RNS Number:1706I
Thistle Hotels PLC
3 March 2003
3rd March 2003
PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS
FOR THE 52 WEEKS ENDED 29 DECEMBER 2002
HIGHLIGHTS
* Disposal of 37 hotel businesses for #598.6 including #45 million of
deferred consideration - at approximately book value.
* Second half turnover in owned or leased hotels ahead 1.9% against
second half 2001.
* Free cash flow #22.9 million comparable with prior year.
* Final dividend maintained at 3.4p per share.
* Cost reduction initiatives continuing in response to market
conditions.
* Cash balances at year end #367 million.
Commenting on the results, Chief Executive Officer, Ian Burke said:
"Revenue for the first eight weeks of the current year in our 18 owned or leased
hotels is 1% ahead of the comparable period in 2002. Our policy has been, and
will continue to be, to contain costs and to generate and conserve cash in what
we anticipate will be an uncertain economic climate in the months ahead."
David Newbigging, Chairman, said "Following discussion with the two largest
shareholders, who between them control approximately 66% of the Company, the
Board decided to retain the surplus cash in the Company for the time being.
However, depending on the outcome of the announcement made by BIL International
Limited on 21 February 2003 regarding a possible offer for Thistle, this policy
will be reviewed to seek to ensure that full value for this cash is obtained by
all shareholders."
For further information, please contact
Ian Burke 020 7895 2304
Thistle Hotels Plc
Nick Denton 020 7357 9477
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 10,718 bedrooms of which 5,204 are in owned or leased
hotels and 5,514 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 4,246 rooms in 32 managed 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 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
Results
In my statement last year, I commented that in 2001 we had experienced market
conditions that were the most challenging for travel and tourism since the Gulf
War in 1991. In the event, 2002 has been equally challenging with a continuing
slowdown in the global economy. This was particularly noticeable in the USA from
where a large proportion of our business and leisure travellers originate. The
possibility of conflict in the Middle East, coupled with an unusual level of
volatility and instability in stock markets, created even more uncertainty.
Against this background, one of our top priorities was the generation and
preservation of cash linked to improvements in our balance sheet. Profit before
tax and exceptional items was #30.9 million (2001: #45.5 million). Adjusted
earnings per share, excluding the exceptional profit on sale of fixed assets and
loss on disposal of businesses, were 5.2 pence (2001: 7.0 pence, restated
following the adoption of FRS 19, the new accounting standard for deferred tax).
Basic earnings per share were 4.5 pence (2001: 7.7 pence). These earnings
reflect the challenging trading environment and the loss of profits from the 37
hotel businesses disposed of during the year which were partially offset by
interest income on the cash proceeds from the disposal.
Dividends
The Board is recommending a final dividend of 3.4 pence per share payable on 6
June 2003 to shareholders on the register on 9 May 2003. If approved, this
would result in total dividends for the year of 5.1 pence per share, unchanged
from the previous year.
Finance
Our free cash flow generated from operations in 2002 amounted to #22.9 million
(2001: #23.3 million). Following the repayment of bank loans referred to below,
we had cash on deposit at the year end amounting to #367.0 million. We still
have debentures outstanding of #200 million and #60 million. Accordingly, our
net cash position as of 29 December 2002 was #107.7 million. Following
discussion with the two largest shareholders, who between them control
approximately 66% of the Company, the Board decided to retain this cash in the
Company for the time being. However, depending on the outcome of the
announcement made by BIL International Limited on 21 February 2003 regarding a
possible offer for Thistle described below, this policy will be reviewed to seek
to ensure that full value for this cash is obtained by all shareholders.
Orb Group
As referred to in the Directors' Report last year, and approved at the
Extraordinary General Meeting of shareholders on 4 April 2002, we disposed of 37
hotel businesses to Gamma Four Limited, part of the Orb Group of companies, on 4
April 2002 for #598.6 million including #45 million of deferred consideration -
approximately book value. The transaction also involved Thistle entering into
agreements to continue managing these 37 hotels for up to 30 years. The net
cash proceeds from the disposals were applied in the first instance to repay our
bank loans of some #174 million with the balance being invested in short term
money market deposits.
