Final Results - Part 2
Whitbread Holdings PLC
2 May 2001
PART 2
Group profit and loss account
Year ended 3 Notes 2000/1 (52 weeks)
March 2001
Before Exception-
exceptional -al items
items (note 4) Total
£m £m £m
Turnover
Group and share of joint
ventures
Continuing operations 3,095.2 - 3,095.2
Less share of joint (500.6) - (500.6)
ventures' turnover
Group turnover 3 2,594.6 - 2,594.6
Group operating profit -
continuing operations 404.4 (2.2) 402.2
Share of operating profit
in:
Joint ventures 10.0 (0.9) 9.1
Associates 13.8 - 13.8
Operating profit of the
group, joint ventures
and associates
Continuing 3 428.2 (3.1) 425.1
operations
Non-operating items -
continuing operations
Net profit/(loss) on
disposal of fixed assets
Group excluding joint - (5.0) (5.0)
ventures and associates
Joint ventures - 0.2 0.2
Associates - 0.5 0.5
Net loss on the disposal
of businesses 10 - (8.8) (8.8)
Fundamental reorganisation
costs - (26.0) (26.0)
Share of joint venture's
fundamental
restructuring costs - - -
Profit before interest 428.2 (42.2) 386.0
Interest 5 (93.4) (0.3) (93.7)
Profit before taxation 334.8 (42.5) 292.3
Taxation 6 (78.1) (16.5) (94.6)
Profit after taxation 256.7 (59.0) 197.7
Equity minority interests - - -
Non-equity minority
interests (0.1) - (0.1)
Preference dividends - - -
Profit earned for ordinary
shareholders 256.6 (59.0) 197.6
Ordinary dividends (153.1) - (153.1)
Retained profit for the year 103.5 (59.0) 44.5
Earnings per 7
share (pence)
Basic 39.93
Adjusted basic 53.49
Diluted 39.90
Adjusted diluted 53.45
Dividends per share (pence)
Interim 8.05
Proposed final 23.10
Year ended 3 Notes 1999/2000 restated (53 weeks)
March 2001
Before Exception-
exceptional -al items
items (note 4) Total
£m £m £m
Turnover
Group and share of joint
ventures
Continuing operations 3,738.9 - 3,738.9
Less share of joint
ventures' turnover (787.5) - (787.5)
Group turnover 3 2,951.4 - 2,951.4
Group operating profit -
continuing operations 389.5 (44.3) 345.2
Share of operating profit
in:
Joint ventures 9.7 (34.2) (24.5)
Associates 12.3 - 12.3
Operating profit of the
group, joint ventures
and associates
Continuing 3 411.5 (78.5) 333.0
operations
Non-operating items -
continuing operations
Net profit/(loss) on
disposal of fixed assets
Group excluding joint - 5.4 5.4
ventures and associates
Joint ventures - (0.1) (0.1)
Associates - - -
Net loss on the disposal
of businesses 10 - (1.8) (1.8)
Fundamental reorganisation
costs - - -
Share of joint venture's
fundamental restructuring
costs - (17.4) (17.4)
Profit before interest 411.5 (92.4) 319.1
Interest 5 (63.1) - (63.1)
Profit before taxation 348.4 (92.4) 256.0
Taxation 6 (81.1) 5.7 (75.4)
Profit after taxation 267.3 (86.7) 180.6
Equity minority interests (0.2) - (0.2)
Non-equity minority
interests - - -
Preference dividends (0.3) - (0.3)
Profit earned for ordinary
shareholders 266.8 (86.7) 180.1
Ordinary dividends (146.5) - (146.5)
Retained profit for the
year 120.3 (86.7) 33.6
Earnings per 7
share (pence)
Basic 36.36
Adjusted basic 54.12
Diluted 36.26
Adjusted diluted 53.99
Dividends per share (pence)
Interim 7.65
Proposed final 21.85
Statement of total recognised gains and losses
Year ended 3 March 2001
1999/2000
2000/1 (restated)
£m £m
Profit earned for ordinary shareholders
Group excluding joint ventures and associates 183.6 219.4
