RNS No 7900n
THISTLE HOTELS PLC
3rd March 1998
Preliminary Results 1997
Results for 52 weeks ended 28 December 1997
HIGHLIGHTS 52 weeks Change 52 weeks
to 28.12.97 (%) to 29.12.96
Turnover (#m) 319.7 +10.1 290.3
Gross profit (#m)* 127.7 +10.4 115.6
Earnings before interest, tax, 127.1 +13.3 112.1
depreciation and amortisation
("EBITDA") (#m)*
Operating profit (#m)* 112.5 +8.8 103.3
Profit on sale of fixed assets 1.3 -61.9 3.4
(#m)
80.6 +34.0 60.1
Profit before tax (#m)*
12.36 +20.8 10.23
Earnings per share (p)*
12.15 +27.2 9.55
Adjusted earnings per share
(p)** 68.6 +2.8 66.7
Occupancy (%) 60.82 +10.5 55.02
Average room rate (#) 41.72 +13.7 36.70
Room yield (#)
* 1996 figures stated before writedown of hotels and development sites of
#87.8 million
1997 figures include #3.1 million depreciation adjustment and #0.7
million termination payment
** Excludes profits on sale of fixed assets
* Turnover up 10.1% to #319.7 million
* Pre-tax profit up 34.0% to #80.6 million
* Earnings per share up 20.8% to 12.36 pence
* Final dividend of 2.8 pence net per share
* Room yield per owned bedroom up 13.7%
Mr Rodney Price - Chairman of Thistle Hotels, commented:
"Thistle Hotels achieved record pre-tax profits of #80.6 million for the year
ended 28 December 1997. This represents a 34% improvement over the previous
year's results while earnings per share increased by 21% to 12.36p. This
result was achieved despite an increase of #3.1 million (of which #2.5 million
relates to prior years) in the depreciation charge arising from the adoption
of new asset lives, a provision of #0.7 million (including additional pension
provisions) relating to the severance payment to Robert Peel and a reduction
of #2.1 million in profits on the sale of fixed assets from #3.4 million to
#1.3 million. Excluding these items, the underlying improvement in 1997
profit before taxation was 47% from #56.7 million to #83.1 million.
"Buoyant trading conditions throughout the country were reflected in occupancy
levels increasing to 68.6% and average room rates increasing by 10.5% to
#60.82, generating room yield growth of 13.7% to #41.72 per room. These
favourable conditions are expected to continue in 1998 subject to no further
strengthening of sterling relative to other currencies.
"The Board is determined to continue to take steps to improve the Company's
overall performance. To this end, it has initiated reviews of the Company's
hotel portfolio, information technology systems and depreciation policy.
"It is intended that, over the course of the next year, the hotel portfolio
will be progressively rationalised by the sale of approximately 30 provincial
hotels that do not fit within the overall strategic plan of the group. The
book value of the hotels in question is approximately #100 million and
together they contributed less than 10% of hotel gross profits in 1997.
"After an independent review of the Company's information technology systems,
it is proposed to upgrade substantially these systems, including the
improvement of overall yield management capability.
"With effect from 14 July 1997, the Interim balance sheet date, depreciation
rates in respect of furniture (including fitted furniture and bathrooms) and
soft furnishings have been changed to reflect what the Board believes is
industry best practice.
"We believe that these initiatives, combined with the commitment to the
refurbishment programme and the addition of new rooms to existing hotels, will
provide a sound basis for continued growth in operating profitability. They
will improve our competitive position as the UK's leading 4 star hotel group
and London's largest hotelier.
"Thistle Hotels has a short list of prospective candidates for the position of
Chief Executive and an announcement of the appointment will be made at the
earliest opportunity."
