26th Apr 2005 07:00
Whitbread PLC26 April 2005 PRESS RELEASE 26th April 2005 Whitbread PLC preliminary results for the financial year to 3 March 2005 Financial highlights • Group sales up 6.8% to £2,111m (2003/4: £1,977.4m) • Total group like-for-like sales up 2.6% • Profit before tax and exceptional items up 9.4% to £263.5m (2003/4: £240.8m)• Profit before tax up 17.8% to £249.4m (2003/4: £211.7m)• Adjusted basic earnings per share up 10.1% to 64.08p• Final dividend up 13.6% to 18.35p; full-year dividend up 13.2% to 25.25p• Underlying return on capital employed up 0.4 percentage points to 10.5%* • Cashflow from operations £440m (2003/4: £383m) *pre-tax, exceptional items and Premier Lodge Operating highlights • Comprehensive review of business • Acquisition of Premier Lodge and creation of Premier Travel Inn • Consolidation of pub restaurants under one management team • Key appointments to senior management team • Exit from Marriott hotels business announced Sir John Banham, chairman Whitbread PLC, said: "The last 12 months have seen theopening of an exciting new chapter in the Whitbread story. The acquisition andsuccessful integration of Premier Lodge to form Premier Travel Inn wasaccompanied by continued good growth in sales, like-for-like sales and byanother steady improvement in return on capital employed (on an underlyingbasis). For the fourth year in succession we have achieved double-digit growthin adjusted earnings per share." Alan Parker, chief executive Whitbread PLC, said: "We have created a strongplatform to build upon in three sectors of the hospitality market where we haveleading positions: budget hotels; restaurants; and sports, health and fitnessclubs. We expect to realise £1.3 billion through the sale of Marriott Hotels andother assets that are not core to our strategy. This restructuring, which is nowsubstantially complete, will step up Whitbread's return on capital employed. Wewill make a significant return of cash to our shareholders and reduce both ourdebt and our pension fund deficit."For further information contact: Christopher Rogers, group finance director 020 7806 5412 Whitbread investor relationsDan Waugh 020 7806 5442Simon French 020 7806 5432 Whitbread corporate communicationsAnna Glover 07747 766958Abigail Langan 01582 396745 Tulchan CommunicationsAndrew Honnor 020 7353 4200 (Pictures available to press at www.newscast.co.uk -020 7608 1000) A presentation for analysts will be held at Deutsche Bank, Winchester House, 1 Great Winchester Street, London EC2N 2DB. Registration is from 9.00am;presentation is at 9.30am. A live audio webcast of the presentation will be available on the investors section of the website at: www.whitbread.co.uk Alternatively, you can listen to the presentation by dialling: +44 (0) 20 8901 6909 and quoting 'Whitbread'. The conference call will be available as a replay for one week. To listen dial +44 (0) 20 8515 2499 and use the pass code 651009#. Chief executive's review In a year of transformation, Whitbread has made progress against the keystrategic measures of earnings growth and return on capital employed. For the fourth year in succession we have generated double-digit growth inadjusted earnings per share. On an underlying basis (excluding the acquired Premier Lodge assets andexceptional items), group return on capital employed improved to 10.5% from10.1%. Both Premier Travel Inn and our high street restaurants had an outstanding year.Performance from pub restaurants has been mixed and a new management team hasbeen appointed. David Lloyd Leisure has achieved sales and profit growth in acompetitive market. In Marriott, where we have been unable to generate acceptable returns, we madethe decision to crystallise value for shareholders through a complete exit. Across the group we have increased turnover by 6.8% and strengthened groupmargin by 0.7% point to 15.5%, driving a 9.4% improvement in profit beforeexceptional items and tax. Like-for-like sales were ahead by 2.6% and we have continued the organic growthof our businesses, with outlet numbers across the group increasing by 15%. Investment in new sites, mainly for Premier Travel Inn, Brewers Fayre and DavidLloyd Leisure, totalled £681m, including the acquisition of Premier Lodge. By placing a sharper focus on the value that we offer our guests and byleveraging the benefits of scale we aim to enhance the competitive positions ofeach of our businesses, driving long term growth and further improvements inreturn on capital employed. Outlook The underlying trends seen in the last quarter of 2004/5 have continued. • Total group sales growth in the first seven weeks of the new financial year has remained strong, primarily due to the contribution from Premier Travel Inn. • Growth in like-for-like sales has