Whitbread PLC - Interim Resul
Whitbread PLC
13 October 2009
WHITBREAD DELIVERS RESILIENT FIRST HALF RESULTS
Whitbread PLC interim results for the six months ended 27 August 2009
Financial Highlights
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Total revenue up 3.1% to £703.3 million (2008/09: £682.2 million)
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Group like for like sales down 2.7%
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Underlying profit1 before tax of £118.2 million down 2.7% (2008/09: £121.5 million)
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Profit before tax and exceptional items down 10.4% to £110.5 million (2008/09: £123.3 million)
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Underlying diluted EPS 47.33p (2008/09: 49.14p)
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Pre-exceptional diluted EPS 44.17p (2008/09: 49.89p)
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Half year net debt at £606.6 million (versus £623.1 million at 26 February 2009); current facilities of £1.16 billion
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Interim dividend 9.65p (2008/09: 9.65p)
Statutory
-
Profit for the period £73.1 million (2008/09: £39.9 million)
-
Total basic EPS 42.32p (2008/09: 23.31p)
Achievements
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Successful launch of Premier Offers to attract new leisure customers
-
Robust trading in pub restaurants
-
Outstanding results at Costa, sales up 21% and pre-exceptional operating profits up 73%
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Gross margins maintained, cost inflation well managed
-
Cash flow neutrality achieved, with a net cash inflow of £17 million
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Opened over 1,000 rooms and 100 Costa stores
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Secured hotel pipeline of 10,000 rooms
Anthony Habgood, Chairman of Whitbread PLC, said:
"Whitbread is coming through a difficult period relatively well. Total revenues at our hotels and restaurants business were marginally lower while at Costa they were up more than 20%. We remain focused on managing the business tightly during these challenging times and ensuring the Company is well-placed to benefit when conditions improve."
Alan Parker, Chief Executive of Whitbread PLC, said:
"In the face of the toughest trading conditions for years, we have taken strong management actions to outperform the market and reduce costs. Encouraging progress has been made, which has continued into the second half of the year. Whitbread's value for money brands have considerable appeal for today's price conscious customers. We remain confident about the outturn for the year, subject to any marked deterioration in the economic environment."
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For further information contact: |
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Whitbread |
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Christopher Rogers, Group Finance Director |
020 7806 5491 |
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Tabitha Aldrich Smith, Director of Communications |
01582 844439 |
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Tulchan |
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Andrew Grant/David Allchurch |
020 7353 4200 |
¹ Underlying profit
Underlying profit excludes exceptional items and the impact of the volatile pension finance cost/credit as accounted for under IAS19.
For photographs and videos, please visit the corporate media library: www.whitbreadimages.co.uk
A presentation for analysts will be held at The London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. The presentation is at 9.30am and a live audio webcast of the presentation will be available on the investors' section of the website at: www.whitbread.co.uk.
Alternatively, you can listen to the presentation by dialing: +44 (0)20 7162 0125, enter the pass code: 845911 and quote The Whitbread Interim Results Presentation.
This will be available as a replay for 30 days and will be available from approximately 12:00 noon on 13 October. Dial: +44 (0) 20 7031 4064 and enter the pass code: 845911
CHIEF EXECUTIVE'S REVIEW
Whitbread is now established as a focused hotel and restaurant business, with a high quality estate and strong brands offering excellent value for money.
The economic backdrop remains challenging and we have been managing the business tightly during the period. We are delivering on our objectives - to outperform our competition, to achieve cash flow neutrality and to reduce costs. These remain our operational focus.
Group revenue for the first six months of the year grew by 3.1% to £703.3 million. Like for like sales were down 2.7%. At Premier Inn sales increased by 0.4%, with like for like sales declining by 7.5%. Sales in pub restaurants were up 6.5%*, with like for like sales up 1.8%. Costa sales increased by 20.6%, with like for like sales up 2.5%.
Group profit before tax and exceptional items on an underlying basis fell by 2.7% to £118.2 million (2008/09: £121.5 million), with (diluted) earnings per share decreasing by 3.7% to 47.33p.
The interim dividend has been maintained at 9.65p (2008/09: 9.65p) and will be paid on 5 January 2010 to all shareholders on the register at the close of business on 23 October 2009. A scrip alternative will be offered.
Outperforming our competition
Premier Inn, with revpar down 9.2%, has again outperformed the hotel market which was down 11.0%. Premier Offers, which has reinforced its value for money proposition and the breadth of Premier Inn's locations, continue to drive the business forward. We have widened our online booking distribution channels, bringing in new revenue streams and introducing new leisure customers to the brand.
We have developed a strong platform for further growth and have successfully tested dynamic pricing in a series of locations. Dynamic pricing delivers automated, flexible pricing appropriate to each hotel and will be rolled out to the whole estate by the end of the year.
Pub restaurants have continued to deliver a robust performance as customers appreciate our attractive value propositions. We have refreshed menus across all brands with the twin objectives of carefully managing margins and offering price conscious customers tempting meal deals such as rump steak and chips for £5.95 at Beefeater. Standing the test of time, Beefeater is celebrating its 35th anniversary this month. We also believe the quality of our estate is crucial to remaining ahead of the competition. We have continued to invest in our ongoing refurbishment programme, with 65 pub restaurants upgraded during the period.
Costa has grown to be a significant business with nearly 1,000 stores in the UK and over 400 stores overseas. It now delivers 22% of group sales, having grown at an average compound rate of 19% per year over the last five years. Costa has seen increased transaction volumes following our '7 out of 10 coffee lovers prefer Costa' marketing campaign and good value meal bundles.
* Down (3.0)% including the 44 sites exchanged for hotels in September 2008 Achieving cash flow neutrality
We have exceeded our cash flow targets for the half year with net debt at £606.6 million compared to £623.1 million at the start of the year. Average net debt during the first half of the year was £599.7 million. The Group's total facilities currently stand at £1,155 million and are in place until December 2010 when they reduce to £930 million. The facilities reduce to £855 million in December 2011.
As previously announced, we have moderated our rate of expansion in the current year while developing a pipeline and landbank for the future. Capital expenditure including overseas investment for the 2009/10 financial year will be c£165 million, 50% down on the previous year.
Reducing operating costs
As a result of the early action taken at the start of 2008, the Group is achieving its target to take out £25 million of structural costs by the end of 2010/11. This year the incremental saving will be £13 million, bringing the total savings at the end of this year to £20 million per annum.
In addition, we have tightly managed labour costs in our operating units. Labour ratios in hotels and pub restaurants have been broadly held whilst in Costa labour ratios have improved materially. Our work on procurement has also enabled us to maintain gross margins across all business units.
Preparing for the future
We will be well prepared to increase the rate of expansion when the time is right.
Including this year's openings, we have a pipeline of around 10,000 rooms, of which 7,000 are committed and 3,000 are in a landbank. This is equivalent to our total room expansion over the last three years. Our commitment includes recently announced plans to build four new hotels (1,570 rooms) at London airports. The hotels at Heathrow, Gatwick and Stansted will be opened on a phased basis from 2011.
Taybarns, the self-service family dining concept, has completed its first year of trading. The response is encouraging and we are developing plans for further expansion of the brand in the next financial year.
Costa is a well differentiated coffee shop brand and has grown to become the UK market leader as well as operating in 24 countries around the world.
Our balance sheet remains robust and our strong freehold asset base gives us the financial flexibility to grow the business going forward.
Current trading and outlook
Our assumption is that the economic conditions will remain difficult for the foreseeable future.
