Final Results
Whitbread PLC
30 April 2003
April 30th, 2003
Whitbread Preliminary Results for the 52 weeks to March 1, 2003
Fourth successive period of double-digit earnings growth
• Proforma profit before tax grows 14% to £214m
• Adjusted earnings per share grow 10% to 52.85p
• Like-for-like sales up 2.4%
• Trading margin up from 12.9% to 14.0%
• Return on capital improved in all brands
• Strong cash position with £39m net inflow
• Dividend per share up 12%
• Net assets per share up by 5% to £6.70
Whitbread (continuing businesses)* 2002/3 % change
Divisional sales (excluding business disposals) (£m) 1780 3.5
Operating profit (£m) 275 10
Profit before tax (£m) 214 14
Profit after tax (£m) 148 12
Return on capital % 9.4 0.7points
* Continuing businesses - those owned by the group at March 3, 2002. Profits are
before exceptional items.
Sir John Banham, chairman, said: 'These are good results. They endorse the
decision announced by the board over two years ago to create a focused leisure
business and confirm that management action is delivering increasing value for
our shareholders.
'This is the fourth period in succession in which Whitbread's continuing
businesses have reported double-digit earnings growth. It demonstrates the
strength of the transformed company and especially the ability of our brands to
out-perform their competitors.
'Capital investment was again focused on those market-leading brands capable of
producing the strongest returns. £114 million of expenditure on new sites
increased the scale of our brands, particularly Travel Inn, Brewers Fayre /
Brewsters and David Lloyd Leisure.
'Whitbread has become a much more efficient business. Trading margin improved
from 12.9% to 14.0% and return on capital was ahead in every brand. The cash
position was strong with a net inflow of £39m.
'The board has confidence in the prospects for the group and this is reflected
in the final dividend payment of 14.30p per share making a total dividend of
19.87p per share for the year - an increase of 12%.
David Thomas, chief executive, said: 'These are good results but I am confident
there's more to be won - and the action plans are in place to do so.
'The restructuring two years ago was undertaken with the conviction that
successful brand management in the leisure industry requires a deep
understanding of consumer needs, clear brand propositions, operational
excellence and first class people.
'These skills are at the heart of Whitbread. They have enabled us to move into
new markets ahead of our competitors, to refresh our existing brands and
generate increasing customer loyalty as well as providing the impetus for the
improved performances we are beginning to deliver.
'Each brand management team combines these skills with a robust plan to deliver
improved value. In Marriott, for example, this is expressed as profit per room
which was maintained despite severe conditions in the four-star hotel market.
'Travel Inn made its existing assets work harder by improving its already high
occupancy levels and also sustained its development programme. Pub restaurants
and the high street brands increased their operating profit, operating margin,
and return on capital. David Lloyd Leisure stood out in the health and fitness
market with improved performance across the board.
'Looking to the future, Whitbread has exciting growth prospects. I expect
Marriott's profit per room growth to at least match its competitors as the hotel
market improves. Travel Inn, Brewers Fayre / Brewsters, Pizza Hut and Costa
will each expand their distribution by 50% over the medium term.
'In David Lloyd Leisure, 21 developing clubs are moving towards the 15% levels
of return earned by mature clubs while the brand is set to grow from 55 to 100
clubs.
Current trading
'For the first eight weeks of the new financial year, like-for-like sales growth
for each of the major brands was as follows:-
Marriott (4.1%)
Travel Inn + 4.0%
Brewers Fayre + 5.2%
Beefeater + 3.3%
David Lloyd Leisure* + 6.8%
* 5 weeks
'These are robust performances which demonstrate the strength of the Whitbread
brands.
'I am hopeful that the early end to the Middle East conflict will be beneficial
both to consumer confidence and to the outlook for our markets - particularly in
four-star hotels. Until conditions are more clear, however, I am continuing to
take a prudent view of capital expenditure and other costs in order to protect
cash flow and earnings.'
Dividend
A final dividend of 14.30p is proposed which will make a total dividend for the
year of 19.87p. This will be paid on July 11th, 2003 to shareholders on the
register at the close of business on, May 9th, 2003.
Copies of the report and accounts and/or the summary report will be sent to
shareholders on May 15th, 2003 and will be available to the public on the
Whitbread website www.whitbread.co.uk or from Simon Barratt, company secretary,
Whitbread PLC, CityPoint, One Ropemaker Street, London EC2Y 9HX.
