Forum Archive Index - September 2001

["DR" <kat47@bigfoot.com>]

05.09.01 :+5.5, (116.5) after H1 profits 28.2m (28.2m) - dividend 1.4p (1.4p). Chairman said: "The first 12 weeks saw a continuation of the strong performance achieved in the second half of 2000. Turnover increased by 11.9% with strong growth in both London and the regions. In the final 16 weeks of the period, however, two external factors had a significant impact on the hotel market and on London in particular. The worldwide economic slowdown, particularly in the US, coupled with the foot and mouth outbreak in the UK have led to a marked reduction in visitors to the UK. This in turn has reduced demand for hotel rooms with the consequence that turnover in the final 16 weeks was level with 2000. Despite this fall-off Thistle has continued to improve its position in terms of revenue per available room (revpar) percentage growth relative to the market. Capital expenditure in the period was £25.6m (2000: £39.9m) with capital expenditure for the current financial year anticipated to be around £42m (2000: £66.3m). The second half year has started slowly in the first six weeks against a strong comparative period last year. London began the first half strongly with turnover up 10.9%, compared to last year, and revenue per available room up 13.2% in the first 12 weeks of the period. A significant reduction in visitors to the UK, as a result of the US economic slowdown and the foot and mouth outbreak in particular, resulted in reductions in turnover and revpar of 2.2% and 1.8% respectively in the final 16 weeks of the period compared to last year. For the first half as a whole, turnover increased by 2.7% to £104.1m (2000: £101.4m) and revpar increased by 3.5% to £64.29 (2000: £62.09). Gross profit before fixed charges improved 2.5% to £61.0m (2000: £59.5m) - a margin of 58.6% (2000: 58.7%). Capital expenditure at £11.4m was spent principally on bedroom upgrades (£7.6m) and hotel infrastructure maintenance (£3.4m). A total of 551 bedrooms were refurbished during the first half, with major room upgrades completed at the Thistle City Barbican, Kings Cross and Euston hotels. REGIONS : The regional hotels also began the first half strongly with turnover up 13.2% and revenue per available room up 14.3% in the first 12 weeks. Being less reliant on inbound US travellers, regional hotels held up better than London over the final 16 weeks of the period, with turnover up 3.8% and revenue per available room up 5.5%. Overall for the first half turnover was up 7.4% to £64.2m (2000: £59.8m) and revenue per available room was up 8.7% to £37.92 (2000: £34.90). Gross profit before fixed charges improved 9.1% to £28.8m (2000: £26.4m) - a margin of 44.9% (2000:44.1%). Capital expenditure at £11.6m was spent on bedroom upgrades (£5.0m), food and beverage outlets (£1.8m), leisure facilities (£2.2m) and infrastructure maintenance (£2.6m). A further 614 bedrooms were refurbished during the first half, with major room upgrades completed at the Thistle Manchester, Luton and Heathrow Park hotels. The shift towards higher yielding corporate business continued in the first half, with corporate guests accounting for 58.5% of room nights sold compared to 52.7% last year. Marketing programmes targeting the corporate business segment contributed to this growth, although some of this change may be due to the external factors mentioned above which had a greater impact on the leisure business than on corporate business. The group continue to focus on reducing reservations costs by channelling more bookings through electronic channels, such as their own website and the Global Distribution Systems (GDS) and also by taking more bookings through our Central Reservations Office (CRO). In the first half website bookings increased by over 200%, GDS bookings by over 25% and CRO bookings by over 40% compared to last year. Room rates were comfortably ahead of last year in both the first and second quarters. The impact of the significant reduction in visitors to the UK is seen in the occupancy figures, which were 2.4 percentage points ahead of last year in the first quarter but 3.9 percentage points down in the second quarter. The Group's tax rate is projected to rise from 20% in 2000 to 25% in 2001. Reducing capital expenditure, and therefore capital allowances, increases the proportion of profit which is subject to tax at a marginal rate of 30% and causes the effective rate to rise to 23%. The further increase to 25% results from proposed changes to tax legislation. Net borrowings increased by £22.8m to £451.7m in the first half principally due to changes in the timing of tax payments, reversing a benefit the Group enjoyed in 2000. Other cash movements, principally lower operating cash flow, were offset by lower capital expenditure... The second half year has started slowly in the first six weeks against a strong comparative period last year. The company's business and balance sheet are in good condition and the board is confident about the group's prospects. Against this background the company believe there will be opportunities to improve and rebalance their current hotel portfolio. However, they remain cautious about short term trading given the general worldwide economic uncertainty."

D.