost model
Whitbread has a long track record of
delivering material cost efficiencies.
Our efficiency programme ensures we
retain a lean and agile cost base, enabling
us to deliver both quality and value for
money for our guests and return on
capital for our shareholders.
Operating responsibly and sustainably
Our long-established Force for Good
programme covers large aspects of our
ESG agenda and ensures that doing the
right thing is embedded in everything
that we do.
1 YouGov Brand Index Quality & Value scores as at 3 March 2022 based on a nationally representative 52 week moving average.
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23
Strong capital discipline
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 high quality.
We have invested in our estate ‘through the cycle’ to ensure
we are well positioned to take market share whilst others are
constrained. We are pursuing an aggressive growth strategy
in the German market, both organically and inorganically, and
now have hotels in most major cities and towns. Our strong
balance sheet enables us to expand at pace and rapidly
establish our footprint, and we are confident of the
opportunity to acquire assets at prices that will drive
good returns.
THE PROFIT WE MAKE
Revenue
We are the largest budget branded hotel chain in the UK with
a growing presence in Germany and hotels in the Middle East.
Our unique model and leading market position in the UK puts
us in a strong position to continue to grow, both in the UK and
internationally. Our focus on maintaining market-leading guest
scores, alongside our dedication to excellent customer service,
means we rank very highly amongst our competitors on both
the value and quality we provide. Our hotel pricing strategy
enables 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.
How we profit
Whitbread is a business of scale, and therefore, as we grow,
a large proportion of our incremental sales convert to profit.
The business can leverage its network to drive economies
of scale, helping offset inflation alongside our cost efficiency
programme. We have a high discretionary free cash flow,
which allows us to continue to invest in our estate, execute
our growth strategy and maintain an attractive return on
capital for our shareholders.
THE VALUES WE SHARE
Our customers
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. At the start of the COVID-19
pandemic we introduced new booking types to give
customers more choice between fully flexible, semi flexible
and value orientated standard bookings. We also introduced
a flexible standard booking rate to allow for amendment of
dates. We strongly believe in helping our customers make
informed choices for a healthier life. We work closely with
Public Health England and continue to monitor our menus
to ensure we offer an excellent choice of healthy options, with
great quality, responsibly sourced, affordable food and drink.
We are passionate about the health and safety of our guests,
and all of our staff are fully trained to ensure our hotels and
restaurants are safe environments for our guests. Premier Inn’s
owner-operator model ensures that these standards and ways
of working can be rigorously enforced across the estate.
Our people
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. We ensure our people 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. We
have embedded 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 barriers to entry and no limits to ambition.
We champion inclusivity and improving diversity across the
entire organisation and we have set eight Diversity and
Inclusion commitments to ensure our teams feel supported
and engaged.
Our shareholders
Our focus on consistent returns from an expanding capital
base, combined with an ambitious growth strategy, create
substantial shareholder value. We have three priorities: to
grow and innovate in our core UK businesses to take market
share; grow at scale in Germany; and to enhance the capability
and infrastructure to support long-term growth. Our long-term
growth will be delivered through disciplined capital allocation
and a flexible approach to property ownership. This financial
strength and flexibility is key to deploying our strategy.
Our communities
Our hotels and restaurants are in hundreds of communities
across 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 a great place 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.
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Our Strategy at a Glance
PROVIDING SUSTAINABLE
LONG-TERM VALUE
We put our customers and teams at
the heart of everything we do. Our
strategy is to provide sustainable
long-term value for our shareholders
by growing our successful hotel and
restaurant brands in structurally
appealing markets, whilst delivering
an attractive return on capital.
CONTINUE TO GROW AND INNOVATE
IN THE UK AND TAKE MARKET SHARE
Premier Inn’s strategy is
underpinned by its Force for Good
programme
Read more on Force for Good on pages 34 to 49
Premier Inn has a current UK estate of 82,286 rooms, with
a committed pipeline of 8,332 rooms and line of sight of
110,000 rooms. We look to maintain our position as one of the
world’s leading budget branded hotels through increasing the
size of our estate and optimising our existing network. The
advantages of our operating model, the strength of the
Premier Inn brand, and our market-leading direct distribution
model will enable the Group to deliver substantial market
share gains in the UK. We remain focused on maintaining
market-leading guest scores and upholding our competitive
position in terms of both value and quality through the
strength of the brand and excellent customer service. We will
continue to innovate new products and services and provide
solutions to fulfil customer demand. Further market share
gains are expected as a result of the enhanced structural
opportunities from the independent sector. The independent
sector has been in long-term decline as customers migrate
from independent to budget branded hotels, which is
expected to accelerate as a result of the COVID-19 pandemic.
We are well placed to capitalise on the expected contraction
in competitor supply and to take market share.
Total UK revenue
UK market outperformance1
£1,668.2m
14.8%
Adjusted operating profit
UK market share growth2
£199.6m
3%
Winner of YouGov "Best Hotel Chain" for 11th year running
UK 2022/23 priorities
› Continued market share gains
› Hotel and restaurant profit recovery and margin recovery
› Expand the number of Premier Plus rooms
› Maintain excellent guest scores
1 STR data, full inventory basis, M&E excludes Premier Inn on a 52 week basis
– restated in line with STR M&E room stock reclassification
2 STR data, revenue share of total UK market, versus 2019/20 on a 52 week basis
3 Source: YouGov BrandIndex Satisfaction, Impression, Value, Recommended & Quality
scores as at 3 March 2022 based on a nationally representative 12 week moving average
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GROW AT SCALE IN GERMANY
ENHANCE OUR CAPABILITIES TO
SUPPORT LONG-TERM GROWTH
In Germany, Premier Inn has an estate of 5,875 rooms, with
a committed pipeline of 8,454 rooms and line of sight of
60,000 rooms. Our aim is to be the number one budget
hotel operator in Germany, by leveraging the strengths and
capabilities of the UK business. The key focus in Germany
is continuing to grow Premier Inn’s presence across major
towns and cities. We look to replicate the success achieved
in the UK market through building our brand presence and
delivering a winning customer proposition.
Our strategic priorities remain consistent with our proven
plan to create sustainable shareholder value over the long
term. We continue to take actions to ensure we develop as
a leaner, stronger, and more resilient business through
utilising our financial flexibility, enhancing our lean and
agile cost model and operate sustainably in everything
that we do. We are also continuing to invest in our IT
platforms, helping further enhance our digital capability,
including a new CRM platform that will be introduced in
the next two years. Our successful efficiency programme,
vertically integrated model, brand strength, product
innovation and direct distribution underpin our consistent
quality and competitive advantages. We have extended
our three-year cost saving programme by one year to
FY25 delivering c.£140m across FY22 to FY25. This next
stage of our efficiency programme will ensure we retain
our lean and agile cost base. Our balance sheet strength,
with freehold backing and strict capital discipline, will
ensure that we maintain our financial strength and can
continue to invest to win.
Total Germany revenue
Customer score4
Cash position
Capex
£35.2m
88
£1,132.4m
£261m
Adjusted operating loss
£(15.4)m
Balance sheet leverage
3.9x
Germany 2022/23 priorities
› Continue to build a network across key towns and cities
Our long-term growth 2022/23 priorities
› Sustain a strong balance sheet and liquidity, including
› Build brand awareness in Germany
› Utilise freehold and leasehold flexibility strategy to
execute great deals
maximising our cash flow
› Demonstrate continued capital discipline in everything we do
› Retention and engagement of teams
›
Improve technology capabilities
› Build on our efficiency programme
4 Source: TrustYou scores from March 2021 to February 2022
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Strategy in Action
INNOVATE
AND GROW
IN THE CORE
UK MARKET
26
Premier Inn UK1
£m
FY22
FY21
FY20
vs FY21
vs FY20
577.4 2,050.3 188.9% (18.6)%
142.5
13.6 (50.8)% 415.4%
Statutory revenue 1,668.2
Other income (excl
rental income)2
Operating costs
before
depreciation,
amortisation and
rent
70.1
(1,248.6) (861.7) (1,270.2) (44.9)%
1.7%
Adjusted
EBITDAR†
Net turnover rent
and rental income
Depreciation:
Right-of-use asset
Depreciation and
amortisation: Other
Adjusted
operating profit/
(loss)†
Interest: Lease
liability
Adjusted profit/
(loss) before tax†
489.8 (141.8) 793.7 445.4% (38.3)%
3.9
4.5
2.1
(13.3)%
85.7%
(125.2) (109.9)
(103.2) (13.9)% (21.3)%
(168.9) (168.5)
(163.2)
(0.2)% (3.5)%
199.6 (415.7) 529.4 148.0% (62.3)%
(124.7)
(117.1)
(115.1)
(6.5)% (8.3)%
74.9 (532.8) 414.3
114.1% (81.9)%
Total statutory revenue was 188.9% ahead of FY21 and 18.6%
down compared to FY20, with H1 statutory revenues down
39.4% versus FY20, improving to up 4.3% in H2.
On a 52-week basis, total accommodation sales were 190.8%
ahead of FY21, and down 13.9% compared to FY20 (H1 down
33.1%, H2 ahead 7.9%).
Open and committed in the UK
91k rooms
Winner of the YouGov Best Value
Hotel Chain for the 11th year running
99% of Premier Inn UK bookings are
made directly through our website
Recognised as 'Top Employer'
for the 12th year running
FLAGSHIP
PREMIER INN OPENS
IN OXFORD
In July 2021, the new flagship Premier Inn in Oxford city
centre at Paradise Square opened its doors.
The new 90-bedroom hotel, including Premier Plus rooms,
has created 27 jobs, will welcome over 35,000 guests
every year and has provided the opportunity to improve
and enhance Paradise Square in Oxford.
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Whitbread Annual Report and Accounts 2021/22 27
Premier Inn UK1 key performance indicators
Number of hotels
Number of rooms
Committed pipeline (rooms)
Direct booking
Occupancy
Average room rate†
Revenue per available room†
Sales2 growth:
Accommodation
Food and beverage
Total
Like-for-like† sales2 growth:
Accommodation
Food and beverage
Total
FY22
841
82,286
8,332
99%
68.3%
£56.67
£38.69
FY21
817
78,718
12,256
99%
29.4%
£46.16
£13.57
FY20
820
78,547
vs FY21
2.9%
4.5%
13,011
(32.0)%
97%
0bps
vs FY21
excl. Wk 53
vs FY20
vs FY20
excl. Wk 53
–
–
–
–
2.6%
4.8%
(36.0)%
200bps
–
–
–
–
76.3% 3890bps 3870bps (800)bps (820)bps
£61.50
£46.91
22.8%
185.1%
22.4%
183.6%
(7.9)%
(17.5)%
(8.1)%
(17.9)%
198.0%
170.2%
188.9%
189.8%
166.6%
182.2%
190.8%
(11.7)%
(13.9)%
163.4% (30.9)%
(32.7)%
181.9%
(18.6)% (20.6)%
182.9%
(15.5)%
(17.5)%
160.6%
(32.6)%
(34.3)%
175.6%
(21.6)%
(23.5)%
1
Includes one site in each of: Guernsey, the Isle of Man and Jersey and two sites in Ireland.
2
Includes Government support – see Note 9 of the consolidated financial statements for further details.
† See pages 207 to 210 for definitions of alternative performance measures.
COVID restrictions materially impacted the performance of the
UK business during the first half of the year. Only essential
business guests were permitted to stay overnight until 17 May,
at which point overnight leisure stays were permitted. Our
restaurants were also not permitted to open for indoor service
until the same date, with the majority remaining temporarily
closed until then. Our hotels and restaurants then operated
largely restriction-free from 19 July, driving a strong
improvement in revenues from that date.
On a 52-week basis, total food and beverage sales were 163.4%
ahead of FY21 and down 32.7% compared to FY20 (H1 down
51.2%, H2 down 13.3%) with the vast majority of the estate only
reopening on 17 May. The overall value pub and restaurant
sector’s recovery has been slower than other restaurant sectors,
and greater impacted in Q4 by the impact of the Omicron
variant. New menus, enhanced drinks offering, and improved
digital marketing will help drive an improvement in Premier Inn
food and beverage sales into FY23.
Leisure demand in the UK Regions was strong post 17 May and
throughout the rest of the financial year, with tradespeople
business demand also resilient throughout. Office-based
business demand remained behind pre-COVID levels, largely
reflecting the various work-from-home guidelines that were in
place during the year.
The London market, and in particular central London (c.7% of
Premier Inn rooms) has lagged the regions during the COVID
pandemic as a result of the low levels of inbound international
travel and subdued business commuting, however trends
improved during Q2, helped by the domestic leisure bounce,
and then in to Q3 as offices reopened.
The emergence of the Omicron COVID variant dampened overall
demand in December 2021 and into January 2022, however
Premier Inn UK total accommodation sales continued to
outperform the market, with trends improving again in February
as most remaining Government COVID restrictions were lifted.
Premier Inn total UK accommodation sales growth was
consistently ahead of the Midscale and Economy market through
the year driving significant market share gains versus the total
market, and demonstrating the strengths of our scale, brand,
direct distribution model and our winning customer proposition.
Other income of £70.1m reflects a £62.0m benefit from the
Coronavirus Job Retention Scheme (“CJRS”) and other wage
support schemes in Ireland and Jersey and an £8.2m benefit
from other grants. The Group ceased claiming under the CJRS
in May following the full reopening of our hotels and restaurants.
Operating costs of £1,248.6m were in-line with expectations and
44.9% higher than FY21, driven by the impact of estate growth,
an increase in revenue related variable costs (primarily food and
beverage costs of sales), lower levels of the Government’s
business rates benefit, partly offset by cost efficiencies.
Right-of-use asset depreciation was £125.2m and lease liability
interest was £124.7m. During the year, 30 new hotels and 3
extensions were opened, totalling 3,787 rooms and 6 hotels
were exited, including 6 disposals, totalling 219 rooms, as the
Group continues to optimise the estate when opportunities
arise. At the end of the period, the total estate stood at 841
hotels. The committed pipeline of over 8,000 rooms underpins
our opportunity to take market share in the UK in the medium
to long-term as competitor supply contracts.
Adjusted profit before tax in the UK was £74.9m reflecting the
strong increase in statutory revenues compared to FY21 driven
by the lower level of COVID restrictions in place, and the
subsequent higher levels of demand.
UK outperformance vs Midscale & Economy market
.
PI accommodation sales
outperformance (vs FY20)2
PI market share3
PI market share gains pp
(vs FY20)3
1 Excluding 53rd week in FY22.
H1
+12.5pp
Sept
+13.3pp
Oct
+17.1pp
Nov
+19.0pp
Dec
+20.3pp
Jan
+16.5pp
Feb1
+19.4pp
FY22 Q1 to Date
+28.3pp
+14.8pp
11.2%
+3.9pp
9.5%
+2.4p
9.5%
9.2%
8.7%
10.6%
10.6%
10.2%
9.9%
+2.1pp
+1.9pp
+2.4pp
+3.3pp
+2.7pp
+3.0pp
+2.4pp
2 STR data, full inventory basis, 26 February 2021 to 14 April 2022, M&E excludes Premier Inn – restated in line with STR M&E room stock reclassification.
3 STR data, revenue share of total UK market, 26 February 2021 to 14 April 2022.
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28
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:
Right-of-use asset
Depreciation and
amortisation: Other
Adjusted
operating loss†
Interest: Lease
liability
Adjusted loss
before tax†
FY22
35.2
FY21
FY20 vs FY21
vs FY20
11.5
11.8 206.1%
198.3%
44.3
11.5
0.3 285.2% 14,666.7%
(65.8) (43.9)
(23.9) (49.9)%
(175.3)%
13.7 (20.9)
(11.8) 165.6%
216.1%
3.7
3.9
0.8
(5.1)%
362.5%
(22.9)
(16.4)
(0.8) (39.6)% (2,762.5)%
(9.9)
(5.4)
(1.6) (83.3)%
(518.8)%
(15.4) (38.8)
(13.4) 60.3%
(14.9)%
(8.5)
(6.1)
(0.2) (39.3%) (4,150.0)%
(23.9) (44.9)
(13.6) 46.8%
(75.7)%
WAREHOUSE
OPENED TO SUPPORT
EXPANSION PLANS
As part of a long-term solution to support the Premier Inn
expansion in Germany, we opened our first warehouse in
Haiger, Germany.
This set up provides centralised storage and quicker
deliveries to hotels when required, ensures availability of key
products during very challenging times, and also reduces
delivery costs by optimising deliveries to multiple locations.
Strategy in Action continued
FOCUS
ON OUR
STRENGTHS
TO GROW IN
GERMANY
Entered into relationship with 1st charity
partner elected in Germany, CHILDREN
Employing over 900 people in Germany
Leading customer proposition supported
by excellent guest scores
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Whitbread Annual Report and Accounts 2021/22 29
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†
Sales2 growth:
Accommodation
Food and beverage
Total
Like-for-like† sales2 growth:
Accommodation
Food and beverage
Total
FY22
35
5,875
8,454
97%
40.7%
£40.53
£16.49
FY21
30
4,880
8,420
99%
22.5%
£40.17
£9.02
FY20
vs FY21
vs FY21
excl. Wk 53
6
1,085
8,709
16.7%
20.4%
0.4%
91% (200)bps
–
–
–
–
vs FY20
483.3%
441.5%
(2.9)%
600bps
vs FY20
excl. Wk 53
–
–
–
–
58.3% 1820bps
1810bps (1760)bps (1770)bps
£69.47
£40.53
0.9%
82.8%
0.8%
(41.7)%
(41.7)%
82.2%
(59.3)%
(59.5)%
185.3%
176.5%
196.9%
369.2%
345.3%
205.0%
206.1%
195.9%
198.3%
189.7%
191.9%
190.1%
114.6%
108.4%
(38.9)%
(41.1)%
249.6%
238.7% (40.9)%
(43.3)%
129.6%
122.9%
(39.2)%
(41.5)%
1
Includes Government support – see Note 9 of the consolidated financial statements for further details.
2 Total and like-for-like on a two-year basis vs FY20.
† See pages 207 to 210 for definitions of alternative performance measures.
Total statutory revenue in Germany was up 206.1% compared to
FY21 driven by the growth in the size of the hotel estate. COVID
restrictions in Germany are administered through a complex
framework of national and federal guidelines, resulting in more
wide-ranging restrictions than in the UK, both in terms of nature
and duration during the year.
1,085
rooms open
in Germany
2020
5,875
rooms open
in Germany
2022
Open and in the committed pipeline
78 hotels
Total accommodation sales were 176.5% ahead of FY21 on a
52-week basis, reflecting the larger estate. At the end of the
year, the open estate stood at 35 hotels, compared to 30 open
hotels at the end of FY21 and 6 open hotels at the end of FY20.
As in the UK, leisure demand was strong in the summer, and our
hotels in leisure-led locations performed well. Business demand
remained low as a result of the COVID work from home
directives that were in place for most of the year, and the
absence of most trade fairs. A digital marketing campaign,
aimed at establishing the Premier Inn brand credentials in
Germany saw favourable results, with brand recognition scores
improving, albeit still at low levels.
Other income reflects £43.6m of COVID grants from the
German Government. Operating costs increased by £21.9m to
£65.8m due to the investment in the business and the increased
estate size, partially offset by £0.7m relief from the Kurzarbeit
Job Support Scheme in Germany. Right-of-use asset
depreciation costs increased by £6.5m to £22.9m over the same
period, reflecting the fact that the majority of new opened
properties are leasehold. Other depreciation and amortisation
costs were £9.9m, and lease liability interest costs were £8.5m.
The adjusted loss before tax for the year decreased by £21.0m,
compared to FY21, to £23.9m.
During the year, five hotels were opened in Stuttgart, Lübeck,
Düsseldorf, Leipzig and Nürnberg and eight were added to the
pipeline (with one site being removed). The open and
committed pipeline now stands at 78 hotels and over 14,000
rooms, and we are continuing to assess opportunities to
accelerate growth organically and through acquisitions.
8,709
open and
committed rooms
14,329
open and
committed rooms
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Chief Financial Officer’s Review
30
FINANCIAL
PERFORMANCE
Hemant Patel
Chief Financial Officer
Statutory revenue
Statutory revenue was 189.0% ahead compared to FY21, largely
reflecting the removal of restrictions in the UK in the second
half of the year and the business continuing to trade ahead of
the UK hotel market.
Adjusted EBITDAR
Other income of £114.5m includes £62.0m of benefit recognised
in respect of the Coronavirus Job Retention Scheme (“CJRS”)
and other wage support schemes in Ireland and Jersey, £8.2m
of other UK hospitality grants and £43.6m of benefit in relation
to German Government grants. The Group ceased claiming
under the CJRS in May 2021 following the full reopening of our
hotels and restaurants Operating costs of £1,345.3m were 43.5%
higher than last year driven by the increase in revenue-related
variable costs, the growth in the estate in both the UK and
Germany, the reduced benefit from the UK Government’s
business rates holiday (£56.3m credit in FY22 compared to
£117.8m credit in FY21) and £0.7m relating to the German Job
Support Scheme (£0.9m credit in FY21). Adjusted EBITDAR of
£472.6m (H1: £178.3m, H2: £294.3m) was £667.5m up on FY21 as
a result of the strong recovery in statutory revenues.
Adjusted operating profit
The leasehold estate grew by net 27 sites in the UK and by 4
sites in Germany compared to the same period in FY21. This
resulted in a £21.8m or 17.3% increase in right-of-use
depreciation charges to £148.1m. Other depreciation and
amortisation charges increased by £4.9m to £178.8m, driven by
new hotel openings. The adjusted operating profit of £153.3m
compared to a loss of £486.7m in FY21 and a profit of £486.8m
in FY20.
Net finance costs
Net finance costs (excluding lease liability interest) were £35.9m
compared to £25.2m in FY21. This increase of £10.7m was driven
by the current year interest costs for the £550m Green Bonds
issued in February 2021, and by higher commitment fees in
relation to the updated Revolving Credit Facility.
Lease liability interest of £133.2m was £10.0m above FY21
primarily driven by the opening of net 27 leasehold sites in the
UK and 4 leasehold sites in Germany.
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Whitbread Annual Report and Accounts 2021/22 Financial highlights
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: Right-of-use asset
Depreciation and amortisation: Other
Adjusted operating profit/(loss)†
Net finance costs (excl lease liability interest)
Interest: Lease liability
Adjusted (loss)/ profit before tax†
Adjusting items
Statutory profit/(loss) before tax
Tax credit/(expense)
Statutory profit/(loss) for the year
31
FY22
1,703.4
0.0
1,703.4
114.5
(1,345.3)
472.6
7.6
(148.1)
(178.8)
153.3
(35.9)
(133.2)
(15.8)
74.0
58.2
(15.7)
42.5
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
vs 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
(17.8)%
(100.0)%
(17.4)%
723.7%
(1.7)%
(37.2)%
162.1%
(42.4)%
(8.5)%
(68.5)%
(172.0)%
(15.5)%
(104.4)%
194.5%
(79.2)%
74.7%
(80.5)%
1
Includes Government support – see Note 9 of the consolidated financial statements for further details.
† See pages 207 to 210 for definitions of alternative performance measures.
Adjusting items
Total adjusting items were a credit of £74.0m. On 28 June 2021, the
Group disposed of a hotel in Putney, London, as part of a sale and
leaseback transaction for gross proceeds of £40.0m. A profit on
disposal of £27.5m was recognised on disposal of the property.
During the period, the Group has recorded profits on other property
disposals of £5.7m.
FY21 adjusting items included a £109.2m impairment charge as a
result of the COVID pandemic, primarily relating to property, plant
and equipment and right of use assets. Subsequent impairment
reviews, reflecting the improved outlook for the Group, have
resulted in an element of the FY21 charge being reversed, and a net
£42.0m impairment credit being recognised in FY22.
In August 2021, HMRC confirmed it would not appeal the ruling of
the First-tier Tribunal in the case of Rank Group plc that VAT was
incorrectly applied to revenues earned from certain gaming
machines from 2005 to 2013. The Group has submitted claims
which are substantially similar and expects to receive overpaid VAT
of £8.7m.
In addition, during the year, the Group recognised provisions of
£4.4m relating to historic indirect tax matters
Taxation
The tax credit of £10.7m on the loss before adjusting items
(FY21: £94.1m tax credit) represents an effective tax rate on the loss
before adjusting items of 67.7%. This is higher than the statutory tax
rate largely due to adjustments to management’s estimate of
deferred tax arising in respect of prior years, offset by expenditure
not deductible for tax purposes and the impact of German tax
losses not recognised.
The statutory tax charge for the period was £15.7m (FY21: £100.9m
tax credit), representing an effective tax rate of 27.0% (FY21: 10.0%).
The effective rate is driven by the deferred tax charge of £13.1m
relating to the enactment of the increase to the UK corporation tax
rate from 19% to 25%, effective from 1 April 2023, the non-
recognition of German tax losses, offset by the prior year credit.
Statutory profit after tax
The statutory profit for the year was £42.5m, compared to a loss
of £906.5m in FY21, largely driven by the strong recovery in
statutory revenue, reflecting the removal of restrictions in the UK
in the second half of the year and the £74.0m of adjusting items
credits, compared to a charge of £372.3m in FY21.
Earnings per share
Adjusted basic
(loss)/earnings
per share†
Statutory basic
(loss)/earnings
per share
FY22
FY21
FY201
vs FY20
(2.5)p
(287.6)
166.3
(101.5)%
21.1p
(481.9)
125.3
(83.2)%
1 Restated to include the impact of the Rights Issue completed in June 2020.
† See pages 207 to 210 for definitions of alternative performance measures.
Adjusted basic loss per share of 2.5p reflects the adjusted statutory
loss for the year. Statutory profit benefited from an adjusting items
credit for the year resulting in a statutory basic profit per share of
21.1p.
Dividend
At the start of the pandemic the Group negotiated covenant
waivers on its revolving credit, which prevented the payment of a
dividend until March 2023 or such time as the Group reverted to
and passed its original covenants.
Following the release of these financial statements, and in line with
the continued dialogue the Group maintains with its lending banks,
the Group will notify its lending banks of its intention to remove
these covenant waivers, and will subsequently issue a compliance
certificate to reinstate the original pre-COVID covenants.
Dividend payments can then recommence, with the Board
recommending a final dividend of 34.7 pence per share on 27 April
2022, reflecting both the Group’s strong balance sheet, encouraging
trading, and confidence in the recovery outlook. This will result in a
dividend payment of £70m. The final dividend will be paid on 1 July
2022 to all shareholders on the register at the close of business on
27 May 2022. Shareholders will again be offered the option to
participate in a dividend re-investment plan. The Group’s dividend
policy has been reinstated to grow the dividend broadly in line with
earnings across the cycle. Full details are set out in note 11 to the
accompanying financial statements.
Cash flow
Total net cashflow before shareholder returns and debt repayments
was an inflow of £187.0m, driven by a recovery in adjusted EBITDAR
to £472.6m, which compared to a loss of £194.9m in FY21, a working
capital inflow of £182.5m and £56.4m property disposal proceeds.
The net cashflow also benefited from the credit of £170.8m COVID
Government grants and support schemes.
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Cash flow
£m
Adjusted EBITDAR†
Change in working capital
Net turnover rent and rental income
Lease liability interest and principal lease payments
Operating cashflow†
Interest (excl lease liability interest)
Corporate taxes
Pension
Capital expenditure: maintenance
Capital expenditure: expansionary1
Acquisitions
Disposal Proceeds
Other
Cashflow before shareholder returns/receipts and debt repayments
Proceeds from Rights Issue
Proceeds from green bond
Repayment of long-term borrowings
Net cash flow
Opening net debt†
Issuance of green bond
Repayment of long-term borrowings
Closing net cash/(debt)†
32
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
546.8
(75.1)
748.1
(322.9)
(546.8)
75.1
(46.5)
FY22
472.6
182.5
7.6
(258.3)
404.4
(18.0)
(0.1)
(14.8)
(93.5)
(167.5)
–
56.4
20.1
187.0
–
–
(303.9)
(116.9)
(46.5)
–
303.9
140.5
1 FY22 includes £1.8m loans advanced to joint ventures, £36.3m payment of contingent consideration (FY21: £3.8m) and £1.4m capital contributions to joint ventures (FY21: £1.3m).
† See pages 207 to 210 for definitions of alternative performance measures.
The £182.5m working capital inflow was primarily driven by a
£101.8m increase in customer deposits and a £44.0m increase in
trade creditors and accruals following the strong trading across
the last quarter and the business returning to more normal
levels of trading. This has resulted in current trade and other
payables increasing to £570.7m (FY21: £316.5m) and an increase
in trade and other receivables to £116.4m (FY21: £74.2m).
Corporation taxes outflow of £0.1m related to Germany.
No corporation tax was paid in relation to UK profits due
to taxable losses being incurred.
Maintenance capital expenditure was £93.5m and expansionary
capital expenditure was £167.5m, resulting in overall full year
spend of £261.0m. The £20.1m other inflow is driven by an
£8.7m VAT claim, £12.9m of share-based payments and £4.3m
of other provision movements.
Disposal proceeds of £56.4m relate to the sale and leaseback
transaction of a hotel in Putney, London, the sale of an unused
corporate office and the disposal of six hotels, as the Group
continues to take the opportunity to optimise the estate when
opportunities arise.
Lease liability interest and lease repayments increased by £56.1m
to £258.3m driven by the higher number of leasehold properties
entering the estate, particularly in Germany, and reflect the
delayed payment of a proportion of the December 2020 quarter
rent payment that would normally have been paid in FY21.
During the year £283.5m of US private placements were repaid,
incurring £21.2m of make-whole fees partly offset by a £0.8m
credit relating to foreign exchange movements. There are now
no outstanding US private placements. Net cash at the end of
the period was £140.5m.
Debt funding facilities and liquidity
£m
Bond
Green Bond
Green Bond
Revolving credit facility
Revolving credit facility
Cash and cash equivalents
Total facilities utilised, net of cash1
Net cash†
Net cash and lease liabilities†
Maturity
2025
2027
2031
2022
2023
Facility
(450.0)
(300.0)
(250.0)
(125.0)
(725.0)
(1,850,0)
Utilised
(450.0)
(300.0)
(250.0)
0.0
0.0
(1,000.0)
1,132.4
132.4
140.5
(3,561.3)
1 Excludes unamortised fees associated with debt instrument.
† See pages 207 to 210 for definitions of alternative performance measures.
The Group’s aim is to manage to investment grade metrics of
FFO lease adjusted debt of <3.5x Net Debt over the medium
term. Whilst the Group remains below its historic profit levels,
the strong balance sheet cash position and freehold assets
support our investment grade rating.
Following the release of these financial statements, The Group
will notify its lending banks of its intention to remove the
covenant waivers that exist on the revolving credit facility, and
issue a compliance certificate to reinstate the original
covenants, being:
› Net Debt2/EBITDA2 < 3.5x,
› EBITDA2/Interest2 >3.0x
2 Adjusted pre-IFRS 16.
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Whitbread Annual Report and Accounts 2021/22 33
The Revolving Credit Facility which is currently £850.0m,
will step down to £725.0m at 7 September 2022.
Property backed balance sheet
During the year, £200.0m US private placement notes were
repaid on 26 March 2021, with £25m US private placement
notes repaid on 6 September 2021 and the remaining US private
placement notes of £58.5m repaid on 14 December 2021.
There are now no outstanding US private placements.
Freehold/leasehold mix
Premier Inn UK
Premier Inn Germany
Group
Open estate
58%:42%
26%:74%
56%:44%
Total estate
including
pipeline
55%:45%
23%:77%
50%:50%
Capital investment
£m
UK maintenance and product
improvement
New/extended UK hotels1
Germany and Middle East2
Total
FY22
FY21
91.3
79.7
90.0
261.0
68.6
63.2
98.8
230.6
1 FY22 includes £1.8m loans advanced to joint ventures.
2 FY22 includes £36.3m payment of contingent consideration (FY21: £3.8m) and
£1.4m capital contributions to joint ventures (FY21: £1.3m).
Total capital expenditure in FY22 was £261.0m, this is lower than
expectations (£275m) as a result of the Group’s refurbishment
programme being delayed by supply chain issues.
Expenditure included £79.7m on developing new sites and
extending existing sites in the UK. In Germany, spend was driven
by the acquisition of a hotel at Berlin Airport and deferred
consideration relating to the Foremost acquisition in FY20.
Property, plant and equipment of £4,227.1m was in-line with
FY21 (£4,213.1m), with capital expenditure largely offset by
depreciation charge.
Central and other costs
Operating costs before depreciation, amortisation and rent
Share of profit/(loss)
Adjusted operating loss†
Net finance costs
Adjusted loss before tax†
† See pages 207 to 210 for definitions of alternative performance measures.
Central operating costs of £31.3m were £5.1m higher than FY21
primarily driven by increased staff costs and the impairment of a
loan to a joint venture. Net finance costs increased by £10.7m to
£35.9m primarily as a result of interest costs on the £550m Green
Bonds issued in February 2021, and by higher commitment fees
in relation to the updated Revolving Credit Facility.
Events after the Balance Sheet date
On 7 March 2022, the Group entered into a sale and leaseback
transaction in relation to a property in Marylebone, London
receiving proceeds of £46.4m.
Pension
The Group’s defined benefit pension scheme, the Whitbread
Group Pension Fund (the "Pension Fund"), had an IAS19 Employee
Benefits surplus of £522.6m at the end of the year (FY21: £188.0m).
The improved funding position was primarily driven by an increase
in corporate bond yields resulting in an increase in the discount
rate and asset performance being higher than the discount rate.
Aligning the discount rate methodology to reflect common market
practice has also contributed to the improved position. This was
partially offset by higher than expected inflation during the year
and an increase in the expectations for future inflation.
The triennial actuarial valuation of the Pension Fund as at
31 March 2020 has been completed. This resulted in a surplus
of assets relative to Technical Provisions of £55m. As a result,
no deficit reduction contributions are due, however annual
contributions of approximately £10m will continue to be paid to
the Pension Fund through the Scottish Partnership arrangements.
The current UK estate is 58% freehold and 42% 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.
The new site openings in Germany and continued expansion in
the UK has resulted in right-of-use assets increasing to
£3,267.6m and lease liabilities increasing to £3,701.8m.
Return on capital
The Group remains 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 any adverse structural impact as a result of the
COVID crisis. Sector-wide cost headwinds can be countered by
our long-standing efficiency programme, pricing power and the
benefits of both organic and inorganic growth.
FY22
(31.3)
0.4
(30.9)
(35.9)
(66.8)
FY21
(26.2)
(6.0)
(32.2)
(25.2)
(57.4)
FY20
(27.1)
(2.1)
(29.2)
(13.2)
(42.4)
vs FY21
(19.5)%
106.7%
4.0%
(42.5)%
(16.4)%
vs FY20
(15.5)%
119.0%
(5.8)%
(172.0)%
(57.5)%
As part of the valuation discussion, Whitbread and the Pension
Fund Trustee have agreed changes to the security package that
supports the Pension Fund. The EBITDA related covenant, which
was due to have been tested in March 2022 and if breached
would have resulted in a cash payment to improve the funding
position to the value of the Secondary Funding Target, has been
permanently removed. The security that the Trustee holds over
£500m of Whitbread’s freehold property (and which was due to
reduce to £450m in March 2022) increased to £531.5m and will
remain at this level until no further obligations are due under the
Scottish Partnership arrangements, which is expected to be in
2025. Following that, the security held by the Trustee will be the
lower of: £500m; and 120% of the buy-out deficit and will remain
in place until there is no longer a buy-out deficit.
Going concern
The directors have concluded that it is appropriate for the
consolidated financial statements to be prepared on the going
concern basis. Full details are set out in note 2 of the attached
financial statements.
Hemant Patel
Chief Financial Officer
27 April 2022
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Whitbread Annual Report and Accounts 2021/22
Chief People Officer's review
34
OUR PEOPLE
ARE AT THE
HEART OF
WHAT WE DO
Rachel Howarth
Chief People Officer
I am incredibly proud to be part of Whitbread,
and have experienced our special culture
first-hand since joining in September. Our
teams are such a critical part of the experience
we give to our guests, and have been an
essential part of our COVID-19 response
over the last 12 months.
It has been another challenging year, with COVID-19
restrictions continuing to impact sites across the UK and
Germany, and supply chain challenges affecting us across the
business. All our teams, across the UK, Ireland, Germany, UAE
and China, have coped admirably, really demonstrating our
values of genuine, confident and committed whilst navigating
the ever-changing restrictions with efficiency, pride and care.
It has also been a year where the hospitality industry has been
in crisis, with well-publicised team shortages across the
summer months as well as supply chain challenges. These
challenges were ones that within Whitbread we faced head
on, particularly recruiting team members throughout the
summer of 2021 where our headcount grew to nearly 36,000
people.
Caring for our teams
Our special culture at Whitbread has really helped us
navigate the challenges and complexities of the last 12 months.
We truly care for our teams, and over the last year we have
demonstrated this through greater investment in wellbeing
(physical, mental and financial), reflecting the challenges,
increased uncertainty and anxiety the pandemic has created.
We provided our teams with communications, support and care
as they were navigating a variety of new, uncharted challenges.
There is more detail on our wellbeing initiatives on page 43.
Investing in pay and reward for our teams
Financial wellbeing is a key area of importance for our teams,
and we have invested significantly in reward and recognition
for our front-line teams throughout this year. Early in the year,
we continued to utilise the Government Job Retention Scheme
in the UK until May 2021 when restrictions were lifted. In April
2021, we increased the pay for all our teams by 2%. Following
this, in May 2021, we rewarded all Whitbread employees across
the UK and Germany with a special recognition payment – to
say thank you for their support and service in the height of the
pandemic. We are also proud to have awarded c.29,000 team
members across our hotels and restaurants with a summer
bonus – an extra week’s pay for those who stayed with us over
the summer months. In the autumn we then followed this by
increasing all hourly pay rates by a minimum of 5%. In Germany,
we implemented tariff increases in 2021 in two federal states
with an average of a 7% increase to our teams.
In addition, this year we have invested £150,000 in hardship
grant funding to be available to our UK-based teams. Through
our partners Hospitality Action, we are proud to have this offer
for our teams when and if they need further financial support,
preventing them from needing alternative, higher interest,
financial funding.
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35
Listening has been crucial throughout this year
We believe that great experiences for our guests start with great
experiences for our teams. Across the year we continued to listen
to our teams through surveys, listening groups and our Employee
Forum, which we call Our Voice. Regularly listening to our teams
through a range of channels enables an understanding of the
quality of the team member employment experience so that it
can be improved, supporting higher team retention.
OPPORTUNITY
We value difference at Whitbread
Over the last 12 months, we are pleased to have made measurable
progress against our eight Diversity and Inclusion commitments,
which were launched in September 2020. The detail on this can
be found on page 41. It was fantastic to be recognised in the 2022
Financial Times Diversity Leaders Index, ranked at number 24
across Europe, as well as achieving 1st place in the leisure,
hospitality and travel sector and a Gold Award for Excellence
in the Stonewall Workplace Equality Index 2022.
OPPORTUNITY
JUSTYNA
ROWLEY
Front of House – Brewers Fayre, The Hampton,
Peterborough
I was aware Whitbread offered qualifications, and I was
looking for a way to gain a qualification while I was working.
I am studying a Hospitality Level 3 apprenticeship. I’m
really enjoying the opportunity to learn while working
on site, and I’m now taking on more responsibility. I am
also completing my English and Maths qualifications,
improving my English and Maths as I go.
One great thing is how flexible my apprenticeship is.
I always work afternoons and evenings, enabling me
to make sure I’m home for my children, including the
school drop-off and when they get home from school.
My coach is accommodating, putting in our calls at
suitable times and being available when needed.
The apprenticeship has helped with my personal
development to step up from a team member to a
salaried role in the future. It has boosted my confidence
at work. I feel like I could be a manager in the future.
FREDDIE
PARKS
Software Engineering Manager – based in Holborn
Digital Office
I started with Whitbread in 2016, when our digital function
was in its early growth phase. As a developer, I enjoyed
the freedom, autonomy and the positive culture. Being
part of an agile team was great, and my scrum team was
like a family, with a clear roadmap of deliverables.
I work on guest-facing digital projects, as part of the
mobile team, working closely and collaborating with the
web team on the Premier Inn website. I enjoy working on
projects that have a direct impact on our guests as you
can get direct feedback.
My experience within Whitbread has been very positive,
with supportive line managers who have helped me grow
and develop my career. I had opportunities to develop my
career with Whitbread and I chose a role where I now
manage my own team. I love working with people and
supporting others with their own personal growth.
No barriers to entry and no limits to ambition
At the heart of it, we are a people business, and our teams make
us special by bringing to life our values of genuine, confident
and committed every day. That’s why we are passionate about
creating the best experiences for our teams – from the moment
they think about joining us to walking through our doors on
their first day, to progressing a fulfilling career with us through
our excellent training and development programmes, including
our range of management development apprenticeships which
launched this year.
Once again, we are proud to be recognised as a ‘Top Employer’
in the UK by the Top Employers Institute. This marks our 12th
consecutive year and reinforces our ongoing commitment to
be the best place to work for our teams and a business that
people seek to be part of. This accreditation is only awarded
to companies with the highest standards of excellence, helping
us gain further insight and feedback to make the experience
even better for our teams and those thinking of a career in
hospitality.
How we have cared for our teams throughout 2020 and 2021
is something for us to be really proud of, and everything we
have put in place sets us up well for an exciting 2022 and
beyond. I am very excited to be part of the journey.
Rachel Howarth
Chief People Officer
27 April 2022
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Force for Good Introduction
36
SUSTAINABILITY
IS AT THE
CORE OF
WHAT WE DO
Chris Vaughan
General Counsel
Being a Force for Good is at the core of our
business. We aim to drive meaningful change
as a result of our programme, and we believe
that a combined focus on our three pillars –
Opportunity, Community, and Responsibility,
with the overall aim of enabling people to
live and work well, does just that. Force for
Good encompasses our approach to social
and governance issues, addresses our
environmental impact and ensures we
have a positive impact on the many people
and communities our business touches.
This year has been another difficult one with COVID-19
restrictions continuing to impact our operations. All our
teams have played their part in navigating these ever-
changing restrictions with pride and care, but above all
safely, as well as managing the supply chain challenges
that we have seen across the business. It is important
to pay tribute to the brilliant work which our teams do
every day, across all our sites, be that in the UK, Ireland,
Germany, UAE or China.
Within this ever-changing environment, we have continued
to work hard behind the scenes to evolve our Force for
Good strategy, driving forward with new initiatives and targets
while maintaining the day-to-day running of our programmes.
I want to take this opportunity to thank all our teams who
are so crucial in ensuring that we meet our targets.
Over the last year we have had many milestones and moments
to be proud of. Not only did we sign up to Race to Zero ahead
of COP26 but we went a step further and brought forward our
pledge to reach Net Zero Scope 1 and 2 carbon emissions by a
decade to 2040. We have also set new targets to reduce Scope 3
emissions by 50% by 2035 and 64% by 2050, and this year, we
have committed to achieve full SBTi accreditation.
In February our work on inclusion was recognised through our
2022 Stonewall Workplace Equality Index score, where we were
placed 1st in the leisure, travel and tourism sector and received
a gold award for excellence in LGBTQ+ inclusion. As a sponsor
of our LGBTQ+ network (GLOW) this was particularly satisfying
for me, giving well-deserved recognition to the engagement
with, and within our teams, and the work of the People and
Diversity and Inclusion teams.
We have of course been watching the unfolding humanitarian
crisis in Ukraine. With so many families displaced through this
tragic situation, we have considered how best we can provide the
support which is so needed. We have not only committed to divert
all fundraising raised for three months from March 2022 to the
Disaster Emergency Committee (DEC), underwriting a minimum
of £500,000, but we are also working with other charities to
donate bedding to those in need. We continue to asses ways that
we can support, for example in the provision of rooms to refugees.
Contributing to charitable causes has always been a core part
of the Whitbread culture, and we will celebrate our 10-year
anniversary later in 2022 with Great Ormond Street Hospital
Children's Charity (GOSH Charity). This year we hit our target of
raising £20 million and a personal highlight for me was the
opening of the Sight and Sound Centre supported by Premier
Inn, the UK’s first dedicated medical facility for children with sight
and hearing loss. This would not have been possible without the
fundraising of our teams, suppliers and the generosity of guests.
Whitbread’s commitment to GOSH Charity was cemented this
year as they came top in a charity partner re-pitch, and I am
delighted to say that we have agreed to extend our partnership
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Whitbread Annual Report and Accounts 2021/22 with GOSH Charity. We undertook this to make sure that our
teams have input into the charity that they fundraise for.
We have of course continued with our efforts on other fronts:
making progress with our stretching Diversity & Inclusion
targets, reducing food waste, and ensuring that all of our
critical commodities are sourced responsibly.
This year we have also undertaken our annual materiality
assessment, reaching out to internal and external stakeholders
to ensure that the issues that we are tackling are the most
material to the business. It is always interesting to see the
results and to anticipate new trends and areas to explore.
It was great to see that the key issues that came out top are
already on our agenda with a few interesting areas to explore
more fully this year, such as biodiversity.
With such a strong foundation in place I am excited to move
into the new year with a clear focus on the delivery of our
targets. Key priorities for the next 12 months will be working
with our suppliers to develop a clear trajectory to reach our
Scope 3 targets, achieving our SBTi status for Scope 1 and 2
emission targets and continuing to build our partnership with
37
GOSH Charity. I also want to make sure that we communicate
our Force for Good progress more widely, and effectively, not
just ensuring our teams are engaged but to work more widely
with the industry and to ensure customers and other key
stakeholders see more of the work that we do.
Force for Good is what continues to make us stand out in a
competitive marketplace. As a business with such a large scale,
we know that every little thing we do can make a big impact
when we work together. Force for Good is how we drive this,
and we see it every day in our team’s commitment to go the
extra mile for each other, our guests, and the world around
them. We are looking forward to building on this and harnessing
the opportunities, innovation, and excitement that Force for
Good brings to the business.
Chris Vaughan
General Counsel
27 April 2022
Force for Good in 2021/22
Our strategy is split into three pillars…
OPPORTUNITY
COMMUNITY
RESPONSIBILITY
A team where everyone can reach their
potential – no barriers to entry and no
limitations to ambition.
