Slide 1: J.D. Wetherspoon Plc Preliminary Announcement
J.D. Wetherspoon Plc Preliminary Announcement 5 September 2003
Slide 2: Highlights - Twelve Months to 27 July 2003
Highlights -Twelve Months to 27 July 2003 • Turnover up 22% to £730.9m • Profit before tax up 5% to £56.1m • Earnings per share up 2% to 17.0p • Free cash flow per share 39.7p (+19%) • Dividend per share increased by 10% 1
Slide 3: Openings - First Half 2003 (21)
Openings- First Half 2003 (21) M25 Midlands Area South West Croydon Birmingham Bridgewater Fulham Broadway Bridgnorth Plymouth Hammersmith Hereford Shepherds Bush Moseley Scotland Windsor North East Airdrie South Consett Kirkintilloch BasingstokeX2 Wales East Grinstead North West Aberdare Liverpool
Slide 4: Openings - Second Half 2003 (24)
Openings- Second Half 2003 (24) East North East South East Rayleigh Newcastle Cowley Peterlee Stansted airport Sunderland M25 Hackney South West Heathrow T1 X2 North West Falmouth Twickenham Crewe Newquay Ellesmere Port Newton Abbott Stalybridge Penzance Midlands Whitehaven Alfreton Oswestry Wales S
Slide 5: Five Year View: Average Sales Per Pub Week
Five Year View Average Sales Per Pub Week (including VAT) £000 26.4 27 24.7 25 23.5 22.7 23 20.4 21 19 17 15 1999 2000 2001 2002 2003 4
Slide 6: Like For Like Sales
Like For Like Sales % 1st 2nd Full Full Full Half Half Year Year Year 2003 2003 2003 2002 2001 Bar 2.2 2.1 2.1 3.5 6.2 Food 14.0 9.3 11.4 9.9 11.4 Total 4.7 3.6 4.1 5.0 7.5 LFL profits (2.6) 0.8 (0.9) 3.8 7.0 5
Slide 7: Trading
Trading • Spirits range • Wine offers • 10am opening • Food development • Lloyds – 50 pubs/continued growth 6
Slide 8: Costs/Purchasing Initiatives
Costs/Purchasing Initiatives • Spirits • Meat contract £240k • Waste disposal £90k • Glass washers £130k 7
Slide 9: Penzance to Wick
Penzance to Wick 8
Slide 10: Airports
Airports Heathrow – T1 Stansted 9
Slide 11: Operating Margins - Summary
Operating Margins - Summary 2003 2002 £000 % of £000 % of Sales Sales Turnover 730,913 - 601,295 - Pub Operating Profit 160,029 21.9 141,660 23.6 Sale & leaseback rentals (7,801) (1.0) (7,721) (1.3) Head Office Costs (34,036) (4.7) (27,511) (4.6) Depreciation (43,209) (5.9) (36,343) (6.0) Statutory
Slide 12: Pub Operating Margins
Pub Operating Margins 2003 2002 Gross margin 62.4% 62.5% Staff costs 24.3% 23.9% Other pub costs 16.2% 15.0% Pub operating profit 21.9% 23.6% 11
Slide 13: Cash Flow
Cash Flow 2003 2002 £000 £000 Cash from operations 130,565 113,700 +15% Interest and tax (29,547) (23,604) Investments in existing pubs (15,896) (18,726) Free cash flow available for 85,122 71,370 +19% new pub development Dividends (5,438) (4,445) Disposal proceeds 10,732 412 Investment in own share
Slide 14: Pub Investment Levels
Pub Investment Levels 2003 2002 2001 2000 1999 % % % % % Capital re-invesment 2.2 3.1 3.3 3.9 3.3 Repairs 2.7 2.5 1.8 1.3 1.4 Total (% of sales) 4.9 5.6 5.1 5.2 4.7 Total (£k per pub) 58 62 53 52 42 13
Slide 15: Financial - Funding
