Interim Results
Whitbread PLC
29 October 2002
29th October 2002
Interim results for the 6 months to August 31st, 2002
Strong profit and earnings growth
Highlights for continuing Whitbread*
• 11% growth in profit before exceptional items and tax to £121.3m
• Trading margin up from 13.9% to 15.2%
• Like-for-like sales up 2.1%
• Restaurants grow operating profit by 14%
• Travel Inn grows like-for-like sales 6.7%, operating profit 13%
• David Lloyd Leisure grows like-for-like sales 6.8%, operating profit 29%
• 'New Marriott' achieves 10% yield premium
Dividends and EPS
• Interim dividend 5.57p per share + 10%
• Adjusted earnings per share 28.91p +12%
(*Continuing Whitbread is the total group excluding the impact of the demerger
of Pubs & Bars and comprises the businesses owned by the group at March 3rd ,
2002)
Sir John Banham, Chairman, said: ' The strong growth in profit and earnings has
been achieved in tough market conditions and is a direct result of actions taken
by Whitbread management. This is the third reporting period in succession when
double digit earnings growth has been achieved by continuing Whitbread.
'The most notable feature of the half-year was the improving efficiency of the
continuing Whitbread businesses. Trading margin for continuing Whitbread
improved from 13.9% to 15.2% and return on capital was ahead in all segments
other than Marriott. Cash flow was strong with a net inflow of £11m.
'The board has confidence in the prospects for the group and this is reflected
in the interim dividend payment of 5.57p share, a 10% increase.
'On behalf of the board, I should like to thank every member of the Whitbread
team for their contribution to this excellent performance.'
David Thomas, Chief Executive, commented: 'These results provide further
evidence of the benefits from transforming Whitbread into a focused company with
strong brands, high quality assets and first rate people.
'The Marriott team maintained the brand's yield premium to the market both in
London and the provinces. Travel Inn delivered on its expansion programme while
still achieving nearly 7% like-for-like sales growth.
'In restaurants, both the pub and high street sectors improved their margins and
their return on capital. David Lloyd Leisure was ahead on every measure with a
particularly impressive 29% improvement in operating profit.
'I am confident that the actions we are taking, coupled with the growing
strength of our brand management teams, will deliver continued outperformance in
uncertain market conditions.
'I am also confident that we can extract further value from the assets we manage
on behalf of our shareholders as well as accelerating the organic growth of our
business. New site capital expenditure is focused on the brands which are
producing the strongest returns - Brewers Fayre, Brewsters, Travel Inn and David
Lloyd Leisure.
'Trading since the half-year has been encouraging with most of our major brands
improving their like-for-like sales position. After 32 trading weeks, Travel Inn
was ahead 6.6%, Beefeater 1.7%, Brewers Fayre 4.4% and David Lloyd Leisure 6.3%
but Marriott remained slightly negative at (0.7%).'
.................
Dividend
The interim dividend will be paid on 7th January 2003 to shareholders on the
register at the close of business on 8th November 2002.
Copies of the interim report will be sent to shareholders on 8th November, 2002
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.
Contacts:
David Reed 0207 806 5436
Eric Dodd 0207 806 5429
Jeremy Probert 0207 806 5443
Dan Waugh 0207 806 5442
Tulchan Communications 0207 353 4200
Pictures available at www.newscast.co.uk
A presentation for analysts will be held at Deutsche Bank, The Auditorium,
Winchester House, 1 Great Winchester Street, London EC2N 2DB. Registration from
09.00 am, presentation at 09.30 am. The presentation also will be webcast on
www.whitbread.co.uk If you prefer to listen in on the conference call rather
than the live webcast, please dial 020-8781-0576 and quote the 'Whitbread
Conference Call'. A replay of the conference call is available two hours
afterwards on 020-8288-4459. Passcode: 477562.
Operating Review
Marriott / Swallow
Sales £200.9m (1.4%)
Like-for-like sales (1.7%)
Operating profit £36.6m (14%)
Overall yield premium to the market was maintained at 25% in London and 19% in
the provinces. Profit per room achieved parity with the average of the three
leading competitors.
The former Swallow hotels continued to benefit from their conversion to the
Marriott brand. They outperformed the market with a 2% improvement in occupancy
and a 4.1% increase in like-for-like sales. They also achieved a 10% yield
premium to the market which was the target set at the time of their acquisition.