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
Environment
Communities
Suppliers
Guests
›
Improving the
nutritional value
of our menus
Ensuring the highest
levels of safety
› Developing an
›
environmentally
friendly customer
proposition
›
› Championing inclusivity
and improving diversity
Industry-leading
training and
development
› Team member
wellbeing is considered
in everything we do
› Science-based targets
to reduce our carbon
emissions intensity
› Supporting our
communities’
economies
› Eliminating unnecessary
› Supporting our charity
single-use plastics
› Reducing food waste
partners to meet
their mission
› Community
engagement e.g.
volunteering schemes
Allowing us to…
› Sourcing responsibly
and with integrity
› Respecting the human
rights of everyone in
our supply chain
› Ensuring our suppliers
are paid on time
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
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FOCUSED
ON A FORCE
FOR GOOD
38
Q&A with Rachel Howarth
& Chris Vaughan
What are you most proud of achieving
this year?
V This year has been another challenging year, for many
C
reasons. I’m proud that we have continued to push forward
the Force for Good agenda amid much uncertainty. Be that
fundraising for our partner charity, continually improving our
supply chain credentials, or setting targets for our Scope 3
emissions. Not only that, we have actually managed to
enhance some of our targets this year, for example, bringing
forward our Scope 1 & 2 Net Zero target by ten years to
2040. The Green Bond allocation and our first full TCFD
report also stand out for me.
H This year has been a complex year to navigate, and the highlight
R
for me is how our teams across the business have really
stepped up to deliver a great guest experience, amid differing
restrictions, labour shortages and supply chain challenges,
amongst others. Our teams have truly delivered, for each other
and for our guests, and this makes me immensely proud.
Why is it so important to have a programme
like Force for Good?
V We know that sustainability programmes are expected and
C
have become non-negotiable for businesses like ours – it's
part and parcel of running a great business. More and more
consumers are concerned with the sustainability credentials
of the companies they spend their money with – and, of
course, our shareholders expect it, too. Force for Good is
also a source of pride within the teams and an agenda they
can really rally around. It gives us clear targets and structure,
so we can plan our response to the many pressing
environmental and social challenges we face.
How embedded is Force for Good
across Whitbread?
V It's truly embedded across all our departments. We have
C
our core sustainability team who manage the strategy
development, drive progress and coordinate reporting,
but the delivery of most of our key targets happens through
the line, where change and impact can really be harnessed.
Delivery of our Opportunity pillar, for example, sits within
our People function; our Community pillar within our
operations and restaurants teams; and our Responsibility
pillar within property and procurement. We know that it’s
important to our team members to work for a company that
makes responsible social and environmental choices. Force
for Good is a key part of induction and we aim to embed
this throughout the organisation, from housekeeping to
procurement and finance. With a large, ever-evolving
programme, we are always working to engage with our
teams; to hear more from them and improve our operations
to ensure that we can meet our targets.
H Our teams are really engaged with Force for Good, and the
R
different areas it covers are ones that are important to them.
In particular, we know our teams are especially enthusiastic
about our charity partnership and really enjoy fundraising
and supporting them.
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Whitbread Annual Report and Accounts 2021/22
39
How are we embedding sustainability
and Force for Good in our finances?
How is Whitbread supporting the wellbeing
of its teams?
V This year has been a game changer for us in terms of how we
C
incorporate sustainability into our finances. We have allocated
£404 million of the £550 million Green Bond which we issued
last year and have also released our first full TCFD report to
analyse the risk posed to the business from climate change.
This work is key to futureproofing our business and an
exciting opportunity to engage with new investors and
stakeholders around sustainability.
H Wellbeing is really part of our culture at Whitbread – we care
R
about our teams, and this has never been more important than
during the last two years. We have a Wellbeing Strategy that
focuses on four areas of accountability – the line manager,
peers and colleagues, the individual and the organisation.
A large part of supporting wellbeing is how we support the
individual, and we have increased communications, have a
new Wellbeing Hub of information, and ensure wellbeing
conversations happen in performance reviews.
It has been widely reported that the pandemic
has meant staff shortages in hospitality. How
has Whitbread been impacted in the last
12 months?
H The whole industry has experienced both recruitment and
R
retention challenges across the last year, which has been
widely reported across the media for the hospitality sector.
We have faced shortages in our teams, both directly and
indirectly in our supply chain.
Our teams want to deliver a great experience for our guests
who come to stay and dine with us, and this has been
incredibly challenging, particularly through the summer
months in 2021. During this time, our teams have taken a great
deal of pride and resilience in finding a way to still deliver great
service. Whilst the year has been challenging, we have been
delighted to welcome over 20,000 new joiners to our teams
this year, and I really feel that we are ending the year well
placed to deliver a great experience for our guests in 2022.
How have we supported our teams during
the pandemic?
H On joining Whitbread in September 2021, our special culture
R
and what it means to work here is something that has really
struck me.
H We have truly cared for our teams throughout this
R
pandemic, in terms of both their safety (through many
listening forums and initiatives), and their mental, physical
and financial wellbeing (through increased communications,
manager capability and other initiatives detailed in the
Opportunity section). I am particularly proud of how we
supported our teams financially throughout lengthy furlough
periods, alongside the significant pay intervention in autumn
2021 which increased all hourly pay rates by a minimum of
5%, which was on top of a 2% increase in April 2021. The
cumulation of all these initiatives leaves an enhancement of
this special culture at Whitbread, which we can build on in
2022 and beyond.
How will energy prices impact our Force
for Good programme?
V We are operating in a volatile marketplace and have seen prices
C
rise across the board. We use renewable electricity across our
UK, owned and operated estate, and will continue to do this as a
core part of our Net Zero by 2040 commitment, and we invest
capital in energy saving products such as synergy grills and heat
pump technologies. We’re working hard to create efficiencies
across our estate to drive down the amount of energy we rely
on, overall, as well as working with our team members at site
level to manage our energy efficiently. This next year we will
have energy as an indicator on our WINcard, ensuring we
incentivise energy reduction, helping to reduce energy demand
and soften the impact of price rises.
H Organisationally, we have also increased the number of
R
mental health first aiders, invested in additional financial
support through hardship grants, and of course we have
our Employee Assistance Programme, Hospitality Action,
which can support our teams and line managers any time
and in multiple languages.
What is next for Diversity and Inclusion
commitments within Whitbread?
H Our Diversity and Inclusion commitments have given
R
us a clear focus since they were launched in 2020, and
I am proud of the progress we are making, both with our
representation levels vs our targets, and also how we
continue to embed a culture of inclusion for all, ensuring
there are no barriers to entry and no limits to ambition,
for anyone, however they identify.
As we are well on course to exceed our Diversity targets,
now is the right time to look even further ahead, and bring
in even more stretching targets looking ahead to 2026.
These are detailed in the Opportunity section of the report,
and demonstrate that getting to our 2023 targets is not
enough – we will continue beyond these, with our aim to
reflect society as a whole.
What are you most excited about in the
coming year?
V I’m looking forward to making good progress against our
C
carbon targets – we’ve set more targets, and it’s time to
deliver against them. We will be continuing our trials of new
technology across the estate to help shape our glide path to
80% reduction by 2030 and then more beyond that to Net
Zero. Addressing our Scope 3 targets is also something I’m
really looking forward to getting going – as the largest part
of our emissions, it is vital that we work with our suppliers to
reduce these where we can. And lastly, engaging more with
our staff, customers and stakeholders on our programme. I
truly believe Force for Good could be a USP for our brands,
and we want to try and make that happen.
H As we come out of the pandemic, I'm really looking forward
R
to having a full year's trading, and I’m excited about the
opportunities that will bring us as a business across both
the UK and Germany. Since I joined Whitbread I have met
so many of our teams who have passion for hospitality,
and I know that our teams are excited to get back to doing
what they love – serving our guests and helping them create
special moments.
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40
Force for Good
2021/22 ANNUAL REPORT
2021/22 ANNUAL REPORT
SUSTAINABILITY TARGETS
SUSTAINABILITY TARGETS
As a large business we know that every small action can add
up to a material change to our people, the communities and
customers we serve, and the planet. We started the year with a
series of ambitious targets against our Force for Good strategy.
While this year has been another challenging one we are proud
that we have continued to move forward, at times even bringing
our timelines forward, and ensuring we remain focused on
driving positive change and creating value, while mitigating
any negative impact that our operations might have.
Our targets, our progress against them and more information
on the work we have done can be found on pages 40 to 47.
OPPORTUNITY
A team where everyone can reach their potential with
no barriers to entry and no limitations to ambition.
OPPORTUNITY
TARGET
We will be for everyone, championing inclusivity and
driving diversity
To have greater diversity in our leadership population,
with a target of 8% ethnic minority and 40% female
representation by 2023
PROGRESS AGAINST TARGETS IN 2021/22
42%
Female representation, an increase of 5% from last year
5%
ethnic minority representation, an increase of 2.8% from
last year in our leadership population as of 3 March 2022
Through our apprenticeship programmes we will support
people to find and develop their hospitality careers
274
apprenticeships completed this year within our teams
We aim to promote internal succession above external
recruitment and will support our teams in this endeavour
2/3
We will be bold about broadening career opportunities,
supporting cross-functional and meaningful career
development
of the promotions in our management teams were internal
this year
Continued progress – more detail can be found on page 42.
We will listen genuinely to our teams, ensuring their
views help inform decision making
Continued progress – more detail can be found on page 42.
We will support the physical and mental wellbeing
of our teams
Continued progress – more detail can be found on page 43.
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Whitbread Annual Report and Accounts 2021/22 41
Gender*
Executive Committee
Leadership community**
All employees
Women
Women
Women
2
Men
6
25%
75%
35
Men
49
42%
24,168
65%
Men
58%
12,816
35%
* As an inclusive organisation, we recognise all gender identities, and understand that
not all our teams will identify as male or female.
** Leadership community is defined by reference to grade and includes those we deem
to be in a senior management role and their direct reports
We have focussed significantly on our inclusion commitments
this year, with a belief that creating an environment of belonging
for our teams and guests is one of the most important actions we
can take. Our inclusion networks have been central to this work,
and we are proud to now have four that represent communities
that are under-represented in society – Gender Equality, enAble
(disability), GLOW (LGBTQ+) and Race, Religion and Cultural
Heritage. In addition, in Germany we have introduced our
inclusion networks for the first time, launching Accessibility
and GLOW to our German teams.
Our work on inclusion has been recognised through our 2022
Stonewall Workplace Equality Index score, where we were
placed 1st in the leisure, travel and tourism sector and received
a gold award for excellence in LGBTQ+ inclusion.
Our Opportunity pillar brings to life
the experience that we want our teams
to have when they work for Whitbread,
combining career opportunities with
team wellbeing, underpinned by an
environment that is inclusive and
allows everyone to be themselves.
We will be for everyone, championing inclusivity and
driving diversity
We want to be as diverse as the communities we serve,
and create an environment for our teams and guests where
difference is valued. This year we have accelerated our
progress against our Diversity and Inclusion commitments,
which were put in place in 2020 to drive our progress. As a
result of strong progress to date, we have stretched and
extended our targets with additional 2026 representation
targets for gender and ethnicity in our leadership population.
We are pleased to be making progress with the diversity of our
leadership community, and proud to have been highlighted in
the 2021 FTSE Women’s Leaders review in the top ten across
the FTSE 100 for female representation at Executive/Direct
Reports level. We currently have 42% female representation,
and 5% ethnic diversity in our leadership population, and are
on track to deliver our 2023 diversity targets of 40% female
representation and 8% ethnic minority representation. We are
confidently on our way to achieving our 2023 targets, and
therefore now is the right time to stretch ourselves further,
recognising that we want to be as diverse as society at all
levels of our organisation. Our new 2025/26 targets stretch
female representation to 45% and minority ethnic
representation to 10%, in our leadership population.
Our commitments to greater diversity:
› To have greater diversity in our leadership population,
with a target of 8% ethnic minority and 40% female
representation by 2023, stretching to 45% female
representation and 10% ethnic minority by 2025/26
› Have targets for greater ethnic diversity in our middle
management population through stringent recruitment
practices that mitigate individual biases
›
Invest more in a diverse talent pipeline to ensure we
can promote diverse talent equitably
› Get better data and insight to understand individual
experiences further
Our commitments to greater inclusion:
› Equip our teams to be fluent around Diversity and
Inclusion, through mandated development and having
an accessible D&I hub
› Amplify the voices of all our minorities, through the
sponsorship of networks and forums
› Review our policies and practices to make sure they
are inclusive of minority groups
› Celebrate key events throughout the year
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We will listen genuinely to our teams, ensuring their views
help inform decision making
Across the UK and Germany, we have completed a significant
amount of listening throughout the year. Pulse surveys,
introduced during the pandemic, have now become our
preferred way of understanding our teams’ experiences in
both the UK and Germany. In the UK, over 7,000 team members
and managers from across our UK hotels and restaurants took
part in our autumn pulse survey. It was pleasing to see that the
focus on keeping our teams safe as restrictions eased had been
maintained, with 87% of respondents indicating that they felt
COVID-19 safe at work. We also maintained good scores against
areas of cultural strength; 86% of respondents reported fair
treatment regardless of personal background, 86% felt they
could be themselves at work (a key measure of inclusion) and
85% reported being trained well to perform their role.
Within our UK Support Centres we have regularly surveyed our
central teams. The surveys indicate that despite a prolonged
period of working from home, we have maintained areas of
cultural strength; 92% felt it was important that Whitbread is
a Force for Good, 92% were clear on how their role supports
Operations, and 88% feel able to be themselves at work. In
addition, 85% were proud to say they work for Whitbread.
In Germany, we conducted two pulse surveys in 2021. In our
most recent pulse survey, 77% of our teams felt well connected
to their team and 67% felt well informed about the business
and adjustments in their daily work.
Our Employee Forum; which we call Our Voice, is made up
of formally elected representatives from across our hotels,
restaurants and Support Centre. Our Voice is designed to
connect our senior leaders with our front-line teams for
two-way conversations about the business. Across this year,
sections of our representative community have regularly met
with Alison Brittain, Chief Executive; Simon Ewins, Managing
Director, UK Hotels & Restaurants; Nigel Jones, Group
Operations Director; Rachel Howarth, Chief People Officer and
our Operations Directors, to understand business challenges
from the perspective of our teams and to ensure that ‘employee
voice’ helps shape decisions that solve those challenges.
In May 2021, the Our Voice representatives had a pivotal role
in supporting the reopening of our hotels and restaurants to
ensure that any COVID-19 concerns were resolved. By working
closely with senior leaders, they relayed any concerns they
heard, helping us successfully reopen whilst maintaining the
confidence of our teams in our approach to keeping our
customers and our teams safe. The representatives within
Support Centre took the same approach as we reopened
our offices in the autumn.
Our representatives have also highlighted the increasing
importance of ensuring that wellbeing is considered in
everything we do and their feedback has helped shape
our activity plan into 2022.
Force for Good continued
OPPORTUNITY
TALVINDER
HEER
General Manager, Brewers Fayre, Old Brickworks, Leeds
Member of the Race, Religion and Cultural Heritage
Steering Committee
I am passionate about people and believe in the oneness
in humanity. I joined the Race, Religion and Cultural
Heritage network because I wanted to make a genuine
difference to our diversity agenda by working alongside
like-minded colleagues. In the modern world in which we
live, we have more diverse families.
I want future generations to have no barriers to entry, and
equality for everyone regardless of race, religion, gender
or sexuality.
I want to make the world a better place for everyone
through both educating and enlightening myself and
others. The collaborative work with my network
colleagues continues to be enjoyable, and something
I can do to contribute to Whitbread being more diverse
and inclusive in years to come.
Industry-leading training and development
In the UK, we have re-launched our induction programmes this
year, which has enabled our site managers to welcome, induct
and train over 20,000 team members. In total over 930,000
online courses have been completed by our UK operations
teams, enabling them to have the tools to do their job and look
after our guests with competence and confidence. In addition,
274 of our teams have completed their apprenticeships this
year. We are proud to have an apprentice programme available
for every role in Premier Inn and Restaurant operations, and this
year launched our management development apprenticeships.
These 18-month Level 4 qualifications will help support our
teams to progress their management careers with Whitbread.
In a year where we have filled vacancies with great talent
to serve our guests, our teams have also focused on building
talent pipelines for the future through the Government funded
Kickstart scheme. Offering work placements and training to
16-24 year olds, we have offered c.200 Kickstart opportunities
so far, with high levels of retention and engagement from
those on programmes. We hope that many will transition to
permanent employment with us at the end of their programme.
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Whitbread Annual Report and Accounts 2021/22 Team member wellbeing is considered in everything we do
Mental, physical and financial wellbeing has been invested in
throughout this year, enabling our teams to be their best, and
our managers to support their teams. Enabling our teams to
navigate a variety of personal and professional challenges,
across the peaks and troughs of the ongoing pandemic has
been absolutely crucial, enabling us to offer our teams
reassurance and support.
In 2021 we have:
›
Invested in more mental health first aiders, taking our
total to 54 mental health first aiders and 86 trained
mental health champions
› Listened to our teams about wellbeing and what is
important to them
›
Invested £150,000 in Hardship Grants, delivered through
our partnership with Hospitality Action
› Delivered training to our teams and line managers about
positive wellbeing
› Continued with Wellbeing Wednesday communications,
connecting our teams with relevant content every month
OPPORTUNITY
43
OPPORTUNITY
THOMAS
WIGGANS
Head Housekeeper – Liverpool Airport Premier Inn
and Our Voice representative
I decided to put myself forward as an Our Voice
representative because I have a passion for creating
a safe, happy and efficient working environment for
our teams. Whitbread is well known for being an
outstanding employer and I think it's really important
that we maintain that reputation and listen to the views
of our hard-working teams.
Since becoming an Our Voice representative, I have really
enjoyed communicating feedback to our Operations
Director and Managing Director, and building relationships
with multiple leaders in the business. They really show
how passionate our leaders are about the wellbeing of
our teams at our meetings. They have a real interest in
how we can work in different ways to improve our
business for our teams, and in turn, our guests.
NICOLE
BECKER-
MANGOLD
Assistant Hotel Manager – Premier Inn
Stuttgart Feuerbach
Nicole is one of the founding members of our German
Premier Inn Inclusion Network 'Nationality, Cultural
Origin & Religion', which was set up in 2021, because
of her personal experience.
In 2012, Nicole and her French-born husband adopted a
baby from Haiti, Skylar. Skylar quickly settled into her new
home and spread a lot of joy with her positive nature. Today,
Skylar is ten years old and goes to high school. She has a big
heart, is sporty, communicative, and socially integrated.
Unfortunately, these qualities have not protected her from
racist hostility throughout her life, from derogatory looks
to exclusion at kindergarten. That is why Nicole joined our
Inclusion Network, where she shares her experiences and
continues to learn from her colleagues.
We have brought our wellbeing strategy to life in a meaningful
and pragmatic way, supporting our teams in the moment they
need it, across the UK and Germany. Our Wellbeing Hub has
been an essential enabler and has opened up a variety of
choice and help for our teams to either use for themselves or
for their wider teams or family. We have also promoted the
excellent support our teams can get from Hospitality Action,
our Employee Assistance Programme, including wider exposure
of the Management Hotline to assist line managers. All of this
support has helped us be very clear to our teams, particularly
all our new team members, that team member wellbeing is
considered in everything we do.
Listening groups have enabled us to build a greater
understanding of some of the issues our teams have faced
across the last year. Within Support Centre, a series of
listening groups across our central teams enabled us to shape
how we returned to the office once Government restrictions
were eased in the autumn of 2021 and enabled us to develop
our hybrid approach to working, balancing working from home
and within our sites. Across Operations we listened to our
salaried managers to identify the root causes of their workload
pressures and the knock-on impact on their work/life balance,
listening to their recommendations about where we could
remove tasks or make things easier.
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44
COMMUNITY
The community pillar is all about making a meaningful contribution to the
customers and communities we serve.
COMMUNITY
TARGET
We will raise £20m for
Great Ormond Street Hospital Children’s Charity
PROGRESS AGAINST TARGETS IN 2021/22
£20m
raised over our ten-year partnership
We will strive to be a leader in our sector for
delicious, appealing and healthier children’s food
We continue to be a signatory of Peas Please and have
been externally recognised for our children’s menus
Public Health England
20% sugar reduction
This year we have reduced the sugar in our Beefeater
and Brewers Fayre puddings by 6% and 11% respectively
against a baseline of 2015 as part of the Office for Health
Improvement and Disparities sugar reduction programme.
We understand the importance of industry collaboration to
drive forward the health and nutrition agenda and Whitbread
are members of the British Nutrition Foundation, the Institute
of Grocery Distribution as well as their Industry Nutrition
Strategy Group.
This year our Chefs have been working hard to ensure that our
guests always have a range of vegetarian and vegan choices on
our breakfast, lunch and dinner menus. We added over a dozen
new options this year, bringing our total number of vegetarian
and vegan dishes to over 80. We know this is a fast-growing
segment and were pleased to launch our first Meat-Free
campaign in January 2022, for Veganuary, signposting to our
guests our extensive meat-free and plant-based offering across
all our brands and platforms. For some brands and dayparts,
we saw a 10% increase in meat-free dishes sold in this period.
10% of all our dishes are already meat free across all our restaurant
brands. We will continue to create delicious dishes that meet the
changing needs of the UK population, catering for all dietary and
lifestyle needs and being conscious of religious beliefs.
Looking after our guests
We have a long-standing commitment to supporting the
Government in its endeavours to tackle obesity in the UK.
Since 2012, we have made a positive contribution by working in
partnership with Government, suppliers and industry partners
on nutrient reduction programmes and regularly develop our
menus. We have been recognised by the Soil Association’s Out
to Lunch survey as well as being invited by Government to be a
founding member of the Out of Home Food and Drink Alliance.
We regularly review children’s dishes to ensure that salt, added
sugar, saturated fat and total fat levels are kept to a minimum
while ensuring that we still maintain taste and appeal to
children. We support the five-a-day message in offering fruit
and vegetables in starters, main courses and desserts.
Brewers Fayre and Beefeater have been externally recognised
by the Soil Association in their Out to Lunch surveys over the
last five years, coming in the top ten of restaurant chains to
offer family-friendly, nutritious and sustainable children’s menus.
Brewers Fayre continues to be a signatory on the Peas Please
Pledge, offering two portions of vegetables with every child’s
main meal. We will be reporting back on our progress to The
Food Foundation in summer 2022.
This year we have reduced the sugar in our Beefeater and
Brewers Fayre puddings by 5.8% and 11% respectively against a
2015 baseline as part of the Office for Health Improvement and
Disparities (OHID) target to reduce sugar by 20%. In 2019 we
had exceeded this target with a 31.2% and 33.9% reduction, but
we changed this to per 100g to align with OHID reporting
requirement. We remain committed to reducing sugar in our
dishes and will work towards targets set by the next stage of
the OHID’s sugar reduction programme.
We want our guests to be able to make informed choices about
the food and drink they order. So, in addition to calorie labelling
being available on our websites and in restaurants, we will
ensure that calorie labelling for all our dishes is available at all
customer points of choice including delivery platforms and apps
in line with Government guidance.
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Whitbread Annual Report and Accounts 2021/22 45
Our Partnership with Great Ormond
Street Hospital Children’s Charity
COMMUNITY
COMMUNITY
£20 MILLION
RAISED
Our partnership with Great Ormond Street Hospital
Children’s Charity has been a long-standing and very
successful one. Despite the challenges of COVID-19, this
year we have continued to raise money in many different
ways, for example, through raffles, races, and Santa
sprints. We are thrilled to have reached a total of
£20 million since we started our partnership in 2012.
In July 2021 the doors of the Sight and Sound Centre,
supported by Premier Inn, opened for the first time. This is
the UK’s first dedicated medical facility for children with
sight and hearing loss, and will aid over 8,000 children a
year. The new facility is specially designed for the unique
sensory needs of children with sight and hearing loss and
replaces the outdated facilities in one of the hospital’s
oldest buildings. We set out to raise £10 million for this
centre and have only been able to achieve this target
through the tireless and creative fundraising of team
members and supply chain partners, and the generosity
of guest contributions.
This year we also piloted an innovative partnership with
DripDrop to provide an automated umbrella rental
service at 30 hotels. Not only does it provide guests
with an escape from the weather but all profits
generated are donated to the Great Ormond Street
Hospital Children’s Charity.
At the end of 2021 we undertook a review of our charity
partnership, reaching out to our teams to ask them who
they wanted to fundraise for. After a thorough pitch
process from a range of charities, we were thrilled that
Great Ormond Street Hospital Children’s Charity came out
top and we have committed to continue our partnership
with them.
SUPPORTING
OUR NEW
CHARITY PARTNER
IN GERMANY
In October 2021 we started working with CHILDREN, a
German charity organisation fighting child poverty in
Germany. CHILDREN supports an operational network of
70 sites all over the country. The local sites are partly
financed by local authorities and the contribution
received from CHILDREN enables the creation of
additional programmes and further support.
The programmes focus on developing new skills and
practical experiences to unlock the potential of the
participating children and teenagers. The organisation
also funds a nutrition programme where children receive
a daily healthy meal at their local site.
Since the partnership began, the teams have raised
€25,000. This has been raised through a combination
of employee donations and the Housekeeping Initiative;
if a guest chooses to forgo their daily visit from
Housekeeping, an automatic donation goes to the charity.
The Housekeeping Initiative is an important programme
for Premier Inn Germany, and we envision an increased
fundraising capability in the upcoming year as the
programme matures.
Supporting local communities
We continue to work in, and support, the communities where
we open new sites. This includes donating volunteer hours to
support local charities and community projects with each new
site opening. Due to COVID-19 restrictions, we didn’t engage
fully with community events until the final quarter of this year;
during this quarter we opened five sites and donated 200 hours
to community engagement projects. These included food
collections for local food banks and supporting local gardening
and sustainability groups. We have also started recording the
number of jobs that we create with each new opening and are
proud to report that we have created 784 new jobs directly
through new site openings.
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RESPONSIBILITY
Always operating in a way that respects people and the planet.
46
RESPONSIBILITY
TARGET
Whitbread’s critical commodities 100%
accredited against robust standards
100% of our suppliers risk assessed
against Force for Good criteria
We will eliminate unnecessary*
single use plastic by 2025
We will cut food waste
by 50% by 2030
We will become Net Zero† for carbon emissions by 2040
We will minimise water use across our business and
champion water stewardship within high-risk areas
We will not send any
waste to landfill
PROGRESS AGAINST TARGETS IN 2021/22
100%
of whole shell egg and 52.6% of our ingredient
eggs have cage free status
100%
of our whole fish is certified to internationally accredited
sustainability standards, e.g. MSC, BAP and Global GAP
100%
of our beef range in the UK is produced to a recognised farm
assurance scheme in its country of origin such as Red Tractor.
We are now RSPO supply chain certified
100%
of suppliers risk assessed
In progress – this has been another challenging year for this
target with the impact of COVID-19 but we will renew our
focus on this in the coming year.
32.3%
reduction from our baseline year
50.1%
Scope 1 and 2 intensity reduction from the 2016/17
baseline year
62,000m3
of water saved through internal water auditing
and supply pipe leak detection – the equivalent
of 25 Olympic swimming pools.
99.9%
of our operational waste diverted from landfill
* 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.
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Whitbread Annual Report and Accounts 2021/22 47
RESPONSIBILITY
GREEN
BOND
Following the issuance of £550 million in Green Bonds in 2021,
we have been managing and monitoring the use of proceeds
against the projects outlined in our Green Bond Framework.
This includes spend against our sustainable procurement,
such as MSC fish and FSC timber, our green building projects
(all construction done to BREEAM excellent or above) and
our renewable energy costs. To date we have allocated over
£404 million of the total amount. This spend has been
allocated to projects looking back 36 months as well as
financing projects in 2021/22. The use of these proceeds has
led to 45 sites being constructed to high environmental
standards, 311,000 Tn Co2 emissions avoided and 100% of
consumables and fish allocated against it were procured to
certified sustainable standard. You can read the full report
on www.whitbread.com/governance/reports-policies
Managing a sustainable supply chain
In 2020, we became the first UK budget hotel chain to become
members of Better Cotton (formally ‘The Better Cotton Initiative’)
and have spent the last year working with our suppliers to
increase the amount of cotton we source sustainably, for our hotel
linen plus Guest Buys the Bed (Sartex). In collaboration with our
laundry suppliers and Better Cotton we have begun to develop
new ways of working to deliver sustainable cotton for rented
linen, which the hospitality industry relies on. In 2021, with one of
our hotel laundry suppliers alone, we achieved 76% of the cotton
in replenished hotel laundry sourced as more sustainable cotton,
through Better Cotton, an ISEAL accredited standard system. For
our Guest Buys the Bed sales, 15% of the cotton in 2021, was
sourced as more sustainable cotton, through Better Cotton. These
figures relate to the 2021 calendar year.
This year we became RSPO supply chain certified. This means
we now have certified processes and systems to maintain the
chain of custody of certified palm oil in our organisation. We
are the first hotel brand to have this certification and will now
start working to ensure that 100% of the palm oil that comes
into the business is certified. This is in addition to the fish, eggs,
and beef that we continue to have audited to ensure responsible
practices by our suppliers.
We are determined to eradicate any human rights issues in our
supply chain, and we continue to work with experts in modern
slavery such as Stop The Traffik to help us risk assess suppliers and
provide expertise on industry engagement. We were pleased to
be the winner in the Best Initiative to Deliver Social Value through
Procurement awards from Chartered Institute of Procurement &
Supply at its Excellence in Procurement Awards. This recognised
a construction-sector engagement programme that we ran.
It aimed to identify root cause issues of modern slavery in the
construction industry in order to create a wider opportunity
to mitigate this risk. You can read our full Modern Slavery Act
Statement at www.whitbread.com/governance/reports-policies.
Our ambition to reach Net Zero
In the run up to COP26 we signed up to the Race to Zero
pledge and pulled our Net Zero target for Scope 1 and 2
forward from 2050 to 2040, which is aligned to a 1.5 degrees
pathway. We have also committed under the Science Based
Targets initiative (SBTi). We set new targets for our Scope 3
emissions and will be working with our suppliers to reduce
emissions by 50% by 2035 and 64% by 2050. Our focus for
Scope 3 in the coming financial year will be to develop detailed
plans to reduce Scope 3 emissions, review data management
systems and continue our engagement with suppliers.
This year we reduced our emissions by 50.1% from our 2016/17
baseline year. As per the previous year, this reduction is
impacted by our sites being shut at some points in the year
due to COVID-19 related restrictions, but we are continuing
to reduce our emissions through energy saving strategies
and employing new technologies. For example, this year we
worked with Endo Enterprise to add an energy saving additive
to 502 boilers across 400 of our restaurant sites. The additives
increase the surface area of heat transfer, making the system
more efficient; year-on-year savings on some sites have already
shown up to 10% reduction on gas use over winter.
We have also continued the replacement of grills to more
energy efficient versions, this year installing 150 new grills
across 103 sites, bringing the total of new grills to 520 since
we started this project in 2018. This project has seen an overall
50% gas reduction in our chargrills.
RESPONSIBILITY
FARESHARE
This year we have reduced food waste by 32% against our
baseline year through continued efficiencies and donating
food that would otherwise go to waste. We do this
through partners such as FareShare who collect our food
and distribute it to local charities. This year we donated
over 622,000 meals to some of the people most in need
as many households continue to be impacted by COVID-19
and the cost-of-living crisis. Food from Whitbread went to
over 2,152 charities from around the country, from Youth
Hubs in Scotland to community food kitchens run by
social housing estate residents in Wales. Emma Brown,
Commercial Manager at FareShare, says: "We receive
a range of good quality food from Whitbread,
including meat and dairy, which enables the charities
and community groups we work with to provide
nutritious food to people most at need."
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FINANCIAL DISCLOSURES
48
This process identified a number of risks and opportunities that
were categorised by the following three risk types:
Hot House
World
3-5°C+
Preparing our business for climate change
We know that climate change is already happening, and that
businesses must be prepared for the changes this will bring,
from increased precipitation and higher temperatures affecting
UK operations, to energy price rises, potential commodity
shortages and supply chain disruption. Understanding these
risks is key to ensuring that the business remains in a strong
position to navigate this more uncertain future.
Last year we set out our commitment to build on the work
already being done against the recommendations of the TCFD.
This year we are proud to have published our first full report
under those recommendations.
The full TCFD report outlines the process we undertook to
identify the principal climate-related issues which have affected
and will potentially affect our businesses, strategy, and financial
planning. This included detailed assessment of activity and
climate-related risk and opportunity in the following areas:
› Products and services
› Supply chain
› Adaptation and mitigation activities
› Operations
› Acquisitions or divestments
› Access to capital
Transition risk
› Policy, regulatory and legal changes
› Technology shifts
› Changing market demand
Physical risk
› Acute: event driven, e.g. extreme weather, flood risks
›
Chronic: longer term shifts in climate patterns,
e.g. sustained higher temperatures
Connected risk
› Second order risks arising from transition or physical risk
impacts, e.g. recessionary pressures
We then undertook climate scenario analysis aligned to
the Network for Greening the Financial System (NGFS),
a consortium of central banks that have developed climate
scenario analysis tools. We analysed our key risks using three
NGFS reference scenarios, analysing risks across the Orderly
Transition, Disorderly Transition and Hot House World scenarios,
with existing and planned mitigating activity reviewed:
Network for
Greening the
Financial System
Approx.
temperature
increase
Orderly
Transition
1.5-2°C
Disorderly
Transition
1.5-3°C
Summary
Decisive global
policy action is
taken to limit
global warming
from early 2020s.
Policy measures
are delayed until
late 2020s/early
2030s, meaning
increased costs,
e.g. higher carbon
prices.
No new policies
are introduced,
leading to
increasing physical
impacts.
Working with key stakeholders across the organisation, we
identified a number of key risks and opportunities related to
climate change over a short-, medium- and long-term horizon.
These are outlined in the following table. Each risk and
opportunity was assessed and analysed against three climate
scenarios, and existing and planned mitigating activities were
reviewed. Modelling was undertaken, where feasible, with the
aim of understanding the quantification of each of the risks
and our opportunities in our business.
This process demonstrated no material concern in the short
(0-2 years) or medium (2-5 years) term. In part, this is due to
the strong mitigating activity already in place to manage our
risks, and the further alleviation provided when the relating
opportunities were taken into consideration.
Our aim is to develop this disclosure year on year as we build
on the granularity of our data and processes in line with the
TCFD and continue to make sure that we are aware of, and
prepared for, the impacts of climate change.
You can see a list of the key risks and opportunities
on the next page and can read the full report at
www.whitbread.com/governance/reports-policies.
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Whitbread Annual Report and Accounts 2021/22 49
RISK DESCRIPTION
Physical risks
Operations: Increase in energy costs. For example, from heating and cooling due to changing and extreme temperatures.
Operations: Risk of increased cost of water/reduced availability due to climate induced water scarcity.
Supply chain: Challenges with sourcing goods and services potentially leading to increase in costs or reduced ability to operate at
high standards. This is particularly true for agricultural items sourced from high-risk areas or if crops/ingredients are particularly
susceptible to temperature variations and extremes. Climate change has potential to reduce crop yields.
Potential for climate change to negatively affect livestock leading to scarcity or increased prices (due to increased prevalence of
disease due to climate change, and requirements to stop using land for livestock feed leading to increased prices). Similarly higher
welfare standards may lead to increased prices.
Buildings: Risk of increased building/equipment costs due to higher specification requirements. For example, increased cost/
complexity/timeframes involved in the planning process such as BREEAM requirement for Excellent, zero emissions at point of
use legislation for new space being introduced (for example: no gas, no F-gas), and biodiversity requirements.
Buildings: Physical damage to owned buildings due to increased frequency and intensity of extreme weather (e.g. storms, flooding)
leading to damage to buildings, increased maintenance costs, delays in repairs and in the worst-case scenario leading to inability to
operate business, e.g. closure after a flood, or frozen pipes bursting leading to water supply disruption.
Supply chain: Logistics problems for goods/manufacturing materials in supply chain which are unavailable or delayed as a result of
climate impacts leading to increase in costs or reduced ability to operate at high standards.
Transition risks
Policy: New and emerging climate legislation which increases costs around energy, waste reduction and packaging, including
greater requirement for recycling.
Policy: Risk that hotels are required to invest more in low-carbon technologies. For example, new boilers, targets for efficient buildings,
new cooking systems, remove F-gas when doing a refurbishment, resilience measures etc.
Market: Less consumer business travel due to increased use of videoconferencing and desire by businesses to reduce carbon
emissions associated with travel.
Market: Severe weather impacting guest visits/stays leading to cancellations.
Reputation: Risk brand is not aligned with increased awareness of climate impacts. For example, our Beefeater brand’s core product
is associated with steak, with its high carbon emissions.
Reputation: Risk our brands fail to align with changing trends. For example, vegetarian/vegan food preferences, preference for locally
sourced food, sustainable management.
Connected risk
Market: Recessionary impacts arising from the impact of climate change.
OPPORTUNITY DESCRIPTION
Increase in non-business customers who are choosing to holiday locally, either because of climate concerns or because
of increased costs associated with overseas travel.
Ability to capitalise on trend towards veganism/vegetarianism by further expanding menu options to cater to this growing
segment of the market.
Attract more customers who are focused on climate change – align brand proposition to climate friendly offering to
maintain and grow market share, e.g. ‘net negative carbon rooms’, ‘net negative carbon beds’, eco-friendly hotels etc.
Travel management companies and corporates are increasingly asking about climate change programmes including
to support their own Scope 3 targets.
Cost reduction by investing in low-carbon technologies and energy efficiency/implementing energy saving measures.
Attract and retain staff by being seen as a sustainability leader.
Opportunity to utilise enhanced position within the market due to quality and sustainability position to mitigate against
higher operating costs.
Opportunity to use scale to drive suppliers to sustainability at scale.
Addition of Electric Vehicle charging points in car parks to attract more customers and increase on-site renewable
energy generation capacity, both of which have potential to generate additional revenue.
Opportunity to source local food and other input materials, which may have a positive marketing benefit and be viewed
favourably by customers.
Our Compliance Statement
Whitbread PLC has complied with the requirements of LR 9.8.6R by including climate-related financial disclosures consistent
with the TCFD recommendations and recommended disclosures.
Whitbread’s full climate-related financial disclosure is set out in a separate document entitled ‘Task Force on Climate-Related Financial
Disclosures – Whitbread PLC’ which can be found on our website. It has been published as a separate document in order to provide
its own context, impact and reporting specific to the key risks and opportunities that have been identified within it.
A description of the key recommended disclosures, how we have responded to and approached them, and where this can be
found in the report is on page 115.
You can read the full report at on www.whitbread.com/governance/reports-policies.
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SECTION 172 STATEMENT
Maintaining and developing positive relations with all the
stakeholders who may be impacted by the decisions we make
is a critical factor in ensuring long-term sustainable success
for our business. Stakeholder engagement is central to the
formulation and delivery of our strategy. As the strategy for
the Group is developed, the views and interests of various
stakeholders are factored in to the strategic options, including
the views of customers, employees, shareholders and suppliers.
Equally, the impact of Group strategy on the communities in
which we operate, and on the environment, is considered.
That way, the strategy of the Group is developed directly
with those interests in mind.
Equally, the interests of all relevant stakeholders are carefully
considered by the Board and the Executive Committee as and
when specific decisions are made throughout the year. In its
decision making, the Board 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.
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 Chief Financial Officer’s report gives details on recent
interactions with shareholders, lenders/bondholders and
Pension Trustees discussions, and qualitative feedback on
specific concerns.
› The Chief People Officer's report provides details of all
relevant employee-related matters, including feedback from
the 'Our Voice' forums.
› 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. It also includes best practice
guidance on section 172 compliance.
› The Chief Executive’s report gives details of any relevant
interaction with Government or regulators, and key issues
with suppliers and landlords.
› Board debate on possible mergers and acquisitions include
wider impact assessments, considering issues such as
integration with the current business, management
capabilities, the impact on team members, 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
51 to 54.
Consideration of stakeholders in decision-making process
The Board receives detailed agenda papers a week ahead
of every meeting, giving directors sufficient time to perform
their duties in line with section 172
Whitbread organises various training programmes
for directors to keep them up to date on all aspects
of the business
The Board receives feedback from employees, customers,
investors and other stakeholders so it is abreast with the
pulse of the business
Board information
The Board relies on
the diverse experience
of the Board members
All decisions are
aligned to the values
and culture of the
organisation and
keep in mind
all stakeholders
External advisers
The Board and its committees meet eight times a year and
additional meetings are held on an ad hoc basis as required
Board decision
All decisions and actions are reviewed to ensure
the intended outcomes are achieved
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Whitbread Annual Report and Accounts 2021/22 STAKEHOLDER ENGAGEMENT
51
Employees
Our greatest assets are our people. A talented, engaged, motivated
and diverse workforce is critical in the delivery of our strategy.
What matters to employees
› A healthy and safe working environment
›
Industry-leading training and development programmes
› Market-leading reward and retention structures
› A business that considers team member wellbeing (physical,
mental and financial)
› An inclusive culture that values difference, allowing everyone
to be themselves at work
› Career development opportunities
› Open, honest and transparent management processes
How the Board engaged
› The Board delegates overall reward and remuneration structures to
the Remuneration Committee. The Committee considers the wider
workforce pay alongside executive remuneration. Annual pay rises
for executives are reviewed in the context of the treatment of the
wider workforce.
› The Board receives monthly data in the monthly KPI pack regarding
team retention, and the monthly data is considered carefully.
› The Chief Executive in her report specifically mentions team
retention and reward strategies, and makes proposals for approval.
› Over the year, the Board has approved specific retention packages
for key team members, e.g. kitchen teams and housekeeping teams,
and has approved increases in hourly pay over and above the
National Living Wage for hourly paid team members.
›
'Our Voice', a body made up of elected representatives across the
business, represent the views of employee constituencies to senior
management. The Board receives reports of these meetings.
› The Board has set eight specific Diversity and Inclusion targets to
ensure that the business is properly representative of the
communities in which we operate. Good progress has been made in
relation to these targets. Read more on page 40.
› Diversity and Inclusion is considered as part of all Board
appointments. This is guided by the Board Diversity Policy, which
was introduced in 2021. In addition, Whitbread was recognised with
a Gold Award for Excellence in the Stonewall Workplace Equality
Index 2022 and has won the Top Employers Institute Award for
12 consecutive years.
› The Board considers succession plans for key team members across
the business.
› The Board receives reports on health and safety management
bi-annually; statistics are included in the KPI pack, and any incidents
are reported straight away to the Board.
Outcomes of engagement
› Diversity and Inclusion achievements, see page 40 to 41
› Pay and reward levels above National Living Wage, see page 34
› Board appointments
›
Improved health and safety scores. Of the 2,586 COVID-Secure
audits completed there was a failure of just 0.15%.
› Significantly enhanced engagement on the subject of mental
health and staff wellbeing, particularly through the pandemic
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Stakeholder Engagement continued
52
Customers
Investors
Customers are at the centre of our business and Board decisions
are driven by providing our guests with an exceptional hospitality
experience so they keep coming back.
The Investor Relations team holds regular investor meetings centred
around our Group strategy and performance, and also around ESG
strategy and Force for Good.
What matters to customers
What matters to investors
› A great choice of hotels to stay in and restaurants to eat in across the
country, wherever our customers choose to be, at competitive prices
› Brilliant service
› Consistently excellent standards in our hotels and restaurants
which are clean, safe and fit for the wishes of our customers
› Healthy menu choices including vegan and fish items on the menu
› Responsibly sourced food, beverage and other products
› Clear and well communicated strategy for the Group
› Financial performance, as we have recovered from COVID-19,
particularly by reference to the competitor set
› A proactive programme of engagement on key topics
› Leadership and governance
› A leading ESG programme
How the Board engaged
How the Board engaged
› The Board receives data on customer satisfaction scores each month
› The Board receives monthly data on changes to the share register
› The Board receives a monthly report on commercial, pricing and
operational performance each month
› Quarterly, including as part of the strategy day presentations, deep
dives are provided into pricing and commercial strategies in the UK
and Germany
› The Board approves the refurbishment, and repairs and maintenance
programmes, and has insisted on a programme of investment
through a cycle in which the business has been challenged, to make
sure that the portfolio is in the best condition possible for customers
› The Board considers room innovations periodically, e.g. Premier Plus
rooms, twin rooms
› The Board considers marketing campaigns and digital strategies
›
Innovations in menu choices have been presented to the Board and
the Board ensures that healthy and nutritious choices are provided
for all customers
› The Remuneration Committee includes customer measures in the
remuneration structures for key team members
and on the programmes which we have of engagement with
shareholders and other investors
› The Chairman and General Counsel consulted with a broad range
of major shareholders in September, at which topics such as strategy,
performance, leadership and ESG were covered
› The Chair of the Remuneration Committee and the General Counsel
have consulted on the new remuneration policy. The new policy
has been amended in the light of the feedback from shareholders,
and will be presented for a shareholder vote at the AGM
› The Chief Executive and the Investor Relations team have held
numerous meetings with shareholders, banks, bondholders and the
Pension Trustees throughout the year
› A Triennial Valuation has been completed this year for the pension
fund, and payment schedules into the fund discussed and approved
by the Board
› The Board receives a presentation at least once each year from the
brokers on the current views of investors and on issues which need
to be addressed
› The Board considers very carefully the Company share price, and
whether the Company is fairly valued, as well as the matters which
could be addressed to generate incremental value. For example,
accelerating the growth of the German business, the value of the
property portfolio, and M&A transactions
Outcomes of engagement
›
Improved customer satisfaction scores
Outcomes of engagement
› Changes to remuneration policy
› Market outperformance demonstrates the value of the
brand proposition and its popularity
› Enhancements in ESG programme, e.g. bringing forward
our Net Zero target by ten years
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Whitbread Annual Report and Accounts 2021/22 53
Suppliers
Communities and the Environment
The Board values its relationships with suppliers and fosters these
carefully to ensure the long-term sustainable success of the Company.