On 4 November 2002, we felt compelled to issue proceedings against certain
members of the Orb Group to seek recovery of amounts due to us in connection
with the disposal agreements. The relevant members of the Orb Group have served
a defence against our claim, together with a counterclaim, which we are
defending. These proceedings are ongoing. Your Directors are of the opinion
that the Company's claim will be successful and that the Orb Group's
counterclaim can be successfully resisted.
Also on 4 November, Orb a.r.l., part of the Orb Group, announced that it was
considering various strategic options including the possible acquisition of
Thistle but that no discussions had been held with us. No discussions were held
with us subsequent to that announcement and on 9 January 2003, in response to a
deadline imposed by the Panel on Takeovers and Mergers, Orb a.r.l. announced
that they would not be proceeding with an offer for Thistle.
It has since been announced that Orb are in discussions which may lead to a sale
of the 37 hotels they acquired from Thistle in 2002. We are monitoring these
discussions closely.
BIL International Limited ("BIL")
On 21 February 2003 BIL, who control approximately 46% of Thistle, announced
that their Board had met to consider making an offer for the issued and to be
issued share capital of Thistle that BIL do not already own. On 25 February
2003 Thistle despatched a circular to shareholders advising them to take no
action. Under the rules of the Panel on Takeovers and Mergers, the Company is
now in an Offer Period and the non-conflicted Directors - namely all those
Directors other than Tan Sri Quek Leng Chan and Arun Amarsi who are Chairman and
Chief Executive respectively of BIL - will be watching the situation closely.
They will keep shareholders informed.
People
There have been no changes to our Board since those referred to in my statement
last year. However, in 2002 our total employed headcount reduced significantly
as some 3,500 Thistle employees transferred to employment with the Orb Group,
being the majority of employees in the 37 hotels sold to them, although these
same employees remain under Thistle's management. All the General Managers of
hotels owned by the Orb Group and managed by Thistle remain employed by us.
This helps us to maintain consistency across all of the hotels operating under
the Thistle brand.
The arrangements relating to the sale and ongoing management of the 37 hotels
have, inevitably, caused some personal disruption to the individuals concerned.
We are grateful to them, and indeed to all those who work for Thistle, for their
dedication and hard work in a very difficult operating environment.
Prospects
There has been no perceptible improvement in economic conditions worldwide
during the early months of 2003, and the weakness in stock markets demonstrates
their continuing volatility and fragility. The possibility of hostilities in
the Middle East adds to this uncertainty and it is clear that these factors are
having a negative impact across the travel, tourism and hospitality industries
generally. Our policy has been, and will continue to be, to contain costs and
to generate and conserve cash in what we anticipate will be an uncertain
economic climate in the months ahead.
Notwithstanding these cautious but, I believe, realistic remarks, revenue for
the first eight weeks of the current year in our 18 owned or leased hotels,
which will produce the majority of our revenue going forward, is 1% ahead of the
comparable period in 2002. Our London hotel assets are of good quality, are
well located and they underpin a strong balance sheet leaving us in a good
position to take advantage of any improvement in London hotel market conditions.
What we cannot predict is when such an upturn will come.
CHIEF EXECUTIVE'S 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 and on the presentation
of the key revenue statistics discussed below.
SEGMENTAL REVIEW
Owned or Leased Hotels
Thistle owns or leases 18 hotels which have a total of 5,204 bedrooms and which
are predominantly London located.
A creditable result was achieved in 2002, a year characterised by challenging
trading conditions, particularly in the London hotel market. The effect of the
events in 2001 reduced first half performance versus the prior year, with a
13.6% decline in turnover for these hotels. However, trading trends improved
through the year and these hotels delivered 1.9% turnover growth in the second
half year versus the comparable period in 2001. Turnover for the full year for
these hotels was #151.1 million, down 6.8% against 2001.
In a small number of hotels there was turnover growth over the full year
compared to 2001 but turnover declined by almost 13% at our largest hotel, the
Thistle Tower, which has faced much new competitive supply in recent years.
Revenue per available room ("Revpar") in the 18 owned or leased hotels in the
second half of the year was #58.36, an increase of 2.7% compared to the second
half of 2001. This Revpar growth was driven by improvements in occupancy, which
increased by 8.9 percentage points. Average room rate was down by 8.7% as a
result of changes in business mix with fewer business travellers and more lower
spend leisure travellers, combined with a number of tactical room rate
reductions. Revpar in the second half of 2002 compared to the first half was up
5.4%. Revpar for the full year fell 6.8% year-on-year to #56.81 with occupancy
up by 2.6 percentage points to 76.2% and average room rate down by 10.0% to
#74.56.
