Interim Results
Whitbread PLC
25 October 2005
25 October 2005
Whitbread announces profit growth from continuing operations
First Half Highlights
• Continuing group sales up by 13.4%; Group like-for-like sales up 0.4%
• Profit before tax from continuing operations up 11.0% to £102.9m (2004/05:
£92.7m)
• EPS growth of continuing operations up 18.4% to 26.5p (2004/05: 22.4p)
• Proforma EPS growth of continuing operations by 5.4% (see Finance Review)
• Dividend up 6.5% to 7.35p (2004/05: 6.90p)
• Over £700m of cash received from asset disposals
• £400m returned to shareholders via special dividend
• Additional £400m capital return programme announced; share buy back
programme commences from today
• £50m injected into pension fund; new package of measures to inject a
further £240m over next five years
• £25m of annual cost savings identified via an organisation restructure;
removal of 250 roles from brand and corporate central teams
Alan Parker, chief executive of Whitbread PLC said: 'I am pleased to report
that, with the benefit of the Premier Lodge acquisition, we have delivered good
sales growth with continuing group sales up by 13.4%. Profit before tax from
continuing operations increased by 11.0% and earnings per share on a pro forma
basis by 5.4%. This result has been achieved despite a difficult consumer and
cost environment.
Premier Travel Inn has delivered strong growth in sales and profit, compensating
for weaker performances in our Pub Restaurant and David Lloyd Leisure
businesses. Performance in the High Street businesses has been mixed.
After such a major programme of asset rationalisation the size and shape of
Whitbread's continuing business is our platform for future growth. We have
leading brands in long term growth markets and our task as a management team is
to deliver consistent improvements in operating performance of each of our
businesses. We can see significant opportunity and are confident we can achieve
this for the benefit of our shareholders. In the period good progress has been
made but there is still more work to be done.'
The Premier Travel Inn integration has been completed on plan and we have
delivered both cost and revenue synergies. We have been able to drive strong
growth in referral bookings between hotels, which has helped increase like for
like sales by 7.7%.
Pub Restaurants have completed the Brewsters conversion and following a period
of significant change we are encouraged by the initial consumer feedback to
pricing and service initiatives in both Beefeater and Brewers Fayre.
David Lloyd Leisure has seen membership stabilise in the mature clubs in the UK
and in Europe we continue to grow members and profits. The performance of
recent openings has exceeded expectations and this, along with the appointment
of new management, gives us confidence for the future.
In our High Street Restaurants division, Costa continues to perform well and is
growing strongly with 100 sites to open this year. However, Pizza Hut and TGI
Friday's have had a difficult six months and they have both suffered from
disappointing sales.
We have made changes within our senior management team to drive improved
performance from our businesses and established a new and leaner organisation
structure. This structure maximises the economies of scale of the Group and
comprises a series of integrated shared services that will serve all the brands,
covering Human Resources, Property, Finance, Information Systems and
Communications.
The effect of this restructuring is the removal of 250 roles from our brand and
corporate central teams, resulting in new cost savings of some £25m from the
underlying cost base of the business, £20m of which will help underpin next
year's result with a further £5m in 2007/08. This restructuring will cost c.
£25m.
We continue to make good progress with our programme of asset disposals. In the
first six months of the year we received proceeds of over £700m, mainly from the
disposal of Marriott hotel assets and in October we completed the sale of
Whitbread's historic Brewery site in the City of London for £55m, more than
double book value. In total we expect to receive proceeds of around £1.3
billion. Of this amount we have already returned £400m to shareholders via a
special dividend in May, and based on our current investment plans and on the
basis that we realise the £1.3 billion, we will return a further £400m.
Initially this return will be made via an on market share buy back programme
commencing from today. Of the balance of the proceeds £290m will be used to
fund the pension deficit.
At the end of August 2005, the Pension Fund deficit stood at £373m (gross),
£261m (net). The increase from the year end position arises primarily as a
result of new assumptions on life expectancy adopted as part of the triennial
valuation and a fall in interest rates. Since the end of the half year a
special contribution of £50m has been made to the Fund, bringing the total
contributions for the year to £100m as previously announced.
Today we are announcing a number of further measures to reduce the deficit and
control future costs including
• payment of a further £190m over the next five years
• members' contributions to increase from 5% to 7% of salary
• inflation linked increase in pensions for service post March 2006 to be
capped at 2.5% per annum
• the renewal of the agreement announced in April 2003 under which the
Company undertakes to fund the pension scheme for a period of up to 15 years
and gives undertakings to the trustees similar to some of the covenants
provided in respect of its banking agreements up to a value of £300m
The interim dividend is to be increased by 6.5% to 7.35p per share (2004/05
6.90p). The interim dividend will be paid on 3 January 2006 to shareholders on
the register at the close of business on 4 November 2005.
Outlook
Although we expect the consumer environment to remain challenging we are
encouraged by the high occupancy rates throughout our hotels, stabilisation of
membership in David Lloyd Leisure and the continued rate of growth in Costa.
