21st May 2020 09:55
(Alliance News) - Whitbread PLC on Thursday reported a rise in earnings for financial 2020 but slashed its annual dividend payout as it announced plans to raise GBP1 billion through a fully underwritten rights issue.
Shares in the Premier Inn-owner were trading 12% lower at 2,505.00 pence each on Thursday morning in London, the worst FTSE 100 performer.
For its financial year that ended February 27, Whitbread's revenue rose 1.1% to GBP2.07 billion from GBP2.05 billion reported for financial 2019. Pretax profit was GBP280 million, a 28% increase from GBP218 million the year prior. The increase in profit was largely due to separation costs incurred in the prior year from the disposal of the Costa coffee-shop business.
Adjusted pretax profit fell by 8.2% to GBP358 million due to a weaker UK travel market, high industry-wide inflation, and the start-up of German hotel operations, the company said.
No final dividend for financial 2020 was declared in an effort to conserve cash amid Covid-19-related uncertainty. As a result, the full-year payout amounts to 32.7p, a sharp 67% cut from 99.7p paid the year before. Future dividend payments have been suspended, Whitbread said.
"Whitbread delivered a resilient financial performance in FY20 in line with expectations, against a backdrop of low UK business and consumer confidence which particularly impacted the regional hotel market. The commercial initiatives we implemented during H1 helped drive a particularly strong end to the year, when we were trading ahead of the market and achieving very strong guest scores," said Chief Executive Alison Brittain.
Turning to more recent events, the FTSE-100 listed company said it had "significant" liquidity entering the new financial year and the Covid-19 crisis, but it now intends to raise GBP1.01 billion via a fully underwritten rights issue to provide a platform for future growth and investment.
It said its UK hotels are ready to open when the government advises, but added that its internal scenario assumes that hotels will be closed, or will have low levels of occupancy, until September.
"The purpose of the rights issue is to ensure that Whitbread emerges from the Covid-19 pandemic in the strongest possible position to take advantage of its long-term structural growth opportunities and win market share in both the UK and Germany," the company said.
The fundraise is fully underwritten by JP Morgan Cazenove and Morgan Stanley, which are acting as joint global coordinators.
Whitbread added that the funds also will provide further liquidity headroom in the event of a resurgence of the Covid-19 outbreak. As at May 15, the company had cash of GBP300 million and access to a GBP950 million revolving credit facility of which GBP50 million is already drawn.
By Ife Taiwo; [email protected]
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