Managed Hotels
Thistle operates 38 hotels under management contracts which have a total of
5,514 bedrooms, of which 1,268 bedrooms are in 6 hotels located in London.
Revpar in the managed hotels fell 3.8% year-on-year to #39.15, with comparable
occupancy levels at 68.6% and average room rate down by 3.9% to #57.07*. Revpar
in the hotels outside London, which are less dependent upon international
travellers, was comparable with the prior year with particularly good
performances at the Thistle East Midlands, Thistle Middlesbrough and Thistle
Birmingham hotels.
* All numbers are for the full 52 week period
Key Revenue Statistics
The key revenue statistics for the full year for the owned or leased and managed
hotels are set out in the table below. A geographical analysis is also
provided.
52 weeks 52 weeks %
KEY REVENUE STATISTICS 2002 2001 change
STATISTICS BY HOTEL TYPE
___________________________________________________________________________________________________
Owned or leased
Occupancy (%) 76.2 73.6 3.5
Average room rate (#) 74.56 82.86 (10.0)
Revpar (#) 56.81 60.98 (6.8)
Turnover (#m) 151.1 162.2 (6.8)
___________________________________________________________________________________________________
Managed
Occupancy (%) 68.6 68.5 0.1
Average room rate (#) 57.07 59.39 (3.9)
Revpar (#) 39.15 40.68 (3.8)
___________________________________________________________________________________________________
Total hotels
Occupancy (%) 72.3 71.0 1.8
Average room rate (#) 66.01 71.21 (7.3)
Revpar (#) 47.73 50.56 (5.6)
___________________________________________________________________________________________________
The statistics shown above include managed hotels for the full 52 week period
STATISTICS BY GEOGRAPHICAL AREA
___________________________________________________________________________________________________
London
Occupancy (%) 75.9 74.0 2.6
Average room rate (#) 73.33 81.91 (10.5)
Revpar (#) 55.66 60.61 (8.2)
Regions
___________________________________________________________________________________________________
Occupancy (%) 67.7 67.2 0.7
Average room rate (#) 55.53 56.14 (1.1)
Revpar (#) 37.59 37.73 (0.4)
___________________________________________________________________________________________________
CASH GENERATION
The focus throughout the year was cash generation by restricting turnover
declines and maintaining tight control of costs.
Revenue Management
The components of revenue management comprise marketing initiatives that
generate demand, a high performance sales team and effective management of
distribution channels.
In terms of marketing programmes, we introduced a number of initiatives during
the year to target business travellers including Thistle Advantage (a
telemarketing and telesales initiative designed to manage and grow our base of
smaller corporate accounts) and the Thistle Preferred Network Card - a package
of benefits for medium and larger corporate accounts. The domestic short break
leisure market remained relatively strong during the year and our tactical
promotions including "Summer in the City" and new products such as the Thistle
Advance Saver, a pre payment apex style product, contributed to revenue growth
in the leisure segments.
Thistle's brand in the UK market continues to show improvements in the
independent British Hotel Guest Survey produced by BDRC. Following extensive
research with our customers, we launched our brand positioning internally in a
series of road shows to all management and staff. Our staff training and
customer service improvement efforts have centered on putting our guests at the
heart of everything we do and consistently delivering to our customers a high
quality individual experience.
We re-structured our sales team midway through the year away from an individual
hotel approach to an account management approach; changes which we believe will
enable us to win more new accounts in the corporate, conference and meetings
sectors and improve the overall business mix.
Significant changes are occurring generally within channels of distribution.
Customers can book rooms in our hotels in person, or through travel agents, by
phone, fax, via Global Distribution Systems (GDS) or the internet. In 2002
internet bookings grew most rapidly, nearly 120% up on 2001. On average over
#100,000 of revenue was generated each week through internet bookings and this
growth rate has continued in the early weeks of the current financial year. GDS
bookings were down approximately 4% year on year although over 8% of all
bookings are made through this channel.