Although good progress is being made in pub restaurants reversing the trends of
the business will take time. Our priorities for the second half are:
• continue improving the operational performance of all of our businesses
• continuing focus on tight cost control
• investing in our leading brands to achieve disciplined and focused growth
• implementing the announced programme of asset restructuring
Copies of the interim report and accounts will be sent to shareholders by
18 November 2005 and will be available to the public on the Whitbread website
www.whitbread.co.uk or from Simon Barratt, company secretary, Whitbread PLC, 52
Chiswell Street, London EC1Y 4SD.
For more information please contact:
Investor Relations:
Christopher Rogers, Whitbread PLC +44 (0) 20 7806 5406
Press Contacts:
Anna Glover, Whitbread PLC +44 (0) 1582 844439
Andrew Grant, Tulchan +44 (0) 20 7353 4200
A presentation for analysts will be held at London Stock Exchange, 10
Paternoster Square, London, EC4M 7LS. 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/investors
Alternatively, you may listen to the presentation by dialling: +44 020 8901
6904. The conference call will be available as a replay for two weeks, to
listen dial +44 (0)20 8901 6904 and use the pass code 683541#.
Premier Travel Inn
Sales £206.9m +48.1%
Like-for-like sales 7.7%
EBIT* £71.8m +48.7%
*defined in note 2 to the accounts
This has been another strong period for our budget hotels business. Premier
Travel Inn has delivered 5.1% growth in revenue per available room in the Travel
Inn estate as the business continued to benefit from the expansion of the brand.
Achieved room rate (excluding sites acquired as part of Premier Lodge) moved up
5.8% to £45.13 from £42.66. Overall the like-for-like sales were up 7.7% for
the period.
Occupancy has been weaker in London and a number of key metropolitan areas since
the July bombings but we expect this to recover during the second-half of the
year. Premier Travel Inn occupancy remains the highest of any UK hotel chain at
81.2%.
Following last year's acquisition and integration of the Premier Lodge business
we have generated 60% growth in 'cross-sell' (revenue generated by referring
bookings between hotels).
The migration of room reservations towards the internet, which drives sales and
efficiencies, has continued apace, with web bookings up from 32.2% to 37.4%.
We continue to add scale to the Premier Travel Inn estate: in the first-half we
built 642 new bedrooms; and we expect this to rise to more than 1,600 by the end
of the year.
Pub restaurants
Sales £315.6m +3.3%
Like-for-like sales (1.2)%
EBIT £39.3m (11.5)%
Trading remains difficult with like-for-like sales for the first-half down by
1.2% and operating margins under pressure from heavy cost inflation in
utilities, rates and labour.
The business has seen persistent covers decline over a long period of time and
this is now being addressed by the management team through branding, product,
pricing and service.
We have exited our young family oriented brand, Brewsters, with the majority of
the 147 outlets transferring to Brewers Fayre; the refurbishment of Beefeater
continues at reduced cost and results are encouraging.
Pricing initiatives and new menus are now on trial. This includes special
price-led offers in off-peak periods, such as two courses for £8.95 in
Beefeater, and product-led enhancements during peak periods. Customer reaction
has been encouraging.
Our 'Science of Service' productivity programme has been rolled out across
Beefeater and this has reduced table turn time by 16 minutes (from 116 minutes
to 100 minutes). Table service has been introduced across the Brewers Fayre
estate which has improved guest satisfaction scores.
We added five new houses to our estate during the first-half and expect to have
built a further 13 by the end of the year. An increasing proportion of this
growth is delivered in tandem with Premier Travel Inn.
David Lloyd Leisure
Sales £112.0m +2.8%
Like-for-like sales 0%
EBIT £21.1m (13.5)%
Following the fall in UK membership numbers in the second half of last year, the
mature clubs in the UK have seen more stable numbers in the first half of this
year. Combined with a strong performance from our new clubs, we have seen an
overall growth in members of 3.7%.
Importantly, we have seen steady and sustained improvement in member
satisfaction scores, which is a good indicator of our ability to retain and
attract members. Member retention is steady year-on-year at 72%.
With low growth in subscription rates anticipated in the second-half - and in an
environment of rising cost pressures - our priority is to grow membership in our
clubs.
The profit contribution before central overhead of our clubs outside the UK has
grown by 82% as the estate grows. Our first club in Spain, the David Lloyd Club
del Turo in Barcelona, which opened in July, is doing well and now has over
4,200 members.
High street restaurants
Sales £112.1m 6.3%
Like-for-like sales (1.8)%
EBIT £7.3m (13.1)%
The individual brands have enjoyed mixed fortunes over the first six months of
the year. Costa continues to deliver good like-for-like sales growth and has
stepped up its rate of expansion both in the UK and overseas; TGI Friday's has
delivered covers growth but this is not yet at a sufficient rate to off-set the
pricing reductions put in place 12 months ago; and Pizza Hut has suffered from a
decline in the retail sector, which drives a large proportion of its trade.
In addition, each of these businesses has witnessed a marked deterioration in
trade in London stores since the July bombings, particularly at weekends.
