in shape for
growth
wwwspiritpubcompanycom
spirit pub company plc annual report 2014
spirit pub company plc annual report 2014 spirit at a glance
our goal is to be the number one hospitality 
company in the uk 
we aim to achieve this by being regarded  
as the best employer delivering the best guest 
experiences and generating the best returns  
for our shareholders in the hospitality industry
we have a high quality estate of 1227 pubs 
nationwide consisting of 794 managed pubs  
and 433 leased pubs and we operate a  
strong portfolio of award winning brands
strategic report
02 chairman’s statement
04  highlights and key performance 
indicators kpis
06 chief executive officer’s review
09 business model
10 our market
12 our strategy
20 managed division overview
21 leased division overview
22 corporate responsibility
26 principal risks and uncertainties
30 our brands
37 financial review
governance
40 board of directors
42 executive management team
44 directors’ report
48 corporate governance statement
52 nomination committee report
53 audit  risk committee report
56 remuneration report
71  statement of directors’ responsibilities  
in relation to the financial statements
financial statements
72 consolidated income statement
73  consolidated statement of 
comprehensive income
74 consolidated balance sheet
75  consolidated statement of changes  
in equity
76 consolidated cash flow statement
77 company balance sheet
78 company statement of changes in equity
78 company income statement
78 company cash flow statement
79 notes to the financial statements
117  independent auditor’s report to the  
members of spirit pub company plc only
120 fiveyear financial record
121 company information and advisers
red ‘bleed’ pulled away 
3mm from rh edge 
to allow for glued hinge 
printer to adjust further 
if necessary strategic report governance financial statements
 spirit pub company plc annual report 2014 01
794
managed pubs
to read more 
about our  
brands and  
operating formats 
see pages 2021 
and 3036
433
leased and 
tenanted pubs 02 spirit pub company plc annual report 2014
chairman’s statement
underlying pretax profits rose by 11 to £60m against 
a backdrop of a continuing difficult although recovering 
consumer environment strong cash generation during the 
year has further strengthened our balance sheet as a result 
the board recommends an increase in the final dividend to 
150 pence per share bringing the total dividend for the full 
year to 222 pence per share an increase of 8
we continue to execute our established strategy underpinned 
by continued focus on maximising long term value for all 
stakeholders through our ‘best for team’ ‘best for guest’ and 
‘best for investor’ model we have continued to invest in pubs 
brands and people and have retained our focus on delivering 
a great guest experience whilst further refining our stable of 
brands our managed brands are seeing market leading growth 
and in our leased estate it is pleasing to report growth in like 
for like net income we also continue to trial innovation models 
we have made further progress in our corporate social 
responsibility programmes which has been recognised with 
a variety of awards in this area during the year our intention 
is to be a responsible retailer in the communities in which we 
operate and to have appropriate regard to and to minimise 
our impact on the environment in which we operate
i am pleased to report on a strong 
performance in the third full year 
for spirit as an independent public 
company we have seen further 
significant progress both in the 
financial performance of the 
business and execution of our 
established strategy which has 
left us in an extremely strong 
position for future growth  strategic report governance financial statements
 spirit pub company plc annual report 2014 03
in november 2013 spirit was ranked 16th in the sunday 
times top 25 best big companies to work for and this award 
demonstrates our commitment to our people and our focus 
on being an employer of choice the success of our company 
is of course driven by the devotion of our employees in pub 
field and support centre and i would like to sincerely thank all 
of them for their impact during the year 
although there are some encouraging lead indicators regarding 
the consumer environment we expect it to remain challenging 
despite these challenges we believe that the continued 
execution of our strategy to deliver hospitality excellence and the 
opportunity to expand our estate through further acquisitions 
will allow us to make further progress in the year ahead
walker boyd
chairman
“ the success of our company is of course driven 
by the devotion of our employees in pub field and 
support centre and i would like to sincerely thank 
all of them for their impact during the year”
 11 
pretax profits
underlying pretax profits rose  
by 11 to £60m against a backdrop  
of a continuing difficult although  
recovering consumer environment 04 spirit pub company plc annual report 2014
highlights and key performance 
indicators kpis
it has been a strong year for spirit driven by effective execution  
of our clear and consistent strategy
overview
our kpis have been selected in alignment with our 
strategic objectives
highlights 
  strong earnings growth
  continued market outperformance in managed and leased
  revenue up 6
  ebitda
1
 up 7
  profit before tax pbt
1
 up 11
  earnings per share
1
 up 13
  strong cash flow and lower leverage
  £75m earmarked for pub acquisitions
managed
  like for like sales
2
 up 44
  ebitdar
1
 margin up 30 basis points
leased
  like for like net income
2
 up 42
  average ebitda
1
 per pub up 100
financial kpis
2012 2014 2013
760
801
758
6
▲
2012 2014 2013
51
60
54
11
▲
2012 2014 2013
146
159
150
7
▲
2012 2014 2013
48
44
16
28
bps
▲
revenue
£m
managed lfl sales growth
2

ebitda
1
£m
profit before tax
1
£m
1 excluding exceptional items
2  like for like lfl growth rates are shown on a 52 week vs 52 week basis 
to exclude the benefit of an extra week’s trading in the financial year to 
23 august 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 05
nonfinancial kpis
2012 2014 2013
58
71
63
13
▲
fy12 q1 fy13 q1
10
8
6
4
2
0
2
spirit
peach total
peach pub
fy14 q1 fy14 q4
2012 2014 2013
94
104
96
8
▲
2012 2014 2013
23
25
24
30
bps
▲
2014 2013
74
66
8
 
▲
2012 2014 2013
49x
40x
47x
07x
▲
basic eps
3
pence
net debt  ebitda
1
managed ebitdar
14
 margin

leased net income per pub
£000
net sales like for like yearonyear comparison
25

employee engagement
6

new measures
during the year new measures were introduced for guest 
satisfaction complaints and the ‘right licensee right concept 
right execution’ measure in the leased estate as such there 
is no historic data for these measures however they are 
considered to be important measures for monitoring the 
health of the business in future years
  guest satisfaction – 848
  complaints – 065 per 1000 covers and 146 per 10000 drinks
  right licensee right concept right execution – 74
our target is to achieve a guest satisfaction score of 90 
we do not set specific targets for complaints or ‘right licensee 
right concept right execution’ but we aim to continually improve 
on these metrics
1  excluding exceptional items
2  like for like lfl growth rates are shown on a 52 week vs 52 week basis  
to exclude the benefit of an extra week’s trading in the financial year to 
23 august 2014
3  basic earnings per share is based on the profit for the period attributable to 
ordinary shareholders excluding exceptional items and the weighted average 
number of ordinary shares outstanding
4  earnings before income tax depreciation amortisation and rent includes 
allocated central overheads
5  the coffer peach business tracker is widely regarded as the industry 
barometer for yearonyear sales performance which includes many of our 
key competitors peach pub is sales through pubs whereas peach total also 
includes sales through restaurants
6  results of the annual employee survey no comparable data is available 
for 2012  06 spirit pub company plc annual report 2014
chief executive officer’s review
together these factors have contributed to a significantly 
stronger balance sheet whilst we have benefitted from a  
milder winter and a 53rd week of trading both divisions have 
outperformed their respective peers profit before tax and 
exceptional items increased by 11 to £60m and earnings 
per share excluding exceptional items was up 13 to 71 pence
our performance in 201314 has given us a solid platform to 
build upon our strengthened financial position means that we 
are now ready to capitalise on the progress made to date and 
continue growing the business both organically and through 
acquisitions our existing estate continues to offer opportunities 
to optimise our assets and grow investment returns and we are 
now actively acquiring pubs into our managed division where 
we see the opportunity to grow our existing brand portfolio from 
c750 to c1200 sites
the year ended 23 august 2014 
was a very successful year for 
spirit with both our managed 
and leased divisions delivering 
a strong financial performance 
reflecting robust organic growth 
rigorous cost control and 
productivity improvements 
further development of our 
brand portfolio as well as the 
disciplined use of cash and 
pragmatic realisation of assets strategic report governance financial statements
 spirit pub company plc annual report 2014 07
managed pubs 
our managed pubs have delivered strong results throughout 
the year with continued outperformance of the industry 
benchmark the coffer peach business tracker like for like 
sales were up 44 for the 52 week period which represents 
an improvement of 108 over a three year period while we 
benefitted from better weather in the first half of the year we 
faced tougher weather comparatives over the summer months 
and the underlying health of our brands and the strength of our 
estate helped increase our average weekly sales by a further 
5 to £18100
driven by strong sales growth ebitda
2
 increased by 8 and 
ebitdar
2
 margin improved by 30 basis points giving a total 
ebitdar
2
 margin improvement of 160 basis points over a three 
year period some of the efficiency gains have been partially 
offset by increases in the carbon reduction tax and the cost of 
introducing bt sport into the estate the strong performance 
has also resulted in higher bonus costs than in the prior year 
with the majority of these bonuses being paid to pub employees
our focus remains on disciplined capital investment to drive 
returns and innovation to ensure that we have compelling 
brands and pubs which appeal to our guests in the first half 
of the year we focused on trialling schemes to determine if we 
could identify more effective brands for our uninvested local 
pubs as a result of these pilots we have identified opportunities 
for a further rollout of our flaming grill brand and have 
developed a new quality local offer golden oak inns  
which we have successfully trialled in seven pubs in the year 
golden oak inns is well suited to smaller but demographically 
well sited pubs and offers excellent food drink and service  
in a contemporary environment we see a significant rollout 
opportunity for this concept across our locals estate
we completed 24 flaming grill investments in the year with an 
average spend of £140000 per pub with five of these pubs 
being transferred from our leased estate a further two pubs 
from the leased estate have been converted to our fayre  
square brand and we commenced our expansion programme 
with the acquisition and conversion of two freehold pubs into 
our flaming grill brand a third pub was acquired in the year 
and opened for trading as a flaming grill in september 2014 
shortly after the year end we also completed 13 major taylor 
walker investments including the conversion of four unbranded 
pubs and optimising the use of previously redundant space 
such as installing cellar bars and function rooms
we continue to seek opportunities to expand our wacky 
warehouse brand by investing in underutilised space our 
ambition is to have a wacky warehouse play area associated 
with all of our fayre  square pubs
in the early part of the year we repositioned our chef  brewer 
offer to a much more premium offer indications were that 
this repositioning was not as successful as was expected 
and as such the offer was once again adjusted closer to the 
midmarket – with focus on delivering a consistently excellent 
guest experience results to date are encouraging
the proportion of our estate invested and branded is now 89 
and we continue to achieve an average return on investment 
in excess of 25 
we have now commenced the refreshment phase of our capital 
investment programme for pubs that had major investment 
spend between three and five years ago we have completed 
37 of these ‘sparkle spends’ in the year at an average cost 
of £37 000 predominantly in the taylor walker estate
28
like for like
1
the leased estate is firmly  
in growth with like for like sales  
growth of 28
44
like for like
1
managed brands continued  
to achieve further growth  
with like for like sales up 44
“ our focus on value for money and delivering a great 
experience for every guest irrespective of demography 
or occasion underpins this positive momentum”
1  growth rates are shown on a 52 week vs 52 week basis to exclude the benefit 
of an extra week trading in the financial year to 23 august 2014
2 excluding exceptional items 08 spirit pub company plc annual report 2014
chief executive officer’s review
continued
during the year we have further strengthened our digital 
and customer relationship management crm capability 
enabling us to better understand and communicate with 
our guests using a combination of both digital and traditional 
marketing the launch of our loyalty scheme in our fayre  
square estate has enabled us to increase both the frequency 
and the value of visits by appropriately incentivising guests 
with tailored rewards 
our acquisition programme commenced in the second half of 
the year with the purchase of three freehold pubs for conversion 
into our flaming grill brand two of which were open for trading 
at the year end with the third opened in september 2014 
we also acquired 19 leasehold pubs from the orchid estate 
which as a package are profitable post rent despite being 
uninvested these pubs are an excellent fit for our existing 
brands and we look forward to rapidly investing in and branding 
these pubs in order to generate good returns 
we intend to add further pubs to our estate in order to 
supplement organic growth and leverage our highly scalable 
overheads and we have made £75m available to fund 
acquisitions our preference is for freehold assets that will 
be suitable for our strong foodled value brands with a target 
return of 20 although we will also acquire leasehold sites 
if these can deliver a target return of 25
since the year end we have completed the acquisition of 
a further three leasehold pubs from the orchid estate which 
will be invested and branded in the first quarter of 201415 
in october 2014 we sold a london pub the prince of wales 
for proceeds of £15m approximately 50x ebitda reflecting 
the development potential of this site in earls court
leased pubs 
the leased estate is firmly in growth with like for like sales 
growth of 28
1
 and like for like net income increasing by 42
1
 
average net income per pub of £104000 2013 £96000 
demonstrates the high quality of our leased estate which 
delivered total operating profit growth of 2 on a 52 week 
basis despite having 6 fewer pubs 
like for like beer volumes are in growth and have been 
consistently ahead of the market throughout the year 
source bbpa like for like rent is also in growth and the 
percentage of pubs on substantive leases has increased 
from 94 to 96 at the year end
our focus has remained on improving the quality of the estate 
through investment innovation and selective disposals and we 
have continued to generate returns from investment in excess 
of our 25 hurdle rate 
we have continued our leased innovation trials during the year 
and these have evolved from the more restrictive franchise type 
agreements towards more flexible fixed and variable turnover 
based rent this is a natural evolution of our approach in 
providing targeted support to our licensees to share with them 
the skills experience and insight which our managed estate 
provides us with
summary
looking forward our strategy remains clear relevant and 
consistent firstly further organic growth from our existing sites 
and secondly a new strand of growth through acquisition 
in order to successfully deliver this second leg of growth we will 
need to continue to build our current pipeline of acquisition sites
we expect both macro and micro economic trends to gradually 
improve over the next year but we expect volatility to remain 
our focus on value for money and delivering a great experience 
for every guest irrespective of demography or occasion 
underpins this positive momentum we remain confident in the 
longterm business outlook based on further organic growth 
from our existing assets and new growth through acquisitions
mike tye
chief executive officer
1  growth rates are shown on a 52 week vs 52 week basis to exclude the benefit 
of an extra week trading in the financial year to 23 august 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 09
business model
our business model is simple – we own or operate pubs that we either 
manage ourselves or that we lease to entrepreneurs who then run  
their own business from those pubs and we operate only in the uk 
we strive to ensure that all of our pubs are operated with the 
right model being managed or leased and that their offer and 
management are appropriate in order to maximise our returns
having a mixed estate of both managed and leased pubs 
ensures that we have more operating flexibility to ensure that 
we maximise our returns based on finding the appropriate 
operating format for each pub we perform a regular review 
of our estate which enables us to identify opportunities and 
respond to changing local demographics and social change 
subject to vacant possession in the case of a leased pub
our managed estate with its combination of property assets 
and brands is one of the highest quality managed pub estates 
nationwide we invest in these pubs to improve the quality 
of our properties and to ensure that we offer our guests 
compelling reasons to visit our pubs our focus on first rate 
talent and leadership ensures that we recruit develop and 
retain the best people who can consistently deliver the best 
guest experience we employ over 17 000 people and their 
primary focus is to ensure that the guest experience is flawless 
and compelling 
our leased estate is of similarly high quality with the particular 
feature that a significant proportion of the leased estate has 
previously been operated as a managed pub and they are 
therefore typically larger than the pubs in other leased estates 
these pubs are best operated by highly skilled licensees who 
run them as their own business but who may also choose to 
benefit from our economies of scale in purchasing and certain 
central support functions such as training
 1227
pubs nationwide
consisting of 794 managed 
pubs and 433 leased pubs
ambition and metrics
spirit’s ambition is to be the number one hospitality company 
in the uk 
our goal is to have each of our three major stakeholder groups 
– our employees team our customers guests and our 
investors – view us as the best hospitality company compared 
to our competition in doing so we aim to create a virtuous circle 
of success in terms of the impact of each of those stakeholders 
on the others
to make our ambition more tangible we have set ourselves 
a small number of challenging targets most relevant to  
each stakeholder group and we measure our performance 
against those targets all of those targets are derived from  
and directly related to achievement of our business strategy 
more information about our progress in achieving those targets 
during the course of the year is included later in this report  
see page 13
business overview
spirit has a high quality estate of 1227 pubs nationwide 
consisting of 794 managed pubs and 433 leased pubs 
our managed estate is predominantly branded in that each 
pub operates under one of our strong portfolio of award 
winning brands or formats our brand and format portfolio 
offers a wide variety of leisure hospitality opportunities and 
has evolved to reflect the increasing polarisation of consumer 
tastes towards both value and premium and ensures that 
we can meet our guest needs across a range of occasions
our brands and formats  10 spirit pub company plc annual report 2014
our market
the pub is a british institution which continues to play a major role 
in british society there are nearly 40000
1
 licensed pubs in the uk 
the uk pub industry can be broadly categorised into three business 
models managed pubs leased or tenanted pubs and individual 
independently owned pubs
individual pubs
individual pubs sometimes known as free houses are 
independently owned and operated by private individuals 
the owner has full operational and managerial control of the 
pub and is free to decide which products to sell there are 
approximately 12000
1
 individual pubs operating in the uk 
spirit’s pubs compete in two core markets – drinking out and 
eating out of which more detail is given on the following page 
across these markets there are a wide variety of competitors 
for different occasions including other pubs restaurants bars 
coffee shops fast food outlets and sandwich retailers
managed pubs
managed pubs are generally owned by a pub company or 
brewer the owner of a managed pub employs all of the pub 
staff is responsible for the operating expenses of the pub and 
generally prescribes the entire range of products offered by 
the pub managed pubs tend to be larger and have a higher 
average weekly turnover than leased or tenanted pubs and 
individual independently owned pubs there are approximately 
6000
1
 managed pubs operating in the uk of which 794 are 
operated by spirit 
leased or tenanted pubs
leased or tenanted pubs are run and managed by a retailer 
who does not own the premises but who operates the pub 
under a lease or tenancy agreement the retailer is generally 
responsible for the maintenance of the pub and is normally 
required to purchase the majority of drink products for resale 
from the owner of the pub leased or tenanted pubs tend to 
have a lower average weekly turnover than managed pubs 
and have historically been more dependent than managed pubs 
on the sale of draught beer there are approximately 22000
1
 
leased and tenanted pubs operating in the uk of which 433 
are operated by spirit
industry background
794
managed pubs
there are approximately  
6000
1
 managed pubs 
operating in the uk of which 
794 are operated by spirit
433
leased and 
tenanted pubs
there are approximately 
22000
1
 leased and tenanted 
pubs operating in the uk 
of which 433 are operated 
by spirit
1 source cga outlet index june 2014 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
4158
4037
3944
3803
3677
3535
3471
3394 3338
2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
77 77
79
81
83
85
88
91
94
strategic report governance financial statements
 spirit pub company plc annual report 2014 11
drinking out source cga
£28bn 2013 market size
total drink volume 
equivalent drinks
eating out source allegra
£81bn 2013 market size
total eating out market 
£bn
the decline in the drinking out market has been partially offset 
by an increase in casual dining with growing demand for more 
foodled and family occasions and a trend toward polarisation 
of demand toward both premium and value offers 
pubs have grown in importance as dining and food 
establishments with an estimated 2
1
 increase in covers 
volume in pubs between 2013 and 2014
1 source cga
the growth of consumption at home via offtrade and 
supermarkets increased regulation such as the smoking ban 
and changing social behaviours have meant that overall volumes 
in the ontrade beer market have been in steady decline for 
over 20 years this decline was exacerbated by the deep 
consumer recession which started in 2008 increasing pressure 
on discretionary spend although the removal of the beer duty 
escalator in march 2014 was a positive step to aid recovery 
the drinking out market remains in decline possibly by a further 
16 between 2014 and 2018 source mintel 
pubs have had to adapt to the changing market in order to 
continue to prosper the majority of the ontrade volume decline 
remains in smaller drinkled pubs that have neither the capital 
to invest nor the facilities to evolve their offer to meet changing 
trends all these factors have created an opportunity for the 
larger managed pub companies to develop foodled branded 
offers with a growing digital presence and to take market share
 
net sales like for like yearonyear comparison  spirit  peach total  peach pub

spirit pub company 
vs coffer peach 
business tracker
when compared to this 
industry benchmark it can 
be seen that spirit’s managed 
pubs have outperformed 
the market for 16 consecutive 
quarters the coffer peach 
business tracker is the 
widely acknowledged industry 
barometer and includes 
many of our key competitors
10
8
6
4
2
0
2
fy11q1
16wks
fy11q2
12wks
fy11q3
12wks
fy11q4
12wks
fy12q1
16wks
fy12q2
12wks
fy12q3
12wks
fy12q4
12wks
fy13q1
20wks
fy13q2
8wks
fy13q3
12wks
fy14q1
20wks
fy14q2
8wks
fy14q3
12wks
fy13q4
12wks
fy14q4
12wks 12 spirit pub company plc annual report 2014
our strategy
our established strategy
our circle of success sets out some very basic values  
which are deliberately kept simple so as to maintain focus
business model
own pubs that we  
either manage ourselves  
or lease to entrepreneurs
best for team
we are authentic and engaging 
people we are determined to be the 
best as individuals and as teams
best for guest
we are obsessed with delivering 
the best guest hospitality  
all day every day
best for investor
we are in business to make money 
for our investors we make  
every penny count strategic report governance financial statements
 spirit pub company plc annual report 2014 13
compelling 
brands  
and pubs 
our aim
to create consistently compelling reasons 
for people to visit our pubs
first rate  
talent and  
leadership 
our aim
to recruit develop and retain  
the best people
flawless 
execution for 
every guest 
our aim
to deliver the best guest experience  
for every guest
measurement strategic drivers
strong measurement and  
analysis systems are core  
to our ability to deliver  
our strategy
ambition
to be the number one hospitality company in the uk
measurement monitoring and review
we use a range of financial and nonfinancial kpis to measure 
progress against our strategic objectives and these are set 
out in more detail on pages 4 and 5 
we also assess and analyse our markets in detail to provide 
a practical context for our strategy – see pages 10 and 11 
for more details
in order to realise our ambition and to execute our strategy 
we set ourselves challenging targets and we have made 
considerable progress in the year
target 2014 2013
guest 
90 recommendation
90 loyalty  retention
 848
2
 1
2
team 
90 recommendation 
90 succession
3
74
535
66
483
investor 
progressive eps growth
4
roi  25
eventual estate  1500 outlets
 127
31
5
1227
86
26
1229
1 new measure in the year hence no comparable data for 2013
2  guest loyalty  retention was not tracked throughout the whole of 2014 
and as such has not been reported this is deemed to be an  
important measure for the business and as such will be  
monitored going forward
3 general manager succession 
4 preexceptional
5 excludes sale of the black lion pub
risk assessment
the risks that we currently believe are likely to have 
the greatest impact on the achievement of our 
strategic objectives should they occur fall under 
the following categories
  economic climate and competition
  recruitment and retention of talent
  service standards brands and reputation
  changes in legislation and political risks
  system failure or cyber security breach
see pages 26 to 29 for further detail of our principal  
risks and uncertainties 
at the heart of our business  
are three core strategic drivers 
which together reflect our 
commitment and approach  
the following pages contain further 
detail on these core strategic drivers
page 14
page 16
page 18 page 26
pages 45 established objectives 
continuous evolution of brand propositions
  responsive to consumer trends and market
  customer relationship management crm and growing 
digital presence
  loyalty schemes
capital strategy
  disciplined approach
  strong returns
  focus on innovation
  refresh programme to protect asset quality
  acquire new pubs
14 spirit pub company plc annual report 2014
794
managed pubs
high quality and diverse estate 
covering a wide variety of 
occasions in both the drinking 
and eating out markets
433
leased pubs
our leased estate is one of 
the best estates in the leased 
and tenanted sector attracting 
the highest calibre licensees 
and providing strong profit 
opportunities
the estate is primarily 
unbranded run by small 
multiple operators or 
individuals our focus is on 
leveraging our managed 
experience where appropriate 
to help our licensees grow 
their businesses and to share 
the upside with them
our strategy
compelling brands and pubs
we strive to ensure that every brand and pub is compelling and 
distinctive giving guests equally compelling reasons to visit our pubs 
we believe that this comprises two major components – evolving our 
brands and investing in our assets and infrastructure
five core managed brands
pubs 
taylor walker and john barras are our 
drinkled brands taylor walker is focused 
on tourists and city workers with the 
majority of pubs in central london while 
john barras is an endorsement over a 
range of community pubs with certain 
common features 
 
pub restaurants 
we have three predominantly foodled 
brands – fayre  square family value 
dining chef  brewer country pub 
and dining and flaming grill community 
pubs with a sizzling steak offer 
 