Total network occupancy was maintained at 72% although achieved room rate fell
2.4% as tourist and conference guests replaced American business travellers,
particularly in London.
Travel Inn
Sales £103.8m + 18%
Like-for-like sales + 6.7%
Operating profit £35.5m + 13%
Travel Inn did well to beat all its financial targets. Return on capital
continued to grow despite a significant investment in new hotels which will not
come on stream until 2003.
Occupancy was up from 84.7% to 85.3% helped by increasing recognition and
preference for the Travel Inn brand and by the effectiveness of BART, the
on-line reservation system. Access to the room inventory across the whole
network enables all Travel Inn receptionists to book guests into the nearest
available room once their chosen hotel is full. During the period some 126,000
room nights were sold through this highly effective cross-referral system.
The network continued to expand reaching 289 hotels and 16,461 rooms with a
further 1325 rooms already under construction. Achieved room rate grew from
£38.16 to £39.89.
Pub restaurants
Sales £302.2m + 1.0%
Like-for-like sales + 2.7%
Operating profit £46.9m + 6.3%
The disposal of 31 units meant overall sales were ahead only 1%. Brewers Fayre
grew like-for-like sales by 3.5% with the Brewsters brand performing
exceptionally well with 5% like-for-like growth. Operating margin grew by 0.3%
points to 18.8% and half-year return on capital improved from 7.3% to 7.6%.
Although Beefeater's like-for-like sales were only up 1.4%, operating margin
grew by 1.1% points to 10.2% and operating profit was ahead by 12%. Return on
capital also improved by 0.7% points. The top quartile of Beefeater's units
produced an annualised return on capital in excess of 18% and further action is
being taken to improve the performance of this brand.
High Street Restaurants (retained)
Sales £195.6m + 5.4%
Like-for-like sales + 0.5%
Operating profit £6.1m +69%
The slow down in London tourism affected like-for-like sales growth but the high
street brands were ahead on all other financial measures including return on
capital. Sales were up by more than 5% and conversion improved dramatically
with significant increases in operating margin and profit per outlet. The
Pelican Group of high street restaurants was disposed of during the period.
David Lloyd Leisure
Sales £88.4m + 10%
Like-for-like sales + 6.8%
Operating profit £20.6m + 29%
David Lloyd Leisure distanced itself yet further from its competitive set with
an across-the-board improvement in financial performance. Coupled with further
developments in services for members, this has made the brand the clear leader
in its industry.
The mature club performance was particularly impressive with revenue and profit
per member well ahead of last year. Mature club return on capital grew 0.7% to
7.9% for the half-year. Two newly built clubs opened during the period with
over 2,000 members each - almost three times historic membership levels - thus
further shortening the average build to maturity.
Two existing clubs were acquired and with two more to open during the second
half, the brand will reach 55 David Lloyd Leisure clubs in the current financial
year. Seven additional sites have been contracted. The number of members grew
15% to 284,463 and member retention was maintained at its previously high
levels.
FINANCE REVIEW
Comparability
The year over year comparability of these results is affected by the demerger of
the Pubs & Bars division 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 high
street business which was sold in May 2002.
Turnover
Turnover including joint ventures for continuing Whitbread declined by 2.4%.
Turnover including joint ventures grew on a like for like basis by 2.1%. With
the exception of Marriott/Swallow, all continuing businesses reported like for
like sales growth and total turnover increases. Marriott/Swallow's sales were
held back by the consequences of September 11.
Operating profit
Operating profit for continuing Whitbread grew by 6.8%. All divisions, with the
exception of Marriott/Swallow, contributed profit increases.
Profit margin for continuing Whitbread increased from 13.9% to 15.2%, while
return on capital for the half year increased from 4.9% to 5.2%. These
improvements were achieved despite the difficult trading conditions experienced
by Marriott/Swallow.
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 5.8% to £215.1m.
Exceptional items
Exceptional items before interest and tax amounted to a net charge of £2.9m.
This amount is analysed in note 3 to the accounts. The components are a net
loss of £7.8m on the disposal of businesses, partly offset by a net profit of
£4.9m on the disposal of fixed assets. The net loss on the disposal of
businesses is arrived at after accounting for £4.8m goodwill previously written
off. It relates to the disposals of the Pelican high street restaurant
businesses and the London-based Curzon gym business.
