Slide 1: Interim Results 2014
2014 Interim Results John Hutson – CEO Kirk Davis - FD The Manor House, Royston
Slide 2: Kirk Davis FD
The Star Inn, Honiton Kirk Davis FD The Six Bells, Lymington 14 March 2014
Slide 3: Financial Summary
Financial Summary 26 weeks to 26/01 H1 2014 H1 2013 Revenue £683.2m £626.4m +9.1% Like-for-like sales +5.2% +6.9% Operating profit £55.7m £52.1m +7.0% Profit before tax £37.8m £34.8m +8.5% Earnings per share 22.1p 20.0p +10.5% Earnings per share (excluding shares held in trust) 23.2p 20.8p +11.5% Fr
Slide 4: Average Sales Per Pub Week (including VAT)
Average Sales Per Pub Week (including VAT) £000 35.3 36 34.0 33.4 34 32.3 32 31.1 30.3 30.1 30.1 29.9 29.0 30 28.0 28.2 28 26 24 22 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 H1 H1 2013 2014 Record Average Sales Per Pub Week 4
Slide 5: Like-for-like Performance
Like-for-like Performance % H1 H1 H2 2014 2013 2013 2013 2012 2011 2010 2009 Bar +3.6 +4.1 +3.5 +3.8 +2.8 +1.7 -0.8 +2.5 Food +10.5 +13.4 +8.7 +10.9 +4.8 +4.2 +0.1 -0.4 Machines -9.5 +4.4 -3.5 +0.4 -2.8 -3.9 +12.1 -7.5 Total LFL sales +5.2 +6.9 +4.8 +5.8 +3.2 +2.1 +0.1 +1.2 LFL Pub Profit* +4.3 +0.0
Slide 6: Operating Margin - Summary
Operating Margin - Summary H1 2014 H1 2014 H1 2013 H1 2013 £000 % of Sales £000 % of Sales Turnover 683,229 626,397 Pub profit (pre repairs) 136,171 19.9 123,242 19.6 Repairs (26,061) (3.8) (22,794) (3.6) Head office costs (22,195) (3.2) (19,631) (3.1) Share Incentive Plan (3,800) (0.5) (3,068) (0.5
Slide 7: Cost Increases
Cost Increases Pulled Pork Sandwich • Tax increases: excise duty, business rates and machine gaming duty • Bar and food supplies increased in the region of 3% • Continued investment in staff costs, repairs and central overheads Best of British 7
Slide 8: Allocation of Resources
Allocation of Resources £161m £90m £59m £108m £164m £159m £117m £46m £96m £5m £10m £15m £33m £23m £76m £15m £26m £10m Dividend £3m £17m Buybacks £12m Capex £126m £121m £10m £102m £82m £10m £83m £75m £61m £49m £36m 2007 2008 2009 2010 2011 2012 2013 H1 H1 2013 2014 8
Slide 9: Capital Expenditure
Capital Expenditure HY14 HY13 £m £m Acquisition and development costs Current year 41.6 15.0 Future year 16.4 4.1 New openings 58.0 19.1 Fixtures, fittings & equipment 11.1 6.7 Refurbishments 10.4 6.3 Business and IT projects 3.2 4.2 Reinvestment 24.7 17.2 Total 82.7 36.3 Significant increased inves
Slide 10: Movement in Net Debt inc. Finance leases
Movement in Net Debt inc. Finance leases £m Free cash flow increased to FY13 Net debt 474.2 £46.7m (2013: £22.6m). Free cash flow (46.7) Total net bank borrowing New pub capex 58.0 (including finance leases) of £499.6m, an increase of £25.4m in Dividends 10.0 the last 6 months (July 2013: Share
Slide 11: Debt Position
Debt Position H1 H1 FY 2014 2013 2013 Net debt/EBITDA 2.93 2.99 2.88 Interest cover (times) 3.11 3.02 3.24 Interest cover including payment to HMRC (times) 2.82 3.02 2.66 Fixed charge cover (times) statutory 1.67 1.68 1.56 excluding depreciation 2.20 2.18 2.08 excluding depreciation and exceptionals
Slide 12: Financial Summary