What matters to suppliers
› Support through the pandemic
› Payment on time and in full
› Good communication: strong and consistent levels of demand,
and transparent feedback on performance
› Tackling modern slavery
› A plan to reduce carbon through the supply chain
How the Board engaged
Whitbread is committed to doing right by the communities we
operate in and the environment. This is embedded in our Force
for Good programme spearheaded by Chris Vaughan, Company
Secretary, and brought to life in our ambitious sustainability targets.
What matters to communities and the environment
› An industry-leading health and safety programme
› We touch a significant number of communities across the whole
country, and we aim to make a meaningful difference to the
communities where we operate
› The raising of substantial funds for our chosen charities,
national and local
› An environmental programme which is industry leading, including
a Scope 1 and 2 Net Zero carbon target by 2040, Scope 3 carbon
targets in line with 1.5 degrees of global warming, and targets to
eliminate single-use plastics and reduce food waste
› Tackling modern slavery
› Leadership and governance
How the Board engaged
› Given the supply chain issues and increased costs as we have emerged
from COVID-19, the Board has received regular updates on issues such
as shortages of supply, the impact on the business and on other
stakeholders, and cost inflation, and strategies to tackle each
› The Board has received presentations regarding our sustainability
programme, Force for Good, and has challenged the targets which
were proposed
› The Board receives monthly updates on key developments in the
› The Board has received deep dives into certain suppliers,
Force for Good programme
› The Board has received information on the amount of fundraising,
with our chosen charity partner, Great Ormond Street Hospital
Children's Charity
for example technology partners
› The Board approves a Modern Slavery Act Statement each year
› The Board approves material contracts with suppliers each year
if they are of significant size and importance. This year, the Board has
reviewed and approved contracts with Oracle, Fujitsu, laundry
providers and energy suppliers
› The Board has received presentations on sustainability, which
includes the responsible sourcing of critical commodities, Scope 3
carbon emissions, the reduction of single-use plastics, and the
reduction of food waste
› This year, the Board has approved the delivery of over
500,000 meals to FareShare, a charity which delivers food
which would otherwise be wasted, to foodbanks
Outcomes of engagement
Outcomes of engagement
›
Increased levels of engagement with the supply chain to
ensure continuity of supply
› Nearly £20m has now been raised for GOSH Charity
› Carbon emissions have reduced by 50.1% since our
› Training and development for certain suppliers regarding
base year of 2017
modern slavery and ethical sourcing
› Payment terms having been maintained and, in some cases,
enhanced through COVID-19
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Stakeholder Engagement continued
54
Lenders
Pension Trustee
The Board has identified our key lenders as our syndicate of banks that
participate within our revolving credit facility, and our bondholders,
who hold our 2015 and 2021 issued bonds.
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.
What matters to lenders
What matters to the Pension Trustee
› Our current performance and financing strategy
› Pension scheme funding and investment strategy that ensures the
› The nature and quantum of debt and level of liquidity of the Company
› Our ability to service the debt interest payments and repayment
at maturity
› Our credit rating and commitment to investment grade metrics
› Our covenants and compliance certification
› The Green Bond Framework
long-term security of members’ defined benefits
› Value for money defined contribution arrangements and engaging
communications that support members in saving for retirement
How the Board engaged
How the Board engaged
› Once a year the Chief Executive and Chief Financial Officer meet the
key lenders within the revolving credit facility to discuss the annual
results and business performance.
› The Chief Financial Officer 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 holds a fixed income call with our bondholders after the
› The Chief Financial Officer regularly interacts with the Chair
annual results presentation.
of the Trustee.
› Our Group Financial Controller 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.
› 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.
› The Board receives presentations in relation to pension issues,
including regarding the funding position, triennial valuation and
investment performance.
› During the year, the 31 March 2020 funding valuation was completed
and, as part of the valuation discussion, it was agreed to make
changes to the security package that supports the pension scheme.
This involved the removal of an EBITDA-related covenant and an
increase to the property security that the Trustee holds.
Outcomes of engagement
Outcomes of engagement
› Debt capital structure that is optimum for the Group
› Strong and open relationship with the pension scheme Trustee
› A base of lenders that can support the Group's financing and
› Well-funded pension scheme and security of defined benefits
operational needs
› Robust relationships with lenders that are continually monitored, and
facilitate refinancing and access to sources of finance when needed
› The support and access to product offerings that the lenders provide
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Whitbread Annual Report and Accounts 2021/22 55
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. Our due diligence process is that each policy and standard is reviewed annually by the responsible party
and updated accordingly to ensure it reflects up to date and accurate information. Further information on the various policies
mentioned below and throughout the report can be found on our website at www.whitbread.co.uk/governance/reports-policies
REPORTING REQUIREMENT
POLICIES AND STANDARDS WHICH
GOVERN OUR APPROACH
SEE FOR ADDITIONAL INFORMATION
Anti-corruption and anti-bribery
› Anti-Bribery Policy
› Code of Conduct
Employees
› Gender Pay Gap Report
› Health and Safety Policy – Statement of Intent
› Speaking Out Policy
Corporate Social Responsibility
Human rights
Privacy
Social matters
Sustainability reporting
› 2020/21 Environmental, Social & Governance 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
› Whitbread PLC Board Diversity Policy 2022
› Customer Privacy Policy
› Data Protection Policy
› Employee Privacy Policy
› Gender Pay Gap Report
› Responsible Sourcing Policy
› Diversity and Inclusion statement
› Corporate Governance, pages 74 and 75
› Nomination Committee Report on page 85
› Force for Good, pages 36 to 49, and sections
highlighted with Force for Good logos
› Section 172 statement on page 50
› Anti-corruption and anti-bribery on page 74
› Force for Good, pages 36 to 49, and sections
highlighted with the Force for Good logos,
in particular our Force for Good targets
› Read the full reports on www.whitbread.com/
governance/reports-policies
› Force for Good, pages 36 to 49, and sections
highlighted with Force for Good logos
› Corporate governance, page 74
› Force for Good, pages 36 to 49, and sections
highlighted with Force for Good logos
› Diversity and Inclusion targets and commitments,
pages 40 and 41
Description of principal risks and impact of business activity
› Principal risks and uncertainties, pages 56 to 60
Description of the business model
Non-financial performance indicators
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. For further
information, see pages 40 and 41.
› Our business model, pages 22 and 23
› Our strategy at a glance, pages 24 and 25
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information 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 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
functional areas complete an annual review of the risks
relevant to the achievement of their strategic goals, while
managing 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.
56
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.
Risks identified are often highly interdependent, meaning
changes to one risk can affect multiple existing risks or result in
new risks being created. Our Risk Working Group allows us to
effectively monitor these interdependencies and identify
associated new risks by taking feeds from across the business,
evaluating findings, and reporting 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
creates 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 and
measures whilst assessing our ability to reduce risk through
mitigation. This ensures alignment between our view of
acceptable risk exposure and the strategic priorities of the Group.
The Executive Committee communicates its appetite for risk,
which is then embedded within our ways of working, meaning
that risk appetite is considered both in the management of
existing risks and 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, but at this present time are
not clearly or fully understood in terms of their nature or value.
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 monitored within the
functional areas and also reviewed regularly by the Executive
Committee and managed through the risk management
framework as appropriate.
With the world now largely adjusted to the disruption caused
by the pandemic, the extent to which existing global and
economic climate risks have been exacerbated by the fractured
international response to the pandemic is becoming clear. As
our business returns to normal operating capacity, there is
opportunity for previously unforeseen risks to emerge, meaning
that it is too early to move away from the heightened risk state
adopted during the pandemic.
One such emerging risk is continued geopolitical conflicts, in
particular the ongoing Russian invasion of Ukraine. These
conflicts have the potential to both create new previously
unforeseen risks, and affect existing risk in areas which could
have a significant impact on Whitbread, for example the
downturn of global economies, widening of sanctions, movement
of key resources, consumer sentiment and willingness to travel.
Identifying and quantifying the impact of risks associated with
such conflicts is difficult, given their continually evolving nature.
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Whitbread Annual Report and Accounts 2021/22 57
Risk management framework
BOARD
AUDIT COMMITTEE
I
I
N
O
T
A
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A
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S
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D
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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 on pages 68 and 69
Read more on pages 80 to 81
I
I
S
N
O
T
A
C
N
U
M
M
O
C
D
N
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EXECUTIVE COMMITTEE
INTERNAL AUDIT
REVIEW, CHALLENGE AND APPROVAL
OF GROUP RISKS
COORDINATION AND ANALYSIS
Read more on page 70
Read more on pages 82
,
Y
G
E
T
A
R
T
S
,
E
C
N
A
N
R
E
V
O
G
However, as a business we have been, and will continue to,
carefully monitor all associated developments.
both top talent and customers. As a business, being able to
identify these shifts early is imperative to our success.
As an organisation, we are facing increased regulatory and
compliance requirements across areas such as corporate
governance and controls; external disclosure; and sustainability
which may have a substantial impact on anything property
related or time bound pressures to meet targets. As new
government bodies or pressure groups are formed, the pace
or quantum of change is uncertain.
International sourcing and supply chains globally are under
stress, as they adapt to demand levels and resourcing issues,
with further disruption to UK markets caused by trade
regulations. As pressure on supply chains persists, we are
reviewing our continuity plans especially around critical
suppliers, whilst ensuring consideration of new and
changing risk against our ethical and sustainability targets,
and control frameworks.
Talent retention and labour supply are a key risk for Whitbread.
Whilst we are effectively managing the immediate need to staff
the business, the labour market is rapidly changing. Younger
generations are driving change in the workforce with new
requirements and expectations from careers and their wider
network. This presents an exciting challenge and opportunity
for Whitbread, where we champion the importance of a diverse
and inclusive culture. As expectations change, there is the
potential to affect risks associated with attracting and retaining
COVID-19
COVID-19 has continued to cause significant disruption to
operations and trading activities throughout the financial year
as both the UK and our overseas operations moved in and out
of restrictions. Whilst the virus is now more endemic in nature,
the unpredictability of new variants and the associated public
reaction to each new variant mean the industry continues to
be impacted.
We have harnessed the lessons learned in the past two years as
we continue to navigate and evaluate the ongoing impact of
COVID-19. Through remaining alert and responsive to the
pandemic situation, both in the UK and overseas, we are
working to identify and mitigate associated risks, such as the
structural shifts detailed in the principal risks table overleaf, at
the earliest opportunity. It is this ability that allows 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 on pages 58 to 60.
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58
PRINCIPAL RISKS
Strategic priorities
1
Innovate and grow in our core UK businesses
2 Focus on our strengths to grow internationally
3 Enhance our capability to support long-term growth
Lower
Higher
Level
Strategic
priorities Risk
Movement
vs prior year
Risk
appetite
N/A
Pandemic
It is still uncertain how future variants and
outbreaks, vaccine efficacy and resulting
restrictions will continue to impact the
hospitality sector, resulting in a longer-term
decline in returns and cash flow, along with
increasing tax burden following the end of
Government support packages. The extended
crisis mode puts additional pressure on
organisational resilience, increasing health and
safety risks to customers and employees whilst
applying significant stress and fatigue to the
leadership team.
Uncertain economic recovery
Uncertainty remains for UK and Germany
economic recovery, with the threat of a
recession, whilst also recognising the impact
from wider macroeconomic trends and current
geopolitical conflicts. This is resulting in
changeable demand, public and consumer
confidence; structural and significant inflation
impacting our cost base across wages, utilities,
food costs and construction materials with
further potential increases in services; leading
to an inability to meet customer demand.
Overall, causing declining cash flows, significant
supply chain disruption, impact on property
valuations, increasing quantum and cost of
borrowing, and a strain on balance
sheet strength.
N/A
Increased due
to economic
uncertainty
and disruption
caused by
COVID-19 and
the current
geopolitical
climate
Key mitigations
› Safeguarding the wellbeing of our guests and team members is
our priority, with regular monitoring to ensure compliance with
updates to Government guidelines and flexibility of hybrid
working where possible.
› We continue to perform extensive scenario modelling to assess
the impact of the pandemic on our financial facilities, borrowing
costs and balance sheet. This, coupled with our agile forward
thinking, allows us to make informed decisions which maintain
headroom whilst optimising commercial opportunities.
› 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 implemented a measured UK expansion plan until the
economic environment is more certain. This is supplemented with
rigorous business planning processes considering many scenarios
and appropriate responses.
› We have updated our international sourcing strategy to include
more focus on our local supplier base and warehousing in
Germany to minimise supply chain disruption.
› We continue to make good progress with our efficiency
programme and maintain rigorous discipline over our capital and
cost spend, partly offsetting inflationary and demand led
pressures.
› Our established control framework allows for close monitoring of
discretionary spend, capital, and M&A spend.
› 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.
› Our People strategy is reviewed regularly to address labour issues
and ensure disruption to operations is minimised.
1
2
3
1
2
3
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.
Increased
due to the
heightened
external
threats
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.
› Several transformation programmes in place reviewing and
updating key systems to ensure these are providing the best
possible support for our operations.
› 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.
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Whitbread Annual Report and Accounts 2021/22 59
Strategic
priorities Risk
Movement
vs prior year
Risk
appetite
Key mitigations
1
2
3
2
1
2
3
1
Structural shifts
It is still unclear whether the changes in working
practices, utilising online meeting technology
and the resulting reduction in business and
international travel is a permanent or long-term
structural shift. In addition, the threat from
disruptors could result in a reduction in
customer demand and Premier Inn brand
strength. The combined impact of these factors
presents a risk to market share, returns, cash
flow, and property asset valuations, particularly
of sites located in metropolitan areas.
Germany growth
The risk that international expansion in
Germany is impacted by the uncertain German
economic climate or failure to achieve a flexible
operating model, impacting our ability to build
the Premier Inn brand, deliver market growth
assumptions and level of return in a timeframe
that satisfies stakeholder expectations whilst
recognising the significant amount of capital
now invested. There is some counterbalance
identified within the risk created by increased
opportunity to acquire sites due to
competitor weakness.
Business change and
interdependencies
The risk that we are unable to successfully
deliver major transformational programmes
particularly under time bound pressures and
realise benefits due to the high volume of
change. This particularly refers to the
replacement of the legacy CRM system in the
next two years, our IT network across the
estate, other commercial and people
technology driven transformation programmes;
and Germany expansion whilst embedding new
teams and ways of working.
Leadership, succession,
and talent retention
The macro labour market's structural changes
could potentially impact the hospitality sector
more adversely as currently it is not considered
an attractive employer. This is compounded by
immigration regulations for specific roles such
as chefs and housekeeping, along with the
transferability of functional expertise, especially
in the Technology, Finance and Digital areas,
which could lead to a smaller talent pool and
low levels of diversity in the senior leadership
team resulting in significant cost inflation.
Increased due
to criticality,
complexities
and high
volume of
changes for
this year
Increased due
to tightening
labour market
and potential
difficulties in
attracting
talent into
hospitality
in current
climate
N/A
› We perform extensive top-line scenario modelling, fed by regular
competitor and market analysis, 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 have a robust
commercial and customer plan targeting new customers and
distribution partners 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.
Our customer and trading committees track customer feedback,
satisfaction and brank index allowing a focused approach
to improvement.
› We are also taking a measured approach to further expansion,
beyond our existing pipeline, until the environment is more certain,
with our focus shifting to lower-risk market share trading initiatives.
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, which is 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 M&A pipelines and
reducing capital costs through better buying power and harnessing
efficiencies and synergies with the UK business whilst complying
with local country requirements.
› A monthly executive meeting reviews the German business in detail,
including financial performance, customer feedback, marketing,
operations, people, capital and property plans.
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 standard assurance management framework.
› Regular reporting to the Executive Committee and Board is
provided as part of the framework, ensuring an appropriate level of
governance is maintained and dependencies are aligned.
› We have made significant progress towards delivering our key
strategic programmes successfully, including both the replacement
of our legacy CRM system and replacement of our IT network. In
addition, we have managed agile and efficient implementation of all
the operational changes required during the pandemic.
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 and programmes such as
Leading the Whitbread Way.
› 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 an ongoing review of high-risk areas such
as IT and digital remuneration.
› The Nomination Committee reviews long-term succession plans
for the Executive Committee and their direct reports, in both the
UK and Germany, recognising the importance of both emergency
and longer-term succession plans for the successful continuity of
the business.
› Pay reviews across operations ensure that our employee offering
remains current, with the latest pay review resulting in wage
increases for our hourly paid employees.
› 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 opportunities within 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.
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information Principal Risks continued
Strategic
priorities Risk
Third-party arrangements and supply
chain rigour
Whitbread has several key supplier relationships
that help ensure the efficient delivery of our
multi-site and Support Centre operations,
including cloud systems, 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. The risk of
supplier failure is increased in specific markets
due to the consolidated nature reducing options
and contingency in place.
Health and safety
The risk of death or serious injury as a result
of Company negligence or a significant failure
resulting from food, fire, terrorism or another
significant safety failure. This could be due
to a failure in safety standards, supply chain
provenance, responsible sourcing or poor
hygiene standards, or a direct targeted
terrorism attack, all of which could lead to
adverse publicity, brand damage and sudden
or prolonged downturn in demand in key
markets and locations.
60
Movement
vs prior year
Increased due
to external
economic and
geopolitical
factors
including
Brexit and
COVID-19
Risk
appetite
Medium › We continually review our suppliers and business continuity
Key mitigations
arrangements with focus on continuity plans in place for
critical suppliers.
› 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.
› Monitoring is performed through our supplier management
arrangements, including regular reviews against predetermined
key performance indicators, ensuring our supplier base
remains optimal.
› Our international sourcing strategy focuses on local suppliers to
minimise potential delays and administrative burden resultant
from trade regulations, whilst our warehouse in Germany gives us
the option to route products used for construction and operation
of hotels directly into the German market rather than via the UK.
Low
› The safety of our guests and employees is of paramount
importance. NSF, an independent specialist, undertakes
unannounced health and safety audits on sites, covering food,
fire, and general health and safety requirements.
› We have robust fire safety policies, procedures and training for
our team members. We work closely with 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.
›
Independent audits over key suppliers in our chain are performed
to ensure supplier practices conform with all relevant health and
safety requirements.
› We invest in ongoing site level training to help identify hostile
reconnaissance activities or potential terrorism, 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.
Environmental, Social and
Governance
Uncertainty as to how these collective risks,
including climate change, will evolve and the
expectations of our wide stakeholder group
to deliver on our commitments and embed
within the business model wholly, could
impact our reputation and performance.
New risk N/A
› Our TCFD response helps us to identify and assess key risks,
opportunities and impacts of climate change to the business.
› Our Force for Good programme covers large aspects of our
ESG agenda, with targets around emissions, food waste,
and single-use plastics, ensuring our accountability for
positive change.
› We continue to manage and monitor the use of proceeds against
the projects outlined in our Green Bond Framework. The
proceeds have been allocated against our green energy,
sustainable procurement, and green building projects.
› We champion inclusivity and improving diversity across the
organisation and have set eight diversity and inclusion targets
to ensure our teams feel supported and engaged as part of
this process.
› Regular ethical supplier audits combined with our responsible
sourcing policies and initiatives ensure ethical end to end buying.
2
3
1
2
3
1
2
3
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Whitbread Annual Report and Accounts 2021/22 VIABILITY STATEMENT
The Corporate Governance Code requires that the directors
have considered the viability of the Group over an appropriate
period of time selected by them. The business planning process
reviewed by the Board, as part of the strategic planning
process, is over a three- and four-year timeline, with the Board
acknowledging that, despite the improved performance of the
business following the easing of restrictions in the year, in the
current environment, the certainty of those plans, the potential
fluctuations in the global economy, the impact on competitor
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 58 and 60 of the Annual Report. This
included a review of the potential impact of climate change and
climate change regulation across the viability statement period.
For the purposes of the viability assessment, the directors
considered a severe but plausible scenario in which the UK
continues to be impacted by COVID-19 restrictions during
2022/23. In this scenario, the Group has sufficient liquidity to
operate within its existing facilities.
61
Should the impacts of the pandemic on trading conditions
result in a severe but plausible case scenario, 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 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 61 was approved by
the Board and signed on its behalf by Chris Vaughan,
General Counsel on 27 April 2022.
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Whitbread Annual Report and Accounts 2021/22Strategic reportGovernanceFinancial statementsOther information CORPORATE
GOVERNANCE
AT A GLANCE
This year we are fully compliant
with the requirements of the 2018
UK Corporate Governance Code
(the ‘Code’), except for Provision 38.
Further details on this can be found
on page 64.
62
Highlights 2021/22
› Ensured the Company’s governance processes continued
to operate successfully through the management of the
COVID-19 pandemic and the recovery of the business as
the restrictions throughout the UK and Germany eased.
› The management of staff shortages, supply chain issues
and cost inflation.
› Organising the induction of our two new non-executive
directors, Kal Atwal and Fumbi Chima, to the business.
Read more on pages 73 and 74
› Enabled shareholders to interact effectively at the Company’s
hybrid AGM, held during the COVID-19 pandemic.
› Appointed Hemant Patel as Chief Financial Officer and as an
executive director. Read more on page 86
› Cementing our commitment to a diverse Board with the
approval of our Board Diversity Policy. Read more on page 84
› Conducted a comprehensive externally facilitated Board
evaluation. Read more on pages 72 and 73
› Carried out a consultation with shareholders on a revised
remuneration policy. Read more on page 100.
Priorities 2022/23
› Continued effective corporate governance while recovering
from the impact of the COVID-19 pandemic.
› Oversight of the plan to replace the Company’s reservation
and customer management systems.
› Support and oversight of the growth of the business in both
the UK and Germany.
› Conduct a thorough review of Whitbread’s Speaking
Out process.
› Review and act on the recommendations from the externally
facilitated Board evaluation. Read more on pages 72 to 73
› Achieving full compliance with the 2018 UK Corporate
Governance Code by the end of the financial year.
Board attendance
The Board generally holds regular scheduled meetings during
the year and on an ad hoc basis as and when required. During
the year, 11 Board meetings were held. The attendance at
meetings by the directors is set out below.
Members of the executive team attended Board and committee
meetings as appropriate.
Meetings attended
Directors
David Atkins
Kal Atwal
Horst Baier
Alison Brittain
Nicholas Cadbury
Fumbi Chima
Adam Crozier
Frank Fiskers
Richard Gillingwater
Chris Kennedy
Louise Smalley1
%
100
100
100
100
100
100
100
100
100
100
83.33
1 The one meeting Louise was unable to attend during her time as a Board member
was due to a conflict with a previously arranged meeting.
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Whitbread Annual Report and Accounts 2021/22
63
Board experience
Board focus areas
The Board comprises directors with a broad range of skills
and experience. The chart below provides an overview of
the experience around the Board table.
The charts below demonstrate the proportion of the Board's
time spent in each area.
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2021/22
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2020/21
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Board tenure
Gender diversity
Ethnic diversity
The length of time each of the directors has served on
the Board, at the date of this report is shown below.
The chart below shows the
gender split of the Board.
The chart below shows the
ethnic diversity of the Board.
6.7
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Board ethnic diversity
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Chairman’s Introduction to Corporate Governance
64
A STRONG
GOVERNANCE
STRUCTURE
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 another challenging and
busy year for Whitbread as we
reopened our business following
the relaxation of COVID-19
related restrictions in the UK and
Germany, whilst navigating global
supply chain issues, cost inflation
and tighter labour supply in the
hospitality sector. The Board
remains committed to, and
focused on, a strong corporate
governance framework.
Our strong governance framework
The Board's primary objective is to ensure the long-term
success of the Group. Key to this objective is the creation
and maintenance of a strong governance structure in order
to support the long-term success of the business and also to
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 a full
review on our compliance with the UK Corporate Governance
Code. We continue to focus our governance on complying with
the provisions and applying the principles in the Code. We hope
to demonstrate throughout this report the Board’s emphasis on
the Company's purpose, culture and strategy, as well as our
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 2021/22 financial year. In the pages
that follow, we have set out how we have complied with the
principles set out in the Code.
The one provision that we cannot report full compliance with
this year is the provision requiring that pension contribution
rates for executive directors should be aligned with those
available to the workforce. As explained in last year’s report,
and again in the directors’ remuneration report this year, we are
taking steps to achieve compliance. The current remuneration
policy, approved in December 2019, committed to a phased
reduction of the pension contribution of current executive
directors by 10%pts from 25% to 15% over a period of three
years. The provision for new executive directors was reduced
to 10%, which aligns with the workforce, and the position has
been addressed as part of the recent remuneration policy
review. The new remuneration policy, which will be put to
shareholders at the AGM in June, will achieve the required full
alignment. Further information on our executive pensions can
be found in the remuneration report on page 106.
Culture and purpose
Whitbread is a hospitality business, focused on ensuring that
our customers have a great experience wherever they stay or
eat across our business. We use a ‘Customer Heartbeat’ model
to measure and monitor performance in this regard, 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 experience to our customers. Our values underpin
everything we do, and we aim to be genuine, confident and
committed in order to reach our goal of becoming the best
budget hotel business in the world.
We believe that our culture is special. Whitbread is a people
business, and a significant amount of our attention, including
that of the Board, is dedicated to making sure we have all the
people in place to delver great service to our customers.
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Whitbread Annual Report and Accounts 2021/22 65
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, opportunities for this have been
limited this year, due to the pandemic, but we were able to
organise one of the Board meetings at our hotel at Heathrow
Airport and in the last few weeks a number of my colleagues
on the Board were able to visit some of our hotels in Germany.
The Board very much looks forward to spending more time in
the business in the year ahead. One of our scheduled Board
meetings is due to take place in Germany, and further visits
have been organised for our non-executive directors to sites
in the UK and Germany.
The Board receives regular reports at each meeting from the
executive team, including the Chief Executive and the Chief
People Officer, both of whom are members of the Executive
Committee. The Chief People Officer provides input on
employee issues, employee satisfaction surveys, which include
questions on culture and reports from the Employee Forum.
Culture is also discussed as part of the strategy discussions
and at the Nomination Committee, for example through
recruitment decisions to senior positions, including for the
new Chief Financial Officer. 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
is 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. To assist with this process, we use an objective matrix
of skills and competencies to assess the skills, experience and
knowledge required at the Board table.
In August 2021, Louise Smalley retired from Whitbread and
stepped down from the Board after completing nine years as an
executive director. Hemant Patel was appointed as Whitbread’s
Chief Financial Officer effective from 21 March 2022 and has
replaced Nicholas Cadbury on the Board and the Executive
Committee. Hemant has been with us since 2018. Before joining
Whitbread, Hemant was Finance Director of Greene King Pub
Company and held numerous senior finance and commercial
roles at Asda and Mars. He is a Chartered Management
Accountant and is also a non-executive director and Chair of
the Audit & Risk Committee of the Department for Digital,
Culture, Media and Sport.
On 1 March 2021 we were 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 the business in previous
roles. Fumbi and Kal bring an invaluable mix of skills and
will provide a breadth of knowledge to the Board. Both Kal
and Fumbi received a tailored induction programme when
joining the Company.
Diversity and inclusion
We are proud of our approach to diversity and inclusion at
Board level, demonstrated through our new Board Diversity
Policy, and three members of the Board identify as Black, Asian
or Mixed Ethnicity. We are aware of the gender mix on the
Board, following Louise Smalley’s departure, with three out of
ten members being female at the current time. We have plans
to increase this in the upcoming year, ensuring we align to the
recommendations in the FTSE Women Leaders Review
(formerly Hampton-Alexander).
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 excellent progress
in this area this year with the appointment of two new non-
executive directors to the Board in March 2021 and an internal
promotion to Chief Financial Officer role in March 2022. After
an exceptional year, the Board has come back to considering
succession planning as a priority.
The Board and its main committees participated in an external
evaluation during the current year. The results of the review,
carried out by Ffion Hague, were positive overall and the
external evaluators remarked that the Board is considered to
be an organised, professional and high functioning board. The
evaluators carried out detailed meetings with various members
of the Board and selected external stakeholders and advisors.
As part of the review, they also attended meetings of the Board
and its committees to form an independent opinion of the
Board's performance. A draft of the report was discussed with
me and with the Board at our meeting in April 2022.
Further information on the Board evaluation and areas for focus
in the year ahead can be found on pages 72 and 73.
Our stakeholders
We believe that it is important to understand the views of our
stakeholders in order to build constructive relationships. In
accordance with Provision 5 of the UK Corporate Governance Code,
Whitbread has formed a workforce advisory panel, which we call
'Our Voice'. This 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.
During the year, the Board has considered many other
stakeholders as well. For example, we have considered on
a number of occasions the relationships with third-party
technology suppliers, as well as suppliers of energy, food and
beverage, and other products. We have discussed our relations
with Government and key industry bodies, and we have focused
very carefully on our customers, their feedback on our
performance and their perceptions of our brand propositions.
We have carefully considered team member retention issues,
and the recruitment and retention of our staff, together with
the levels of pay and reward for all of our team members.
Further information on our stakeholder engagement can be
found on pages 51 to 54.
Adam Crozier
Chairman
27 April 2022
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Whitbread Annual Report and Accounts 2021/22Financial statementsOther informationStrategic reportGovernance 66
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
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
Board composition
Diversity, tenure and experience
Board, Committee and director
performance evaluation
65 and 85
68 to 69
63
72 to 73
Nomination Committee report
84 to 86
Chairman’s statement
Strategic report
10 and 11
1 to 61
Board engagement with key stakeholders
51 to 54
Section 4: Audit, risk and internal control
See page
Shareholder engagement
Audit Committee report
Conflicts of interest
52
80 to 83
74
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
Section 2: Division of responsibilities
See page
O Risk management and internal control
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
68 and 69
67
73 to 74
framework and principal risks company
is willing to take to achieve its
long-term objectives
Audit Committee report
Strategic report
Fair, balanced and understandable
Annual Report
80 to 83
1 to 61
81
Going concern basis of accounting
81 and 117
Viability statement
61
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
87 to 111
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Whitbread Annual Report and Accounts 2021/22 BOARD RESPONSIBILITIES
67
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
Ensuring a culture of openness and debate around the Board table
Leading the annual evaluation of the Board, the committees and
individual directors
Ensuring, through the General Counsel, that the members of the
Board receive accurate, timely and clear information
›
›
›
›
Optimising the performance of the Group
Chief Executive
›
› Day-to-day operation of the business
› Reviewing and proposing strategy
›
›
Ensuring effective communication with shareholders and employees
The creation of shareholder value by delivering profitable growth and
a good return on capital
Ensuring the Company has a strong team of high-calibre executives,
and putting in place appropriate management succession and
development plans
Leading and motivating a large workforce of people
›
›
I
T
D
U
A
I
E
E
T
T
M
M
O
C
I
N
O
T
A
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N
I
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E
T
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I
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E
T
T
M
M
O
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I
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O
T
A
R
E
N
U
M
E
R
Read more
on pages
80 to 83
Read more
on pages
84 to 86
Read more
on pages
87 to 111
Senior Independent Director
› The Senior Independent Director provides a sounding 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
Executive directors
› The executive directors are responsible for the day-to-day 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
THE
BOARD
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.
EXECUTIVE
COMMITTEE
Read more on page 70
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Corporate Governance continued
BOARD OF DIRECTORS
68
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
on page 63.
Key
A Audit Committee
N Nomination Committee
R Remuneration Committee
Committee chair
Committee member
Adam Crozier
CHAIRMAN
N R
Alison Brittain
CHIEF EXECUTIVE
Date of appointment to the Board: April 2017
Date of appointment as Chairman: March 2018
Date of appointment to the Board: September 2015
Age: 58
Experience:
Age: 57
Experience:
Adam was Chief Executive of ITV plc from 2010 to
2017. During his time as Chief Executive, ITV was
transformed into a global media player of scale,
delivering consistently good growth and with
increasing emphasis on international content
creation and distribution.
Prior to ITV, Adam was Chief Executive of Royal Mail,
where he led its modernisation and transformed it
from a heavily loss-making position to profitability.
He has also been CEO of The Football Association
and joint CEO of Saatchi & Saatchi. Adam has served
as Chairman of Vue International and ASOS.
Prior to joining Whitbread, Alison was Group Director
of Lloyds Banking Group’s Retail Division, having
previously been executive director for Retail
Distribution and Board Director at Santander UK PLC.
She has held senior roles at Barclays Bank, was a
Member of the Prime Minister’s Advisory Group and a
non-executive director of Marks & Spencer Plc.
Alison was named ‘Business Woman of the Year 2017’
in the Veuve Clicquot awards and awarded a CBE in
the 2019 New Year’s honours list.
External appointments:
External appointments:
› BT Group plc (Chairman)
› Great Ormond Street Hospital Discovery Appeal
(Trustee)
› Kantar Group (Chairman)
› Prince’s Trust Council (Deputy Chair)
› Experian PLC (non-executive director)
› British Airways PLC* (non-executive director)
* A wholly owned subsidiary of International Airlines
Group (IAG) SA
Hemant Patel
CHIEF FINANCIAL OFFICER
Richard Gillingwater
SENIOR INDEPENDENT DIRECTOR
N R
Date of appointment to the Board: March 2022
Date of appointment to the Board: June 2018
Age: 52
Experience:
Age: 65
Experience:
Hemant joined Whitbread in 2018 as UK Finance
Director, having previously been Finance Director
of Greene King Pub Co. He also worked at Asda-
Walmart for 11 years, carrying out various
management roles including Commercial Finance
Director, Director of Own Label and Director of
Strategy. He also had several finance roles over
six years at Mars, Inc.
He was Chair of the Royal Armouries Museum and
was awarded an MBE for services to museums and
heritage in the 2020 birthday honours list. He also
received the Arts and Business Individual of the Year
award in 2007 for his work with Interplay Theatre.
External appointments:
› DCMS (non-executive director)
Richard is Chairman of Janus Henderson Group plc,
served as a non-executive director of Helical PLC and
was former Pro-Chancellor of the Open University.
Richard also served as Chairman on SSE PLC from
2015 to 2021.
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 Bayes
Business School.
External appointments:
› Janus Henderson plc (Chairman)
› Spirax-Sarco Engineering plc
(independent non-executive director and
senior independent director)
› Wellcome Trust (Chair of the Investment Committee)
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69
Frank Fiskers
INDEPENDENT NON-EXECUTIVE DIRECTOR
R N A
Fumbi Chima
INDEPENDENT NON-EXECUTIVE DIRECTOR
N A
David Atkins
INDEPENDENT NON-EXECUTIVE DIRECTOR
N R A
Date of appointment to the Board: February 2019
Date of appointment to the Board: March 2021
Date of appointment to the Board: January 2017
Age: 60
Experience:
Age: 47
Experience:
Age: 56
Experience:
Frank spent ten years from 2007 as President & CEO
of Scandic Hotels Group and took the company
public in 2015. He has experience in a number of
countries in Europe and Africa.
Frank has served as Chairman of Norstedt and
Akademibokhandln. He has also served as a board
member of the Swedish Hospitality Employers
Association, Dame Thomas Foundation for Young
People, and the British Hospitality Association.
Fumbi is Chief Information Officer at BECU, and
previously held similar roles at adidas, Fox Network
Group, Burberry, Walmart Asia’s business operations
and American Express global corporate technologies.
Fumbi has more than 25 years of leadership and
technology experience in both the retail and
financial sectors.
In addition to technology, Fumbi’s background
showcases a dedication to diversity, women’s
empowerment and inclusion.
David was Chief Executive of Hammerson plc,
a British property development and investment
company, and one of the UK's largest listed property
companies. He stepped down from the position
in November 2020.
He is also the 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).
External appointments:
External appointments:
External appointments:
› Shurgard Self Storage SA (non-executive director)
› BECU (Chief Information Officer and Executive
› Reading Real Estate Foundation
Vice-President)
› Africa Prudential (independent director)
› Women at Risk International Foundation (director)
› The Azek Company (board member)
› Ted Baker PLC (non-executive director)
(director and Trustee)
› OCS Group Ltd (non-executive director)
Kal Atwal
INDEPENDENT NON-EXECUTIVE DIRECTOR
N R
Chris Kennedy
INDEPENDENT NON-EXECUTIVE DIRECTOR
A N
Horst Baier
INDEPENDENT NON-EXECUTIVE DIRECTOR
N A
Date of appointment to the Board: March 2021
Date of appointment to the Board: March 2016
Date of appointment to the Board: November 2019
Age: 50
Experience:
Age: 58
Experience:
Age: 65
Experience:
Kal has over 13 years’ executive committee
experience at BGL Group Limited in various roles,
including Founding Managing Director of
comparethemarket.com. Kal was also Chair of
SimplyCook, a tech-enabled meal kit subscription
service prior to its sale to Nestlé.
Kal began her career at EY in Madrid, after which
she held a number of operational and strategic
roles with Southern Derbyshire Chamber and
Northcliffe Media Ltd.
Kal is an experienced strategic leader with
international experience in start-up, scale-up,
fintech and digital businesses.
External appointments:
› Admiral Financial Services Ltd
(non-executive director)
› Royal London Group (non-executive director)
› WH Smith PLC (non-executive director)
› SimplyCook Ltd (Board Adviser)
Chris is Chief Financial Officer and Chief Operating
Officer of ITV plc, which he joined in February 2019.
Prior to this, Chris held CFO 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.
Chris was voted FTSE 100 CFO in 2015.
He was Chief Financial Officer of TUI AG, the
London-listed Anglo-German leisure travel group
for eight years until the end of September 2018.
During his time at TUI AG, Horst played an important
role in TUI's transformation from a tour operator to a
global provider of holidays.
External appointments:
External appointments:
ITV plc (Chief Financial Officer)
›
› The EMI Group Archive Trust (Trustee)
› Great Ormond Street Hospital Trust (Trustee)
› 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)
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EXECUTIVE COMMITTEE
70
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:
Hemant Patel
CHIEF FINANCIAL OFFICER
›
formulation of strategy for recommendation to the Board;
› management of performance in accordance with strategy
and budgets;
› talent and succession;
› risk management;
› 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.
Rachel Howarth is Chief People Officer, responsible for Human
Resources across the organisation in the UK and Germany, and
the opportunity pillar as part of our Force for Good programme.
Nigel Jones leads Whitbread’s strategy and operations for
Technology, Procurement & Supply Chain and the overall
Whitbread transformation plan, as well as having responsibility
for safety and security across the business.
Mark Anderson is responsible for the acquisition, development
and management of Whitbread’s substantial property portfolio
and in addition he leads Whitbread’s International businesses,
overseeing development and operations in Germany and the
Middle East, and M&A.
Simon Jones leads the UK business, both for Premier Inn and
Whitbread’s portfolio of restaurant brands. Simon is responsible
for the performance of the UK business and is directly
accountable for hotel and restaurant operations, brand
marketing and communications, proposition development,
revenue management and pricing, F&B development and
trading. Simon also leads the commercial, brand and marketing
agenda in Germany
Simon Ewins is responsible for all Hotel & Restaurants portfolio
operations across the UK and Ireland 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 is the Executive Committee member responsible for
Whitbread’s sustainability programme, Force for Good.
Biographical details for Alison Brittain and Hemant Patel
can be found on page 68.
Rachel Howarth
CHIEF PEOPLE OFFICER
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
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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 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 Chief Financial Officer, the Chief People Officer 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
on the right.
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.
The Chairman meets with the non-executive directors without
the executive directors present after each Board meeting.
The Senior Independent Director meets annually with all
non-executive directors to review 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:
BOARD AGENDA 2021/22
Standing agenda items
› Chief Executive’s report
› Chief Financial Officer's report
› General Counsel’s report
› Chief People Officer's report
› Premier Inn & Restaurants MD report
› Property & International MD report
› Approval of capital projects
› KPI pack
Q1
› Approval of year-end documentation
› Risk management and insurance
› Succession planning
› Premier Inn performance
› Group valuation and defence considerations
› Replacement of the Group’s reservation
and customer management system
› Pensions update
Q2
› Premier Inn & Restaurants opening plan
› Property portfolio valuation and update
› Commercial and operational update
› ESG update
Q3
› Group strategy
› Commercial and operational update
› 2021/22 interim results
›
Investor relations/shareholder update
› Premier Inn & Restaurants opening
› Capital structure and financing
› German acquisition
› Update on the replacement of the Group’s
reservation and customer management system
› approval of Group financial statements and the preliminary
announcement of half-year and full-year results;
› approval of and changes to the Group’s capital structure,
strategy, the annual budget and the Group’s business plan;
› approval of capital projects, acquisitions and disposals valued
at over the limit set out in the matters reserved to the Board;
› Pensions triennial review
Q4
› Operational update
› Governance update
› Budget review
› approval of interim dividends and recommendation of final
› People strategy/talent succession
dividends; and
› establishment of Board committees.
› Update on the replacement of the Group’s
reservation and customer management system
› Revolving credit facility update
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BOARD EVALUATION
Board performance evaluation
An evaluation of the Board, its committees, individual
directors and the Chairman is carried out each year.
An internally facilitated Board evaluation has been carried
out for the last two years, so this year we have undertaken
an externally facilitated evaluation.
Board and committee review cycle
Year 1
(Financial year 2019/20)
Internal review
Year 2
(Financial year 2020/21)
Internal review
Year 3
(Financial year 2021/22)
Externally facilitated review
2020/21 internal evaluation
The internal evaluation last year highlighted the following areas:
Areas identified for
improvement 2020/21
Board agendas – consider
reducing the number of
items to allow for detailed
discussions on all topics
Succession planning and Board
experience – review succession
plans for Chief Executive,
executive directors and wider
leadership team, and consider
non-executive directors with
specific food and beverage
and technology experience in
the future
A check-in on the current
strategy and how it might
need to be evolved to address
a post-COVID world
Progress made in 2021/22
There has been some progress
on this but, in a busy year,
there is still more work to do
and it will continue to be a
focus this year.
There has been positive
progress with two new
non-executive directors
joining the Board in March
2021 and an internal
promotion to fill the position
of Chief Financial Officer.
This was covered as part of
the strategy day in November.
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 with the Board
attending various training
sessions to improve their
knowledge on technology
and associated risks.
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.
Training and development
post-COVID
Details of training can be
found on page 73 and 74.
72
2021/22 externally facilitated review
An evaluation of the effectiveness of the Board, its committees,
individual directors, and the Chairman, is carried out each year.
This year, an external evaluation has been carried out, because
it was three years since the last externally facilitated process.
The evaluation has been conducted by Ffion Hague, on behalf
of Independent Board Evaluation. It is confirmed that neither
Ffion Hague, nor Independent Board Evaluation, have any other
connection to the Company.
2021/22 evaluation
Overall, the feedback given to the evaluation team was very
positive. Despite two years of significant disruption to the
business as a result of the COVID-19 pandemic, the Board
feels that it has worked very well and considers itself to
be an organised, professional and high functioning Board.
This view was consistent with the feedback from outside
the Board and there were relatively few areas of potential
improvement identified.
Methodology
A comprehensive brief was given to the assessment team
by the Chairman, Chief Executive and the General Counsel.
Detailed meetings were conducted with each director, all
members of the Executive Committee, and certain key
external stakeholders, such as the auditor and remuneration
adviser. The lead evaluator attended meetings of the Board,
the Audit Committee, the Remuneration Committee and the
Nomination Committee. A report was then compiled, which
included an overall summary of findings, recommendations
for improvement, and included guidance in relation to best
practice UK Corporate Governance Code compliance.
Draft conclusions were discussed with the Chairman,
and subsequently at the Board meeting on 20 April 2022.
Feedback has also been provided direct to each committee
chair and the report on the Chairman’s performance has
been discussed with the Senior Independent Director. In
addition, the Chairman has received a report with feedback
on the performance of individual directors.
Overall Summary and Recommendations
The following aspects of Board performance were rated
particularly strongly by Board members:
› Strategy: the strategy is well laid out, and the strategy
debates are thorough and comprehensive, and each
Board member was able to contribute their views;
› Culture: Board culture is very positive. Relationships
are good, open and transparent, but with appropriate
constructive challenge;
› Board composition and new Board members: the Board
has the appropriate levels of skills and competencies,
and new Board members are selected in a thoughtful
and democratic way, and once appointed, a thorough
induction is undertaken;
› Governance: the Board approaches governance in a serious
and diligent way, and Board processes are good;
› Board support and resources: the support provided
is good and the Board is kept updated with the latest
developments in corporate governance.
In terms of the areas needing attention, the following were
highlighted by Board members:
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› Succession planning: given the length of tenure of senior
management, succession and talent management is a
priority for the year;
› For obvious reasons, the Board has lacked quality time
in the business, and physical time together, where further
discussions can take place in a more informal setting;
› Papers and presentations: there is scope for more succinct
papers and presentations, and identification of key points
and Board “asks”;
› Performance evaluation: more feedback would be
appreciated on the performance of individual directors.
The report contained a benchmark review of the Board
against peer groups which identified a need to improve
the gender balance of the non-executive director group as
soon as practicable. The evaluation team also highlighted
the need to review the employee engagement mechanism of
the Board and to agree specific actions to link non-executive
Board members more closely with the business and senior
managers over the coming year.
The following recommendations for action were accepted by
the Board during its discussion on the evaluation:
› Culture: plan more meetings out in the business and schedule
more private sessions of the Chairman and non-executive
directors alone at, or around, scheduled Board meetings;
› Governance: it was agreed to consider setting some clear
Board objectives to reflect priorities; to consider a further
senior female non-executive director appointment; and to
consider repeating the induction programme after three
years on the Board;
› Connection with the business: agreed to consider an
informal mentoring programme with non-executive
directors and senior managers; and also to have regular
check-ins with Executive Committee members;
› Employee engagement: agreed to review how the Board
interacts with the wider workforce.
Audit Committee
The feedback suggests that the Committee is very well
chaired, provides a strong, constructive and knowledgeable
challenge, and contains the right level of expertise. It was
recognised that a priority over the coming year is to provide
support for the new Chief Financial Officer and it was agreed
to consider the quality of the papers.
Remuneration Committee
The Committee is considered to be effectively and efficiently
chaired, and well supported by the internal team and by the
external advisers. Committee members are acutely aware of
shareholder views, and of the adverse vote at the AGM on
the remuneration report, and are keen to continue to seek
the right balance between reward and incentives over the
coming year.
Nomination Committee
It has been a busy period for the Nomination Committee,
with the appointment of two non-executive directors and a
new Chief Financial Officer in recent months. The succession
process for the new Chief Financial Officer was thought to
have been very well handled. There is more work to do in
terms of succession planning and the Committee is fully
aware of its responsibilities with respect to diversity and
inclusion and is determined to address them.