The corresponding figure for last year included £20.3m reorganisation costs
relating primarily to the demerger of Pubs & Bars.
Interest
The net interest charge fell by £7.3m to £29.8m. This reduction reflects a
lower level of net debt and lower interest rates this year. Net interest was
covered 5.1 times by operating profit. The weighted average rate of interest on
fixed rate sterling debt at the period end was 6.7%. Of the net sterling debt
at the period end, 59% was at fixed rates of interest.
Profit before exceptional items and tax
Profit before exceptional items and tax declined by 11%, as a result of the
demerger of Pubs & Bars. Profit at this level for continuing Whitbread
increased by 11%.
Taxation
As explained in note 1 to the accounts, the tax charge on profit before
exceptional items for the interim period has been calculated by applying the
forecast effective tax rate for the full year. The charge against profit before
exceptional items for the period of £40.2m represents an underlying rate of
33.1%. The charge includes deferred tax as detailed in note 5.
Earnings per share
Adjusted earnings per share, which excludes exceptional items and goodwill
amortisation, increased by 12% to 28.91p.
Dividend
An interim dividend of 5.57p per share, an increase of 10% over last year, will
be paid on 7 January 2003 to all shareholders on the register at the close of
business on 8 November 2002.
Cash flow
Net cash inflow before use of liquid resources and financing was £11m. This
outcome was arrived at after accounting for net capital expenditure of £91m and
for £23m net receipts from the disposals of Pelican and Curzon. £58m of capital
expenditure was spent on acquiring and developing new outlets.
Financing
Creditors at the half year end includes loan capital repayable within one year
of £235m, compared with £17m at the end of 2001/2. This explains the increase
in creditors and reduction in loan capital over the first half.
Net debt at the end of the half year amounted to £964m resulting in a balance
sheet gearing ratio of 49%.
Net asset value
Net asset value per share increased over the period from £6.37 to £6.59.
Pensions
In view of the recent proposal from the Accounting Standards Board to extend the
transitional arrangements for FRS17 ('Retirement Benefits'), we have continued
to account for pensions in accordance with SSAP24. We have therefore not
adopted FRS17 early, as previously intended.
The triennial review of our defined benefit scheme as at 31 March 2002, has
recently been performed. The SSAP24 charge for pensions in these accounts is
based on the results of this review.
During the transition period for FRS17, we will continue to report the financial
position of the pension fund as measured on that basis. At the end of our 2001/
2 financial year, there was a pension fund deficit of £84m on an FRS17 basis.
As a result of the subsequent decline in stock markets world-wide, this deficit
had increased by the end of the half year.
Proforma profit and loss account for continuing Whitbread
2002/3 2001/2 Growth
£m £m %
Divisional profit 159.2 148.4
Central costs (8.1) (6.9)
Operating profit 151.1 141.5 + 6.8
Interest (29.8) (32.2)
Profit before exceptional items and tax 121.3 109.3 +10.9
Group Profit and Loss Account
Six months to 31 August 2002 Notes 6 months to 31 Aug 2002
Before exceptional Exceptional items Total
items (note 3)
£m £m £m
Turnover
Group and share of joint ventures 990.9 - 990.9
Less share of joint ventures' turnover (77.3) - (77.3)
------------------ ------------------ ------------------
- Continuing operations 913.6 - 913.6
- Discontinued operations - - -
------------------ ------------------ ------------------
Group turnover 2 913.6 - 913.6
========== ========== ==========
Group operating profit 131.2 - 131.2
Share of operating profit in:
- Joint ventures 6.6 - 6.6
- Associates 13.3 - 13.3
---------------- ---------------- ----------------
- Continuing operations 151.1 - 151.1
- Discontinued operations - - -
