RNS Number:4780Q
Thistle Hotels PLC
6 September 2000
Announcement of Interim Results for the 28 weeks ended 9 July 2000
* Strong finish to half year after slow start; good start to second
half.
* Retained hotel turnover up 4.3% to #161.1 million.
* Revenue per available room ("Revpar") growth of 4.6% in retained
hotels and 8.1% in London.
* Retained hotel gross profit before fixed charges up 5.7% to #85.9
million.
* Cash flow from operations up 19.9% to #69.2 million.
* Profit before tax down 9.0% on higher interest charges following the
special dividend and accounting changes but underlying profit up 7%.
* Interim ordinary dividend of 1.7 pence per share recommended, up
6.3%.
Highlights Notes 28 weeks % 28
ended change weeks
9/7/00 ended
11/7/9
9
Turnover - retained hotels (#m) 1 161.1 4.3 154.4
Revenue per available room - retained 1 50.30 4.6 48.10
hotels (#)
Hotel gross profit before fixed charges
- retained hotels (#m) 1, 2 85.9 5.7 81.3
Cash flow from operations (#m) 69.2 19.9 57.7
EBITDA (#m) 3,4 64.4 (0.2) 64.5
Operating profit (#m) 48.6 (4.9) 51.1
Profit before taxation (#m) 29.4 (9.0) 32.3
Adjusted earnings per share (p) 4 4.7 (4.1) 4.9
Interim dividend per share (p) 1.7 6.3 1.6
Commenting on the results, David Newbigging, Chairman, said "The results
for the 28 weeks ended 9 July 2000 were encouraging, with strong
performances in both London and the regions over the final 16 weeks of the
period, more than offsetting the difficult start to the year, particularly
in the regions, that I described in the 1999 Annual Report."
"The second half year has started well with turnover growth in retained
hotels in the first 8 weeks of the second half more than 10% up on last
year and we remain on course to achieve our profit expectations for the
year."
Enquiries:
Thistle Hotels Plc 020 7723 8383
Ian Burke, Chief Executive
Hogarth Partnership Limited 020 7357 9477
Nick Denton
Rachel Hirst
Notes
1 Retained hotels include the Thistle Middlesbrough for the first time
this year since its reopening in April 2000.
2 Fixed charges comprise property rent, rates and insurance, depreciation
and amortisation.
3 EBITDA represents earnings before interest, taxation, depreciation and
amortisation.
4 Before exceptional items, which comprise profits on the sale of
tangible fixed assets
NOTES TO EDITORS
Thistle is the largest hotel group in London with 23 properties in prime
locations throughout the Capital and has hotels in key regional cities of
England, Scotland and Wales.
There are 56 hotels in the group with a total of 10,718 bedrooms. In
London, Thistle has 6,336 rooms in 23 hotels and in the regions, 4,382
rooms in 33 hotels.
Thistle's London hotels include the Thistle Tower, the Thistle Charing
Cross, the Thistle Marble Arch, the Thistle Kensington Gardens, the
Thistle Victoria and The Royal Horseguards. Thistle has hotels in
Aberdeen, Bristol, Birmingham, Cardiff, Edinburgh, Glasgow, Liverpool,
Manchester and Newcastle among other regional centres as well as hotels at
airports in Aberdeen, East Midlands, Gatwick, Heathrow, Luton and
Manchester.
In May, Thistle announced that in conjunction with Morrison Construction
Group it is to develop and own up to ten hotels in Britain and Ireland
over the next five years.
Thistle has recently been voted 'Best Hotel Group' for the second year
running by readers of Group Travel Organiser magazine.
CHAIRMAN'S STATEMENT
The results for the 28 weeks ended 9 July 2000 were encouraging, with
strong performances in both London and the regions over the final 16 weeks
of the period, more than offsetting the difficult start to the year,
particularly in the regions, that I described in the 1999 Annual Report.
Under a new accounting standard (FRS15), and in line with the rest of the
UK hotel industry, we are now depreciating our buildings on a new formula.
This has significantly increased our depreciation charge, by #5.8 million
in the half year, although it has no impact on cash flow. We have
restated our 1999 results correspondingly and further details are given in
Note 1 to the Interim Financial Information.
Profit before tax in the period was #29.4 million, down 9% (1999 - #32.3
million) mainly because of higher interest charges following the special
dividend last year and accounting changes, but underlying profit improved
by over 7%. The Board has declared an interim dividend of 1.7 pence per
share (1999 - 1.6 pence), an increase of 6.3%. This will be paid on 17
November 2000 to shareholders on the register as at 13 October 2000.