Joint ventures 5.0 (46.6)
Associates 9.0 7.3
Group including joint ventures and associates 197.6 180.1
Currency translation differences on net
foreign investment 1.5 3.0
Premium on cancellation of preference stocks - (0.2)
199.1 182.9
Prior year adjustment arising from the implementation
of UITF abstract 24 (5.8) -
Total gains and losses recognised since previous year
end 193.3 182.9
Group cash flow statement
Year ended 3 Notes 2000/1
March 2001
£m
Cash flow from
operating
activities 8 492.3
Dividends received from
joint ventures and
associates 3.5
Returns on investments and
servicing of finance
Interest received 2.0
Interest paid (94.9)
Debt issue costs (5.3)
Other dividends received -
Loan interest received 1.3
Preference dividends paid -
Net cash outflow from
returns on investments and
servicing of finance (96.9)
Taxation
UK Corporation Tax paid (92.9)
Capital expenditure and
financial investment
Property and plant
purchased (331.9)
Investments purchased and
loans advanced (6.7)
Property and plant sold 130.8
Investments sold and loans
realised 22.1
Net cash outflow from
capital expenditure and
financial investment (185.7)
Acquisitions and disposals
New businesses 9 (11.0)
acquired
Businesses
sold 10 500.3
Net cash inflow/(outflow)
from acquisitions and
disposals 489.3
Equity dividends paid (148.2)
Net cash inflow/(outflow)
before use of liquid
resources and financing 461.4
Management of liquid
resources
Net movement on short term
securities and
bank
deposits 11 0.8
Financing
Minority dividends (0.1)
Issue of shares 6.2
Repurchase of shares (42.6)
Repayment of preference
stock -
Net movement on short term
bank borrowings 11 (28.0)
Loan capital 11 285.0
issued *
Loan capital 11 (669.5)
repaid
Net cash inflow/(outflow)
from financing (449.0)
Increase in 11 13.2
cash
Proposed final Notes 1999/2000 (restated)
£m
Cash flow from operating
activities 8 559.0
Dividends received from
joint ventures and
associates 1.7
Returns on investments and
servicing of finance
Interest received 7.2
Interest paid (86.2)
Debt issue costs -
Other dividends received 0.1
Loan interest received 1.8
Preference dividends paid (0.3)
Net cash outflow from
returns on investments and
servicing of finance (77.4)
Taxation
UK Corporation Tax paid (52.8)
Capital expenditure and
financial investment
Property and plant
purchased (372.3)
Investments purchased and
loans advanced (12.2)
Property and plant sold 16.9
Investments sold and loans
realised 22.9
Net cash outflow from
capital expenditure and
financial investment (344.7)
Acquisitions and disposals
New businesses 9 (632.4)
acquired
Businesses
sold 10 11.3
Net cash inflow/(outflow)
from acquisitions and
disposals (621.1)
Equity dividends paid (139.3)
Net cash inflow/(outflow)
before use of liquid
resources and financing (674.6)
Management of liquid
resources
Net movement on short term
securities and bank
deposits 11 0.2
Financing
Minority dividends -
Issue of shares 10.9
Repurchase of shares -
Repayment of preference
stock (10.0)
Net movement
on 11 2.0
short term
bank borrowings
Loan capital 11 1,070.2
issued *
Loan capital 11 (368.3)
repaid
Net cash inflow/(outflow)
from financing 704.8
Increase in 11 30.4
cash
* The net of receipts and payments on revolving credits is included in loan
capital issued.