------------------ ------------------ ------------------
Operating profit of the group, joint
ventures and associates 2 151.1 - 151.1
Non-operating items
Net profit/(loss) on disposal of fixed
assets
Group excluding joint ventures and
associates - 4.6 4.6
Joint ventures - 0.2 0.2
Associates - 0.1 0.1
Net loss on the disposal of businesses 8 - (7.8) (7.8)
Fundamental reorganisation costs - - -
---------------- ----------------- ------------------
Profit before interest 151.1 (2.9) 148.2
Interest 4 (29.8) - (29.8)
---------------- ----------------- ------------------
Profit before taxation 121.3 (2.9) 118.4
Taxation 5 (40.2) - (40.2)
----------------- ------------------ ------------------
Profit after taxation 81.1 (2.9) 78.2
Non-equity minority interests (0.2) - (0.2)
----------------- ------------------ -------------------
Profit earned for ordinary shareholders 80.9 (2.9) 78.0
Ordinary dividend (16.5) - (16.5)
------------------ ------------------- -------------------
Retained profit for the period 64.4 (2.9) 61.5
========== ========== ==========
Dividends per share (pence)
Interim 5.57
Final
Earnings per share (pence) 6
Basic 26.49
Adjusted basic 28.91
Diluted 26.39
Adjusted diluted 28.79
Group Profit and Loss Account (Continued)
Six months to 31 August 2002 Notes 6 months to 1 Sept 2001 Year to 2 Mar 2002
(restated) (restated)
Before exceptional After After
items exceptional exceptional
items items
£m £m £m
Turnover
Group and share of joint ventures 1,140.9 1,140.9 2,171.6
Less share of joint ventures' turnover (70.4) (70.4) (157.3)
------------------ ------------------ ------------------
- Continuing operations 944.5 944.5 1,888.4
- Discontinued operations 126.0 126.0 125.9
------------------ ------------------ ------------------
Group turnover 2 1,070.5 1,070.5 2,014.3
========== ========== ==========
Group operating profit 154.7 154.7 76.4
Share of operating profit in:
- Joint ventures 5.0 5.0 12.2
- Associates 12.3 12.3 16.9
---------------- --------------- -----------------
Continuing operations 141.5 141.5 75.0
Discontinued operations 30.5 30.5 30.5
---------------- --------------- -----------------
Operating profit of the group, joint
ventures and associates 2 172.0 172.0 105.5
Non-operating items
Net profit/(loss) on disposal of fixed
assets
Group excluding joint ventures and
associates - (0.1) (2.0)
Joint ventures - - -
Associates - - (0.2)
Net loss on the disposal of businesses 8 - (3.7) (3.9)
Fundamental reorganisation costs - (20.3) (25.0)
---------------- ----------------- ------------------
Profit before interest 172.0 147.9 74.4
Interest 4 (36.3) (37.1) (67.4)
---------------- ----------------- ------------------
Profit before taxation 135.7 110.8 7.0
Taxation 5 (45.1) (43.6) (59.4)
----------------- ------------------ ------------------
Profit/(loss) after taxation 90.6 67.2 (52.4)
Non-equity minority interests (0.1) (0.1) (0.2)
----------------- ------------------ ------------------
Profit/(loss) earned for ordinary
shareholders 90.5 67.1 (52.6)
Ordinary dividend (15.0) (15.0) (52.6)
------------------ ------------------ ------------------
Retained profit/(loss) for the period 75.5 52.1 (105.2)
========== ========== ==========
Dividends per share (pence)
Interim 5.05 5.05
Final 12.75
Earnings per share (pence) 6
Basic 18.24 (15.91)
Adjusted basic 25.77 47.85
Diluted 18.17 (15.91)
Adjusted diluted 25.67 47.68
Statement of total recognised gains and losses
Six months to 31 August 2002 6 months 6 months Year to
to 31 Aug 2002 to 1 Sept 2001 2 Mar 2002
£m £m £m
Profit/(loss) earned for ordinary shareholders
Group excluding joint ventures and associates 64.7 56.3 (71.0)
Joint ventures 4.1 3.3 7.4
Associates 9.2 7.5 11.0
------------ ------------ ------------
Group including joint ventures and associates 78.0 67.1 (52.6)
Currency translation differences on net foreign
investment 0.5 (1.8) (1.5)
------------ ------------ ------------
Total gains and losses recognised since previous
year end 78.5 65.3 (54.1)
====== ====== ======