Cost Containment
Tight control was maintained over costs throughout the year. We reduced our
like for like operating costs by approximately 5% year-on-year despite gains in
occupancy and cost increases in a number of areas including insurance costs,
although we benefited from a one-off property rates rebate of #2.3 million. Our
new central purchasing and distribution arrangement with Scottish & Newcastle
Retail and Wincanton covering the majority of the Group's food requirements is
working well. We have experienced lower food purchasing costs and processing
efficiencies and a significant reduction in the number of food lines purchased
from a more limited number of food suppliers.
Capital expenditure in the year was #8.5 million (2001: #38.3 million), of which
#1.2 million was spent at the managed hotels during the period prior to the
disposal. The significant reduction against the prior year reflects both the
policy to restrict capital expenditures to essential maintenance expenditures
only, and the completion in 2001 as planned of our three year refurbishment
programme.
The net impact of these actions to restrict turnover declines and control costs
has been to generate free cash flow of #22.9 million (2001: #23.3 million).
PEOPLE
Our people are the core of our business, and are critical in delivering the
quality customer service levels we aspire to. Communication with staff at all
levels is encouraged, with regular update forums for all staff. Staff turnover
has again reduced to 48% (2001: 61%) and our 2002 Employee Attitude Survey
showed improved staff satisfaction.
FINANCE DIRECTOR'S REVIEW
Disposal of 37 hotel businesses
The disposal of a group of subsidiary companies which together owned 37 London
and regional hotel businesses to Gamma Four Limited, a member of the Orb Group,
was completed on 4 April 2002 for a total consideration of #598.6 million,
including deferred consideration of #45.0 million. On 4 November 2002 the
Company issued proceedings against Gamma Four Limited and certain other members
of the Orb Group to seek recovery of amounts due in connection with that
disposal. The amount being sought by the Company is approximately #14.6 million
plus interest and costs. The principal sum only is included in debtors at 29
December 2002. On 17 January 2003 the relevant members of the Orb Group served
a defence against the Company's claims, together with a counterclaim, which the
Company is defending. The amount of the counterclaim is asserted to be #54
million. No provision has been made in respect of the counterclaim as, having
taken legal advice, the directors are of the opinion that the counterclaim can
be successfully resisted.
The deferred consideration in the form of a #45.0 million loan note is
receivable on or before 1 January 2005. Interest accrues at a rate of 5% per
annum and is receivable when the principal is repaid. At 29 December 2002 the
interest accrued was #1.7 million. There is no dispute with the Orb Group over
this loan note. Payment has been guaranteed by various members of the Orb
Group. In addition, Thistle holds a second legal charge over the shares in the
Jersey-based parent of the Orb Group company which owns the managed hotels as
security for the loan note. In view of the litigation noted above and other
matters recently reported in the press in respect of the Orb Group, the Board
has decided to defer recognition of the deferred consideration and associated
interest receivable until there is either increased certainty of recovery or the
amounts are realised in cash. Accordingly, the exceptional profit on disposal
of #41.3 million reported in the Interim Report has been restated to a #4.0
million loss on disposal, and interest income to 29 December 2002 of #1.7
million has not yet been recognised in the Profit and Loss Account.
The trading result for the hotels which were disposed of is included until
disposal and is shown separately within the segmental reporting. This amounted
to a profit of approximately #9.0 million. Fee income earned from subsequent
management of the hotels was #5.9 million and is included in turnover.
Thistle's fee income comprises a sales and marketing fee of 2% of rooms revenue,
a management fee of 3% of total revenue and an incentive fee based on EBITDA
performance.
Trading Performance - Profit
Thistle's trading profit and cash flow performance in 2002 reflects both the
continuing difficult market conditions described in the Chief Executive's review
and the sale of the 37 hotel businesses in April 2002.
Turnover for the owned or leased hotels fell by #11.1 million from #162.2
million to #151.1 million and due to the Group's high operational gearing this
reduction was largely reflected in a gross profit reduction of #8.4 million from
#63.8 million to #55.4 million. Throughout the year there has been tight control
of support office costs and a year-on-year reduction of #2.9 million was
achieved. The achievement of improved operational efficiency remains a priority
both within the hotels and the support office functions.
