Final Results - Part 1

Whitbread Holdings PLC
2 May 2001

PART 1

2  May, 2001

               EMBARGOED UNTIL 07.00, WEDNESDAY 2ND MAY 2001

                            Whitbread Holdings PLC

             Preliminary results for the 52 weeks to 3 March 2001

Financial highlights                         Future* Whitbread    Total Group**


Sales (including share of joint ventures)  £1709m        +17%     £3095m  -17%
EBITDA before exceptional items            £354m         +23%     £585m   +2%

Operating profit before exceptional items  £241m         +22%     £428m   +4%
Profit before exceptional items and tax                           £335m   -4%

Profit before tax                                                 £292m   +14%

Adjusted earnings per share                                       53.49p  -1%

Dividend per share                                                31.15p  +6%


*   Divisional results for Hotels, Restaurants, and Sports, Health and Fitness

** Part year only for Beer Company and First Quench

*        Strategic transformation

*        Pubs and Bars valued at £1,625 million - return of £2.30 per share

*        Beer and First Quench sales completed

*        Strong like-for-like growth in Marriott, Travel Inn, Brewers Fayre,
         David Lloyd Leisure and Costa

*        Future Whitbread EBITDA + 23%

*        Dividend per share up 6%

Sir John Banham, chairman, said: 'Future Whitbread has made a flying start
with strong sales and profit growth and an improvement in overall margin.

'The last year has seen a transformation of Whitbread as we have sold slow
growth businesses to concentrate our firepower on more dynamic markets.  In
lodging, eating-out and active leisure we have strong brands, leading market
positions and exciting prospects.

'Last year we set our brands the challenging target of a 5% annual
like-for-like sales growth.  I am pleased to report that Marriott, Travel Inn,
Costa and David Lloyd Leisure exceeded this target with Brewers Fayre and
Pizza Hut close to it.

'In Hotels, Marriott's yield premium to the market increased to 17%.  The
first 10 Swallow Hotels have successfully converted to Marriott and total
Marriott rooms have now grown to 8688. The conversion programme is on schedule
with seven hotels becoming Marriotts in Spring 2001 and most of the remaining
hotels following in the current financial year.

'The Travel Inn brand goes from strength to strength with a total of 29 new
hotels coming on line during the year. It is now the country's largest budget
hotel chain with 262 hotels and 14,186 rooms at the end of the year. In
January, Travel Inn became the first UK hotel brand to offer a 100% guarantee
of satisfaction to its customers.

'The major opportunities within our Restaurant Division are to grow Brewers
Fayre to its optimum size and to achieve the full potential of the Beefeater
estate which consists of 257 of the country's best large restaurant sites.
The first new restaurant concept to be introduced to this estate, Out & Out,
has started well and will be established on at least 40 sites by the end of
the current year.

'After a slow start to the year, David Lloyd Leisure's membership sales grew
dramatically in the second half and for the year as a whole were 23% ahead.
The brand's leadership position was confirmed by an NOP survey which put
public awareness of David Lloyd Leisure at three times the rating of the
nearest competitor.

'On 19 October 2000 the board announced its intention to realise the value in
the Pubs and Bars Division and to return 75% of the net proceeds to
shareholders.  An agreement was reached with Morgan Grenfell Private Equity on
20 March 2001 which values Pubs and Bars at £1,625 million - some 40% ahead of
book value.  The return of value to shareholders, amounting to £2.30 per
share, is expected to take place in early June.

Current trading and prospects

'The new financial year has started well with all future Whitbread divisions
in like-for-like sales growth for the first five weeks and on track to achieve
the same for the rest of April. Marriott has been affected by a fall in the
number of US visitors to London but management action has already been taken
to mitigate the impact.  For the year as a whole, food input prices are
expected to remain below inflation as a result of buying efficiencies.  A
further trading update will be given at the time of the AGM in June.