Costa, which has now joined Pizza Hut in implementing a smoking ban across all
of its stores, is launching an enhanced food range to help generate further
sales growth in the second half.
In the first half we have opened 26 Costa equity stores and 7 franchise stores
in the UK and a further 17 overseas franchise stores overseas. Our first
stores in India and Pakistan opened at the start of the second-half.
TGI Friday's opened two new stores in the first half in Newcastle-upon-Tyne and
Fulham Broadway, London. Pizza Hut has opened 17 new stores and has plans to
open a further 46 in the second-half.
Finance review
International Financial Reporting Standards (IFRS)
Whitbread has adopted IFRS in preparing its group accounts for 2005/06 and as
such the focus of the statements is on continuing operations with full
disclosure of discontinuing operations in the note 3 to the accounts. In
advance of this, restated comparisons for both the half-year ended 2 September
2004 and the full-year ended 3 March 2005 have already been published on the
Whitbread website.
Changes in Group operations
There are have been three major changes in the Group's operating entities
compared to the prior period as set out below.
Marriott
On 5 May 2005 Whitbread sold 46 of its Marriott hotels to a Joint Venture owned
50% each by Whitbread and subsidiaries of Marriott International with the
intention to sell on these assets to third party property owners. On the same
day, the management of the hotels was transferred to a management company wholly
owned by Marriott International. Interests in a further eight properties were
retained by Whitbread pending onward transfer.
Details of the financial performance of the discontinued business and the
effects of the disposal can be found in note 3 to the accounts.
Whitbread Restaurants Germany
The 2005/06 performance includes 9 weeks of trading prior to the disposal of our
German business operating 67 Maredo restaurants, whilst 2004/05 contained a full
26 weeks of trading activity.
Premier Lodge
The 2005/06 performance includes 26 weeks of trading from the Premier Lodge
acquisition (completed on 25 July 2004), whilst the prior period only included 6
weeks of trade.
Taxation
The tax charge on profit for the interim period has been calculated by applying
the forecast effective tax rate for the current year.
The UK tax expense of £30.9m represents an effective rate of 34.5% on the
continuing businesses, which compares with 30.5% for the full year in 2004/05.
The charge includes deferred tax.
Earnings per share
Earnings per share
Earnings per share of the continuing business increased by 18.4% to 26.5p. The
detail can be found in note 6 to the financial statements.
To aid a meaningful year on year comparison earnings per share has been
calculated on a pro forma basis, which allocates interest between continuing and
discontinuing businesses. On this basis the growth in earnings per share of the
continuing business is 5.4% (see table below)
2005/06 2004/05
£m £m
Profit before tax 102.9 92.7
Adjustment 1 6.9 11.9
Adjustment 2 (6.4)
____ ____
103.4 104.6
Tax (31.1) (29.7)
____ ____
72.3 74.9
Average number of shares 271.1m 296.5m
Proforma EPS 26.62p 25.25p + 5.4%
Adjustment 1 - this allocates interest between continuing and discontinuing on
the basis of gross assets.
Adjustment 2 - this reverses the benefit of interest earned on the disposal
proceeds from the Marriott sale before their return to shareholders.
A similar increase in pro forma EPS would also be derived by starting with
operating profit and adjusting for the financing costs associated with the
special dividend and the Premier Lodge acquisition.
Dividend
An interim dividend of 7.35p per share, an increase of 6.5% over last year, will
be paid on 3 January 2006 to all shareholders on the register at the close of
business on 4 November 2005.
Capital Expenditure
The capital expenditure on property, plant and equipment of £132.6m was
allocated between acquisition expenditure (£62.0m) and maintenance expenditure
(£70.6m).
The forecast capital expenditure for the full year is about £250 - £260m
compared with an actual figure for 2004/05 of £261m.
Financing
Net debt at the end of the half year amounted to £1,122.6m, compared to
£1,361.3m as at 2 September 2004. Since the start of the financial year debt
has decreased by £226.1m, with the principal non-trading movements arising from
the retention of some £310m of the proceeds of the sale of Marriott assets
partially offset by an additional pension fund payment of £50m.
Pensions
At the end of our 2004/05 financial year there was a gross pension fund deficit
of £346m (net deficit after deferred tax of £242m). As at 31st August 2005 the
gross deficit stood at £373m. This increase has been driven primarily by
changes in assumption on life expectancy adopted as part of the triennial
valuation and (despite a similar growth rate in both assets and liabilities) an
absolute growth in the fund's net liability. A package of measures to reduce
the deficit has been announced. This includes further injections over the next
5 years of £190m after the company's payment of £100m in the current year.