Financial Summary The Narrows, Abingdon • Solid sales and financial performance • Increased investment in staff costs, repairs and central overheads • Significant investment in new openings • Continued strong cash generation with significant cash headroom available 12
Slide 13: John Hutson CEO
John Hutson CEO The High Main, Byker
Slide 14: Business Update
Business Update Pen Cob, Pwllheli • Property • People • Changing Sales Mix • Peach Brandtrack • Continued improvement • Cost outlook • Taxation • Current trading and outlook 14
Slide 15: Property Update
Property Update Average cost of development £1.5m, in line with last years openings 20 pubs opened as of 14 March 2014 HY FY 14 13 20 pubs on site as of 14 March 2014 Trading pubs at start of FY 886 860 Freehold pubs opened 13 14 We still anticipate opening approximately 40-50 pubs this fina
Slide 16: "It's a People Thing"
“It’s a People Thing” • Circa 32,000 employees (2007: 20,588) • Created over 11,000 jobs since the start of the credit crunch • Dedicated employee website & e-learning suite • Catering Academy – over 380 kitchen managers are going through a catering academy & a further 100 have already Graduates gra
Slide 17: Changing Sales Mix Over Last 10 Years
Changing Sales Mix Over Last 10 Years 100.0% 0.4% 0.5% 0.7% 4.8% 4.5% 3.2% Other 90.0% 23.2% Machines 80.0% 29.4% 34.5% 70.0% Food 60.0% 50.0% Bar 40.0% 71.6% 30.0% 65.6% 61.6% 20.0% 10.0% 0.0% FY 2003 FY 2008 H1 2014 Long-term growth in food sales mix 17
Slide 18: Peach BrandTrack
Peach BrandTrack 2 Where we sit down and eat - BRITAIN’S MOST VISITED PUB & CASUAL DINING BRANDS Claimed usage in last 6 months May 12 Oct 12 April 13 Oct 13 Wetherspoons 44% 40% 43% 43% Pizza Hut 41% 30% 32% 31% Harvester 29% 28% 28% 29% Nandos 26% 20% 21% 22% Pizza Express 26% 22% 23% 22% Frankie
Slide 19: Peach BrandTrack: Britain's favourite big brand
Peach BrandTrack: Britain’s favourite big brand If the following brands were available in the same location, which would be your first choice to eat at? (ranked by % of adults choosing each brand) (out of a list of 16 – the top 6 ) May October April Oct 2012 2012 2013 2013 Wetherspoons 10% 11% 11% 1
Slide 20: Continued Improvement
Continued Improvement • 283 pubs are in the 2014 CAMRA Good Beer Guide • Raised over £8.5m for CLIC Sargent (for children with cancer) • Continued reinvestment – toilets, carpets and redecoration • 4.88 average scores on the doors out of a maximum of 5 (90%) achieving the maximum score of 5. • Bonus
Slide 21: Cost Outlook
Cost Outlook The Stannary Court, Plympton • Tax increases: excise duty, business rates and carbon tax • Bar, food and utility cost inflation expected to be around 3% • National minimum wage to increase by 3% • Continued investment in staffing to support catering • Continued high investment in our pu
Slide 22: Taxation
Taxation 2014 2013 First Half First Half £m £m VAT 133.6 126.1 Alcohol duty 77.9 74.7 PAYE and NIC 38.0 34.7 Business rates 22.5 23.4 Corporation tax 8.8 8.6 Machine duty 6.4 1.8 Climate change levy 3.0 2.1 Carbon tax 1.3 1.3 Stamp duty 1.2 0.3 Fuel duty 1.1 1.0 Landfill tax 0.7 0.6 Premise licence
Slide 23: Current Trading and Outlook