In the nine weeks since the pre-close statement (13 August 2009), Group momentum seen in the second quarter has continued. Costa has traded strongly and there has been a robust performance in our pub restaurants. There is an improving trend now evident at Premier Inn. In the absence of a marked deterioration in the economic environment, we remain confident about the outturn for the year.
Hotels and Restaurants
Hotels and Restaurants
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H1 2009/10 |
H1 2008/09 |
% |
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Premier Inn revenues
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312.1
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311.0
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0.4
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Restaurants revenues
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236.7
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244.1
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(3.0)
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Total revenues
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548.8
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555.1
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(1.1)
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Premier Inn like for like sales %
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(7.5)
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10.1
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Restaurants like for like sales %
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1.8
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4.5
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Operating profit, pre-exceptional
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127.4
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139.2
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(8.5)
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Operating profit, post exceptional
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127.8
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133.9
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(4.6)
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Hotels and Restaurants has traded with relative resilience in a challenging operating environment. Total revenues decreased by 1.1% to £548.8 million with pre-exceptional operating profit down 8.5% year on year to £127.4 million. Against tough comparatives, like for like sales were down 3.6%. Managing costs and driving sales were the priorities during the first half.
Premier Inn is outperforming the hotel market, demonstrating the flight to value by both business and leisure customers. Total sales at Premier Inn increased by 0.4% to £312.1 million (2008/09: £311.0 million) with like for like sales down by 7.5%. Revpar stabilised during the half and was down by 9.2% on a like for like basis.
Premier Inn continues to attract business customers, with 15% more members joining our Business Account scheme year-on-year. Although overall spend on the Account is down by 4%, as smaller businesses cut back on travel, our top 300 managed accounts have increased their spend by 16%.
Premier Offers was launched in June to expand our share of the leisure market. We have made more than one million rooms available to the end of the calendar year at rates from £29. The offer has enhanced weekend occupancy and has since been extended throughout the week during holiday periods.
We have commenced the roll out of dynamic pricing, with over 100 hotels now live. We are continuing to develop ways of widening our booking distribution, particularly online.
Premier Inn is the UK's largest hotel chain and as such offers the widest choice of locations. We opened seven new hotels in the UK and 1,077 rooms in the first six months of this year. In the second half we will continue our growth bringing the UK total for the year to over 1,600 rooms. Overseas, we opened a hotel in Dubai and we will open our first hotel in Bangalore, India later this month.
Our pub restaurants, Beefeater, Brewers Fayre, Table Table and Taybarns, have delivered a robust performance as we remain focused on providing great value for money, family dining in comfortable surroundings. Revenues have decreased by 3.0% to £236.7 million (2008/09: £244.1 million). However, excluding the 44 sites exchanged for hotels in September 2008, sales increased by 6.5% and we attracted 6.8% more customers. Like for like sales rose by 1.8% with average like for like spend per head on food of £8.83.
We have continued to invest in the quality of our pub restaurant estate. In the last six months we have refurbished 50 Brewers Fayre and 15 Beefeater pub restaurants at an average cost of £125,000 per unit.
We have 375 pub restaurants in total, with 331 on joint sites with a Premier Inn. Our joint sites generally deliver industry leading returns and, together with our 44 stand alone pub restaurants, contribute nearly two thirds of Whitbread Hotels and Restaurants' profit before overheads.
Costa
Costa
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H1 2009/10 |
H1 2008/09 |
% |
Revenues
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155.4
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128.9
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20.6
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Like for like sales %
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2.5
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3.7
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Operating profit, pre-exceptional
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12.6
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7.3
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72.6
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Operating profit, post exceptional
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12.2
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7.3
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67.1
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Costa has achieved an outstanding performance in the first half of the year. Total revenues were up by 20.6% at £155.4 million and pre-exceptional operating profit up 72.6% at £12.6 million (2008/09: £7.3 million). Sales in the UK and overseas franchise units were £92 million, an increase of 27% on 2008/09.
Costa's market leading sales performance is derived from both new openings and transaction volumes which, in the like for like estate, increased by 3.9%. Food capture is 42.1%.
The strength behind the Costa brand is the quality of its coffee, served by trained Baristas in welcoming and comfortable stores. Its '7 out of 10 coffee lovers prefer Costa' marketing campaign continues to drive transaction volumes.
Tight cost control and finding the best locations are also fundamental to Costa's success. In terms of cost controls Costa has been employing its 'right person, right place' initiative to manage labour ratios. Capitalising on the weakness in the high street property market, we have also been able to negotiate better, more flexible rental terms and reduce build costs on new stores by some 10%. These measures, along with the strong sales performance, have contributed to the profit margin in the first half.
We have continued to grow the business in the first half of this year, keeping our portfolio balanced across high streets, retail parks, rail, airports and other travel hubs. Net 93 new stores were opened in the UK, net 72 of which were franchises. Our franchise partnerships continue to enable us to open up new areas of growth for Costa and we have opened two concessions in Hilton Hotels, 11 in Moto service areas and five with Compass Group in hospitals.
Internationally, we have moved into profit and are focusing on bringing key markets such as China, Russia and Central Europe to scale.
FINANCE REVIEW
Revenue
Group revenue in the first half increased by 3.1% year on year to £703.3 million.
Revenue by business segment
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£m |
2009/10 |
2008/09* |
% Change |
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Hotels and Restaurants |
548.8 |
555.1 |
(1.1) |
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Costa |
155.4 |
128.9 |
20.6 |
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Less: inter-segment |
(0.9) |
(2.1) |
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Other |
- |
0.3 |
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Revenue |
703.3 |
682.2 |
3.1 |
* Restated for sales to Costa franchisees which were previously recorded as other as they related to Whitbread Food logistics sales to third parties.
On a like for like basis sales declined 2.7%. New openings in the year drove total sales growth with eight new hotels (1,307 rooms), three pub restaurants and over 100 new Costa stores.
Results
Last year we introduced an underlying profit measure on the face of the consolidated income statement. We have continued with this measure but have refined it so that it now excludes only exceptional items and the impact of the volatile pension finance cost/credit as accounted for under IAS19 (see Interest below).
The Directors believe that this measure provides additional useful information for shareholders on the underlying trends and performance of the Group.
Underlying profit before tax for the half year is £118.2 million, down 2.7% on last year.
Total profit for the half year is £73.1 million, up 83.2% compared to £39.9 million last year.
Exceptional items
Net exceptional loss amounted to £3.3 million for the half year compared to £46.5 million last year which included £43.9 million in respect of the tax arising from the abolition of HBA's. These amounts are analysed in more detail in note 3 but the charge in this half year largely relates to the £25 million cost reduction programme announced in 2008.
Interest
The pre-exceptional interest cost of the first half is £20.3 million compared to £12.1 million and includes a pension finance cost of £7.7 million which was a credit of £1.8 million last year. This charge represents the difference between the expected return on scheme assets and the interest cost of the scheme liabilities set at the beginning of the year.
Excluding the pension finance cost, the underlying net interest cost for the half year was £12.6 million compared to £13.9 million last year. This reduction reflects the lower interest rate that the Group has achieved on floating interest rate debt, offset by the increase in average debt levels from £457.3 million in the first half of last year versus £599.7 million in this half year.
Tax
The underlying tax expense of £36.3 million represents an effective tax rate of 30.7% on the underlying profits, which compares with 30.0% last year. The year on year movement in the rate has been predominantly driven by increased overseas losses which are not tax deductible.