Group balance sheet
3 March 2001
Notes 2001 2000 (restated)
£m £m
Fixed assets
Intangible assets 151.8 157.7
Tangible assets 4,138.1 4,254.3
Investments
In joint ventures
Share of gross assets 69.2 235.3
Share of gross liabilities (28.3) (108.6)
40.9 126.7
In associates 53.0 50.0
Other investments 2.4 25.2
4,386.2 4,613.9
Current assets and
liabilities
Stocks 36.1 64.9
Debtors 165.9 338.9
Cash at bank and
in hand 66.9 123.1
268.9 526.9
Creditors - amounts
falling duewithin one year (689.9) (1,447.1)
Net current liabilities (421.0) (920.2)
Total assets less current
liabilities 3,965.2 3,693.7
Creditors - amounts
falling due after more
than one year
Loan capital (1,272.6) (1,120.2)
Provisions for liabilities
and charges (41.6) (31.9)
2,651.0 2,541.6
Capital and reserves
Called up share capital 2,207.8 2,235.0
Revaluation reserve 621.5 669.1
Other reserves -
non-distributable (1,830.5) (1,934.7)
Profit and loss account 1,646.9 1,566.9
Shareholders' 12 2,645.7 2,536.3
funds
Equity minority interests 2.2 2.2
Non-equity minority
interests 3.1 3.1
2,651.0 2,541.6
Notes to the accounts
1. Restructuring of the Whitbread Group
The restructuring of the Whitbread Group is described in the Finance Review.
The Group restructuring has been accounted for in accordance with the
principles of merger accounting setout in Financial Reporting Standard No 6
(FRS6) and schedule 4A to the Companies Act 1985. In accordance with merger
accounting principles, the shares issued in connection with the scheme of
arrangement to acquire Whitbread PLC, as adjusted to reflect the issue of
options and repurchase of shares, have been treated as if issued throughout
the year and the corresponding year.
2. Changes to accounting policies
UITF abstract 24, requiring that pre-opening costs are written off as
incurred, was implemented during the year. The effect on profit and net
assets by segment is shown below.
Impact of UITF 24 2000/1
Operating
profit Net assets
£m £m
Hotels 0.1 (2.8)
Restaurants - (1.2)
Sports, health and fitness 0.6 (0.5)
0.7 (4.5)
Pubs & Bars - managed (0.3) (0.9)
Net increase/(decrease) 0.4 (5.4)
Impact of UITF 24 1999/2000
Operating
profit Net assets
£m £m
Hotels 0.9 (2.9)
Restaurants 0.4 (1.2)
Sports, health and fitness (0.3) (1.1)
1.0 (5.2)
Pubs & Bars - managed (0.6) (0.6)
Net increase/(decrease) 0.4 (5.8)
3. Segmental analysis of turnover, profit and net assets
Operating
Year ended 3 March Turnover EBITDA** profit *** Net assets
2001
By business segment £m £m £m £m
Hotels 439.7 129.4 90.4 1,263.9
Restaurants 1,130.2 179.0 122.8 1,267.3
Sports, health and 139.3 46.0 28.2 425.5
fitness
1,709.2 354.4 241.4 2,956.7
Pubs & Bars - managed 530.9 132.5 105.4 770.7
- leased 146.8 74.8 71.6 390.1
Beer 324.3 21.1 12.5 (3.8)
Other drinks 359.5 13.4 13.4 47.7
Acquired businesses for
disposal * 16.3 1.7 1.7 2.0
Segmental turnover,
profit and net assets 3,087.0 597.9 446.0 4,163.4
Inter-segment turnover
(see note below) (65.0)
Share of joint ventures'
turnover (500.6)
Central services 73.2 (8.4) (13.6) (221.1)
Allocation to Whitbread Share
Ownership Scheme (4.2) (4.2)
Exceptional items (note 4) (3.1) (3.1)
2,594.6 582.2 425.1 3,942.3
By geographical segment
United Kingdom 2,525.6 575.9 422.5 3,920.2
Rest of the world 69.0 6.3 2.6 22.1
2,594.6 582.2 425.1 3,942.3
Notes to the accounts
3. Segmental analysis of turnover, profit and net assets
(continued)
Operating
EBITDA** profit *** Net assets