Other Exceptional Items
An exceptional profit of #1.0 million arose during the year on the disposal of
one non-trading property. The relocation of the Leeds support office to new
leasehold premises has been delayed to April 2003, due to building delays beyond
the control of Thistle. This move will generate an exceptional pre-tax profit
on disposal of the current freehold site of some #2.0 million on completion of
its sale in 2003.
Interest
Interest payable of #28.8 million comprised #26.2 million in respect of the
#260.0 million debentures in place throughout the year and #2.6 million in
respect of bank loans and overdrafts for the period up to the disposal of the 37
hotel businesses in April 2002.
Since the disposal, the Group has been cash positive and funds have been
deposited with leading UK banks. Interest receivable on these deposits amounted
to #10.5 million during the year; an average rate of 3.8% per annum.
Profit Before Tax
Profit before tax (PBT) decreased by #21.2 million to #27.9 million but,
adjusting for the exceptional items in each year, the underlying profit before
tax was #30.9 million, a decrease of #14.6 million.
Tax
The Group's overall tax charge of #6.1 million comprised a #9.8 million charge
in respect of current year trading and a credit of #3.7 million in respect of
prior years. The overall effective rate for the year was thus 20% of the profit
before exceptional items. It is not anticipated that any tax charge will arise
on those exceptional items. For the year to December 2003, the tax charge is
expected to revert to the standard rate of 30% of profit before exceptional
items.
Financial Reporting Standard (FRS) 19 (Deferred Tax) has been applied for the
first time in 2002. FRS 19 requires the Group to provide for deferred tax on
certain timing differences where previously no provision has been required. On
the implementation of FRS 19 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 2001 tax
charge has been restated from #9.0 million to #11.7 million to reflect this
change in accounting policy.
Earnings Per Share
Adjusted earnings per share decreased by 26% to 5.2 pence reflecting the reduced
adjusted PBT but benefiting from the reduced effective tax rate described above.
Adjusted EPS is calculated on earnings before the after tax impact of
exceptional items. Basic EPS decreased from 7.7 pence to 4.5 pence.
Cash Flow
Net cash inflow from operating activities of #61.9 million represented 126% of
operating profit. There was a net working capital outflow of #10.0 million
during the year of which #6.1 million is in respect of amounts recoverable as
part of the #14.6 million balance disputed by the Orb Group as described above.
Interest paid of #31.5 million was #2.7 million higher than the profit and loss
account charge due to the payment of amounts accrued at the previous year end.
Interest receipts of #10.2 million were only marginally less than the profit and
loss account income of #10.5 million.
The Group's 2002 cash tax rate was 31%, substantially lower than in 2001 when
tax paid included #21.4 million deferred from 2000. The cash tax rate is the
ratio of corporation tax paid during the year to profit before tax and
exceptional items for the year.
The Group generated cash (after tax and interest) of #30.9 million. This cash
flow, together with proceeds from fixed asset sales, financed capital
expenditure of #8.5 million, the purchase of Thistle shares held by the Employee
Benefits Trust of #1.1 million and the payment of ordinary dividends of #24.6
million.
In 2002 in line with previously reported policy, capital expenditure of #8.5
million was focused on essential replacement and health and safety expenditure.
A net cash inflow after costs of #539.1 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.
Balance Sheet
Following the disposal of the 37 hotel businesses the Group's balance sheet
investment in properties has been reduced from #1.6 billion at December 2001 to
#1.0 billion at December 2002. This represents the remaining 18 hotels, whose
value is substantially higher on an individual hotel basis than those sold due
to their size and location, being mainly in London.
The Directors have carried out an internal review of the carrying value of the
Group's assets based on the prospect of long-term ownership. In the case of one
hotel, The London Ryan, a professional valuation was obtained, which indicated a
write down of #4.8 million. Accordingly an impairment provision has been made
and was charged directly to the Revaluation Reserve.
At the end of the year, the Group held cash of #367.0 million. After deducting
the fixed rate debentures of #259.3 million, net cash was #107.7 million (2001:
net debt of #430.2 million).
Dividend
The dividend policy remains to maintain a payout which is substantially financed
out of free cash flow and reflects the sustainable cash flow and balance sheet
strength of the Group. Although the operational cash generating capacity of the
business has fallen as a result of the sale of 37 hotel businesses, net cash
flow in 2002 remains strong, and hence the Board has decided to recommend
maintaining the final dividend at 3.4 pence per share. This would result in an
unchanged dividend for the year and a total cash outflow of #24.6 million.