slowed, particularly in pub restaurants and David Lloyd Leisure. Despite signs of a less confident consumer, we anticipate ongoing Whitbreaddelivering increased sales in the year ahead. A tightening environment is evident from the higher costs arising from nationalminimum wage, utility charges and the five-year rating revaluation. We aretaking steps to limit the impact of these increases through operationaleffectiveness and margin management and we shall keep capital expenditure underdisciplined review. The Board believes that Whitbread is well placed for further organic growth,improvements in returns and dividends growing faster than earnings per share.This confidence is reflected in the Board's recommendation of a 13.6% increasein the final dividend, bringing the total for the year to 25.25p. 2004/5 ChangePremier Travel Inn Sales £323m +41%Like-for-like sales* +6.4%Operating profit pre-exceptional items £109m +47%Operating profit post-exceptional items £103m +39%Return on capital employed* 15.7% +2.1% pts *excludes Premier Lodge and exceptional items The performance of Premier Travel Inn has been particularly encouraging withsales increasing from £230m to £323m and operating profit up 47% to £109m. Although this level of growth is due in part to the acquired Premier Lodge units(which contributed 32 weeks trading), like-for-like sales growth of 6.4% andreturn on capital employed of 15.7% in the former Travel Inn outlets,demonstrate the health of the business. Operating profit in former Travel Inn pushed ahead by 17.8%, driven byimprovements in occupancy, room rate and operating margin. Occupancy moved up to81.2% from 80.2% as London units experienced a stronger first half than in theprevious year and achieved room rate grew by 4.2% to £43.25. Room yieldincreased by 5.6% to £35.14. We have opened 817 new bedrooms in addition to the 9,498 from Premier Lodge. Weplan to open 1,800 new bedrooms in 2005/6. We have introduced Travel Inn's transparent pricing policy into the formerPremier Lodge units, eliminating discounts and commission payments. This hascontributed to a 6.5% year-on-year increase in room yield in these units sincethe acquisition. The integration of Travel Inn and Premier Lodge to form Premier Travel Inn tookjust 32 weeks, creating the UK's largest hotels business, with more than 28,400bedrooms in 452 locations across the UK. Its completion - on time and within budget - creates a platform for growth andwill enable Whitbread to generate cost and revenue synergies. We have rebuilt our reservations system to accommodate the acquired and 'pipeline' bedrooms. This should enable us to raise occupancy in the formerPremier Lodge outlets towards the higher levels enjoyed by Travel Inn. With a larger estate, we are better able to retain and recycle demand through 'cross-sell' (where we offer guests the nearest available Premier Travel Innbedroom if their first choice location is unavailable). Cross-selling generated£16.6m of revenue over the course of the year, and we anticipate substantialgrowth in 2005/6. By directing a higher proportion of reservations through the internet, we areimproving operational efficiency and making it simpler for guests to book. Onaverage the internet accounted for 31% of all our room reservations in 2004/5.The former Premier Lodge outlets experienced particularly strong growth with webbookings rising from 19% prior to acquisition to more than 30% by year-end. To strengthen awareness of the new brand and to generate demand across ourestate we launched in February a national television advertising campaign and anewly created Premier Travel Inn website. Pub restaurants 2004/5 ChangeSales £597m +1.1%Like-for-like sales +1.3%Operating profit pre-exceptional items £78.3m (6.9)%Operating profit post-exceptional items £78.0m (7.3)%Return on capital employed* 10.1% (1.4)% pts*excludes pubs acquired as part of Premier Lodge and exceptional items After a difficult start to the year, like-for-like sales improved in the thirdquarter. This level of improvement was not maintained in the final quarter andfor the year as a whole, margin, operating profit and return on capital employeddeclined. Our largest pub restaurant brand, Brewers Fayre had another good year. After aslow start, Beefeater improved in the second half but Brewsters hasunderperformed. In January we consolidated all our pub restaurants under one management team. Byoperating as one business we will be able to achieve benefits of synergy andscale from our 600-strong estate. We aim to generate stronger sales growth by delivering better value to ourcustomers, making our range of dishes more competitive and raising levels ofservice. We will be integrating within Brewers Fayre the majority of our remaining 144Brewsters branded outlets, which have been