Jarvis Hotels, the leading UK business and leisure hotel group, today announces a 41.6% decline
in profits before tax and exceptional items to £17.0m in the financial year to 30 March 2002. These results reflect the difficult trading background, especially through the second half of the
financial year.
Highlights includes:
—Turnover reduced by 8.2% for the year as a whole, with commercial markets bearing the brunt of the
decline, particularly in London and the South East—Profit before tax and exceptional items fell by 41.6% to £17.0m (2001: £29.1m), mainly caused by a drop
in occupancy from 68.8% to 65.5%—Exceptional items include £0.7m for the accelerated write-off of web site development costs, £0.5m for
uninsured claims and replacement premiums arising from the collapse of Independent Insurance, £0.45m
issue costs in respect of bank facilities and a £0.6m profit arising on the sale of an hotel—Earnings per share before exceptional items fell by 57.1%, from 14.0p to 6.0p, partly reflecting the
absence of last year’s release of prior year tax provisions as well as the drop in trading levels—In view of the Group’s strong asset base and balance sheet, and healthy cash flow, the Board has
recommended a maintained final dividend of 3.8p, making the total 5.6p for the year, unchanged from 2001.
—Average room rate was only fractionally lower at £53.34 (2001: £53.38), reflecting an active marketing
programme, and the decline in rooms revenue per available room (‘Revpar’) was held to 5% (£34.91 vs.
£36.74)—During the year, Jarvis completed the re -branding of 56 hotels under the Ramada International flag, after
entering into a 20-year agreement with Marriott International Inc. All of these hotels are now actively
marketed through Marriott’s powerful worldwide sales and marketing distribution network, MARSHA—A new division, Jarvis Hospitality Management (‘JHM’) was established to secure operating leases with
limited capital involvement at prime locations throughout the UK. JHM has recently completed leases to
operate two new hotels at Glasgow Airport, one under the Ramada flag, the other as the first UK franchise for
the Travelodge brand, owned by Compass—During the year, major re -development projects were completed at the Ramada Guildford/Leatherhead,
and the Ramada Chester hotels. Both these properties now trade in the four-star commercial and leisure
markets. In addition, there were substantial refurbishment projects at Bristol, Ascot, Edinburgh and
Watford—Five smaller properties that no longer fit the Jarvis brand are being marketed: two of these are under
offer and one has been sold—The Group now operates 67 hotels throughout the UK, with some 6900 bedrooms, over 500 conference
rooms and 32 health clubs.
Business Strategy: Despite the difficult trading background, the Board remains committed to its strategy to deliver shareholder
value by evolving the Company into a hospitality management services group, establishing links with major
international hotel brands, and reducing the emphasis on the ownership of hotel properties. It remains the Board’s intention to market a portfolio of hotels for a sale and leaseback transaction as soon as
conditions are appropriate.
Current Trading: The current year has seen the underlying trends of weekly turnover improve in the last twelve weeks to the
end of May, although they are still below the equivalent period of last year. We have taken strong action to
control costs throughout the business, to limit all expenditure and capital programmes and to maximise cash
generation through carefully targeted marketing initiatives. A further update will be given to shareholders at the Annual General Meeting on 31 July 2002.
Commenting on the results, John Jarvis CVO CBE, Chairman said: “These full year figures reflect the trends I highlighted when reporting our interim results last November. The
series of extraordinary events last year had a material impact on important parts of our business, and in those
difficult circumstances we worked hard to limit the effect on our profits. The Board remains committed to its strategy to take the Company forward to meet the challenges of the
changing market place. Above all, we remain focussed on our goals of restoring profit growth and improving
shareholder value. It is too early to predict the pattern of trading as we approach the peak summer tourist
trading period. We applaud the tremendous contribution to overseas tourism promotion created by the
outstanding success of Her Majesty The Queen’s Golden Jubilee celebrations. The Company is well positioned
to take full advantage of further recovery in our key markets and to pursue every profit growth opportunity.”
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