Year ended 4 March Turnover (restated) (restated) (restated)
2000
By business segment £m £m £m £m
Hotels 287.5 77.8 54.6 1,181.1
Restaurants 1,071.6 174.2 121.1 1,211.4
Sports, health and 103.6 36.4 22.7 404.1
fitness
1,462.7 288.4 198.4 2,796.6
Pubs & Bars - managed 521.6 135.3 109.0 757.9
- leased 146.9 67.7 64.3 385.9
Beer 1,116.0 80.9 46.5 298.9
Other drinks 656.7 14.4 14.4 131.6
Acquired businesses for
disposal * 10.8 1.3 1.3 129.6
Segmental turnover,
profit and net assets 3,914.7 588.0 433.9 4,500.5
Inter-segment turnover (see
note below) (244.4)
Share of joint ventures'
turnover (787.5)
Central services 68.6 (10.3) (18.0) (237.7)
Allocation to Whitbread Share
Ownership Scheme (4.4) (4.4)
Exceptional items (note 4) (78.5) (78.5)
2,951.4 494.8 333.0 4,262.8
By geographical segment
United Kingdom 2,880.5 486.2 328.0 4,243.7
Rest of the world 70.9 8.6 5.0 19.1
2,951.4 494.8 333.0 4,262.8
** EBITDA is earnings before interest, tax, depreciation and amortisation.
*** Operating profit is stated after charging the amortisation of goodwill of
£7.7m (1999/2000 - £1.2m) relating to the acquisition of Swallow Group
Limited and £0.4m (1999/2000 - £0.1m) relating to the acquisition of
Racquets & Healthtrack Group Ltd in Hotels and Sports, health and fitness
respectively.
* The acquired business for disposal relates mainly to the pubs business
acquired with Swallow Group Limited, which was sold on 7June 2000.
Segmental turnover for Restaurants includes the group's share of joint
venture turnover amounting to £138.2m, (1999/2000 -£130.4m), Hotels includes
£2.9m(1999/2000 - £0.4m) and Other drinks turnover is derived wholly from
the group's share of a joint venture. Inter-segment turnover is from Beer to
the other segments. Central services turnover comprises, primarily, food
distribution services provided to a joint venture. The geographical analysis
of turnover and profit is by source. The analysis ofturnover by destination
is not materially different. Sales between geographical segments are not
material.
The results and net assets of the majority of Travel Inns are included in
the divisions that operate them, not in Hotels.
Net assets included above are total net assets excluding net debt.
Following the sale of the Whitbread Beer Company there remains a continuing
activity within the Beer segment. This is as a result of the terms of the
sale of the Whitbread Beer Company to Interbrew which included arrangements
for Whitbread to retain the people and the necessary production capacity to
ensure compliance with its obligations for the remaining period of the
Heineken and Murphy licences.
In the profit and loss account, turnover of the group and share of joint
ventures includes sales from the group to joint ventures amounting to
£107.5m (1999/2000 - £220.2m) and sales to the group from joint ventures
amounting to £8.0m (1999/2000 -£24.0m).
Notes to the accounts
3. Segmental analysis of turnover, profit and net assets
(continued)
2000/1 1999/2000
The exceptional costs included in operating £m £m
profit are detailed in note 4.
The analysis is as follows:
Pub Partnerships, Inns and Restaurants * 2.9 10.3
Restaurants - 7.2
Hotels - 15.0
Other drinks 0.9 34.2
Central services (0.7) 11.8
3.1 78.5
* These costs relate to the restructuring of these divisions into Pubs &
Bars and Restaurants. This was a combined project and there was no suitable
basis for allocating the costs to individual divisions.