Whitbread's people

'Whitbread has always prided itself on being a people business.  The major
corporate transactions undertaken during the year and the growth in sales and
profits for future Whitbread would not have been achieved without the
commitment and professionalism of everyone involved.

'This has been a year of momentous change. On behalf of our shareholders I
should like to thank all of our people for their hard work and dedication that
made the progress of last year possible.'

Dividend

A final dividend of 23.10 pence per existing share is proposed which will make
a total dividend for the year of 31.15 pence.  This will be paid on 13 July
2001 to shareholders on the register at the close of business on 18 May 2001.
As this is after the date of the proposed share capital consolidation the
dividend actually paid will be 38.50 pence per share on the lower number of
consolidated shares.

The total cash dividend in future will reduce as a result of the lower number
of shares in issue and because the board intends to adopt a dividend policy
that will initially be based on an overall dividend cover of approximately 2.5
times compared with a current cover of 1.7 times.  Such a policy will be
implemented for the first time in respect of the interim dividend for the
financial year to 2 March 2002.

Copies of the report and accounts and /or the annual review will be sent to
shareholders by 14 May, 2001 and will be available to the public on the
Whitbread website www.whitbread.co.uk or from Simon Barratt, company
secretary, Whitbread Holdings PLC, CityPoint, One Ropemaker Street, London
EC2Y 9HX.

For further information please contact:-

City:
David Reed                               020 8076 5436
Matthew Fearn                            020 8076 5429
Jeremy Probert                           020 8076 5443

Media:
David Reed                               020 8076 5436
Jeremy Probert                           020 8076 5443
Dan Waugh                                020 8076 5442

OPERATING AND FINANCE REVIEW

Summary

Four strategic initiatives have had a significant impact on the accounts for
2000/1:

- the acquisition of Swallow Group Limited in January 2000.

- the disposal of the Whitbread Beer Company in May 2000.
- the disposal of Whitbread's 50% interest in the First Quench off-licence
  joint venture in October 2000.

- the establishment in February 2001 of Whitbread Holdings as the new holding
  company for Whitbread and the agreement signed, after the year end, in
  March 2001 to demerge the Pubs and Bars division.

The effects of these initiatives are described later in this review.  After
the completion of the demerger of Pubs and Bars, future Whitbread will
comprise the Whitbread Hotel Company, Whitbread Restaurants and David Lloyd
Leisure.

The comparative period for these results (1999/2000) contained 53 weeks.  This
benefited sales and profits in that year.

Operating profit and EBITDA figures, where referred to in this review, are
stated before exceptional items (see note 4 to the accounts).

Turnover including joint ventures fell by 17% as a result of the disposals
referred to above.  Like for like sales increased by 2.5% while sales of
future Whitbread increased by 17%.  Group turnover, which excludes sales of
joint ventures, fell by 12%.

Operating profit before exceptional items grew by 4%.  Operating profit for
future Whitbread divisions increased by 22%.  The profit contribution of each
business is described in the Operating Review which follows.  In 2001/2 the
results of all Travel Inns operated by Whitbread will be reported under '
Hotels'.

Earnings before interest, tax, depreciation and amortisation (EBITDA) and
before exceptional items, which is a good indicator of cash generation, grew
by 2%.  Once again year over year growth was significantly affected by the
strategic initiatives described earlier.  EBITDA by division is reported in
the Operating Review.

Profit before exceptional items and tax was down by 4%.  This result reflects
the  profit dilution from the disposal of the Whitbread Beer Company.  In the
longer term, it is anticipated that the reinvestment of the proceeds of its
sale will generate a higher return than that which would have been generated
by retaining our beer business.

Earnings per share was up by 10%.  Adjusted E.P.S. was down by 1%, reflecting
the factors already referred to.  The proposed final dividend is 23.10 pence
per share, a 5.7% increase on last year.  The full years dividend per share,
interim plus final, is up by 5.6% to 31.15 pence per share.  The proposed
final dividend of 23.10 pence is equivalent to 38.50 pence per share in
respect of each share held, after taking account of the proposed share capital
consolidation.

