RNS No 3673m
SCOTTISH HIGHLAND HOTELS PLC
25 June 1999
Interim Results
Highlights
- Room rate up 6% to #54.23, on occupancy down 2%
to 63.5%.
- Overall room yields up 3%.
- Profit before taxation down #0.3m to #1.06m.
- Earnings per share down 15% to 3.4p.
- Maintained interim dividend of 1.4p (net).
- Second half trading and forward bookings showing
improving trend.
Hamish Grossart, Chairman, commented
It is disappointing to be reporting a break in an
otherwise consistent trend of profit growth since 1992.
Demand has been weak in Scotland and Northern England in
winter and spring. Happily, market conditions since May
have been much better and we consider that there are
currently good prospects for the recent trading improvement
continuing.
Chairmans statement
During the six months to 30 April 1999, the group continued
to trade with good operating ratios and, despite lower
sales and profits, operating cash flow was ahead of last
year. Subsequent to the half year end, the bedroom
extension at Stirling Highland and the new leisure club at
Hellaby Hall have been completed on time and on budget.
At the beginning of the current year, we indicated that
trading conditions had weakened. These conditions
persisted until May, but trading since then, coupled with
healthy bookings for the remainder of the year, suggest a
better second half.
Results
Group turnover for the six months to 30 April 1999 was
#9.27 million, some 5 per cent lower than last year, on a
like for like basis. This years figures exclude Pitlochry
Hydro Hotel which was sold in July 1998.
Achieved average room rate rose by 6 per cent to #54.23 on
occupancy 2 per cent lower at 63.5 per cent. Room yields
overall grew by 3 per cent, a good performance given market
conditions, but this was more than offset by lower revenue
from catering and leisure. Against the background of lower
sales, the group reduced overall costs by 1 per cent from
last years level, and in addition, benefited from reduced
interest charges arising on lower borrowings at improved
rates of interest.
Profit before taxation for the seasonally less busy first
half was #1.06 million, some #0.3 million lower than the
corresponding period last year. Earnings per share, after
a lower tax charge, were down 15 per cent to 3.4 pence.
Financial position
Net assets rose to #32.98 million, equivalent to 113 pence
per ordinary share, excluding any of the potential #7.4
million revaluation surplus identified by the groups
property advisers at the last year end.
Operating cash flow in the first half was ahead of the
previous year. Capital expenditure in the six month
period, including expenditure on the new leisure club at
Hellaby Hall and on the bedroom extension at Stirling
Highland, totalled #1.58 million, resulting in total
borrowings of #14.29 million at 30 April 1999. This
represented balance sheet gearing of 43 per cent.
Dividend
The Board has authorised the payment of a maintained
interim dividend of 1.4 pence (net) per ordinary share.
This dividend will be paid on 6 September 1999 to
shareholders on the register on 13 August 1999.
Year 2000
The groups year 2000 programme, details of which were set
out in the 1998 Annual Report, has continued during the
first half of the financial year, with particular emphasis
on our computer hardware upgrade. To date the group has
not identified any business critical issues or faced any
major unforeseen expenditure.
Current trading and outlook
Market demand in Northern England and Scotland weakened at
the end of last year, but has recently shown encouraging
signs of recovery. Lower interest rates are likely to
stimulate consumer and business purchasing as the year
progresses, and this is borne out by our current trading
returns and forward bookings, both of which are showing an
improving trend.
The second half will also benefit from the recent
development capital expenditure and initial trading from
the bedroom extension at Stirling Highland and the new
leisure club at Hellaby Hall is most encouraging. The
board therefore looks to the traditionally busier second
half with greater confidence and considers that there are
currently good prospects for the recent trading improvement
continuing into next year.
Takeover discussions
On 23 June 1999 the company confirmed that preliminary
discussions were taking place with a third party which may
or may not lead to an offer being made for the company. A
further announcement will be made as soon as appropriate.
