WHITBREAD PLCSTAKEHOLDER REVIEW 2001/02SHAREHOLDERS, CUSTOMERS,EMPLOYEES, SOCIETY

‘STRONG TRADINGRESULTS, VALUECREATION AND PROMISINGOUTLOOK’

THE NEW FINANCIALYEAR IS OFF TO A PROMISING START –THE OUTLOOK FOR OUR MARKETS IS POSITIVE

These were strong trading results withmost of our brands exceeding 5% like-for-like sales growth.

Restaurants and David Lloyd Leisurealso were ahead of their 10% earningsgrowth targets and made excellentprogress in terms of ROCE. Profit in ourLondon hotels was held back significantlyin the aftermath of September 11 butprompt management action led tocontinuing market out-performance.

Management has set about improvingthe returns from the continuingbusinesses with considerable vigourand these results show the first signsof their success.

Hotels grew sales in a difficult marketand virtually completed the integrationand conversion of the Swallow hotels.Core Marriott increased operating profit and a nationwide programme to improve efficiency is expected to save £10 million within Marriottin the current financial year. Travel Inn grew sales, like-for-like sales andoperating profit.

WHITBREAD CONTINUING BUSINESSES

SALES(£M)

00/01

1,709

99/00

1,463

01/02

1,822

EBITDA(£M)

00/01

354

99/00

285

01/02

374

OPERATING PROFIT(£M)

00/01

236

99/00

188

01/02

250

Restaurants grew like-for-like sales byover 5% in its continuing businesses,increased returns and completed itsbrand review, leading to the decisionto sell the Pelican Group. The divisionalso undertook a reorganisation toreduce future operating costs.

David Lloyd Leisure grew sales,operating profit, margin, and returnsas well as making good progress inensuring its new clubs generatemature levels of return more quickly.

CORPORATE TRANSACTIONSSome £3 billion of corporatetransactions in the last 30 monthshave completely transformedWhitbread and the prospects for the business.

During the year these transactionsincluded the demerger of Pubs & Bars,the disposal of 45 pub restaurants and the decision to dispose of thePelican Group.

Net proceeds generated during the year were £1.7 billion with the Pelicandisposal yet to come. £1.1 billion,equivalent to £2.30 per share, wasreturned to shareholders in June 2001,with the balance being used to reducegroup debt and invest in future growth.Goodwill of £147 million relating to thePelican Group, previously written off toreserves, has been charged to the profitand loss account in this year. This is a non-cash item and has no impacton shareholders’ funds. The net effectof the year’s corporate transactions hasbeen to generate a surplus over bookvalue of £422 million.

CURRENT TRADING AND OUTLOOKThe new financial year has got off to a promising start. Marriott is stillexperiencing softness in Londonalthough yield has been sustainedahead of the market. Our other majorbrands continue in like-for-like salesgrowth ahead of the 5% target.

The outlook for our markets is positivewith growth expected in the UKeconomy and consumer confidenceremaining high. Our brands are strongand we are continuing to invest intheir future.

The board is confident that thetransformed Whitbread will build on the success already achieved and will continue to make goodprogress towards the achievementof our ambitious financial targets.

THE BOARDSam Whitbread retired as a directorin September 2001 after 29 years as a non-executive director – 8 of them as chairman. His contribution over the years was invaluable both in formal board meetings and the many hundreds of informal contactshe had with Whitbread people.

John Padovan will retire from theboard at this year’s Annual GeneralMeeting. I should also like to thankhim for his valued work as a non-executive director and chairman of the Whitbread Pension Trustees.

WHITBREAD PEOPLEThis has been a second year ofmomentous change at Whitbread.

On behalf of our shareholders I should like to thank all of our peoplefor the skill, hard work and sheerprofessionalism which have deliveredsuch strong results.

DIVIDENDA final dividend of 12.75 pence isproposed which will make a totaldividend for the year of 17.8 pence.This will be paid on 12 July 2002 toshareholders on the register at theclose of business on 10 May 2002.

Sir John BanhamChairman

30 April 2002

ExceptionalSurplus over profit and loss

Impact of current year corporate transactions (£m) book value account

Pubs & Bars– Surplus over book value 477 nil– Costs (25) (25)

Net impact – Pubs & Bars 452 (25)

Pelican– Write down (26) (26)– Goodwill – previously written off to reserves – (147)– Reorganisation (2) (2)

Net impact – Pelican (28) (175)

Other – including taxation (2) (2)

Surplus over book value/exceptional items 422 (202)

The Whitbread annual review aims to give shareholders a clear and concise overview of the group’s business and prospects but does not contain sufficient information to allow for as full an understanding of the results and affairs of the group as would be provided by the full Whitbread 2001/02 Annual Report and Accounts.

The full Whitbread report and accounts is published on the company’s website at www.whitbread.co.uk

It can also be obtained, free of charge, by completing and returning the reply-paid card attached to the enclosed voting form.

SHAREHOLDERS:MAKING ASSETSEARN THEIR KEEPSOME £3 BILLION OF CORPORATE TRANSACTIONSHAVE COMPLETELY TRANSFORMED WHITBREADAND THE PROSPECTS FOR THE BUSINESS. THE NETEFFECT OF THE YEAR’S CAPITAL TRANSACTIONSHAS BEEN TO GENERATE A SURPLUS OVER BOOKVALUE OF £422 MILLION.

1,738new rooms

Total now15,924

OPERATING REVIEW

HOTELSHotels grew sales by 3.7% but sawoperating profit decline by 2.4% as a result of lower yields followingSeptember 11. Return on capitalemployed improved in core Marriottbut declined overall for the samereason. Travel Inn grew like-for-likesales by 3.6% and like-for-like ROCE by 0.5% point to 15.0%.

Marriott/SwallowSALES £404.5M +0.4%LIKE-FOR-LIKE SALES –0.1%OPERATING PROFIT £71.6M –8.9%ROCE 5.8% –0.8% Point

To maintain sales in a difficult marketwas a considerable achievement.The operating profit decline of 8.9%also compared favourably with the 4-star market in general. These results were achieved by compensating forthe decline in US visitors, especially to London, with leisure business at lower short-term rates. The long-term positioning of Marriottas an upscale hotel brand, therefore,has been protected.

The 36 Marriott hotels that havecarried the brand for more than two years, grew operating profit andmargin despite a slight decline inoccupancy and room rates. Annualoperating profit per room grewfrom £7,600 to £7,900.

The 10 Swallow hotels that wereconverted to the Marriott brand in the2000/01 financial year grew sales by13% and achieved a 9% yield premiumto the 4-star market. The 12 hotels that were converted in 2001/02 grew sales by 6% and have achieved a 4%premium since conversion.

Travel InnSALES £177.3M +12%LIKE-FOR-LIKE SALES +3.6%OPERATING PROFIT £60.2M +6.7%ROCE 12.5% –0.8% Point

The Travel Inn brand added 1,738 newrooms and 20 new units during theyear bringing the totals to 15,924rooms and 282 hotels. This makesTravel Inn the UK’s leading brandedhotel network. Unprompted brandawareness grew from 18% to 29%.

Overall occupancy fell slightly from82% to 81% mainly as a result of fewer visitors to London. The provincialnetwork of 200 hotels maintainedoccupancy at 82.2%. Achieved roomrate grew by 4.4% to £38.59 and yieldgrew 1.9% to £31.29. Like-for-like returnon capital employed also grew from14.5% to 15%.

