RNS Number:8713Z
Thistle Hotels PLC
5 March 2001
THISTLE HOTELS Plc
Strictly embargoed: Not for use before 7:00 am, Monday 5 March 2001
5 March 2001
Preliminary Announcement of Annual Results
for the 53 weeks ended
31 December 2000
"THISTLE ANNOUNCE 12% GROWTH IN UNDERLYING PRE TAX PROFIT"
* Strong operating and financial performance, particularly in the
second half
* Turnover for retained hotels up 8.0% to #324.4 million
* London average room rate over #80 for the first time
* Underlying profit before tax increased by 11.7%
* Cash flow from operations up 30.8% to #152.8 million
* Adjusted earnings per share up 6.7% to 11.1 pence
* Total dividends up 6.3% to 5.1 pence per share
Highlights
52 weeks
ended
53 weeks 26/12/99
ended % as
Notes 31/12/00 change restated
Turnover - retained hotels (#m) 1 324.4 8.0 300.3
Revenue per available room - retained hotels (#) 1 53.45 6.0 50.43
Hotel gross profit before fixed charges
- retained hotels (#m) 1,2 175.6 9.2 160.8
Cash flow from operations (#m) 152.8 30.8 116.8
EBITDA (#m) 3,4 134.7 4.6 128.8
Operating profit (#m) 4 105.4 2.3 103.0
Profit before taxation (#m) 68.2 0.7 67.7
Adjusted earnings per share (p) 4 11.1 6.7 10.4
Dividend per share (p) 5.1 6.3 4.8
The comparative figures for 1999 have been restated to reflect the impact of
Financial Reporting Standard 15 (FRS 15).
Commenting on the results, David Newbigging, Chairman, said "Progress in 2000
was encouraging with a particularly good performance in the second half when
turnover and revpar increased by 11.9% and 7.3% respectively compared with
1999. This momentum has been maintained through the first eight weeks of the
current year."
Ian Burke, Chief Executive Officer, added "In the first eight weeks of the
current financial year, revpar and turnover are ahead by over 10% on the
comparative period last year in both London and the regions. This is
encouraging, although the somewhat uncertain general economic outlook
worldwide may have some effect on the UK hotel market. Nonetheless our aim
continues to be to achieve growth in revpar above the market resulting from
our capital expenditure programme and the initiatives we have taken to improve
profitability and performance generally."
Enquiries:
Thistle Hotels Plc
Ian Burke, Chief Executive ( 020 7723 0101)
Hogarth Partnership Limited
Nick Denton (020 7357 9477)
Notes to highlights
1 Retained hotels include the Thistle Middlesbrough for the first time this
year since its re-opening in April 2000.
2 Fixed charges comprise property rent, rates, insurance, depreciation and
amortisation.
3 EBITDA represents earnings before interest, tax, 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 hotels 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 10,739 bedrooms. In London,
Thistle has 6,331 rooms in 23 hotels and, in the regions, 4,408 rooms in 33
hotels.
Thistle's London hotels include the Thistle Tower, the Thistle Charing Cross,
the Thistle Marble Arch, the Thistle City Barbican, 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.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
CHAIRMAN'S STATEMENT
Results
The results for the 53 weeks ended 31 December 2000 were encouraging. After a
slow start to the year the second half picked up momentum and the year overall
finished strongly with good growth in turnover, underlying profitability and
cash flow.
Turnover for our retained hotels increased by 8.0% and revenue per available
room ("revpar") by 6.0% for the full year. The corresponding figures for the
second half were 11.9% and 7.3% respectively with London performing
particularly strongly and good improvements from our regional hotels. Profit
before tax was #68.2 million and adjusted earnings per share were 11.1 pence,
an increase of 6.7% over 1999.
The figures for 1999 have been restated to take account of Financial Reporting
Standard 15 (FRS 15) which was introduced during the year. Earnings per share
(EPS) figures are adjusted to show the Group's profit after taxation but
before profit on the sale of tangible fixed assets.
Dividends
The Board is recommending a final dividend of 3.4 pence per share which, if
approved, would result in total dividends for the year of 5.1 pence per share,
an increase of 6.3%.
