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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Whitbread Plc | LSE:WTB | London | Ordinary Share | GB00B1KJJ408 | ORD 76 122/153P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 25.00 | 0.91% | 2,769.00 | 2,766.00 | 2,768.00 | 2,774.00 | 2,748.00 | 2,752.00 | 33,062 | 08:50:15 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Hotels And Motels | 2.97B | 312.1M | 1.7691 | 15.51 | 4.84B |
From Feb 2020 to Feb 2025
TIDMWTB
RNS Number : 3373Q
Whitbread PLC
18 October 2011
WHITBREAD PLC RESULTS FOR THE SIX MONTHS ENDED 1(ST) SEPTEMBER 2011
WHITBREAD DELIVERS STRONG GROWTH
Highlights
-- Total revenue up 10.7% to GBP891.3 million (2010/11: GBP805.4 million)
-- Group like for like sales up 3.3% in the half year
-- Underlying profit(1) before tax up 15.2% to GBP174.9 million (2010/11: GBP151.8 million)
-- Group return on capital(2) 13.6%
-- Whitbread Hotels and Restaurants underlying profits up 8.5% to GBP167.1 million delivering a return on capital of 12.5% (2010/11: 12.1%)
-- Costa underlying profits up 41.8% to GBP27.8 million delivering a return on capital of 28.5% (2010/11: 35.6%)
-- Underlying diluted EPS up 17.8% to 72.20p (2010/11: 61.27p)
-- Interim dividend up 55.6% to 17.50p (2010/11: 11.25p) consistent with our stated intent to rebalance the first half dividend
Statutory
-- Profit after tax and exceptional items for the half year up to GBP159.2 million (2010/11: GBP116.0 million)
-- Total basic EPS 90.79p (2010/11: 66.29p)
Driving organic growth
Focus on building strong brands
-- Premier Inn grew total sales by 10.6% and like for like sales(3) by 5.2%. Like for like revpar grew by 4.4% to GBP44.49 with an increase in London of 11.4% and the provinces of 3.0% both benefitting from dynamic pricing
-- Costa grew system sales by 23.3% to GBP383.6 million, total reported sales by 26.3% and like for like sales by 6.7% helped by the success of its Ice Cold Costa campaign and international growth
Investing in growth
-- Whitbread Hotels and Restaurants opened 12 new hotels, 1,408 rooms and five restaurants
-- Costa grew its store network opening 167 new stores including the 100(th) store in China and has just celebrated the opening of its 2,000(th) store worldwide
-- Costa Express is progressing well with 65 new units and 135 conversions
-- Around 2,500 new UK jobs to be created during the year
On track to achieve five year growth milestones
-- 65,000 Premier Inn rooms
-- 3,500 Costa stores worldwide and GBP1.3 billion system sales
-- 3,000 Costa Express units
Anthony Habgood, Chairman of Whitbread PLC said:
"This is a good set of results demonstrating the strength of our brands in tough market conditions. The strong first half performances of our two main growth engines, Premier Inn and Costa, give us confidence to continue to expand the business. As indicated with our results in April, we are rebalancing our dividend payments to reflect our earnings profile better and, as a result, our interim payment is up 55.6% to 17.50p."
Andy Harrison, Chief Executive of Whitbread PLC said:
"Whitbread traded well in the first half with a 10.7% growth in sales and a 15.2% increase in underlying profits. Our strong brands, supported by customer driven commercial actions, are providing winning customer propositions.
We are continuing to grow our business and this year we plan to open 4,000 new Premier Inn rooms and 14 new restaurants in the UK, together with 300 Costa stores worldwide. This is another step towards our five year growth milestones which will grow Premier Inn UK by almost 50% to 65,000 rooms and increase the Costa network by 75% to 3,500 stores worldwide, together with at least 3,000 Costa Express machines. We believe this expansion, supported by like for like sales growth, should create substantial shareholder value.
Our overall first half sales performance is the best guide to the Group's underlying trading, although on a month by month basis trading continues to be variable in a challenging consumer environment. The first half performance puts us on track to deliver full year results in line with expectations."
For further information contact:
Whitbread
Christopher Rogers, Group Finance Director +44 (0) 20 7806 5491
Anna Glover, Communications Director +44 (0) 1582 844 244
Tulchan
David Allchurch/Tom Murray +44 (0) 20 7353 4200
(1) Underlying profit
Underlying profit excludes exceptional items, the impact of the pension finance cost as accounted for under IAS 19 and the amortisation of acquired intangibles
(2) Return on capital
Return on capital is the return on invested capital that is calculated by taking underlying profit before interest and tax for the year to 1 September 2011 divided by net assets excluding debt, taxation liabilities and the pension deficit as at 1 September 2011.
(3) Like for likes
Premier Inn like for like numbers where quoted relate to UK and Ireland only and for Costa they relate to UK equity only.
Further information
For photographs and videos, please visit the corporate media library:
www.whitbreadimages.co.uk
A presentation for analysts will be held at The London Stock Exchange,
10 Paternoster Square, London, EC4M 7LS. The presentation is at 9.30 am and a live webcast of the presentation will be available on the investors' section of
the website at: http://www.whitbread.co.uk/investors
CHIEF EXECUTIVE'S REVIEW
In the first six months of the year, Whitbread has continued to deliver a positive performance with good sales and profit growth despite the challenging consumer environment. Organic expansion, coupled with good like for like sales growth have generated an increase in Group total sales of 10.7% to GBP891.3 million with Premier Inn up 10.6% to GBP393.4 million, Costa up 26.3% to GBP250.8 million and Restaurants up 0.5% to GBP248.5 million.
Group underlying profit before tax increased by 15.2% to GBP174.9 million (2010/11: GBP151.8 million) with underlying diluted EPS increasing by 17.8% to 72.20p.
Group like for likes sales increased by 3.3% with the two main growth engines of Premier Inn and Costa delivering strong like for like sales increases of 5.2% and 6.7% respectively. Trading in our Restaurants business continued to be challenging with like for like sales down (1.6%) in an increasingly value driven market.
At the half year, net debt was GBP520.1 million (compared to GBP487.9 million at 3 March 2011). As part of the Group's continuing strategy to diversify its sources of funds we undertook a sale and leaseback of seven Premier Inns and adjacent restaurants in August for GBP53.8 million. This created a profit over book value of GBP24.8 million which has been included in exceptional items. Additionally, in September we successfully concluded an issue of private placement loan notes of US$210 million and GBP25 million with an equivalent sterling value of GBP156.4 million.
Reflecting our decision to rebalance the dividend between the first and second half years, the interim dividend has been increased by 55.6% to 17.50p (2010/11: 11.25p). This will be paid on 10 January 2012 to all shareholders on the register at the close of business on 28 October 2011. A scrip dividend alternative will again be offered.
I would like to take this opportunity to thank all of our 40,000 employees for their hard work and contribution to Whitbread's success.
Building strong brands
Whitbread is the UK's largest hotel and restaurant group with some 2,000 sites visited by over 11 million customers every month and market leading brands in hotels and coffee shops.
We are focused on continuing to build and grow our strong brands by consistently delivering great service, excellent value and innovative new products which appeal to our millions of customers and, at the same time, making our brands even more accessible through increased distribution channels.
Whitbread Hotels and Restaurants
Premier Inn
Premier Inn had a successful first half with total room nights sold up by 7.0% to 6.3 million benefitting from both good business and leisure demand. Average room rate was up by 3.4% which, combined with occupancy up 0.8ppts to 79.4%, increased like for like revpar by 4.4% with growth across both midweek and the weekend. Like for like revpar grew by 11.4% in London and by 3.0% in the provinces.
As the UK's largest budget hotel chain and recognised by YouGov as the No.1 budget hotel brand, Premier Inn's superior business model enables us to win market share and optimise performance.
We continue to invest in developing strong distribution channels which target both business and leisure customers. The Business Account programme now constitutes 26% of Premier Inn sales delivering GBP102.6 million of revenue (including food and beverage) in the first half. We have over 16,000 live accounts (active in the last 12 months) which is a 6.4% increase on last year.
Online bookings now account for 76% of all bookings, 66% of which are through premierinn.com. This equates to 2.8 million bookings and GBP302 million of revenue in the first half year alone. We have recently introduced 'Trip Advisor' ratings to our website to give our customers a more informed choice when selecting a hotel.