Travel Inn’s new reservation systemwas introduced across the networkgiving on-line access to the entireroom stock. Room bookings via thewebsite are now running at up to 15% of the weekly total leading to cost and occupancy benefits.

Whitbread PLC 02/03

TURNOVER OF THE UK HOTEL MARKET

(£BN AT CURRENT PRICES)

Source: ONS/Mintel

2003

12.1

20042001

10.6

2000

10.0

1999

9.1

12.8

2002

11.4

RESTAURANTSWhitbread Restaurants grew sales by 6.4%, operating profit by 13% and return on capital employed by1.5% point.

Pub RestaurantsSALES £576.1M +6.1%LIKE-FOR-LIKE SALES +5.6%OPERATING PROFIT £71.3M +5.5%ROCE 9.3% +0.6% Point

Operating profit growth of 5.5% was a mix of a 9.6% increase in BrewersFayre and a 3.4% decline in Beefeater as trading weeks were lost and costsincurred through the new brandconversion programme.

Brewers Fayre had a highly successfulyear growing like-for-like sales by 5.6%and operating margin from 14.8% to15.0%. The Brewster’s brand won theTommy’s award as the UK’s most family-friendly restaurant and 14 new units were added bringing the total to 134.

Beefeater also continued itssegmentation strategy. Some 16% of the estate was disrupted by thisprocess leading to increased costs and the decline in operating profit.The comparable Beefeater estate grew sales by 5.4% and operating profit by 12.6%

High Street RestaurantsSALES £498.3M +6.7%LIKE-FOR-LIKE SALES +3.3%OPERATING PROFIT £16.9M +64%ROCE 12.9% +6.5% Points

Overall, like-for-like sales growth,excluding Pelican, exceeded 5%.Although Pizza Hut was again thebiggest contributor to the 64% growthin operating profit, both T.G.I. Friday’sand Costa made significant progress,particularly in the second half of theyear. Like-for-like sales were up 6.0% in Pizza Hut, 4.4% in T.G.I. Friday’s and 5.7% in Costa.

Some 72 poorly performing sites were disposed of during the year andin October, Whitbread Restaurantsannounced the decision to dispose of the Pelican brands including CaféRouge and Bella Pasta.

SPORTS, HEALTH AND FITNESSSALES £165.6M +19%LIKE-FOR-LIKE SALES +15%OPERATING PROFIT £34.4M +22%ROCE 7.6% +1.0% Point

David Lloyd Leisure exceeded its salesand profit targets and grew return on capital employed by 1.0 percentagepoint. There was a particularly strongperformance from the new andmaturing clubs which led to a furtherimprovement in operating margin to 20.8%.

Five new clubs were opened during the year bringing the total to 49. Firstyear memberships are running atover double previous levels followingeffective pre-opening marketing.This is expected to reduce the timetaken to reach mature club ROCElevels in excess of 16%.

The total number of David LloydLeisure club members grew from220,000 to 261,000. Retention rates fell slightly to 73% following theintroduction of a new 3 monthcontract but remained well above the industry average of 60%. Membersatisfaction scores increased duringthe period by 3.7% to 74.7%. Ten sites were in the pipeline at the end of the year with five planned to open in 2002/03.

OTHERPubs & Bars turnover for the first 10weeks of the financial year prior to thedemerger in May was £125.9 millionwith operating profit of £30.5 million.

Beer and other drinks turnover of £78.3 million relates to Whitbread’scontinuing contractual relationshipwith Heineken and operating profitof £15.8 million relates, primarily, toWhitbread’s 25% holding in BritanniaSoft Drinks.

David ThomasChief Executive

UK PRIVATE HEALTH & FITNESSCLUB MEMBERS

(MILLIONS)

2003

4.25

20042001

3.40

2000

2.86

1999

2.39

4.68

2002

3.81

Source: Mintel

TURNOVER OF UK EATING-OUT MARKET

(£BN AT CURRENT PRICES)

2003

28.1

20051999

24.2

1997

22.6

1995

18.5

31.0

2001

25.7

Source: Taylor Nelson Sofres/Whitbread

Whitbread PLC 04/05

FINANCE REVIEW

YEAR OVER YEAR COMPARISONS OF PERFORMANCEThe last two years have been a period of transformation for Whitbread,inevitably hindering year over yearcomparisons of performance. Duringthis time the following strategicinitiatives have been completed:– the disposal of Whitbread Beer

Company in May 2000;– the disposal of Whitbread’s 50%

interest in the First Quench off-licence joint venture in October 2000;

– the demerger of the Pubs & Barsdivision in May 2001.

These transactions have created value for shareholders and enabledWhitbread to focus on those growthsegments of the UK leisure marketwhere the group already occupiesleading positions.

Wherever possible, the results in this report are presented in a waywhich helps the measurementof performance trends in continuingWhitbread. Continuing Whitbreadrepresents all businesses within the group at the end of the financialyear. It excludes the continuing beer activity.

Operating profit and EBITDA figures,where referred to in this review,are stated before exceptional items.

Like-for-like sales figures exclude salesof outlets first opened or disposed ofduring 2000/01 or 2001/02.

Proforma profit and loss accountfor continuing Whitbread (£m)

2001/02 2000/01

Turnover including joint ventures 1,822 1,709

Operating profit before exceptional items 250 236Interest (63) (62)

Profit before tax and exceptional items 187 174Taxation (56) (55)

Profit after tax before exceptional items 131 119

TURNOVER On a like-for-like basis, turnoverincluding joint ventures increased by4.2%. Total turnover of continuingWhitbread increased by 6.6%. As aresult of the demerger and disposalsdescribed earlier, total turnoverincluding joint ventures fell by 30%.

OPERATING PROFIT Operating profit before exceptionalitems of continuing Whitbreaddivisions increased by 5.9%. The profitcontribution of each business isdescribed in the Operating Review.The results of all Travel Inns operatedby Whitbread are now reported under ‘Hotels’. Previously, Travel Inns adjacent to Restaurants’ outlets andDavid Lloyd Leisure clubs werereported within the results of thosedivisions. The figures for last year have been adjusted accordingly. Totaloperating profit before exceptionalitems declined by 35%, reflecting thedemerger and disposals.

EARNINGS BEFORE INTEREST, TAX,DEPRECIATION AND AMORTISATION(EBITDA) EBITDA is a good indicator of cashgeneration. EBITDA for continuingWhitbread grew by 5.6%.

INTERESTThe net interest charge fell by £26.3 million to £67.4 million. Thisreduction reflects a lower level of netdebt and lower interest rates this year. Net interest was covered 4.2 times by operating profit beforeexceptional items.

PROFIT BEFORE EXCEPTIONAL ITEMS AND TAX On a proforma basis (see tableopposite), profit before exceptionalitems and tax for continuing Whitbreadwas up by 7.6%. Total profit beforeexceptional items and tax, which wassignificantly affected by the disposalsand demerger, was down by 36%.

EXCEPTIONAL ITEMSA further £25 million of reorganisationand transaction costs, relating to the demerger of Pubs & Bars, werecharged as non-operating exceptionalitems in the year. A charge of£26.3 million for impairment of certain high street restaurantsoperated by our Pelican business wastaken, as an operating exceptionalitem, in the year. Following the decision to dispose of the Pelican business,the related goodwill of £146.5 million,created and previously written off to reserves at the time of acquisition,has now been written off to the profit and loss account (as anoperating exceptional item) andcredited to reserves. This accountingtreatment, which accords with FRS 10, has no cash impact or effecton shareholders’ funds.

