Final Results - Year Ended 4 March 2000, Part 2
Whitbread PLC
4 May 2000
PART 2
PRELIMINARY ANNOUNCEMENT OF PROFIT
Group profit and loss account
Year ended 4 March 2000 Notes 1999/2000(53 weeks) 1998/9 (52weeks)(restated)
------------------------------------------------------
Before Excep- Before Excep-
except- tional excep- tional
ional items ional items
items (note 3) Total items (note 3) Total
£m £m £m £m £m £m
------------------------------------------------------
Turnover
Group and share of
joint ventures
Continuing operations 3,697.1 - 3,697.1 3,398.9 - 3,398.9
Acquisitions 41.8 - 41.8 - - -
Less share of joint
ventures' turnover (787.5) - (787.5) (457.5) - (457.5)
-----------------------------------------------------
Group turnover 2 2,951.4 - 2,951.4 2,941.4 - 2,941.4
=====================================================
Group operating
profit -
continuing operations 389.1 (44.3) 344.8 375.7(29.8) 345.9
Share of operating
profit in:
Joint ventures 9.7 (34.2) (24.5) 9.3 - 9.3
Associates 12.3 - 12.3 9.9 - 9.9
-----------------------------------------------------
Operating profit of the
group, joint ventures
and associates 2,3
-----------------------------------------------------
Continuing operations 402.5 (63.5) 339.0 394.9(29.8) 365.1
Acquisitions 8.6 (15.0) (6.4) - - -
-----------------------------------------------------
411.1 (78.5) 332.6 394.9(29.8) 365.1
Non operating items -
continuing operations
Net profit/(loss)on disposal
of fixed assets
Group excluding joint
ventures and associates - 5.4 5.4 - 14.0 14.0
Joint ventures - (0.1) (0.1) - - -
Loss on the disposal of
businesses 9 - (1.8) (1.8) - (17.9) (17.9)
Share of joint venture's
fundamental restructuring
costs - (17.4) (17.4) - (6.9) (6.9)
-----------------------------------------------------
Profit before interest 411.1 (92.4) 318.7 394.9 (40.6) 354.3
Interest 4 (63.1) - (63.1) (53.2) - (53.2)
-----------------------------------------------------
Profit before taxation 348.0 (92.4) 255.6 341.7 (40.6) 301.1
Taxation 5 (81.1) 5.7 (75.4) (76.1) 2.5 (73.6)
-----------------------------------------------------
Profit after taxation 266.9 (86.7) 180.2 265.6 (38.1) 227.5
Equity minority interests (0.2) - (0.2) (0.2) - (0.2)
Preference dividends (0.3) - (0.3) (0.4) - (0.4)
-----------------------------------------------------
Profit earned for ordinary
shareholders 266.4 (86.7) 179.7 265.0 (38.1) 226.9
Ordinary dividends (146.5) - (146.5) (137.2) - (137.2)
-----------------------------------------------------
Retained profit for the
year 119.9 (86.7) 33.2 127.8 (38.1) 89.7
=====================================================
Earnings per share
(pence) 6
Basic 36.28 46.09
Adjusted basic 53.79 51.37
Diluted 36.18 45.64
Adjusted diluted 53.64 50.87
Dividends per share
(pence)
Interim 7.65 7.28
Proposed Final 21.85 20.50
Statement of total recognised gains and losses
1999/2000 1998/9
Year ended 4 March 2000 -----------------------
£m £m
Profit earned for ordinary
shareholders
Group excluding joint ventures and associates 219.0 245.0
Joint ventures (46.6) (1.7)
Associates 7.3 5.3
-----------------------
Group including joint ventures and associates 179.7 248.6
Prior year adjustments for depreciation
arising from the introduction of FRS 15 (141.3) -
Premium on cancellation of
preference stocks (0.2) -
Unrealised surplus on
revaluation of fixed assets - 7.3
-----------------------
38.2 255.9
Currency translation differences
on net foreign investment 3.0 (0.8)
------------------------
Total gains and losses
recognised since previous year end 41.2 255.1
=======================
Cash flow statement
Notes 1999/2000 1998/9