Capital expenditure - £332 million (1999/2000: £372 million) was invested in
existing businesses in the year.  Of this amount £235 million related to
future Whitbread and included £120 million on acquiring and developing new
retail sites.  Most of the new site expenditure was spent by Marriott Hotels,
Travel Inns, David Lloyd Leisure and Brewers Fayre.

Cash inflow before financing was £461 million.  This figure includes net
proceeds from businesses sold of £500 million.  After adjusting for this, for
the expenditure on acquiring and developing new sites and for businesses
acquired, the underlying cash flow was £92 million.

Operating Review

Hotels

Sales  £440m + 53%

Like-for-like sales + 9%

EBITDA £129m + 66%

Operating profit £90m + 66%

Capital expenditure £101m

Marriott occupancy was 75% and achieved room rates rose 8% to £83.13.  Revenue
per available room was up 8% to £62.35.  The brand's yield premium to the
market was 17%.  Guest satisfaction scores grew 2% points to 81%.  The
Marriott brand was voted the British Business Travellers Leading Choice Hotel
Brand of the Year in the 2001 British hotel guest survey.

Swallow hotels' total and like-for-like sales were disrupted by the conversion
to the Marriott brand. Ten hotels converted in summer 2000 and a further seven
in Spring  2001.  Five more will follow by the autumn. The Swallow acquisition
as a whole is on track to achieve the returns expected in its third full year.

Travel Inn occupancy within the Hotel Company was 85% with total accommodation
sales up 19%.  Including the joint venture with Punch Retail and the
management agreement with Road Chef, 29 new Travel Inns were opened during the
year bringing the total to 262 with 14,186 rooms.

Total hotel profit including Travel Inns reported through other businesses,
was £135 million.  With 336 hotels and 25,000 rooms, Whitbread is now the
second largest operator in the UK hotel market.  There are a further 16 hotels
currently under development.

Total hotel like-for-like sales grew 7% with Marriott up 9% and the Travel Inn
brand up 5%.

Restaurants

Sales                  £1130m + 5%

Like-for-like sales           + 2%

EBITDA                  £179m + 3%

Operating profit        £123m + 1%

Capital expenditure      £93m

Restaurant sales and profit growth were largely driven by the three big brands
of Brewers Fayre, Beefeater and adjacent Travel Inns.  Together these brands
represented 91% of Restaurant operating profit - Brewers Fayre 38%, Travel Inn
36% and Beefeater 17%.  Like-for-like sales for the UK brands were 3% ahead
with good performances from Pizza Hut and Costa.

In October the Restaurants Division announced the provisional results of a
review of brands.  The major features were:

*        the expansion of the successful Brewsters brand to 200 sites

*        the planned segmentation of the 258 - strong Beefeater estate

*        the expansion of Costa to 500 sites

*        the disposal of 140 sites - some 10% of the total

*        the trial of updated Cafe Rouge, Bella Pasta and TGI Friday's brands.

All these strategies are now being implemented and their success is being
monitored in order to complete the review process in the current financial
year.

Brewers Fayre grew total sales by 8% and like-for-like sales by 4%.  The brand
grew from 386 to 393 sites - 120 of them Brewsters.  Average weekly sales in
Brewsters were boosted some 7% following conversion.

Beefeater grew total sales by 0.4% and like-for-like sales by 2%. Final
quarter like-for-like sales increased by 3%.  The new Out & Out restaurant pub
brand was introduced to 13 sites. A further 30 Beefeaters will become Out &
Outs in the current financial year.  New brands for the remainder of the
estate are currently in trial.

Pizza Hut grew total sales by 6% and like-for-like sales by 4%.  Full service
restaurants achieved like-for-like sales up 5%.   The number of outlets
trading at the end of the year was 442.