Consolidated income statement
Notes 6 months to 6 months to Year to
1 September 2005 2 September 2004 3 March 2005
£m £m £m
Continuing operations
Revenue 2 809.1 713.6 1,462.0
Cost of sales (157.0) (150.3) (300.3)
----------------- ----------------- -----------------
Gross profit 652.1 563.3 1,161.7
Distribution costs (453.0) (382.1) (807.7)
Administrative expenses (75.2) (70.0) (132.7)
----------------- ----------------- -----------------
Non-recurring items:
Impairment of property, plant and
equipment - - (10.0)
Reorganisation costs - - (6.5)
Profit/(loss) on disposal of property,
plant and equipment 0.2 (0.4) (0.4)
----------------- ----------------- -----------------
0.2 (0.4) (16.9)
----------------- ----------------- -----------------
Operating profit 124.1 110.8 204.4
Share of profit from joint ventures 2 3.0 4.3 11.5
Share of profit from associates 2 10.1 8.9 10.4
----------------- ----------------- -----------------
Profit before financing and tax 137.2 124.0 226.3
Finance costs (34.5) (31.7) (76.3)
Finance income 0.2 0.4 2.0
----------------- ----------------- -----------------
Profit before tax 102.9 92.7 152.0
Underlying profit before tax # 102.7 93.1 168.9
Non-recurring items 0.2 (0.4) (16.9)
----------------- ----------------- -----------------
Profit before tax 102.9 92.7 152.0
----------------- ----------------- -----------------
Income tax expense:
UK tax (30.9) (26.2) (44.9)
----------------- ----------------- -----------------
Net profit from continuing activities 72.0 66.5 107.1
Discontinued operations:
Net profit on disposal of businesses 11.4 - -
Profit for the year from discontinued
operations 24.8 23.7 61.1
----------------- ----------------- -----------------
3 36.2 23.7 61.1
----------------- ----------------- -----------------
Net profit from ordinary activities 108.2 90.2 168.2
----------------- ----------------- -----------------
Attributable to:
Parent shareholders 108.1 90.0 167.9
Equity minority interest 0.1 0.1 0.1
Non-equity minority interest - 0.1 0.2
----------------- ----------------- -----------------
108.2 90.2 168.2
----------------- ----------------- -----------------
Dividends proposed per share in respect of
the period (pence)
Special 135.00 - -
Interim 7.35 6.90 6.90
Final - - 18.35
========== ========== ==========
Continuing operations:
Earnings per share (pence) 6
basic for profit for the period 26.50 22.39 36.05
basic for underlying profit # 26.42 22.53 41.35
diluted for profit for the period 26.26 22.24 35.79
diluted for underlying profit # 26.19 22.37 41.04
# Underlying profit is reported on continuing operations before non-recurring
items, being impairment of property, plant and equipment, reorganisation costs
and profit/(loss) on disposal of property, plant and equipment.
Consolidated statement of recognised income and expense
6 months to 6 months to Year to
1 September 2005 2 September 2004 3 March 2005
£m £m £m
Cash flow hedges:
Losses taken to equity (1.2) - -
Exchange differences on translation of foreign
operations (0.5) 0.8 0.3
Actuarial gains/(losses) on defined benefit pension
schemes (72.8) (7.4) 25.6
Tax on items taken directly to or from equity 6.4 2.6 (6.6)
------------ ------------ ------------
Net gain/(loss) recognised directly in equity (68.1) (4.0) 19.3
Profit for the period 108.2 90.2 168.2
------------ ------------ ------------
Total recognised income and expense for the period 40.1 86.2 187.5
------------ ------------ ------------
Attributable to:
Parent shareholders 40.0 86.0 187.2
Equity minority interest 0.1 0.1 0.1
Non-equity minority interest - 0.1 0.2
------------ ------------ ------------
40.1 86.2 187.5
======= ======= =======
Consolidated balance sheet
Notes 1 September 2005 2 September 2004 3 March 2005
£m £m £m
ASSETS
Non-current assets
Property, plant and equipment 2,665.7 3,591.3 2,604.0
Intangible assets 94.8 152.1 193.3
Investment in associates 10.9 47.2 43.1
Investment in joint ventures 46.1 47.2 45.6
Other financial assets 12.7 6.3 11.3
Derivative financial instruments 88.0 - -
------------ ------------ ------------
2,918.2 3,844.1 2,897.3
------------ ------------ ------------
Current assets
Assets classified as held for sale 349.4 0.2 992.3
Inventories 20.4 23.8 23.0
Trade and other receivables 102.5 84.6 107.3
Prepayments 55.2 53.5 40.6
Derivative financial instruments 11.6 - -
Cash at bank and in hand 7 28.1 91.4 53.5
------------ ------------ ------------
567.2 253.5 1,216.7
------------ ------------ ------------
TOTAL ASSETS 3,485.4 4,097.6 4,114.0
======= ======= =======
EQUITY AND LIABILITIES
Equity attributable to equity holders of
the parent
Issued capital 150.3 149.2 149.6
Share premium 29.1 18.3 23.2
