Interim Results
September 03 2002 - 3:01AM
UK Regulatory
RNS Number:6611A
Thistle Hotels PLC
03 September 2002
3 September 2002
Interim Results Announcement
for the 28 weeks ended
14 July 2002
Thistle Hotels Plc today announces results for the 28 weeks ended 14 July 2002.
RESULTS AND HIGHLIGHTS
* Disposal of 37 hotel businesses for #598.6 million, with a #41.3
million profit on disposal.
* Owned or leased hotels turnover down 13.6% to #79.1 million.
* Free cash flow #11.6 million (2001: #6.4 million outflow).
* Interim dividend maintained at 1.7p per share.
* Cost reduction initiatives implemented in response to market
conditions.
* Cash balances at half year #364.1 million.
Commenting on the results, David Newbigging, Chairman said:
"The first six weeks of the second half year to 25 August have seen some
improvement in trading with turnover down 7% against the comparative period last
year for the owned or leased hotels. This compares to a decline of 24.6% over
the final 15 weeks of 2001 and a decline of 13.6% over the first 28 weeks of
2002 and we anticipate a higher revenue per available room over the second half
year compared to the second half last year."
"The overall economic environment remains uncertain and stock markets worldwide
have experienced exceptional volatility in recent weeks. Against this
background, our strong balance sheet and sound liquidity position are a source
of considerable strength."
For further information, please contact
Ian Burke 020 7895 2304
Thistle Hotels Plc
Nick Denton 020 7357 9477
Chelsea Hayes
Hogarth Partnership Limited
NOTES TO EDITORS
Thistle is the largest hotel operator in London with 22 hotels in prime
locations throughout the capital and has hotels in key regional cities of
England, Scotland and Wales.
There are 56 Thistle Hotels of which 18 are owned or leased and 38 are managed.
There are a total of 10,728 bedrooms of which 5,204 are in owned or leased
hotels and 5,524 are in managed hotels. In London there are 4,747 rooms in 16
owned or leased hotels and 1,268 rooms in 6 managed hotels. In the Regions
there are 457 rooms in 2 owned or leased hotels and 4,256 rooms in 32 managed
hotels.
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 operates 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.
CHAIRMAN'S STATEMENT
Trading conditions in the UK hotel market, particularly in London, have been
tough through the first half 2002, impacted by continued global economic
uncertainty and a slow recovery to travel confidence since the events of last
September. Our focus has been to protect cash flow by restricting turnover
declines and maintaining tight control over cash operating and capital costs.
Free cash flow was #11.6 million (2001: #6.4 million outflow).
Profit before tax was #57.9 million (2001: #29.4 million) which included #42.3
million of exceptional items. Operating profit was #27.6 million (2001: #49.8
million) reflecting the challenging trading environment and also the loss of
profits following the disposal of 37 hotel businesses. These 31 Regional and 6
London hotel businesses were sold, following shareholder approval at an
Extraordinary General Meeting on 4 April 2002, to Gamma Four Limited for a total
consideration of #598.6 million, including #45 million of deferred
consideration. The net cash proceeds were applied in the first instance to
repay Thistle's bank loans of #174 million with the balance of the proceeds
currently invested in short term money market deposits. There was a #41.3
million profit on disposal of these businesses, which has been treated as an
exceptional item.
Adjusted earnings per share, which excludes the effect of the exceptional items,
were 2.6 pence against 4.3 pence in 2001. We have adopted for the first time in
this Interim Statement FRS19 "Deferred Tax". This change in accounting policy
has been accounted for as a prior year adjustment and previously reported
figures have been restated accordingly. Further details are provided in Note 1
to the Interim Financial Statements.
The Board has declared an unchanged interim dividend of 1.7 pence per share.
This will be paid on 15 November 2002 to shareholders on the register as at 18
October 2002.
The first six weeks of the second half year to 25 August have seen some
improvement in trading with turnover down 7% against the comparative period last
year for the owned or leased hotels. This compares to a decline of 24.6% over
the final 15 weeks of 2001 and a decline of 13.6% over the first 28 weeks of
2002 and we anticipate a higher revenue per available room over the second half
year compared to the second half last year.
The overall economic environment remains uncertain and stock markets worldwide
have experienced exceptional volatility in recent weeks. Against this
background, our strong balance sheet and sound liquidity position are a source
of considerable strength.