Cash flow statement
6 months to 31 August 2002 Notes 6 months to 6 months to Year to
31 Aug 2002 1 Sept 2001 2 Mar 2002
£m £m £m
Cash inflow from operating activities 7 160.2 180.2 352.1
Dividends received from joint ventures
and associates 6.3 0.2 2.8
Returns on investments and servicing of
finance
Interest received 0.5 1.8 3.1
Interest paid (27.7) (36.7) (75.0)
------------ ------------ ------------
Net cash outflow from returns on
investments and servicing of finance (27.2) (34.9) (71.9)
Taxation (23.3) (36.7) (83.4)
Capital expenditure and financial
investment
Property and plant purchased (107.9) (155.8) (286.8)
Investments purchased and loans advanced (0.4) (7.9) (9.9)
Property and plant sold 17.5 1.7 64.4
Investments sold and loans realised - - 8.0
------------ ------------ ------------
Net cash outflow from capital
expenditure and financial investment (90.8) (162.0) (224.3)
Acquisitions and disposals
Businesses sold and demerged 8 23.3 462.1 461.6
------------ ------------ ------------
Net cash inflow from acquisitions and
disposals 23.3 462.1 461.6
Equity dividends paid (37.5) (113.3) (128.1)
------------ ------------ ------------
Net cash inflow before use of liquid
resources and financing 11.0 295.6 308.8
Management of liquid resources
Net movement on short term securities
and bank deposits 9 6.8 0.2 0.2
Financing
Minority dividends - - (0.2)
Issue of shares 1.1 5.3 6.3
Net movement on short term bank
borrowings 9 2.7 (8.3) (16.0)
Loan capital issued 9 3.0 2.5 5.0
Loan capital repaid # 9 (16.9) (278.2) (303.5)
------------ ------------ ------------
Net cash outflow from financing (10.1) (278.7) (308.4)
------------ ------------ ------------
Increase in cash 9 7.7 17.1 0.6
====== ====== ======
# The net of receipts and payments on a revolving credit facility is included in
loan capital repaid.
Balance Sheet
31 August 2002 Notes 31 Aug 2002 1 Sept 2001 2 Mar 2002
£m £m £m
Fixed assets
Intangible assets 145.7 154.1 149.9
Tangible assets 3,004.0 3,022.6 2,996.1
Investments
In joint ventures
------------ ------------ ------------
- Share of joint ventures' gross
assets 75.5 70.6 70.9
- Share of joint ventures' gross
liabilities (37.6) (42.7) (37.5)
Loans to joint ventures 5.9 13.9 5.9
------------ ------------ ------------
43.8 41.8 39.3
In associates 66.7 60.3 63.6
Other investments 6.8 8.6 6.9
------------ ------------ ------------
3,267.0 3,287.4 3,255.8
------------ ------------ ------------
Current assets and liabilities
Stocks 26.3 28.9 28.1
Debtors 143.8 169.2 112.0
Cash at bank and in hand 101.1 110.1 73.1
------------ ------------ ------------
271.2 308.2 213.2
Creditors - amounts falling due within
one year (662.9) (534.3) (431.8)
------------ ------------ ------------
Net current liabilities (391.7) (226.1) (218.6)
------------ ------------ ------------
Total assets less current liabilities 2,875.3 3,061.3 3,037.2
Creditors - amounts falling due after
more than one year
Loan capital (747.6) (998.3) (978.5)
Provisions for liabilities and charges (169.4) (156.3) (170.2)
------------ ------------ ------------
1,958.3 1,906.7 1,888.5
====== ====== ======
Capital and reserves
Called up share capital 148.0 147.6 147.7
Share premium account 7.1 3.7 4.4
Revaluation reserve 139.4 138.7 140.4
Other non-distributable reserves (1,802.3) (1,820.6) (1,815.5)
Profit and loss account 3,459.6 3,431.9 3,405.0
------------ ------------ ------------
Shareholders' funds 10 1,951.8 1,901.3 1,882.0
Equity minority interests 3.4 2.3 3.4
Non-equity minority interests 3.1 3.1 3.1
------------ ------------ ------------
1,958.3 1,906.7 1,888.5
====== ====== ======
Notes to the accounts
1. Basis of preparation of accounts
The interim accounts were approved by the board on 28 October 2002. They have
been prepared on the basis of the accounting policies set out in the 2001/2
group accounts. The taxation charge on profit before exceptional items for the
interim period has been calculated by applying the forecast effective tax rate
for the full year.
