Slide 1: Full Year Results 2016/17
WHITBREAD FULL YEAR RESULTS 2016/17
Slide 2: Disclaimer
Disclaimer Thispresentation (the" Presentetion”) isprovidedon astrity prvateand confident bessf or infermnation purposescny By attending or resting this resentation y cuwilibedeernedttohave agreedtothe chigatin sendrestricronsset cut below. \Wrhoutthe expresspricrw ritten consent of the Company, the
Slide 3: Richard Baker, Chairman
Richard Baker Chairman Ss VV) TREAD
Slide 4: Alison Brittain, Chief Executive
Alison Chief Executive Brittain
Slide 5: Agenda
Agenda (+) Introduction (2) Financials G) Strategic update
Slide 6: Build capability
Build capability Grow and innovate Focus on our strengths to support in core UK to grow internationally long term growth c.85,000 c.£2.5bn 2020 growth @) Premier inn varie COSTA sctem sales Long term growth in earnings and dividends combined with strong return on capital WHITBREAD
Slide 7: Group highlights - another year of strong growth
Group highlights - another year of strong growth Total Profit Earnings Full year Return Leverage revenue before tax” per share™ dividend on capital =) ACO £3.1bn £565.2m 246.48p 95.80p WHITBREAD *Underlying profit before tax and underlying earnings per share for 52 weeks to 2 March 2017 1 2015/16 co
Slide 8: Premier Inn - unrivalled business model
Premier Inn - unrivalled business model * Underlying operating profit of £468m* * Total sales up 9.0% up 7.4% ¢ 3,816 new UK rooms, c.9,000 * Return on capital of 13.0%" over 2 years * Structural growth in branded budget hotels + Faster maturity of new sites Record distribution Improved quality and
Slide 9: Costa - customer and market leadership
Costa - customer and market leadership * Underlying operating profit of £158m * Total sales up 10.7% up 5.3% ¢ Excellent return on capital of 45% * +255 net new stores worldwide * +1,585 net new Express machines ¢ Structural growth in coffee market * UK equity like for likes up 2.0% Investing to dri
Slide 10: Nicholas Cadbury, Group Finance Director
Nicholas Cadbury Group Finance Director Ss VV) TREAD 10
Slide 11: Underlying profit before tax up 6.2%
Underlying profit before tax up 6.2% £m 2015/16 2016/17 - Change ar Change ; (2015/16) (2015/16) Revenue 2,921.8 3,106.0 6.3% 8.2% Profit from operations 600.4 626.0 4.3% 6.8% Central costs (31.6) (33.6) (6.3)% (7.0)% Underlying operating profit 568.8 592.4 4.1% 6.8% Interest (22.5) (27.2) (20.9)% (
Slide 12: Good revenue growth of 8.2%
Good revenue growth of 8.2% Revenue £m Premier Inn Restaurants Total Premier Inn & Restaurants Costa - UK Costa - International Total Costa Inter-segment Group a A > 2016/17: 52 weeks to 2 March 2017 2015/16: 53 Weeks to 3 March 2016 2016/17 a SrOweD : (2015/16) 1,349.1 7.1% 558.8 (0.6)% 1,907.9 4.7
Slide 13: Premier Inn - driving good total UK sales growth
Premier Inn’ - driving good total UK sales growth % Regions London Total Revpar in catchments with no capacity growth 2.6 oi) 1.4 (c.62% of like for like estate) Impact on revpar from new capacity -2.3 -1.1 -2.0 Reported revpar (like for like) 0.3 -3.3 -0.6 Extensions impact from revpar to sales 333
Slide 14: Good operating profit growth in both businesses
Good operating profit growth in both businesses Profit 2015/16 2016/17 Change Change ém iets ese ape tay bani Seen 451.5 471.5 4.4% 7.0% Premier Inn International (4.6) (3.5) 23.9% Total Premier Inn & Restaurants 446.9 468.0 4.7% Costa - UK 151.0 154.3 2.2% Costa - International 2.5 af 48.0% Total C
Slide 15: Margin progression - Premier Inn & Restaurants
Margin progression - Premier Inn & Restaurants * Good cost 2.2 0.3 management, | as offsetting inflation and our investments 2015/16 Week 53 Like for like Efficiency Inflation Labour and Rent/rates 2016/17 Investment 2016/17 2015/16 and new NLW underlying sites before investment WHITBREAD
Slide 16: Margin progression - Costa
Margin progression - Costa * Investing in future growth * Margins 20bps better 18 than guidance due to 423 investment phasing into Ei 07 2017/18 ei - 14.4 13.9, 0.1 —— i | 13.1 2015/16 Week 53 Like for like Inflation Labour and 2016/17 Investment 2016/17 2015/16 and new NLW underlying sites before i
Slide 17: Profit after tax up 10.5%
