Interim Results
Whitbread PLC
28 October 2004
28 October 2004
Whitbread interim results for the six months to 2 September 2004
Budget hotels lead strong profits growth
2004/5 change
Group turnover £1,027.1m +4.6%
Like-for-like sales growth +3.0%
Profit before tax and exceptional items £147.4m +9.4%
Profit before tax and after exceptional items £147.1m +20.1%
Adjusted earnings per share 35.31p +10.4%
Basic earnings per share 33.79p (1.8)%
Dividend per share 6.9p +12.2%
Return on capital employed (MAT)* 10.1% +0.5% pt
*pre-tax, excluding the acquisition of Premier Lodge
Sir John Banham, chairman said: 'These good results were achieved in mixed
market conditions and we have once again increased adjusted earnings per share
by more than 10%.
'Profit before tax and exceptional items was up 9.4% despite significant
disposals in our hotels and restaurants businesses last year. Cash flow remains
strong and return on capital employed moved up from 9.6% to 10.1% on a moving
annual total (MAT) basis, excluding the impact of the Premier Lodge acquisition
(see Finance Review).
'Although forecasts for the UK economy and consumer spending are mixed, the
board remains confident about the group's prospects. Our recently acquired
businesses are performing well. We expect further progress in terms of trading
performance, organic growth and the more effective use of shareholders' assets.
'This is reflected in the interim dividend of 6.9p per share, an increase of
12%. This will be paid on 4 January 2005 to shareholders on the register at the
close of business on 5 November 2004.
'On behalf of the board, I should like to thank every member of the Whitbread
team for their contribution to this performance.'
Details of the business review are contained in a separate announcement,
available from www.whitbread.co.uk
Copies of the interim report and accounts will be sent to shareholders on 8th
November, 2004 and will be available to the public on the Whitbread website
www.whitbread.co.uk or from Simon Barratt, company secretary, Whitbread PLC,
CityPoint, One Ropemaker Street, London EC2Y 9HX.
For further information please contact:-
David Reed - Whitbread 020 7806 5436
Dan Waugh - Whitbread 020 7806 5442
Julie Weldon - Whitbread 020 7806 5443
Photographs are available to press at www.newscast.co.uk -020 7608 1000.
Broadcast-standard footage is at www.thenewsmarket.com/whitbread. You can
preview all materials online and receive broadcast-standard video in MPEG2
format, or by tape. Registration and video is free and available for accredited
journalists and news producers.
A presentation for analysts will be held at Deutsche Bank, Winchester House, 1
Great Winchester Street, London EC2N 2DB. Registration from 9.00am,
presentation at 9.30am. A live webcast of the presentation will be available on
the website at : www.whitbread.co.uk Alternatively, you may listen to the
presentation by dialling: +44 0207 098 0705 (or +1 718 354 1171 for those
calling from the USA). The conference call will be available as a replay for
two weeks. To listen dial +44 (0)207 984 7578 (+1 718 354 1112 for the USA) and
use the pass code 183258.
Chief executive's review
Alan Parker, chief executive said: 'The first half of the year has been a
pivotal period for Whitbread.
'Our acquisition in July of Premier Lodge has shifted the balance of the
business more strongly into branded budget hotels, a sector where we enjoy clear
leadership in the UK. In addition, we have completed a major review of all our
brands to inject greater focus and purpose.
'We have enjoyed underlying sales growth in each of our businesses, and across
the group we have made further gains in return on capital employed.
Current trading
'Like-for-like sales growth since the half-year has been maintained at group
level with improvements in Marriott and our pub restaurants compensating for a
slower period in high street restaurants.
'Total sales at the half-year were up 4.6% and subsequently have grown by 5.8% -
and 13% including the contribution from Premier Lodge.'
Like-for-like sales 32 weeks 26 weeks
Premier Travel Inn* 6.5% 6.5%
Marriott 5.0% 4.8%
Pub restaurants 1.0% 0.7%
High street restaurants 1.9% 2.7%
David Lloyd Leisure+ 3.9% 4.0%
Total Group* 3.0% 3.0%
* excludes Premier Lodge acquisition
+ to 31 weeks; excludes Cannons Health & Fitness BV acquisition
Premier Travel Inn
Sales £142m +24%
Like-for-like sales* +6.5%
Operating profit £49.1m +28%
Return on capital employed (MAT)* 14.8% +2.0% pts
*excludes Premier Lodge
Our budget hotels business continues to deliver outstanding performance with
strong growth in sales, profits and return on capital employed.
The acquisition of Premier Lodge in July has augmented Whitbread's leading
position in this exciting segment of the UK lodging market: with almost 28,000
bedrooms, Premier Travel Inn is by far the largest hotel brand in the UK; and by
being in more than 440 different locations, the brand has unparalleled
distribution and consumer reach.
Excluding the impact of the acquisition, sales in this business were ahead by
10.7% against last year, and operating profit up 16.4%. Occupancy strengthened
from 82% to 84%; average room rate was up by 3.1% to £42.66; and operating
margin moved from 33.5% to 35.3%.
