Swallow Group Interim Results

Whitbread PLC 3 December 2001 SWALLOW GROUP LIMITED Unaudited results for the six months to 1 September 2001 This interim announcement has been prepared for the benefit of preference shareholders and debenture holders of Swallow Group Limited, whose shares and stock are listed on the London Stock Exchange. The group has been a wholly owned subsidiary of Whitbread Group PLC throughout the period. The group's operating profit of continuing businesses before exceptional items, but including the joint venture, for the six months to 1 September 2001 was £27.3m compared to £20.7m. The directors do not propose to pay a dividend on the ordinary shares. The group has benefitted from a number of changes actioned by the Whitbread group last year that have impacted on the results this year. These include the transfer of the ownership of Country Club Hotels Limited from Whitbread to the Swallow group on 2 September 2000. In addition the group acquired the assets and businesses of Whitbread (GC) Limited and Lawnpark Limited, which is most of the Courtyard Marriott businesses owned by Whitbread on 3 March 2001. The group has also benefitted from the Grantham Marriott business acquired as Swingbridge Limited on 16 November 2000. The group has implemented FRS 19, Deferred Tax, during the period. The impact is described in note 1 to the accounts. During the period, the group acquired the remaining 50% ownership of the joint venture operating the Liverpool City Centre Marriott. 29 November 2001 Swallow Group Limited Whitbread House Park Street West Luton LU1 3BG Group Profit and Loss Account Six months to 1 September 2001 6 months to 6 months to Year ended 1.9.2001 2.9.2000 3.3.2001 Notes £m (restated) (restated) £m £m Turnover - Continuing 112.9 76.4 177.2 operations - Acquisitions 1.1 - - - Discontinued - 15.1 15.1 operations ------------------ ------------------ ------------------ Group and 114.0 91.5 192.3 share of joint ventures Less share of joint (0.8) (1.2) (2.6) ventures' turnover ------------------ ------------------ ------------------ Group turnover 113.2 90.3 189.7 ========== ========== ========== Group operating profit - Continuing 27.1 20.6 46.8 operations Less exceptional costs Reorganisation - (4.0) - costs Exceptional - (4.3) - bad debts - Acquisitions 0.3 - - - Discontinued - 3.0 3.0 operations ------------------ ------------------ ------------------ 27.4 15.3 49.8 Share of operating profit in: - Joint 0.2 0.1 0.5 ventures ------------------ ------------------ ------------------ Operating 27.6 15.4 50.3 profit of the group, joint ventures and associates Non-operating items Net profit/ (loss) on - 0.2 9.0 disposal of fixed assets Net profit on the disposal 20.0 22.5 of a business - Fundamental - - (6.1) reorganisation costs Provision for loss on the - (12.0) - disposal of business sold in previous years ---------------- ----------------- ------------------ Profit before 27.6 23.6 75.7 interest Interest 2 (6.2) (6.1) (12.0) ---------------- ----------------- ------------------ Profit before 21.4 17.5 63.9 taxation Taxation 3 (7.1) (7.8) (14.7) ----------------- ------------------ ------------------ Profit after 14.3 9.7 49.0 taxation Preference (0.1) (0.1) (0.1) dividend ------------------ ------------------- ------------------- Retained 14.2 9.6 48.9 profit for the year ========== ========== ========== Earnings per share (pence) 4 Basic 9.49 6.42 32.69 Adjusted basic 10.36 7.15 15.38 Statement of total recognised gains and losses Six months to 1 September 2001 6 months 6 months 2000/1 to 1.9.2001 to 2.9.2000 (restated) £m (restated) £m £m Profit earned for ordinary shareholders Group excluding joint ventures and 14.0 9.5 48.5 associates Joint ventures 0.2 0.1 0.4 ------------ ------------ ------------ Group including joint ventures and 14.2 9.6 48.9 associates Prior year adjustments arising from the implementation of FRS 19 (14.5) - - Adjust comparative periods for the implementation of FRS 15 - (1.2) - ------------ ------------ ------------ Total gains and losses recognised