For further information please contact:-
David Reed - Whitbread 020 7806 5436
Dan Waugh - Whitbread 020 7806 5442
Eric Dodd - Whitbread 020 7806 5429
Andrew Grant - Tulchan Communications 020 7353 4200
(Pictures available to press at www.newscast.co.uk -020 7608 1000)
(A presentation for analysts will be held at Deutsche Bank, Winchester House, 1
Great Winchester Street, London EC2N 2DB. Registration from 9.00am,
presentation at 9.30am. The presentation also will be available on the website
at www.whitbread.co.uk Alternatively, you can listen to the presentation by
dialling 020 8996 3900 and using the password 'Whitbread' The conference call
will be available as a replay for a period of three months. To listen dial
01296 618700 (+441296 618700) and use the passcode 462758.
Operating Review
Marriott
Sales £392m (3.1%)
Like-for-like sales (0.5%)
Operating profit £71.6m +0%
ROCE 5.8% + 0%
Pre-goodwill amortisation, operating profit was £78.6m and ROCE 6.5%.
Maintaining operating profit in the face of a depressed four-star market was a
considerable achievement. Overall yield premium to the market also was
maintained at 20.2% in London and 19.0% in the provinces. Profit per room for
the Marriott brand was maintained year-over-year.
The former Swallow hotels continued to benefit from their conversion to the
Marriott brand. Achieved room rate grew from £68.73 to £69.62, occupancy was up
1.1% points and like-for-like sales grew 2.7%.
Total network occupancy was ahead 1.3% points although achieved room rate fell
as leisure and conference guests replaced business travellers, particularly in
London.
Travel Inn
Sales £204m + 15%
Like-for-like sales + 6.1%
Operating profit £66.7m + 11%
ROCE 12.6% + 0.1% point
Travel Inn was highly successful in its twin objectives of further improving the
performance of its existing network and achieving network growth.
Achieved room rate grew from £38.59 to £39.98, occupancy was up 1% point to 82%
and like-for-like sales were ahead 6.1%.
Return on capital also improved despite two large projects involving some 900
rooms not coming on stream until the new financial year. Travel Inn ended the
period with 293 hotels and 16,669 rooms making it the UK's largest hotel brand.
It remains on target to achieve its mid-term objective of 25,000 rooms.
Pub restaurants
Sales £583m + 1.2%
Like-for-like sales + 2.7%
Operating profit £76.6m + 10%
ROCE 9.9% + 0.9% points
Sales growth for the segment was held back by the disposal of 31 units and the
announcement that a further 51 sites were to be sold. The Brewers Fayre estate,
however, grew like-for-like sales by 4% with a particularly strong performance
from the Brewsters' brand at 5%. Operating margin was 0.5% up year-over-year at
15.4%. Return on capital was ahead by 0.5% points.
Beefeater's like-for-like sales were up by 0.8%, operating margin improved by
1.6% points and return on capital was up 1.2% points.
Agreement has been reached to sell 34 of the Beefeater sites and it is expected
that when the disposal of the 51 sales is completed it will achieve close to
book value. Six trial sites for the future of the Beefeater estate are
producing encouraging results.
High Street Restaurants
Sales £418m + 5.3%
Like-for-like sales +1.6%
Operating profit £21.4m + 25%
ROCE 19.1% + 3.9% points
Sales growth was held back by a slow London market but the high street brands
performed well on all other measures. Operating margin grew by 0.8% points to
5.1%, profit per outlet grew by 20.7% and return on capital was up from 15.2% to
19.1%.
David Lloyd Leisure
Sales £183m + 11%
Like-for-like sales + 6.1%
Operating profit £43.3m + 26%
ROCE 9.1% + 1.5% points
David Lloyd Leisure is the leader in the UK health and fitness industry in terms
of financial performance, market share and value with well above average rates
of member retention.
Once again mature club performance was particularly impressive with a 0.9%
points improvement in return on assets to 15.8%.
Overall the David Lloyd Leisure brand achieved operating margin growth of 2.9%
to 23.7% with a 26% improvement in operating profit. Member retention, at 76%,
was 3% points ahead of last year and some 16% points above the industry average.
Six new clubs were opened during the year bringing the total to 55. Membership
grew from 279,000 to 310,000.
FINANCE REVIEW
Year-over-year comparisons of performance
The year-over-year comparability of these results is affected by the inclusion
of 10 weeks trading figures for Pubs & Bars in 2001/2. The demerger of Pubs &
Bars was completed in May 2001.
References in this report to 'continuing Whitbread' refer to the total group
less Pubs & Bars. This definition of continuing Whitbread, which is consistent
with that used in the 2001/2 annual report, includes the Pelican business which
was sold in May 2002.
Operating profit and EBITDA figures, where referred to in this review, are
stated before exceptional items (see note 3 to the accounts).
Like-for-like sales figures exclude sales of outlets first opened or disposed of
during 2001/2 or 2002/3.
Since the announcement of the decision to demerge Pubs & Bars, the financial
focus of the group has been directed towards improving the return from the
business assets within Hotels, Restaurants and Active Leisure whilst also
organically growing these businesses within the group's resources and cash
flows.