wacky warehouse 
a wellknown soft play brand comprising 
children’s play barns and play areas the 
majority alongside fayre  square pubs 
good night inns 
we have approximately 1000 hotel rooms 
associated with our pubs of which over 
600 carry our own good night inns brand
golden oak inns 
in addition to our five core brands 
we have successfully trialled a new 
concept in 201314 golden oak inns 
a high quality local inns brand with a 
contemporary environment and excellent 
food and service
page 30 strategic report governance financial statements
 spirit pub company plc annual report 2014 15
innovation
we are always looking at ways to evolve our brands and 
respond to changing consumer and market trends in 2014 
we introduced a number of new ideas including the golden oak 
inns trading format and wacky corners play areas within rather 
than adjacent to our pubs and we have continued to evolve 
and improve chef  brewer flaming grill fayre  square and 
taylor walker 
through digital and crm schemes we are deepening our 
understanding of what drives our guests’ behaviour using 
the richness of our loyalty data improving our guest survey 
information and extending our analysis of all feedback streams 
digital channels enable us to communicate more effectively with 
our guests and potential guests across a variety of digital media 
and our digital and traditional marketing combine to provide a 
coherent marketing strategy for each of our brands and offers
digital
our digital marketing strategy is designed to enable guests 
to interact with our brands through a number of online touch 
points guests use our websites to discover and fully plan 
their visit through detailed pub and menu information before 
reserving their table via an integrated online booking service 
paid advertising and search engine optimisation strategies 
are utilised to acquire new guests through mainstream search 
engines supported by gift card and affiliate programmes 
that increase brand exposure – both online and offline – 
and incentivise guest footfall through voucher redemption 
fans and followers are encouraged to engage in twoway 
relationships through our branded facebook and twitter pages
crm
crm supports our vision of increasing guest retention and 
growing lifetime value through a deeper understanding of 
guest behaviour facilitating greater insight and more effective 
communication our single customer view holds all guest 
information in a single database allowing for more efficient 
campaign management and analysis and a number of online 
and inpub opportunities are used to increase the number of 
subscribed guests our brands can talk to through electronic 
crm channels such as email and sms
loyalty
the launch of loyalty schemes has enabled us to increase 
frequency of visit and value by incentivising guests with cash 
rewards before utilising rich transactional data to target users 
with tailored offers that encourage frequent guests to spend 
more and lapsing guests to revisit the simple card swipe 
mechanic is popular with guests who also have the option of 
using a key fob to earn points and spend rewards in 201415 
we will launch a loyalty mobile application to make it easier for 
our guests to earn rewards 
portfolio optimisation 
we are constantly looking to optimise our property portfolio 
through regular estate reviews these enable us to determine 
the appropriate operating format for each pub to ensure that 
we maximise our returns during the year we invested in and 
rebranded 28 pubs completed the transfer of seven pubs 
from the leased estate to the managed estate and completed 
55 refurbishments in the managed estate 
investment
our approach to investment is disciplined eightynine per cent 
of our managed estate is now invested and branded and a 
refresh programme is also underway for already invested pubs 
to maintain returns without fully reinvesting fortytwo per cent 
of the leased estate has been recently invested and we also 
seek to coinvest with our licensees our programme of 
investment continues to deliver returns in excess of our targeted 
hurdle rate of 25 for internal reporting purposes we measure 
returns in two ways against the performance for the 12 months 
prior to investment and also against a projected trend based 
upon recent trading performance
growth
we are looking to grow our estate and leverage our existing 
scale and skills during the year we acquired three new pubs 
for our flaming grill brand and acquired the leasehold interest 
in 19 pubs from the administrators of the orchid group we 
have acquired a further three orchid pubs since the year end 
we have started to build a pipeline of acquisitions with our 
focus being on expanding our flaming grill fayre  square 
and taylor walker brands
15m
transactions
fayre  square loyalty 
programme ‘reward card’ 
is a success – to date 
over 160000 registered 
cardholders and approximately 
15 million transactions
online
deposit system
 extended our online deposit 
system to incorporate the 
flaming grill brand
 7 9 2  000
covers
online booking for 
792000 covers
30
web visitors  
have increased 
by almost 30 
in 2014 to 
approximately 
111 million
£2m
£2m worth of 
sales coming 
through affiliates  
nonspirit 
marketing 
channels established objectives 
hospitality excellence
  the best guest experience – every time
  teams engaged with a shared vision
  incentives to reward great service
  hospitality trainer for every pub
delivering sales growth
  increase repeat visits 
  greater dwell time and spend per head
  more guests recommending to friends and family
16 spirit pub company plc annual report 2014
“i am here to make my guests smile”
“i want to make my guests smile”
“i know how to make my guests smile” 
“i can make my guests smile”
our strategy
flawless execution
flawless execution is all about delivering a consistently great guest 
experience which in turn drives volume and sales again we believe 
that two main objectives are at the core of that proposition
5000
we now have 
over 5000 
employees on 
team spirit 
our internal 
facebook page
‘smile’
in order to help achieve our ambition to be the number 
one hospitality company in the uk we have continued 
to promote a particular way of doing business under the 
banner of ‘making people smile’ this gains an emotional 
commitment from our employees to ensure we are all 
focused on delivering the best guest experience and 
making guests smile every time they visit one of our pubs  strategic report governance financial statements
 spirit pub company plc annual report 2014 17
the best guest 
experience – 
every time
incentives
we know that nothing makes a bigger difference to our business 
than our people we not only have an annual awards ceremony 
in place that allows us to recognise our star performers but also 
a variety of recognition schemes that run throughout the year 
these schemes allow us to recognise those employees who 
have made a real contribution to our business
there is also a specific incentive scheme for pub teams that 
achieve a high score on our guest experience mystery visit 
gemv programme we also run a mystery visit scheme  
for our leased estate and our licensees welcome the 
feedback received 
team spirit
we now have over 5000 employees on team spirit  
our internal facebook page this forum is used for recognition 
sharing information and to share best practice via examples 
of pub teams ‘making our guests smile’ 
hospitality trainer for every pub
to support our focus on hospitality excellence and flawless 
execution we have a hospitality trainer responsible for every 
managed and leased pub to ensure that we provide the best 
quality training to our teams building the capability to positively 
impact the guest experience and measured through guest 
surveys and mystery visits
productivity mindset
in the year we focused on reinforcing a mindset of productivity 
in the way that everyone works – to use fewer resources to 
achieve the same or a better result to use the same resources 
to achieve a better result and to stimulate new approaches to 
how we can improve in all areas of the business early examples 
of projects connected with this initiative include an in depth 
consideration of the processes around food production 
promotional strategy supply chain and speed of service 
systems and infrastructure
we continuously focus on using technology information and 
processes to make it easier for our pub teams to deliver flawless 
execution and where possible to improve productivity our 
epos and back office system the rollout of which completed 
in december 2012 continues to help drive efficiency and 
support the initiatives introduced to improve flawless execution established objectives 
recruiting the best people
  improved recruitment and selection methods
  award winning apprenticeships
training and development
  the power of great leadership
  weekly  monthly bite size training
focus on retention
  robust succession plans 
  stability delivering results
  reward and recognition
18 spirit pub company plc annual report 2014
our strategy
first rate talent and leadership
leadership development
building on the success of previous programmes we continue 
to offer a variety of development options designed to develop 
the skill and talent of leaders across the business to improve 
business performance and ultimately enabling us to achieve 
our ambition 
the leadership cadre our senior management and executive 
management team successors are also taking on more 
accountability for the leadership of the business in further 
support we created the ‘spirit 100’ the top 100 leaders in 
our business across the company and which has strengthened 
relationships between the field and support centre 
talent pipeline and internal succession
an award winning career pathway continuous improvement in 
the quality of our training and a focus on succession planning 
and better management information have all contributed to 
there being more internal promotions than in previous years 
internal promotion reinforces hospitality as a career and 
encourages those starting out in their career to progress 
best employer 
our employees voted us to be one of the best 
businesses to work for in the uk as we ranked 
16th in the sunday times top 25 best big 
companies to work for in 2014 this is based on 
criteria including fair deal wellbeing and personal 
growth this award endorses our commitment  
to recruit develop and retain the highest calibre team  
and to be an employer of choice
during the year spirit won the ‘best hr campaign’ and a 
coveted gold award for ‘best overall campaign’ at the institute 
of internal communications ioic awards for its learning and 
development programme
diversity
spirit is committed to providing a working environment and 
conditions where all employees are treated equally and on the 
basis of their merits abilities and potential without discrimination 
we are confident that the policies we have in place ensure 
that in practice we adopt this approach to equality whereby 
all employees are treated equally in respect of recruitment 
promotion career development training and reward 
as a company spirit values diversity in its workforce for the 
strength and vitality that it brings to the business including 
gender ethnicity cultural backgrounds and skills and 
knowledge the board is supportive of such matters and is 
satisfied that the group as a whole in addition to the board 
and executive management team reflect this principle within 
the group women comprise 53 of total employees and 
within management women comprise 29 twenty per cent 
of the members of the executive management team who report 
to the chief executive officer are women and women also 
comprise 14 at board level it is equally important to the 
board that it also reflects an appropriately diverse balance 
of skills and experience 
as an employer of 17136
1
 people our team are central to us being  
able to achieve our goal of excellence in hospitality we are dedicated 
to finding the best people and helping them to grow to meet their 
potential and we believe that translates into three key objectives
1 as at 23 august 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 19
hospitality as a career
spirit plays a major role in promoting hospitality as a career 
we have been heavily involved in the government consultation 
on traineeships and the further development of apprenticeships 
in hospitality we continue to offer work experience  
opportunities and sector based work academies for the long 
term unemployed we have also launched ‘apprentichef’ 
a structured programme with development and pay progression 
to take school leavers through to kitchen manager roles
spirit offers all employees access to a career pathway from 
team players through to senior management clearly showing 
the development and progression opportunities available 
our development opportunities include a range of qualifications 
from level 2 apprenticeships to level 7 master’s programmes 
all our guest facing employees undertake a series of engaging 
and interactive elearning sessions as part of our induction 
programme covering topics such as food hygiene health 
and fire safety and challenge 21
graduates and other qualifications 
our graduate scheme is designed to attract talented individuals 
who are looking to develop a career in hospitality spirit offers 
a number of graduate places each year and retention and 
success rates are high with over 80 retention at the end 
the first year and with many graduates promoted to general 
manager within 18 months of joining spirit 
at spirit we also offer an alternative to university and our 
fullyfunded vocational qualifications range from entry level 
apprentices for our team players and team leaders through to 
a degree in multisite retail leadership three of our employees 
graduated with a company sponsored master’s degree from 
leeds metropolitan university in june 2014 
apprenticeships
our apprenticeship programme allows our pub team members 
to gain level 2 qualifications in food and beverage food 
processing customer service or team leadership depending 
on job role and career aspirations we also have a highly 
acclaimed level 3 programme which has provided a springboard 
for many of our deputy general managers and kitchen 
managers to progress to become general managers during 
the year spirit was recognised as a ‘top 100 apprenticeship 
employer’ at the national apprentice awards and won the 
hospitality guild’s ‘partnership of the year’ award 
we currently have over 1500 apprentices either working 
towards or already graduated from level 2 and level 3 
qualifications the apprenticeship programme has retention 
rates of over 75 and over 40 of those completing level 3 
have been promoted within spirit our timely completion ratio 
continues to be significantly higher than the industry average 
and over 60 of our pubs now have at least one apprentice 
in learning 
pensions
since the may 2013 implementation date the vast majority of 
employees who are eligible to be enrolled into pension auto
enrolment schemes have decided to remain in the schemes 
and receive the company’s matching pension contribution
share incentive plan sip
employees are offered the opportunity to share in the group’s 
success by owning shares in the company via the group’s 
hmrc approved share incentive plan the plan is open to 
all employees of the group including the executive directors 
and currently 245 employees participate employees have the 
opportunity to purchase up to £1800 of shares per annum out 
of pretax salary partnership shares and for every partnership 
share bought by the employee of the company we give the 
employee one share free of charge matching shares the 
shares are held in trust using an employee benefit trust ebt 
for a period of three years at the end of which the matching 
shares will normally be released provided that the partnership 
shares have been retained and that the employee is still 
employed by the group at this time during this time the shares 
are beneficially owned by employees attract voting rights and 
are eligible for dividends the voting rights in respect of these 
shares are exercised by the trustees of the ebt on behalf of 
the employees if after three years the employee elects to keep 
the matching shares in the ebt for a further two years ie for 
a total period of five years the matching shares are released 
to the employee free of tax and national insurance
 1 500
apprentices
we currently have over 
1500 apprentices either 
working towards or already 
graduated from level 2 
and level 3 qualifications 01 london  south east 34
02 north 28
03 midlands 28
04 south west  wales 6
05 scotland 3
01
02
04
05
03
20 spirit pub company plc annual report 2014
managed division overview
our managed estate consists of 794 pubs the majority of which are 
high quality we benefit from a significant exposure to the economically 
stronger london and south east region with 34 of our estate within 
that area
our brands and formats cover a wide variety of occasions  
in the mass market and have evolved to reflect the increasing 
polarisation of consumer tastes towards both value and 
premium this has continued to be a trend despite early signs 
of economic recovery and our offers are currently tailored to 
appropriately respond to this demand
managed estate – geographical distribution managed brands
managed brands 
number 
of pubs
growth 
potential
chef  brewer 138 175200
fayre  square 158 225250
flaming grill 109 250275
taylor walker  metropolitan 123 150175
golden oak inns 7 150200
local pubs 230
not trading 29
total managed 794
wacky warehouse
1
95 225250
1 includes 15 wacky corners and two wacky tots spots
we consider that our flaming grill fayre  square wacky 
warehouse taylor walker chef  brewer and golden oak inns 
brands have further growth potential with our locals estate 
providing a source of pubs for conversion into our flaming grill 
and golden oak inns brands see above for detail see pages 
30 to 36 for further detail of our managed brands
  continued strategy of a minimum number of brands with 
critical mass to drive simplicity focus and productivity
  each brand is well positioned in the quadrants to maximise 
the potential guest base where appropriate we will move 
some of our low price wet led community locals towards 
food and quality offers as part of developing this 
proposition we intend to further develop golden oak inns 
providing a more aspirational offer for their core guests 
  continued development of each brand proposition 
to increase guest relevance and drive frequency of visits
  value for money equation used in each segment to identify 
areas of differentiation and competitive advantage and 
support guest recruitment strategies
quality focus
price focus
drink focus   food focus 01 london  south east 24
02 north 39
03 midlands 21
04 south west  wales 5
05 scotland 9
01
02
04
05
03
strategic report governance financial statements
 spirit pub company plc annual report 2014 21
leased division overview
spirit leased is one of the highest quality estates in the sector with 
433 sites across the uk our leased estate includes a wide variety 
of pubs from premium food outlets through to great sportsled locals
most of our pubs are operated by individual licensees however 
a quarter of our pubs are on long term leases with small 
multiple operators many of whom are highly respected in 
the sector our experienced licensees bring their own quality 
operations teams and benefit from the added value that 
we as a major pub company can provide primarily through 
inpub training investment an extensive product range and 
a managed infrastructure providing retail knowhow and scale
after a number of years in decline the business has stabilised 
and has now started to grow this has been achieved by 
continuing the focus on a combination of investment innovation 
and robust performance management around the retail offer 
and the calibre of our licensees
seventyfour per cent of the leased estate is now believed 
to have the right licensee with the right concept and executing 
the offer well
we aim to maximise the value of each of our leased pubs 
by continuing to exert greater influence where appropriate 
over the retail offer and leveraging our managed expertise 
and infrastructure we want to share the upside with high 
calibre retail focused entrepreneurial licensees and assist 
them to position each business for sustainable growth
for more information visit 
wwwspiritleasedpubscom 
wwwfacebookcomspiritleased 
wwwtwittercomspiritleased
leased estate – geographical distribution
22
103
433
leased sites 
97
171
40 22 spirit pub company plc annual report 2014
corporate responsibility
as part of our business strategy we recognise that the way we do 
business has an impact on the communities in which we operate 
on the environment and on wider society
winner
winners – european supply 
chain excellence awards 
2013 – consumer products 
category
ultra bio fuel 
in partnership with convert2green and kuehnenagel 
spirit have trialled ultra bio fuel within the existing food 
distribution fleet
this bio fuel is derived from our own waste cooking oil and 
tests to date indicate an 85 carbon reduction saving per 
annum per vehicle compared with traditional mineral diesel 
through our food distribution fleet renewal programme we 
will gradually remove the use of red diesel and as part of 
that renewal programme we are investing in vehicle camera 
technology to create driver efficiencies and improve health 
and safety performance within our distribution network
winner
winners – the sustainability 
leaders awards 2013 – 
internal operational 
engagement
we are proud to have received a number of awards during the 
year recognising our efforts as responsible corporate citizens 
such recognition is welcome but regardless of whether we win 
awards or not we believe that our approach to corporate social 
responsibility is a critical part of executing our strategy
supply chain
in a macroeconomic environment of rising raw material labour 
and environmental compliance costs achieving efficiencies 
within the supply chain is more important than ever
continued progress towards a consolidated  
supply chain solution
our supply chain strategy is to leverage our scale and 
infrastructure where appropriate whilst removing complexity 
in the end to end supply chain to provide a more user friendly 
and efficient ordering platform for the general managers at 
our managed pubs and the licensees of our leased pubs 
who utilise our supply chain
through consolidation of the supply chain we have achieved
  a reduction of approximately 29000 deliveries to our pubs 
per annum saving around 100 tonnes of carbon emissions
  a saving of an average 30 minutes of administration time 
per day per managed pub
waste management 
spirit was recognised again during the year for its sector 
leading approach to end to end waste management by 
winning the sustainability leaders award 2013 for internal 
operational engagement 
as a result of the continued success of our recycling scheme 
and key partnerships with our waste service providers we now 
divert 82 of our waste from landfill it is our objective to divert 
100 of waste from landfill by 2017  strategic report governance financial statements
 spirit pub company plc annual report 2014 23
as part of our commitment we have recycled
  1 million litres of used cooking oil
  2100 tonnes of food waste via anaerobic digestion 
  1800 tonnes of cardboard 
  43 tonnes of tin
  48 tonnes of plastic
  9800 tonnes of glass 
wrap waste and resources action programme
we have identified wrap as a key partner in helping us 
correctly identify the factors which have the greatest impact 
on food and packaging waste to help us reduce waste in the 
supply chain and improve compliance in recycling at pub level 
just two examples are reviewing ingredients in the meals 
we serve in an effort to reduce food waste and improved 
communication and training to encourage changes in behaviour 
environment and energy consumption
during the year spirit installed front of house energy efficient led 
lighting in its entire managed estate improving the environment 
for guests and our pub employees whilst delivering an average 
reduction in energy consumption of 6 we have committed 
to a further rollout of led lighting with installations in our 
78 wacky warehouses due to be completed by february 2015
on a wider scale spirit has negotiated a new dual fuel energy 
contract with inenco in partnership with total gas and 
power from october 2014 total gas and power will supply 
spirit with 100 renewable electricity with power generated 
from wind biomass and hydro sources as part of that 
agreement automatic meter readers amrs will be installed or 
renewed across the estate by the close of 2014 the enhanced 
measurement of timely and accurate consumption data that 
we expect from our new amrs will be used to create a robust 
energy reporting suite to provide a better platform for behavioural 
change on energy consumption within our pubs and to improve 
the accuracy of forecasting of energy costs
as part of our ongoing commitment to reduce energy  
usage there are a number of trials underway to automate the 
switching on and off of electrical appliances and gas central 
heating systems together with trials of more efficient cellar 
cooling technology 
during the year we commenced our first energy saving 
opportunities scheme esos audit this is a government 
scheme which requires large enterprises to carry out a 
mandatory programme of energy audits to be undertaken 
by december 2015 and we are well placed to deliver our 
requirements by this date 
responsible retailing 
drinks
we work with all of our suppliers to ensure we play an active role 
in the department of health’s public health responsibility deal 
pledge to lower the units of alcohol consumed in the uk by 1 
billion units each year examples of this include the introduction 
of 25ml measures of spirits in all of our pubs and the ranging 
of lower strength and 0 alcohol whilst our soft drinks range 
continues to grow we include a soft drink as an alternative to 
an alcoholic drink as part of our meal deals across all brands 
to enable our team members to deliver a responsible service 
across our estate we operate a challenge 21 and where 
required challenge 25 scheme of age verification we also use 
a mystery guest age verification scheme to regularly test our 
procedures we remain committed to employing initiatives 
in drinks brands and drinks retailing to reinforce the message 
of responsible consumption for example during the year we 
have moved away from using priceled promotions and now 
focus promotional activity on range choice and links with food 
in chef  brewer we pair all of our main course monthly 
specials with the best matching wine instead of a focus on 
discount promotions in terms of our responsible sourcing 
programme we now have local ales being sold in over 
500 managed pubs supporting many small breweries
food
we aim to deliver a sector leading food offer to our guests from 
a supply base of fully accredited and quality assured factories 
our suppliers commit to delivering a consistently high standard 
of products into our pubs
products supplied to us must satisfy all current food 
manufacturing legislation and environmental health 
requirements our products are also fully compliant to 
an agreed specification and agreed sensory evaluation
all of our menu products are free from added hydrogenated 
vegetable oils monosodium glutamate and food containing 
or consisting of genetically modified organisms 
we appreciate that attitudes towards food are changing and 
guests want to know more about the food they eat we have 
full nutritional content detailed on our brand websites thus 
helping our guests to make an informed choice 
full allergen information is available on our brand websites 
and in house for all 14 declarable allergens in line with the 
new eu food information regulation 11692011 fir
we are committed to working closely with our suppliers 
to ensure that our bespoke products continue to meet the 
department of health’s 2012 public health responsibility 
deal guidelines to reduce salt consumption in the uk 24 spirit pub company plc annual report 2014
corporate responsibility
continued
sourcing 
we acknowledge our responsibility to minimise our impact 
on the environment by only selecting suppliers with responsible 
and sustainable sourcing policies in place all of our food 
suppliers are accredited to british retail consortium audit 
standards or equivalent 
we support animal welfare standards and the sustainable and 
ethical sourcing of seafood our taylor walker and chef  brewer 
brands go further than this and use sustainably sourced cod 
caught using wider nets that allow younger smaller codling to 
slip through and back into the ocean spirit is also supporting 
british dairy farming through our partnerships with beechdean 
ice cream and tomlinson’s dairy
all of our costa coffee beans and ‘own brand’ beans are 100 
rainforest alliance certified and our eggs are sourced from 
british farms
community charity and not for profit activity
we remain committed to raising money for charity and we 
encourage our teams in our pubs and at our support centre 
to help us in fundraising for good causes
children in need 
in june 2014 our wacky warehouse brand hosted the 
world’s largest party with 78 wacky warehouses taking part 
this was promoted through social media and over 5000 
children and adults joined in the fun the supersized free 
birthday party featured all the ingredients of a wacky party 
and wacky mascots were on hand collecting donations for 
children in need spirit raised £21000 for children in need 
in 201314
great ormond street hospital 
great ormond street remains the chosen charity for our 
taylor walker brand and we plan to raise £250000 for 
the hospital to build a new medical team resource centre 
meeting room and relaxation area so far we have raised 
£130000 towards the target of which £69000 was raised 
this year funds have been raised from barrel pulls in london 
and sponsored cycles across scotland as well as selling 
santa hats at christmas and pub ghost story booklets 
during halloween
working with catering schools 
and colleges 
over the past 18 months we have successfully partnered 
with milton keynes college running masterclasses for their 
students on key hospitality topics and giving them access 
to our online induction material on topics such as food safety 
and health and safety training we also provide work 
placements so the students get essential real world 
experience to support their academic studies
partnering with prostate cancer uk 
we partnered with prostate cancer uk to support their 
campaign ‘men united v prostate cancer’ during the 
summer months when football matches were being shown 
in our pubs in total spirit has raised over £145000 in the 
last four years through fundraising initiatives for prostate 
cancer uk strategic report governance financial statements
 spirit pub company plc annual report 2014 25
we work in partnership with ‘believe in young people’ a charity 
committed to helping young people find their right career path 
we provide nationwide placements in the hospitality sector 
under our ‘teen spirit’ work experience programme which was 
awarded the gold work experience quality standard in the 
year for the high quality materials we use to support students 
through their placements which are tailored according to 
individuals’ needs 
we have also designed a new ‘apprentichef’ programme aimed 
specifically at young people to provide a clear development 
programme over a 30 month period and a chance to grow 
a career in spirit 
electronic communication
as part of our ongoing efforts to develop sustainable business 
processes we have switched to paperless wage slips and 
employee discount vouchers spirit employees now receive their 
wage slips electronically providing a reduction of approximately 
215000 sheets of a4 paper per annum also during the year 
our human resources department has introduced a paperless 
digital contracts platform switching to electronic contracts 
for salaried employees has saved a minimum of 80000 sheets 
of paper per annum 
human rights
we respect human rights we accept our responsibility to avoid 
causing or contributing to adverse human rights impacts that 
are directly linked to our operations and we seek to prevent 
or mitigate any such impacts which may be caused by our 
business relationships that is not just a matter of legal 
compliance for us but is more fundamentally connected with 
the way we want to do business and that is why we do not have 
a separate human rights policy our approach to human rights 
is to incorporate our values into the way we do business and 
the way we interact with the communities in which we operate
greenhouse gas emissions
this section provides the emissions data and supporting 
information required by the companies act 2006 strategic 
report and directors’ report regulations 2013 part 7 
disclosures concerning greenhouse gas emissions
footprint boundary
an operational control approach has been used to define the 
greenhouse gas emissions boundary as defined in defra’s 
latest environmental reporting guidelines ‘your organisation 
has operational control over an operation if it or one of its 
subsidiaries has the full authority to introduce and implement 
its operating policies at the operation’ 
for spirit this captures emissions associated with the 
operation of the managed estate offices and all company 
owned and leased vehicles in the uk there are no overseas 
sites or activities 
emissions sources
all material scope one and two emissions are included  
in the emissions calculation
  fuel combustion stationary natural gas coal biomass logs 
mobile vehicle fuel 
  purchased electricity
  fugitive emissions refrigeration fgases
there are no known process emissions and no purchased 
heat or steam 
exclusions
spirit sites that are leased to private landlords do not 
fall within the operational control of the organisation 
and therefore emissions associated with the leased 
estate have been excluded
methodology and emissions factors
emissions have been calculated using the methodology set 
out in the environmental reporting guidelines ref pb 13944 
published by defra in june 2013 emissions factors are taken 
from decc  defra’s june 2014 update 
greenhouse gas reporting
the greenhouse gas emissions for spirit for 201314 
are detailed below
source
tonnes co
2
e 
201314 
fuel combustion stationary  
gas coal logs 29163 262
fuel combustion mobile  
owned transport 1023 09
facility operation fgases 684 06
purchased electricity 80393 723
total 111263 100
note as this is the first reporting year no historical comparison 
is available
emissions intensity
for purposes of baselining and ongoing comparison we are 
required to express the greenhouse gas emissions data using 
a ‘carbon intensity’ metric we are using turnover to calculate 
this metric
spirit’s turnover in 201314 was £801m giving an intensity 
of 139 tonnes co
2
e per £1m turnover  26 spirit pub company plc annual report 2014
principal risks and uncertainties
the board has ultimate responsibility for spirit’s risk management 
framework and the aim of that framework is that appropriate people 
in the business should identify evaluate manage and prioritise 
the material risks and uncertainties to which the group is exposed 
the outcomes are monitored by the audit  risk committee 
the committee and board according to a structured programme 
of consideration and review
for the financial year ended 23 august 2014 the committee 
reviewed the formal risk management framework adopted by 
spirit and this was approved by the board there has been 
considerable progress in developing and embedding an 
enterprise risk management framework over the three years 
since inception of the business and the focus has shifted 
as appropriate between establishing the framework and 
embedding the right approach to risk using relevant elements 
of that framework 
overview of framework
the risk management framework adopted by spirit has 
continued to evolve from the previous year it uses risk appetite 
and risk tolerance statements approved by the board as the 
foundation of a structure which relies on regular ‘risk champions’ 
meetings to populate a risk register which captures and 
scores the principal risks to the business the risk champions 
represent particular functions in the business but also perform 
a valuable role in calibrating risk across the business 
1
assess risk  
appetite
identify  
risks
analyse   
evaluate  
risks
decide on 
mitigating 
actions and 
ownership
monitor  
report and 
track
2
3
4
5
board
management
audit  
 risk 
committee
risk  
assurance
executive  
management 
team strategic report governance financial statements
 spirit pub company plc annual report 2014 27
the risk register documents and scores risks first on a gross 
basis based on likelihood and impact of occurrence secondly 
on a net basis taking account of available mitigation and finally 
on a target basis to set a realistic goal for the future in doing so 
a risk appetite and action plan is also assessed on an individual 
risk basis 
the risk register is regularly reviewed by the executive 
management team responsible for each function and then 
collectively at executive management team meetings to 
provide an opportunity for business overview and calibration 
the committee reviews the entire risk register at least twice 
a year and the board reviews the highest ranking risks and 
a key risk indicator dashboard on a regular basis
focus in the coming year will be on further embedding 
and refining the risk framework 
in addition to the risk management framework referred to 
above in which day to day evaluation and management of risk 
is carried out by management risk assurance is also provided 
from a number of other sources including but not limited to 
internal audit operational audit and where appropriate 
specialist third party internal audit resource together they 
provide assurance to the board on the effectiveness of key 
controls and the management of risk using a ‘three lines of 
defence’ approach which also involves the external auditor 
as appropriate 
methodology of risk assessment
spirit is exposed to a variety of financial operational  
economic and regulatory risks and uncertainties which it  
risk impact mitigating actions 
market and economy
economic climate and competition
there is an inherent risk that economic factors 
such as rising interest rates declining real 
wages higher unemployment tax increases 
lack of consumer credit or falling house prices 
could adversely affect the level of consumer 
confidence which could result in a negative 
effect on the level of spending by the customers 
of spirit’s pubs
with competitor activity increasing there is also 
a risk that we lose market share
team
guest
investor
  there are a series of structured review processes from the strategic plan 
to quarterly brand strategy reviews periodic executive management team 
reviews periodic sector development meetings and weekly performance 
updates these seek to assess amongst other things the impact of the 
economic climate on our strategic objectives these meetings are also 
tasked with producing contingency plans as the economic climate changes 
such as improving the flexibility of our cost structure
  diverse brand proposition that can adapt to social changes
  menus pricing and promotional offers are continually monitored and 
reviewed to adapt to the needs of guests
  interest rate swaps continue to be employed to generate the desired interest 
rate profile for the current year derivative financial instruments were 
employed such that 98 of all loans august 2013 100 were either at 
fixed rate or were converted to fixed rate as a result of swap arrangements
cost increases
an increase in costs including food drink 
labour and utility costs is an ongoing risk to the 
business this could be due to a variety of factors 
including amongst others the unavailability of 
products the economic climate inflationary price 
increases and  or increases in taxes and duties
guest
investor
  supplier contracts have been negotiated so far as practicable to protect 
the group against significant increases in food drink and utility costs
  the group has the potential to source products from a number of alternative 
suppliers
  electricity and gas have been partially forward purchased for the next 
financial year and there is a dedicated focus on monitoring and reducing 
utility usage
  careful cost control processes ensure that all costs are budgeted subject 
to appropriate authorisation and monitored as appropriate
  menus and retail prices are continually monitored and updated to optimise 
the offer
groups under the following headings ‘market and economy’ 
‘financial’ ‘operations people and infrastructure’ ‘regulatory’ 
and ‘reputational’
our principal risks and uncertainties as they relate 
to achievement of our strategy
our principal risks and how they are managed are detailed on 
the following pages however this is not an exhaustive list of all 
of the risks to which the business is exposed – in transferring 
risks from the register to this report some risks have been 
consolidated for consistency of presentation and are not 
presented in an order of priority or seriousness they are 
however presented to draw particular attention to their impact 
on each of our stakeholders team guest and investor and 
therefore achievement of our strategic objectives
our approach to risk is pragmatic we are concerned about 
risks which score highly at gross level but not all of those risks 
are susceptible to meaningful mitigation in terms of achieving 
our strategy we are mindful of risks we cannot influence but 
focused on those where by our actions we can bring about 
significant mitigation a meaningful gross to net swing or get 
closest to achieving our target smallest net to target gap 
that said we are not unduly focused on scoring it is a guide 
to keep the relativity of risks in perspective but no more
the risks on our risk register which we currently believe are 
likely to have the greatest impact on achievement of our 
strategic objectives should they occur and which therefore 
form the main trends and factors likely to affect the future 
development performance and position of our business 
over the short term have been highlighted in red
 strategic risks 28 spirit pub company plc annual report 2014
principal risks and uncertainties
continued
risk impact mitigating actions 
operations people and infrastructure
system failure or cyber security breach
there is a risk that business operations could 
be adversely impacted by the loss or partial loss 
of a critical system or sensitive information due 
to a system failure or cyber security breach
team
guest
investor
  networks and systems are protected by antivirus software firewalls and 
network segmentation that are regularly updated
  the introduction of more up to date software provides additional inbuilt security
  regular internal and external penetration testing is performed by accredited 
providers and if shortcomings are identified they are addressed as appropriate
  incident management business continuity management and it disaster 
recovery plans are in place for critical business processes to mitigate the 
effects of the business being unable to operate in the event of a major 
incident – these plans have been audited and further improved in the year
  an information security steering group was established during the year 
to provide guidance and impetus to improve security of information assets
recruitment and retention of talent
failure to recruit train and successfully retain 
key employees and licensees and to carry 
out appropriate succession planning could 
impact the ability to deliver the company’s 
strategic plan
team
investor
  a well developed coherent programme of recruitment induction training 
and coaching is provided for group employees managed employees and 
new licensees within the leased estate
  succession planning at all levels is being improved to ensure high calibre 
individuals are retained and talent development is accelerated
  comprehensive leadership development programmes and various training 
programmes at all levels of the business have been ongoing throughout 
the year
  the group carries out biannual employee engagement surveys and regular 
listening groups to obtain direct feedback from employees
  there is a formal remuneration strategy to ensure individuals and teams 
are paid fairly and competitively
  the group continues to monitor the financial health of licensees
leased operating model
failure to innovate the leased operating model 
could result in risk to future ebitda and the 
group falling behind its competitors within the 
leased pub market 
the announcement earlier this year that our 
leased pubs will be regulated under the new 
statutory code and government adjudicator 
could have adverse implications on the 
profitability of the leased division
investor  there is an appropriate strategic plan in relation to leased innovation that 
is monitored and updated regularly
  focus has been on creating opportunities for each pub business to grow 
providing relevant pricing and product ranges to help keep licensees 
competitive and facilitate a recruitment pipeline of quality licensees
  we will continue to engage actively with the government in relation to the 
new statutory code and government adjudicator however as things stand 
we do not believe it will significantly affect our operations and will only serve 
to formalise the ways of working that we currently have in place
supply chain
spirit places reliance on external suppliers for 
the supply of food drink and other products 
and other critical business processes 
poor performance and  or poor quality service 
delivery could impact operations and lead to 
financial loss
guest 
investor
  active management of key suppliers including periodic review of service 
levels compared to the service level agreements in place with those suppliers
  the disaster recovery and business continuity plans of material suppliers 
are reviewed internally on a regular basis
  product quality is closely monitored and tested and the group has access 
to alternative products or suppliers if required
financial 
liquidity and going concern
spirit’s borrowings are subject to restrictions 
on the release of excess cash and a variety of 
financial covenants failure to comply with the 
terms of the loan agreements could restrict the 
ability of the group to fund the business strategy 
particularly around dividends and investments 
by restricting the uses to which cash could be put
cash flow volatility driven by the seasonality 
of cash flows could also result in a going 
concern risk
investor  cash flow forecasts are produced to assist management in identifying 
liquidity requirements and are stress tested for possible scenarios 
these include assessments of the ability to meet the restricted payment 
conditions in the debt structure in order that cash can be released to the 
group outside that structure
  covenants are closely monitored and stress tested to ensure the group 
is able to generate sufficient returns to service debt and meet covenant 
requirements
  during the year the group reprofiled its a1 and a3 secured loan notes 
to provide more short and medium term liquidity and to ensure more 
financial flexibility
  there are a number of other options available to the group to help meet debt 
service costs if required for example tighter control of capital expenditure 
within the securitised estate
 strategic risks strategic report governance financial statements
 spirit pub company plc annual report 2014 29
risk impact mitigating actions 
underperforming investments
there is a risk that investment sites do not 
perform due to poor site selection and poor 
brand development and execution which  
could result in insufficient return on investment
investor  robust analysis is performed to provide effective and focused 
investment decisions
  the return on investment roi of invested sites is tracked on a periodic basis 
compared to both budget and a control group
  periodic meetings are held to discuss strategy in relation to investment 
performance and growth
pensions
spirit has two defined benefit pension schemes 
which must be funded to meet required benefit 
payments the value and funding of the schemes 
are subject to the risks of changes in life 
expectancy actual and expected price inflation 
and changes in bond yields these could result 
in an increase in the pension fund deficit leading 
to unexpected increases in funding requirements 
investor  the defined benefit pension schemes are closed to new members and future 
accrual defined contribution schemes are operated for the company’s 
employees instead
  the company continues to examine and implement strategies which 
will further mitigate the risks of an increased deficit or reduced surplus – 
the medium to long term risk reduction strategy is currently being reviewed
  a close relationship is maintained with the trustees of the pension schemes
regulatory
food food hygiene health and safety
there is a risk that a major food hygiene or health 
and safety incident could lead to serious illness 
injury or loss of life due to poor standards of 
safety compliance and necessary due diligence 
this could result in fines prosecution negative 
publicity reputational damage and  or negative 
business performance
team
guest
investor
  health and safety policies are formally documented regularly reviewed 
and briefed to the support centre and field based teams and our managed 
pub teams
  independent inspectors are engaged to carry out professional safety audits 
on a regular basis
  health and safety is reviewed at the periodic operations risk meeting which 
considers all aspects of health and safety across the managed estate
  preplanned maintenance and repairs are performed to ensure property 
standards are adequate
  spirit has a specification of all products which all suppliers must adhere to 
and these are regularly checked through internal audits
  all new products are analysed chemically regarding their nutritional make up to 
ensure product quality existing products are also tested on a rotational basis
  safety measures are in place to ensure that product integrity is maintained 
and that all food and drink products are fully traceable
changes in legislation 
and political risks
spirit is subject to many different areas of 
regulation particularly due to the high level of 
control over the sale of alcohol and can be 
subject to the consequences of delay and failure 
to obtain required licences permits and 
approvals increasing public focus in areas such 
as binge drinking underage drinking and health 
impacts over recent years means that the 
government may introduce further regulation
guest
investor
  the group works closely with trade bodies to address the key issues 
facing the pub sector
  the group ensures that training provided covers all aspects of licensing 
requirements and has appropriate due diligence measures in place to 
confirm that all pubs meet all licensing legislation
  with regard to the late night levy and early morning alcohol restriction orders 
in areas where spirit pubs may be affected an appropriate response is made 
as part of consultations and in the event of implementation remedial actions 
are taken
reputational
service standards brands 
and reputation
an issue may occur which could materially 
impact or damage the reputation of one of the 
managed pub brands this could affect the 
ability of the brand to attract future guests or 
negatively impact the ability of that brand to 
generate income increased use of digital and 
social media may exacerbate or accelerate the 
consequences of any such issue
investor  guests are considered at the heart of the business and continued focus on 
the guest experience has resulted in improved feedback scores throughout 
the year
  a coherent programme of training for all team members including the 
‘making people smile’ philosophy ensures teams are motivated to create 
a great guest experience
  a third party supplier carries out ‘mystery guest’ audits and all guests are 
invited to complete satisfaction surveys so standards can be monitored and 
any specific concerns can be addressed
  independent inspectors and an independent operational audit team provide 
assurance on internal controls within the managed estate
  active monitoring and management of social media is performed 30 spirit pub company plc annual report 2014
 
our brands
taylor walker
 ‘a traditional metropolitan 
pub that delivers the great 
british pub experience to 
those that visit live work 
and play in the city’
taylor walker encapsulates the best of british 
hospitality with landmark pubs serving cask ale 
premium world lager and classic british dishes 
over 70 of the estate is in central london 
with the remainder in other uk cities including 
edinburgh york newcastle and birmingham
our core guests are tourists and city workers and 
we have continued to enhance the offer based on 
the experience that these key groups are seeking
continuing to see the importance of cask ale to  
our guests we sold over 840 different ales from 
local breweries during the year
for more information visit 
wwwtaylorwalkercouk
wwwfacebookcomtaylorwalkerpubs 
wwwtwittercomtaylorwalkerpub
highlights
  we converted four pubs 
to taylor walker and 
completed 12 major 
refurbishments and 24 
minor refurbishments this 
year as part of our ongoing 
plans to grow the number 
of taylor walker pubs and 
refresh our existing estate
  we have extended the craft 
ale range across the estate 
to allow regular rotation of 
craft ales
  taylor walker ale 
introduced into 20 prime 
london sites to help 
enhance the taylor 
walker brand
  launched the ‘taylor 
walker history  ale trail’ 
mobile application that 
allows guests to follow 
a series of trails between 
some of our iconic pubs
future plans
  extend taylor walker ale 
across the managed estate
  continue to invest to 
increase capacity and 
maximise the sales 
opportunity
  develop both drink and 
food ranges to improve 
the tourist and locals’ 
guest experience
  introduce a web based 
function room referral site 
to help maximise corporate 
and tour group bookings
6
5
8
103
1
123
sites strategic report governance financial statements
 spirit pub company plc annual report 2014 31
 
flaming grill
 ‘flaming great steaks  
in a flaming great pub’
flaming grill pubs offer a friendly welcome and are 
a great place to meet up with friends and family 
catch up over a drink watch some sporting action 
and enjoy quality flame grilled food in a vibrant 
atmosphere flaming grill’s fantastic product offer 
and cheeky and irreverent tone are ensuring the 
brand continues to go from strength to strength 
the popularity of the flaming grill challenge dishes 
has engaged the guest base and subsequently 
led to the creation of dedicated website pages 
and facebook pages the brand’s social media 
channels have a strong following engaging with 
around 70000 fans and followers every day 
flaming grill is spirit’s youngest brand with the 
first pubs converted in 2009 since that point the 
brand has grown rapidly and now has over 100 
pubs sourced from both community locals and 
foodled pubs 
for more information visit 
wwwflaminggrillpubscom 
wwwfacebookcomflaminggrillpubs 
wwwtwittercomflaminggrillpub
highlights
  double digit volume and 
sales growth
  acquired three new flaming 
grill pubs and exceeded 
100th flaming grill opening 
milestone  
  continued innovation on 
the food offer with festivals 
and challenges
  successfully evolved 
the menu to incorporate 
‘rhythm of the week’ offers 
and ‘stretch’ at both the 
entry and premium ends 
of the menu pricing
  launched ‘blaze’ our 
outdoor food van visiting 
festivals and events to 
spread the flaming grill 
message to our target 
audience
future plans
  introduce ‘stadium’ bars 
a dedicated sports  games 
zone for diehard sports fans
  continue focus on 
delivering great value 
through both food and 
drink offers
  introduce loyalty schemes 
  brand expansion through 
the conversion of existing 
spirit pubs into the flaming 
grill brand and further 
acquisitions
1
47
39
17
5
109
sites 32 spirit pub company plc annual report 2014
 
our brands
continued
chef  brewer
 ‘classic country pubs 
a warm and relaxing 
atmosphere offering high 
quality pub food and drinks 
at surprisingly good prices’
proud to offer expertly chosen food and drink 
with the unmistakable hospitality and warmth of 
a real british country pub with beer gardens in 
the summer roaring fires in the winter a monthly 
selection of specials and a rotating cask ale range 
chef  brewer has a broad appeal attracting both 
the more affluent and the more mainstream guest 
as it satisfies a number of occasions at surprisingly 
good prices
for more information visit 
wwwchefandbrewercom 
wwwfacebookcomchefandbrewer 
wwwtwittercomchefandbrewer
highlights
  429000 covers booked 
online in 2014
  increased engagement 
of kitchen teams through 
the launch of our chef 
academy apprenticeship 
programme and our annual 
chef skills competition
  introduced outdoor bars 
to maximise garden appeal
  new investment trials 
underway 
future plans
  continue to evolve the 
core food and drink offer
  refresh programme to 
maintain estate quality
  introduce loyalty schemes
138
sites
3
31
49
48
7 strategic report governance financial statements
 spirit pub company plc annual report 2014 33
 
fayre  square
 ‘delicious meals square deals 
friendly and efficient service 
the value pub restaurant 
of choice for families’
fayre  square is all about those everyday 
excuses to get together with family and friends 
those chances to relax catch up enjoy great 
deals and quality food and share great times 
in good company
we are proud to have held our core ‘2 for £10’ 
deal on main course pub favourites since 2007 
we also offer a compelling range of ‘2 for’ deals 
and ‘2 for £5’ on starters and desserts 
we are so confident that our guests will love our 
meals we offer a ‘no quibble’ guarantee – if for 
any reason our guests are not happy with their 
meal we will replace it no quibble
for the kids we have wacky warehouses 
wacky corners or wacky tot spots at over  
half of our fayre  square pubs 
for more information visit 
wwwfayresquarecom 
wwwfacebookcomfayreandsquare 
wwwtwittercomfayreandsquare
highlights
  launched loyalty 
programme – to date over 
160000 registered loyalty 
cards with over 15 million 
transactions 
  all main meals are now 
available as part of a deal
future plans
  fayre  square reward 
mobile application to be 
launched enabling guests 
to find their nearest pub 
book a table and redeem 
offers and rewards in pub 
  more investments and 
potential acquisitions 
  brand expansion through 
the conversion of existing 
spirit pubs into the fayre  
square brand and further 
acquisitions
158
sites
66
58
23
11 34 spirit pub company plc annual report 2014
 
