Slide 1: FY18 Full Year Results
FY18 Full Year Results April 2018 FY18 FULL YEAR RESULTS | APRIL 2018
Slide 2: Contents
Contents Highlights Alison Brittain p3 Financial performance Nicholas Cadbury p6 Strategic update Alison Brittain p16 Structure update Alison Brittain p34 Appendices p39 2 FY18 FULL YEAR RESULTS | APRIL 2018
Slide 3: Summary | Strong momentum in delivering our plan
Summary | Strong momentum in delivering our plan Structural growth Market leading brands and Continued disciplined opportunity loyal customers capital management Focus on our Build capability to Grow & innovate in 1 core UK markets 2 strengths to grow 3 support long-term internationally growth • Del
Slide 4: Committed to creating two high-quality independent companies
Committed to creating two high-quality independent companies • Decision to demerge Costa following UK’s largest and most successful hotel business, regular & rigorous Board review with attractive international growth opportunities • Two highly attractive businesses - attractive economics - leading m
Slide 5: Highlights | Good financial performance in line with expectations
Highlights | Good financial performance in line with expectations 4.5% The UK’s 8th The #1 hotel 72,466 Good profit rooms to favourite coffee year in chain in the UK growth £591m a row shop… again! Consistently Good return on Strong return on 13.4% high return on 15.4% 46.0% capital capital capital
Slide 6: Financial Performance | Nicholas Cadbury – CFO
FINANCIAL PERFORMANCE | Nicholas Cadbury – CFO The image part with relationship ID rId2 was not found in the file. 6 6 6 FY18 FULLFY18 YEAR FULLRESULTS | APRIL YEAR RESULTS | APRIL2018 2018
Slide 7: Financial highlights | Good overall performance
Financial highlights | Good overall performance FY17 FY18 ! • Good revenue growth across all Revenue £3,106m £3,295m 6.1% businesses • Disciplined cost management Underlying PBT £565m £591m 4.5% delivering expected profit growth Underlying EPS 246.5p 260.2p 5.6% • Strong cash generation supporting i
Slide 8: Premier Inn | Continued strong financial performance
Premier Inn | Continued strong financial performance FY17 FY18 ! • Strong revenue growth delivered Revenue £1,908m £2,007m 5.2% through market leading occupancy UK & Germany £1,902m £2,004m 5.4% and new capacity International £6m £3m n.m. • Continued market share gain Underlying op. profit £468m £49
Slide 9: Costa | Revenue growth & earnings in line with expectations
Costa | Revenue growth & earnings in line with expectations FY17 FY18 ;’ ! • Strong revenue growth underpinned Revenue £1,202m £1,292m 7.5% by store and Express expansion UK Stores £876m £921m 5.2% • UK like-for-like sales remain positive UK Express £178m £210m 18.0% against tough retail conditions
Slide 10: Margin progression | Efficiency programme supporting investment
Margin progression | Efficiency programme supporting investment 0.7% 0.9% (1.0)% (0.5)% (0.3)% 0.2% (1.1)% 1.7% (1.4)% (0.2)% (0.9)% 2.3% (0.9)% 24.8% 13.1% 24.5% 12.3% FY17 LFL + new Inflation Labour Rent Efficiency Investment International FY18 FY17 LFL + new Inflation Labour Rent Efficiency Inves
Slide 11: Cash generation | Strong & consistent to fund investments
Cash generation | Strong & consistent to fund investments Underlying Op. £622m • Good discretionary FCF conversion of profit 94% Depreciation & amortisation £230m • Business model enables consistent working capital management Other non-cash £13m items • Discretionary FCF used to fund: Working capita
Slide 12: Investment | Compelling opportunities to invest capital
Investment | Compelling opportunities to invest capital Last 2 Maturity Mature • Significant investment in FY17 FY18 years duration ROC new capacity delivering strong return on capital Maintenance & product improvement • Maintenance CapEx - Premier Inn (inc. refurbs) £148m £118m £266m - - - IT trans
Slide 13: Return on capital | Consistently strong returns on a growing base
Return on capital | Consistently strong returns on a growing base 4500 5 0% 28 0.5 14010 0.6 49.9% 45% 0.45 4000 26 4,037 12010 3,903 25.5 46.3% 45.4% 46.0% 0.5 0.4 3,728 40% 3 500 24 23.8 10010 40.5% 3 5% 0.35 3 000 3,209 22 0.4 22.2 0.3 2,820 3 0% 8010 2 500 20 2 5% 20.2 0.25 0.3 19.0 12,058 2 000
Slide 14: Capital discipline | Asset-backed balance sheet provides flexibility
Capital discipline | Asset-backed balance sheet provides flexibility Maintaining an appropriate leverage position 3 500 4.5 Diverse & flexible funding options 2,058 2,227 Balanced debt maturity profile 4.3 3 000 1,878 USPP 4.1 1,670 2 500 £432m @2.6-5.2% 3 .9 1,454 1,203 3 .7 2 000 RCF 3.5 target ce
Slide 15: FY19 outlook | Consistent investment for sustainable growth