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. Louise Smalley retired from the Board on 31 August 2021
after joining Whitbread in 1995. Fumbi Chima and Kal Atwal
were appointed to the Board on 1 March 2021 as independent
non-executive directors. Hemant Patel was appointed to the
Board and Executive Committee with effect from 21 March 2022
as Chief Financial Officer. Nicholas Cadbury stepped down from
the Board on 20 March 2022.
Commitment
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.
During the year, Alison Brittain advised the Board that she had
been invited to join the advisory board at British Airways. The
Board noted that the position was not on the board of a listed
company. It also noted that the time commitment required was
expected to be low, and that the position was not one for which
any remuneration would be received. Alison also advised the
Board of her intention to step down from the board of the
Prince’s Trust during the course of 2022. The Board carefully
considered the time commitment involved, together with
Alison’s other commitments, and then confirmed that it was
acceptable for Alison to accept the position at British Airways.
Training and development
Throughout the year, Board members attended various deep
dive sessions across a range of topics, to hone their skills and
expertise. Some of the topics covered in these training
sessions were:
› GAAP developments;
› Audit Committee obligations;
› TCFD and climate disclosure; and
› Diversity and Inclusion.
The Board also attended externally facilitated training
covering topics including:
› Ransomware and cyber resiliency;
› Risk management;
› Developing a Paris-aligned investment strategy;
› Education session on global supply chain challenges; and
› Audit and corporate governance.
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74
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.
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.
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, meetings
were arranged with other Board colleagues and with a number
of senior leaders from across the business to get a better
understanding of Group strategy, key issues and how the
Company is run. They were given access to all historic Board
and Committee meeting papers. They also met with key
external stakeholders, including the auditors, brokers,
investment banking advisers and remuneration consultants.
Once the COVID-19 related Government imposed restrictions
were eased, Fumbi and Kal visited Whitbread sites in London
and in Birmingham with Simon Ewins, Managing Director, UK
Hotels & Restaurants. Hemant Patel joined the Board as Chief
Financial Officer on 21 March 2022. As part of his induction,
he has met with the Company’s brokers, investment banks,
key shareholders and analysts, and has met with Slaughter
& May, corporate legal advisers, to understand the role and
responsibilities of being a PLC director.
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 potential 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. 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 or
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
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 Chairman holds a round of meetings each
year with major shareholders to obtain feedback on their
views and any issues of concern, and these meetings took
place during 2021.
The Company communicates with both the institutional and
private shareholders through a number of different means.
All directors take part in the AGM and shareholders are able
to submit questions to directors, including committee chairs
throughout the year. Further information on shareholder
engagement can be found on pages 51 to 54.
The annual general meeting
The AGM provides all shareholders with the opportunity to
communicate directly with the Board and the Board encourages
their participation at the meeting.
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.
All voting by shareholders at this year’s AGM will be by poll. The
voting results, including proxy votes received, will be displayed
on a screen at the end of the meeting. In addition, the audited
poll results will be disclosed on the Company’s website
following the meeting and announced through the regulatory
news service.
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 page 113.
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 page 81.
Going concern
The directors’ going concern statement can be found in the
directors’ report on page 117.
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Viability statement
The viability statement can be found on page 61.
training is provided. An externally hosted whistleblowing
system is also available.
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 22 to 29.
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/governance/
reports-policies. A detailed report from the Chairman of the
Remuneration Committee is set out on pages 87 to 111. Reports
from the Audit and Nomination Committees can be found on
pages 80 to 86.
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 2021/22 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 56 to 61.
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.
› 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.
› 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.
› All major capital and revenue projects, together with
› An internal control evaluation process is overseen by the
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
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.
›
Internal Audit provides independent programme assurance
over strategic programmes, as part of its overall audit plan
and as required by the Board, leveraging third-party subject
matter experts where appropriate, e.g. for our reservations
system replacement, strategic network replacement and
people programmes.
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76
CULTURE AT
WHITBREAD
At Whitbread, our culture has been shaped
over our 280-year history. It has evolved
through external and internal influences
and has stood the test of time. Our values
of genuine, confident and committed are
embedded in everything we do: the decisions
we make, the targets we set and how we
balance our actions to achieve our strategy.
Being in the hospitality industry, our 35,700 team members are
the face of Whitbread. They bring our hotels and restaurants
to life, supported every day by their colleagues in the Support
Centre. Whitbread recognises that, while culture can be set at
the top, it is our front line team members who truly create and
keep our special culture alive. This belief has helped us to be
named as a Top Employer 12 consecutive years.
We believe that our culture is special, and it is woven into
our values, purpose and mission, and in the way we make
decisions. We demonstrate our culture in everything we do
and every decision we make. We are a hospitality company,
focused on delivering great service and experiences for all of
our customers, and our customer heartbeat model, supported
by our values, is closely aligned to our purpose.
Our culture is very much about hospitality, based around
cooperation and collaboration, rooted in driving excellent
performance, serving and delighting our guests. By constantly
innovating and connecting genuinely with our customers,
we aspire to grow our brands and stay ahead – ultimately,
our goal is to be the world’s best budget hotel company.
It’s our Winning Teams that make everyday experiences
special for our customers, so they keep coming back –
and we keep progressing.
As we progress, we aim to be a Force for Good. Being diverse
and inclusive is an important part of this. We want every team
member to bring their very best selves to work, and our
communities – ‘GLOW’, our LGBTQ+ network; ‘Race, Religion
and Cultural Heritage network’; and our disability inclusion
network, ‘enAble’ – have been championing our purpose of no
barriers to entry and no limits to ambition. Each of these groups
is sponsored by a member of the Executive Committee.
The pandemic meant that organisations had to adapt to the
changing environment around them while being true to their
values. It also meant that maintaining our special culture has
been more difficult, with large numbers of team members on
furlough and/or working from home. We believe that we
achieved the right balance at Whitbread. It also brought about
long-term changes in the way companies operate. Recently we
have thought carefully about the need to retain our culture while
adapting to new conditions and have introduced a new hybrid
working model for our Support Centre teams with this in mind.
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The UK Corporate Governance Code 2018 emphasises
the importance of culture in ensuring the success of an
organisation. One of the principles of the Code is that the
board should establish the company’s purpose, values and
strategy, and satisfy itself that these and its culture are
aligned. All directors must act with integrity, lead by
example and promote the desired culture.
The Code further provides that the board should assess and
monitor culture. Where it is not satisfied that policy, practices
or behaviour throughout the business are aligned with the
company’s purpose, values and strategy, it should seek
assurance that management has taken corrective action.
The Board has monitored the Company’s culture in a number
of ways, some of which are set out below:
INITIATIVE
ACTION TAKEN
Engaging with our sites
Board Diversity Policy
As soon as business reopened and restrictions eased, a Board
meeting was arranged on site for the Board to be visible in the
business and experience our special culture. Individual Board
members have stayed in our hotels and visited our restaurants
on a planned and unplanned basis in order to share the guest
experience and understand the culture across the business.
The Board believes that diversity in all forms is critical to the
effectiveness of the Board and Whitbread’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.
This Board Diversity Policy is applicable to the PLC Board only,
but sits alongside the Whitbread Code of Conduct, and Diversity
and Inclusion Policy, which set out Whitbread’s broader
commitment to diversity and inclusion.
Attendance at ‘Leading in an Inclusive World’
training
In May, all members of the Board attended a two-hour upskilling
session focusing on diversity and inclusion, including their role in
our Diversity and Inclusion commitments.
Team retention
Listening updates
Chief Financial Officer
An internal hire
German Sharesave scheme
This session was delivered by our partners INvolve, topics
included bias, privilege and allyship, and at the end all Board
members committed to a personal action.
The Board carefully considered the levels of team retention and
pay. To make sure that Whitbread is an attractive place to come
and work, and to stay, our team members were offered a number
of retention packages and enhanced hourly pay to retain the
special nature of our service oriented hospitality culture.
The Board has received presentations on our pulse surveys
throughout the year, and feedback from Our Voice representatives,
including through the monthly report by the Chief People Officer.
Our Talent strategy, and succession and retention issues have all
been carefully considered by the Board.
We believe in 'no barriers to entry, no limits to ambition' and are
proud that our new CFO has been internally promoted. This
demonstrates how we can support all our people to develop their
careers at Whitbread, at all levels of our business.
The Whitbread Sharesave scheme has been available for all
UK-based employees for many years. The Board wanted to
ensure that German colleagues also had the opportunity to share
in the growth of the business alongside their UK counterparts and
also drive employee commitment and ambition. Sharesave was
successfully launched in Germany in November 2021.
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Corporate Governance continued
Q&A WITH
NON-EXECUTIVE
DIRECTOR,
KAL ATWAL
78
How was your induction to Whitbread?
A Due to the circumstances of the COVID-19 pandemic,
K
I had a hybrid induction experience with Whitbread,
which expanded over my first year on the Board.
I would describe the induction as very thorough. It was quite
intense, but also tailored to my own interests, for example
the digital agenda. Initially, the majority of my induction
consisted of meeting my fellow Board members, members
of the Executive Committee and external advisors. It was
impossible to visit our hotels and restaurants at the time due
to lockdown restrictions. However the virtual nature of these
meetings allowed me to cover a lot of ground, something
I don’t think would have been possible in ’normal‘ times.
Once restrictions eased and the business reopened, I had
the opportunity to visit the hotels and restaurants. I visited
several Premier Inn hotels, hub by Premier Inn and a Bar +
Block all in the London area. Later in the year, I visited a
variety of Premier Inns in the Birmingham area. The site
visits provided an overview of the development of the
hotels and restaurants and what is required in certain
areas. I also really valued being involved in structuring
the induction – as a result, separate training sessions
were arranged and I spent more time on understanding
the commercial, marketing, pricing, digital and technology
areas of the business.
How have you found your first year
as a non-executive director at Whitbread?
A It’s been quite a rollercoaster. Since joining Whitbread in
K
March 2021, I’ve seen the business closed due to COVID-19
restrictions and then re-opened. There was a lot of
operational stress on the business, from regional lockdown
differences, to staff shortages, to supply chain issues and
latterly cost inflation. Seeing the business in action at a time
of operational hardship has greatly aided my understanding
of the hospitality sector.
Throughout the year, I have been impressed by the level
of operational detail that the business puts into providing
its first-class consumer proposition. The hospitality sector
is a dynamic and fast-changing business, and it is a very
customer-focused business – I’ve been impressed with
how much time the Board spends talking about customers.
The other group which receives a lot of attention is our
people – as a hospitality business, our people are critical
to our success, and the Board spends a lot of time talking
through people issues.
Overall, my first year at Whitbread has exceeded my
expectations. I’m glad to be a part of a business that
focuses so heavily on the customer and its people.
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What do you think are the key challenges
in the current governance climate?
What was one of the highlights for you during
your year at Whitbread?
A A standout of the year for me was developing a good
K
understanding of the business, visiting many different hotels
and restaurants throughout the UK. It provided an insight
into how the business operates on the ground and I was
grateful to meet and chat with the teams. It gave me a real
understanding of the difficult challenges they’ve faced
throughout the year and how they remain motivated and
enthusiastic. I learnt about the support Whitbread provides
in having a career in hospitality and how a team member
progresses in the industry. Moreover, I learnt about how we
support their personal development. This was evidenced
when a team member told me that Whitbread had helped
her to achieve her goal of learning to drive.
I also loved seeing the different types of hotels in the
portfolio: from smaller hotels on the outskirts of towns
and cities, which had a family feel and where teams spoke
of having a regular customer base, to larger inner-city
hotels which cater to bigger groups and business guests.
A particular personal highlight was the fish and chips
I had at one of the Table Table restaurants I visited!
On the business side, I’ve enjoyed getting to grips with
the significant technology and digital agenda of the Group.
There is much to do here, but I have been impressed by
the levels of innovation throughout the business.
What are your key focuses for the year ahead?
A I’m looking forward to visiting Germany. We have planned
K
trips in April and September to visit the Premier Inn
hotels in several different areas. I’m excited about better
understanding the German side of the business and
meeting the team members who operate these hotels.
More generally, I want to get out to more sites now that
we will be entering into a year without disruptions. We will
be focusing on recovering from the COVID-19 pandemic and
aiming to continue the outperformance versus the market
during this phase.
Lastly, a key focus is to assist in strengthening and
challenging the technology, digital and data agendas
and the ongoing technology transformation, while also
supporting the growth drivers in the UK and overseas.
A It is always a challenge to keep up to speed with the ever
K
changing world of corporate governance. I think the Board
strikes the right balance between the need to discuss
governance matters, while focusing on performance,
strategy, operations, and people, but we always ensure
that we take the time to keep up to date with corporate
governance developments.
There have also been significant changes relating to ESG
reporting requirements in recent years, and in this annual
report you will find a summary of our first TCFD report on
page 48 to 49.
How important is Diversity and Inclusion
to the business?
A Whitbread has a good reputation for its Diversity and
K
Inclusion (D&I) programmes, particularly from a gender
perspective. The importance of D&I is well embedded in
the business, and this is demonstrated through already
having achieved the target of having 40% female
representation in the leadership population by 2023 and
being on track to deliver the commitment of 8% ethnic
diversity in the leadership population by 2023.
Nevertheless, there is always more to do and improve upon.
A particular focus for me, is to understand how we develop
the talent pipeline from within, beyond senior leadership
roles. I am passionate about understanding the progression
of the teams in our hotels and restaurants and how we can
develop their career paths.
In Alison Brittain you have a Chief Executive who genuinely
cares, supported by an executive team that is equally as
committed on the subject. This sets the tone for the rest of
the business. There is a genuine appetite and desire to drive
Whitbread’s D&I commitments throughout the business. I’ll
continue to provide challenge around the Board table, as a
diverse board aids in effective decision making, but I am
happy with the steps Whitbread is taking to become more
diverse and inclusive.
How would you describe the
Whitbread culture?
A The culture throughout Whitbread is customer-led and
K
people-focused, with an emphasis on being transparent and
collaborative. While being hardworking and straightforward,
it’s also a fun working environment. I would describe it
as collaborative in nature, with very strong levels of
transparency throughout the business. It’s a nice place
to work, and the people I’ve met have been very friendly.
Around the Board table, it’s the same: it is collaborative,
there is good constructive challenge, and there is no fear
of challenge. And it’s fun. I’ve really enjoyed the meetings.
We all recognise we are on the same team but acknowledge
the different approaches everyone has to offer.
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Chris Kennedy
Chair, Audit Committee
Membership of the Audit Committee
and meeting attendance
Name of director
Chris Kennedy (Chair)
David Atkins
Horst Baier
Fumbi Chima
Frank Fiskers
Meetings attended
and eligible
to attend
4/4
4/4
4/4
4/4
4/4
The Committee met four times in 2021/22.
Meetings were attended by all members
of the Committee and, by invitation, the
Chairman of the Board, the Chief Executive,
the Chief Financial Officer, the Head of Internal
Audit, the Group Financial Controller 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.
80
Composition of the Committee
In accordance with the UK Corporate Governance Code 2018,
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 Chair 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,
this being the third year, an external evaluation was undertaken
by Ffion Hague, of the skills and experience of the Committee.
The report stated that the Committee is very well chaired,
provides a strong, constructive and knowledgeable challenge,
and contains the right level of expertise. It was recognised that
a priority was to provide support for the new Chief Financial
Officer and it was agreed that the quality of the papers would
be given consideration. Through the external appointments that
David Atkins, Frank Fiskers, Fumbi Chima and Horst Baier have
held, they bring a depth of financial and commercial experience
that add to the strengths of the Committee.
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 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.
Significant matters in the financial statements
The key areas of judgement and estimates considered by the
Committee, in relation to the 2021/22 accounts and disclosed
in Note 2 to the consolidated financial statements on pages 149
and 150, 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.
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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 2020/21
to 2021/22 was assessed. The Committee discussed a change
in methodology used to estimate the discount rate used in
calculating the value of the scheme liabilities, concluding
that the adoption of a single-AA rated methodology
was appropriate.
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 undertaken at year-end which
resulted in the recognition of a net impairment reversal of
£42.0m (impairment charge £10.5m and impairment reversal
£52.5m) across UK and Ireland and no impairment or reversals
being recognised in Germany. The reversal was driven by the
recovery of trading performance across the UK estate due to
the easing of COVID-19 restrictions in FY22 and reductions in
the discount rate.
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. The Committee also challenged the inputs used in
management’s model, with a specific focus on discount rates
and growth rates. 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.
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.
Going concern and viability
The Committee received regular updates on the steps taken by
management to secure liquidity for the recovery period beyond.
The assessment of the Group to continue as a going concern is
supported by the following:
› Cash and cash equivalents of £1.1bn at the balance sheet date.
› Whitbread met all financial covenants during the period of
assessment under both the base case and severe but
plausible scenarios.
› £1.0bn of sterling bonds maturing outside of the going
concern period, between October 2025 and May 2031,
with no covenants
› All US private placement loan notes having been repaid, with
the final 2022 tranche being repaid in full during the period,
removing the associated covenants.
› Formal agreement having been reached with Pension
Trustees to remove the financial covenant test from the
deed of covenant.
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.
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 including the
impact of climate change and climate change legislation on
the Group’s operations. 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 in the UK and maturing
in our overseas businesses; where areas of improvement were
noted as processes are being embedded.
During the year, the Committee dedicated time to the
following matters:
› Deferred tax on freehold and leasehold estate – Due to the
complex nature of the tax environment associated with the
Group’s properties, management presented a review to the
Committee with a focus on the controls over the processes for
determining the valuation of deferred tax assets and liabilities.
This included a review of the enhanced controls over key
processes and assumptions which had been implemented
during the year as well as plans to embed further controls
within the wider tax processes during the coming year.
› Repairs and maintenance expenditure – The Committee
received a briefing from management on improvements
made to controls over repairs and maintenance expenditure.
› Control environment in Germany – As a result of the focus on
growth and relative immaturity of the Group’s operations in
Germany, the Committee reviewed the effectiveness of the
controls in this area. The review allowed the Committee to
gain a deeper understanding of the controls and process
enhancements undertaken in 2021/22.
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
58 to 60.
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Audit Committee Report continued
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 processes supporting
Whitbread’s health and safety operations, payroll activities and
integration programme in Germany. In the UK, operational and
commercial reviews were performed, including repairs and
maintenance, payroll, and compliance with the requirements
of the Coronavirus Job Retention Scheme. The IT Internal
Audit team focused on information security and compliance,
with reviews performed over the Security Operations Centre
and GDPR practices, as well as providing 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 2022 which
covers the activities to June 2023. 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.
Areas highlighted for audit on the current plan include a
greater focus on operational risks in Germany, including
repairs and maintenance, procurement, and refunds. In the UK,
audits are centred on optimising processes where associated
risk has increased in the year, including labour planning, target
operating model, and supply chain logistics. The IT Internal
Audit team provides assurance over Whitbread’s information
systems, with the plan focused on the robustness of core IT
operational areas including change management, asset
management, and incident and problem management at
a time when significant change is expected to go live.
The team will continue to provide assurance to de-risk
Whitbread’s ongoing major change projects, including the
replacement of the CRM system, the replacement of the
network across all our sites and our People programme.
Internal audit ways of working have continued to adapt to
changing requirements for remote and hybrid working. The
overall approach remains the same and the underlying audit
methodology and processes are unchanged, with audits 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 2021 annual general meeting. The current
audit partner is Katie Houldsworth, who was appointed in 2020.
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 2021. Overall,
it was noted that despite the challenges of remote working,
the audit was effective and executed to a high standard with
relevant and robust challenge together with partnering on
significant judgemental areas and best practice governance.
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 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.
The Committee reviewed a letter received from the FRC on
its review of the Group’s 2020/21 Annual Report and Accounts.
The FRC’s review was based solely on the contents of the
Annual Report and Accounts. The FRC had no questions or
queries that they wished to raise with the Group.
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.
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Whitbread Annual Report and Accounts 2021/22 83
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.
Total non-audit fees amounted to £0.1m consisting of the
interim review. Although this is considered to be a non-audit
service, the objectives of the review are aligned with the audit.
Chris Kennedy
Chair, Audit Committee
27 April 2022
Main activities during the year
In 2021/22, 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.
March 2021
› Review of year-end Financial Statements template,
financial reporting outlook, and tax
› External auditor – approval of remuneration, terms of
engagement and other fees, controls update and
FRC audit quality review
›
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 the year’s Speaking Out reports
› Review of Committee’s rolling agenda
› Audit Committee evaluation report
› Audit Committee terms of reference
April 2021
› 2020/21 Annual Report and Accounts
› 2020/21 Deloitte external audit report
› Non-audit services and fees
›
Internal audit – review of 2020/21 report and terms
of reference
› Risk and controls – review of statements on risk
management and tax controls
› Compliance report
› Review of management papers in relation to going concern
and viability, job retention scheme, assessment of whether
the annual report is fair balanced and understandable
› Meeting with auditors without executive team present
and non-executive directors only meeting
October 2021
› Review of FY22 Interim Results – including management
papers in relation to judgements and estimates,
impairment and going concern
› External audit – half-year report, letter of representation,
UK Corporate Governance Code update, and approval of
terms of engagement
› Risk and controls – litigation review, compliance report,
and controls update (Q2 Financial Control Framework,
Fraud; IT General Controls)
›
Internal audit – interim update, including retail audit, and
external quality assessment with PwC in attendance
› Non-audit fees
Activities post financial year
March 2022
› Review of year-end Financial Statements and Report template;
including accounting judgements, estimates methodology, tax
and summary of COVID-19 grant and subsidiary audits.
› External audit-approval of remuneration, terms of
engagement, non-audit fees and controls update
›
Internal audit- approval of plan, audit committee
quality evaluation
› Risk and controls – review of risk management process,
approval of policy, update on financial control framework,
speaking out reports and litigation review
› TCFD Disclosure draft
› Audit committee rolling agendas and terms of reference
› Assurance update and Group's reservation and customer
management system update
April 2022
› 2021/2022 Annual report and accounts including strategic
report, governance and consolidated accounts
› External audit – Year end audit report and non audit fees
July 2021
› Risk and controls – cyber security benchmarking update
›
Internal audit – Internal audit report; terms of reference
and R&M report
and German hedging
› Compliance – Audit Committee effectiveness review, GDPR
review, treasury policy approval, external audit year-end
feedback and assessment
›
Internal audit – progress update, Group's reservation and
customer management system assurance plan, and Repairs
and Maintenance update
› Risk and controls – review of statements on risk
management and tax controls
› Compliance report
› Green Bond allocation
› External committee evaluation
› TCFD report
› Meeting with auditors without executive team present
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Nomination Committee Report
84 84
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.
Board Diversity Policy
Our new Board Diversity Policy was published in 2021.
In summary, it recognises the significance of Board diversity,
including gender and ethnicity, and sets out our commitments.
These include:
›
At least 33% female representation on the Board; and
› Representation from ethnic minorities on the Board.
The policy also sets out plans for the monitoring and reporting
of our work to meet these commitments and recognises that
there may be points in time when we temporarily fall short of
the targets set.
The full policy can be found on our website at
www.whitbread.co.uk/governance/reports-policies/
Adam Crozier
Chair, Nomination Committee
Membership of the Nomination Committee
and meeting attendance
Name of director
Adam Crozier (Chair)
David Atkins
Kal Atwal
Horst Baier
Fumbi Chima
Frank Fiskers
Richard Gillingwater
Chris Kennedy
Meetings attended
and eligible
to attend
4/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4
This year, we are pleased to
welcome Hemant Patel to the
Board as Chief Financial Officer.
In addition to this, we approved
a new Board Diversity Policy in
January 2022, which cements our
commitment to a diverse Board.
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Whitbread Annual Report and Accounts 2021/22 85
Main activities during the year
In 2021/22, the Nomination Committee's main activities
included the following:
› Reviewing Whitbread's internal talent succession and the
talent market for executive director roles.
› Refreshing market mapping for talent
› Board and Executive Committee succession planning
› The appointment of Hemant Patel as Chief Financial
Officer, including agreeing his induction into his new role
› Deep dive talent review into Whitbread's critical capabilities,
› Review of retention of talent by function and level for
both the UK and Germany
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 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
Chair, Nomination Committee
27 April 2022
Female representation
We have strong female representation at Whitbread. 65% of our
total workforce is female, along with 41% of our leaders. We are
proud to be one of only eight FTSE 100 companies to be led
by a female Chief Executive. Whitbread was recognised in the
FTSE Women Leaders Review 2022, in the top ten for our
female leadership representation.
In addition, we monitor and publish our Gender Pay Gap report
every year. There are still areas we can improve – you can read
our latest Gender Pay Gap report, which includes our action
plan, on our website www.whitbread.co.uk/governance/
reports-policies.
Ethnic representation
Across the organisation, 13% of our teams identify as Black,
Asian, or Mixed Ethnic, and we are proud to represent the
diverse communities we serve. Within our leadership
population, we are making progress against our 8%
representation target by the end of 2023, as 5% of our leaders
are Black, Asian or Mixed Ethnic. In addition, we are proud to
have been recognised as one of 42 companies that exceeded
the ‘1 by 21’ target in the Parker Review Report 2022.
In the last 12 months, we have also internally published our first
ethnicity pay gap report, sharing our findings with our teams
along with our race action plan. Representation at a senior level
continues to be a key action, and we recognise that, whilst we
are making progress, we still have more to do. There is more
detail on our Diversity and Inclusion commitments in the
Opportunity section on page 41.
Succession planning
The Chairman leads the Committee in annually evaluating 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. Additionally, a review of the current talent market
for key roles such as Chief Executive and Chief Financial Officer
is conducted and refreshed regularly. This process helps the
Committee ensure a robust succession plan and development
of a diverse pipeline in line with the Board’s policies and
Diversity and Inclusion commitments.
Last year, we committed to our focus on expanding the Board’s
experience into consumer marketing and technology with the
appointment of Fumbi Chima and Kal Atwal in March 2021. They
have provided the Board with immense value and a vital mix of
skills, especially in the technology sector, digital transformation,
marketing and general management.
This year, our attention moved to appointing our new Chief
Financial Officer following the resignation of Nicholas Cadbury.
Further information on the Committee’s process of appointing
our new executive director, Hemant Patel, can be found on the
next page.
As part of our annual talent cycle, we review the long-term
succession plan for our Executive Committee and its direct
reports as standard. The Committee recognises the importance
of reviewing the internal succession strength and ensuring
robust emergency and medium-term succession plans are in
place. We also value deep dive talent reviews into the critical
capabilities of the Executive Committee and senior leadership
team. This review includes both the UK and Germany.
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Nomination Committee Report continued
Executive director succession
Taking account of the Committee's active year, we have outlined
below the process for recruiting, appointing, and inducting our
new Chief Financial Officer, Hemant Patel.
86
STAGE 1
STAGE 2
STAGE 3
› Following a review of the
specification and an update
to the market mapping for
the role, Spencer Stuart
presented a list of external
and internal candidates.
› The Committee identified
a shortlist of candidates.
› A separate committee was
created, consisting of non-
executive directors and
executive directors to
interview the candidates
in a two-stage process.
› The candidates were assessed
against the role specification
and pre-determined criteria
of knowledge and skills.
› Resignation of Group Finance
Director, Nicholas Cadbury.
› The Committee worked together
to design and agree the role
specification for the Chief
Financial Officer. This included
considering the skills and
experience required and
ensuring candidates fit with our
culture at Whitbread.
› Along with the role
specification, a timetable was
created to ensure a smooth
transition for the business as
a whole as well as the Board
and executive team. These were
passed over to our appointed
executive search agency,
Spencer Stuart.
INDUCTION
STAGE 5
STAGE 4
› The Board approved the
appointment.
› The final stage of the process
was for the Committee to
ensure a robust induction and
development plan was put in
place to ensure and boost
Hemant's success in his new
role. Details of this induction
can be found to the left.
› The results of the interview
process were reviewed by
the Committee.
› The successful candidate, Hemant
Patel, was then recommended for
appointment to the Board as
Chief Financial Officer.
As a result of Hemant being
internally promoted to the role,
the induction process was
tailored to build upon his
knowledge and understanding
of the business, Whitbread's
strategic priorities and the role
of the Board. Listed below is
some of the activities included
in his induction:
›
Introduction to the Board
and non-executive directors.
› Meeting the external auditor,
Deloitte, PwC as remuneration
consultants and investment
advisors
› Shadowing Nicholas Cadbury,
former Group Finance Director
› Sessions to meet and
understand the work of
the teams within the
Finance department.
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Whitbread Annual Report and Accounts 2021/22 Whitbread Annual Report and Accounts 2021/22
87
Remuneration Report
Remuneration Committee
Report
Frank Fiskers
Chair, Remuneration Committee
We entered the 2021/22 financial year with
optimism for a brighter future, with the UK
Government’s roadmap for the reopening of
society in place and hope that we would be
able to operate close to normality for much
of the year. The situation was similar in
Germany. There have clearly been some
hurdles to overcome, most notably the
emergence of the new Omicron variant just
before Christmas. On the whole, operating
conditions, whilst remaining challenging,
were much improved on the year before.
Whitbread has delivered an excellent performance in the context
of this challenging backdrop. We set targets at the start of the
year to significantly outperform our competitors, and this has
been achieved. We have also returned to profitability in the latter
part of the year, which is ahead of where we thought we might
be. This really is a testament to the fantastic job that people right
across the organisation have done, led by our high-performing
management team.
In the light of such an excellent performance by the team, it is
not surprising that the targets we set at the beginning of the
year have been significantly exceeded. As a result, payouts
under the Annual Incentive Scheme for the 2021/22 financial
year on a formulaic basis are at the top end of the range.
The Remuneration Committee has given careful thought as
to whether payouts at this level are appropriate or whether
this formulaic outcome should be adjusted. In making this
assessment, the Committee considered the experience over
the year for a range of stakeholders (see page 90 for further
details). Whilst the experience for stakeholders has been
good, for the first three months of the year, the Company
took advantage of the Government’s Job Retention Scheme.
As a result, we concluded that, despite the overall excellent
performance, it was appropriate to reduce the opportunity,
and therefore the payouts, by 25% under the Annual Incentive
Scheme. More details are provided on page 88 under 2021/22
annual incentives.
Updated remuneration policy
The current remuneration policy was approved by shareholders
at a general meeting in December 2019 and, as such, we will
be seeking shareholder approval for a new updated policy at
the AGM in June this year. At the end of 2021, I conducted an
extensive consultation exercise with major shareholders, to seek
views on the current structure of our remuneration schemes.
After a detailed review, carefully taking into account the views
of shareholders in the consultation process, the Remuneration
Committee continues to believe that the overall structure of our
remuneration schemes is appropriate for Whitbread at this time,
and is the best way of aligning the interests of management with
shareholders and other stakeholders. As a result, the proposed
policy is largely unchanged from the one approved in 2019. We
do, however, intend to reduce the executive directors’ pension
contribution to 10% of salary with effect from 31 December 2022
so as to align to the wider workforce. We also plan to introduce
greater flexibility in the selection of financial metrics included in
the Annual Incentive Scheme, to ensure that we can set the most
appropriate and relevant targets each year.
After listening to feedback from shareholders on our proposals,
we have made two changes to the Annual Incentive Scheme:
firstly, we will ensure that at least 60% of future years' incentives
will be based on financial metrics (original proposal was 50%);
and secondly, we intend that profit will be the predominant
financial metric. I would like to thank shareholders for engaging
with us as we developed the revised policy and I would ask for
your support for the resolution approving the policy at the
AGM in June.
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Remuneration Committee Report continued
2020/21 annual incentives
As I explained in my report last year, although it had been clear
from early in the 2020/21 year that the profit element could not
be achieved, performance against the other elements was strong.
Whilst we were confident that the 2020/21 incentive outcome
fairly reflected the year’s strong performance, we agreed to make
no payment at that time, but rather to carry over the incentive
earned subject to an underpin. This approach allowed us to
conserve cash, while providing a direct incentive for the recovery
of the business from the pandemic and a retention mechanic at
a time when the executives had very little retention coming from
long-term incentive plans. It was, therefore, aligned with the
interests of shareholders.
The underpin on this deferred element required satisfactory
performance to be delivered on at least 50% of each executive's
strategic objectives set for the 2021/22 financial year.
As explained above, Whitbread has performed exceptionally
well in challenging external circumstances this year and this is
reflected in the outcomes of the executives’ strategic objectives.
The outcomes for Alison Brittain and Louise Smalley are 84.0%
and 84.6% respectively and are clearly itemised on pages 104
and 105. These outcomes are well above the 50% threshold and
the Committee has confirmed that the criteria set for the release
of the 2020/21 carried-over incentive have been met in full.
As the underpin has been met, the incentive would ordinarily be
payable based on the structure and conditions we set in 2021
and explained to shareholders at that time. However, whilst the
Committee believes management has performed exceptionally
well during the last two years and all performance requirements
have been fully delivered, Alison Brittain, Louise Smalley and the
Committee have jointly come to the decision that Alison and
Louise will not receive these incentive payments. Instead, an
equivalent amount is to be used to form a welfare fund for
Whitbread employees.
Although no payment will be made, the Committee remains
of the view that the approach taken last year served a useful
purpose in creating an appropriate structure at a time of
significant uncertainty in the business and the wider economy,
and balanced this against investors' guidance at the time.
Nicholas Cadbury is not entitled to receive any carried-over
payment, having left the Company before the award would
have been made.
88
2021/22 annual incentives
The incentive for 2021/22 was based on a combination of profit,
efficiency savings and strategic objectives. As I explained in
my letter last year, the Committee took a different approach
to setting the profit target given the significant restrictions in
the hospitality sector and the uncertain outlook at the time the
targets were set. In particular, we decided to focus the executives
on delivering strong profit conversion and strong sales growth
relative to the market.
When calculating the outcome of the profit conversion element,
the Committee reviewed the need for potential adjustments.
The targets were set based on an assumed level of Government
support and, during the course of the year, additional Government
support, i.e. support which was not included in the original targets,
was utilised. Therefore, to ensure we were making a like-for-like
assessment of performance vs targets set at the start of the year,
the target was increased by £80m, which was the amount of
additional Government support received. This ensures that
executives’ incentive outcomes do not benefit from any
unanticipated support received.
Full details of the outcome against all performance measures
is included on page 91.
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. The Committee is comfortable that the formulaic
outcome, after discounting the additional Government support,
of 95.2% for the Chief Executive, fully reflects management's
strong performance against targets for the year.
Whilst the wider stakeholder experience, which is shown in the
table on page 90, has been good, the Committee is cognisant of
the views expressed to us by shareholders and investor bodies.
Accordingly, we have decided to make a further discretionary
reduction. In order to reflect the Company’s use of the CJRS for
just under three months (25% of the year) during this financial
year, we have reduced the overall incentive by 25%. This results in
a total award for the CEO of 71.4%, of which half will be deferred
and paid in shares as usual.
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Whitbread Annual Report and Accounts 2021/22 89
Annual general meeting
At the 2021 AGM, whilst the majority of shareholders supported
the resolution to approve the 2020/21 remuneration report,
a significant minority did not. We have consulted with major
shareholders during the year and we concluded that the main
reasons for the lack of support from some shareholders related
to the annual incentive being awarded in respect of 2020/21,
albeit it was carried over until 2021/22 subject to the
achievement of certain objectives.
The Committee remains of the view this was the right decision
to have taken at the time due to outstanding performance
which has continued into year two of the recovery plan, much
benefiting shareholders. It was the optimum way of incentivising
the recovery of the business from the pandemic, and provided
an element of retention at a time when long-term incentives
were not available. However, we believe that the joint decision
by Alison Brittain, Louise Smalley and the Committee, for Alison
and Louise not to receive an incentive payment has addressed
the issue in full.
Together with my colleagues on the Remuneration Committee,
I very much hope that shareholders will support both the new
remuneration policy and this remuneration report at the 2022 AGM.
Group Finance Director/Chief Financial Officer
As announced previously, our Group Finance Director, Nicholas
Cadbury, stepped down from the Board when he left the Company
on 20 March 2022. As announced at the point of his departure,
the treatment of his remuneration was fully in accordance with
the approved policy (see page 108 for further information).
Hemant Patel was appointed as Chief Financial Officer with effect
from 21 March 2022. His remuneration details are included on
page 91 and all elements are in line with the approved policy.
The wider organisation
This report is necessarily focused on executive remuneration,
but the Committee is very cognisant of the need to consider
remuneration structures across the workforce when taking
decisions on executive pay. It was pleasing that we were able to
give all UK-based hourly paid team members a mid-year pay
increase which was in addition to last April’s increase. It meant
that all of our pay rates were ahead of the National Minimum
Wage and National Living Wage, with all hourly pay rates
increasing by at least 7.8% over the year. The additional increase
was to thank our teams for helping stand the business back up
following the closure of most of its estate during lockdown and
as a result of the strong summer demand seen across the hotel
market, in addition to helping to attract new talent. Our hourly-
paid team members also received two bonuses in the year: a
special recognition payment in May and a summer retention
award. This year’s salary review for executives will be in line
with the review across the organisation.
The year ahead
I explained in last year’s report that, recognising that there
remained significant uncertainty because of the unpredictable
external environment, the Committee had decided to take a
different approach by setting a sales-adjusted profit target
for the 2021/22 annual incentive. At the time, the Committee
expected to revert to the usual approach for the 2022/23 annual
incentive and, whilst some uncertainty remains, a fixed profit
target has been set.
Alison Brittain’s strategic growth objectives for the 2021/22 annual
incentive included a number of ESG-specific objectives, further
details of which are shown on pages 104 and 105. The Committee
recognises the growing importance of ESG issues and it was clear
from the shareholder consultation that there is a desire from a
broad collection of shareholders to include ESG measures as part
of executive remuneration. It has been decided to include a 10%
allocation to ESG, split between Force for Good and customer
metrics, and further details are included on page 110.
In summary, the performance measures for the 2022/23 annual
incentive are: profit (50%), efficiency savings (20%); strategic
growth objectives (20%); and ESG (10%).
Recognising that there does remain some external uncertainty,
we have elected to retain the same underpins for the Restricted
Share Plan 2022 award as used for the 2021 award, being: a
balanced overall assessment of performance and delivery against
strategic priorities; and a cumulative cost efficiency saving. It is
the Committee’s intention to return to the type of underpins
which we originally used when the Restricted Share Plan was
developed, and this is likely to be from 2023 onwards.
I look forward to meeting some of you at our AGM in June and
will be happy to answer any questions you might have on our
revised remuneration policy or on the application of the
current policy.
Frank Fiskers
Chair, Remuneration Committee
27 April 2022
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REMUNERATION AT A GLANCE
90
Business performance
Total shareholder return
350
300
250
200
150
100
Financial measures
£40m
Efficiency savings
+25%
Sales growth vs the market
50
0
01 Mar
2012
28 Feb
2013
27 Feb
2014
26 Feb
2015
03 Mar
2016
02 Mar
2017
01 Mar
2018
28 Feb
2019
27 Feb
2020
25 Feb
2021
03 Mar
2022
Whitbread
FTSE 100
Source: Datastream from Refinitiv
The chart looks at the value over ten years of £100 invested in Whitbread PLC on 1 March 2012 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.
Stakeholder experience in 2021/22
Employees
› Team members received special
recognition payments in May 2021
to reward them for their effort and
contribution during 2020/21
› A retention bonus for our hourly paid
team members who stayed with us
over the busy summer period
› A mid-year additional pay increase for
our operational team members, with
minimum pay rates increased by 5%
Executives
› 2020/21 incentive performance
requirements fully delivered, but
will not be received
› 2021/22 incentive reduced by 25% to
reflect the use of the CJRS for the first
three months of our financial year
Customers
› Significant investment in our CleanProtect
promise, our rigorous daily cleaning
regime to help protect guests
› Enhanced sick pay for COVID-related
› Added additional room rate classes to
absence
› Over 8,000 jobs created
›
›
Investment in diversity & inclusion
training and strong progress against
leadership diversity targets
1,086 team members started
apprenticeships during 2021/22
and 95% of learners continued
their apprenticeships while we
were still not fully reopened
Investors
› Dividend of 34.7p per share
› Significant market outperformance
in the UK, with Premier Inn total
accommodation sales 14.8% ahead of
the midscale and economy market
› Expansion continuing at pace in
Germany with 35 open hotels and 41
in the pipeline, with accommodation
sales 189.7% ahead of 2019/20
give more flexibility during the increased
uncertainty, following the increased guest
refunds at the start of the pandemic
› c.1,650 Premier Plus rooms rolled out
›
Introduced a twin room solution to give
customers greater choice
› Significantly enhanced our food offer
and improved our core drinks offer
Suppliers
› Supported supplier cash flow with
temporary extension of payment terms
on large value orders and fast-tracking
of supplier invoicing queries
›
Introduced a committed buy process,
giving additional contractual security
on long-haul and campaign products
› Used our UK logistics network to
support suppliers with deliveries
during driver and transport shortages
› Appointed a third party to
support suppliers with post-
Brexit customs processes
› Maintained responsible sourcing
programme despite COVID challenges
Communities
› Raised £1.7m for Great Ormond Street
Hospital Children’s Charity (GOSH
Charity), resulting in a total of £20m
since the start of our partnership,
which has supported the development
of the Sight and Sound Centre which
is now fully open
› Decision taken that all new build
construction will be industry-leading
BREEAM Excellent standard
Joint venture partners
› Additional financial support agreed
for Pure due to COVID impact on
the business
Landlords
› All rent paid in full, in contrast
to competitors
Environment
› Net Zero target brought forward by
ten years to 2040 and accelerated
interim target agreed to 2030
› Scope 3 targets set and commitment
given to be SBTi accredited
› Food waste: over 500,000 meals
donated to FareShare
› Force for Good rolled out in Germany
Details of how the Board considers the
interests of the Group’s employees and
other stakeholders is contained on
pages 50 to 54.
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91
Incentive outcomes for 2021/22
The table below sets out the outcome under the 2021/22 annual incentive. As outlined on page 88, a reduction has been applied to the
formulaic outcome to reflect the Company’s use of the CJRS for three months during 2021/22. The total incentive earned is as follows:
Measure
Profit
performance
Sales growth vs market measure
Profit conversion measure
Threshold
Target
Max
Actual: +25%
-1%
0%
+2.25%
Actual: (£16m)
(£44m)
(£64m)
(£24m)
Weighting
(% of
maximum)
25%
Outcome achieved
Alison
Brittain
25%
Louise
Smalley1
25%
25%
25%
25%
Efficiency savings
Actual: £40m
20%
20%
20%
Strategic growth objectives
Formulaic outcome (% of maximum)
£20m
£25m
£30m
Details of performance are
set out on pages 104 and 105
Outcome after discretionary reduction in bonus opportunity (% of maximum)
Adjusted total outcome (% of salary)
Actual annual bonus (£’000)
30%
25.2%
25.39%
95.20%
95.39%
71.40%
121.38%
1,086
71.54%
60.81%
244
1 Louise Smalley retired from the Company and stepped down from the Board on 31 August 2021. The bonus outcome has been pro-rated to reflect the part of the year during
which Louise served on the Board.
As usual, 50% of the total annual incentive achieved will be deferred and paid in shares which will vest after three years.
2021/22 LTIP outcome
There were no LTIP awards due to vest during 2021/22. The first awards made under the Restricted Share Plan (“RSP”) will vest
in 2023, subject to the achievement of the two performance underpins.
Implementation of the remuneration policy for 2022/23
Base salary
Alison Brittain will receive a salary increase in May 2022 in line with the general increases in pay for salaried employees across the
organisation. Hemant Patel, having recently been appointed, will not be entitled to a salary increase in May.
Alison Brittain
Hemant Patel
Salary at
1 May 2022
(£000’s)
921
Salary at
1 May 2021
(£000’s)
895
% increase
3%
515
N/A
N/A
Pension
Alison Brittain’s pension contribution will reduce to 10% effective from 31 December 2022, at which point it will be aligned with the
rate available to the majority of the wider workforce. On appointment, Hemant Patel’s rate was set at 10%.
Alison Brittain
Hemant Patel
Pension
contribution
rate from 31
December
2022 (% of
base salary)
10%
Pension
contribution
rate from May
2022 (% of
base salary)
15%
Pension
contribution
rate from May
2021 (% of
base salary)
18%
10%
10%
N/A
Annual Incentive Scheme
The maximum bonus for 2022/23 for the current executive directors will be 170% of base salary, with awards payable based on
the following measures:
Financial alignment: 70%
Strategic alignment: 30%
Profit performance: 50%
Efficiency: 20%
Strategic growth: 20%
ESG: 10%
Restricted Share Plan
Awards are based on 125% of salary for Alison Brittain and 110% of salary for Hemant Patel, and are expected to vest in 2025,
after which they will be subject to a two-year holding period. The awards are subject to the following underpins:
Balanced overall assessment of performance and delivery
against strategic priorities
Cumulative cost efficiency saving of £60m over the three-year
performance period
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92
DIRECTORS' REMUNERATION POLICY
Introduction
This report outlines the Company’s directors’ remuneration policy
(the 'Policy'), which shareholders will be asked to approve at
the annual general meeting to be held on 15 June 2022. Subject
to shareholder approval, the Policy will be effective from the date
of the 2022 AGM and is intended to apply for three years.
For executive directors, our approach continues to be designed
so as to:
› align with the business strategy and the achievement
of planned business goals;
› support the creation of sustainable long-term shareholder value;
Future 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.
Operation
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.
Benefits
› Benefits are intended to be
› Executive directors are entitled to benefits relating to a car
› We do not anticipate that the maximum payable would
› None.
competitive in the market so as to
assist the recruitment and retention
of executive directors.
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.
Annual Incentive
Scheme (AIS)
› To provide a direct link between
annual performance and reward.
› Targets for measures are normally set at the beginning of the
› Up to 200% of base salary (up to 50% of maximum paid in
› Awards are payable based on a mix of financial metrics and
financial year.
cash and the remainder is paid in deferred share awards).
other business objectives. Financial metrics will represent no
› To incentivise the achievement of
› Cash awards paid following the end of the financial year.
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.
› 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 as set out below.
Restricted Share
Plan (RSP)
› To enable the growth strategy in both
the UK and Germany, which requires
different strategies and approaches.
