Whitbread Plc · LSE:WTB
Whitbread — H1 2012/13 Earnings Presentation
61 slides from Whitbread's earnings presentation, Oct 23, 2012
Slide 1: Interim Results 2012
Interim Results 2012 23 October 2012 1
Slide 2: Interim Results 2012
Interim Results 2012 23 October 2012 2
Slide 3: Anthony Habgood, Chairman
Anthony Habgood Chairman EAT SLEEP & DRINK WHITBREAD 7s
Slide 4: Andy Harrison, Chief Executive
Andy Harrison Chief Executive 4
Slide 5: Summary
Summary • Good H1 performance – continued outperformance, winning share – Total sales up 14.2% – Costa up 25.0%, Premier Inn up 12.9% – Underlying PBT up 10.6%; ROCE 13.7% – Operating cashflow up to £285.3m up 11.0% – Interim dividend up 11.4% • Strong brands drive strong like for like performance –
Slide 6: Christopher Rogers, Group Finance Director
Christopher Rogers Group Finance Director 6
Slide 7: Highlights
Highlights H1 2012/13 £m H1 2012/13 H1 2011/12 Change Revenue £1,018.1m £891.3m 14.2% Underlying profit before tax £193.4m £174.9m 10.6% ROIC 13.7% 13.4% EPS underlying (diluted) 81.65p 72.20P 13.1% Proposed interim dividend 19.50p 17.50p 11.4% 7
Slide 8: Profit & loss
Profit & loss H1 2012/13 £m H1 2012/13 H1 2011/12 Change Revenue 1,018.1 891.3 14.2% Profit from operations 217.4 194.9 11.5% Central costs (11.4) (8.6) (32.6)% Interest (12.6) (11.4) (10.5)% Underlying profit before tax 193.4 174.9 10.6% 8
Slide 9: Profit & loss - continued
Profit & loss - continued H1 2012/13 £m H1 2012/13 H1 2011/12 Change Underlying profit before tax 193.4 174.9 10.6% Pension finance cost - IAS 19 (8.6) (7.8) (10.3)% Amortisation of acquired (1.3) (1.3) intangible Profit before tax, 183.5 165.8 10.7% pre exceptionals Taxation (46.6) (45.6) (2.2)% Ne
Slide 10: Revenue by business segment
Revenue by business segment H1 2012/13 £m H1 2012/13 H1 2011/12 Change Hotels & Restaurants 705.9 641.9 10.0% Costa 313.4 250.8 25.0% Less: inter-segment * (1.2) (1.4) Revenue 1,018.1 891.3 14.2% 10 * Sales between segments
Slide 11: Hotels & Restaurants revenue
Hotels & Restaurants revenue H1 2012/13 £m H1 2012/13 H1 2011/12 Change Premier Inn revenue 443.5 392.8 12.9% Restaurants revenue * 262.4 249.1 5.3% Hotels & Restaurants 705.9 641.9 10.0% 11 * Revenue from joint site and stand alone restaurants, restated for the transfer of a site from the solus est
Slide 12: Like for like sales
Like for like sales H1 2012/13 2012/13 6.8% 8.4% H1 2012/13 H1 2012/13 3.7% 3.4% 5.2% 5.4% 4.6% 4.3% 3.8% 3.2% 2.6% 2.1% 1.1% 1.3% -0.9% 2011/12 2012/13 2011/12 2012/13 2011/12 2012/13 Premier Inn Restaurants Costa 12 Q3 Q4 Q1 Q2
Slide 13: Unit growth
Unit growth March Opened Trf/Close Net August 2012 d 2012 Premier Inn – 47,429 1,621 (30) 1,591 49,020 UK & Ireland Premier Inn – 1,296 1,296 International Total Premier Inn 48,725 1,621 (30) 1,591 50,316 (rooms) Restaurants 387 1 1 2 389 Costa – UK 1,392 94 (7) 87 1,479 Costa – International 811 80
Slide 14: Profit by business segment
Profit by business segment H1 2012/13 £m H1 2012/13 H1 2011/12 Change Hotels & Restaurants – UK & 184.6 169.6 8.8% Ireland Hotels & Restaurants – (3.3) (2.5) International Total Hotels & Restaurants 181.3 167.1 8.5% Costa – UK 34.6 26.4 31.1% Costa – International* 1.5 1.4 Total Costa 36.1 27.8 29.9
Slide 15: Profit & loss
Profit & loss H1 2012/13 £m H1 2012/13 H1 2011/12 Change Revenue 1,018.1 891.3 14.2% Profit from operations 217.4 194.9 11.5% Central costs (11.4) (8.6) (32.6)% Interest (12.6) (11.4) (10.5)% Underlying profit before tax 193.4 174.9 10.6% 15
Slide 16: Interest charge
Interest charge H1 2012/13 £m H1 2012/13 H1 2011/12 Underlying interest charge (12.6) (11.4) Pension finance cost – IAS 19 (8.6) (7.8) Interest charge, pre exceptionals (21.2) (19.2) Exceptional interest 10.1 (0.8) Total interest cost (11.1) (20.0) Average net debt in first half £499.1m (2011/12 £45
Slide 17: Exceptional items
