Whitbread (LSE:WTB), in its interim results statement, reported adjusted profit before tax of £287m for the 26 weeks to 27 August, down 9% from £316m a year earlier.
Revenue for the half rose 2% to £1,572m, while profit before tax fell 62% to £109m after the Premier Inn owner booked £178m of adjusting items, up sharply from £28m a year earlier - these were mainly non-cash tied to the group's strategic review and growth plan, which leads to the conversion of branded restaurants into hotel-only food and beverage offerings.
Premier Inn UK and Ireland accommodation sales rose 3% and RevPAR grew 2%, with the group outperforming the midscale and economy market by 2 percentage points on RevPAR and widening its RevPAR premium to £7.75.
UK&I food and beverage sales fell 9%, which management said was in line with expectations given the AGP transition; segment adjusted profit before tax fell 6% to £313m, with margins down to 22.0% from 23.4%.
Premier Inn Germany delivered double-digit accommodation sales growth, with total sales up 19% in local currency, supported by nearly 1,800 new room openings, though the segment's adjusted loss before tax widened to £8m from £3m, reflecting in-year costs linked to new openings.
Net debt stood at £663m at the half-year end, up from £563m a year earlier, with lease-adjusted leverage at 3.4x against 3.2x previously, reflecting continued AGP investment and the phasing of planned property disposals.
The board declared an interim dividend of 36.4p per share, unchanged from the prior year.
"Whitbread is a business with increasing strategic momentum," said chief executive Dominic Paul, pointing to the extension of the AGP, which he said would "deliver a great experience for guests and double-digit returns for shareholders."
All 197 remaining branded restaurants were closed in September as part of the AGP extension, with planning applications for conversions now under way; the group has agreed the sale of 173 sites, with offers received on most of the remainder.
Whitbread received £53m of property-related proceeds in the year to date and still expects to recycle £450m to £500m this year while keeping net capex between £200m and £300m, part of a wider plan targeting £2bn of free cash flow available for shareholder returns by FY31.
In the five weeks since the half-year end, UK&I accommodation sales rose 4.5% and RevPAR grew 3.2%, while Germany accommodation sales were up 31.2% in local currency; management said forward bookings remain positive and it remains confident in the full-year outlook.
The company also noted a requisitioned general meeting, with the board recommending shareholders vote against a resolution proposed by Corvex.