The integration of the Travel Inn and Premier Lodge businesses to create Premier
Travel Inn is on course for completion by the end of the financial year.
Marriott
Sales £196m +0.9%
Like-for-like sales +4.8%
Operating profit* £36.7m +1.4%
Return on capital employed (MAT)* 6.2% +0.1%pt
*before goodwill amortisation
The full-service sector of the hotels market continues to be challenging,
although there are now clear signs of recovery.
For the first time in three years we are able to report growth in both sales and
profit. Both rate and occupancy are driving this resurgence: average room rate
is ahead year-on-year; and occupancy moved from 72% to 74%. Operating margin
improved by 0.1% point to 18.8%.
However, return on capital employed remains unacceptably low at 6.2%.
In September we welcomed Patrick Dempsey as managing director of Whitbread Hotel
Company (Marriott). He will focus on growing a business that has more bedrooms
under management, operating from a smaller asset base and generating higher
returns on capital employed.
Pub restaurants
Sales £306m (0.6)%
Like-for-like sales +0.7%
Operating profit £48.5m (9.2)%
Return on capital employed (MAT) 10.1% (0.9)% pt
Our largest pub restaurant brand, Brewers Fayre continues to deliver solid
growth. Declining sales at Brewsters are a result of market positioning rather
than a reflection on the quality of the underlying assets. We are confident that
we can reverse the negative trend by integrating the outlets within Brewers
Fayre.
Lower sales in our pub restaurants is due in part to the disposal of 50
Beefeater outlets last year and the poor performance of Out & Out (which is
reported as part of Beefeater).
In addition, Beefeater has been held back by the disruption inherent in its
conversion programme, which has led to the loss of trading weeks. 57 outlets
have now been converted to the new format and we are continuing to see strong
uplift in sales as well as margin improvements in those sites.
Operating margin across our entire pub restaurant business declined by 1.5%
points to 15.9%.
We will be bringing together our pub restaurants under a single management team,
headed by Phil Urban. This will deliver greater focus and enhance the benefits
of synergy.
High street restaurants
Sales £221m +6.7%
Like-for-like sales +2.7%
Operating profit £12.2m +53%
Return on capital employed (MAT) 25.3% +5.6% pts
Our high street business continues to drive performance improvements in sales,
operating margin (up from 3.9% to 5.5%), operating profit, and return on capital
employed.
Building on its solid UK base, Costa has developed a successful franchise model
that is taking the brand into markets overseas.
TGI Friday's is broadening its distribution through the development of a smaller
footprint store. The first new outlets will open in the second half of the year
in Bath and in Harrogate.
Pizza Hut continues to grow through a mix of full-service restaurants and
franchised home delivery stores.
David Lloyd Leisure
Sales £109m +9.3%
Like-for-like sales +4.0%
Operating profit* £26.2m +11.0%
Return on capital employed (MAT)* 9.7% +0.3% pt
*before goodwill amortisation
David Lloyd Leisure has once again delivered strong growth in operating profit
despite a slight softening in like-for-like sales over the summer. This has
driven a 0.3% point improvement in return on capital employed.
Membership growth has been held back by lower than anticipated levels of member
retention in a number of clubs. Overall, membership retention at the half year
stands at 72%. Operating margin improved from 23.7% to 24.1%.
The organic growth prospects of this business are excellent. Our Worthing club
will open in November ahead of target with 3,000 members from the first day of
trading.
It will bring the number of David Lloyd Leisure clubs in the UK and Ireland to
57, with four openings scheduled for 2005/6.
Meanwhile our fledgling operations in continental Europe are progressing well:
we now have six clubs in the Netherlands with a combined membership of more than
23,500; our club in Brussels opens for business in early November with more than
3,000 members; and we are on course to open our Barcelona club in the first half
of 2005/6.
Finance review
On 25 July 2004 Whitbread acquired the Premier Lodge business ('Premier'). The
accounts for the six months to 2 September therefore include 6 weeks trading of
Premier and the balance sheet includes the assets and the borrowings the Group
took out relating to the acquisition.
Premier
Premier comprised the Premier Lodge business and 19 adjacent pub restaurants.
132 hotels were trading at the acquisition with 9,133 rooms. There were also 9
development sites with approximately 929 rooms. The hotel business is being
integrated with Travel Inn under the name Premier Travel Inn. The pub
restaurants will be integrated with Brewers Fayre.
The following numbers for Premier are incorporated within the Interim Report and
Accounts to 2 September 2004.
£m
Sales 15.4
Profit before interest and tax 4.5
Interest (3.1)
Profit before tax 1.4
Assets 553
Borrowings 545
The whole of the profit and assets of Premier are shown in the Premier Travel
Inn segment.
Other than the impact of the above acquisition the numbers year on year are
comparable. The asset disposals in 2003/4 were broadly matched by site
acquisitions for our expanding brands and, to date, in 2004/5 there has been no
significant acquisition or disposal activity.