Further enhancements to our dynamic pricing system have improved our capability to optimise room rate whilst achieving growth in occupancy towards our 80% target. We have introduced a new dual price structure with 'Premier Saver' rates (these rates are non refundable and payable at booking) and 'Premier Flexible' (which are fully refundable and payable either on check-in or at booking). By using a broader range of rates across all seven days of the week we are achieving more efficient pricing, enabling us to better optimise both midweek and weekend revpar.
The introduction of our new CRM system in August enables us to become increasingly sophisticated at targeting our database of six million customers with incremental revenue-generating promotions such as the new Weekend Rewards programme aimed at the business user and the 'Inn'sider Offers to leisure customers.
In the UK, Whitbread Hotels and Restaurants opened 11 hotels, 1,265 rooms and five new restaurants. Internationally we have opened one hotel in the half year bringing the total to five hotels (1,055 rooms) in the Middle East and India. Our total estate at the half year stood at 607 hotels, 45,694 rooms and 383 restaurants.
In the first six months of the year we implemented a new cluster management structure within Premier Inn. This will improve the customer experience and facilitate our ambitious growth plans. In addition, the joint site general managers are now focused on their restaurant to deliver a better customer experience and enhance commercial performance.
Restaurants
Our Restaurants are trading in an increasingly value driven market and we saw a decline in like for like performance which coincided with the consumer downturn in early 2011. In this market environment, brands with lower price points are performing better and our brand with the lowest spend per head, Brewers Fayre, is outperforming our two higher-priced brands, Beefeater and Table Table.
The new management team are focused on strengthening our brands, driving operational performance across the entire estate and improving menus and value for money propositions. For instance, customers can now buy main meals from GBP4.99 in Beefeater and Table Table, while in Brewers Fayre our Buffet Place concept is proving very popular with an all you can eat buffet for GBP5.99. There are now 77 Buffet Places across the estate with plans to roll out a further 25. We have also introduced further added value offers to appeal to customers including drinks promotions, an all you can eat breakfast from GBP7.99 (with children eating for free) and are in the process of rolling out free wifi.
Costa
Costa achieved another excellent performance with underlying profits up 41.8% to GBP27.8 million, worldwide systems sales up 23.3% to GBP383.6 million and an increase in like for like UK equity store sales of 6.7%.
A key factor in Costa's success is our continued focus on product innovation and development. Over the summer, the Ice Cold Costa range delivered a 44% increase in revenue to GBP12.4 million (2010/11 GBP8.6 million) benefitting from an extended sales period and new drink flavours. In August, Costa launched its 'Costa Light' coffee, which has fewer calories and less caffeine and after one month already accounts for 1-2% of coffee sales. There are now three Costa Drive Thru's around the country and sales are ahead of expectations. We have a further ten in our pipeline and the potential for 75 across the country.
Since its launch in March, Costa Express has grown rapidly and is performing ahead of expectations, with an old Coffee Nation unit typically achieving a 20% uplift in cups sold once it is branded Costa Express serving Costa coffee. We have secured excellent relationships with existing and new partners, such as Tesco, Esso, Welcome Break, Moto and Compass Group and during the course of 2011/12 we expect to have rebranded over 500 existing Coffee Nation units and added a further 250 new Costa Express units across the UK.
In the first six months, Costa reached two significant milestones, opening its 2,000(th) store worldwide and its 100(th) store in China in the summer. We added 85 (net) new Costa stores in the UK, of which 43 are company operated and 42 are franchise stores. Internationally we added 47 (net) new stores of which 24 are company operated and 23 are franchise stores.
Driving profitable organic growth
In the first half of the year we continued to invest in disciplined growth and by the end of 2011/12 we will have created some 2,500 jobs in the UK. Total capital expenditure in 2011/12 will be around GBP325 million, up from GBP262 million in 2010/11 (including the acquisition of Coffee Nation).
In 2011/12 we plan to have opened around 4,000 new Premier Inn UK rooms, 14 restaurants and approximately 300 Costa stores worldwide of which around150 will be in the UK and around150 overseas.
Looking ahead we are on track to achieve our five year growth milestones that we set out in our Preliminary Results in April; to increase Premier Inn by 50% to 65,000 rooms, double the size of Costa to GBP1.3 billion system sales and 3,500 stores worldwide and have 3,000 Costa Express units.
In the UK, Premier Inn already has a committed pipeline of around 11,000 rooms which, when added to existing room stock of 44,484 provides over 55,000 secured rooms. Over 50% of new rooms will be in Greater London and the South East, with 38% in new markets where we do not currently have representation. As part of this programme we also plan to open 22 restaurants. The reported return on capital of this investment is expected to be around 20%.
Outside of the UK, Premier Inn has a pipeline of five new hotels in India and the Middle East, with the first hotel in Abu Dhabi set to open later this year. We are developing a 'capital right' strategy which will see the brand develop across our target territories of the Middle East, India and Asia Pacific using a number of different ownership models. Our investment to date amounts to under GBP50 million and we anticipate spending around GBP30 million per annum.
Good Together corporate responsibility programme
Our corporate responsibility programme, which we call 'Good Together' has been refocused and now covers the three key areas of Teams and Communities, Customer Wellbeing and Energy and Environment. Costa and Whitbread Hotels and Restaurants are in the process of developing new and stretching targets across each of these areas.
Whitbread employees have achieved around 1,100 qualifications through the apprenticeship and skills for life programmes and as we grow our outlet numbers we continue to offer jobs and training opportunities. Whitbread Hotels and Restaurants recently reached their target of GBP1 million raised for their nominated charity, WaterAid, while the Costa Foundation continues to fund the building of schools in coffee growing areas such as Uganda and Colombia.
Outlook
Whitbread performed well in the first half, driven by good sales growth from Premier Inn and Costa. Our strong brands, supported by customer driven commercial actions, are providing winning customer propositions.
Our overall first half sales performance is the best guide to the Group's underlying trading, although on a month by month basis trading continues to be variable in a challenging consumer environment. The first half performance puts us on track to deliver full year results in line with expectations.
Whitbread Hotels and Restaurants
Hotels and Restaurants H1 2011/12 H1 2010/11 % Change -------------------------------- ----------- ----------- --------- Premier Inn revenue GBPm 393.4 355.7 10.6 -------------------------------- ----------- ----------- --------- Restaurants revenue GBPm 248.5 247.3 0.5 -------------------------------- ----------- ----------- --------- Total revenue pre exceptional GBPm 641.9 603.0 6.5 -------------------------------- ----------- ----------- --------- Exceptional revenue* GBPm - 5.0 - -------------------------------- ----------- ----------- --------- Total revenue post exceptional GBPm 641.9 608.0 5.6 -------------------------------- ----------- ----------- --------- Premier Inn like for like sales %** 5.2 10.1 - -------------------------------- ----------- ----------- --------- Premier Inn rooms UK and Ireland (no.) 44,639 42,664 4.6 -------------------------------- ----------- ----------- --------- Premier Inn like for like revpar growth % ** 4.4 9.3 - -------------------------------- ----------- ----------- --------- Premier Inn occupancy (total) %** 79.1 78.4 - -------------------------------- ----------- ----------- --------- Restaurants like for like sales % (1.6) 4.2 - -------------------------------- ----------- ----------- --------- Restaurants like for like covers growth % (1.4) 6.4 - -------------------------------- ----------- ----------- --------- Underlying operating profit pre exceptional(1) GBPm 167.1 154.0 8.5 -------------------------------- ----------- ----------- --------- WHR return on capital(2) % 12.5 2.1 - -------------------------------- ----------- ----------- ---------
* GBP5.0m refund in respect of VAT on gaming machine income** UK & Ireland only
Whitbread Hotels and Restaurants delivered good growth, driven by Premier Inn. Total pre exceptional revenues increased by 6.5% to GBP641.9 million with underlying operating profit pre exceptional up 8.5% year on year to GBP167.1 million. Like for like sales continued their positive momentum up 2.5% (2010/11: 7.6%).
During the first half Premier Inn delivered a strong performance with total sales up 10.6% to GBP393.4 million (2010/11: GBP355.7 million) and like for like sales up by 5.2%. Provincial like for like revpar increased by 3.0% and London saw growth of 11.4%.
Our Restaurants have been impacted by an increasingly value driven market place and although like for likes sales are down by (1.6) % we have been able to grow total covers by 0.8%. Total sales are positive at 0.5% benefitting from new openings.