The benefit of this focus is demonstrated by the proforma results for continuing
Whitbread as set out in the following table.
Proforma results for continuing Whitbread £(m)
As
Continuing Whitbread Pubs & Bars published
2002/3 2001/2 2001/2 2001/2
£m £m £m £m
Divisional sales 1803 1822
Less Pelican (23) (101)
Comparable divisional
sales 1780 1721
Operating profit before
exceptional items 275 250 30 280
EBITDA 401 374 36 410
Interest (61) (63) (4) (67)
Profit before tax and
exceptional items 214 187 26 213
Taxation (66) (56) (7) (63)
Profit after tax before
exceptional items 148 131 19 150
Net assets 2931 2865
Return on capital (%) 9.4 8.7
The return on capital, on a proforma basis, has grown from 8.7% in 2001/2 to
9.4% despite the depressed four-star hotel market.
Turnover
Turnover grew by 2.4% on a like for like basis. Comparable divisional turnover
grew by 3.5%. The decline in headline reported turnover reflects the demerger
and the Pelican disposal.
Operating profit
Operating profit for continuing Whitbread grew by 10%. Marriott maintained its
profit level despite the depressed four-star hotel market. All other divisions
increased their profits.
Profit margin for continuing Whitbread increased from 12.2% to 14.0%, while
return on capital increased from 8.7% to 9.4%. These improvements reflect the
continued focus on cost control and asset management. This focus is embedded
into the internal performance review processes.
Earnings before exceptional items, interest, tax, depreciation and amortisation
('EBITDA')
EBITDA is a good indicator of the operating cash generated by each division.
EBITDA for continuing Whitbread grew by 7.2% to £401 million. All divisions
increased their EBITDA.
Exceptional items
Exceptional items before tax amounted to a net charge of £11.2 million. This
amount is analysed in note 3 to the accounts. The components are: a charge of
£5 million to provide against the costs of an onerous lease on a site unlikely
to be developed; and a net loss of £7.8 million on the disposal of businesses,
partly offset by a net profit of £1.6 million on the disposal of fixed assets.
The net loss on the disposal of businesses is stated after accounting for £4.8
million of goodwill previously written off. It relates to the disposals of the
Pelican high street restaurant businesses and the London-based Curzon gym
business.
Interest
The net interest charge fell by £6.4 million to £61.0 million. This reduction
reflects a lower level of net debt and lower interest rates this year. Net
interest was covered 4.5 times by operating profit before exceptional items.
Taxation
The charge against profit before exceptional items for the period of £66.4
million represents an underlying rate of 31.0%. The factors affecting the tax
charge are explained in note 5 to the accounts. A £16.4 million credit to
current tax, which arises from the release of specific provisions from previous
years, has been treated as exceptional.
Shareholder return
Basic earnings per share were 51.77 pence, while adjusted basic E.P.S. was 52.85
pence - an increase of 10% year over year. Adjusted basic E.P.S. excludes
exceptional items and goodwill amortisation.
The total dividend for the year of 19.87 pence per share represents an increase
of 12%. The dividend payment is 40% of post-tax earnings before exceptional
items (cover of 2.5 times). The final dividend of 14.30 pence per share will be
paid on 11 July 2003 to all shareholders on the register at the close of
business on 9 May 2003.
The company's share price opened the financial year at 633 pence and closed it
at 521 pence. Net asset value per share increased over the year from 637 pence
to 670 pence. The last revaluation of the group's properties was carried out in
1998/9. Consequently, £1.8 billion of tangible fixed assets are carried at
cost.
Accounting policies
The accounting policies adopted in preparing these accounts are consistent with
those used in the previous year.
Capital Expenditure
£218 million was invested in property and plant, compared with £287 million last
year. Of this amount, £114 million (£130 million in 2001/2) related to the
acquisition and development of new sites. The reduction in the level of capital
expenditure results from the completion of the major part of the Swallow to
Marriott conversion programme and a reduction in expenditure in Marriott
following September 11. Other capital expenditure includes £9 million incurred
in acquiring and implementing a group-wide E.R.P. system.
Capital expenditure (£m) 2002/3 2001/2
Hotels - Marriott 27 71
-Travel Inn 65 71
Restaurants - Pub restaurants 47 53
- High street restaurants 15 18
Sports, health and fitness 54 57
Other 10 3
Current Whitbread 218 273
Pubs & Bars - 14
218 287
The current forecast is for capital expenditure of around £275 million in
2003/4. The majority of expansionary capital expenditure will be directed at
developing new Travel Inns and David Lloyd Leisure clubs. Some £20 million
additional expenditure will be incurred on the new E.R.P. system.