Exceptional items H1 2012/13 £m H1 2012/13 H1 2011/12 Settlement of tax claim 13.5 - Interest on tax claim 10.6 - Reduction in tax rate 17.1 18.3 Other (including profit/loss on sale of (2.2) 28.4 property/investments) Tax on exceptional items (2.5) (7.7) Exceptional items 36.5 39.0 17
Slide 18: Cash flow
Cash flow £m 2010/11 Movement Net debt (487.9) H1 2012/13 H1 2011/12 (32.2) (520.1) 2011/12 15.8 (504.3) 300 H1 2012/13 (21.5) (525.8) 270 285 240 210 188 180 £m 150 120 90 49 60 30 32 0 36 2 22 -30 Cashflow from Cash capital Dividends Interest and tax Pension * Other Increase in net debt operations
Slide 19: Capex
Capex Capex by business (£m) Expansionary vs maintenance (£m) 147 77 143 74 101 38 111 105 91 36 41 28 H1 2011/12 H2 2011/12 H1 2012/13 H1 2011/12 H2 2011/12 H1 2012/13 19 Costa Hotels & Restaurants Expansionary Maintenance
Slide 20: Property analysis – UK hotels
Property analysis – UK hotels 48,865 Rooms as at 11,000 Committed 30 August 2012 pipeline 80% 80% • Post build out 70% 73% 70% 73% of the pipeline freehold falls 60% 60% to 65% 50% 50% 40% 40% 30% 30% 27% 27% 20% 20% 10% 10% 0% 0% Leasehold <35 Freehold & long Leasehold <35 Freehold & long years lea
Slide 21: Property analysis
Property analysis Investment in freehold and long leasehold continues to rise £m Gross investment Disposals Net 2010/11 80 (1) 79 2011/12 128 (32) 96 2012/13E 115 (1) 114 Total 323 (34) 289 * * 21
Slide 22: Returns
Returns* % H1 2012/13 H1 2011/12 FY 2011/12 Hotels & Restaurants 12.5 12.5 12.4 Costa 31.2 28.5 32.4 Group 13.7 13.4 13.6 * Underlying profit before interest and tax for the year divided by segmental net assets at the 22 balance sheet date, adding back debt, taxation liabilities and the pensions def
Slide 23: Other financial items
Other financial items • Triennial pensions review completed – no change in deficit funding payments agreed in 2008 • 2012/13 payment £35m as £25m pre-paid in 2011/12 • IAS 19 pension deficit increases to £640m (£525m net of tax) – driven by reduction in discount rate which falls a further 0.55% • Ca
Slide 24: Summary
Summary • Revenue +14.2% • Underlying profit before tax £193.4m +10.6% • EPS, Underlying 81.65p +13.1% • Proposed interim dividend 19.50p +11.4% 24
Slide 25: Andy Harrison, Chief Executive
Andy Harrison Chief Executive 25
Slide 26: Good first half result – Hotels & Restaurants
Whitbread Good first half result Hotels & Restaurants • Total sales up +10.0% • Profit up 8.5% to £181.3m, ROCE 12.5% • Premier Inn continues to strengthen, outperform and win market share – New UK rooms: H1 1,591 – FY 4,500 – On track for 65,000 UK rooms by 2016 milestone – Like for like revpar* gr
Slide 27: Premier Inn
Premier Inn 27
Slide 28: Key levers for outperformance
Key levers for outperformance Winning customer propositions Network Driving Premierinn.com strength outperformance Dynamic pricing 28
Slide 29: Continued outperformance
Continued outperformance 25.0% 20.0% Revpar growth – UK regions 15.0% 10.0% 5.0% % 0.0% -5.0% Royal holiday comparative -10.0% Pd8 Pd9 Pd10 Pd11 Pd12 Pd1 Pd2 Pd3 Pd4 Pd5 Pd6 Pd7 STR Total Market STR Economy / Midscale Market Premier Inn (LFL) 29 Source: STR Global
Slide 30: Continued outperformance
Continued outperformance Revpar growth – Greater London 45.0% 35.0% 25.0% 15.0% % 5.0% -5.0% -15.0% Royal holiday Olympics effect -25.0% comparative Pd8 Pd9 Pd10 Pd11 Pd12 Pd1 Pd2 Pd3 Pd4 Pd5 Pd6 Pd7 30 Source: STR Global STR Total Market STR Economy / Midscale Market Premier Inn (LFL)
Slide 31: Continued outperformance
Continued outperformance Revpar outperformance vs Midscale & Economy* (%pts) 7.9 5.5 0.4 1.3 1.2 -1.2 2011/12 2012/13 H1 H2 H1 Greater London UK Regions 31 * Based on STR Global
Slide 32: Structural growth opportunity
Structural growth opportunity UK hotel market Premier Inn c.5% c.6% c.9% share 678,000 679,000 705,000 rooms rooms rooms 13% 18% 25% 23% 24% 24% 64% 58% 51% 2007 2010 2016 32 Branded Budget Other Branded Independent
Slide 33: Dynamic pricing