› Awards normally vest after a period of at least three years,
› Annual awards to a maximum of 125% of base salary in
› Vesting will be subject to two or more performance underpins,
subject to two or more performance underpins and
continued employment.
respect of each financial year.
which will be disclosed at or around the time of grant in the DRR.
› The grant for 2022/23 for the current executive directors will
›
If one or more of the underpins is not met, then a portion of
› To promote long-term value creation
› After vesting, there will be an additional holding period
be 125% of base salary for the CEO and 110% of base salary
the award up to or equal to the weighting of that measure(s)
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.
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.
for the CFO. Any increase beyond this level for the CFO will
will lapse, subject to the overall discretion set out below.
only be applied in exceptional circumstances and will be at
the discretion of the Committee.
less than 60% of the total award for each year, of which the
predominant amount is intended to be profit. 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.
›
It is anticipated that all performance underpins will be equally
weighted, although the Committee retains the discretion to
adjust the weighting of any underpins each year.
› The Committee will select the underpins each year in order to
align with the Company’s strategy and these will normally be
disclosed at or around the time of grant, in the DRR. At least
one underpin will be based on an objective financial metric.
›
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.
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Maximum potential value
Performance metrics
› Annual salary increases would normally be in line with the
› None.
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.
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.
› The maximum bonus for 2022/23 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.
Whitbread Annual Report and Accounts 2021/22 93
› provide an appropriate balance between remuneration
elements that attract, retain and motivate the highest calibre
of executive talent; and encourage a high-performance
culture by ensuring share–based remuneration constitutes a
substantial proportion of the remuneration package and by
linking maximum payout opportunity to outstanding results.
Whitbread is an international-focused hotel business and our
approach is also designed to enable the Company’s long-term
objective of expansion and growth in both the UK and Germany.
The policy table below provides more detail on each key element
of remuneration for executive and non-executive directors,
including the maximum potential value of each element, a brief
summary of how it works and details of any performance metrics.
Maximum potential value
› Annual salary increases would normally be in line with the
Performance metrics
› None.
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.
Benefits
› Benefits are intended to be
› Executive directors are entitled to benefits relating to a car
› We do not anticipate that the maximum payable would
› None.
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.
› 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 2022/23 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 financial metrics and
other business objectives. Financial metrics will represent no
less than 60% of the total award for each year, of which the
predominant amount is intended to be profit. 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.
Restricted Share
Plan (RSP)
› To enable the growth strategy in both
› Awards normally vest after a period of at least three years,
› Annual awards to a maximum of 125% of base salary in
› Vesting will be subject to two or more performance underpins,
the UK and Germany, which requires
subject to two or more performance underpins and
respect of each financial year.
which will be disclosed at or around the time of grant in the DRR.
› The grant for 2022/23 for the current executive directors will
be 125% of base salary for the CEO and 110% of base salary
for the CFO. Any increase beyond this level for the CFO will
only be applied in exceptional circumstances and will be at
the discretion of the Committee.
›
›
If one or more of the underpins is not met, then a portion of
the award up to or equal to the weighting of that measure(s)
will lapse, subject to the overall discretion set out below.
It is anticipated that all performance underpins will be equally
weighted, although the Committee retains the discretion to
adjust the weighting of any underpins each year.
› The Committee will select the underpins each year in order to
align with the Company’s strategy and these will normally be
disclosed at or around the time of grant, in the DRR. At least
one underpin will be based on an objective financial metric.
›
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.
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Future policy table
Element
Base salary
Purpose and link to strategy
Operation
› Base salaries are set to be sufficient
Salaries are reviewed annually taking account of:
to attract and retain the calibre of
executive talent needed to support the
› the salary review across the Group;
long-term interests of the business.
› trading circumstances;
› personal performance, including against agreed
objectives; and
of companies.
› market data for an appropriate comparator group
competitive in the market so as to
or car allowance and healthcare or personal insurance.
assist the recruitment and retention
of executive directors.
›
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.
Annual Incentive
Scheme (AIS)
› To provide a direct link between
› Targets for measures are normally set at the beginning of the
annual performance and reward.
financial year.
› To incentivise the achievement of
› Cash awards paid following the end of the financial year.
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.
› 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 as set out below.
different strategies and approaches.
continued employment.
› To promote long-term value creation
› After vesting, there will be an additional holding period
rather than focusing on specific
during which vested shares cannot be sold, such that the
targets at a time when the executive
combined underpin measurement period and holding period
directors need to balance investment
is at least five years.
and growth.
› To retain executive directors
throughout an important time
for the business to deliver the
growth strategy.
› Subject to clawback and malus provisions as set out below.
› Dividend equivalents may be provided on vested awards
during a holding period.
Whitbread Annual Report and Accounts 2021/22Financial statementsOther informationStrategic reportGovernance Remuneration Report continued
Directors' Remuneration Policy continued
Future policy table
94
Element
Sharesave scheme
Purpose and link to strategy
› To encourage long-term shareholding
Operation
› Annual invitation to all employees, including the
Maximum potential value
Performance metrics
› Consistent with prevailing HMRC limits, currently savings
› None.
in the Company.
executive directors.
limited to £500 per month.
› 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.
›
In the event an employee working in Germany is made an
executive director, they will be eligible to participate in the
International Sharesave scheme (which is aligned with the
scheme for UK-based employees).
Pension
› Pension benefits are provided in
› Executive directors are entitled to participate in the
› The current contribution rate is 15% of base salary (as of
› None.
order to offer a market competitive
remuneration package that is sufficient
to attract and retain executive talent.
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.
Chairman and
non-executive
director fees
› To attract and retain a Chairman
› The Chairman receives an annual fee and the non-executive
› The fees are reviewed annually by the Board (excluding the
› None.
and non-executive directors of the
highest calibre.
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.
1 May 2022) for incumbent executive directors. This will
reduce to 10% of base salary effective from 31 December
2022, which is aligned with the rate available to the
majority of the wider workforce.
› For any new appointment, the contribution will be up
to a maximum of 10% of salary (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).
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.
› Non-executive director fees must remain within the aggregate
limit approved by shareholders from time to time. The current
aggregate limit is £700,000 (excluding the Chairman's fee
and additional fees, such as for committee membership).
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Whitbread Annual Report and Accounts 2021/22 95
Future policy table
Element
Purpose and link to strategy
Operation
Sharesave scheme
› To encourage long-term shareholding
› Annual invitation to all employees, including the
Maximum potential value
› Consistent with prevailing HMRC limits, currently savings
Performance metrics
› None.
in the Company.
executive directors.
limited to £500 per month.
› 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.
›
In the event an employee working in Germany is made an
executive director, they will be eligible to participate in the
International Sharesave scheme (which is aligned with the
scheme for UK-based employees).
Pension
› Pension benefits are provided in
› Executive directors are entitled to participate in the
order to offer a market competitive
Company’s pension scheme (or other pension arrangements
remuneration package that is sufficient
relevant to their location if based overseas).
to attract and retain executive talent.
› Defined contribution scheme.
› Can elect for cash in lieu of pension contributions.
Chairman and
non-executive
director fees
highest calibre.
› To attract and retain a Chairman
› The Chairman receives an annual fee and the non-executive
and non-executive directors of the
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.
› None.
› The current contribution rate is 15% of base salary (as of
1 May 2022) for incumbent executive directors. This will
reduce to 10% of base salary effective from 31 December
2022, which is aligned with the rate available to the
majority of the wider workforce.
› For any new appointment, the contribution will be up
to a maximum of 10% of salary (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).
› 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.
› None.
› Non-executive director fees must remain within the aggregate
limit approved by shareholders from time to time. The current
aggregate limit is £700,000 (excluding the Chairman's fee
and additional fees, such as for committee membership).
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Directors' Remuneration Policy continued
96
Share-based awards under the AIS and RSP may:
a) be delivered as nil-cost options, forfeitable shares, conditional share awards or equivalent cash-settled instruments; and
b) be adjusted in the event of any variation of the Company’s share capital or in any other circumstances the Committee considers
it appropriate.
Illustration of application of remuneration policy
The graphs below show how the Policy will be applied in 2022/23, with details of expected remuneration levels for each director
for below threshold performance, for on-target performance and for maximum performance.
Executive directors – potential value of 2022/23 package
Alison Brittain
Below threshold
87%
13%
£1,071,000
On target
Maximum
Maximum, with 50%
share price growth
Hemant Patel
31%
4%
13%
13%
38%
£3,005,000
25%
4%
21%
21%
3%
18%
21%
18%
30%
£3,788,000
40%
£4,364,000
Below threshold
91%
9%
£587,000
On target
Maximum
Maximum, with 50%
share price growth
34%
3% 14%
14%
36%
£1,591,000
26%
3%
22%
22%
28%
£2,029,000
23%
2%
19%
19%
37%
£2,312,000
Salary and benefits
Pension
Cash incentive
Deferred shares
RSP
The table below sets out the assumptions used in the above scenario charts:
Below threshold
› Only the fixed pay elements are received
On target
› Fixed pay elements plus target annual
Maximum
› Fixed pay elements plus maximum
(base salary, benefits and pension).
bonus and RSP.
annual incentive award and RSP, with
values as set out to the left.
› An additional scenario sets out the value
of the RSP assuming a 50% increase in
share price between grant and vesting.
›
Incentives are based on salaries at
1 May 2022.
› On target pay for the annual incentive
award has been included at 50% of the
maximum award (170% for each director).
› On target pay for the RSP has been
included at 100% of the 2022/23 maximum
award (125% of salary for the CEO and
110% of salary for the CFO).
› Salary reflects what will be paid in
2022/23. For the CEO this means the
salary has been pro-rated to reflect the
increase from 1 May 2022. The CFO’s
salary was set on appointment and will
not increase from 1 May 2022.
› Benefits are included at the value in
the 2021/22 single figure table. As the
incumbent CFO was not on the Board
during 2021/22, we have taken the
outgoing CFO’s benefits for 2021/22
as a representative figure.
› The CEO’s pension is calculated based
on the change in contribution rates as
outlined on page 100. The CFO’s pension
is 10% of salary.
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Performance measures
With the exception of base salary, benefits, pension and
participation in the Sharesave scheme, all other elements of
the remuneration packages of the executive directors are linked
to performance.
The RSP is subject to performance underpins, which, if not met,
may cause an award to be reduced. The RSP was introduced to
enable the growth strategy in both the UK and Germany, to
support shareholder alignment through direct exposure to share
price and to retain executive directors throughout an important
time for the business to deliver the growth. The underpins each
year are set taking into account the business plan and the
Group’s strategy so as to protect against a payment for failure.
The performance measures and targets for the Annual
Incentive Scheme are selected annually to align with the
business strategy. Targets for measures are normally set
at the beginning of the financial year.
There are a number of types of measure used to determine
the level of awards under the scheme. There are financial and
other business measures and some strategic growth objectives.
The growth objectives will be quantitative measures linked
to individual responsibilities in the context of our strategic
objectives and will be reviewed in advance by the Committee.
Targets are set taking into account the business plan.
Malus and clawback
Malus and clawback provisions apply to the RSP for the
duration of the vesting period and for two years following
vesting respectively, which can result in a reduction of the
award (including to zero). Malus and clawback provisions apply
to the deferred annual bonus and cash portion of the bonus
respectively for the duration of three years from the date of the
award (or, if earlier, in the case of a deferred share award, the
date of vesting).
Malus and clawback can be triggered where, in the opinion of the
Committee, there are exceptional circumstances including: (i) a
material misstatement of results; (ii) misconduct on the part of the
participant; (iii) where the participant is deemed to have caused a
material loss for the Company and/or the Group as a result of (a)
reckless, negligent or wilful actions or (b) inappropriate values or
behaviour; (iv) where there has been an event that has caused, or
is likely to cause, material reputational damage to the Group; (v)
an error in assessing the performance conditions or underpin that
results in the award vesting/bonus being awarded to a greater
degree than would have been the case had that error not
occurred; or (vi) insolvency or corporate failure.
For awards already granted, malus and clawback provisions as
in place at the time of that grant will continue to apply.
Shareholding requirements
The Chief Executive is required to build and hold a shareholding
at least equal to the value of 300% of salary, and the Chief
Financial Officer is expected to reach a holding equal to the
value of 200% of salary. Until they reach this level, executive
directors are expected to retain 100% of vested awards (after
the deduction of income tax, national insurance contributions
and dealing fees). In addition, a newly appointed executive
director is expected to build a shareholding in the Company
during the vesting of any share awards. The failure to adhere to
these requirements may lead to the executive director being
excluded from participation in future share plan awards.
Shares held outright (including by a connected person)
count towards the shareholding requirement. In addition,
any vested but unexercised options, deferred bonus shares or
vested Long Term Incentive Plan (LTIP) or RSP share awards
subject to a holding period count towards the shareholding
requirement on a notional net of tax basis. Any awards still
subject to performance conditions, including awards subject
to a performance underpin under the RSP, cannot count
towards a shareholding requirement.
Additionally, executive directors will continue to have shareholding
requirements post-cessation. It is a term of grant of all deferred
bonus and RSP awards granted since December 2019 that the
award cannot be exercised if an individual is not, at that point in
time, meeting their post-cessation shareholding requirement.
The post-cessation shareholding requirements have been set at:
›
100% of the normal shareholding requirement for the first
year post-cessation of employment;
› 50% for the second year post-cessation of employment; and
› 25% for the third year post-cessation of employment.
In cases where the individual has not had sufficient time to
build up shares to meet the above levels, the requirement is
set at the individual’s actual level of shareholding at cessation
of employment. The Committee retains the flexibility to waive
the post-cessation shareholding requirements in certain
exceptional circumstances.
The Committee recognises that it will be unable to enforce
the post-cessation shareholding requirement by restricting
the sale of shares vesting under share awards where the
awards had already been granted to the executive directors
prior to December 2019, as no such conditions were part of
these awards when granted and the Committee believes it is
inappropriate to retrospectively amend these. The Committee
has therefore decided to establish transitional arrangements
for the executive directors as at December 2019 whereby
post-cessation shareholding requirements will build as future
awards vest. Any newly appointed executive directors will be
subject, in full, to the post-cessation shareholding requirement.
Changes to the Policy in 2022/23
The principal change to the proposed policy vs that approved
by shareholders at the 2019 general meeting is the reduction of
executive directors' pension allowance to 10% in line with the
level available to the wider workforce. Other changes are minor
drafting amendments.
Service contracts and external appointments
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 — see policy on payment for loss of
office below;
› 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 or being put
on garden leave.
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Directors' Remuneration Policy continued
The dates of the executive directors’ service contracts are
as follows:
Alison Brittain
Hemant Patel
21 May 2015
26 January 2022
Executive directors’ service contracts are available for
inspection by any person at the Company’s registered office
during normal office hours and on the Company’s website at
www.whitbread.co.uk. The executive directors are entitled to
retain fees from external directorships.
The effective dates of the letters of appointment of the
Chairman and the non-executive directors are as follows:
Adam Crozier
David Atkins
Kal Atwal
Horst Baier
Fumbi Chima
Frank Fiskers
Richard Gillingwater
Chris Kennedy
1 March 2018
1 January 2017
1 March 2021
1 November 2019
1 March 2021
1 February 2019
27 June 2018
1 March 2016
The Chairman and non-executive directors were each appointed
for an initial three-year term and are subject to annual re-
election at the AGM.
Policy on payment for loss of office
Base salary and contractual benefits
All of the executive directors have a rolling service contract
with a 12-month notice period from the Company. The Company
may make a payment in lieu of notice to include up to 12 monthly
payments of base salary and the cash equivalent of pension
contributions. The Company may also either allow for contractual
benefits to continue during this time or, at its sole discretion, pay
the value of those benefits on a monthly basis. Neither notice nor
payment in lieu of notice would be given if an executive director
is summarily dismissed for reason of gross misconduct.
An executive director is under a contractual duty to mitigate his
or her position by actively seeking an alternative remunerated
position and the Company will make a corresponding reduction
in any payment in lieu of notice. Where a payment in lieu of
notice is not applicable, the payment of salary and contractual
benefits would cease on the individual’s leaving date.
The Committee reserves the right to make any other payments
in connection with a director’s cessation of office or employment
where the payments are made in good faith in discharge of an
existing legal obligation (or by way of damages for breach of
such an obligation) or by way of settlement of any claim arising
in connection with the cessation of a director’s office or
employment. Any such payments may include but are not limited
to paying any fees for outplacement assistance and/ or the
director’s legal and/or professional advice fees in connection
with his or her cessation of office or employment.
Annual Incentive Scheme
If an executive director leaves the Company for a ‘permitted
reason’ under the rules of the scheme (redundancy, death, the
sale of his or her employing company or business out of the
Group, injury, ill-health or disability, or if the Committee decides
to apply ‘good leaver’ status in accordance with the discretion
outlined later in the 'Remuneration Committee discretion' section
of this Policy), the default position would be that unvested
deferred share awards would vest on the date of leaving and
a time pro-rated cash award would be made for the incentive
year in which cessation of employment occurs. No new deferred
share awards would be granted in respect of any Annual
98
Incentive Scheme award made after the executive director leaves
the Company, and the executive director would receive a time
pro-rated cash payment in lieu of the deferred share awards.
Notwithstanding the above, the Committee has the discretion
to make a deferred share award for the incentive year in which
cessation of employment occurs, with any such award due
to vest at the same time as the awards made to continuing
employees for that year and for unvested deferred bonus awards
to vest as if the executive director had not left the Company.
If an executive director leaves the Company for any other reason,
25% of an outstanding deferred share award would vest if the
leaving date was between one and two years from the date of
grant and 50% of an outstanding deferred share award would
vest if the leaving date was between two and three years from
the date of grant. Any other unvested deferred share awards
would lapse on the date of leaving. The executive director would
receive no cash incentive payment for the financial year in which
they leave, and no deferred share awards would be awarded.
In the event that an executive director was to leave the
Company by reason of gross misconduct, or in circumstances
in which the reputation of the Company is materially damaged,
the malus provisions may be applied, in which case, no deferred
shares would vest.
In the event of a change of control of the Company, deferred
bonus awards will normally vest at that point unless the
Committee determines otherwise, e.g. a replacement award
is granted by the acquiring company. For in year schemes,
no new deferred share awards would be granted, and the
executive director would normally receive a pro-rated cash
payment in lieu of the deferred share awards, assuming that
the performance metrics had been fully satisfied.
Restricted Share Plan
If an executive director leaves the Company for a ‘permitted
reason’ under the rules of the plan (redundancy, death, the sale
of his or her employing company or business out of the Group,
injury, ill-health or disability, or if the Committee decides to
apply ‘good leaver’ status in accordance with the discretion
outlined in the 'Remuneration Committee discretion' section
of this Policy), the default position would be that any unvested
RSP awards would be pro-rated for time served (over the
relevant underpin vesting period) unless the Committee
determines otherwise. The extent to which unvested RSP
awards vest would be determined by the Committee taking
into account the performance underpins, the underlying
financial performance of the Company and any other factors
the Committee considers appropriate, and the awards would
normally vest at the original vesting date, unless the
Committee determines otherwise. If the participant died,
awards will normally be allowed to vest (subject to the
factors set out above) on the date of death.
If an executive director leaves the Company for any other reason,
any unvested RSP awards would lapse at the date of leaving.
Vested, but unexercised, RSP awards (including those subject to a
holding period) would normally be exercisable up to the later of
six months from the date of leaving or six months from the end of
the holding period. However, if the executive director is summarily
dismissed for gross misconduct, the award would lapse.
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In the event that an executive director was summarily dismissed
for gross misconduct or was to leave the Company in circumstances
in which the reputation of the Company is materially damaged,
the Committee would consider the application of the clawback
and/or malus provisions to which the awards were subject. In
the event of a change of control of the Company, unvested RSP
awards will typically vest to the extent determined by the
Committee, taking into account (i) the Committee’s assessment
of the relevant performance underpins; (ii) the underlying
financial performance of the Company; and (iii) such other
factors as it considers relevant. RSP awards will (unless the
Committee determines otherwise) be reduced on a time-
apportioned basis, normally by reference to the proportion of the
underpin measurement period (or if the Committee determines,
the vesting period) that has elapsed. In determining whether an
award should not be time pro-rated, the Committee will take
into account: (i) the performance of the Company during the
vesting period; (ii) the Company’s share price performance
during the vesting period; (iii) the amount of consideration from
any buyer; and (iv) such other factors as it considers relevant.
Approach to remuneration on recruitment
Our approach to recruitment is that remuneration should be
set in line with the policy table set out above. Whilst we would
not seek to vary this approach, there may be circumstances in
which it is necessary to do so.
On the appointment of a new executive director, base salary
levels will be set taking into account a range of factors including
experience and expertise, internal salaries, market levels and
cost. If an individual is appointed on a base salary below the
market positioning contingent on individual performance, the
Committee may realign base salary over the one to three years
following appointment, which may result in a higher than
normal rate of annualised increase, with any such increase
aligned to internal policies. If the Committee intends to do so,
it will be noted in the first directors’ remuneration report
following an individual’s appointment.
Service contracts will be entered into on terms similar to those
for the existing executive directors, summarised in the service
contracts and external appointments section. However, if
necessary, the Committee would authorise the payment
of a relocation allowance and repatriation, as well as other
associated international mobility terms or agree terms
appropriate to the local market for an executive director
based overseas.
With respect to the appointment of a new Chairman or non-
executive director, the approach will be consistent with that
currently adopted. Variable pay will not be considered and
as such no maximum applies. With respect to non-executive
directors, fees will be consistent with the Policy at the time of
appointment. If necessary, to secure the appointment of a new
Chairman not based in the UK, payments relating to relocation
and/or housing could be considered.
A timely announcement with respect to any director
appointment will be made to the regulatory news services
and posted on Whitbread’s website.
Comparison of executive remuneration policy with wider
employee population
When reviewing the executive directors’ remuneration policy,
the Remuneration Committee takes into consideration the pay
and employment conditions of all employees across the Group.
For example, the principle change to the proposed policy versus
that approved by shareholders at the 2019 General Meeting is
the reduction of executive directors' pension allowance to 10%
to align with the level available to the wider workforce. Further,
Alison Brittain's salary increase for the upcoming year was set
in line with the general increases in pay for salaried employees
across the organisation.
This section of the Policy describes each element of the
executive remuneration package and explains the extent
to which those elements are made available to the wider
employee population.
Other elements of annual remuneration will be set in line with the
Policy set out in the policy table. As such, variable remuneration
will be capped at 200% of salary under the Annual Incentive
Scheme. If a new executive director is recruited, they can be
granted an award under the RSP, the maximum opportunity of
which will be 125% of salary. The following exceptions will apply:
Base salary
The base salaries of all employees, including the executive
directors, are subject to annual review. 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.
› as deemed necessary and appropriate to secure an
appointment, the Committee is able to make additional
payments linked to relocation; and
› the Committee may also make an additional award of cash or
shares in connection with the appointment of a new director
in order to compensate for the forfeiture, or the loss of value
in respect of all or part, of an award from a previous employer.
Such awards would take account of the value, the performance
conditionality of the awards which they replace, the proportion
of the performance period remaining and the type of award.
The Committee would take into account the strategy at
Whitbread and may also require the appointee to purchase
shares in Whitbread to a pre-agreed level prior to vesting.
Where an individual is recruited internally to the position of
executive director, Whitbread will seek to honour any pre-
existing contractual commitments, taking into account the
remuneration of the existing executive directors.
Benefits
Approximately 450 employees across the Group are entitled to
a company car or cash in lieu of a company car. The scheme is
structured so that the level of the allowance is on a sliding scale,
with employees on higher grades receiving a larger allowance.
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 1,900 employees are entitled to participate in
the Group’s private healthcare scheme, with 630 of these,
including the executive directors, entitled to family cover. In
addition, a small number of senior executives, including the
executive directors, are entitled to annual health screening.
All employees receive discounts on Company products, but
the executive 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. The Company has
shareholder approval to extend its share schemes overseas
and the Committee has now established a Sharesave scheme
for employees in Germany.
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Remuneration Committee discretion
The Committee retains the discretion to apply ‘good leaver’
terms to leavers in respect of both the Annual Incentive Scheme
and the RSP. In exercising its discretion, the Committee must
consider the individual circumstances in the particular case
and must not exercise its discretion in a way which would
be discriminatory on grounds of sex, race, age or any other
protected characteristic within the meaning of section 4 of
the Equality Act 2010.
The Committee must also, so far as it is able to do so, exercise
its discretion in a way which is consistent as between individuals
who are in the same position.
Under the rules of the Annual Incentive Scheme, if ‘good leaver’
terms apply, any deferred share awards normally vest in full on
the date of leaving and may be exercised within six months.
Under the rules of the RSP, the award would normally vest
subject to the satisfaction of performance underpins measured
at the end of the period originally set (unless the Committee
determines otherwise). The number of shares vesting would
normally be on a pro-rata basis, taking account of the proportion
of the relevant period that the individual had been employed
within the Group (unless the Committee determines otherwise).
The extent to which RSP awards vest would also be subject to
the Committee’s discretion (mentioned above) to determine the
level of vesting based on the underlying financial performance
of the Company and such other factors it considers appropriate.
Vested but unexercised awards (including those subject to a
holding period (under the RSP) are exercisable for six months
from the later of the end of any relevant holding period and the
date of termination.
The Committee sets the performance targets for the Annual
Incentive Scheme and the underpins for the RSP. The
Committee may change a performance target or underpin from
time to time to take account of legal changes or to obtain or
retain favourable tax, regulatory or exchange control treatment
or in the event that it considers it fair and reasonable to do so.
Any change to an existing underpin under the RSP must not
have the effect, in the opinion of the Committee, of making the
underpin materially easier or materially more difficult to achieve
than it was when the award was initially granted.
The Committee has the discretion to override formulaic
outcomes under the Annual Incentive Scheme and RSP, where
it considers it would be appropriate to do so to better reflect
overall Company performance.
Remuneration Report continued
Directors' Remuneration Policy continued
Annual Incentive Scheme
Approximately 3,900 employees are eligible to take part in an
annual incentive scheme linked to the achievement of financial
and other business targets. The maximum opportunity is
dependent on role. Approximately 45 employees, including
the executive directors, are entitled to participate in the Annual
Incentive Scheme, with maximum payouts split between cash and
deferred share awards, ranging from 60% to 170% of base salary.
Approximately 90 employees, including the executive directors,
are given individual strategic objectives in addition to the
financial and other business targets mentioned above.
Restricted Share Plan
Approximately 45 employees, including the executive directors,
participate in the RSP. This plan 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.
From 31 December 2022, the incumbent executive directors
will receive Company contributions of 10% of base salary,
which aligns with the contribution rate offered to the majority
of the wider workforce. The upper limit for new joiners
continues to be 10% of base salary as agreed in the previous
policy. Contributions can be allocated to the individual’s pension
or taken as cash. Employees who do not choose to participate
may be automatically enrolled, with contributions in line with
the automatic enrolment regulations.
Consideration of shareholder views and summary of decision
making process
The Committee has consulted with Whitbread’s major investors,
along with Glass Lewis, ISS and the Investment Association.
These consultations have been very helpful to us as we have
updated our policy for the future, and I would like to thank all
those who responded to the consultations for their time and
input. Following feedback that financial metrics should have an
increased weighting within the Annual Incentive Scheme, we
have increased the weighting to a minimum of 60% of the total
award and stated that the predominant amount is intended to
be profit. This is the only change we have made to the proposed
policy following the consultation process, as feedback has been
positive and supportive of the Committee’s approach.
Legacy matters
The Committee reserves the right to make any remuneration
payments and/or payments for loss of office (including
exercising any discretions available to it in connection with
such payments) notwithstanding that they are not in line with
the Policy set out above where the terms of the payment were
agreed: (i) before the Company’s first shareholder-approved
directors’ remuneration policy came into effect; (ii) before
this Policy came into effect if the terms were in line with the
Company’s shareholder-approved directors’ remuneration
policy in force at the time those terms were agreed; or (iii) at
a time when the relevant individual was not a director of the
Company and, in the opinion of the Committee, the payment
was not in consideration for the individual becoming a director
of the Company. For these purposes, ‘payments’ includes the
Committee satisfying awards of variable remuneration and,
in relation to an award over shares, the terms of the payment
are 'agreed' at the time the award is granted.
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101
101
Meetings attended and
eligible to attend
4/4
Remuneration Committee – advisers
Internal advisers
Chris Vaughan – General Counsel and Secretary to the Committee
Steve Jones – Reward, Pensions and Insight Director
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. Fees
paid to PwC in respect of advice received by the Committee
amounted to £154,500. 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.
Remuneration Committee agenda – 2021/22
› Approval of Annual Incentive Scheme and targets for 2021/22.
› Deferral of awards to executive directors under the Annual
Incentive Scheme for 2020/21.
› Executive directors’ and senior executives' salary review.
› Approval of the 2021 awards made under the RSP.
› Approval of the 2021 remuneration report.
› Update to Sharesave rules.
› Review of wider remuneration strategy across the organisation.
› Shareholder consultation in relation to revised
remuneration policy.
› Review of senior executive pension arrangements.
› Committee effectiveness evaluation.
› Review of the terms of reference.
Remuneration Committee – membership
Name of director
Frank Fiskers (Chairman)
David Atkins
Kal Atwal
Adam Crozier
Richard Gillingwater
4/4
4/4
4/4
4/4
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.
› Approve awards to be made to executive directors and other
senior executives under incentive schemes.
› Ensure that contractual terms on termination, and any
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.
› Review the alignment of incentives with the Company’s
wider culture.
› Obtain ideas and concerns from the wider workforce about
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, including provision 40 and 41. 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.
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.
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102
Single total figure of remuneration – executive directors (audited information)
Base salary1
Benefits
Pension
Fixed pay
Annual
Incentive
Scheme
Long-term
incentive
Variable pay
Total
Director
Alison Brittain
Nicholas Cadbury
Louise Smalley2
21/22
£’000
20/21
£’000
21/22
£’000
20/21
£’000
21/22
£’000
892
606
200
816
556
367
20
20
9
22
22
19
166
112
38
20/21
£’000
20/21
£’000
21/22
£’000
21/22
£’000
194 1,078 1,032 1,086
–
131
709
739
86
247
472
244
20/21
£’000
–
–
–
21/22
£’000
–
–
–
20/21
£’000
21/22
£’000
– 1,086
–
–
20/21
£’000
21/22
£’000
20/21
£’000
– 2,164 1,032
709
–
739
–
244
–
491
472
1 The 2020/21 base salary figures reflect that the executive directors agreed to a 30% three-month reduction in response to the pandemic. The figures, had no reduction been
made would have been £882k, £606k and £400k for Alison, Nicholas and Louise respectively.
2 Louise Smalley retired from the Company and stepped down from the Board on 31 August 2021. The figures shown for the 2021/22 financial year are for the part of the year
during which Louise served on the Board.
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. The base salary numbers shown in the
table therefore include two months’ pay based on the director’s
salary from 1 May 2020 and ten months’ pay based on the
director’s salary from 1 May 2021.
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
2020/21 annual incentives
As explained in last year’s report, the targets for the 2020/21
incentive scheme had been established prior to the first
COVID-19 lockdown coming into force and it was clear very
early in the year that the profit element, as originally set, could
not be achieved. However, the Committee decided the target
would not be adjusted.
Following the end of the year, we carefully considered the levels
of achievement for the other elements of the incentive. Whilst it
was clear that these stretching objectives had been achieved,
we decided to make no payment at that time, but rather to carry
over this earned part of the incentive, subject to an underpin
based on the achievement of further stretching targets, to be
assessed in 2021/22. Whilst we were confident the 2020/21
incentive outcome fully reflected the strong performance in that
year, this approach allowed us to conserve cash, provide a direct
incentive for recovery of the business from the pandemic and
a retention mechanic at a time when the executives had very
little retention coming from long term incentive plans. It was,
therefore, aligned with the interests of shareholders.
The underpin on this deferred element required satisfactory
performance to be delivered on at least 50% of each executive's
strategic objectives set for the 2021/22 financial year.
As explained on page 88, Whitbread has performed
exceptionally well in challenging external circumstances this
year. Performance has been significantly ahead of the budget/
economy hotel market and also ahead of internal and external
expectations. We have continued to grow the business in
Germany, building a portfolio of 35 hotels in this attractive
growth market. The Committee has also considered the
treatment of all stakeholders over the course of the year:
customer and guest scores have improved; our efficiency
programme has accelerated; our hourly paid team members
have received two pay rises and two bonus payments; we
have supported suppliers throughout and paid on time; and we
have announced an intention to recommend a final dividend.
This is due to the strong performance of all of our employees,
including the executives, and is reflected in the outcomes
of their strategic objectives. The outcomes for the executive
directors are 84.0% and 84.6% for Alison and Louise
respectively, and are clearly itemised on pages 104 and 105.
These outcomes are well above the 50% threshold for the
underpin to be met.
As the underpin has been met, the incentive would ordinarily
be payable based on the structure and conditions we set in
2021 and explained to shareholders at that time. However,
whilst the Committee believes management has performed
exceptionally well during the last two years and all performance
requirements have been fully delivered, Alison Brittain, Louise
Smalley and the Committee have jointly come to the decision
that Alison and Louise will not receive these incentive payments.
Instead, an equivalent amount is to be used to form a welfare
fund for Whitbread employees. The incentive payment for
Nicholas Cadbury lapsed.
Although no payment will be made, the Committee remains
of the view that the approach taken last year served a useful
purpose in creating an appropriate structure at a time of
significant uncertainty in the business and the wider economy,
and balanced this against investors' guidance at the time.
2021/22 annual incentives
The incentive for 2021/22 was assessed against a combination
of profit, efficiency savings and strategic objectives. The
Committee took a different approach to setting profit targets
given the significant restrictions in the hospitality sector and
an uncertain outlook.
The profit target was assessed in two parts, against targets set
at the start of the year. The first part assessed profit conversion,
with the profit target adjusted for actual sales. This allowed
the Committee to measure whether Whitbread was generating
the right return on its sales, when the absolute level of sales
was determined in large part by the timeframe during which
restrictions on trade were in place. The second part assessed
sales growth relative to the market, which enabled the Committee
to test if the Company was performing more strongly than
competitors and delivering additional profit as a result.
When calculating the outcome of the profit conversion element,
the Committee reviewed the need for potential adjustments.
The targets were set based on an assumed level of Government
support. During the course of the year additional Government
support, not included in the original targets, was utilised. This
was primarily due to a grant received in Germany and an
extension of the Government’s CJRS in the UK. To ensure a
like-for-like assessment of performance vs targets set at the
start of the year, this additional Government support of £80m
was removed from the underlying profit outcome. This ensures
that executives’ incentive outcomes do not benefit from the
additional support received.
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Whitbread Annual Report and Accounts 2021/22 103
Full details of the outcome against all performance measures is
included on page 91.
Sales growth
› Target performance was set at growing sales in line with
market, and stretch performance was set at growing sales
by 2.25% points ahead of market.
› Our actual sales growth was 25% points ahead of market,
delivering an additional £279m of profit.
Profit conversion
› Targets for the profit conversion measure were set based
on the total Whitbread sales, using a formula determined
at the start of the year. Based on our actual sales, the
targeted loss was (£124m).
› However, since the targets were agreed, unplanned UK
and Germany government support was made available
to Whitbread, totalling £80m.
› This government support was accepted in order to protect
jobs and allow Whitbread to continue to invest for growth.
› However, to ensure that incentive outcomes are not boosted
by receiving this support, this additional government support
was added to the targeted profit outcome to increase the
target from (£124m) to (£44m).
› The actual outcome of (£16m) was in excess of the stretch
goal of (£24m).
The percentage of salary received by each director as a result
of the profit measure is as follows:
Director
Alison Brittain
Louise Smalley
Total % of salary
85.00
85.00
Awards based on efficiency target (20% of total award)
The target was £25m with a threshold of £20m and stretch of
£30m. Stretch was exceeded, with efficiency savings of £40m
delivered in the year across procurement, operations and
property.
Director
Alison Brittain
Louise Smalley
Total % of salary
34.00
34.00
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. The Committee is comfortable that the formulaic
outcome fully reflects management's strong performance
against targets for the year.
However, the Committee is focused on ensuring that the final
outcome best reflects the wider stakeholder experience and the
views expressed to us by shareholders and investor bodies. As
such, it has decided to make a further discretionary reduction.
In order to reflect the Company’s use of the CJRS for the first
three months of our financial year, the Committee is reducing
the overall outcome by 25%. This means executives are only
receiving an incentive payment for the final nine months of the
year when the CJRS was not accessed.
For the 2020/21 incentive, the Committee made a pre-emptive
decision to cancel the profit measure, but to continue with the
other elements. We know that a significant minority of shareholders
did not support this action and that is why, for the 2021/22
incentives, we have gone further and reduced the entire annual
incentive payment to zero for the period during which the CJRS
was accessed.
Awards based on profit measure (50% of total award)
As stated last year, the profit target was measured on a basis
that adjusted for the level of actual sales. This enabled the
executives to be rewarded for delivery of what was in their
control: profit conversion; and sales relative to the market.
The measure was constructed in two parts. To assess profit
conversion, the first element measured the Whitbread profit
against the expected profit given the actual Whitbread sales.
To assess sales relative to market, the second element measured
Whitbread sales growth vs Market sales growth, using FY20 as
a pre-COVID-19 reference point.
The outcomes under the sales growth and profit conversion
measures are set out below:
Sales growth
vs market
measure
Profit
conversion
measure
Sales growth
vs Market
(FY20 base
point)
-1%
0%
+2.25%
+25%
100%
Profit
(£m)
(£64m)
(£44m)
(£24m)
(£16m)
100%
Threshold (25% maximum)
Target (50% maximum)
Stretch (100% maximum)
Actual
Outcome (% of maximum)
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104
Awards based on strategic objectives (30% 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.
Alison Brittain, Chief Executive
Measures
Actual outcome
Achievement
per outcome
Manage the impacts of the COVID pandemic
Effectively manage the property portfolio
Complete the US private placements buyback
to plan with acceptable terms
Deliver contract base efficiencies/labour
model and produce a smaller and simpler
field operations structure
Launch new brand marketing campaign and
programme to ‘reboot’ sites to drive commercial
performance on reopening
Completed and maintained option on the targeted amount of
sale and leaseback opportunities ready to execute with Board
approval should it be required.
Completed forward funding of £73m for Marylebone
development.
Completed on time and in line with provision level.
Completed and savings achieved ahead of target.
Completed, with good return on investment and strong
commercial performance with significant market
outperformance. The outperformance vs Economy and Midscale
market was +14.8% for the year.
Manage operational impacts at sites in all territories Operational performance managed throughout period incl. health
and safety, site closures, site consolidation, and site reopening as
necessary across the four nations in the UK and Germany and the
UAE businesses.
Premier Inn growth and optimisation
UK room openings
Premier Plus rooms to be opened and new room
products trialled
30 hotels opened (c.3,800 rooms), ahead of target (20+ new
hotels, 2,500 new rooms).
c.1,650 Premier Plus rooms opened and c.150 new room
products, ahead of target (300+ new Premier Inn Plus rooms
and trial 100+ new room products incl. twin rooms).
Maintain and develop plan for optimising the
property network
Completed above target – a portfolio of sites identified and
prepared for sale when market conditions are right.
Site disposals as part of network optimisation
New pipeline rooms and refurbishment
Completed disposal of nine sites valued ahead of target level
at £57m (target £40m).
Both just below target – c.700 rooms added to pipeline (target
750 rooms) and £29.3m of refurbs completed (target £30m).
Germany growth
Evaluate priority going concern portfolio acquisition
options
Significant number of portfolios assessed – ahead of schedule.
Execute at least one acquisition
No acquisitions executed.
Delivery of German commercial strategy incl. review
of direct vs indirect booking strategy
New commercial strategy delivered and executed with above
market performance delivered at city level.
Hotel openings
14 hotels and c.2,200 rooms opened ahead of target (14 hotels
and c.1,800 rooms).
Refurbishment, rebranding and integration of Centro,
Hotels, three Accom and complete Foremost hotels
Completed.
Add pipeline sites
Group projects
Replacement room booking system project to
be on track on time, quality and budget for
delivery 2022/23
Produce savings from UK property costs
Six pipeline sites added – ahead of target of five sites.
Project has been subject to re-planning of both time and budget.
Achieved – delivered c.£8.65m cost and c.£16m net present
value (NPV) ahead of target delivery of c.£2m of property cost
savings from occupancy costs and re-gears of c.£5m NPV.
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Achievement
per outcome
Achievement
per outcome
Measures
Actual outcome
Complete full technical review of all commercial and
data systems. Deliver commercial IT agenda and
Payments remediation work
Technical reviews completed on track. Payment remediation
completed, including changing gateway and acquirer.
Commercial IT plan delivered on time.
ESG
Review and accelerate science-based Net Zero
target for carbon emissions
Develop Green Bond Framework and report against
use of £550m bond proceeds
Board-approved plans for Net Zero carbon by 2040.
Framework developed with report included on page 47. Of
£550m bond, we have established that c.£438m has already
been spent on qualifying projects.
Develop an ESG communications programme for
key shareholders and other stakeholders
Delivered ESG report, two ESG conferences, and four analyst
teach-ins.
Inclusive leadership training completed for senior
leadership group and Group D&I commitments
agreed and communicated
Completed, with 2023 target for female representation in the
leadership group (40%) achieved and significant progress
made towards the 2023 ethnic diversity leadership target.
Achieved 84% of maximum = 42.84% of salary
Louise Smalley, Human Resources Director
Measures
Actual outcome
Optimising our ability to be productive and perform to our best
Launch of hybrid working within UK and Germany
Support Centres with aligned principles, actively
using Our Voice consultation forums in the UK to
drive listening, visible action and engagement
through the transition
Completed – consultation undertaken and transparent
communication to explain rationale to impacted employees.
Return to office in Sept 21 for majority in UK launched with
high-quality tools and guidance to support managers. German
phased return delayed due to Government guidance and review
of space requirements given capacity constraints, but all policy
processes and practices ready to be utilised.
Develop training and comms programme to reboot
sites on reopening to accelerate recovery
Maintain overhead cost efficiency discipline and
further manage cost by delivering efficiency savings
through contract base efficiencies and labour model
as sites reopen
Completed – new hire retention ahead of 2019/20.
Completed – governance processes performing well. Overhead
cost efficiencies from organisation redesign maintained.
Develop UK KPIs that will determine the underlying
site team stability post restrictions to actively
mitigate risk to the new operating models
Completed, with a full suite of KPIs for opening and targeted
understanding of movement by role and region understood to
enable targeted investments.
Enable our recovery with a targeted supply
management plan as the economy and labour
market opens
Not completed, with supply issues accelerating ahead of
our resource readiness having significantly reduced
resourcing capacity.
Simplification saving and service through technology
HR core IT platform review for UK and Germany
Completed – investment approved and moved to RFP.
Stakeholder engagement with key audiences defined
and engaged
Completed, with some further alignment needed.
Define plan for de-risking future IT changes and quick
wins in terms of comms platforms for site engagement
Completed – data strategy being executed with comms
platform in pilot.
We are for everyone and we value difference/Attracting and hiring great diverse talent
Internal ethnicity pay gap report produced with
insights and action plans
Completed – first report communicated Company-wide with
context, action plan and 2023 commitments being tracked on
a new D&I scorecard.
Inclusive leadership training completed for senior
leadership group supported by their personal D&I
commitments agreed and communicated
Gender network established with a structure
that takes account of intersectionality across
the four networks
Inclusive policy sprint plan defined and executed
to maximise opportunities to sponsor inclusion
Completed.
Partially completed – network and steerco launched together
with intersectionality bridge in progress but not complete.
Completed – priority guidance and policy reviews completed
for all three launched networks, with disability inclusion
prioritising workplace assessments in H2.
Achieved 84.62% of maximum = 43.16% of salary
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106
Total awards
The maximum potential award was 170% of salary and the total incentive earned is as follows:
Director
Alison Brittain
Louise Smalley
% of salary
based on profit
% of salary based on
efficiency target
% of salary based on
strategic objectives
Total % of salary
Total % of salary after
25% reduction
Total £’000
85.00
85.00
34.00
34.00
42.84
43.16
161.84
162.16
121.38
121.62
1,086
244
The percentages shown above show the percentage of salary earned before any deductions. However, as explained on page 88, the
awards were reduced by 25% and this reduction is reflected in the cash total shown above as well as in the single figure table on
page 102. In Louise Smalley's case, the cash amount was further reduced to reflect the time served during the year. Half of these
awards will be paid in cash in May 2022, with the remaining half being settled in deferred shares, which are expected to vest in 2025.
Long-term incentives
No awards were due to vest to the executive directors under either the Long-term Incentive Plan or the Restricted Share Plan
during the year.
Pension
The executive directors receive a monthly amount in cash in lieu of pension contributions. This reduced from 21.5% to 18% in
May 2021 and it will further reduce to 15% in May 2022.
Under the proposed remuneration policy on pages 92 to 100, this rate will reduce to 10% effective from 31 December 2022, at
which point it will be aligned with the rate available to the majority of the wider workforce. On appointment, Hemant Patel’s
rate was set at 10%.
No executive director participates in a Group defined benefit or final salary pension scheme.
Single total figure of remuneration – Chairman and non-executive directors (audited information)
Director
Adam Crozier
David Atkins
Kal Atwal
Horst Baier
Fumbi Chima
Frank Fiskers
Richard
Gillingwater
Chris Kennedy
Base fee1
21/22
£’000
408
20/21
£’000
380
62
62
62
62
62
62
62
58
–
58
–
58
58
58
Senior Independent
Director fee
Fee as Chairman of a
Board Committee
Fee as a member of a
Board Committee
21/22
£’000
20/21
£’000
21/22
£’000
20/21
£’000
21/22
£’000
20/21
£’000
–
–
–
–
–
–
15
–
–
–
–
–
–
–
15
–
–
–
–
–
–
20
–
20
–
–
–
–
–
20
–
20
–
10
5
5
5
5
5
–
–
10
–
5
–
5
5
–
Total
21/22
£’000
408
20/21
£’000
380
72
67
67
67
87
82
82
68
–
63
–
83
78
78
1 The 2020/21 base fee figures reflect that the Chairman and non-executive directors agreed to a 20% three-month reduction in response to the pandemic. The figures, had no
reduction been made would have been £400k for the Chairman and £61k for each of the non-executive directors.