focused too heavily on youngfamilies. Conversion to Brewers Fayre's more traditional pub restaurant formatallows us to increase dining space and broaden their consumer appeal, whilstmaintaining a family-friendly environment. We have converted a total of 57 Beefeaters to our new format with 25 more tofollow in 2005/6. We aim to generate performance uplift by extending ourrefreshed menu and service style across the entire Beefeater estate and byadapting our offering to drive sales throughout the week. We have added 31 outlets to our estate and we will continue to grow in 2005/6. The execution of our plans will lead to continued disruption in the short-term,but we believe that we have taken the actions that will underpin sustainedgrowth. High street restaurants 2004/5 ChangeSales £476m +5.1%Like-for-like sales +1.2%Operating profit £35.2m +24%Return on capital employed 28.2% +2.9% pts For the fourth year in succession, our high street restaurants have deliveredgrowth in operating profit greater than 20%. A strong rise in outlet numbers, mainly from Costa and Pizza Hut, generated goodsales increases and contributed to a 1.1% points improvement in operatingmargin. Costa has added 66 new stores in the UK and has continued to enhance the qualityof its estate by exiting under-performing outlets. Over the course of 2005/6 Costa will accelerate its rate of growth, with anincreasing proportion of new stores being opened under franchise agreements. Through franchising, Costa is developing into an international retail business.Our presence in the Middle East has doubled and we now have 77 stores trading innine countries in the region. Also we have signed agreements to take the brandinto India, Ireland and Cyprus. Over the last year, we have made a number of operational improvements at TGIFriday's to drive sales and strengthen margin. By streamlining the TGI Friday'smenu (removing a total of 45 items) we have simplified our back-of-houseoperations, improved our speed of service and made gains on our guestsatisfaction scores. We have opened new TGI Friday's stores in Bath and Harrogate and in 2005/6 weexpect to open in Fulham Broadway, Newcastle-upon-Tyne and Poole. Outlet growth of 50 new stores at Pizza Hut fuelled further increases in salesand operating profit. David Lloyd Leisure 2004/5 ChangeSales £219m +8.3%Like-for-like sales +3.6%Operating profit pre-exceptional items* £51.0m +3.9%Operating profit post-exceptional items* £41.0m (16.5)%Return on capital employed*# 9.5% 0% pt * before goodwill amortisation # before exceptional items In a competitive market, David Lloyd Leisure continues to generate sales andprofit growth. The business delivered like-for-like sales growth of 3.6%, while new andrecently opened clubs have performed ahead of our expectations. Return on capital employed for our mature clubs remains impressive at 15.1%,while for the business as a whole it stands at 9.5%. As competition has intensified and consumer confidence weakened, we have seenincreased attrition and slowing new member sales. This contributed to a declinein total UK membership, which finished the year down 2.3%. Revenue per member improved while our membership retention dropped 1% point to72%. Sales in the first half of 2005/6 will reflect the lower opening member numbers,although we expect to rebuild membership as the year progresses. We will drivenew member sales through better marketing and a sharper focus on the health andfitness member. In addition we aim to strengthen membership retention throughthe introduction of new service skills training and a focus on brand standards. Our new club in Worthing, West Sussex, has performed well, opening in November2004 with record member numbers for a new club. In 2005/6 we will open two clubs in the UK, at Kingshill in Kent and atSouthend-on-Sea in Essex. Our overseas clubs have had a good year with membership rising to more than40,000. We have added two clubs in the Netherlands to the five that we acquiredfrom Cannons in 2003/4 and in November we opened our first club in Belgium, atBrussels. Our Dublin club continues to perform well and in June we will open our firstclub in Spain, at Barcelona. In its centenary year, the prestigious Real Club deTenis del Turo will re-open under the David Lloyd Leisure banner. Marriott 2004/5 ChangeSales £389m (0.6)%Like-for-like sales +3.5%Operating profit pre-exceptional items* £67.4m (5.7)%Operating profit post-exceptional items* £47.0m (16.1)%Return on capital employed*# 6.1% (0.1)% pt *Before goodwill amortisation # before exceptional items With the full-service hotels market in gradual recovery, Marriott deliveredlike-for-like sales growth for the first year since 2000/1. However, with theSwallow Hotels and Courtyard by Marriott disposals leading to a reduction in