Capital expenditure during the period was #39.9 million (1999 - #42.9
million) with forecast capital expenditure for the current financial year
anticipated to be around #70 million. The Company completes its three
year capital expenditure programme at the end of next year when all hotels
will have been upgraded to a consistent standard. As this programme nears
completion, a key objective is to generate and conserve cash and reduce
debt levels.
The second half year has started well with turnover growth in retained
hotels in the first 8 weeks of the second half more than 10% up on last
year and we remain on course to achieve our profit expectations for the
year.
OPERATING AND FINANCIAL REVIEW
KEY REVENUE STATISTICS
28 weeks 28 weeks 52 weeks
ended ended % ended
9/7/00 11/7/99 change 26/12/99
------------------------------------------------------------------------
London Retained
Occupancy 78.8% 75.8% 4.0% 79.3%
Average Room Rate (#) 77.05 74.12 4.0% 75.04
Revenue per available room (#) 60.72 56.18 8.1% 59.51
Turnover (#m) 105.0 98.3 6.8% 192.5
------------------------------------------------------------------------
Regions Retained
Occupancy 64.6% 67.3% -4.0% 68.2%
Average Room Rate (#) 54.28 53.42 1.6% 53.85
Revenue per available room (#) 35.06 35.95 -2.5% 36.73
Turnover (#m) 56.1 56.1 0.0% 107.8
------------------------------------------------------------------------
Total Retained Hotels
Occupancy 73.0% 72.4% 0.8% 74.9%
Average Room Rate (#) 68.88 66.43 3.7% 67.33
Revenue per available room (#) 50.30 48.10 4.6% 50.43
Turnover (#m) 161.1 154.4 4.3% 300.3
------------------------------------------------------------------------
Total Group
Occupancy 73.0% 72.1% 1.3% 74.5%
Average Room Rate (#) 68.82 65.94 4.4% 66.86
Revenue per available room (#) 50.24 47.54 5.7% 49.81
Turnover (#m) 161.2 157.5 2.3% 304.7
------------------------------------------------------------------------
London
Turnover in retained hotels increased by 6.8% to #105.0 million (1999 -
#98.3 million) driven by strong performances in recently renovated hotels
including the Thistle Charing Cross, Thistle Tower and The Royal
Horseguards.
Revenue per available room in retained hotels increased 8.1% to #60.72
(1999 - #56.18) with gains in occupancy, up from 75.8% to 78.8%, and
average room rate, up from #74.12 to #77.05. This growth was ahead of the
market, improving our comparative revenue per available room.
Retained hotels gross profit before fixed charges improved 9.9% to #61.3
million (1999 - #55.8 million) - a margin of 58.4% (1999 - 56.8%).
Capital expenditure at #22.3 million was spent on bedroom upgrades, new
restaurants, hotel infrastructure maintenance and the construction of the
first Otium Health & Leisure Club in a London hotel at the Thistle City
Barbican. Just under 1,100 bedrooms were refurbished during the half year
leaving about 900 rooms to be refurbished over the next 12 months, to
complete the room renovation programme in London hotels. A number of new
restaurants opened, including a Faya Mediterranean Bar and Grill at the
Thistle Lancaster Gate and a Water Cafe, at the Thistle Tower.
Christopher's restaurant, a joint venture with Christopher Gilmour, opened
this week at the Thistle Victoria.
Regions
Trading conditions were difficult in the first 12 weeks of the year
leaving turnover for retained hotels for the half year unchanged from last
year at #56.1 million. Revenue per available room was down 2.5% to #35.06
(1999 - #35.95) with average room rate up 1.6% to #54.28 (1999 - #53.42)
but occupancy down 2.7 percentage points to 64.6%. Gross profit before
fixed charges decreased 3.5% to #24.6 million (1999 - #25.5 million), as
new competitive supply adversely impacted results in Cardiff, Bristol and
Birmingham. The 132-bedroom Thistle Middlesbrough re-opened in April
after an extensive renovation contributing #0.5 million in turnover over
13 weeks and a #0.1 million gross profit before fixed charges.
Capital expenditure was #15.5 million. This included #5.0 million
completing the #8.6 million renovation of the Thistle Middlesbrough, #3.4
million upgrading 502 bedrooms and #2.0 million on new Otium Health &
Leisure Clubs. New Otium clubs opened at the Thistle St. Albans and the
Thistle Aberdeen Altens, both of which are trading well and a further 3
clubs are under construction; at New Hall in the Midlands, the Thistle
Glasgow and the Thistle Inverness. 26 new bedrooms opened in August at
the Thistle Gatwick.
