RNS No 3439c
THISTLE HOTELS PLC
2nd September 1997
THISTLE HOTELS Plc
Announcement of Interim Results for the 28 weeks ended 13 July, 1997
Highlights
28 weeks Change 28 weeks 52 weeks
to 13/7/97 (%) to to
14/7/96 29/12/96
Turnover (# m) 160.2 +9.8 146.0 290.3
Gross Profits (#m) 62.9 +9.9 57.2 115.6
Operating Profit (#m)* 55.0 +8.9 50.6 103.3
Profit on sale of fixed 0.9 -30.8 1.3 3.4
assets (#m)
Profit before tax (#m)* 38.1 +58.4 24.1 60.1
Earnings per share (p)* 5.87 +17.2 5.01 10.23
Occupancy (%) 65.4 +2.7 63.7 66.7
Average room rate (#) 59.08 +8.7 54.33 55.02
Room yield (#) 38.64 +11.6 34.61 36.70
*1996 figures stated before writedown of hotels and development sites of #87.8
million
* Turnover up 9.8% to #160.2 million
* Pre-tax profits increase by 58.4% to #38.1 million
* Occupancy and room rates up across all regions
* 1,013 rooms refurbished including 706 in London
* 1.4 pence per share interim dividend
Mr Rodney Price, Chairman of Thistle, said:
"I am pleased to announce an 8.9% increase in operating profits to #55.0
million and a 58.4% increase in pre-tax profit to #38.1 million for the 28
weeks to 13 July, 1997. While these results reflect a creditable improvement
in operating performance and provide the basis for a record annual profit,
they nevertheless fall short of the demanding targets which we have set
ourselves.
"Current trading conditions, and the fact that historically the Group's gross
profits have tended to be weighted to the second half of the financial year,
suggest that operating profit growth for the full year will be slightly above
that achieved in the first half."
Announcement of Interim Results for the 28 weeks ended 13 July, 1997
REVIEW OF RESULTS
I am pleased to announce an 8.9% increase in operating profits to #55.0
million and a 58.4% increase in pre-tax profit to #38.1 million for the 28
weeks to 13 July, 1997. While these results reflect a creditable improvement
in operating performance and provide the basis for a record annual profit,
they nevertheless fall short of the demanding targets which we have set
ourselves.
Turnover increased to #160.2 million, up 9.8% from #146.0 million for the same
period in 1996. This was underpinned by an increase in average room rates for
the Group of 8.7% to #59.08 from #54.33, while occupancy increased by 1.7
percentage points from 63.7% to 65.4%.
Operating profit for the period, after adjusting for the property writedown in
1996, increased by 8.9% to #55.0 million. After a strong start to the year,
operating profit growth was held back by a disappointing performance in the
second quarter, particularly from certain of our London and Scottish hotels,
as well as an 18.0% increase in administrative expenditure which was
attributable to new sales and marketing initiatives together with costs
associated with operating as a listed public company.
Pre-tax profits, after adjusting for the property writedown, increased by
58.4% to #38.1 million from #24.1 million. Earnings per share, on the same
basis, increased by 17.2% to 5.87p. Earnings benefited from the reduction in
interest charges by #10.0 million from #27.8 million to #17.8 million which
was primarily attributable to the lower absolute level of debt following
flotation of the Company in October last year. The tax charge of #1.9 million
is calculated by reference to the estimated effective tax rate for the full
year and reflects the utilisation of prior year tax losses.
The exceptional item of #0.9 million relates to the profit on disposal of The
Angus Hotel at Dundee in Scotland.
The Board is declaring an interim dividend of 1.4 pence per share. This will
be paid on 21 November 1997 to shareholders on the register on 17 October,
1997.
LONDON HOTELS
In the Group's London hotels, which generated 66% of total gross profits,
turnover increased by 12.1% to #90.4 million from #80.6 million, while gross
profits increased by 12.7% from #37.0 million to #41.7 million. Room sales
moved ahead driven by increases in average room rates of 9.6% from #63.12 to
#69.21 and occupancy of 1.5 percentage points from 73.9% to 75.4%. In
particular, strong improvements in operating profits were recorded at three of
the Group's largest hotels: The Tower, The Mount Royal and The Grosvenor, all
of which have had significant amounts invested in refurbishing their product
over the last three years and all of which outperformed their budgets for the
period under review.
