Slide 1: Welcome with a smile
Welcome with a smile
Slide 2: Anthony Habgood, Chairman
Anthony Habgood Chairman
Slide 3: Christopher Rogers, Finance Director
Christopher Rogers Finance Director
Slide 4: PBT from continuing operations, pre exceptionals
4 2007/08 2006/07 % change PBT from continuing £210.3m £166.5m 26.3% operations, pre exceptionals EPS pre exceptionals 85.9p 65.8p 30.5% Proposed final dividend 26.90p 22.15p 21.4% Interim dividend 9.10p 8.10p 12.3% Total dividend for year 36.00p 30.25p 19.0% 4
Slide 5: Revenue from continuing operations and profit from operations
5 £m 2007/08 2006/07 % change Revenue from 1,216.7 1,173.5 3.7% continuing operations Profit from operations 254.3 226.3 12.4% Central costs (24.4) (21.6) (13.0)% Interest (19.6) (38.2) 48.7% PBT from continuing 210.3 166.5 26.3% operations, pre exceptionals 5
Slide 6: PBT, taxation and profit for the year
6 £m 2007/08 2006/07 % change PBT from continuing 210.3 166.5 26.3% operations, pre exceptionals Taxation (67.2) (55.8) Net profit from continuing 143.1 110.7 29.3% operations Discontinued operations 19.6 40.4 Total profit, pre exceptionals 162.7 151.1 7.7% Exceptionals 382.1 130.4 Profit for the ye
Slide 7: Discontinued operations: David Lloyd Leisure, T.G.I.Friday's, Pub Restaurants
7 •! David Lloyd Leisure •! Profit disclosed within discontinued operations for both 2007/08 and 2006/07 •! T.G.I.Friday’s •! Profit from 2006/07 reclassified within discontinued operations •! Pub Restaurants •! Trading results of the disposed estate, for 21 weeks through to July 28th 2006, are trea
Slide 8: Revenue by division
8 £m 2007/08 2006/07 % change Premier Inn 527.8 458.5 15.1% Pub Restaurants: retained 446.1 436.4 2.2% Costa 216.3 175.1 23.5% Less: inter-segment (2.4) (2.8) Sales from continuing Whitbread 1,187.8 1,067.2 11.3% Pub Restaurants: disposed* - 82.5 Other 28.9 23.8 21.4% Revenue from continuing 1,216.7
Slide 9: Like-for-like sales by division
9 % 2007/08 2006/07 Premier Inn 10.4 8.2 Pub Restaurants 0.8 0.9 Costa 6.5 6.6 Total 5.7 4.7 9
Slide 10: Profit from operations by division
10 £m 2007/08 2006/07 % change Premier Inn – UK 179.4 156.3 14.8% Premier Inn – overseas (1.4) (0.1) Total Premier Inn 178.0 156.2 14.0% Pub Restaurants 55.5 52.3 6.1% Costa - UK 22.4 18.5 21.1% Costa – overseas (1.6) (0.7) Total Costa 20.8 17.8 16.9% Profits from operations 254.3 226.3 12.4% 10
Slide 11: Revenue and profit from operations
11 £m 2007/08 2006/07 % change Revenue from continuing 1,216.7 1,173.5 3.7% operations Profit from operations 254.3 226.3 12.4% Central costs (24.4) (21.6) (13.0)% Interest (19.6) (38.2) 48.7% PBT from continuing 210.3 166.5 26.3% operations, pre exceptionals 11
Slide 12: Net interest charge
12 £m 2007/08 2006/07 Interest on borrowings (31.9) (40.9) Interest on deposits 4.1 1.3 Pension interest credit/charge 7.0 (0.5) Other 1.2 1.9 Net interest charge (19.6) (38.2) 12
Slide 13: Exceptional items
13 £m 2007/08 Exceptional credits Business disposals 440.8 Pension credit 10.0 Exceptional costs Reorganisation costs (21.2) Premier Inn rebranding (7.0) Debenture redemption (14.2) Bond costs (9.4) Loss on property disposals and reversions (27.2) Tax and interest 10.3 Total net exceptional profit 3
Slide 14: Cash flow
14 £m 2007/08 2006/07 EBITDA 322 332 Working capital movements (46) 66 Cashflow from operations 276 398 Cash capital expenditure (285) (243) Cashflow after investment (9) 155 Interest, tax and ordinary dividends (116) (118) Disposals/buybacks/other 598 35 Decrease in net debt 473 72 14