OPERATING AND FINANCIAL REVIEW
The disposal of 37 hotel businesses to Gamma Four Limited on 4 April 2002 has
had a significant impact on the structure of the Group going forward and on the
presentation of the key operating statistics.
Owned or Leased Hotels
Thistle owns or leases 18 hotels which have a total of 5,204 bedrooms. In
London there are 4,747 rooms in 16 hotels and in the Regions a further 457 rooms
in two hotels.
Our response to the tough market conditions over the past 12 months has been to
seek to restrict turnover declines whilst maintaining tight control over cash
costs. We have experienced a significant reduction in international business
and leisure travellers, particularly in London, offset to a degree, by a more
robust domestic short break leisure market.
Occupancy levels were reasonably firm at 72.4% compared with 75.4% in 2001 but
average room rate fell by 10.7% from #85.69 to #76.51 due to a trend from agreed
contract rates to tactical discounted rates, combined with changes in customer
mix. Consequently revenue per available room declined by 14.3% from #64.61 to
#55.39. The declines in non rooms revenue was less than the declines in rooms
revenue, leading to a 13.6% decline in total turnover to #79.1 million (2001:
#91.5 million).
Gross profit of #27.8 million was #11.1 million lower than in 2001. Cost control
measures were in place at the hotels throughout the period but high operational
gearing levels in the business mean that the majority of the reduction in
turnover for the period is reflected in reduced gross profit earned.
In terms of cost control, we have reduced our operating expenses, particularly
our hotel wages, which represent our single biggest cost. We have implemented,
as planned during the first half, a central purchasing and distribution
arrangement covering the majority of the Group's food requirements. This is
leading to both lower food purchasing costs and processing efficiencies with a
significant reduction in the number of food suppliers from 280 to approximately
60. However, there have been some cost increases notably business rates up 30%,
a #1.1 million increase for the owned or leased hotels and insurance costs up
by over 60%, an increase of #0.3 million for the owned or leased hotels.
With the completion in 2001 of our three year refurbishment programme, over the
past 12 months we have been able to restrict capital expenditures to essential
maintenance expenditures only. We intend to maintain this policy throughout the
balance of the current financial year. During the period capital expenditure of
#2.9 million was spent, mainly on a number of small maintenance and health and
safety projects across the portfolio.
The net impact of these actions has been to improve free cash flow to #11.6
million (2001: #6.4 million outflow).
Managed Hotels
Thistle manages 38 hotel businesses which have a total of 5,524 bedrooms. In
London there are 1,268 rooms in 6 hotels and in the Regions a further 4,256
rooms in 32 hotels.
Turnover of #33.0 million covers the period to 4 April 2002 whereas the
comparative figure of #76.8 million is in respect of the full 28 week period to
15 July 2001. On a like for like basis turnover for the period of #33.0 million
was 4.6% lower than in 2001 and turnover in the managed hotels for the full 28
weeks was 5.0% lower than in 2001.
Since the completion of the sale of the hotels, Thistle manages each of the
hotels under long term management agreements and earns management fees based on
both the turnover and profitability of the hotels managed.
Capital expenditure of #1.2 million was spent at the managed hotels during the
period prior to the disposal. The responsibility for all future capital
expenditure rests with the new owners rather than with Thistle.
FINANCE
The reduction in the Group's turnover and operating profit for the 28 weeks to
14 July 2002 reflects both the difficult trading conditions and the sale of 37
hotels in April 2002.
The trading result for the sold hotels is included up until disposal and is
shown within the segmental reporting under the heading disposed hotels. Fee
income earned from our subsequent management of the hotels was #2.3 million and
is also included in turnover.
There were two exceptional items during the period. The disposal of the 37
hotels generated an exceptional profit of #41.3 million after costs and, in
addition, a profit of #1.0 million was generated on the sale of one ancillary
property. Due to the availability of brought forward losses and other tax
reliefs it is not anticipated that any tax charge will arise on either disposal.
Financial Reporting Standard FRS19 "Deferred Tax" has been applied for the first
time. FRS19 requires the Group to provide for deferred tax on certain timing
differences where previously no provision has been made. On the implementation
of FRS19 a prior year adjustment has been made which has the effect of reducing
shareholders' funds at 30 December 2001 by #133.3 million to #1,023.2 million
from the previously reported #1,156.5 million.