While the majority of the Group's other hotels in London have achieved year on
year growth in revenues and profitability in line with the stronger underlying
market, a number of hotels have generated profits at levels significantly
lower than expected. This has been particularly evident at hotels which are
currently undergoing major refurbishment, such as The Royal Horseguards, where
the building works have had a significant effect on current year
profitability. In addition, several of the Group's London hotels which are due
for refurbishment have under-performed the market.
During the first half 706 bedrooms, representing over 10% of our roomstock in
the capital, have been refurbished. It is the Board's intention to continue to
prioritise the refurbishment of the Company's hotels in London. This will not
only include those hotels which are scheduled to be rebranded as Thistle
hotels, but also the remaining three-star properties.
Having noted the overall increase in occupancy at our London hotels which rely
heavily on international traffic, it is pleasing to note that this includes an
increase in the number of room nights sold to dollar denominated markets of
over 13,000 during the first half. This reflects a return on our significant
sales and marketing initiatives over recent years. However, the appreciation
of sterling does appear to have had an impact on volume from some other key
markets. In particular, the number of room nights sold to the European and
Japanese markets versus 1996 fell by over 19,000 and 6,000 respectively.
Given that 1998 brochures will reflect prices based on current exchange rates,
it remains to be seen precisely what impact this will have on incoming traffic
next year.
PROVINCIAL HOTELS
In England and Wales turnover grew by 9.2% to #49.8 million and hotel gross
profits increased by 14.7% to #15.4 million. Average room rates increased by
7.2% to #48.02 from #44.78 while occupancy increased by 1.9 percentage points
to 57.4% from 55.5%. Once again hotels which have undergone renovation in
recent years have performed in line with or ahead of expectations. These
included The Grand, Bristol; The Park, Cardiff; The Quay Thistle, Poole; The
Pinewood, Manchester; and The Arden, Stratford upon Avon.
Turnover in the Group's 24 Scottish hotels grew by a more modest 4.9% to #19.7
million from #18.8 million and gross profits increased by 10.8% from #5.4
million to #6.0 million. This improvement fell short of the Group's
expectations reflecting the fact that market conditions in Scotland remain
weaker than those in London and the rest of England. Average room rates
increased by 7.9% to #42.52 from #39.40 while occupancy increased by 1.5
percentage points from 51.5% to 53.0%. We anticipate an improvement in the
second half, particularly bearing in mind the recent refurbishment to three of
our largest hotels: The Glasgow Thistle, The King James in Edinburgh and The
Aberdeen Airport Thistle.
CAPITAL EXPENDITURE
The Board is committed to its programme of refurbishing, and where possible
adding new rooms, to existing hotels. During the half year capital
expenditure totalled #26.4 million. This included 1,013 bedrooms, of which
706 were in London. The largest project is the refurbishment of The Royal
Horseguards Hotel. Other major projects include ongoing refurbishment at The
Tower and Mount Royal Hotels, as well as upgrades to the roomstock at The
Barbican, Charles Dickens and Kennedy in London, the Brighton and Glasgow
Thistles and The Strathallan at Birmingham.
The complete renovation and upgrade to four star standard of Hendon Hall
Hotel, which will be relaunched as a Thistle Country House Hotel later this
year, is on track to be completed during the second half.
Against a difficult environment for obtaining necessary planning and other
consents, particularly in London, we also completed 54 new rooms.
REBRANDING
In June the Skean Dhu Airport Hotel was relaunched as The Aberdeen Airport
Thistle following an upgrade of its bedrooms and public areas. A further seven
hotels (including Hendon Hall) are scheduled to be rebranded as Thistle hotels
in the second half. This will bring the total number in the portfolio to 58.
BUSINESS MIX
Progress continues to be made in switching the mix of our business from
leisure to higher spend commercial traffic. In the first half of the year,
over 25,500 additional commercial room nights were sold compared with the same
period last year. In total, 48.2% of room nights sold were to the commercial
sector versus 47.7% in 1996. The Company is targeting a business mix of 50%
commercial, 50% leisure by the end of 1998.