Pelican, which consists mainly of the Cafe Rouge and Bella Pasta brands, saw
total sales decline by 4% following the closure of restaurants but
like-for-like sales were slightly ahead by 0.5% and by 5% in the core estate
for the final quarter of the year.

T.G.I Friday's grew total sales by 10% although like-for-like sales were down
by 5%.  Management actions to redress the like-for-like performance began to
take effect in the final quarter of the year.

Whitbread Restaurants Germany achieved like-for-like sales growth of 2% before
they were affected by customer concern over BSE in the second half of the
year.  For the year as a whole, sales in local currency declined by 0.4% in
total and 4% on a like-for-like basis.

Costa grew total sales by 44% and like-for-like sales by 10%.  The number of
units trading grew from 192 to 253 in the course of the year.

Sports, health and fitness

Sales £139m + 34%

Like-for-like sales + 9%

EBITDA £46m + 26%

Operating profit £28m + 24%

Capital expenditure £33m

David Lloyd Leisure's trading highlight was a 23% increase in club members to
230,000. This was despite opening only one new club during the period and a
slow start to membership sales in the first half of the year.

Memberships are the key to success in this business.  In mature clubs (over
three years old) increasing memberships improves sales, margins and the return
on capital employed while in new and developing clubs they shorten the build
to maturity.  Membership retention rates at 79% were well ahead of the
industry norm.

Initiatives to improve early returns in new clubs have benefited the two most
recent openings. Edinburgh exceeded its first year membership target by 50%
leading to a 6% point improvement in year one return on capital. The new
Southampton club is showing similar promise and this new approach will be
applied to the five new clubs opening in the current financial year.

David Lloyd Leisure is the largest business of its kind in the UK having grown
from 14 clubs at the time of its acquisition to a total of 44 at the end of
the year.  It is also the best recognised brand name with public awareness
three times the rating of the nearest competitors according to an NOP survey.

Pubs and Bars                                Managed               Leased

Sales                               £531m         + 2%        £147m    + 0%
Like-for-like sales                                 0%                 + 2%
EBITDA                              £133m          -2%        £75m     + 10%
Operating profit                    £105m          -3%        £72m     + 11%
Capital expenditure                 £72m                      £13m


Managed pubs total sales grew 2% although like-for-like sales were flat and
operating profit declined.  This disguised a particularly strong performance
by the High Street bars business where total sales were 17% ahead and
like-for-like sales were up 1%.

Leased pubs total sales were steady although like-for-like sales were up 2%
and operating profit was up 11%.  Profit per pub grew 13%.  133 major
developments were completed during the year and 120 leases were assigned at an
average premium of £65,000 for the outgoing lessee.

Beer and other drinks

For Beer, sales were £324 million and operating profit was £13 million.  The
Whitbread Beer Company was sold to Interbrew on 25 May 2000 for £394 million.
Other drinks comprise Whitbread's former 50% interest in the First Quench
off-licence business and a 25% share of Britannia Soft Drinks.  Sales for
other drinks for the period were £360 million and operating profit was £13
million.  The sale of First Quench to Nomura, for a total consideration of £
226 million of which 50% was payable to Whitbread, was completed on 16 October
2000.

Finance Review

Establishment of new holding company and demerger of Pubs and Bars

The proposal to introduce a new holding company, by means of a scheme of
arrangement, was approved at the extraordinary general meeting held on 30
January 2001.  Consequently, Whitbread Holdings PLC became the holding company
for Whitbread PLC and the companies within its group with effect from 26
February 2001.  On that date Whitbread shares were delisted and dealings in
Whitbread Holdings shares commenced on the London Stock Exchange.  As
explained in note 1 to the accounts, the group accounts are presented as if
Whitbread Holdings had been the holding company for the entire financial years
of 1999/2000 and 2000/1.