Turnover
Turnover grew by 4.6% with like-for-like sales growing by 3.0%. Our Marriott
business has recorded sales growth and like-for-like sales growth.
Operating profit
Operating profit grew by 7.5%. Growth was led by Premier Travel Inn, High
Street Restaurants and David Lloyd Leisure with Marriott also delivering profit
growth. Whilst Pub Restaurants declined in the first half with the Beefeater
conversions and Brewsters repositioning, profits are expected to recover in the
second half.
Profit margins increased from 16.4% to 16.9% as our businesses continue to focus
in this area. MAT return on capital for the half year fell from 9.6% to 8.6%
as a result of the Premier acquisition. Excluding the profits and assets of
Premier, the group MAT ROCE was 10.1%, an improvement of 0.5% points.
Earnings before exceptional items, interest, tax, depreciation and amortisation
(EBITDA)
EBITDA is a good measure of the cash generated by each division (see note 2 to
the accounts). EBITDA for the Group grew by 7.8% to £240.8m.
Non-operating and exceptional items
The accounts this half year show a small loss of £0.3m on property disposals and
no other exceptional items. Last year's numbers relate to the disposal of
Swallow Hotels and 50 Beefeater Restaurants.
Interest
Ongoing businesses interest in the half year fell from £26.3m to £22.6m
reflecting the strong cash management of the Group. Further interest of £3.1m
was incurred on the loans for Premier in the first six weeks.
Net interest was covered 6.7 times (2003/4 6.1 times) by operating profit. The
full year impact of Premier will reduce this ratio.
At the end of the period £419m of net sterling debt was fixed for a weighted
average of 7 years. The weighted average interest rate was 6.8%.
Profit before tax
Profit before exceptional items and tax increased by 9.4%. Profits before tax
grew by 20% as last year's exceptional costs were not repeated.
Taxation
As explained in note 1 to the accounts, the tax charge on profit before
exceptional items for the interim period has been calculated by applying the
forecast effective tax rate for the current year.
The charge against profit of £46.7m represents an effective rate of 31.7% which
compares with 32% for the full year in 2003/4. The charge includes deferred
tax as detailed in note 5.
Earnings per share
Adjusted earnings per share, which excludes exceptional items and goodwill
amortisation, increased by 10% to 35.31p.
Dividend
An interim dividend of 6.90p per share, an increase of 12% over last year, will
be paid on 4 January 2005 to all shareholders on the register at the close of
business on 5 November 2004.
Cash flow
The net cash outflow before use of liquid resources and financing was £(575)m
compared with an inflow of £36m for the corresponding period. The differences
are largely as a result of capital transactions and the underlying cash flows
for the Group remain strong.
2004/5 2003/4
£m £m
Cash Flow from Operating Activities 188 182
Other ordinary course items (92) (82)
Routine Capital Expenditure (71) (71)
_____ _____
Underlying cash inflow 25 29
Capital Expenditure on new sites (52) (37)
Acquisitions/Disposals (548) 44
_____ _____
Net Cash (out flow)/inflow before (575) 36
use of liquid resources and financing _____ _____
Dividends from Joint Ventures and associates amounted to £4.3m. This compares
with Profit after tax in the period from these companies of £13.7m.
Our forecast for capital expenditure for the full year (excluding Premier) is
about £250m compared with an actual figure for 2003/4 of £230m.
As reported in the press, we are currently looking to sell our Courtyard Hotels.
These have an asset value of about £50m. We hope to announce the sale
shortly.
Financing
Net debt at the end of the half year amounted to £1,361m an increase of £568m
over the period as a result of Premier. The period end balance sheet gearing
ratio was 63%.
Net asset value
Net asset value per share increased from £6.96 to £7.28.
Pensions
In view of the extension granted by the Accounting Standards Board to the
transitional arrangements for FRS 17 ('Retirement Benefits'), we have continued
to account for pensions in accordance with SSAP 24.
At the end of our 2003/4 financial year there was a Pension Fund deficit of
£366m on FRS17 basis. The net deficit after tax was £256m. Since the year
end the value of Fund assets has risen but not as fast as the value of the
liabilities. The estimated deficits at the half year end were £376m and £263m
after tax. It should be noted that FRS17 calculations are very susceptible to
short term movements in equity values and interest rates.
Impact of business review
The conclusions of the Business Review are set out in a separate Letter to
shareholders from the Chief Executive. The sale of Courtyard Hotels is
expected prior to the year end but no other significant accounting consequences
from the matters set out in the letter are expected in the balance of the
current year.
International financial reporting standards (IFRS)
Whitbread will be required to adopt IFRS when preparing its group accounts for
2005/6. In preparation for this, all existing IFRS have been reviewed in detail
so as to assess their likely impact on our reported figures and the actions
required to collect the necessary data.
We intend to publish these adjustments with supporting narrative, before we
present our first IFRS figures at 2005/6 interims. We have started to collect
data on a dual basis (UK GAAP and IFRS).