Enquiries:
Thistle Hotels Plc
Rodney Price, Chairman 0171 518 6800
Hartley Sutcliffe, Group Finance Director 0171 723 8383
Julia Record, Director of Public Relations 0171 723 8383
Hogarth Partnership Limited
Nick Denton 0171 357 9477
Rachel Hirst
RESULTS FOR 52 WEEKS ENDED 28 DECEMBER 1997
Turnover for the year increased to #319.7 million, up 10.1% from #290.3
million in 1996. This was underpinned by buoyant market conditions and
evidenced by an increase in average room rates for the Group of 10.5% to
#60.82 from #55.02, and occupancy rates by 1.9 percentage points from 66.7% to
68.6%. Room yields increased by 13.7% to #41.72.
Operating profits, after adjusting for the property write down in 1996,
increased by 8.8% to #112.5 million. This result was struck after a #3.1
million increase in the depreciation charge (of which #2.5 million relates to
prior years) following the Board's decision to change the rates of
depreciation of certain categories of fixed assets to reflect industry best
practice with effect from the half year and a provision of #0.7 million
relating to the termination payment payable to Robert Peel who resigned as
Chief Executive in November. If the impact of these two items is excluded,
operating profits would have been #116.3 million or 12.6% higher than in 1996.
Administrative expenditure increased by 24.4% to #15.3 million from #12.3
million. This increase was primarily attributable to new sales and marketing
initiatives, costs associated with operating as a listed public company and
the termination payment referred to above.
The decrease in interest charges reflects the full year impact of the lower
absolute level of debt following the recapitalisation of the Company upon
flotation in October 1996 together with savings attributable to the interest
rate swap on the #200 million debentures. Pre-tax profits, after adjusting
for the property writedown in 1996, increased by 34.0% to #80.6 million from
#60.1 million.
The exceptional item of #1.3 million relates to the profit on disposal of four
small provincial hotels and compares with the #3.4 million profit on disposal
in 1996.
Earnings per share increased by 20.8% to 12.36 pence from last year's adjusted
earnings per share of 10.23 pence.
LONDON HOTELS
In the Group's 24 London hotels, which generated 65.8% of hotel total gross
profits, turnover increased by 12.8% to #181.6 million from #160.9 million,
while gross profits increased by 12.8% from #74.7 million to #84.2 million.
Prior year figures have not been adjusted for the change in basis of
depreciation which has reduced 1997 hotel gross profits by #1.9 million.
As indicated at the half year, strong improvements were recorded at a number
of hotels which have undergone recent refurbishment. These included The
Tower, Mount Royal, Kingsley, Royal Scot, Grosvenor and Charing Cross Hotels.
One Whitehall Place, the new Conference and Banqueting facility adjoining The
Royal Horseguards Hotel, performed strongly in its first full year of
operation and a further significant increase in profitability is expected in
the coming year as it establishes its credentials at the top end of this
market.
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 under performed their peers. This has been
particularly evident at hotels which are due for refurbishment and at hotels
such as The Royal Horseguards, Charles Dickens and Hendon Hall, where building
works had a significant impact on occupancies and profitability. Further work
remains to be done in London which will also have an impact upon profits in
1998 and 1999 at certain hotels. Management is confident, however, that this
is in the best long term interests of shareholders and that the expected
returns will justify the significant investment.
Each year almost exactly two-thirds of the room nights sold in our London
hotels are to visitors, including commercial customers, from overseas. Total
rooms sold to foreign guests remained flat with a 12% increase in room nights
sold to the North American market and a 15% increase in Australian business
offset by a 4% decrease in rooms sold to continental European travellers and a
4% decrease in Japanese sourced room nights.
While room rates increased by an average of 11.1%, the percentage of rooms
sold in London to the commercial sector remained flat versus 1996 at 38%. It
is this specific area of yield management where a significant opportunity to
the Company lies in terms of generating increased revenues from existing
assets by refurbishing the product, reducing the number of rooms contracted in
advance to tour operators and then competing even more aggressively in the
corporate and higher spend leisure sectors.