A number of regional asset disposals were made during the half year,
including 3 small hotels; the Black Bull in Glasgow, the Wellesley in
Leeds and the Dee Motel in Aberdeen, realising aggregate proceeds of #9.1
million.
Information Technology systems
The new information technology systems implemented in 1999 have enabled us
to manage more effectively our rooms inventory and to sell rooms
throughout existing and emerging distribution channels. Room sales by
means of the Global Distribution Systems are up significantly on 1999.
Room sales via our web site, www.thistlehotels.com, have doubled over the
past six months.
Further new initiatives designed to secure room bookings through emerging
channels have been launched in recent weeks, including the development of
a corporate extranet link to Thistle's reservations system. The
implementation of a new management information system utilising SAP
software was completed in March and this back office system was also
successfully integrated with each hotel's front office system.
People
The "Be My Guest" customer service improvement programme launched at the
start of the year is progressing well. Over 80% of management and staff
have undertaken the training and the early results in terms of improved
guest satisfaction, as measured by our customer satisfaction surveys, are
encouraging.
Finance
Retained hotel turnover increased 4.3% to #161.1 million. Revenue per
available room increased 4.6% with a 0.6 percentage point gain in
occupancy to 73.0% and a 3.7% increase in average room rate to #68.88
(1999 - #66.43).
Profit before tax was down 9% at #29.4 million (1999 - #32.3 million),
although underlying profit before tax improved by over 7%, after adjusting
for four factors:
i Hotel disposals, most notably the Charles Dickens in 1999, reduced
year on year profits by #0.6 million.
ii The #92.4 million special dividend in April 1999 increased interest
charges by #2.5 million compared to 1999, when it had only a partial
effect.
iii The adoption of a new accounting standard, FRS15 (Tangible Fixed
Assets), referred to in the Chairman's Statement, reduced year on
year profits by #1.0 million, compared with the restated 1999 figure.
iv Other accounting changes reduced year on year profits by #1.2
million.
The Group's taxation charge continues to benefit from the high level of
allowances generated by its capital investment programme and for the
current year the effective tax rate is estimated at 19.5% of profit before
exceptional items (1999 - 20%).
Adjusted earnings per share decreased 4.1% to 4.7p with the lower level of
earnings being partially offset by a reduced number of shares, due to the
share consolidation at the time of the special dividend in 1999.
Cash flow from operating activities was #11.5 million higher at #69.2
million, mainly due to better working capital management. After all other
expenditure (capital expenditure, tax, interest and dividends), the Group
generated #4.4 million of net cash in the half year.
THISTLE HOTELS Plc
GROUP PROFIT & LOSS ACCOUNT
for the 28 weeks ended 9 July 2000
28 weeks 28 weeks 52 weeks
ended ended ended
09/07/00 11/07/99 26/12/99
as restated as restated
Notes #'m #'m #'m
--- --- ---
Turnover 2 161.2 157.5 304.7
Cost of sales (100.7) (97.4) (185.3)
-----------------------------------
Gross profit 2 60.5 60.1 119.4
Administrative expenses (11.9) (9.0) (16.4)
-----------------------------------
Operating profit 48.6 51.1 103.0
Profit on sale of tangible fixed 1.2 0.9 2.4
assets
Interest payable and similar (20.4) (19.7) (37.7)
charges
-----------------------------------
Profit before taxation 29.4 32.3 67.7
Taxation 3 (5.5) (6.3) (13.3)
-----------------------------------
Profit after taxation 23.9 26.0 54.4
Dividends 4 (8.2) (100.1) (115.5)
-----------------------------------
Transfer to / (from) reserves 15.7 (74.1) (61.1)
===================================
Earnings per share 5 5.0p 5.0p 10.8p
Diluted earnings per share 5 5.0p 5.0p 10.8p
Adjusted earnings per share 5 4.7p 4.9p 10.4p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
28 weeks 28 weeks 52 weeks
ended ended ended
09/07/00 11/07/99 26/12/99
as restated as restated
#'m #'m #'m
--- --- ---
Profit for the period 23.9 26.0 54.4
Unrealised surplus on revaluation - 3.8 3.8
of properties
-----------------------------------
Total gains and losses relating to 23.9 29.8 58.2
the period
Prior year adjustment 1 (66.8) - -
-----------------------------------
Total gains and losses recognised (42.9) 29.8 58.2
since last annual report
===================================
THISTLE HOTELS Plc
GROUP BALANCE SHEET
at 9 July 2000
09/07/00 11/07/99 26/12/99
as restated as restated
#'m #'m #'m
--- --- ---