Retained earnings 3,057.5 3,300.6 3,387.7
Other reserves (1,850.7) (1,760.0) (1,759.8)
------------ ------------ ------------
Equity attributable to equity holders of
the parent 8 1,386.2 1,708.1 1,800.7
Equity minority interest 2.8 2.7 2.7
Non-equity minority interest - 3.1 3.1
------------ ------------ ------------
TOTAL EQUITY 1,389.0 1,713.9 1,806.5
------------ ------------ ------------
Non-current liabilities
Interest-bearing loans and borrowings 713.0 659.6 1,219.0
Minority owned preference shares 3.1 - -
Provisions 36.1 25.1 25.6
Derivative financial instruments 2.9 - -
Deferred income tax liabilities 215.8 186.7 256.0
Pension liability 373.0 376.0 346.0
------------ ------------ ------------
1,343.9 1,247.4 1,846.6
------------ ------------ ------------
Current liabilities
Interest-bearing loans and borrowings 437.7 793.1 98.2
Provisions 0.5 1.5 3.9
Derivative financial instruments 2.2 - -
Trade and other payables 301.0 303.1 341.9
Income tax payable 11.1 38.6 16.9
------------ ------------ ------------
752.5 1,136.3 460.9
------------ ------------ ------------
TOTAL LIABILITIES 2,096.4 2,383.7 2,307.5
------------ ------------ ------------
TOTAL EQUITY AND LIABILITIES 3,485.4 4,097.6 4,114.0
====== ====== ======
Consolidated cash flow statement
6 months to 6 months to Year to
Notes 1 September 2005 2 September 2004 3 March 2005
£m £m £m
Net profit from ordinary activities 108.2 90.2 168.2
Adjustments for:
Taxation charged on total operations 33.8 37.2 54.6
Net finance cost 34.0 30.6 74.1
Total income from joint ventures (10.4) (4.3) (11.5)
Total income from associates (10.3) (8.9) (11.0)
(Gain)/loss on disposal of property,
plant and equipment (1.9) 0.4 (22.8)
Profit on disposal of businesses (11.4) - -
Depreciation and amortisation 56.8 63.9 133.6
Impairment of property and goodwill - - 31.5
Other non-cash items 1.1 4.2 9.8
------------ ------------ ------------
Operating profit before working capital
changes 199.9 213.3 426.5
(Increase)/decrease in inventories (0.6) 1.0 1.9
(Increase) in trade and other receivables (64.3) (20.2) (21.1)
Increase/(decrease) in trade and other
payables 15.7 (5.5) 34.1
Payments against provisions (0.8) (0.5) (1.4)
Payment to pension fund (55.0) - -
------------ ------------ ------------
Cash generated from operations 94.9 188.1 440.0
Interest paid (27.6) (23.7) (71.8)
Income taxes paid (25.1) (19.9) (48.8)
------------ ------------ ------------
Net cash flows from operating activities 42.2 144.5 319.4
====== ====== ======
Cash flows from investing activities
Disposal of subsidiary, including net
overdraft disposed of 724.8 - -
Purchase of property, plant and equipment (132.6) (122.9) (251.5)
Purchase of investments and loans
advanced (1.4) (8.5) (8.6)
Purchase of intangible assets (1.0) - (9.4)
Proceeds from disposal of property, plant
and equipment 17.1 2.7 64.8
Acquisition of subsidiary, net of cash
acquired - (548.3) (553.8)
Dividends from joint venture - - 10.8
Dividends from associates 45.1 4.3 12.3
Interest received 0.7 0.8 1.4
------------ ------------ ------------
Net cash flows from/(used in) investing
activities 652.7 (671.9) (734.0)
------------ ------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital 6.6 5.3 10.6
Increase/(decrease) in short-term
borrowings (5.1) 3.1 (8.7)
Proceeds from long-term borrowings 200.0 615.8 513.4
Issue costs of long-term borrowings (0.4) - -
Repayment of long-term borrowings (464.7) (24.2) (29.7)
Equity dividends paid 5 (456.6) (47.8) (68.2)
Dividends paid to minority interests (0.1) (0.1) (0.2)
------------ ------------ ------------
Net cash flows from/(used in) financing
activities (720.3) 552.1 417.2
------------ ------------ ------------
Net increase in cash and cash equivalents (25.4) 24.7 2.6
Net foreign exchange difference (1.0) 1.2 0.4
Net cash disposed of 7 (14.1) - -
Opening cash and cash equivalents 52.1 49.1 49.1
------------ ------------ ------------
Closing cash and cash equivalents 7 11.6 75.0 52.1
======= ======= =======
Reconciliation to cash at bank and in
hand in the balance sheet:
Cash and cash equivalents shown above 11.6 75.0 52.1
Add back overdrafts (included in current
liabilities) 31.1 47.9 21.1
Less short-term bank borrowings (included
in overdrafts) (14.6) (31.5) (19.7)
------------ ------------ ------------
Cash at bank and in hand shown within
current assets on the balance sheet 28.1 91.4 53.5
====== ====== ======
Notes to the accounts
1. Basis of accounting and preparation
With effect from 4 March 2005, Whitbread PLC has moved to reporting its
financial results in accordance with International Financial Reporting Standards
(IFRS) as required by European Union law.