Earnings per share
Diluted underlying earnings per share decreased by 3.7% to 47.3p. An analysis of the impact of exceptional and pension finance costs is as follows:
|
EPS |
2009/10 |
2008/09 |
|
Underlying |
47.3p |
49.1p |
|
Exceptional items |
(1.9)p |
(26.6)p |
|
Pension finance cost/credit |
(3.1)p |
0.8p |
|
Total operations (diluted) |
42.3p |
23.3p |
Further details can be found in note 6.
Dividend
An unchanged interim dividend of 9.65p, will be paid on 5 January 2010 to all shareholders on the register at the close of business on 23 October 2009. A scrip alternative will be offered.
Capital expenditure and Business Acquisitions
Total Group cash capital expenditure on property, plant and equipment during the first half was £78 million with Hotels and Restaurants spend amounting to £68 million and Costa £10 million, the balance relating to Group activity. Capital expenditure is split between acquisition expenditure, which includes the acquisition and development of properties, and maintenance expenditure. In addition £6 million (£10 million in 2008/09) was invested in our international joint ventures.
Financing
In the first half the Group reduced net debt by £16.5 million to £606.6 million as a result of a reduced capital expenditure programme and stronger cash management.
As at 27 August 2009 the Group had committed revolving credit facilities of £1,155 million. The facilities reduce to £930 million in December 2010, £855 million in December 2011 and £455 million in December 2012 with the remaining facility maturing in March 2013.
The policy of the Board is to manage the Group's financial position and capital structure in a manner consistent with maintaining investment grade status. The Group aims to run current operations on a cash flow neutral basis for the remainder of this year.
Pensions
As at 27 August 2009 the IAS 19 pension deficit has increased by £175 million to £408 million. This was driven by the declining discount rate (which is based on AA corporate bonds) where the yield fell 1.2% to 5.4% since the year end, offset by an increase in the market value of the pension fund investments of £133 million.
Responsibility Statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements has been prepared in accordance with IAS 34;
b) The interim management report includes a fair review of the information required by the Financial Statements Disclosure and Transparency Rules (DTR) 4.2.7R - indication of important events during the first six months and their impact on the financial statements and description of principal risks and uncertainties for the remaining six months of the year; and
c) The interim management report includes a fair review of the information required by DTR 4.2.8R - disclosure of related party transactions and changes therein.
By order of the Board
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Alan Parker |
Christopher Rogers |
|
Chief Executive |
Group Finance Director |
Interim consolidated income statement
|
|
Notes |
6 months to 27 August 2009 £m |
6 months to 28 August 2008 £m |
Year to 26 February 2009 £m |
|
|
|
|
|
|
|
Revenue |
2 |
703.3 |
682.2 |
1,334.6 |
|
Cost of sales |
|
(104.8) |
(99.9) |
(193.0) |
|
Gross profit |
|
598.5 |
582.3 |
1,141.6 |
|
|
|
|
|
|
|
Distribution costs |
|
(405.4) |
(392.8) |
(782.3) |
|
Administrative expenses |
|
(65.2) |
(59.6) |
(132.1) |
|
Operating profit |
|
127.9 |
129.9 |
227.2 |
|
|
|
|
|
|
|
Share of loss from joint ventures |
|
(1.3) |
(1.2) |
(2.1) |
|
Share of profit from associate |
|
0.4 |
0.5 |
1.1 |
|
|
|
|
|
|
|
Operating profit of the Group |
2 |
127.0 |
129.2 |
226.2 |
|
|
|
|
|
|
|
Finance costs |
4 |
(21.3) |
(14.6) |
(35.4) |
|
Finance revenue |
4 |
0.2 |
2.5 |
7.8 |
|
Profit before tax |
|
105.9 |
117.1 |
198.6 |
|
|
|
|
|
|
|
Analysed as: |
|
|
|
|
|
Underlying profit before tax |
|
118.2 |
121.5 |
224.4 |
|
IAS 19 Income Statement (charge)/credit for pension finance cost |
3 |
(7.7) |
1.8 |
5.5 |
|
Profit before tax and exceptional items |
|
110.5 |
123.3 |
229.9 |
|
Exceptional distribution costs |
3 |
0.5 |
(5.3) |
(15.5) |
|
Exceptional administrative expenses |
3 |
(4.3) |
(0.9) |
(13.3) |
|
Exceptional finance costs |
3 |
(0.8) |
- |
(2.5) |
|
Profit before tax |
|
105.9 |
117.1 |
198.6 |
|
|
|
|
|
|
|
Underlying tax expense |
|
(36.3) |
(36.4) |
(68.1) |
|
Exceptional tax and tax on non GAAP adjustments |
3 |
3.5 |
(40.8) |
(40.2) |
|
Tax expense |
|
(32.8) |
(77.2) |
(108.3) |
|
|
|
|
|
|
|
Profit for the period |
|
73.1 |
39.9 |
90.3 |
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Parent shareholders |
|
73.6 |
40.6 |
91.8 |
|
Equity minority interest |
|
(0.5) |
(0.7) |
(1.5) |
|
|
|
73.1 |
39.9 |
90.3 |
|
Earnings per share (note 6) |
6 months to 27 August 2009 p |
6 months to 28 August 2008 p |
Year to 26 February 2009 p |
|
Earnings per share |
|
|
|
|
Basic for profit for the period |
42.32 |
23.31 |
52.82 |
|
Diluted for profit for the period |
42.27 |
23.25 |
52.76 |
|
Earnings per share before exceptional items |
|
|
|
|
Basic for profit for the period |
44.22 |
50.00 |
93.10 |
|
Diluted for profit for the period |
44.17 |
49.89 |
92.99 |
|
Underlying earnings per share |
|
|
|
|
Basic for profit for the period |
47.38 |
49.26 |
90.80 |
|
Diluted for profit for the period |
47.33 |
49.14 |
90.69 |
Interim consolidated statement of comprehensive income
|
|
6 months to |
6 months to |
Year to |
|
|
27 August 2009 |
28 August 2008 |
26 February 2009 |
|
|
£m |
£m |
£m |
|
|
|
|
|
|
Profit for the period |
73.1 |
39.9 |
90.3 |
|
|
|
|
|
|
Net gain/(loss) on cash flow hedges |
3.3 |
4.4 |
(29.6) |
|
Deferred tax |
(0.9) |
(1.2) |
8.3 |
|
|
2.4 |
3.2 |
(21.3) |
|
|
|
|
|
|
Actuarial losses on defined benefit pension schemes |
(167.3) |
(171.8) |
(255.5) |
|
Current tax |
- |
14.0 |
14.0 |
|
Deferred tax |
46.8 |
34.1 |
57.5 |
|
|
(120.5) |
(123.7) |
(184.0) |
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
(2.9) |
0.3 |
5.3 |
|
|
|
|
|
|
Other comprehensive loss for the period, net of tax |
(121.0) |
(120.2) |
(200.0) |
|
|
|
|
|
|
Total comprehensive loss for the period, net of tax |
(47.9) |
(80.3) |
(109.7) |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Parent shareholders |
(47.4) |
(79.6) |
(108.2) |
|
Equity minority interest |
(0.5) |
(0.7) |
(1.5) |
|
|
(47.9) |
(80.3) |
(109.7) |
|
|
|
|
|