PROVINCIAL HOTELS
In England and Wales turnover grew by 8.7% to #98.0 million and hotel gross
profits increased by 12.8% from #27.2 million to #30.6 million, despite an
increase of #0.9 million relating to the new depreciation rates. Average room
rates increased by 9.1% from #44.52 to #48.55 while occupancy increased by 1.8
percentage points from 57.6% to 59.4%. Once again hotels which have undergone
renovation in recent years performed strongly. 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 Scottish hotels grew by 4.4% to #39.6 million from
#37.9 million and gross profits increased by 13.7% from #11.6 million to #13.1
million. The relatively low overall growth in revenues is primarily
attributable to the impact of the sale of The Portpatrick and Angus Hotels
during the year. On a like for like basis, the remaining Scottish hotels
increased their revenues and profitability by 7.4% and 14.7% respectively.
The impact of the change of depreciation rates on Scottish hotel's profits
during the year was #0.3 million. Average room rates increased by 10.0% to
#43.18 from #39.26 while occupancy increased by 1.8 percentage points from
55.8% to 57.6%. Improved performances as a result of recent refurbishment
were generated at The Glasgow Thistle, The King James in Edinburgh and the two
rebranded hotels in Aberdeen.
CAPITAL EXPENDITURE
The Board continues to be committed to its programme of refurbishing and,
where possible, adding new rooms to existing hotels. During the year, capital
expenditure totalled #49.6 million, of which #35.8 million or 72.2% was spent
on London properties. Major projects included the elimination of single rooms
and the refurbishment of over half of the rooms at The Royal Horseguards Hotel
as well as the ongoing refurbishment at The Tower and Mount Royal hotels and
upgrades to roomstock at the Barbican, Charles Dickens and Kennedy in London,
the Brighton and Glasgow Thistles, The Wiltshire at Swindon, The Strathallan
in Birmingham and The Atlantic Tower in Liverpool.
The renovation of Hendon Hall Hotel in London, which has been relaunched as a
Thistle Country House Hotel, was completed in the second half of the year.
In 1998 further works have either been committed or are under way at a number
of hotels including the Tower, Mount Royal, the completion of the Charing
Cross, Royal Horseguards and Hospitality Inn - Bayswater as well as a number
of provincial properties.
DEPRECIATION
During the year, a further detailed review of the Group's asset lives and the
bases of depreciation of tangible fixed assets was carried out. Following
this review, the Group's bases of depreciation of certain categories of fixed
assets have been amended with effect from 14 July 1997, the Interim balance
date, as follows:
Assets Asset Lives Adjusted
From To
All furniture, including 15 years 10 years
fitted furniture and
bathroom equipment
Soft furnishings 10 years 5 years
Plant and equipment 15 years No change
Motor vehicles and 5 years No Change
computers
This has resulted in a #3.1 million increase to the depreciation charge in
1997 of which #2.5 million relates to prior years.
REBRANDING
The following hotels were rebranded as Thistle Hotels during the year:
London Hendon Hall
Hospitality Inn, Piccadilly (now The Piccadilly
Thistle)
The Kingsley
Liverpool Atlantic Tower
Wallingford The George
Swindon The Wiltshire
Aberdeen Skean Dhu - Altens (now The Aberdeen Thistle)
Skean Dhu - Airport (now The Aberdeen Airport
Thistle)
This has taken the total number of hotels in the portfolio operating under the
Thistle brand to 58.
RATIONALISATION OF THE PORTFOLIO
During the year, the leasehold of The Angus at Dundee was sold for #3.35
million before expenses. In addition, three small provincial hotels were sold
for a total of #3.0 million.
Following a review by the Board, the Company has decided to rationalise the
portfolio and dispose of approximately 30 provincial hotels, the majority of
which do not contribute significantly to gross profits and none of which fit
within the Company's overall strategic plans. Discussions are currently
taking place with our financial advisers. Upon successful completion of this
disposal exercise, Thistle Hotels Plc will be left with a core of around 60
predominantly 4 star hotels operating under the Thistle brand. The aggregate
book value of hotels marked for disposal is approximately #100 million and
they contribute less than 10% of hotel gross profits in 1997.
SYSTEMS DEVELOPMENT
Having commissioned an independent review of the Company's information
technology systems, the Board has decided to implement a number of
improvements over the next two years. At present the Company has a number of
different, stand-alone computer systems which operates in its hotels and at
Head Office.