The proposal to demerge the Pubs and Bars division to Fairbar, by means of a
capital reduction, and the share capital consolidation were approved at the
extraordinary general meeting held on 20 April 2001. Subject to Court approval
of the reduction of capital and the demerger and to the conditions to those
and the offer being satisfied:

- the Pubs and Bars division will be transferred to Fairbar.
- shareholders in Whitbread Holdings as at 9 May (indicative date) will
  receive one Fairbar Share for each of their Whitbread Holdings shares and     
  shareholders in Fairbar will receive an offer from MGPE of £2.30 for each     
  Fairbar share held (approximately £1130 million in aggregate).
- the share capital consolidation will reduce the existing number of issued
  Whitbread Holdings shares by 40 per cent to reflect the value returned to
  shareholders.
- approximately £495 million of the value realised will be retained by the
  Whitbread Holdings Gro

Interest

Net interest increased by £30.6 million to £93.7 million.  The increase
reflects the higher net debt carried in the year.  The higher level of debt
results from the acquisition of Swallow Group Limited in January 2000 and the
capital expenditure programme, partially offset by the proceeds from the
disposals of the Whitbread Beer Company and First Quench.  Net interest was
covered 4.6 times by operating profit before exceptional items.

Exceptional items

Exceptional costs of £3.1 million were charged against operating profit.
There were also exceptional non-operating items that totalled a net amount of
£39.1 million.  These exceptional items are analysed in note 4 to the
accounts.  As explained in that note, there will be further transaction and
reorganisation costs in 2001/2.  These are estimated at around £25 million.

Taxation

The tax charge for the year was £94.6 million, of which £16.5 million has been
accounted for as exceptional.  The effective rate of tax on profit before
exceptional items was 23.3%.  The effective rate is lower than the standard UK
corporate tax rate of 30%, principally because of the recent levels of capital
expenditure.  The resulting tax relief has exceeded the charge for
depreciation.  A further influence on this year's effective rate was a tax
credit in respect of earlier years of £11.0 million

The net tax charge on the exceptional losses included a charge of £20.9
million relating to the sale of the Whitbread Beer Company.  Although this
disposal resulted in a book loss of £17.9 million (after goodwill written back
of £71.5 million), it resulted in a taxable profit.  This apparent anomaly
arises because the rate of tax relief on fixed assets has been faster than the
rate of depreciation used for accounting purposes.  Consequently the tax net
book value of the Beer Company, against which the sales proceeds were
measured, was lower than the accounting net book value.

Second half year as a discrete trading period

The strategic initiatives referred to earlier, and their timing, affected the
comparability of sales and profits between the first and second half year
periods.  Year over year trends in the second half of 2000/1 were also
adversely affected by comparison with a 27 week second half of 1999/2000.

Shareholder return

Earnings per share was up by 10% while adjusted earnings per share (adjusted
for exceptional items and goodwill amortisation) was down by 1%.  The proposed
final dividend is 23.10 pence per share.  (This is equivalent to 38.50 pence
per share after taking account of the proposed share capital consolidation).
The total dividend for the year, interim plus final of 31.15 pence per share,
results in growth of 5.6%.  The total dividend is covered 1.7 times by
adjusted earnings per share.

8 million Whitbread shares were purchased on the market in November and
December 2000 at a cost of £43 million.  The cost of the buyback has been
charged to the profit and loss reserve.

The company's share price closed the year at 628 pence, compared with an
opening price of 513.5 pence.

Net asset value per share at the balance sheet date was 539 pence compared
with 512 pence at the previous year end.

The Board expects, upon the transactions described under 'Demerger' earlier
being implemented, to adopt a dividend policy which will be based initially on
an overall dividend cover of approximately 2.5 times.  This is explained in
more detail in the Chairman's Statement.