The Group's overall tax charge of #3.1 million comprised a #4.6 million (30%)
charge in respect of current period trading and a credit of #1.5 million in
respect of prior years. The overall effective rate for the period was thus 20%
of the profit before exceptional items and we anticipate that this overall
effective rate will also apply to the results before exceptional items for the
full year to December 2002. For the year to December 2003 the tax charge is
expected to revert to the standard rate of 30%.
Capital expenditure at #4.1 million was lower than the depreciation charge of
#13.6 million in line with the previously reported policy of reduced expenditure
and it is currently estimated that total expenditure for the year will be some
#12 million.
A net cash inflow after costs of #539.3 million arose on the sale of the 37
hotels and from this #174.0 million was used to repay bank debt with the
remainder being retained in the business. At the half year cash balances stood
at #364.1 million.
KEY OPERATING STATISTICS
Statistics by Hotel type 28 Weeks 28 Weeks % 52 Weeks
ended ended Change ended
14 July 2002 15 July 2001 30 Dec 2001
Owned or Leased Hotels
Occupancy (%) 72.4 75.4 (4.0) 73.6
Average room rate (#) 76.51 85.69 (10.7) 82.86
Revenue per available room (#) 55.39 64.61 (14.3) 60.98
Managed Hotels
Occupancy (%) 66.5 68.4 (2.8) 68.5
Average room rate (#) 58.02 60.74 (4.5) 59.39
Revenue per available room (#) 38.58 41.55 (7.1) 40.68
All Hotels
Occupancy (%) 69.4 71.8 (3.3) 71.0
Average room rate (#) 67.39 73.44 (8.2) 71.21
Revenue per available room (#) 46.77 52.73 (11.3) 50.56
Statistics by geographical area 28 Weeks 28 Weeks % 52 Weeks
ended ended Change ended
14 July 2002 15 July 2001 30 Dec 2001
London
Occupancy (%) 71.9 75.9 (5.3) 74.0
Average room rate (#) 75.55 84.70 (10.8) 81.91
Revenue per available room (#) 54.32 64.29 (15.5) 60.61
Regions
Occupancy (%) 66.1 66.5 (0.6) 67.2
Average room rate (#) 56.06 57.02 (1.7) 56.14
Revenue per available room (#) 37.06 37.92 (2.3) 37.73
The statistics shown above include Managed Hotels for the full 28 week period.
THISTLE HOTELS Plc
GROUP PROFIT AND LOSS ACCOUNT
for the 28 weeks ended 14 July 2002
28 Weeks 28 weeks ended 52 weeks ended
ended 15 July 2001 30 Dec 2001
14 July 2002 as restated as restated
Notes #m #m #m #m #m #m
Turnover Owned or leased hotels 79.1 91.5 162.2
Disposed hotels 33.0 76.8 143.1
Management fee income 2.3 - -
114.4 168.3 305.3
Cost of sales (75.3) (105.4) (198.4)
Gross profit Owned or leased hotels 27.8 38.9 63.8
Disposed hotels 9.0 24.0 43.1
Management fee income 2.3 - -
39.1 62.9 106.9
Administrative expenses (11.5) (13.1) (24.0)
Operating profit 27.6 49.8 82.9
Profit on sale of tangible fixed 1.0 - 3.6
assets
Profit on disposal of businesses 2 41.3 - -
Net interest payable (12.0) (20.4) (37.4)
Profit before taxation 57.9 29.4 49.1
Taxation 3 (3.1) (8.8) (11.7)
Profit after taxation 54.8 20.6 37.4
Dividends 4 (8.2) (8.2) (24.6)
Transfer to reserves 46.6 12.4 12.8
Earnings per share 5 11.4p 4.3p 7.7p
Diluted earnings per share 5 11.4p 4.2p 7.7p
Adjusted earnings per share 5 2.6p 4.3p 7.0p
The above results all arise from continuing operations.