Adoption of IFRS, with its focus on the balance sheet and the incorporation of
fair value accounting, will both change the net asset position and increase the
volatility of reported profits. The main impacts on Whitbread will be:
- the requirement to account for the surplus or deficit on our pension
fund in our balance sheet;
- the requirement to incorporate the market values of financial
derivatives into our balance sheet;
- Our opening IFRS balance sheet will also be impacted by the requirement
to account for deferred tax on gains on sales of property rolled over
into new assets and on previously reported gains on the revaluation of
properties;
- Accounting for the fair value of acquisition under IFRS is likely to
give rise to different values than under UK GAAP.
Group Profit and Loss Account
Six months to 2 September 2004 Notes 6 months to 2 September 2004
Before exceptional Exceptional items Total
items (note 3)
£m £m £m
Turnover, continuing operations
- Ongoing businesses 1,011.7 - 1,011.7
- Acquisitions 15.4 - 15.4
----------------- ----------------- -----------------
Group and share of joint ventures 1,027.1 - 1,027.1
Less share of joint ventures' turnover (88.7) - (88.7)
----------------- ----------------- -----------------
Group turnover 2 938.4 - 938.4
================= ================= =================
- Ongoing businesses 147.6 - 147.6
- Acquisitions 4.5 - 4.5
----------------- ----------------- -----------------
Group operating profit, continuing
operations 152.1 - 152.1
Share of operating profit in:
- Joint ventures 7.4 - 7.4
- Associates 13.6 - 13.6
----------------- ----------------- -----------------
Operating profit of the group, joint
ventures and associates 2 173.1 - 173.1
Non-operating items
Net loss on disposal of fixed assets 3 - (0.3) (0.3)
----------------- ----------------- -----------------
Profit before interest 173.1 (0.3) 172.8
- Ongoing businesses (22.6) - (22.6)
- Acquisitions (3.1) - (3.1)
----------------- ----------------- -----------------
Interest 4 (25.7) - (25.7)
----------------- ----------------- -----------------
Profit before tax 147.4 (0.3) 147.1
Tax 5 (46.7) - (46.7)
----------------- ----------------- -----------------
Profit after tax 100.7 (0.3) 100.4
Equity minority interests (0.1) - (0.1)
Non-equity minority interests (0.1) - (0.1)
----------------- ----------------- -----------------
Profit earned for ordinary shareholders 100.5 (0.3) 100.2
Ordinary dividend (20.4) - (20.4)
----------------- ----------------- -----------------
Retained profit for the period 80.1 (0.3) 79.8
================= ================= =================
Dividends per share (pence)
Interim 6.90
Final
Earnings per share (pence) 6
Basic 33.79
Adjusted basic 35.31
Diluted 33.56
Adjusted diluted 35.06
Group Profit and Loss Account (Continued)
Six months to 2 September 2004 Notes 6 months to 30 August 2003 Year to 4 March
2004
Before exceptional After After
items exceptional exceptional
£m items items
£m £m
Turnover, continuing operations
- Ongoing businesses 981.6 981.6 1,977.4
- Acquisitions - - -
----------------- ----------------- -----------------
Group and share of joint ventures 981.6 981.6 1,977.4
Less share of joint ventures' turnover (83.7) (83.7) (189.2)
----------------- ----------------- -----------------
Group turnover 2 897.9 897.9 1,788.2
================= ================= =================
- Ongoing businesses 138.1 138.1 236.5
- Acquisitions - - -
----------------- ----------------- -----------------
Group operating profit, continuing
operations
138.1 138.1 236.5
Share of operating profit in:
- Joint ventures 7.1 7.1 18.6
- Associates 15.8 15.8 22.4
----------------- ----------------- -----------------
Operating profit of the group, joint
ventures and associates
2 161.0 161.0 277.5
Non-operating items
Net loss on disposal of fixed assets 3 - (8.9) (10.3)
----------------- ----------------- -----------------
Profit before interest 161.0 152.1 267.2
- Ongoing businesses (26.3) (29.6) (55.5)
- Acquisitions - - -
----------------- ----------------- -----------------
Interest 4 (26.3) (29.6) (55.5)
----------------- ----------------- -----------------
Profit before tax 134.7 122.5 211.7
Tax 5 (44.4) (20.9) (46.9)
----------------- ----------------- -----------------
Profit after tax 90.3 101.6 164.8
Equity minority interests (0.1) (0.1) (0.1)
Non-equity minority interests (0.1) (0.1) (0.2)
----------------- ----------------- -----------------
Profit earned for ordinary shareholders 90.1 101.4 164.5
Ordinary dividend (17.7) (17.7) (65.5)
----------------- ----------------- -----------------
Retained profit for the period 72.4 83.7 99.0
================= ================= =================
Dividends per share (pence)
Interim 6.15 6.15
Final 16.15
Earnings per share (pence) 6
Basic 34.40 55.74
Adjusted basic 31.99 58.22
Diluted 34.21 55.39
Adjusted diluted 31.82 57.85
Statement of total recognised gains and losses