In the first half of the year, Premier Inn opened 1,408 new rooms and 12 hotels. Our total estate at the half year stood at 45,694 rooms of which 1,055 are located in our international markets of India and the Middle East. We opened five new restaurants, all of which were adjacent to a Premier Inn, and now have 383 restaurants in the estate. We remain committed to maintaining our hotels and restaurants to the highest standards and have refurbished around 1,940 hotel rooms and 33 Table Table andBeefeater restaurants in the first half of this year, in addition to introducing Buffet Place to 50 Brewers Fayres.
Costa
Hot Features
Premium
%
H1 2011/12 H1 2010/11 Change
------------------------------- ----------- ----------- --------
System sales GBPm 383.6 311.2 23.3
------------------------------- ----------- ----------- --------
Revenue GBPm 250.8 198.5 26.3
------------------------------- ----------- ----------- --------
Like for like sales % (UK) 6.7 8.5 -
------------------------------- ----------- ----------- --------
UK stores (no.) 1,302 1,134 14.8
------------------------------- ----------- ----------- --------
International stores (no.) 701 582 20.4
------------------------------- ----------- ----------- --------
Costa Express / Coffee Nation
units (no.) 934 - -
------------------------------- ----------- ----------- --------
Underlying operating profit
pre exceptional(1) GBPm 27.8 19.6 41.8
------------------------------- ----------- ----------- --------
Return on capital(2) % 28.5 35.6 -
------------------------------- ----------- ----------- --------
Costa continued its excellent performance in the first half of 2011/12. Underlying operating profit pre exceptional grew by 41.8% to GBP27.8 million. UK like for like sales increased by 6.7% and the international business continued to grow profitability contributing GBP1.6 million (2010/11: GBP0.3 million).
Total system sales, which are sales from company owned and franchise stores combined, were up 23.3% to GBP383.6 million. International Costa franchise store sales were up by 11.5% to GBP57.0 million and total UK franchise store sales were up by 23.0% to GBP103.0 million.
In the first six months we have converted 135 Coffee Nation units to Costa Express and added 65 new Costa Express units. There are 734 Coffee Nation units remaining and we expect to have converted over 500 in total by the year end and added a total of 250 new units. Costa operates in 25 countries and is the number two international coffee shop operator with 2,003 stores: 1,302 in the UK and 701 overseas. We opened 132 (net) stores in the first half of the year, comprising 67 company operated stores (43 in the UK and 24 internationally) and 65 franchise stores (42 in the UK and 23 internationally). To date we have refurbished 88 UK equity stores.
FINANCE REVIEW
Revenue
Group revenue increased by 10.7% year on year to GBP891.3 million.
Revenue by business segment
GBPm H1 2011/12 H1 2010/11 % Change ------------------------ ----------- ---------- --------- Hotels and Restaurants 641.9 608.0 5.6 ------------------------ ----------- ---------- --------- Costa 250.8 198.5 26.3 ------------------------ ----------- ---------- --------- Less: inter-segment (1.4) (1.1) (27.3) ------------------------ ----------- ---------- --------- Revenue 891.3 805.4 10.7 ------------------------ ----------- ---------- ---------
Growth in revenue has been driven by new openings and like for like sales growth. In addition, Costa has benefited from Coffee Nation which we acquired at the end of last year and has contributed some GBP12.4 million of revenue in this half year.
In Hotels and Restaurants, Premier Inn UK opened 1,265 new rooms in 11 new hotels whilst like for like sales grew 5.2%. The increase in like for like sales growth reflects the benefits of dynamic pricing and a strong London market. Internationally we opened a second hotel in India with 143 rooms taking our international business to five hotels. Five new restaurants were opened in the half year with total sales increasing by 0.5% although like for like sales declined by (1.6)% as a result of a fall in like for like covers and a reduction in spend per head.
At Costa, 85 net new units were opened in the UK and 47 net new units overseas. On the back of strong footfall growth UK equity retail like for like sales grew by 6.7%. Reported sales in Costa's international business grew by 15.1% with China doing particularly well.
Results
Underlying profit before tax for the half year is GBP174.9 million, up 15.2% on the first half of last year and underlying diluted earnings per share were 72.20p compared to 61.27p last year, up 17.8%.
Total profit for the first six months was GBP159.2 million which compares to GBP116.0 million last year, up 37.2%.
Exceptional items
Exceptional items are analysed in more detail in note 3 but in total aggregate to a credit of GBP39.0 million. There are four major components with the largest being a sale and leaseback transaction which was completed in the period with a profit on disposal of GBP24.8 million from the sale of seven properties.
During the period, prior year capital allowance claims were agreed by HMRC and an additional GBP5.3 million was recognised, which when combined with prior year figures brings the total benefit to GBP12.9 million. A tax credit of GBP18.3 million arising from the reduction in corporation tax rates from 27% to 25% contained within the Finance Act 2011 was recognised as an exceptional credit. These tax credits were offset by tax on exceptional items amounting to GBP7.7 million.
Interest
The underlying interest charge is GBP11.4 million, a reduction of GBP0.2 million compared to last year reflecting reduced levels of average debt in the period which year on year fell by GBP29.3 million to GBP454.9 million. The total pre-exceptional interest cost amounted to GBP19.2 million. Included within this figure is an IAS 19 pension charge of GBP7.8 million (2010/11: GBP5.8 million). This charge represents the difference between the expected return on scheme assets and the interest cost of the scheme liabilities.
Tax
An underlying tax expense of GBP47.9 million represents an effective tax rate of 27.4% on the underlying profits, which compares with 29.2% last year. The excess over the statutory tax rate of 26.2% is predominantly driven by the impact of losses arising in overseas subsidiaries and permanently disallowable items.
Earnings per share
Diluted underlying earnings per share increased by 17.8% to 72.20p.
EPS H1 2011/12 H1 2010/11 ---------------------------- ----------- ---------- Underlying (Diluted) 72.20p 61.27p ---------------------------- ----------- ---------- Non GAAP adjustments (3.85)p (2.38)p ---------------------------- ----------- ---------- Exceptional items 22.08p 7.21p ---------------------------- ----------- ---------- Total operations (diluted) 90.43p 66.10p ---------------------------- ----------- ----------
Further details can be found in note 6.
Dividend
At the Preliminary Results in April we announced that we would rebalance the interim and final dividend payments. As a result the interim dividend of 17.50p is an increase on last year of 55.6%. This will be paid on 10 January 2012 to all shareholders on the register at the close of business on 28 October 2011. A scrip dividend alternative will again be offered.
Net Debt and Cashflow
The principal cashflow movements are as follows:
GBPm H1 2011/12 H1 2010/11 ----------------------------- ----------- ----------- Cashflow from operations* 257.1 198.5 ----------------------------- ----------- ----------- Capital expenditure (129.0) (88.8) ----------------------------- ----------- ----------- Interest, tax and dividends (97.7) (57.7) ----------------------------- ----------- ----------- Pension contributions (61.0) (0.9) ----------------------------- ----------- ----------- Other (1.6) (4.9) ----------------------------- ----------- ----------- Net cashflow (32.2) 46.2 ----------------------------- ----------- ----------- Net debt bfwd (487.9) (513.4) ----------------------------- ----------- ----------- Net debt cfwd (520.1) (467.2) ----------------------------- ----------- -----------
*This agrees to cash generated from operations in the accounts excluding the pension payment
The Group increased cashflow from its operations by 29.5% to GBP257.1 million compared to last year. Despite this increase the Group had a cash outflow of GBP32.2 million in the half year compared to a cash inflow of GBP46.2 million last year. The movement is primarily a result of three factors. Firstly, in line with our plans, we have increased capital expenditure by GBP40.2 million. Secondly, in accordance with the pension deficit funding plan, the Group made a payment of GBP61.0 million to the pension scheme, and lastly the cash tax outflow was GBP26.8 million compared to a small cash receipt of GBP1.8 million in the previous year. Last year benefitted from the tax effect of the pension deficit recovery plans we put in place.