THISTLE HOTELS Plc
GROUP BALANCE SHEET
at 14 July 2002
14 July 2002 15 July 2001 30 Dec 2001
as restated as restated
Notes #m #m #m
Fixed assets
Tangible assets 1,009.1 1,636.4 1,627.3
Current assets
Stocks 0.4 1.2 1.2
Debtors: amounts falling due within one year 42.1 42.5 28.1
Debtors: amounts falling due after more than one 45.6 - -
year
Cash at bank and in hand 364.1 2.2 3.1
452.2 45.9 32.4
Creditors: amounts falling due within one year (52.8) (159.1) (69.9)
Net current assets / (liabilities) 399.4 (113.2) (37.5)
Total assets less current liabilities 1,408.5 1,523.2 1,589.8
Creditors: amounts falling due after more than one (259.3) (368.3) (433.3)
year
Provisions for liabilities and charges (78.9) (132.1) (133.3)
Net assets 1,070.3 1,022.8 1,023.2
Equity share capital and reserves
Called up share capital 123.7 123.6 123.6
Share premium account 398.9 398.5 398.5
Revaluation reserve 7 296.1 446.0 441.5
Other reserves 50.8 50.8 50.8
Profit and loss account 7 200.8 3.9 8.8
Total equity shareholders' funds 1,070.3 1,022.8 1,023.2
THISTLE HOTELS Plc
GROUP CASH FLOW STATEMENT
for the 28 weeks ended 14 July 2002
28 Weeks 28 weeks 52 weeks
ended ended ended
14 July 2002 15 July 2001 30 Dec 2001
Notes #m #m #m
Net cash inflow from operating activities 6 33.3 62.8 112.4
Returns on investments and servicing of finance
Interest paid (18.4) (19.2) (40.6)
Interest received 3.5 - -
Taxation paid (4.1) (24.5) (24.0)
Capital expenditure
Purchase of tangible fixed assets (4.1) (25.6) (38.3)
Sale of tangible fixed assets 1.4 0.1 13.8
Free Cash Flow 11.6 (6.4) 23.3
Disposals
Disposal of businesses 2 539.3 - -
Equity dividends paid (16.4) (16.4) (24.6)
Cash inflow / (outflow) before management of liquid
resources and financing 534.5 (22.8) (1.3)
Management of liquid resources
Net increase in seven day deposits (345.0) - -
Financing
Issue of share capital 0.5 - -
Loans repaid (174.0) - -
Increase / (decrease) in cash 16.0 (22.8) (1.3)
GROUP RECONCILIATION OF NET CASH / (DEBT)
for the 28 weeks ended 14 July 2002
28 Weeks 28 weeks 52 weeks
ended ended ended
14 July 2002 15 July 2001 30 Dec 2001
#m #m #m
Increase / (decrease) in cash in the period 16.015 (22.8) (1.3)
Cash flow from increase in liquid resources 345.0 - -
Cash flow from repayment of loans 174.0 - -
Movement in net cash and debt in the period 535.0 (22.8) (1.3)
Net debt at the beginning of the period (430.2) (428.9) (428.9)
Net cash / (debt) at the end of the period 104.8 (451.7) (430.2)
THISTLE HOTELS Plc
OTHER GROUP FINANCIAL STATEMENTS
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the 28 weeks ended 14 July 2002
28 Weeks 28 weeks 52 weeks
ended ended ended
14 July 2002 15 July 2001 30 Dec 2001
as restated as restated
Notes #m #m #m
Profit for the period and total gains and losses
relating to the period 54.8 20.6 37.4
Prior year adjustment 1 (133.3)
Total gains and losses recognised since last annual
report (78.5)
GROUP RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the 28 weeks ended 14 July 2002
28 Weeks 28 weeks 52 weeks
ended ended ended
14 July 2002 15 July 2001 30 Dec 2001
as restated as restated
#m #m #m
Profit for the financial period 54.8 20.6 37.4
Dividends (8.2) (8.2) (24.6)
Issue of share capital 0.5 - -
Net change in the period 47.1 12.4 12.8
Opening equity shareholders' funds as previously reported 1,156.5 1,141.0 1,141.0
Prior year adjustment (Note 1) (133.3) (130.6) (130.6)
Opening equity shareholders' funds as restated 1,023.2 1,010.4 1,010.4
Closing equity shareholders' funds 1,070.3 1,022.8 1,023.2
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
NOTES TO THE INTERIM FINANCIAL STATEMENTS
The interim financial statements, which are unaudited, have been prepared on the
basis of the accounting policies set out in the 2001 Annual Report and Accounts
except for the adoption of FRS 19 "Deferred Tax", the effects of which are
described in Note 1.