Slide 15: Capital expenditure by division
15 £m 2007/08 2006/07 Premier Inn 147 120 Pub Restaurants 79 58 Costa 34 23 Corporate 10 5 Discontinued 15 37 Total 285 243 15
Slide 16: Cost savings and future segmental disclosure
16 •! Cost savings communicated in February 2008 •! £25m annual savings; majority falling in 2009/10 •! £35m cost of achievement; £21.2m taken in 2007/08 •! Future segmental disclosure: •! Hotels and Restaurants •! Costa •! Pub Restaurants sales will be separately disclosed 16
Slide 17: Debt, facilities and share buyback
17 •! Year end debt down from £898m to £425m •! A new £455m 5-year revolving credit facility has been agreed to replace the £280m facility which expired in March. Total facilities now stand at £1,155m •! On market buyback reached £338m by 28 February 2008; 175.7m shares remain in issue* •! Leverage
Slide 18: Pension deficit and tax rate
18 •! Pension deficit decreases from £196m (£137m net of tax) to £33m (£24m net of tax) benefiting from £50m cash injections during the year •! £90m of further payments due to pension fund •! £50m 2008/09 and £20m in 2009/10 and 2010/11, •! Subject to triennial valuation to be completed 2008 •! Effe
Slide 19: 2008/09 cost expectations
19 •! International start up costs of £3m in 2007/08 and expected to increase to c.£5m in 2008/09 •! Pension interest credit in 2008/09 to fall from £7.0m to £5.5m •! Rent to increase from £60m to over £70m 19
Slide 20: Financial summary
20 •! Sales from Continuing Whitbread up 11.3% •! Like-for-like sales up by 5.7% •! PBT from continuing operations, pre-exceptionals up 26.3% to £210.3m •! Diluted total pre-exceptional EPS up 30.5% to 85.9p •! Final dividend up 21.4% to 26.90p giving a full year dividend of 36.00p – up 19.0% 20
Slide 21: Alan Parker, Chief Executive
: Premier Inn Bar & restaurant Free parking Alan Parker Chief Executive
Slide 22: Divisional highlights
22 •! Premier Inn leads the hotel market •! Pub Restaurants delivered significant improvements in profit per unit •! Costa expansion accelerated in UK and overseas 22
Slide 23: Simplified business and management structure
23 •! Simplified business and management structure •! Sold David Lloyd Leisure & T.G.I. Friday’s – £995m proceeds •! Combined divisional management of Hotels and Pub Restaurants •! Programme of internal re-organisation to improve operating efficiency •! Outsourced Whitbread Food Logistics •! Total c
Slide 24: Strong market positions
24 •! Premier Inn – excellent position in the marketplace as hotel guests look for better value •! Pub Restaurants – remodelled estate with distinct brand segmentation •! Costa - strong consumer brand in an established and growing sector •! Well maintained Whitbread properties – c.£300m maintenance
Slide 25: Five-year ambitions: Premier Inn and Costa growth
25 Costa to double to Premier Inn 2,000 stores up 50% to 55,000 rooms 25
Slide 26: Premier Inn
Premier Inn Welcome with a smile
Slide 27: Premier Inn results
27 £m 2007/08 2006/07 % change Revenue 527.8 458.5 15.1% Profit 178.0 156.2 14.0% Like-for-like sales 10.4% 8.2% •! Selling more rooms than ever before: •! Total occupancy maintained at 78.3% with 10% more rooms •! Like-for-like occupancy steady at 79.2% •! Yield up 6.6% to £40.17 •! Profit per room
Slide 28: Number of rooms, top three hotel brands
28 Year-on-year Number of rooms, top three hotel brands growth Premier Inn Premier +3,400Inn 36,006 Holiday Inn +1,036 Holiday Inn 29,119 Holiday Inn Express Travelodge +2,626 Travelodge 21,445 Source: BDRC British Hotel Guest Survey Feb 2008 28