Six months to 2 September 2004 6 months 6 months Year to
to 2 September 2004 to 30 August 2003 4 March 2004
£m £m £m
Profit earned for ordinary shareholders
Group excluding joint ventures and associates 90.8 85.1 137.1
Joint ventures 4.3 5.2 12.1
Associates 5.1 11.1 15.3
------------ ------------ ------------
Group including joint ventures and associates 100.2 101.4 164.5
Currency translation differences on net foreign
investment 0.8 0.2 (0.7)
------------ ------------ ------------
101.0 101.6 163.8
Prior year adjustment arising from the adoption of
UITF abstracts 17 (as amended) and 38 - - (6.7)
------------ ------------ ------------
Total gains and losses recognised since previous
year end 101.0 101.6 157.1
============ ============ ============
Group Cash flow statement
Six months to 2 September 2004 Notes 6 months to 6 months to Year to
2 September 2004 30 August 2003 4 March 2004
£m £m £m
Cash inflow from operating activities 9 188.1 181.5 382.9
Dividends received from joint ventures
and associates
Joint ventures - - 9.5
Associates 4.3 4.1 11.9
Returns on investments and servicing of
finance
Interest received 0.8 1.8 1.5
Interest paid (23.7) (28.2) (57.3)
------------ ------------ ------------
Net cash outflow from returns on
investments and servicing of finance (22.9) (26.4) (55.8)
Tax (19.9) (15.0) (28.0)
Capital expenditure and financial
investment
Property and plant purchased (122.9) (107.7) (209.0)
Investments purchased and loans advanced (8.5) (2.4) (5.3)
Property and plant sold 2.7 44.2 112.3
------------ ------------ ------------
Net cash outflow from capital
expenditure and financial investment (128.7) (65.9) (102.0)
Acquisitions and disposals
Businesses acquired 10 (548.3) - (20.6)
------------ ------------ ------------
Net cash outflow from acquisitions and
disposals (548.3) - (20.6)
------------ ------------ ------------
Equity dividends paid (47.6) (42.1) (60.4)
------------ ------------ ------------
Net cash inflow/(outflow) before use of
liquid resources and financing (575.0) 36.2 137.5
Management of liquid resources
Net movement on short term securities
and bank deposits 11 0.4 4.2 5.3
Financing
Minority dividends (0.1) (0.1) (0.2)
Issue of shares 5.3 3.0 6.9
Net movement on short term bank
borrowings 11 3.1 (3.7) 7.7
Loan capital issued 11 615.8 55.0 22.7
Loan capital repaid 11 (24.2) (88.5) (174.0)
------------ ------------ ------------
Net cash inflow/(outflow) from financing 599.9 (34.3) (136.9)
------------ ------------ ------------
Increase in cash 11 25.3 6.1 5.9
============ ============ ============
Group Balance Sheet
2 September 2004 Notes 2 September 2004 30 August 2003 4 March 2004
£m (restated)
£m £m
Fixed assets
Intangible assets 148.4 137.3 147.6
Tangible assets 3,592.3 2,991.6 2,989.7
Investments
In joint ventures
------------ ------------ ------------
- Share of joint ventures' gross
assets 88.2 85.0 90.1
- Share of joint ventures' gross
liabilities (41.0) (39.4) (47.2)
- Loans to joint ventures 1.8 1.8 1.8
------------ ------------ ------------
49.0 47.4 44.7
In associates 70.4 63.9 65.3
Other investments 6.3 2.6 3.7
------------ ------------ ------------
3,866.4 3,242.8 3,251.0
------------ ------------ ------------
Current assets and liabilities
Stocks 23.8 23.9 24.4
Debtors - amounts falling due within one
year 7 138.1 150.6 105.2
Debtors - amounts falling due after more
than one year 7 56.9 45.3 56.5
Cash at bank and in hand 91.4 56.2 68.8
------------ ------------ ------------
310.2 276.0 254.9
Creditors - amounts falling due within
one year 8 (1,154.5) (332.8) (420.2)
------------ ------------ ------------
Net current liabilities (844.3) (56.8) (165.3)
------------ ------------ ------------
Total assets less current liabilities 3,022.1 3,186.0 3,085.7
Creditors - amounts falling due after
more than one year
Loan capital (659.6) (930.8) (807.5)
Provisions for liabilities and charges (185.1) (184.3) (179.8)
------------ ------------ ------------
2,177.4 2,070.9 2,098.4
============ ============ ============
Capital and reserves
Called up share capital 149.2 148.3 148.7
Share premium account 18.3 10.0 13.5
Revaluation reserve 123.0 118.0 124.5
Other non-distributable reserves (1,812.6) (1,813.0) (1,816.2)
Profit and loss account 3,693.7 3,600.8 3,621.1
------------ ------------ ------------
Shareholders' funds 13 2,171.6 2,064.1 2,091.6
Equity minority interests 2.7 3.7 3.7
Non-equity minority interests 3.1 3.1 3.1
------------ ------------ ------------
2,177.4 2,070.9 2,098.4
============ ============ ============
Notes to the accounts
1. Basis of preparation of accounts
The interim accounts were approved by the board on 27 October 2004. They have
been prepared on the basis of the accounting policies set out in the 2003/4
group accounts. The tax charge on profit before exceptional items for the
interim period has been calculated by applying the forecast effective tax rate
for the current year.