------- --------------------------------------
Year ended 4 March 2000 £m £m
Cash inflow from
operating activities 7 559.0 519.0
Dividends received from
joint ventures and
associates 1.7 2.4
Returns on investments and
servicing of finance
Interest received 7.2 13.5
Interest paid (86.2) (79.6)
Other dividends received 0.1 0.1
Loan interest received 1.8 2.2
Preference dividends paid (0.3) (0.4)
-------- --------
Net cash outflow from returns
on investments and servicing
of finance (77.4) (64.2)
Taxation
UK Corporation Tax paid (52.8) (72.5)
Capital expenditure and
financial investment
Property and plant purchased (372.3) (443.2)
Investments purchased and
loans advanced (12.2) (10.7)
Property and plant sold 16.9 116.6
Investments sold and loans
realised 22.9 14.9
-------- --------
Net cash outflow from capital
expenditure and financial
investment (344.7) (322.4)
Acquisitions and disposals
New businesses acquired 8 (632.4) (3.2)
Businesses sold 9 11.3 (6.6)
-------- --------
Net cash outflow
from acquisitions and
disposals (621.1) (9.8)
Equity dividends paid (139.3) (130.4)
-------- -------
Net cash outflow before
use of liquid resources
and financing (674.6) (77.9)
Management of liquid
resources
Net movement on short
term securities and
bank deposits 10 0.2 14.6
Financing
Issue of shares 10.9 8.5
Repayment of
preference stock (10.0) -
Net movement on short
term bank borrowings 10 2.0 8.7
Loan capital issued 10 1,070.2 64.3
Loan capital repaid 10 (368.3) 42.2
-------- --------
Net cash inflow from 704.8 39.3
financing -------- -------
Increase/(decrease)
in cash 10 30.4 (24.0)
======== =======
Balance sheet
-------------
4 March 2000
----------------
Notes 2000 1999 (restated)
--------------------------------------------
£m £m
Fixed assets
Intangible assets 157.7 8.5
Tangible assets 4,254.3 3,528.1
Investments
In joint ventures
Share of gross assets 235.3 302.8
Share of gross liabilities (108.6) (132.0)
126.7 170.8
In associates 50.0 43.9
Other investments 25.2 27.3
--------- ---------
4,613.9 3,778.6
--------- ---------
Current assets and liabilities
Stocks 64.9 65.2
Debtors 351.0 190.5
Cash at bank and in hand 123.1 48.3
--------- ----------
539.0 304.0
Creditors - amounts falling due
within one year (1,453.4) (764.5)
--------- ----------
Net current liabilities (914.4) (460.5)
--------- ----------
Total assets less current liabilities 3,699.5 3,318.1
Creditors - amounts falling due after
more than one year
Loan capital (1,120.2) (794.4)
Provisions for liabilities and charges (31.9) (28.4)
--------- ---------
2,547.4 2,495.3
========= =========
Capital and reserves
Called up share capital 124.2 133.4
Share premium account 196.6 180.8
Revaluation reserve 669.1 661.5
Other reserves - non distributable (20.5) 10.9
Profit and loss account 1,572.7 1,506.6
--------- ---------
Shareholders' funds 11 2,542.1 2,493.2
Equity minority interests 2.2 2.1
Non-equity minority interests 3.1 -
--------- ---------
2,547.4 2,495.3
========= =========
Notes to the accounts
---------------------
1. Changes to accounting policies
FRS 15 (Tangible Fixed Assets) has been adopted in the year. Under previous
accounting standards, where retail properties were maintained in such a state
of repair that their residual value was at least equal to their net book value
and the corresponding depreciation would not be material, depreciation need
not be charged. However FRS 15 now requires that retail properties are
disaggregated and that depreciation is charged on the separate components.
The effects of this are as follows:
* Freehold and leasehold retail properties are now depreciated.