Cash flow
The net cash inflow before use of liquid resources and financing was £39
million. This compares with a net cash outflow of £26m, on a proforma basis,
for 2001/2. The underlying cash inflow, after adjusting for the proceeds from
business disposals and for the £114 million cost of acquiring and developing new
sites, was £130 million.
The principal reason for the decline in tax paid is that 2001/2 included the
final payments on account in respect of the liabilities relating to Pubs & Bars.
Pensions
The pensions charge to the profit and loss account continues to be based on
SSAP24. The charge reflects the results of the recent triennial review of our
defined benefit scheme, which revealed a deficit on the fund of £64 million.
The fund was closed to new members on 31 December 2001.
The second stage of the FRS17 (Retirement Benefits) transitional arrangements
has been adopted and the disclosures required will be included in the annual
report. On an FRS17 basis, the pension fund had a deficit on 1 March 2003 of
£420 million. The net deficit, after tax, was £294 million. It should be noted
that the FRS17 calculations are very susceptible to short term movements in
equity values and interest rates.
In line with our aim to be the 'Employer of Choice', the Board announced in
April 2003 that the company had signed an agreement with Whitbread Pension
Trustees Limited. Under that agreement, the company has undertaken to fund the
pension scheme for a period of up to 15 years and given undertakings to the
trustees similar to some of the covenants provided in respect of its banking
agreements. As a consequence of this agreement, the company will make payments
into the fund for each of the next three years at a rate of £15 million above
the anticipated SSAP24 charge. There will be no change to the profit and loss
account as a consequence of this agreement for each of the three years until the
next triennial valuation in March 2005.
Financial position
Net debt at the year end amounted to £941 million, resulting in a balance sheet
gearing ratio of 47%. Net interest was covered 4.5 times by operating profit
before exceptional items.
In February 2003 a £625 million committed credit facility, which expires in
April 2005, was reduced by £150 million. At the same time a £280 million 5 year
facility was agreed. At the year end, £457 million of the total committed
credit facility of £755 million was unused.
Group profit and loss account
Year Ended 1 March 2003 Notes 2002/3
Before
exceptional Exceptional
items items (note 3) Total
£m £m £m
Turnover
Group and share of joint ventures 1,965.1 - 1,965.1
Less share of joint ventures' turnover (171.0) - (171.0)
------------------ ------------------ ------------------
Continuing operations 1,794.1 - 1,794.1
Discontinued operations - - -
------------------ ------------------ ------------------
Group turnover 2 1,794.1 - 1,794.1
================== ================== ==================
Group operating profit 242.1 (5.0) 237.1
Share of operating profit in:
Joint ventures 15.1 - 15.1
Associates 17.8 - 17.8
---------------- ---------------- ----------------
Continuing operations 275.0 (5.0) 270.0
Discontinued operations - - -
------------------ ------------------ ------------------
Operating profit of the group, joint
ventures and associates 2,3 275.0 (5.0) 270.0
Non-operating items - continuing
operations
Net profit/(loss) on disposal of fixed
assets
Group excluding joint ventures and
associates - 0.8 0.8
Joint ventures - 0.5 0.5
Associates - 0.3 0.3
Net loss on the disposal of businesses 8 - (7.8) (7.8)
Fundamental restructuring costs - - -
---------------- ----------------- ------------------
Profit/(loss) before interest 275.0 (11.2) 263.8
Interest 4 (61.0) - (61.0)
---------------- ----------------- ------------------
Profit/(loss) before tax 214.0 (11.2) 202.8
Tax 5 (66.4) 16.4 (50.0)
----------------- ------------------ ------------------
Profit/(loss) after tax 147.6 5.2 152.8
Equity minority interests (0.2) - (0.2)
Non-equity minority interests (0.2) - (0.2)
----------------- ------------------ -------------------
Profit/(loss) earned for ordinary
shareholders 147.2 5.2 152.4
Ordinary dividends (58.7) - (58.7)
------------------ ------------------- -------------------
Retained profit/(loss) for the year 88.5 5.2 93.7
================== =================== ===================
Earnings per share (pence) 6
Basic 51.77
Adjusted basic 52.85