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 were introduced. These are subject to transitional arrangements for
the executive directors in role at the time they were introduced. 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.
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The table below shows the holdings of directors as at 3 March 2022:
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
13,930
–
455
420
100
132,861
39,099
64,794
3,137
2,063
2,400
315
2,115
2,000
2,250
44,170
19,172
16,662
5,134
1,678
2,576
4,706
1,484
2,217
–
–
–
–
–
–
–
99
60
84
10
63
70
73
94
62
72
9
64
60
68
300
200
200
100
100
100
100
100
100
100
111
585
282
694
159
97
135
16
102
112
117
103
537
249
563
151
100
116
15
102
96
109
–
77,660
46,419
18,295
–
–
–
–
–
–
–
Director
Chairman
Adam Crozier
Executive directors
Alison Brittain
Nicholas Cadbury
Louise Smalley2
Non-executive directors
David Atkins
Kal Atwal
Horst Baier
Fumbi Chima
Frank Fiskers
Richard
Gillingwater
Chris Kennedy
1 The market price used was the average for the last quarter of the financial year (3,011.67p). 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 are structured as nil-cost options
on vesting.
2 Louise Smalley retired from Whitbread and stepped down from the Board on 31 August 2021. The information provided in the table above is as at that date.
There has been no 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
Key
Scheme
Number of shares
Exercise price
Exercise date
Market price on exercise
(p)
AIS
AIS
AIS
SAYE
12,922
8,593
10,300
356
N/A
N/A
N/A
N/A
23-Nov-21
07-May-21
07-May-21
09-Aug-21
3,012.0
3,245.0
3,245.0
3,183.0
AIS: Deferred shares awarded in prior years under the Annual Incentive Scheme.
SAYE: Options granted under the savings-related share option scheme.
Awards granted
No awards were granted during the year under the Annual Incentive Scheme. Awards were granted under the Restricted Share Plan
as follows, with the market price being the average closing price of a Whitbread share for the five trading days immediately prior to
the grant, excluding any days on which dealing in Whitbread shares by management was prohibited:
Director
Alison Brittain
Nicholas Cadbury
Key
Scheme
Date of award
Number of shares
RSP
RSP
27.04.21
27.04.21
31,363
18,746
Market price
(p)
3,495.6
3,495.6
Total value
(£'000)
1,096
655
RSP: Awards made under the Restricted Share Plan.
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Performance metrics
The awards made under the Restricted Share Plan will vest in
2024, subject to two underpins being met. They will then be
subject to a two-year holding period. The first of the underpins
is 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 is a cumulative cost efficiency saving
of £60m over the three-year performance period.
The underpins will be measured up to the end of the 2023/24
financial year. The award granted to Nicholas lapsed when he
left the Company.
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 Company’s share schemes, no
other payments were made during the year to past directors.
Remuneration terms for
Louise Smalley's departure
As disclosed in last year’s report and 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,
subject to the assessment of the underpins at that time, and will
be pro-rated based on service during the performance period;
and Louise was eligible to participate in the 2021/22 Annual
Incentive Scheme, with the award pro-rated for service in the
year. The terms did not include any pay in lieu of notice or
eligibility to participate in the 2021 RSP. The post-employment
shareholding requirements will apply.
108
Remuneration terms for
Nicholas Cadbury’s departure
Nicholas Cadbury stepped down from the Board and left the
Company on 20 March 2022.
The following information was provided on the Company’s
website in accordance with section 430 (2B) of the Companies
Act 2006. All arrangements are in line with the Company’s stated
remuneration policy approved by the shareholders at the general
meeting held on 6 December 2019.
Nicholas received his salary, benefits and pension allowance as
usual until the date of leaving the Company. There was no pay
in lieu of notice. No cash payments or share awards have or will
be made in respect of either the 2020/21 or the 2021/22 annual
incentive schemes.
Share awards deferred in respect of annual incentives earned
from the 2019 and 2020 schemes will partially vest, and the
balance of unvested shares will lapse on the date of leaving,
in line with the remuneration policy. The awards made under
the RSP in 2020 and 2021 will lapse.
Chief Executive’s remuneration
Whitbread is in the hospitality business and has a large workforce
of around 36,000 team members who are employed directly by
the business, with 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 31-100 (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 in previous years, the Chief Executive has a high level
of variable pay, which impacts the CEO pay ratio. For 2021/22
this has led to the median pay ratio increasing from 53:1 in
2020/21 to 105:1. This is due to the outcome under the annual
incentive award being 71.4% this year whereas there was no
payout under the annual incentive last year. In future years,
when RSP awards begin to vest, the amounts vesting in the
year will also be included in the Chief Executive's single figure
and hence will be included when calculating the CEO pay ratio.
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 25th,
median and 75th percentile ratios 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.
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Whitbread Annual Report and Accounts 2021/22 109
The table below shows how the total pay of the Chief Executive compares with our UK employees at the 25th, median and 75th percentile:
Year
2021/22
2020/21
2019/20
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
Total pay (FTE):
Total pay & benefits
(FTE):
Pay ratio (Option A):
Pay ratio (Option A):
Pay ratio (Option A):
£19,341
£19,659
110:1
55:1
150:1
£20,138
£20,592
105:1
53:1
143:1
£21,594
£22,153
98:1
50:1
134:1
The figures were calculated on 28 February 2022 (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 2021/22 on
page 102 of £2.165m.
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
2021/22
2020/21
2019/20
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
2012/13
Chief Executive
Alison Brittain
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
Single total figure of
remuneration £’000
% of maximum annual
incentive achieved % of LTIP award vesting
2,164
1,032
2,636
5,5881
2,336
2,509
634
2,423
3,057
4,554
6,374
3,432
71,43
0.02
56.7
54.8
64.1
49.8
38.8
38.8
38.8
86.8
82.6
74.9
N/A
N/A
36.0
0.0
38.3
76.5
N/A
97.2
97.2
100.0
100.0
89.8
1
Includes £3.7m from the vesting of a one-off award under the Performance Share Plan in relation to the sale of Costa. This award vested at 97.53% of maximum.
2 The % of maximum annual incentive achieved for the 2020/21 financial year was deferred until 2022 and payable in the event that Alison achieved further strategic objectives
during the 2021/22 financial year. As explained on page 88, whilst the Committee believes management have performed exceptionally well during the last two years and the
performance requirements have been fully delivered, it has been decided that the incentive will not be received and, instead, an equivalent amount is to be used to form a
welfare fund for Whitbread employees.
3 The percentage of maximum annual incentive achieved for 2021/22 disclosed in the table above reflects the annual incentive outcome after the 25% reduction has been applied,
as explained on page 88.
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) increased by 138.4% in
the year, compared with an increase of 10.5% for the Group’s
employees as a whole.
Relative importance of spend on pay
The table below compares the change in total expenditure
on employee pay during the year to the change in dividend
payments and share buybacks.
Implementation of remuneration
policy in 2022/23
Base salary
Alison Brittain will receive a 3% salary increase in May 2022,
in line with the general increases in pay for salaried employees
across the organisation. Hemant Patel, having recently been
appointed, will not be entitled to a salary increase in May.
The base salaries of the executive directors with effect from
1 May 2022 will be as follows:
2020/21
2021/22
% Change
Director
Employee costs
£581.5m
£678.9m
16.7%
Alison Brittain
Dividends
£–
£–
No change
Hemant Patel
Base salary at
1 May 2022
£’000
Base salary at
1 May 2021
£’000
921
515
895
N/A
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.
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110
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.
Given the increased focus from investors on ESG measures and
the recent shareholder consultation revealed a strong appetite
for ESG measures to be included, there will be a 10% allocation
to ESG. The ESG measure will be made up of the reinstatement
of WINcard Customer metrics and the introduction of Force for
Good metrics.
The measures and weightings for the 2022/23 annual incentive
are therefore as follows:
Measure
Profit performance
Efficiency
Strategic growth objectives
ESG measures
Weighting
50%
20%
20%
10%
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 2022/23 report. As signalled on page 89
of the 2020/21 report, the measurement of the profit target
will revert to the usual approach.
Strategic growth objectives
Each executive director also has business objectives linked to
the Group’s strategic priorities. They will be eligible to receive
up to 20% 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. A summary is included below.
Alison Brittain
UK growth and optimisation to include the opening of
new hotels and an increased pipeline together with the
refurbishment of existing hotels and the continuation of
new product trials.
Growth of the German business to include assessment of
potential acquisitions in addition to the opening of hotels
from the committed pipeline.
Infrastructure and financial with the replacement reservation
system on track for pilot and property costs savings.
ESG objectives including carbon reduction accreditation.
Hemant Patel
UK growth and profitability including the optimisation of the
estate and improved RevPAR.
Growth and profitability of the German business, identifying
good returns for the next phase of German growth and a review
of the operational cost model in order to maximise long-term
margin opportunities.
Capital structure and capital allocation projects including
RCF refinancing and reduction of pension longevity risk
through a buyin together with the identification of network
optimisation opportunities.
Group projects including financial management of the
replacement reservation system and a major networks upgrade.
ESG
The 10% allocation to ESG measures will be split between:
› Force for Good (Reduction in carbon emissions and diversity
in our senior leadership population);
› WINcard Customer (Premier Inn Satisfaction and Restaurants
satisfaction)
› The targets for the ESG measures 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 2022/23 report.
Cash awards will be made in May 2023, with deferred equity
issued in April or May 2023 and due to vest in 2026, with no
further performance conditions applying.
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Whitbread Annual Report and Accounts 2021/22 111
Restricted Share Plan
It is anticipated that the executive directors will receive awards
under the RSP in April or May 2022. These will be based on 125%
of salary for Alison Brittain and 110% of salary for Hemant Patel.
The awards will be subject to two underpins and, subject to
these underpins being met, are expected to vest in 2025, 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
The Chairman received a 3% increase in his fee with effect
from 1 March 2022, taking his annual fee to £420,250.
Non-executive director fees
The base annual fee for non-executive directors increased on
1 March 2022 by 3% to £64,300. The fees for the chairmanship
of the Audit Committee and the Remuneration Committee
were increased to £20,600. The fee for the Senior Independent
Director increased to £15,450 and the fees for membership of
the Audit and Remuneration Committees increased to £5,150.
Statement of shareholder voting
The advisory resolution to approve the 2020/21 annual report
on remuneration was put to shareholders for approval at the
2021 AGM and the resolution was passed. At a General Meeting
in December 2019, the current remuneration policy was put to
a vote by shareholders and was also passed.
The voting results were as follows:
Resolution
For
Against
Total
Withheld
Annual
report on
remuneration
Directors'
remuneration
policy
72,249,099
(64.25%)
40,192,388
(35.75%)
112,441,487 23,841,439
64,495,817
(70.5%)
27,038,317
(29.5%)
91,534,134
178,635
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Whitbread Annual Report and Accounts 2021/22Financial statementsOther informationStrategic reportGovernance 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 3 March 2022.
Results and dividends
Group adjusted loss before tax
Group profit before tax
Recommended final dividend per share
(£16 million)
£58 million
34.7p
Details on the Group’s dividend policy can be found on
page 31 in the Chief Financial Officer’s review.
Subject to approval at the AGM, the final dividend will be
payable on 1 July 2022 to the shareholders on the register
at the close of business on 27 May 2022.
The Board
Board of Directors
The directors at the date of this report are listed on pages 68
and 69. Kal Atwal and Fumbi Chima were appointed to the
Board as non-executive directors from 1st March 2021 and
Louise Smalley resigned from the Board on 31st August 2021.
Hemant Patel was appointed to the Board on 21 March 2022.
Details of directors’ training are given in the corporate
governance report on pages 73 to 74.
Directors’ service contracts
The key terms of the executive directors’ service contracts,
together with the dates of those contracts can be found in
the remuneration report on page 98, along with the effective
dates of the letters of appointment of the Chairman and the
non-executive directors.
112
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,
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;
› 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 page 107.
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Whitbread Annual Report and Accounts 2021/22 113
Shares
Share capital
Details of the issued share capital can be found in Note 27
to the accounts.
› 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
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.
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 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 155p per B share
and 159p 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 155p per B share and 159p
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.
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 2022 AGM. The Company did
not purchase and of its own shares during the year. At
3 March 2022 12.5 million shares were held as treasury shares
(25 February 2021: 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
% of issued
share capital1
9,155,869
9,105,321
9,046,346
8,855,756
6,698,606
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 27 April 2022.
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Whitbread Annual Report and Accounts 2021/22Financial statementsOther informationStrategic reportGovernance 114
Directors’ report continued
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 greenhouse gases (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.
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. 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 (Automated
Meter Reading) 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 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 continued to
trial new technologies, for example, we 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.
In 2021/22 we were again impacted by lockdowns due to
COVID-19 across our estates, with a national lockdown closing
sites from March 2021 and a staggered re-opening with the
majority of properties open by May 2021. We saw further
closures over the Christmas period in 2021. Throughout
2021/22 we continued to implement the energy efficiency
measures from the previous year as outlined above (BMS
control and the use of energy management software).
In 2021/22, where possible, we have again worked to
implement new technologies. For example, we have continued
the replacement of grills to a more energy efficient version,
this year installing 150 new grills across 103 sites, bringing the
total of new grills to 520 since we started this project in 2018.
This project has seen an overall 50% gas reduction in our
chargrills. We also worked with an external partner to add an
energy saving additive to 502 boilers across 400 of our
restaurant sites. Year-on-year savings on some sites has
already shown up to 10% reduction on gas use over winter.
We also utilised refurbishment projects to reduce energy
consumption, for example through upgrading lighting to LED’s.
Source of emissions
Gas (T CO2e)
LPG (T CO2e)
Fuel oil (T CO2e)
F-gas (T CO2e)
Fleet mileage (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)
Fleet mileage (kWh)
Electricity, district heating
and EV charging (kWh)
Self-generated electricity
via solar PV (kWh)
Total (kWh)
2021/22
Rest of
the world
2,155
–
–
–
133
UK
46,770
2,221
–
7,098
5,338
Total
48,925
2,221
–
7,098
5,471
Scope
Scope 1
Scope 1
Scope 1
Scope 1
Scope 1
2020/21
Rest of
the world
590
–
–
–
85
UK
35,954
2,594
–
3,921
3,110
Total
36,544
2,594
–
3,921
3,195
Total %
change
33.9%
-14.4%
0.0%
81.0%
71.2%
Scope 2
67,143
6,525
73,669
51,509
3,483
54,992
34%
Scope 2
2,777
128,570
64,203
3,238
8,814
5,526
6,014
137,384
69,730
2,711
97,088
48,290
2,616,379
124,362
2,740,741
2,516,989
2,114
4,157
2,789
68,821
4,825
101,245
51,079
2,585,810
24.7%
35.7%
36.5%
6.0%
–
–
–
–
0.0501
0.0254
–
–
–
–
255,349,480
11,766,080
267,115,560
195,542,009
3,205,701
198,747,710
9,645,034
–
0
–
9,645,034
11,263,465
–
–
–
–
11,263,465
–
21,732,565
461,275
22,193,840
12,237,601
333,754
12,571,355
76.5%
316,220,832
28,462,624 344683,455
220,932,960
13,272,101
234,205,061
47.2%
4,365,016
–
4,365,016
4,406,461
–
4,406,461
607,312,926
40,689,979 648,002,905
444,382,496
16,811,556
461,194,052
-0.9%
40.5%
0.0392
28.0%
0.0198
28.5%
34.4.%
-14.4%
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Whitbread Annual Report and Accounts 2021/22 115
Taskforce on Climate-Related Financial Disclosures
Whitbread PLC has complied with the requirements of LR 9.8.6R
by including climate-related financial disclosures consistent with
the TCFD recommendations and recommended disclosures. This
table outlines where in the body of the full report the specific
detail can be found in response to each recommendation.
Whitbread’s full climate-related financial disclosure is set out in a
separate document entitled ‘Task Force on Climate-Related Financial
Disclosures – Whitbread PLC’ which can be found on our website
www.whitbread.co.uk. It has been published as a separate document
in order to provide its own context, impact and reporting specific to
the key risks and opportunities that have been identified within it.
Recommendation
Governance: Disclose the organisation’s governance around climate-related risks and opportunities.
Where we’ve covered the recommendation in the TCFD disclosure
Describe the board’s oversight of
climate-related risks and opportunities.
Describe management’s role in assessing
and managing climate-related risks and
opportunities.
The Governance section describes the Board’s oversight of climate-related
issues including the frequency by which the Board and other forums meet
to consider these issues; and how it considers and implements, and monitors
progress against goals and targets.
The Governance and Risk Management sections describe management’s
role in the assessment and management of climate-related issues including
assignment of climate-related responsibilities; the associated organisational
structure(s); processes by which management is informed about climate-
related issues; and how management monitors climate-related issues.
Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses,
strategy, and financial planning where such information is material.
Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium,
and long term.
The Strategy section sets out what Whitbread considers to be the relevant
short, medium, and long-term time horizons, together with a description of
the specific climate-related issues potentially arising and associated potential
financial impact on the organisation. A description of the principal risks and
opportunities is also set out in the Strategy section.
TCFD
Report
page
20
20-22
Page(s)
5
The process(es) used to determine which risks and opportunities could
have a material financial impact on the organisation are set out in the Risk
Management section.
Within the Strategy section, Whitbread describes how climate-related issues
serve as an input to its financial planning process, the time period(s) used,
and how these risks and opportunities are prioritised.
6-18
Climate-related scenarios were used to inform the strategy and financial
planning, and such scenarios have been described in the Risk
Management section.
In the Strategy section, Whitbread has described how resilient its strategies
are to climate-related risks and opportunities.
6-18
Describe the impact of climate-related
risks and opportunities on the
organisation’s businesses, strategy,
and financial planning.
Describe the resilience of the
organisation’s strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower scenario.
Describe the organisation’s processes
for identifying and assessing climate-
related risks.
Risk Management: Disclose how the organisation identifies, assesses, and manages climate-related risks.
In the Risk Management section, Whitbread describes its risk management
processes for identifying and assessing climate-related risks, including how
it determines the relative significance of climate-related risks.
Describe the organisation’s processes
for managing climate-related risks.
In the Risk Management section, Whitbread describes its processes for
managing climate-related risks, including how it makes decisions to mitigate,
transfer, accept, or control those risks.
Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management.
Metrics & Targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where
such information is material.
In the Risk Management section, Whitbread sets out how its processes for
identifying, assessing and managing climate-related risks are integrated into
its overall risk management.
Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with its
strategy and risk management process.
Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks.
Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
Within the Metrics & Targets section, Whitbread has disclosed the key metrics
it uses to measure and manage climate-related risks and opportunities.
Within the Metrics & Targets section, Whitbread has provided its Scope 1,
Scope 2 and Scope 3 GHG emissions and the related risks.
Within the Metrics & Targets section, Whitbread has described its key
climate-related targets, in line with anticipated regulatory requirements,
market constraints and/or other goals.
6-18
Page(s)
23-26
23-26
Page(s)
27-30
27
27-30
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Whitbread Annual Report and Accounts 2021/22Financial statementsOther informationStrategic reportGovernance Directors’ report continued
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
Post balance sheet events
Section
Strategic report, pages 1
to 61
Financial statements,
Note 24, page 175
N/A
N/A
Financial statements,
Note 34, page 190
Stakeholder and employee
engagement
Stakeholder engagement,
pages 51 to 54
Conflicts of interest
Statement of capitalised interest
Long-term incentive schemes
Corporate governance
report, page 74
Financial statements,
Note 8, page 155
Remuneration report,
pages 87 to 111
Details on Whitbread's compliance with Disclosure Guidance
and Transparency Rules 7.2 can be found on this page.
116
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 51 to 54.
Employment policies
Whitbread has a range of employment policies covering such
issues as diversity, employee wellbeing and equal opportunities.
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 36 to 49.
Employee involvement
The importance of good relations with our teams is fundamental
to our culture and the success of our business. Across the UK and
Germany, across our sites and Support Centres, we regularly ask
all our employees for their views, through regular pulse surveys.
Every employee has an opportunity to participate in these
surveys, and action plans are created by site/business area.
Our Employee Forum, which we call Our Voice, is made up
of formally elected representatives from across our hotels,
restaurants and Support Centres. Our Voice is designed
to connect our senior leaders with our front-line teams
for two-way conversations about the business, ensuring
employee views are properly represented. More detail
can be found on page 65.
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%.
Regular internal communications are made to all employees to
ensure that they are kept well informed about the performance
of Whitbread, and of financial and economic factors that may
affect the Company’s performance.
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Whitbread Annual Report and Accounts 2021/22 117
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 25 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 2022 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 61. 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
Chief Financial Officer’s review on pages 30 to 33.
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 61.
Annual general meeting
The AGM will be held at on 15 June 2022 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.
Approved by the Board on 27 April 2022 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
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Whitbread Annual Report and Accounts 2021/22Financial statementsOther informationStrategic reportGovernance Corporate Governance continued
118
DIRECTORS’ RESPONSIBILITY STATEMENT
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.
This responsibility statement was approved by the board of
directors on 27 April 2022 and is signed on its behalf by:
By order of the Board
Alison Brittain
Chief Executive
Hemant Patel
Chief Financial Officer
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.
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 financial statements
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.
In preparing the parent company financial statements,
the directors are required to
› select suitable accounting policies and then apply
them consistently;
› make judgements and accounting estimates that are
reasonable and prudent;
› state whether Financial Reporting Standard 101 Reduced
Disclosure Framework has been followed, subject to any
material departures disclosed and explained in the financial
statements; and
› prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that directors:
› properly select and apply accounting policies;
› present information, including accounting policies,
in a manner that provides relevant, reliable, comparable
and understandable information;
› provide additional disclosures when compliance with the
specific requirements in IFRS 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.
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Whitbread Annual Report and Accounts 2021/22
119
ASSURANCE STATEMENT
The nature of the assurance
This is a report by Corporate Citizenship for the Management
of Whitbread.
Corporate Citizenship has undertaken limited assurance of
certain selected environmental and sustainability performance
data against HM Government Environmental Reporting
Guidelines (March 2019), the GHG Protocol Corporate
Accounting and Reporting Standard (2015) and the GRI
Principles of Accuracy, Clarity, Comparability, Completeness,
Timeliness and Verifiability, as described below:
Pillar
Target
Statements to Assure
Opportunity
More diversity in leadership population
with 8% ethnic minority and 40% female
representation in our top 100 by the end
of 2023
Community
Through our apprenticeship programmes
we will support people to find and develop
their hospitality careers
For every new site we will donate
our time to actively supporting local
community activity
Raise £20m for GOSH Charity, raise £3m
each year for our charity partner
Progress against targets in FY21/22 – we have 41.67% female
representation and 4.8% ethnic minority representation in
our leadership population as of 28th February 2022.
(Leadership community is defined by all roles at grades
C20+ that are UK based)
274 of our teams have completed their apprenticeships this year
(2021/22)
200 hours donated to local communities through new site openings
784 new team members join Whitbread directly though New Sites
Opening this year/We created 784 new jobs through new site
openings this year
We raised £1.7 million in 21/22, creating a total amount of £20
million raised throughout our partnership with GOSH Charity. We
started our partnership in 2012.
Public Health England 20% Sugar Reduction This year we have reduced the sugar in our Beefeater and Brewer’s
Responsibility
Whitbread’s critical commodities
accredited against robust standards
100% of our suppliers risk assessed
against Force for Good criteria
Fayre puddings by 5.8% and 11% respectively against a baseline of
2015 as part of the Office for Health Improvement and Disparities
sugar reduction programme.
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
We are working hard to meet our ingredient egg target by 2025
with 52.6% of our 2021/22 ingredient egg requirement sourced
from cage free hens* (*for UK sites only).
100% of our raw beef range in the UK is produced to a recognised
farm assurance scheme in its country of origin such as Red Tractor.
Our Business Benchmark on Farm Animal Welfare (BBFAW) 2021
was tier 3 rating
In 2020 we became the first UK budget hotel chain to become
members of Better Cotton (formally ‘The Better Cotton Initiative’)
In collaboration with our laundry suppliers and Better Cotton we
have begun to develop new ways of working to deliver sustainable
cotton for rented linen, which the hospitality industry relies on. In
2021, with one of our hotel laundry suppliers alone, we achieved
76% of the cotton in replenished hotel laundry sourced as more
sustainable cotton, through Better Cotton; an ISEAL accredited
standard system.
For our guest buys the bed sales 15% of the cotton in 2021, was
sourced as more sustainable cotton, through Better Cotton too.
This year we became RSPO (Roundtable Sustainable Palm Oil)
supply chain certified. This means we now have certified processes
and systems to maintain the chain of custody of certified Palm Oil
in our organisation.
We are the first pub or hotel group to have this certification.
100% of our supplier are risk assessed.
We will cut food waste by 50% by 2030
32.34% reduction from our 2018 baseline year
621,988 meals donated to charity
We will become Net Zero for carbon
emissions by 2040
50.07% Scope 1 and 2 intensity reduction from our 2016/17
baseline year
We will not send any waste to landfill
99.91% of our operational waste diverted from landfill
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Whitbread Annual Report and Accounts 2021/22Financial statementsOther informationStrategic reportGovernance 120
Independence
We have worked with Whitbread since 2002 and have provided
assurance since 2007. During 2021/2022, except as noted below,
our work with Whitbread focused on assurance, assistance with
developing Whitbread’s Task Force on Climate-related Financial
Disclosures and the S&P Global Corporate Sustainability
Assessment (DJSI).
Conclusion
Based on the scope of work and assurance procedures
performed, nothing has come to our attention that causes us
to believe that the selected environmental and sustainability
performance data is not prepared, in all material respects,
in accordance with the HM Government Environmental
Reporting Guidelines (March 2019), the GHG Protocol
Corporate Accounting and Reporting Standard (2015)
and the GRI Principles of Accuracy, Clarity, Comparability,
Completeness, Timeliness and Verifiability.
Corporate Citizenship Limited
London
7 April 2022
Corporate Governance continued
Assurance statement continued
Whitbread is entirely and solely responsible for the production
and publication of the data assured, Corporate Citizenship for
its assurance.
This engagement was performed in accordance with the
International Standard on Assurance Engagement (ISAE)
3000 (Assurance Engagements other than Audits or Reviews
of Historical Financial Information) and the relevant subject-
matter specific ISAE for GHG data (ISAE 3410, Assurance
Engagements on Greenhouse Gas Statements).
GHG quantification is subject to inherent uncertainty due to
factors such as incomplete scientific knowledge about the
global warming potential of different GHGs and uncertainty
around the models and parameters used in estimating
GHG emissions.
Corporate Citizenship has complied with the requirements
for independence, professional ethics and quality control
as stipulated by ISAE 3000 (2020) Requirement 3a and 3b.
Assurance work performed
The assurance work was commissioned in August 2021 and
was completed on 7 April 2022. Detailed records were kept
of meetings and correspondence relating to the assurance.
A team of four, led by a Director, undertook the assurance
and commentary process. An assurance specialist director
acted as adviser to the group.
The assurance engagement was undertaken to a limited level,
and involved the following activities:
› A review of underlying data sources and substantiating
evidence to support this year’s reporting, to assess
robustness of monitoring and reporting systems;
› A review of the activity data for energy (process, building
and company vehicles), travel, water and waste;
› A review of year-on-year performance trends to identify
any significant changes in operational eco-efficiency and
investigate the reasons behind these trends;
› A review of GHG calculations for accuracy and consistency
with best practice guidelines;
› A review of the data collation tools and processes for
charitable donations, sustainable sourcing of key
commodities, human rights assessments and waste;
› A review of the calculation methodologies behind
Whitbread’s market-based Scope 2 emissions, including
evidence of renewable electricity purchases;
› A review of data consolidation and aggregation;
› A review of group reporting to check for errors or omissions
in data analysis, consistency with underlying data sets and
reasonableness of reporting.
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Whitbread Annual Report and Accounts 2021/22 INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF WHITBREAD PLC
121
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 3 March 2022 and of the Group’s profit for
the 53 weeks then ended;
the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
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”; and
›
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, and United Kingdom adopted international accounting standards. The financial reporting framework that has been
applied in the preparation of the parent company financial statements is applicable law and United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”.
Basis for opinion
2.
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 we have not provided any non-audit services prohibited by the FRC’s Ethical Standard
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.
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3.
Summary of our audit approach
KEY AUDIT
MATTERS
The key audit matters that we identified in the current year were:
›
Impairment and impairment reversals of property, plant and equipment and right-of-use assets; and
› Recognition of UK and Germany government grants.
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
SCOPING
The materiality that we used for the Group financial statements was £16.0 million (2021: £16.0 million)
which was determined on the basis of 0.38% (2021: 0.42%) of net assets.
We focused our Group audit scope primarily on all significant trading entities at Premier Inn in the UK
and the Group head office, with specified audit procedures performed for the Germany business.
SIGNIFICANT
CHANGES IN OUR
APPROACH
These locations represent the principal business units and account for 97% of the Group’s revenues
and 92% of the Group’s net assets.
The following changes have been made to our approach for the following key audit matters:
›
Impairment and impairment reversals of property, plant and equipment and right-of-use assets –
There continues to be significant judgement and complexity in the cash flow forecasting required
for the impairment reviews required under IAS 36 Impairment of Assets. Given the recovery of
demand in the industry during the period, we have extended the scope of our work to include the
appropriateness of any potential reversal of impairments on previously impaired sites.
› Recognition of UK and Germany government grants – In the prior period, we identified a key audit
matter relating to the presentation and accuracy of amounts received from government support in
the UK, through the Coronavirus Job Retention Scheme. In the current period we have extended the
scope of work to include government grants received in Germany as well as the UK.
Our 2021/22 audit report no longer includes the following as key audit matters:
› Going concern – Due to the continued market recovery during the period, we do not consider the
assessment of the use of the going concern basis of accounting to be as complex for the current
period compared to the prior period.
›
Impairment of goodwill relating to the Germany cash generating unit – The full goodwill amount relating
to the Germany cash generating unit was impaired in the prior period and therefore is not considered
relevant for the current period.
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 included consideration of the following matters:
›
obtained confirmation of the financing facilities including nature of facilities, repayment terms and covenants;
›
›
assessed the reasonableness of the assumptions used in management’s three-year business plans including the base case
scenario, severe but plausible scenario, and reverse stress test scenario;
tested the clerical accuracy and assessed the models used to prepare the business plans; this work included obtaining an
understanding of the relevant controls over management’s model;
›
considered the amount of headroom in the business plans with regards to liquidity and covenants;
›
assessed the sensitivity of the headroom in management’s business plans; and
›
assessed the appropriateness of the Group’s disclosure concerning the going concern basis.
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.
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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.
Key audit matters
5.
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.
5.1.
Impairment and impairment reversals 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 £4,227.1 million (2021: £4,234.7 million) of Property,
plant and equipment and £3,267.6 million (2021: £2,738.4 million) of Right-of-use assets at 3 March 2022.
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, an impairment of £97.9 million was
recognised as a result of the expected impact of the COVID-19 pandemic on short-term and longer term
cash flows, which are key assumptions in the impairment assessment.
In the current year, there continues to be significant judgement and complexity in the cash flow forecasting
given the ongoing impact of the COVID-19 pandemic. The recovery of cash flow forecasts across some sites
during the year means the Group is also required to consider if any reversal of impairment losses previously
recognised is required. In the current year, the Group has recognised an impairment of £10.5 million as well
as impairment reversals of £52.5 million.
Estimation is required in determining the recoverable amount of the Group’s portfolio of sites. 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, which would indicate an impairment is required. There is also
a risk that the recoverable value of previously impaired sites is higher than the carrying value, which would
indicate an impairment reversal is required. Where an impairment review 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 or impairment reversal.
A CGU is determined to be each individual trading outlet;
› Calculation of the appropriate discount and long-term growth rates;
› Estimates of future trading earnings and cash flow projections, including the recovery profile post COVID-19;
› Assessing the future growth profile of sites which have not yet reached maturity;
› Appropriateness of the valuation methodology, 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 matter considered by the Audit Committee, as discussed on page 81.
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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 CGUs displaying impairment indicators or impairment reversal indicators
by challenging a sample of CGUs for which no indicators had been identified;
› 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 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 FY23 as COVID-19 restrictions are eased, and longer term expectations;
› Performed testing on a sample of sites where impairment had been recognised, sites where impairment
had been indicators identified, but no impairment recognised and sites which indicated an impairment
reversal was required; 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 and impairment reversals
recognised in the year are appropriate. We consider the disclosures, including the sensitivities in Note 15,
to be appropriate.
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5.2. Recognition of UK and Germany government grants
KEY AUDIT
MATTER
DESCRIPTION
As described in Note 9 (Government grants and assistance), during the year, the Group 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”). In Germany, the Government has
provided reimbursement of eligible fixed costs incurred by entities impacted by COVID-19 through the
Corona Bridging Aid for Small and Medium-Sized Enterprises.
This government funding meets the definition of a government grant under IAS 20 Government Grants
and a total of £113.8 million (2021: £153.4 million) 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 both the UK and Germany government funding schemes is complex.
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 UK
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.
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 the government grants do not meet the definition of an adjusting item on
the basis that the funding is compensation for costs that form part of the normal operations of the business.
Similarly, the costs for which the government grants compensate have not been classified as adjusting and
therefore the related income has not been classified as an adjusting item.
HOW THE SCOPE
OF OUR AUDIT
RESPONDED TO
THE KEY AUDIT
MATTER
We consider the recognition of UK and Germany government grants 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 government grants;
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 specialists, selected a sample of models used to determine the grant claims and
challenged the approach to calculating claims and the application of the scheme rules;
› With input from our specialists, recalculated a sample of claims to assess whether eligibility 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;
› Reviewed correspondence between management and the relevant government authorities;
› Assessed whether the disclosures are in line with IAS 20 Government Grants requirements;
› Challenged management on the judgement exercised in classifying the government grant income
as a non-adjusting item; and
› Evaluated the status of claims spanning the year-end including assessing the likelihood of challenge
for claims not yet formally approved, in order to determine whether these have been accounted for
correctly as at 3 March 2022.
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 balance sheet date to be
reasonable. We are satisfied that the recognition of UK and Germany government grants is appropriate.
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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:
Group financial statements
Parent company financial statements
MATERIALITY
BASIS FOR
DETERMINING
MATERIALITY
£16.0 million (2021: £16.0 million)
We have determined materiality to be
£16.0 million, which represents 0.38%
(2021:0.42%) of net assets.
The approach is consistent with the prior year.
RATIONALE FOR
THE BENCHMARK
APPLIED
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.
After due consideration, we determined that
net assets was the most appropriate benchmark
to use, consistent with the prior year.
£13.6 million (2021: £6.4 million)
Materiality was determined on the basis of the
Parent Company’s net assets. This was then
capped at 85% (2021: 40%) of Group materiality.
The increase in the cap was due to decreased
complexity and uncertainty associated with the
impact of the COVID-19 pandemic, compared
to the prior year.
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.
Net assets £4,119m
Net assets
Group materiality
Group materiality £16m
Component
materiality range
£6m to £15m
Audit Committee
reporting threshold £0.8m
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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
Parent company financial statements
70% (2021: 65%) of Group materiality
70% (2021: 65%) 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 decreased complexity and uncertainty associated with the impact of the COVID-19 pandemic
on the financial statements compared to the prior year.
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
(2021: £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.
An overview of the scope of our audit
Identification and scoping of components
7.
7.1.
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 performed by the Group
audit team, with the assistance of component auditors in Germany.
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.
Revenue
Net assets
Full audit scope
97%
Full audit scope
92%
Review at
group level
3%
Specified audit
procedures
Review at
group level
7%
1%
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7.2. 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 over 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 and expenditure (processed through Oracle Fusion) 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 processes supporting revenue, expenditure (processed through Oracle Fusion), additions to property plant
and equipment and intangible assets.
As described on page 81 of the Audit Committee report, during the year management presented a review to the Committee
of the controls over the processes for determining the valuation of deferred tax assets and liabilities. This included a review
of controls implemented during the year as well as plans to embed further enhancements in the wider tax processes during
the coming year. We performed walkthrough procedures to determine whether the controls implemented in the year were
effectively designed.
7.3. Our consideration of climate-related risks
As described on pages 48 and 49, the Group has assessed the risks and opportunities associated with various future climate-
related scenarios. The Group’s full TCFD report outlines the process they have taken to identify the principal climate-related
issues which have affected and will potentially affect the business. We have considered the Group’s assessment of the impact
of these risks and the opportunities on the financial statements and their conclusion (disclosed in Note 2 to the financial
statements) that there is no material impact on the financial performance and position of the Group. We also read the full TCFD
report to consider whether it is materiality consistent with the financial statements and our knowledge obtained in the audit.
7.4. Working with other auditors
The Group audit team is responsible for the scope and direction of the audit process and provides direct oversight, review
and coordination of our component audit teams. During the current year we engaged component auditors from the Deloitte
member firm in Germany to perform specific procedures on the German entities. This approach allowed us to engage local
auditors who have appropriate knowledge of local regulations to perform this audit work. We issued detailed instructions to
the component auditor and directed and supervised their work.
We interacted regularly with the component Deloitte team during each stage of the audit and reviewed key working papers.
We maintained continuous and open dialogue with our component teams in addition to holding formal meetings so that we
were fully aware of their progress and results of their procedures.
8. Other information
The other information comprises the information included in the annual report, being the strategic reports on pages 2 to 61 and
the governance reports on pages 62 to 118, 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.
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Responsibilities of directors
9.
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.
Auditor’s responsibilities for the audit of the financial statements
10.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
11.
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.
11.1. 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:
›
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; and
›
the matters discussed among the audit engagement team, component audit team and relevant internal specialists, including
tax, valuations, pensions, IT, financial instrument and industry specialists 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 and impairment reversals of property, plant
and equipment and right-of-use assets. 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.
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11.2. Audit response to risks identified
As a result of performing the above, we identified impairment and impairment reversals of property, plant and equipment
and right-of use assets 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.
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 General 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.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
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:
›
›
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 117;
› 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 61;
› the directors’ statement on fair, balanced and understandable set out on page 74;
› the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 81;
› the section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 81; and
› the section describing the work of the Audit Committee set out on page 80.
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Whitbread Annual Report and Accounts 2021/22
131
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:
› 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 this regard.
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 this regard.
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 2015 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 seven years, covering the years ending 3 March
2016 to 3 March 2022.
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).
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.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these
financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on
the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’).
This auditor’s report provides no assurance over whether the annual financial report has been prepared using the single
electronic format specified in the ESEF RTS.
Kate J Houldsworth FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, UK
27 April 2022
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements CONSOLIDATED ACCOUNTS 2021/22
132
Contents
133 Consolidated income statement
134 Consolidated statement of comprehensive income
135 Consolidated statement of changes in equity
136 Consolidated balance sheet
137 Consolidated cash flow statement
138 Notes to the consolidated financial statements
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Whitbread Annual Report and Accounts 2021/22 CONSOLIDATED INCOME STATEMENT
Year ended 3 March 2022
133
53 weeks to 3 March 2022
52 weeks to 25 February 2021
Before
adjusting
items
£m
Adjusting
items
(Note 6)
£m
Statutory
£m
Notes
Before
adjusting
items
£m
Adjusting
items
(Note 6)
£m
Statutory
£m
Revenue
Other income
Operating costs
Impairment of loans to joint ventures
OPERATING PROFIT/(LOSS) BEFORE
JOINT VENTURES
Share of profit/(loss) from joint ventures
OPERATING PROFIT/(LOSS)
Finance costs
Finance income
(LOSS)/PROFIT BEFORE TAX
Tax credit/(expense)
(LOSS)/PROFIT FOR THE YEAR
3
1,703.4
4
122.4
5 (1,671.1)
(1.8)
16
–
8.7
1,703.4
131.1
65.3 (1,605.8)
(1.8)
–
588.9
161.8
(1,231.4)
–
0.5
6.3
589.4
168.1
(351.7) (1,583.1)
(5.8)
(5.8)
152.9
74.0
226.9
(480.7)
(350.7)
(831.4)
0.4
153.3
(173.6)
4.5
(15.8)
–
74.0
–
–
74.0
0.4
227.3
(173.6)
4.5
58.2
(6.0)
(486.7)
(1.7)
(352.4)
(7.7)
(839.1)
(153.8)
5.4
(635.1)
(21.2)
1.3
(175.0)
6.7
(372.3) (1,007.4)
10.7
(5.1)
(26.4)
47.6
(15.7)
42.5
94.1
(541.0)
6.8
(365.5)
100.9
(906.5)
16
3
8
8
3
10
EARNINGS PER SHARE
(Note 11)
Basic
Diluted
53 weeks to 3 March 2022
52 weeks to 25 February 2021
pence
pence
pence
pence
pence
pence
(2.5)
(2.5)
23.6
23.4
21.1
20.9
(287.6)
(287.6)
(194.3)
(194.3)
(481.9)
(481.9)
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Year ended 3 March 2022
PROFIT/(LOSS) FOR THE YEAR
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT:
Remeasurement gain/(loss) on defined benefit pension scheme
Current tax on defined benefit pension scheme
Deferred tax on defined benefit pension scheme
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME STATEMENT:
Net gain on cash flow hedges
Deferred tax on cash flow hedges
Net gain/(loss) on hedge of a net investment
Deferred tax on net (gain)/loss on hedge of a net investment
Cost of hedging
Exchange differences on translation of foreign operations
Deferred tax on exchange differences on translation of foreign operations
134
53 weeks
to 3 March
2022
£m
52 weeks to
25 February
2021
£m
42.5
(906.5)
Notes
32
10
10
25
10
25
10
25
10
318.8
(2.3)
(88.0)
228.5
2.4
(0.5)
9.0
(0.8)
2.5
12.6
(16.0)
2.7
(13.3)
(16.3)
2.7
(2.4)
(16.0)
2.3
(0.6)
(8.5)
0.8
–
(6.0)
19.3
(1.5)
17.8
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, NET OF TAX
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, NET OF TAX
227.8
270.3
(4.2)
(910.7)
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Whitbread Annual Report and Accounts 2021/22 CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
Year ended 3 March 2022
135
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
At 27 February 2020
112.9
90.8
50.2
5,861.9
18.6
(2,385.6)
3,748.8
Loss for the year
Other comprehensive income
Total comprehensive income
Ordinary shares issued on exercise of employee
share options (Note 27)
Ordinary shares issued on rights issue (Note 27)
Loss on ESOT shares issued
Accrued share-based payments (Note 31)
Tax on share-based payments
–
–
–
0.1
51.7
–
–
–
–
–
–
2.8
929.3
–
–
–
–
–
–
–
–
–
–
–
(906.5)
(16.0)
(922.5)
–
10.1
10.1
–
–
(6.7)
14.0
(1.9)
–
–
–
–
–
–
1.7
1.7
–
–
6.7
–
–
(906.5)
(4.2)
(910.7)
2.9
981.0
–
14.0
(1.9)
AT 25 FEBRUARY 2021
164.7
1,022.9
50.2
4,944.8
28.7
(2,377.2)
3,834.1
Profit for the year
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
–
–
–
–
–
–
–
–
–
42.5
228.5
271.0
–
(4.4)
(4.4)
–
3.7
3.7
42.5
227.8
270.3
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
AT 3 MARCH 2022
0.1
–
–
–
164.8
1.8
–
–
–
1,024.7
–
–
–
–
50.2
–
(3.2)
12.9
(0.2)
5,225.3
–
–
–
–
24.3
–
3.2
–
–
(2,370.3)
1.9
–
12.9
(0.2)
4,119.0
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements CONSOLIDATED BALANCE SHEET
At 3 March 2022
136
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
CURRENT ASSETS
Inventories
Derivative financial instruments
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
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
3 March
2022
£m
25 February
2021
£m
Notes
13
22
22
14
14
16
25
32
17
25
18
19
14
20
22
23
25
26
20
22
23
10
26
27
28
28
28
28
28
159.3
3,267.6
–
4,227.1
–
41.1
15.8
522.6
8,233.5
19.4
–
116.4
1,132.4
1,268.2
64.8
9,566.5
–
129.3
19.6
–
–
570.7
719.6
991.9
3,572.5
11.7
150.6
1.2
4,727.9
5,447.5
4,119.0
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
164.8
1,024.7
50.2
5,225.3
24.3
(2,370.3)
4,119.0
164.7
1,022.9
50.2
4,944.8
28.7
(2,377.2)
3,834.1
1 Right-of-use assets – investment property represents leasehold sites which the Group acquired on the acquisition of Foremost Hospitality Hiex GmbH which was subleased
to a third party (see Note 22).
ALISON BRITTAIN CHIEF EXECUTIVE
HEMANT PATEL CHIEF FINANCIAL OFFICER
27 April 2022
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Whitbread Annual Report and Accounts 2021/22 CONSOLIDATED CASH FLOW STATEMENT
Year ended 3 March 2022
137
CASH GENERATED FROM/(USED IN) OPERATIONS
Payments against provisions
Pension payments
Interest paid – lease liabilities
Interest paid – other
Interest received
Corporation taxes (paid)/received
NET CASH FLOWS FROM/(USED IN) 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 acquired
Cash flows on aborted acquisition
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 (USED IN)/FROM FINANCING ACTIVITIES
Proceeds from issue of shares on exercise of employee share options
Proceeds from issue of shares on rights issue, net of fees
Drawdowns of long-term borrowings
Repayments of long-term borrowings
Costs of long-term borrowings
Lease incentives received/(paid)
Payment of principal of lease liabilities
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Opening cash and cash equivalents
Foreign exchange differences
CLOSING CASH AND CASH EQUIVALENTS
Notes
29
32
22
3
13
26
16
16
27
53 weeks
to 3 March
2022
£m
52 weeks to
25 February
2021
£m
693.7
(227.0)
(18.9)
(14.8)
(133.2)
(20.2)
2.2
(0.1)
508.7
(200.4)
56.4
(21.1)
–
–
(36.3)
(1.4)
(1.8)
(204.6)
1.9
–
50.0
(353.9)
–
2.0
(127.1)
(427.1)
(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
21
21
21
19
(123.0)
1,256.0
(0.6)
1,132.4
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
At 3 March 2022
138
1 GENERAL INFORMATION AND AUTHORISATION OF CONSOLIDATED
FINANCIAL STATEMENTS
The consolidated financial statements of Whitbread PLC for the year ended 3 March 2022 were authorised for issue by the
Board of Directors on 27 April 2022. 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 117.
