Chairman's statement
Whitbread has come through a difficult economic period very creditably. It is trading well and has opportunities for growth, both in the UK and internationally.
When I wrote to you at this time last year we were all facing a period of unprecedented economic turmoil. As I said at the time, Whitbread had already taken action to prepare itself for a downturn and we entered 2009/10 with a robust balance sheet, market-leading brands in value for money sectors and proven operational expertise. That preparation stood us in good stead.
During 2009/10 Premier Inn took action to reinforce its value for money credentials and to attract more leisure customers against the backdrop of a falling hotels market. This delivered beneficial results, particularly in the second half of the year. Our restaurants also focused on more value for money offers which contributed to improved performance. Costa had a very successful year with strong marketing activity and the introduction of new products including Flat White coffee.
Whitbread has come through a difficult economic period very creditably. It is trading well and has opportunities for growth, both in the UK and internationally. Revenues at our Hotels and Restaurants business increased by 3.2% ending the year on an improving trend. Revenues at Costa increased by 23.4% - an excellent performance. Premier Inn grew, as planned, by over 2,200 rooms while also securing land for future development. We added five new pub restaurants and over 300 new coffee shops.
Our increased focus on cash management and continuing cost reduction programmes were key to our success in the year and the Company has ended the period with a positive cash flow of nearly £110 million - exceeding our target for cash neutrality.
We believe that 2010/11 will continue to be a difficult economic environment for our customers and we will therefore remain focused on prudent and tight management. Growth remains a priority and, in the short term, this will be on a measured basis until we see more sustained signs of recovery.
Chief Executive succession
On 3 March 2010, we announced that Alan Parker has decided to retire on 25 November 2010, his 64th birthday. Alan has made an invaluable contribution to the growth and development of Whitbread during his six years as Chief Executive. Under his leadership Whitbread has grown to become the UK's leading hospitality company with a strong focus on value for money brands.
In anticipation of Alan's retirement, the non-executive directors under my chairmanship, began the search for his successor. We conducted a thorough international search and selection process and had a number of high quality candidates. Details can be found in the Remuneration Report. The result of this process was that we decided to appoint Andy Harrison to succeed Alan. Andy is currently Chief Executive at easyJet PLC, which he joined in 2005, having previously spent nine years as Chief Executive of RAC PLC. He will join us on 1 September and take over from Alan as Chief Executive in late November.
We are delighted with this appointment. Andy has 14 years' proven experience as a successful leader of two significant consumer-facing and service oriented public listed companies. Most recently, at easyJet, he has successfully led and profitably internationalised a leading value for money brand in a highly competitive market. Whitbread has opportunities for growth, both in the UK and through developing our international presence. We believe that Andy's skills and experience are ideally suited to lead Whitbread and to take advantage of these opportunities.
Dividend
The Board recommends a final dividend of 28.35p per share, making a total dividend for the year of 38.00p per share, up by 4%. The final dividend will be paid on 14 July 2010 to shareholders on the register at the close of business on 14 May 2010. Once again, a scrip dividend alternative will be offered and further information on how shareholders can elect to participate in the scrip dividend scheme are available from the registrars or on the Company's website.
Board
Charles Gurassa stepped down from the Board in September 2009 having served for nine years as an independent non-executive director and for much of that time as Chairman of the Remuneration Committee. I would like to thank Charles for his significant input to the Board. He was a major contributor at an extraordinarily important time as Whitbread evolved into a focused hotel and restaurant company.
Also in September 2009, Richard Baker joined the Board as an independent non-executive director. Richard was Chief Executive of Alliance Boots from 2003 until 2007 having led the merger of the Boots Group and Alliance Unichem in 2005. Before that time Richard held a number of roles, including Chief Operating Officer at Asda. He is currently Chairman of Virgin Active and Groupe Aeroplan Europe as well as being an Operating Partner of Advent International. We are delighted to welcome Richard to our Board. His wealth of experience in consumer-facing industries, as well as at senior Board level, will be a great asset to Whitbread.
Our people
Being a truly customer focused organisation requires our people to make everyday experiences feel special to our customers. All our employees are extraordinarily committed to providing excellent service and I would like to thank them on behalf of the Board for their efforts over the past year.
Anthony Habgood
Chairman
28 April 2010
