Whitbread profits wiped out by cost of purging assets

Whitbread revealed last week that its profits had nose-dived after a massive write-down on its Pelican restaurants and the demerger of its pubs and bars division.

Pre-tax profit at the group tumbled by 97.6% to just £7m in the 12 months to 2 March, compared with £292m a year earlier.

The massive fall was the result of several costly exceptional items, including a £146.5m goodwill write-off on the soon-to-be-sold Pelican group, a £26.3m write-down on the value of the group, and £25m relating to the demerger of Whitbread's pubs and bars division. Pelican includes the Bella Pasta and Café Rouge chains. Excluding these items, pre-tax profit still fell by 36.2% to £231m.

Group turnover also dipped during the period. It fell by 22.7% to £2b, compared with £2.6b a year earlier.

Despite the overall fall, Whitbread's hotel and restaurant divisions showed some growth.

Sales at its Marriott, Swallow and Travel Inn hotels grew by 3.7% to £581.8m during the year, although operating profit fell by 2.4% to £131.8m as a result of the fall-off in business following 11 September.

Turnover at the Marriott and Swallow hotels increased by 0.4% to £404.5m, with operating profit falling by 8.9% to £71.6m.

The group's Travel Inn hotels did better, with turnover up by 12% to £177.3m and operating profit growing by 6.7% to £60.2m.

Sales at Whitbread's restaurants grew by 6.4% to £1.1b, from £1b a year earlier. Operating profit increased by 13% to £88.2m, compared with £77.9m in 2001.

Turnover at the group's pub-restaurants increased by 6.1% to £576.1m during the year, with operating profit up by 5.5% to £71.3m. Turnover at its high-street restaurants grew by 6.7% to £498.3m with operating profit increasing by 64% to £16.9m.

Sir John Banham, chairman of Whitbread, said the new financial year had "got off to a promising start", although trading was still difficult for its Marriott hotels in London.

by Samantha McClary