thesize of the estate, operating profits fell by 5.7%. Underlying growth in profit, excluding contributions from disposed hotels, wasflat. Occupancy in these hotels edged ahead by 1.8% points to 72.6% and achievedroom rate improved by 4% to £74.04, as Marriott recorded a 6.8% increase in roomyield. Marriott's London hotels have been affected by the weakness of the US dollar,which appears to be stifling a full recovery of the North American businesstraveller market. An effective leisure breaks marketing campaign run over December and January anda good performance in the conference market gave us a strong finish to the year. In March 2005 we announced our decision to exit the ownership and operation ofour Marriott business. On 22 April a proposal to sell the majority of ourfull-service hotel assets into a joint venture with Marriott Internationalreceived shareholder approval. Through this transaction we expect to realise atleast £1bn over the next two years. Britannia Soft Drinks Britannia Soft Drinks (Britvic) enjoyed solid trading, despite less favourablesummer weather. However, the business's increased investment in existing and newbrand extensions, IT and business infrastructure and increased pension costs ledto an 18% decline in operating profit. Britannia Soft Drinks paid to Whitbread acash dividend for the year of £11.9m. FINANCE REVIEW Whitbread reported financial highlights for the year ended 3 March 2005 are setout below: 2005 2004 Increase £m £m % Turnover (including share of joint ventures) 2,111.0 1,977.4 6.8Operating profit before exceptional items 327.8 293.0 11.9Profit before tax and exceptional items 263.5 240.8 9.4Exceptional items before tax (14.1) (29.1) 51.5Profit before tax 249.4 211.7 17.8Adjusted earnings per share 64.08p 58.22p 10.1Dividend per share 25.25p 22.30p 13.2Underlying return on capital employed 10.5% 10.1% 0.4%pts The group has undergone significant change since Alan Parker took over as ChiefExecutive in June 2004: In July 2004 we acquired Premier Lodge for £505 million and a further 19 pubrestaurant sites for £31.2 million. The lodges are now integrated in PremierTravel Inn and the pub restaurants in Brewers Fayre; In March 2005 after the year-end, we announced the disposal of our franchisedMarriott hotels business. Following the EGM on 22 April 2005 we expect thistransaction to complete on 5 May 2005; With the appointment of Christopher Rogers as Finance Director on 1 May 2005seven of Alan Parker's direct reports will have changed. The most immediate impact on the financial statements comes from the PremierLodge acquisition and under each heading we have tried to identify theunderlying effect as well as the group total. The longer reaching impact will,of course, result from the changing management and the reshaping of the groupfollowing the Marriott disposal. Year-end date These accounts are drawn up to 3 March 2005 and represent 52 weeks trading. Thisis five fewer days than last year but, consistent with our practice, comparisonsare shown year-on-year. Accounting policies Accounting policies adopted in preparing these accounts are consistent with theprevious year. Turnover Group turnover grew by 7% year-on-year to £1,913 million. Of this, £80 million,representing year-on-year growth of 4.5%, resulted from the acquisition ofPremier Lodge. Underlying growth of 2.5% was largely a function of like-for-likesales growth, which averaged 2.6% across the brands. Acquisitions and disposalsof individual sites broadly netted out. Operating profit (before exceptionals) Operating profit grew strongly by 11.9% year-on-year. Of this growth, £21million, or 7.2%, came from Premier Lodge. The underlying growth of 5% reflects particularly strong growth from Travel Inn(as was) and high street restaurants. Profit margins increased from 14.8% to 15.5%. Return on capital, based on year-end assets, reduced from 10.1% to 9.4%. Howeverthe profit and loss account contains only seven months' trading for PremierLodge although the assets are fully reflected in the balance sheet. Adjustingfor this return on capital grew from 10.1% to 10.5%. Once again these improvements reflect the focus throughout the business on costcontrol and asset management. Operating profit (after exceptionals) Operating profit grew by 4.8%. Exceptional items Net exceptional costs before interest and tax amounted to £14.1 million. Thisamount is analysed in note 4 to the accounts. In essence there are four items. We made a profit versus book value, on the disposal of 11 Courtyard by MarriottHotels and, in view of the transaction with Marriott announced on 14 March, havewritten down the remaining hotels. We also considered it prudent to provide £10 million against four David Lloydclubs that are not currently performing as well as we would