Treasury Policy
The Board has regularly reviewed the funding policy of the Group, including the
appropriate levels of equity and debt, management of the Group's liquidity and
the dividend policy. Following the sale of the 37 hotel businesses during 2002
the Treasury policy involved the maintenance of the Group's surplus cash on
deposit with banks of high credit standing. There were no interest rate swaps
outstanding at any time during the year.
Accounting Standards
The Group has not adopted early the accounting requirements of FRS 17
(Retirement Benefits). Had the Group implemented FRS 17 at 29 December 2002 then
the balance sheet would have contained an item for the pensions liability of
#8.5 million net of deferred tax with a corresponding reduction in Group net
assets. We will review our funding commitments at the time of the next
Actuarial Review in May 2003.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP PROFIT AND LOSS ACCOUNT
for the 52 weeks ended 29 December 2002
2002 2001
as restated
Notes #m #m #m #m
Turnover Owned or leased hotels 151.1 162.2
Disposed hotels 33.0 143.1
Management fee income 5.9 -
______ ______
190.0 305.3
Cost of sales (119.7) (198.4)
Gross profit Owned or leased hotels 55.4 63.8
Disposed hotels 9.0 43.1
Management fee income 5.9 -
______ ______
70.3 106.9
Administrative expenses (21.1) (24.0)
______ ______
Operating profit 2 49.2 82.9
Profit on sale of tangible fixed 3 1.0 3.6
assets
Loss on disposal of businesses 4 (4.0) -
Net interest payable (18.3) (37.4)
______ ______
Profit before taxation 27.9 49.1
Taxation 5 (6.1) (11.7)
______ ______
Profit after taxation 21.8 37.4
Dividends 6 (24.6) (24.6)
______ ______
Transfer to reserves (2.8) 12.8
______ ______
Earnings per share 7 4.5p 7.7p
Diluted earnings per share 7 4.5p 7.7p
Adjusted earnings per share 7 5.2p 7.0p
The above results all arise from continuing operations.
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP BALANCE SHEET
at 29 December 2002
2002 2001
as restated
Notes #m #m
Fixed assets
Tangible assets 999.4 1,627.3
Investments 1.1 -
_______ _______
1,000.5 1,627.3
_______ _______
Current assets
Stocks 0.4 1.2
Debtors: amounts falling due within one year 38.7 28.1
Debtors: amounts falling due after more than one year 46.7 -
Cash at bank and in hand 367.0 3.1
_______ _______
452.8 32.4
Creditors: amounts falling due within one year (52.9) (69.9)
_______ _______
Net current assets / (liabilities) 399.9 (37.5)
_______ _______
Total assets less current liabilities 1,400.4 1,589.8
Creditors: amounts falling due after more than one year (306.0) (433.3)
Provisions for liabilities and charges (78.3) (133.3)
_______ _______
Net assets 1,016.1 1,023.2
_______ _______
Equity share capital and reserves
Called up share capital 123.7 123.6
Share premium account 398.9 398.5
Revaluation reserve 9 290.9 441.5
Other reserves 9 13.4 50.8
Profit and loss account 9 189.2 8.8
_______ _______
Total equity shareholders' funds 1,016.1 1,023.2
_______ _______
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
GROUP CASH FLOW STATEMENT
for the 52 weeks ended 29 December 2002
2002 2001
Notes #m #m
Net cash inflow from operating activities 8 61.9 112.4
Returns on investments and servicing of finance
Interest paid (31.5) (40.6)
Interest received 10.2 -
Taxation paid (9.7) (24.0)
Capital expenditure
Purchase of tangible fixed assets (8.5) (38.3)
Sale of tangible fixed assets 1.6 13.8
Purchase of investments (1.1) -
_______ _______
Free Cash Flow 22.9 23.3
Disposals
Disposal of businesses 4 539.1 -
Equity dividends paid (24.6) (24.6)
_______ _______
Cash inflow / (outflow) before management of
liquid resources and financing 537.4 (1.3)
Management of liquid resources
Net increase in seven day deposits (351.0) -
Financing
Issue of share capital 0.5 -
Loans repaid (174.0) -
_______ _______
Increase / (decrease) in cash 12.9 (1.3)
_______ _______
GROUP RECONCILIATION OF NET CASH / (DEBT)
for the 52 weeks ended 29 December 2002