Financial - Funding 2003 2002 • Gearing (%) – post FRS19 97 98 – pre FRS19 81 82 • Interest cover (times) 4.0 4.2 • Fixed charge cover (times) - statutory 1.9 2.1 - excluding 2.7 2.8 depreciation • Unutilised bank facilities (including cash £103m £105m balances) 14
Slide 16: Underlying Economic Profits
Underlying Economic Profits 2003 2002 £’000 £’000 PBT 56,139 53,568 Add: Depreciation 43,209 36,343 Less: Capital invested in existing pubs (15,896) (18,726) Economic profit 83,452 71,185 +17% Cash tax (13,317) (8,556) Economic profit after tax on cash basis 70,135 62,629 +12% 15
Slide 17: ROC/CROCCE/ROE
ROC/CROCCE/ROE 2003 2002 • P&L return on capital 8.9% 9.2% • Crocce 13.0% 13.9% • P&L return on equity 11.6% 12.1% • Cash return on equity 17.2% 18.8% Detailed calculations included in appendix D 16
Slide 18: Exceptional Items
Exceptional Items • Capital loss on 18 pubs sold for net consideration of £10.7m £2.7m • Provision against two non trading sites £1.0m • Exceptional loss £3.7m 17
Slide 19: On-going Cost Items
On-going Cost Items • Minimum wage cost £2m including differentials • Licensing reform £1m plus • Replacement share option plan £2.5m 18
Slide 20: Current Trading and Prospects
Current Trading and Prospects • August trading (3.5% LFL sales) • Circa 35 new pub openings in current year • Licensing reform/smoking debate • Further pressures on costs • Strong cash generation • Continued growth 19
Slide 21: Appendices
Appendices A- 10 Year financial graphs B- 10 Year trends C- Capital trends D- ROC/CROCCE calculations 20
Slide 22: 10 Year Financial Trends
Appendix A 10 Year Financial Trends Average Sales Per Pub Week (including VAT) Number of Pubs 26.4 £000 26 700 24.7 608 635 23.5 24 22.7 600 522 22 20.4 19.2 19.7 500 20 428 17.8 18 400 327 15.9 16 14 300 252 194 14 200 146 12 110 87 10 100 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2000 2001 2002 20
Slide 23: JDW - The Last 10 Years
Appendix B JDW - The Last 10 Years 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Sales per pub (£000) 619 702 786 848 872 904 1,004 1,040 1,093 1,169 EBITDA per pub (£000) (1) 135.6 149.5 177.6 190.8 184.9 188.0 203.8 205.9 207.4 201.9 Average capital employed per pub 820 895 949 974 1028 990 97
Slide 24: Capital Trends
Appendix C Capital Trends 1999 2000 2001 2002 2003 Size (sq.ft.) – openings 3,037 3,217 3,526 3,808 3,721 Number of openings 84 101 94 87 45 % which are freehold 58 67 75 53 56 Freehold average cost (£k) 427 465 506 597 511 Average development cost (£k) 941 1,049 1,178 1,262 1,317 Average cost per s
Slide 25: ROC/CROCCE/ROE
Appendix D ROC/CROCCE/ROE 2003 2002 2001 £000 £000 £000 Shareholder funds per balance sheet (a) 318,628 310,133 273,839 Add: net debt (b) 308,860 302,840 241,577 Capital employed (c) 627,488 612,973 515,416 Add: deferred tax provision 62,419 57,399 47,803 Cumulative depreciation 169,366 129,040 92,8
Slide 26: ROC/CROCCE/ROE
Appendix D ROC/CROCCE/ROE 2003 2002 £000 £000 Profit after tax (e) 36,395 35,416 Add: interest (f) 18,844 16,517 Profit pre-interest (g) 55,239 51,933 Add: deferred tax 6,427 9,596 Depreciation 43,209 36,343 Cash return (h) 104,875 97,872 • P&L return on capital [(g)/average (c)] 8.9% 9.2% • CROCCE