During the first half of the year the Group undertook a second issue of private placement loan notes in both US dollar and sterling in line with its stated policy to diversify both the sources and maturity of debt. These loan notes were issued in four series with maturities of between seven and ten years and coupons from 3.9 % to 4.9%. The US dollar component was swapped to sterling with the total transaction having a value of GBP156.4 million with sterling interest rates ranging from fixed at 4.3% to 5.2% and an average of 4.8%. The proceeds, which are receivable in two tranches, the first of GBP62.6 million in September 2011 and the balance in January 2012, will be used to repay drawings under the shorter maturity bank debt. More details of this transaction are set out in notes 9 and 13. In total the Group will have a total of GBP258.2 million debt funded from private placements by January 2012.
In addition to the loan notes set out above, the Group had committed revolving credit facilities of GBP930 million as at 1 September 2011 of which GBP410 million was drawn. The revolving credit facilities reduce to GBP855 million in December 2011 and GBP455 million in December 2012 with the remaining facility maturing in March 2013.
The policy of the Board is to manage the financial position and capital structure of the Group in a manner that is consistent with Whitbread maintaining its investment grade status.
During the half year the Group completed a sale and lease back transaction selling seven properties for GBP53.8 million which gave rise to a GBP24.8 million profit on disposal. The cash for this transaction was received on 2 September 2011.
Capital expenditure
Total Group cash capital expenditure on property, plant and equipment and intangible assets during the half year was GBP129.0 million with Hotels and Restaurants spend amounting to GBP100.7 million and Costa GBP28.3 million. Capital expenditure is split between development expenditure, which includes the acquisition and development of properties (GBP91.1 million) and maintenance expenditure (GBP37.9 million). We forecast that capital expenditure for the full year will be around GBP325 million.
Pensions
As at 1 September 2011, there was an IAS 19 pension deficit of GBP517.0 million, which compares to GBP488.0 million as at 3 March 2011. The movement in the deficit includes GBP82.2 million actuarial losses in the half year on the schemes assets and liabilities. This is offset by the GBP61.0 million contribution.
Related Parties
Related parties have been considered in detail in note 11 and are therefore not included within this Finance Review.
Post Balance Sheet Events
An interim dividend of 17.50p per share (2010/11: 11.25p) amounting to a total payment of GBP30.8 million (2010/11 GBP19.7 million) was declared by the Board on 17 October 2011.
On 6 September 2011, the Group announced an agreement for long term debt from US investors under a private placement. Details have been set out above.
Risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group are detailed on pages 18 and 19 of the Directors' Report and Accounts for the year ended 3 March 2011. The risks are categorised into the following areas: health, safety and security, strategic business risks including the effects of the UK economy, financial loss, funding, market expectations, business continuity, counterparty and third party contracts, customers / key relationships, pensions, international and reputational risk. Certain financial risks are also detailed in note 25 to the financial statements dated 3 March 2011, for example: interest rate risk, liquidity risk, credit risk and foreign currency risk. The Directors consider that these key risks and uncertainties continue to be relevant to the Group for the remainder of the financial year.
A copy of the Directors' Report and Accounts is available on the Company's website at www.whitbread.co.uk.
Responsibility statement We confirm that to the best of our knowledge: a) The condensed set of financial statements has been prepared in accordance with IAS 34; b) The interim management report includes a fair review of the information required by the Financial Statements Disclosure and Transparency Rules (DTR) 4.2.7R - indication of important events during the first six months and their impact on the financial statements and description of principal risks and uncertainties for the remaining six months of the year; and c) The interim management report includes a fair review of the information required by DTR 4.2.8R - disclosure of related party transactions and changes therein. By order of the Board
Andy Harrison Christopher
Rogers
Chief Executive Group Finance
Director
Interim unaudited consolidated income statement
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
Notes GBPm GBPm GBPm
----------------------------- ------ -------------
Revenue 2 891.3 805.4 1,599.6
Cost of sales (140.3) (120.4) (237.1)
------------- ------------- ---------
Gross profit 751.0 685.0 1,362.5
Distribution costs (455.2) (435.9) (886.6)
Administrative expenses (86.9) (79.7) (166.0)
------------- ------------- ---------
Operating profit 208.9 169.4 309.9
Share of loss from joint
ventures (0.6) (1.5) (2.8)
Share of profit from
associate 0.6 0.5 0.8
------------- ------------- ---------
Operating profit of the
Group 2 208.9 168.4 307.9
Finance costs 4 (22.1) (19.5) (38.1)
Finance revenue 4 2.1 2.1 1.4
------------- ------------- ---------
Profit before tax 188.9 151.0 271.2
Analysed as:
Underlying profit before tax 174.9 151.8 287.5
Amortisation of acquired
intangible assets 3 (1.3) - (0.4)
IAS 19 Income Statement
charge for pension finance
cost 3 (7.8) (5.8) (11.5)
------------- ------------- ---------
Profit before tax and
exceptional items 165.8 146.0 275.6
Exceptional items 3 23.1 5.0 (4.4)
Profit before tax 188.9 151.0 271.2
----------------------------- ------ ------------- ------------- ---------
Underlying tax expense (47.9) (44.3) (83.7)
Exceptional tax and tax on
non GAAP adjustments 3 18.2 9.3 34.6
------------- ------------- ---------
Tax expense (29.7) (35.0) (49.1)
Profit for the period 159.2 116.0 222.1
------------- ------------- ---------
Attributable to:
Parent shareholders 159.7 116.4 223.3
Non-controlling interest (0.5) (0.4) (1.2)
------------- ------------- ---------
159.2 116.0 222.1
------------- ------------- ---------
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
Earnings per share (note 6) p P P
---------------------------------------- ------------ ------------ --------
Earnings per share
Basic for profit for the period 90.79 66.29 127.16
Diluted for profit for the period 90.43 66.10 126.73
Earnings per share before exceptional
items
Basic for profit for the period 68.62 59.05 111.79
Diluted for profit for the period 68.35 58.89 111.41
Underlying earnings per share
Basic for profit for the period 72.48 61.45 116.75
Diluted for profit for the period 72.20 61.27 116.35
Interim unaudited consolidated statement of comprehensive income
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
GBPm GBPm GBPm
---------------------------------------- ------------ ------------ --------
Profit for the period 159.2 116.0 222.1
Items that will not be reclassified to
profit or loss:
Actuarial losses on defined benefit
pension schemes (82.2) (61.1) (51.4)
Current tax 15.7 10.9 10.9
Deferred tax 5.8 6.2 3.5
Deferred tax: change in rate of
corporation tax (7.2) (3.5) (3.4)
------------ ------------ --------
(67.9) (47.5) (40.4)
Items that may be reclassified
subsequently to profit or loss
Net (loss)/ gain on cash flow hedges (4.1) (4.7) 8.6
Deferred tax 1.1 1.3 (2.4)
------------ ------------ --------
(3.0) (3.4) 6.2
Deferred tax: change in rate of
corporation tax (0.6) (0.4) (0.3)
Exchange differences on translation of
foreign operations (0.1) (0.3) (0.8)
Other comprehensive loss for the period,
net of tax (71.6) (51.6) (35.3)
Total comprehensive profit for the
period, net of tax 87.6 64.4 186.8
------------ ------------ --------
Attributable to:
Parent shareholders 88.1 64.8 188.0
Non-controlling interest (0.5) (0.4) (1.2)
------------ ------------ --------
87.6 64.4 186.8
------------ ------------ --------
Interim unaudited consolidated statement of changes in equity
6 months to 1 September 2011
Capital
Share Share redemption Retained Currency Other Non-controlling Total