Hamish Grossart
Chairman
25 June 1999
Group profit and loss account
for the six months ended 30 April 1999
6 months 6 months Year
ended ended ended
30 April 30 April 31 October
1999 1998 1998
#000 #000 #000
Turnover 9,267 10,143 21,848
Cost of sales (7,010) (7,529) (14,950)
______ ______ ______
Hotel operating profit 2,257 2,614 6,898
Administrative expenses (388) (334) (645)
Depreciation (321) (301) (627)
______ ______ ______
Operating profit 1,548 1,979 5,626
Exceptional item: profit
on disposal of hotel - - 204
______ ______ ______
Profit on ordinary activities
before interest 1,548 1,979 5,830
Interest (492) (614) (1,174)
______ ______ ______
Profit on ordinary activities
before taxation 1,056 1,365 4,656
Taxation (74) (177) (471)
______ ______ ______
Profit on ordinary activities
after taxation 982 1,188 4,185
Dividends:
- equity (409) (409) (1,169)
- non equity - (28) (55)
______ ______ ______
Retained profit for the
financial period 573 751 2,961
______ ______ ______
Basic and diluted earnings
per ordinary share 3.4p 4.0p 14.1p
______ ______ ______
Dividend per ordinary share 1.4p 1.4p 4.0p
______ ______ ______
Group balance sheet
at 30 April 1999
30 April 30 April 31 October
1999 1998 1998
#000 #000 #000
Fixed assets
Tangible assets 49,906 49,600 48,413
______ ______ ______
Current assets
Stocks 202 230 206
Debtors 1,314 1,419 1,461
Cash at bank and in hand 22 25 69
______ ______ ______
1,538 1,674 1,736
Creditors: amounts falling
due within one year (7,390) (6,471) (6,623)
______ ______ ______
Net current liabilities (5,852) (4,797) (4,887)
______ ______ ______
Total assets less current
liabilities 44,054 44,803 43,526
Creditors: amounts falling
due after more than
one year (10,500) (13,000) (10,500)
Provision for liabilities
and charges (577) (609) (622)
______ ______ ______
Net assets 32,977 31,194 32,404
______ ______ ______
Capital and reserves
Called up share capital 1,461 2,461 1,461
Share premium account 6,365 6,365 6,365
Capital redemption reserve 1,015 15 1,015
Revaluation reserve 10,771 11,208 10,771
Special reserve 7,370 7,370 7,370
Other reserves 180 180 180
Profit and loss account 5,815 3,595 5,242
______ ______ ______
32,977 31,194 32,404
______ ______ ______
Shareholders funds
Equity 32,977 30,194 32,404
Non-equity - 1,000 -
______ ______ ______
32,977 31,194 32,404
______ ______ ______
Group cash flow statement
for the six months ended 30 April 1999
6 months 6 months Year
ended ended ended
30 April 30 April 31 October
1999 1998 1998
#000 #000 #000
Cash inflow from
operating activities 1,429 1,416 5,190
______ ______ ______
Returns on investments
and servicing of finance
Interest paid (491) (607) (1,163)
Non equity dividend paid - (28) (55)
______ ______ ______
Net cash outflow from
returns on investments
and servicing of finance (491) (635) (1,218)
______ ______ ______
Taxation paid (31) (182) (337)
______ ______ ______
Capital expenditure
Purchase of tangible
fixed assets (1,582) (513) (1,016)
Sale of tangible fixed assets 79 - -
______ ______ ______
Net cash outflow for
capital expenditure (1,503) (513) (1,016)
______ ______ ______
Acquisitions and disposals
Disposal of hotel - - 1,771
______ ______ ______
Equity dividends paid (760) (702) (1,111)
______ ______ ______
Cash (outflow)/inflow
before financing (1,356) (616) 3,279
Financing
Redemption of share capital - - (1,100)
Debt due beyond one year:
Repayment of secured loan - - (2,000)
______ ______ ______
Net cash outflow from financing - - (3,100)
______ ______ ______
(Decrease)/increase in
cash in the period (1,356) (616) 179
______ ______ ______
___________________________________________________________
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash
in the period (1,356) (616) 179
Cash outflow from decrease
in debt - - 2,000
______ ______ ______
Movement in net debt
in the period (1,356) (616) 2,179
Net debt at start of period (12,931) (15,110) (15,110)
______ ______ ______
Net debt at end of period (14,287) (15,726) (12,931)
______ ______ ______
Notes to the interim statement
for the six months ended 30 April 1999
1 Basis of preparation
The new Financial Reporting Standards FRS 10: Goodwill
and Intangible Assets, FRS 11: Impairment of Fixed
Assets and Goodwill, FRS 12: Provisions, Contingent
Liabilities and Contingent Assets, FRS 13: Financial
Instruments and Other Derivatives: Disclosures and FRS
14: Earnings per Share, are applicable for the
financial year ending 31 October 1999. At 30 April
1999 the only impact of the application of these
standards is the disclosure of diluted earnings per
share.
