Thistle Hotels PLC - Interim Results
September 09 1998 - 3:31AM
UK Regulatory
RNS No 6698m
THISTLE HOTELS PLC
9th September 1998
Thistle Hotels Plc
Announcement of Interim Results for the 28 weeks
ended 12 July, 1998
"Thistle announces 20% increase in half year profits"
28 weeks Increase 28 weeks
ended % ended
12/7/98 13/7/97
Turnover (#m) 168.9 5.4 160.2
Gross profit before exceptional
items (#m) 71.3 13.4 62.9
Operating profit before
exceptional items (#m) 63.1 14.7 55.0
Profit before taxation and
exceptional items (#m) 44.5 19.6 37.2
Fixed asset write downs (#m) (6.0) -
Profit on disposal of fixed
assets (#m) 9.8 0.9
Provision for loss on disposal
of fixed assets (#m) (31.0) -
Adjusted earnings per share (p) 6.12 7.0 5.72
Revenue per available room
(RevPar) (#) 42.63 10.3 38.64
* Profit before taxation and exceptional items up 20% to #44.5
million
* RevPar up 10%
* Gearing at 28% on equity shareholders' funds of #1,313.8
million
* 1.5 pence per share interim dividend
* Proposed return of capital of #185 million (30 pence per share)
CHAIRMAN'S QUOTE
Mr Rodney Price, Chairman of Thistle, said ..........
"I am pleased to report a 20% increase in profit before taxation
and exceptional items to #44.5 million, for the 28 weeks to 12
July, 1998. This very satisfactory result reflects a 10% increase
in revenue per available room and a 9% increase in operating
profit margin.
"The Board is proposing a return of capital of #185 million (30
pence per share).
"Although the general economic outlook is less favourable than it
was six months ago, the Board considers that there is further
opportunity to improve the Group's performance".
KEY OPERATING STATISTICS
28 weeks 28 weeks Change 52 weeks
ended ended % ended
12/07/98 13/07/97 28/12/97
Unaudited Unaudited Audited
RevPar (#)
London 56.10 52.18 7.5 56.68
Regional UK 29.39 26.04 12.9 27.56
------ ------ ------ ------
Group 42.63 38.64 10.3 41.72
====== ====== ====== ======
Occupancy (%)
London 73.6 75.4 (2.4) 78.9
Regional UK 57.4 56.2 2.1 58.8
------ ------ ------ ------
Group 65.4 65.4 - 68.6
====== ====== ====== ======
Average room rate (#)
London 76.22 69.21 10.1 71.84
Regional UK 51.20 46.34 10.5 46.88
------ ------ ------ ------
Group 65.18 59.08 10.3 60.82
====== ====== ====== ======
Hotel gross margins (%)
London 48.2 46.0 4.8 46.2
Regional UK 34.2 30.8 11.0 31.8
------ ------ ------ ------
Group 42.2 39.3 7.4 40.0
====== ====== ====== ======
Group operating margin (%) 37.4 34.3 9.0 35.2
====== ====== ====== ======
CHAIRMAN'S STATEMENT
I am pleased to report a 20% increase in profit before taxation
and exceptional items to #44.5 million, for the 28 weeks to 12
July, 1998.
Hotel gross profit improved by 13% to #71.3 million (1997 - #62.9
million).
Revenue per available room improved by 10.3% to #42.63 reflecting
occupancy unchanged at 65.4% and a 10.3% increase in average room
rate to #65.18 (1997 - #59.08).
Operating profit margins improved by 9% to 37.4% (1997 - 34.3%)
resulting from initiatives to reduce the hotel cost base and to
hold administrative expenses.
The Board has declared an interim dividend of 1.5 pence per share,
up 0.1 pence, an increase of 7% (1997 - 1.4 pence per share).
This will be paid on 19 November 1998 to shareholders on the
register as at 16 October 1998.
REVIEW OF OPERATIONS
LONDON
Hotel gross profit grew by 12% to #46.7 million (1997 - #41.7
million) and the hotel gross profit margin improved 2.2 percentage
points to 48.2%.