TAXATIONThe charge against profit beforeexceptional items for the period of£63.5 million represents an underlyingrate of 29.8%. The charge includesdeferred tax, as described under‘Accounting policies’ below. The taxcharge for 2000/01 has been restatedto reflect the adoption of FRS 19(Deferred Tax).

The exceptional charges forimpairment and goodwill, totalling£173 million, do not attract reliefagainst current tax.

ADJUSTED EARNINGS PER SHARE(EPS) AND DIVIDENDAdjusted EPS was up by 0.1%. Theproposed final dividend is 12.75 penceper share. The full year’s dividend pershare, interim plus final, is 17.80 penceper share. This level of paymentreflects the board’s proposal for thecurrent year to pay dividends ofapproximately 40% of post-tax profits.

CAPITAL EXPENDITURE £287 million was invested in propertyand plant, compared with £332 millionlast year. Of this amount, £130 millionrelated to the acquisition anddevelopment of new sites.

Capital expenditure (£m)2001/02 2000/01

Hotels– Marriott/Swallow 71 82– Travel Inn 71 45Restaurants– Pub restaurants 53 36– High street restaurants 18 31Sports, Health and Fitness 57 33Other 3 8

Continuing Whitbread 273 235Pubs & Bars 14 85Beer – 12

287 332

CASH FLOW Cash inflow before financing was£309 million. This figure wassignificantly impacted by the net cashreceived as a result of disposals and the Pubs & Bars demerger togetherwith the outflow of the costs of that demerger. The tax and dividendpayments relating to businesses thatare not part of continuing Whitbreadalso impacted the figure. On aproforma basis, continuing Whitbreadcash flow is detailed in the table below.

The net cash outflow for continuingWhitbread of £26 million is after the group invested £130 million ofexpenditure in new outlets, leaving the group with an underlying cashinflow of c.£100 million per annum.

DEMERGER OF PUBS & BARSThe demerger of the Pubs & Barsdivision was concluded in May 2001 at a value of £1,612 million, afteradjustments for working capital.£1,129 million of cash was returneddirectly to shareholders and£483 million was retained by the group to pay transaction costs andreduce long-term borrowings.The transaction realised a gain on the book value of Pubs & Bars of £477 million. For technical reasons,this gain is not included in the profitand loss account.

SECOND HALF YEARProfit for the second half was lowerthan that for the first half. The firsthalf benefited from 10 weeks tradingof Pubs & Bars, while the second halfsuffered from the consequences ofSeptember 11 on our hotels businesses.

SHAREHOLDER RETURNA 3 for 5 share capital consolidationwas implemented at the time of thePubs & Bars demerger. This reflectedthe £2.30 per share returned toshareholders in June 2001.

Adjusted earnings per share, calculatedon the weighted average number of shares in issue during the period,increased by 0.1% to 47.85 pence.The total dividend for the year, interimplus final, amounts to 17.80 pence per share.

The company’s share price opened the year at 628 pence and closed the year at 633 pence. Net asset value pershare at the balance sheet date was637 pence, compared with 507 pence(restated for FRS 19 – see page 28) at the previous year end.

ACCOUNTING POLICIESFRS 19 (Deferred Tax) has beenadopted for these accounts. Deferredtax is the tax attributable to thetiming differences arising from theinclusion of items of income andexpenditure in one period for taxpurposes (in accordance with taxlegislation) and another for accounting(in accordance with UK company lawand financial reporting standards).The principal timing difference forWhitbread relates to hotel buildingsand to furniture, fixtures andequipment in all our properties. Forthese assets, tax relief normallyexceeds the charge against profit fordepreciation in the early years of theirlife. The position reverses in later years.

The impact of adopting FRS 19 isdetailed on page 28. It should be emphasised that FRS 19 has no impact on tax paid or cash flows.

Pension costs and assets and liabilitieshave continued to be accounted for on the basis of SSAP 24 (Accounting for Pension Costs).

Relating toContinuing demerger

Proforma cash flow – continuing Whitbread 2001/02 (£m) As published Whitbread and disposals

Cash flow from operations 352 336 16Dividends received 3 3 –Interest costs etc. (72) (67) (5)Taxation (84) (37)(1) (47)Capital expenditure (net) (224) (212) (12)Acquisitions and disposals 462 – 462Dividends (128) (49)(2) (79)

Net cash inflow/(outflow) 309 (26) 335

(1) Estimated taxation paid in current year on profits of continuing Whitbread.(2) Apportioned dividend on basis of 2001/02 dividend policy.

PENSIONSA new financial reporting standard(FRS 17 – Retirement Benefits) willrequire pension fund assets to bevalued at market value at the balancesheet date. This method, by requiringa valuation on a specific day willintroduce a higher level of volatilityinto the method of accounting forpensions. On an FRS 17 basis, therewould have been a pension funddeficit of £84 million at the balance sheet date. This equates toapproximately 7% of the value of thefund. This shortfall would be reducedto £59 million after tax. The definedbenefit scheme has now been closedto new members.

FINANCIAL RISKS AND TREASURY POLICIESThe main financial risks faced by the group relate to: the availability of funds to meet business needs;fluctuations in interest rates; and therisk of default by a counterparty in a financial transaction.

The Treasury Committee, whichis chaired by the finance director,reviews and monitors the treasuryfunction. The undertaking of financial transactions of aspeculative nature is not permitted.

The group finances its operations by a combination of internally-generatedcash flow, bank borrowings and long-term debt market issues. The groupseeks to achieve a spread in thematurity of its debts.

Interest rate swaps and interest ratecaps are used to achieve the desiredmix of fixed and floating rate debt.The group’s policy is to fix or cap aproportion of projected net interestcosts over the next five years. Thispolicy reduces the group’s exposure to the consequences of interest ratefluctuations.

The group maintains an approved list of counterparties for interest rateswaps and caps, foreign exchangecontracts and term deposits. The groupmonitors its positions with, and thecredit ratings of, its counterparties.

FINANCIAL POSITIONNet debt at the year end amounted to £976 million, resulting in a balancesheet gearing ratio of 52%. Net interestwas covered 4.2 times by operatingprofit before exceptional items.

Following the demerger of Pubs & Bars we reduced the £625 million bankfacility, which expires in April 2003, by£400 million. The £625 million facilityexpiring in April 2005 remains in place. At the year end, £452 million of the total committed credit facility of £850 million was unused.

INTEREST RATE RISK MANAGEMENTAt the year end £548 million (58%)of group net sterling debt was fixed for a weighted average of 8 years, usingfixed rate borrowings and interest rateswaps. The average rate of interest onthis fixed rate sterling debt was 6.8%.

Based on the group’s net debtposition at the year end, a 1% changein interest rates would affect costs byapproximately £4 million, or around1.5% of the 2001/02 operating profitbefore exceptional items.

FOREIGN CURRENCY RISKMANAGEMENTAt the year end foreign currencyborrowings amounted to £47 million.All foreign currency borrowings,other than those made to hedgeoverseas investments, have beenswapped into sterling.

Transaction exposures resulting frompurchases in foreign currencies may be hedged by forward foreign currencytransactions and currency options.