The interim statement for the six months ended 30 April
1999 was approved by the directors on 21 June 1999.
The financial information contained in this interim
report does not constitute statutory accounts for the
group for the relevant periods. The interim report is
unaudited but has been reviewed by the auditors and
their report to the directors is set out on page 9.
The comparative figures for the financial year ended 31
October 1998 are based on the companys statutory
accounts for that financial year. Those accounts have
been reported on by the companys auditors and
delivered to 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.
2 Earnings per share
Basic earnings per share is calculated as follows:
6 months 6 months Year
ended ended ended
30 April 30 April 31 October
1999 1998 1998
Profit for the period
after non equity
dividends 982,000 1,160,000 4,130,000
Weighted average number
of equity shares in
issue 29,228,736 29,228,736 29,228,736
Basic earnings per share 3.4p 4.0p 14.1p
There is no dilution in earnings per share in any of
the periods after allowing for the full exercise of all
outstanding options.
3 Interim dividend
The interim dividend of 1.4 pence per share (1998: 1.4
pence) will be paid on 6 September 1999 to those
shareholders on the register at the close of business
on 13 August 1999.
Notes to the interim statement
for the six months ended 30 April 1999
4 Cash flow statement
Reconciliation of operating profit to cash inflow from
operating activities
6 months 6 months Year
ended ended ended
30 April 30 April 31 October
1999 1998 1998
#000 #000 #000
Operating profit 1,548 1,979 5,626
Depreciation charge 321 301 627
Grant provision release (35) (35) (70)
(Gain)/loss on sale of
tangible fixed assets (79) - 2
Decrease/(increase) in
stocks 4 (3) 21
Decrease/(increase)
in debtors 147 (387) (429)
(Decrease) in creditors (477) (439) (587)
______ ______ ______
Cash inflow from
operating activities 1,429 1,416 5,190
______ ______ ______
5 Interim report
Copies of the interim report have been sent to
shareholders. Further copies are available from the
companys registered office at Regent Court, 70 West
Regent Street, Glasgow, G2 2QZ.
Review report by KPMG Audit Plc
to Scottish Highland Hotels plc
We have reviewed the interim financial information for the
six months ended 30 April 1999 set out on pages 4 to 8
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 had been consistently applied, and making
enquiries of group management responsible for financial and
accounting matters. The review was substantially less in
scope than an audit performed in accordance with Auditing
Standards and accordingly we do not express an audit
opinion on the interim financial information.
On the basis of our review:
7 in our opinion the interim financial information has
been prepared using accounting policies consistent with
those adopted by Scottish Highland Hotels plc in its
financial statements for the year ended 31 October 1998;
and
7 we are not aware of any material modifications that
should be made to the interim financial information as
presented.
KPMG Audit Plc 24 Blythswood Square
Chartered Accountants Glasgow
G2 4QS
25 June 1999
Contacts
Scottish Highland Hotels plc
Hamish Grossart 0468 025209
Alasdair Cameron (Deputy Chairman) 0141 331 6620
or 0468 385564
Buchanan Communications Ltd.
Tim Thompson 0171 466 5000
Isabel Petre 0171 466 5000
END
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