Finance
A key objective is to improve cash generation and to reduce the level of debt
by increasing profitability and controlling working capital. Also from 2001,
there will be a reduced need for capital expenditure on our existing hotels.
In 2000 cash flow from operations increased by 30.8% to #152.8 million. Net
cash generated amounted to #32.3 million and year end debt had been reduced to
#428.9 million, representing a debt ratio of 37.6%.
Operations
During 2000 we made good progress towards our objective of establishing
Thistle as a consistent full service, four star hotel brand. Capital
expenditure during the year was #66.3 million (1999: #63.0 million) and a
further 1,824 rooms were upgraded, with 82% of our 10,739 rooms having been
refurbished to the Thistle brand standard. In our hotels we also opened a
number of branded restaurants and leisure clubs, and improved our banqueting
and conference facilities. We are now in the final year of our accelerated
upgrade programme and we expect capital expenditure in 2001 to be around #50
million, down on previous years' levels.
The Operating and Financial Review contains a more detailed report on
operations and finance.
Prospects
In the first eight weeks of the current financial year the momentum generated
in the second half of last year has been maintained, with revpar and turnover
ahead by over 10% on the comparative period last year in both London and the
regions. This is encouraging, although the somewhat uncertain general economic
outlook worldwide may have some effect on the UK hotel market. Nonetheless
our aim continues to be to achieve growth in revpar above the market resulting
from our capital expenditure programme and the initiatives we have taken to
improve profitability and performance generally.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
OPERATING AND FINANCIAL REVIEW
Good progress was achieved both operationally and financially in 2000. On a
like for like basis our key revenue, underlying profitability and cash flow
figures were comfortably ahead of 1999 and our revenue per available room grew
faster than the market as a whole. We are now in the final year of our
three-year programme to upgrade our hotels, introduce new information
technology systems and develop our people. The benefits of these initiatives
are showing through and we look forward to delivering further improvements in
our comparative competitive position this year.
KEY REVENUE STATISTICS
53 weeks 52 weeks
ended ended %
31/12/00 26/12/99 change
London retained hotels
Occupancy (%) 81.3 79.3 2.5%
Average room rate (#) 80.05 75.04 6.7%
Revenue per available room (#) 65.08 59.51 9.4%
Turnover (#m) 211.0 192.5 9.6%
Regions retained hotels
Occupancy (%) 67.8 68.2 (0.6%)
Average room rate (#) 53.92 53.85 0.1%
Revenue per available room (#) 36.56 36.73 (0.5%)
Turnover (#m) 113.4 107.8 5.2%
Total retained hotels
Occupancy (%) 75.8 74.9 1.2%
Average room rate (#) 70.52 67.33 4.7%
Revenue per available room (#) 53.45 50.43 6.0%
Turnover (#m) 324.4 300.3 8.0%
Total Group hotels
Occupancy (%) 75.8 74.5 1.7%
Average room rate (#) 70.49 66.86 5.4%
Revenue per available room (#) 53.43 49.81 7.3%
Turnover (#m) 324.6 304.7 6.5%
Retained hotels include the Thistle Middlesbrough for the first time this year
since its re-opening in April 2000.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
TURNOVER
Turnover for retained hotels increased by 8.0%, driven by an increase in
revenue per available room ("revpar") of 6.0%. Our financial year 2000
contained 53 weeks compared to 52 in 1999. The extra week, between Christmas
and the New Year, is a quieter week than an average week and it contributed
approximately 1% of the Group's turnover for the year. A summary of the main
drivers of turnover and revpar is shown in the table opposite.
SEGMENTAL REVIEW
A summary of hotel turnover and gross profit for retained hotels in London and
the regions is set out below.
London Regions Total
2000 1999 2000 1999 2000 1999
Hotel turnover (#'m) 211.0 192.5 113.4 107.8 324.4 300.3
Hotel gross profit (before
fixed charges)
(#'m) 124.8 111.2 50.8 49.6 175.6 160.8
Hotel gross profit margin
(before fixed
charges) 59.1% 57.8% 44.8% 46.0% 54.1% 53.5%
Fixed charges comprise property rent, rates and insurance, depreciation and
amortisation.
