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Swallow Group Ltd (07IP)

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Friday 29 November, 2002

Swallow Group Ltd

Interim Results

Swallow Group Limited
29 November 2002



                             SWALLOW GROUP LIMITED

             Unaudited results for the six months to 31 August 2002


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 and the associate, for the six months to 31
August 2002 was £27.1m compared to £27.6m for the six months to 1 September
2001.  The directors do not propose to pay a dividend on the ordinary shares.


As a hotel group, the Swallow Group has been adversely affected by the impact of
the events of 11 September last year.  However, the former Swallow Hotels have
continued to benefit from their conversion to the Marriott brand.  Occupancy has
been maintained, although achieved room rate has fallen as tourist and
conference guests have replaced American business travellers, particularly in
London.


29 November 2002

Swallow Group Limited

Whitbread House

Park Street West

Luton

LU1 3BG

Group Profit and Loss Account

Six months to 31 August 2002

                                                    6 months to         6 months to 1.9.2001  Year ended 2.3.2002
                                                        31.8.2002                         £m                   £m
                                                               £m
                                        Notes                   


Turnover

Group and share of joint ventures                                 115.7                114.0                231.2

Less share of joint ventures' turnover                                -                (0.8)                (0.8)

                                                     ------------------   ------------------   ------------------

Group turnover                          2                         115.7                113.2                230.4

                                                             ==========           ==========           ==========



Group operating profit

- Continuing operations                                            27.0                 27.4                 51.9

Share of operating profit in:

Joint ventures                                                        -                  0.2                  0.2

Associates                                                          0.1                    -                    -

                                                      -----------------   ------------------   ------------------

Operating profit of the group, joint    2                          27.1                 27.6                 52.1
ventures and associates



Non-operating items

Net profit/(loss) on disposal of fixed
assets                                                            (0.2)                    -                  0.4
                                                       ----------------    -----------------   ------------------

Profit before interest                                             26.9                 27.6                 52.5

Interest                                3                         (6.1)                (6.2)               (12.3)

                                                       ----------------    -----------------   ------------------

Profit before taxation                                             20.8                 21.4                 40.2

Taxation                                4                         (6.7)                (7.1)               (13.0)

                                                      -----------------   ------------------   ------------------

Profit after taxation                                              14.1                 14.3                 27.2

Preference dividend                                               (0.1)                (0.1)                (0.2)

                                                     ------------------  -------------------  -------------------

Retained profit for the year                                       14.0                 14.2                 27.0

                                                             ==========           ==========           ==========


Earnings per share (pence)               5

Basic                                                               9.36                9.49               18.05

Adjusted basic                                                      9.16               10.36               18.31



Statement of total recognised gains and losses

Six months to 31 August 2002                                    6 months            6 months
                                                            to 31.8.2002         to 1.9.2001              2000/1

                                                                      £m                  £m                  £m
Profit earned for ordinary shareholders

Group excluding joint ventures and associates                       14.0                14.0                26.8

Joint ventures                                                         -                 0.2                 0.2

                                                            ------------        ------------        ------------

Total gains and losses recognised since previous
year end                                                            14.0                14.2                27.0
                                                                  ======              ======              ======


Cash flow statement


Six months to 31 August 2002             Notes               6 months to         6 months to          Year ended
                                                               31.8.2002            1.9.2001            2.3.2002
                                                                      £m                  £m                  £m

Cash flow from operating activities      6                          84.9                56.3                25.1

                                         
Returns on investments and servicing of
finance
Interest received                                                      -                   -                   -
Interest paid                                                      (6.2)               (6.2)              (12.4)
Preference dividends paid                                          (0.1)               (0.1)               (0.2)
                                                            ------------        ------------        ------------
Net cash outflow from returns on
investments and servicing of finance                               (6.3)               (6.3)              (12.6)

Taxation
UK Corporation Tax paid                                                -                   -               (7.5)
Capital expenditure and financial
investment
Property and plant purchased                                      (12.4)              (19.0)              (32.9)
Loans advanced                                                         -                   -               (2.4)
Property and plant sold                                              0.5                   -                 1.4
                                                            ------------        ------------        ------------
Net cash outflow from capital
expenditure and financial investment                              (11.9)              (19.0)              (33.9)

Acquisitions and disposals
New businesses acquired                  7                             -               (7.3)               (5.6)
                                                             -----------        ------------        ------------
Net cash inflow /(outflow) from
acquisitions and disposals                                             -               (7.3)               (5.6)
                                                            ------------        ------------        ------------
Net cash inflow before use of liquid
resources and financing                                             66.7                23.7              (34.5)
                                                                    