Whitbread PLC 06/07

DELIVERING SHAREHOLDER VALUE…The last year has seen a significantincrease in the speed at which ourDavid Lloyd Leisure clubs are reachingmaturity. Four of the five clubs whichopened during the year exceeded their targets by some distance.Southampton, for example, achievedalmost full membership in 12 monthsagainst an industry average of around4 years. This was largely thanks tomarketing initiatives and a tirelessoutreach campaign that kept the cluband its benefits in front of the localpopulation.

We’re not just attracting moremembers; with a retention rate 13percentage points higher than industryaverages, we’re keeping them longertoo. David Lloyd Leisure club membersappreciate our facilities, our innovationsand our constant quest to give thembetter value. Over the year, more than14,000 members completed surveysthat track what we’re doing right andwhere we can improve in order to helpthem reach their goals. For example,we’re rolling-out a new inductionprocess that has been designed as a direct response to suggestions raisedby the membership survey.

Across the business, like-for-like salesare up 15%, driven by new membershipinitiatives and by extra incomegenerated in each club. Gym, personaltraining and studio sales rose 38% and those for food and beverage by 16%, reflecting our investmentin a new menu as well as new catering equipment that improvesservice times.

Membership retention, sales and yieldmanagement of individual clubs arethe key challenges for the comingmonths, and we will tailor membershipcategories to match the needs of customers, the capacity of each club and our responsibility to ourshareholders.

Our mission is to help members getmore out of life. And we’re doing so byhelping our shareholders get more outof their investment at the same time.

Stewart MillerManaging DirectorDavid Lloyd Leisure

STEWART MILLERat the David Lloyd Leisure club in Dublin.

Whitbread PLC 08/09

OUR MISSION IS TO HELP MEMBERSGET MORE OUT OF LIFE AND OURSHAREHOLDERS TO GET MORE OUT OF THEIR INVESTMENT

CUSTOMERS:TRUSTEDBRANDS THATDELIGHT ANDREASSURE

BILL SHANNONat the Kingston TavernBrewers Fayre in Milton Keynes.

BRANDS ARE THE FUTURE FOR THE LEISURE BUSINESS…People eat out at Pizza Hut orBrewsters, not Whitbread. They workout with David Lloyd Leisure, notWhitbread. And they get a goodnight’s sleep at Marriott or Travel Inn,not Whitbread.

Brewsters, Costa, Beefeater, DavidLloyd Leisure, Marriott… these are thebrands that customers trust becausethey deliver a consistent experiencetime after time. There are no shocks onthe menu, surprises on the treadmill or dripping taps in the en-suitebathroom. Customers know whatthey want, they know what to expectand forecasts show that they’re going to be wanting and expecting more of it in the coming years.

In the pub restaurant sector, forexample, brands already account for31% of the £5.5 billion marketplace.That’s set to increase to 37% of£6.5 billion over the next three years.In the coffee sector, the shift to brandsis more marked still – from 30% to50% over the same period.

At Whitbread, we’re in a uniqueposition to exploit this trend. Brewstersis already recognised by many as thebest family experience. It’s a placewhere adults relax, children areentertained and the whole familyenjoys great food at great prices.

Now we’re working hard todifferentiate all our brands, ensuringthat they deliver a well-definedexperience, with minimum overlap:Brewers Fayre is the best pub food for miles; Beefeater is the full-servicetraditional restaurant; Pizza Hutgives you the best choice of pizzasunder one roof; Costa is the Italianexperience; T.G.I. Friday’s offers US-stylehospitality and incredible food.

As people continue to seek out thereassurance that brands deliver,Whitbread brands will be uniquelypositioned to rise to the challenge.

Bill ShannonManaging Director Whitbread Restaurants

Whitbread PLC 10/11

MAKING LIVES EASIERWe aim to offer dishes that are difficult or time-consuming for customers to put together themselves.Half a roast chicken, withlots of veg and chipolatasausages, may be feasible for Sunday lunch at home –but on a wet Thursdayevening when the schoolrun has been followed by swimming lessons, cubsand a trip to Grandma’s,that’s where our family-friendly restaurants come in.

FAMILY-FRIENDLYChildren are involved in one third of all restaurantmeals in this country which makes them very importantcustomers of ours.

WHAT DO CUSTOMERS WANT FROMUS? IT’S A QUESTION ON THE AGENDAOF EVERY BOARD MEETING, EVERYGATHERING OF TEAM LEADERS, EVERYDISCUSSION AMONG EMPLOYEES ATALL LEVELS

SUMMER SENSATIONA luxuriously smooth ice-coldespresso, Gelatte was one of the big hits at Costa duringthe summer.

Across the business, we have a rangeof processes that harvest the insidestory on how well we are meeting and exceeding customer expectations,and how we are faring against thecompetition.

The Balanced Scorecard is thecornerstone of this system. Tailored foreach business, the Scorecard gives usan accurate and highly visual way tomeasure our progress. Red, amber andgreen ‘traffic lights’ accompany harddata to quickly indicate where we’resucceeding – and where we should bedoing better.

In our restaurants, for example, theScorecard features comprehensivecustomer surveys and a team ofmystery diners to measure three keyareas: the experience in terms ofservice and environment, the food –and, critically, would they recommendthe venue to others.

Last year, for example, more than two-thirds of Brewers Fayre customers saidthey’d be happy to recommend thebrand to their friends and colleagues –a proportion which we believe leadsour industry.

Customer satisfaction was again amajor achievement in Whitbreadhotels. The famous Travel Inn 100%Satisfaction Guarantee, whichpromises a full, no-questions-askedrefund to unhappy guests, led to just0.4% of revenue returned. Put anotherway, 99.6% of guests were fullysatisfied. The fact that Travel Inn isnow the UK’s largest hotel brand interms of number of rooms as well asnumber of guests and number ofhotels means that even more peoplecan now relax, confident in the qualitydelivered by the country’s leadingbudget hotel brand.

At David Lloyd Leisure, customersurveys indicated that although ourtrainers were doing a terrific job tospeed up services on the racquetcourts, the speed of service in the cafeswas not without fault. We boughtnew equipment that enables us to serve Costa Cappuccino four times as fast as it used to take to serve aninferior brand.

The way in which we continue todelight customers was recognisedthroughout the year.

Parents voted Brewsters ‘The MostFamily-Friendly Restaurant Chain’, inan awards scheme organised by thebaby charity, Tommy’s. Today, one-thirdof all restaurant meals in the UKinvolve children, so it’s sound businesssense to cater for their needs. Parentsknow they can trust Brewsters to servegreat food at good prices, whileentertaining the children at the sametime. And children love cuddling up toBrewster the Bear before dashing off tocreate their own hideous concoctionsat the Ice Cream Factory.

Marriott won the first ever AA ‘HotelGroup of the Year’ Award. The Awardrecognises the hotel group which hasdemonstrated an outstandingcommitment to improving anddeveloping their product offer whilemaintaining brand consistencythroughout. David Young, AA ChiefHotel Inspector, commented: ‘Marriottwas selected for this new awardbecause it has shown significantcommitment to investment within its portfolio… overall performanceacross the group continues to impress, with an average qualityassessment percentage of 69% – the country’s highest.’

Whitbread PLC 12/13

EMPLOYEES:OUR PEOPLE ARETHE FACE OF OURBUSINESS

Whitbread PLC 14/15

ALAN PARKERon site at the last Swallow hotel to be converted to Marriott.

A TRIBUTE TO THE WHITBREADSPIRIT…This has been a challenging year forour hotel business and our employees.