es VV) TREAD Profit after tax up 10.5% £m 2015/16 2016/17 7 chariee vine Chaves . (2015/16) (2015/16) Underlying profit before tax 546.3 565.2 3.5% 6.2% Non-underlying operating costs (40.7) (39.7) Non-underlying finance costs (17.9) (10.1) Profit before tax 487.7 515.4 5.7% 8.8% aimee ETR 21.1% (11
Slide 18: Strong funds from operations support capital investment
Strong funds from operations support capital investment £m 2016/17 EBITDA’ 806 Working capital and share based payments 54 Cash generated from operations 860 Product improvement and maintenance capital (206) Operating cash flow after maintenance capital 654 Interest, taxation and other (180) Pension
Slide 19: A strong balance sheet
A strong balance sheet c.3,400 £m Net debt Maintained leverage ratios 2016/17 Pension‘ Adjusted net debt: EBITDAR 3.2x Net debt: EBITDA 1.1K Lease commitments (Rent x 8) Net debt Total debt funding facilities £1,900m Adjusted debt EBITDAR * Good headroom on leverage metrics and funding facilities ¢
Slide 20: A strong balance sheet
A strong balance sheet Recycling of capital through sale and leaseback * Sale and leaseback allows Whitbread to recycle capital from mature assets into high returning opportunities * Sale and leaseback prove the value of our covenant to prospective landlords * Three London hotels: — Total proceeds £
Slide 21: Capital expenditure driving future growth
Capital expenditure driving future growth Cash capital 2016/17 £m Premier Inn & Restaurants 486 Expansion capital - growing pipeline and room openings 338 Acquisition of UK freehold properties, freehold and leasehold construction - £303m Germany and Premier Inn International - £35m Product improveme
Slide 22: Delivered strong returns
Delivered strong returns Premier Inn & Restaurants Costa Group Adjusted om 14.4%) (14.6% (os A6.9% Investment in future ii az as 49.9% 5.4% Spells 0.7% pts 1.5% pts 1.6% pts - = 49.9% 45.4% UK and 46.3% - Germany 15.7% 15.3% 5.2% Reported _ 15-95% 12.9% 13.0% returns r — . . — 2014/15 2015/16 2016/1
Slide 23: Q4 - good total sales growth of 7.8%
Q4 - good total sales growth of 7.8% Premier Inn & Restaurants * Very strong London sales growth 13% with 11% from new rooms * Regional sales up 7.8% with revpar up 2.1% where no capacity add Costa * UK equity like for like +0.6% comparable calendar basis ed ona * High Street like for like down -1.2
Slide 24: Current trading
Current trading * Early days in the new financial year (week 7) with year on year trading comparison impacted by the timing of Easter * Whitbread’s early indications (7 weeks) are: — Premier Inn has had a good start to the year — Costa has had positive like for like sales but in a weaker consumer re
Slide 25: Considerations for 2017/18
Considerations for 2017/18 Premier Inn & Restaurants ¢ New hotel sales contribute c.+6% * Impact of new capacity on revpar c.-1.5% * Extensions impact from revpar to sales of c.+2.5% * c.4,200 room openings this year ¢ Margin, -20 to Obps as per previous guidance Underlying interest c.£32m At this e
Slide 26: Considerations for 2017/18 - capital
Considerations for 2017/18 - capital Cash capital 2017/18 £m plan Premier Inn & Restaurants c.500 - 550 Expansion capital c.300 Germany c.50 - 100 Product improvement and maintenance capital c.150 Costa c.140 Expansion capital c.80 Product improvement and innovation, maintenance capital and IT c.60
Slide 27: Summary
Summary Investing in the long term opportunities and driving total sales Delivered strong profit growth and returns Good cash generation, strong balance sheet and momentum behind our cost efficiency programme Confident of making further good progress this year VV) TREAD
Slide 28: Alison Brittain, Chief Executive
Alison Chief Executive Brittain 28
Slide 29: Premier Inn
Ez z . 7 = — ® Premier Inn 29
Slide 30: Premier Inn - a unique model to profitable growth
Premier Inn - a unique model to profitable growth * Digital development * Marketing optimisation * Lower exposure to OTAs * Structural growth opportunities and brand strength * Organic Premier Inn growth * Roll-out of hub by Premier Inn * Extensions Fast maturity of new sites Digital direct Network
Slide 31: Winning market share and offering the greatest choice of locations
Winning market share and offering the greatest choice of locations Number of UK hotels 762" 737 697* 2014/15 to 2016/17 * Rooms available increase c.18% * Maintained occupancy at over 80% * Strong returns’ at 13.0% 2014/15 2015/16 2016/17 @ ibis @ Holiday inn Express @ Travelodge ® Premier inn ® Pre