Interim consolidated balance sheet
|
|
|
27 August |
28 August |
26 February |
|
|
|
2009 |
2008 |
2009 |
|
|
Notes |
£m |
£m |
£m |
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Intangible assets |
|
119.1 |
117.7 |
118.9 |
|
Property, plant and equipment |
|
2,321.0 |
2,150.9 |
2,301.1 |
|
Investment in joint ventures |
|
25.3 |
12.1 |
22.8 |
|
Investment in associate |
|
1.5 |
1.0 |
1.3 |
|
Other financial assets |
|
0.9 |
0.9 |
0.9 |
|
|
|
2,467.8 |
2,282.6 |
2,445.0 |
|
Current assets |
|
|
|
|
|
Inventories |
|
17.1 |
13.7 |
16.5 |
|
Trade and other receivables |
|
85.8 |
76.0 |
67.0 |
|
Derivative financial instruments |
|
- |
5.3 |
- |
|
Cash and cash equivalents |
7 |
28.6 |
116.2 |
44.5 |
|
|
|
131.5 |
211.2 |
128.0 |
|
|
|
|
|
|
|
Assets classified as held for sale |
|
- |
69.9 |
- |
|
|
|
|
|
|
|
TOTAL ASSETS |
|
2,599.3 |
2,563.7 |
2,573.0 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Financial liabilities |
|
37.1 |
120.3 |
1.9 |
|
Provisions |
|
14.9 |
24.8 |
19.3 |
|
Derivative financial instruments |
|
17.5 |
- |
11.8 |
|
Income tax liabilities |
|
30.6 |
28.2 |
16.4 |
|
Trade and other payables |
|
254.6 |
240.2 |
243.6 |
|
|
|
354.7 |
413.5 |
293.0 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Financial liabilities |
7 |
598.1 |
577.4 |
665.7 |
|
Provisions |
|
21.6 |
23.7 |
21.6 |
|
Derivative financial instruments |
|
18.5 |
10.3 |
27.6 |
|
Deferred income tax liabilities |
|
146.8 |
210.7 |
195.7 |
|
Pension liability |
8 |
408.0 |
153.0 |
233.0 |
|
Trade and other payables |
|
8.3 |
5.9 |
7.9 |
|
|
|
1,201.3 |
981.0 |
1,151.5 |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
1,556.0 |
1,394.5 |
1,444.5 |
|
|
|
|
|
|
|
NET ASSETS |
|
1,043.3 |
1,169.2 |
1,128.5 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Share capital |
|
145.8 |
145.1 |
145.3 |
|
Share premium |
|
46.0 |
44.9 |
46.1 |
|
Capital redemption reserve |
|
12.3 |
12.3 |
12.3 |
|
Retained earnings |
|
2,953.1 |
3,054.5 |
3,038.8 |
|
Currency translation reserve |
|
2.4 |
0.3 |
5.3 |
|
Other reserves |
|
(2,116.7) |
(2,087.9) |
(2,120.0) |
|
Equity attributable to equity holders of the parent |
|
1,042.9 |
1,169.2 |
1,127.8 |
|
|
|
|
|
|
|
Equity minority interest |
|
0.4 |
- |
0.7 |
|
|
|
|
|
|
|
TOTAL EQUITY |
|
1,043.3 |
1,169.2 |
1,128.5 |
|
|
|
|
|
|
Interim consolidated statement of changes in equity
6 months to 27 August 2009
|
|
Share capital £m |
Share premium £m |
Capital redemption reserve £m |
Retained earnings £m |
Currency translation £m |
Other reserves £m |
Total £m |
Minority interest £m |
Total equity £m |
|
At 26 February 2009 |
145.3 |
46.1 |
12.3 |
3,038.8 |
5.3 |
(2,120.0) |
1,127.8 |
0.7 |
1,128.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
73.6 |
- |
- |
73.6 |
(0.5) |
73.1 |
|
Other comprehensive income |
- |
- |
- |
(121.4) |
(2.9) |
3.3 |
(121.0) |
- |
(121.0) |
|
Total comprehensive income |
- |
- |
- |
(47.8) |
(2.9) |
3.3 |
(47.4) |
(0.5) |
(47.9) |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
- |
0.4 |
- |
- |
- |
- |
0.4 |
- |
0.4 |
|
Scrip dividend |
0.5 |
(0.5) |
- |
- |
- |
- |
- |
- |
- |
|
Accrued share-based payments |
- |
- |
- |
2.9 |
- |
- |
2.9 |
- |
2.9 |
|
Equity dividends |
- |
- |
- |
(40.8) |
- |
- |
(40.8) |
- |
(40.8) |
|
Foreign currency |
- |
- |
- |
- |
- |
- |
- |
0.2 |
0.2 |
|
At 27 August 2009 |
145.8 |
46.0 |
12.3 |
2,953.1 |
2.4 |
(2,116.7) |
1,042.9 |
0.4 |
1,043.3 |
6 months to 28 August 2008
|
|
Share capital £m |
Share premium £m |
Capital redemption reserve £m |
Retained earnings £m |
Currency translation £m |
Other reserves £m |
Total £m |
Minority interest £m |
Total equity £m |
|
At 28 February 2008 |
148.8 |
43.8 |
8.5 |
3,261.2 |
- |
(2,145.1) |
1,317.2 |
- |
1,317.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
40.6 |
- |
- |
40.6 |
(0.7) |
39.9 |
|
Other comprehensive income |
- |
- |
- |
(124.9) |
0.3 |
4.4 |
(120.2) |
- |
(120.2) |
|
Total comprehensive income |
- |
- |
- |
(84.3) |
0.3 |
4.4 |
(79.6) |
(0.7) |
(80.3) |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
0.1 |
1.1 |
- |
- |
- |
- |
1.2 |
- |
1.2 |
|
Ordinary shares cancelled |
(3.8) |
- |
3.8 |
(73.9) |
- |
73.9 |
- |
- |
- |
|
Purchase of own shares |
- |
- |
- |
- |
- |
(20.0) |
(20.0) |
- |
(20.0) |
|
Preference shares cancelled |
- |
- |
- |
(4.5) |
- |
- |
(4.5) |
- |
(4.5) |
|
Cost of ESOT shares purchased |
- |
- |
- |
- |
- |
(1.1) |
(1.1) |
- |
(1.1) |
|
Accrued share-based payments |
- |
- |
- |
3.1 |
- |
- |
3.1 |
- |
3.1 |
|
Additions |
- |
- |
- |
- |
- |
- |
- |
0.7 |
0.7 |
|
Equity dividends |
- |
- |
- |
(47.1) |
- |
- |
(47.1) |
- |
(47.1) |
|
At 28 August 2008 |
145.1 |
44.9 |
12.3 |
3,054.5 |
0.3 |
(2,087.9) |
1,169.2 |
- |
1,169.2 |
Year to 26 February 2009
|
|
Share capital £m |
Share premium £m |
Capital redemption reserve £m |
Retained earnings £m |
Currency translation £m |
Other reserves £m |
Total £m |
Minority interest £m |
Total equity £m |
|
At 28 February 2008 |
148.8 |
43.8 |
8.5 |
3,261.2 |
- |
(2,145.1) |
1,317.2 |
- |
1,317.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
91.8 |
- |
- |
91.8 |
(1.5) |
90.3 |
|
Other comprehensive income |
- |
- |
- |
(175.7) |
5.3 |
(29.6) |
(200.0) |
- |
(200.0) |
|
Total comprehensive income |
- |
- |
- |
(83.9) |
5.3 |
(29.6) |
(108.2) |
(1.5) |
(109.7) |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
0.3 |
2.3 |
- |
- |
- |
- |
2.6 |
- |
2.6 |
|
Ordinary shares cancelled |
(3.8) |
- |
3.8 |
(73.9) |
- |
73.9 |
- |
- |
- |
|
Purchase of own shares |
- |
- |
- |
- |
- |
(20.0) |
(20.0) |
- |
(20.0) |
|
Preference shares cancelled |
- |
- |
- |
(4.5) |
- |
- |
(4.5) |
- |
(4.5) |
|
Cost of ESOT shares purchased |
- |
- |
- |
- |
- |
(1.2) |
(1.2) |
- |
(1.2) |
|
Loss on ESOT shares issued to participants |
- |
- |
- |
(2.0) |
- |
2.0 |
- |
- |
- |
|
Accrued share-based payments |
- |
- |
- |
6.0 |
- |
- |
6.0 |
- |
6.0 |
|
Additions |
- |
- |
- |
- |
- |
- |
- |
2.2 |
2.2 |
|
Equity dividends |
- |
- |
- |
(64.1) |
- |
- |
(64.1) |
- |
(64.1) |
|
At 26 February 2009 |
145.3 |
46.1 |
12.3 |
3,038.8 |
5.3 |
(2,120.0) |
1,127.8 |
0.7 |
1,128.5 |
Interim consolidated cash flow statement
|
|
|
6 months to |
6 months to |
Year to |
|
|
|
27 August 2009 |
28 August 2008 |
26 February 2009 |
|
|
Notes |
£m |
£m |
£m |
|
Profit for the period |
|
73.1 |
39.9 |
90.3 |
|
Adjustments for: |
|
|
|
|
|