RATIONALISATION OF THE PORTFOLIO
During the period, the leasehold of The Angus at Dundee was sold for #3.35
million. I am also pleased to report that non-refundable deposits have been
received pursuant to options granted over 2 of our smaller provincial hotels.
Each option is exercisable within 18 months subject to the developers
obtaining planning approvals to redevelop the properties.
The Board has identified a number of other predominantly seasonal provincial
hotels which for various reasons do not fit within its overall strategic plan.
While the proceeds from the sale of these hotels will not be material in the
overall context of the Group, it is nevertheless intended that these will be
disposed of in due course.
FINANCIAL
Following a detailed review of the Company's management and statutory
reporting procedures by the Audit Committee, a number of changes have been
made to the presentation of the Company's accounts. The most significant of
these is the separate disclosure of disposal gains as exceptional items in the
Profit & Loss Account. The other changes involve the reclassification of
certain items between gross profits and administrative expenditure, none of
which have any impact upon operating profits or the overall results of the
Group. Comparative figures for 1996 have been restated accordingly.
As previously stated, the lower interest charges during the period were
primarily attributable to the lower absolute level of debt following
flotation. In June this year, the Company issued #60 million of 7.875% secured
debentures at an effective rate of 7.99% fixed for 25 years to June 2022. The
net proceeds of the issue were used to repay existing debt facilities. At the
same time, the terms of #105 million of bank loan facilities were renegotiated
at lower borrowing margins and their maturity extended to 2002 for #85 million
and 2007 for the remaining #20 million. As a result of these transactions,
the Company's #375 million term loans now have an average maturity of over
14.5 years.
CURRENT TRADING AND PROSPECTS
The Board remains confident that further growth in profitability will be
supported by the buoyancy of the London and provincial UK markets and the
Group's ongoing investment programme. Current trading conditions, and the fact
that historically the Group's gross profits have tended to be weighted to the
second half of the financial year, suggest that operating profit growth for
the full year will be slightly above that achieved in the first half.
THISTLE HOTELS Plc
INTERIM PROFIT AND LOSS ACCOUNT 1997
Before After
revaluation revaluation
writedown writedown
28 Weeks 28 Weeks 28 Weeks 52 Weeks
ended ended ended ended
13/07/97 14/07/96 14/07/96 29/12/96
Unaudited Audited* Audited* Audited*
--------- --------- --------- ---------
#000 #000 #000 #000
Turnover (Note 3) 160,240 145,978 145,978 290,337
Cost of sales (97,313) (88,728) (88,728) (174,737)
--------- --------- --------- ---------
Gross profit (Note 3) 62,927 57,250 57,250 115,600
Administrative Expenses (7,879) (6,678) (6,678) (12,265)
Write down of hotels and - - (87,797) (87,797)
development sites
--------- --------- --------- ---------
Operating Profit/(loss) 55,048 50,572 (37,225) 15,538
Profit on sale of fixed 900 1,350 1,350 3,399
assets
Interest Payable (17,813) (27,844) (27,844) (46,610)
--------- --------- --------- ---------
Profit / (loss) before 38,135 24,078 (63,719) (27,673)
tax
Taxation (Note 4) (1,910) (550) (550) (8,709)
--------- --------- --------- ---------
Profit / (loss) for the 36,225 23,528 (64,269) (36,382)
period
Dividends paid and (8,642) - - (40,716)
proposed
--------- --------- --------- ---------
Retained Profit / (loss) 27,583 23,528 (64,269) (77,098)
for the period
========= ========= ========= =========
Earnings / (loss) per 5.87 5.01 (13.68) (7.24)
share (Note 5)
Adjusted earnings per 5.87 5.01 5.01 10.23
share (Note 5)
* Restated as described on page 4
THISTLE HOTELS Plc
INTERIM BALANCE SHEET AT 13 JULY, 1997
13/07/97 14/07/96 29/12/96
Unaudited Audited Audited
--------- --------- ---------
#000 #000 #000
Fixed assets
Tangible assets 1,703,545 1,694,409 1,685,474
--------- --------- ---------
Current assets
Stocks 1,758 1,743 2,024