Diluted 51.59
Adjusted diluted 52.67
Dividends per share (pence)
Interim 5.57
Proposed final 14.30
Group Profit and Loss Account (Continued)
Year ended 1 March 2003 Notes 2001/2
Before
exceptional Exceptional
items items (note 3) Total
£m £m £m
Turnover
Group and share of joint ventures 2,171.6 - 2,171.6
Less share of joint ventures' turnover (157.3) - (157.3)
------------------ ------------------- -------------------
Continuing operations 1,888.4 - 1,888.4
Discontinued operations 125.9 - 125.9
------------------ ------------------- -------------------
Group turnover 2 2,014.3 - 2,014.3
================== =================== ===================
Group operating profit 250.9 (174.5) 76.4
Share of operating profit in:
Joint ventures 12.2 - 12.2
Associates 16.9 - 16.9
---------------- --------------- -----------------
Continuing operations 249.5 (174.5) 75.0
Discontinued operations 30.5 - 30.5
---------------- --------------- -----------------
Operating profit of the group, joint
ventures and associates 2,3 280.0 (174.5) 105.5
Non-operating items - continuing
operations
Net profit/(loss) on disposal of fixed
assets
Group excluding joint ventures and
associates - (2.0) (2.0)
Joint ventures - - -
Associates - (0.2) (0.2)
Net loss on the disposal of businesses 8 - (3.9) (3.9)
Fundamental restructuring costs - (25.0) (25.0)
---------------- --------------- -----------------
Profit/(loss) before interest 280.0 (205.6) 74.4
Interest 4 (66.6) (0.8) (67.4)
---------------- ----------------- ------------------
Profit/(loss) before tax 213.4 (206.4) 7.0
Tax 5 (63.5) 4.1 (59.4)
----------------- ------------------ ------------------
Profit/(loss) after tax 149.9 (202.3) (52.4)
Equity minority interests - - -
Non-equity minority interests (0.2) - (0.2)
----------------- ------------------ ------------------
Profit/(loss) earned for ordinary
shareholders 149.7 (202.3) (52.6)
Ordinary dividends (52.6) - (52.6)
------------------ ------------------ ------------------
Retained profit/(loss) for the year 97.1 (202.3) (105.2)
================== ================== ==================
Earnings per share (pence) 6
Basic (15.91)
Adjusted basic 47.85
Diluted (15.91)
Adjusted diluted 47.68
Dividends per share (pence)
Interim 5.05
Proposed final 12.75
Group statement of total recognised gains and losses
Year ended 1 March 2003 2002/3 2001/2
£m £m
Profit/(loss) earned for ordinary shareholders
Group excluding joint ventures and associates 139.4 (71.0)
Joint ventures 6.6 7.4
Associates 6.4 11.0
------------ ------------
Group including joint ventures and associates 152.4 (52.6)
Currency translation differences on net foreign investment 0.2 (1.5)
------------ ------------
Total gains and losses recognised since previous year end 152.6 (54.1)
============ ============
Group cash flow statement
Year ended 1 March 2003 Notes 2002/3 2001/2
£m £m
Cash flow from operating
activities 7 355.2 352.1
Dividends received from joint
ventures and associates 13.3 2.8
Returns on investments and
servicing of finance
Interest received 1.2 1.8
Interest paid (64.0) (75.0)
Debt issue costs (0.6) -
Loan interest received - 1.3
------------ ------------
Net cash outflow from returns on
investments and servicing of
finance (63.4) (71.9)
Tax
UK Corporation Tax paid (49.6) (83.4)
Capital expenditure and financial
investment
Property and plant purchased (218.3) (286.8)
Investments purchased and loans
advanced (0.9) (9.9)
Property and plant sold 29.4 64.4
Investments sold and loans
realised 4.1 8.0
------------ ------------
Net cash outflow from capital
expenditure and financial
investment (185.7) (224.3)
Acquisitions and disposals
Businesses sold and demerged 8 23.1 461.6
------------ ------------
Net cash inflow from acquisitions 23.1 461.6
and disposals
Equity dividends paid (53.9) (128.1)
------------ ------------
Net cash inflow before use of
liquid resources and financing 39.0 308.8
Management of liquid resources
Net movement on short term
securities and bank deposits 9 3.9 0.2
Financing
Minority dividends (0.2) (0.2)
Issue of shares 1.3 6.3
Net movement on short term bank
borrowings
9 (3.3) (16.0)
Loan capital issued 9 78.3 5.0
Loan capital repaid * 9 (109.3) (303.5)
------------ ------------
Net cash outflow from financing (33.2) (308.4)
------------ ------------
Increase in cash 9 9.7 0.6
============ ============
* The net of receipts and payments on revolving credits is included in loan
capital repaid.