2002 2001
#m #m
Increase / (decrease) in cash in the period 12.9 (1.3)
Cash flow from increase in liquid resources 351.0 -
Cash flow from repayment of loans 174.0 -
_______ _______
Movement in net cash and debt in the period 537.9 (1.3)
Net debt at the beginning of the period (430.2) (428.9)
_______ _______
Net cash / (debt) at the end of the period 107.7 (430.2)
_______ _______
THISTLE HOTELS Plc
PRELIMINARY ANNOUNCEMENT
OTHER GROUP FINANCIAL STATEMENTS
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the 52 weeks ended 29 December 2002
2002 2001
as restated
Notes #m #m
Profit for the financial year 21.8 37.4
Impairment provision (4.8) -
_______ _______
Total recognised gains and losses relating to the year 17.0 37.4
_______
Prior year adjustment 1 (133.3)
_______
Total recognised gains and losses recognised since last
annual report
(116.3)
_______
GROUP RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the 52 weeks ended 29 December 2002
2002 2001
as restated
#m #m
Total recognised gains and losses relating to the year 17.0 37.4
Dividends (24.6) (24.6)
Issue of share capital 0.5 -
_______ _______
Net change in the year (7.1) 12.8
_______ _______
Opening equity shareholders' funds as previously 1,156.5 1,141.0
reported
Prior year adjustment (Note 1) (133.3) (130.6)
_______ _______
Opening equity shareholders' funds as restated 1,023.2 1,010.4
_______ _______
Closing equity shareholders' funds 1,016.1 1,023.2
_______ _______
The figures for the 52 weeks to 29 December 2002 are an abridged version of the
Group's statutory accounts which will be delivered to the Registrar of Companies
in due course. The auditors' report on those accounts was unqualified and did
not contain a statement under section 237(2) or (3) of the Companies Act 1985.
The figures for the 52 weeks to 29 December 2002 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 Group's statutory accounts for the 52 weeks ended 30 December 2001 have been
filed with the Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985. 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 FRS 19.
The Board of Directors approved this preliminary announcement on 28 February
2003.
1. Prior year adjustment
Financial Reporting Standard 19 (Deferred Tax) has been adopted for the first
time 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 year ended 30
December 2001 have been restated accordingly. The effect of the change in
policy was to increase the tax charge for the year ended 30 December 2001 by
#2.7 million. The effect of the change in policy on the results for the year
ended 29 December 2002 has been to credit #53.8 million to the net loss on
disposal of businesses and to decrease the tax charge for the year by #1.2
million.
2. Operating Profit
2002 2001
#m #m
Operating profit is stated after charging:
Depreciation and amortisation 22.7 32.6
Repairs and renewals 5.6 8.4
_____ ____
3. Profit on sale of tangible fixed assets
2002 2001
#m #m
Profit on sale of tangible fixed assets 1.0 3.6
_____ ____
During the year the Group realised an aggregate net profit of #1.0 million
(2001: #3.6 million) on the disposal of one ancillary property (2001: one
hotel). There was no tax charge attributable to this profit (2001: #nil). The
sale proceeds net of selling costs were #1.4 million (2000: #10.4 million).
4. Profit on disposal of businesses
On 4 April 2002 the Group disposed of 37 hotel businesses for an initial
consideration of #553.6 million resulting in an exceptional loss after disposal
costs of #4.0 million. The loss reflects the release of deferred tax liabilities
of #53.8 million provided under FRS19 for these disposed hotel businesses.
Initial net sale proceeds of #539.1 million after costs of #4.0 million and cash
balances disposed of #2.0 million were received during the year. A further #8.5
million of consideration in respect of working capital balances is receivable
but is the subject of a dispute as described below.