Current Trading and Outlook • LFL sales for the six weeks to 9 March 2014 increased by 6.7% with total sales growth of 11.6% • Largest ever ale festival expected this spring 28th March-13th April • Continuing pressure from increased taxation and inflation • Strong H2 profit performance last financia
Slide 24: Questions
Questions The George Inn, Sandbach The Hope & Champion, Beaconsfield 24
Slide 25: Appendix
The Captain Noel Newton, Oakham Appendix
Slide 26: Appendices
Appendices • A 10 year overview • B 10 year financial trends • C 10 year capital trends • D1 ROC/CROCCE/ROE calculations • D2 ROC/CROCCE/ROE calculations • E Cash flow • F SWAP maturity profile 26
Slide 27: 10 Year Overview
Appendix A 10 Year Overview £000 Average Sales Per Pub Week (including VAT) 950 Number of Pubs 36.0 900 34.0 850 32.0 800 30.0 34.0 35.3 905 33.4 750 886 32.3 860 28.0 823 31.1 30.3 30.1 29.9 30.1 700 775 29.0 28.0 28.2 731 26.0 650 694 643 655 657 671 24.0 600 2004 2005 2006 2007 2008 2009 2010 201
Slide 28: 10 Year Financial Trends
Appendix B 10 Year Financial Trends H1 H1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 2014 Sales per pub (£000) 1,239 1,246 1,283 1,354 1,333 1,344 1,335 1,360 1,401 1,476 726 766 EBITDA per pub (£000) (1) 204.4 195.7 205.6 219.0 211.6 212.9 205.8 198.7 194.9 200.9 95.9 99.8 Number of pub
Slide 29: 10 Year Capital Trends
Appendix C 10 Year Capital Trends H1 H1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 2014 Size (sq.ft.) – 4,317 4,176 3,928 3,855 3,618 3,359 3,781 3,572 3,325 3,643 4,076 3,538 Openings Number of openings 28 13 9 18 23 39 47 50 40 29 5 19 % which are freehold 43 54 22 61 57 33 32 68 45 48
Slide 30: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE 12 months to Jan 2014 12 months to Jan 2013 £000 £000 EBITDA (cash return) 170,773 158,591 Depreciation (a) (55,823) (52,313) Operating profit (b) 114,950 106,278 Interest (35,061) (34,887) Profit before tax 79,889 71,391 Current tax (c) (18,425) (17,607) Profit after cash
Slide 31: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE H1 H1 2014 2013 £000 £000 Shareholders equity per accounts 234,467 193,873 Deferred tax balances 53,177 54,074 Interest rate swaps valuations 33,688 56,755 Impairment balances 42,105 30,644 Net book value of revalued assets (8,322) (9,706) Adjusted shareholders equity (e)
Slide 32: Cash Flow
Appendix E Cash Flow H1 H1 FY 2014 2013 2013 £000 £000 £000 Free Cash Flow 46,677 22,583 65,349 Dividends (9,987) (10,021) (15,053) Proceeds on Disposal - - 645 Investment in new pubs (58,010) (19,054) (60,888) (21,320) (6,492) (9,947) Share Buy Backs (2,893) - - (24,213) (6,492) (9,947) Non Cash Mo
Slide 33: Swap Maturity Profile
Appendix F Swap Maturity Profile Swap Value From To Weighted Average % £400m 29 Jul 2012 12 Nov 2014 5.3% £400m 12 Nov 2014 31 Jul 2016 3.5% £400m 31 Jul 2016 31 Jul 2018 2.2% £400m 31 July 2018 31 July 2021 3.7% £150m 31 July 2021 31 July 2023 3.8% 33
Slide 34: Forward-looking statements notice
This document may contain forward-looking statements that may or may not prove accurate. Phrases such as "target", "intend", "anticipate", "believe", "estimate", "expect" and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known a