Whitbread PLC uses hotel and restaurant assets to make significant contribution to pension fund
Whitbread PLC, the UK’s largest hotel and restaurant group, today announced in its 2010 annual report that a number of its hotels and restaurants will be used to enable a contribution of over £100m to the company’s pension fund.
Whitbread is the latest FTSE 100 company this month, following Marks and Spencer and Sainsbury’s, to announce this new approach to funding pension schemes that was developed by Deloitte1. It has also recently been adopted by ITV and John Lewis. The combined value of these transactions is £1.2 billion.
Using Deloitte’s approach, Whitbread has formed a partnership with the pension scheme trustee that is backed by a stake in the company’s hotel and restaurant portfolio. Whitbread will continue to control the properties while the partnership provides income to the pension scheme.
David Robbins, the Deloitte pensions partner advising Whitbread, said: “Whitbread has used its hotel and restaurant assets in a novel and intelligent way to make a significant contribution to the pension scheme.”
Christopher Rogers, Group Finance Director said “We are happy to partner with the pension scheme trustee using this innovative approach. This is a very effective and efficient use of our property assets and benefits Whitbread in terms of cashflow.”
Keith Jones, Chairman of the Whitbread Pension Fund Trustee Board said: “We were pleased to be able to enter into this agreement as part of a package of measures designed to improve the security of our members’ pensions. The arrangement provides increased cash flows to the scheme which are very well secured without placing undue strain on the company.”
FTSE 100 pension scheme deficits have grown to more than £100bn recently; representing a significant funding challenge for these companies. Deloitte’s approach represents a step change to the traditional method of cash funding pension schemes.
Robbins adds: “Many of our clients have sought to use balance sheet assets to fund their deficits. However, they also want to retain control of these assets and avoid contributing more than is needed to their pension schemes. Deloitte’s approach solves this.”
Deloitte is currently advising a large number of companies across a range of industry sectors to fund over £2bn of UK corporate pension deficits, using assets as diverse as property, brands and investments.
Robbins concluded: “We believe this solution has the potential to become a more widely used tool to help tackle the pensions crisis.”
Deloitte’s approach involves the pension scheme acquiring a stake in a partnership backed by corporate assets, enabling the scheme to benefit from a secure source of income. The company can then ensure the underlying assets continue to be managed in the best possible way and also mitigate its risk of overfunding the scheme.
About Deloitte Total Reward and Benefits Limited
Deloitte Total Reward and Benefits Limited is a multi-disciplinary consulting group comprising 100 actuaries and other pensions and benefits specialists, which focuses on delivering high quality pensions advice to employers and scheme trustees. Deloitte Total Reward and Benefits Limited is authorised and regulated by the Financial Services Authority.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk\about for a detailed description of the legal structure of DTT and its member firms.
The information contained in this press release is correct at the time of going to press. For more information, please visit www.deloitte.co.uk.
About Whitbread PLC
Whitbread PLC is the UK’s largest hotel and restaurant group operating market-leading businesses in the budget hotels and restaurant sectors. Its well-loved brands are Premier Inn, Beefeater, Brewers Fayre, Table Table, Taybarns and Costa Coffee.
Whitbread PLC employs over 33,000 people and serves 10 million customers every month in over 2,000 outlets across the UK.
In the year ended 4 March 2010, Whitbread PLC reported a 7.5% increase in Group Revenue to £1,435.0 million and Underlying Profit before tax of £239.1 million up 6.6%.
Whitbread PLC is listed on the London Stock Exchange and is a constituent of the FTSE 100. It is also a member of the FTSE4Good Index.