Revenue per available room grew by 7.5% with average room rate
growth of 10.1% to #76.22 (1997 - #69.21) reflecting a change in
business mix.
Occupancy was 73.6% (1997 - 75.4%). The decrease reflects the
loss of leisure group room nights from certain European Markets
impacted by the strength of Sterling and also reduced business
from markets in the Far East. However, 25,000 additional
commercial room nights were sold, taking the overall share of room
nights for the commercial segment to 42% (1997 - 38%).
Major capital expenditure projects are underway at the Hospitality
Inn, Bayswater and the Charing Cross Hotel, both of which will be
repositioned as Thistle Hotels and relaunched in October 1998 and
March 1999 respectively. A similar number of rooms were
unavailable for sale due to refurbishment as in 1997.
REGIONAL UK
Hotel gross profit improved by 15.0% to #24.6 million (1997 -
#21.4 million) and the hotel gross profit margin improved by 3.4
percentage points to 34.2%.
Revenue per available room increased by 12.9% to #29.39 (1997 -
#26.04) with a 1.2 percentage point improvement in occupancy to
57.4% combined with a 10.5% increase in the average room rate to
#51.20 (1997 - #46.34). The result reflects strong performances in
a number of cities including Aberdeen, Glasgow, Birmingham and
Liverpool.
ASSET MANAGEMENT
Following a review of the Group's hotel portfolio, 38 small
regional hotels were identified for disposal. Five of these
hotels were sold during the period and contracts were exchanged
for the sale of a further 30 hotels on 3rd September 1998. A
provision for loss on disposal of #31.0 million has been
established at the half year.
The Hospitality Inn, Middlesborough was closed in July due to the
need to undertake structural repairs and a write down of #6.0
million has been taken at the half year.
The Group's retail interests in the Mount Royal property were sold
during the first half giving rise to an exceptional gain of #9.8
million.
The net impact of these property value adjustments is an
exceptional loss of #27.2 million.
A review of the 24 largest hotels representing approximately 70%
of the Group's property value has been undertaken by Christie &
Co. Overall this showed a small surplus to book value which has
not been reflected in the Group's accounts.
Capital expenditure during the half-year totalled #25.2 million.
The priority for further capital expenditure remains the
refurbishment of those rooms and public areas that are not yet at
the standard required for the Thistle brand.
BRANDING
The Group's focus is on establishing the Thistle brand as a strong
four star brand. Following the disposal of the hotels identified
for sale, there will be 44 Thistle Hotels with over 7,500 rooms.
These hotels will be renamed as Thistle together with the city and
location descriptor, and the individual hotel name will be phased
out. For example The Park Cardiff will become the Thistle
Cardiff.
The 13 remaining non Thistle branded hotels will be evaluated over
the next six months to determine where there is an opportunity to
position them as Thistle Hotels.
FINANCING
Interest expense at #18.6 million was up from #17.8 million last
year, but there was a reduction in debt from #373.9 million to
#366.4 million leaving gearing at 28%.
The effective tax rate increased to 19% from 5% as a substantial
proportion of tax losses brought forward have been fully utilised
and a provision has been made in respect of the adverse tax impact
arising on the disposal of hotels.
The Board considers that the Group's financial position is strong
and is proposing a #185 million return of capital to shareholders
(30 pence per share). A circular setting out the details of the
return will be sent to shareholders in the next few weeks. It is
expected that the return of capital will comprise two tranches:
#90 million by November 1998 with the balance of #95 million in
April 1999. The Board believes that this can be achieved whilst
maintaining sufficient flexibility to pursue its investment
strategy and that it will enhance shareholder value through an
appropriate gearing of the hotel portfolio.
INFORMATION TECHNOLOGY SYSTEMS
Progress continues to be made in upgrading and enhancing computer
systems throughout the Group. The Group intends to be Year 2000
compliant by mid 1999.
CURRENT TRADING PROSPECTS
Although the general economic outlook is less favourable than it
was six months ago, the Board considers that there is further
opportunity to improve the Group's performance.