Group balance sheet
1 March 2003 Notes 2003 2002
£m £m
Fixed assets
Intangible assets 141.5 149.9
Tangible assets 3,045.1 2,996.1
Investments
In joint ventures
- Share of joint ventures' gross assets 78.1 70.9
- Share of joint ventures' gross liabilities (37.7) (37.5)
- Loans to joint ventures 1.8 5.9
------------ ------------
42.2 39.3
In associates 56.7 63.6
Other investments 7.0 6.9
------------ ------------
3,292.5 3,255.8
------------ ------------
Current assets and liabilities
Stocks 23.9 28.1
Debtors 131.1 112.0
Cash at bank and in hand 75.4 73.1
------------ ------------
230.4 213.2
Creditors - amounts falling due within one
year (474.4) (431.8)
------------ ------------
Net current liabilities (244.0) (218.6)
------------ ------------
Total assets less current liabilities 3,048.5 3,037.2
Creditors - amounts falling due after more
than one year
Loan capital (879.8) (978.5)
Provisions for liabilities and charges (178.1) (170.2)
------------ ------------
1,990.6 1,888.5
============ ============
Capital and reserves
Called up share capital 148.0 147.7
Share premium account 7.3 4.4
Revaluation reserve 134.5 140.4
Other reserves (1,815.8) (1,815.5)
Profit and loss account 3,509.9 3,405.0
------------ ------------
Shareholders' funds 10 1,983.9 1,882.0
Equity minority interests 3.6 3.4
Non-equity minority interests 3.1 3.1
------------ ------------
1,990.6 1,888.5
============ ===========
Notes to the accounts
1. Changes to accounting policies
Although the second stage of the FRS 17 (Retirement Benefits) transitional
arrangements has been adopted in the current year there have been no changes to
the reported figures which continue to be prepared on the basis of SSAP 24.
2. Segmental analysis of turnover, profit and net assets
Year ended 1 March 2003 Operating profit #
Turnover EBITDA (S) Net assets
By business segment £m £m £m £m
Hotels - Marriott/Swallow 391.9 113.1 71.6 1,225.2
- Travel Inn 204.3 83.9 66.7 529.4
------------ ------------ ------------ ------------
596.2 197.0 138.3 1,754.6
------------ ------------ ------------ ------------
Restaurants
- Pub Restaurants 582.9 106.4 76.6 771.0
- High St Rests. - retained 418.0 36.8 21.4 111.9
- High St Rests. - disposed of 23.3 1.4 0.7 -
------------ ------------ ------------ ------------
1,024.2 144.6 98.7 882.9
------------ ------------ ------------ ------------
Sports, Health and Fitness 183.0 63.2 43.3 476.5
------------ ------------ ------------ ------------
1,803.4 404.8 280.3 3,114.0
Beer and Other Drinks 65.9 16.6 16.6 49.0
------------ ------------ ------------ ------------
Inter-segment turnover (see note
below) (2.5)
Share of joint ventures'
turnover (171.0)
Central Costs 98.3 (20.4) (21.9) (231.8)
Exceptional items (note 3) (5.0) (5.0)
------------ ------------ ------------ ------------
1,794.1 396.0 270.0 2,931.2
============ ============ ============ ============
By geographical segment
United Kingdom 1,723.7 388.5 266.1 2,888.9
Rest of the world 70.4 7.5 3.9 42.3
------------ ------------ ------------ ------------
1,794.1 396.0 270.0 2,931.2
============ ============ ============ ============
2. Segmental analysis of turnover, profit and net assets (continued)
Year ended 2 March 2002 Operating
(restated) Turnover EBITDA (S) profit # Net assets
By business segment £m £m £m £m
Hotels - Marriott/Swallow 404.5 112.2 71.6 1,234.2
- Travel Inn 177.3 75.3 60.2 481.7
------------ ------------ ------------ ------------
581.8 187.5 131.8 1,715.9
------------ ------------ ------------ ------------
Restaurants
- Pub Restaurants 576.1 99.4 69.6 769.8
- High St Rests. - retained 397.0 29.4 17.1 112.5
- High St Rests. - disposed of 101.3 4.6 (0.2) 18.8
------------ ------------ ------------ ------------
1,074.4 133.4 86.5 901.1
------------ ------------ ------------ ------------
Sports, Health and Fitness 165.6 53.6 34.4 453.5
------------ ------------ ------------ ------------
1,821.8 374.5 252.7 3,070.5
Beer and Other Drinks 78.3 15.8 15.8 56.5
Inter-segment turnover (see note
below) (2.9)
Share of joint ventures'
turnover (157.3)
Central Costs 148.5 (16.1) (19.0) (262.5)
------------ ------------ ------------ ------------
1,888.4 374.2 249.5 2,864.5
Pubs & Bars 125.9 36.0 30.5 -
Exceptional items (note 3) (174.5) (174.5)
------------ ------------ ------------ ------------
2,014.3 235.7 105.5 2,864.5
============ ============ ============ ============
By geographical segment
United Kingdom 1,942.6 228.4 101.9 2,828.0
Rest of the world 71.7 7.3 3.6 36.5
------------ ------------ ------------ ------------
2,014.3 235.7 105.5 2,864.5
============ ============ ============ ============
(S) EBITDA is earnings before interest, tax, depreciation and amortisation.