FY19 outlook | Consistent investment for sustainable growth • Early in the year, London market remains challenging, but overall forward bookings in line with our plans • 4,000-4,500 new room openings in FY19 in the UK & Germany • Growing pipeline in Germany – organically and acquisitions • Efficienc
Slide 16: Strategic Update | Alison Brittain – CEO
STRATEGIC UPDATE | Alison Brittain – CEO 16 16 FY18 FULLFY18 YEAR FULLRESULTS | APRIL YEAR RESULTS | APRIL2018 2018
Slide 17: A clear plan for growth | Strong operational momentum
A clear plan for growth | Strong operational momentum Focus on our Build capability to Grow & innovate in 1 core UK markets 2 strengths to grow 3 support long-term internationally growth Germany • 8th Best Big Company to work for Sunday Times 2017 • 4,385 net rooms opened • 1st acquisition (19 hotel
Slide 18: Premier Inn | Structural opportunity exploited by our unique model
1 Growth in the UK 2 International focus 3 Build capabilities Premier Inn | Structural opportunity exploited by our unique model Structural opportunity in the growing UK hotel market Premier Inn’s unique business model • Direct distribution increased • Growth ahead of peers 6% 9% 11% >12% to 97% 12%
Slide 19: Premier Inn | Network plan focused on optimising sales & returns
1 Growth in the UK 2 International focus 3 Build capabilities Premier Inn | Network plan focused on optimising sales & returns • Postcode-level analysis Catchment case study: Southwark Detailed catchment • Detailed mapping of existing RevPAR, £ analysis supply and changes over time 100 1 60,000 • Op
Slide 20: Premier Inn | Enhancing our advantage through technology
1 Growth in the UK 2 International focus 3 Build capabilities Premier Inn | Enhancing our advantage through technology Digital innovation driving direct distribution model Digital capabilities lowering marketing costs 85 100% 2 2 2 2 2 2 2 2 2 2 201,000,000 20 220 20 2 2 220 22 0 0 0 0 00 0 0 0 00 0
Slide 21: Premier Inn | Ongoing enhancements to our customer offer
1 Growth in the UK 2 International focus 3 Build capabilities Premier Inn | Ongoing enhancements to our customer offer Optimising room refurbishments Unrivalled quality and value creates strong brand Product YouGov Brand Index Quality score consistency key 35 to Premier Inn Hilton model 30 Premier I
Slide 22: Costa | Market Growth opportunity unlocked by Costa's model
1 Growth in the UK 2 International focus 3 Build capabilities Costa | Market Growth opportunity unlocked by Costa’s model The leader in the growing UK coffee market Costa’s market-leading business model 3 5000 40 GR tio n C A 3 0000 10 % co ffe e co n su mp 33.6 35 1 Focused network plan 30.7 30 • >
Slide 23: Costa | Network plan focused on optimising sales & returns
1 Growth in the UK 2 International focus 3 Build capabilities Costa | Network plan focused on optimising sales & returns • Postcode level analysis FY18 Total FY18 ROC Estate Sales (Stores <3 Current growth Detailed • National presence provides Channel growth years old) Estate to 2020 catchment unriv
Slide 24: Costa | Optimising catchment level sales & return on capital
1 Growth in the UK 2 International focus 3 Build capabilities Costa | Optimising catchment level sales & return on capital Network planning C-Store Concession (2016) • Integrated plan across stores & Express Petrol Retail Park (2011) • Objective to maximise Education catchment sales at a Drive Thru
Slide 25: Costa | Momentum in improving the customer proposition
1 Growth in the UK 2 International focus 3 Build capabilities Costa | Momentum in improving the customer proposition Customers enjoying improved food offer Focus areas for FY19 Costa savoury food capture rate uplift Network Breakfast Salads New lunch • Continue new store focus on launched launched l
Slide 26: Costa | Accelerating use of technology
1 Growth in the UK 2 International focus 3 Build capabilities Costa | Accelerating use of technology Activities completed Work underway 2018/2019 focus Systems New POS terminals Click & Collect • Workforce planning system • New tills implementation almost • Extend trial of click & implemented comple
Slide 27: Costa Express | Rapid growth in the UK and internationally
1 Growth in the UK 2 International focus 3 Build capabilities Costa Express | Rapid growth in the UK and internationally Machine unit economics • Unrivalled quality, technology and design Capex per machine c.£13,000 All machines connected through in-house telemetry to assess performance Revenue c.£3
Slide 28: Germany | Accelerating the new hotel pipeline
1 Growth in the UK 2 International focus 3 Build capabilities Germany | Accelerating the new hotel pipeline Long-term opportunity to replicate UK success To be Organic acquired Total • Expecting double-digit ROC for organic sites at maturity Open and 1 hotel 13 hotels 14 hotels trading (210 rooms) (
Slide 29: Costa China | Ambition growing and expansion gaining