capital premium reserve earnings translation reserves Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
At 3 March
2011 147.0 50.8 12.3 3,128.8 4.3 (2,103.0) 1,240.2 1.8 1,242.0
Profit for the
period - - - 159.7 - - 159.7 (0.5) 159.2
Other
comprehensive
income - - - (67.4) (0.1) (4.1) (71.6) - (71.6)
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
Total
comprehensive
income - - - 92.3 (0.1) (4.1) 88.1 (0.5) 87.6
Ordinary
shares
issued - 0.2 - - - - 0.2 - 0.2
Loss on ESOT
shares
issued - - - (2.1) - 2.1 - - -
Accrued
share-based
payments - - - 3.6 - - 3.6 - 3.6
Equity
dividends - - - (58.6) - - (58.6) - (58.6)
Scrip dividend 0.1 (0.1) - 1.5 - - 1.5 - 1.5
Additions - - - - - - - 3.8 3.8
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
At 1 September
2011 147.1 50.9 12.3 3,165.5 4.2 (2,105.0) 1,275.0 5.1 1,280.1
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
6 months to 2 September 2010
Capital
Share Share redemption Retained Currency Other Non-controlling Total
capital premium reserve earnings translation reserves Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
At 4 March
2010 146.4 49.1 12.3 3,006.8 5.1 (2,112.7) 1,107.0 1.0 1,108.0
Profit for the
period - - - 116.4 - - 116.4 (0.4) 116.0
Other
comprehensive
income - - - (46.6) (0.3) (4.7) (51.6) - (51.6)
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
Total
comprehensive
income - - - 69.8 (0.3) (4.7) 64.8 (0.4) 64.4
Ordinary
shares
issued 0.1 0.8 - - - - 0.9 - 0.9
Cost of ESOT
shares
purchased - - - - - (5.1) (5.1) - (5.1)
Loss on ESOT
shares
issued - - - (1.4) - 1.4 - - -
Accrued
share-based
payments - - - 3.2 - - 3.2 - 3.2
Equity
dividends - - - (49.7) - - (49.7) - (49.7)
Scrip dividend 0.1 (0.1) - 1.7 - - 1.7 - 1.7
Additions - - - - - - - 1.2 1.2
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
At 2 September
2010 146.6 49.8 12.3 3,030.4 4.8 (2,121.1) 1,122.8 1.8 1,124.6
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
Year to 3 March 2011
Capital
Share Share redemption Retained Currency Other Non-controlling Total
capital premium reserve earnings translation reserves Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
At 4 March
2010 146.4 49.1 12.3 3,006.8 5.1 (2,112.7) 1,107.0 1.0 1,108.0
Profit for the
period - - - 223.3 - - 223.3 (1.2) 222.1
Other
comprehensive
income - - - (43.1) (0.8) 8.6 (35.3) - (35.3)
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
Total
comprehensive
income - - - 180.2 (0.8) 8.6 188.0 (1.2) 186.8
Ordinary
shares
issued 0.2 2.1 - - - - 2.3 - 2.3
Cost of ESOT
shares
purchased - - - - - (5.1) (5.1) - (5.1)
Loss on ESOT
shares
issued - - - (6.2) - 6.2 - - -
Accrued
share-based
payments - - - 7.7 - - 7.7 - 7.7
Deferred tax
on
share-based
payments - - - 1.2 - - 1.2 - 1.2
Rate change on
historic
revaluation - - - 0.6 - - 0.6 - 0.6
Equity
dividends - - - (69.4) - - (69.4) - (69.4)
Scrip
dividends 0.4 (0.4) - 7.9 - - 7.9 - 7.9
Additions - - - - - - - 2.0 2.0
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
At 3 March
2011 147.0 50.8 12.3 3,128.8 4.3 (2,103.0) 1,240.2 1.8 1,242.0
-------- -------- ----------- --------- ------------ ---------- -------- ---------------- --------
Interim unaudited consolidated balance sheet
1 September 2 September 3 March
2011 2010 2011
Notes GBPm GBPm GBPm
------------------------------- ----- ------------ ------------ ----------
ASSETS
Non-current assets
Intangible assets 203.8 149.4 204.3
Property, plant and equipment 2,455.9 2,342.6 2,415.9
Investment in joint ventures 17.9 17.5 17.4
Investment in associate 2.0 1.5 1.4
Trade and other receivables 3.3 - 2.9
Derivative financial
instruments - 0.7 -
Other financial assets 7 - 0.9 0.9
2,682.9 2,512.6 2,642.8
Current assets
Inventories 24.7 19.2 18.4
Trade and other receivables 140.5 98.2 84.3
Cash and cash equivalents 8 39.4 34.7 38.2
------------ ------------ ----------
204.6 152.1 140.9
Assets classified as held for
sale 3.9 1.2 4.0
TOTAL ASSETS 2,891.4 2,665.9 2,787.7
LIABILITIES
Current liabilities
Financial liabilities 8 49.3 11.3 4.2
Provisions 15.4 21.4 15.4
Derivative financial
instruments 12.1 18.2 16.3
Income tax liabilities 14.6 30.8 15.4
Trade and other payables 300.5 258.5 280.2
------------ ------------ ----------
391.9 340.2 331.5
Non-current liabilities
Financial liabilities 8 510.2 490.6 521.9
Provisions 26.9 28.1 29.8
Derivative financial
instruments 19.8 22.7 16.6
Deferred income tax liabilities 131.4 145.5 142.7
Pension liability 10 517.0 500.0 488.0
Trade and other payables 14.1 14.2 15.2
------------ ------------ ----------
1,219.4 1,201.1 1,214.2
TOTAL LIABILITIES 1,611.3 1,541.3 1,545.7
NET ASSETS 1,280.1 1,124.6 1,242.0
------------ ------------ ----------
EQUITY
Share capital 147.1 146.6 147.0
Share premium 50.9 49.8 50.8
Capital redemption reserve 12.3 12.3 12.3
Retained earnings 3,165.5 3,030.4 3,128.8
Currency translation reserve 4.2 4.8 4.3
Other reserves (2,105.0) (2,121.1) (2,103.0)
------------ ------------ ----------
Equity attributable to equity
holders of the parent 1,275.0 1,122.8 1,240.2
Non-controlling interest 5.1 1.8 1.8
TOTAL EQUITY 1,280.1 1,124.6 1,242.0
------------ ------------ ----------
Interim unaudited consolidated cash flow statement
6 months 6 months
to to Year to
1 2
September September 3 March
2011 2010 2011
Notes GBPm GBPm GBPm
---------------------------------------- ----- --------- ---------- ---------
Profit for the period 159.2 116.0 222.1
Adjustments for:
Taxation charged on total operations 29.7 35.0 49.1
Net finance cost 4 20.0 17.4 36.7
Total loss from joint ventures 0.6 1.5 2.8
Total income from associate (0.6) (0.5) (0.8)
(Gain)/loss on disposal of property,
plant and equipment, and property
reversions 3 (24.8) - 0.4
Loss on disposal of business - - 2.4
Depreciation and amortisation 55.4 50.0 101.2
Impairment of financial assets,
investments and property 3 0.9 - 4.6
Share-based payments 3.6 3.2 7.7
Other non-cash items 3.5 (3.4) (0.1)
--------- ---------- ---------
Cash generated from operations before
working capital changes 247.5 219.2 426.1
Increase in inventories (6.3) (2.2) -
Decrease / (increase) in trade and other
receivables 1.3 (1.5) 8.8
Increase / (decrease) in trade and other
payables 17.9 (12.3) (10.2)
Payments against provisions (3.3) (4.7) (9.5)
Pension payments (61.0) (0.9) (8.9)
--------- ---------- ---------
Cash generated from operations 196.1 197.6 406.3
Interest paid (14.0) (13.6) (25.7)
Taxes (paid) / recovered (26.8) 1.8 (34.5)
--------- ---------- ---------
Net cash flows from operating activities 155.3 185.8 346.1
Cash flows from investing activities
Purchase of property, plant and
equipment (127.6) (87.8) (199.6)
Purchase of intangible assets (1.4) (1.0) (2.6)
Proceeds from disposal of property,
plant and equipment 0.5 1.3 3.1
Business combinations, net of cash
acquired - - (59.5)
Capital contributions and loans to joint
ventures (0.9) (1.2) (3.4)
Dividends from associate - 0.4 0.6
Interest received 0.2 2.1 1.4
--------- ---------- ---------
Net cash flows from investing activities (129.2) (86.2) (260.0)
Cash flows from financing activities
Proceeds from issue of share capital 0.2 0.9 2.3
Cost of purchasing ESOT shares - (5.1) (5.1)
Capital contributions from minority
interest equity partner 3.8 - -
Increase / (decrease) in short-term
borrowings 49.1 (17.8) (25.5)
Proceeds from long-term borrowings - - 101.8
Repayments of long-term borrowings (17.0) (38.5) (104.1)
Issue costs of long-term borrowings - (1.1) (1.1)
Dividends paid 5 (57.1) (48.0) (61.5)
--------- ---------- ---------
Net cash flows used in financing
activities (21.0) (109.6) (93.2)
Net increase / (decrease) in cash and
cash equivalents 5.1 (10.0) (7.1)
Opening cash and cash equivalents 34.2 41.5 41.5
Foreign exchange differences 0.1 (0.1) (0.2)
--------- ---------- ---------
Closing cash and cash equivalents 8 39.4 31.4 34.2
--------- ---------- ---------
Reconciliation to cash and cash
equivalents on the balance sheet:
Cash and cash equivalents shown above 39.4 31.4 34.2
Add back overdrafts - 3.3 4.0
--------- ---------- ---------
Cash and cash equivalents shown within current
assets on the balance sheet 39.4 34.7 38.2
--------- ---------- ---------
Notes to the accounts
1. Basis of accounting and preparation
The interim condensed consolidated financial statements were authorised for issue in accordance with a resolution of the Board of Directors on 17 October 2011.