our brands
continued
wacky warehouse
 ‘all day wacky fun  
for kids and grownups’
with 95
1
 sites nationwide wacky warehouse 
is the uk’s leading soft play and activity centre 
provider for children aged up to 12 years old 
situated mostly alongside or within our fayre  
square pubs the brand continues to surge 
ahead of its nearest competitors 
wacky warehouse understands that whilst it is 
vital for children to have fun its venues need to be 
designed to satisfy the needs of the whole family 
– meaning parents can get a break too
for more information visit 
wwwwackywarehousecouk 
wwwfacebookcomwackywarehouse 
wwwtwittercomwackywarehouse
1 includes 15 wacky corners and two wacky tots spots
highlights
  21 new sites this year 
four wacky warehouses 
15 wacky corners and 
two wacky tot spots 
  20th birthday of wacky 
warehouse consolidating 
its position as the uk’s 
number one soft play 
and party company 
  new website with online 
booking for parties and 
sales of unlimited play 
monthly cards
  through the ‘little leaders 
campaign’ we recruited 
parents and children via 
social media to collaborate 
with us to build a new 
kids’ menu 
future plans
  new build wacky 
warehouses
  continue development of 
‘infills’ of wacky corners 
and wacky tot spots 
  refine brand and 
environment to increase 
engagement and 
competitiveness
  build on success of 
the introduction of the 
pub menus by positioning 
wacky warehouse as 
‘eat and play’
95
1
sites
46
36
8
5 strategic report governance financial statements
 spirit pub company plc annual report 2014 35
 
john barras
 ‘your local where there is 
always something going on’
at john barras you will find everything a great local 
pub should be a great drinks range great value 
pub food a great place to watch sports action 
and the best entertainment and pub activities  
all at outstandingly great value
john barras has a diverse guest profile ranging 
from low income young families to affluent 
preretirees it is not ‘all things to all people’ 
it simply appeals to all ages who like similar things 
and is best defined as ‘heart of the community’ 
for more information visit 
wwwjohnbarrascom 
wwwfacebookcomjohnbarraspubs 
wwwtwittercomjohnbarraspubs
highlights
  a more extensive range 
of drink products is now 
available than ever before 
in particular developing 
further our cask and craft 
beer offer – over 100 of our 
john barras pubs support 
local breweries by selling 
local ales
  launch of a web based 
tool to support the 
communication of 
promotions to our guests
  launch of our ‘local social’ 
initiative helping general 
managers to communicate 
with their guests via 
social media
future plans
  continue to develop both 
our food and drinks ranges 
to better cater for guests 
at a local level
  develop our credentials as 
the home of sport – launch 
of our ‘sports promise’ 
communicating clearly to 
guests the great service 
they can expect during 
each key sporting event
  continue to drive  
‘heart of the community’ 
by delivering compelling 
reasons to visit
  opportunities to convert 
a number of john barras 
pubs to our new quality local 
format golden oak inns
110
sites
2
36
35
31
6 36 spirit pub company plc annual report 2014
 
our brands
continued
good night inns
 ‘we’ll make you feel at home’
good night inns is a collection of charming hotels 
with plenty of character which offer a comfortable 
homely stay for all of our guests most of our  
hotels have plenty of tradition and heritage 
with interesting and varied histories
with over 600 rooms operating under the brand 
all of the hotels are conveniently located next to 
one of our pub restaurants
for more information visit 
wwwgoodnightinnscouk
highlights
  introduced occupancy 
driven rate strategy
  relaunched website with 
a number of offers tailored 
to rewarding guests 
future plans
  increase affiliate and online 
travel agency partnerships 
  launch new website 
to drive bookings and 
incentivise return visits
28
sites
1
10
12
4
1 strategic report governance financial statements
 spirit pub company plc annual report 2014 37
financial review
summary consolidated income statement
before exceptional items
2014
£m
2013
£m change
revenue 801 758
outlet costs 543 519
outlet ebitdar 258 239 8
rent 68 67
onerous lease provision 11 13
outlet ebitda 201 186 8
central costs 42 37
ebitda 159 150 7
depreciation 38 36
operating profit 121 113 7
net finance costs 61 59
profit before tax 60 54 11
tax 13 13
profit after tax 47 42 12
basic adjusted eps 71p 63p 13
profit after tax before exceptional items 47 42
exceptional items net of tax
1
52 7
profit after tax including exceptional items
1
99 35 187
basic eps including exceptional items
1
151p 52p 190
1 restated for the impact of ias 19 see note 1 to the financial statements
the financial review covers the 53 weeks to 23 august 2014 and 
therefore the results benefit from an additional week of trading 
when compared to the prior year at the end of the year the estate 
comprised 794 managed pubs and 433 leased pubs a net reduction 
in the estate size of two pubs from the prior year
results for the period 38 spirit pub company plc annual report 2014
financial review
continued
results
operating profit before exceptional items was up 7 at £121m 
with 9 growth in the managed estate and 2 growth in the 
leased estate 
the quality of earnings continues to improve with a £2m 15 
lower credit from the onerous lease provision in ebitda in the 
period inclusive of the discount on the unwind of this provision 
this results in a £1m reduction in credit taken to profit before 
tax the further reduction in the utilisation of the onerous lease 
provision reflects the actions that have been taken to further 
mitigate the losses on these properties either through 
investment or through alternative property solutions such 
as sublets for alternate use
the strong performance of the business in the year has resulted 
in higher bonuses being payable and this has contributed £5m 
additional central support costs 
net finance costs are higher than in the prior period due to the 
increased regulatory costs of our undrawn liquidity facility
tax 
the effective taxation charge for the period was 219
1
 
the comparable rate for the prior year was 234 with the 
movement primarily due to the reduction in corporation 
tax rates
we have not paid any corporation cash tax in the period 
although we do expect to commence cash tax payments 
in 201415 the cash tax rate is expected to be substantially 
below the effective tax rate due to the availability of brought 
forward losses
exceptional items
exceptional items include a £202m charge in respect of vat 
on gaming machines and default interest repayable to hmrc 
at 21 august 2010 a contingent asset of £189m existed in 
relation to the group’s outstanding gaming machine vat claim 
hmrc requested repayment of this amount during 201314 
following a ruling of the court of appeal in favour of the rank 
group plc rank in october 2013 however in april 2014 rank 
were granted leave to appeal directly to the supreme court on 
this matter and this case is due to be heard in april 2015 as the 
outcome of the gaming machine vat claim has yet to be finally 
concluded the group has not made a cash payment to hmrc
the annual property revaluation has resulted in a net increase 
in the valuation of the pub estate of £140m which comprises 
a credit of £72m taken to the income statement for those pubs 
for which the valuation at august 2014 is assessed to be higher 
than at august 2013 a valuation gain of £68m has been taken 
directly to equity
other property related exceptional items arise from the profit 
on disposal of properties of £19m a £4m credit for the release 
of the onerous lease provision in respect of disposed properties 
and a noncash charge of £3m reflecting the impact of 
contracted annual uplifts in property head lease rentals 
finance related exceptional items include a £21m charge 
for the marktomarket of interest rate swaps and a £2m gain 
on the cancellation of debenture bonds and swaps
the costs of defined benefit pension schemes which are 
closed to new members have resulted in a £2m charge to 
exceptional items
these exceptional items give rise to a £1m tax credit with a 
further £1m tax credit arising due to the impact of the change 
in the statutory rate
capital expenditure and disposals
capital expenditure for the year was £44m of which £24m 
was invested in our managed estate £6m in our leased estate 
£3m spent on the acquisition of and investment in three 
freehold pubs and £3m on the purchase of the freehold interest 
of pubs already operated by spirit
during the year focus has been on maintaining disciplined 
capital investment to drive returns and innovation and to ensure 
that the group has compelling brands and pubs to attract and 
retain our guests in the managed estate 55 refurbishments 
were completed at an average cost of £166000 which was 
significantly lower than prior years reflecting both the smaller 
average footprint of the pubs and also cost efficiencies achieved 
the success of trials of the flaming grill brand in smaller 
footprint pubs and the resultant lower capital spend per pub 
led to the acceleration of the rollout of this brand in the second 
half of the year 
the leased estate benefitted from £6m spent on 43 projects 
and there is a strong pipeline of sites for investment in 201415
since the year end we have completed the acquisition of a 
further three leasehold pubs from the orchid estate which will 
be invested and branded in the first quarter of 201415
disposal proceeds of £34m were £19m above book values 
with one pub the black lion located in bayswater in london 
achieving a sale price of £27m due to its potential as part of 
a wider development site the group continues to operate 
the black lion under a shortterm agreement until such time 
as the purchaser has achieved planning consent
1 excluding exceptional items strategic report governance financial statements
 spirit pub company plc annual report 2014 39
since the year end another london pub the prince of wales 
was sold in october 2014 achieving a sales price of £15m 
approximately 50x ebitda reflecting the development 
potential of this site in earls court
property valuation
in accordance with our accounting policy we have updated 
the market valuation of our estate to £1513m at the year end 
representing an increase in the value of the managed estate 
of 12 and an increase in the value of the leased estate of 
2 this valuation was completed in conjunction with colliers 
international independent chartered surveyors who completed 
physical inspections and individual valuations for 25 of the 
estate with the results of these site visits extrapolated over the 
remaining estate taking into consideration a range of factors 
including location tenure and operating format
cash flow and capital structure
cash flow from operating activities was £165m up from £122m 
in the prior year with working capital benefitting from the 
53rd week after accounting for capital expenditure cash from 
disposals financing costs and tax there was a net cash inflow 
of £58m august 2013 £4m in the period
at august 2014 the group had £801m debt in the form of 
longterm mortgage type finance secured on a portfolio of 
1072 properties the debt fully repays over terms extending 
to 22 years and due to the interest rate swaps is predominantly 
at fixed rates of interest repayments of this debt commenced 
in march 2014 with £7m having been repaid in the year and 
£12m due to be repaid in 201415
on an ongoing basis the group reviews its capital structure 
and financing options in order to ensure that they appropriately 
reflect the business needs and the strategic intentions for 
the group with regard to the upcoming commencement of 
the debt amortisation the group successfully reprofiled the 
securitised debt in november 2013 in order to provide greater 
financial flexibility to effect this reprofiling a proportion of the 
a1 and a3 bonds were exchanged for new a6 and a7 bonds 
respectively with the new bonds having a slightly higher 
interest rate and a longer amortisation profile this reprofiling 
ensured the group has greater short and medium term financial 
flexibility and provides the group with an appropriate balance 
between financial flexibility and incremental liquidity and the 
additional interest cost to the group the weighted average 
effective interest rates of interestbearing borrowings including 
the effect of interest rate swaps and excluding finance leases 
at august 2014 is 78 august 2013 77
a key long term objective for the group has been to reduce 
the net debt to ebitda
1
 ratio to between 40 and 45 times and 
maintain appropriate headroom against our financial covenants 
gross debt within the debenture was £801m at the year end 
august 2013 £822m offset by cash within the debenture 
of £106m august 2013 £50m leading to net debenture 
debt of £695m the group holds £53m of cash outside the 
debenture structure giving net debt of £641m at august 2014 
august 2013 net debt of £706m including £14m of debenture 
bonds held outside the debenture structure £nil at august 
2014 the debt to ebitda ratio preexceptional items was 
40 times at the yearend august 2013 47 times which is 
now within the target range set in 2012 
the debt service cover ratio dscr which is the primary 
measure under which the performance of the debenture 
is measured was 19 times at the yearend august 2013 
20 times giving significant headroom against the default 
covenant dscr of 13 times there is also significant 
headroom above the dscr level which is required to be 
met in order to transfer cash out of the debenture structure 
for general corporate purposes
cash held by group companies outside the debenture 
structure was £53m at the yearend august 2012 £52m 
these resources will continue to be used to fund plc cash 
outflows invest in the growth of the business and fund 
dividend payments to shareholders
pensions
the group operates two defined benefit pension schemes 
both of which are closed to new entrants the triennial actuarial 
valuation of the schemes as at october 2012 was completed 
during the year and it was agreed that the deficit funding 
contributions should continue at £5m the same level as 
in previous years
as at august 2014 these pension schemes are in a net liability 
position of £4m reflecting a decrease of £3m in the year 
net liability of £1m at august 2013 this change in valuation 
is driven by movements in equity markets and corporate bond 
yields in the year together with updated valuation assumptions
the group has adopted ias 19 revised employee benefits 
in the year as a result annual administration costs of the 
schemes of £16m are now charged to administration charges 
within operating profit rather than netted against the pensions 
finance charge 
1 excluding exceptional items
the strategic report on pages 2 to 39 was approved by 
the board and signed on its behalf by paddy gallagher 
finance director on 3 november 2014 name walker boyd mike tye paddy gallagher tony rice mark pain christopher bell julie chakraverty
position chairman chief executive officer finance director senior independent 
nonexecutive director
independent 
nonexecutive director
independent 
nonexecutive director
independent 
nonexecutive director
age 62 60 51 62 53 56 43
length of service on 
board as at 31114
3 years 4 months 3 years 4 months 3 years 3 years 4 months 3 years 4 months 3 years 3 months 2 years 11 months
independent ✓ ✗ ✗ ✓ ✓ ✓ ✓
member of nomination 
committee
✓ ✗ ✗ ✓ ✓ ✓ ✓
member of audit  risk 
committee
✗ ✗ ✗ ✓ ✓ ✓ ✓
member of remuneration 
committee
✓ ✗ ✗ ✓ ✓ ✓ ✓
experience appointed nonexecutive 
chairman in july 2011 in 
preparation for the demerger 
of spirit from punch taverns plc 
punch taverns where he was 
nonexecutive director from 
april 2011
appointed as a nonexecutive 
director of csr plc in 
december 2013
walker was nonexecutive 
chairman of wh smith a position 
he held from 1 september 2010 
until 31 august 2013 after joining 
the board as a nonexecutive 
director in february 2010 he has 
substantial retail expertise both 
in the uk and the usa he was 
group finance director at signet 
jewellers limited previously 
signet group plc until june 2010 
having held this position 
since 1995
mike tye was appointed chief 
executive officer in december 
2011 after briefly holding the 
position of deputy chief 
executive officer from june 2011 
this was in connection with the 
demerger of spirit from punch 
taverns where he was managing 
director for the managed 
business from july 2008
mike is a trustee and board 
member of prostate cancer uk 
from october 2014 and also a 
member of the government 
future high street forum 
mike has spent over 20 years 
working in many different areas 
of the leisure business mainly 
with whitbread forte and 
aramark in recent years he has 
been managing director of 
costa coffee premier travel inn 
where he led the acquisition 
and integration of premier lodge 
to travel inn and david lloyd 
leisure where he led the business 
turnaround and subsequent sale 
his early career was spent 
managing fmcg brands and 
running his own wine and spirit 
retail and wholesale business
paddy gallagher was  
appointed finance director 
in november 2011 
prior to that paddy held a 
number of high profile finance 
positions including chief financial 
officer at rank group plc 
chief financial officer at 
quadriga worldwide ltd 
uk finance director at dell and 
director of financial operations 
at wang international
appointed senior independent 
nonexecutive director of spirit 
in july 2011 formerly senior 
independent nonexecutive 
director of punch taverns from 
march 2010 and independent 
nonexecutive director from 
december 2007 
tony has held senior 
management positions with 
bae systems and tunstall plc 
tony stepped down as ceo of 
cable and wireless at the end 
of 2013 he is a trustee of shelter 
and a nonexecutive director 
of the whittington health trust 
he is also chairman of xerxes plc 
tony was also nonexecutive 
director and chairman of the 
audit committee at cable  
wireless from 2003 to 2006 and 
at telewest from 2000 to 2003 
tony was also appointed as a 
nonexecutive director of halma 
plc with effect from 8 august 2014 
and chair of miller homes with 
effect from 23 september 2014
appointed independent 
nonexecutive director of spirit 
in july 2011 in preparation for 
the demerger of spirit from 
punch taverns where he was 
an independent nonexecutive 
director from december 2007
mark has a wealth of experience 
as a listed company main board 
director mark served as chief 
financial officer of barratt 
developments plc from 2006 
to 2009 he was previously at 
abbey national where he held a 
number of senior executive and 
group board positions including 
group finance director from 
1998 to 2001 and customer 
sales director from 2002 to 2005 
mark is a nonexecutive director 
at aviva insurance limited 
johnston press and yorkshire 
building society and is also 
chairman of london square 
mark is a fellow of the institute 
of chartered accountants
appointed independent 
nonexecutive director of spirit 
in august 2011
christopher was chief executive 
officer of ladbrokes plc between 
2006 and 2010 prior to that 
he spent 12 years at alliedlyons 
and held a number of senior 
positions six years as managing 
director at hilton group and eight 
years as managing director at 
ladbroke group christopher is 
also currently senior independent 
director of quintain estates and 
development and was appointed 
as chairman of xl media plc 
in march 2014 he has also 
been a board member of the 
responsible gaming strategy 
board rgsb since 2009
appointed independent 
nonexecutive director of spirit 
in january 2012
julie is a nonexecutive director 
and chair of the innovation 
committee at aberdeen asset 
management plc she is also a 
nonexecutive director at amlin 
plc and a trustee of the girls’ day 
school trust
she previously spent 13 years 
at ubs investment bank 
where she was a board member 
and held a number of global 
leadership positions with a 
specialist background in risk 
management and fixed income 
julie was also a nonexecutive 
director at paternoster the 
specialist pensions insurer 
she started her financial services 
career with jp morgan
40 spirit pub company plc annual report 2014
board of directors name walker boyd mike tye paddy gallagher tony rice mark pain christopher bell julie chakraverty
position chairman chief executive officer finance director senior independent 
nonexecutive director
independent 
nonexecutive director
independent 
nonexecutive director
independent 
nonexecutive director
age 62 60 51 62 53 56 43
length of service on 
board as at 31114
3 years 4 months 3 years 4 months 3 years 3 years 4 months 3 years 4 months 3 years 3 months 2 years 11 months
independent ✓ ✗ ✗ ✓ ✓ ✓ ✓
member of nomination 
committee
✓ ✗ ✗ ✓ ✓ ✓ ✓
member of audit  risk 
committee
✗ ✗ ✗ ✓ ✓ ✓ ✓
member of remuneration 
committee
✓ ✗ ✗ ✓ ✓ ✓ ✓
experience appointed nonexecutive 
chairman in july 2011 in 
preparation for the demerger 
of spirit from punch taverns plc 
punch taverns where he was 
nonexecutive director from 
april 2011
appointed as a nonexecutive 
director of csr plc in 
december 2013
walker was nonexecutive 
chairman of wh smith a position 
he held from 1 september 2010 
until 31 august 2013 after joining 
the board as a nonexecutive 
director in february 2010 he has 
substantial retail expertise both 
in the uk and the usa he was 
group finance director at signet 
jewellers limited previously 
signet group plc until june 2010 
having held this position 
since 1995
mike tye was appointed chief 
executive officer in december 
2011 after briefly holding the 
position of deputy chief 
executive officer from june 2011 
this was in connection with the 
demerger of spirit from punch 
taverns where he was managing 
director for the managed 
business from july 2008
mike is a trustee and board 
member of prostate cancer uk 
from october 2014 and also a 
member of the government 
future high street forum 
mike has spent over 20 years 
working in many different areas 
of the leisure business mainly 
with whitbread forte and 
aramark in recent years he has 
been managing director of 
costa coffee premier travel inn 
where he led the acquisition 
and integration of premier lodge 
to travel inn and david lloyd 
leisure where he led the business 
turnaround and subsequent sale 
his early career was spent 
managing fmcg brands and 
running his own wine and spirit 
retail and wholesale business
paddy gallagher was  
appointed finance director 
in november 2011 
prior to that paddy held a 
number of high profile finance 
positions including chief financial 
officer at rank group plc 
chief financial officer at 
quadriga worldwide ltd 
uk finance director at dell and 
director of financial operations 
at wang international
appointed senior independent 
nonexecutive director of spirit 
in july 2011 formerly senior 
independent nonexecutive 
director of punch taverns from 
march 2010 and independent 
nonexecutive director from 
december 2007 
tony has held senior 
management positions with 
bae systems and tunstall plc 
tony stepped down as ceo of 
cable and wireless at the end 
of 2013 he is a trustee of shelter 
and a nonexecutive director 
of the whittington health trust 
he is also chairman of xerxes plc 
tony was also nonexecutive 
director and chairman of the 
audit committee at cable  
wireless from 2003 to 2006 and 
at telewest from 2000 to 2003 
tony was also appointed as a 
nonexecutive director of halma 
plc with effect from 8 august 2014 
and chair of miller homes with 
effect from 23 september 2014
appointed independent 
nonexecutive director of spirit 
in july 2011 in preparation for 
the demerger of spirit from 
punch taverns where he was 
an independent nonexecutive 
director from december 2007
mark has a wealth of experience 
as a listed company main board 
director mark served as chief 
financial officer of barratt 
developments plc from 2006 
to 2009 he was previously at 
abbey national where he held a 
number of senior executive and 
group board positions including 
group finance director from 
1998 to 2001 and customer 
sales director from 2002 to 2005 
mark is a nonexecutive director 
at aviva insurance limited 
johnston press and yorkshire 
building society and is also 
chairman of london square 
mark is a fellow of the institute 
of chartered accountants
appointed independent 
nonexecutive director of spirit 
in august 2011
christopher was chief executive 
officer of ladbrokes plc between 
2006 and 2010 prior to that 
he spent 12 years at alliedlyons 
and held a number of senior 
positions six years as managing 
director at hilton group and eight 
years as managing director at 
ladbroke group christopher is 
also currently senior independent 
director of quintain estates and 
development and was appointed 
as chairman of xl media plc 
in march 2014 he has also 
been a board member of the 
responsible gaming strategy 
board rgsb since 2009
appointed independent 
nonexecutive director of spirit 
in january 2012
julie is a nonexecutive director 
and chair of the innovation 
committee at aberdeen asset 
management plc she is also a 
nonexecutive director at amlin 
plc and a trustee of the girls’ day 
school trust
she previously spent 13 years 
at ubs investment bank 
where she was a board member 
and held a number of global 
leadership positions with a 
specialist background in risk 
management and fixed income 
julie was also a nonexecutive 
director at paternoster the 
specialist pensions insurer 
she started her financial services 
career with jp morgan
strategic report governance financial statements
 spirit pub company plc annual report 2014 41 name mike tye paddy gallagher alan morgan chris welham debbie moore bob broadbridge
position chief executive officer finance director chief operating officer managing director 
spirit leased
hr director it director
age 60 51 37 44 52 55
length of service  
as at 31114
3 years 4 months 3 years 3 years 4 months 2 years 6 months 2 years 6 months 3 years 4 months
experience mike tye was appointed chief 
executive officer in december 
2011 after briefly holding the 
position of deputy chief 
executive officer from june 2011 
this was in connection with the 
demerger of spirit from punch 
taverns where he was managing 
director for the managed 
business from july 2008
mike is a trustee and board 
member of prostate cancer uk 
from october 2014 and also a 
member of the government 
future high street forum 
mike has spent over 20 years 
working in many different areas 
of the leisure business mainly 
with whitbread forte and 
aramark in recent years he has 
been managing director of 
costa coffee premier travel inn 
where he led the acquisition 
and integration of premier lodge 
to travel inn and david lloyd 
leisure where he led the business 
turnaround and subsequent sale 
his early career was spent 
managing fmcg brands and 
running his own wine and spirit 
retail and wholesale business
paddy gallagher was  
appointed finance director 
in november 2011 
prior to that paddy held a 
number of high profile finance 
positions including chief financial 
officer at rank group plc 
chief financial officer at 
quadriga worldwide ltd 
uk finance director at dell and 
director of financial operations 
at wang international
alan morgan was appointed 
chief operating officer in 2013
prior to that alan was national 
operations director within spirit 
and had held a number of senior 
operational and commercial roles 
within whitbread and david lloyd 
leisure alan is also a governor 
and nonexecutive director 
of milton keynes college
chris welham was appointed 
managing director spirit leased 
in february 2012 
prior to that chris was 
operations director at greene 
king pub partners leading half 
of their leased business chris 
has over 18 years’ experience 
in the industry and has held a 
number of senior operational 
roles in greenalls pubmaster 
and punch taverns chris is also 
a nonexecutive director at the 
british institute of innkeeping from 
may 2014
debbie moore was appointed 
hr director in february 2012 
prior to that debbie held a 
number of high profile hr roles 
including hr director at the 
post office from 2007 to 2012 
leading the people agenda of that 
organisation through significant 
change which impacted both 
employee engagement and 
business profitability previously 
debbie has been hr director 
at hays plc and uk retail hr 
director at the dixons group
debbie is a trustee of the burton 
breweries charitable trust
bob broadbridge was appointed 
it director in may 2010 
bob joined spirit from the health 
lottery where he held the position 
of chief operating officer for 
it and operations previously 
he was it director at the tote 
wh smith and superdrug 
his early career was spent with 
mars and cadburyschweppes
42 spirit pub company plc annual report 2014
executive management team name mike tye paddy gallagher alan morgan chris welham debbie moore bob broadbridge
position chief executive officer finance director chief operating officer managing director 
spirit leased
hr director it director
age 60 51 37 44 52 55
length of service  
as at 31114
3 years 4 months 3 years 3 years 4 months 2 years 6 months 2 years 6 months 3 years 4 months
experience mike tye was appointed chief 
executive officer in december 
2011 after briefly holding the 
position of deputy chief 
executive officer from june 2011 
this was in connection with the 
demerger of spirit from punch 
taverns where he was managing 
director for the managed 
business from july 2008
mike is a trustee and board 
member of prostate cancer uk 
from october 2014 and also a 
member of the government 
future high street forum 
mike has spent over 20 years 
working in many different areas 
of the leisure business mainly 
with whitbread forte and 
aramark in recent years he has 
been managing director of 
costa coffee premier travel inn 
where he led the acquisition 
and integration of premier lodge 
to travel inn and david lloyd 
leisure where he led the business 
turnaround and subsequent sale 
his early career was spent 
managing fmcg brands and 
running his own wine and spirit 
retail and wholesale business
paddy gallagher was  
appointed finance director 
in november 2011 
prior to that paddy held a 
number of high profile finance 
positions including chief financial 
officer at rank group plc 
chief financial officer at 
quadriga worldwide ltd 
uk finance director at dell and 
director of financial operations 
at wang international
alan morgan was appointed 
chief operating officer in 2013
prior to that alan was national 
operations director within spirit 
and had held a number of senior 
operational and commercial roles 
within whitbread and david lloyd 
leisure alan is also a governor 
and nonexecutive director 
of milton keynes college
chris welham was appointed 
managing director spirit leased 
in february 2012 
prior to that chris was 
operations director at greene 
king pub partners leading half 
of their leased business chris 
has over 18 years’ experience 
in the industry and has held a 
number of senior operational 
roles in greenalls pubmaster 
and punch taverns chris is also 
a nonexecutive director at the 
british institute of innkeeping from 
may 2014
debbie moore was appointed 
hr director in february 2012 
prior to that debbie held a 
number of high profile hr roles 
including hr director at the 
post office from 2007 to 2012 
leading the people agenda of that 
organisation through significant 
change which impacted both 
employee engagement and 
business profitability previously 
debbie has been hr director 
at hays plc and uk retail hr 
director at the dixons group
debbie is a trustee of the burton 
breweries charitable trust
bob broadbridge was appointed 
it director in may 2010 
bob joined spirit from the health 
lottery where he held the position 
of chief operating officer for 
it and operations previously 
he was it director at the tote 
wh smith and superdrug 
his early career was spent with 
mars and cadburyschweppes
strategic report governance financial statements
 spirit pub company plc annual report 2014 43 44 spirit pub company plc annual report 2014
directors’ report
the directors present to shareholders their report and audited 
financial statements of the group together with the independent 
auditor’s report for the 53 weeks ended 23 august 2014
certain information required for disclosure as part of this report 
is provided in other sections of the annual report and financial 
statements as appropriate these include the corporate 
governance statement the nomination committee report 
the audit  risk committee report the remuneration report 
and the group financial statements and these are accordingly 
incorporated by reference into and shall be deemed to form 
part of the directors’ report
in previous years the directors’ report has included sections 
dealing with the group’s principal activity charitable contributions 
and creditor payment policy and practice due to changes in 
reporting requirements we are no longer required to report on 
these issues specifically within this section of the annual report 
and financial statements however the strategic report 
on pages 2 to 39 includes details of the group’s main trading 
activities and the corporate responsibility report on pages 22 
to 25 includes details of the group’s charitable contributions
strategic report
a review of the year’s activities information on the risks and 
uncertainties faced by the group and likely future developments 
in the business of the group are included in the strategic report 
the management of business risk is set out in the audit  risk 
committee report on pages 53 to 55 spirit’s principal risks and 
uncertainties on pages 26 to 29 and kpis are shown on pages 
4 and 5
results and dividends
the results of the group for the year are set out in the 
consolidated income statement on page 72 an interim 
dividend of 072 pence per share was paid to shareholders 
on 3 june 2014 the directors have proposed a final dividend 
of 150 pence per share which subject to approval by 
shareholders at the annual general meeting agm in january 
2015 will be payable on 10 february 2015 to shareholders 
on the register as at 16 january 2015 this will bring the total 
dividend for the year to 222 pence per share 2013 205 pence
directors
biographies of the directors currently serving on the board 
are given on pages 40 and 41
as at 23 august 2014 and as at the date of this report 
the board was made up of seven members consisting of 
the chairman two executive directors and four nonexecutive 
directors all four of whom were independent in accordance 
with the criteria set out in b11 of the uk corporate 
governance code the code
there were no board changes during the year
in accordance with the requirements of the code all directors 
will offer themselves for reelection at the agm on 13 january 
2015 the procedure for the appointment replacement and 
reelection of directors and the role of the nomination 
committee is set out in the corporate governance statement 
and nomination committee report on pages 48 to 52
details of directors’ service contracts are set out in the 
remuneration report on pages 56 to 70
there are no special provisions contained in any of the 
directors’ contracts for loss of office beyond normal contractual 
obligations further details of directors’ contracts are contained 
within the remuneration report on pages 56 to 70
  wherever in this report we refer to ‘he’ ‘his’ or ‘him’ those references are 
deemed to include ‘she’ ‘hers’ or ‘her’ as the context requires strategic report governance financial statements
 spirit pub company plc annual report 2014 45
directors’ interests
the beneficial interests of directors who held office at 
23 august 2014 in the share capital of the company are 
shown below
at
3 november
2014
ordinary
shares
at
23 august 
2014
ordinary
shares
at
17 august
2013
ordinary
shares
walker boyd 200000 200000 200000
mike tye 709408 709055 664026
paddy gallagher 116952 116952 101276
tony rice 810000 810000 503013
mark pain 29177 29177 29177
christopher bell 110266 110266 110266
julie chakraverty 100000 100000 100000
none of the directors have any other interests in the shares or 
other securities of the company or of any other company in the 
group save for the interests disclosed elsewhere in the annual 
report and financial statements 2014
a statement of the directors’ remuneration is set out in the 
remuneration report on pages 56 to 70
directors’ conflicts of interests
the companies act 2006 sets out directors’ general duties 
concerning conflicts of interest and related matters the board 
has agreed an approach and adopted guidelines for dealing 
with conflicts of interest and has added responsibility for 
authorising conflicts of interest under the schedule of matters 
reserved for the board
during the year any conflicts of interests of the directors and 
their connected persons were reviewed the board confirmed 
that it was not aware of any situations that may or did conflict 
with the interests of the company other than those that may 
arise from directors’ other appointments as disclosed in their 
biographies on pages 40 and 41
the nomination committee will continue to conduct periodic 
reviews of conflict authorisations to determine whether the 
authorisation given should continue be added to or be revoked 
by the board
in accordance with the company’s articles of association 
the board authorised the company secretary to receive 
notifications of conflicts of interest on behalf of the board and 
to make recommendations as to whether the relevant matters 
should be authorised by the board the company has 
complied with these procedures
no director had a material interest in any significant contract 
with the company or any of its subsidiaries during the year
directors’ insurance and indemnities
as at the date of this report there are qualifying third party 
indemnity and qualifying pension scheme indemnity provisions 
governed by the companies act 2006 in place under which 
the company has agreed to indemnify the directors and 
the company secretary of the company and the directors 
and the company secretary of any member of the group 
or of an associated company or certain companies in which 
the company has a direct or indirect minority shareholding 
or other interest to the extent permitted by law and the 
company’s articles of association against all liability arising 
in respect of any act or omission in their duties
the company’s indemnity provision was in place throughout 
the year and remains in place as at the date of this report the 
indemnity is uncapped in amount but does not provide cover in 
the event that the act or omission constitutes wilful misconduct 
or recklessness is conduct which would entitle the company to 
dismiss the director or officer summarily without compensation 
or pay in lieu of notice or if the director or officer is entitled to 
recover any amount in relation to the liability from any other 
person in accordance with section 236 of the companies act 
2006 the group also maintains directors’ and officers’ liability 
insurance in respect of its directors and officers 46 spirit pub company plc annual report 2014
directors’ report
continued
substantial shareholdings
as at 31 october 2014 being the last business day prior to 
the approval of this report the company has been notified 
of the following substantial interests representing 3 or more 
in accordance with chapter 5 of the dtr and section 793 of the 
companies act 2006 in the ordinary shares of the company
shareholder
total 
holding 