Dynamic pricing Mix of rooms sold • Flexible offer rolled out to two-thirds of the estate 86% 72% • Estimated revpar uplift of a couple of % pts* • Expectation Saver will reach % c.30-40% of rooms sold at maturity • Benefit primarily delivered via three related factors 28% – Premium on Flex rate – V
Slide 34: Investing in strong brands
Investing in strong brands Share of voice* 59% • Maintained marketing 38% investment - share of voice up to 59% H1 2011/12 H1 2012/13 Website visits 24m 29m • Strong brand – 22% increase in web traffic • 82% of bookings H1 2011/12 H1 2012/13 through automated Automated channels 76% 82% channels 34 *
Slide 35: Investing in our brand
Investing in our brand Net recommend* refurbished sites (%) • 2011/12 and 2012/13 – £45m investment in 73 6,000 older rooms 63 • Drives improved guest scores 25 20 12 7 0-6 7-8 9-10 Pre conversion Post conversion 35 Source: NPS total estate ORC Customer Satisfaction Survey ; NPS for the 6,000 rooms
Slide 36: Guest scores continue to improve
Guest scores continue to improve Net recommend* H1 2012/13 total estate (%) • Annual investment of c.£75m to maintain 64 68 consistent brand standard 24 22 12 10 0-6 7-8 9-10 New reception Last year This year 36 * Guest recommend total of 436,070 responses first half 2012/13
Slide 37: Network continues to strengthen
Network continues to strengthen Premier Inn* 5,126 65,000 8,100 • 31 new hotels will 2,909 open this year 1,591 47,274 • Greater customer Number of rooms choice relative to our competitors • Network plan built Number of hotels 619 +12 +19 +72 from 300 local market decisions Full year 2011/12H1 2012/
Slide 38: Focus on London
Focus on London 11,323 Growing in London Total hotels 4,008 • Room growth 26%; 47% increased market share from 5% to 6% 7,703 – 9 new hotels, 1,576 rooms 2,216 6,127 26% 6,016 1,660 • Maintained strong 4,283 occupancy of 86% 3,325 • 33% of committed pipeline 1,142 1,204 1,299 H1 2012 H1 2013 Inc. co
Slide 39: International – making progress
International – making progress • Solid H1 performance: New Delhi – Total occupancy up 6.1% pts to 56.2% – Like for like revpar up 34.8% – Total number of rooms 1,296 • Moving to „Capital Light‟ model • Signed 11 MOUs for 18 hotels • Focus on three territories: – India – Middle East – Asia Pacific 3
Slide 40: Restaurants
Restaurants 40
Slide 41: Improving performance
Improving performance Menu management Stronger Improved guest Joint sites key performance experience Managing margins 41
Slide 42: Improving performance
Improving performance 5% Like for like sales growth 4% 4.6% 3% 2% 2.1% 1% 1.3% 1.1% 0% Q1 Q2 Q3 Q4 Q1 Q2 2011/12 2012/13 -1% -1.4% -1.7% -2% 42
Slide 43: Menu management
Menu management • Delivering a more competitive product with great value deals – Breakfast sales (+20% year on year) – Buffet place sales (+7% on conversion) • Value meals 40% of sales • New menus – Menu engineering – Localised pricing 43 Like for like covers up +6%
Slide 44: Improving guest experience
Improving guest experience Net recommend H1 2012/13 (%) • Sharper focus – dedicated 72 69 restaurant teams • Improving consistency of service delivery through training academies – 2,600 team members trained in 3 Skills Academies 18 18 • Fortnightly Mystery Guest 13 10 programme Guest scores 0-6 7-8
Slide 45: Managing margins
Managing margins • Food and labour inflation offset by: – Selective price increases Inflation – Cost efficiencies of £4-5m pressures: this year • Investing in stronger, Labour +2.5% dedicated restaurant Food +5.0% management team 45
Slide 46: Restaurants reinforce Premier Inn
Restaurants reinforce Premier Inn • Joint site model key Room stock (%) – Optimal format for sub 80 room – WTB joint ROCE* 17.7%; Solus 15.3% Co-located – c.20% of growth pipeline 15% Solus • WTB joint site superior to Co-Lo 40% – F&B (breakfast) critical to Premier Inn “Joint sites” – Higher guest
Slide 47: Costa Coffee
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Slide 48: Outstanding first half results