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 UK-adopted
international accounting standards.
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 53 weeks to 3 March 2022 (prior financial year:
52 weeks to 25 February 2021).
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 61. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the financial review on pages 26 to 33. The principal risks of the
Group are set out on pages 56 to 60. 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. Details of the
Group’s available and drawn facilities are included in Note 20. At 3 March 2022, the Group had a cash balance of £1,132.4m with
available borrowing facilities of £1,850.0m for use in the going concern assessment, of which £1,000.0m had been drawn down.
The Group’s forecasts indicate that it will continue to have significant financial resources, continue to settle its debts as they
fall due and operate well within its covenants as outlined in Note 20 for at least a period of 12 months from the date of these
financial statements. Various downside scenarios over and above those already included in the base case have been considered
in respect of these forecasts. Under these downside scenarios, the Group can meet its liquidity requirements through available
funds and is able to meet the original covenants in place on its revolving credit facility, allowing the Group to terminate the
covenant test waiver period and be able to make a dividend payment. The Group has no further financial covenants in place.
In the event that it was necessary to access additional funding, the directors have a reasonable expectation that this could
be achieved.
The directors have also determined that, over the period of the going concern assessment, there is not expected to be a
significant impact as a result of climate change.
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.
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Whitbread Annual Report and Accounts 2021/22 139
2 ACCOUNTING POLICIES CONTINUED
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 25 February 2021, except for the
adoption of the new standards and policies applicable for the year ended 3 March 2022. 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
26 February 2021.
Covid-19-Related Rent Concessions Beyond 30 June 2021 (Amendment to IFRS 16)
In the prior year, the Group early adopted Covid-19-Related Rent Concessions (Amendment to IFRS 16) that provided 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. This practical expedient was available to rent concessions for which any reduction in lease payments
affected payments originally due on or before 30 June 2021.
In March 2021, the Board issued Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) that
extends the practical expedient to apply to reduction in lease payments originally due on or before 30 June 2022.
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 2022 (a rent concession meets
this condition if it results in reduced lease payments on or before 30 June 2022 and increased lease payments that extend
beyond 30 June 2022); 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 Board in May 2021) 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.
Other IFRS Standards and Interpretations
In addition, the Group has also adopted Interest Rate Benchmark Reform – Phase 2 which has been assessed as having no
financial impact or disclosure at this time.
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 140
2 ACCOUNTING POLICIES CONTINUED
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)
› 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 1 – Disclosure of Accounting Policies (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
› Amendments to IAS 8 Definition of Accounting Estimate (effective for periods beginning on or after 1 January 2023)
› Amendments to IAS 12 – Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (effective for periods
beginning on or after 1 January 2023)
› 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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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 141
2 ACCOUNTING POLICIES CONTINUED
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.
Software-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing the Company with the right to access the cloud provider’s application
software over the contract period. Costs incurred to configure or customise, and the ongoing fees to obtain access to the cloud
provider’s application software, are recognised as operating expenses when the services are received.
Some of these costs incurred are for the development of software code that enhances or modifies, or creates additional
capability to, existing on-premise systems and meets the definition of and recognition criteria for an intangible asset.
These costs are recognised as intangible software assets and amortised over the useful life of the software on a straight-line
basis. The useful lives of these assets are reviewed at least at the end of each financial year, and any change accounted for
prospectively as a change in accounting estimate.
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 remeasurement
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.
Sale and leaseback
A sale and leaseback transaction occurs when the Group sells an asset and immediately reacquires the use of the same asset
by entering into a lease with the buyer. A sale occurs when control of the underlying asset passes to the buyer. A lease liability
is recognised, the associated property, plant and equipment asset is derecognised, and a right-of-use asset is recognised at
the proportion of the carrying value relating to the right retained. Any gain or loss arising relates to the rights transferred to
the buyer.
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 206 to 210.
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;
› net impairment and related charges for sites which are/were 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 was recognised within revenue
from sales of food and beverage in the year to 25 February 2021.
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. Remeasurements 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
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.
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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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 149
2 ACCOUNTING POLICIES CONTINUED
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.
The Group has considered the impact of climate-related risks on its financial performance and position, and although the
impact represents an uncertainty, it is not considered to be material.
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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2 ACCOUNTING POLICIES CONTINUED
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 and reversal
Where there are indicators of impairment or reversal, 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
The Group provides services in relation to accommodation, food and beverage both in the UK and internationally.
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. Included within central and other in the following tables are the costs of running the public company, other
central overhead costs and share of profit/(losses) from joint ventures.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 3 SEGMENT INFORMATION CONTINUED
The following tables present revenue and profit information regarding business operating segments for the years ended
3 March 2022 and 25 February 2021.
Year to 3 March 2022
Year to 25 February 2021
REVENUE
Accommodation
Food, beverage and other items1
REVENUE BEFORE ADJUSTING
ITEMS
Adjusting revenue (Note 6)
REVENUE
UK &
Ireland
£m
1,157.8
510.4
Germany
£m
29.1
6.1
1,668.2
35.2
Central
and other
£m
–
–
–
Total
£m
1,186.9
516.5
1,703.4
–
1,703.4
UK &
Ireland
£m
388.5
188.9
Germany
£m
10.2
1.3
577.4
11.5
Central
and other
£m
–
–
–
151
Total
£m
398.7
190.2
588.9
0.5
589.4
1 Revenue from food, beverage and other items for the UK & Ireland segment includes £nil (2020/21: £12.0m) of consideration receivable from HM Revenue & Customs under
the Eat Out to Help Out Scheme.
PROFIT/(LOSS)
ADJUSTED OPERATING
PROFIT/(LOSS) BEFORE
JOINT VENTURES
Share of profit/(loss) from joint
ventures
ADJUSTED OPERATING
PROFIT/(LOSS)
Net finance costs
ADJUSTED PROFIT/(LOSS)
BEFORE TAX
Adjusting items before tax (Note 6)
PROFIT/(LOSS) BEFORE TAX
Year to 3 March 2022
UK &
Ireland
£m
Germany
£m
Central
and other
£m
Total
£m
Year to 25 February 2021
UK &
Ireland
£m
Germany
£m
Central
and other
£m
Total
£m
199.6
(15.4)
(31.3)
152.9
(415.7)
(38.8)
(26.2)
(480.7)
–
–
0.4
0.4
–
–
(6.0)
(6.0)
199.6
(124.7)
(15.4)
(8.5)
(30.9)
(35.9)
153.3
(169.1)
(415.7)
(117.1)
(38.8)
(6.1)
(32.2)
(25.2)
(486.7)
(148.4)
74.9
(23.9)
(66.8)
(15.8)
74.0
58.2
(532.8)
(44.9)
(57.4)
(635.1)
(372.3)
(1,007.4)
Adjusted operating profit/(loss) for the UK & Ireland segment includes the impact of Business Rates Relief provided
by the UK Government of £56.3m (2020/21: £117.8m), income from Hospitality and Leisure Grant provided by the UK
Government of £8.2m (2020/21: £3.5m) and income from the job retention schemes in the UK, Ireland and Jersey of £62.0m
(2020/21: £139.0m). Adjusted operating loss for the German segment includes £1.0m (2020/21: £1.5m) from the Kurzarbeit
scheme and other Government grants of £43.3m (2020/21: £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 3 March 2022
UK &
Ireland
£m
Germany
£m
Central
and other
£m
Total
£m
Year to 25 February 2021
UK &
Ireland
£m
Germany
£m
Central
and other
£m
148.1
52.3
165.8
21.1
54.2
–
234.5
25.8
148.3
9.6
125.2
20.6
22.9
0.3
–
–
–
–
–
–
–
200.4
121.0
96.4
220.0
21.1
105.9
10.8
93.2
–
260.3
173.0
21.9
157.9
148.1
20.9
145.2
5.1
109.9
23.3
16.4
0.3
–
–
–
–
–
–
–
Total
£m
217.4
199.1
10.8
194.9
150.3
126.3
23.6
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Segment assets and liabilities are not disclosed because they are not reported to, or reviewed by, the Chief Operating
Decision Maker.
Revenues from external customers are split geographically as follows:
152
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
Government grants (Note 9)
Other
OTHER INCOME BEFORE ADJUSTING ITEMS
Insurance proceeds (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
Other site property costs
Variable lease payment expense/(credit) (Note 22)
Net foreign exchange differences
Other operating charges2
Adjusting operating costs2 (Note 6)
2021/22
£m
1,661.8
35.2
6.4
1,703.4
2022
£m
6,571.3
1,009.1
114.7
7,695.1
2020/21
£m
575.5
11.5
2.4
589.4
2021
£m
6,343.6
809.3
81.6
7,234.5
2021/22
£m
2020/21
£m
7.9
113.8
0.7
122.4
–
8.7
131.1
7.8
153.4
0.6
161.8
1.8
4.5
168.1
2021/22
£m
146.6
678.9
20.9
157.9
148.1
87.8
71.2
277.3
0.3
2.1
80.0
(65.3)
1,605.8
2020/21
£m
72.2
581.5
23.6
150.3
126.3
51.2
10.9
158.7
(0.6)
0.4
56.9
351.7
1,583.1
1 Cost of inventories recognised as an expense includes £6.1m (2020/21: £14.6m) of inventory write downs recorded during the year.
2 Adjusting operating costs includes a credit for net impairments and write offs of £36.2m (2020/21: charge of £350.4m), a credit of £28.8m (2020/21: credit of £9.0m)
relating to other operating charges and a credit of £0.3m (2020/21: charge of £10.3m) relating to employee benefit expenses (see Note 6).
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 5 OPERATING COSTS CONTINUED
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
153
2021/22
£m
2020/21
£m
1.0
0.6
1.6
0.1
–
0.1
1.7
0.9
0.6
1.5
0.1
1.1
1.2
2.7
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.
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
VAT settlement3
ADJUSTING OTHER INCOME
Operating costs:
TSA costs1
Costa disposal – separation costs and other costs4
Impairment – goodwill5
Net impairment reversals/(write offs) – property, plant and equipment, right-of-use assets and other
intangible assets6
Impairment – investment in joint ventures7
Guaranteed minimum pension8
Aborted acquisition costs9
UK restructuring10
Gains on disposals, property and other provisions11
ADJUSTING OPERATING COSTS
Share of loss of joint ventures:
Impairment12
Finance (costs)/income:
Early prepayment charge (Note 20)13
VAT settlement3
ADJUSTING ITEMS BEFORE TAX
2021/22
£m
2020/21
£m
–
–
8.7
8.7
–
–
–
36.2
–
–
–
0.3
28.8
65.3
0.5
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)
–
(1.7)
–
–
74.0
(21.2)
1.3
(372.3)
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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 (CHARGE)/CREDIT
154
2021/22
£m
2020/21
£m
(13.3)
(13.1)
(26.4)
19.3
(12.5)
6.8
1 Following the sale of Costa to The Coca-Cola Company on 3 January 2019, 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. The agreements ended in FY21 and the Group earned £nil (2020/21: £0.5m) during
the year.
2 During 2020/21, the Group recognised insurance claim proceeds of £1.8m in other income covering property and loss of trade in relation to a fire at a site in FY19/20.
3 In August 2021, HMRC confirmed it would not appeal the ruling of the First Tier Tribunal in the case of Rank Group plc that VAT was incorrectly applied to revenues earned
from certain gaming machines from 2006 to 2013. The Group has submitted claims for the repayment of overpaid VAT amounting to £8.7m which are substantially similar.
During the prior year, the Group submitted claims to HMRC in relation to similar matters and recognised £4.5m within other income and £1.3m within finance income.
4 During 2020/21, the Group recognised a credit of £6.4m for costs the Group no longer expects to incur relating to the separation of Costa and the impact of the disposal
on the continuing business.
5 During 2020/21, the Group 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 which the Group entered into in the year ended 1 March 2018 and was impaired as a result of the impact of the COVID-19 pandemic on
growth rates.
6 The Group identified impairment indicators and indicators of impairment reversals relating to assets held by the Group. An impairment review of those assets was
undertaken, resulting in a net impairment reversal of £42.0m. This is made up of an impairment loss on trading sites of £10.5m (£10.1m relating to property, plant and
equipment and £0.4m relating to right-of-use assets) offset by impairment reversals of £52.5m (£30.4m relating to property, plant and equipment and £22.1m relating to
right-of-use assets). In addition, an impairment charge of £5.8m was recorded in relation to assets classified as held for sale. Further information is provided in Note 15.
During 2020/21, a total charge of £109.2m was recorded, made up of £97.9m of impairment losses on trading sites (£61.2m relating to property, plant and equipment and
£36.7m relating to right-of-use assets), £3.9m relating to assets classified as held for sale, £1.7m relating to the cancellation of significant IT projects and £5.7m following a
review of early stage expansion projects where the Group decided not to proceed with the project.
7 During 2020/21, 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 was recorded within adjusting items. Further information is available in Note 16.
8 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 in FY21 was
estimated at £1.1m, which has been recognised as a past service cost in the income statement. 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.
9 At 27 February 2020, the Group had purchased a call option for an acquisition as part of the Group’s strategy for international growth. During 2020/21, as a result of the
COVID-19 pandemic, the Group decided 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 2020/21.
10 During 2020/21, the Group restructured its Support Centre and site operations and recognised redundancy and project costs of £12.1m. Following the completion of the
restructuring, the remaining provision of £0.3m was released to the income statement.
11 During the year, the Group disposed of a single property as part of a sale and leaseback transaction for gross proceeds of £40.0m. The Group will continue to rent the
property for a period of five years. A profit on disposal of £27.5m was recognised on disposal of the property. In addition, during the year, the Group made a profit on
other property disposals of £5.7m and recognised other provisions of £4.4m relating to historic indirect tax matters. From FY18 to FY20 the Group established a provision
for the performance of remedial work on cladding material at a small number of the Group’s sites. During 2020/21, the Group released provisions of £3.3m for costs
which were no longer expected to be incurred and received reimbursements of costs of remedial work on cladding material from property developers totalling £13.4m.
In addition, during 2020/21, the Group made a loss on disposal of £1.1m and released other provisions of £2.8m.
12 During 2020/21, the Group recorded a cost of £1.7m representing its share of a site level impairment in the accounts of its Middle East joint venture, Premier Inn Hotels LLC.
13 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 recognised during 2020/21.
7 EMPLOYEE BENEFITS EXPENSE
Wages and salaries
Social security costs
Pension costs
2021/22
£m
2020/21
£m
621.0
46.7
11.2
678.9
531.1
38.9
11.5
581.5
The amounts above exclude adjusting items. Wages and salaries excludes a credit of £0.3m (2020/21: charge of £12.1m) relating
to the restructuring of the Group’s operations and a credit of £nil (2020/21: credit of £2.9m) relating to costs associated with
the separation of Costa. Pension costs excludes £nil (2020/21: charge of £1.1m) 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 £12.9m (2020/21: £12.7m), which arises from transactions
accounted for as equity-settled share-based payments.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 7 EMPLOYEE BENEFITS EXPENSE CONTINUED
Employee costs are split between hourly paid and salaried employees as below:
Employee costs – hourly paid
Employee costs – salaried
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 contingent consideration (Note 26)
Interest capitalised (Note 14)
Impact of ineffective portion of cash flow and fair value hedges and cost of hedging (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
Analysed as:
Total finance costs
Total finance income
TOTAL NET FINANCE COSTS
155
2021/22
£m
2020/21
£m
440.3
238.6
678.9
2021/22
Number
33,546
782
34,328
391.7
189.8
581.5
2020/21
Number
32,190
599
32,789
2021/22
£m
2020/21
£m
3.8
–
1.2
3.0
–
7.3
2021/22
Number
2020/21
Number
2
2
2021/22
£m
2020/21
£m
(7.4)
(30.0)
(133.2)
(1.4)
0.9
(2.5)
(173.6)
0.7
0.2
–
3.6
4.5
(169.1)
(5.3)
(24.1)
(123.2)
(2.1)
0.9
–
(153.8)
1.2
0.8
0.4
3.0
5.4
(148.4)
–
–
(169.1)
(21.2)
1.3
(168.3)
(173.6)
4.5
(169.1)
(175.0)
6.7
(168.3)
Net finance costs includes £169.7m (2020/21: £172.9m) finance costs and £0.9m (2020/21: £2.0m) finance income in respect
of financial assets and liabilities that are measured at amortised cost using the effective interest rate method.
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 9 GOVERNMENT GRANTS AND ASSISTANCE
During the year, the Group has received Government support designed to mitigate the impact of COVID-19.
Grants received during the year consisted of:
UK Coronavirus Job Retention Scheme
Ireland Employment Wage Subsidy Scheme
Jersey Co-Funded Payroll Scheme
UK Hospitality and Leisure Grant
German Fixed Cost Grant
German Kurzarbeit Scheme – compensation for social security payments
INCLUDED IN OTHER INCOME
The Group benefited from the following schemes which led to savings in operating costs:
German Kurzarbeit Scheme – employees support
UK Business Rate Relief
REDUCTION IN OPERATING COSTS
156
2021/22
£m
2020/21
£m
61.7
0.2
0.1
8.2
43.3
0.3
113.8
138.3
0.5
0.2
3.5
10.3
0.6
153.4
2021/22
£m
2020/21
£m
0.7
56.3
57.0
0.9
117.8
118.7
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 £61.7m (2020/21: £138.3m) has been recorded within other income. The Group has recognised income from job retention
schemes in Ireland and Jersey totalling £0.2m and £0.1m respectively within other income (2020/21: £0.5m and £0.2m).
The related salary costs which are compensated by the scheme are included within operating costs in the consolidated
income statement.
The UK Government also provided grants to support businesses in the retail, hospitality and leisure sector who had been
impacted by closures and other restrictions. The Group has recognised £8.2m (2020/21: £3.5m) in other income relating to
these grants and no further grants are expected to be received.
In Germany, the Government has provided financial support to cover certain fixed costs incurred by companies in sectors
which have been significantly impacted by the COVID-19 pandemic and related restrictions. The Group has recognised a total
of £43.3m (2020/21: £10.3m) in relation to the schemes within other income.
The German Government also 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 £0.7m (2020/21: £0.9m) and a total of £0.3m (2020/21: £0.6m) was recognised in other income
relating to compensation for social security payments.
The UK Government and devolved administrations introduced business rates holidays for retail, hospitality and leisure
businesses. Relief in England ended in July 2021 and the holiday in Northern Ireland, Wales and Scotland continued until April
2022. The relief has allowed the Group to reduce operating costs by £56.3m in the year (2020/21: £117.8m).
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.
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) was charged at 5% VAT.
A new reduced rate of 12.5% was introduced from 1 October 2021 and ended on 31 March 2022. The standard VAT rate of 20%
returned on 1 April 2022.
The Group took part in the COVID-19 VAT deferral scheme, allowing it to defer VAT payments totalling £14.9m into the current
year which would ordinarily have fallen due during FY21. These have been repaid during the period.
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 claimed £12.0m as part of
the scheme which has been recognised as revenue in the year to 25 February 2021.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 10 TAXATION
CONSOLIDATED INCOME STATEMENT
Current tax:
Current tax credit
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
157
2021/22
£m
2020/21
£m
–
(1.0)
(1.0)
(10.7)
11.9
1.2
16.5
13.1
(12.9)
16.7
15.7
(109.4)
12.5
(5.2)
(102.1)
(100.9)
The adjustments in respect of prior periods arise mainly due to a reassessment of deferred tax on property, plant and equipment.
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
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 OTHER COMPREHENSIVE INCOME
2021/22
£m
2020/21
£m
2.3
(2.7)
0.5
0.8
(2.7)
88.0
86.6
88.9
0.6
(0.8)
1.5
2.4
3.7
1.0
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 3 March 2022 and 25 February
2021 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.
2021/22
2020/21
Tax on
adjusted
profit
£m
Tax on
profit
£m
Tax on
adjusted
profit
£m
Tax on
profit
£m
(LOSS)/PROFIT BEFORE TAX AS REPORTED IN THE CONSOLIDATED
INCOME STATEMENT
(15.8)
58.2
(635.1)
(1,007.4)
Tax at current UK tax rate of 19% (2020/21: 19%)
Effect of different tax rates
Unrecognised losses in overseas companies
Effect of joint ventures
Effect of super deduction in respect of tax relief for fixed assets
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
(3.0)
(3.8)
11.8
–
(2.7)
3.6
(1.0)
(13.8)
–
(1.8)
11.1
(3.8)
11.8
–
(2.7)
1.9
(1.0)
(12.9)
13.1
(1.8)
(120.7)
(6.9)
14.7
0.3
–
10.0
9.0
(1.7)
–
1.2
(191.4)
(6.9)
17.0
0.3
–
59.1
11.9
(5.2)
12.5
1.8
TAX (CREDIT)/EXPENSE REPORTED IN THE CONSOLIDATED INCOME
STATEMENT
(10.7)
15.7
(94.1)
(100.9)
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 158
10 TAXATION CONTINUED
Deferred tax
The major deferred tax (liabilities)/assets recognised by the Group and movement during the current and prior financial years
are as follows:
AT 27 FEBRUARY 2020
(54.3)
(64.4)
(56.3)
Accelerated
capital
allowances
£m
Rolled over
gains and
property
revaluations
£m
Pensions
£m
Leases
£m
43.3
Losses
£m
Other
£m
Total
£m
–
(6.1)
(137.8)
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
(Charge)/credit to consolidated income
statement1
(Charge)/credit to statement of comprehensive
income2
Charge to statement of changes in equity
Foreign exchange and other movements
AT 3 MARCH 2022
10.0
–
–
–
–
0.1
6.6
–
–
–
–
–
(3.8)
(2.4)
–
–
–
–
0.7
–
–
(4.7)
(3.5)
0.2
(44.2)
(57.8)
(62.5)
36.0
84.4
(0.7)
–
–
–
–
83.7
4.2
(0.6)
(1.9)
4.7
–
(0.1)
0.2
102.1
(3.7)
(1.9)
–
(3.5)
0.2
(44.6)
(28.3)
(34.7)
(15.4)
12.6
53.7
(4.6)
(16.7)
–
–
–
(72.5)
–
–
–
(92.5)
(88.0)
–
–
(165.9)
–
–
0.1
48.7
1.9
–
–
139.3
(0.5)
(0.3)
(2.5)
(7.7)
(86.6)
(0.3)
(2.4)
(150.6)
1 The total charge to the consolidated income statement of £16.7m comprises a rate change charge of £13.1m, being the largest component of the net charge. This has arisen
due to the substantively enacted increase in the UK corporation tax rate from 19% to 25%. A decision made to utilise capital allowances in the FY21 tax computation has
caused a £21.0m movement between the Accelerated capital allowances and Losses categories above.
2 The total charge to other comprehensive income of £86.6m includes a rate change charge of £27.5m and a charge of £60.6m driven by actuarial gains on the defined
benefit pension scheme.
The Group has unrecognised German tax losses of £128.2m (2021: £84.8m) which can be carried forward indefinitely and offset
against future taxable profits in the same tax group. The Group carries out an assessment of the recoverability of these losses
for each reporting period and, to the extent that they exceed deferred tax liabilities within the same tax group, 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 £40.9m (2021: £26.2m).
At 3 March 2022, no deferred tax liability is recognised (2021: £nil) on gross temporary differences of £13.9m (2021: £3.0m)
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 (2020/21: £0.2m).
Factors affecting the tax charge for future years
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 from 19% to 25%, effective from
1 April 2023. The change has resulted in the remeasurement of those UK deferred tax assets and liabilities which are forecast
to be utilised or to crystallise after this effective date, using the higher tax rate. A charge of £13.1m has been recorded in the
consolidated income statement and a charge of £27.5m in the consolidated statement of comprehensive income based on the
Group’s current estimate of how the balances will unwind. However, the Group has some ability to control the timing of this
unwinding and could vary the value of the deferred tax liability by up to £11.0m.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 159
11 EARNINGS PER SHARE
The basic earnings per share (EPS) figures are calculated by dividing the net profit/(loss) 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 0.7m (2021: 2.3m) share options
excluded from the diluted earnings per share calculation because they would be anti-dilutive.
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
2021/22
million
201.9
1.0
202.9
2020/21
million
188.1
–
188.1
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 214.5m, less 12.5m treasury shares held by Whitbread PLC and 0.2m held by the ESOT (2021: 214.4m, less 12.5m
treasury shares held by Whitbread PLC and 0.4m held by the ESOT).
The profits/(losses) used for the earnings per share calculations are as follows:
PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO PARENT SHAREHOLDERS
Adjusting items before tax (Note 6)
Adjusting tax charge/(credit) (Note 6)
ADJUSTED LOSS FOR THE YEAR ATTRIBUTABLE TO PARENT SHAREHOLDERS
BASIC EPS ON PROFIT/(LOSS) FOR THE YEAR
Adjusting items before tax (Note 6)
Adjusting tax charge/(credit) (Note 6)
BASIC EPS ON ADJUSTED LOSS FOR THE YEAR
DILUTED EPS ON PROFIT/(LOSS) FOR THE YEAR
DILUTED EPS ON ADJUSTED LOSS FOR THE YEAR
2021/22
£m
42.5
(74.0)
26.4
(5.1)
2021/22
pence
21.1
(36.7)
13.1
(2.5)
2020/21
£m
(906.5)
372.3
(6.8)
(541.0)
2020/21
pence
(481.9)
197.9
(3.6)
(287.6)
20.9
(2.5)
(481.9)
(287.6)
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 12 DIVIDENDS PAID AND PROPOSED
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
Proposed for approval at annual general meeting:
Final equity dividend for the current year
160
2021/22
2020/21
pence per
share
£m
pence per
share
£m
–
–
0.30
–
–
–
0.90
0.90
–
–
–
–
–
–
34.70
70.0
–
–
–
–
–
–
–
–
Following the publication of these financial statements, the Group is able to demonstrate compliance with covenant metrics
agreed with its lenders, being net debt/adjusted EBITDA < 3.5x and adjusted EBITDA/interest > 3.0x. The Group will notify
its lending banks of its intention to remove the covenant waivers which are currently in place, and will subsequently issue a
compliance certificate to reinstate the original covenants.
As a result, a final dividend of 34.70p per share amounting to a dividend of £70.0m was recommended by the directors at
their meeting on 27 April 2022. A dividend reinvestment plan (DRIP) alternative will be offered. The proposed final dividend
is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these
consolidated financial statements.
13 INTANGIBLE ASSETS
COST
At 27 February 2020
Additions
Recognised on acquisition of a subsidiary
Assets written off
Foreign currency adjustment
AT 25 FEBRUARY 2021
Additions
Assets written off
Foreign currency adjustment
AT 3 MARCH 2022
AMORTISATION AND IMPAIRMENT
At 27 February 2020
Amortisation during the year
Impairment during the year
Amortisation on assets written off
AT 25 FEBRUARY 2021
Amortisation during the year
Amortisation on assets written off
Foreign currency adjustment
AT 3 MARCH 2022
NET BOOK VALUE AT 3 MARCH 2022
NET BOOK VALUE AT 25 FEBRUARY 2021
IT software
and
technology
£m
Goodwill
£m
111.3
–
224.2
–
14.6
350.1
–
–
–
350.1
(0.8)
–
(238.8)
–
(239.6)
–
–
–
(239.6)
110.5
110.5
108.8
10.8
–
(9.7)
0.1
110.0
21.1
(10.8)
(0.1)
120.2
(46.5)
(23.6)
–
8.7
(61.4)
(20.9)
10.8
0.1
(71.4)
48.8
48.6
Total
£m
220.1
10.8
224.2
(9.7)
14.7
460.1
21.1
(10.8)
(0.1)
470.3
(47.3)
(23.6)
(238.8)
8.7
(301.0)
(20.9)
10.8
0.1
(311.0)
159.3
159.1
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 £7.3m (2021: £0.5m).
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 14 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY
161
COST
At 27 February 2020
Additions
Acquisition of a subsidiary
Interest capitalised
Movements to held for sale in the year
Disposals
Assets written off
Foreign currency adjustment
AT 25 FEBRUARY 2021
Additions
Interest capitalised
Movements to held for sale in the year
Disposals
Assets written off
Transfers
Foreign currency adjustment
AT 3 MARCH 2022
DEPRECIATION AND IMPAIRMENT
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
Depreciation charge for the year
Impairment reversal/(charge) (Note 15)
Movements to held for sale in the year
Disposals
Depreciation on assets written off
Transfers
Foreign currency adjustment
AT 3 MARCH 2022
NET BOOK VALUE AT 3 MARCH 2022
NET BOOK VALUE AT 25 FEBRUARY 2021
Land and
buildings
£m
Plant and
equipment
£m
Total
property,
plant and
equipment
£m
Investment
property
£m
Total
£m
3,538.1
116.0
–
0.9
(11.2)
(0.2)
(8.1)
5.1
3,640.6
92.0
0.9
(62.2)
(8.8)
(4.1)
21.4
(17.8)
3,662.0
(211.2)
(16.1)
(63.8)
3.8
–
–
(287.3)
(22.9)
16.9
7.3
0.6
4.1
(0.2)
0.1
(281.4)
3,380.6
3,353.3
1,536.0
82.4
6.0
–
(2.5)
–
(104.1)
(0.2)
1,517.6
128.0
–
(4.5)
–
(57.9)
–
(2.5)
1,580.7
5,074.1
198.4
6.0
0.9
(13.7)
(0.2)
(112.2)
4.9
5,158.2
220.0
0.9
(66.7)
(8.8)
(62.0)
21.4
(20.3)
5,242.7
(630.9)
(134.1)
(0.6)
1.4
106.2
0.2
(842.1)
(150.2)
(64.4)
5.2
106.2
0.2
(657.8)
(135.0)
(2.4)
2.4
–
57.9
–
0.7
(945.1)
(157.9)
14.5
9.7
0.6
62.0
(0.2)
0.8
(734.2) (1,015.6)
4,227.1
846.5
4,213.1
859.8
20.4
0.7
–
–
–
–
–
0.7
21.8
–
–
–
–
–
(21.4)
(0.4)
–
5,094.5
199.1
6.0
0.9
(13.7)
(0.2)
(112.2)
5.6
5,180.0
220.0
0.9
(66.7)
(8.8)
(62.0)
–
(20.7)
5,242.7
(0.1)
(0.1)
–
–
–
–
(0.2)
–
–
–
–
–
0.2
–
–
–
21.6
(842.2)
(150.3)
(64.4)
5.2
106.2
0.2
(945.3)
(157.9)
14.5
9.7
0.6
62.0
–
0.8
(1,015.6)
4,227.1
4,234.7
Included above are assets under construction of £260.5m (2021: £289.9m).
There is a charge in favour of the pension scheme over properties with a market value of £531.5m (2021: £500.0m). See Note 32
for further information.
Amounts relating to right-of-use assets under IFRS 16 are detailed in Note 22.
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 162
14 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY CONTINUED
Investment property
During 2019/20, the Group acquired a freehold site which was leased to a third party and was recorded within investment
property. The Group recognised rental income of £0.2m (2020/21: £0.4m) within other income and £0.1m (2020/21: £0.1m) of
direct operating expenses in relation to this property.
During the year, the property was transferred to property, plant and equipment as the lease ended and the Group took over
the operations of the hotel.
CAPITAL EXPENDITURE COMMITMENTS
Capital expenditure commitments for property, plant and equipment
for which no provision has been made
2022
£m
2021
£m
106.4
82.5
Capitalised interest
Interest capitalised during the year amounted to £0.9m, using an average rate of 2.7% (2020/21: £0.9m, using an average rate
of 2.9%).
Assets held for sale
During the year, four property assets with a combined net book value of £57.0m (2020/21: seven at £9.1m) were transferred to
assets held for sale. No property was transferred back to property, plant and equipment (2020/21: one with a net book value
of £0.6m). Seven property assets sold during the year had a net book value of £11.2m (2020/21: three at £3.9m). An impairment
loss of £nil (2020/21: £0.7m) was recognised relating to assets classified as held for sale. By the year end there were eleven sites
with a combined net book value of £64.8m (2021: 14 at £19.0m) 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 £15.4m (2021: £11.4m).
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.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 15 IMPAIRMENT
During the year, net impairment reversals of £34.4m (2020/21: impairment losses £348.8m) and asset write offs of £nil
(2020/21: £7.4m) were recognised within operating costs. These impairment reversals are primarily driven by an increase in
anticipated cash flows, and a decrease in the discount rate reflecting reduced market risk and volatility. The losses/(reversals)
were recognised on the following classes of assets:
163
IMPAIRMENT LOSSES/(REVERSALS)
Property, plant and equipment – impairment losses
Property, plant and equipment – impairment reversals
Property, plant and equipment – transfer to assets held for sale
Intangible assets – goodwill
Right-of-use assets – impairment losses
Right-of-use assets – impairment reversals
Investments in joint ventures
Assets held for sale
ASSET WRITE OFFS
Property, plant and equipment – early stage expansion projects
IT assets
TOTAL (CREDIT)/CHARGE FOR IMPAIRMENT AND ASSET WRITE OFFS
2021/22
£m
2020/21
£m
10.1
(30.4)
5.8
–
0.4
(22.1)
1.8
–
–
–
(34.4)
61.2
–
3.2
238.8
36.7
–
8.2
0.7
5.7
1.7
356.2
All of the impairment assessments take account of expected market conditions which include future risks including climate
change and climate change related legislation.
Property, plant and equipment and right-of-use assets – impairment review
As a result of the COVID-19 pandemic and subsequent easing of restrictions, the Group identified indicators of both
impairment and impairment reversals and as a result performed an impairment assessment of all trading sites. This resulted
in net impairment reversals of £20.3m (2020/21: impairment loss of £61.2m) being recorded in relation to property, plant and
equipment in the UK and net impairment reversals of £21.7m (2020/21: impairment loss £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 8.7% in the
UK, and 7.3% in Germany (2021: 9.5% UK and 8.9% Germany). The discount rate has decreased 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.
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164
15 IMPAIRMENT CONTINUED
Long-term growth rates
A long-term growth rate of 2.0% (2021: 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 8.7% to 9.7%.
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 reasonable 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/(reversal) in the year to 3 March 2022 of:
INCREMENTAL IMPAIRMENT CHARGE/(REVERSAL)
Increase to impairment charge/(reversal) if discount rate increased by 2%
Increase to impairment charge/(reversal) if long-term growth rates reduced by 1%
Increase to impairment charge/(reversal) if EBITDAR multiple reduced by 10%
Total
£m
24.9
18.9
3.1
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.
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 27 FEBRUARY 2020
Recognised on acquisition of a subsidiary
Foreign exchange
Impairment
AT 25 FEBRUARY 2021 AND 3 MARCH 2022
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
In the prior year an impairment of £238.8m was recorded in relation to goodwill arising on the acquisition of Foremost
Hospitality Hiex GmbH, 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% (2021: 2.0%) growth rate. The pre-tax discount rate applied to cash flow projections is 8.7% for the UK and 7.3% for
Germany (2021: 9.5% UK and 8.9% Germany).
As a result of the German goodwill being impaired in the prior year and the level of headroom within the UK segment, there is
no reasonable possible change that could result in a further material impairment of goodwill.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 165
15 IMPAIRMENT CONTINUED
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.
An impairment review was carried out during the year ended 25 February 2021 and an impairment charge of £8.2m recorded in
the financial statements relating to the Group’s investment in Healthy Retail Limited. Additional loan funding of £1.8m has been
provided to Healthy Retail Limited in the year to 3 March 2022 and subsequently impaired. See Note 16.
Property, plant and equipment – assets held for sale
During the period, four hotels were transferred to assets held for sale, resulting in an impairment charge of £5.8m (2020/21:
seven hotels resulting in an impairment charge of £3.2m). In addition, during 2020/21, 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.
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 £1.4m (2020/21: £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 £1.8m (2020/21: £8.2m).
The Group has an option to purchase the remaining 51% interest which expires on 31 December 2022. 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 profit/(loss) for the year
Foreign exchange movements
Loans advanced
Impairment1
Interest on loans
Capital contribution
CLOSING INVESTMENT IN JOINT VENTURES
1
Includes an impairment of loans advanced to joint ventures of £1.8m (2020/21: £5.8m) determined under IFRS 9.
2022
£m
37.3
0.4
2.0
1.8
(1.8)
–
1.4
41.1
2021
£m
54.8
(7.7)
(3.3)
–
(8.2)
0.4
1.3
37.3
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 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
PROFIT/(LOSS) BEFORE TAX
Income tax
Profit/(loss) after tax
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
GROUP SHARE
Profit/(loss) after tax1
Other comprehensive income
2022
Healthy
Retail
Limited
£m
Premier Inn
Hotels LLC
£m
9.1
141.2
(10.4)
(56.0)
83.9
41.1
–
–
–
41.1
6.9
(4.6)
(56.0)
18.2
–
(4.6)
–
(10.9)
(2.0)
0.7
–
0.7
–
0.7
0.4
–
2.0
20.2
(15.9)
(16.1)
(9.8)
(4.9)
4.5
7.5
(7.1)
–
1.6
(13.1)
(16.1)
11.8
0.3
(4.2)
–
(10.5)
(1.3)
(3.9)
–
(3.9)
–
(3.9)
–
–
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)
–
Total
£m
11.1
161.4
(26.3)
(72.1)
74.1
36.2
4.5
7.5
(7.1)
41.1
8.5
(17.7)
(72.1)
30.0
0.3
(8.8)
–
(21.4)
(3.3)
(3.2)
–
(3.2)
–
(3.2)
0.4
–
166
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 prior year.
At 3 March 2022, the Group’s share of the capital commitments of its joint ventures amounted to £0.1m (2021: £0.1m).
17 INVENTORIES
Finished goods held for resale
Consumables
The carrying value of inventories is stated net of a provision of £2.5m (2021: £5.5m).
2022
£m
15.0
4.4
19.4
2021
£m
7.5
4.6
12.1
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 18 TRADE AND OTHER RECEIVABLES
Trade receivables
Prepayments and accrued income
Other receivables
167
2021
£m
22.1
17.6
34.5
74.2
2022
£m
45.5
24.2
46.7
116.4
Trade and other receivables are non-interest bearing and are generally on 30-day terms. Trade receivables includes £44.2m
(2021: £16.0m) relating to contracts with customers. Other receivables include £14.7m (2021: £14.0m) 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 3 March 2022 was £2.0m (2021: £1.3m).
During the year, credit losses of £2.7m (2020/21: £0.7m) were recognised within operating costs in the consolidated
income statement.
19 CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Money market funds
Short-term deposits
2022
£m
43.5
757.3
331.6
1,132.4
2021
£m
19.2
1,011.8
225.0
1,256.0
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.
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 20 BORROWINGS
Amounts drawn down on the Group’s borrowing facilities are as follows:
Revolving credit facility
Private placement loan notes
Senior unsecured bonds
168
Current
2022
£m
–
–
–
–
2021
£m
–
312.0
–
312.0
Non-current
2022
£m
–
–
991.9
991.9
2021
£m
–
–
990.5
990.5
Covenants
The Group has received covenant test waivers for its revolving credit facility covering the period to 2 March 2023. 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. Following the publication of these financial statements, the Group is able
to demonstrate compliance with covenant metrics agreed with its lenders, being net debt/ EBITDA < 3.5x and EBITDA/interest
> 3.0x. The Group will notify its lending banks of its intention to remove the covenant waivers which are currently in place, and
will subsequently issue a compliance certificate to reinstate the original covenants.
Revolving credit facility (£850m)
On 29 January 2021, the Group agreed to amend and extend its revolving credit facility (RCF). The agreement gives total
committed credit of £850.0m available until 7 September 2022 and £725.0m available until 7 September 2023. The facility is
a Multicurrency Revolving Facility Agreement and has variable interest rates with GBP being linked to SONIA and EUR being
linked to EURIBOR.
At 3 March 2022, the Group had available £850.0m (2021: £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
On 26 March 2021, the Group repaid loan notes with a principal value of £200.0m originally due for repayment in August 2027.
An early repayment charge of £21.2m was recorded in the financial statements for the year ended 25 February 2021. As a result
of the hedging arrangements in place, the total cash outflow recorded by the Group was £220.4m.
On 6 September 2021, the Group repaid loan notes on maturity with a principal values of £25.0m. On 14 December 2021, the
Group repaid loan notes with a principal value of US$93.5m originally due for repayment in January 2022. As a result of the
hedging arrangements in place, the total cash outflow recorded by the Group was £83.5m.
Senior unsecured bonds
The Group has issued senior unsecured bonds with coupons and maturities as shown in the following table:
Title
2025 senior unsecured bonds
2027 senior unsecured green use of proceeds bonds
2031 senior unsecured green use of proceeds bonds
Year issued
Principal value
Maturity
2015
2021
2021
£450.0m 16 October 2025
31 May 2027
£300.0m
31 May 2031
£250.0m
Coupon
3.375%
2.375%
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.
On issue of these bonds, the Group received gross proceeds of £546.8m and incurred arrangement 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 £3.4m (2021: £3.9m) directly incurred in relation to the bond facilities are included in the carrying value
and are being amortised over the term of the facilities.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 169
20 BORROWINGS CONTINUED
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 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-. The Group did not draw down on the facility during the year or prior to its expiry on
22 March 2021.
21 MOVEMENTS IN CASH AND NET DEBT
25 February
2021
£m
Cost of
borrowings
£m
1,256.0
(1,302.5)
(3,231.6)
5.8
(4,528.3)
3,231.6
(5.8)
(46.5)
–
–
–
–
–
–
–
–
YEAR ENDED
3 MARCH 2022
Cash and cash equivalents
LIABILITIES FROM
FINANCING ACTIVITIES
Borrowings
Lease liabilities
Derivatives held to hedge
financing activities
Total liabilities from
financing activities
Less: lease liabilities
Less: derivatives held to hedge
financing activities
NET (DEBT)/CASH
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
Net new
lease
liabilities
£m
Foreign
exchange
£m
Fair value
adjustments
to loans
£m
Amortisation
of premiums
and
discounts
£m
3 March
2022
£m
Cash flow
£m
(123.0)
–
(0.6)
–
–
–
–
1,132.4
(1.4)
–
(991.9)
(3,701.8)
303.9
127.1
–
(619.4)
8.1
22.1
–
–
–
(5.8)
–
–
431.0
(619.4)
30.2
(5.8)
(1.4)
(4,693.7)
(127.1)
619.4
(22.1)
–
180.9
–
–
–
7.5
–
5.8
–
–
–
3,701.8
–
(1.4)
140.5
Amortisation
of premiums
and
discounts
£m
25 February
2021
£m
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
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)
Less: lease liabilities
Less: derivatives held to hedge
financing activities
2,620.6
(17.7)
–
–
–
(79.0)
686.9
NET (DEBT)/CASH
(322.9)
5.5
280.3
2.7
3.1
–
7.2
(4.4)
(24.1)
(4,528.3)
–
11.9
–
–
3,231.6
(5.8)
7.5
(24.1)
(46.5)
–
–
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 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:
170
RIGHT-OF-USE ASSET
At 27 February 2020
Additions
Recognised on acquisition of a subsidiary
Impairment
Foreign currency adjustment
Depreciation
Terminations
AT 25 FEBRUARY 2021
Additions
Impairment
Foreign currency adjustment
Depreciation
Terminations
Transfers
AT 3 MARCH 2022
LEASE LIABILITY
At 27 February 2020
Additions
Recognised on acquisition of a subsidiary
Interest
Foreign currency adjustment
Payments
Terminations
AT 25 FEBRUARY 2021
Additions
Interest
Foreign currency adjustment
Payments
Terminations
Transfers
AT 3 MARCH 2022
Property
£m
2,271.5
427.7
193.3
(36.7)
2.9
(122.0)
–
2,736.7
612.9
21.7
(22.9)
(144.0)
(0.2)
62.0
3,266.2
Property
£m
2,618.8
419.9
193.3
122.0
2.5
(189.9)
(2.4)
3,164.2
618.8
132.0
(22.1)
(255.9)
(0.2)
63.5
3,700.3
Total
right-of-use
assets
£m
Other
£m
Investment
property
£m
2.2
1.0
–
–
–
(1.3)
(0.2)
1.7
0.8
–
–
(1.1)
–
–
1.4
2,273.7
428.7
193.3
(36.7)
2.9
(123.3)
(0.2)
2,738.4
613.7
21.7
(22.9)
(145.1)
(0.2)
62.0
3,267.6
–
15.4
51.9
–
0.7
(3.0)
–
65.0
–
–
–
(3.0)
–
(62.0)
–
Total
right-of-use
assets
£m
Other
£m
Investment
property
£m
1.8
1.0
–
0.1
–
(1.3)
(0.2)
1.4
0.8
0.1
–
(0.8)
–
–
1.5
2,620.6
420.9
193.3
122.1
2.5
(191.2)
(2.6)
3,165.6
619.6
132.1
(22.1)
(256.7)
(0.2)
63.5
3,701.8
–
16.0
51.9
1.1
0.6
(3.6)
–
66.0
–
1.1
–
(3.6)
–
(63.5)
–
Total
£m
2,273.7
444.1
245.2
(36.7)
3.6
(126.3)
(0.2)
2,803.4
613.7
21.7
(22.9)
(148.1)
(0.2)
–
3,267.6
Total
£m
2,620.6
436.9
245.2
123.2
3.1
(194.8)
(2.6)
3,231.6
619.6
133.2
(22.1)
(260.3)
(0.2)
–
3,701.8
1 During 2020/21, the Group acquired leasehold sites which was sub-leased to a third party and recorded within investment property. During the year, the property was
transferred to right of use assets for property, plant and equipment as the sub-lease ended and the Group took over the operations of the hotel.
During the year, the Group had non-cash additions to right-of-use assets and lease liabilities of £583.3m (2020/21: £399.7m)
relating to new leases and £34.3m (2020/21: £36.8m) relating to amendments to existing leases. The Group received cash
lease incentives of £2.0m (2020/21: £2.7m) and paid cash lease incentives of £nil (2020/21: £7.6m) 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 prior financial year, the Group underpaid lease payments with a total value of £22.7m. As a result,
the underpaid amount was included within lease liabilities in the consolidated balance sheet. Substantially all of these amounts
were paid in FY22. The Group early adopted the requirements of Amendments to IFRS 16: Covid-19-Related Rent Concessions
during the prior year. As a result of early adopting these requirements, rent deferrals which would otherwise have been treated
as lease modifications were 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 2021/22Notes to the Consolidated Financial Statements continued 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 expense/(credit)
Impairment (reversals)/losses 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 £260.6m (2020/21: £201.8m).