The balance sheet as at 4 March 2004 and the profit and loss account and cash
flow statement for the year ended on that date are extracts from the statutory
accounts which have been delivered to the Registrar of Companies. The auditors'
report on the statutory accounts was unqualified and did not contain a statement
under section 237 of the Companies Act 1985.
2. Segmental analysis of turnover, profit and net assets
Six months to Turnover EBITDA (S) Operating profit # Net assets
2 September 2004
£m £m £m £m
By business segment
Marriott brands 195.7 53.6 32.7 1,154.5
Premier Travel Inn 141.7 61.8 49.1 1,095.9
------------ ------------ ------------ ------------
Total hotels 337.4 115.4 81.8 2,250.4
------------ ------------ ------------ ------------
Pub Restaurants 305.5 63.0 48.5 783.2
High Street Restaurants 221.3 18.9 12.2 129.2
------------ ------------ ------------ ------------
Total restaurants 526.8 81.9 60.7 912.4
------------ ------------ ------------ ------------
David Lloyd Leisure 108.9 36.8 26.0 531.8
Developing businesses - (0.5) (0.5) -
------------ ------------ ------------ ------------
Total sports, health and fitness 108.9 36.3 25.5 531.8
------------ ------------ ------------ ------------
973.1 233.6 168.0 3,694.6
Soft Drinks 12.8 12.8 60.2
Inter-segment turnover (see note
below) (1.3)
Central Costs 55.3 (5.6) (7.7) (216.1)
------------ ------------ ------------ ------------
Group including joint ventures
and associates 1,027.1 240.8 173.1 3,538.7
Share of joint ventures (88.7) (7.4) (7.4) (49.0)
Share of associates (13.6) (13.6) (70.4)
------------ ------------ ------------ ------------
Group excluding joint ventures
and associates 938.4 219.8 152.1 3,419.3
============ ============ ============ ============
By geographical segment
United Kingdom 986.5 237.5 172.1 3,452.2
Rest of the world 40.6 3.3 1.0 86.5
------------ ------------ ------------ ------------
1,027.1 240.8 173.1 3,538.7
============ ============ ============ ============
2. Segmental analysis of turnover, profit and net assets (continued)
Six months to 30 August 2003 Turnover EBITDA (S) Operating Net assets
profit #
£m £m £m £m
By business segment
Marriott brands 194.0 54.4 32.2 1,225.1
Travel Inn 114.1 47.8 38.3 543.4
------------ ------------ ------------ ------------
Total hotels 308.1 102.2 70.5 1,768.5
------------ ------------ ------------ ------------
Pub Restaurants 307.4 65.5 53.4 753.5
High Street Restaurants 207.5 15.6 8.0 118.0
------------ ------------ ------------ ------------
Total restaurants 514.9 81.1 61.4 871.5
------------ ------------ ------------ ------------
David Lloyd Leisure 99.6 33.7 23.4 496.0
Developing businesses - (0.4) (0.4) (0.1)
------------ ------------ ------------ ------------
Total sports, health and fitness 99.6 33.3 23.0 495.9
------------ ------------ ------------ ------------
922.6 216.6 154.9 3,135.9
Beer & Other Drinks 10.1 15.6 15.6 55.8
Inter-segment turnover (see note
below) (1.2)
Central Costs 50.1 (8.9) (9.5) (213.1)
------------ ------------ ------------ ------------
Group including joint ventures
and associates 981.6 223.3 161.0 2,978.6
Share of joint ventures (83.7) (7.1) (7.1) (47.4)
Share of associates (15.8) (15.8) (63.9)
------------ ------------ ------------ ------------
Group excluding joint ventures
and associates 897.9 200.4 138.1 2,867.3
====== ====== ====== ======
By geographical segment
United Kingdom 945.5 220.9 160.5 2,932.8
Rest of the world 36.1 2.4 0.5 45.8
------------ ------------ ------------ ------------
981.6 223.3 161.0 2,978.6
============ ============ ============ ============
(S) EBITDA is earnings before exceptional items, interest, tax, depreciation and
amortisation.
# Operating profit is stated after charging the amortisation of goodwill as
follows:
6 months to 6 months to
2 September 2004 30 August 2003
£m
£m
Hotels - Marriott brands 4.0 4.0
Sports, health and fitness - David Lloyd
Leisure 0.2 0.2
Following the sale of The Whitbread Beer Company there remained a continuing
activity within the Beer segment. This ceased on 15 April 2003.