LONDON (RETAINED HOTELS)
The London hotel market was relatively strong throughout 2000 despite a
reported reduction in overseas visitors to the UK. Two leading industry
sources, Arthur Andersen and PKF, suggest that, for the categories of hotel
which we operate, London market revpar growth was of the order of 6% in 2000.
Thistle's London revpar outperformed the market, increasing by 9.4%, and
turnover increased by 9.6%. In the second half of 2000, revpar and turnover
growth were higher again at 10.5% and 12.5% respectively. We continue to
derive benefit from the investment programme with strong performances
delivered in a number of recently renovated hotels including the Thistle
Tower, Thistle Charing Cross, Thistle Marble Arch, Thistle Victoria and
Thistle City Barbican hotels.
Gross profit before fixed charges increased by 12.2% to #124.8 million and
from 57.8% to 59.1% of turnover. This increase in an already high margin was
driven by better business mix (and therefore room rates) and good cost
control.
REGIONS (RETAINED HOTELS)
The regional hotel market, according to the same industry sources, grew
modestly in revpar terms in 2000. This market is not a homogeneous market and
performance in individual towns and cities varies widely. New capacity in
certain markets such as Cardiff and Glasgow adversely impacted demand for
four-star rooms contributing to a revpar decline in Thistle's regional hotels
of 0.5% in 2000, although there was a 1.4% improvement in the second half of
the year.
Non-room sales increased by 5.0% reflecting the impact of investment in
leisure, restaurants and meeting rooms, particularly at the Thistle Aberdeen
Altens, Thistle Cheltenham and Thistle Newcastle hotels.
In addition, our 132-bedroom hotel in Middlesbrough was re-opened in April
after an extensive renovation and contributed #1.8 million in turnover over 38
weeks and #0.6 million in gross profit before fixed charges.
As a consequence of these developments, regional turnover increased by 5.2%
compared to 1999 as a whole and by 10.8% in the second half. Gross profit
before fixed charges improved by 2.4% year on year.
Our investment programme identified London room upgrades as a priority and the
results of these upgrades are showing through in our London revpar
performance. In 2000 and 2001, there is a higher level of capital investment
in room upgrades in the regional hotels and restaurant, meeting and leisure
facilities generally. The improvement in regional revpar and non-room sales in
the second half of 2000, are early signs that results are responding to this
shift in investment focus.
BRAND MANAGEMENT
When we started our three year accelerated investment programme, there was
little, if any, discernible branding in our hotels. The development of the
Thistle brand, with guests experiencing a more consistent product and service
offering, was identified as a key objective.
Some 8,800 (82%) of Thistle's 10,739 bedrooms have now been refurbished and 52
of 56 hotels are now Thistle branded with the Heathrow Park hotel to be
re-branded in the Summer of 2001. The three remaining unbranded hotels are
trading profitably, and currently there are no plans to sell them or to
convert them to the Thistle brand. Three small regional hotels were sold
during the year - the Black Bull, Wellesley and Dee Motel.
We have continued to develop our branded restaurant and leisure concepts. A
new Faya Mediterranean Bar and Grill (taking the total to three) was opened at
the Thistle Lancaster Gate; further Gengis restaurants (taking the total to
three) were opened at the Thistle Middlesbrough and the Thistle Newcastle;
further Co.Motion coffee shop units were opened in 12 hotels (taking the total
to 16). A further five Otium leisure centres (taking the total to nine) were
opened at the Thistle City Barbican, Thistle St Albans, Thistle Aberdeen
Altens, New Hall and Thistle Inverness hotels, and an additional Otium opened
at the Thistle Glasgow hotel in January 2001. A number of individually named
restaurants were also opened, such as Christopher's, a joint venture with
Christopher Gilmour, at the Thistle Victoria and wwwater.cafe at the Thistle
Tower hotel. These new concepts are generally performing well.
Conference and banqueting ("C&B") is an important part of our business. During
2000, a further 31 hotels implemented Meeting Plan, our branded meetings
product and, in October, we opened our new 500 seat conference facility at the
Thistle Tower hotel. A new software package, which will improve the
management of our C&B business further, has been selected and will be
implemented in 2001.