For further information please contact:
Thistle Hotels Plc
Ian Burke, Chief Executive 0171 723 8383
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
THISTLE HOTELS Plc
INTERIM PROFIT & LOSS ACCOUNT
28 weeks ended 12/07/98 Unaudited 28 weeks 52 weeks
Before ended ended
Notes except- Except- 13/07/97 28/12/97
ional ional
items items Total Unaudited Audited
#'m #'m #'m #'m #'m
Turnover 3 168.9 - 168.9 160.2 319.7
Cost of sales (97.6) (6.0) (103.6) (97.3) (192.0)
----- ----- ----- ----- -----
Gross profit 3 71.3 ( 6.0) 65.3 62.9 127.7
Administrative
expenses (8.2) - (8.2) (7.9) (15.2)
----- ----- ----- ----- -----
Operating
profit 63.1 (6.0) 57.1 55.0 112.5
Profit on sale
of fixed assets - 9.8 9.8 0.9 1.3
Provision for
loss on
disposal of
fixed assets - (31.0) (31.0) - -
Interest
payable (18.6) - (18.6) (17.8) (33.2)
----- ----- ----- ----- -----
Profit before
taxation 44.5 (27.2) 17.3 38.1 80.6
Taxation 4 (6.7) (1.8) (8.5) (1.9) (4.3)
----- ----- ----- ----- -----
Profit after
taxation 37.8 (29.0) 8.8 36.2 76.3
Dividends (9.3) - (9.3) (8.6) (25.9)
----- ----- ----- ----- -----
(Loss
transferred)/
profit retained 28.5 (29.0) (0.5) 27.6 50.4
===== ===== ===== ===== =====
Earnings Per
Share 5 1.43p 5.87p 12.36p
Adjusted
Earnings Per
Share 5 6.12p 5.72p 12.15p
THISTLE HOTELS Plc
INTERIM BALANCE SHEET
12/07/98 13/07/97 28/12/97
Unaudited Unaudited Audited
Fixed assets #'m #'m #'m
Tangible assets 1,724.6 1,703.5 1,716.0
----- ----- -----
Current assets
Stocks 1.5 1.7 2.0
Debtors 60.6 54.6 44.8
Investments 0.1 0.1 0.1
Cash at bank and in hand 2.3 5.2 6.1
----- ----- -----
64.5 61.6 53.0
Creditors (falling due within
one year) (94.5) (98.7) (84.9)
----- ----- -----
Net current liabilities (30.0) (37.1) (31.9)
----- ----- -----
Total assets less current
liabilities 1,694.6 1,666.4 1,684.1
Creditors (falling due after
one year) (349.8) (374.9) (369.8)
Provisions for liabilities and
charges (31.0) - -
----- ----- -----
Net assets 1,313.8 1,291.5 1,314.3
===== ===== =====
Capital and reserves
Called up share capital 123.5 123.5 123.5
Share premium account 490.3 490.3 490.3
Revaluation reserve 455.6 456.5 456.2
Other reserves 50.8 50.8 50.8
Profit and loss account 193.6 170.4 193.5
----- ----- -----
Equity shareholders' funds 1,313.8 1,291.5 1,314.3
===== ===== =====
THISTLE HOTELS Plc
INTERIM CASH FLOW STATEMENT
28 weeks 28 weeks 52 weeks
ended ended ended
12/07/98 13/07/97 28/12/97
Unaudited Unaudited Audited
#'m #'m #'m
Cash flow from
operating
activities (see
Note 2) 72.5 55.1 124.0
Returns on
investments &
servicing of
finance
Interest paid (17.5) (16.6) (32.7)
----- ----- -----
Net cash
outflow for
returns on
investments &
servicing of
finance (17.5) (16.6) (32.7)
Tax paid (9.0) (7.1) (10.1)
Capital
expenditure
Purchase of
tangible fixed
assets (25.2) (26.4) (50.0)
Sale of
tangible fixed
assets 4.0 3.1 6.2
----- ----- -----
Net cash
outflow for
capital
expenditure (21.2) (23.3) (43.8)
Equity
dividends paid (17.3) (12.3) (21.0)
----- ----- -----
Cash inflow/
(outflow)
before
financing 7.5 (4.2) 16.4
Financing
New loans - 59.2 59.2
Repayments of
loans (15.0) (45.0) (70.0)
----- ----- -----
(Decrease)/
increase in
debt (15.0) 14.2 (10.8)
----- ----- -----
(Decrease)/
increase in
cash (7.5) 10.0 5.6