Outstanding first half results • System sales up 23.3% to £472.8m* • System stores grew by 6.4% to 2,344 • Strong UK like for like growth of 6.8% with a positive impact from the weather • Added 794 Express Machines to total 1,986 • Underlying profit up 29.9% to £36.1m • ROCE of 31.2% 48 * Pre IFRIC
Slide 49: Strong performance across the board
Strong performance across across the board UK Retail Retail Costa EMEI Costa Asia UK Costa Enterprises Costa Enterprises Costa EMEI Costa Equity stores Europe, China Asia and Costa Express Equity stores Individual franchise Equity stores Corporate Partnerships Middle Europe, East East Middle South C
Slide 50: UK strong – with good momentum
UK strong – with good momentum UK equity like for like growth (%) • Another strong 8.4 performance – Strong LFL sales growth of 6.8% 5.2 5.4 3.8 – Consistent across all channels – Positive weather impact Q3 2011/12 Q4 2011/12 Q1 2012/13 Q2 2012/13 • Continued rapid expansion UK store expansion – 87
Slide 51: UK Retail - key drivers
UK Retail - key drivers Preference: Costa is still the UK’s favourite And the gap is widening • The UK‟s favourite coffee shop 2012 32% Costa • Innovation 2011 28% – New Ice cold Costa drinks up 29% year on year 2012 23% – New food range Starbucks – New hot drinks: Caffe Caramella, 2011 25% Cortado,
Slide 52: Costa Enterprises - excellent year
Costa Enterprises - excellent year Costa Express machines • 794 new machines added in H1 with c.400 from Shell 204 • Coffee Nation - Costa Express machines 1,782 +20% • Costa Express sales up 86.8% year on year 222 970 877 2011 2012 H1 2013 52 Costa Express
Slide 53: Costa EMEI
Costa EMEI • Continuous store growth : 16 net stores added in H1; total of 663 • System sales up 13.8%, underpinned by like for like sales growth across the regions of 6.8% – Middle East sales rebounding after the Arab Spring – Central & Southern Europe more difficult • We are now trading in Dubai 2
Slide 54: China – a growing opportunity
China – a growing opportunity China stores • Opened 37 new stores, total of 201 stores in 25 cities 264 • Like for like sales growth of 19.2% in H1 Costa Costa Target Population cities stores cities (m) 164 today today Tier 1 4 70 4 138 95 Tier 2 35 270 16 72 Tier 3 109 480 3 4 51 32 Tier 4 512 518
Slide 55: Summary
Summary • Another outstanding performance • Brand network continues to strengthen • On track to deliver growth milestones: – After 18 months – System sales up 38% from £659m, stores up 25% from 1,871 • China exciting opportunity China 55
Slide 56: Targets 2016/17
Targets 2016/17 Teams and community Customer wellbeing Environment Job Creation • Accreditation and sustainable • 25% carbon reduction* • 10,000 new UK jobs supply of: • 15% reduction Charitable Activity - Tea/Coffee in water* consumption • £5m charitable fund raising by - Timber WHR • Zero waste -
Slide 57: Activity in the first half of year
Activity in the first half of year Teams and community Customer wellbeing Environment • 1,500 jobs created • Calorific labeling in Costa and • On track for carbon reduction Thyme restaurants. Trials in and water consumption • 1,000 nationally recognised place for other Restaurant targets qualificati
Slide 58: Outlook
Outlook • Good performance in H1 driven by competitive outperformance in broadly flat markets – Helped by Olympics, some comparatives and weather • Markets remain challenging – London settling post Olympics • Expect to continue to outperform competitors; like for like sales growth to moderate from s
Slide 59: Summary
Summary • Another good performance, combining – Good like for like sales growth – Rapid organic growth – Good returns – Strong cashflows • Driven by our leading brands, which are getting stronger – Winning share – International growth progressing • Creating substantial value from strong organic grow
Slide 60: Q&As
EAT SLEEP & DRINK
Slide 61: Interim Results 2012
Interim Results 2012 23 October 2012 61