The interim results announcement is prepared in accordance with the IFRS
accounting policies expected to apply at 2 March 2006. These policies are
unchanged from those set out in the restatement of the Group's results for IFRS
published on 3 August 2005 and available on the Company's website at
www.Whitbread.co.uk. There has been no change between the accounting basis
published in that document and the interim results announcement.
IAS 12 requires the measurement of deferred tax assets and liabilities to
reflect the tax consequences that would follow from the manner in which it is
expected, at the balance sheet date, to recover the carrying amount of assets
and liabilities. The company has reconsidered the effect of this requirement on
various properties acquired as part of a business combination and as a result
recognised an additional deferred tax liability of £17.3m at 1 September 2005,
at 2 September 2004 and at 3 March 2005. As Whitbread has taken advantage of
the exemption in IFRS 1 relating to business combinations, recognition of this
amount results in an equivalent reduction in equity.
As permitted, this interim report has been prepared in accordance with UK
listing rules and not in accordance with IAS 34 'Interim Financial Reporting'
and is therefore not fully compliant with IFRS. Whitbread has anticipated that
the amendments to IAS 19 'Actuarial Gains and Losses, Group Plans and
Disclosures', which have yet to be formally adopted for use in the EU, will be
so adopted in time to be applicable to the next annual financial statements.
As allowed by IFRS 1 'First time adoption of International Financial Reporting
Standards' the provisions of IAS 32 and IAS 39 have not been applied to the
comparative periods and are applied from 4 March 2005.
A reconciliation of equity at 5 March 2004, the date of transition to IFRS, and
at 3 March 2005 was provided in the IFRS restatement document issued on 3 August
2005. A reconciliation of profit for the year ended 3 March 2005 was also
published within that document. A reconciliation of profit and equity between
that previously published at 2 September 2004 under UK GAAP and restated for
IFRS was published on 3 October 2005. These are correct except for the IAS 12
adjustment described above.
A copy of these documents can be found on the company's web site at
www.Whitbread.co.uk.
The financial information for the year ended 3 March 2005 is extracted from the
statutory accounts of the Group for that year, now amended to conform with
applicable IFRS as discussed above. These published accounts, in a form
consistent with UK GAAP were reported on by the auditors without qualification
or statement under sections 237(2) or (3) of the Companies Act 1985 and have
been delivered to the Registrar of Companies.
The interim accounts for the six months ended 1 September 2005 and the
comparatives to 2 September 2004 are unaudited but have been reviewed by the
auditors.
2. Segmental analysis
6 months to 6 months to Year to
1 September 2005 2 September 2004 3 March 2005
Revenue** EBIT # Revenue** EBIT # Revenue** EBIT #
£m £m £m £m £m £m
By business segment
Premier Travel Inn 206.9 71.8 139.7 48.3 319.4 107.2
Pub Restaurants 315.6 39.3 305.5 44.4 596.7 73.8
High Street Restaurants 112.1 7.3 105.5 8.4 219.7 25.0
David Lloyd Leisure 112.0 21.1 108.9 24.4 218.5 49.3
Other
Soft drinks - 10.0 - 8.4 - 10.5
Inter-segment revenue * (1.5) - (1.3) - (3.2) -
Central costs 64.0 (12.5) 55.3 (9.5) 110.9 (22.6)
------------ ------------ ------------ ----------- ------------ -----------
Total continuing operations 809.1 137.0 713.6 124.4 1,462.0 243.2
------------ ------------ ------------ ----------- ------------ -----------
Discontinued operations
Marriott brands 72.2 24.7 195.7 34.3 388.6 65.5
Maredo 11.8 1.0 29.1 (0.3) 62.3 3.4
------------ ------------ ------------ ----------- ------------ -----------
Total operations 893.1 162.7 938.4 158.4 1,912.9 312.1
------------ ------------ ------------ ----------- ------------ -----------
By geographical segment
United Kingdom 870.1 160.5 897.8 157.4 1,825.0 308.9
Rest of the world 23.0 2.2 40.6 1.0 87.9 3.2
------------ ------------ ------------ ----------- ------------ -----------
893.1 162.7 938.4 158.4 1,912.9 312.1
======= ======= ======= ====== ======= ======
** Revenue excludes revenue from joint ventures.
# EBIT is profit before interest, tax and non-recurring items, except for joint
ventures and associates as noted below.
* Inter-segment revenue was from High Street Restaurants to the other segments.
Joint ventures and associates are included in the above analysis net of tax,
interest and non-recurring items. The Group's share of profit reported on the
face of the income statement for the period is as follows:
Continuing Joint ventures Total Continuing Associates Total
Discontinued Discontinued
£m £m £m £m £m £m
Group's share of
operating profit 5.8 13.5 19.3 13.7 0.3 14.0
Group's share of
non-recurring items - 0.1 0.1 - - -
Group's share of interest (0.4) (5.6) (6.0) (1.7) (0.1) (1.8)
Group's share of taxation (2.4) (0.6) (3.0) (1.9) - (1.9)
------------ ------------ ------------ ----------- ------------ ----------
3.0 7.4 10.4 10.1 0.2 10.3
======= ======= ======= ====== ======= ======
3. Disposals
The two disposals in the period were the Marriott segment and Maredo, resulting
in a profit on disposal of £11.4m included within discontinuing operations
during the period.