The general slowdown in the IT sectorwas compounded firstly by theproblems at Railtrack and then by theoutbreak of Foot and Mouth, both ofwhich had a knock-on effect for ourhotels. Worse was to come and theterrible events of September 11 led to a virtual cessation of internationaltravel, particularly from the US.To make matters worse, activity in the American financial services sector,which is a major market for ourLondon hotels, all but dried up.

We reacted at speed, taking costs outof the business in order to maintainprofitability. Regrettably, among themeasures taken was a wage freezeand a raft of redundancies which sawaround 300 people leave our hotels.

Against this background, you mightexpect morale and commitmentamong employees to be at an all-time low. Yet the very reverse is true.Turnover amongst our people atMarriotts actually fell from 46% to 36% during the year – that’s belowour target figure and around half ofthe rates experienced elsewhere. AtTravel Inn, people turnover has fallenfrom 76% to 46% in the last threeyears – and this is in an industry sector where 100% turnover is the norm.

The reasons are many, with improvedterms and conditions, managementdevelopment programmes, the TravelInn 100% Satisfaction Guarantee andeven a range of new uniforms allplaying a part.

But what our success as an employerreally comes down to is a simpleacknowledgement that our people are our most valuable resource – and we have a company-widecommitment to doing all that we canto help them seize opportunities andenjoy the rewards they deserve.

Alan ParkerManaging DirectorWhitbread Hotels

PROVIDING THE TOOLS TO DO THE JOBSales people can’t workeffectively without theright support. Our recentinvestments include advancesales training initiatives inDavid Lloyd Leisure and theestablishment of a new salesforce for the hotels business.The new team will beresponsible for direct salesto travel agents, an areawhich is rich in potentialfor Marriott.

LEARNING THE TRADEAround 1,000 young peopleare currently learning a trade as Whitbread ModernApprentices.

The hospitality sector is not known for its employee-friendly approach tobusiness. Labour turnover is usuallyhigh, loyalty is unusually low andrewards are correspondingly meagre.All too often, this is seen as ‘the way of the world’.

At Whitbread, we take a rather differentview. We believe that loyalty is a two-way street. In our experience, what youget out of a relationship is somethingthat approximates to what you put in.And during the year, we put a great dealof effort into creating and maintaininga working environment where highquality, committed people can growand prosper.

Our goal remains to be recognisedthroughout the industry as theemployer of choice, and we tookanother step in this direction when ourhotels business was accorded 50thplace in The Sunday Times ‘100 BestCompanies to Work For, 2002’. Far andaway the best-placed hotel group, weranked 41 positions above our nearestrival. The newspaper surveyedemployees across the UK, evaluatingfactors including their trust inmanagement, pride in work and thecompany, staff satisfaction andcamaraderie. It concluded: ‘WhitbreadHotels aim to surprise and delightguests with their service, but there isan equally surprising emphasis givento treating staff well in an industrywhere this is not the norm’.

We regularly canvas the opinions ofemployees ourselves, especiallythrough the Views survey which tracksemployee opinions and benchmarksthem against other high-performingUK companies. This year’s survey sawemployee satisfaction take anotherhike upwards. Hotels recordedincreases across the board, including a 9% rise to 78% in the number ofpeople who said they were satisfiedoverall with their place of work.

Employees at David Lloyd Leisure gaveus similar feedback: nine out of ten areproud to work for DLL and 69%reported favourably on the CompanyImage and Competitive Position, 9%above the norm for the UK Retail andLeisure sector.

Whitbread people are empowered totake decisions that directly affect theirunits, while also maintaining brandstandards. Restaurant managers fromeach brand get together in local clustergroups at least six times a year toshare ideas. In Beefeater, managersmeet more regularly still and havelaunched a range of locally-based,shared marketing initiatives thatdeliver advantages to the Beefeaters in the area.

We aim to help all our people reachtheir personal career goals. For example,at David Lloyd Leisure it’s not just themembers who get more out of life.This coming year will see the launch of a programme which will enable the health and fitness team to gainvaluable personal training qualificationsfrom the National Association of SportsMedicine in America; an organisationthat we believe is the best of its kind inthe world.

Flexibility is the key to meeting theneeds of our employees and also the needs of our business. Part-timeworking allows us to tailor resourcesto meet demand, but it also helpsemployees achieve the work-lifebalance that many of them areseeking. When Wendy Johnson leftto have her first baby, she returned towork part-time for two days a week.‘It’s great,’ she says. ‘You keep yourhand in, you learn new technology and update your skills. It’s also goodfor Whitbread because if people leaveand don’t come back part-time, thecompany can lose the skills andinformation that people carry withthem through years of service.’

OURS IS A PEOPLE BUSINESS.WHETHER CUSTOMERS ARE EATINGOUT, WORKING OUT OR STAYING OUT OVERNIGHT, THE FACE OF OUR BUSINESS IS THE FACE OF THEINDIVIDUAL WHO GREETS THEM IN OUR RESTAURANTS, CLUBS AND HOTELS

Whitbread PLC 16/17

SOCIETY:HELPING YOUNGPEOPLE ACHIEVETHEIR POTENTIAL

WHITBREAD HAS A SPECIAL ROLE TO PLAY…Keen. Hard-working. Responsible.Those words are perhaps not the first you’d associate with the youth of today. But the fact is that youngpeople are not so very different to howthey’ve always been. They’re energeticand eager to try new experiences. Butthey’re also easy prey, prone to errorand needful of support when thingsdon’t work out as planned.

Our brands have a special affinity with the under 25s. A high percentageof our employees and potentialemployees fall into that category, as domany of our customers. It’s a naturalstep for us to focus our resources onwhere they can do most good for ourpeople and our customers.

But although we’ve tightened the focus of our Community InvestmentProgramme to strengthen the bondbetween our brands and young people,this is not altruism or patronage for its own sake. Instead, it’s a hard-edgedbusiness approach that also deliversvalue at the bottom line. There aremany instances where our involvementcreates both a win for society and alsoa win for our business.

There’s a fine tradition at Whitbreadfor giving time, expertise and resourcesto the community. From raising moneyfor Sport Relief to helpingschoolchildren understand more aboutthe hospitality business or donatingfurniture from hotels and restaurantsto hostels for the homeless, we knowthat we’re actively contributing to abetter society.

Young people are the future of ourworld and of our business. Whetherthey work with us, enjoy their leisuretime with us or need some real help,to achieve what they want in life wewant to help them seize that futurewith both hands.

David ThomasChief ExecutiveWhitbread

DAVID THOMASChief Executive and Chairman of the Community InvestmentProgramme

18/19Whitbread PLC

OUR COMMUNITY PROGRAMME HAS MOVED TOWARDS A MORE FOCUSEDAPPROACH THAT COMBINES BENEFIT TO THE COMMUNITY WITH ADVANTAGESFOR OUR BUSINESSES

RECYCLING OUR RESOURCESFurniture and electricalequipment no longer neededin our restaurants, hotels and leisure clubs was donated to 50 charities during the year, including 4 of the young people’s Foyer scheme and 4 YMCAs.

GREENING THE PLANET11 Marriott hotels are nowcertified under the GreenGlobe scheme which wasestablished in the wake of the 1992 Earth Summit.Green Globe assessed the environmentally and socially sustainableperformance of each hotel.

ACTION ON THE HOME FRONTDiarmuid Gavin from BBC’sHomefront in the Gardenlaunched our 2002 ActionEarth campaign at SpitalfieldsCity Farm in London. So far,420 projects have beencompleted – ranging fromplanting schemes andrestoring habitats to pickingup litter.

