Directors' report
The directors present their report and accounts for the year ended 4 March 2010
Certain information required for disclosure in this report is provided in other appropriate sections of the Annual Report and Financial Statements. These include the Business Review, the Corporate Governance and Remuneration Reports and the Group Financial Statements and accordingly these are incorporated into the report by reference.
Principal activities and review of business
The principal activity of the Group is the operation of hotels, restaurants and coffee shops. These operations are largely carried out in the UK, although Premier Inn operates one hotel in Ireland, one hotel in India and three hotels in Dubai via a joint venture. Costa operates coffee shops in 24 international markets through joint ventures or on a franchise basis, and, following the acquisition of Coffeeheaven International plc, wholly owned coffee shops in five Central European countries. Details of the Group's activities, developments and performance for the year, the main trends and factors likely to affect its future development and performance and information required by the Companies Act 2006 relating to the business review are detailed throughout the report. Details of the Company's WINcard, containing the key performance indicators can be found here.
Subject to approval at the Annual General Meeting, the final dividend will be payable on 14 July 2010 to shareholders on the register at the close of business on 14 May 2010.
| Results and dividends | |
|---|---|
| Group profit before tax and exceptional items | £223.6m |
| Group profit before tax and after exceptional items | £208.0m |
| Interim dividend paid on 5 January 2010 | 9.65p per share |
| Recommended final dividend | 28.35p per share |
| Total dividend for the year | 38.0p per share |
Board of directors
The directors at the date of this report are listed on the Board of directors page . Richard Baker joined the Board on 7 September 2009, Charles Gurassa stepped down from the Board on 7 September 2009 and all others served throughout the year.
Richard Baker will stand for election and Anthony Habgood, Simon Melliss and Christopher Rogers will stand for re-election at the forthcoming AGM in accordance with the Company's Articles of Association.
Details of the directors' service contracts are given in the remuneration report . None of the non-executive directors has a service contract.
Details of continuing professional development for all directors are given in the corporate governance report.
Share capital
Throughout the year, the authorised share capital has been £319,889,877 divided into 410,170,050 ordinary shares of 76122/153p each (representing 98.47% of the total share capital), 265 million B non-cumulative preference shares of 1 penny each (representing 0.83% of the total share capital) and 224 million C non-cumulative preference shares of 1 penny each (representing 0.70% of the total share capital). However, subject to approval of the new Articles of Association at the Annual General Meeting, the Company will cease to have an authorised share capital in accordance with the Companies Act 2006.
Details of the issued share capital can be found in note 28 of the accounts pdf.
Holders of ordinary shares are entitled to attend and speak at general meetings of the Company, to appoint one or more proxies and, if they are corporations, corporate representatives to attend general meetings and to exercise voting rights. Holders of ordinary shares may receive a dividend and on a liquidation may share in the assets of the Company. Holders of ordinary shares are entitled to receive the Company's annual report and accounts. Subject to meeting certain thresholds, holders of ordinary shares may requisition a general meeting of the Company or the proposal of resolutions at annual general meetings.
Voting rights
On a show of hands at a general meeting of the Company, every holder of ordinary shares present in person or by proxy and entitled to vote has one vote and on a poll every member present in person or by proxy and entitled to vote has one vote for every ordinary share held. Voting rights for any ordinary shares held in treasury are suspended. None of the ordinary shares carry any special rights with regard to control of the Company. Electronic and paper proxy appointments and voting instructions must be received by the Company's Registrars not later than (i) 48 hours before a meeting or adjourned meeting, or (ii) 24 hours before a poll is taken, if the poll is not taken on the same day as the meeting or adjourned meeting.
Unless the directors decide otherwise, a shareholder cannot attend or vote shares at any general meeting of the Company or at any separate general meeting of the holders of any class of shares in the Company or upon a poll or exercise any other right conferred by membership in relation to general meetings or polls if he has not paid all amounts relating to those shares which are due at the time of the meeting.
Restrictions on transfer of shares
There are the following restrictions on the transfer of shares in the Company:
- certain restrictions which may from time to time be imposed by laws and regulations (for example, insider trading laws);
- pursuant to the Company's share dealing code, the directors and senior executives of the Company require approval to deal in the Company's shares;
- where a person with at least a 0.25% interest in a class of shares has been served with a disclosure notice and has failed to provide the Company with information concerning interests in those shares;
- the subscriber ordinary shares may not be transferred without the prior written consent of the directors;
- the directors can, without giving any reason, refuse to register the transfer of any shares which are not fully paid; and
- transfers cannot be in favour of more than four joint holders.
The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of shares or on voting rights.