Management of liquid resources
Financing
Loan capital repaid                      8                             -                   -               (0.5)
                                                            ------------        ------------        ------------
Net cash outflow from financing                                        -                   -               (0.5)
                                                            ------------        ------------        ------------
Increase/(decrease) in cash              8                          66.7                23.7              (35.0)
                                                                  ======              ======              ======


Balance Sheet
31 August 2002                           Notes                 31.8.2002            1.9.2001            2.3.2002
                                                                      £m                  £m                  £m
Fixed assets

Intangible assets                                                 (16.5)              (17.5)              (17.0)

Tangible assets                                                    699.9               690.6               696.4

Investment in associate                                              2.4                   -                 2.4

                                                            ------------        ------------        ------------

                                                                   685.8               673.1               681.8

                                                            ------------        ------------        ------------

Current assets and liabilities

Stocks                                                               1.7                 1.7                 1.6

Debtors                                                             22.3                41.7                34.2

Cash at bank and in hand                                            95.7                85.0                71.9

                                                            ------------        ------------        ------------

                                                                   119.7               128.4               107.7

Creditors - amounts falling due within
one year                                                         (104.4)             (135.3)             (103.3)
                                                            ------------        ------------        ------------

Net current assets/(liabilities)                                    15.3               (6.9)                 4.4

                                                            ------------        ------------        ------------

Total assets less current liabilities                              701.1               666.2               686.2

Creditors - amounts falling due after
more than one year

Loan capital                                                     (121.1)             (118.7)             (121.1)

Provisions for liabilities and charges                            (31.1)              (25.4)              (30.2)
                                                                  
                                                            ------------        ------------        ------------

                                                                   548.9               522.1               534.9

                                                                  ======              ======              ======

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                38.1                38.1

Other non-distributable reserves                                     0.2                 0.2                 0.2

Profit and loss account                                            366.3               339.5               352.3

                                                            ------------        ------------        ------------

                                                                   548.9               522.1               534.9

                                                                  ======              ======              ======
Shareholders' funds

Equity shareholders funds                9                         545.8               519.0               531.8

Non-equity shareholders funds                                        3.1                 3.1                 3.1

                                                            ------------        ------------        ------------

                                                                   548.9               522.1               534.9

                                                                  ======              ======              ======


Notes to the accounts


1.      Basis of preparation of accounts


These interim accounts were approved by the board on 29 November 2002. They have
been prepared on the basis of the accounting policies set out in the 2001/2
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 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


The business of the group is primarily that of a hotelier.

                                                                                   Operating                 Net
                                                                Turnover              profit              assets
                                                                      £m                  £m                  £m

Six months to 31 August 2002                                       115.7                27.1               577.8

Six months to 1 September 2001                                     113.2                27.6               562.9



Operating profit is stated after (crediting)/charging:


                                                                                 6 months to         6 months to
                                                                                   31.8.2002            1.9.2001
                                                                                          £m                  £m

Goodwill amortisation                                                                  (0.5)                 1.3
                                                                                      ======              ======

During the six months ended 1 September 2001, the St Martins Nursing Home was
acquired creating goodwill of £1.7m, which was fully written off in the period.


All trade and assets held are within the United Kingdom.  Net assets included
above are total net assets excluding net debt.


3.            Interest


                                                                6 months            6 months          Year ended
                                                            to 31.8.2002         to 1.9.2001            2.3.2002
                                                                      £m                  £m                  £m

Interest payable                                                     6.2                 6.2                12.4

Interest capitalised                                               (0.2)                   -                   -

Interest receivable                                                    -                   -               (0.1)
                                                            ------------        ------------        ------------
                                                                     6.0                 6.2                12.3

Net interest payable by:

Associates                                                           0.1                   -                   -
                                                            ------------        ------------        ------------
                                                                     6.1                 6.2                12.3
                                                                  ======              ======              ======



4.            Taxation



                                                                6 months            6 months          Year ended
                                                            to 31.8.2002         to 1.9.2001            2.3.2002
                                                                      £m                  £m                  £m

Current taxation on profits for the period before
exceptional items

UK Corporation Tax                                                   5.8                 4.8                 5.9
                                                            ------------        ------------        ------------
Total current taxation                                               5.8                 4.8                 5.9
                                                            ------------        ------------        ------------