THE FOOD ACCESSPARTNERSHIPHelps ensure a healthy diet for hundreds of peoplein the London Boroughof Newham. Its founder,Eric Samuel, was Whitbread’s‘Volunteer of the Year’.

For over 25 years, we’ve started, joined,funded or supported a vast range of programmes aimed at helpinginitiatives of all sorts and people of all ages. During the last year, wetightened our focus and concentratedour resources on helping young people fulfil their potentialin a number of important ways.

For example, despite the best efforts oftelevision the passion for Jamie, Nigellaand Ainsley has failed to translate intoa big enough rise in the number ofyoung people pursuing catering as acareer. Our Chef Modern Apprenticeshipscheme aims to address the shortagein our restaurants and hotels whilealso helping young people enjoy apractical, rewarding future at the sametime. Piloted last year, the programmeis open to anyone aged 16 – 24 and Gary Valentine was among the firstto seize the opportunity. ‘I’ve justbeen promoted to sous chef,’ he says.‘The apprenticeship gave me thepaperwork skills I needed to get on.It’s given my career a real boost.’

In another bid to encourage youngpeople to consider a career in thehospitality sector, we worked with theSouth-West Grid for Learning to createa virtual hotel, based on the SwindonMarriott. Schoolchildren and studentscan explore the hotel without leavingthe classroom. The software invitesthem to move around the hotel, askquestions of virtual members of staffand inspect documentation – all at theclick of a mouse.

We are always keen to work closelywith communities on initiatives thatwill deliver immediate mutual benefit.The new David Lloyd Leisure club inCheam is a partnership betweenourselves and Non-Such High Schoolfor Girls. Built in the school grounds,the club has helped fund new facilitiesfor the girls, including access to thepool between 9am and 12 noon.In return, our members have their newclub and are able to park in the schoolgrounds during the evening.

Sport Relief, the new fundraisingcampaign from Comic Relief and BBC Sport which takes place through the early summer of 2002, is unitingthe world of sport to raise money for vulnerable children and youngsters.We are keen to play our part to the full. Two of our brands will beencouraging customers and employeesto enjoy their sport and raise funds for a good cause. Marriott is theofficial Sport Relief golf partner, whileDavid Lloyd Leisure is the health andfitness partner.

Volunteering remains close to theheart of all Whitbread people. Wewere pleased to once again work withthe Home Office and the NationalCenter for Volunteering to recognisethe work of unsung heroes andheroines in our communities throughthe Whitbread Volunteer ActionAwards. The overall ‘Volunteer of theYear’ was presented to Eric Samuelwho gives his skills and his time inorder to alleviate food poverty amongthe residents of Newham, London.‘This is a great example of how a bigorganisation can really do its bit forthe community’ says Eric, who hassince been invited to carry the GoldenJubilee baton in the lead-up to the2002 Commonwealth Games. ‘Thepublicity generated by the Award hasraised the profile of the Food AccessPartnership and literally changed thelives of a lot of people in Newham.’

Whitbread PLC 20/21

CUSTOMERS ANDWHITBREADEATING, SLEEPING,DRINKING,WORKING OUT…ENJOYING

THE BOARD IS CONFIDENT THAT THETRANSFORMED WHITBREAD WILLCONTINUE TO MAKE GOOD PROGRESSTOWARDS THE ACHIEVEMENT OF OURAMBITIOUS FINANCIAL TARGETS

+11%PROFIT AFTER TAX, CONTINUINGBUSINESSES

Whitbread PLC 24/25

SUMMARY DIRECTORS’REPORT

RESULTS AND DIVIDENDSThe group profit before tax for the year amounted to £213.4 million beforeexceptional items, £7.0 million afterexceptional items. The directors haverecommended a final dividend for theyear of 12.75 pence per share. Thedividend will be payable on 12 July2002 to shareholders on the register at close of business on 10 May 2002.The total dividend for the year,including the interim dividend of5.05 pence paid on 8 January 2002,amounts to 17.8 pence per share. Thisis in accordance with the statementin last year’s Report and Accounts of the company’s dividend policy forthis year, which is to pay dividends of approximately 40% of profits after tax, giving a dividend cover ofsome 2.5 times.

Shareholders may participate in a dividend re-investment plan, underwhich their cash dividend is used topurchase additional shares in thecompany. Further details can be foundon page 31.

PRINCIPAL ACTIVITIES AND REVIEWOF THE BUSINESSA detailed review of the company’sactivities and the development of itsbusiness, and an indication of likelyfuture developments, are given in thechairman’s statement and on pages 2 to 7.

BOARD OF DIRECTORSThe directors are listed on pages 26and 27. All of them served throughoutthe financial year. Lord MacLaurin and Alan Perelman resigned as directors on 20 March 2001. Sam Whitbreadresigned on 18 September 2001.

DIRECTORS’ REMUNERATION Increase Gains made Increase Gains made

Total in accrued on exercise Total in accrued on exercise2001/02 pension in of options in 2001/02 pension in of options in

remuneration 2001/02 2001/02 remuneration 2001/02 2001/02£(i) £(ii) £ £(i) £(ii) £

Sir John Banham 192,442 – c David Richardson 362,049 40,386 186(iii)(iv)

Stewart Miller 314,086 13,234 3,710(iv) Bill Shannon 422,845 11,103 –Alan Parker 328,650 13,906 – David Thomas 627,276 26,989 37,495Alan Perelman(v) 68,552 v– 73,810(i) Total emoluments for the period were £2,474,069, including non-executive directors’fees* (2000/01 – £2,963,612).For full details see the Annual Report and Accounts 2001/02.(ii) The total increase in directors’ accrued pension entitlement was £105,618 (2000/01 – £118,607).(iii) Options exercised under the Savings Related Share Option Scheme.(iv) Notional gain.(v) Part year.

Prue Leith, David Richardson,David Thomas and Lord Williamson will stand for re-election at theforthcoming Annual General Meeting.John Padovan will retire at the meeting.Details of directors’service contractsare given on page 20 of the full AnnualReport and Accounts. None of the non-executive directors has a servicecontract other than as described in the Remuneration Report (page 20 of the Annual Report and Accounts) in relation to Sir John Banham.

ANNUAL GENERAL MEETING The AGM will be held at 2.00pm on18 June 2002 at The Brewery, ChiswellStreet, London EC1Y 4SD. The notice of meeting is enclosed with this report and is accompanied by a letterfrom the chairman. In addition to theordinary business of the meeting,shareholder consent will be soughtto renew authority for the purchase by the company of its own ordinaryshares, to approve a Share IncentivePlan for all employees, and to receivethe Remuneration Report, the keypoints of which are detailed below.

CORPORATE GOVERNANCE ANDDIRECTORS’ REMUNERATIONThe company is committed to highstandards of corporate governance.A detailed report on the company’scompliance with the Combined Codeof best practice on corporategovernance is contained in the fullAnnual Report and Accounts 2001/02on pages 14 and 15.

The full Remuneration Report is setout on pages 18 to 24 of the fullAnnual Report and Accounts or onrequest from Lloyds TSB Registrars at the address quoted on page 31.

The company’s remuneration policy is designed to enable the company to attract, retain, and motivateexecutives who have the skills, expertiseand enthusiasm to drive the businessforward and to reward them in line withboth their personal contribution and thecompany’s overall success. It is a furtherelement of the company’s policy toensure that the levels of reward are inline with those offered by the company’scomparator group of companies.