It is intended to:
* rationalise the existing varied hotel management systems;
* re-route all reservations through the central reservations office ("CRO")
and establish a two way interface between the CRO and our London hotels
providing real time room availability and thereby allowing us to leverage
further upon our position as the largest hotelier in one of the world's
largest hotel markets;
* replace the existing Head Office mainframe computer with a financial
applications package and data warehouse which is integrated between the
Group's hotels and Head Office.
The Board is confident that the investment in new systems, in line with the
above strategy, will generate demonstrable returns through improved revenue
management and the elimination of duplicated manual procedures.
ACCOUNTS PRESENTATION
Following a detailed review of the Company's reporting procedures by the Audit
Committee, a number of changes have been made to the presentation of the
Group's accounts. The most significant of these changes is the separate
disclosure of profits on disposal of properties in the profit and loss
account. The other changes were the reclassification of certain items between
cost of sales and administrative expenses, none of which have an impact on
operating profits or the overall results of the Group. Comparative figures
for 1996 have been restated accordingly.
CASHFLOW
The recapitalisation and flotation of the Company in 1996 placed it in the
position whereby the significant capital expenditure programme to which it was
committed could be funded from internally generated cashflows. In 1997,
cashflow from operating activities increased by #10.4 million or 9.2% to
#124.0 million. After investing a further #49.6 million in the ongoing
refurbishment of the Company's hotels, #63.8 million was applied to the
payment of interest, dividends and Advance Corporation Tax and #70.0 million
to the repayment of debt. Net additional funds of #59.2 million were raised
by the issue of a further #60 million of debentures due for repayment in 2022.
TAXATION AND DIVIDENDS
The Group's effective tax rate in 1997 was 5.3% (1996 14.5%). The effective
tax rate is substantially below the statutory rate due to the availability of
tax losses and capital allowances.
The directors intend to pay a final dividend of 2.8 pence per share on 21 May
1998 subject to approval at the Annual General Meeting on 13 May, 1998, giving
a total of 4.2 pence per share for the year.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
ROOM STATISTICS YEAR ENDED 28 DECEMBER 1997
LONDON ENGLAND/ SCOTLAND GROUP
WALES
Room nights
sold '000
1997 1,861 1,012 458 3,331
1996 1,832 994 457 3,283
Increase % 1.6% 1.8% 0.1% 1.5%
Available
room
nights '000 2,357 1,705 796 4,858
1997 2,378 1,725 820 4,923
1996 -0.9% -1.2% -3.0% -1.3%
Increase %
Occupancy % 78.9% 59.4% 57.6% 68.6%
1997 77.0% 57.6% 55.8% 66.7%
1996
A.R.R. # #71.84 #48.55 #43.18 #60.82
1997 #64.65 #44.52 #39.26 #55.02
1996 11.1% 9.1% 10.0% 10.5%
Increase %
Yield # #56.68 #28.84 #24.87 #41.72
1997 #49.78 #25.64 #21.91 #36.70
1996 13.9% 12.5% 13.5% 13.7%
Increase %
Note: Occupancies are calculated by reference to total rooms, irrespective of
whether they are unavailable for letting due to refurbishment, staff use or
seasonal closure.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP PROFIT & LOSS ACCOUNT
for the financial year ended 28 December 1997
Before
Exceptional Exceptional
Items Items
1997 1996* 1996* 1996*
Note #'000 #'000 #'000 #'000
Turnover 1 319,744 290,337 - 290,337
Cost of sales
Write down of hotels - - (87,797) (87,797)
& development sites
Other (192,034) (174,737) - (174,737)
--------- --------- --------- ---------
Gross profit 1 127,710 115,600 (87,797) 27,803
Administrative expenses (15,259) (12,265) - (12,265)
--------- --------- --------- ---------
Operating profit 112,451 103,335 (87,797) 15,538
Profit on sale of tangible 2 1,296 3,399 - 3,399
fixed assets
Interest payable and 3 (33,183) (46,610) - (46,610)
similar charges
--------- --------- --------- ---------
Profit/(loss) before 4 80,564 60,124 (87,797) (27,673)
taxation
Taxation 5 (4,277) (8,709) - (8,709)
--------- --------- --------- ---------
Profit/(loss) after taxation 76,287 51,415 (87,797) 36,382)
Dividends (25,926) (40,716) - (40,716)
--------- --------- --------- ---------
Profit/(loss)for the year 50,361 10,699 (87,797) (77,098)
retained ========= ========= ========= =========
Earnings/(loss) per share 12.36p (7.24)p
Adjusted earnings per share:-
Net basis 12.36p 10.23p
Nil distribution basis 12.49p 11.38p
Adjusted earnings per share is based on the Group's profit/(loss) after
taxation for the period but before the write down of hotels and development
sites and on the average number of shares in issue. The average number of
shares in issue during 1997 was 617,289,588 (1996 - 502,545,136).