Deferred tax
Timing differences                                                   0.9                 2.3                 7.0
Adjustments to deferred tax for earlier periods                        -                   -                 0.1
                                                            ------------        ------------        ------------
Total deferred taxation                                              0.9                 2.3                 7.1
                                                            ------------        ------------        ------------
Total taxation charge                                                6.7                 7.1                13.0
                                                                  ======              ======              ======


5.            Earnings per share


Basic earnings per share is calculated by dividing earnings for ordinary
shareholders of £14.0m (2001 - £14.2m, 2001/2 - £27.0m) by the weighted average
number of ordinary shares in issue during the period, 149,570,000, (2001 -
149,570,000, 2001/2 - 149,570,000).  Adjusted basic earnings per share is
calculated as follows:



                                                              Earnings (£m)
                                                  6 months             6 months           Year ended
                                              to 31.8.2002          to 1.9.2001             2.3.2002

Earnings and basic earnings per share                 14.0                 14.2                 27.0

                                                      
Earnings and basic earnings per share
attributable to:
Net goodwill amortisation                            (0.5)                  1.3                  0.8
Exceptional items, net of tax                          0.2                    -                (0.4)
                                              ------------         ------------         ------------
Adjusted earnings and basic earnings
per share                                             13.7                 15.5                 27.4
                                                    ======               ======               ======


                                                          Earnings per share (p)
                                                  6 months             6 months           Year ended
                                              to 31.8.2002          to 1.9.2001             2.3.2002


Earnings and basic earnings per share                 9.36                 9.49                18.05

Earnings and basic earnings per share
attributable to:
Net goodwill amortisation                           (0.33)                 0.87                 0.53

Exceptional items, net of tax                         0.13                    -               (0.27)

                                              ------------         ------------         ------------
Adjusted earnings and basic earnings                  9.16                10.36                18.31
per share
                                                    ======               ======               ======


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.



6.         Net cash inflow from operating activities



                                                                                 6 months to          Year ended
                                                             6 months to            1.9.2001            2.3.2002
                                                               31.8.2002          (restated)          (restated)
                                                                    £m                    £m                  £m

Group operating profit                                              27.0                27.4                51.9

Depreciation/amortisation                                            7.5                 8.7                14.3

Increase in stocks                                                 (0.1)               (0.1)                   -

(Increase)/decrease in debtors                                       0.2               (2.0)                13.9

Increase/(decrease) in net creditor balances with
Whitbread Group                                                     50.2                25.1              (46.2)
                                                                    
Increase/(decrease) in creditors                                     0.1               (2.8)               (8.8)
                                                            ------------        ------------        ------------
Cash inflow from operating activities                               84.9                56.3                25.1
                                                                  ======              ======              ======


The movements on the inter-company balances with the Whitbread Group have been
separately shown rather than within debtors and creditors.  The comparatives
have been adjusted accordingly.


7.            Acquisitions


                                                        6 months             6 months           Year ended
                                                    to 31.8.2002          to 1.9.2001             2.3.2002
                                                              £m                   £m                   £m

Cash outflow in respect of new businesses
acquired
Cost of acquisitions                                           -                  9.7                  8.0
Loan notes issued                                              -                (2.4)                (2.4)
                                                    ------------         ------------         ------------
Cash outflow                                                   -                  7.3                  5.6
                                                          ======               ======               ======


8.            Reconciliation of net cash flow to movement in net debt


                                                             6 months to            6 months          Year ended
                                                               31.8.2002         to 1.9.2001            2.3.2002
                                                                      £m                  £m                  £m

Increase in cash in the period                                      66.7                23.7              (35.0)
Cash inflow from decrease in loan capital                              -                   -                 0.5
                                                            ------------        ------------        ------------
Changes in net debt resulting from cash flows                       66.7                23.7              (34.5)
Loan capital acquired with acquisitions                                -               (3.4)                   -
Loan capital issued in connection with acquisitions                    -               (2.4)               (2.4)
                                                            ------------        ------------        ------------
Movement in net debt in the period                                  66.7                17.9              (36.9)
Opening net debt                                                  (95.6)              (58.7)              (58.7)
                                                            ------------        ------------        ------------
Closing net debt                                                  (28.9)              (40.8)              (95.6)
                                                                  ======              ======              ======


9.            Movements in shareholders' funds


                                                                                    
                                                               31.8.2002            1.9.2001            2.3.2002
                                                                     £m                   £m                  £m

Opening equity shareholders' funds                                 531.8               504.8               504.8
Profit earned for ordinary shareholders                             14.0                14.2                27.0
                                                            ------------        ------------        ------------
Closing equity shareholders' funds                                 545.8               519.0               531.8
                                                                  ======              ======              ======


                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                                                                       

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