shareholding made up of
ordinary 
shares
contracts 
for 
difference
schroders 1260 83213531 –
alchemy special opportunities 630 40522000 –
aberforth partners 524 34574520 –
old mutual asset managers 453 29901315 –
norges bank 380 25108712 –
glenview capital management 371 24486697 –
legal  general 345 22793777 –
political contributions
during the year the group made no political contributions 
the company does not make donations and has no intention 
of making donations to what are generally regarded as political 
parties or organisations within the european union however 
as the legislation is very broadly drafted as a precautionary 
measure a resolution to permit the company to make donations 
and incur political expenditure is included as a resolution at the 
company’s agm
the environment and greenhouse gas emissions
the group regards compliance with relevant environmental 
laws and the adoption of responsible standards as integral 
to its business operation it is also committed to introducing 
measures to limit any adverse effects its business may have 
on the environment and will promote continuous improvement 
in accordance with best available techniques
the corporate responsibility report on pages 22 to 25 includes 
the greenhouse gas emissions disclosures required by the 
companies act 2006 strategic report and directors’ report 
regulations 2013 this information is incorporated by reference 
into and shall be deemed to form part of the directors’ report
financial instruments
the group’s policy on the use of financial instruments is set 
out in note 21 to the financial statements
share capital and change of control
as at 23 august 2014 the company’s issued share capital 
comprised a single class of ordinary shares which carry no right 
to fixed income details of the issued share capital together 
with details of the movements in the company’s issued share 
capital during the year are shown in the share capital note on 
page 110 
no person has any special rights of control over the company’s 
share capital and all issued shares are fully paid
as at the date of this report the company does not hold any 
shares in treasury
the company is party to certain nonmaterial agreements 
including trust deeds relating to the company’s employee 
share incentive plans that contain change of control provisions 
in the event of the takeover of the company but these are not 
considered to be significant on an individual basis
authority of the directors to allot shares
at the previous agm held on 14 january 2014 the company 
obtained shareholder authority to buy back up to 66039854 
shares representing approximately 10 of the company’s 
issued equity share capital at the time at the company’s 
forthcoming agm authority will be sought to buy back up 
to 66056074 shares representing approximately 10 of the 
company’s issued equity share capital as at the time of the 
agm this authority will only be exercised by the directors 
if it is considered that it will result in an increase in earnings 
per share and will benefit shareholders generally as a whole
authority will also be sought at the forthcoming agm for 
directors to allot up to 220186915 shares in the company 
representing approximately onethird of the company’s issued 
equity share capital excluding treasury shares and up to 
440373829 equity securities representing approximately 
twothirds of the company’s issued equity share capital 
excluding treasury shares the board will also seek authority 
to disapply preemption rights over 33028037 shares 
representing approximately 5 of the company’s issued 
equity share capital at the time
further details of the above resolutions are contained within 
the notice of meeting sent to shareholders with this report strategic report governance financial statements
 spirit pub company plc annual report 2014 47
there are no restrictions on the transfer of shares in the 
company other than those which may from time to time be 
applicable under existing laws and regulations for example 
under the market abuse directive and the company is not 
aware of any agreements between shareholders that may result 
in restrictions on the transfer of securities or on voting rights 
in addition there are no people holding securities that carry 
special rights with regard to control of the company
in addition pursuant to the listing rules of the financial 
conduct authority directors and persons discharging 
managerial responsibility of the company require prior approval 
from the company to deal in the company’s securities and are 
prohibited from dealing during a close period
articles of association
the company’s articles of association may only be amended 
at a general meeting of shareholders by special resolution 
and on a show of hands every member who is present in 
person and proxy entitled to vote shall have one vote on a poll 
every member who is present in person and proxy shall have 
one vote for every share of which he is the holder a shareholder 
may appoint more than one proxy in relation to their holdings 
provided that each proxy does not vote in relation to the 
same shares
annual general meeting
the forthcoming agm will be held on 13 january 2015 
the notice convening the agm sent to shareholders with this 
report gives full details of deadlines for exercising voting rights 
and appointing a proxy or proxies to vote in relation to 
resolutions to be considered at the meeting
post balance sheet events
on 21 october 2014 a pub in the managed estate was sold 
for net proceeds of £150m
going concern
the financial position of the group its cash flows liquidity 
position and borrowing facilities are described in the financial 
review on pages 37 to 39 note 21 to the consolidated financial 
statements includes the group’s objectives policies and 
processes for managing its capital its financial risk management 
objectives details of its financial instruments and hedging 
activities and its exposures to credit and liquidity risk
after reviewing budgets and other longer term plans and 
making enquiries the directors have a reasonable expectation 
that the company and the group has adequate resources to 
continue in operational existence for the foreseeable future 
accordingly they adopt the going concern basis of accounting 
in preparing the financial statements
audit information
the directors confirm that so far as they are aware there  
is no relevant audit information as defined in section 418  
of the companies act 2006 of which the external auditor is 
unaware and that all directors have taken all reasonable steps 
to make themselves aware of any relevant audit information and 
to establish that the external auditor is aware of that information 
kpmg llp have expressed their willingness to continue in 
office as auditor and a resolution to reappoint them will be 
proposed at the forthcoming agm
by order of the board
paddy gallagher
finance director
3 november 2014 48 spirit pub company plc annual report 2014
corporate governance statement
introduction from the chairman
the board continues to believe that a strong and effective 
governance system is critical to business integrity and to 
promoting and maintaining investors’ trust in the company 
we also keep our governance framework under review for 
comparison with best practice in companies of a similar size 
and nature as part of our review processes during the year 
we appointed an external evaluator to carry out an impartial 
review of the effectiveness of the board and its committees 
both collectively and in terms of the balance of skills experience 
and knowledge of the directors the outcome of the review was 
very satisfactory and further details can be found on page 51 
the directors’ report on pages 44 to 47 which includes 
information as required by section 726 of the disclosure 
and transparency rules dtr as permitted by section 729 
of the dtr the nomination committee report on page 52 
the audit  risk committee report on pages 53 to 55 and 
the remuneration report on pages 56 to 70 are incorporated 
by reference into and shall be deemed to form part of this 
statement and together explain how the board operates 
and how the board and its committees function to achieve 
compliance with the main and supporting principles as set 
out in the code 
walker boyd
chairman
3 november 2014
statement of compliance
following the publication by the financial reporting council 
of the new version of the uk corporate governance code 
the code
1
 in september 2012 this is the first year the 
company has been required to report against the code the 
listing rules have yet to be updated by the financial conduct 
authority and continue to require that certain compliance 
statements are made in relation to the predecessor edition of 
the code issued in june 2010 the board confirms that the 
company continues to demonstrate its commitment to effective 
corporate governance by being fully compliant with all of the 
provisions set out in both editions of the code and with chapter 
7 of the dtr during the 53 week period ended 23 august 2014 
internal control
the board maintains overall responsibility for the group’s 
system of internal control and for reviewing its effectiveness 
the audit  risk committee report on pages 53 to 55 details 
the features of the company’s systems of internal control 
and how such systems are designed to manage rather than 
to eliminate the risk of failure to achieve the company’s 
strategic objectives 
membership of the board and its committees
role
audit  risk
 committee
nomination
 committee
remuneration
 committee
walker  
boyd
chairman ✓ 
chairman
✓
mike tye chief executive 
officer
paddy 
gallagher
finance 
director
tony rice senior 
independent 
nonexecutive 
director
✓ ✓ ✓ 
chairman
mark pain independent 
nonexecutive 
director
✓ 
chairman
✓ ✓
christopher 
bell
independent 
nonexecutive 
director
✓ ✓ ✓
julie 
chakraverty
independent 
nonexecutive 
director
✓ ✓ ✓
1  a copy of the code as referred to in this report can be found on the financial 
reporting council’s website httpsfrcorgukourworkcodesstandards
corporategovernanceukcorporategovernancecodeaspx strategic report governance financial statements
 spirit pub company plc annual report 2014 49
chairman and chief executive officer
the roles of the chairman and the chief executive officer 
are distinct and separate with a clear division of responsibilities 
the chairman leads the board and ensures the effective 
engagement and contribution of all nonexecutive directors 
and executive directors the chief executive officer is 
responsible for all the group’s businesses and acts in 
accordance with the authority delegated by the board 
responsibility for the development of policy strategy and 
operational management is delegated to the chief executive 
officer finance director and executive management team
senior independent nonexecutive director sid
since his appointment as sid in 2011 tony rice continues to 
be responsible for supporting the chairman and monitoring the 
division of responsibilities between the chairman and the chief 
executive officer he is also available to address shareholders’ 
concerns which have not been satisfactorily resolved through 
the normal channels as part of the external evaluation of the 
board referred to above conclusions in relation to the chairman 
were collated by the external evaluator and submitted to the sid 
for consideration as part of his leadership of the overall review 
of the chairman’s performance
nonexecutive directors
the company actively encourages its nonexecutive directors 
to constructively challenge the strategy proposed by the 
executive directors by scrutinising and challenging the 
company’s performance the nonexecutive directors must 
satisfy themselves as to the integrity of financial information 
and that financial controls are robust and defensible in addition 
they must ensure that appropriate remuneration and succession 
planning arrangements are in place in relation to the executive 
directors and the executive management team
where nonexecutive directors have concerns regarding 
the running of the company they are encouraged to escalate 
the matter with the relevant individual executive director  
at a meeting of the board or with the company secretary 
to supplement their knowledge and experience nonexecutive 
directors are authorised to serve on other company boards 
as long as they set aside enough time to make a satisfactory 
commitment to their role at spirit however to ensure executive 
directors remain focused they are not permitted to take more 
than one nonexecutive directorship in or the chairmanship of 
a ftse 100 company in the year under consideration neither 
of the executive directors were nonexecutive directors in 
or chairman of a ftse 100 company
the role and responsibility of the board
the work of the board and its committees is structured 
around scheduled meetings which are linked to key events in 
the company’s corporate calendar with additional meetings 
convened to consider matters which are time critical or which 
require further discussion
whilst the board has delegated the normal operational 
management of the company to the executive directors and 
its executive management team it retains a schedule of matters 
which are specifically reserved for its decision in summary 
these include strategy changes to capital structure approval of 
financial reporting on the recommendation of the audit  risk 
committee where appropriate ensuring the maintenance  
of a sound system of internal control and risk management 
corporate governance and approval or otherwise of 
recommendations on board appointments from the 
nomination committee and remuneration from the 
remuneration committee
the main committees established by the board are the 
nomination committee audit  risk committee and 
remuneration committee the membership of each committee 
is made up of all four nonexecutive directors and the chairman 
with the exception of the audit  risk committee where the 
chairman attends by invitation only further details of the 
committees and their functions can be found on pages 52 
to 70 each committee operates within defined terms of 
reference copies of which are available from the company 
secretary and can also be found at wwwspiritpubcompanycom 
in addition separate committees are also set up by the 
board from time to time to consider specific issues when 
the need arises 
together however the board is collectively responsible to 
the company’s shareholders for the group’s performance 
and sets the strategic aims and objectives of the group to 
fulfil this responsibility the board determines the company’s 
key policies agrees on performance criteria and delegates 
to its executive management team their planning and 
implementation overall the board ensures that all necessary 
resources are in place in order for the company to meet its 
objectives and that all decisions are taken objectively and in 
the long term interest of the company and its stakeholders  50 spirit pub company plc annual report 2014
corporate governance statement
continued
subject to the company’s articles of association the 
companies act 2006 and any directions given by the company 
by special resolution the business of the company is managed 
by the board which may exercise all the powers of the 
company whether relating to the management of the business 
or not in particular the board may exercise all the powers 
of the company to borrow money to mortgage or charge  
any of its undertaking property assets present and future 
and uncalled capital as well as to issue debentures and other 
securities and to give security for any debt liability or obligation
meetings of the board and its committees
during the year the board met nine times the nomination 
committee met twice and the audit  risk committee and 
the remuneration committee both met four times attendance 
at these meetings was as follows
board
audit  risk
 committee
nomination
 committee
remuneration
 committee
walker boyd 9 by invitation 2 4
mike tye 9 by invitation by invitation by invitation
paddy gallagher 9 by invitation na na
tony rice 8 3 1 4
mark pain 8 4 2 4
christopher bell 9 3 1 4
julie chakraverty 9 4 2 4
in addition to the scheduled meetings the chairman met 
independently of the executive directors with the nonexecutive 
directors on several occasions to allow informal discussions 
on a variety of issues the nonexecutive directors led by the 
sid also met without the chairman being present
the standing agenda for meetings of the board includes reports 
from the chief executive officer finance director investor 
relations department and governance and risk assurance 
department with the chief executive officer and finance 
director supplementing each report with an overview of how 
the group is performing against expectations in addition the 
board receives reports and presentations from other members 
of the executive management team senior management and 
external advisers regularly throughout the year
all directors have access to independent professional advice 
at the company’s expense should they require it to discharge 
their duties they also have access to the advice and services 
of the company secretary who is responsible for advising the 
board through the chairman on all governance matters and 
providing assistance and information on corporate 
administration and legal matters 
balance independence and diversity
the board includes a combination of both executive and 
nonexecutive directors so that no individual or small group 
can dominate proceedings or the board’s decision making 
the directors believe that the composition of the board and 
the committees is appropriate for spirit with a correct balance 
of skills and experience in each case 
taking that balance of skills and experience into account 
and bearing in mind that the company celebrated its third 
anniversary as an independently listed company during 
the year the term of service as nonexecutive directors of 
tony rice mark pain and christopher bell all of whose terms 
of service would otherwise have expired were extended by 
a further three years additionally the term of service of the 
chairman was also extended by up to three years 
in the year under consideration the chairman has asked that the 
nomination committee develop medium term succession plans 
during 2015 for the nonexecutive directors and the chairman 
to ensure that the continuity of the board is optimised 
the board considers all of the nonexecutive directors namely 
tony rice mark pain christopher bell and julie chakraverty 
to be independent in accordance with the criteria set out in 
b11 of the code and also considered walker boyd to be 
independent upon his appointment as chairman accordingly 
over half of the directors on the board are independent in 
character and judgement and free from relationships or 
circumstances which are likely to affect or could appear 
to affect their judgement 
as a company spirit values diversity throughout its workforce 
and this is an equally important consideration at board level 
in order to ensure that the board also reflects an appropriate 
balance of skills diversity in all forms and experience this is 
a primary consideration whenever the nomination committee 
makes an appointment to the board as it evaluates the 
requirements of the role and aims to find the individual 
best suited to the role this decision is always based upon 
characteristics knowledge experience and merits regardless 
of gender further information about the split of diversity 
throughout the group can be found in the strategic report 
on page 18 strategic report governance financial statements
 spirit pub company plc annual report 2014 51
board evaluation
during the year an external evaluation of the board was 
conducted by absolute board excellence since the company’s 
incorporation in 2011 this was the first time that the board had 
been externally evaluated the results of the evaluation were 
discussed at the board meeting in july 2014 areas of particular 
strength identified by the review included board relationships 
both within the board and between the board and the wider 
business and the quality of leadership and debate
the principal recommendations from the evaluation included 
widening board debate to include further external perspective 
where appropriate improving the quality of management 
information by further clarifying agendas and the format   
content of board papers and encouraging a more consistent 
consideration of development and succession planning 
relations with shareholders
the company encourages twoway communication with both 
its institutional and private shareholders and aims to provide 
a timely response to all enquiries there is a regular dialogue 
with institutional shareholders as well as presentations after 
the company’s annual and interim results announcements 
the chairman also writes to the top ten shareholders  
on an annual basis inviting them to correspond with the 
nonexecutive directors if they so wish
the board uses its annual general meeting agm to 
communicate with institutional and private shareholders and 
welcomes participation from all shareholders the chairman 
seeks to ensure that the chairmen of the nomination audit  
risk and remuneration committees and the sid attend the 
agm to answer any relevant questions all members of the board 
are available to meet with major shareholders if requested
communications with shareholders are given high priority 
to ensure that there is a balanced and well understood 
assessment of the group’s position and prospects 
the company aims to provide as much information as is 
commercially sensible in each case to existing and potential 
investors recognising that proper communication is the best 
way to develop understanding of the group’s strategy 
performance and growth potential 52 spirit pub company plc annual report 2014
nomination committee report
introduction from the chairman
as there were no changes to the board composition 
during the year the attention of the nomination committee 
the committee was focused on development of succession 
planning for directors and the executive management team
further details about the membership of the committee  
its role and responsibilities and the activities it has carried out 
during the year are set out below 
walker boyd
nomination committee chairman
3 november 2014
membership of the committee
walker boyd committee chairman
tony rice
mark pain
christopher bell and
julie chakraverty 
the committee’s terms of reference state that it will meet at 
least twice annually but otherwise then as and when required 
the chief executive officer hr director and company 
secretary may also attend meetings of the committee  
although they are not permitted to be present during 
discussions in connection with their own succession 
during the year two meetings of the committee took place 
which focused on
  succession planning for directors and senior executives 
including nonexecutive director rotation
  leadership development
  reviewing any conflicts of interest at board level
role and responsibilities
the main purpose of the committee is to review the structure 
size and composition including the skills knowledge and 
experience of the board and make recommendations to 
the board with regard to any adjustments that are deemed 
necessary this is to ensure that it is effective in discharging 
its responsibilities
performance evaluation
it is usual practice for the board to undergo an internal 
evaluation of its own performance and that of its committees 
and chairman this year however the process has been led 
by an external evaluator further details about the evaluation 
can be found in the corporate governance statement on 
pages 48 to 51
in addition to assist their own personal development each 
director biannually reviews their personal development plan 
to set their goals and assess their progress during the year 
ongoing training and proactive coaching is provided by the 
company to develop support and update the knowledge and 
skills of its board including days out in trade regular meetings 
with the executive management team internal and external 
courses and continual dialogue with peers and colleagues 
directors are expected to take responsibility for their own 
individual developmental needs in conjunction with the 
chairman company secretary and hr director
appointment replacement and removal of directors
although there were no changes to the board composition 
during the year the committee maintains formal and rigorous 
selection and appointment criteria which is supplemented 
by an intensive induction process which includes
  individual time with the chairman the chief executive 
officer and other members of the board and executive 
management team
  meetings with the company’s external advisers brokers  
and lawyers
  an internal induction course which introduces the group  
its divisions and its employees
  visits to the group’s managed and leased pubs and those  
of competitors 
the company may by special resolution remove any director 
before the expiration of his period of office more particularly 
the office of a director shall be vacated if i he resigns or offers 
to resign and the board resolves to accept such offer ii he 
becomes physically or mentally incapable of acting as a director 
and remains so for more than three months iii he is absent 
without the permission of the board from meetings of the board 
whether or not an alternate director appointed by him attends 
for six consecutive months and the board resolves that his 
office is vacated iv he becomes bankrupt or compounds 
with his creditors generally v he is prohibited by law from 
being a director vi he ceases to be a director by virtue of the 
companies act 2006 or vii he is removed from office pursuant 
to the company’s articles of association strategic report governance financial statements
 spirit pub company plc annual report 2014 53
audit  risk committee report
introduction from the chairman
all members of the audit  risk committee the committee 
are independent nonexecutive directors of the company  
and all contribute their own financial experience to effectively 
assess the external and internal audits of the company and 
its internal control and risk management systems
the committee focused on a number of topics during the year 
and ensured that it remained uptodate with revisions to the 
code and the related guidance on audit committees further 
details about the membership of the committee its role and 
responsibilities and activities it has carried out during the year 
are set out below 
mark pain
audit  risk committee chairman
3 november 2014
the members of the committee comprise mark pain 
chairman of the committee tony rice christopher bell 
and julie chakraverty the board is satisfied that mark pain 
has significant recent and relevant financial experience 
biographies of the audit  risk committee members 
are shown on pages 40 and 41
the committee is compliant with section c31 of the code 
and satisfies the requirements of chapter 71 of the dtr 
in accordance with its terms of reference the committee holds 
a minimum of four meetings each financial year with further 
meetings called as required the meetings are held quarterly 
at an appropriate time and align to the external reporting 
timetable ensuring that there is sufficient time to address any 
issues all members of the committee are expected to attend 
all of the meetings and attendance at these meetings by the 
committee members is shown in the corporate governance 
statement on page 50 the internal and external auditors 
together with the chairman finance director the company 
secretary and other persons may also attend the meetings 
by invitation
during the financial year to 23 august 2014 four meetings 
of the committee took place which focused on
  reviewing the 2014 interim results and the 2014 annual 
report and financial statements the ‘annual report’
  reviewing the antibribery hospitality and ethics procedures 
and policies
  monitoring the company’s risk management framework 
and internal controls for which the board has overall 
responsibility
  the internal audit function and nonaudit services provided 
by the external auditor
  the internal audit plan for the year and the monitoring 
of progress in delivery of that plan
  internal audit reports delivered during the year
  the external audit plan
  reviewing the company’s financial controls treasury 
and whistleblowing policies
  reviewing and evaluating the effectiveness and the overall 
performance of the internal and external auditors
  reviewing the business continuity procedure and incident 
management planning
  reviewing and updating the company’s risk register
  approving certain structural changes to the internal audit 
and risk management functions towards the end of the year 
  reviewing the authority limit and contract authorisation 
procedures
the committee’s responsibilities are set out in its terms of 
reference which are available on the company’s website 
they are unchanged in the year and comprise all matters 
indicated by the dtr and the code including
  monitoring and reviewing the integrity of the annual and 
interim financial statements of the company and any formal 
announcements relating to the company’s financial 
performance
  reviewing the policies and process for identifying and 
assessing the company’s business risks
  reviewing the internal audit plan and resourcing and 
monitoring and reviewing the effectiveness of the company’s 
internal audit function
  making recommendations to the board in relation to the 
appointment reappointment and removal of the external 
auditor and approving the remuneration and terms of 
engagement of a new external auditor
  approving and reviewing the policy on the use of the external 
auditor for nonaudit services
  reviewing and monitoring the external auditor’s 
independence and objectivity and the effectiveness of the 
audit process taking into consideration relevant guidance
at the board’s request the committee has reviewed the 
annual report for the year ended 23 august 2014 and has 
advised the board that taken as a whole they are fair balanced 
and understandable and provide the information necessary for 
shareholders to assess the companys performance business 
model and strategy  54 spirit pub company plc annual report 2014
audit  risk committee report
continued
significant issues considered by the committee 
in relation to the financial statements for 201314 
during the year a number of areas in relation to the financial 
statements were considered by the committee including areas 
raised by the external auditor kpmg llp of which the most 
significant were
valuation of the property portfolio including operating 
leases and those assets held for sale 
the committee considered the outputs of the estate valuation 
at year end reviewed the methodology adopted by the external 
valuers and management and discussed the approach with 
the external auditor the committee also considered whether 
assets held for sale are appropriately valued and presented
recoverability of goodwill 
the committee reviewed management’s paper which set out 
the assumptions used and conclusions reached in assessing 
the recoverability of goodwill which was further supported by 
sensitivity analysis 
deferred tax
the committee considered the recoverability of the group’s 
deferred tax assets and concluded that these were appropriately 
recognised in the financial statements
the committee also reviewed a number of other areas 
including the process for accounting for supplier rebates 
and concluded that these were not material issues
risk management internal control  
and internal audit
the committee is dedicated to ensuring that the ‘three lines 
of defence’ of controls management oversight and independent 
assurance are functioning effectively in protecting the interests 
of shareholders 
risk management
the responsibility for managing risk is retained by the board 
but the committee’s terms of reference provide that the group’s 
risk management policy and framework the adequacy of risk 
information and reporting together with the effectiveness of the 
internal control environment and the effectiveness of internal 
audit are monitored by the committee
during the year the committee reviewed the group’s 
risk register and the risk management framework which 
provides that business risks are reviewed at least quarterly 
the committee performs a full review of the risk register twice 
a year reviewing the appropriateness of the considered 
risk profile and challenging mitigations and action plans as 
necessary a summary of these risks can be found in spirit’s 
principal risks and uncertainties on pages 26 to 29
internal control
the committee also has oversight of internal control systems 
the features of the group’s systems of internal control include
  an established organisational structure with clearly defined 
lines of responsibility and delegation of authority
  documented policies and procedures which are 
regularly reviewed
  comprehensive budgets and forecasts which are reviewed 
and revised on a regular basis with performance monitored 
against them and explanations obtained for material variances
  a detailed investment approval process with a hierarchical 
approval structure and post investment appraisals
  an internal audit function which performs regular 
assessments of the quality and effectiveness of risk 
management and of the internal control environment
  regular reporting from internal audit control updates 
changes to accounting policies as well as any accounting 
and legal developments
  documented fraud ethics bribery and whistleblowing 
policies and procedures regular review of current 
whistleblowing regulations and reporting of any 
whistleblowing incidents to the committee whether  
using the whistleblowing process or otherwise
  a regular review of treasury policies and activities 
by the committee
  appointment of staff of the highest calibre to fulfil their allotted 
responsibilities together with an established programme of 
management and staff development and succession planning
  formal financial reporting processes for preparation of the 
consolidated accounts
during the year the effectiveness of the system of internal 
control of the group was kept under review to ensure the 
effectiveness of those controls in order to safeguard 
shareholders’ interests and the group’s assets and offer 
assurance that robust financial reporting processes are in place 
such systems including controls for financial operational 
compliance and risk management matters are designed to 
manage rather than eliminate the risk of failure to achieve the 
group’s strategic objectives however it should be recognised 
that these systems can only provide reasonable and not 
absolute assurance against material misstatement or loss
internal audit
the internal audit plan is made up of key audit areas that are 
reviewed annually rotational audits that are reviewed at least 
once every five years followup audits audits driven by the 
risk register and adhoc reviews as requested the committee 
has an active role in setting and approving the internal audit plan 
the internal audit function is cosourced with pwc and the 
committee undertakes an assessment of performance of the 
function as a whole on an annual basis via a combination of 
questionnaires and more in depth interviews of key stakeholders strategic report governance financial statements
 spirit pub company plc annual report 2014 55
external auditor
one of the primary purposes of the committee is to make 
a recommendation on the appointment or reappointment 
of the external auditor spirit has been an independently audited 
plc for three years and the date of appointment of the external 
auditor was on demerger on 1 august 2011 as such partner 
rotation and auditor rotation have not been required 
nor otherwise deemed necessary in view of the benefits of 
continuity there are no contractual obligations which acted 
to restrict the committee’s choice of external auditor
during the year a new approach was adopted to review the 
effectiveness of external audit whereby a thorough review will 
be performed every three years or more regularly as required 
and a more high level review in intervening years this approach 
uses questionnaire and interview tools in combination to 
consider feedback in its proper context given that this was the 
first year of adopting this approach a thorough review has been 
performed this year 
to maintain the independence of the external auditor the board 
has determined a policy detailing what nonaudit services can 
be provided by the company’s external auditor under this 
policy the external auditor is invited to provide services where 
their position as auditor renders them best placed to undertake 
the work in the case of other services no contracts in excess 
of £50000 in value can be awarded to the external auditor 
without prior approval furthermore no contracts can be 
awarded once commitments of half the current audit fee have 
been made without prior approval during the year £58000 
in nonaudit fees were paid to the external auditor
employee concerns
the group has in place documented ethics policies and 
a structured whistleblowing process to enable employees 
to raise concerns about possible improprieties that may 
occur within the group any reported incidents are internally 
investigated and documented with follow up action taken 
as appropriate 56 spirit pub company plc annual report 2014
remuneration report
introduction from the chairman
i am pleased to take this opportunity to summarise the 
company’s remuneration strategy and the way it has been 
implemented during the year under review
spirit’s senior management team have performed very well 
this year as well as exceeding their financial targets for both 
the leased and managed divisions they have delivered on 
a number of objectives that will position the business for future 
success these include the debt reprofiling that will give us 
the financial capability to acquire and invest in properties over 
the next few years and the commencement of the acquisition 
programme with the purchase of three standalone sites and 
19 orchid sites that further improve prospects for growth 
as a people oriented business our success in being ranked 
16th in the sunday times top 25 best big companies to work 
for 2014 is particularly pleasing and reinforces our view of the 
strength of the leadership at all organisational levels
in accordance with the new regulations governing the disclosure 
and approval of directors’ remuneration our remuneration 
report has been split into two parts the remuneration policy 
is being put to a binding vote at the agm on 13 january 2015 
and the directors’ remuneration report will be put to a second 
nonbinding vote
tony rice
chairman remuneration committee
3 november 2014
remuneration outcomes in 201314
during the year the company’s strong portfolio of managed 
brands continued to achieve further growth with like for like 
sales up 44
1
 following the stabilisation of the leased estate 
in the prior year the leased estate returned to growth in the 
year with like for like net income increasing by 42
1