like. These write-downs are both non-cash items. The £6.5 million one-off costs in Premier Travel Inn represent the costs ofintegration. The final item is the net result of the profits and losses on individualrestaurant property disposals during the year amounting to approximately £2million profit. Interest (before exceptionals) The net interest charge rose from £52.2 million to £64.3 million; of this £17.7million relates to the borrowings the group took out to purchase and convertPremier Lodge and the19 adjacent pub restaurants. Interest rates have risen year-on-year but the underlying cash generation of thebusiness has enabled a reduction in the underlying interest charge. Net interest was covered 5.1 times by operating profit but with Premier Lodge ona 12 month proforma basis the cover would fall to 4.5 times. Tax The charge of £81.6 million against profit before exceptionals represents a taxrate of 31% (2003/4: 32%). The factors affecting the tax charge are explained innote 9 to the accounts but the principal reason for the reduction year-on-yearis that previous year tax credits have been agreed and recognised in theaccounts. The exceptional tax credit of £9.1 million is the tax relief we expect to gainas a result ofthe exceptional charges. Shareholder returns Basic earnings per share (EPS) were 59.56p while adjusted EPS were 64.08p, anincrease of 10.1% year-on-year. Adjusted EPS excludes exceptional items andgoodwill amortisation. The total dividend for the year of 25.25p per share represents an increase of13.2%. In October the Board announced its intention to grow dividends fasterthan earnings per share. As a result the full year dividend is covered 2.4times by profit before exceptionals. The final dividend of 18.35p per ordinaryshare (as at year-end) will be paid on 8 July 2005 to all shareholders on theregister at the close of business on 6 May 2005. This will be the equivalent of21.4p per New Ordinary Share following the share consolidation, approved at theEGM on 22 April 2005. The company's share price opened the year at 740p and closed it at 889p. Netasset value per share increased over the year from 703p to 736p. Capital expenditure £261 million was invested in property and plant compared with £230 million lastyear. This is in the range indicated 12 months ago. Of this amount £127 million (2003/4: £96 million) related to the acquisition anddevelopment of new sites. The current forecast is for capital expenditure in the range £250-275 millionfor 2005/6. The majority of the expansionary capital will be directed to PremierTravel Inns, David Lloyd Leisure clubs and Brewers Fayres. Cash flow Overall, the group had a net cash outflow before use of liquid resources andfinancing of £477 million after paying £554 million to acquire and developPremier Lodge. Adjusting for acquisitions and disposals in both years the grouphad a net cash inflow of £12 million, after investing heavily in organic sitegrowth, compared with £46 million last year. Divisional free cash flow rose from £268 million to £322 million. Pensions For the final time the charge in the profit and loss account is based on SSAP 24and the triennial valuation at 31 March 2002 when the deficits on the fundsamounted to £64 million. Note 7 sets out in considerable detail the impact of moving to FRS17 on both the2003/4 and 2004/5 Financial Statements. The deficits in the Pension Funds onthis basis have fallen to £242 million after allowing for deferred tax (£346million gross) from the £256 million at the start of the year. Financial position Net debt at the year-end amounted to £1,264 million, a rise of £471 millionduring the year principally brought about by the acquisition cost of PremierLodge. Balance sheet gearing was 57% at the year-end. At the year-end committed facilities of £334 million were unused. Immediatelyfollowing the year-end, and to facilitate the transaction with Marriott, the£275 million facility was cancelled and a new £200 million facility taken out. Going concern The directors have a reasonable expectation that the group has adequateresources to continue operating for the foreseeable future. For this reason, thegoing concern basis continues to be adopted in preparing the accounts. Financial risks and treasury policies The main financial risks faced by the group relate to: the availability of fundsto meet business needs; fluctuations in interest rates; and the risk of defaultby a counter party in a financial transaction. The Treasury Committee, which is chaired by the Finance Director, reviews andmonitors the treasury function. The undertaking of financial transactions of aspeculative nature is not permitted. The group finances its operations by a combination of internally generated cashflow, bank borrowings and long-term debt market