4. Exceptional items 2000/1 1999/2000
£m £m
Restructuring/rationalisation costs (2.2) (14.4)
Impairment of leasehold properties - (7.2)
Integration costs - (15.0)
Abortive acquisition costs - (7.7)
Group excluding joint ventures and associates (2.2) (44.3)
Joint venture reorganisation costs (0.9) -
Impairment of investment in First Quench - (34.2)
Charged against operating profit (3.1) (78.5)
Non-operating items
Net profit/(loss) on disposal of fixed assets
Group excluding joint ventures and associates (5.0) 5.4
Joint ventures 0.2 (0.1)
Associates 0.5 -
Net loss on the disposal of businesses (note (8.8) (1.8)
10)
Share of First Quench's fundamental - (17.4)
restructuring costs
Fundamental reorganisation costs
Demerger of Pubs & Bars - transaction costs (11.0) -
Reorganisation costs (15.0) -
(42.2) (92.4)
The restructuring costs, charged against operating profit, relate mainly to
the reorganisation of Pub Partnerships, Inns and Restaurants into the new
Pubs & Bars and Restaurants divisions. The integration costs relate to the
acquisition of the Swallow Group plc. Abortive acquisition costs relate to
the lapsed Allied Domecq Retailing offer.
The transaction costs are principally advisers fees and legal costs. The
fundamental reorganisation costs reflect the organisational changes
resulting from the sale of The Whitbread Beer Company in May 2000 and the
proposed demerger of Pubs and Bars. In both cases the costs are those costs
incurred in 2000/1. There will be further costs estimated at around £25m in
2001/2,which will also be accounted for within non-operating exceptional
items.
5. Interest 2000/1 1999/2000
£m £m
Interest payable 96.7 73.4
Interest receivable (3.2) (8.8)
Interest capitalised (3.4) (5.4)
90.1 59.2
Interest payable by:
Joint ventures 1.5 1.9
Associates 1.8 2.0
93.4 63.1
Exceptional interest payable * 0.3 -
93.7 63.1
* The exceptional interest payable is the premium on the redemption of the
irredeemable loan stock which was associated with the demerger of the Pubs
and Bars business.
Notes to the accounts
6. Taxation 2000/1 1999/2000
£m £m
Current taxation on profits for the year before
exceptional items
UK Corporation Tax 82.8 89.1
Deferred tax - (8.0)
82.8 81.1
Adjustments to earlier periods
UK Corporation Tax (11.0) (4.6)
71.8 76.5
Joint ventures 2.8 1.6
Associates 3.5 3.0
78.1 81.1
Tax on operating exceptional items
Group (0.4) (6.8)
Joint ventures - 1.1
Tax on non-operating exceptional items
Group 16.9 -
94.6 75.4
7. Earnings per share
Basic earnings per share is calculated by dividing earnings for ordinary
shareholders of £197.6m (1999/2000 - £180.1m) by the weighted average number
of ordinary shares in issue during the year, 494.9m (1999/2000 - 495.3m).
Adjusted basic earnings per share is calculated as follows:
Earnings (£m) Earnings per share (p)
1999/2000 1999/2000
2000/1 (restated) 2000/1 (restated)
Earnings and basic earnings per
share 197.6 180.1 39.93 36.36
Earnings and basic earnings per
share attributable to:
Goodwill amortisation 8.1 1.3 1.64 0.26
Exceptional costs, 59.0 86.7 11.92 17.50
net of tax
Adjusted earnings and basic
earnings per share 264.7 268.1 53.49 54.12
Earnings includes a number of exceptional items. 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 495.2m (1999/2000 - 496.7m).