reflecting the progress of the group’s profit performance 
during the financial year the level of bonus payable for the 
year was 1065 of salary for the chief executive officer 
and 71 of salary for the finance director
the 50 of the company’s long term incentive plan 2011 
ltip awards subject to an earnings per share eps 
performance condition completed their performance period 
in the year with the eps targets fully achieved resulting in 
100 of these awards vesting
the remaining 50 of the 2011 ltip awards are subject to a 
relative total shareholder return tsr performance condition 
for which the performance period ends on 8 november 2014 
current calculations estimate that the company’s performance 
will be between median and upper quartile with 822 of these 
awards forecast to vest the final results for these awards will 
be reported in next year’s remuneration report 
remuneration arrangements for 201415
the remuneration policy is designed to drive business 
performance and in so doing deliver shareholder value 
during the year we made no substantial changes to our 
policy and the main features of the remuneration arrangements 
for executive directors are as follows
  base salaries were reviewed and were increased by 2 
from october 2014 which is in line with the general workforce
  the other elements of fixed pay benefits and pension 
remain unchanged
  annual bonus continues to be capped at a maximum of 
150 of base salary for the chief executive officer and 
100 of base salary for the finance director in each case 
75 is based on financial metrics and 25 is based on the 
achievement of individual targets no bonus will be payable 
unless a threshold level of profit before tax pbt is achieved
  long term incentive awards are granted under the company’s 
ltip  grant levels in november 2014 will be 150 and 100 
of base salary for the chief executive officer and finance 
director respectively awards will vest for a combination of 
sliding scale relative tsr and adjusted fully diluted eps 
performance targets the performance targets remain 
consistent with those applying to awards granted in the 
prior year
i hope that you will be supportive of the two resolutions 
to approve the remuneration report at this year’s agm
1  growth rates are quoted on a 52 week vs 52 week basis to exclude the benefit 
of an extra week’s trading in 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 57
future policy table for executive directors
element purpose and link 
to strategy
operation including 
framework to assess 
performance
maximum 
opportunity
performance 
metrics
salary
attract motivate and retain 
the best candidate for 
the role 
reflect an individual’s 
skills experience role 
and responsibilities
the committee normally 
reviews salaries for 
executive directors every 
12 months unless there is 
a significant change in 
responsibilities
any changes are normally 
effective from october 
each year
pay reviews take into 
account personal 
performance changed 
responsibilities and pay 
review budgets for the 
general workforce  
the committee also 
considers the results of 
benchmarking against 
companies of a similar size 
and in similar industries and 
the impact of any increase 
to base salaries on the total 
remuneration package
the salaries for new 
executive directors 
including internal 
promotions will take into 
account the above and 
be set to reflect their skills 
and previous experience
there is no prescribed 
maximum salary or 
maximum annual increase 
the increase will typically 
be in line with the general 
increase for the broader 
employee population but 
on occasions may need to 
recognise for example an 
increase in the scale scope 
or responsibility of the role 
current salary levels are 
disclosed in the directors’ 
remuneration report
none
benefits
provide market competitive 
benefits or cash alternative
benefits in kind include 
the provision of a car or 
car allowance payment of 
private fuel private medical 
scheme life assurance and 
permanent health insurance
the committee may wish 
to offer executive directors 
other employee benefits 
on broadly similar terms 
as those offered to other 
employees from time to time
no prescribed maximum
the value of insured 
benefits can vary from year 
to year based on the cost 
of providing those benefits
car allowance of £11000 
or equivalent company car
none
remuneration policy not subject to audit 
the approach of the remuneration committee the committee
to remuneration is designed to help drive business performance 
and maximise shareholder value in order to align the interests 
of the executive directors and other members of the executive 
management team with shareholders’ interests the committee 
has developed a remuneration approach which achieves 
an appropriate balance between fixed and variable pay 
accordingly a significant proportion of remuneration is linked 
to the achievement of challenging short and long term 
performance targets
the committee regularly reviews its approach in light of market 
conditions performance strategy key performance indicators 
the structure and levels of remuneration across the group 
and developments in corporate governance and best practice 
the committee also considers the level of social and 
governance risk associated with its approach to remuneration 
to ensure that there are sufficient safeguards in this regard 
for the purposes of section 226d6b of the companies act 
2006 it is intended that the following policy will take effect 
from the date of the agm which is scheduled to be held on 
13 january 2015 58 spirit pub company plc annual report 2014
remuneration report
continued
element purpose and link 
to strategy
operation including 
framework to assess 
performance
maximum 
opportunity
performance 
metrics
pension
provide a market 
competitive pension
contribution may be made 
to the group’s defined 
contribution pension plan 
and  or a cash alternative 
may be provided eg 
where hmrc limits would 
be exceeded 
25 of basic salary for the 
chief executive officer and 
20 of basic salary for the 
finance director 
where a cash alternative 
is offered these rates are 
reduced by the employer’s 
national insurance liability
none
annual bonus
drive and reward the 
achievement of short term 
company objectives
deferred element 
encourages long term 
shareholding and aids 
retention whilst discouraging 
excessive risktaking
based on a range of 
stretching targets with 
the majority of the bonus 
subject to financial 
measures targets are 
reviewed annually as part 
of the budgeting process 
twothirds of the bonus 
is normally paid in cash 
the remaining onethird 
net of tax is deferred into 
shares and held for a further 
two years
dividends are received 
on the deferred shares
clawback provisions are 
in place
150 of salary maximum 
for 201415 levels see 
page 63 of the directors’ 
remuneration report
performance period 
normally measured over 
one year 
performance metrics 
will be primarily related 
to profitbased targets 
although other metrics 
eg personal and  or 
strategic objectives may 
apply to part of the bonus
no more than 20 of 
bonus will be payable 
for threshold financial 
performance
long term 
incentive plan
incentivise share ownership 
retention and longterm 
performance in line with 
group strategy
awards have a performance 
period of three years
the level of vesting is 
dependent on continued 
employment over the three 
year vesting period and 
achievement of the agreed 
performance conditions 
the committee will review 
annually the suitability of 
the agreed performance 
measures
dividend equivalents may be 
awarded in respect of vested 
ltip awards
clawback provisions are 
in place
maximum annual award 
is 200 of salary  
for 201415 levels see  
page 63 of the directors’ 
remuneration report
normally based on a three 
year performance period
will be subject to financial 
targets eg eps and  or 
share price related 
measures eg tsr
a maximum of 25 of an 
award vests at threshold 
performance increasing 
to full vesting at maximum 
performance strategic report governance financial statements
 spirit pub company plc annual report 2014 59
element purpose and link 
to strategy
operation including 
framework to assess 
performance
maximum 
opportunity
performance 
metrics
allemployee share 
incentive plan
encourages long term 
shareholding in the 
company and commitment 
to the company 
invitations made by the 
committee under the 
hmrc approved share 
incentive plan
matching shares granted 
at a 11 ratio to the 
partnership shares
executives are eligible to 
participate on the same 
terms as other employees 
in accordance with the 
prescribed hmrc limits 
continued employment 
with the group and 
commitment to hold the 
partnership shares for a 
minimum of three years
shareholding 
guidelines
encourages long term 
shareholding in the 
company to provide 
alignment between 
executives and 
shareholders
requirement to build up 
a significant shareholding 
targets are set to encourage 
executive directors to retain 
shares received from share 
incentive schemes only 
beneficially held shares 
and those held under share 
incentive schemes with 
no performance conditions 
attached count towards 
the shareholding guidelines
the executive directors’ 
shareholding and position 
against the requirement 
are set out on page 68 
of the directors’ 
remuneration report
none
nonexecutive 
directors’ fees
reflects time commitment 
and responsibilities of 
each role
reflects level of fees 
paid for similar positions 
in the market
cash fee normally paid 
four weekly
fees are normally reviewed 
annually but an increase is 
not always given
includes a chairman’s 
fee and standard 
nonexecutive director fee 
additional fees are payable 
to committee chairs and the 
senior independent director
no maximum fee or 
maximum fee increase
fee increases for 
nonexecutive directors 
will not normally exceed 
the average salary increase 
awarded to executive 
directors although increases 
may be above this level 
eg if there is an increase 
in the time commitment 
or responsibility level
nonexecutive directors 
will be reimbursed for any 
normal business related 
expenses and any taxable 
benefit implications that 
may result
current fee levels are 
disclosed on page 63  
of the directors’ 
remuneration report
the maximum limit in the 
articles of association is 
£05m in aggregate
none
choice of performance measures and target setting
for both the annual bonus and long term incentive plans 
our policy is to choose performance measures which help 
drive and reward the achievement of our strategy and also 
provide alignment between employees and shareholders 
the committee reviews metrics annually to ensure they 
remain appropriate and reflect the future strategic direction 
of the group
the annual bonus is primarily based on financial measures which 
the committee believes will reward executive directors for 
sustainable business performance and enhance shareholder 
value as a result of the committee’s desire to align executive 
reward with the company’s key strategic objectives part of the 
bonus may be based on personal objectives this will reward 
executive directors for the achievement of specific and 
challenging individual targets providing that the threshold level 
of performance against financial measures is achieved for each 
performance metric maximum payout requires significant 
outperformance of target levels 60 spirit pub company plc annual report 2014
remuneration report
continued
for long term incentives the committee believes that the 
blend of eps and tsr targets provides an appropriate 
balance between incentivising and rewarding good financial 
performance on the one hand whilst on the other hand 
providing a strong and direct alignment with the interests 
of institutional shareholders by rewarding stock market 
outperformance performance against the eps and tsr 
targets will be independently calculated and then reviewed 
by the committee the committee retains discretion over 
the calculation of eps in order to appropriately adjust for 
any material oneoff items including but not limited to major 
acquisitions changes in accounting policies and major share 
issues and any other variation to the company’s share capital
the committee retains discretion to use different measures 
for future awards if these are better aligned to the company’s 
strategy the committee will consult with shareholders 
as appropriate
approach to recruitment
the principle applied in recruitment of a new executive director 
is for the remuneration package to be set in accordance with 
the terms of the company’s approved remuneration policy in 
force for existing executive directors at the time of appointment 
each element of the remuneration policy is set out in further 
detail below 
salary
the salaries for new executive directors including internal promotions will be set to reflect their skills previous experience 
and package the company’s intended pay positioning and the market rate for the applicable role 
in those cases where it is appropriate to offer a below median salary initially the committee will have the discretion to allow 
phased salary increases over a period of time for newlyappointed executive directors including internal promotions to reflect 
increased experience as a result in certain years this may involve increases in base salary that are in excess of the rate for 
the wider workforce and inflation
benefits
benefits will be provided in line with those offered to other executive directors taking account of local market practice 
with relocation expenses or arrangements provided if necessary legal fees and other costs incurred by the individual may 
also be paid by the company
pension
in line with policy offered to existing executive directors
incentive 
opportunity
the aggregate ongoing ie after the year of appointment incentive opportunity offered to new recruits will be no higher than 
that offered under the annual bonus plan and the ltip policy to the existing executive directors in the year of appointment 
the annual bonus opportunity will be no higher than that offered to existing executive directors the committee may award 
up to 200 of salary under the ltip although in exceptional circumstances the committee may go above this limit in relation 
to buyout awards see below different performance measures and targets may be set initially for the annual bonus plan 
and ltip taking into account the different responsibilities of the individual and the point in the financial year at which they join
‘buyout’ awards
the committee may offer additional cash and  or sharebased ‘buyout’ awards when it considers these to be in the best 
interests of the company and therefore shareholders including awards made under listing rule 942 r any such ‘buyout’ 
payments would be based solely on remuneration lost when leaving the former employer and would reflect the delivery 
mechanism ie cash shares options time horizons and performance conditions attached to that remuneration 
where appropriate the committee may make use of the exceptional limit under the ltip to facilitate these awards
transitional 
arrangements 
for internal 
appointments 
to the board
in the case of an internal appointment any variable pay element awarded in respect of the prior role may be allowed to pay 
out according to its terms on grant adjusted as relevant to take into account the appointment in addition any other ongoing 
remuneration obligations existing prior to appointment may continue provided that they are put to shareholders for approval 
at the first agm following the appointment
differences in pay policy between employees 
and executive directors
the remuneration policy for executive directors aims to attract 
and retain the best staff and to focus their remuneration on 
the delivery of long term sustainable growth by using a mix 
of salary benefits bonus and longer term incentives 
there are some differences in the structure of the remuneration 
policy for the executive directors and other employees which 
the committee believes are necessary to reflect the different 
levels of responsibility of employees across the company 
the remuneration of executive directors is tailored to have 
a greater focus on performance related pay compared with 
that of other employees across the company this includes 
the award of an annual ltip to the executive directors as it 
is understood they have the greatest potential to influence 
company level performance strategic report governance financial statements
 spirit pub company plc annual report 2014 61
policy on payment for loss of office
payment for termination will be determined according to the 
following principles set out below
fixed 
remuneration
the executive director will be entitled to base salary pension and other benefits for any part of the notice period worked 
and any period of garden leave on termination the executive director will be entitled to payment for any accrued but 
untaken holiday
the company may elect to pay a sum in lieu of notice for all or any part of the notice period calculated by reference to 
the value of salary and pension and other contractual benefits in respect of mike tye such payments will be made in 
instalments subject to mitigation 
where the employment is being terminated by the company for gross misconduct or other circumstances entitling the 
company to treat the contract as at an immediate end termination will be immediate and no payment in lieu of notice will 
be made
annual bonus
under the annual bonus plan an employee who ceases employment or is under notice prior to the payment of bonus 
typically will not receive any payment however the committee has discretion to make a bonus payment payable in cash 
but prorated for the period of time served from the start of the financial year to the date of termination excluding any garden 
leave any such bonus payment typically would be subject to the normal bonus targets tested at the end of the year 
and would take into account individual performance over the notice period served
deferred shares
bonus deferred into shares will be released once the remaining deferral period has elapsed 
long term 
incentive plan
under the ltip unvested awards will normally lapse upon cessation of employment however if an executive director ceases 
employment in certain specified circumstances or for any other reason at the discretion of the committee the committee 
has discretion to allow awards to vest at the normal vesting date or earlier if the committee exercises this discretion awards 
are prorated to reflect time served since the date of grant and are based on the achievement of the performance criteria as 
determined by the committee
share incentive 
plan
the executive directors participate on the same basis as for other employees 
approach to service contracts and letters 
of appointment
the committee’s policy is to offer service contracts for 
executive directors with notice periods of 12 months  
all nonexecutive directors’ appointments are terminable  
on one month’s notice by either party with the exception  
of the chairman whose appointment is terminable at six 
months’ notice on either side 62 spirit pub company plc annual report 2014
remuneration report
continued
illustration of remuneration scenarios
the chart below details the hypothetical composition of 
each executive director’s remuneration package and how 
it could vary at different levels of performance based on the 
application of the policy set out on pages 57 to 61 for 201415
minimum maximum
■ ltip
■ bonus
■ fixed pay
target
fd
minimum maximum target
ceo
£651
100
£1095
£638
£419
100 66
21
13
38
31
31
£2133
35
35
31
£1132
16
26
57
executive directors’ remuneration
£000
the above chart is for indicative purposes only and does 
not include any assumptions in respect of future share price 
movements the amounts shown are those applicable for 
201415 with the exception of benefits which are based 
on actual amounts for 201314 the assumptions in respect 
of each scenario are as follows
  minimum fixed remuneration only ie salary benefits 
and pension the salary and pension amounts are those 
applicable for 201415
  target fixed remuneration plus target annual bonus 
opportunity 40 of the maximum bonus opportunity 
plus 25 vesting of the maximum award under the ltip 
  maximum fixed remuneration plus maximum annual bonus 
opportunity plus 100 vesting of the maximum award 
under the ltip 
  annual bonus maximum and ltip award levels are based 
on the application of the policy for 201415 as set out in the 
directors’ remuneration report
statement of consideration of employment conditions 
elsewhere in the group
the committee does not consult directly with employees 
when determining remuneration policy for executive directors 
however the committee is informed of pay decisions across 
the organisation including information on general pay increases 
and pay structures to ensure that decisions on executive 
director pay are made with reference to the policy applying 
throughout the organisation and are consistent with those on 
which pay decisions for the rest of the workforce are taken 
how shareholder views are taken into account
the committee considers shareholder feedback received 
on the directors’ remuneration report each year and any 
comments received from shareholder representative bodies 
more generally shareholders’ views are seriously considered 
when shaping and implementing remuneration policy when 
any material changes are proposed to the remuneration policy 
the committee chairman will inform major shareholders in 
advance and will generally offer a meeting to discuss these 
key areas of discretion in the remuneration policy
the committee operates the group’s variable incentive 
plans according to their respective rules and in accordance 
with hmrc rules where relevant to ensure the efficient 
administration of these plans the committee will apply certain 
operational discretions these discretions are implicit in the 
policy stated above but we have listed them for clarity 
they include but are not limited to
  discretion in exceptional circumstances to amend previously 
set incentive targets or to adjust the proposed payout to 
ensure a fair and appropriate outcome
  certain decisions relating to the long term incentive plan 
awards for which the committee has discretion as set out 
in the rules of the relevant share plans which have been 
approved by shareholders 
  the decisions on exercise of malus and  or clawback rights
legacy arrangements
for the avoidance of doubt in approving this remuneration 
policy authority is given to the company to honour any 
commitments entered into with current or former executive 
directors before the current legislation on remuneration policies 
came into force or before an individual became an executive 
director such as the payment of outstanding incentive awards 
even where it is not consistent with the policy prevailing at the 
time such commitment is fulfilled details of any payments to 
former executive directors will be set out in the directors’ 
remuneration report as they arise 
external directorships for executive directors
subject to board approval executive directors are permitted 
to accept one outside appointment on an external board 
or committee as long as it is not deemed to interfere with 
the business of the company any fees received in respect 
of such an appointment which are disclosed as a footnote 
to the directors’ single total figure of remuneration table set out 
on page 64 are retained by the executive directors concerned strategic report governance financial statements
 spirit pub company plc annual report 2014 63
service contracts and letters of appointment
the service contracts and letters of appointment of the 
directors include the following terms
executive directors
company 
notice period contract date
unexpired term of 
contract months
mike tye 12 months 26 june 2008 rolling contract
1
paddy gallagher 12 months 7 november 201 1 rolling contract
1
nonexecutive 
directors
company 
notice period
date of first 
appointment
unexpired term of 
contract months
walker boyd 6 months 4 july 2011 34
mark pain 1 month 4 july 2011 34
tony rice 1 month 4 july 2011 34
christopher bell 1 month 1 august 2011 35
julie chakraverty 1 month 20 january 2012 4
1  contract will continue until terminated by notice either by the company  
or the director
directors’ remuneration report
the following report will be subject to a second nonbinding 
vote at the forthcoming agm and sets out how the company’s 
remuneration policy will be implemented in 201415 and how 
it has been implemented in 201314 
application of remuneration policy for 201415
executive directors’ base salaries
the committee has awarded modest cost of living salary 
increases of 2 for the forthcoming year which reflect the 
general level of increase given to employees across the business 
basic salary
from 
6 october 2013
from 
5 october 2014
mike tye £484500 £494190
paddy gallagher £331500 £338130
pension and benefits
both mike tye and paddy gallagher have elected to receive a 
cash supplement of 25 and 20 of salary net of employer’s 
national insurance respectively in lieu of a contribution to the 
defined contribution scheme 
annual bonus plan
the annual bonus in 201415 will operate on the same basis 
as in 201314 and will be consistent with the policy detailed 
in the remuneration policy in terms of the performance 
conditions maximum bonus opportunity is 150 of base salary 
for the chief executive officer and 100 of base salary for the 
finance director payments under the bonus will be based 
75 upon the achievement of profit before tax pbt targets and 
25 on challenging personal objectives set by the committee 
the pbt target will be based on delivery of the group’s own 
internal plans which are comprehensively set scrutinised 
and agreed by the board overlaid on the financial forecasts 
and expectations in the investor community threshold payout 
being 2667 of the bonus subject to the pbt target will be 
awarded for achieving 98 of budgeted pbt rising to maximum 
payout being 75 of the maximum bonus for achieving 108 
of budgeted pbt
the 25 of the bonus awarded for achievement of personal 
and  or strategic objectives is also subject to an underpin and 
none of this element of the bonus will pay out if the threshold 
level 98 of budgeted pbt is not met
the specific pbt targets and the personal objectives are 
deemed to be commercially sensitive and these will be 
disclosed retrospectively in the 201516 directors’ 
remuneration report
long term incentive plan ltip
awards of 150 of base salary for the chief executive officer 
and 100 of base salary for the finance director will be made 
under the ltip in 201415 on the same terms as set out in the 
policy table the performance conditions are anticipated to be 
as follows
  eps element 50 this represents growth in the company’s 
adjusted fully diluted eps 125 of ltip awards will vest for 
annual compound eps growth of 7 pa increasing on a 
straight line basis to 25 vesting for annual compound eps 
growth of 10 pa vesting then increases on a straight line 
basis to 50 for annual compound eps growth of 12 pa
  relative tsr element 50 this represents the company’s 
tsr relative to the constituents of the ftse 250 excluding 
investment trusts and financial services companies 125 of 
ltip awards will vest if the company is ranked at the median 
increasing prorata to 50 vesting for a ranking at upper 
quartile or better
nonexecutive directors’ remuneration
fees were last reviewed in june 2014 with effect from 
24 august 2014 
201314
from 
24 august 2014
chairman’s fee £180000 £190000
base fee £42000 £45000
additional fee for chairing the 
audit  risk or remuneration 
committee £10000 £10000
senior independent director fee £3000 £3000 64 spirit pub company plc annual report 2014
remuneration report
continued
the following parts of the remuneration report are subject to audit other than elements explaining the application of the 
remuneration policy for 2014
single total figure of remuneration
the detailed emoluments received by the executive and nonexecutive directors for the year ended 23 august 2014 are shown 
below and are derived from the remuneration policy on page 57 no payments were made for loss of office and no payments 
were made to past directors
director £000 year
base salary
  fees
taxable 
benefits
1
annual 
bonus
2
long term 
incentive
3
pension 
contributions
4
other
5
total 
executive directors
mike tye 201314 483 33 514 1453 106 1 2590
201213 475 38 178 – 104 – 795
paddy gallagher 201314 331 13 234 497 60 – 1135
201213 325 15 65 – 65 – 470
chairman
walker boyd 201314 180 – – – – – 180
201213 180 – – – – – 180
nonexecutive directors
tony rice 201314 55 – – – – – 55
201213 55 – – – – – 55
mark pain 201314 52 – – – – – 52
201213 52 – – – – – 52
christopher bell 201314 42 – – – – – 42
201213 42 – – – – – 42
julie chakraverty 201314 42 – – – – – 42
201213 42 – – – – – 42
1  taxable benefits include the provision to every executive director of a car or car allowance including payment of private fuel and running expenses and private 
medical insurance in the 201213 annual report the figures included nontaxable benefits
2  the annual bonus is paid twothirds in cash and onethird in shares with the portion deferred into shares subject to an additional holding period of two years  
with no further performance conditions attached the calculation for the 201314 annual bonus payment amount is set out on page 65 
3  long term incentive awards vesting under the ltip this value incorporates an estimated vesting of the tsr element of the 2011 ltip for which the performance 
period does not end until 8 november 2014 further details are set out on pages 65 and 66 
4  mike tye receives a payment in lieu of contributions to the group’s pension scheme equivalent to 25 of salary net of employer’s national insurance 
until 21 november 2013 the company contributed an amount equivalent to 20 of salary to the group’s pension scheme on behalf of paddy gallagher  
after which he received a payment in lieu of contributions equivalent to 20 of salary net of employer’s national insurance
5  the face value of the matching awards granted under the sip in the year further details may be found on page 67 
additional information in respect of the single figure table 
annual bonus
for 201314 the maximum bonus opportunities for mike tye and paddy gallagher were 150 and 100 of salary respectively 
seventyfive per cent of the payout was determined by performance against profit targets established at the start of the financial 
year the remaining 25 was measured by performance against personal objectives which are subject to an underpin requiring 
the threshold profit target to be achieved before any payout can be awarded for performance against personal objectives
we have set out below performance against the profit targets and personal objectives for the 201314 annual bonus
profit targets 75 of maximum bonus opportunity
bonus payout 
 of total bonus
threshold 20
target 30
maximum 75
actual payout 51
the pbt achieved of £603m fell between the target and maximum for bonus purposes the bonus payout was equivalent to 51 
of maximum bonus the committee will disclose the actual 201314 targets in next year’s remuneration report when they are no 
longer considered to be commercially sensitive strategic report governance financial statements
 spirit pub company plc annual report 2014 65
personal objectives 25 of maximum bonus opportunity
personal objectives for executive directors are set each year and are designed to relate to the company’s priorities both financial 
and nonfinancial
for the chief executive officer in 201314 personal objectives included defining future growth strategies delivery of the key 
priorities compelling brands flawless execution talent and leadership improvement in key business ratios and development 
of the organisation structure
for the finance director in 201314 personal objectives included completion of refinancing commencement of a retail investor 
programme improving losses on onerous leases and improvement of returns on investment
the committee determined that the objectives had been largely satisfied resulting in the level of award shown in the table below
summary
201314 bonus payout  
as a  of maximum opportunity
201314 
bonus 
payout 
in £000
profit 
target 
personal 
objectives total
mike tye 51 20 71 £514
paddy gallagher 51 20 71 £234
long term incentive plan
the ltip awards granted on 9 november 2011 substantially completed their performance period in the 201314 financial year and 
accordingly have been included in the 201314 single total figure of remuneration these awards are based 50 on a threeyear 
eps growth performance condition and 50 on a relative tsr performance condition against the constituents of the ftse 250 
excluding investment trusts and financial services companies 
details of the performance targets the level of achievement against them and the resultant level of vesting are set out in the 
tables below
eps growth 50 of maximum opportunity
annual compound growth in adjusted  
diluted eps over the period
2
  of ltip award which will vest
performance condition less than 7 per annum 0
7 per annum 125
10 per annum 25
15 or more per annum 50
actual performance
1
155 per annum 50
1  in determining the level of vesting achieved for the november 2011 ltip award the committee has exercised its discretion in accordance with the performance 
condition to ensure that eps for 2014 is measured on a basis consistent with the eps for 2011 as envisaged by the committee at the time of grant the 2014 eps 
has therefore been adjusted to 74 pence to reflect the change in budgeted interest charges arising from the debt reprofiling which completed in november 2013 
for the same reason an adjustment will also be made to the 2015 eps for the ltip awards made in november 2012
2 vesting on a straight line basis between these targets
tsr performance 50 of maximum opportunity
the following table refers to tsr performance to 30 september 2014 the final vesting results will be provided in next year’s 
remuneration report
rank of the company’s tsr against the  
tsr of the members of the comparator group  of ltip award which will vest
performance condition below median 0
at median 125
between median and upper quartile between 125 and 50 on a straightline basis
upper quartile or above 50
actual performance 5862 of 188 companies 411
1
1  tsr has been calculated using a base average share price plus dividends over the three months to 8 november 2011 and an end average share price 
plus dividends over the period 9 august 2014 to 30 september 2014 66 spirit pub company plc annual report 2014
remuneration report
continued
summary 
201314 ltip expected payout 
as a  of maximum opportunity
201314 
expected 
number of 
ltip shares 
vesting
201314 
expected 
face value 
of ltip 
shares 
vesting
1
£000 eps growth 
tsr 
performance total
mike tye 50 411 911 1939166 £1453
paddy gallagher 50 411 911 663398 £497
1 the face value of ltip shares vesting is calculated using the average share price over the final quarter of the financial year being 7494 pence
 