The interim consolidated financial statements are prepared in accordance with UK listing rules and with IAS 34 'Interim Financial Reporting'. The interim financial report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.
The financial information for the year ended 3 March 2011 is extracted from the statutory accounts of the Group for that year and does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. These published accounts were prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted for use in the European Union, and reported on by the auditors without qualification or statement under Sections 498(2) or (3) of the Companies Act 2006 and have been delivered to the Registrar of Companies.
The interim financial statements for the six months ended 1 September 2011 and the comparatives to 2 September 2010 are unaudited but have been reviewed by the auditors; a copy of their review report is included at the end of this report.
A combination of the strong cash flows generated by the business, and the significant available headroom on its credit facilities, support the Director's view that the Group has sufficient funds available for it to meet its foreseeable working capital requirements. The directors have concluded therefore that the going concern basis remains appropriate.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 3 March 2011 except for the change in accounting policy for underlying operating profit noted below and the adoption of new Standards and Interpretations as of 4 March 2011, of which the significant standards for the Group are noted below:
Underlying operating profit
Included on the face of the Income Statement the group presents underlying profit before tax to assist investors in their assessment and understanding of underlying business trends. This measure excludes the impact of exceptional items, pension finance cost under IAS19, and for the first time in 2011/12 the amortisation charge on acquired intangible assets.
IAS 24 Related Party Disclosures (Amendment)
The amended standard clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The adoption of this amendment did not have any impact on the financial position or performance of the Group.
IFRIC 14 Prepayments of a minimum Funding Requirement (Amendment)
The amendment provides guidance on assessing the recoverable amount of a net pension asset. It permits an entity to treat the prepayment of a minimum funding requirement as an asset. The adoption of this amendment did not have any impact on the financial position or performance of the Group.
The Group has also elected to early adopt the amendments to IAS 1 Presentation of Financial Statements and expects these to be endorsed by the European Union. The amendment provides guidance on the requirement for entities to group items presented in the Statement of Other Comprehensive Income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently. The adoption of this amendment resulted in changes to the format of the OCI. This amendment did not have any impact on the financial position or performance of the Group.
2. Segmental analysis
For management purposes, the Group is organised into two strategic business units (Hotels & Restaurants and Costa) based upon their different products and services:
-- Hotels & Restaurants provide services in relation to accommodation and food
-- Costa generates income from the operation of its branded, owned and franchised coffee outlets.
No operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its strategic business units separately for the purpose of making decisions about allocating resources and assessing performance. Segment performance is measured based on underlying operating profit before exceptional items. Included within the unallocated and elimination columns in the tables are the costs of running the public company. The unallocated assets and liabilities are cash and debt balances (held and controlled by the central treasury function), taxation, pensions, certain property, plant and equipment and central working capital balances.
Inter-segment revenue is from Costa to the Hotels & Restaurants segment and is eliminated on consolidation. Transactions were entered into on an arm's length basis in a manner similar to transactions with third parties.
The following tables present revenue and profit information and certain asset and liability information regarding business operating segments for the six months to 1 September 2011 and 2 September 2010 and for the full year ended 3 March 2011.
Unallocated
Hotels
& and Total
Restaurants Costa elimination operations
6 months to 1 September 2011 GBPm GBPm GBPm GBPm
-------------------------------- ----------- ------ ----------- ----------
Revenue
Revenue from external customers 641.9 249.4 - 891.3
Inter-segment revenue - 1.4 (1.4) -
----------- ------ ----------- ----------
Total revenue 641.9 250.8 (1.4) 891.3
----------- ------ ----------- ----------
Underlying operating profit
before exceptional items 167.1 27.8 (8.6) 186.3
Amortisation of acquired
intangible assets - (1.3) - (1.3)
----------- ------ ----------- ----------
Operating profit before
exceptional items 167.1 26.5 (8.6) 185.0
Exceptional items:
Impairment of investment - - (0.9) (0.9)
Net gain / (loss) on disposal
of property, plant and
equipment 24.8 (0.4) 0.4 24.8
Operating profit of the Group 191.9 26.1 (9.1) 208.9
----------- ------ -----------
Net finance costs (20.0)
----------
Profit before tax 188.9
Tax expense (29.7)
----------
Profit for the period 159.2
----------
Assets and liabilities
Segment assets 2,556.2 261.4 - 2,817.6
Unallocated assets - - 73.8 73.8
----------- ------ ----------- ----------
Total assets 2,556.2 261.4 73.8 2,891.4
----------- ------ ----------- ----------
Segment liabilities (193.1) (55.6) - (248.7)
Unallocated liabilities - - (1,362.6) (1,362.6)
----------- ------ ----------- ----------
Total liabilities (193.1) (55.6) (1,362.6) (1,611.3)
----------- ------ ----------- ----------
Net assets 2,363.1 205.8 (1,288.8) 1,280.1
----------- ------ ----------- ----------
Unallocated
Hotels
& and Total
Restaurants Costa elimination operations
6 months to 2 September 2010 GBPm GBPm GBPm GBPm
-------------------------------- ----------- ------ ----------- ----------
Revenue
Revenue from external customers 608.0 197.4 - 805.4
Inter-segment revenue - 1.1 (1.1) -
----------- ------ ----------- ----------
Total revenue 608.0 198.5 (1.1) 805.4
----------- ------ ----------- ----------
Underlying operating profit
before exceptional items 154.0 19.6 (10.2) 163.4
Amortisation of acquired
intangible assets - - - -
----------- ------ ----------- ----------
Operating profit before
exceptional items 154.0 19.6 (10.2) 163.4
Exceptional items:
Refund of VAT on gaming
machine income 5.0 - - 5.0
----------- ------ ----------- ----------
Operating profit of the Group 159.0 19.6 (10.2) 168.4
----------- ------ -----------
Net finance costs (17.4)
----------
Profit before tax 151.0
Tax expense (35.0)
----------
Profit for the period 116.0
----------
Assets and liabilities
Segment assets 2,425.6 166.6 - 2,592.2
Unallocated assets - - 73.7 73.7
----------- ------ ----------- ----------
Total assets 2,425.6 166.6 73.7 2,665.9
----------- ------ ----------- ----------
Segment liabilities (156.1) (45.2) - (201.3)
Unallocated liabilities - - (1,340.0) (1,340.0)
----------- ------ ----------- ----------
Total liabilities (156.1 (45.2) (1,340.0) (1,541.3)
----------- ------ ----------- ----------
Net assets 2,269.5 121.4 (1,266.3) 1,124.6
----------- ------ ----------- ----------
Unallocated
Hotels
& and Total
Restaurants Costa elimination Operations
Year to 3 March 2011 GBPm GBPm GBPm GBPm
-------------------------------- ----------- ------ ----------- ----------
Revenue
Revenue from external customers 1,177.3 422.3 - 1,599.6
Inter-segment revenue - 2.7 (2.7) -
----------- ------ ----------- ----------
Total revenue 1,177.3 425.0 (2.7) 1,599.6
----------- ------ ----------- ----------
Underlying operating profit
before exceptional items 283.4 50.5 (22.1) 311.8
Amortisation of acquired
intangible assets - (0.4) - (0.4)
----------- ------ ----------- ----------
Operating profit before
exceptional items 283.4 50.1 (22.1) 311.4
Exceptional items:
Refund of VAT on gaming
machine income 4.6 - - 4.6
Net loss on disposal of
property, plant and
equipment and property
reversions - (0.4) - (0.4)
Impairment (12.3) (1.5) - (13.8)
Impairment reversal 7.9 1.3 - 9.2
Share of impairment of assets
in joint ventures - (0.7) - (0.7)
Sale of business - (2.4) - (2.4)
----------- ------ -----------
Operating profit of the Group 283.6 46.4 (22.1) 307.9
----------- ------ -----------
Net finance costs (36.7)
----------
Profit before tax 271.2
Tax expense (49.1)
----------
Profit for the year 222.1
----------
Assets and liabilities
Segment assets 2,473.6 230.5 - 2,704.1
Unallocated assets - - 83.6 83.6
----------- ------ ----------- ----------
Total assets 2,473.6 230.5 83.6 2,787.7
----------- ------ ----------- ----------