8. Net cash inflow from operating activities
1999/2000
2000/1 (restated)
£m £m
Group operating profit 402.2 345.2
Investment income (0.1) (0.3)
Depreciation/amortisation 157.1 161.8
Impairment of leasehold properties - 7.2
Payments against provisions (29.4) (6.8)
Other non-cash items 5.4 44.1
(Increase)/decrease in stocks (12.6) 3.2
Increase in debtors (109.0) (5.7)
Increase in creditors 78.7 10.3
Cash flow from operating activities 492.3 559.0
Notes to the accounts
9. Acquisitions Fair value
of assets Adjusted
acquired Adjustments fair value
as at to fair of assets
Fair value adjustments in 4 March 2000 values acquired
respect
of the Swallow Group Limited
which was acquired on 6 January £m £m £m
2000
Tangible fixed assets 486.5 - 486.5
Investments 8.7 1.5 10.2
Net working capital, excluding (29.5) (1.2) (30.7)
cash
Assets held awaiting disposal 143.9 2.2 146.1
Cash and overdrafts 25.2 - 25.2
Loan capital (172.8) - (172.8)
Taxation (3.9) - (3.9)
Provisions * - (13.0) (13.0)
Minority interests (3.1) - (3.1)
Net assets acquired 455.0 (10.5) 444.5
Goodwill 142.8 10.2 153.0
Cost of new businesses 597.8 (0.3) 597.5
Cash outflow in respect of new businesses acquired
2000/1 1999/2000
£m £m
Cost of acquisitions - 687.4
Deferred consideration - (11.7)
Payments in respect of previous years' 11.0 0.1
acquisitions
Swallow dividend paid to Swallow shareholders - 9.2
Loan stock issued as consideration - (26.1)
Cash and overdrafts of businesses acquired - (26.5)
Cash outflow 11.0 632.4
* The increased provision relates to the onerous contracts for the reversion
of leases from the nursing homes business sold by Swallow Group Limited
prior to acquisition.
10. Disposals
First
Quench
Whitbread Retailing
Beer Company Ltd 2000/1
£m
Intangible fixed assets 7.9 - 7.9
Tangible fixed assets 305.9 - 305.9
Investments 24.1 76.7 100.8
Net working capital, excluding (5.3) - (5.3)
cash and
overdraft
Carrying value of net assets 332.6 76.7 409.3
Gross proceeds 394.2 113.0 507.2
Less costs (8.0) (3.1) (11.1)
Net proceeds 386.2 109.9 496.1
Profit before goodwill write 53.6 33.2 86.8
back
Goodwill written back (71.5) (24.1) (95.6)
Profit/(loss) on disposal (17.9) 9.1 (8.8)
Net sale proceeds 386.2 109.9 496.1
Accrued costs 3.0 1.2 4.2
Cash inflow 389.2 111.1 500.3
The above relates to the disposal of The Whitbread Beer Company on 25 May
2000 and the disposal of Whitbread's 50% interest in First Quench Retailing
Limited on 16 October 2000.
Notes to the accounts
11. Reconciliation of net cash flow to movement in net
debt
2000/1 1999/2000
£m £m
Increase in cash in the period 13.2 30.4
Cash (inflow)/outflow from movement in loan 389.8 (701.9)
capital
Cash inflow from movement in liquid resources (0.8) (0.2)
Cash (inflow)/outflow from movement in short-term
borrowings 28.0 (2.0)
Changes in net debt resulting from cash flows 430.2 (673.7)
Loan capital issued in connection with - (26.1)
acquisitions
Loan capital acquired with acquisitions - (172.7)
Foreign exchange movements (1.1) 4.7
Amortisation of premiums and discounts 0.8 14.9
Movement in net debt in the period 429.9 (852.9)
Opening net debt (1,721.2) (868.3)
Closing net debt (1,291.3) (1,721.2)
12. Shareholders' funds 2001 2000
£m £m
Movements in shareholders' funds
Equity shareholders' funds at 4 March 2000
as published 2,542.1 2,493.2
Adjust for the implementation of UITF abstract (5.8) (6.2)
24
Equity shareholders' funds at 4 March 2000 2,536.3 2,487.0
restated
Profit earned for ordinary shareholders 197.6 180.1
Dividends (153.1) (146.5)
44.5 33.6
Other recognised gains and losses relating to 1.5 3.0
the year
Goodwill on disposal 95.6 8.1
Other reserve movements - (0.3)
Share capital issued 10.4 14.9
Share capital repurchased (42.6) -
Cancellation of preference stock - (10.0)
Equity shareholders' funds at 3 March 2001 2,645.7 2,536.3
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