Whitbread has previously announced the intention to exit the full service hotels
sector. On 5 May 2005 Whitbread sold 46 of its Marriott hotels to a joint
venture owned 50% each by Whitbread and Marriott International. The joint
venture has commenced the disposal process for these hotels to third party
property owners. Whitbread retained its interest in a further eight properties,
which are in the process of being marketed. At 1 September 2005 the properties
retained by Whitbread, and its investment in the joint venture, were classified
as held for sale and reported within discontinued operations within these
financial statements.
On 25 April 2005 Whitbread PLC announced the conditional sale of its German
steak-house business Maredo. The sale took place on 19 May 2005.
The effect of the disposals during the period is as follows:
Marriott Maredo
£m £m
Sale proceeds 1,011.5 15.1
Total net assets sold (874.6) (12.9)
Goodwill written off (96.2) -
Costs of disposal (16.9) (2.7)
Unrealised profit on sale of business to joint venture (11.9) -
------------ ------------
Profit/(loss) on disposal 11.9 (0.5)
======= =======
Cash flows relating to discontinued operations are as follows:
6 months to 6 months Year to
1 September 2005 2 September 3 March 2005
£m 2005
£m £m
Marriott
Net cash inflows from operating activities 13.0 21.5 84.1
Net cash flows from investing activities (14.9) (18.5) 11.3
------------ ------------ ------------
Net increase/(decrease) in cash and cash equivalents (1.9) 3.0 95.4
======= ======= =======
Maredo
Net cash inflows from operating activities 1.4 0.4 4.8
Net cash flows from investing activities (0.3) (0.2) (2.6)
------------ ------------ ------------
Net increase in cash and cash equivalents 1.1 0.2 2.2
======= ======= =======
Discontinued operations during the period is made up as follows:
6 months to 6 months to Year to
1 September 2005 2 September 2004 3 March 2005
£m £m £m
Revenue 84.0 224.8 450.0
Cost of sales (12.4) (29.1) (181.9)
----------------- ----------------- -----------------
Gross profit 71.6 195.7 269.0
Distribution costs (46.6) (145.5) (169.7)
Administrative expenses (6.9) (16.2) (31.0)
----------------- ----------------- -----------------
Non-recurring items:
Impairment of goodwill - - (17.2)
Impairment of property, plant and equipment - - (4.3)
Profit on disposal of property, plant and
equipment 1.7 - 23.2
----------------- ----------------- -----------------
1.7 - 1.7
----------------- ----------------- -----------------
Operating profit 19.8 34.0 70.0
Share of profit from joint ventures 7.4 - -
Share of profit from associates 0.2 - 0.6
Non-recurring items:
Net profit on disposal of businesses 11.4 - -
----------------- ----------------- -----------------
Profit before financing and tax 38.8 34.0 70.6
Finance costs (0.3) - -
Finance income 0.6 0.7 0.2
----------------- ----------------- -----------------
Profit before tax 39.1 34.7 70.8
Income tax expense:
UK tax (2.9) (11.0) (9.7)
----------------- ----------------- -----------------
Net profit from discontinued operations 36.2 23.7 61.1
========== ========== ==========
4. Acquisitions
During the period the accounting for the acquisition of Premier Inns Limited has
been finalised, which has resulted in the amendment of the deferred tax fair
value adjustment previously published. The effect of this is to reduce the fair
value of deferred tax previously reported by £0.5m.
5. Dividends paid
1 September 2005 2 September 3 March 2005
£m 2004
£m £m
Declared and paid in the period:
Equity dividends on ordinary shares:
Special dividend - 135.0 pence 402.0 - -
Final dividend for 2004/05 - 18.35 pence (2003/04
- 16.15 pence) 54.6 47.8 47.8
Interim dividend for 2004/05 - 6.90 pence (2003/04
- 6.15 pence) - - 20.4
------------ ------------ ------------
456.6 47.8 68.2
======= ======= =======
6. Earnings per share
Basic earnings per share is calculated by dividing earnings for parent
shareholders of £108.1m (2004 - £90.0m) by the weighted average number of
ordinary shares in issue during the period, 271.7m (2004 - 296.5m). Adjusted
basic earnings per share is calculated as follows:
Earnings (£m)
6 months 6 months Year to
to 1 September 2005 to 2 September 2004 3 March 2005
Total operations
Earnings and basic earnings per share 108.1 90.0 167.9
Earnings and basic earnings per share attributable
to:
Non-recurring items (net of tax) (13.3) 0.4 14.0
------------ ------------ ------------
Adjusted earnings and basic earnings per share for
underlying profit 94.8 90.4 181.9
======= ======= =======
Continuing operations
Earnings and basic earnings per share 72.0 66.4 106.9
Earnings and basic earnings per share attributable
to:
Non-recurring items (net of tax) (0.2) 0.4 15.7
------------ ------------ ------------
Adjusted earnings and basic earnings per share for
underlying profit 71.8 66.8 122.6
======= ======= =======
Earnings per share (p)
6 months 6 months Year to
to 1 September 2005 to 2 September 2004 3 March 2005
Total operations
Earnings and basic earnings per share 39.78 30.35 56.63
Earnings and basic earnings per share attributable
to:
Non-recurring items (net of tax) (4.89) 0.14 4.72
------------ ------------ ------------
Adjusted earnings and basic earnings per share for
underlying profit 34.89 30.49 61.35
======= ======= =======
Continuing operations
Earnings and basic earnings per share 26.50 22.39 36.05
Earnings and basic earnings per share attributable
to:
Non-recurring items (net of tax) (0.08) 0.14 5.30
------------ ------------ ------------
Adjusted earnings and basic earnings per share for
underlying profit 26.42 22.53 41.35
======= ======= =======
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 274.2m (2004 - 298.6m).