Segment liabilities (175.4) (52.2) - (227.6)
Unallocated liabilities - - (1,318.1) (1,318.1)
----------- ------ ----------- ----------
Total liabilities (175.4) (52.2) (1,318.1) (1,545.7)
----------- ------ ----------- ----------
Net assets 2,298.2 178.3 (1,234.5) 1,242.0
----------- ------ ----------- ----------
3. Exceptional items and other non GAAP adjustments
6 months 6 months
to to 2 Year to
1 September September 3 March
2011 2010 2011
GBPm GBPm GBPm
--------------------------------------- ------------- ----------- ---------
Exceptional items before tax and
interest:
Revenue
Refund of VAT charged on gaming
machine income - 5.0 4.6
Distribution costs
Net profit / (loss) on disposal of
property, plant and equipment, and
property reversions (a) 24.8 - (0.4)
Impairment of property, plant and
equipment - - (13.0)
Impairment reversal - - 9.2
------------- ----------- ---------
24.8 - (4.2)
Administrative expenses
Impairment of financial assets (b) (0.9) - -
Impairment of other intangibles - - (0.8)
Sale of businesses - - (2.4)
------------- ----------- ---------
(0.9) - (3.2)
Share of impairment of fixed assets in
joint ventures - - (0.7)
23.9 5.0 (3.5)
Exceptional interest:
Interest on VAT refunded - 0.9 0.7
Interest on exceptional tax (c) (0.4) (0.4) (0.7)
Movement in discount on provisions (0.4) (0.5) (0.9)
------------- ----------- ---------
(0.8) - (0.9)
Exceptional items before tax 23.1 5.0 (4.4)
------------- ----------- ---------
Other non GAAP adjustments made to
underlying profit before tax to arrive
at reported profit before tax:
Amortisation of acquired intangible
assets (1.3) - (0.4)
IAS 19 Income Statement charge for
pension finance cost (7.8) (5.8) (11.5)
------------- ----------- ---------
(9.1) (5.8) (11.9)
------------- ----------- ---------
Items included in reported profit
before tax but excluded from
underlying profit before tax 14.0 (0.8) (16.3)
------------- ----------- ---------
6 months
to 6 month Year to
1 September to 2 September 3 March
2011 2010 2011
GBPm GBPm GBPm
---------------------------------- ------------- ---------------- ---------
Tax adjustments included in
reported profit after tax, but
excluded from underlying profit
after tax:
Tax on exceptional items (7.7) (1.6) (1.3)
Exceptional tax items - capital
allowances claims (d ) 5.3 - 7.6
Exceptional tax items - rolled
over gains - - 16.7
Deferred tax relating to UK tax
rate change (e) 18.3 9.3 8.4
Tax on non GAAP adjustments 2.3 1.6 3.2
18.2 9.3 34.6
------------- ---------------- ---------
(a) The GBP24.8m relates to the sale and leaseback agreement of seven properties. Contracts were exchanged on 11(th) August 2011 but the cash was not received until after the half year end.
(b) This is an impairment of a financial asset detailed in Note 7.
(c) The associated interest arising on late payment of an item claimed in a previous year, which had been disputed, is included in exceptional interest charges in line with the treatment of the original item.
(d) Following the abolition of Industrial Buildings Allowances for hotel buildings, the Group reviewed and resubmitted prior year capital allowance claims. These claims have now been agreed with HMRC.
(e) The Finance Act 2011 reduced the main rate of UK Corporation Tax to 26% from 1 April 2011 and to 25% from 1 April 2012. The effect of the new rate is to reduce the deferred tax provision by a net GBP10.5m, comprising a credit of GBP18.3m to the Income Statement and a charge of GBP7.8m to the Consolidated Statement of Comprehensive Income.
Additional changes to the main rate of UK Corporation Tax are proposed, to reduce the rate by 1% per annum to 23% by 1 April 2014. These changes had not been substantively enacted at the balance sheet date and consequently are not included in these financial statements. The effect of these proposed reductions would be to reduce the net deferred tax liability by GBP9.2m. Further UK tax changes are a reduction from 1 April 2012 in the rate of capital allowances applicable to plant & machinery and to integral features from 20% to 18% and from 10% to 8% respectively.
4. Finance (costs) / revenue
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
GBPm GBPm GBPm
------------------------------------------- ----------- ----------- -------
Finance costs
Bank loans and overdrafts (15.0) (13.6) (28.2)
Other loans - (0.2) (0.3)
Interest capitalised 1.5 1.0 2.8
----------- ----------- -------
(13.5) (12.8) (25.7)
Net pension finance cost (7.8) (5.8) (11.5)
----------- ----------- -------
Finance costs before exceptional items (21.3) (18.6) (37.2)
Exceptional finance costs (note 3) (0.4) (0.4) -
Movement in discount on provisions (note 3) (0.4) (0.5) (0.9)
----------- ----------- -------
Total finance costs (22.1) (19.5) (38.1)
----------- ----------- -------
Finance revenue
Bank interest receivable 0.1 0.2 0.2
Other interest receivable 1.8 1.0 1.2
1.9 1.2 1.4
Exceptional finance revenue (note 3) - 0.9 -
Impact of ineffective portion of cash flow
and fair value hedges 0.2 - -
----------- ----------- -------
Total finance revenue 2.1 2.1 1.4
----------- ----------- -------
5. Dividends paid
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
GBPm GBPm GBPm
------------------------------------------- ----------- ----------- -------
Paid in the period:
Equity dividends on ordinary shares:
Final dividend for 2010/11 - 33.25 pence 58.6 - -
Settled via scrip issue (1.5) - -
Final dividend for 2009/10 - 28.35 pence - 49.7 49.7
Settled via scrip issue - (1.7) (1.7)
Interim dividend for 2010/11 - 11.25
pence - - 19.7
Settled via scrip issue - - (6.2)
----------- ----------- -------
57.1 48.0 61.5
----------- ----------- -------
Dividends on other shares:
B share dividend - - -
C share dividend - - -
----------- ----------- -------
- - -
Total dividends paid 57.1 48.0 61.5
----------- ----------- -------
Shareholders were offered a scrip alternative to the 2010/11 cash final dividend of 33.25p. Scrip elections were received on 4.7m shares, resulting in the issue of new shares with a nominal value of GBP0.1m.
6. Earnings per share
The basic earnings per share figures are calculated by dividing the net profit for the year attributable to ordinary shareholders, therefore before non-controlling interests, by the weighted average number of ordinary shares in issue during the year after deducting treasury shares and shares held by an independently managed employee share ownership trust (ESOT).
The diluted earnings per share figures allow for the dilutive effect of the conversion into ordinary shares of the weighted average number of options outstanding during the period.
The numbers of shares used for the earnings per share calculations are as follows:
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
million million million
------------------------------------- ------------- ------------- ---------
Basic weighted average number of
ordinary shares 175.9 175.6 175.6
Effect of dilution - share options 0.7 0.5 0.6
------------- ------------- ---------
Diluted weighted average number of
ordinary shares 176.6 176.1 176.2
------------- ------------- ---------
The profits used for the earnings per share calculations are as follows:
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
GBPm GBPm GBPm
Profit for the period attributable
to parent shareholders 159.7 116.4 223.3
Exceptional items - gross (23.1) (5.0) 4.4
Exceptional items - taxation (15.9) (7.7) (31.4)
------------- ------------- ---------
Profit for the period before
exceptional items attributable to
parent shareholders 120.7 103.7 196.3
Non GAAP adjustments - gross 9.1 5.8 11.9
Non GAAP adjustments - taxation (2.3) (1.6) (3.2)
------------- ------------- ---------
Underlying profit for the period
attributable to parent
shareholders 127.5 107.9 205.0
6 months 6 months
to to Year to
1 September 2 September 3 March
2011 2010 2011
p p p
Basic for profit for the period 90.79 66.29 127.16
Exceptional items - gross (13.13) (2.85) 2.51
Exceptional items - taxation (9.04) (4.39) (17.88)
------------- ------------- ---------
Basic for profit before exceptional
items for the period 68.62 59.05 111.79
Non GAAP adjustments - gross 5.17 3.31 6.78
Non GAAP adjustments - taxation (1.31) (0.91) (1.82)
------------- ------------- ---------
Basic for underlying profit for the
period 72.48 61.45 116.75
Diluted for profit for the period 90.43 66.10 126.73
Diluted for profit before
exceptional items for the period 68.35 58.89 111.41
Diluted for underlying profit for
the period 72.20 61.27 116.35
7. Other financial assets
At At
1 September 3 March
2011 2011
--------------------------- ------------- ---------
GBPm GBPm
Opening cost or valuation 0.9 0.9
Impairment (0.9) -
------------- ---------
Closing cost or valuation - 0.9
------------- ---------
Non-current - 0.9
------------- ---------
The Group's other financial asset related to an investment in a German hotel which was held at fair value. This asset has been assessed and the Group believe that its value is impaired.