* Fixtures and fittings in retail properties were previously included within
retail property in the fixed assets note and furniture and equipment were
included in plant and machinery. These two categories are now combined
under the heading 'Retail furniture, fixtures and equipment', and
depreciated. As required by FRS 15, because the group's assets have been
disaggregated into different components, with significantly differing
economic lives for depreciation purposes, the above changes have been
accounted for as prior year adjustments. An adjustment has been made to
account for backlog depreciation on fixtures and fittings which would have
been charged in previous years had the revised accounting policies been in
place when the current fixed asset portfolio was acquired.
A consequence of a subsequent UITF abstract is that the restatement does not
adjust 1998/9 to a comparable basis to 1999/2000. This arises in respect of
retail freehold buildings and retail leasehold buildings where the lease has
more than twenty years to run, for which there will be a depreciation charge
for the first time in 1999/2000. Had the comparative amount been restated
to a comparable basis, the depreciation charge for 1998/9 would have been
increased by a further £12.1m.
* In addition the implementation of FRS 15 has resulted in a backlog
depreciation adjustment in respect of fixtures and fittings in industrial
properties.
The effect on the segmental analysis of profit and net assets (see note 2) is
to reduce both as shown below. The effect of changing to a comparable basis
is also shown.
Impact of FRS 15
1998/9
1999/2000 1998/9 operating
---------- --------- --------- -------- profit on
Operating Net Operating Net comparable
profit assets profit assets basis
--------- --------- --------- -------- ---------
£m £m £m £m £m
Beer - (3.1) - (3.1) -
Pub Partnerships (3.1) (26.8) (2.1) (23.7) (3.0)
Inns (18.7) (72.7) (13.1) (54.0) (17.2)
Restaurants (8.9) (38.6) (5.6) (29.7) (7.3)
Hotels (5.7) (24.5) (0.3) (18.8) (4.0)
Sports, health and fitness (6.4) (17.6) (2.5) (11.2) (3.8)
Other drinks (0.4) (0.4) - - (0.4)
Central services - (0.8) - (0.8) -
--------- --------- --------- -------- ---------
(43.2) (184.5) (23.6) (141.3) (35.7)
========= ========= ========= ======== =========
In addition, FRS 16(Current Tax) has been adopted, which has led to tax relief
on the discount on shares issued to employees under share option schemes being
accounted for in the profit and loss account, rather than reserves as
previously. The amount of the relief is £0.5m (1998/9 - £1.9m). Comparative
amounts have been adjusted.
The company has amended its policy regarding the treatment of discounts and
promotional costs. Costs previously classified within administration and
other costs and cost of sales have been reclassified and deducted from
turnover. The effect of this adjustment on the profit and loss account is to
reduce turnover by £24.8m(1998/9 - £25.0m), administration and other costs by
£17.7m (1998/9 - £15.2m) and cost of sales by £7.1m (1998/9 - £9.8m). The
effect on the segmental analysis is to reduce the turnover of Beer by £5.1m
(1998/9 - £5.1m), Inns by £12.4m (1998/9 - £9.6m) and Restaurants by £7.7m
(1998/9 - £10.3), and to increase Sports, health and fitness by £0.4m (1998/9
- nil). There is no effect on operating profit. Comparative amounts for
1998/9 have been restated to reflect the revised policy.