On 4 November 2002, the Company issued proceedings against Gamma Four Limited
and certain other members of the Orb Group to seek recovery of amounts due in
connection with that disposal. The amount being sought by the Company is
approximately #14.6 million plus interest and costs and the principal sum is
included in debtors at 29 December 2002. On 17 January 2003, the relevant
members of the Orb Group served a defence against the Company's claims, together
with a counterclaim, which the Company is defending. The amount of the
counterclaim is asserted to be #54 million. No provision has been made in
respect of the counterclaim as, having taken legal advice, the directors are of
the opinion that the counterclaim can be successfully resisted.
Deferred consideration in the form of a #45.0 million loan note is receivable on
or before 1 January 2005. Interest accrues at a rate of 5% per annum and is
receivable when the principal is repaid. At 29 December 2002 the interest
accrued was #1.7 million. There is no dispute with the Orb Group over this loan
note. Payment has been guaranteed by various members of the Orb Group and, in
addition, Thistle holds a second legal charge over the shares in the
Jersey-based parent of the Orb Group company which owns the managed hotels as
security for the loan note. In view of the litigation noted above and other
matters recently reported in the press in respect of the Orb Group, the Board
has decided to defer recognition of the deferred consideration and associated
interest receivable until there is either increased certainty of recovery or the
amounts are realised in cash. Accordingly the exceptional profit on disposal
previously reported in the Interim Report has been restated to a #4.0 million
loss on disposal, and interest income to 29 December 2002 of #1.7 million has
not yet been recognised in the Profit and Loss Account.
5. Taxation
2002 2001
as restated
#m #m
Corporation tax 9.3 11.0
Deferred tax 0.5 2.7
_____ ____
9.8 13.7
Adjustments in respect of previous years
Corporation tax (2.0) (2.0)
Deferred tax (1.7) -
_____ ____
6.1 11.7
_____ ____
6. Dividends
2002 2001
#m #m
Interim paid of 1.7 pence (2001: 1.7 pence) per share 8.2 8.2
Final proposed of 3.4 pence (2001: 3.4 pence) per share 16.4 16.4
_____ ____
24.6 24.6
_____ ____
7. Earnings per share
Earnings per share of 4.5 pence (2001: 7.7 pence) are based on the
Group's profit after taxation of #21.8 million (2001: #37.4 million) and on the
average number of shares in issue during the period of 482.0 million (2001:
481.9 million).
Diluted earnings per share of 4.5 pence (2001: 7.7 pence) takes into
account, in addition to the average number of shares noted above, dilutive
potential ordinary shares arising from employee share options of 0.4 million
(2001: 0.3 million).
Adjusted earnings per share of 5.2 pence (2001: 7.0 pence) are based on
the Group's adjusted profit after taxation of #24.8 million (2001: #33.8
million) which excludes the net exceptional loss of #3.0 million (2001: profit
of #3.6 million) and the attributable taxation of #nil (2001: #nil).
8. Reconciliation of operating profit to net cash inflow
from operating activities
2002 2001
#m #m
Operating profit 49.2 82.9
Depreciation and amortisation 22.7 32.6
Profit on disposal of fixed assets - (0.2)
Decrease in stocks 0.2 0.2
(Increase) / decrease in debtors (14.9) 2.9
Increase / (decrease) in creditors 4.7 (6.0)
______ ______
Net cash inflow from operating activities 61.9 112.4
______ ______
9. Movements on reserves
2002 2001
#m #m
Revaluation reserve
At the beginning of the year 441.5 446.0
Impairment provision (4.8) -
Transfer of depreciation (1.0) (1.4)
Revaluation surplus realised on disposals (144.8) (3.1)
______ ______
At the end of the year 290.9 441.5
______ ______
Other reserves
At the beginning of the year 50.8 50.8
Realised on disposals (37.4) -
______ ______
At the end of the year 13.4 50.8
______ ______
9. Movements on reserves (continued) 2002 2001
#m #m
Profit and loss account
At the beginning of the year as previously reported 142.1 122.1
Prior year adjustment (Note 1) (133.3) (130.6)
______ ______
At the beginning of the year as restated 8.8 (8.5)
(Loss)/profit for the financial year (2.8) 12.8
Transfer of depreciation 1.0 1.4
Revaluation surplus realised on disposals 144.8 3.1
Other reserve realised on disposals 37.4 -
______ ______
At the end of the year 189.2 8.8
______ ______
This information is provided by RNS
The company news service from the London Stock Exchange
END
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