# Operating profit is stated after charging the amortisation of goodwill as
follows:
2002/3 2001/2
£m £m
Hotels - Marriott/Swallow 8.0 8.1
Sports, Health and Fitness 0.4 0.4
------------ ------------
The figures for the year ended 2 March 2002 have been restated to reflect the
transfer of the supply chain function from Central Costs to Restaurants. The
effect is not material.
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. This arrangement ceased on 15 April 2003.
2. Segmental analysis of turnover, profit and net assets (continued)
Segmental turnover includes the group's share of joint venture turnover as
follows:-
2002/3 2001/2
£m £m
Hotels - Marriott/Swallow - 0.8
- Travel Inn 2.8 1.6
High Street Restaurants 168.2 154.9
------------ ------------
171.0 157.3
============ ============
Inter-segment turnover was from High Street Restaurants to the other segments.
Central Costs turnover comprises, primarily, food distribution services provided
to a third party and a joint venture. The geographical analysis of turnover and
profit is by source. The analysis of turnover by destination was not materially
different. Sales between geographical segments are not material.
Net assets included above are total net assets excluding net debt.
The exceptional costs included in operating profit are detailed in note 3. The
analysis is as follows:
2002/3 2001/2
£m £m
High Street Restaurants - 174.5
Sports, Health and Fitness 5.0 -
------------ ------------
5.0 174.5
============ ============
3. Exceptional items
2002/3 2001/2
£m £m
Restructuring costs - (1.7)
Onerous contract on non-trading leasehold property (5.0) -
Impairment of leasehold properties - (26.3)
Impairment of goodwill - (146.5)
------------ ------------
Charged against operating profit (5.0) (174.5)
Non operating items
Net profit/(loss) on disposal of fixed assets:
- Group excluding joint ventures and associates 0.8 (2.0)
- Joint ventures 0.5 -
- Associates 0.3 (0.2)
Net loss on the disposal of businesses (note 8) (7.8) (3.9)
Fundamental reorganisation costs:
- Demerger of Pubs & Bars - transaction costs - (14.6)
- Reorganisation costs - (10.4)
------------ ------------
(11.2) (205.6)
============ ============
The £5.0m onerous contract provision relates to a site which is not being
developed.
The restructuring costs in 2001/2 relate to the planned disposal of the Pelican
High Street Restaurants business.
The 2001/2 impairment of leasehold properties related to leasehold properties
operated by Pelican. The impairment of goodwill in that year related to the
goodwill created, and previously written off to reserves, on the acquisition of
the Pelican and BrightReasons businesses. An equivalent amount was added to
reserves.
The transaction costs were principally advisers' fees and legal costs relating
to the discontinued Pubs & Bars business. The fundamental reorganisation costs
related to the demerger of Pubs & Bars in May 2001.
4. Interest
2002/3 2001/2
£m £m
Interest payable 63.0 71.4
Interest receivable (1.2) (3.1)
Interest capitalised (3.7) (3.3)
------------ ------------
58.1 65.0
Interest payable by:
Joint ventures 0.7 0.9
Associates 0.6 0.7
------------ ------------
59.4 66.6
Exceptional interest payable* - 0.8
------------ ------------
59.4 67.4
Interest from unwinding discounts on provisions 1.6 -
------------ ------------
61.0 67.4
============ ============
* The exceptional interest payable represents refinancing costs associated with
the demerger of the Pubs & Bars business.
5. Tax
2002/3 2001/2
£m £m
Current tax on profits for the year before exceptional items
UK Corporation Tax 46.5 47.8
Adjustments to UK Corporation Tax for earlier periods (11.3) (4.0)
------------ ------------
35.2 43.8
Overseas tax 0.7 (0.2)
Adjustments to overseas tax for earlier periods 0.1 (0.1)
Joint ventures 4.8 3.8
Associates 6.1 5.0
------------ ------------
46.9 52.3
Current tax on exceptional items - (4.1)
Exceptional current UK tax adjustment (16.4) -
------------ ------------
Total current tax 30.5 48.2
------------ ------------
Deferred tax on profit before exceptional items
Timing differences - Group 11.0 11.1
- Joint Ventures 3.5 0.1
- Associates 5.0 -
------------ ------------
Total deferred tax 19.5 11.2
------------ ------------
Total tax charge 50.0 59.4
============ ============
The exceptional current tax adjustment arises from the release of specific
provisions from earlier years.