Fixed assets
Tangible assets 1,615.1 1,614.9 1,600.9
-----------------------------------
Current assets
Stocks 1.1 0.9 1.4
Debtors 43.2 44.9 35.5
Investments - 0.1 0.1
Cash at bank and in hand 3.6 2.2 6.0
-----------------------------------
47.9 48.1 43.0
Creditors (due within one year) (103.2) (110.3) (99.8)
-----------------------------------
Net current liabilities (55.3) (62.2) (56.8)
-----------------------------------
Total assets less current liabilities 1,559.8 1,552.7 1,544.1
Creditors (due after one year) (433.3) (454.8) (433.8)
Provisions for liabilities and charges - (0.9) -
-----------------------------------
Net assets 1,126.5 1,097.0 1,110.3
===================================
Capital and reserves
Called up share capital 123.6 123.5 123.5
Share premium account 398.5 397.8 398.1
Revaluation reserve 446.0 449.4 448.8
Other reserves 50.8 50.8 50.8
Profit and loss account 107.6 75.5 89.1
-----------------------------------
Total equity shareholders' funds 1,126.5 1,097.0 1,110.3
===================================
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
09/07/00 11/07/99 26/12/99
as restated as restated
#'m #'m #'m
--- --- ---
Profit for the period 23.9 26.0 54.4
Dividends (8.2) (100.1) (115.5)
Issue of share capital 0.5 - 0.3
Unrealised surplus on revaluation of - 3.8 3.8
properties
-------------------------------------
Net change in the period 16.2 (70.3) (57.0)
Opening equity shareholders' funds
as previously stated 1,177.1 1,226.8 1,226.8
Prior year adjustment (66.8) (59.5) (59.5)
-------------------------------------
Opening equity shareholders' funds 1,110.3 1,167.3 1,167.3
as restated
-------------------------------------
Closing equity shareholders' funds 1,126.5 1,097.0 1,110.3
=====================================
THISTLE HOTELS Plc
GROUP CASH FLOW STATEMENT
for the 28 weeks ended 9 July 2000
28 weeks 28 weeks 52 weeks
ended ended ended
09/07/00 11/07/99 26/12/99
Notes #'m #'m #'m
--- --- ---
Cash flow from operating 6 69.2 57.7 116.8
activities
Returns on investments
and servicing of finance
Interest paid (18.1) (17.4) (37.4)
Tax paid (1.0) (2.5) (10.3)
Capital expenditure
Purchase of tangible (39.9) (42.9) (63.0)
fixed assets
Sale of tangible fixed 9.1 4.7 29.7
assets
------ ------ ------
(30.8) (38.2) (33.3)
Equity dividends paid
Ordinary dividends paid (15.4) (16.2) (23.9)
Special dividends paid - (92.4) (92.4)
------ ------ ------
(15.4) (108.6) (116.3)
-------- -------- --------
Cash inflow / (outflow) 3.9 (109.0) (80.5)
before financing
Financing
Issue of share capital 0.5 - 0.3
Redemption of share - - -
capital
New loans - 105.0 105.0
Repayments of loans - (5.0) (26.0)
------ ------ ------
0.5 100.0 79.3
-------- -------- --------
Increase / (decrease) in 4.4 (9.0) (1.2)
cash
======== ======== ========
RECONCILIATION OF NET DEBT
28 weeks 28 weeks 52 weeks
ended ended ended
09/07/00 11/07/99 26/12/99
#'m #'m #'m
--- --- ---
Increase / (decrease) in cash 4.4 (9.0) (1.2)
Cash flow from increase in debt - (100.0) (79.0)
Reclassification of current asset (0.1) - -
investment
-------- -------- --------
Movement in net debt in the period 4.3 (109.0) (80.2)
Net debt at beginning of period (461.6) (381.4) (381.4)
-------- -------- --------
Net debt at end of period (457.3) (490.4) (461.6)
======== ======== ========
THISTLE HOTELS Plc
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. Basis of preparation
------------------------
The interim financial information, which is unaudited, has been prepared on
the basis of the accounting policies set out in the 1999 Annual Report and
Accounts, with the exception of the adoption for the first time this year
of Financial Reporting Standards 15 (Tangible Fixed Assets) and 16 (Current
Taxation).
The adoption of FRS 15 has resulted in additional depreciation in the
period of #5.8 million (1999: #4.8 million) and a prior year adjustment of
#66.8 million. The three key consequences for the Group are as follows:
- Integral plant and the non-core elements of buildings (comprising
surface finishes and services), which amounted to #150.1 million at 26
December 1999, are now treated as separate depreciable asset categories
rather than as components of property costs. These costs are now
depreciated over 15 to 30 years in accordance with the guidelines
established by the British Association of Hospitality Accountants,
resulting in an additional depreciation charge of #5.0 million in the
period (1999 restated by: #4.8 million). This change in accounting
policy has led to a prior year adjustment to net book values of #68.6
million. In addition, as a result of this change, the loss arising on
the disposal of the Charles Dickens last year has reduced by #1.8
million.