The development of a hotel brand recognised and valued by both guests and
travel partners does not happen overnight, but we are making good progress in
establishing the Thistle brand and our new marketing initiatives this year
will further raise awareness of the improved quality of the Thistle brand.
SALES AND DISTRIBUTION
Our market segments consist of corporate and leisure customers and midweek
(Monday to Thursday) and weekend (Friday to Sunday) segments. Corporate
customers predominate in the midweek segment and leisure customers at the
weekend. Higher rates are generally achieved from corporate customers and in
midweek when the demand for hotel accommodation is highest. There is also
quite a divergence in rates achieved in the mainly leisure weekend business.
Our sales strategy is focussed on delivering the optimum mix of corporate and
higher rated leisure customer in times of high demand and using lower rated
leisure customers tactically in periods of lower demand. Our priority is to
drive profitability through achieving better rates and managing our customer
mix is an essential part of the process. In 2000, corporate customers
accounted overall for over 53% of our rooms sold compared to around 47% in
1999. This improvement in mix reflects the improvement in both the hotel
product and also our sales and revenue management disciplines.
Our customers can book rooms in our hotels in person or through travel agents,
by phone, fax, via Global Distribution Systems (GDS) or the internet.
Bookings can be taken at hotels or in our central reservations office in
Leeds. Each customer has his or her own preference but the speed and
convenience of the GDS and the internet have resulted in sharp increases in
bookings through these channels. GDS and internet bookings are made direct
into our systems without intervention from Thistle staff. Each distribution
channel has its own costs and a priority for us, is to move more business to
lower cost channels such as the GDS and internet. GDS and internet bookings
grew significantly in 2000 and we are seeing further increases so far in 2001
with internet bookings ahead four fold, to #66,000 per week on average. We
aim to stay at the forefront of the development of these key distribution
channels.
Finally, our ability to target tailored offers to specific customer groups
will improve significantly in 2001 with the launch, in the Spring, of our new
Customer Relationship Management System, which will provide us with even more
detailed knowledge of our customers.
PEOPLE
Our hotel product and information technology systems have improved
significantly over the past two years and we are determined to match these
improvements with better customer service. All hotels have their own customer
service targets, which are independently monitored. The skills and attitude of
our people are the key to the achievement of these targets and over 90% of all
staff, including support offices, have now been through the first stage of our
progressive customer service improvement programme, Be My Guest. A second
phase of Be My Guest, focussed on improving anticipation of customer needs,
will be implemented in 2001.
In our view there is a strong correlation between staff satisfaction and
customer satisfaction. During 2000 both staff and customer satisfaction
improved as measured by independent survey. At the same time, staff turnover
has reduced, although it is still high and reducing it is a priority for us,
both from a customer service and a cost perspective.
FINANCE
Profit before tax ("PBT")
Headline PBT improved by 0.7% to #68.2 million, although, on a comparable
basis, the increase in underlying PBT was 11.7%. The principal adjustments in
deriving this underlying figure are shown below:
* Hotel disposals, most notably the Charles Dickens in 1999, reduced
year on year profits by #2.1 million (including profits on sale);
* 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;
* Adoption of a new accounting standard, FRS 15 (Tangible Fixed
Assets), reduced year on year profits by #1.8 million compared to the
restated 1999 figure.
* Other accounting changes reduced year on year profits by #1.0
million; and
* The #1.0 million adverse impact of the extra week in 2000.
The principal drivers in this improvement in underlying profitability are the
increase in turnover and hotel gross margin.
Taxation
The Group's taxation charge continues to benefit from the high level of
allowances generated by its capital investment programme and, for the
financial year 2000, the effective tax rate is projected at 20% of profit
before exceptional items (1999: 20%).
Earnings per share ("EPS")
Adjusted earnings per share increased by 6.7% to 11.1 pence. Adjusted EPS is
calculated on earnings before the after tax impact of asset sales.
Cash flow
Despite a year of significant capital expenditure, the Group generated net
cash of #32.3 million.
Net cash inflow from operating activities improved by 30.8% to #152.8 million
with the biggest single improvement, #28.1 million, resulting from tighter
management of working capital.
Tax payments in 2000 were lower at #3.1 million (1999: #10.3 million), but the
improvement reflects timing differences which will reverse in 2001.