The balance sheet as at 2 March 2002 and the profit and loss account and cash
flow statement for the year ended on that date are extracts from the statutory
accounts which have been delivered to the Registrar of Companies. The auditors'
report on the statutory accounts was unqualified and did not contain a statement
under section 237 of the Companies Act 1985.
2. Segmental analysis of turnover, profit and net assets
6 months to 31 August 2002 Turnover EBITDA (S) Operating profit # Net assets
£m £m £m £m
By business segment
Hotels - Marriott/Swallow 200.9 57.7 36.6 1,241.1
- Travel Inns 103.8 43.9 35.5 500.8
------------ ------------ ------------ ------------
304.7 101.6 72.1 1,741.9
------------ ------------ ------------ ------------
Restaurants
- Pub Restaurants 302.2 62.1 46.9 776.4
- High Street Restaurants
- retained 195.6 14.2 6.1 117.7
- High Street Restaurants -
disposed of 23.3 1.4 0.7 -
------------ ------------ ------------ ------------
521.1 77.7 53.7 894.1
------------ ------------ ------------ ------------
Sports, Health and Fitness 88.4 30.3 20.6 478.8
------------ ------------ ------------ ------------
914.2 209.6 146.4 3,114.8
Beer & Other Drinks 32.9 12.8 12.8 58.8
------------ ------------ ------------ ------------
Segmental turnover, profit and
net assets 947.1 222.4 159.2 3,173.6
Inter-segment turnover (see note
below) (1.3)
Share of joint ventures'
turnover (77.3)
Central costs 45.1 (7.3) (8.1) (251.1)
------------ ------------ ------------ ------------
913.6 215.1 151.1 2,922.5
====== ====== ====== ======
By geographical segment
United Kingdom 880.5 212.8 150.5 2,885.7
Rest of the world 33.1 2.3 0.6 36.8
------------ ------------ ------------ ------------
913.6 215.1 151.1 2,922.5
====== ====== ====== ======
2. Segmental analysis of turnover, profit and net assets (continued)
6 months to 1 September 2001 Turnover EBITDA (S) Operating Net assets
(restated) profit #
By business segment £m £m £m £m
Hotels - Marriott/Swallow 203.7 63.2 42.4 1,243.2
- Travel Inns 87.9 38.7 31.5 448.6
------------ ------------ ------------ ------------
291.6 101.9 73.9 1,691.8
------------ ------------ ------------ ------------
Restaurants
- Pub Restaurants 299.1 58.8 44.1 805.4
- High Street Restaurants -
retained 185.5 10.4 3.6 117.1
- High Street Restaurants -
disposed of 51.6 1.4 (0.5) 51.7
------------ ------------ ------------ ------------
536.2 70.6 47.2 974.2
------------ ------------ ------------ ------------
Sports, Health and Fitness 80.4 25.5 16.0 441.7
------------ ------------ ------------ ------------
908.2 198.0 137.1 3,107.7
Pubs & Bars 126.0 36.0 30.5 (4.6)
Beer & Other Drinks 38.6 11.3 11.3 56.1
------------ ------------ ------------ ------------
Segmental turnover, profit and
net assets 1,072.8 245.3 178.9 3,159.2
Share of joint ventures'
turnover (70.4)
Central costs 68.1 (5.9) (6.9) (260.2)
------------ ------------ ------------ ------------
1,070.5 239.4 172.0 2,899.0
====== ====== ====== ======
By geographical segment
United Kingdom 1,036.4 237.0 171.3 2,862.4
Rest of the world 34.1 2.4 0.7 36.6
------------ ------------ ------------ ------------
1,070.5 239.4 172.0 2,899.0
====== ====== ====== ======
• EBITDA is earnings before interest, tax, depreciation and amortisation.
The figures for the six months to 1 September 2001 have been restated to reflect
the transfer of the supply chain function from Central costs to Restaurants.
The effect is not material.
# Operating profit is stated after charging the amortisation of goodwill as
follows:
6 months to 6 months to
31 Aug 2002 1 Sept 2001
£m £m
Hotels - Marriott/Swallow 4.0 4.1
Sports, Health and Fitness 0.2 0.2
Following the sale of The Whitbread Beer Company there remains a continuing
activity within the Beer & Other Drinks 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.