The results have been reviewed and reported on by the Group's auditors,
PricewaterhouseCoopers. The Group's statutory accounts for the 52 weeks ended
30 December 2001, together with an unqualified audit report thereon, have been
filed with the Registrar of Companies. The figures for the 52 weeks ended 30
December 2001 in this report are an abridged version of the Group's statutory
accounts for that period as restated for the impact of FRS19.
The interim financial information was approved by the Board on 2 September 2002.
1. Prior year adjustment
Financial Reporting Standard 19 "Deferred Tax" has been adopted for the first
time in the interim financial statements and full provision for deferred tax has
been made. In previous periods the Group's accounting policy was to not provide
for deferred tax unless there was a reasonable probability that a liability
would arise in the foreseeable future. The change in policy has been accounted
for by means of a prior year adjustment as at 1 January 2001 and the previously
reported figures for the 28 weeks ended 15 July 2001 and the 52 weeks ended 30
December 2001 have been restated accordingly. The effect of the change in
policy on the results for the 28 weeks ended 14 July 2002 has been to contribute
#53.8 million to the net profit on disposal of businesses and to decrease the
tax charge for the period by #0.6 million.
2. Profit on disposal of businesses
During the period the Group disposed of 37 hotel businesses for a total
consideration of #598.6 million resulting in an exceptional profit after
disposal costs of #41.3 million. The profit reflects deferred tax liabilities of
#53.8 million provided under FRS19 for these disposed hotel businesses. Initial
net proceeds of #539.3 million after costs of #3.7 million and cash balances
disposed of #2.0 million were received during the period with a further #8.6
million of consideration in respect of working capital balances receivable after
the period end. Deferred consideration receivable of #45.0 million is
payable by 1 January 2005 and accrues interest at a rate of 5%.
3. Taxation
28 Weeks 28 weeks 52 weeks
ended ended ended
14 July 2002 15 July 2001 30 Dec 2001
as restated as restated
#m #m #m
Corporation tax 4.5 7.3 11.0
Deferred tax 0.1 1.5 2.7
4.6 8.8 13.7
Adjustments in respect of previous years
Corporation tax (0.8) - (2.0)
Deferred tax (0.7) - -
3.1 8.8 11.7
4. Dividends
The Board has declared an interim dividend of 1.7 pence per share (2001: 1.7
pence per share).
5. Earnings per share
Earnings per share of 11.4 pence (2001: 4.3 pence) are based on the Group's
profit after taxation of #54.8 million (2001: #20.6 million) and on the average
number of shares in issue during the period of 482.2 million (2001: 481.9
million).
Diluted earnings per share of 11.4 pence (2001: 4.2 pence) takes into account,
in addition to the average number of shares noted above, dilutive potential
ordinary shares arising from employee share options of 0.5 million (2001: 2.9
million).
Adjusted earnings per share of 2.6 pence (2001: 4.3 pence) are based on the
Group's adjusted profit after taxation of #12.5 million (2001: #20.6 million)
which excludes exceptional items of #42.3 million (2001: #nil) and the
attributable taxation charge of #nil (2001: #nil).
6. Reconciliation of operating profit to
net cash inflow from operating activities
28 Weeks 28 weeks 52 weeks
ended ended ended
14 July 2002 15 July 2001 30 Dec 2001
#m #m #m
Operating profit 27.6 49.8 82.9
Depreciation and amortisation 13.6 17.2 32.6
Profit on disposal of fixed assets - - (0.2)
Decrease in stocks 0.2 0.2 0.2
(Increase) / decrease in debtors (16.7) (11.5) 2.9
Increase / (decrease) in creditors 8.6 7.1 (6.0)
Net cash inflow from operating activities 33.3 62.8 112.4
7. Movements on reserves
Revaluation reserve
At the beginning of the period 441.5 446.0 446.0
Transfer of depreciation (0.6) - (1.4)
Revaluation surplus realised on disposals (144.8) - (3.1)
At the end of the period 296.1 446.0 441.5
Profit and loss account
At the beginning of the period as previously reported 142.1 122.1 122.1
Prior year adjustment (Note 1) (133.3) (130.6) (130.6)
At the beginning of the period as restated 8.8 (8.5) (8.5)
Profit for the financial period 46.6 12.4 12.8
Transfer of depreciation 0.6 - 1.4
Revaluation surplus realised on disposals 144.8 - 3.1
At the end of the period 200.8 3.9 8.8
This information is provided by RNS
The company news service from the London Stock Exchange
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