issues.The group seeks to achieve a spread in the maturity of its debts. Interest rate swaps and interest rate caps are used to achieve the desired mixof fixed and floating rate debt. The group's policy is to fix or cap aproportion of projected net interest costs over the next five years. This policyreduces the group's exposure to the consequences of interest rate fluctuations. Interest rate risk management At the year-end, £423 million (33%) of group net debt was fixed for a weightedaverage of 6.6 years using fixed rate borrowings and interest rate swaps. Theaverage rate of interest on this fixed rate sterling debt was 6.8%. Based on the group's net debt position at the year end, a 1% change in interestrates would affect costs by approximately £8 million or around 2.5% of the 2004/5 operating profit before exceptionals. Foreign currency risk management At the year end, foreign currency borrowings amounted to £84 million. Theseborrowings provide a partial hedge against overseas investments. Transaction exposures resulting from purchases in foreign currencies arenormally hedged by forward foreign currency transactions and currency options. International Financial Reporting Standards (IFRS) Whitbread is required to adopt IFRS for financial reporting from 2005 onwards.The Group's first results reported under IFRS will be the interim results for2005/6. Prior to this, we will publish a set of comparable figures on an IFRSbasis. We set out below the principal areas for 2004/5 that will be affected by theadoption of IFRS compared with UK GAAP, based on IFRS expected to be in force at2 March 2006. These standards are subject to review and endorsement by the EUand interpretative guidance by the IASB and are therefore subject to change.The information below is for illustrative purposes only and is subject tofurther review and external audit. £m Profit Earned forUnaudited Ordinary Shareholders Net Assets Share-based payments (3) -Pensions accounting # (14) (312)Income tax (including deferred tax) (137)Goodwill amortisation/impairment 7 7Dividends 55Net impact (10) (387) # Includes joint ventures and associates The principles of IAS 39 require that financial instruments be measured at fairvalue. Whitbread uses derivative financial instruments to hedge its exposure tofluctuations in interest rates. The profit and net assets impact of thismarking to market of financial instruments, and the associated tax, has not beenincluded above. Britannia Soft Drinks In March 2004, we announced that the existing shareholders in Britannia SoftDrinks Limited (BSD) had signed an agreement with PepsiCo, which creates anopportunity to undertake an initial public offering (IPO) of BSD. In conjunctionwith the other shareholders we will determine the best time to realise thisopportunity. Whitbread has a 23.75% shareholding in BSD. Post Balance Sheet event On 14 March 2005 we announced the intention to dispose of the whole of ourinterest in our Marriott Hotels business, principally by way of a disposal ofthe Hotel properties to a Joint Venture (jointly owned with Marriott) and thetransfer of the Hotel Management to Marriott UK. The detail of this transactionwas set out in a circular to shareholders dated 5 April 2005. The transactionwas approved at the EGM on 22 April 2005. Also approved at that meeting was a special dividend of 135p per share and aconsolidation of shares on a 6 for 7 basis. The special dividend will be paid on20 May 2005 and the consolidation will become effective from 16 May 2005. On 25 April 2005 the group announced that it has signed a conditional agreementto dispose of its German restaurant business. The total cash proceeds,including a repatriation of capital prior to the sale, will be 35.6 millionEuros, slightly in excess of book value. This transaction is expected tocomplete in May 2005. David RichardsonFinance Director25 April 2005 Group profit and loss accountYear Ended 3 March 2005 Notes 2004/5 Before exceptional items Exceptional items £m (note 3) Total £m £mTurnover Group and share of joint ventures 2,111.0 - 2,111.0 Less share of joint ventures' turnover (198.1) - (198.1) ------------------ ------------------ ------------------ Ongoing businesses 1,832.8 - 1,832.8 Acquisitions 80.1 - 80.1 ------------------ ------------------ ------------------ Group turnover - continuing operations 2 1,912.9 - 1,912.9 ================== ================== ================= Ongoing businesses 268.7 (30.4) 238.3 Acquisitions 21.2 (6.5) 14.7 ------------------ ------------------ ------------------ Group operating profit, continuingoperations 289.9 (36.9) 253.0 Share of operating profit in: Joint ventures 19.3 - 19.3 Associates 18.6 - 18.6 ------------------ ------------------ ------------------ Operating profit of the group, jointventures and