Segmental turnover includes the group's share of joint venture turnover as
follows:
6 months to 6 months to
2 September 2004 30 August 2003
£m £m
Hotels - Premier Travel Inn 2.0 1.8
High Street Restaurants 86.7 81.9
------------ ------------
88.7 83.7
============ ============
Inter-segment turnover was from High Street Restaurants to the other segments.
Central Costs turnover comprises, primarily, food distribution services provided
to a joint venture. The geographical analysis of turnover and profit is by
source. The analysis of turnover by destination was not materially different.
Sales between geographical segments are not material.
Net assets included above are total net assets excluding net debt.
3. Exceptional items
6 months to 6 months to Year to
2 September 2004 30 August 2003 4 March 2004
£m £m £m
Operating items
Impairment of property - - (4.4)
Impairment of goodwill - - (11.1)
------------ ------------ ------------
Charged against operating profit - - (15.5)
Non-operating items
Net profit/(loss) on disposal of fixed assets
- Group excluding joint ventures and associates (0.4) (9.8) (10.8)
- Joint ventures 0.1 0.8 0.4
- Associates - 0.1 0.1
------------ ------------ ------------
(0.3) (8.9) (10.3)
Exceptional financing costs (note 4) - (3.3) (3.3)
Exceptional tax (note 5) - 23.5 26.5
Deferred tax on exceptional items (note 5) - - 3.7
------------ ------------ ------------
(0.3) 11.3 1.1
============ ============ ============
4. Interest
6 months to 6 months to Year to
2 September 2004 30 August 2003 4 March 2004
£m £m £m
Interest payable 25.9 27.2 53.1
Interest receivable (0.9) (0.8) (1.4)
Interest capitalised (0.8) (1.6) (2.2)
------------ ------------ ------------
24.2 24.8 49.5
Interest payable by:
Joint ventures 0.2 0.2 0.5
Associates 0.4 0.5 0.6
------------ ------------ ------------
24.8 25.5 50.6
Interest from unwinding discounts on provisions
0.9 0.8 1.6
Exceptional financing costs - 3.3 3.3
------------ ------------ ------------
25.7 29.6 55.5
============ ============ ============
5. Tax
6 months to 6 months to Year to
2 September 2004 30 August 2003 4 March 2004
£m £m £m
Current tax on profits for the period before
exceptional items
UK Corporation Tax 36.2 31.0 56.1
Adjustments to UK Corporation Tax for earlier
periods (2.3) 0.3 (1.0)
------------ ------------ ------------
33.9 31.3 55.1
Overseas tax 0.2 0.2 0.4
Adjustments to overseas tax for earlier periods - (0.6) -
Joint ventures 2.7 2.2 5.7
Associates 3.7 4.3 5.6
Exceptional current UK tax adjustment - (23.5) (26.5)
------------ ------------ ------------
Total current tax 40.5 13.9 40.3
------------ ------------ ------------
Deferred tax on profit before exceptional items
Timing differences - Group 5.9 6.7 8.6
- Joint Ventures 0.3 0.3 0.7
- Associates - - 1.0
Deferred tax on exceptional items - Group - - (3.7)
------------ ------------ ------------
Total deferred tax 6.2 7.0 6.6
------------ ------------ ------------
Total tax charge 46.7 20.9 46.9
============ ============ ============
6. Earnings per share
Basic earnings per share is calculated by dividing earnings for ordinary
shareholders of £100.2m (2003 - £101.4m) by the weighted average number of
ordinary shares in issue during the period, 296.5m (2003 - 294.8m). Adjusted
basic earnings per share is calculated as follows:
Earnings (£m)
6 months 6 months Year to
to 2 September 2004 to 30 August 2003 4 March 2004
Earnings and basic earnings per share 100.2 101.4 164.5
Earnings and basic earnings per share attributable
to:
Goodwill amortisation 4.2 4.2 8.4
Exceptional items, net of tax 0.3 (11.3) (1.1)
------------ ------------ ------------
Adjusted earnings and basic earnings per share 104.7 94.3 171.8
============ ============ ============
Earnings per share (p)
6 months 6 months Year to
to 2 September 2004 to 30 August 2003 4 March 2004
Earnings and basic earnings per share 33.79 34.40 55.74
Earnings and basic earnings per share attributable
to:
Goodwill amortisation 1.42 1.42 2.85
Exceptional items, net of tax 0.10 (3.83) (0.37)
------------ ------------ ------------
Adjusted earnings and basic earnings per share 35.31 31.99 58.22
============ ============ ============
Earnings includes a number of exceptional items (note 3). In order to
demonstrate the effect of these, together with the impact of goodwill
amortisation, an adjusted earnings per share figure is also presented. Diluted
earnings per share is the basic and adjusted basic earnings per share after
allowing for the dilutive effect of the conversion into ordinary shares of the
weighted average number of options outstanding during the period. The number of
shares used for the diluted calculation is 298.6m (2003 - 296.4m).