*Restated as described on page 6.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP BALANCE SHEET
at 28 December 1997
1997 1996
#'000 #'000
Fixed assets
Tangible assets 1,715,988 1,685,474
---------- ----------
Current assets
Stocks 2,067 2,024
Debtors 44,824 35,745
Investments 52 52
Cash at bank and in hand 6,086 528
---------- ----------
53,029 38,349
Creditors (due within one year) (84,906) (84,356)
---------- ----------
Net current liabilities (31,877) (46,007)
---------- ----------
Total assets less current 1,684,111 1,639,467
liabilities
Creditors (due after one year) (369,783) (375,500)
---------- ----------
Net assets 1,314,328 1,263,967
========== ==========
Equity capital & reserves
Called up share capital 123,458 123,458
Share premium account 490,331 490,331
Revaluation reserve 456,236 456,585
Other reserves 50,773 50,773
Profit and loss account 193,530 142,820
---------- ----------
Total equity shareholders' funds 1,314,328 1,263,967
========== ==========
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP CASH FLOW STATEMENT
for the financial year ended 28 December 1997
1997 1996
Note #'000 #'000
Cash flow from operating 6 124,038 113,555
activities
Returns on investments &
servicing of finance
Interest paid (32,710) (53,665)
--------- ---------
Net cash flow for returns (32,710) (53,665)
on investments & servicing
of finance
Tax paid (10,136) (579)
Capital expenditure
Purchase of tangible (49,970) (51,610)
fixed assets
Sale of tangible fixed assets 6,146 3,180
--------- ---------
Net cash outflow for capital (43,824) (48,430)
expenditure
Equity dividends paid (20,988) -
--------- ---------
Cash inflow before financing 16,380 10,881
Financing
Issue of ordinary share capital - 237,405
New loans 59,210 -
Loans repaid (70,000) (225,025)
--------- ---------
Decrease in debt (10,790) (225,025)
--------- ---------
Increase in cash 5,590 23,261
========= =========
Reconciliation of net debt
Increase in cash in the year 5,590 23,261
Cash flow from decrease in debt 10,790 225,025
--------- ---------
Change in net debt resulting 16,380 248,286
from cash flows
Provision for finance costs (73) -
on debenture stock
Disposal of current asset
investment as dividend in specie - (259)
--------- ---------
Movement in net debt in 16,307 248,027
the year
Net debt at beginning of year (390,185) (638,212)
--------- ---------
Net debt at end of year (373,878) (390,185)
========= =========
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
1997 1996
#'000 #'000
Profit/(loss) for the year 76,287 (36,382)
Revaluation adjustment - (116,822)
--------- ---------
Total recognised gains and losses 76,287 (153,204)
relating to the year ========= =========
NOTE OF HISTORICAL COST PROFITS AND LOSSES
1997 1996
#'000 #'000
Profit/(loss) before taxation 80,564 (27,673)
as reported
Realisation of property revaluation 349 -
gains of previous periods
--------- ---------
Historical cost profit/(loss) 80,913 (27,673)
before taxation ========= =========
Historical cost profit/(loss) 50,710 (77,098)
retained after taxation and dividends ========= =========
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
1997 1996
#'000 #'000
Opening equity shareholders' funds 1,263,967 1,220,482
Profit/(loss) for the year 76,287 (36,382)
Dividends (25,926) (40,716)
New share capital issued - 237,405
Revaluation adjustment - (116,822)
---------- ----------
Closing equity shareholders' funds 1,314,328 1,263,967
========== ==========
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost convention as
modified by the revaluation of certain properties and in accordance with
applicable accounting standards.