===== ===== =====
Reconciliation
of net debt
(Decrease)/
increase in
cash in the
period (7.5) 10.0 5.6
Cash flow from
decrease/
(increase) in
debt 15.0 (14.2) 10.8
----- ----- -----
Change in net
debt resulting
from cash flows 7.5 (4.2) 16.4
Provision for
finance costs
on debenture
stock - (0.2) (0.1)
----- ----- -----
Movement in net
debt in the
period 7.5 (4.4) 16.3
Net debt at
beginning of
period (373.9) (390.2) (390.2)
----- ----- -----
Net debt at end
of period (366.4) (394.6) (373.9)
===== ===== =====
NOTES
1. Basis of preparation
The interim financial information has been prepared on the
basis of the accounting policies set out in the 1997 Annual
Report and has been reviewed by the Company's Auditors,
PricewaterhouseCoopers. Their review report is set out below.
The Group profit and loss account for the year ended 28
December 1997 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 report, have been filed
with the Registrar of Companies.
2. Reconciliation of operating profit to net cashflow from
operating activities
28 weeks 28 weeks 52 weeks
ended ended ended
12/07/98 13/07/97 28/12/97
Unaudited Unaudited Audited
#'m #'m #'m
Operating profit
before exceptional
items 63.1 55.0 112.5
Depreciation 7.6 6.1 14.6
Decrease/(increase) in
stocks 0.5 0.3 (0.1)
Increase in debtors (4.6) (13.6) (3.3)
Increase in creditors 5.9 7.3 0.3
----- ----- -----
Net cash inflow from
operating activities 72.5 55.1 124.0
===== ===== =====
3. Segment analysis
A.
28 weeks 28 weeks 52 weeks
ended ended ended
12/07/98 13/07/97 28/12/97
Unaudited Unaudited Audited
#'m #'m #'m
Turnover by UK region
London 96.9 90.7 182.1
Regional 72.0 69.5 137.6
----- ----- -----
Total group turnover 168.9 160.2 319.7
===== ===== =====
B.
28 weeks 28 weeks 52 weeks
ended ended ended
12/07/98 13/07/97 28/12/97
Unaudited Unaudited Audited
#'m #'m #'m
Gross profit by UK
region
London 46.7 41.7 84.2
Regional 24.6 21.4 43.8
----- ----- -----
Hotels gross profit 71.3 63.1 128.0
Other operating
expenses - (0.2) (0.3)
----- ----- -----
Total group gross
profit 71.3 62.9 127.7
===== ===== =====
4. Taxation
The tax charge for the 28 weeks ended 12 July, 1998 is based
upon the estimated effective tax rate for the full year.
5. Earnings per share
Earnings per share of 1.43 pence (1997: 5.87 pence) are based
on the group's profit after taxation of #8.8 million (1997:
#36.2 million) and on the average number of shares in issue
during the period of 617,296,108 (1997: 617,289,588).
Adjusted earnings per share of 6.12 pence are based on the
group's profit after taxation but before exceptional items of
#37.8 million (1997: #35.3 million). The tax charge used in
this calculation is based on an effective rate of 15% before
the adverse tax impact arising on the disposal of 30 hotels.
REVIEW REPORT BY THE AUDITORS TO THISTLE HOTELS Plc
We have reviewed the interim financial information for the six
months ended 12 July, 1998 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 28 December 1997, and
* we are not aware of any material modifications that should be
made to the interim financial information as presented.
PricewaterhouseCoopers
Chartered Accountants, Leeds
8 September 1998
END
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