Capital expenditure of #66.3 million (1999: #63.0 million) was spent on room
upgrades (#24.3 million), additional new rooms (#9.0 million), food and
beverage outlets (#3.7 million), leisure facilities (#7.0 million),
information technology and systems (#5.6 million), and general capital
expenditure (#16.7 million). Our capital expenditure in 2001 is expected to
be around #50 million. Thereafter, we expect it to reduce further as we revert
to a normal refurbishment programme. As capital expenditure, and hence capital
allowances reduce, the effective tax rate will rise.
The net cash inflow of #32.3 million, compared to an outflow of #1.2 million
in 1999, was particularly pleasing given the high level of investment in the
business.
Net borrowings and interest charges
Net borrowings at the year-end were #32.7 million lower at #428.9 million and
gearing reduced from 41.6% last year to 37.6%. Interest charges increased
slightly to #38.4 million (1999: #37.7 million) due to the full year effect of
the #92.4 million special dividend paid in April 1999. This was partially
offset by the benefit of better cash management and an interest rate swap.
Interest was covered by operating profit 2.7 times (1999: 2.7 times).
Dividends
Subject to approval at the Annual General Meeting, the directors have
recommended a final dividend of 3.4 pence per share on 8 June 2001 to
shareholders on the register on 11 May 2001. Together with the interim
dividend of 1.7 pence per share, this would give a total ordinary dividend for
the year of 5.1 pence per share (1999: 4.8 pence per share), an increase of
6.3%. The dividend payment date is later than in 2000 due to the timing of the
Annual General Meeting.
Accounting standards
FRS 15 (Tangible Fixed Assets) was the only new accounting standard adopted
during the year which had an impact on the Group accounts. Under FRS 15, and
in line with the rest of the UK hotel industry, we are now depreciating our
buildings on a new formula. In accordance with the requirements of the
standard, we have reduced the 26 December 1999 value of our buildings by #66.8
million and restated our 1999 PBT to reflect additional depreciation of #9.0
million. The additional depreciation in 2000 was #10.8 million. The
additional depreciation charges in 1999 and 2000 are not strictly comparable
because of the way in which the 1999 figure is required to be calculated. The
effect of this is to reduce the reported profit growth in 2000 by #1.8
million.
New accounting standards on deferred taxation and retirement benefits have
been announced, for implementation at latest in 2002 and 2003 respectively.
We will be evaluating the impact of these standards during 2001.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP PROFIT AND LOSS ACCOUNT
for the 53 weeks ended 31 December 2000
2000 1999
as restated
Notes #'m #'m
Turnover 2 324.6 304.7
Cost of sales (196.8) (185.3)
______ ______
Gross profit 2 127.8 119.4
Administrative expenses (22.4) (16.4)
______ ______
Operating profit 3 105.4 103.0
Profit on sale of tangible assets 4 1.2 2.4
Interest payable and similar charges 5 (38.4) (37.7)
______ ______
Profit before taxation 68.2 67.7
Taxation 6 (13.4) (13.3)
______ ______
Profit after taxation 54.8 54.4
Dividends 7 (24.6) (115.5)
______ ______
Transfer to / (from) reserves 30.2 (61.1)
______ ______
Earnings per share 8 11.4p 10.8p
Diluted earnings per share 8 11.4p 10.8p
Adjusted earnings per share 8 11.1p 10.4p
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP BALANCE SHEET
at 31 December 2000
2000 1999
as restated
#'m #'m
Fixed assets
Tangible assets 1,628.0 1,600.9
______ ______
Current assets
Stocks 1.4 1.4
Debtors 31.0 35.5
Investments - 0.1
Cash at bank and in hand 4.4 6.0
_______ ______
36.8 43.0
Creditors (due within one year) (90.5) (99.8)
_______ _______
Net current liabilities (53.7) (56.8)
_______ _______
Total assets less current liabilities 1,574.3 1,544.1
Creditors (due after one year) (433.3) (433.8)