Slide 29: Hotels and rooms added
29 •! 34 hotels added with 3,437 rooms – up 10% •! 1,786 rooms in new hotels •! 1,651 rooms added to existing properties 29
Slide 30: Operating profit and ROCE
30 Operating profit Profit CAGR of 18% ROCE £m 200 Acquisition of Premier Lodge 15% 175 150 10% 125 100 75 5% 50 25 0 0% 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 ROCE Operating profit 30
Slide 31: Rooms and RevPar growth
31 Rooms Rooms CAGR 14.2% RevPar £ 40,000 Hotel recession 40 30,000 30 20,000 20 10,000 10 0 0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Rooms RevPar 31
Slide 32: Changed customer perception of Premier Inn
32 •! Changed customer perception of Premier Inn over a five year period 32
Slide 33: Premier Travel Inn variance from Travelodge
33 2002 2007 Travel Inn Premier Travel Inn variance from Travelodge variance from Travelodge Positive attributes % % Helpful, friendly staff -4 +5 Quality F&B +1 +8 Comfortable bedrooms +1 +7 Bedrooms are good for working in -2 +7 Negative attributes Provide rather basic accommodation +10 -25 Tired
Slide 34: Premier Inn re-brand
34 •! Successful re-brand launched in October •! Cost £13m of which £7m was expensed in 2007/08 •! Supported by multi-media TV and outdoor marketing campaign •! Website searches up 173% 34
Slide 35: Guest survey responses
35 Guest survey responses •! 85% will recommend Premier Inn •! 91% intend to revisit Key drivers ofFirst performance stay Very satisfied Value for money 2-5 79% Hotel cleanliness 93% 6-10 Friendliness and 91% helpfulness of staff 11+ Source: Guests Recommend Survey 2007/08 with 425,588 participants
Slide 36: Total hotel market and branded budget sector
36 Total hotel market Branded budget sector by Existing Supply as a Proportion of Total number Budget Hotel of rooms Stock UK 64% 13% 87% France 23% 36% USA 25% T 13% Premier Inn 5% of total hotel market Full service Branded budget Source: TRI Hospitality 2007 36
Slide 37: Planning assumption: market growth to 2017
37 •! Planning assumption •! Total market set to grow 11% over 10 years •! Branded budget hotel sector set to grow 63% 2007 2017 58% 50% 29% 31% 13% 19% 708,000 rooms 787,000 rooms Branded budget Branded full service Unbranded Source: TRI Hospitality 2007 37
Slide 38: Profile of future demand sources for Premier Inn
38 Profile of future demand sources for Premier Inn Hotel displacement 55% Market growth 25% Non hotel Created substitution * demand 9% 11% Source: TRI Hospitality 2007; * Bed and Breakfast, visiting friends and relatives, etc. 38
Slide 39: Region-by-region growth locations and competitive edge
39 •! Completed region-by-region analysis to pinpoint specific growth locations - city/town/seaside resort •! 4,000+ rooms to open 2008/09 •! Our competitive edge is: •! Choice of joint or solus model •! Flexible deal structuring •! Strength of Whitbread covenant •! High-performance model drives hig
Slide 40: International joint ventures: Middle East and India
40 •! JV with Emirates in the Middle East •! First hotel opened in April •! Four hotels in committed pipeline •! 50 hotels with 8,000 rooms planned by 2012 •! JV signed with Emaar-MGF in India •! Four hotels in committed pipeline •! 1st hotel to open in 2009 •! 80 hotels with 12,000 rooms planned by
Slide 41: 41
41 41
Slide 42: Pub Restaurants results