2. Segmental analysis of turnover, profit and net assets
1999/2000 1998/9 (restated)
---------------------- -----------------------------------
Proforma
Operat- Operat- comparable
ing Net ing operating Net
Turnover profit assets Turnover profit profit* assets
---------------------- -----------------------------------
£m £m £m £m £m £m £m
Beer 1,116.0 46.5 298.9 1,053.5 51.6 51.6 304.9
Pub Partnerships 146.9 64.3 385.9 144.8 55.2 54.3 377.7
Inns 859.4 173.5 1,297.1 819.1 166.0 161.9 1,237.1
Restaurants 733.8 56.8 674.1 692.8 57.1 55.4 650.6
Hotels 287.5 53.7 1,184.0 222.8 47.7 44.0 540.3
Sports, health and
Fitness 103.6 23.0 405.1 78.0 18.8 17.5 263.2
Other drinks 656.7 14.4 131.6 647.7 19.0 18.6 176.6
Acquired business
awaiting disposal
(see note below) 10.8 1.3 129.6 - - - -
----------------------------------------------------------
Segmental turnover,
operating profit and
net assets 3,914.7 433.5 4,506.3 3,658.7 415.4 403.3 3,550.4
Inter-segment
turnover(see
note below) (244.4) (322.5)
Share of joint
ventures'
turnover (787.5) (457.5)
Central services 68.6 (18.0) (237.7) 62.7 (16.8) (16.8)(186.8)
Allocation to
Whitbread Share
Ownership Scheme (4.4) (3.7) (3.7)
Exceptional items
(see note 3) (78.5) (29.8) (29.8)
----------------------------------------------------------
2,951.4 332.6 4,268.6 2,941.4 365.1 353.0 3,363.6
==========================================================
By geographical segment
United Kingdom 2,880.5 327.6 4,249.5 2,870.5 359.7 347.6 3,340.6
Rest of the world 70.9 5.0 19.1 70.9 5.4 5.4 23.0
---------------------------------------------------------
2,951.4 332.6 4,268.6 2,941.4 365.1 353.0 3,363.6
=========================================================
* The proforma comparable operating profit for 1998/9 is the restated 1998/9
figure to reflect the adjusted effect of FRS 15 as if it had been applied
without the restriction of the subsequent UIFT abstract (note 1).
The acquired business awaiting disposal relates to the managed pubs business
acquired with Swallow Group plc.
Inter-divisional pricing for the supply of beer and related services has been
rebased to reflect current conditions in the market. The impact of this in
the current period is to reduce the profit of the Beer segment by £10.6m and
to increase the profits of Pub Partnerships, Inns and Restaurants by £4.4m,
£5.6m and £0.6m respectively. Comparative figures have not been changed.
The comparative turnover for Beer and the inter-segment turnover have been
increased by £50.3m to take account of inter-divisional sales previously
excluded.
The comparative turnover for Other drinks and the share of joint venture
turnover have both been increased by £13.9m to take account of sales
previously excluded.
The exceptional costs are detailed in note 3. The analysis is as follows:
1999/2000 1998/9
------------------------
£m £m
Beer - 16.6
Pub Partnerships, Inns and Restaurants* 10.3 -
Restaurants 7.2 13.2
Hotels 15.0 -
Other drinks 34.2 -
Central services 11.8 -
------------------------
78.5 29.8
========================
* These costs relate to the restructuring of these divisions into Pubs & Bars
and Restaurants. This was a combined project and there was no suitable
basis for allocating the costs to individual divisions.
Restaurants' segmental turnover includes the group's share of joint venture
turnover amounting to £130.4m (1998/9 - £121.0m) and Other drinks turnover is
derived wholly from the group's share of a joint venture (1998/9 - £335.6m).
Inter-segment turnover is from Beer to the other segments. Central services
turnover comprises, primarily, food distribution services provided to a joint
venture. The geographical analysis of turnover and profit is by source. The
analysis of turnover by destination is not materially different. Sales
between geographical segments are not material. The results and net assets of
the majority of Travel Inns are included in the divisions that operate them,
not in Hotels. Net assets included above are total net assets excluding net
debt.
In the profit and loss account, turnover of the group and share of joint
ventures includes sales from the group to joint ventures amounting to £220.2m
(1998/9 - £137.6m).