6. Earnings per share
Basic earnings per share is calculated by dividing earnings for ordinary
shareholders of £152.4m (2001/2 - £(52.6)m) by the weighted average number of
ordinary shares in issue during the year of 294.4m (2001/2 - 330.6m). Adjusted
basic earnings per share is calculated as follows:
Earnings (£m) Earnings per share (p)
2002/3 2001/2 2002/3 2001/2
Earnings and basic earnings per
share 152.4 (52.6) 51.77 (15.91)
Earnings and basic earnings per
share attributable to:
Goodwill amortisation 8.4 8.5 2.85 2.57
Exceptional costs, net of tax (5.2) 202.3 (1.77) 61.19
---------- ---------- ------------ ------------
Adjusted earnings and basic
earnings per share 155.6 158.2 52.85 47.85
========== ========== ============ ============
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 295.4m
(2001/2 - 330.6m) and for the adjusted diluted calculation is 295.4m (2001/2 -
331.8m).
7. Net cash inflow from operating activities
2002/3 2001/2
£m £m
Group operating profit 237.1 76.4
Depreciation/amortisation 126.0 130.2
Impairment of leasehold properties and goodwill - 172.8
Payments against provisions (4.9) (24.6)
Other non-cash items 7.9 (1.9)
(Increase)/decrease in stocks 2.3 (0.1)
(Increase)/decrease in debtors (24.7) 10.3
Increase/(decrease) in creditors 11.5 (11.0)
------------ ------------
Cash flow from operating activities 355.2 352.1
============ ============
8. Disposals
2002/3
£m
Tangible fixed assets 34.6
Net working capital, excluding cash and overdrafts (3.1)
Cash and overdrafts 6.7
Provisions (6.1)
------------
Carrying value of net assets 32.1
Gross proceeds 32.8
Less costs (3.7)
------------
Net proceeds 29.1
------------
Loss before goodwill written back (3.0)
Goodwill written back (4.8)
------------
Loss on disposal (7.8)
============
Net sale proceeds 29.1
Cash & overdrafts sold (6.7)
Accrued costs 1.1
Deferred proceeds (0.4)
------------
Cash inflow 23.1
============
The above relates to the disposal of The Pelican Group Ltd and BrightReasons
Group Ltd on 31 May 2002 and Curzons Management Associates Ltd on 5 May 2002.
9. Reconciliation of net cash flow to movement in net debt
2002/3 2001/2
£m £m
Increase in cash in the period 9.7 0.6
Cash outflow from movement in loan capital 31.0 298.5
Cash inflow from movement in liquid resources (3.9) (0.2)
Cash outflow from movement in short-term borrowings 3.3 16.0
------------ ------------
Changes in net debt resulting from cash flows 40.1 314.9
Foreign exchange movements (5.4) 0.3
Amortisation of premiums and discounts 0.7 0.1
------------ ------------
Movement in net debt in the period 35.4 315.3
Opening net debt (976.0) (1,291.3)
------------ ------------
Closing net debt (940.6) (976.0)
============ ============
10. Shareholders' funds
2003 2002
£m £m
Movements in shareholders' funds
Equity shareholders' funds at 2 March 2002 1,882.0 2,487.7
Profit/(loss) earned for ordinary shareholders 152.4 (52.6)
Dividends (58.7) (52.6)
------------ ------------
93.7 (105.2)
Other recognised gains and losses relating to the year 0.2 (1.5)
Goodwill on disposal 4.8 -
Share capital issued 3.2 6.3
Value of Pubs & Bars demerger (1,611.6)
Gain over book value 477.3
------------
Gross assets demerged from group (1,134.3)
Value of debt demerged 482.5
------------
Net Assets demerged - (651.8)
Impairment of goodwill (see note 3) - 146.5
----------- ------------
Equity shareholders' funds at 1 March 2003 1,983.9 1,882.0
============ ============
11. Accounts
The financial information above, which has been prepared on the same basis as
set out in the 2001/2 financial statements, does not constitute statutory
accounts as defined in the Companies Act 1985. The financial information for the
period ended 1 March 2003 has been extracted from the statutory accounts on
which an unqualified audit opinion has been issued. Statutory accounts for the
period ended 1 March 2003 will be delivered to the Registrar of Companies in due
course. The comparative financial information is based on the statutory accounts
for the financial period ended 2 March 2002. Those accounts, upon which the
auditors issued an unqualified opinion, have been delivered to the Registrar of
Companies.
12. Post balance sheet event
The Board announced in April 2003 that the company had signed an agreement with
Whitbread Pension Trustees Limited. Under that agreement, the company has
undertaken to fund the pension scheme for a period of up to 15 years and given
undertakings to the trustees similar to some of the covenants provided in
respect of its banking agreements. As a consequence of this agreement, payments
will be made into the fund for each of the next three years at a rate of £15m
above the anticipated SSAP 24 charge. There will be no change to the profit and
loss account as a consequence of this agreement for each of the three financial
years until the next triennial valuation in March 2005.
This information is provided by RNS
The company news service from the London Stock Exchange
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