Weighted average number of ordinary shares for the purposes of earnings per share 271.7
Effect of dilutive potential ordinary shares:
Share options - number of shares to be issued for nil consideration 2.5
------------
Weighted average number of ordinary shares for the purposes of dilutive earnings per share 274.2
=======
6 months to 6 months to Year to
1 September 2005 2 September 2004 3 March 2005
Earnings per share on discontinued operations:
basic for profit for the period 1.29 7.96 20.57
basic for profit adjusted for underlying profit 8.46 7.96 20.00
diluted for profit for the period 13.17 7.97 20.42
diluted for profit adjusted for underlying profit 8.39 7.97 19.85
7. Movements in cash and net debt
3 March Cash Cashflow Foreign Amortisation Fair value 1 September
2005 * disposed of exchange of premiums adjustments 2005
and to loan
discounts capital
£m £m £m £m £m £m £m
Cash at bank and in
hand 53.5 28.1
Overdrafts (21.1) (31.1)
------------ ------------
32.4 (14.1) (20.3) (1.0) - - (3.0)
Less short term bank
borrowings 19.7 - (5.1) - - - 14.6
------------ ------------ ------------ ---------- ------------ ------------ ------------
Cash and cash
equivalents 52.1 (14.1) (25.4) (1.0) - - 11.6
Short term bank
borrowings (19.7) - 5.1 - - - (14.6)
Loan capital under
one year * (86.1) (406.6)
Loan capital over one
year * (1,295.0) (713.0)
------------ ------------
Total loan capital * (1,381.1) - 271.0 0.6 1.9 (12.0) (1,119.6)
------------ ------------ ------------ ---------- ------------ ------------ ------------
Net debt (1,348.7) (14.1) 250.7 (0.4) 1.9 (12.0) (1,122.6)
======= ======= ======= ====== ======= ======= =======
* Includes the effect of restating for IAS 32 and IAS 39 as follows:
Previously IAS 32 and Restated
reported IAS 39
Loan capital under one year 77.1 9.0 86.1
Loan capital over one year 1,219.0 76.0 1,295.0
------------ ------------ ------------
Total loan capital 1,296.1 85.0 1,381.1
======= ======= =======
8. Shareholders' funds
6 months 6 months Year to
to 1 September 2005 to 2 September 2004 3 March 2005
£m £m £m
Total equity attributable to parent shareholders at
beginning of period as previously reported 1,800.7 1,687.8 1,687.8
Effect of adopting IAS 32 & 39 (0.9) - -
Effect of adopting amendments to IAS 12 (see note 1) - (17.3) (17.3)
------------ ------------ ------------
Total equity attributable to parent shareholders at
beginning of period (restated) 1,799.8 1,670.5 1,670.5
Total recognised income and expense for the period 40.0 86.0 187.2
Accrued share based payments (3.6) (3.8) (1.1)
Ordinary shares issued 6.6 5.3 10.6
Movement in associates reserves 0.0 (2.1) 1.7
Equity dividends paid (see note 5) (456.6) (47.8) (68.2)
------------ ------------ ------------
Total equity attributable to parent shareholders at
end of period 1,386.2 1,708.1 1,800.7
====== ====== ======
9. Post balance sheet events
An interim dividend of 7.35p per share (2004: 6.90p) amounting to a dividend of
£18.9m (2004: £20.4m) was declared by the Directors at their meeting on 21
October 2005. These financial statements do not reflect this dividend payable.
On 26 September 2005 Whitbread PLC announced the sale of The Brewery, Chiswell
street site to the event venue company, Earls Court & Olympia Ltd for an
estimated £55m, some £35m higher than the book value of the assets.
On 26 September 2005 Whitbread announced further structural change within the
organisation that will result in the exit of people and property during the
second half of the year. As a result of this change the Group will be
establishing a series of shared services that will serve all the brands within
the Group. A full update will be given in conjunction with the announcement of
these results on 25 October 2005.
This information is provided by RNS
The company news service from the London Stock Exchange
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