Taxation charged on total operations |
|
32.8 |
77.2 |
108.3 |
|
Net finance cost |
4 |
21.1 |
12.1 |
27.6 |
|
Total loss from joint ventures |
|
1.3 |
1.2 |
2.1 |
|
Total income from associate |
|
(0.4) |
(0.5) |
(1.1) |
|
(Gain)/loss on disposal of property, plant and equipment, and property reversions |
(0.5) |
0.2 |
(6.9) |
|
|
Depreciation and amortisation |
|
47.5 |
45.0 |
96.3 |
|
Impairment of property |
|
- |
- |
16.7 |
|
Reorganisation provision |
|
0.8 |
- |
2.8 |
|
Other non-cash items |
|
4.3 |
3.4 |
12.1 |
|
Cash generated from operations before working capital changes |
|
180.0 |
178.5 |
348.2 |
|
|
|
|
|
|
|
(Increase) in inventories |
|
(0.6) |
(0.5) |
(3.3) |
|
(Increase) in trade and other receivables |
|
(17.3) |
(10.2) |
(0.6) |
|
Increase in trade and other payables |
|
18.6 |
11.0 |
10.6 |
|
Payments against provisions |
|
(5.8) |
(9.7) |
(20.2) |
|
Payment to pension fund |
|
- |
(50.0) |
(50.0) |
|
Cash generated from operations |
|
174.9 |
119.1 |
284.7 |
|
|
|
|
|
|
|
Interest paid |
|
(13.2) |
(15.9) |
(35.8) |
|
Taxes paid |
|
(21.6) |
(11.2) |
(37.0) |
|
Net cash flows from operating activities |
|
140.1 |
92.0 |
211.9 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(76.6) |
(148.5) |
(275.7) |
|
Purchase of intangible assets |
|
(1.6) |
(0.4) |
(0.6) |
|
Proceeds/(costs) from disposal of property, plant and equipment |
|
1.5 |
0.3 |
(1.0) |
|
Acquisition of subsidiary, net of cash acquired |
|
- |
(19.4) |
(30.4) |
|
Capital contributions to joint ventures |
|
(6.3) |
(9.7) |
(17.1) |
|
Dividends from associate |
|
0.1 |
0.3 |
0.6 |
|
Interest received |
|
0.1 |
0.8 |
2.3 |
|
Net cash flows from investing activities |
|
(82.8) |
(176.6) |
(321.9) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issue of share capital |
|
0.4 |
1.2 |
2.6 |
|
Cost of purchasing own shares |
|
- |
(25.6) |
(25.7) |
|
Increase/(decrease) in short-term borrowings |
|
33.7 |
20.5 |
(9.2) |
|
Issue costs of long-term borrowings |
|
- |
(2.3) |
(2.3) |
|
(Repayment)/increase in long-term borrowings |
|
(67.6) |
143.2 |
231.1 |
|
Dividends paid |
5 |
(40.8) |
(47.1) |
(64.1) |
|
Net cash flows (used in)/from financing activities |
|
(74.3) |
89.9 |
132.4 |
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(17.0) |
5.3 |
22.4 |
|
Opening cash and cash equivalents |
|
42.7 |
20.3 |
20.3 |
|
Closing cash and cash equivalents |
7 |
25.7 |
25.6 |
42.7 |
|
|
|
|
|
|
|
Reconciliation to cash and cash equivalents on the balance sheet: |
|
|
|
|
|
Cash and cash equivalents shown above |
|
25.7 |
25.6 |
42.7 |
|
Add back overdrafts |
|
2.9 |
90.6 |
1.8 |
|
Cash and cash equivalents shown within current assets on the balance sheet |
28.6 |
116.2 |
44.5 |
|
Notes to the accounts
1. Basis of accounting and preparation
The interim condensed consolidated financial statements were authorised for issue in accordance with a resolution of the Board of Directors on 12 October 2009.
The interim consolidated financial statements are prepared in accordance with UK listing rules and with IAS 34 'Interim Financial Reporting'. The interim financial report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.
The financial information for the year ended 26 February 2009 is extracted, with the exception of the restatements made as a result of IAS 1 Revised and IFRS 8 noted below, from the statutory accounts of the Group for that year and does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. These published accounts were prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted for use in the European Union, and 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 financial statements for the six months ended 27 August 2009 and the comparatives to 28 August 2008 are unaudited but have been reviewed by the auditors; a copy of their review report is included at the end of this report.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 26 February 2009, except for the adoption of new Standards and Interpretations as of 27 February 2009, of which the significant standards for the Group are noted below:
IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
The standard has been amended to clarify the definition of vesting conditions and to prescribe the accounting of an award that is effectively cancelled because a non-vesting condition is not satisfied. The adoption of this amendment did not have any impact on the financial position or performance of the Group.
IFRS 7 Financial Instruments: Disclosures
The amended standard requires additional disclosure about fair value measurement and liquidity risk. These disclosures will be incorporated into the consolidated financial statements for the year ended 4 March 2010.
IFRS 8 Operating Segments
This standard sets out requirements for disclosure of information about an entity's operating segments, its products and services, the geographical areas in which it operates, and its major customers. The Group determined that the operating segments were the same as the business segments previously identified under IAS 14 Segment Reporting. Additional disclosures about each of these segments are shown in note 2, including revised comparative information.
IAS 1 Revised Presentation of Financial Statements
The revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with non-owner changes in equity presented as a single line (minority interest). In addition, the standard introduces the statement of comprehensive income: it presents all items of recognised income and expense, either in one single statement, or in two linked statements. The Group has elected to present two statements.
IAS 23 Borrowing Costs (Revised)
The standard has been revised to require capitalisation of borrowing costs when such costs relate to a qualifying asset. The revision to this standard has had no effect on the financial position or performance of the Group as borrowing costs have already been capitalised under the previously allowed alternative treatment.
IFRIC 13 Customer Loyalty Programmes
This interpretation requires customer loyalty award points to be accounted for as a separate component of the sales transaction in which they are granted. Where award credits are collected on behalf of a third party, they should not be disclosed as revenue. The adoption of this amendment did not have any impact on the financial position or performance of the Group.