Segmental turnover includes the Group's share of joint ventures turnover as
follows:-
6 months to 6 months to
31 Aug 2002 1 Sept 2001
£m £m
Hotels - Marriott/Swallow - 0.8
- Travel Inns 1.3 0.6
High Street Restaurants 76.0 69.0
------------ ------------
77.3 70.4
====== ======
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.
Notes to the accounts
3. Exceptional items
6 months to 6 months to Year to
31 Aug 2002 1 Sept 2001 2 Mar 2002
£m £m £m
Restructuring/rationalisation costs
- Group excluding joint ventures and associates - - (1.7)
Impairment of leasehold properties - - (26.3)
Impairment of goodwill - - (146.5)
------------ ------------ ------------
Charged against operating profit - - (174.5)
Non-operating items
Net profit/(loss) on disposal of fixed assets
- Group excluding joint ventures and associates 4.6 0.2 (2.0)
- Joint ventures 0.2 - -
- Associates 0.1 (0.3) (0.2)
Net loss on the disposal of businesses (note 8) (7.8) (3.7) (3.9)
Fundamental reorganisation costs
- Demerger of Pubs & Bars - transaction costs - (14.4) (14.6)
- Reorganisation costs - (5.9) (10.4)
------------ ------------ ------------
(2.9) (24.1) (205.6)
====== ====== ======
The restructuring costs in 2001/2 relate to the disposal of the Pelican High
Street Restaurants business. The impairment of leasehold properties relates to
leasehold properties, operated by Pelican. The impairment of goodwill relates
to the goodwill created, and previously written off to reserves, on the
acquisition of the Pelican and BrightReasons businesses. An equivalent amount
has been added to reserves (see note 10).
4. Interest
6 months to 6 months to Year to
31 Aug 2002 1 Sept 2001 2 Mar 2002
£m £m £m
Interest payable 30.7 38.4 71.4
Interest receivable (0.5) (1.7) (3.1)
Interest capitalised (1.0) (1.5) (3.3)
------------ ------------ ------------
29.2 35.2 65.0
Interest payable by:
Joint ventures 0.3 0.3 0.9
Associates 0.3 0.8 0.7
Exceptional interest payable* - 0.8 0.8
------------ ------------ ------------
29.8 37.1 67.4
====== ====== ======
* The exceptional interest payable represents refinancing costs associated with
the demerger of the Pubs & Bars business.
5. Taxation
6 months to 6 months to Year to
31 Aug 2002 1 Sept 2001 2 Mar 2002
£m £m £m
Current taxation on profits for the period before
exceptional items
UK Corporation Tax 26.3 30.2 47.8
Adjustments to UK Corporation Tax for earlier
periods (0.3) (1.2) (4.0)
------------ ------------ ------------
26.0 29.0 43.8
Overseas tax - - (0.2)
Adjustments to overseas tax for earlier periods - - (0.1)
Joint ventures 2.3 1.4 3.8
Associates 3.9 3.7 5.0
------------ ------------ ------------
32.2 34.1 52.3
Current tax on operating exceptional items
Group - - (0.5)
Current tax on non-operating exceptional items
Group - (1.5) (3.6)
------------ ------------ ------------
Total current taxation 32.2 32.6 48.2
------------ ------------ ------------
Deferred tax on profit before exceptional items
Timing differences - Group 8.4 11.0 11.1
Adjustments to Deferred Tax for earlier periods (0.5) - -
Timing differences - Joint Ventures 0.1 - 0.1
------------ ------------ ------------
Total deferred taxation 8.0 11.0 11.2
------------ ------------ ------------
Total taxation charge 40.2 43.6 59.4
====== ====== ======
6. Earnings per share
Basic earnings per share is calculated by dividing earnings for ordinary
shareholders of £78.0m (2001 - £67.1m) by the weighted average number of
ordinary shares in issue during the period, 294.4m (2001 -367.9m). Adjusted
basic earnings per share is calculated as follows:
Earnings (£m)
6 months 6 months Year to
to 31 Aug 2002 to 1 Sept 2001 2 Mar 2002
Earnings and basic earnings per share 78.0 67.1 (52.6)
Earnings and basic earnings per share
attributable to:
Goodwill amortisation 4.2 4.3 8.5
Exceptional items, net of tax 2.9 23.4 202.3
------------ ------------ ------------
Adjusted earnings and basic earnings
per share 85.1 94.8 158.2
====== ====== ======
Earnings per share (p)
6 months 6 months Year to
to 31 Aug 2002 to 1 Sept 2001 2 Mar 2002
Earnings and basic earnings per share 26.49 18.24 (15.91)
Earnings and basic earnings per share
attributable to:
Goodwill amortisation 1.43 1.17 2.57
Exceptional items, net of tax 0.99 6.36 61.19
------------ ------------ ------------
Adjusted earnings and basic earnings
per share 28.91 25.77 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 295.6m (2001 - 369.3m).