1 Growth in the UK 2 International focus 3 Build capabilities Costa China | Ambition growing and expansion gaining The investible model South China JV acquisition Future ambition • 16 stores now in latest format, 1) Enables full control of operations 1) Organic store growth after a successful trial
Slide 30: Efficiency | Programme extending target
1 Growth in the UK 2 International focus 3 Build capabilities Efficiency | Programme extending target Focus areas Case study on procurement & distribution Updated ambition 70% of 3rd • Increased target from £150 million to Dairy A Dairy D party volume £250 million 3rd party Distribution Last 10 year
Slide 31: Technology | Delivery through Group-wide team
1 Growth in the UK 2 International focus 3 Build capabilities Technology | Delivery through Group-wide team Whitbread shared IT team successfully delivering complex IT transformation • COMPLETE | Mobile app updates • COMPLETE | In-sourced website Customer • COMPLETE | Business booking • COMPLETE | P
Slide 32: Property | A significant competitive advantage
1 Growth in the UK 2 International focus 3 Build capabilities Property | A significant competitive advantage Superior site access Strong covenant • 1,700 freehold rooms added to pipeline • 2,900 leasehold rooms added to pipeline • 2,250 rooms through freehold extension Proven Balanced portfolio Supe
Slide 33: A Force for Good
1 Growth in the UK 2 International focus 3 Build capabilities A Force for Good Opportunity Community Responsibility Being a place where everyone Making meaningful contributions Treating people and the planet can reach their potential to the communities we serve with respect • Targeting 5,000 • >£10m
Slide 34: Costa Demerger | Alison Brittain – CEO
COSTA DEMERGER | Alison Brittain – CEO 34 34 34 FY18 FULLFY18 YEAR FULLRESULTS | APRIL YEAR RESULTS | APRIL2018 2018
Slide 35: Committed to creating two high-quality independent companies
Committed to creating two high-quality independent companies • Decision to demerge Costa following UK’s largest and most successful hotel business, regular & rigorous Board review with attractive international growth opportunities • Two highly attractive businesses - attractive economics - leading m
Slide 36: Timing | Committed to demerge as fast as practical & appropriate
Timing | Committed to demerge as fast as practical & appropriate Supply chain & • Deliver a further £100 million of efficiency savings over next 2 years 1 procurement • Ensure 2,000+ procurement and supply chain agreements are optimised for transformation separation Modern & stable • Completion of c
Slide 37: Structure update | Two high-quality businesses with scale
Structure update | Two high-quality businesses with scale Market • The owner of Premier Inn –UK’s leading hotel chain with almost 800 hotels comprising • A leading out-of-home coffee business with position 74,000 rooms over 3,800 stores in 32 countries Competitive • Largest UK network by comfortable
Slide 38: Questions | Alison Brittain & Nicholas Cadbury
QUESTIONS | Alison Brittain & Nicholas Cadbury 38 38 38 FY18 FULLFY18 YEAR FULLRESULTS | APRIL YEAR RESULTS | APRIL2018 2018
Slide 39: Appendices
Appendices I. Definitions p40 II. Supplementary information p41 III. Cautionary statement p42 Whitbread ADR programme Whitbread has established a sponsored Level I American Depositary Receipt (ADR) programme for which Deutsche Bank perform the role of depositary bank. The Level I programme trades on
Slide 40: Appendix I. | Definitions
Appendix I. | Definitions Average Room Rate (ARR) Hotel accommodation revenue divided by the number of rooms occupied by guests. Discretionary free cash flow Cash generated from operations after payments for interest, tax and maintenance capital. (Discretionary FCF) Underlying earnings before intere
Slide 41: Appendix II. | Supplementary information
Appendix II. | Supplementary information Further information is available in a supporting supplementary information pack (both Adobe PDF and Microsoft Excel formats) from www.whitbread.co.uk/investors. This information includes: A. Estate analysis B. Sales, profit & return on capital C. Group income
Slide 42: Appendix III. | Cautionary statement
Appendix III. | Cautionary statement Nothing contained in this presentation is intended to constitute an offer, invitation or inducement to engage in an investment activity for the purposes of the prohibition on financial promotions under the Financial Services and Markets Act 2000. In making this p
Slide 43: Contacts
CONTACTS Matt Johnson Investor Relations Director E matt.johnson@whitbread.com Matt Holman Investor Relations Manager E matt.holman@whitbread.com Ann Hyams Investor Relations Manager E ann.hyams@whitbread.com M +44 7848 146 761 M +44 7712 243 322 M +44 7796 709 087 Whitbread plc Whitbread Court, Hou