scheme interests awarded during the year
ltip awards granted in the year
on 8 november 2013 executive directors were granted awards under the ltip which will vest in 2016 with one half of the award 
subject to challenging eps growth targets and the remaining half subject to a relative tsr performance condition against the 
constituents of the ftse 250 excluding investment trusts and financial services companies further detail on these awards 
is set out below
executive
number of 
ltip awards
1
basis face value
2
mike tye 961564 150 of base salary £726750
paddy gallagher 438608 100 of base salary £331500
1  ltip awards are structured as nilcost options
2  based on a share price of 7558 pence which was the average share price over three dealing days immediately prior to grant
one half of the ltip awards granted on 8 november 2013 are subject to a growth in eps performance condition over the three 
financial years to 20 august 2016 this half of the awards vest according to the following schedule
annual compound growth in adjusted diluted eps
1
 of ltip award which will vest
less than 7 per annum 0
7 per annum 125
10 per annum 25
12 or more per annum 50
1 vesting on a straight line basis between these targets
the remaining half of the awards granted on 8 november 2013 are subject to a relative tsr performance condition against 
the constituents of the ftse 250 excluding investment trusts and financial services sector companies at the date of grant 
tsr performance is measured over the period 8 november 2013 to 7 november 2016 with the awards vesting in accordance 
with the following schedule 
rank of the company’s tsr against the  
tsr of the members of the comparator group  of ltip award which will vest
below median 0
at median 125
between median and upper quartile between 125 and 50 on a straightline basis
upper quartile or above 50
deferred share bonus
one third of all bonuses paid after tax are deferred into company shares and released after a two year period with no 
further performance conditions attached the following shares were acquired on 1 november 2013 in respect of the 201213 
financial year
executive
number of 
share bonus 
plan sbp 
awards face value
1
mike tye 42961 £31469
paddy gallagher 15676 £11483
1 based on a share price of 7325 pence which was the average share price over three dealing days immediately prior to grant strategic report governance financial statements
 spirit pub company plc annual report 2014 67
sip options granted in the year
the group operates a hmrc approved sip scheme all eligible employees including executive directors may be invited to 
participate on similar terms for a fixed period of three years the face value of the matching awards are included in the other 
column of the single figure table as they are not subject to any performance conditions aside from retaining the shares and 
remaining in employment with the company for a period of three years
executive
number of 
partnership 
shares 
purchased 
during 
the year
number of 
dividend 
shares 
purchased 
during 
the year
number of 
matching 
shares 
conditionally 
awarded 
during 
the year
face value 
of matching 
shares
1
vesting 
date
2
mike tye 2068 314 2068 £1530 various
paddy gallagher 0 0 0 £0 various
1 based on a closing share price of 74 pence
2  participants buy shares monthly under the share incentive plan and the company provides one matching share for each share purchased  
these are first available for vesting three years after purchase
directors’ interests in shares
the table below sets out details of executive directors outstanding share awards
at 17 august 
2013
granted 
during the 
period
exercised 
during the 
period
lapsed
during the 
period
at 23 august 
2014
date of 
award
date of 
release
mike tye
2011 ltip
1
2128613 – – – 2128613 091111 091114
2012 ltip
1
1185918 – – – 1185918 091112 091115
2013 ltip
1
– 961564 – – 961564 081113 081116
2011 sbp
2
161605 – 161605 – – 271011 261013
2012 sbp
2
93611 – – – 93611 011112 311014
2013 sbp
2
– 42961 – – 42961 011113 311015
2011 sip
3
2708 – – – 2708 201112 various
3
2012 sip
3
2340 – – – 2340 201213 various
3
2013 sip
3
– 2068 – – 2068 201314 various
3
paddy gallagher
2011 ltip
1
728209 – – – 728209 091111 091114
2012 ltip
1
540945 – – – 540945 091112 091115
2013 ltip
1
– 438608 – – 438608 081113 081116
2012 sbp
2
26276 – – – 26276 011112 311014
2013 sbp
2
– 15676 – – 15676 011113 311015
1  awards granted under the 2013 ltip are subject to the performance conditions as outlined on page 66 of this report the 2011 and 2012 ltip are subject to the 
same performance conditions over the relevant performance periods but the eps growth required for maximum vesting is 15 or more per annum compared 
with 12 or more per annum for the 2013 ltip
2  any awards held under the sbp or sip are not subject to any performance conditions sip shares are dependent on the retention of the partnership shares until 
the release date 
3  participants buy shares monthly under the sip and the company provides one matching share for each share purchased these are first available for vesting three 
years after purchase 68 spirit pub company plc annual report 2014
remuneration report
continued
share ownership
the directors’ interests in the company’s shares as at 23 august 2014 were as follows
director
beneficially owned at
outstanding 
sbp awards
outstanding 
ltip awards
outstanding 
sip awards
shareholding 
requirement 
 of base 
salary
current 
shareholding 
 of base 
salary
12
 of 
guideline 
achieved
17 august 
2013
23 august 
2014
executive directors
mike tye 403762 709055 136572 4276095 7116 150 130 87
paddy gallagher 75000 75000 41952 2352735 – 100 26 26
nonexecutive directors
walker boyd 200000 200000 – – – – – –
tony rice 503013 809997 – – – – – –
mark pain 29177 29177 – – – – – –
christopher bell 110266 110266 – – – – – –
julie chakraverty 100000 100000 – – – – – –
1  awards held under the sbp and sip are included in the current shareholding as there are no further performance conditions attached to these awards sip shares 
are dependent on the retention of the partnership shares until the release date 
2  for the purposes of determining compliance with the requirement shares are valued based on the share price on 23 august 2014
the following sections of the directors’ remuneration report are not subject to audit
relative importance of spend on pay
the following table sets out the percentage change in distributions to shareholders and employee remuneration costs
201314 201213  change
employee remuneration costs £m
1
2069 1932 71
dividends £m
2
138 128 78
1  based on the figure shown in note 7 to the financial statements
2  based on the cash returned to shareholders through dividends as shown in the consolidated cash flow statement
percentage increase in remuneration of the chief executive officer
the table below shows the movement in the salary benefits and annual bonus for the chief executive officer between the current 
and previous financial year compared to salaried employees of the company 
element of remuneration
chief 
executive 
officer 
 change
employees 
 change
salary 17
1
37
2
taxable benefits 0 0
annual bonus 288 548
3
1  the salary review took effect part way through the year and therefore this change is less than the increase in base salary which took effect on 6 october 2013
2 all salaried employees as the most relevant comparator
3 all support centre employees as the most relevant comparator strategic report governance financial statements
 spirit pub company plc annual report 2014 69
total shareholder return performance graph
the following graph shows the total shareholder return tsr of spirit with dividends reinvested from 1 august 2011 the first 
day of trading in spirit shares to 23 august 2014 against the corresponding changes in a hypothetical holding in shares in the 
ftse 250 index excluding investment trusts the ftse 250 excluding investment trusts was chosen as a suitable comparator 
index as it represents a broad equity index in which the company is a constituent member the chart only represents tsr 
performance from 1 august 2011 as this date represents the first day spirit traded as an independent company and no tsr data 
is therefore available prior to this date
160
140
120
100
80
60
total shareholder return rebased
1 august 2011 20 august 2011 23 august 2014 17 august 2013 18 august 2012
spirit pub company plc
ftse 250 excluding investment trusts
source thomson reuters
this graph compares the tsr performance of spirit pub company plc with the tsr performance of the ftse 250 index excluding investment trusts over the period 
from 1 august 2011 the first day of trading in spirit pub company shares to 23 august 2014 the other points plotted show the tsr performance at intervening 
financial year ends
during the year the company’s share price varied between £0665 and £088 and ended the year at £074
the table below shows the total remuneration for the chief executive officer over the same period as the tsr chart shows above 
note that all share awards are valued at the date of vesting
year ending chief executive officer
total 
remuneration 
£000
annual 
bonus
 of max
1
long term 
incentives
 of max
2
23082014 mike tye £2590 71 911
17082013 mike tye £795 25 –
18082012
3
mike tye £940 50 –
18082012
4
ian dyson £1161 – –
20082011
5
ian dyson £789 67 –
1  note that this shows the annual bonus payments as a percentage of the maximum opportunity
2  shows the number of shares which vested as a percentage of the maximum number of shares which could have vested for the years ending 20 august 2011 
and 18 august 2012 ian dyson did not have any outstanding ltips that could have vested in the year for the years ending 18 august 2012 and 17 august 2013 
the long term incentive vesting opportunity for mike tye was in respect of awards granted under the historic punch ltip for the year ending 23 august 2014 
the value incorporates an estimated vesting of the tsr element of the 2011 ltip for which the performance period does not end until 8 november 2014
3  this represents the remuneration received by mike tye for performing the role of chief executive officer following his appointment on 16 december 2011
4  this figure includes payments to ian dyson following his departure from the company on 16 december 2011 equivalent to 12 months of pay and benefits in line 
with his contract of employment
5  reflects remuneration during the period from demerger on 1 august 2011 to 20 august 2011 70 spirit pub company plc annual report 2014
remuneration report
continued
adviser to the committee
during the year the committee received independent remuneration advice from new bridge street nbs part of aon plc 
this independent adviser was appointed by the committee and is accountable to it aon plc also provides consulting advice 
to the group in respect of its pension schemes and actuarial investment and other advice to the pension scheme trustees 
the committee does not believe that the independence of its adviser is compromised by these other appointments the terms 
of engagement between the committee and nbs are available from the company secretary on request nbs is a signatory 
to the remuneration consultants’ code and has provided a statement confirming its independence in line with best practice 
the committee will assess from time to time whether the appointment of nbs remains appropriate or should be put out to 
tender as part of its effectiveness review for the year under review nbs’s total fees charged were £43000 excluding vat 
the committee also consults with the chief executive officer the company secretary and the hr director 
dilution
in accordance with institutional shareholder guidelines the committee sets a limit on the amount of shares that can be  
issued to satisfy all of its employee share plan awards of 10 of the company’s issued share capital in any rolling ten year period 
of this 10 only half can be issued to satisfy awards under the discretionary arrangements at demerger shareholder approval 
was obtained to equitably divide punch’s historic dilution between punch and spirit based upon whether holders of awards were 
to be employed by punch or spirit post demerger accordingly the company’s current dilution position is as follows
limit
current 
dilution level
10 in ten years 263
5 in ten years 25
statement of shareholder voting 
at last year’s agm the directors’ remuneration report received the following votes from shareholders
total number 
of votes
 of 
votes cast
votes cast in favour 506552723 9942
votes cast against 2947416 058
total votes cast excludes withheld votes 509500139 100
votes withheld
1
11847509 –
1 a vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast ‘for’ and ‘against’ a resolution
approved by the board and signed on its behalf
tony rice
chairman remuneration committee
spirit pub company plc
3 november 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 71
statement of directors’ responsibilities 
in relation to the financial statements
the directors are responsible for preparing the annual report 
the remuneration report and the financial statements in 
accordance with applicable law and regulations
company law requires the directors to prepare financial 
statements for each financial year in that respect the directors 
have prepared the group and company financial statements 
in accordance with international financial reporting standards 
ifrs as adopted by the european union and article 4 of the 
ias regulation
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 group and the company and of 
the profit or loss of the group and the company for that period 
in preparing those financial statements international accounting 
standard 1 requires that directors
  select suitable accounting policies and then apply 
them consistently
  make judgements and accounting estimates that are 
reasonable and prudent
  present information including accounting policies  
in a manner that provides relevant reliable comparable 
and understandable information
  in respect of the group financial statements to provide 
additional disclosures when compliance with the specific 
requirements of ifrs is insufficient to enable users to 
understand the impact of particular transactions other 
events and conditions on the group’s financial position 
and performance
  state whether ifrs as adopted by the european union  
and applicable uk accounting standards have been  
followed subject to any material departures disclosed  
and explained in the group and company financial 
statements respectively
  prepare the financial statements on the going concern  
basis unless it is inappropriate to presume that the  
company will continue in business
the directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
and group’s transactions and disclose with reasonable 
accuracy at any time the financial position of the company 
and the group and to enable them to ensure that the financial 
statements and the remuneration report comply with the 
companies act 2006 and as regards the group financial 
statements article 4 of the ias regulation the directors are 
also responsible for safeguarding the assets of the company 
and the group 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
directors’ responsibility statement
the directors confirm that to the best of their knowledge
a  the financial statements prepared in accordance with ifrs 
as adopted by the european union give a true and fair view 
of the assets liabilities financial position and profit of the 
company and the group
b  the strategic report includes a fair review of the development 
and performance of the business and the position of the 
group together with a description of the principal risks and 
uncertainties that it faces and
c  the annual report and financial statements taken as a 
whole are fair balanced and understandable and provide 
the information necessary for shareholders to assess the 
group’s performance business model and strategy
on behalf of the board
mike tye   paddy gallagher
chief executive officer   finance director
3 november 2014    3 november 2014 72 spirit pub company plc annual report 2014
notes
53 weeks to 23 august 2014 52 weeks to 17 august 2013
1
pre 
exceptional 
items
£m
exceptional 
items
2
£m
total
£m
pre 
exceptional 
items
£m
exceptional 
items
2
£m
total
£m
revenue 2 8009 – 8009 7582 – 7582
operating costs before depreciation and amortisation 6415 170 6585 6087 53 6140
ebitda
3
2 1594 170 1424 1495 53 1442
depreciation and amortisation 382 – 382 362 – 362
property related gains  losses including impairment 6 – 716 716 – 206 206
profit  loss on sale of noncurrent assets – 187 187 – 24 24
operating profit  loss 3 1212 733 1945 1133 283 850
finance income 4 05 20 25 05 08 13
finance costs 5 614 43 657 595 01 596
movement in fair value of interest rate swaps 6 – 211 211 – 420 420
profit before tax 603 499 1102 543 144 687
uk income tax charge  credit 8 132 24 108 127 214 341
profit  loss attributable to owners  
of the parent company 471 523 994 416 70 346
earnings  loss per share 9
basic pence 71 80 151 63 11 52
diluted pence 71 78 149 63 11 52
dividends 10
interim paid pence 072 068
proposed pence 150 137
1 restated for the impact of ias 19 revised 2011 see note 1 
2 exceptional items are explained in note 1 and analysed in note 6 
3  ebitda represents earnings before depreciation and amortisation property related gains  losses including impairment profit  loss on sale of noncurrent 
assets finance income finance costs movement in fair value of interest rate swaps and uk corporation tax of the group
consolidated income statement
for the 53 weeks ended 23 august 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 73
notes
53 weeks to 
 23 august 
2014
£m
 52 weeks to
17 august 
2013
1
£m
profit attributable to owners of the parent company 994 346
items that will not be reclassified to profit or loss
remeasurement loss on defined benefit pension schemes 26 80 58
unrealised gain on revaluation of the property portfolio 675 586
tax credit  charge relating to components of other comprehensive income 8 15 18
total items that will not be reclassified to profit or loss and other comprehensive gains 610 510
total comprehensive gain attributable to owners of the parent company 1604 856
1 restated for the impact of ias 19 revised 2011 see note 1
consolidated statement 
of comprehensive income
for the 53 weeks ended 23 august 2014 74 spirit pub company plc annual report 2014
notes
23 august 
2014
£m
17 august 
2013
£m
assets
noncurrent assets
property plant and equipment 11 14352 13140
operating leases 12 664 613
goodwill 12 2121 2137
deferred tax assets 16 385 478
retirement benefit asset 26 – 18
17522 16386
current assets
inventories 17 92 85
trade and other receivables 15 260 257
assets held for sale 18 113 29
cash and cash equivalents 25 1591 1016
2056 1387
total assets 19578 17773
liabilities
current liabilities
trade and other payables
1
19 1519 1279
borrowings 20 147 281
derivative financial instruments 21 208 211
provisions 22 353 112
2227 1883
noncurrent liabilities
trade and other payables
1
19 155 125
borrowings 20 8136 8168
derivative financial instruments 21 1338 1264
retirement benefit obligations 26 38 24
provisions 22 422 538
10089 10119
total liabilities 12316 12002
net assets 7262 5771
equity
called up share capital 24 66 66
revaluation reserve 2754 2092
merger reserve
2
15872 15872
share based payment reserve
2
45 29
retained earnings 11475 12288
total equity 7262 5771
1 trade and other payables at 17 august 2013 of £1404m have been amended to present £125m due after more than one year separately on the balance sheet
2  other reserves of £15901m at 17 august 2013 have been amended to present the merger reserve of £1587 2m and share based payment reserve of £29m separately
on behalf of the board
mike tye  paddy gallagher
3 november 2014  3 november 2014
consolidated balance sheet
at 23 august 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 75
share 
capital
£m
revaluation 
reserve
£m
merger 
reserve
1
£m
share based 
payment 
reserve
1
£m
retained 
earnings
£m
total 
equity
£m
at 18 august 2012 66 1552 15872 14 12482 5022
profit for the period
2
– – – – 346 346
other comprehensive gains  losses
2
– 540 – – 30 510
total comprehensive gain – 540 – – 316 856
dividends paid – – – – 128 128
share based payment expense – – – 15 06 21
at 17 august 2013 66 2092 15872 29 12288 5771
profit for the period – – – – 994 994
other comprehensive gains  losses – 662 – – 52 610
total comprehensive gain – 662 – – 942 1604
dividends paid – – – – 138 138
share based payment expense – – – 16 09 25
at 23 august 2014 66 2754 15872 45 11475 7262
1 other reserves of £15901m reported in the prior period have been amended to present the merger reserve and share based payment reserve separately
2 restated for the impact of ias 19 revised 2011 see note 1
consolidated statement of changes 
in equity
for the 53 weeks ended 23 august 2014 76 spirit pub company plc annual report 2014
53 weeks to 
23 august 
2014
£m
52 weeks to 
17 august 
2013
1
£m
cash flows from operating activities
operating profit 1945 850
depreciation and amortisation 382 362
exceptional operating items 733 283
ebitda before exceptional items 1594 1495
decrease in provisions 102 102
working capital and other noncash movements 224 118
difference between pension contributions paid and amounts recognised in operating profit 64 60
net cash generated from operating activities 1652 1215
cash flows from investing activities
purchase of property plant and equipment 441 527
proceeds from sale of property plant and equipment and assets held for sale 342 128
interest received 05 06
net cash used in investing activities 94 393
cash flows from financing activities
interest paid 626 632
capitalised issue costs paid 69 –
repayment of borrowings 69 –
repayment of derivative financial instruments and other costs on repayment of borrowings 76 19
repayments of obligations under finance leases 05 01
dividends paid 138 128
net cash used in financing activities 983 780
net increase in cash and cash equivalents 575 42
opening cash and cash equivalents 1016 974
closing cash and cash equivalents 1591 1016
1 restated for the impact of ias 19 revised 2011 see note 1
consolidated cash flow statement
for the 53 weeks ended 23 august 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 77
notes
23 august 
2014
£m
17 august 
2013
£m
assets
noncurrent assets
investments in subsidiary undertakings 14 3423 3398
current assets
cash and cash equivalents 97 159
total assets 3520 3557
net assets 3520 3557
equity
called up share capital 24 66 66
merger reserve 3298 3298
share based payment reserve 45 29
retained earnings 111 164
total equity 3520 3557
on behalf of the board
mike tye  paddy gallagher
3 november 2014  3 november 2014
company balance sheet
at 23 august 2014
company number
07662835 78 spirit pub company plc annual report 2014
share 
capital
£m
merger 
reserve
£m
share based 
payment 
reserve
£m
retained 
earnings
£m
total 
equity
£m
at 18 august 2012 66 3298 14 86 3464
profit for the period – – – 200 200
dividends paid – – – 128 128
share based payment expense – – 15 06 21
at 17 august 2013 66 3298 29 164 3557
profit for the period – – – 76 76
dividends paid – – – 138 138
share based payment expense – – 16 09 25
at 23 august 2014 66 3298 45 111 3520
company income statement
for the 53 weeks ended 23 august 2014
as permitted by section 408 of the companies act 2006 the company’s income statement has not been included in these 
financial statements the company’s profit for the period was £76m 2013 £200m
company cash flow statement
for the 53 weeks ended 23 august 2014
53 weeks to 
23 august 
2014
£m
52 weeks to 
17 august 
2013
£m
cash flows from operating activities
operating result – –
net cash generated from operating activities – –
dividends received from subsidiary undertakings 80 282
interest received 01 –
net cash generated from investing activities 81 282
exceptional finance costs paid 05 –
dividends paid 138 128
net cash used in financing activities 143 128
net decrease  increase in cash and cash equivalents 62 154
opening cash and cash equivalents 159 05
closing cash and cash equivalents 97 159
company statement of changes 
in equity
for the 53 weeks ended 23 august 2014 strategic report governance financial statements
 spirit pub company plc annual report 2014 79
1 accounting policies
corporate information
spirit pub company plc is a public limited company incorporated and domiciled in england the company’s shares are listed 
on the london stock exchange
basis of preparation
the consolidated financial statements have been prepared in accordance with international financial reporting standards ifrs 
as adopted by the european union the company’s financial statements have been prepared in accordance with ifrs as adopted 
by the european union and as applied in accordance with the provisions of the companies act 2006 the company has taken 
advantage of the exemption provided under section 408 of the companies act 2006 not to publish its individual income statement 
and related notes
the accounting policies set out below have unless otherwise stated been applied consistently to all periods presented in the 
financial statements
the financial statements are prepared under the historical cost convention as modified by the revaluation of certain items 
principally land and buildings derivative financial instruments and retirement benefits
the financial statements have been prepared on a going concern basis in determining the appropriate basis of preparation of 
the financial statements the directors are required to consider whether the group can continue in operational existence for the 
foreseeable future further details regarding cash forecasting and the monitoring of financial covenants are contained in note 21 
the directors are of the opinion that the group and the company have adequate resources to continue in operational existence 
for the foreseeable future and feel it appropriate to adopt the going concern basis in preparing the annual report and 
financial statements 
further information in relation to the group’s business activities together with the factors likely to affect its future development 
performance and position is set out in the strategic report on pages 9 to 39 and principal risks and uncertainties on pages 26 to 29 
the financial position of the group its cash flows liquidity position and borrowings are described in the financial review on 
pages 37 to 39 and in notes 20 and 21 together with information on the group’s strategies surrounding managing interest rate risk 
liquidity risk capital risk and credit risk 
the group and company financial statements are presented in sterling and all values are rounded to the nearest hundred 
thousand pounds except where indicated
new standards interpretations and amendments to existing standards
the iasb and ifric have issued and endorsed the following standards and amendments which are effective for the group  
and the company in these financial statements
  ifrs 13 fair value measurement
  ias 19 employee benefits revised 2011
ifrs 13 fair value measurements establishes a single source of guidance under ifrs for all fair value measurements 
this standard applies to assets liabilities and an entity’s own equity instruments that under other ifrss are required or permitted 
to be measured at fair value or when disclosure of fair value is provided fair value is defined as the price that would be received to 
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date ie an exit 
price the standard has not had an impact on the group’s measurement of position or performance but has resulted in additional 
disclosures see notes 11 12 18 and 21
notes to the financial statements
for the 53 weeks ended 23 august 2014 notes to the financial statements continued
for the 53 weeks ended 23 august 2014
80 spirit pub company plc annual report 2014
1 accounting policies continued
new standards interpretations and amendments to existing standards continued
the amendment to ias 19 employee benefits makes changes to the recognition and measurement of the defined benefit pension 
expense and termination benefits and disclosures relating to all employee benefits the interest cost and expected return on scheme 
liabilities and assets used in the previous version of ias 19 have been replaced with a ‘net interest’ amount which is calculated 
by applying a discount rate to the net defined benefit obligation this amendment has a corresponding impact on remeasurement 
gains and losses recognised in the statement of comprehensive income with no overall change to the net retirement benefit liability 
in the balance sheet the impact of the adoption of ias 19 revised 2011 on the current and comparative periods is set out below
53 weeks to
23 august 
2014
£m
52 weeks to
17 august 
2013
£m
consolidated income statement
increase in exceptional operating costs 16 07
decrease in exceptional finance income 218 201
decrease in exceptional finance expense 200 178
decrease in exceptional income tax charge 08 07
decrease in profit for the period 26 23
decrease in basic earnings per share in pence 04 04
decrease in diluted earnings per share in pence 04 03
consolidated statement of comprehensive income
decrease in remeasurement loss on defined benefit pension schemes 34 30
increase in exceptional income tax charge 08 07
decrease in other comprehensive gains for the period 26 23
net movement in total comprehensive gains – –
in addition the above decrease in profit and decrease in other comprehensive gains have impacted on the consolidated statement 
of changes in equity the reconciliation from operating profit to cash generated from operating activities see consolidated cash flow 
statement and a number of notes to the financial statements there were no impacts on the consolidated balance sheet
the iasb and ifric have issued and endorsed the following standards which are not yet effective and have not been early 
adopted by the group and company which will be adopted in future accounting periods
  ifrs 10 consolidated financial statements
  ifrs 11 joint arrangements
  ifrs 12 disclosure of interests in other entities
  ias 27 separate financial statements 2011
  ias 28 investments in associates and joint ventures 2011
  ifrs 9 financial instruments
the amendments to published standards that have an effective date of after these financial statements have not been adopted 
early by the group
the directors do not anticipate that the adoption of these standards and amendments will have a material impact on the group’s 
reported income or net assets in the period of adoption strategic report governance financial statements
 spirit pub company plc annual report 2014 81
1 accounting policies continued
basis of consolidation
consolidated financial statements comprise the financial statements of the company and all of its subsidiary undertakings 
subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from 
the date on which control is transferred out of the group
the group’s interest in its joint venture was incorporated in the financial statements using the equity method of accounting  
prior to that company becoming a wholly owned subsidiary in january 2014
all intragroup balances and transactions including unrealised profits arising from intragroup transactions are eliminated in full 
unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred
goodwill
goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the fair value 
of the group’s share of the identifiable assets liabilities and contingent liabilities costs related to the acquisition other than those 
associated with the issue of debt or equity securities are expensed as incurred following initial recognition goodwill is measured 
at cost less any accumulated impairment losses where assets are transferred between segments or disposed the apportioned 
value of goodwill allocated to those assets is also transferred or charged to the income statement respectively
goodwill carried in the balance sheet is not amortised goodwill is reviewed for impairment annually or more frequently if events 
or changes in circumstances indicate that the carrying value may be impaired 
if the cost of acquisition is less than the fair value of the net identifiable assets liabilities and contingent liabilities of the subsidiary 
acquired the gain is recognised immediately in the income statement
property plant and equipment
freehold and long leasehold land and buildings are initially stated at cost and subsequently at valuation
landlord’s fixtures and fittings include removable items which are generally regarded as within landlord ownership these are 
depreciated in accordance with the policy detailed below 
depreciation is provided to writeoff the cost of property plant and equipment less estimated residual values by equal annual 
instalments as follows
licensed properties unlicensed properties and owneroccupied properties
50 years or the life of the lease if shorter
fixtures and fittings including landlord’s fixtures and fittings
5 to 15 years
it and other assets including it equipment and motor vehicles
5 to 15 years
freehold land is not depreciated
an annual assessment of residual values is performed and there is no depreciable amount if residual values are the same as 
or more than book value residual values are based on the estimated amount that would be currently obtainable from disposal 
of the asset net of disposal costs if the asset were already of the age and condition expected at the end of its useful life notes to the financial statements continued
for the 53 weeks ended 23 august 2014
82 spirit pub company plc annual report 2014
1 accounting policies continued
impairment 
assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently 
if events or changes in circumstances indicate that the carrying amount may not be recoverable assets that are subject to 
depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying 
amount may not be recoverable a review for indicators of impairment is performed annually an impairment loss is recognised 
for the amount by which the asset’s carrying amount exceeds its recoverable amount the recoverable amount is the higher of 
an asset’s fair value less costs to sell and valueinuse any impairment charge is recognised in the income statement in the period 
in which it occurs when an impairment loss other than an impairment loss on goodwill subsequently reverses due to a change 
in the original estimate the carrying amount of the asset is increased to the revised estimate of its recoverable amount up to the 
carrying amount that would have resulted net of depreciation had no impairment loss been recognised for the asset in prior periods
revaluation
surpluses which arise from the revaluation are recorded directly within the revaluation reserve unless they are reversing a revaluation 
decrease which has been recognised in the income statement previously in which case the surplus is recognised in the income 
statement up to the amount previously recognised in the income statement where the revaluation exercise gives rise to a deficit 
this is reflected directly in the revaluation reserve to the extent that a surplus exists against the same asset any residual amount is 
then recognised in the income statement
investments
investments in subsidiaries are carried at cost less any impairment in value in the financial statements of the company
trade and other receivables
trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amount an estimate 
for doubtful debts is made when collection of the full amount is no longer probable receivables are written off against the doubtful 
debt provision when management deems the debt to be no longer recoverable
inventories
inventories are valued at the lower of cost and net realisable value
cash and cash equivalents
cash and cash equivalents comprise cash at bank and in hand and short term deposits
assets held for sale
assets held for sale are measured at the lower of carrying amount and fair value less costs to sell and are not depreciated
assets held for sale and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale 
transaction rather than through continuing use this condition is regarded as met only when the sale is highly probable and the 
asset is available for immediate sale in its present condition management must be committed to the sale and completion should 
be expected within one year from the date of classification
provisions
provisions are recognised when the group has a present legal or constructive obligation to transfer economic resources as a result 
of past events
provisions are measured at management’s best estimate of the expenditure required to settle the present obligation at the balance 
sheet date provisions are discounted if the effect of the time value of money is material the discount rate used to determine the 
present value reflects current market assessments of the time value of money and the risks specific to the liability strategic report governance financial statements
 spirit pub company plc annual report 2014 83
1 accounting policies continued
borrowings
all loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with 
the borrowings 
after initial recognition interestbearing loans and borrowings are subsequently measured at amortised cost using the effective 
interest rate method amortised cost is calculated taking account of any issue costs and any discounts or premiums on settlement
gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the 
amortisation process
accounting for derivative financial instruments and hedging activities 
the group uses derivative financial instruments such as interest rate swaps to hedge its risk associated with interest rate 
fluctuations such derivative financial instruments are initially accounted for and subsequently remeasured to fair value 
changes in fair value of any derivative financial instruments that do not qualify for hedge accounting are recognised immediately 
in the income statement
equity instruments
equity instruments issued by the company are recorded at the fair value of the proceeds net of direct issue costs
merger reserve
the merger reserve represents capital contributions received and amounts recognised on the acquisition of spirit pub company 
holdco limited as part of the demerger from the punch taverns plc group in 2011
taxation
income tax expense comprises both the income tax payable based on taxable profits for the period and deferred tax
deferred tax is recognised on all temporary differences at the balance sheet date between the tax bases of assets and liabilities 
and their carrying amounts except where the deferred tax liability arises from the initial recognition of goodwill or where the 
deferred tax asset or liability arises on an asset or liability in a transaction which is not a business combination and at the time 
of the transaction affects neither accounting nor taxable profit or loss deferred tax assets are recognised to the extent that 
it is probable that future taxable profits will be available against which the assets can be utilised
deferred tax is measured on an undiscounted basis at the rates that are expected to apply in the period when the liability is settled 
or the asset is realised based on tax rates and tax laws enacted or substantively enacted at the balance sheet date movements 
in deferred tax are charged or credited in the income statement except where they relate to items charged or credited directly to 
equity in which case the deferred tax is also dealt with in equity
for properties acquired as part of a business combination movements in the deferred tax liability resulting from indexation 
allowance are taken to the income statement until the tax base cost plus indexation allowance reaches the fair value on acquisition 
and directly to equity thereafter for historic revaluation surpluses notes to the financial statements continued
for the 53 weeks ended 23 august 2014
84 spirit pub company plc annual report 2014
1 accounting policies continued
leases 
leases of property plant and equipment where the group has substantially all the risks and rewards of ownership are classified 
as finance leases finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and 
the present value of the minimum lease payments the asset is then depreciated over the shorter of the estimated useful life of the 
asset or the lease term a corresponding liability is included in the balance sheet as a finance lease obligation lease payments are 
apportioned between the finance charges and reduction of the lease liability to achieve a constant rate of interest on the remaining 
balance of the liability finance charges are recognised in finance costs
leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases 
operating lease payments are recognised as an expense in the income statement on a straightline basis over the lease term
the fair values attached to operating head leasehold interests on acquisitions are deemed to represent lease premiums and are 
carried as intangible assets these operating leases are capitalised at cost and subsequently stated at valuation 
other payments made on entering into or acquiring operating leases are included in prepayments and amortised over the lease 
term on a straightline basis
pensions
the group operates two defined benefit schemes see note 26 which require contributions to be made to separately administered 
funds the asset or liability recognised in the balance sheet in respect of the group’s defined benefit arrangements is the difference 
between the fair value of scheme assets and the present value of scheme liabilities any defined benefit assets are limited to the 
total of any unrecognised past service costs and the present value of economic benefits in the form of any future refunds from the 
plan or reductions in future contributions to the plan the cost of providing benefits under the plans is determined separately for 
each plan using the projected unit credit actuarial method the current service cost is charged to operating profit the net interest 
income  charge on the net retirement benefit assets  liabilities is shown within exceptional finance income  costs 
remeasurement gains and losses are recognised in full as they occur in other comprehensive income
the group also contributes to money purchase pension plans for employees see note 7 amounts payable are charged to the 
income statement as they fall due
share based payments 
a number of employees of the company’s subsidiaries including directors receive an element of remuneration in the form of share 
based payments whereby employees render services in exchange for shares or rights over shares
share based payments are measured at fair value at the date of grant the fair value of transactions involving the granting of 
shares is determined by the share price at the date of grant the fair value of transactions involving the granting of share options 
is calculated by an external valuer based on a binomial model in valuing share based payments no account is taken of any 
performance conditions other than conditions linked to the price of the shares of spirit pub company plc ‘market conditions’
the cost of share based payments is recognised together with a corresponding increase in the share based payment reserve 
on a straightline basis over the vesting period based on the company’s estimate of how many of the awards will eventually vest 
no expense is recognised for awards that do not ultimately vest except for awards where vesting is conditional upon a market 
condition which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other 
performance conditions are satisfied
where the terms of a share based payment award are modified as a minimum an expense is recognised as if the terms had not 
been modified in addition an expense is recognised for any increase in the value of the transaction as a result of the modification 
as measured at the date of the modification
where a share based payment 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 however if a new award is substituted for the cancelled award and designated 
as a replacement award on the date that it is granted the cancelled and new awards are treated as if they were a modification to 
the original award as described in the previous paragraph the dilutive effect of outstanding options is reflected as additional share 
dilution in the computation of earnings per share strategic report governance financial statements
 spirit pub company plc annual report 2014 85
1 accounting policies continued
revenue
revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and 
services provided in the normal course of business net of discounts and vat all operations take place solely in the united kingdom
drink and food sales 
revenue in respect of drink and food sales is recognised at the point at which the goods are provided net of any discounts 
or volume rebates allowed
rents receivable 
rents receivable are recognised on a straightline basis over the lease term
other income
other income includes the group’s share of net machine income which is recognised in the period to which it relates revenue 
in respect of hotel rooms is recognised at the time of the guest visit
dividend distribution
final dividends are recognised as a liability in the group’s and the company’s financial statements in the period in which the 
dividends are approved by the company’s shareholders interim dividends are recognised when they are paid
exceptional items
in order to provide a trend measure of underlying performance profit is presented excluding items which management consider 
will distort comparability either due to their significant nonrecurring nature or as a result of specific accounting treatments 
further detail on the nature of exceptional items is included in note 6
significant accounting estimates and judgements
the preparation of financial statements requires management to make estimates and assumptions that affect the reported 
amounts of assets and liabilities disclosure of contingent assets and liabilities at the date of the financial statements and the 
reported amounts of revenues and expenses during the period 
on an ongoing basis management evaluates its estimates and judgements including those relating to income taxes  
deferred tax financial instruments property plant and equipment goodwill intangible assets valuations provisions and 
postemployment benefits
management bases its estimates and judgements on historical experience and on various other factors that are believed to be 
reasonable under the circumstances the results of which form the basis for making judgements about the carrying value of assets 
and liabilities that are not readily available from other sources actual results may differ from these estimates under different 
assumptions and conditions
the estimates and judgements that have a significant effect on the amounts recognised in the financial statements are detailed below
property valuations
the group carries its property portfolio at open market valuation the valuations which are supported by market evidence and 
a rolling fiveyear programme of site visits by independent property surveyors are prepared with regard to factors such as current 
and future projected income levels taking account of the location quality of the pub and recent market transactions in the sector 
changes in these assumptions such as the valuation basis applied in comparable market transactions or the income level 
generated by a pub could materially impact the valuation of these properties
impairment of property  plant and equipment and operating leases
property plant and equipment and operating leases are reviewed for impairment if circumstances suggest that the carrying 
amount may not be recoverable recoverable amounts are determined based on valueinuse calculations and estimated sale 
proceeds these calculations require assumptions to be made regarding future cash flows and the choice of a suitable discount 
rate in order to calculate the present value of those cash flows actual outcomes may vary from these estimates notes to the financial statements continued
for the 53 weeks ended 23 august 2014
86 spirit pub company plc annual report 2014
1 accounting policies continued
significant accounting estimates and judgements continued
goodwill impairment
the group assesses whether goodwill is impaired on at least an annual basis the recoverable amounts of the groups of cash
generating units cgus to which goodwill has been allocated is determined based on valueinuse calculations these calculations 
require assumptions to be made regarding future cash flows and the choice of a suitable discount rate in order to calculate the 
valueinuse of those cash flows these assumptions are disclosed in note 13 actual outcomes could vary from these estimates
retirement benefit asset  liability
the present value of defined benefit pension scheme liabilities are determined on an actuarial basis and depend on a number 
of actuarial assumptions which are disclosed in note 26 any change in these assumptions could impact the carrying amounts 
of retirement benefit assets  liabilities
onerous lease provisions 
the group provides for its onerous obligations under operating leases where the property is closed or vacant and for properties 
where rental expense is in excess of income the estimated timings and amounts of cash flows are determined using the 
experience of internal and external property experts however any changes to the estimated method of exiting from the property 
could lead to changes to the level of the provision recorded
deferred tax
deferred tax assets and liabilities require management judgement in determining the amounts to be recognised when assessing 
the extent to which deferred tax assets should be recognised consideration is given to the timing and level of future taxable 
income following reviews of budgets and forecasts 
authorisation of financial statements
the group’s and company’s financial statements for spirit pub company plc for the period ended 23 august 2014 were authorised 
for issue by the board of directors on 3 november 2014 and the balance sheets were signed on the board’s behalf by mike tye 
and paddy gallagher
2 segmental analysis 
the group has two reportable segments a managed estate and a leased estate which are the group’s strategic business units 
each strategic business unit consists of a number of cashgenerating units cgus which are individual pubs these cgus 
generate their own revenues which are consolidated to give the group revenue and as a result group revenue is not reliant 
on one significant customer 
the group’s risks and returns are affected predominantly by the differences in the products and services provided by the strategic 
business units
the chief operating decision maker is represented by the executive directors and the executive management team of the group 
performance is measured based on segmental ebitda as included in the internal management reports that are reviewed by 
the executive directors and the executive management team the spirit pub company plc board consider adjusted segmental 
ebitda when assessing the performance of the business and making decisions about the allocation of resources
the group operates solely in the united kingdom and therefore has only one geographical segment
between 17 august 2013 and 23 august 2014 six pubs with a fair value of £29m transferred from the leased to the managed 
estate and two pubs with a fair value of £05m transferred from the managed to the leased estate between 18 august 2012 and 
17 august 2013 one pub with a fair value of £07m transferred from the leased to the managed estate and five pubs with a fair 
value of £38m transferred from the managed to the leased estate as a result of these intragroup transfers £nil 2013 £02m 
of goodwill was transferred from the managed estate to the leased estate and £03m 2013 £nil of goodwill was transferred from 
the leased estate to the managed estate strategic report governance financial statements
 spirit pub company plc annual report 2014 87
2 segmental analysis continued
2014
managed
£m
leased
£m
total
£m
drink revenue 3787 598 4385
food revenue 2948 – 2948
rental income – 188 188
other revenue 445 43 488
revenue 7180 829 8009
operating costs
1
5919 496 6415
ebitda
1
1261 333 1594
depreciation and amortisation 361 21 382
operating profit before exceptional items 900 312 1212
operating exceptional items 733
net finance costs 632
movement in fair value of interest rate swaps 211
uk income tax charge 108
profit attributable to owners of the parent company 994
2013
2
managed 
£m
leased
£m
total
£m
drink revenue 3599 581 4180
food revenue 2786 – 2786
rental income – 185 185
other revenue 397 34 431
revenue 6782 800 7582
operating costs
1
5616 471 6087
ebitda
1
1166 329 1495
depreciation and amortisation 339 23 362
operating profit before exceptional items 827 306 1133
operating exceptional items 283
net finance costs 583
movement in fair value of interest rate swaps 420
uk income tax charge 341
profit attributable to owners of the parent company 346
1 before exceptional items
2 restated for the impact of ias 19 revised 2011 see note 1 notes to the financial statements continued
for the 53 weeks ended 23 august 2014
88 spirit pub company plc annual report 2014
2 segmental analysis continued
2014
managed
£m
leased
£m
unallocated
£m
total
£m
assets and liabilities
segment assets 15374 3560 – 18934
unallocated assets – – 644 644
total assets 15374 3560 644 19578
segment liabilities 2242 155 – 2397
unallocated liabilities – – 9919 9919
total liabilities 2242 155 9919 12316
net assets  liabilities 13132 3405 9275 7262
2013
managed
£m
leased
£m
unallocated
£m
total
£m
assets and liabilities
segment assets 13607 3489 – 17096
unallocated assets – – 677 677
total assets 13607 3489 677 17773
segment liabilities 1844 151 – 1995
unallocated liabilities – – 10007 10007
total liabilities 1844 151 10007 12002
net assets  liabilities 11763 3338 9330 5771
2014 2013
managed
£m
leased
£m
total
£m
managed
£m
leased
£m
total
£m
capital expenditure
investment spend 395 86 481 367 125 492
with the exception of the transfer of pubs there are immaterial sales between the business segments segment assets include 
property plant and equipment operating leases goodwill inventories receivables and assets held for sale and exclude centrally 
held cash of £458m 17 august 2013 £442m deferred tax assets of £181m 17 august 2013 £215m retirement benefit assets 
of £nil 17 august 2013 £18m and other assets of £05m 17 august 2013 £02m while segment liabilities comprise operating 
liabilities and exclude corporate borrowings of £8167m 17 august 2013 £8350 m related derivatives of £1546m 17 august 2013 
£1475m retirement benefit liabilities of £38m 17 august 2013 £24m and other liabilities of £168m 17 august 2013 £158m 
capital expenditure comprises additions to property plant and equipment and operating leases strategic report governance financial statements
 spirit pub company plc annual report 2014 89
3 analysis of expenses 
the following items have been included in arriving at operating profit  loss
2014 
£m
2013
1
£m
drink and food costs 2442 2348
managed pub running costs 2974 2824
leasehold rentals 560 534
depreciation and amortisation 382 362
gains  losses related to the revaluation of the property portfolio 716 206
profit  loss on sale of noncurrent assets 187 24
other costs
2
609 434
total costs deducted from revenue to determine operating profit  loss 6064 6732
1 restated for the impact of ias 19 revised 2011 see note 1
2 included within other costs are £170m of costs 2013 £53m relating to exceptional items
auditor’s remuneration is as follows
2014
£m
2013
£m
statutory audit services 
audit of group financial statements 02 02
audit of subsidiary companies pursuant to legislation – –
 