7. Debtors
2 September 2004 30 August 2003 4 March 2004
£m £m £m
Amounts falling due within one year
Trade and other debtors and prepayments 119.4 138.8 95.2
Joint ventures 14.3 7.5 8.5
Associates 4.4 4.3 1.5
------------ ------------ ------------
138.1 150.6 105.2
Amounts falling due after more than one year
Deferred consideration for property disposals - - 4.8
Pension prepayment under SSAP 24 56.9 45.3 51.7
------------ ------------ ------------
56.9 45.3 56.5
============ ============ ============
8. Creditors - amounts falling due within one year
2 September 2004 30 August 2003 4 March 2004
£m £m £m
Loan capital 745.2 5.0 5.8
Bank overdrafts 47.9 21.4 48.1
Trade and other creditors and accruals 252.1 231.8 248.8
Associates - - 0.8
Corporation Tax 38.6 15.6 24.2
Other taxes and social security 50.2 40.9 44.7
Proposed dividend on ordinary shares 20.5 18.1 47.8
------------ ------------ ------------
1,154.5 332.8 420.2
============ ============ ============
9. Net cash inflow from operating activities
6 months 6 months Year to
to 2 September 2004 to 30 August 2003 4 March 2004
£m £m £m
Group operating profit 152.1 138.1 236.5
Depreciation/amortisation 67.7 62.3 127.9
Impairment of property and goodwill - - 15.5
Payments against provisions (0.5) (1.3) (2.4)
Other non-cash items (0.5) - 5.9
(Increase)/decrease in stocks 1.0 - (0.5)
Increase in debtors (20.2) (18.0) (21.9)
Increase/(decrease) in creditors (11.5) 0.4 21.9
------------ ------------ ------------
Cash flow from operating activities 188.1 181.5 382.9
============ ============ ============
10. Acquisitions
On 25 July 2004 the group acquired the trade and assets of the Premier Lodge
business for a provisional cost of £553m. The estimated fair value of the net
assets acquired amounts to £553m and, therefore, no goodwill arises on the
transaction under UK GAAP.
11. Reconciliation of net cash flow to movement in net debt
6 months 6 months Year to
to 2 September 2004 to 30 August 2003 4 March 2004
£m £m £m
Increase in cash in the period 25.3 6.1 5.9
Cash (inflow)/outflow from movement in loan capital (591.6) 33.5 151.3
Cash inflow from movement in liquid resources (0.4) (4.2) (5.3)
Cash (inflow)/outflow from movement in short-term
borrowings (3.1) 3.7 (7.7)
------------ ------------ ------------
Changes in net debt resulting from cash flows (569.8) 39.1 144.2
Foreign exchange movements (0.3) (0.9) 1.2
Amortisation of premiums and discounts 1.4 1.4 2.6
------------ ------------ ------------
Movement in net debt in the period (568.7) 39.6 148.0
Opening net debt (792.6) (940.6) (940.6)
------------ ------------ ------------
Closing net debt (1,361.3) (901.0) (792.6)
============ ============ ============
12. Balance sheet movements in cash and net debt
4 March 2004 Cash flow Foreign Amortisation of 2 September 2004
exchange premiums and
discounts
£m £m £m £m £m
Cash at bank and in hand 68.8 91.4
Overdrafts (note 8) (48.1) (47.9)
------------ ------------
20.7 21.8 1.0 - 43.5
Less short-term securities, bank
deposits and borrowings
28.0 3.5 - - 31.5
------------ ------------ ------------ ------------ ------------
Cash 48.7 25.3 1.0 - 75.0
Short-term securities and bank
deposits 0.4 (0.4) - - -
Short-term bank borrowings (28.4) (3.1) - - (31.5)
------------ ------------
Loan capital under one year
(note 8) (5.8) (745.2)
Loan capital over one year (807.5) (659.6)
------------ ------------
Total loan capital (813.3) (591.6) (1.3) 1.4 (1,404.8)
------------ ------------ ------------ ------------ ------------
Net debt (792.6) (569.8) (0.3) 1.4 (1,361.3)
============ ============ ============ ============ ============
13. Shareholders' funds
6 months 6 months Year to
to 2 September 2004 to 30 August 2003 4 March 2004
£m (restated)
£m £m
Movements in shareholders' funds
Opening equity shareholders' funds 2,091.6 1,983.9 1,983.9
Prior year adjustment for UITF abstracts 17 (as
amended) and 38 - (6.7) (6.7)
------------ ------------ ------------
Opening equity shareholders' funds - restated 2,091.6 1,977.2 1,977.2
Profit earned for ordinary shareholders 100.2 101.4 164.5
Dividends (20.4) (17.7) (65.5)
------------ ------------ ------------
79.8 83.7 99.0
Other recognised gains and losses relating to
the period 0.8 0.2 (0.7)
UITF 17 charge for share based payments - - 5.9
Shares purchased for share schemes (5.9) - -
Movement on associates' reserves - - 3.3
Share capital issued 5.3 3.0 6.9
------------ ------------ ------------
Closing equity shareholders' funds 2,171.6 2,064.1 2,091.6
============ ============ ============
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