_______ _______
Net assets 1,141.0 1,110.3
_______ _______
Equity capital and reserves
Called up share capital 123.6 123.5
Share premium account 398.5 398.1
Revaluation reserve 446.0 448.8
Other reserves 50.8 50.8
Profit and loss account 122.1 89.1
_______ _______
Total equity shareholders' funds 1,141.0 1,110.3
_______ _______
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP CASH FLOW STATEMENT
for the 53 weeks ended 31 December 2000
2000 1999
Notes #'m #'m #'m #'m
Cash flow from operating activities 9 152.8 116.8
Returns on investments and servicing of finance
Interest paid (36.6) (37.4)
Tax paid (3.1) (10.3)
Capital expenditure
Purchase of tangible fixed assets (66.3) (63.0)
Sale of tangible fixed assets 9.1 29.7
Equity dividends paid
Ordinary dividends paid (23.6) (23.9)
Special dividends paid - (92.4)
_______ _______
Cash inflow / (outflow) before financing 32.3 (80.5)
Financing
Issue of share capital 0.5 0.3
New loans - 105.0
Repayments of loans (0.5) (26.0)
_______ _______
- 79.3
_______ _______
Increase / (decrease) in cash 32.3 (1.2)
_______ _______
RECONCILIATION OF NET DEBT
for the 53 weeks ended 31 December 2000
2000 1999
#'m #'m
Increase / (decrease) in cash 32.3 (1.2)
Cash flow from decrease / (increase) in 0.5 (79.0)
debt
Reclassification of current asset (0.1) -
investment
_______ _______
Movement in net debt in the year 32.7 (80.2)
Net debt at beginning of year (461.6) (381.4)
_______ _______
Net debt at end of year (428.9) (461.6)
_______ _______
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the 53 weeks ended 31 December 2000
2000 1999
as
restated
Notes #'m #'m
Profit for the financial year 54.8 54.4
Unrealised surplus on revaluation of properties - 3.8
_____ ______
Total gains and losses relating to the year 54.8 58.2
Prior year adjustment 1 (66.8) -
______ ______
Total gains and losses recognised since last (12.0) 58.2
annual report
______ ______
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the 53 weeks ended 31 December 2000
2000 1999
as
restated
#'m #'m
Profit before taxation as reported 68.2 67.7
Realisation of property revaluation gains of 2.8 1.0
previous years
_____ _____
Historical cost profit before taxation 71.0 68.7
_____ _____
Historical cost profit/(loss) after taxation and 33.0 (60.1)
dividends
______ _____
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the 53 weeks ended 31 December 2000
2000 1999
as
restated
Notes #'m #'m
Profit for the financial year 54.8 54.4
Dividends (24.6) (115.5)
Issue of share capital 0.5 0.3
Unrealised surplus on revaluation of properties - 3.8
_____ _____
Net change in year 30.7 (57.0)
Opening equity shareholders' funds as previously 1,177.1 1,226.8
reported
Prior year adjustment 1 (66.8) (59.5
______ ______
Opening equity shareholders' funds as restated 1,110.3 1,167.3
______ ______
Closing equity shareholders' funds 1,141.0 1,110.3
______ ______
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
NOTES TO THE PRELIMINARY ANNOUNCEMENT
The foregoing statements do not constitute the Group's statutory accounts.
The Group's 2000 statutory accounts, on which the Group's auditors,
PricewaterhouseCoopers, have neither qualified their opinion nor included a
statement under section 237(2) or (3) of the Companies Act 1985, are to be
delivered to the Registrar of Companies in due course.
The Board of directors approved this preliminary announcement on 5 March 2001.
The financial information for the 52 weeks ended 26 December 1999 is derived
from the Group's statutory accounts for that period, as restated for the
impact of Financial Reporting Standard 15 (FRS 15), which, together with an
unqualified report, have been filed with the Registrar of Companies.
1. Basis of preparation
The financial information has been prepared on the basis of the accounting
policies set out in the Group's 1999 statutory accounts, with the exception of
the adoption for the first time this year of FRS 15 (Tangible Fixed Assets)
and FRS 16 (Current Taxation).