3. Exceptional items 1999/2000 1998/9
---------------------------------------
£m £m
Restructuring/rationalisation costs (14.4) (16.6)
Impairment of leasehold properties (7.2) (13.2)
Integration costs (15.0) -
Abortive acquisition costs (7.7) -
--------- ---------
Group excluding joint ventures and
associates (44.3) (29.8)
Impairment of investment in
First Quench (34.2) -
--------- ---------
Charged against operating profit (78.5) (29.8)
Non-operating items
Net profit on disposal
of fixed assets
Group excluding joint ventures and associates 5.4 14.0
Joint ventures (0.1) -
Loss on the disposal of businesses (note 9) (1.8) (17.9)
Share of First Quench's fundamental
restructuring costs (17.4) (6.9)
--------- ---------
(92.4) (40.6)
========= =========
The restructuring costs in 1999/2000 mainly relate to the reorganisation of
Pub Partnerships, Inns and Restaurants into the new Pubs & Bars and
Restaurants divisions. The rationalisation costs in 1998/9 relate to the exit
from two breweries and a regional distribution depot and customer service
centre in the six months to 29 August 1998, plus a bottling plant in the
second half of 1998/9. The integration costs relate to the acquisition of the
Swallow Group plc. Abortive acquisition costs relate to the lapsed Allied
Domecq Retailing offer.
4. Interest
1999/2000 1998/9
---------- --------
£m £m
Interest payable 73.4 74.8
Interest receivable (8.8) (15.4)
Interest capitalised (5.4) (10.8)
---------- --------
59.2 48.6
Interest payable:
Joint ventures 1.9 2.0
Associates 2.0 2.6
---------- --------
63.1 53.2
========== ========
5. Taxation
Current taxation on profits for the year
UK Corporation Tax at 30.08% (1998/9 - 31%) 81.9 73.3
Deferred tax (8.0) -
Overseas tax 0.4 0.4
---------- --------
74.3 73.7
Adjustments to earlier periods
Corporation Tax (4.6) (3.9)
---------- --------
69.7 69.8
Joint ventures 2.7 1.8
Associates 3.0 2.0
---------- --------
75.4 73.6
========== ========
The UK and joint venture Corporation Tax charges have been adjusted by £6.8m
reduction and £1.1m increase respectively (1998/9 - £1.7m and £0.8m reduction)
in respect of exceptional and non-operating items.
6. Earnings per share
Basic earnings per share is calculated by dividing earnings for ordinary
shareholders of £179.7m (1998/9 - £226.9m) by the weighted average number of
ordinary shares in issue during the year, 495.3m (1998/9 - 492.3m). Adjusted
basic earnings per share is calculated as follows:
Earnings (£m) Earnings per share (p)
------------------------ ----------------------
1998/9 1998/9
1999/2000 (restated) 1999/2000 (restated)
------------------------ ----------------------
Earnings and basic
earnings per share 179.7 226.9 36.28 46.09
Earnings and basic
earnings per share
attributable to:
Exceptional costs,
net of tax 71.7 28.1 14.48 5.71
Non-operating items,
net of tax 15.0 10.0 3.03 2.03
Adjust 1998/9 FRS 15
depreciation restatement
to comparable basis
(note 1) - (12.1) - (2.46)
---------------------------------------------------
Adjusted earnings
and basic earnings
per share 266.4 252.9 53.79 51.37
===================================================
The adjusted earnings per share is presented so as to show more clearly the
underlying performance of the group. 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 496.7m (1998/9 - 497.2m).