171
2021/22
£m
2020/21
£m
148.1
133.2
–
0.3
(21.7)
(7.9)
252.0
126.3
123.2
–
(0.6)
36.7
(7.8)
277.8
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
2022
£m
906.6
–
906.6
2021
£m
797.6
–
797.6
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 71% 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 3 March 2022, the Group was committed to leases with future cash outflows totalling £2,106.7m (2021: £2,690m) 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 £7.9m (2020/21: £7.8m). 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
2022
£m
2.9
5.2
6.4
14.5
2021
£m
7.9
10.0
10.7
28.6
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 23 PROVISIONS
At 27 February 2020
Created
Transferred
Utilised
Released
AT 25 FEBRUARY 2021
Created
Utilised
Released
AT 3 MARCH 2022
Analysed as:
Current
Non-current
AT 3 MARCH 2022
Analysed as:
Current
Non-current
AT 25 FEBRUARY 2021
Restructuring
£m
Onerous
contracts
£m
Property
costs
£m
Insurance
claims
£m
Government
payments
£m
2.0
5.8
–
(5.8)
(0.9)
1.1
0.4
(0.8)
(0.3)
0.4
0.4
–
0.4
1.1
–
1.1
11.1
4.9
–
(4.3)
(1.6)
10.1
0.9
(5.3)
(0.7)
5.0
2.5
2.5
5.0
8.3
1.8
10.1
31.9
–
–
(12.9)
(3.3)
15.7
–
(9.1)
–
6.6
5.2
1.4
6.6
15.7
–
15.7
–
2.2
6.8
(1.8)
–
7.2
3.0
(2.0)
–
8.2
0.4
7.8
8.2
–
7.2
7.2
–
3.6
–
–
–
3.6
11.8
(3.8)
(2.3)
9.3
9.3
–
9.3
3.6
–
3.6
Other
£m
3.4
–
–
(0.3)
(1.3)
1.8
–
–
–
1.8
1.8
–
1.8
1.8
–
1.8
172
Total
£m
48.4
16.5
6.8
(25.1)
(7.1)
39.5
16.1
(21.0)
(3.3)
31.3
19.6
11.7
31.3
30.5
9.0
39.5
Restructuring
A provision of £1.1m was brought forward in relation to the restructure of the Groups support centre and site operations
announced as a result of the COVID-19 pandemic. During the year the Group utilised £0.8m of the provision and £0.3m was
released to the income statement.
Onerous contracts
Onerous contract provisions relate primarily to property, software licences and supplier contracts 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% (2021: 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 £0.3m has been utilised in the year.
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 £0.8m (2021: £3.0m) 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.
During the year, the Group utilised £0.4m of the provision.
Supplier contracts
Certain supplier contract arrangements were deemed to be onerous where, as a result of the reduced trading brought on by
the COVID-19 pandemic restrictions minimum order commitments were not going to be met. A provision of £3.3m was brought
forward in relation to these contracts. During the year the Group utilised £2.4m of the provision and released £0.7m of the
provision to the income statement.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 173
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 £15.7m was brought forward in relation to these costs. During the year
£9.1m of the provision has been utilised and £nil of costs have been released. £5.2m of the remaining provision is expected to
be utilised within one year.
In addition, the Group has recognised £nil (2021/21: £13.4m) reimbursements of those costs from property developers.
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.
Insurance
A provision of £7.2m was brought forward in relation to the estimate of the cost of future claims against the Group from
employees and the public. The claims covered typically relate to accidents and injuries sustained in Whitbread’s sites.
During the year further provisions of £3.0m were created and £2.0m of the provision was utilised.
Government payments
The Group has made various claims for government support which are subject to the review by relevant agencies.
The provision recognised represents the Group’s best estimate of amounts potentially repayable under previously submitted
claims, and for potential historical indirect tax repayments. A provision of £3.6m was brought forward in relation to these
claims. During the year further provisions of £11.8m were created and £3.8m of the provision was utilised. Due to the complex
nature and fast pace of changes in the rules around certain government payments, the Group has endeavoured to apply and
adhere to the rules in place. In certain areas where a rule interpretation was required, the Group has claimed in accordance with
its assumptions. Subsequent 3rd party review has highlighted an alternative assumption could be formed and on the basis of a
probable outflow a provision based on that approach has been made.
Other
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 3 March 2022, £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.
24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments, other than derivatives, comprise bank 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. The interest rate swaps for sterling were expired in February 2022. At the year-end, £991.9m
(100%) of Group debt was fixed for an average of 5.5 years at an average interest rate of 3.0% (2021: £1,302.5m (100%) for 5.3
years at 3.0%).
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 3 March 2022 and 25 February 2021 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; and
› gains or losses are recognised in equity or the consolidated income statement in line with the accounting policies set out in
Note 2.
Based on the Group’s net debt/cash position at the year-end, a 1% pt increase in interest rates would increase the Group’s profit
before tax by £11.3m (2021: £12.5m), and have nil impact on equity (2021: £0.8m).
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 174
24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
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.
The tables below summarise the maturity profile of the Group’s financial liabilities at 3 March 2022 and 25 February 2021 based
on contractual undiscounted payments, including interest:
3 MARCH 2022
Interest-bearing loans and borrowings
Lease liabilities1
Trade and other payables
25 FEBRUARY 2021
Interest-bearing loans and borrowings
Lease liabilities1
Derivative financial instruments
Trade and other payables
On
demand
£m
Less than 3
months
£m
–
–
–
–
19.0
67.3
163.6
249.9
On
demand
£m
Less than 3
months
£m
–
–
–
–
–
221.8
54.6
–
71.2
347.6
3 to 12
months
£m
15.2
206.5
12.4
234.1
3 to 12
months
£m
102.4
175.1
2.4
37.7
317.6
1 to 5
years
£m
More than
5 years
£m
554.1
1,116.5
1.2
1,671.8
594.6
4,918.3
–
5,512.9
1 to 5
years
£m
More than
5 years
£m
573.7
925.5
–
26.8
1,526.0
609.3
4,513.4
–
–
5,122.7
Total
£m
1,182.9
6,308.6
177.2
7,668.7
Total
£m
1,507.2
5,668.6
2.4
135.7
7,313.9
Carrying
value
991.9
3,701.8
176.9
4,870.6
Carrying
value
1,302.5
3,231.6
2.4
134.0
4,670.5
1 Contractual undiscounted payments relating to lease liabilities due in more than 5 years includes £1,324.5m (2021: £1,140.2m) due between 5 and 10 years, £1,925.3m
(2021: £1,859.4m) due between 10 and 20 years and £1,668.5m (2021: £1,513.8m) 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 £1,240.4m (2021: £1,327.4m).
Foreign currency risk
Foreign exchange exposure is currently not significant to the Group.
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.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 175
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 26 to 33 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 for the period to 3 March 2022 and repaid the private placement
loan notes during the year. 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 adjusted 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 RCF was transitioned to the agreed Risk Free Rate (SONIA) from GBP LIBOR effective 1 January 2022.
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 25 FINANCIAL INSTRUMENTS
The carrying value of financial assets and liabilities at each reporting date are as follows:
176
AS AT 3 MARCH 2022
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 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
Amortised cost
Fair value
Financial
assets
£m
Financial
liabilities
£m
Hedging
instruments
£m
Other
£m
Carrying
value
£m
92.2
375.1
–
–
–
–
–
56.6
244.2
–
–
–
–
–
–
–
(991.9)
(3,701.8)
–
(151.8)
–
–
–
(1,302.5)
(3,231.6)
–
(71.2)
–
–
–
–
–
15.8
–
–
–
–
–
–
12.4
–
–
–
757.3
–
–
–
–
(25.1)
92.2
1,132.4
(991.9)
(3,701.8)
15.8
(151.8)
(25.1)
–
1,011.8
–
–
–
–
(62.8)
56.6
1,256.0
(1,302.5)
(3,231.6)
12.4
(71.2)
(62.8)
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 £988.9m. 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
2022
£m
2021
£m
15.8
14.8
–
25.1
2.4
62.8
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 177
25 FINANCIAL INSTRUMENTS CONTINUED
During the year ended 3 March 2022, there were no transfers between fair value measurement levels. Derivative financial
instruments include £15.8m assets (2021: £6.6m) and £nil liabilities (2021: £nil) due after one year. Contingent consideration
includes £1.2m (2021: £25.6m) 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 had interest rate swaps in place which matured in February 2022. In addition, the
Group did not draw down on the UK Government Covid Corporate Financing Facility during the year or prior to its expiry on
22 March 2021.
Foreign currency risk
The Group was exposed to foreign currency risk associated with the private placement bonds denominated in US$ and had
cross-currency swaps in place in relation to the interest and principal repayment. These bonds were repaid during the year (see
Note 20) and therefore the cross currency swaps are no longer held.
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 in line with the bonds.
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 3 March 2022 and a net unrealised gain of £9.7m (2021: gain
of £8.5m) has been recorded in the translation reserve. The Group has recorded costs of hedging of £2.5m within finance costs
in the consolidated income statement as a result of the foreign currency basis spread within the hedging instrument.
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25 FINANCIAL INSTRUMENTS CONTINUED
The impact of the hedging instruments and hedged items on the statement of financial position is as follows:
Notional
amount
£m
Carrying
amount
£m
Line item in statement
of financial position
£m
Change in fair
value used
for measuring
ineffectiveness
for the year
£m
Change in
fair value
of hedged
item
£m
Hedged item
£m
AS AT 3 MARCH 2022
NET INVESTMENT IN FOREIGN
OPERATIONS
Cross-currency swaps
450.0
15.8
Derivative financial
instruments
Net investment
in foreign
subsidiaries
9.0
(9.0)
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
The impact of the hedging instruments in the consolidated income statement and other comprehensive income (OCI) is
as follows:
2021/22
Interest rate swaps
Cross-currency swaps
2020/21
Interest rate swaps
Cross-currency swaps
Total hedging
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
(0.2)
(8.0)
(0.4)
(5.4)
2.5
8.1
2.4
5.7
Finance costs
Finance costs
Finance costs
Finance costs
–
–
(2.4)
0.1
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 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:
179
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
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 3 MARCH 2022
Cash flow
hedge
reserve
£m
Foreign
currency
translation
reserve
£m
(3.6)
18.6
(0.4)
(5.4)
2.4
5.7
–
–
(0.6)
(1.9)
(0.2)
(8.0)
2.5
8.1
–
–
(0.5)
–
–
–
–
–
19.3
(8.5)
(0.7)
28.7
–
–
–
–
(16.0)
9.7
1.9
24.3
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 £14.2m (2021: £4.5m)
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
2022
£m
73.7
25.8
146.2
223.0
78.1
25.1
571.9
570.7
1.2
571.9
2021
£m
24.2
26.5
41.3
140.3
47.0
62.8
342.1
316.5
25.6
342.1
Included with contract liabilities is £141.4m (2021: £37.5m) relating to payments received for accommodation where the stay will
take place after the year-end and £4.8m (2021: £3.8m) revenue deferred relating to the Group’s customer loyalty programmes.
During the year, £41.3m presented as a contract liability in 2021 has been recognised in revenue (2021: £51.0m).
Trade payables typically have maturities up to 60 days depending on the nature of the purchase transaction and the
agreed terms.
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Contingent consideration
Opening contingent consideration
Recognised on acquisition of a subsidiary
Recognised on acquisition of assets
Unwinding of discount rate
Paid during the period
Foreign exchange movements
CLOSING CONTINGENT CONSIDERATION
180
2021
£m
4.4
56.3
1.9
2.1
(3.8)
1.9
62.8
2022
£m
62.8
–
–
1.4
(36.3)
(2.8)
25.1
The Group has contingent consideration in relation to 9 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 £0.1m.
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
(2021: 76.80P EACH)
At 27 February 2020
Issued on exercise of employee share options
Issued in rights issue
AT 25 FEBRUARY 2021
Issued on exercise of employee share options
AT 3 MARCH 2022
million
147.0
0.1
67.3
214.4
0.1
214.5
£m
112.9
0.1
51.7
164.7
0.1
164.8
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 (2020/21: 0.1m) ordinary shares, fully paid, were exercised by employees under the terms
of various share option schemes. The Group received proceeds of £1.9m (2020/21: £2.9m) on exercise of these options.
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27 SHARE CAPITAL CONTINUED
Preference share capital
ALLOTTED, CALLED UP AND FULLY PAID SHARES OF 1P EACH
(2021: 1P EACH)
AT 17 FEBRUARY 2020, 25 FEBRUARY 2021 AND 3 MARCH 2022
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 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
Other comprehensive income – net gain on cash flow hedges (Note 25)
Other comprehensive income – deferred tax on cash flow hedges (Note 25)
Other comprehensive income – gain on net investment hedge
Cost of hedging
Loss on ESOT shares issued
AT 3 MARCH 2022
Treasury
reserve
£m
Merger
reserve
£m
Hedging
reserve
£m
Excluded
component
of hedge
reserve
£m
Total
other
reserves
£m
527.0 1,855.0
–
–
–
–
–
(6.7)
520.3 1,855.0
–
–
–
–
–
517.1 1,855.0
–
–
–
–
(3.2)
3.6
(2.3)
0.6
–
1.9
(2.4)
0.5
–
–
–
–
– 2,385.6
(2.3)
–
0.6
–
(6.7)
–
– 2,377.2
(2.4)
–
0.5
–
0.7
0.7
(2.5)
(2.5)
(3.2)
–
(1.8) 2,370.3
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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 27 February 2020
Exercised during the year
AT 25 FEBRUARY 2021
Exercised during the year
AT 3 MARCH 2022
Treasury shares held by
Whitbread PLC
ESOT shares held
million
12.5
–
12.5
–
12.5
£m
514.5
–
514.5
–
514.5
million
1.0
(0.6)
0.4
(0.2)
0.2
£m
12.5
(6.7)
5.8
(3.2)
2.6
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.
Excluded component of hedge reserve
The excluded component of hedge reserve records movements in the elements of derivatives used in hedging arrangements
that are excluded from the hedge relationship.
29 ANALYSIS OF CASH FLOWS GIVEN IN THE CASH FLOW STATEMENT
Profit/(loss) for the year
Adjustments for:
Tax expense/(credit)
Net finance costs (Note 8)
Share of (profit)/loss from joint ventures
Depreciation and amortisation
Share-based payments
Impairment (reversals)/write offs (Note 15)
Gains on disposals, property and other provisions
Timing difference on insurance receipts
Other non-cash items
CASH GENERATED FROM/(USED IN) OPERATIONS BEFORE WORKING CAPITAL CHANGES
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
CASH GENERATED FROM/(USED IN) OPERATIONS
2021/22
£m
42.5
2020/21
£m
(906.5)
15.7
169.1
(0.4)
326.9
12.9
(34.4)
(28.8)
–
7.7
511.2
(7.3)
(45.4)
235.2
693.7
(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)
Other non-cash items include an inflow of £0.8m representing a bad debt charge, an inflow of £4.3m (2020/21: £9.2m)
as a result of net provision movements and an inflow of £2.6m (2020/21: £3.8m) representing non-cash pension scheme
administration costs. During 2020/21, other non-cash items also include £12.4m representing the write off of a deposit paid
in relation to an acquisition.
30 CONTINGENT LIABILITIES
There are no contingent liabilities to be disclosed in the year ended 3 March 2022 (2021: none).
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183
31 SHARE-BASED PAYMENT PLANS
Long Term Incentive Plan (LTIP)
The LTIP awarded shares to directors and senior executives of the Group. Vesting of all shares under the scheme 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). The awards are settled in equity once exercised. No further LTIP awards have
been issued since FY20 as they have been replaced by the Restricted Share Plan options.
Deferred equity awards
Awards are made under the Whitbread Leadership Group Incentive Scheme. 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) was 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 was 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). A similar award was made in
2020 vesting in March 2023 and March 2024. During the prior 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. 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 Remuneration Committee and if granted
will be on a pro-rated basis to the leaving date. The awards are settled in equity once exercised.
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31 SHARE-BASED PAYMENT PLANS CONTINUED
Movements in the number of share awards are as follows:
53 WEEKS TO 3 MARCH 2022
Long Term Incentive Plan
Deferred equity awards
R&R Scheme
Restricted Share Plan
52 WEEKS TO 25 FEBRUARY 2021
Long Term Incentive Plan
Deferred equity awards
Performance Share Plan
R&R Scheme
Restricted Share Plan
Outstanding
at the
beginning
of the year
149,688
242,160
652,851
106,687
1,151,386
Outstanding
at the
beginning of
the year
342,422
178,210
162,627
234,035
69,191
986,485
Granted
during the
year
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
–
4,345
12,146
167,673
184,164
–
–
–
–
–
(17,859)
(79,978)
(139,583)
–
(237,420)
130,499
(1,330)
154,341
(12,186)
523,455
(1,959)
(19,485)
254,875
(34,960) 1,063,170
129,613
5,998
9,586
-
145,197
Granted
during the
year1
Replaced
during the
year
36,848
151,615
31,228
352,824
239,533
812,048
–
–
–
187,781
(187,781)
–
Exercised
during the
year
(84,094)
(81,417)
(193,855)
(108,654)
–
(468,020)
Expired
during the
year
Outstanding
at the end of
the year
Exercisable
at the end of
the year
(145,488)
(6,248)
–
(13,135)
(14,256)
149,688
242,160
–
652,851
106,687
(179,127) 1,151,386
61,472
9,627
–
22,135
–
93,234
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
2021/22
2020/21
Options
1,139,975
410,032
(81,727)
(295,172)
1,173,108
89,941
WAEP £ per
share
26.59
24.86
26.15
26.65
26.01
30.66
Options
775,294
783,707
(111,796)
(307,230)
1,139,975
101,400
WAEP £ per
share
32.25
25.68
25.37
27.53
26.59
27.23
1 Awards granted during the prior 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 2022 and 2027 are exercisable at prices between £25.33
and £31.62 per share (2021: between 2021 and 2026 at prices between £25.27 and £33.22). The weighted average share price
at the date of exercise for options exercised during the year was £31.63 (2021: £25.94).
The weighted average contractual life of the share options outstanding as at 3 March 2022 is between 2 and 3 years.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 185
31 SHARE-BASED PAYMENT PLANS CONTINUED
The following table lists the inputs to the model used for the years ended 3 March 2022 and 25 February 2021:
Exercise
price
£
Price at
grant date
£
Expected
term
Years
Expected
dividend
yield
%
Expected
volatility
%
Risk-free
rate %
-
–
–
–
–
–
24.86
25.33
24.86
25.33
32.97
23.63
31.60
31.60
32.97
23.63
29.63
31.38
29.63
31.38
3.00
3.00
2.00
3.00
3.00
3.00
3.25
3.25
5.25
5.25
0.75
0.25
–
0.75
0.75
0.25
2.00
0.75
2.00
1.25
N/A
N/A
N/A
N/A
N/A
N/A
45.0
45.0
45.0
45.0
N/A
N/A
N/A
N/A
N/A
N/A
0.69
0.02
0.75
(0.08)
Vesting
conditions
Service3
Service3
Service3
Service3
Non–market1,2,3,4
Non–market1,3,4
Service3
Service3
Service3
Service3
Grant date
27.04.2021
01.03.2020
17.12.2020
17.12.2020
27.04.2021
01.03.2020
23.12.2021
23.12.2020
23.12.2021
23.12.2020
Deferred equity awards
Deferred equity awards
R&R awards – 2 years
R&R awards – 3 years
Restricted share plan
Restricted share plan
SAYE – 3 years
SAYE – 3 years
SAYE – 5 years
SAYE – 5 years
1 Return on capital employed.
2 Other performance conditions.
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 share based payment plans. The ESOT held 0.2m
shares at 3 March 2022 (2021: 0.4m). 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
2021/22
£m
2020/21
£m
–
1.5
–
5.5
1.6
4.3
12.9
0.7
2.7
0.1
4.7
0.1
4.4
12.7
Accrued share-based payments in the consolidated statement of changes in equity includes £nil (2020/21: £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 £11.0m (2020/21: £10.8m). At the year-end, the Group owed
outstanding contributions of £nil (2021: £1.7m) in respect of the defined contribution scheme.
At the year-end, 23,449 employees (2021: 20,985) were active members of the scheme, which also had 52,303 deferred
members (2021: 48,152).
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 186
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 (2021: nil), 18,606 deferred pensioners (2021: 19,243) and 16,089 pensions
in payment (2021: 16,145).
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
(2021: 17.0 years).
Funding
Expected contributions to be made in the next reporting period total £14.6m (2020/21: £13.7m). In 2021/22, contributions were
£13.0m with £2.6m from the employer, £10.3m from Moorgate Scottish Limited Partnership (SLP) and £0.1m of benefits settled
by the Group in relation to an unfunded scheme (2020/21: £13.0m, with £2.7m from the employer, £10.2m from Moorgate
SLP and £0.1m of benefits settled by the Group in relation to an unfunded scheme). In addition, Whitbread paid £1.8m
(2020/21: £1.8m) 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 2020 by Towers Watson Ltd using the projected unit credit
method. The valuation showed a surplus of assets relative to technical provisions of £55.0m (31 March 2017: deficit of £450.0m).
As a result, no deficit reduction contributions are due.
As part of the valuation discussion, Whitbread and the Pension Fund Trustee agreed changes to the security package that
supports the Pension Fund. The EBITDA related covenant was permanently removed and the security that the Trustee holds
over £500.0m of Whitbread’s freehold property (and which was due to reduce to £450.0m in March 2022) will increase to
£531.5m and will remain at this level until no further obligations are due under the Scottish Partnership arrangements which is
expected to be in 2025. Following that, the security held by the Trustee will be the lower of: £500.0m; and 120% of the buy-out
deficit and will remain in place until there is no longer a buy-out deficit.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 187
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 £96.8m (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 remeasurement of
movements in other comprehensive income.
There is the potential for a period of heightened
market volatility due to the economic impact of the
Russia-Ukraine conflict.
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
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 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 2020 of the UK scheme to 3 March 2022 for IAS 19 Employee Benefits purposes were:
188
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
3 March
2022
%
At
25 February
2021
%
3.40
2.30
3.40
2.60
3.60
3.10
2.20
3.10
1.90
3.20
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 20.0 years (2021: 20.5 years) if they
are male and for a further 22.6 years (2021: 23.1 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 21.1 years (2021: 21.5 years) after retirement if they are male and for a
further 23.8 years (2021: 24.3 years) after retirement if they are female.
During the year, the Group has changed its methodology for determining the discount rate to include single-AA
corporate bonds.
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 (INCOME)/EXPENSE RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT
(GROSS OF DEFERRED TAX)
Amounts recognised in operating costs for past service costs or curtailment are £nil (2021: £1.1m).
The amounts taken to the consolidated statement of comprehensive income are as follows:
Actuarial gains
Return on plan assets (greater)/lower than discount rate
REMEASUREMENT 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
Remeasurement 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
2021/22
£m
2020/21
£m
(3.6)
2.6
–
(1.0)
(3.0)
2.7
1.1
0.8
2021/22
£m
(218.8)
(100.0)
(318.8)
2020/21
£m
(130.2)
146.5
16.3
2022
£m
2021
£m
(2,521.2)
3,043.8
522.6
(2,804.3)
2,992.3
188.0
2021/22
£m
2,804.3
52.3
–
(266.0)
(33.9)
81.1
(116.5)
(0.1)
2,521.2
2020/21
£m
2,992.7
48.7
1.1
30.5
(70.6)
(90.1)
(107.9)
(0.1)
2,804.3
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 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 greater/(lower) 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:
189
2021/22
£m
2,992.3
55.9
100.0
2.6
10.3
1.8
(116.5)
(2.6)
3,043.8
2020/21
£m
3,183.0
51.7
(146.5)
2.7
10.2
1.8
(107.9)
(2.7)
2,992.3
Equities
Alternative assets
Bonds
Private markets
Liability driven Investments3
Cash and other4
2022
Quoted
and pooled
£m
Unquoted
£m
76.4
143.0
164.6
–
2,160.8
35.1
2,579.9
–
–
3.2
460.7
–
–
463.9
Total
£m
76.4
143.0
167.8
460.7
2,160.8
35.1
3,043.8
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
1 The total of these items equals the cash paid by the Group as per the consolidated cash flow statement. ‘Contributions from employer’ include 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
Decrease/(increase)
in liability
2022
£m
2021
£m
359.0
(458.0)
421.0
(546.0)
(73.0)
72.0
(92.0)
90.0
(126.0)
(130.0)
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.
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 190
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
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
2021/22
Joint
ventures
£m
2020/21
Joint
ventures
£m
0.1
0.1
2021/22
£m
2020/21
£m
8.4
–
3.9
12.3
6.2
–
5.1
11.3
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 (2021: £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.
34 EVENTS AFTER THE BALANCE SHEET DATE
Property
On 7 March 2022, the Group entered into a forward funding transaction in relation to one property which was included within
assets classified as held for sale at the year end, receiving gross proceeds of £46.4m.
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Whitbread Annual Report and Accounts 2021/22Notes to the Consolidated Financial Statements continued 191
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 consisted of 13 trading hotels which were rebranded to Premier Inn as well as the leasehold for
a further six pipeline sites. The transaction formed part of the Group’s strategic priority of international growth.
Trading hotel leases
In 2020/21, the Group recognised right-of-use assets and lease liabilities in relation to the 13 hotels which were rebranded.
Lease liabilities were recognised at the present value of future lease payments, using assumptions consistent with those of new
leases. Right-of-use assets were valued at an amount equal to the lease liability as the lease arrangements were considered to
be at market rates.
Pipeline hotel leases
Three of the pipeline sites were open and operated by a third party. The Group acquired the headlease for these sites and
subleased them. The Group recognised investment property and lease liabilities in relation to these sites. During the year, the
Group took over the operations of these sites and the investment property was transferred to right-of-use assets.
Contingent consideration
Contingent consideration was recognised at the date of acquisition and £62.6m were paid in instalments when the Group took
control of the operations of the pipeline hotels.
Subsequent to the acquisition, an impairment of the goodwill arising on acquisition was recorded (see Note 15).
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 was
accounted for as an asset acquisition under IFRS 3 Business Combinations as the fair value of the assets was concentrated in
a single group of similar assets. The transaction consisted of six open hotels and seven pipeline hotels which were due to open
between 2021 and 2023. On acquisition, the Group recognised right-of-use assets of £84.9m and lease liabilities of £77.2m in
relation to the open hotels. The Group had also committed to lease commitments of £202.4m in relation to the pipeline hotels.
Contingent consideration of £1.9m would become payable once handover of the pipeline sites is complete.
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements 192
WHITBREAD PLC
COMPANY ACCOUNTS 2021/22
Contents
192
193
194
Company balance sheet
Company statement of changes in equity
Notes to the Company financial statements
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Whitbread Annual Report and Accounts 2021/22 COMPANY BALANCE SHEET
Year ended 3 March 2022
Company number 04120344
NON-CURRENT ASSETS
Investment in subsidiaries
Other receivables
CURRENT ASSETS
Other receivables
TOTAL ASSETS
CURRENT LIABILITIES
Other payables
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Capital redemption reserve
Retained earnings
Treasury reserve
TOTAL EQUITY
193
3 March
2022
£m
25 February
2021*
£m
Notes
3
4
4
5
6
7
7
7
7
2,439.3
1,201.3
3,640.6
2,426.4
1,265.1
3,691.5
100.0
100.0
3,740.6
–
–
3,691.5
(13.5)
(13.5)
(13.5)
3,727.1
(11.5)
(11.5)
(11.5)
3,680.0
164.8
1,024.7
50.2
3,004.5
(517.1)
3,727.1
164.7
1,022.9
50.2
2,962.5
(520.3)
3,680.0
* The format of the company balance sheet has been changed (see Note 1).
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 £32.3m (2020/21: £22.9m).
ALISON BRITTAIN CHIEF EXECUTIVE
HEMANT PATEL CHIEF FINANCIAL OFFICER
27 April 2022
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Whitbread Annual Report and Accounts 2021/22GovernanceOther informationStrategic reportFinancial statements COMPANY STATEMENT
OF CHANGES IN EQUITY
Year ended 3 March 2022
194
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
112.9
Share
premium
(Note 7)
£m
Capital
redemption
reserve
(Note 7)
£m
Retained
earnings
(Note 7)
£m
Treasury
reserve
(Note 7)
£m
Total
£m
90.8
50.2
2,932.3
(527.0)
2,659.2
–
–
0.1
51.7
–
–
–
–
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
Profit for the year
TOTAL COMPREHENSIVE INCOME
Ordinary shares issued on exercise of employee share options
Loss on ESOT shares issued
Accrued share–based payments
-
-
0.1
-
-
-
-
1.8
-
-
-
-
-
-
-
32.3
32.3
-
(3.2)
12.9
-
-
-
3.2
-
32.3
32.3
1.9
-
12.9
AT 3 MARCH 2022
164.8
1,024.7
50.2
3,004.5
(517.1)
3,727.1
1 The share premium amount of £929.3m is net of £28.2m in relation to transaction costs associated with the rights issue.
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Whitbread Annual Report and Accounts 2021/22 Notes to the Company financial statements
At 3 March 2022
195
1 BASIS OF ACCOUNTING
The financial statements of Whitbread PLC for the year ended 3 March 2022 were authorised for issue by the Board of
Directors on 27 April 2022. The financial year represents the 53 weeks to 3 March 2022 (prior financial year: 52 weeks to
25 February 2021).
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.
In the current period the format of the Company Balance Sheet has been changed to align with the presentation of the
Consolidated Balance Sheet.
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 non-current 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.
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.
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Whitbread Annual Report and Accounts 2021/22Other informationGovernanceStrategic reportFinancial statements 3 INVESTMENT IN SUBSIDIARY UNDERTAKINGS
INVESTMENTS AT COST
Opening investments
Contributions to subsidiaries in respect of share-based payments
CLOSING INVESTMENTS
196
2022
£m
2,426.4
12.9
2,439.3
2021
£m
2,412.4
14.0
2,426.4
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 OTHER RECEIVABLES
Amounts due from subsidiary undertakings
Analysed as:
Current
Non-current
5 OTHER PAYABLES
Unclaimed dividends
Corporation tax payable
2022
£m
1,301.3
1,301.3
2021
£m
1,265.1
1,265.1
100.0
1,201.3
1,301.3
–
1,265.1
1,265.1
2022
£m
6.0
7.5
13.5
2021
£m
6.1
5.4
11.5
12_Notes_to_the_Company_financial_statements_p195_205_v29.indd 196
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Whitbread Annual Report and Accounts 2021/22Notes to the Company financial statements continued 6 SHARE CAPITAL
ORDINARY SHARE CAPITAL
ALLOTTED, CALLED UP AND FULLY PAID ORDINARY SHARES OF 76.80P EACH (2021: 76.80P EACH)
At 27 February 2020
Issued on exercise of employee share options
Issued in rights issue
AT 25 FEBRUARY 2021
Issued on exercise of employee share options
AT 3 MARCH 2022
197
million
147.0
0.1
67.3
214.4
0.1
214.5
£m
112.9
0.1
51.7
164.7
0.1
164.8
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 (2020/21: 0.1m) ordinary shares, fully paid, were exercised by employees under the terms
of various share option schemes. The Company received proceeds of £1.9m (2020/21: £2.9m) on exercise of these options.
Preference share capital
ALLOTTED, CALLED UP AND FULLY PAID SHARES OF 1P EACH
(2021: 1P EACH)
27 February 2020, 25 February 2021 and 3 March 2022
B shares
C shares
million
2.0
£m
–
million
1.9
£m
–
12_Notes_to_the_Company_financial_statements_p195_205_v29.indd 197
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Whitbread Annual Report and Accounts 2021/22Other informationGovernanceStrategic reportFinancial statements 198
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 27 FEBRUARY 2020
Exercised during the year
AT 25 FEBRUARY 2021
Exercised during the year
AT 3 MARCH 2022
Treasury shares held by
Whitbread PLC
ESOT shares held
million
12.5
–
£m
514.5
–
12.5
514.5
–
–
12.5
514.5
million
1.0
(0.6)
0.4
(0.2)
0.2
£m
12.5
(6.7)
5.8
(3.2)
2.6
Distributable reserves
As at 3 March 2022, Whitbread PLC had distributable reserves of £2,304.2m (2021: £2,271.9m).
8 CONTINGENT LIABILITIES
Whitbread PLC is a member of the Whitbread Group PLC VAT group. All members are jointly and severally liable for the VAT
liability. At the balance sheet date the Group VAT liability amounted to £7.3m (2021: £11.1m).
12_Notes_to_the_Company_financial_statements_p195_205_v29.indd 198
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Whitbread Annual Report and Accounts 2021/22Notes to the Company financial statements continued 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
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 Flensburg City 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 Hotel GmbH
Country of
incorporation
Germany8
England1
England1
England1
Scotland2
England18
Scotland2
Scotland2
England1
Scotland2
Ireland3
Jersey5
Guernsey16
Isle of Man4
Jersey5
England1
Germany8
Germany8
Germany8
Germany8
Germany8
England1
Germany8
Germany8
Germany8
Germany8
England1
United Arab
Emirates6
Qatar7
Premier Inn Hotels Limited
Premier Inn Hotels LLC
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
England1
Premier Inn Ochre Limited
Germany8
Premier Inn Rostock City Hafen GmbH
(formerly UNA 344. Equity Management GmbH)
Premier Inn Stuttgart Feuerbach GmbH
Germany8
199
% 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
100.0
% 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
100.0
–
–
–
–
–
–
–
–
–
–
–
100.0
49.0
24.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
49.0
24.0
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 EUR 25,000
Ordinary £1.00
Ordinary EUR 25,000
Ordinary EUR 25,000
Ordinary EUR 25,000
There are no classes of
shares. The total nominal
share capital amounts
to EUR 300.000 and is
divided into two shares,
one in the nominal amount
of EUR 275.000 and one
in the nominal amount of
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 £1.00
Ordinary EUR 25,000
Ordinary EUR 25,000
12_Notes_to_the_Company_financial_statements_p195_205_v29.indd 199
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Whitbread Annual Report and Accounts 2021/22Other informationGovernanceStrategic reportFinancial statements 9 RELATED PARTIES CONTINUED
Active related undertakings continued
Company name
Country of
incorporation
Premier Inn Verwaltungsgesellschaft Süd GmbH
(formerly: Acom Hotelbetriebs- und
Verwaltungs GmbH)
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
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
Germany8
England1
England1
Indonesia10
United Arab
Emirates11
England1
England1
England1
England1
Germany8
Germany8
Singapore12
England1
England1
Class of shares held
Ordinary EUR 50,000
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
Country of
incorporation
England1
Scotland15
Scotland15
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
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
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
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
% 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
12_Notes_to_the_Company_financial_statements_p195_205_v29.indd 200
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Whitbread Annual Report and Accounts 2021/22Notes to the Company financial statements continued 9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
Carpenters of Widnes Limited
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
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
201
% 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
100.0
100.0
100.0
100.0
100.0
100.0
100.0
66.7
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
Class of shares held
Ordinary £0.01
Deferred ordinary £1.00
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
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Whitbread Annual Report and Accounts 2021/22Other informationGovernanceStrategic reportFinancial statements 9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
Hunter & Oliver Limited
J. Burton (Warwick) Limited
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
Country of
incorporation
England1
England1
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
Class of shares held
Ordinary £1.00
Ordinary £1.00
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
202
% 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
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
12_Notes_to_the_Company_financial_statements_p195_205_v29.indd 202
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Whitbread Annual Report and Accounts 2021/22Notes to the Company financial statements continued 9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
Scorechance 1 Limited
Scorechance 12 Limited
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
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
The Four Seasons Hotel Investments
Management Limited
The Four Seasons Hotel Limited
The Oyster Spa Company Limited
England1
England1
England1
203
% 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
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
30.2
8.8
100.0
100.0
100.0
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
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
12_Notes_to_the_Company_financial_statements_p195_205_v29.indd 203
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9 RELATED PARTIES CONTINUED
Dormant related undertakings continued
Company name
The Portsmouth and Brighton United
Breweries, Limited
Thomas Wethered & Sons Limited
Threlfalls (Liverpool & Birkenhead) Limited
Threlfalls (Salford) Limited
Trentrise Limited
Uncle Sam’s Limited
Virlat Limited
W. M. Darley, Limited
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
Country of
incorporation
Class of shares held
% 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)
England1
Ordinary £0.25
–
100.0
100.0
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
England1
England1
England1
England1
England1
Ordinary £1.00
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
–
–
–
–
–
–
–
–
–
–
–
–
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
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
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
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Whitbread Annual Report and Accounts 2021/22Notes to the Company financial statements continued 205
% 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
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
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 Quest Trustee Limited
Whitbread Restaurants (Australia) Limited
Whitbread Restaurants Limited
Whitbread Scotland Limited
Whitbread Secretaries Limited
Country of
incorporation
England1
England1
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 £0.56
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 2021/22Other informationGovernanceStrategic reportFinancial statements Glossary
206
ADJUSTED PROPERTY RENT
OCCUPANCY
Total property rent less a proportion of contingent rent.
BASIC EARNINGS PER SHARE (BASIC EPS)
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
restaurants and integrated hotel restaurants.
GOSH CHARITY
Number of hotel bedrooms occupied by guests expressed
as a percentage of the number of bedrooms available in
the period.
OPERATING PROFIT
Profit before net finance costs and tax.
OTAS
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.
Great Ormond Street Hospital Children’s Charity.
WINCARD
IFRS
International Financial Reporting Standards.
LEASE DEBT
Eight times adjusted property rent.
Whitbread In Numbers – balanced scorecard to measure
progress against key performance targets.
YOURSAY
Whitbread’s annual employee opinion survey to provide
insight into the views of employees.
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Whitbread Annual Report and Accounts 2021/22 Alternative performance measures
207
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)
2021/22
2020/21
1,157.8
20,430
56.67
29.1
718
388.5
8,415
46.16
10.2
255
GERMANY AVERAGE ROOM RATE (£)
40.53
40.17
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
2021/22
189.8%
8.2%
2020/21
(70.9%)
0.5%
UK ACCOMMODATION SALES GROWTH
198.0%
(70.4%)
Two year UK
like-for-like
revenue growth
Movement in
accommodation
sales per segment
information (Note
3)
Accommodation
sales from non
like-for-like
Change in revenue for outlets open for at least two years. This is a
temporary measure introduced to provide a comparison between the
current year and the comparative period before the impact of the
COVID-19 pandemic.
RECONCILIATION
UK like-for-like revenue growth
Contribution from net new hotels
UK ACCOMMODATION SALES GROWTH
2021/22
(15.5%)
3.8%
(11.7%)
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Whitbread Annual Report and Accounts 2021/22GovernanceFinancial statementsOther informationStrategic report Alternative performance measures continued
208
Closest equivalent
IFRS measure
No direct
equivalent
Adjustments to
reconcile to IFRS
measure
Refer to
definition
APM
Revenue per
available room
(RevPAR)
INCOME STATEMENT MEASURES
Adjusted*
operating profit/
(loss)
Profit/loss before
tax
Adjusting items
(Note 6), finance
income/costs
(Note 8)
Definition and purpose
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 (£)
2021/22
2020/21
1,157.8
29,928
38.69
29.1
1,765
16.49
388.5
28,620
13.57
10.2
1,135
9.02
Profit/loss before tax, finance costs/income and adjusting items
Reconciliation: Consolidated income statement
Adjusted* tax
Tax charge/credit Adjusting items
(Note 6)
Tax charge/credit before adjusting items.
Reconciliation: Consolidated income statement
Adjusted* profit/
(loss) before tax
Profit/loss before
tax
Adjusting items
(Note 6)
Profit/loss before tax and adjusting items.
Reconciliation: Consolidated income statement
Adjusted* basic
EPS
Basic EPS
Adjusting items
(Note 6)
BALANCE SHEET MEASURES
Net cash/debt
Total liabilities
from financing
activities
Adjusted net
cash/debt
Total liabilities
from financing
activities
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
Adjusted profit/loss 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
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 cash/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 (cash)/debt
Restricted cash adjustment
ADJUSTED NET (CASH)/DEBT
2021/22
£m
(140.5)
10.0
(130.5)
2020/21
£m
46.5
10.0
56.5
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Whitbread Annual Report and Accounts 2021/22 209
APM
Closest equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Definition and purpose
BALANCE SHEET MEASURES
Lease adjusted
net debt
Total liabilities
from financing
activities
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 (cash)/debt
Lease debt
LEASE ADJUSTED NET DEBT
2021/22
£m
(130.5)
1,884.7
1,754.2
2020/21
£m
56.5
1,771.0
1,827.5
Exclude lease
liabilities and
derivatives
held to hedge
financing
activities.
Includes an
adjustment for
cash assumed
by ratings
agencies to
not be readily
available
Net cash/debt
and lease
liabilities
Cash and cash
equivalents less
total liabilities from
financing activities
Refer to
definition
CASH FLOW MEASURES
Funds from
operations
(FFO)
Net cash flows
from operating
activities
Refer to
definition
Net debt/cash plus lease liabilities. The directors consider this to be a
useful measure of the financing position of the Group.
RECONCILIATION
Net (cash)/debt
Lease liabilities
NET (CASH)/DEBT AND LEASE LIABILITIES
2021/22
£m
(140.5)
3,701.8
3,561.3
2020/21
£m
46.5
3,231.6
3,278.1
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.
A comparative is not disclosed as while the Group's covenant waivers were
in place, FFO was not considered to be a key alternative performance
measure.
RECONCILIATION
Net cash flow from operations
Payment of principal of lease liabilities
Working capital movements
Cash interest
Adjusted property rent
FUNDS FROM OPERATIONS
2021/22
£m
508.7
(127.1)
(182.5)
18.0
235.6
452.7
Lease adjusted
net debt to FFO
No direct
equivalent
Refer to
definition
Ratio of lease-adjusted net debt compared to FFO.
A comparative is not disclosed as while the Group's covenant waivers were
in place, lease adjusted net debt to FFO was not considered to be a key
alternative performance measure.
RECONCILIATION
Lease adjusted net debt
Funds from operations
LEASE ADJUSTED NET DEBT TO FFO
2021/22
£m
1,754.2
452.7
3.9x
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Whitbread Annual Report and Accounts 2021/22GovernanceFinancial statementsOther informationStrategic report APM
Closest equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Operating cash
flow
Cash generated
from operations
Refer to
definition
210
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 profit/(loss)
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 received/(paid)
Movement in working capital
OPERATING CASH FLOW
2021/22
£m
153.3
148.1
157.9
20.9
480.2
(133.2)
(127.1)
2.0
182.5
404.4
2020/21
£m
(486.7)
126.3
150.3
23.6
(186.5)
(123.2)
(71.7)
(7.3)
(99.8)
(488.5)
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/
loss
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 this measure to be useful as it is a commonly used
industry metric which facilitate comparison between companies. The
Group's RCF covenants include measures based on Adjusted EBITDA
(pre-IFRS 16).
RECONCILIATION
Adjusted operating profit/(loss)
Depreciation – right-of-use assets
Depreciation – property, plant and equipment
Amortisation
ADJUSTED EBITDA (POST-IFRS 16)
Variable lease payment expense/(credit)
Rental income
ADJUSTED EBITDAR
Rental expense, variable lease payments and rental
income
ADJUSTED EBITDA (PRE-IFRS 16)
2021/22
£m
153.3
148.1
157.9
20.9
2020/21
£m
(486.7)
126.3
150.3
23.6
480.2
(186.5)
0.3
(7.9)
(0.6)
(7.8)
472.6
(194.9)
(230.7)
241.9
(216.5)
(411.4)
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.
* 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.
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Whitbread Annual Report and Accounts 2021/22
Shareholder services
211
USEFUL CONTACTS
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
The website address is www.linkgroup.eu
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 2022
The AGM will take place at 2pm on Wednesday 15 June 2022
at Whitbread Court, Porz Avenue, Dunstable LU5 5XE.
We want to give as many of our shareholders the opportunity
to attend the meeting as possible and we therefore intend to
continue to offer the opportunity to attend electronically so
that there is a choice as to how to attend.
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.
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Whitbread Annual Report and Accounts 2021/22GovernanceFinancial statementsOther informationStrategic report Shareholder services continued
Analysis of ordinary shares at 3 March 2022
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
Capital gains tax
For further information on:
212
Number of holders
19,834
% of holders
54.77
Number of shares
684,966
% of share capital
0.32
5,539
5,709
2,533
1,189
582
184
314
103
152
34
36
3
3
36,215
15.30
15.76
6.95
3.28
1.61
0.51
0.87
0.28
0.42
0.09
0.10
0.01
0.01
807,309
1,845,005
1,779,794
1,635,124
1,806,799
1,282,880
6,977,269
7,405,157
35,623,295
25,534,781
71,070,627
19,816,368
38,200,568
214,469,942
0.38
0.86
0.83
0.76
0.84
0.60
3.25
3.45
16.61
11.91
33.14
9.24
17.81
› 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.
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 price?
You can keep up to date with the current share price at the
Company’s website: www.whitbread.co.uk.
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
Share and bond scams are often run from ‘boiler rooms’ where
fraudsters cold-call investors offering them worthless,
overpriced or even non-existent shares or bonds. Boiler rooms
use increasingly sophisticated tactics to approach investors,
offering to buy or sell shares in a way that will bring a huge
return. But victims are often left out of pocket – sometimes
losing all of their savings or even their family home.
Even seasoned investors have been caught out, with the
biggest individual loss recorded by the police being £6m.
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
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 Group, on the shareholder helpline +44 (0)344
855 2327. They will be able to assist you in arranging a
replacement.
› 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.
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 211.
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.
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Whitbread Annual Report and Accounts 2021/22 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.
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Whitbread Court
Houghton Hall Business Park
Porz Avenue
Dunstable
Bedfordshire
LU5 5XE
www.whitbread.co.uk/investors
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