Slide 32: Investing to offer a consistently superior product
Slide 33: Premier Inn delivers on both quality and value
Premier Inn delivers on both quality and value YouGov Brandindex 35 30 ©) Hilton °- Premier Inn ® Oy * Premier Inn leading on 3 B Martiots ee quality and value, securing a 20 = wider market appeal” Si) a5 = * Position improved "» Holiday Inn m y year on year 5 Holiday Inn Express lbis @, > Travelodg
Slide 34: Dynamic pricing - improving customer pricing
Dynamic pricing - improving customer pricing Reducing price dipping * Consistently raising prices towards date of arrival, giving a better customer proposition London — learning fast * ATE - early days learning fast * Market benefitted from significant event pricing * Premier Inn focus on VFM and pr
Slide 35: Record direct distribution through premierinn.com
Record direct distribution through premierinn.com Volume of reservations by channel ¢ We continue to reduce our exposure to third party distribution channels 8% 9% 7h 6% 9 6% Premier | : ‘ ; Es ee — 94% bookings direct to Premier Inn * We have built an in-house digital capability to compete with dig
Slide 36: Driving total sales and profit at good returns
Driving total sales and profit at good returns We have maintained occupancy while ..and increased earnings in line with sales growing room nights available... at good returns 1/818 1,902 1,656 23.8m mn 1,492 1,359 1,238 , ddd 2011/12 2012/1 2013/1 201 5 2015/1 2016/1 ee ees are UK 12.8% 12.9% 138% 1
Slide 37: Premier Inn London supply and total sales growth ahead of competition
Premier Inn London supply and total sales growth ahead of competition London rooms opened* London accommodation sales growth YoY 3,397 ‘ * Premier Inn has a low market share of c.8% 15.8% 15.9% * Premier Inn growing share of rooms and accommodation sales 852 . * New hotels maturing fast, c.80% occup
Slide 38: hub - new hotels performing well
hub - new hotels performing well ¢ 5 hub hotels now open (722 rooms) — London: 4 hotels, occupancy 85% — Edinburgh: 1 hotel, occupancy 73% * TripAdvisor score” 4.5 across all sites — 89% excellent or very good experience ¢ Attractive economics == — Expected returns of c.13% at maturity ipeline @) Pr
Slide 39: Premier Inn regional supply and total sales growing ahead of competitors
Premier Inn regional supply and total sales growing ahead of competitors Regional rooms opened’ Regional accommodation sales growth YoY 15.2% 14.7% 3649 * Premier Inn growing share of rooms and sales 9.9% 9.2% 8.2% * New sites maturing faster with c.75% of occupancy 5.2% . in year 1 1,568 * Total es
Slide 40: Further growth with good returns
Further growth with good returns UK rooms* c.14,500 c.82,500 ¢.2,500 c.85,000 => Line of sight >100,000 rooms ss c.68,000 are * Pipeline delivers good returns 43,600 — UK hotels deliver 13% return — UK pipeline expected to deliver similar 24,400 returns by 2020 2016/17: Open Committed pipeline Open
Slide 41: Good progress in rebranding and rejuvenating our restaurants
Good progress in rebranding and rejuvenating our restaurants Beefeater . BAR | BLOCK | * Continue to grow share in a challenging market = — Total sales up 1.2% and like for like sales down -0.3%, ahead of pub restaurant market * Restaurants providing a vital service to Premier Inn guests — Customers
Slide 42: Grow and innovate in our core UK businesses
eo Grow and innovate in our core UK businesses COSTA COSTA 42
Slide 43: Costa - a clear plan for consistent profitable growth
Costa - aclear plan for consistent profitable growth UK oe ? Innovate coffee and food, invest in store proposition, amplify A giant step forward the brand and improve digital capability ; 5 Focus on major cities, step change China Unlock potential brand awareness and develop a compelling proposition
Slide 44: Investing in the UK drivers of growth
Investing in the UK drivers of growth Brand Coffee Food Ch nnel Store Digital Credentials experience Maintain Translate quality Step change Pipeline focus on Deliver the right Build loyalty and amplify and innovation to support growth channels format for through brand presence to sales - coffee sale
Slide 45: UK's favourite coffee shop - 7th year in a row