Key points of note are:– There have been no significant

changes to the company’sremuneration policy during 2001/02;

– The total remuneration for thedirectors in 2001/02 was £2,474,069,which was £489,543 less than in 2000/01;

– The chairman, the executivedirectors and members of the GroupExecutive have agreed to defer the date of their 2002 annual payreview by six months, until October;

– The board has taken the decisionthat shareholders should be giventhe opportunity to receive the fullRemuneration Report at the AnnualGeneral Meeting.

The table below shows the totalremuneration for the chairman andexecutive directors together withinformation about pensions and shareoption gains. No actual awards vestedunder the Long Term Incentive Plan in2001/02.

The Annual Report and Accounts canbe found on the company’s website(www.whitbread.co.uk).

1 SIR JOHN BANHAM* CHAIRMANSir John was appointed a director in November 1999 and becamechairman in June 2000. He is a member of the Remuneration and Audit committees and chairman of the Nomination Committee. His otherappointments include chairman of ECI Ventures Group, the senior non-executive director of Amvescap, and a director of The Merchants Trust PLC.He was chairman of Kingfisher PLCfrom 1996 to 2001 and of Tarmac PLCfrom 1993 to 1999. Previously Sir Johnwas a director of McKinsey and Cobefore becoming the first Controller of the Audit Commission in 1983 andDirector General of the CBI in 1987.He was also the first chairman of theLocal Government Commission forEngland from 1992 to 1995 and thefounding chairman of WestcountryTelevision. Aged 61.

2 DAVID THOMAS CBECHIEF EXECUTIVEAppointed chief executive in 1997,David has been at Whitbread since1984 and a director since 1991. Hisroles have included managing directorof Whitbread Inns and WhitbreadRestaurants and Leisure. Previously, hewas with Finefare, Linfood and GrandMetropolitan. He is a non-executivedirector of Xansa PLC, a trustee of In Kind Direct and a member of theLondon Tourist Board. Aged 58.

3 DAVID RICHARDSONHaving previously been the strategicplanning director, David becamefinance director on 1 March 2001. Hehas been with Whitbread since 1983and was appointed to the board in1996. He was previously at ICL, havingqualified as an accountant withTouche Ross. Aged 50.

4 BILL SHANNONManaging director of WhitbreadRestaurants division and a director of Whitbread since 1994, Bill joined thecompany in 1974 as a finance managerand has since been managing director of Beefeater Restaurant and Pub,Thresher, Whitbread Pub Partnershipsand Whitbread Inns. He is a non-executive director of Aegon PLC and a director of Pizza Hut (UK) Limited.Aged 52.

5 STEWART MILLERManaging director of David LloydLeisure since May 2001 and a directorof Whitbread since May 2000, Stewarthas been with Whitbread since 1981.His roles have included operationsdirector and chief executive of PizzaHut UK, operations director ofBeefeater, sales and marketing directorof Whitbread Inns and managingdirector of Whitbread Pub Partnershipsand Whitbread Pubs & Bars. He is a director of Business In Sport andLeisure Limited. Aged 49.

BOARD OF DIRECTORS

1 3 5

2 4

6 ALAN PARKER Alan joined Whitbread as ManagingDirector of Whitbread Hotel Companyin 1992 and was appointed to theBoard in May 2000. He was previouslySenior Vice-President of Holiday InnEurope, Middle East and Africa andbefore that Managing Director ofCrest Hotels. Alan is visiting Professorat the University of Surrey and ex-chairman and a director of the BritishHospitality Association. Aged 55.

7 CHARLES GURASSA*Appointed a director in July 2000,Charles is chairman of theRemuneration Committee and a member of the NominationCommittee. He is currently Chairmanof TUI Northern Europe Limited andTUI Airline Group and an ExecutiveDirector of Preussag AG, havingformerly been with British Airways as Head of Leisure, World Sales andDirector of Passenger and CargoBusiness. Aged 46.

8 PRUE LEITH*Appointed a Director in 1995, Prue is a member of the Remuneration, Auditand Nomination committees. She is anon-executive director of WoolworthsGroup PLC and Triven VCT PLC and aformer non-executive director ofSafeway PLC and Halifax PLC. Aged 62.

9 JOHN PADOVAN*A director since 1992, John is a memberof the Remuneration and Nominationcommittees, chairman of the AuditCommittee and chairman ofWhitbread Pension Trustees. He is alsochairman of Williams Lea Group andof Schroder Split Investment Fund andchairman or non-executive director of several other listed and unlistedcompanies. John will be retiring as adirector of the company at the AGMon 18 June 2002. Aged 63.

10 DAVID TURNER*Appointed a director on 1 January 2001, David is a member of the Audit, Remuneration and NominationCommittees. Previously FinanceDirector of GKN PLC, he is now theChief Financial Officer of the BramblesGroup comprising Brambles Industriesplc in the UK and Brambles IndustriesLimited in Australia. Aged 57.

11 LORD WILLIAMSON*Appointed a director in 1998. Beforethis, Lord Williamson was secretary-general of the European Commissionfrom 1987 to 1997, having been head of the European Secretariat, UKCabinet Office from 1983 to 1987 andDeputy Director General for Agricultureat the Commission between 1977 and 1983. He is a member of the Audit,Remuneration and Nominationcommittees. Aged 67.

*Non-executive director

BOARD OF DIRECTORS

7 9 11

6 8 10

SUMMARY GROUP PROFIT AND LOSS ACCOUNT

2001/02 2000/01 (restated)#

Before Beforeexceptional Exceptional exceptional Exceptional

items items Total items items TotalYear ended 2 March 2002 £m £m £m £m £m £m

Turnover – group and share of joint ventures 2,171.6 – 2,171.6 3,095.2 – 3,095.2Less share of joint ventures’ turnover (157.3) – (157.3) (500.6) – (500.6)

Group turnover 2,014.3 – 2,014.3 2,594.6 – 2,594.6

Operating profit* 280.0 (174.5) 105.5 427.8 (3.1) 424.7

Non-operating items – continuing operations – (31.1) (31.1) – (39.1) (39.1)

Profit before interest 280.0 (205.6) 74.4 427.8 (42.2) 385.6

Interest (66.6) (0.8) (67.4) (93.4) (0.3) (93.7)

Profit before taxation 213.4 (206.4) 7.0 334.4 (42.5) 291.9

Taxation (63.5) 4.1 (59.4) (106.4) (1.4) (107.8)

Profit/(loss) after taxation 149.9 (202.3) (52.4) 228.0 (43.9) 184.1

Non-equity minority interests (0.2) – (0.2) (0.1) – (0.1)

Profit/(loss) earned for ordinary shareholders 149.7 (202.3) (52.6) 227.9 (43.9) 184.0

Ordinary dividends (52.6) – (52.6) (153.1) – (153.1)

Retained profit/(loss) for the year 97.1 (202.3) (105.2) 74.8 (43.9) 30.9

Earnings per share (pence)Basic (15.91) 37.18Adjusted basic 47.85 47.79

Dividends per share (pence)Interim 5.05 8.05Final (proposed) 12.75 23.10

*Included in operating profit before exceptional items is income from joint ventures of £12.2m (2000/01 – £10.0m) andfrom associates of £16.9m (2000/01 – £13.8m).