since previous year end (0.3) 8.4 48.9 ====== ====== ====== Movements in shareholders' funds 1.9.2001 2.9.2000 3.3.2001 £m (restated) (restated) £m £m Movements in shareholders' funds Opening equity shareholders' funds - as reported 519.3 464.9 464.9 Prior year adjustment on the implementation of FRS 19 (14.5) (9.0) (9.0) Adjust comparative periods for the implementation of FRS 15 - (1.2) - ------------ ------------ ------------ Opening equity shareholders' funds - 504.8 457.6 455.9 restated Profit earned for ordinary shareholders 14.2 9.6 48.9 ------------ ------------ ------------ Closing equity shareholders' funds 519.0 464.3 504.8 ====== ====== ====== Cash flow statement Six months to 1 September 2001 Notes 6 months to 6 months to 2000/1 1.9.2001 2.9.2000 £m £m £m Cash flow from operating 5 activities 56.3 (71.7) 89.8 Returns on investments and servicing of finance Interest received - 0.1 0.1 Interest paid (6.2) (6.3) (12.1) Preference dividends paid (0.1) (0.1) (0.1) ------------ ------------ ------------ Net cash outflow from returns on investments and servicing of finance (6.3) (6.3) (12.1) Taxation UK Corporation Tax paid - (1.6) (1.8) Capital expenditure and financial investment Property and plant purchased (19.0) (9.9) (40.1) Property and plant sold - 6.6 12.2 ------------ ------------ ------------ Net cash outflow from capital expenditure and financial investment (19.0) (3.3) (27.9) Acquisitions and disposals New businesses acquired 6 (7.3) - (106.3) Businesses sold - 111.1 113.6 ----------- ------------ ------------ Net cash inflow / (outflow) from acquisitions and disposals (7.3) 111.1 7.3 ------------ ------------ ------------ Net cash inflow before use of liquid resources and financing 23.7 28.2 55.3 Management of liquid resources Financing Loan capital repaid 7 - (6.2) (6.3) ------------ ------------ ------------ Net cash outflow from financing - (6.2) (6.3) ------------ ------------ ------------ Increase in cash 7 23.7 22.0 49.0 ====== ====== ====== Balance Sheet 1 September 2001 Notes 1.9.2001 2.9.2000 3.3.2001 £m (restated) (restated) £m £m Fixed assets Intangible assets (17.5) - (17.9) Tangible assets 690.6 482.6 663.8 Investments - In joint ventures - Share of gross assets - 5.8 6.4 - Share of gross liabilities - (2.9) (3.1) ------------ ------------ ------------ - 2.9 3.3 ------------ ------------ ------------ 673.1 485.5 649.2 ------------ ------------ ------------ Current assets and liabilities Stocks 1.7 0.9 1.6 Debtors 41.7 124.2 36.7 Cash at bank and in hand 85.0 34.4 61.1 ------------ ------------ ------------ 128.4 159.5 99.4 Creditors - amounts falling due within one year (135.3) (32.5) (98.9) ------------ ------------ ------------ Net current assets / (liabilities) (6.9) 127.0 0.5 ------------ ------------ ------------ Total assets less current liabilities 666.2 612.5 649.7 Creditors - amounts falling due after more than one year Loan capital (118.7) (115.0) (118.7) Provisions for liabilities and charges (25.4) (30.1) (23.1) ------------ ------------ ------------ 522.1 467.4 507.9 ====== ====== ====== Capital and reserves Called up share capital 18.1 18.1 18.1 Share premium account 126.2 126.2 126.2 Revaluation reserve 38.1 92.2 38.1 Other reserves - non-distributable 0.2 0.3 0.2 Profit and loss account 339.5 230.6 325.3 ------------ ------------ ------------ Shareholders' funds Equity shareholders funds 519.0 464.3 504.8 Non-equity shareholders funds 3.1 3.1 3.1 ------------ ------------ ------------ 522.1 467.4 507.9 ====== ====== ====== Notes to the accounts 1. Basis of preparation of accounts These interim accounts were approved by the Board on 29 November 2001. They have been prepared on the basis of the accounting policies set out in the 2000 /1 accounts, except in respect of Deferred Tax as set out below. 