BASIS OF PREPARATION
The Group accounts comprise a consolidation of the accounts of the holding
company and its subsidiaries all of which are prepared up to the same date as
the holding company. Uniform accounting policies are adopted by all companies
in the Group. Results of subsidiaries acquired or disposed of during the year
are included for the period during which they are within the Group. The
amount by which the consideration paid differs from the values attributed to
net tangible assets of subsidiaries acquired is written off to reserves.
The foregoing statements do not constitute the Group's statutory accounts.
The Group's 1997 statutory accounts, on which the Company's auditors, Price
Waterhouse, have given an unqualified opinion in accordance with section 235
of the Companies Act 1985, are to be delivered to the Registrar of Companies.
The Group's 1996 statutory accounts have been filed with the Registrar of
Companies.
NOTES
1997 1996
1. Segment analysis #'000 #'000
Turnover by UK region
London 181,606 160,929
England & Wales 98,030 90,195
Scotland 39,594 37,913
-------- --------
Total hotels turnover 319,230 289,037
Non hotels turnover 514 1,300
-------- --------
Total group turnover 319,744 290,337
======== ========
Gross profit by UK region
London 84,215 74,684
England & Wales 30,639 27,170
Scotland 13,133 11,553
-------- --------
Total hotels gross profit 127,987 113,407
Other operating (expenses)/income (277) 2,193
-------- --------
Total group gross profit 127,710 115,600
======== ========
The 1996 comparative figures are stated before exceptional items of #87.8
million comprising the write down of hotels and development sites.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
NOTES
1997 1996
2. Profit on sale of fixed assets #'000 #'000
1,296 3,399
------ ------
During the year the Group disposed of
four of its provincial hotels for a
net aggregate cash consideration of
#6.1 million.
1997 1996
3. Interest payable and similar charges #'000 #'000
Interest on long term loans 26,733 24,411
Interest on bank overdrafts and loans 5,817 21,490
repayable within 5 years
Bank charges 633 709
------ ------
33,183 46,610
No interest has been capitalised ====== ======
during the year.
1997 1996
4. Profit/(loss) before taxation #'000 #'000
This is stated after charging:-
Depreciation and amortisation 14,624 8,787
Repairs and renewals 10,670 10,036
Auditors' remuneration 120 92
Repairs and renewals includes amounts
attributable to maintenance wages.
In addition to the above, other fees paid
to the auditors amounted to #151,000
1996 #547,000).
1997 1996
5. Taxation #'000 #'000
Corporation tax at 31.5% (1996 - 33%) 3,439 2,176
ACT written off 838 5,774
Prior year adjustments - 759
------ ------
4,277 8,709
====== ======
The corporation tax charge based on
the profit for the year has benefited
from capital allowances and relief for
losses brought forward of approximately 23,000 14,500
====== ======
Losses available for relief against 6,000 43,000
future profits ====== ======
The directors estimate that the corporation tax liability which
would arise if all hotels includes in fixed assets were sold at valuation
would not exceed #150 million (1996 #150 million).
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
NOTES
6. Reconciliation of operating profit to 1997 1996
net cash inflow from operating activities #'000 #'000
Operating profit 112,451 15,538
Write down of hotels & development - 87,797
sites
Depreciation 14,624 8,787
Profit on sale of tangible fixed assets (18) -
(Increase)/decrease in stocks (43) 100
Increase in debtors (3,274) (956)
Increase in creditors 298 2,289
-------- --------
Net cash inflow from operating activities 124,038 113,555
======== ========
END
FR AOORKWWKORRR
Thistle Hotels (LSE:THO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Thistle Hotels (LSE:THO)
Historical Stock Chart
From Jul 2023 to Jul 2024
