Chairman's statement

This was the first full year Whitbread operated as a focused hotel and restaurant company. It follows a number of years in which we have concentrated our resources on growth in attractive, value for money sectors, building strong, distinctive brands with real competitive advantage.

2008/09 was a year of good progress and, against a backdrop of increasingly difficult economic conditions, we delivered industry-leading performance. Revenues at our Hotels and Restaurants business were up 9% and revenues at Costa were up 22% - the fifth year of double-digit growth. Premier Inn added a record 4,553 new rooms to the estate, exceeding our original target. We opened 13 new restaurants and added 296 coffee shops.

During the year, management undertook an organisational review to ensure the business operates efficiently. The hotels and restaurants businesses were combined into one operating unit and we announced a number of key outsourcing activities. We are on track to achieve the promised 25 million cost savings by 2010/11.

Our strong operational performance and investment in the business in 2008/09 provide us with a good platform for the tougher times we have now entered. We are focused on managing Whitbread prudently and tightly in light of the challenges we now face and, while we remain committed to growing the business, we have decided to limit our capital expenditure this year and we aim to achieve cash neutrality.

We go into 2009/10 with a robust balance sheet, market-leading brands in value for money sectors and proven operational expertise.

Dividend
In the light of current trading conditions the Board recommends an unchanged final dividend of 26.90p per share, making a total dividend for the year of 36.55p per share, up 1.5%. The final dividend will be paid on 10 July 2009 to shareholders on the register at the close of business on 8 May 2009. This year we propose to introduce a scrip dividend alternative, subject to shareholder approval, to replace the existing dividend reinvestment plan. Further information, including details of how shareholders can elect to participate should they wish to do so, will be included with my letter to shareholders relating to the forthcoming Annual General Meeting.

Board
I am pleased to report that, as of the beginning of 2009, Patrick Dempsey was appointed to the Board. Patrick joined Whitbread in 2004 and took over the management of Whitbread's budget hotels business in 2005, since when Premier Inn has grown by around 10,000 rooms and undertaken a major rebranding.

Stephen Williams was appointed as Senior Independent Director, replacing Rod Kent who stepped down from the Board on 31 March 2008. Stephen, who is General Counsel and Chief Legal Officer at Unilever and Senior Independent Director at Arriva PLC, joined the Board on 27 April 2008.

People
On behalf of the Board, I would like to thank all our people for their continued commitment, energy and drive to succeed. Our people are the most important part of our business, ensuring that all of our customers receive the standards of service they expect of Whitbread. We work hard to develop our people, providing training and a clear path of progression to encourage them to flourish.

habgood-signature