associates - continuingoperations 2 327.8 (36.9) 290.9 Non-operating items, continuingoperations Net profit/(loss) on disposal of fixedassets: Group excluding joint ventures andassociates - 22.9 22.9 Joint ventures - (0.1) (0.1) Associates - - - ------------------ ------------------ ------------------ Ongoing businesses 306.6 (7.6) 299.0 Acquisitions 21.2 (6.5) 14.7 ------------------ ------------------ ------------------ Profit/(loss) before interest,continuing operations 327.8 (14.1) 313.7 Interest 4 (64.3) - (64.3) ------------------ ------------------ ------------------ Profit/(loss) before tax 263.5 (14.1) 249.4 Tax 5 (81.6) 9.1 (72.5) ------------------ ------------------ ------------------ Profit after tax 181.9 (5.0) 176.9 Equity minority interests (0.1) - (0.1) Non-equity minority interests (0.2) - (0.2) ------------------ ------------------ ------------------ Profit earned for ordinary shareholders 181.6 (5.0) 176.6 Ordinary dividends (75.0) - (75.0) ------------------ ------------------ ------------------ Retained profit for the year 106.6 (5.0) 101.6 ================= ================== ================== Earnings per share (pence) 6 Basic 59.56 Adjusted basic 64.08 Diluted 59.12 Adjusted diluted 63.61 Dividends per share (pence) Interim 6.90 Proposed final 18.35 Group profit and loss account (continued)Year ended 3 March 2005 Notes 2003/4 Before exceptional items Exceptional £m items (note 3) Total £m £mTurnover Group and share of joint ventures 1,977.4 - 1,977.4 Less share of joint ventures' turnover (189.2) - (189.2) ------------------ ------------------ ------------------ Ongoing businesses 1,788.2 - 1,788.2 Acquisitions - - - ------------------ ------------------ ------------------ Group turnover - continuing operations 2 1,788.2 - 1,788.2 ================== ================== ================== Ongoing businesses 252.0 (15.5) 236.5 Acquisitions - - - ------------------ ------------------ ------------------ Group operating profit, continuingoperations 252.0 (15.5) 236.5 Share of operating profit in: Joint ventures 18.6 - 18.6 Associates 22.4 - 22.4 ------------------ ------------------ ------------------ Operating profit of the group, jointventures and associates - continuingoperations 2 293.0 (15.5) 277.5 Non-operating items, continuingoperations Net profit/(loss) on disposal of fixedassets: Group excluding joint ventures andassociates - (10.8) (10.8) Joint ventures - 0.4 0.4 Associates - 0.1 0.1 ------------------ ------------------ ------------------ Ongoing businesses 293.0 (25.8) 267.2 Acquisitions - - - ------------------ ------------------ ------------------ Profit/(loss) before interest,continuing operations 293.0 (25.8) 267.2 Interest 4 (52.2) (3.3) (55.5) ------------------ ------------------ ------------------ Profit/(loss) before tax 240.8 (29.1) 211.7 Tax 5 (77.1) 30.2 (46.9) ------------------ ------------------ ------------------ Profit after tax 163.7 1.1 164.8 Equity minority interests (0.1) - (0.1) Non-equity minority interests (0.2) - (0.2) ------------------ ------------------ ------------------ Profit earned for ordinary shareholders 163.4 1.1 164.5 Ordinary dividends (65.5) - (65.5) ------------------ ------------------ ------------------ Retained profit for the year 97.9 1.1 99.0 ================== ================= ================== Earnings per share (pence) 6 Basic 55.74 Adjusted basic 58.22 Diluted 55.39 Adjusted diluted 57.85 Dividends per share (pence) Interim 6.15 Proposed final 16.15 Group statement of total recognised gains and losses Year ended 3 March 2005 2004/5 2003/4 £m £mProfit earned for ordinary shareholders Group excluding joint ventures and associates 153.0 137.1 Joint ventures 11.5 12.1 Associates 12.1 15.3 ----------- ----------- Group including joint ventures and associates 176.6 164.5 Currency translation differences on net foreign investment 0.3 (0.7) Unrealised gain arising from the dilution of the shareholding in anassociated undertaking 3.7 - ----------- ----------- Total gains and losses recognised since previous year end 180.6 163.8 ====== ====== Group cash flow statement Year ended 3 March 2005 Notes 2004/5 2003/4 £m £m £m £mCash flow from operating activities 9 439.9 382.9 Dividends receivedJoint ventures 10.8 9.5Associates 12.3 11.9Returns on investments and servicing offinanceInterest received 1.4 1.5Interest paid (71.8) (57.3)Minority dividends paid (0.2) (0.2) ----------- -----------Net cash outflow from returns oninvestments and servicing of finance (70.6) (56.0)TaxUK Corporation Tax paid (48.8) (28.0)Capital expenditure and financialinvestmentFixed assets purchased (260.9) (209.0)Investments purchased and loans advanced (2.7) (5.3)Property and plant sold 64.8 112.3 ----------- -----------Net cash outflow from capitalexpenditure and financial