B shares and C shares
Holders of B shares and C shares are entitled to receive an annual non-cumulative preferential dividend calculated at a rate of 75% of 6 month LIBOR on a value of 155 pence per B share and 159 pence per C share respectively, but are not entitled to any further right of participation in the profits of the Company. They are also entitled to the payment of 155 pence per B share and 159 pence per C share respectively on a return of capital on winding-up (excluding any intra-group reorganisation on a solvent basis).
Except in limited circumstances, the holders of the B shares and C shares are not entitled, in their capacity as holders of such shares, to receive notice of any general meeting of the Company nor to attend, speak or vote at any such general meeting.
Employee share schemes
Whitbread does not have any employee share scheme with shares which have rights with regard to the control of the Company that are not exercisable directly by the employees.
Appointment and replacement of directors
Directors shall be no less than two and no more than twenty in number. Directors may be appointed by the Company by ordinary resolution or by the Board of directors. A director appointed by the Board holds office until the next Annual General Meeting and is then eligible for election by the members.
At every Annual General Meeting the following directors shall retire from office:
- Any director who has been appointed by the directors since the last Annual General Meeting;
- Any director who held office at the time of the two preceding Annual General Meetings and who did not retire at either of them; and
- Any director who has been in office, other than as a director holding an executive position, for a continuous period of nine years or more at the date of the meeting.
Any director who retires at an annual general meeting may offer himself for reappointment by the shareholders.
The Company may by special resolution remove any director before the expiration of his term of office.
Any director automatically stops being a director if (i) he gives the Company a written notice of resignation, (ii) he gives the Company a written notice in which he offers to resign and the directors decide to accept this offer, (iii) all of the other directors (who must comprise at least three people) pass a resolution or sign a written notice requiring the director to resign, (iv) he is or has been suffering from mental ill health and the directors pass a resolution removing the director from office, (v) he has missed directors' meetings (whether or not an alternate director appointed by him attends those meetings) for a continuous period of six months without permission from the directors and the directors pass a resolution removing the director from office, (vi) a bankruptcy order is made against him or he makes any arrangement or composition with his creditors generally, (vii) he is prohibited from being a director under any applicable legislation, or (viii) he ceases to be a director under any applicable legislation or he is removed from office under the Company's Articles of Association.
Amendment of the Company's Articles of Association
Any amendments to the Articles of Association of the Company may be made in accordance with the provisions of the Companies Act by way of special resolution.
Powers of the directors
The business of the Company is managed by the directors who may exercise all the powers of the Company, subject to the Company's Memorandum and Articles of Association, any relevant legislation and any directions given by the Company by passing a special resolution at a general meeting. In particular, the directors may exercise all the powers of the Company to borrow money, issue shares, appoint and remove directors and recommend and declare dividends.
Significant agreements
The Company's facility agreements, details of which can be found in note 22 of the accounts pdf, contain provisions entitling the counterparties to exercise termination or other rights in the event of a change of control of the Company.
Contractual arrangements
The Group has contractual arrangements with numerous third parties in support of its business activities, none of which are considered individually to be essential to its business and, accordingly, it has not been considered necessary for an understanding of the development, performance or position of the Group's business to disclose information about any of those third parties.
Financial Instruments
Information on the Company's use of financial instruments, financial risk management objectives and policies and exposure is given in note 26 of the consolidated financial statements pdf.
Compensation for loss of office
There are no agreements between the Company and its directors or employees providing for compensation for loss of office or employment that occurs as a result of a takeover bid.
Supplier payment policy
The Company has no trade creditors (26 February 2009: nil). The Group keeps to the payment terms which have been agreed with suppliers. Where payment terms have not been specifically agreed, it is the Group's policy to settle invoices close to the end of the month following the month of invoicing. The Group's ability to keep to these terms is dependent upon suppliers sending accurate and adequately detailed invoices to the correct address on a timely basis. The Group had 48 days' purchases outstanding at 4 March 2010 (26 February 2009: 46 days), based on the trade creditors at that date and purchases made during the year.