audit related assurance services 01 –
in addition to the fees disclosed above the group’s defined benefit pension schemes have paid £01m to the group’s auditor  
in the period to 23 august 2014 2013 £nil for nonaudit services
the accounts of the parent company do not include details of remuneration receivable by the auditor and its associates for 
nonaudit services as the group accounts are required to include this information as required by regulation 51b of the 
companies disclosure of auditor remuneration and liability limitation agreements regulations 2008 on a consolidated basis
4 finance income
2014 
£m
2013
1
£m
bank interest receivable 05 05
exceptional finance income note 6 20 08
total finance income 25 13
1 restated for the impact of ias 19 revised 2011 see note 1 notes to the financial statements continued
for the 53 weeks ended 23 august 2014
90 spirit pub company plc annual report 2014
5 finance costs
2014 
£m
2013
1
£m
interest payable on secured loan notes 557 533
other interest payable 07 06
effect of unwinding discounted provisions note 22 50 56
exceptional finance costs note 6 43 01
total finance costs 657 596
1 restated for the impact of ias 19 revised 2011 see note 1
6 exceptional items
in order to provide a trend measure of underlying performance profit is presented excluding items which management consider will 
distort comparability either due to their significant nonrecurring nature or as a result of specific accounting treatments included in 
the consolidated income statement are the following exceptional items
2014 
£m
2013
1
£m
operating
restructuring redundancy and other related oneoff costs
2
– 15
movement on property liabilities
3
35 –
vat repayable
4
159 –
retirement benefit scheme expenses
5
16 07
profit  loss on sale of noncurrent assets 187 24
gains  losses related to the revaluation of the property portfolio 716 206
impact of annual uplifts in rent and rentfree periods 30 31
733 283
finance income
loan note and interest rate swap redemptions
6
20 08
20 08
finance costs
interest on vat repayable
4
43 –
net interest on net retirement benefit assets  obligations
5
– 01
43 01
movement in fair value of interest rate swaps
7
211 420
total exceptional items before tax 499 144
tax
tax impact of exceptional items 15 108
adjustments to tax in respect of prior periods 01 41
tax charge in respect of the change in tax rate
8
10 65
24 214
total exceptional items after tax 523 70
1 restated for the impact of ias 19 revised 2011 see note 1
2 in the prior period relates to redundancy costs following a reorganisation of the group
3 represents release of property lease provision on disposal of properties
4  represents the amount provided in relation to the amount repayable by the group in respect of its gaming machine vat claim net of amounts refunded by a third 
party see note 22
5  represents the administration expenses of the defined benefit pension schemes and the net interest on net defined benefit assets  obligations the net interest 
is a noncash item and the administration expenses and net interest income are excluded from underlying profit
6  represents the write off of swap fair value adjustments and associated break costs on the cancellation of swaps and the write off of debt fair value adjustments 
and break costs on monoline insurance on the cancellation of secured loan notes
7 represents the movement in the fair value of interest rate swaps that are classified as fair value through profit and loss
8 see note 16 for detail of the changes in tax rate strategic report governance financial statements
 spirit pub company plc annual report 2014 91
7 employees and directors
staff costs
2014 
£m
2013
£m
wages and salaries 1909 1784
social security costs 106 104
share based payments 31 24
pension costs 23 20
2069 1932
the group operates defined contribution schemes the costs of which are included above
the average number of employees during the period was as follows
2014 2013
management and administration
1
423 449
retail staff
1
16038 16351
16461 16800
1 employee numbers relate to actual employees rather than fulltime employee equivalents
directors’ emoluments are disclosed in the remuneration report on pages 56 to 70
8 tax
a tax charged  credited in the income statement
2014 2013
1
pre 
exceptional 
items
£m
exceptional 
items
£m
total
£m
pre 
exceptional 
items
£m
exceptional 
items
£m
total
£m
current tax
uk corporation tax – current period 59 59 – 01 01 –
uk corporation tax – adjustments in respect of prior periods – – – – – –
59 59 – 01 01 –
deferred tax note 16
origination and reversal of temporary differences  
– current period 73 44 117 128 107 235
origination and reversal of temporary differences  
– change in standard rate of tax – 10 10 – 65 65
origination and reversal of temporary differences  
– adjustments in respect of prior periods – 01 01 – 41 41
73 35 108 128 213 341
total tax charge  credit in the income statement 132 24 108 127 214 341
1 restated for the impact of ias 19 revised 2011 see note 1 notes to the financial statements continued
for the 53 weeks ended 23 august 2014
92 spirit pub company plc annual report 2014
8 tax continued
b reconciliation of the total tax charge
the effective rate of tax is different to the full rate of corporation tax the differences are explained below 
2014 
£m
2013
1
£m
profit on ordinary activities before tax 1102 687
tax at current uk tax rate of 222 2013 236
2
245 162
effects of
net effect of expenses not deductible for tax purposes and nontaxable income before exceptional items 02 02
net effect of expenses not deductible for tax purposes and nontaxable income exceptional items – 03
adjustments to tax in respect of prior periods exceptional items 01 41
impact of change in tax rate 10 65
net effect of permanent differences arising in respect of disposals and revaluations of property portfolio 126 78
total tax charge reported in the income statement 108 341
1 restated for the impact of ias 19 revised 2011 see note 1
2 see note 16 for detail of the changes in tax rate
details of the exceptional tax credits and debits are included in note 6
c tax charged in other comprehensive income
in addition to the amount charged to the income statement tax movements recognised directly in equity through the consolidated 
statement of comprehensive income were as follows
2014 
£m
2013
1
£m
deferred tax
deferred tax charge on unrealised gain on revaluation of the property portfolio 12 31
deferred tax credit on remeasurements of defined benefit pension schemes 18 13
deferred tax credit on share based payment expense 09 –
deferred tax credit  charge recognised directly in equity 15 18
1 restated for the impact of ias 19 revised 2011 see note 1 strategic report governance financial statements
 spirit pub company plc annual report 2014 93
9 earnings per share
basic earnings per share is based on the profit for the period attributable to ordinary shareholders and the weighted average 
number of ordinary shares outstanding 
diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average 
number of ordinary shares outstanding during the period adjusted for the effects of dilutive options
the weighted average number of shares during the period is 6604 million 2013 6602 million there are 72 million potential 
dilutive ordinary shares at 23 august 2014 17 august 2013 54 million in relation to employee share awards
reconciliations of earnings are set out below
2014 2013
1
earnings
£m
per share 
amount
pence
earnings
£m
per share 
amount
pence
basic profit 994 151 346 52
diluted profit 994 149 346 52
supplementary earnings per share figures
basic earnings before exceptional items 471 71 416 63
diluted earnings before exceptional items 471 71 416 63
1 restated for the impact of ias 19 revised 2011 see note 1
10 dividends
2014 
£m
2013
£m
declared and paid in the period
interim dividend for 2014 072 pence 2013 068 pence per share 48 44
final dividend for 2013 137 pence 2012 130 pence per share 90 84
138 128
proposed final dividend for approval at agm
final dividend for 2014 150 pence 2013 137 pence per share 99 90
total proposed dividend for 2014 222 pence 2013 205 pence per share 147 134
the board recommended on 21 october 2014 the proposed final dividend for the 53 weeks ended 23 august 2014 this did not 
qualify for recognition in the financial statements at 23 august 2014 as it had not been approved by the shareholders at that date notes to the financial statements continued
for the 53 weeks ended 23 august 2014
94 spirit pub company plc annual report 2014
11 property plant and equipment
land and 
buildings
£m
fixtures 
and 
fittings
£m
it and 
other 
assets
£m
total
£m
cost or valuation
at 18 august 2012 11549 1213 – 12762
reclassification
1
14 170 227 43
additions 288 116 88 492
revaluation
2
89 185 – 96
net transfers from assets held for sale 92 08 – 100
disposals 91 04 – 95
at 17 august 2013 11913 978 315 13206
additions 187 246 48 481
revaluation
2
969 23 – 992
net transfers to assets held for sale 98 08 – 106
disposals 125 04 – 129
at 23 august 2014 12846 1235 363 14444
accumulated depreciation
at 18 august 2012 – – – –
reclassification
1
– – 43 43
charge for the period 115 189 23 327
net transfers to assets held for sale – 08 – 08
revaluation
2
115 197 – 312
at 17 august 2013 – – 66 66
charge for the period 134 185 26 345
revaluation
2
134 185 – 319
at 23 august 2014 – – 92 92
net book value at 23 august 2014 12846 1235 271 14352
net book value at 17 august 2013 11913 978 249 13140
1 during the period the group reclassified it equipment and other assets into a separate category
2  the group’s revaluation gain of £1311m comprises £614m 2013 £458m shown in the consolidated statement of comprehensive income and £697m 
2013 £242m in the consolidated income statement
the cost of work in progress within property plant and equipment at 23 august 2014 was £79m 17 august 2013 £147m
a revaluation of property plant and equipment
at 23 august 2014 the group’s property portfolio has been revalued to open market value the directors have performed this 
valuation with reference to a sample valuation of 299 properties 2013 238 properties which were valued at that date by colliers 
international independent chartered surveyors this sample was reviewed by management in conjunction with colliers to ensure 
that it provided sufficient coverage both geographically by tenure and for the managed estate by brand colliers and management 
extrapolated the findings of these formal valuations across the remaining properties and it is with reference to these findings that 
the directors have performed their valuation
these valuations have been incorporated into the financial statements and the resulting revaluation adjustments have been taken 
to the revaluation reserve or income statement as appropriate strategic report governance financial statements
 spirit pub company plc annual report 2014 95
11 property plant and equipment continued
a revaluation of property plant and equipment continued
the sample of properties was valued at market value in accordance with the provisions of royal institution of chartered surveyors 
rics appraisal and valuation standards ‘the red book’ assuming each asset is sold as part of the continuing enterprise in 
occupation individually as a fully operational trading entity the market value has been determined having regard to assumptions 
such as current and future projected income levels which represents a key unobservable input projected income levels take 
account of the location the quality of the pub or restaurant recent market transactions in the sector and potential alternative use 
value in addition the valuation was based on the valuer’s assumptions and models changes in these variables and assumptions 
could materially impact the valuations
these valuations and the assumptions made are discussed and reviewed with the board and the group’s auditor
these techniques are consistent with the principles in ifrs 13 fair value measurement and use significant unobservable inputs 
such that the fair value measurement of each property within the portfolio has been classified as level 3 in the fair value hierarchy 
see note 21
a summary of the key inputs used in the valuation of the property portfolio are as follows
managed leased total
closing number of pubs 794 433 1227
average ebitda multiple 75x 66x –
£m £m £m
property valuation at 23 august 2014 1218 258 1476
nonpub specific property related assets 27 10 37
valuation at 23 august 2014 1245 268 1513
a sensitivity analysis has been conducted on the valuation of the property portfolio to give an indication of the impact of 
movements in the most sensitive assumption being projected income the analysis considers the impact of a change in this 
assumption with the other variables held constant in practice changes in one assumption may be accompanied by changes in 
another this sensitivity analysis should not be taken as a projection of likely future valuation movements increasing the projected 
income used in the revaluation by 25 would increase the valuation by £40m decreasing the projected income used in the 
revaluation by 25 would decrease the valuation by £40m
if the properties had not been revalued the historical cost net book value of property plant and equipment would be £14235m 
17 august 2013 £14256m
during the year the group reclassified it equipment motor vehicles and unlicensed properties from land and buildings and 
fixtures and fittings into a separate category it and other assets these items are carried at cost less accumulated depreciation
b assets held under finance leases
the group leases various licensed properties offices and other commercial properties and other assets under finance leases 
the leases have various terms escalation clauses and renewal rights
included in property plant and equipment above are properties held under finance leases with a net book value of £153m 
17 august 2013 £137m
c assets held as security
included within the net book value of property plant and equipment above are licensed properties with a net book value of 
£13914m 17 august 2013 £12863m over which the group’s borrowings are secured by way of fixed and floating charges notes to the financial statements continued
for the 53 weeks ended 23 august 2014
96 spirit pub company plc annual report 2014
12 goodwill and operating lease intangible assets
operating 
leases
£m
goodwill
£m
cost or valuation
at 18 august 2012 484 2247
disposals – 09
revaluation
1
129 –
at 17 august 2013 613 2238
net transfers to assets held for sale 01 –
disposals – 16
revaluation
1
52 –
at 23 august 2014 664 2222
amortisation and impairment
at 18 august 2012 – 101
charge for the period 35 –
revaluation
1
35 –
at 17 august 2013 – 101
charge for the period 37 –
revaluation
1
37 –
at 23 august 2014 – 101
net book value at 23 august 2014 664 2121
net book value at 17 august 2013 613 2137
1  the group’s revaluation gain of £89m 2013 £94m comprises £60m 2013 £128m shown in the consolidated statement of comprehensive income and £29m 
2013 £36m debit in the consolidated income statement
goodwill has been reduced in the period by £16m 2013 £09m representing the apportioned value of goodwill allocated to those 
pubs disposed of during the period 
at 23 august 2014 the goodwill assigned to the managed estate is £1440m 17 august 2013 £1447m and the goodwill assigned 
to the leased estate is £681m 17 august 2013 £690m
a revaluation of operating leases
as detailed in note 11 the group has a policy of revaluing its property portfolio and as a result a revaluation gain has been 
recognised in operating leases at 23 august 2014 
the valuation techniques are described in note 11 these are consistent with the principles in ifrs 13 fair value measurement 
and use significant unobservable inputs such that the fair value measurement of each operating lease intangible asset has been 
classified as level 3 in the fair value hierarchy see note 21
if the properties had not been revalued the historical cost net book value of operating leases would be £492m 17 august 2013 
£516m there is no material difference between the carrying value of operating leases and their historical cost net book value 
adjusted for the reversal of historic impairments
b assets held as security
included within operating leases are properties with a net book value of £627m 17 august 2013 £540m over which the group’s 
borrowings are secured by way of fixed and floating charges strategic report governance financial statements
 spirit pub company plc annual report 2014 97
13 impairment losses
property plant and equipment and operating leases
when any indicators of impairment are identified property plant and equipment and operating leases are reviewed for impairment 
based on each cashgenerating unit cgu the cashgenerating units are individual pubs the carrying values of these individual 
pubs are compared to the recoverable amount of the cgus which is the higher of valueinuse and fair value less costs to sell
at 23 august 2014 and 17 august 2013 a review of indicators of impairment was performed there were no indicators of impairment 
and therefore no impairment was identified
goodwill
goodwill is allocated to groups of cgus based on the benefits to the group that arise from each business combination the two 
groups of cgus are identified by their pub operating format managed or leased and this is the lowest level at which goodwill is 
monitored by the group 
during the period to 23 august 2014 a goodwill impairment review was performed by means of comparing the recoverable 
amount of the cgus to the carrying value of the unit including goodwill the recoverable amount of the cgus was determined 
based on valueinuse calculations these valueinuse calculations are based on earnings before interest and tax and extrapolated 
for a period of 50 years using a multiple of ten as the terminal value the pretax riskadjusted discount rate applied to cash flow 
projections range between 8 and 9 2013 range between 8 and 9 these cash flows are based on forecast cash flow 
information for the next four year period based on our internal forecasts and an average growth rate of 225 2013 225 
applied subsequently for a further period of 46 years based on our long term forecasts based on this review no impairment 
of goodwill has been identified 2013 £nil management considers the impact of changes in assumptions to the valueinuse 
calculations in particular the sensitivity of the calculation to changes in growth rates and discount rates and have stress tested 
these calculations across a range of scenarios neither a reduction in the growth rate to 025 over the 50 year period nor an 
increase in the discount rate to 100 would lead to an impairment of goodwill
during the 53 week period to 23 august 2014 £06m of goodwill was disposed of as a result of disposals from the leased estate 
2013 £08m and £10m of goodwill was disposed of as a result of disposals from the managed estate 2013 £01m notes to the financial statements continued
for the 53 weeks ended 23 august 2014
98 spirit pub company plc annual report 2014
14 investments in subsidiary undertakings
company
2014
£m
2013
£m
opening balance 3398 3377
additions 25 21
closing balance 3423 3398
additions represent capital contributions relating to share based payment expenses
details of the principal subsidiary undertakings as at 23 august 2014 are as follows
name of company nature of business
subsidiaries
spirit pub company managed limited pub operating company
spirit pub company leased limited pub operating company
spirit pub company trent limited pub operating company
spirit pub company holdco limited holding company
spirit pub company sge limited intermediate holding company
spirit group holdings limited intermediate holding company
spirit pub company supply limited group supply company
spirit pub company services limited management and administration company
spirit pub company investments limited financing company
the company owns 100 of the ordinary share capital of spirit pub company holdco limited and indirectly controls 100 of the 
voting rights of the other subsidiaries listed above
all companies are incorporated in england and wales
in addition to those investments listed above the group also maintains daytoday control over spirit issuer parent limited and its 
wholly owned subsidiary spirit issuer plc a special purpose entity that provides financing to the group although no company in 
the group owns any shares either directly or indirectly in spirit issuer parent limited or spirit issuer plc the financial statements are 
also consolidated into the group financial statements in accordance with sic 12
exemption has been taken to exclude subsidiary undertakings from the above disclosure whose results or financial position do not 
principally affect the financial statements
 
15 trade and other receivables
group
2014
£m
2013
£m
amounts falling due within one year
trade receivables 43 49
prepayments 130 158
other receivables 87 50
260 257 strategic report governance financial statements
 spirit pub company plc annual report 2014 99
16 deferred tax
the movement on the deferred tax account is as follows
group
2014
£m
2013
1
£m
opening balance 478 837
charged to income statement 108 341
credited  charged to equity 15 18
closing balance 385 478
1 restated for the impact of ias 19 revised 2011 see note 1
the company has no deferred tax balances
the movements in deferred tax assets and liabilities during the period are shown below 
deferred tax assets
group
tax 
losses
£m
retirement 
benefit 
liabilities
£m
financial 
instruments
£m
accelerated 
capital 
allowances
£m
total
£m
at 18 august 2012 420 – 365 141 926
charged to income statement
1
159 13 144 42 358
credited  charged to equity
1
– 14 01 – 13
at 17 august 2013 261 01 220 99 581
charged  credited to income statement 62 11 14 44 103
credited to equity – 18 – – 18
at 23 august 2014 199 08 234 55 496
1 restated for the impact of ias 19 revised 2011 see note 1
deferred tax liabilities
group
other
£m
total
£m
at 18 august 2012 89 89
credited to income statement 17 17
charged to equity 31 31
at 17 august 2013 103 103
charged to income statement 05 05
charged to equity 03 03
at 23 august 2014 111 111
at 23 august 2014 the group has unused tax losses of £1185m 17 august 2013 £1486m and unused capital losses of £7509m 
17 august 2013 £8093m available for offset against future profits a deferred tax asset has been recognised in respect of 
£996m 17 august 2013 £1307m of such losses which are expected to be utilised against future profit streams within the group 
no deferred tax asset has been recognised in respect of the remaining £189m 17 august 2013 £179m of losses due to the 
unpredictability of future profit streams current legislation deems that these losses may be carried forward for an unlimited number 
of years
factors affecting future current tax charges
reductions in the uk corporation tax rate from 26 to 24 effective from 1 april 2012 and to 23 effective from 1 april 2013 
were substantively enacted on 26 march 2012 and 3 july 2012 respectively further reductions to 21 effective from 1 april 2014 
and 20 effective from 1 april 2015 were substantively enacted on 2 july 2013 this will reduce the group’s future current tax 
charge accordingly the deferred tax asset at 23 august 2014 has been calculated based on the rates of 20 and 21 
substantively enacted at the balance sheet date notes to the financial statements continued
for the 53 weeks ended 23 august 2014
100 spirit pub company plc annual report 2014
17 inventories
2014
£m
2013
£m
goods held for resale 92 85
the group consumed £2085m of inventories during the period 2013 £2002m and charged £nil to the income statement for the 
writedown of inventories during the period 2013 £nil
18 assets held for sale
2014
£m
2013
£m
assets held for sale 113 29
at 23 august 2014 assets held for sale represents £60m 17 august 2013 £07m of pubs from the managed estate and £53m 
17 august 2013 £22m of pubs from the leased estate these pubs are being actively marketed for sale individually with varying 
expected completion dates within one year
when a pub is being actively marketed for disposal it is written down to fair value less costs to sell being the expected net 
disposal proceeds when this is lower than carrying value and transferred to assets held for sale this has resulted in an 
impairment charge in the period of £09m 2013 £nil this is a nonrecurring fair value which has been measured using  
observable inputs being the prices for recent sales of similar businesses and is therefore within level 2 of the fair value hierarchy
 
19 trade and other payables
2014 2013
amounts falling due
total
£m
amounts falling due
total
£m
within 
one year
£m
after 
more than 
one year
£m
within 
one year
£m
after 
more than 
one year
£m
trade payables 439 – 439 386 – 386
other tax and social security payable 249 – 249 226 – 226
other payables
1
92 155 247 85 125 210
accruals and deferred income 739 – 739 582 – 582
1519 155 1674 1279 125 1404
1 other payables at 17 august 2013 of £210m have been amended to present £125m due after more than one year separately
the contractual maturity of trade and other payables is within one year with the exception of an amount of £155m 17 august 2013 
£125m in respect of annual uplifts in rent and rentfree periods within other payables which falls due after more than one year strategic report governance financial statements
 spirit pub company plc annual report 2014 101
20 borrowings 
2014 2013
amounts falling due
total
£m
amounts falling due
total
£m
within 
one year
£m
after 
more than 
one year
£m
within 
one year
£m
after 
more than 
one year
£m
secured loan notes issued by spirit issuer plc 135 8032 8167 275 8075 8350
obligations under finance leases 12 104 116 06 93 99
147 8136 8283 281 8168 8449
a secured loan notes issued by spirit issuer plc
on 7 november 2013 spirit issuer plc issued £1013m class a6 secured loan notes and £584m class a7 secured loan notes 
at nominal value the proceeds of the issue of these new classes of secured loan notes were used to purchase at nominal value 
and cancel £1013m class a1 secured loan notes and £584m class a3 secured loan notes
interest is paid quarterly in arrears on all secured loan notes the details for the secured loan notes including the date of the final 
scheduled instalment for each class of note as indicated in its description are as set out below the group has taken out various 
interest rate swaps to reduce the interest rate risk associated with floating rate notes see note 21
2014 2013
amounts falling due
total
£m
amounts falling due
total
£m
within 
one year
£m
after 
more than 
one year
£m
within 
one year
£m
after 
more than 
one year
£m
class a1 secured floating rate notes repayable 
by september 2026 at libor
1
 055 69 296 365 231 1216 1447
class a2 secured floating rate notes repayable  
by june 2029 at libor
1
 27 – 1866 1866 – 1866 1866
class a3 secured fixed  floating rate notes repayable 
by september 2019 at 586 to december 2014 and 
libor
1
 055 thereafter 52 463 515 – 1099 1099
class a4 secured fixed  floating rate notes repayable 
by march 2025 at 6582 to december 2018 and 
libor
1
 2775 thereafter – 2077 2077 – 2077 2077
class a5 secured fixed  floating rate notes repayable 
by december 2032 at 5472 to december 2028 and 
libor
1
 075 thereafter – 1585 1585 – 1585 1585
class a6 secured floating rate notes repayable by 
december 2036 at libor
1
 18 to september 2018 
and libor
1
 33 thereafter – 1013 1013 – – –
class a7 secured fixed  floating rate notes repayable 
by december 2036 at 586 to december 2014 
libor
1
 395 to september 2018 and libor
1
 
545 thereafter – 584 584 – – –
nominal value of secured loan notes 121 7884 8005 231 7843 8074
add premium arising from fair value adjustment 30 198 228 44 232 276
less capitalised issue costs 16 50 66 – – –
secured loan notes issued by spirit issuer plc 135 8032 8167 275 8075 8350
1 for threemonth deposits
the figures above are net of notes held by the group not yet cancelled which as at 23 august 2014 were £nil 17 august 2013 
£20m class a2 £68m class a3 £28m class a4 and £27m class a5 notes
the secured loan notes have been secured by way of fixed and floating charges over various assets of the group notes to the financial statements continued
for the 53 weeks ended 23 august 2014
102 spirit pub company plc annual report 2014
20 borrowings continued
a secured loan notes issued by spirit issuer plc continued
maturity profile of secured loan notes
the table below summarises the maturity profile of the group’s secured loan notes at 23 august 2014 and 17 august 2013 based 
on contractual undiscounted cash flows including interest 
2014
within 
one year
£m
one to 
two years
£m
two to 
five years
£m
more than
 five years
£m
total
£m
interestbearing loans and borrowings
– capital 121 105 340 7439 8005
– interest 44 44 129 412 629
– interest rate swaps 577 568 1682 5379 8206
742 717 2151 13230 16840
2013
within 
one year
£m
one to 
two years
£m
two to 
five years
£m
more than
 five years
£m
total
£m
interestbearing loans and borrowings
– capital 231 342 699 6802 8074
– interest 41 40 115 275 471
– interest rate swaps 577 560 1608 3853 6598
849 942 2422 10930 15143
b obligations under finance leases
the minimum lease payments under finance leases fall due as follows
2014 2013
minimum 
lease 
payments
£m
present 
value of 
future 
obligations
£m
minimum 
lease 
payments
£m
present 
value 
of future 
obligations
£m
within one year 12 12 07 06
within one to five years 41 34 27 22
over five years 322 70 325 71
375 116 359 99
c interest rate analysis
the weighted average effective interest rates of interestbearing borrowings including the effect of interest rate swaps at the 
balance sheet date are as follows
2014

2013

secured loan notes 78 77
finance leases 65 65
total borrowings 77 76 strategic report governance financial statements
 spirit pub company plc annual report 2014 103
21 financial instruments
a derivative financial instruments
the carrying values of derivative financial instruments in the balance sheet are as follows
2014 2013
current 
liabilities
£m
noncurrent 
liabilities
£m
current 
liabilities
£m
noncurrent 
liabilities
£m
interest rate swaps 208 1338 211 1264
the group has taken out various interest rate swaps to reduce the interest rate risk associated with floating rate notes as follows
spirit issuer plc
interest rate swap agreements have been entered into which swap the libor interest rate to a fixed rate of 6681 on the class 
a1 class a2 and class a6 notes and after their respective stepup dates 4555 on the class a3 class a4 class a5 and class 
a7 notes prior to september 2012 the interest rate swap agreements swapped the libor interest rate to 6581 on the class a1 
and class a2 notes
the capital amount of these swaps reduces over time to reflect the reduction in the capital amounts of the floating rate notes 
see note 20 for more detail at their inception these swaps ensured that cash flows were perfectly hedged over the life of the 
notes however they were deemed ineffective at the time of the 2006 acquisition of the group by the punch taverns plc group 
in accordance with the requirements of ias 39 and therefore do not qualify for hedge accounting with movements in their fair 
value being recognised in the income statement
in november 2013 the group purchased and cancelled a portion of the a1 and a3 notes and issued new a6 and a7 notes 
the portion of the swaps associated with the a1 and a3 notes cancelled has been redesignated to the new a6 and a7 notes 
as the contractual repayment profile of the a6 and a7 notes differs to the contractual repayment profile of the a1 and a3 notes 
the a6 and a7 swaps no longer match the contractual repayment profile of those notes
the interest rate exposure of the group’s financial liabilities excluding shortterm payables is predominantly fixed after taking 
account of the various interest rate swaps entered into by the group
b financial risk management
the main risks arising from the group’s financial instruments are interest rate risk liquidity risk capital risk and credit risk there is 
no currency exposure as all material transactions and financial instruments are in sterling the group has no material exposure to 
equity securities or commodity price risk and it is the group’s policy that no speculative trading in financial instruments shall be 
undertaken the board reviews and agrees policies for each of these risks and they are summarised on pages 27 to 29
interest rate risk
as the group has no significant interestbearing assets other than cash and cash equivalents the group’s income and operating 
cash flows are substantially independent of changes in market interest rates income and cash flows from cash and cash 
equivalents fluctuate with interest rates
the group finances its operations through a mixture of equity shareholders’ funds and secured loan notes the group borrows at 
both fixed and floating rates of interest and then employs derivative financial instruments such as interest rate swaps to generate 
the desired interest rate profile and to manage the group’s exposure to interest rate fluctuations the cash balances attract interest 
at floating rates 
where overhedging arises for example due to early repayment of floating rate notes the group will seek to eliminate the 
overhedging where this is financially practicable either by embedding the cost in new swaps or by terminating the overhedge 
at 23 august 2014 there are £57m 17 august 2013 £167m of interest swaps outstanding on cancelled floating rate notes notes to the financial statements continued
for the 53 weeks ended 23 august 2014
104 spirit pub company plc annual report 2014
21 financial instruments continued
b financial risk management continued
interest rate risk continued
the group has taken out derivative financial instruments such that 98 of all loans at 23 august 2014 17 august 2013 100 
were either at fixed rate or were converted to fixed rate as a result of swap arrangements thereby largely eliminating the group’s 
exposure to changes in interest rates
cash flows associated with cash and cash equivalents debt and interest rate swaps and the fair value of these instruments 
fluctuate with changes in interest rates if the interest rates had been 1 higher or lower during the period the effect on the income 
statement would be as follows
interest 
receivable
£m
interest 
payable
£m
movement 
in fair value 
of interest 
rate swaps
£m
2014
impact on income statement and equity if interest rates increased by 1 gain  loss 13 01 440
impact on income statement and equity if interest rates decreased by 1 loss  gain 13 01 440
2013
impact on income statement and equity if interest rates increased by 1 gain 10 02 502
impact on income statement and equity if interest rates decreased by 1 loss 10 02 502
whilst cash flow interest rate risk is largely eliminated the use of fixed rate borrowings and derivative financial instruments exposes 
the group to fair value interest rate risk such that the group would not significantly benefit from falls in interest rates and would be 
exposed to unplanned costs such as break costs should debt or derivative financial instruments be restructured or repaid early
liquidity risk
the group’s funding strategy is to ensure a mix of financing methods offering flexibility and costeffectiveness to match the 
requirements of the group the group is primarily financed by secured loan notes with approximately 93 17 august 2013 84 
of the capital balance on these loan notes being repayable after more than five years from the balance sheet date subject to 
relevant covenants being met these covenants are formally reported on after each quarter end but are monitored internally on a 
periodic basis the board continues to review alternative sources of finance the group’s objective is to smooth the debt maturity 
profile and to arrange funding ahead of requirements where required so maturing short term debt may be refinanced or paid as 
it falls due cash flow forecasts are frequently produced to assist management in identifying liquidity requirements and are stress 
tested for possible scenarios this includes assessment of the ability to meet the restricted payment condition in the securitisation 
structure in order that cash can be released to the top company level should the securitisation not meet the restricted payment 
condition then cash generated may under certain circumstances become trapped within the securitisation not made available 
to the wider group to naturally delever that securitisation during the period to 23 august 2014 the restricted payment condition 
was met at each measurement date including at 23 august 2014
cash balances are invested in shortterm deposits such that they are readily available to settle shortterm liabilities or to fund 
capital additions included within cash and cash equivalents held by the group is £267m 2013 £12m held in disposal proceeds 
accounts within the debenture for which there are some restrictions in place regarding their use the permitted uses for this 
restricted cash include the acquisition of licensed properties into the securitisation and the purchase of the securitisation’s own 
debt subsequent to the period end £234m was released from the disposal proceeds accounts as the conditions for such a 
release were met strategic report governance financial statements
 spirit pub company plc annual report 2014 105
21 financial instruments continued
b financial risk management continued
capital risk
the group’s capital structure is made up of net debt issued share capital and reserves these are managed effectively to 
minimise the group’s cost of capital to add value to shareholders and to service debt obligations ultimately ensuring that the 
group continues as a going concern the group’s principal external debt is held within one securitisation the securitised debt is 
monitored by a variety of measures which are reported to the debt providers on a quarterly basis the primary measure is a debt 
service cover ratio dscr which compares free cash flow to debt service being interest and capital amortisation the group 
assesses the performance of the business the level of available funds and the short to mediumterm strategic plans concerning 
capital spend as well as the need to meet financial covenants and such assessment influences the level of dividends payable as 
well as decisions as to whether to buy back debt in the current period the group reduced the nominal value of its outstanding 
securitised debt from £8074m to £8005m at 23 august 2014 the dscr was 19 times 17 august 2013 20 times compared 
to the default financial covenant of 13 times 17 august 2013 13 times
credit risk
with the exception of cash and cash equivalents invested with banks and financial institutions there are no significant 
concentrations of credit risk within the group the maximum credit risk exposure relating to financial assets is represented by 
the carrying value as at the balance sheet date the group’s objective is to minimise credit risk by ensuring that surplus funds 
are invested with banks and financial institutions with high credit ratings and that the group deals with third parties that have 
been subject to credit checks or that have good credit scores where appropriate trade and other receivables as shown on the 
consolidated balance sheet comprise a large number of individually small amounts from unrelated customers and are shown 
net of a provision for doubtful debts management estimates the provision for doubtful debts based on a review of all individual 
receivable accounts experience and known factors at the balance sheet date taking into account any collateral held in the form 
of cash deposits which is quantified these cash deposits are applied against unpaid debt when licensees leave the pubs and 
vary in size the amount of cash deposits held at 23 august 2014 is £40m 17 august 2013 £42m these are held on the balance 
sheet within trade and other payables receivables are written off against the doubtful debt provision when management deems 
the debt no longer recoverable 
an analysis of the provision held against trade receivables for doubtful debts is shown below
2014
£m
2013
£m
opening provision for doubtful debts 19 21
charged to income statement 03 03
utilised during the period 10 05
closing provision for doubtful debts 12 19
the ageing of trade receivables at the balance sheet date net of the doubtful debt provision is as follows
2014
£m
2013
£m
live debt current 39 35
035 days past due 01 10
over 35 days past due 03 04
43 49
live debt primarily represents balances outstanding from current licensees closed debt relates to outstanding balances from 
customers that are no longer current licensees of the group and is fully provided
there are no indicators at 23 august 2014 that debtors will not meet their payment obligations in respect of the net amount of trade 
receivables recognised in the balance sheet  notes to the financial statements continued
for the 53 weeks ended 23 august 2014
106 spirit pub company plc annual report 2014
21 financial instruments continued
c financial instruments fair value estimation
financial instruments carried at fair value are required to be measured by reference to the following levels
  level 1 – quoted prices in active markets for identical assets or liabilities
  level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly  
ie as prices or indirectly ie derived from prices
  level 3 – inputs for the asset or liability that are not based on observable market data ie unobservable inputs
notes 11 and 12 include disclosures in relation to land and buildings that are measured at fair value and note 18 includes 
disclosures in relation to assets held for sale for which a fair value is measured
the following table presents the group’s financial liabilities that are measured at fair value financial assets of the group which 
principally comprise trade receivables and cash and cash equivalents are not included in this note because their book value 
approximates their carrying value
at 23 august 2014
fair value hierarchy
total
fair value
£m
amortised
cost
£m
total 
carrying
value
£m
level 1
£m
level 2
£m
level 3
£m
financial liabilities at amortised cost
trade payables – 439 – 439 439
finance lease obligations – 116 – 116 116
secured loan notes due within one year – 120 – 120 135 135
secured loan notes due after more than one year – 7841 – 7841 8032 8032
financial liabilities at fair value through profit or loss
interest rate swaps due within one year – 208 – 208 208
interest rate swaps due after more than one year – 1338 – 1338 1338
total liabilities – 10062 – 10062 10268
at 17 august 2013
fair value hierarchy
total
fair value
£m
amortised
cost
£m
total 
carrying
value
£m
level 1
£m
level 2
£m
level 3
£m
financial liabilities at amortised cost
trade payables – 386 – 386 386
finance lease obligations – 99 – 99 99
secured loan notes due within one year – 209 – 209 275 275
secured loan notes due after more than one year – 7095 – 7095 8075 8075
financial liabilities at fair value through profit or loss
interest rate swaps due within one year – 211 – 211 211
interest rate swaps due after more than one year – 1264 – 1264 1264
total liabilities – 9264 – 9264 10310
the fair value of interest rate swaps are determined based on publicly available yield curves used in discounted cash flows 
tested for reasonableness against a third party valuation
there have been no transfers between levels 1 and 2 during the period strategic report governance financial statements
 spirit pub company plc annual report 2014 107
22 provisions
property 
leases
£m
vat 
repayable
£m
insurance
£m
total
£m
at 18 august 2012 675 – 16 691
unwinding of discount effect of provisions 56 – – 56
charged to income statement – – 34 34
utilised during the period 126 – 05 131
at 17 august 2013 605 – 45 650
unwinding of discount effect of provisions 50 – – 50
charged to income statement – 202 35 237
amounts refunded from third parties – 20 – 20
released to income statement on disposal 43 – – 43
utilised during the period 113 – 26 139
at 23 august 2014 499 222 54 775
 
provisions have been analysed between current and noncurrent as follows
2014
£m
2013
£m
current 353 112
noncurrent 422 538
775 650
property leases
the provision for property leases has been set up to cover operating costs of vacant or lossmaking premises the provision 
covers the expected shortfall between operating income and rents payable for a portfolio of trading and nontrading properties 
the estimated period required to mitigate these losses is identified on an individual property basis by reference to the forecast 
profitability and investment programme for each property
vat repayable
the vat provision represents the group’s outstanding gaming machine vat claim and the associated default interest
at 21 august 2010 a contingent asset of £189m existed in relation to the group’s outstanding gaming machine vat claim 
a decision in the taxpayer’s favour was reached during 2010 in respect of the rank group plc’s gaming claim allowing the 
group to further pursue its own gaming claim and during the period to 20 august 2011 the group’s claim was repaid by hmrc 
hmrc agreed to make the repayment of the existing claim subject to the group providing a guarantee to hmrc that in the event 
that the existing decision in the rank group plc is overturned in a higher court the amount will be repayable in full the decision 
in relation to the rank group plc’s claim was referred to the court of justice of the european union and at 20 august 2011 the 
group recognised the repayment amount as a provision during november 2011 the court of justice of the european union 
considered the rank group plc’s gaming claim and found in favour of the taxpayer and as a result the group recognised the 
£189m in exceptional items during the period to 18 august 2012 and disclosed a contingent liability at 18 august 2012 and 
17 august 2013
on 30 october 2013 the court of appeal found in favour of hmrc in the rank group plc’s gaming claim as a result in january 
2014 hmrc issued letters to the group seeking repayment of amounts due as outlined in ‘revenue  customs brief 0114’ 
accordingly at 23 august 2014 the group has recognised a provision for the amount previously repaid to the group of £179m as 
well as statutory interest of £30m and default interest of £13m the group received a £20m refund from a third party in respect of 
fees associated with the claim at 23 august 2014 the cash has not been paid to hmrc as the rank group plc has been granted 
permission to appeal to the supreme court with the hearing to be held on 20 april 2015
insurance
the provision for insurance relates to an estimate of monies that may become payable on claims not yet made to the group or are 
outstanding on existing claims the majority of this provision is expected to be utilised within five years of the balance sheet date notes to the financial statements continued
for the 53 weeks ended 23 august 2014
108 spirit pub company plc annual report 2014
23 share based payments
at 23 august 2014 the group had three types of share based payment arrangements which directors and employees are able 
to acquire shares in the company all of these schemes are equitysettled schemes 
longterm incentive plan 2011
the first scheme is a longterm incentive plan ltip whereby eligible senior management are granted awards of ltip shares 
the shares are issued to ltip members subject to their continued threeyear employment from the date of award and to the extent 
that the performance conditions set by the remuneration committee at the date the award is made are satisfied further information 
on the performance conditions of the ltip are shown in the remuneration report on pages 56 to 70 at 23 august 2014 eligible 
employees held rights over ordinary shares that may result in the issue of 6682826 shares on 7 november 2014 644140 shares 
on 8 may 2015 5228176 shares on 9 november 2015 and 3868482 shares on 8 november 2016
the exception to this is an award of 59207 shares made under the ltip rules on 2 march 2012 which was not subject to 
performance conditions and was satisfied by market purchases of shares this award vested in full on 6 february 2014
share bonus plan 2011
the second scheme is a share bonus plan sbp whereby at the discretion of the board certain senior management who are 
eligible for an annual bonus can participate eligible employees are awarded rights to the issue of a maximum number of shares 
at the beginning of a two year period which they will be entitled to receive at the end of that period if the eligibility condition set 
by the remuneration committee at the time the allocation is made is satisfied at the balance sheet date eligible employees held 
rights over ordinary shares which have been satisfied by market purchases of these shares 
share incentive plan 2011
the third scheme is a share incentive plan sip open to all eligible employees whereby proceeds contributed by employees are 
used to buy shares in the company at prevailing market values these shares are called partnership shares and are held in a trust 
on behalf of the employee for every partnership share bought by the employee the company will give the employee one share 
free of charge matching share the employees have to take their shares out of the plan on leaving the company and will not 
be entitled to the matching share if they leave within three years of purchasing the partnership shares if the company awards 
dividends to its shareholders the employee will receive a dividend on each of the partnership and matching shares they hold 
the company arranges for the dividends to be used to buy extra shares dividend shares dividend shares must be held in the 
plan for three years before they can be removed unless the employee leaves the company in which case they must be taken out 
the scheme was introduced in november 2011 with shares being acquired at market values on a monthly basis 
as at 23 august 2014 1643758 shares had been issued by the company to the trust at par value 17 august 2013 1256380 
shares the par value of the shares issued that has been deducted from reserves is negligible the market value of these shares 
at 23 august 2014 was £12m strategic report governance financial statements
 spirit pub company plc annual report 2014 109
23 share based payments continued
fair value of share awards
longterm incentive plan
the key assumptions used in the measurement of the fair values of awards made are as follows
grant date
9 november 
2013
9 november 
2012
8 may 
2012
2 march 
2012
9 november 
2011
valuation model tsr element monte carlo monte carlo monte carlo – monte carlo
valuation model eps element black scholes black scholes black scholes – black scholes
valuation model – – – black scholes –
share price at date of grant £078 £059 £056 £061 £044
exercise price £nil £nil £nil £nil £nil
expected volatility 267 285 323 na 603
expected life 3 years 3 years 3 years 19 years 3 years
riskfree interest rate 078 026 052 na 066
expected dividend yield 263 329 353 321 427
fair value per award £059 £044 £041 £057 £033
expected volatility has been calculated based on a proxy volatility for the company using the average volatility of six companies 
in the same sector for a period corresponding to the expected life of the option or share award
the riskfree rate of return is the yield on zerocoupon uk government bonds of a term consistent with the assumed option life
share incentive plan
the fair value of the matching shares is recognised as the market value of the shares issued at the date of purchase this charge 
is spread over the threeyear vesting period on a straightline basis 
movements in awards under share based payment schemes
reconciliations of movements for the ltip sbp and sip schemes over the 53 weeks to 23 august 2014 are shown below
2014
longterm 
incentive 
plan
no
share 
bonus 
plan
no
share 
incentive 
plan
no
outstanding at 17 august 2013 13144395 281492 667220
granted during the period 4175090 66036 319853
exercised during the period 59207 161605 –
forfeited during the period 836654 – 132809
outstanding at 23 august 2014 16423624 185923 854264 notes to the financial statements continued
for the 53 weeks ended 23 august 2014
110 spirit pub company plc annual report 2014
24 share capital 
2014 2013
no £m no £m
allotted issued calledup and fully paid
ordinary shares of 1 pence 660528331 66 660321591 66
changes in share capital
under the longterm incentive plan and share bonus plan no ordinary shares were issued during the period 2013 nil under the 
share incentive plan 206740 matching shares were issued at par consideration 2013 309392 see note 23 for further details of 
these schemes the issue of these shares resulted in net cash proceeds of £nil 2013 £nil
all ordinary shares in issue at 23 august 2014 rank pari passu in all respects
25 net debt
a analysis of net debt
2014
£m
2013
£m
secured loan notes 8005 8074
cash and cash equivalents 1591 1016
nominal value of net debt
1
6414 7058
fair value adjustments in respect of secured loan notes 162 276
fair value of interest rate swaps 1546 1475
finance lease obligations 116 99
net debt 8238 8908
balance sheet
borrowings 8283 8449
derivative financial instruments 1546 1475
cash and cash equivalents 1591 1016
net debt 8238 8908
1 nominal value of net debt excludes finance lease obligations
b analysis of changes in net debt
at 
18 august 
2012
£m
cash flow
£m
noncash 
movements
£m
at 
17 august 
2013
£m
cash flow
£m
noncash 
movements
£m
at 
23 august 
2014
£m
current assets
cash at bank and in hand 974 42 – 1016 575 – 1591
974 42 – 1016 575 – 1591
debt 
borrowings 8513 – 64 8449 143 23 8283
derivative financial instruments 1951 03 473 1475 59 130 1546
10464 03 537 9924 202 107 9829
net debt per balance sheet 9490 45 537 8908 777 107 8238
net debt incorporates the group’s borrowings derivative financial instruments and obligations under finance leases less cash and 
cash equivalents
noncash movements relate to the amortisation of premium on loan notes capitalised issue costs and derivative financial 
instruments together with fair value movements on derivative financial instruments strategic report governance financial statements
 spirit pub company plc annual report 2014 111
25 net debt continued
c reconciliation of net cash flow to movement in net debt
2014
£m
2013
£m
increase in cash and cash equivalents in the period 575 42
cash outflow from change in debt financing 202 03
change in net debt resulting from cash flows 777 45
noncash movements in net debt 107 537
obligations under finance leases – –
change in net debt resulting from noncash flows 107 537
movement in net debt 670 582
opening net debt 8908 9490
closing net debt 8238 8908
 