2. Segmental analysis
For management purposes, the Group is organised into two strategic business units (Hotels & Restaurants and Costa) based upon their different products and services:
-
Hotels & Restaurants provide services in relation to food and accommodation
-
Costa generates income from the operation of its branded coffee shops directly via owned stores and via franchise arrangements.
No operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its strategic business units separately for the purpose of making decisions about allocating resources and assessing performance. Segment performance is measured based on pre-exceptional profit before tax and interest. Included within the unallocated and elimination columns in the tables below are functions managed by a central division (including the costs of running the public company). The unallocated assets and liabilities are cash and debt balances (held and controlled by the central treasury function), taxation, pensions, certain property, plant and equipment and central working capital balances. Sales to Costa franchise partners were previously categorised as unallocated but are now included within Costa.
Inter-segment revenue is from Costa to the Hotels & Restaurants segment and is eliminated on consolidation. Transactions were entered into on an arm's length basis in a manner similar to transactions with third parties.
All activities are continuing.
The following tables present revenue and profit information and certain asset and liability information regarding business segments for the six months to 27 August 2009, 28 August 2008 and the year ended 26 February 2009.
|
|
|
|
Unallocated |
|
|
|
Hotels & |
|
and |
Total |
|
|
Restaurants |
Costa |
elimination |
operations |
|
6 months to 27 August 2009 |
£m |
£m |
£m |
£m |
|
Revenue |
|
|
|
|
|
Revenue from external customers |
548.8 |
154.5 |
- |
703.3 |
|
Inter-segment revenue |
- |
0.9 |
(0.9) |
- |
|
Total revenue |
548.8 |
155.4 |
(0.9) |
703.3 |
|
|
|
|
|
|
|
Operating profit before exceptional items |
127.4 |
12.6 |
(9.2) |
130.8 |
|
Exceptional items: |
|
|
|
|
|
Net gain on disposal of property, plant and equipment and property reversions |
0.4 |
(0.4) |
0.5 |
0.5 |
|
Reorganisation |
- |
- |
(4.3) |
(4.3) |
|
Operating profit of the Group |
127.8 |
12.2 |
(13.0) |
127.0 |
|
Net finance costs |
|
|
|
(21.1) |
|
Profit before tax |
|
|
|
105.9 |
|
Tax expense |
|
|
|
(32.8) |
|
Profit for the period |
|
|
|
73.1 |
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
|
Segment assets |
2,382.6 |
116.4 |
- |
2,499.0 |
|
Investment in joint ventures |
23.3 |
2.0 |
- |
25.3 |
|
Investment in associate |
1.5 |
- |
- |
1.5 |
|
Unallocated assets |
- |
- |
73.5 |
73.5 |
|
Total assets |
2,407.4 |
118.4 |
73.5 |
2,599.3 |
|
|
|
|
|
|
|
Segment liabilities |
(160.8) |
(32.6) |
- |
(193.4) |
|
Unallocated liabilities |
- |
- |
(1,362.6) |
(1,362.6) |
|
Total liabilities |
(160.8) |
(32.6) |
(1,362.6) |
(1,556.0) |
|
|
|
|
|
|
|
Net assets |
2,246.6 |
85.8 |
(1,289.1) |
1,043.3 |
|
|
|
|
Unallocated |
|
|
|
Hotels & |
|
and |
Total |
|
|
Restaurants |
Costa |
elimination |
operations |
|
6 months to 28 August 2008 (restated *) |
£m |
£m |
£m |
£m |
|
Revenue |
|
|
|
|
|
Revenue from external customers |
555.1 |
126.8 |
0.3 |
682.2 |
|
Inter-segment revenue |
- |
2.1 |
(2.1) |
- |
|
Total revenue |
555.1 |
128.9 |
(1.8) |
682.2 |
|
|
|
|
|
|
|
Operating profit before exceptional items |
139.2 |
7.3 |
(11.1) |
135.4 |
|
Exceptional items: |
|
|
|
|
|
Premier Inn rebranding |
(5.1) |
- |
- |
(5.1) |
|
Net loss on disposal of property, plant and equipment |
(0.2) |
- |
- |
(0.2) |
|
Reorganisation |
- |
- |
(0.9) |
(0.9) |
|
Operating profit of the Group |
133.9 |
7.3 |
(12.0) |
129.2 |
|
Net finance costs |
|
|
|
(12.1) |
|
Profit before tax |
|
|
|
117.1 |
|
Tax expense |
|
|
|
(77.2) |
|
Profit for the period |
|
|
|
39.9 |
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
|
Segment assets |
2,245.7 |
111.1 |
- |
2,356.8 |
|
Investment in joint ventures |
10.5 |
1.6 |
- |
12.1 |
|
Investment in associate |
1.0 |
- |
- |
1.0 |
|
Unallocated assets |
- |
- |
193.8 |
193.8 |
|
Total assets |
2,257.2 |
112.7 |
193.8 |
2,563.7 |
|
|
|
|
|
|
|
Segment liabilities |
(119.7) |
(22.8) |
- |
(142.5) |
|
Unallocated liabilities |
- |
- |
(1,252.0) |
(1,252.0) |
|
Total liabilities |
(119.7) |
(22.8) |
(1,252.0) |
(1,394.5) |
|
|
|
|
|
|
|
Net assets |
2,137.5 |
89.9 |
(1,058.2) |
1,169.2 |
* Sales of £5.7m to Costa franchise partners were previously categorised as unallocated but are now included within Costa sales.
|
|
|
|
Unallocated |
|
|
|
Hotels & |
|
and |
Total |
|
|
Restaurants |
Costa |
elimination |
operations |
|
Year to 26 February 2009 (restated *) |
£m |
£m |
£m |
£m |
|
Revenue |
|
|
|
|
|
Revenue from external customers |
1,061.6 |
272.7 |
0.3 |
1,334.6 |
|
Inter-segment revenue |
- |
3.6 |
(3.6) |
- |
|
Total revenue |
1,061.6 |
276.3 |
(3.3) |
1,334.6 |
|
|
|
|
|
|
|
Operating profit before exceptional items |
254.9 |
22.7 |
(22.6) |
255.0 |
|
Exceptional items: |
|
|
|
|
|
Net gain on disposal of property, plant and equipment and property reversions |
6.3 |
0.2 |
0.4 |
6.9 |
|
Premier Inn rebranding |
(5.7) |
- |
- |
(5.7) |
|
Reorganisation |
- |
- |
(13.3) |
(13.3) |
|
Impairment |
(15.3) |
(1.2) |
(1.3) |
(17.8) |
|
Impairment reversal |
0.2 |
0.9 |
- |
1.1 |
|
Operating profit of the Group |
240.4 |
22.6 |
(36.8) |
226.2 |
|
Net finance costs |
|
|
|
(27.6) |
|
Profit before tax |
|
|
|
198.6 |
|
Tax expense |
|
|
|
(108.3) |
|
Profit for the year |
|
|
|
90.3 |
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
|
Segment assets |
2,305.5 |
113.1 |
- |
2,418.6 |
|
Investment in joint ventures |
20.9 |
1.9 |
- |
22.8 |
|
Investment in associate |
1.3 |
- |
- |
1.3 |
|
Unallocated assets |
- |
- |
130.3 |
130.3 |
|
Total assets |
2,327.7 |
115.0 |
130.3 |
2,573.0 |
|
|
|
|
|
|
|
Segment liabilities |
(110.3) |
(31.5) |
- |
(141.8) |
|
Unallocated liabilities |
- |
- |
(1,302.7) |
(1,302.7) |
|
Total liabilities |
(110.3) |
(31.5) |
(1,302.7) |
(1,444.5) |
|
|
|
|
|
|
|
Net assets |
2,217.4 |
83.5 |
(1,172.4) |
1,128.5 |
* Sales of £12.5m to Costa franchise partners were previously categorised as unallocated but are now included within Costa sales.