42 £m 2007/08 2006/07* % change Revenue 446.1 518.9 (14.0%)* Profit 55.5 52.3 6.1% Like-for-like sales 0.8% 0.9% •! Two years of like-for-like sales growth •! Retained estate sales up 2.2% •! Significant improvement in profit per pub restaurant – around 40% *Figures include 235 disposed sites 42
Slide 43: Pub Restaurants: right experience for the local market
43 •! Provide the right restaurant experience for the right demographic in the local market •! Work is underway in two main areas •! Developing the brand propositions •! Driving further operating efficiencies 43
Slide 44: Pub Restaurants brand propositions
44 Pub Restaurants 144 102 157 Average spend per £13.95 £11.57 £10.21 head * Customer Full table service Choice of service Counter service Proposition: The chargrill Modern pub food in Family friendly – restaurant specialist stylish surroundings great value ‘Two for £9.00’ Developments: All restaura
Slide 45: Pub Restaurants - Table Table
Pub Restaurants - Table Table
Slide 46: 2007/08 and 2008/09 focus
46 2007/08 focus •! Discounts •! Controllable expenses 2008/09 focus •! Labour •! Overheads 46
Slide 47: Joint sites: Premier Inn and pub restaurants
47 •! Deliver superior results •! Sales and cost synergies on 300 joint sites •! Pub restaurant joint sites operating profit +35% vs standalone •! Sleep, Eat and Drink – a joined-up guest experience •! c.50% of guests had breakfast •! c.47% of guests had dinner •! Consistent quality throughout •! Ta
Slide 48: Costa
tS “tall Welcome with a smile
Slide 49: Costa results
49 £m 2007/08 2006/07 % change Revenue 216.3 175.1 23.5% Profit 20.8 17.8 16.9% Like-for-like sales 6.5% 6.6% •! Seven years of like-for-like sales growth •! Profit growth despite continued investment overseas •! 1,000th store opened in March – estate doubled in 3 years •! 285 net new stores opened
Slide 50: Costa sales, profit and store numbers
50 250.0 1000 Profits CAGR of 50% 900 Excellent ROCE at 28.7% 200.0 800 700 150.0 600 500 Sales £'m Number of stores 100.0 400 300 50.0 200 100 0.0 0 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Sales Number of stores 50
Slide 51: Costa, Starbucks, Caffé Nero store numbers
51 Year-on-year Number of stores February 2008 growth Costa +163 Costa 695 Starbucks +101 Starbucks 635 Caffé Nero +44 Caffé Nero 336 Source: Costa – Actual year ending February 2008; Starbucks & Nero: websites March 2008 51
Slide 52: Costa brand strength
52 Brand strength demonstrated by: •! Good like-for-like sales for all parts of the day •! Average transaction value £3.65 - up 3.7% •! Food capture is 42.9% Only 30% of the population have visited Costa 52
Slide 53: UK opportunities
53 •! UK opportunities •! Under-representation in major cities and towns •! London •! Retail Parks •! Retail concessions e.g. Tesco •! Roadside locations •! 300+ stores to open in 2008/09 53
Slide 54: International store growth
54 •! 122 net new stores opened last year (up 70%) across 20 countries Store numbers 2007/08 2006/07 Increase Middle East 181 130 39% Central Europe 58 22 164% India 37 18 105% China 21 5 320% Total 297 175 70% •! International represents 30% of total system store base 54
Slide 55: Summary and five-year ambitions
55 •! Now a focused hotel and restaurant business in resilient value-for-money sectors •! Five-year ambitions for disciplined growth •! Premier Inn to increase by 50% •! Costa to double •! Strong momentum set to continue 55
Slide 56: Premier Inn
: Premier Inn : Bar & restaurant Free parking
Slide 57: Welcome with a smile
Welcome with a smile