8. Movements in cash and net debt
Fair value Amortisation
1
3 March Foreign adjustments of premiums September
Cash to loan and
2011 flow exchange capital discounts 2011
GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------- ------- -------- ----------- ------------ ---------
Cash at bank
and in
hand 38.2 39.4
Overdrafts (4.0) -
------- ---------
Cash and
cash
equivalents 34.2 5.1 0.1 - - 39.4
Short-term
bank
borrowings - (49.1) - - - (49.1)
Loan capital
under one
year (0.2) (0.2)
Loan capital
over one
year (521.9) (510.2)
------- ---------
Total loan
capital (522.1) 17.0 - (5.0) (0.3) (510.4)
------- ------- -------- ----------- ------------ ---------
Net debt (487.9) (27.0) 0.1 (5.0) (0.3) (520.1)
------- ------- -------- ----------- ------------ ---------
9. Derivative financial instruments
Cash flow hedges
At 1 September 2011 the Group had interest rate swaps in place to swap a notional amount of GBP400m (2010: GBP400m) whereby it receives a variable interest rate based on LIBOR on the notional amount and pays fixed rates of between 5.145% and 5.695% (2010: 5.145% and 5.695%). The swaps are being used to hedge the exposure to changes in future cash flows from variable rate debt.
The swaps with maturities beyond the life of the current revolving credit facilities (2013) are in place to hedge against the core level of debt the Group will hold.
On 13 August 2010, Series A loan notes were issued in the US Private Placement market. Following this the Group entered into a cross-currency swap whereby the fixed interest rate of 4.55% is received on a notional amount of $40.0m and an average of 4.53% is paid on a notional sterling balance of GBP26.7m.
On 27 July 2011 the Group entered into a further Note Purchase Agreement to issue notes amounting to $210m and GBP25m in the US Private Placement Market. Following this the Group entered into a number of cross currency swap agreements which swapped the USD to GBP at 1.5978 giving total funding in GBP of GBP156.4m. In addition the Group receives interest payments which match the rates payable under the notes of between 4.2% and 5.1% and pays between 4.3% and 5.2%. These swaps eliminate any foreign exchange risk on interest rates or on the repayment of the principle borrowed.
Fair value hedges
The Group has not entered into any new fair value swaps since the previous reporting period.
10. Pension liability
The pension liability in the period has increased from GBP488.0m to GBP517.0m. The main movements in the deficit are as follows:
GBPm
Pension liability at 3
March 2011 488.0
Net actuarial losses 82.2
Employer contributions (61.0)
Net interest cost 7.8
Pension liability at 1
September 2011 517.0
-------
The actuarial losses on scheme liabilities are primarily due to the reduction in the discount factor from 5.6% to 5.4%, coupled with poor asset performance compared to expected returns assumed at the beginning of the period.
11. Related party disclosure
The Group's principal subsidiaries, joint ventures and associate are listed in the following table:
% equity interest
--------------------------------
1
September 2 September 3 March
Principal Country of
activity incorporation 2011 2010 2011
-------------- ------------ -------------- ---------- ----------- -------
Principal subsidiaries
Whitbread Hotels and
Group PLC restaurants England 100.0 100.0 100.0
Premier Inn
Hotels
Limited Hotels England 100.0 100.0 100.0
Whitbread
Restaurants
Limited Restaurants England 100.0 100.0 100.0
Premier Inn
Limited Hotels England 100.0 100.0 100.0
Operator of
coffee
shops and
roasters
and
wholesalers
of coffee
Costa Limited beans England 100.0 100.0 100.0
Yueda Costa
(Shanghai)
Food &
Beverage
Management Operator of
Company coffee
Limited shops China 51.0 51.0 51.0
Operator of
coffee
Coffeeheaven shops in
International eastern
Limited Europe England 100.0 100.0 100.0
Operators of
customer
facing
espresso
based
coffee
Coffee Nation vending
Limited machines England 100.0 - 100.0
Principal joint ventures
Premier Inn United
Hotels LLC Hotels Arab Emirates 49.0 49.0 49.0
Rosworth
Investments
Limited Coffee shops Cyprus 50.0 50.0 50.0
Hualian Costa
(Beijing)
Food &
Beverage
Management
Company
Limited Coffee shops China 50.0 50.0 50.0
Principal associate
Morrison
Street Hotel
Limited Hotels Scotland 40.0 40.0 40.0
Shares in Whitbread Group PLC are held directly by Whitbread PLC. Shares in the other subsidiaries are held by Whitbread Group PLC. All principal subsidiary undertakings have the same year end as Whitbread PLC, with the exception of Yueda Costa (Shanghai) Food & Beverage Management Company Limited which has a year end of 31 December as required by Chinese legislation. All the above companies have been included in the Group consolidation. The companies listed above are those that materially affect the amount of profit and the assets of the Group.
Transactions and balances with related parties are shown in the table below.
Amounts owed Amounts owed
Sales to by related to related
related party party party
GBPm GBPm GBPm
----------------------------- -------------- ------------ ------------
Joint ventures
6 months to 1 September 2011 0.9 0.4 -
6 months to 2 September 2010 0.2 - -
Year to 3 March 2011 1.8 0.3 -
Associate
6 months to 1 September 2011 1.6 - 2.5
6 months to 2 September 2010 1.6 0.2 2.5
Year to 3 March 2011 3.1 - 2.5
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made at normal market prices. Outstanding balances are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables. For the six months ended 1 September 2011, the Group has not raised any provision for doubtful debts relating to amounts owed by related parties (2010: GBPnil). An assessment of bad debts is undertaken each financial year through examining the financial position of the related party and the market in which it operates.
12. Capital expenditure commitments
Capital expenditure commitments for which no provision has been made are set out in the table below:
1 September 2 September 3 March
2011 2010 2011
GBPm GBPm GBPm
------------------------------ ----------- ----------- -------
Property, plant and equipment 90.8 64.6 63.9
Intangible assets - - 0.2
13. Events after the balance sheet date
An interim dividend of 17.50p per share (2010: 11.25p) amounting to a dividend of GBP30.8m (2010: GBP19.7m) was declared by the Directors. A scrip alternative will be offered. These financial statements do not reflect this dividend payable.
On 6 September 2011, the Group announced an agreement for long term debt from US investors under a private placement amounting to US$210m and GBP25m. On the basis of the Note Purchase Agreement entered into on 27 July 2011, these have been arranged with existing and additional institutional investors and swapped to achieve total funding of GBP156.4m. The funding is to be effected in two tranches with GBP62.6m drawn down on 6 September 2011 and the balance in January 2012 which coincides with the maturity of GBP200m of 5.7% fixed rate swaps. The additional borrowings will be used to replace funds drawn under the Group's bank facilities.
14. Contingent liability
The Group received a GBP4.6m refund of VAT charged on gaming machine income in 2010/11, together with associated interest of GBP0.7m. The refund was made following a ruling that the application of VAT to certain types of gaming machine income contravened the European Union's principle of fiscal neutrality. HMRC have appealed against the ruling, and if HMRC's appeal is upheld the refund and associated interest of GBP5.3m would be repayable.
Independent review report to Whitbread PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 1 September 2011 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet and the Consolidated Cash Flow statement. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 1 September 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
17 October 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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