3. Exceptional items and other non GAAP adjustments
|
|
6 months to 27 August 2009 £m |
6 months to 28 August 2008 £m |
Year to 26 February 2009 £m |
|
Exceptional items before tax and interest: |
|
|
|
|
Distribution costs |
|
|
|
|
Net profit/(loss) on disposal of property, plant and equipment, and property reversions |
0.5 |
(0.2) |
6.9 |
|
Premier Inn rebranding (a) |
- |
(5.1) |
(5.7) |
|
Impairment of property, plant and equipment Impairment reversal |
- - |
- - |
(17.8) 1.1 |
|
Administrative expenses |
|
|
|
|
Reorganisation costs (b) |
(4.3) |
(0.9) |
(13.3) |
|
|
(3.8) |
(6.2) |
(28.8) |
|
Exceptional interest: |
|
|
|
|
Interest on exceptional tax (c) |
(0.3) |
- |
(1.7) |
|
Movement in discount on provisions |
(0.5) |
- |
(0.8) |
|
|
(0.8) |
- |
(2.5) |
|
Other non GAAP adjustments made to underlying profit before tax to arrive at reported profit before tax: |
|
|
|
|
IAS 19 Income Statement (charge)/credit for pension finance (cost)/revenue |
(7.7) |
1.8 |
5.5 |
|
|
|
|
|
|
Items included in reported profit before tax but excluded from underlying profit before tax |
(12.3) |
(4.4) |
(25.8) |
Prior year exceptional costs of £5.3m have been reclassified from administrative expenses to distribution costs to ensure consistent and appropriate disclosure.
|
|
6 months to 27 August 2009 £m |
6 months to 28 August 2008 £m |
Year to 26 February 2009 £m |
|
Tax adjustments included in reported profit after tax, but excluded from underlying profit after tax: |
|
|
|
|
Tax on continuing exceptional items |
1.3 |
3.6 |
5.4 |
|
Tax on other non GAAP adjustments |
2.2 |
(0.5) |
(1.5) |
|
Deferred tax arising on abolition of Industrial Buildings Allowances (d) |
- |
(43.9) |
(44.1) |
|
|
3.5 |
(40.8) |
(40.2) |
|
|
|
|
|
(a) Premier Inn rebranding costs in the prior year relate to asset write off and brand relaunch costs.
(b) Additional costs have been incurred with regard to the reorganisation announced in 2007/8.
(c) The associated interest arising on late payment of an item claimed in a previous year, which had been disputed, is included in exceptional interest charges.
(d) The deferred tax charge that arose in the prior year was as a result of the enactment by the UK government in July 2008 of the abolition of Industrial Buildings Allowances for hotel buildings.
|
4. Finance (costs)/revenue |
|
|
|
|
|
6 months to |
6 months to |
Year to |
|
|
27 August |
28 August |
26 February |
|
|
2009 |
2008 |
2009 |
|
|
£m |
£m |
£m |
|
Finance costs |
|
|
|
|
Bank loans and overdrafts |
(13.2) |
(15.7) |
(35.3) |
|
Other loans |
(0.1) |
(0.3) |
(0.2) |
|
Interest capitalised |
0.5 |
1.5 |
3.0 |
|
|
(12.8) |
(14.5) |
(32.5) |
|
Net pension finance cost |
(7.7) |
- |
- |
|
Impact of ineffective portion of cash flow hedges |
- |
(0.1) |
(0.4) |
|
Finance costs before exceptional items |
(20.5) |
(14.6) |
(32.9) |
|
Exceptional finance costs (note 3) |
(0.3) |
- |
(1.7) |
|
Movement in discount on provisions (note 3) |
(0.5) |
- |
(0.8) |
|
Total finance costs |
(21.3) |
(14.6) |
(35.4) |
|
|
|
|
|
|
Finance revenue |
|
|
|
|
Bank interest receivable |
- |
0.2 |
0.4 |
|
Other interest receivable |
- |
- |
1.6 |
|
Income from investments |
0.1 |
0.5 |
0.3 |
|
|
0.1 |
0.7 |
2.3 |
|
Net pension finance revenue |
- |
1.8 |
5.5 |
|
Impact of ineffective portion of cash flow hedges |
0.1 |
- |
- |
|
Total finance revenue |
0.2 |
2.5 |
7.8 |
|
|
|
|
|
5. Dividends paid
|
|
6 months to |
6 months to |
Year to |
|
|
27 August |
28 August |
26 February |
|
|
2009 |
2008 |
2009 |
|
|
£m |
£m |
£m |
|
Paid in the period: |
|
|
|
|
|
|
|
|
|
Equity dividends on ordinary shares: |
|
|
|
|
Final dividend for 2008/9 - 26.90 pence (2007/8 - 26.90 pence) |
40.7 |
47.1 |
47.1 |
|
Interim dividend for 2008/9 - 9.65 pence (2007/8 - 9.10 pence) |
- |
- |
16.7 |
|
|
40.7 |
47.1 |
63.8 |
|
Dividends on other shares: |
|
|
|
|
B share dividend |
0.1 |
- |
0.2 |
|
C share dividend |
- |
- |
0.1 |
|
|
0.1 |
- |
0.3 |
|
|
|
|
|
|
Total dividends paid |
40.8 |
47.1 |
64.1 |
Shareholders were offered a scrip alternative to the cash final dividend of 26.90p. Scrip elections were received on 22.6m shares, resulting in the issue of new shares with a nominal value of £0.5m.
6. Earnings per share
The basic earnings per share figures are calculated by dividing the net profit for the year attributable to ordinary shareholders, therefore before minority interests, by the weighted average number of ordinary shares in issue during the year after deducting treasury shares and shares held by an independently managed employee share ownership trust (ESOT).
The diluted earnings per share figures allow for the dilutive effect of the conversion into ordinary shares of the weighted average number of options outstanding during the period.