- Freehold and long leasehold properties (other than amounts attributable
to land) are now depreciated over their remaining useful economic lives,
resulting in an additional depreciation charge of #0.8 million in the
period. No prior year adjustment has been made as the decision to
recognise a useful economic life represents a change in accounting
estimate as opposed to a change in accounting policy.
- The Group has followed the transitional provisions of FRS 15 to retain
the book value of land and buildings which were revalued in 1996 and
1999 and not to revalue properties in the future. The results have been
reviewed and reported on by the Group's auditors,
PricewaterhouseCoopers. The figures for the 52 weeks ended 26 December
1999 are an abridged version of the Group's statutory accounts for that
period, as restated for the impact of FRS 15, which, together with an
unqualified audit report, have been filed with the Registrar of
Companies.
The interim financial information was approved by the Board on 5 September
2000.
2. Segment analysis
-------------------
28 weeks 28 weeks 52 weeks
ended ended ended
09/07/00 11/07/99 26/12/99
as restated as restated
#'m #'m #'m
--- --- ---
Turnover by UK region
London - retained 105.0 98.3 192.5
London - other - 1.8 2.3
Regions - retained 56.1 56.1 107.8
Regions - other 0.1 1.3 2.1
----------------------------------
Total Group turnover* 161.2 157.5 304.7
==================================
* Of which:
Retained 161.1 154.4 300.3
Other 0.1 3.1 4.4
----------------------------------
161.2 157.5 304.7
==================================
Gross profit before fixed charges by
UK region
London - retained 61.3 55.8 111.2
London - other - 1.2 1.5
Regions - retained 24.6 25.5 49.6
Regions - other - 0.3 0.6
----------------------------------
Total gross profit before fixed 85.9 82.8 162.9
charges**
Fixed charges (25.4) (22.7) (43.5)
----------------------------------
Total Group gross profit 60.5 60.1 119.4
==================================
** Of which:
Retained 85.9 81.3 160.8
Other - 1.5 2.1
----------------------------------
85.9 82.8 162.9
==================================
Fixed charges comprise property rent, rates and insurance, depreciation and
amortisation.
The prior year figures have been restated to classify the Charles Dickens
hotel as an 'other hotel' following its disposal in August 1999 and the
Thistle Middlesbrough hotel as a 'retained hotel' following its reopening
in April 2000. In addition, central discounts receivable have been
allocated to hotel gross profit at the half year stage in order to be
consistent with full year reporting, resulting in an increase in the
Group's gross profit and administrative expenses of #1.1 million in the
period (1999: #0.8 million).
3. Taxation
-----------
The taxation charge for the 28 weeks ended 9 July 2000 is based upon the
estimated effective tax rate for the full year.
4. Dividends
------------
The Board has declared an interim dividend of 1.7 pence per share (1999:
1.6 pence per share).
5. Earnings per share
---------------------
Earnings per share of 5.0 pence (1999: 5.0 pence) are based on the Group's
profit after taxation of #23.9 million (1999: #26.0 million) and on the
average number of shares in issue during the period of 481.9 million (1999:
514.8 million).
Diluted earnings per share of 5.0 pence (1999: 5.0 pence) takes into
account, in addition to the average number of shares noted above, dilutive
potential ordinary shares arising from employee share options of 0.3
million (1999: 0.6 million).
Adjusted earnings per share of 4.7 pence (1999: 4.9 pence) are based on the
Group's profit after taxation, but before the profit on sale of tangible
fixed assets, of #22.7 million (1999: #25.1 million). No taxation charge
has been attributed to the profit on sale of tangible fixed assets in this
calculation.
6. Reconciliation of operating profit to net cash inflow
from operating activities
--------------------------------------------------------
28 weeks 28 weeks 52 weeks
ended ended ended
09/07/00 11/07/99 26/12/99
as restated as restated
#'m #'m #'m
--- --- ---
Operating profit 48.6 51.1 103.0
Depreciation 15.8 13.4 25.8
Decrease in stocks 0.3 0.7 0.2
(Increase) / decrease in debtors (7.6) (8.5) 0.1
Increase / (decrease) in creditors 12.1 1.5 (10.3)
Decrease in provisions - (0.5) (2.0)
-----------------------------------
Net cash inflow from operating 69.2 57.7 116.8
activities
===================================
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