Debtors 54,579 39,876 35,745
Investments 52 311 52
Cash at bank and in hand 5,235 450 528
--------- --------- ---------
61,624 42,380 38,349
Creditors (due within one 98,682 96,872 84,356
year)
--------- --------- ---------
Net current liabilities (37,058) (54,492) (46,007)
--------- --------- ---------
Total assets less current 1,666,487 1,639,917 1,639,467
liabilities
Creditors (due after one 374,937 600,525 375,500
year)
--------- --------- ---------
Net assets 1,291,550 1,039,392 1,263,967
========= ========= =========
Capital and reserves
Called up share capital 123,458 93,941 123,458
Share premium account 490,331 282,443 490,331
Revaluation reserve 456,585 456,585 456,585
Other reserves 50,773 50,773 50,773
Profit and loss account 170,403 155,650 142,820
--------- --------- ---------
Shareholders' Funds 1,291,550 1,039,392 1,263,967
========= ========= =========
THISTLE HOTELS Plc
INTERIM CASHFLOW STATEMENT
1997 1996
28 weeks 28 weeks
Unaudited Audited
#000's #000's
For the 28 weeks ended 13
July 1997
Cashflow from operating 55,092 52,481
activities (Note 2)
Returns on investments &
servicing of finance
Interest paid (16,624) (32,948)
-------- --------
Net cash outflow from
returns on investments
& servicing of finance (16,624) (32,948)
Tax paid (7,092) -
Capital expenditure &
financial investment
Purchase of tangible fixed (26,441) (28,247)
assets
Sale of tangible fixed 3,174 1,532
assets
-------- --------
Net cash outflow from
capital expenditure
& financial investment (23,267) (26,715)
Equity dividends paid (12,346) -
-------- --------
Cash inflow / (outflow) (4,237) (7,182)
before use of liquid
resources and financing
Financing
Issue of ordinary share
capital
New loans 59,210 -
Repayment of loans (45,000) -
-------- --------
Increase / (decrease) in 14,210 -
debt
-------- --------
Increase / (decrease) in 9,973 (7,182)
cash
======== ========
Reconciliation of net debt
Increase / (decrease) in 9,973 (7,182)
cash in the period
Cashflow from (increase) / (14,210) -
decrease in debt
-------- --------
Change in net debt (4,237) (7,182)
resulting from cashflows
Provision for finance costs (227) -
on debenture stock
Disposal of current asset - -
investment as dividend in
specie
-------- --------
Movement in net debt in the (4,464) (7,182)
period
Net debt at beginning of (390,185) (638,212)
period
-------- --------
Net debt at end of period (394,649) (645,394)
1996
52 weeks
Audited
#000's
Cashflow from operating activities (Note 2) 113,555
Returns on investments & servicing of finance
Interest paid (53,665)
--------
Net cash outflow from returns on investments
& servicing of finance (53,665)
Tax paid (579)
Capital expenditure & financial investment
Purchase of tangible fixed assets (51,610)
Sale of tangible fixed assets 3,180
--------
Net cash outflow from capital expenditure
& financial investment (48,430)
Equity dividends paid -
--------
Cash inflow / (outflow) before use of
liquid resources and financing 10,881
Financing
Issue of ordinary share capital 237,405
New loans -
Repayment of loans (225,025)
--------
Increase / (decrease) in debt (225,025)
--------
Increase / (decrease) in cash 23,261
========
Reconciliation of net debt
Increase / (decrease) in cash in the period 23,261
Cashflow from (increase) / decrease in debt 225,025
--------
Change in net debt resulting from cashflows 248,286
Provision for finance costs on debenture stock -
Disposal of current asset investment as dividend in (259)
specie
--------
Movement in net debt in the period 248,027
Net debt at beginning of period (638,212)
--------
Net debt at end of period (390,185)
Notes
1. Basis of preparation
The interim financial information, which was approved by the Board on 1
September 1997, has been prepared on the basis of the accounting policies set
out in the 1996 Annual Report and has been reviewed by the Company's Auditors,
Price Waterhouse. Their review report is set out below. The Group profit and
loss account for the year ended 29 December 1996 and the Group balance sheet
as at that date, are an abridged version of the statutory accounts for that
period, which together with an unqualified audit report, have been filed with
the Registrar of Companies.