26 retirement benefits
the group operates two funded defined benefit pension schemes the spirit group pension scheme sgps and the spirit group 
retail pension scheme sgrps
both schemes operate in the uk and are final salary pension plans which provide benefits to members in the form of a guaranteed 
level of pension payable for life the level of benefits provided depends on members’ length of service and their salary in the final 
years leading up to retirement pensions in payment are updated in line with the retail price index
the benefit payments are from trusteeadministered funds plan assets held in trusts are governed by uk regulations as is the 
nature of the relationship between the group and the trustees and their composition responsibility for governance of the plans 
– including investment decisions and contribution schedules – lies jointly with the group and the board of trustees the board of 
trustees must be composed of representatives of the group and scheme participants in accordance with the schemes’ regulations
there have been no amendments curtailments or settlements to the schemes during the period
following the completion of the triennial actuarial valuations of the pension schemes minimum funding plans have been agreed 
setting out contributions to be made by the group the expected contributions to the two defined benefit pension schemes in the 
period ending 22 august 2015 are £50m the level of contributions required to be made to the defined benefit plans may affect the 
amount timing and uncertainty of the group’s future cash flows
as explained in note 1 with effect from 19 august 2012 the group has adopted revised ias 19 employee benefits and accordingly 
the 17 august 2013 comparative figures have been restated
a net retirement benefit liability
2014 2013
sgps
£m
sgrps
£m
total
£m
sgps
£m
sgrps
£m
total
£m
fair value of scheme assets 1579 3108 4687 1433 2926 4359
present value of scheme liabilities 1593 3075 4668 1415 2778 4193
net retirement benefit liability  asset 14 33 19 18 148 166
impact of minimum funding requirement  asset ceiling – 57 57 – 172 172
net retirement benefit liability  asset recognised  
in the balance sheet 14 24 38 18 24 06 notes to the financial statements continued
for the 53 weeks ended 23 august 2014
112 spirit pub company plc annual report 2014
26 retirement benefits continued
a net retirement benefit liability continued
at 23 august 2014 the sgrps net retirement benefit asset of £33m was subject to an asset ceiling of £46m 17 august 2013 
the sgrps net retirement benefit asset of £148m was restricted to £49m being the amount that could be recovered through 
reduced contributions to the related defined contribution scheme a liability of £57m 17 august 2013 £73m has also been 
recognised being the minimum funding requirement agreed following the triennial valuation of the scheme completed in 2013
the weighted average duration of the defined benefit obligation for the 53 week period to 23 august 2014 was 23 years for the 
sgps and 19 years for the sgrps the expected maturity profile of the undiscounted defined benefit payments is as follows
within 
one year
£m
two to 
five years
£m
six to 
10 years
£m
more than 
10 years
£m
total
£m
as at 23 august 2014 135 633 1005 9538 11311
b movements in net retirement benefit liability
fair 
value of 
scheme 
assets
£m
present 
value of 
scheme 
liabilities
£m
subtotal
£m
impact of 
minimum 
funding 
requirement 
 asset 
ceiling
£m
total
£m
at 18 august 2012 4190 3903 287 287 –
expenses 07 – 07 – 07
net finance cost 191 179 12 13 01
amounts included in income statement 184 179 05 13 08
remeasurements
–  return on plan assets excluding amounts included 
in interest expense  income 60 – 60 – 60
– gain from change in financial assumptions – 154 154 – 154
– experience gains  losses 09 101 92 – 92
–  change in asset ceiling excluding amounts included 
in interest expense – – – 128 128
amounts included in other comprehensive income 69 255 186 128 58
contributions from employers 60 – 60 – 60
payments from plans – benefit payments 144 144 – – –
at 17 august 2013 4359 4193 166 172 06
expenses 16 – 16 – 16
net finance cost 209 200 09 09 –
amounts included in income statement 193 200 07 09 16
remeasurements
–  return on plan assets excluding amounts included 
in interest expense  income 203 – 203 – 203
– gain from change in financial assumptions – 407 407 – 407
–  change in asset ceiling excluding amounts included 
in interest expense – – – 124 124
amounts included in other comprehensive income 203 407 204 124 80
contributions from employers 64 – 64 – 64
payments from plans – benefit payments 132 132 – – –
at 23 august 2014 4687 4668 19 57 38 strategic report governance financial statements
 spirit pub company plc annual report 2014 113
26 retirement benefits continued
c financial assumptions
the values of both schemes’ liabilities have been determined by a qualified actuary based on the results of actuarial valuations 
as at 31 october 2012 updated to the balance sheet date
the significant actuarial assumptions used in determining the valuations are as follows and apply to both schemes
2014 2013
rate of increase in pensions 31 33
discount rate 42 48
inflation assumption rpi 34 36
inflation assumption cpi 25 27
the mortality assumptions at the period end are based on standard mortality tables that allow for future mortality improvements 
the assumptions are that the life expectancy of a member who retires at the age of 65 is as follows
2014 2013
sgps sgrps sgps sgrps
male currently aged 45 25 years 24 years 25 years 24 years
male currently aged 65 23 years 22 years 23 years 22 years
female currently aged 45 27 years 27 years 27 years 27 years
female currently aged 65 24 years 24 years 24 years 24 years
d fair value of scheme assets
both schemes’ assets are stated at their market values at the balance sheet date and the expected return on scheme assets is 
derived as a weighted average of the expected return on each asset class recognising the proportions of the assets invested in 
each the expected return on each asset class is determined after taking external expert advice and by reference to relevant equity 
and bond indices
23 august 2014 17 august 2013
sgps
£m
sgrps
£m
total
£m
sgps
£m
sgrps
£m
total
£m
equities 485 768 1253 558 970 1528
debt – government bonds 466 1004 1470 368 840 1208
debt – corporate bonds 476 1054 1530 373 852 1225
uk property 140 258 398 122 224 346
other 12 24 36 12 40 52
net pension asset 1579 3108 4687 1433 2926 4359
the assets above are quoted with the exception of uk property the fair values of the assets have not materially changed due 
to the adoption of ifrs 13
the pension schemes have not invested in any of the group’s own financial instruments nor in properties or other assets used 
by the group notes to the financial statements continued
for the 53 weeks ended 23 august 2014
114 spirit pub company plc annual report 2014
26 retirement benefits continued
e sensitivities
the sensitivities regarding the principal assumptions used to measure the schemes’ liabilities are set out below the illustrations 
consider the single change shown with the other assumptions assumed to be unchanged in practice changes in one assumption 
may be accompanied by offsetting changes in another assumption changes in market values may also occur at the same time 
as the changes in assumptions and may or may not offset them
assumption change in assumption impact on scheme liabilities
discount rate decrease by 05 increase by £56m
rate of inflation increase by 05 increase by £47m
f risks and uncertainties
both of the group’s defined benefit pension schemes are closed to new members the schemes are subject to risk regarding 
the relative amount of the schemes’ assets which are affected by the value of investments and the returns generated by such 
investments compared to the schemes’ liabilities which are affected by changes in the life expectancy actual and expected price 
inflation and changes in bond yields the difference in value between scheme assets and scheme liabilities may vary significantly 
in the short term potentially resulting in an increased deficit or reduced surplus being recognised on the group’s balance sheet 
27 operating lease commitments – minimum lease payments
group
2014
£m
2013
£m
future minimum rentals payable under noncancellable operating leases
within one year 679 643
between one and five years 2678 2530
after five years 9171 9212
12528 12385
the future minimum rentals payable under noncancellable operating leases when discounted to present value are £5862m 
17 august 2013 £5468m
the group leases various licensed properties offices and other commercial properties under noncancellable operating lease 
agreements the leases have various terms escalation clauses and renewal rights the group also leases vehicles under 
noncancellable operating lease agreements
the group operates 173 licensed properties under noncancellable operating lease agreements for which the group has agreed 
to undertake to lease for a further ten years when the current leases expire in 2034 an estimate of the future minimum rental 
payments under the current leases including the additional ten year extension is included in the table above
the total future minimum sublease payments expected to be received are £419m 17 august 2013 £355m
the group is a lessor of licensed properties to retailers the leases have various terms escalation clauses and renewal rights
the total noncancellable future minimum lease payments expected to be received in respect of these leases are
2014
£m
2013
£m
within one year 174 185
between one and five years 599 589
after five years 818 743
1591 1517
the company has no operating lease commitments at 23 august 2014 17 august 2013 £nil strategic report governance financial statements
 spirit pub company plc annual report 2014 115
28 capital and other financial commitments
group
capital commitments for property  plant and equipment
2014
£m
2013
£m
contracted but not provided 89 129
the company has no capital commitments at 23 august 2014 17 august 2013 £nil
29 related party transactions
group
transactions with key management personnel
the key management personnel of the group comprise members of the spirit pub company plc board of directors and other 
nominated members of the executive management team
the key management personnel compensation is as follows
2014
£m
2013
£m
short term employee benefits 34 26
postretirement benefits 03 03
share based payments 19 14
56 43
transactions with joint ventures
prior to 29 january 2014 the group held 51 of the share capital of allied kunick entertainments limited a joint venture with 
kunick 109 limited on 3 april 2013 kunick 109 limited entered liquidation as a result of the liquidation of kunick 109 limited 
and following advice on the terms of the joint venture arrangements the group has since the date of liquidation of kunick 109 
limited borne 100 of the shareholder costs of allied kunick entertainments limited
on 29 january 2014 the remaining 49 of the share capital of allied kunick entertainments limited was transferred to the 
group for £nil consideration as a consequence at 23 august 2014 the group holds 100 of the share capital of allied kunick 
entertainments limited
during the period to 17 august 2013 the group paid invoices and raised sales invoices on behalf of allied kunick 
entertainments limited
balances arising from transactions with joint ventures
2013
£m
unsecured loan stock receivable 130
amounts owed to joint ventures 07
total amounts due from joint ventures 123
the amount owed to the group and outstanding at 17 august 2013 was fully provided for by the group due to the uncertainty  
of its recoverability
transactions with defined benefit pension schemes
neither the group nor the company have had any transactions with any of the pension schemes during the current or prior 
periods other than those disclosed in note 26 notes to the financial statements continued
for the 53 weeks ended 23 august 2014
116 spirit pub company plc annual report 2014
29 related party transactions continued
 
company
transactions with key management personnel
the key management personnel of the company comprise members of the spirit pub company plc board of directors 
the directors do not receive any remuneration from the company 2013 £nil as their emoluments are borne by other group 
companies the company did not have any transactions with the directors during the period 2013 £nil 
transactions with subsidiary undertakings
during the period the company has received dividends from its subsidiary spirit pub company holdco limited of £80m 
2013 £282m there have been no other transactions with subsidiary undertakings in the period 2013 nil
30 contingent liabilities
in prior periods the group has disposed of a number of properties for which it remains contingently liable for the head leases 
should the assignee default on the terms of the lease this may result in a number of leases reverting to the group for which the 
annual net exposure to the group is considered unlikely to exceed £18m per annum 17 august 2013 £60m 
at 17 august 2013 the group disclosed a contingent liability of £189m in relation to the group’s outstanding gaming machine 
vat claim at 23 august 2014 a current provision is recognised in respect of this amount see note 22
31 post balance sheet events
on 21 october 2014 a pub in the managed estate was sold for net proceeds of £150m
the financial statements were authorised by mike tye and paddy gallagher on 3 november 2014 at this date there were 
no adjusting or nonadjusting events after the balance sheet date strategic report governance financial statements
 spirit pub company plc annual report 2014 117
opinions and conclusions arising from our audit
1 our opinion on the financial statements is unmodified
we have audited the financial statements of spirit pub company plc for the 53 weeks ended 23 august 2014 set out on pages 
72 to 116
in our opinion 
  the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 23 august 
2014 and of the group’s profit for the 53 weeks then ended
  the group financial statements have been properly prepared in accordance with international financial reporting standards 
as adopted by the european union
  the parent company financial statements have been properly prepared in accordance with uk accounting standards
  the financial statements have been prepared in accordance with the requirements of the companies act 2006 and as regards 
the group financial statements article 4 of the ias regulation 
2 our assessment of risks of material misstatement
in arriving at our audit opinion above on the financial statements the risks of material misstatement that had the greatest effect 
on our audit were as follows
valuation of the property portfolio including those assets held for sale and operating leases £1513 million
refer to page 54 audit and risk committee report pages 81 82 and 84 accounting policy and pages 94 to 96 financial disclosures
the risk
the group’s balance sheet includes significant assets with respect to the property portfolio as land and buildings public house 
fixtures and fittings operating leases and assets held for sale the group carries its property portfolio at open market value which 
is supported by market evidence determined with reference to judgemental factors such as current and future projected income 
levels location quality of the pub and comparable market transactions in the sector the properties are subject to a rolling five 
year programme of site visits by independent property surveyors and those properties are valued at that date in accordance 
with provisions of royal institution of chartered surveyors appraisal and valuation standards ‘the red book’ the remainder 
of the property portfolio is subject to an extrapolation technique using multiples supplied by the independent valuer and it is with 
reference to this that the directors have performed their valuation
the risk is that the assumptions made by the directors are inaccurate or that the extrapolation or sampling techniques used 
are not appropriate and as a result assets are stated at an inappropriate estimate of their open market value 
our response
our procedures included amongst others using kpmg valuation specialists to challenge the appropriateness of the valuation 
methodology used by management together with the sampling and extrapolation techniques applied we evaluated the competence 
and objectivity of the independent property surveyors and compared the available market transaction data and sales activity in 
the sector to the relevant assumptions used in the valuation to identify any areas that required further consideration we critically 
assessed valuation assumptions applied by the directors including the justification for any significant changes to assumptions 
since the prior period including improvements in multiples at a brand and geographical level along with understanding any 
movements in value which were not consistent with our expectations 
we also reviewed the disclosures provided in relation to the valuation assumptions key inputs and sensitivities
independent auditor’s report to the 
members of spirit pub company plc only 118 spirit pub company plc annual report 2014
independent auditor’s report to the 
members of spirit pub company plc only
continued
recoverability of goodwill £2121 million
refer to page 54 audit and risk committee report page 81 accounting policy and page 96 financial disclosures
the risk
the group’s balance sheet includes goodwill arising from historical acquisitions as the group’s market capitalisation as at 
23 august 2014 is lower than its net asset value there is an indicator present that the goodwill carrying value may be impaired 
the recoverable amounts of the groups of cash generating units “cgus” to which goodwill has been allocated is based on 
valueinuse calculations these calculations require assumptions to be made regarding future cash flows and the choice of 
a suitable discount rate in order to calculate the value in use of those cash flows
due to the inherent uncertainty involved in forecasting and discounting future cash flows which are the basis of the assessment 
of the recoverability this is considered to be one of the key judgemental area in the audit 
our response
our procedures included amongst others critically assessing the key assumptions applied by the group in determining the 
recoverable amount of cgus in particular we evaluated the appropriateness and consistency of underlying assumptions in 
determining the cash flows including considering the appropriateness of the growth assumptions applied by reference to historical 
forecasting accuracy a comparison of forecast cash flows to those currently being achieved by the cgus and challenging the 
group where such future cash flows were significantly higher than current levels or did not reflect known or probable changes in 
business environment we also challenged the key inputs used in the calculation of the discount rates used by the group including 
comparisons with external data sources and comparator group data using our own valuation specialists we performed our 
own sensitivity analysis including a reasonable reduction in assumed growth rates and cash flows and an increase in the applied 
discount rate we considered the sum of the discounted cash flows compared to the group’s market capitalisation to assess 
the reasonableness of those cash flows we assessed whether the group’s disclosures about sensitivity of the outcome of the 
impairment assessment to changes in key assumptions appropriately reflected the risks inherent in the valuation of goodwill
carrying value of the deferred tax asset £385 million
refer to page 54 audit and risk committee report page 83 accounting policy and page 99 financial disclosures
the risk
the group’s balance sheet includes deferred tax assets mostly generated by brought forward losses and temporary differences 
on financial instruments the risk is that carrying value of the deferred tax asset is not recoverable as it is dependent on the 
group’s ability to access and utilise those losses and temporary differences in future accounting periods
our response
our procedures included amongst others analysing and challenging the recognition of deferred tax asset assumptions applied 
by the group with the use of our own uk tax specialists with regard to the availability of losses and temporary differences within 
the group and their planned utilisation we compared actual utilisation of current year losses to forecasts and critically reviewed 
the expected future taxable profits and planned loss utilisation model we reviewed any group structure or trade restrictions known 
to impact on the loss utilisation and considered how those potential impacts had been addressed in the accounting 
we also assessed the adequacy of the group’s disclosures in respect of tax and uncertain tax positions relating to expected future 
taxable profits
3 our application of materiality and an overview of the scope of our audit
the materiality for the group financial statements as a whole was set at £28m this was determined with reference to a 
benchmark of group profit before taxation which we consider to be one of the principal considerations for members of the 
company in assessing the financial performance of the group materiality represents 25 of group profit before tax and 23 
of group profit before tax adjusted for the provision in relation to the gaming machine vat claim as disclosed in note 6 and the 
profit on sale of noncurrent assets as disclosed on the face of the income statement strategic report governance financial statements
 spirit pub company plc annual report 2014 119
we agreed with the audit committee to report to it all corrected and uncorrected misstatements we identified through our audit 
with a value in excess of £140000 in addition to other audit misstatements below that threshold that we believe warranted 
reporting on qualitative grounds
audits for group reporting purposes of all components were performed by the group audit team and covered 100 of total group 
revenue group profit before taxation and total group assets these audits were performed to materiality levels based on the 
relevant local statutory materialities and ranged from £3000 to £21 million
4 our opinion on other matters prescribed by the companies act 2006 is unmodified
in our opinion 
  the part of the remuneration report to be audited has been properly prepared in accordance with the companies act 2006 
  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 
5 we have nothing to report in respect of the matters on which we are required to report by exception 
under isas uk and ireland we are required to report to you if based on the knowledge we acquired during our audit we have 
identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial 
statements a material misstatement of fact or that is otherwise misleading 
in particular we are required to report to you if 
  we have identified material inconsistencies between the knowledge we acquired during our audit and the directors’ statement 
that they consider that the annual report and financial statements taken as a whole is fair balanced and understandable and 
provides the information necessary for shareholders to assess the group’s performance business model and strategy or
  the audit and risk committee report does not appropriately address matters communicated by us to the audit committee
under the companies act 2006 we are required to report to you if in our opinion 
  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 and the part of the remuneration report to be audited are not in agreement with 
the accounting records and returns or 
  certain disclosures of directors’ remuneration specified by law are not made or 
  we have not received all the information and explanations we require for our audit
under the listing rules we are required to review 
  the directors’ statement set out on page 47  in relation to going concern
  the part of the corporate governance statement on pages 48 to 51 relating to the company’s compliance with the nine 
provisions of the 2010 uk corporate governance code specified for our review
we have nothing to report in respect of the above responsibilities 
scope of report and responsibilities
as explained more fully in the statement of directors’ responsibilities in relation to the financial statements set out on page 71 
the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair  
view a description of the scope of an audit of financial statements is provided on the financial reporting council’s website at 
wwwfrcorgukauditscopeukprivate this report is made solely to the company’s members as a body and is subject to important 
explanations and disclaimers regarding our responsibilities published on our website at wwwkpmgcomukauditscopeukco2013a 
which are incorporated into this report as if set out in full and should be read to provide an understanding of the purpose of this 
report the work we have undertaken and the basis of our opinions
greg watts senior statutory auditor
for and on behalf of kpmg llp statutory auditor
chartered accountants
one snowhill snow hill queensway birmingham b4 6gh
3 november 2014 120 spirit pub company plc annual report 2014
consolidated trading results
23 august 
2014
1
£m
17 august 
2013
2
£m
18 august 
2012
3
£m
20 august 
2011
3
£m
21 august 
2010
3
 
unaudited
£m
revenue
4
8009 7582 7600 7344 7240
operating expenses before depreciation and amortisation
4
6415 6087 6139 5948 5930
ebitda
4
1594 1495 1461 1396 1310
depreciation and amortisation
4
382 362 367 348 328
operating profit
4
1212 1133 1094 1048 982
net finance costs
4
609 590 583 608 579
profit before tax
4
603 543 511 440 403
taxation
4
132 127 128 123 114
profit after tax
4
471 416 383 317 289
exceptional items 523 70 6016 1814 1718
earnings per share
basic adjusted pence
5
71 63 58 48 44
1 the period ended 23 august 2014 is a 53 week period all other periods are 52 week periods
2 restated for the impact of ias 19 revised 2011 see note 1 to the financial statements
3 the comparative periods ending 18 august 2012 20 august 2011 and 21 august 2010 have not been restated for the impact of ias19 revised 2011
4 before exceptional items
5 earnings adjusted for the impact of exceptional items
consolidated balance sheets
23 august 
2014
£m
17 august 
2013
1
£m
18 august 
2012 
£m
20 august 
2011
£m
21 august 
2010 
unaudited
£m
property plant and equipment 14352 13140 12762 17142 17180
goodwill 2121 2137 2146 2168 2272
operating leases 664 613 484 548 738
other noncurrent assets 385 496 868 588 2107
total noncurrent assets 17522 16386 16260 20446 22297
assets held for sale 113 29 169 42 372
cash and cash equivalents 1591 1016 974 1396 379
other current assets 352 342 324 377 354
current liabilities 2227 1883 1901 2165 1931
noncurrent liabilities 10089 10119 10804 10986 26746
net assets  liabilities 7262 5771 5022 9110 5275
share capital 66 66 66 66 66
reserves 7196 5705 4956 9044 5341
shareholders’ equity  deficit 7262 5771 5022 9110 5275
nominal value of gross debt 8005 8074 8074 8435 8665
nominal value of net debt 6414 7058 7100 7039 8286
1  current liabilities at 17 august 2013 of £2008m and noncurrent liabilities of £9994m have been amended to present £125m previously presented within current 
liabilities as noncurrent liabilities see note 19
fiveyear financial record strategic report governance financial statements
 spirit pub company plc annual report 2014 121
company information and advisers
company information
directors of the company
walker boyd chairman
mike tye chief executive officer
paddy gallagher finance director
tony rice nonexecutive director
mark pain nonexecutive director
christopher bell nonexecutive director
julie chakraverty nonexecutive director
financial calendar
q1 interim management statement january 2015
annual general meeting 13 january 2015
half year end 7 march 2015
interim results announcement april 2015
q3 interim management statement june 2015
year end 22 august 2015
preliminary results announcement october 2015
registered office
sunrise house
ninth avenue
burton upon trent
de14 3jz
44 01283 498 400
company number
07662835
advisers
auditor
kpmg llp
one snowhill
snow hill queensway
birmingham
b4 6gh
44 0121 232 3000
principal bankers
barclays bank plc
one snowhill
snow hill queensway
birmingham
b3 2wn
44 0121 480 5562
financial adviser and joint broker 
goldman sachs international
peterborough court
133 fleet street
london
ec4a 2bb
44 020 7774 1000
joint broker 
numis securities limited
10 paternoster square
london
ec4m 7lt
44 020 7260 1000
legal adviser
slaughter and may
one bunhill row
london
ec1y 8yy
44 020 7600 1200
registrar
computershare investor services plc
the pavilions
bridgwater road
bristol
bs99 7nh
44 0870 702 0003
designed and produced by instinctif partners wwwinstinctifcom
 
 
  spirit pub company plc
sunrise house
ninth avenue
burton upon trent
staffordshire
de14 3jz 
 
t 44 01283 498 400
wwwspiritpubcompanycom
spirit pub company plc annual report 2014


Summary:
 06 spirit pub company plc annual report 2014
chief executive officer’s review
together these factors have contributed to a significantly 
stronger balance sheet whilst we have benefitted from a  
milder winter and a 53rd week of trading both divisions have 
outperformed their respective peers profit before tax and 
exceptional items increased by 11 to £60m and earnings 
per share excluding exceptional items was up 13 to 71 pence
our performance in 201314 has given us a solid platform to 
build upon our strengthened financial position means that we 
are now ready to capitalise on the progress made to date and 
continue growing the business both organically and through 
acquisitions our existing estate continues to offer opportunities 
to optimise our assets and grow investment returns and we are 
now actively acquiring pubs into our managed division where 
we see the opportunity to grow our existing brand portfolio from 
c750 to c1200 sites
the year ended 23 august 2014 
was a very successful year for 
spirit with both our managed 
and leased divisions delivering 
a strong financial performance 
reflecting robust organic growth 
rigorous cost control and 
productivity improvements 
further development of our 
brand portfolio as well as the 
disciplined use of cash and 
pragmatic realisation of assets strategic report governance financial statements
 spirit pub company plc annual report 2014 07
managed pubs 
our managed pubs have delivered strong results throughout 
the year with continued outperformance of the industry 
benchmark the coffer peach business tracker like for like 
sales were up 44 for the 52 week period which represents 
an improvement of 108 over a three year period while we 
benefitted from better weather in the first half of the year we 
faced tougher weather comparatives over the summer months 
and the underlying health of our brands and the strength of our 
estate helped increase our average weekly sales by a further 
5 to £18100
driven by strong sales growth ebitda
2
 increased by 8 and 
ebitdar
2
 margin improved by 30 basis points giving a total 
ebitdar
2
 margin improvement of 160 basis points over a three 
year period some of the efficiency gains have been partially 
offset by increases in the carbon reduction tax and the cost of 
introducing bt sport into the estate the strong performance 
has also resulted in higher bonus costs than in the prior year 
with the majority of these bonuses being paid to pub employees
our focus remains on disciplined capital investment to drive 
returns and innovation to ensure that we have compelling 
brands and pubs which appeal to our guests in the first half 
of the year we focused on trialling schemes to determine if we 
could identify more effective brands for our uninvested local 
pubs as a result of these pilots we have identified opportunities 
for a further rollout of our flaming grill brand and have 
developed a new quality local offer golden oak inns  
which we have successfully trialled in seven pubs in the year 
golden oak inns is well suited to smaller but demographically 
well sited pubs and offers excellent food drink and service  
in a contemporary environment we see a significant rollout 
opportunity for this concept across our locals estate
we completed 24 flaming grill investments in the year with an 
average spend of £140000 per pub with five of these pubs 
being transferred from our leased estate a further two pubs 
from the leased estate have been converted to our fayre  
square brand and we commenced our expansion programme 
with the acquisition and conversion of two freehold pubs into 
our flaming grill brand a third pub was acquired in the year 
and opened for trading as a flaming grill in september 2014 
shortly after the year end we also completed 13 major taylor 
walker investments including the conversion of four unbranded 
pubs and optimising the use of previously redundant space 
such as installing cellar bars and function rooms
we continue to seek opportunities to expand our wacky 
warehouse brand by investing in underutilised space our 
ambition is to have a wacky warehouse play area associated 
with all of our fayre  square pubs
in the early part of the year we repositioned our chef  brewer 
offer to a much more premium offer indications were that 
this repositioning was not as successful as was expected 
and as such the offer was once again adjusted closer to the 
midmarket – with focus on delivering a consistently excellent 
guest experience results to date are encouraging
the proportion of our estate invested and branded is now 89 
and we continue to achieve an average return on investment 
in excess of 25 
we have now commenced the refreshment phase of our capital 
investment programme for pubs that had major investment 
spend between three and five years ago we have completed 
37 of these ‘sparkle spends’ in the year at an average cost 
of £37 000 predominantly in the taylor walker estate
28
like for like
1
the leased estate is firmly  
in growth with like for like sales  
growth of 28
44
like for like
1
managed brands continued  
to achieve further growth  
with like for like sales up 44
“ our focus on value for money and delivering a great 
experience for every guest irrespective of demography 
or occasion underpins this positive momentum”
1  growth rates are shown on a 52 week vs 52 week basis to exclude the benefit 
of an extra week trading in the financial year to 23 august 2014
2 excluding exceptional items 08 spirit pub company plc annual report 2014
chief executive officer’s review
continued
during the year we have further strengthened our digital 
and customer relationship management crm capability 
enabling us to better understand and communicate with 
our guests using a combination of both digital and traditional 
marketing the launch of our loyalty scheme in our fayre  
square estate has enabled us to increase both the frequency 
and the value of visits by appropriately incentivising guests 
with tailored rewards 
our acquisition programme commenced in the second half of 
the year with the purchase of three freehold pubs for conversion 
into our flaming grill brand two of which were open for trading 
at the year end with the third opened in september 2014 
we also acquired 19 leasehold pubs from the orchid estate 
which as a package are profitable post rent despite being 
uninvested these pubs are an excellent fit for our existing 
brands and we look forward to rapidly investing in and branding 
these pubs in order to generate good returns 
we intend to add further pubs to our estate in order to 
supplement organic growth and leverage our highly scalable 
overheads and we have made £75m available to fund 
acquisitions our preference is for freehold assets that will 
be suitable for our strong foodled value brands with a target 
return of 20 although we will also acquire leasehold sites 
if these can deliver a target return of 25
since the year end we have completed the acquisition of 
a further three leasehold pubs from the orchid estate which 
will be invested and branded in the first quarter of 201415 
in october 2014 we sold a london pub the prince of wales 
for proceeds of £15m approximately 50x ebitda reflecting 
the development potential of this site in earls court
leased pubs 
the leased estate is firmly in growth with like for like sales 
growth of 28
1
 and like for like net income increasing by 42
1
 
average net income per pub of £104000 2013 £96000 
demonstrates the high quality of our leased estate which 
delivered total operating profit growth of 2 on a 52 week 
basis despite having 6 fewer pubs 
like for like beer volumes are in growth and have been 
consistently ahead of the market throughout the year 
source bbpa like for like rent is also in growth and the 
percentage of pubs on substantive leases has increased 
from 94 to 96 at the year end
our focus has remained on improving the quality of the estate 
through investment innovation and selective disposals and we 
have continued to generate returns from investment in excess 
of our 25 hurdle rate 
we have continued our leased innovation trials during the year 
and these have evolved from the more restrictive franchise type 
agreements towards more flexible fixed and variable turnover 
based rent this is a natural evolution of our approach in 
providing targeted support to our licensees to share with them 
the skills experience and insight which our managed estate 
provides us with
summary
looking forward our strategy remains clear relevant and 
consistent firstly further organic growth from our existing sites 
and secondly a new strand of growth through acquisition 
in order to successfully deliver this second leg of growth we will 
need to continue to build our current pipeline of acquisition sites
we expect both macro and micro economic trends to gradually 
improve over the next year but we expect volatility to remain 
our focus on value for money and delivering a great experience 
for every guest irrespective of demography or occasion 
underpins this positive momentum we remain confident in the 
longterm business outlook based on further organic growth 
from our existing assets and new growth through acquisitions
mike tye
chief executive officer
1  growth rates are shown on a 52 week vs 52 week basis to exclude the benefit 
of an extra week trading in the financial year to 23 august 2014