7. Net cash inflow from operating activities
6 months 6 months Year to
to 31 Aug 2002 to 1 Sept 2001 2 Mar 2002
£m £m £m
Group operating profit 131.2 154.7 76.4
Depreciation/amortisation 64.0 67.4 130.2
Impairment of leasehold properties and goodwill - - 172.8
Payments against provisions (2.4) (17.0) (24.6)
Other non-cash items (2.0) (3.6) (1.9)
(Increase) in stocks (0.2) (1.2) (0.1)
(Increase)/decrease in debtors (38.1) (35.7) 10.3
Increase/(decrease) in creditors 7.7 15.6 (11.0)
------------ ------------ ------------
Cash inflow from operating activities 160.2 180.2 352.1
====== ====== ======
8. Disposals
6 months
to 31 Aug 2002
£m
Fixed assets 34.6
Net working capital, excluding cash and overdraft (3.1)
Provisions (6.1)
Cash and overdraft 6.7
------------
Carrying value of net assets 32.1
------------
Gross sale proceeds 32.8
Less costs (3.7)
------------
Net sale proceeds 29.1
Goodwill previously written off to reserves (4.8)
------------
Loss on disposal (7.8)
======
Net sale proceeds 29.1
Accrued costs 1.3
Proceeds still outstanding (0.4)
Cash transferred with disposals (6.7)
------------
Cash inflow 23.3
======
The above relates to the disposal of the Pelican Group Ltd and BrightReasons
Group Ltd on 31 May 2002 and of Curzons Management Associates Ltd on 5 May 2002.
9. Reconciliation of net cash flow to movement in net debt
6 months 6 months Year to
to 31 Aug 2002 to 1 Sept 2001 2 Mar 2002
£m £m £m
Increase in cash in the period 7.7 17.1 0.6
Cash outflow from movement in loan capital 13.9 275.7 298.5
Cash inflow from movement in liquid resources (6.8) (0.2) (0.2)
Cash (inflow)/outflow from movement in short-term
borrowings (2.7) 8.3 16.0
------------ ------------ ------------
Changes in net debt resulting from cash flows 12.1 300.9 314.9
Foreign exchange movements (1.1) (1.2) 0.3
Amortisation of premiums and discounts 0.8 (0.7) 0.1
------------ ------------ ------------
Movement in net debt in the period 11.8 299.0 315.3
Opening net debt (976.0) (1,291.3) (1,291.3)
------------ ------------ ------------
Closing net debt (964.2) (992.3) (976.0)
====== ====== ======
10. Movements in shareholders' funds
31 Aug 2002 1 Sept 2001 2 Mar 2002
£m £m £m
Opening equity shareholders' funds 1,882.0 2,487.7 2,487.7
------------ ------------ ------------
Profit/(loss) earned for ordinary shareholders 78.0 67.1 (52.6)
Dividends (16.5) (15.0) (52.6)
------------ ------------ ------------
61.5 52.1 (105.2)
Other recognised gains and losses relating to
the period 0.5 (1.8) (1.5)
Goodwill on disposal 4.8 - -
Share capital issued 3.0 5.3 6.3
------------ ------------ ------------
Value of Pubs & Bars demerger - (1,611.6) (1,611.6)
Gain over book value - 487.1 477.3
------------ ------------ ------------
Gross assets demerged from group - (1,124.5) (1,134.3)
Value of debt demerged - 482.5 482.5
------------ ------------ ------------
Net assets demerged - (642.0) (651.8)
Impairment of goodwill (see note 3) - - 146.5
------------ ------------ ------------
Closing equity shareholders' funds 1,951.8 1,901.3 1,882.0
====== ====== ======
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