investment (198.8) (102.0) Acquisitions and disposalsBusinesses acquired 10 (553.8) (20.6) ----------- -----------Net cash outflow from acquisitions and (553.8) (20.6)disposals Equity dividends paid (68.2) (60.4) ----------- -----------Net cash inflow/(outflow) before use ofliquid resources and financing (477.2) 137.3 Management of liquid resourcesNet movement on short term securitiesand bank deposits 11 0.2 5.3 FinancingIssue of shares 10.6 6.9Shares purchased for ESOT (5.9) -Net movement on short term bankborrowings 11 (8.7) 7.7 Loan capital issued 11 513.4 22.7Loan capital repaid * 11 (29.7) (174.0) ----------- -----------Net cash inflow/(outflow) from financing 479.7 (136.7) ----------- -----------Increase in cash 11 2.7 5.9 =========== =========== * The net of receipts and payments on revolving credits is included in loancapital repaid. Group balance sheet3 March 2005 Notes 2005 2004 £m £mFixed assets Intangible assets 126.0 147.6 Tangible assets 3,596.2 2,989.7 Investments In joint ventures - Share of joint ventures' gross assets 87.0 90.1 - Share of joint ventures' gross liabilities (43.4) (47.2) - Loans to joint ventures 1.8 1.8 ----------- ----------- 45.4 44.7 In associates 68.8 65.3 Other investments 6.4 3.7 ----------- ----------- 3,842.8 3,251.0 ----------- ----------- Current assets and liabilities Stocks 23.0 24.4 Debtors - amounts falling due within one year 7 147.9 105.2 Debtors - amounts falling due after more than one year 7 72.6 56.5 Cash at bank and in hand 53.5 68.8 ----------- ----------- 297.0 254.9 Creditors - amounts falling due within one year 8 (517.5) (420.2) ----------- ----------- Net current liabilities (220.5) (165.3) ----------- ----------- Total assets less current liabilities 3,622.3 3,085.7 Creditors - amounts falling due after more than oneyear Loan capital (1,219.0) (807.5) Provisions for liabilities and charges (194.9) (179.8) ----------- ----------- 2,208.4 2,098.4 =========== =========== Capital and reserves Called up share capital 149.6 148.7 Share premium account 23.2 13.5 Revaluation reserve 123.3 124.5 Other reserves (1,814.0) (1,816.2) Profit and loss account 3,720.5 3,621.1 ----------- ----------- Shareholders' funds 12 2,202.6 2,091.6 Equity minority interests 2.7 3.7 Non-equity minority interests 3.1 3.1 ----------- ----------- 2,208.4 2,098.4 =========== =========== Notes to the accounts 1. Pension accounting Although the third stage of the FRS 17 (Retirement Benefits) transitionalarrangements has been adopted there have been no changes to the reported figureswhich continue to be prepared on the basis of SSAP 24. 2. Segmental analysis of turnover, profit and net assets Year ended 3 March 2005 Operating profit # Turnover EBITDA (S) Net assetsBy business segment £m £m £m £mMarriott brands 388.6 100.0 59.4 1,107.3Premier Travel Inn 323.2 138.0 108.7 1,068.4 ----------- ----------- ----------- -----------Total hotels 711.8 238.0 168.1 2,175.7 ----------- ----------- ----------- -----------Pub restaurants 596.7 108.8 78.3 810.1High street restaurants 476.3 49.9 35.2 124.9 ----------- ----------- ----------- -----------Total restaurants 1,073.0 158.7 113.5 935.0 ----------- ----------- ----------- -----------David Lloyd Leisure 218.5 72.7 50.6 539.6Developing business - (1.0) (1.0) (0.1) ----------- ----------- ----------- -----------Total sports, health and fitness 218.5 71.7 49.6 539.5 ----------- ----------- ----------- ----------- 2,003.3 468.4 331.2 3,650.2Soft drinks 17.4 17.4 58.6Inter-segment turnover (see notebelow) (3.2)Central costs 110.9 (15.0) (20.8) (236.8)Exceptional items (note 3) (6.5) (36.9) ----------- ----------- ----------- -----------Group including joint venturesand associates 2,111.0 464.3 290.9 3,472.0Share of joint ventures (198.1) (19.3) (19.3) (45.4)Share of associates (18.6) (18.6) (68.8) ----------- ----------- ----------- -----------Group excluding joint venturesand associates 1,912.9 426.4 253.0 3,357.8 ====== ====== ====== ====== By geographical segmentUnited Kingdom 2,023.1 455.9 287.7 3,376.9Rest of the world 87.9 8.4 3.2 95.1 ----------- ----------- ----------- -----------Group including joint venturesand associates 2,111.0 464.3 290.9 3,472.0 ====== ====== ====== ====== 2. Segmental analysis of turnover, profit and net assets (continued) Year ended 4 March 2004 Operating profit # Turnover EBITDA (S) Net assetsBy business segment £m £m £m £mMarriott brands 390.9 107.0 63.5 1,157.8Travel Inn 229.8 93.0 74.0 544.8 ----------- ----------- ----------- -----------Total hotels 620.7 200.0 137.5 1,702.6 ----------- ----------- ----------- -----------Pub restaurants 590.4 113.2 84.1 733.5High street restaurants 453.3 42.7 28.5 112.8 ----------- ----------- ----------- -----------Total restaurants 1,043.7 155.9 112.6 846.3Related Shares:
Whitbread