7. Net cash inflow from operating activities
1998/9
1999/2000 (restated)
------------ -----------
£m £m
Group operating profit 344.8 345.9
Investment income (0.3) (0.4)
Depreciation/amortisation 161.8 134.2
Impairment of leasehold properties 7.2 13.2
Movement on provisions 17.7 4.8
Other non-cash items 20.0 15.5
Decrease in stocks 3.2 32.2
Increase in debtors (5.7) (25.6)
Increase/(decrease) in creditors 10.3 (0.8)
------------ -----------
Cash flow from operating activities 559.0 519.0
============ ===========
8. Acquisitions
Fair value adjustments
Book Value --------------------------- Assets
of assets Accounting acquired at
acquired Revaluations policy changes fair value
----------- ------------ ------------ ------------
£m £m £m £m
Tangible fixed assets 556.2 13.8 - 570.0
Investments 9.9 (1.2) - 8.7
Net working capital,
excluding cash (29.5) (3.4) (2.0) (34.9)
Assets held awaiting disposal 109.1 34.8 - 143.9
Cash and overdrafts 26.5 - - 26.5
Loan Capital (122.5) (50.3) - (172.8)
Taxation (3.9) 2.0 - (1.9)
Minority interests (3.1) - - (3.1)
----------- ------------ ------------ -----------
Net assets acquired 542.7 (4.3) (2.0) 536.4
=========== ============ ============
Goodwill 151.0
-----------
Cost of new businesses 687.4
===========
Cash outflow in respect of new
businesses acquired 1999/2000 1998/9
--------- -------
£m £m
Cost of acquisitions 687.4 -
Deferred consideration (11.7) -
Payments in respect of previous
years' acquisitions 0.1 3.2
Swallow dividend paid to
Swallow shareholders 9.2 -
Loan stock issued as consideration (26.1) -
Cash and overdrafts of
businesses acquired (26.5) -
--------- -------
Cash outflow 632.4 3.2
========= =======
The acquisitions included above comprise principally: Racquets and Healthtrack
Group Ltd (acquired 30 September 1999),and Swallow Group plc (acquired 6
January 2000). A review of properties acquired has been carried out by
qualified surveyors. Retained properties have been revalued to their existing
use value and properties for disposal, which are included in debtors, have
been valued at their estimated net realisable value. Debentures with fixed
interest rate coupons have been revalued to fair value. The values of other
assets and liabilities have been adjusted to amounts estimated to be realised
or paid respectively.
9. Disposals 1999/2000
£m
-----------
Tangible fixed assets 11.3
Net working capital, excluding cash and overdraft (0.1)
Cash and overdraft (0.1)
---------
Carrying value of net assets 11.1
Goodwill written back 8.1
Provided in 1998/9 (6.2)
Loss on disposal (1.8)
---------
Net sale proceeds 11.2
Cash and overdraft on disposal 0.1
---------
Cash inflow 11.3
=========
The above relates to the disposal of Gatehouse Nurseries on 28 May 1999. The
loss in the profit and loss account for 1998/9 comprises the provision for
Gatehouse Nurseries included in the above table (£6.2m) and the loss on
disposal of Thresher to First Quench (£11.7m).
10. Reconciliation of net cash flow to movement in net debt
1999/2000 1998/9
----------- ---------
£m £m
Increase/(decrease) in cash in the period 30.4 (24.0)
Cash inflow from movement in loan capital (701.9) (22.1)
Cash inflow from movement in liquid resources (0.2) (14.6)
Cash inflow from movement in short-term borrowings (2.0) (8.7)
----------- ---------
Changes in net debt resulting from cash flows (673.7) (69.4)
Loan capital issued in connection with acquisitions (26.1) -
Loan capital acquired with acquisitions (172.7) -
Foreign exchange movements 4.7 (2.0)
Amortisation of premiums and discounts 14.9 3.1
---------- ---------
Movement in net debt in the period (852.9) (68.3)
Opening net debt (868.3) (800.0)
----------- ---------
Closing net debt (1,721.2) (868.3)
11. Shareholders' funds 2000 1999
--------- ----------
£m £m
Movements in shareholders' funds
Shareholders' funds at 27 February 1999
as published 2,634.5 2,477.3
Adjust for the implementation of FRS 15 (141.3) (117.7)
----------- --------
Shareholders' funds at 27 February 1999 - restated 2,493.2 2,359.6
Profit earned for ordinary shareholders 179.7 226.9
Dividends (146.5) (137.2)
----------- --------
33.2 89.7
Revaluation of tangible fixed assets - 7.3
Other recognised gains and losses
relating to the year 3.0 (0.8)
Goodwill on disposal 8.1 24.3
Other reserve movements (0.3) (0.1)
Share capital issued 14.9 13.2
Cancellation of preference stock (10.0) -
----------- --------
Shareholders' funds at 4 March 2000 2,542.1 2,493.2
=========== ========
Analysis of shareholders' funds
Equity shareholders' funds 2,542.1 2,483.4
Non-equity shareholders' funds - 9.8
----------- --------
2,542.1 2,493.2
=========== ========
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