#Comparative amounts have been restated to comply with FRS 19 (Deferred Tax). The effect on the profit and loss accountis to increase the taxation charge in 2001/02 by £11.1m (2000/01 – £13.2m). The balance sheet effect is to increaseprovisions by £139.4m (2001 – £165.4m) and intangible assets by £7.0m (2001 – £7.4m).

Whitbread PLC 28/29

SUMMARY GROUP CASH FLOW STATEMENT

2001/02 2000/01Year ended 2 March 2002 £m £m

Cash inflow from operations 352.1 492.3Dividends received from joint ventures and associates 2.8 3.5Interest paid, less received, and investment income (71.9) (96.9)Tax paid (83.4) (92.9)Net capital expenditure (224.3) (185.7)

(24.7) 120.3Acquisitions and disposals of business 461.6 489.3Ordinary dividends paid to shareholders (128.1) (148.2)

Net cash inflow before changes in funding 308.8 461.4Net share and loan capital raised (308.2) (448.2)

Increase in cash 0.6 13.2

SUMMARY GROUP BALANCE SHEET2001

2002 (restated)#

As at 2 March 2002 £m £m

Fixed assetsIntangible assets 149.9 159.2Tangible assets 2,996.1 4,138.1Investments 109.8 96.3

3,255.8 4,393.6

Current assets and liabilitiesStocks 28.1 36.1Debtors 112.0 165.9Cash at bank and in hand 73.1 66.9

213.2 268.9Creditors – amounts falling due within one year (431.8) (689.9)

Net current liabilities (218.6) (421.0)

Total assets less current liabilities 3,037.2 3,972.6Creditors – amounts falling due after more than one yearLoan capital (978.5) (1,272.6)Provisions for liabilities and charges (170.2) (207.0)

1,888.5 2,493.0

Capital and reservesCalled up share capital 147.7 2,207.8Share premium account 4.4 –Revaluation reserve 140.4 621.5Other reserves (1,815.5) (1,830.5)Profit and loss account 3,405.0 1,488.9

Shareholders’ funds 1,882.0 2,487.7Minority interests 6.5 5.3

1,888.5 2,493.0

#Restated to comply with FRS 19 – see page 28.

The summary financial statement on pages 28 and 29 was approved by the directors and signed on their behalf by D M Thomas and D H Richardson on 30 April 2002.

INDEPENDENT AUDITORS’STATEMENT TO THE MEMBERS OF WHITBREAD PLC

We have examined the group’ssummary financial statement.

RESPECTIVE RESPONSIBILITIES OFDIRECTORS AND AUDITORSThe directors are responsible forpreparing the Stakeholder Review inaccordance with applicable law.

Our responsibility is to report to youour opinion on the consistency of thesummary financial statement withinthe Stakeholder Review with the fullannual accounts and Directors’Report, and its compliance with therelevant requirements of section 251 of the Companies Act 1985 and theregulations made thereunder. We alsoread the other information containedin the Stakeholder Review and consider the implications for our report if we become aware of anyapparent misstatements or materialinconsistencies with the summaryfinancial statement.

BASIS OF OPINIONWe conducted our examination inaccordance with Bulletin 1999/6 ‘Theauditors’ statement on the summaryfinancial statement’ issued by theAuditing Practices Board for use in the United Kingdom.

OPINIONIn our opinion the summary financialstatement is consistent with the fullannual accounts and Directors’ Reportof Whitbread PLC for the year ended2 March 2002 and complies with theapplicable requirements of section 251 of the Companies Act 1985, andregulations made thereunder.

Ernst & Young LLPRegistered AuditorLondon

30 April 2002

Whitbread PLC 30/31

SHAREHOLDER SERVICES

For further information about thecompany and its businesses pleasevisit the Whitbread website atwww.whitbread.co.uk

REGISTRARThe company’s registrar is Lloyds TSBRegistrars, The Causeway, Worthing,West Sussex BN99 6DA. For enquiriesregarding your shareholding pleasetelephone 0870 600 3968.

In addition, shareholders can viewinformation about their shareholdings,find information on how to register a change of name and whatto do if a share certificate is lostby visiting the shareholder website at www.shareview.co.uk. There are also facilities to download change of address, dividend mandate andstock transfer forms. Please ensurethat you advise Lloyds TSB promptly of a change of name or address.

DIVIDEND REINVESTMENT PLANFull details of the Plan, which offers you the chance to reinvestyour cash dividend in the purchase of additional company shares,are available from the registrars at the address given above.

DIVIDEND PAYMENT BY BACSWe can pay your dividends direct toyour bank or building society accountusing the Bankers’ Automated ClearingService (BACS). This means that yourdividend will be in your account on the same day we make the payment.Your tax voucher will be posted to your home address. If you would like to use this method of payment pleasering the registrars on 0870 6003968.

INDIVIDUAL SAVINGS ACCOUNT (ISA)Lloyds TSB Registrars provide acompany sponsored ISA. For furtherinformation or to receive a copy of the ISA brochure please ring 0870 2424244. Calls are charged atnational rates.

SHARE DEALING SERVICEShare dealing by postLloyds TSB Registrars 0870 24 24 244Barclays Stockbrokers 0845 702 3021Nat West Stockbrokers 0870 600 2050

Share dealing by telephoneStocktrade 0845 840 1533

The availability of these servicesshould not be taken as arecommendation to deal.

CAPITAL GAINS TAXMarket values of shares in thecompany as at 31 March 1982 wereas follows:

‘A’ limited voting sharesof 25p each 103.75p

‘B’ limited sharesof 25p each 103.75p

Whitbread has had discussions with the Inland Revenue concerningthe capital gains tax cost of Whitbreadshares following the reduction ofcapital on 10 May 2001. It is confirmedthat the market value of eachWhitbread share on 10 May 2001 forthese purposes was 606.5 pence and the market value of each Fairbarshare was 230 pence.

SHAREHOLDER BENEFITSDetails of special discounts and offersby Whitbread businesses have beenmailed with this report and furtheroffers are expected to be mailed withthe Interim Statement in November.Any future offers will be subject toreview by the board.

SHAREGIFTIf you have a small number ofWhitbread PLC shares, with a valuethat makes it uneconomic to sell them, you may donate the shares tocharity through the Sharegift schemeoperated by the Orr MackintoshFoundation. Further information onSharegift can be obtained from their website (www.sharegift.org) or by calling 020 7337 0501.

FINANCIAL DIARY – 2002/03

1 MAYRESULTS ANNOUNCEMENT

8 MAYEX DIVIDEND DATE FOR FINALDIVIDEND

10 MAYRECORD DATE FOR FINAL DIVIDEND

18 JUNEAGM

12 JULYPAYMENT OF FINAL DIVIDEND

31 AUGUSTHALF YEAR END

29 OCTOBERANNOUNCEMENT OF HALF YEARRESULTS (DATE UNDER REVIEW)

6 NOVEMBEREX DIVIDEND DATE FOR INTERIMDIVIDEND

8 NOVEMBERRECORD DATE

7 JANUARY 2003PAYMENT OF INTERIM DIVIDEND

1 MARCH 2003END OF FINANCIAL YEAR

Designed and produced by BamberForsyth:Fitch. Printed by St Ives Westerham Press. Main portraits by Sven Seiffert.Other photography by Timothy Allen, Richard Baker, Stuart Freedman, Simon Jarratt, Davey Jones, David Loftus,Zed Nelson and Bill Robinson.

Whitbread PLCCityPointOne Ropemaker StreetLondonEC2Y 9HX

www.whitbread.co.uk