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 balance sheet as at 3 March 2001 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. FRS 19 (Deferred Tax) has been adopted in the current period. The comparative amounts have been restated to comply with the new standard. The effect on the profit and loss account is to increase the taxation charge for the Group by £ 2.3m (2000 - £2.0m, 2000/1 - £5.3m). The balance sheet effect is to increase provisions by £25.4m (2000 - £11.0m, 2000/1 - £23.1m) and to decrease the negative goodwill by £8.3m (2000 - £nil, 2000/1 - £8.6m). Provisions for deferred tax have not been calculated on a discounted basis. 2. Interest 6 months 6 months 2000/1 to 1.9.2001 to 2.9.2000 £m £m £m Interest payable 6.2 6.1 12.1 Interest receivable - - (0.2) ------------ ------------ ------------ 6.2 6.1 11.9 Net interest payable by: Joint ventures - - 0.1 ------------ ------------ ------------ 6.2 6.1 12.0 ====== ====== ====== 3. Taxation 6 months 2000/1 6 months to 2.9.2000 (restated) to 1.9.2001 (restated) £m £m £m Current taxation on profits for the period before exceptional items UK Corporation Tax 4.8 4.8 9.6 Adjustments to earlier periods UK Corporation Tax - - (0.2) ------------ ------------ ------------ 4.8 4.8 9.4 Current tax on non-operating exceptional items Group - 1.0 - Deferred tax Timing differences 2.3 2.0 5.3 ------------ ------------ ------------ 7.1 7.8 14.7 ====== ====== ====== 4. Earnings per share Basic earnings per share is calculated by dividing earnings for ordinary shareholders of £14.2m (2000 - £9.6m, 2000/1 - £48.9m) by the weighted average number of ordinary shares in issue during the period, 149,570,000, (2000 - 149,570,000, 2000/1 - £149,570,000). Diluted earnings per share are not shown separately, as there is no dilutive effect. Adjusted basic earnings per share is calculated as follows: Earnings (£m) 6 months 6 months to 2.9.2000 2000/1 to 1.9.2001 (restated) (restated) Earnings and basic earnings per share 14.2 9.6 48.9 Earnings and basic earnings per share attributable to: Net goodwill amortisation 1.3 - (0.5) Exceptional items, net of tax - 1.1 (25.4) ------------ ------------ ------------ Adjusted earnings and basic earnings per share 15.5 10.7 23.0 ====== ====== ====== Earnings per share (p) 6 months 6 months 2000/1 to 1.9.2001 to 2.9.2000 (restated) (restated) Earnings and basic earnings per share 9.49 6.42 32.69 Earnings and basic earnings per share attributable to: Net goodwill amortisation 0.87 - (0.33) Exceptional items, net of tax - 0.73 (16.98) ------------ ------------ ------------ Adjusted earnings and basic earnings per share 10.36 7.15 15.38 ====== ====== ====== 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. 5. Net cash inflow from operating activities 6 months to 2000/1 6 months to 2.9.2000 (restated) 1.9.2001 (restated) £m £m £m Group operating profit 27.4 15.3 49.8 Depreciation/amortisation 8.7 4.5 11.7 Payments against provisions - (3.4) - Other non-cash items - 8.3 (6.0) (Increase) / decrease in stocks (0.1) 0.1 0.2 Increase in amount due from parent - (90.7) - company Increase in debtors (4.1) (3.5) 22.3 Increase in creditors 24.4 (2.3) 11.8 ------------ ------------ ------------ Cash inflow/(outflow) from operating 56.3 (71.7) 89.8 activities ====== ====== ====== 6. Acquisitions Cash outflow in respect of new 6 months 6 months 2000/1 to 1.9.2001 to 2.9.2000 £m £m £m Cost of acquisitions 9.7 - 106.5 Loan notes raised to fund acquisitions (2.4) - - Cash and overdrafts of businesses acquired - - (0.2) ------------ ------------ ------------ Cash outflow 7.3 - 106.3 ====== ====== ====== 7. Reconciliation of net cash flow to movement in net debt 6 months 6 months 2000/1 to 1.9.2001 to 2.9.2000 £m £m £m Increase in cash in the period 23.7 22.0 49.0 Cash inflow from movement in loan - 6.2 6.3 capital ------------ ------------ ------------ Changes in net debt resulting from cash 23.7 28.2 55.3 flows Loan capital acquired with acquisitions (3.4) - (4.0) Loan capital issued in connection with acquisitions (2.4) - - ------------ ------------ ------------ Movement in net debt in the period 17.9 28.8 51.3 Opening net debt (58.7) (110.0) (110.0) ------------ ------------ ------------ Closing net debt (40.8) (81.8) (58.7) ====== ====== ======

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