UK’s favourite coffee shop’ - 7th year in a row Brand Preference: Costa is the UK’s favourite 37% 31% 22% 13% 1k —_—_—— oe, 11% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: 2008 — 2014; YouGov Q. If there were a Costa, Starbucks and Caffé Nero next door to each other, which one would be
Slide 46: Costa - delivering initiatives to drive like for like growth
Costa - delivering initiatives to drive li growth May June New cold drinks Frostino Cold Brew Super Day Smoothie Coffee/drinks Old Paradise Street Single origin blend Food Better breakfast Healthy salad ke for like September Old Paradise Street Single origin blend Porridge Bacon roll Healthy yogurt
Slide 47: Pipeline weighted towards higher performing categories
Pipeline weighted towards higher performing categories A * Travel and Drive Thrus delivering significantly higher like for like growth Travel store’ UK equity openings as a proportion of total openings 18.3% 17.4% 12.4% 2014/15 2015/16 2016/17 2017/18
Slide 48: Premier Inn International
@) Premier Inn ® Premier Inn 48
Slide 49: Germany - building the pipeline
Germany - building the pipeline Pipeline 5 hotels, Frankfurt Premier Inn 942 rooms : ¢ A successful first year * Currently ranked #1 on TripAdvisor * 100% direct bookings — 70% online * Current occupancy level c.60% ® Hotels opened 2016 @ Secured sites opening 2018/19 Target cities Building a pipeli
Slide 50: Focus on our strengths internationally
Focus on our strengths internationally ¢ Middle East — Successful profitable joint venture ina challenging market — 6hotels open and pipeline of 2 hotels * India and South East Asia — Exit strategy on plan
Slide 51: Costa International
” TSR EEE ica) COSTA / COSTA 51
Slide 52: Poland - good performance
* Poland — good performance — 131 stores with potential to double — High single digit like for like sales — Reached profitability in 2016/17 — 259 Costa Express machines performing well ¢ Franchise — strong growth — Profitable and growing — 731stores in 23 countries — New formats and channels
Slide 53: China and Asia - focusing on the opportunity
China and Asia - focusing on the opportunity * China remains a significant market opportunity — 409 stores today * Confident in re-orientating to scale successfully * Amore focused property strategy — Focused growth on key core cities — Exited 37 poor performing stores, c.30 more planned for 2017/18
Slide 54: Costa Express - doubling up
Costa Express - doubling up ¢ Strong track record of success — 6,801 machines 11% international — 1,585 net installations in 2016/17 — c.1,250 net installations in 2017/18 ¢ New markets — trials in Germany, Netherlands and Malaysia ¢ Renewal of key UK contracts * New management system — Improved sca
Slide 55: Build capability and infrastructure to support long term growth
Build capability and infrastructure WHITBREAD to support long term growth WHITBREAD
Slide 56: Whitbread building capabilities and efficiency
Whitbread building capabilities and efficiency * Strengthen * Agood start — * Successful sale * Insourced Costa Executive team savings in and leaseback digital team * Recruited new procurement and transactions to * Consolidating Transformation enol cen ea Uline recycle capital key suppliers Director
Slide 57: Cutting edge Roastery - driving innovation and efficiency
Cutting edge Roastery - driving innovation and efficiency ¢ New Roastery - investment of £38 million * State of the art roasting and packing equipment Increased capacity four fold — Underpins growth for next 20 years * Product innovation Integrated laboratory and unique development roaster, that wil
Slide 58: A force for good
A force for good Teams and community Customer wellbeing Energy and environment c.£9M raised for GOSH Commitment to be 100% renewable and target achieved for 100% cage free All electricity across our UK Premier Inn Clinical Building on all whole shell eggs by 2020 owned and operated estate is from re
Slide 59: Summary
Summary * Continued to deliver strong consistent sustainable growth and returns * Good progress against our strategic plan in both the UK and international markets and building capability and infrastructure * Strong and sustainable business model supported by market leading brands and structural gro
Slide 60: Q&As
Slide 61: Full Year Results 2016/17
WHITBREAD FULL YEAR RESULTS 2016/17
Slide 62: Standard information