Major interests
As at 28 April 2010, the Company had received formal notification, under the Disclosure and Transparency Rules, of the following material holdings in its shares:
|
|
No. of shares | % of issued share capital |
|---|---|---|
| BlackRock | 17,667,678 | 10.03% |
| Schroders Plc | 10,531,421 | 5.35% |
| Legal & General | 6,978,034 | 3.97% |
| Directors' share interests The interests of directors and their connected persons at the end of the year in the ordinary shares of 76122/153p each in the Company are shown below: |
|||
|
|
Held at 28/04/2010 | Held at 04/03/2010 | Held at 26/02/2009 |
|---|---|---|---|
| Anthony Habgood | 50,797 | 50,797 | 50,797 |
| Alan Parker | 45,263 | 45,263 | 65,263 |
| Patrick Dempsey | 27,086 | 15,938 | 1,984 |
| Christopher Rogers | 47,976 | 34,821 |
14,319 |
| Richard Baker | 1,450 |
1,450 | -(2) |
| Wendy Becker | 6,000 | 6,000 | 2,500 |
| Philip Clarke | 3,939 | 3,939 | 3,797 |
| Charles Gurassa | n/a | 1,821(1) | 1,821 |
| Simon Melliss | 1,500 | 1,500 | 1,500 |
| Stephen Williams | 4,000 | 4,000 | 4,000 |
| The share
interests shown above include the non-beneficial interests of
Anthony Habgood in 522 ordinary shares of 76122/153p each. (1) at date stepped down from the Board (2) at date of appointment Further details regarding the interests of the directors in the share capital of the Company, including with respect to options to acquire ordinary shares, are set out in the remuneration report. |
|||
Charitable and political donations
No direct charitable donations have been made by the Company. The Whitbread Charitable Trust made donations totaling £41,872 during the year. Costa Limited, a subsidiary of the Company, made a direct donation of £176,307 to the Costa Foundation. Further details about the Costa Foundation can be found on page 31. In addition, the Company organised and supported a number of charitable events and a number of its employees carried out charitable activities during working hours. The value of these activities has not been quantified.
The Company has not made any political donations during the year and intends to continue its policy of not doing so for the foreseeable future.
Employment policies
Whitbread has a range of employment policies covering such issues as diversity, employee wellbeing and equal opportunities.
The Company takes its responsibilities to the disabled seriously and seeks not to discriminate against current or prospective employees because of any disability. Employees who become disabled during their career at Whitbread will be retained in employment wherever possible and given help with rehabilitation and training.
Employee involvement
The importance of good relations and communications with employees is fundamental to the continued success of our business. Each of the Group's operating businesses maintains employee relations and consults employees as appropriate to its own particular needs. Regular internal communications are made to all employees to ensure that they are kept well informed of the performance of the Group. Further information can be found in Our People section.
Directors' indemnity
A qualifying third party indemnity provision (as defined in Section 236 (1) of the Companies Act 2006) is in force for the benefit of the directors.
Purchase of own shares
The Company is authorised to purchase its own shares in the market. Approval to renew this authority for a further year will be sought from shareholders at the 2010 AGM.
The Company did not purchase any of its own shares during the year. 14.7 million shares (representing 7.8% of the total called up share capital at the beginning of the year) are held as treasury shares. This number has not changed throughout the year.
Auditor
Ernst & Young LLP have expressed their willingness to continue in office as auditor of the Company and a resolution proposing their reappointment will be put to shareholders at the 2010 AGM. After proper consideration, the Audit Committee is satisfied that the Company's auditor, Ernst & Young LLP, continues to be objective and independent of the Company. In coming to this conclusion, the Audit Committee gave full consideration to the non-audit work carried out by Ernst & Young LLP.
The Audit Committee has considered what work should not be carried out by the external auditor and have concluded that certain services, including internal audit, acquisition due diligence and IT consulting services, will not be carried out by Ernst & Young LLP.
Disclosure of information to auditor
The directors have taken all reasonable steps to make themselves aware of relevant audit information and to establish that the auditor is aware of that information. The directors are not aware of any relevant audit information which has not been disclosed to the auditor.
Going concern
The Group's business activities, together with the factors likely to effect its future development, performance and position are set out in the Business Review on pages throughout the report. The financial position of the Company, its cash flows, net debt and borrowing facilities and the maturity of those facilities are set out in the Finance Director's report. In addition there are further details in the financial statements on the Group's financial risk management, objectives and policies (note 25) and details of the financial instruments (note 26 and 27). Notes can be found in the Consolidated accounts pdf.
The Group has considerable financial resources and, as a consequence, the directors believe that the Group is well placed to manage its business risks.
The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
Annual General Meeting
The AGM will be held at 2.00pm on 22 June 2010 at the Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE. The notice of meeting is enclosed with this report for those shareholders receiving hard copy documents, and available at www.whitbread.co.uk for those who elected to receive documents electronically. At the 2010 AGM, all voting will be by poll. Electronic handsets will be utilised and results will be displayed on the screen at the meeting.
By order of the Board.
Simon Barratt
General Counsel and Company Secretary
28 April 2010
Registered Office:
Whitbread Court
Houghton Hall Business Park
Porz Avenue
Dunstable
Bedfordshire
LU5 5XE
Registered in England: No. 4120344
The directors' report has been drawn up and presented in accordance with and in reliance upon applicable English company law and any liability of the directors in connection with this report shall be subject to the limitations and restrictions provided by such law. The directors' report includes the Chairman's statement, the Business Review throughout the report and this report.
The Annual Report and Accounts contain certain statements about the future outlook for the Group. Although the Company believes that the expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.