Cash flow

Cash inflow from operating activities was £67 million lower for the year at £
492 million.  This reduction results primarily from the sale of The Whitbread
Beer Company for which the levels of stock, debtors and creditors were higher
at the date of sale than at the start of the year.  A secondary factor is
expenditure relating to the integration costs of The Swallow Group Limited and
the divisional restructuring and rationalisation in 2000, both of which were
provided for in 1999/2000.

Net cash outflow from 'capital expenditure and financial investment', at £186
million, was £159 million below last year as a result of lower capital
expenditure and the proceeds from the sale of most of the ex-Swallow pubs.

The increase in tax paid is accounted for by the abolition of ACT  (Advanced
Corporation Tax) and the introduction of Corporation Tax payments on account.
These measures are being phased in over a number of years.  As a consequence,
our tax payments were unusually low in 1999/2000.

The cash inflow before financing was £461 million.  In order to assess the
underlying cash flow performance, it is necessary to eliminate the cash flows
relating to the acquisition and disposal of businesses (net inflow of £489
million) and the investment in new retail outlets (outflow of £120 million
included within 'property and plant purchased').  The underlying cash inflow,
after making these adjustments, was £92 million.  The equivalent figure for
1999/2000 was £136 million.

Accounting policies

UITF 24 (Accounting for start up costs) has been adopted in these accounts.
Its impact is described in note 2 to the accounts.

Work is in progress to prepare for the implementation of the additional
disclosure requirements of FRS 17 (Retirement Benefits) in 2001/2, followed by
full implementation in 2003/4.  Preparation is also ongoing for the
implementation of FRS 19 (Deferred Tax) in 2001/2.  FRS 19 will increase our
tax charge to close to 30% of profit before tax.  Neither of these standards
will have an impact on cashflows.

Financial risks and treasury policies

The main financial risks faced by the group relate to: the availability of
funds to meet business needs; fluctuations in interest rates; and the risk of
default by a counterparty in a financial transaction.

The Risk Committee, which is chaired by the group finance director, reviews
and monitors the treasury function.  The undertaking of financial transactions
of a speculative nature is not permitted.

The group finances its operations by a combination of internally - generated
cash flow, bank borrowings and long-term debt market issues.  The group seeks
to achieve a spread in the maturity of its debts.

Interest rate swaps and interest rate caps are used to achieve the desired mix
of fixed and floating rate debt.  The group's policy is to fix or cap a
proportion of projected net interest costs over the next five years.  This
policy reduces the group's exposure to the consequences of interest rate
fluctuations.

The group maintains an approved list of counterparties for interest rate swaps
and caps, foreign exchange contracts and term deposits.  The group monitors
its positions with, and the credit ratings of, its counterparties.

Financial position

Net debt at the year end amounted to £1291 million, resulting in a balance
sheet gearing ratio of 49%.  Net interest was covered 4.6 times by operating
profit before exceptional items.

A new £1,250 million bank facility was arranged in April 2000.  This replaced
a revolving credit facility of £530 million, which was due to expire in
January 2001, and a £750 million bank facility, arranged to finance the
Swallow Group acquisition.  £625 million of the new facility has a three year
term, while the remaining £625 million has a five year term.  The new facility
will be reduced by £200m subsequent to the demerger of the Pubs & Bars
division.  At the year end, of the £1,250 million committed credit facility, £
600 million was unused.

Interest rate risk management

At the year end £449 million (36%) of group net sterling debt was fixed for a
weighted average of 10 years, using fixed rate borrowings and interest rate
swaps.  The average rate of interest of this fixed rate sterling debt was
7.1%.

Based on the group's net debt position at the year end, a 1% change in
interest rates would affect costs by approximately £8 million, or around 2% of
the 2000/1 operating profit before exceptional items.

Foreign currency risk management

At the year end foreign currency borrowings amounted to £48 million.  Any
foreign currency borrowings, other than those made to hedge overseas
investments, have been swapped into sterling.

Transaction exposures resulting from purchases in foreign currencies may be
hedged by forward foreign currency transactions and currency options.
END

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