Standard information General Average Room Rate (ARR) Income before fixed costs (IBFC) Income after fixed costs (IAFC) Joint sites Like for like sales Occupancy Return on capital Solus sites Revpar/yield Hotel accommodation income divided by the number of rooms occupied by guests Premier Inn & Restau
Slide 63: Standard information
Standard information Premier Inn & Restaurants Solus ' Sales 874.2 808.5 fm fa) (BFC fm 518.2 4n3 a lar? £m 286.5 263.6 * Net assets ? em 1,672.7 1,708.6) Fe Return on capital * 74 6 Joint * Sales fm 1,032.6 1,012.4 (BFC £m 484.8 461.7 WFC fm 335.6 322.6 Net assets * fm 1,878.0 1,714.4 Return on cap
Slide 64: Standard information
Standard information Premier Inn & Restaurants continued Number of rooms fal Solus : q ~ Managed 39,024 37,100 Ww ~ Associate 5 282 a - Franchise & management contract ! 194} | 194) ag Total solus 39,218 37,576 | fae Joint sites 28,863] | 27,023) = Total UK & Ireland 68,081 64,599 = Premier Inn Inte
Slide 65: Standard information
Standard information Costa System sales - total £m 1,781.2 1,612.8 Sales - total fm 1,201.7 1,103.2 EBITDA from operations fm 231.3 215.6 Underlying operating profit fm 158.0 153.5 Segmental net assets £m 348.1 307.6 Cash - capital expenditure - total ' fm 124.3 102.5 Cash - business acquisitions £m
Slide 66: Whitbread cost base
Whitbread cost base 2016/17 c.£2.2bn Indicative cost inflation c.£10m 2017/18 c.15m p.a. : 2-3% p.a. => £30-40m p.a. c.5% p.a. c.£30m p.a. (including Apprenticeship Levy and NLW incremental £15-20m p.a.) Cost efficiencies (c.£150m over 5 years) making good progress Procurement Renegotiated and conso
Slide 67: Premier Inn - driving good Q4 total sales growth
Premier Inn’ - driving good @4 Total sales growth % Regions Revpar in markets with no capacity growth 21 (c.62% of like for like estate) Impact on revpar from new capacity -2.9 Reported revpar (like for like) -0.8 Extensions impact from revpar to sales 3.5 Food & Beverage and other -0.2 Total like f
Slide 68: Significant facilities from diverse sources
Significant facilities from diverse sources 3 Fr Sources of funding (£m) * Funds from operations (EBITDA £806m’) @ Committed bank facility @ Bond mM USPP @USPP (new - 2017) ® Uncommitted MM Uncommitted money markets lines: £120m Committed bank facility: £950m, 2021 — Option to extend +lyear US priva
Slide 69: Non-underlying operating costs
Non-underlying operating costs £m 2015/16 2016/17 Premier Inn International exit costs - (30.0) Costa International restructuring costs - (14.5) UK restructuring costs - (21.6) Net (loss)/gain on disposal of PPE and property revisions - principally three sale and lease back transactions, net of oner
Slide 70: Lease commitments and depreciation
Lease commitments and depreciation * Premier Inn & Restaurants rent expected to increase by c.£15-20m in 2017/18 (including forward funding and sale and leaseback carried out in 2016/17) Annual rent 2015/16 2016/17 £m Premier Inn & Restaurants 123.4 139.8 Costa 11-2. 121.4 Total property rent 234.7
Slide 71: Interest, taxation and pension
Interest, taxation and pension * Underlying interest charge of £27.2m (2015/16 £22.5m) £m 2015/16 2016/17 Interest on borrowings (32.7) (36.3) Interest capitalised 10.0 8.9 Other 0.2 0.2 Underlying net finance costs (22.5) (27.2) Effective interest rate 4.7% 3.8% * Effective tax rate — 2015/16 21.3%
Slide 72: Structural growth opportunities remain strong
Structural growth opportunities remain strong Total UK hotel market rooms Budget branded Other branded Independents Premier Inn rooms Premier Inn share % 678,000 686,000 692,000 709,000 729,000 752,000 19% 23% 2015 2017 2019 2021 43,000 52,000 59,000 c.68,000 .77,000 c.86,000 9000090 New model assum
Slide 73: Delivering future structural growth opportunities
Delivering future structural growth opportunities UK coffee and tea UK coffee shop market™* consumption per capita’ Number of outlets % share CAGR 7% A nation of coffee drinkers! 55% 41% 2005 2016E 2010 2016E 2020E Tea share % Source: *Euromonitor 2015; ** Allegra Project Café 2016
Slide 74: Strength and breadth - 2016/17
Strength and breadth - 2016/17 UK Retail Equity stores Individual franchise Costa Enterprises Costa Express Corporate Partnerships Costa EME! Europe, Middle East and India Costa Asia China and South East Asia f ‘ f ‘ f System sales System sales System sales System sales £960.9m a £427.4m £280.9m a £