The numbers of shares used for the earnings per share calculations are as follows:
|
|
6 months to 27 August 2009 million |
6 months to 28 August 2008 million |
Year to 26 February 2009 million |
|
Basic weighted average number of ordinary shares |
173.9 |
174.2 |
173.8 |
|
Effect of dilution - share options |
0.2 |
0.4 |
0.2 |
|
Diluted weighted average number of ordinary shares |
174.1 |
174.6 |
174.0 |
The profits used for the earnings per share calculations (all activities are continuing) are as follows:
|
|
6 months to 27 August 2009 £m |
6 months to 28 August 2008 £m |
Year to 26 February 2009 £m |
|
Profit for the period attributable to parent shareholders |
73.6 |
40.6 |
91.8 |
|
Exceptional items - gross |
4.6 |
6.2 |
31.3 |
|
Exceptional items - taxation |
(1.3) |
40.3 |
38.7 |
|
Profit for the period before exceptional items attributable to parent shareholders |
76.9 |
87.1 |
161.8 |
|
Non GAAP adjustments - gross |
7.7 |
(1.8) |
(5.5) |
|
Non GAAP adjustments - taxation |
(2.2) |
0.5 |
1.5 |
|
Underlying profit for the period attributable to parent shareholders |
82.4 |
85.8 |
157.8 |
|
|
6 months to 27 August 2009 p |
6 months to 28 August 2008 p |
Year to 26 February 2009 p |
|
Basic for profit for the period |
42.32 |
23.31 |
52.82 |
|
Exceptional items - gross |
2.65 |
3.56 |
18.01 |
|
Exceptional items - taxation |
(0.75) |
23.13 |
22.27 |
|
Basic for profit before exceptional items for the period |
44.22 |
50.00 |
93.10 |
|
Non GAAP adjustments - gross |
4.43 |
(1.03) |
(3.16) |
|
Non GAAP adjustments - taxation |
(1.27) |
0.29 |
0.86 |
|
Basic for underlying profit for the period |
47.38 |
49.26 |
90.80 |
|
|
|
|
|
|
Diluted for profit for the period |
42.27 |
23.25 |
52.76 |
|
Diluted for profit before exceptional items for the period |
44.17 |
49.89 |
92.99 |
|
Diluted for underlying profit for the period |
47.33 |
49.14 |
90.69 |
7. Movements in cash and net debt
|
|
|
|
Amortisation |
|
|
|
26 February |
|
of premiums |
27 August |
|
|
2009 |
Cash flow |
and discounts |
2009 |
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
Cash at bank and in hand |
44.5 |
|
|
28.6 |
|
Overdrafts |
(1.8) |
|
|
(36.6) |
|
|
42.7 |
(50.7) |
- |
(8.0) |
|
Less short-term bank borrowings |
- |
33.7 |
- |
33.7 |
|
Cash and cash equivalents |
42.7 |
(17.0) |
- |
25.7 |
|
|
|
|
|
|
|
Short-term bank borrowings |
- |
(33.7) |
- |
(33.7) |
|
|
|
|
|
|
|
Loan capital under one year |
(0.1) |
|
|
(0.5) |
|
Loan capital over one year |
(665.7) |
|
|
(598.1) |
|
Total loan capital |
(665.8) |
67.6 |
(0.4) |
(598.6) |
|
Net debt |
(623.1) |
16.9 |
(0.4) |
(606.6) |
8. Pension liability
The pension liability in the period has increased from £233.0m to £408.0m. The main movements in the deficit are as follows:
|
|
£m |
£m |
|
Pension liability at 26 February 2009 |
|
233.0 |
|
Actuarial gains on scheme assets |
(133.2) |
|
|
Actuarial losses on scheme liabilities |
300.5 |
|
|
Net actuarial losses |
|
167.3 |
|
Net interest cost |
|
7.7 |
|
Pension liability at 27 August 2009 |
|
408.0 |
The actuarial losses on scheme liabilities are primarily due to the reduction in the discount factor from 6.6% to 5.4%. All other assumptions are unchanged.
9. Related party disclosure
The Group's principal subsidiaries, joint ventures and associate are listed in the following table:
|
|
|
|
% equity interest |
||
|
|
|
|
27 August |
28 August |
26 February |
|
|
Principal activity |
Country of incorporation |
2009 |
2008 |
2009 |
|
Principal subsidiaries |
|
|
|
||
|
Whitbread Group PLC |
Hotels and restaurants |
England |
100.0 |
100.0 |
100.0 |
|
Premier Inn Hotels Limited |
Hotels |
England |
100.0 |
100.0 |
100.0 |
|
Whitbread Restaurants Limited |
Restaurants |
England |
100.0 |
100.0 |
100.0 |
|
Premier Inn Limited |
Hotels |
England |
100.0 |
100.0 |
100.0 |
|
Costa Limited |
Roasters, wholesalers and retailers of coffee |
England |
100.0 |
100.0 |
100.0 |
|
Yueda Costa (Shanghai) Food & Beverage Management Company Limited |
Coffee shops |
China |
51.0 |
51.0 |
51.0 |
|
|
|
|
|
|
|
|
Principal joint ventures |
|
|
|
||
|
Premier Inn Hotels LLC |
Hotels |
United Arab Emirates |
49.0 |
49.0 |
49.0 |
|
Premier Inn India Private Limited |
Hotels |
India |
49.9 |
49.9 |
49.9 |
|
Rosworth Investments Limited |
Coffee shops |
Cyprus |
50.0 |
50.0 |
50.0 |
|
Hualian Costa (Beijing) Food & Beverage Management Company Limited |
Coffee shops |
China |
50.0 |
50.0 |
50.0 |
|
|
|
|
|
|
|
|
Principal associate |
|
|
|
||
|
Morrison Street Hotel Limited |
Hotels |
Scotland |
40.0 |
40.0 |
40.0 |
Shares in Whitbread Group PLC are held directly by Whitbread PLC. Shares in the other subsidiaries are held by Whitbread Group PLC. All principal subsidiary undertakings have the same year-end as Whitbread PLC, with the exception of Yueda Costa (Shanghai) Food & Beverage Management Company Limited which has a year-end of 31 December as required by Chinese legislation. All the above companies have been included in the Group consolidation. The companies listed above are those that materially affect the amount of profit and the assets of the Group.
Transactions and balances with related parties are shown in the table below.
|
|
Sales to related party £m |
Amounts owed by related party £m |
Amounts owed to related party £m |
|
Joint ventures |
|
|
|
|
6 months to 27 August 2009 |
0.2 |
5.6 |
- |
|
6 months to 28 August 2008 |
- |
- |
- |
|
Year to 26 February 2009 |
1.3 |
2.5 |
- |
|
|
|
|
|
|
Associate |
|
|
|
|
There have been no sales to the associate during the above reporting periods, nor were any balances outstanding at the end of those periods. |
|||
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made at normal market prices. Outstanding balances are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables. For the six months ended 27 August 2009, the Group has not raised any provision for doubtful debts relating to amounts owed by related parties (2008: £ nil). An assessment of bad debts is undertaken each financial year through examining the financial position of the related party and the market in which it operates.
10. Capital expenditure commitments
Capital expenditure commitments for which no provision has been made are set out in the table below:
|
|
27 August |
28 August |
26 February |
|
|
2009 |
2008 |
2009 |
|
|
£m |
£m |
£m |
|
Property, plant and equipment |
40.1 |
55.9 |
54.2 |
|
Intangible assets |
- |
- |
- |
11. Events after the balance sheet date
An interim dividend of 9.65p per share (2008: 9.65p) amounting to a dividend of £16.8m (2008: £16.7m) was declared by the Directors. A scrip alternative will be offered. These financial statements do not reflect this dividend payable.
12. Risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group are detailed on pages 4 and 5 of the Directors' Report and Accounts for the year ended 26 February 2009. An additional risk/uncertainty since the year end is the swine flu pandemic. If the incidence of swine flu should significantly increase in the UK, it could mean that a higher number of the Company's employees and customers are affected. A specific working group has been set up to direct the Company's response to the pandemic with a clear plan to mitigate its effects where practicable. This includes contingency plans with authority levels for operational decisions, employee policies and communication strategies. Certain financial risks are also detailed in note 27 to the financial statements, for example: interest rate risk, credit risk and foreign currency risk. A copy of the Directors' Report and Accounts is available on the Company's website at www.whitbread.co.uk. Set out above within the Chief Executive's Review is a commentary on the outlook for the Group for the remaining six months of the financial year.
Independent review report to Whitbread PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 27 August 2009 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity and the consolidated cash flow statement. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 27 August 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
12 October 2009
This information is provided by RNS
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