The adoption of FRS 15 has resulted in additional depreciation in the year of
#10.8 million (1999: #9.0 million as adjusted) 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 #9.0 million in the year
(1999: #9.0 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 charge, the loss arising on the disposal of the Charles
Dickens hotel 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 #1.8
million in the year. No prior 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.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
NOTES TO THE PRELIMINARY ANNOUNCEMENT
2. Segmental analysis
2000 1999
as restated
#'m #'m
Turnover by UK region
London - retained 211.0 192.5
London - other - 2.3
Regions - retained 113.4 107.8
Regions - other 0.2 2.1
_____ _____
Total Group turnover* 324.6 304.7
_____ _____
* Of which:
Retained 324.4 300.3
Other 0.2 4.4
_____ _____
324.6 304.7
_____ _____
Gross profit before fixed charges by UK region
London - retained 124.8 111.2
London - other - 1.5
Regions - retained 50.8 49.6
Regions - other - 0.6
_____ _____
Total gross profit before fixed charges** 175.6 162.9
Fixed charges (47.8) (43.5)
_____ _____
Total Group gross profit 127.8 119.4
_____ _____
** Of which:
Retained 175.6 160.8
Other - 2.1
_____ _____
175.6 162.9
_____ _____
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 as a 'retained hotel' following its re-opening in April
2000.
Fixed charges comprise property rent, rates and insurance, depreciation and
amortisation.
3. Operating profit 2000 1999
as restated
#'m #'m
This is stated after charging :-
Depreciation and amortisation 29.3 25.8
Repairs and renewals 8.8 7.6
_____ _____
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
NOTES TO THE PRELIMINARY ANNOUNCEMENT
4. Profit on sale of tangible fixed assets 2000 1999
as restated
#'m #'m
Profit on sale of tangible fixed assets 1.2 2.4
____ ____
During the year, the Group realised an aggregate net profit of #1.2 million on
the disposal of 3 non-core hotels and a number of ancillary properties.
5. Interest payable and similar charges
2000 1999
#'m #'m
Interest on long term loans 28.0 27.6
Interest on bank overdrafts and loans repayable
within 5 years 10.3 9.6
Bank charges 0.1 0.5
____ ____
38.4 37.7
____ ____
6. Taxation
2000 1999
#'m #'m
Corporation tax at 30% (1999: 30.25%) 13.4 13.0
ACT written off - 0.3
_____ ____
13.4 13.3
_____ ____
The corporation tax charge based on the
profit for the year has benefited from capital
allowances and relief for losses brought forward
of approximately 6.8 9.5
_____ ____
Losses available for relief against future
profits 0.1 0.2
_____ ____
The directors estimate that the corporation tax liability which would arise if
all hotels included in fixed assets were sold at valuation would not exceed #
130 million (1999: #140 million as restated).
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
NOTES TO THE PRELIMINARY ANNOUNCEMENT
7. Dividends
2000 1999
#'m #'m
Interim dividend paid of 1.7 pence per share
(1999: 1.6 pence per share) 8.2 7.7
Special dividend paid - 92.4
Final dividend proposed of 3.4 pence per share
(1999: 3.2 pence per share) 16.4 15.4
_____ _____
24.6 115.5
_____ _____
8. Earnings per share
Earnings per share of 11.4 pence (1999: 10.8 pence) are based on the Group's
profit after taxation of #54.8 million (1999: #54.4 million) and on the
average number of shares in issue during the period of 481.9 million (1999:
501.9 million).
Diluted earnings per share of 11.4 pence (1999: 10.8 pence) takes into
account, in addition to the average number of shares noted above, dilutive
potential ordinary shares arising from employee share options of 0.2 million
(1999: 0.6 million).
Adjusted earnings per share of 11.1 pence (1999: 10.4 pence) are based on the
Group's profit after taxation, but before the profit on the sale of tangible
fixed assets, of #53.6 million (1999: #52.0 million). No taxation charge has
been attributed to the profit on sale of tangible fixed assets in this
calculation.
9. Reconciliation of operating profit
to net cash inflow from operating activities
2000 1999
as restated
#'m #'m
Operating profit 105.4 103.0
Depreciation 29.3 25.8
Decrease in stocks - 0.2
Decrease in debtors 4.5 0.1
Increase/(decrease) in creditors 13.6 (10.3)
Decrease in provisions - (2.0)
_____ _____
Net cash inflow from operating activities 152.8 116.8
_____ _____
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