2. Reconciliation of operating profit to net cashflow from operating
activities
1997 1996 1996
28 weeks 28 weeks 52 weeks
Unaudited Audited Audited
#000's #000's #000's
Operating profit 55,048 (37,225) 15,538
Depreciation charges 6,096 4,252 8,787
Writedown of hotels & development 0 87,797 87,797
sites
Decrease in stocks 266 381 100
Decrease/(Increase) in debtors (13,593) (6,271) (956)
Increase in creditors 7,275 3,547 2,289
Net cash inflow from operating 55,092 52,481 113,555
activities
3. Segment analysis
1997 1996 1996
28 weeks 28 weeks 52 weeks
Unaudited Audited Audited
#000 #000 #000
a) Turnover by UK Region
London 90,416 80,638 160,929
England/Wales 49,810 45,621 90,195
Scotland 19,736 18,819 37,913
--------- --------- ---------
Hotels Turnover 159,962 145,078 289,037
Non Hotels Turnover 278 900 1,300
Total Group Turnover 160,240 145,978 290,337
======== ======== ========
b) Gross Profit by UK Region
London 41,672 36,969 74,684
England/Wales 15,367 13,399 27,170
Scotland 6,035 5,447 11,553
--------- --------- ---------
Hotels Gross Profit 63,074 55,815 113,407
Other Operating (147) 1,435 2,193
Income/(Expense)
--------- --------- ---------
Total Group Gross Profit 62,927 57,250 115,600
========= ========= =========
4. Tax
The tax charge for the 28 weeks ended 13 July, 1997 is based upon the
estimated effective tax rate for the full year.
5. Earnings per share
Earnings per share of 5.87p (1996: loss of 13.68p) are based on the Group's
profit after taxation of #36,225,000 (1996: loss of #64,269,000) and on the
number of shares in issue during the period of 617,289,588 (1996: 469,703,084
adjusted for the 1 for 2 consolidation in 1996).
Adjusted earnings per share in 1996 are based on profits after tax but before
the writedown of hotels and development sites of #87.8 million and on the
weighted average number of shares in issue during the period of 469,703,084 at
the interim and 502,545,136 for the full year.
REVIEW REPORT BY THE AUDITORS TO THISTLE HOTELS Plc
We have reviewed the interim financial information for the six months ended 13
July 1997 set out on pages 6 to 10 which is the responsibility of, and has
been approved by, the directors. Our responsibility is to report on the
results of our review.
Our review was carried out having regard to the Bulletin 'Review of Interim
Financial Information', issued by the Auditing Practices Board. This review
consisted principally of applying analytical procedures to the underlying
financial data, assessing whether accounting policies have been consistently
applied, and making enquiries of management responsible for financial and
accounting matters. The review excluded audit procedures such as tests of
controls and verification of assets and liabilities, and was therefore
substantially less in scope than an audit performed in accordance with
Auditing Standards. Accordingly we do not express an audit opinion on the
interim financial information.
On the basis of our review:
* in our opinion the interim financial information has been prepared using
accounting policies consistent with those adopted by Thistle Hotels Plc
in its financial statements for the year ended 29 December 1996, and
* we are not aware of any material modifications that should be made to the
interim financial information as presented.
Price Waterhouse
Chartered Accountants, Leeds
1 September 1997
Key Operating Statistics 1997 1996 1996
26 weeks 26 weeks 52 weeks
--------- ------------------
Occupancy %
London 75.4 73.9 77.0
England/Wales 57.4 55.5 57.6
Scotland 53.0 51.5 55.8
------- ------- -------
Group 65.4 63.7 66.7
======= ======= =======
Average Room Rate #
London 69.21 63.12 64.65
England/Wales 48.02 44.78 44.52
Scotland 42.52 39.40 39.26
------- ------- -------
Group 59.08 54.33 55.02
======= ======= =======
Further copies of this interim statement can be obtained from Thistle Hotels
Plc, at either 2 The Calls, Leeds LS2 7JU or Capital House, 25 Chapel Street,
London NW1 5JJ.
Press Enquiries:
Thistle Hotels Rodney Price
0113 243 9111 Robert Peel
Hogarth Partnership Nick Denton
0171 357 9477
END
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