Slide 1: Annual Results 2011/12
Annual Results 2011/12 26 April 2012 EAT SLEEP & DRINK WHITBREAD
Slide 2: Anthony Habgood, Chairman
Anthony Habgood Chairman
Slide 3: Andy Harrison, Chief Executive
Andy Harrison Chief Executive
Slide 4: Summary
EAT SLEEP & DRINK Summary WHITBREAD Double digit growth, with strong brands getting stronger — Sales up 11.2% and underlying PBT up 11.3% — EPS up 15.2% — Dividend up 15.2% 5 year growth milestones on track — Delivering planned growth in Premier Inn and Costa — Returns from new investments on track
Slide 5: Christopher Rogers, Group Finance Director
Christopher Rogers Group Finance Director
Slide 6: Summary
Summary £m 2011/12 2010/11 Underlying profit before tax £320.1m £287.5m EPS underlying (diluted) 134.05p 116.35p Proposed final dividend 33.75p 33.25p Interim dividend 17.50p 11.25p Total dividend for year 51.25p 44.50p Change 11.3% 15.2% 1.5% 55.6% 15.2%
Slide 7: Summary - Profit & Loss
Summary - Profit & Loss £m 2011/12 2010/11 Change Revenue * 1,778.0 1,599.6 11.2% Profit from operations 365.3 333.9 9.4% Central costs (19.9) (22.1) 10.0% Interest (25.3) (24.3) (4.1)% Underlying profit before tax 320.1 287.5 11.3% * 2010/11 includes exceptional revenue of £4.6m in respect of VAT r
Slide 8: Summary - Underlying Profit & Loss
Summary - Underlying Profit & Loss £m Underlying profit before tax Pension finance cost - IAS 19 Amortisation of acquired intangibles Profit before tax, pre exceptional Taxation Net profit, pre exceptional Exceptional Profit for the year 2011/12 320.1 (14.0) (2.6) 303.5 (80.1) 223.4 42.6 266.0 2010/
Slide 9: Revenue by business segment
Revenue by business segment £m 2011/12 2010/11 Change Hotels & Restaurants * 1,239.3 V3 5.3% Costa 541.9 425.0 27.5% Less: inter-segment (3.2) (2.7) (18.5)% Revenue 1,778.0 1,599.6 11.2% *2010/11 includes exceptional revenue of £4.6m in respect of VAT on gaming machine income +T Sales between segmen
Slide 10: Hotels & Restaurants revenue
Hotels & Restaurants revenue kop, 697.8 474.9 483.4 i 2010/11 2011/12 2010/11 2011/12 Premier Inn total Restaurants” * Revenue from joint site and stand alone restaurants
Slide 11: Unit growth
Unit growth March Opened Closed March 2011 2012 Premier Inn - UK & Ireland 43,374 4,055 47,429 Premier Inn - International 921 385 (10) 1,296 Total Premier Inn (rooms) 44,295 4,440 (10) 48,725 Restaurants 379 12 (4) 387 Costa - UK 1217 195 (20) 15392 Costa - International 654 192 (35) 811 Total Cost
Slide 12: Like for like sales
Like for like sales 11.0 9.0 7.0 % 5.0 3: o a oO -1.0 -3.0 -1.7 Restaurants Premier Inn MQi @Q2 ™Q3 84 Costa
Slide 13: Profit by business segment
Profit by business segment £m Hotels & Restaurants - UK & Ireland Hotels & Restaurants - International * Total Hotels & Restaurants Costa - UK Costa - International Total Costa Profit from operations * 2010/11 restated to exclude Ireland 2011/12 300.2 (4.6) 295.6 65.1 4.6 69.7 365.3 2010/11 286.6 (3
Slide 14: Summary - Profit & Loss
Summary - Profit & Loss £m 2011/12 2010/11 Change Revenue 1,778.0 1,599.6 11.2% Profit from operations 365-3 333.9 9.4% Central costs (19.9) (22.1) 10.0% Interest (25.3) (24.3) (4.1%) Underlying profit before tax 320.1 287.5 11.3%
Slide 15: Interest charge
Interest charge £m Underlying interest charge Pension finance cost - IAS 19 Interest charge, pre exceptional Exceptional interest Total interest cost Average debt in 2011/12 £441.3m 2011/12 (25.3) (14.0) (39.3) (0.8) (40.1) 2010/11 £451.8m 2010/11 (24.3) (11.5) (35.8) (0.9) (36.7)
Slide 16: Exceptional items
Exceptional items £m 2011/12 =. 2010/11 Net profit on asset disposal 14.4 (2.8) Impairment (11.3) (5.3) VAT refund re gaming machines - 4.6 Other (0.8) (0.9) Tax Capital allowance claim following abolition of IBA 16.6 7.6 Impact of reduction of Corporation Tax rate 26.2 25.1 Tax on exceptional items
Slide 17: Cash flow
Cash flow 2011/12 tm, Corporation tax at 26.17% 80.0 307.9 ¥ F is 587) | ) Claims in respect of prior years (22.9) o td Pension Relief (22.2) Other (3.6) cin Cash tax 31.3 Br 2 (95.4) __. (87.0) (31.3) EE ese) 50) Cashflow from Proceeds on Cash capital Pension Dividends Tax Interest Other Increase i
Slide 18: Capex
Capex Capex by business Expansionary vs maintenance 350 350 300 300 250 250 200 200 £m £m 150 150 100 100 50 50 33 0 0 2011/12 2010/11 2011/12 2010/11 @Costa MHotels & Restaurants BeExpansion Maintenance
Slide 19: Property analysis - UK hotels
Property analysis - UK hotels As at 1 March 2012 Committed pipeline 100% 5 47,274 rooms” 100% > 10,500 rooms*** 90% 4 90% - 80% ~ 80% 70% 70% 60% 60% 50% 50% - 40% 40% + 30% 30% 20% 20% 10% 10% 0% T ’ 0% Leasehold" Freehold & long Leasehold Freehold & long < 35 years eae < 35 years leasehold * Inclu
Slide 20: Property analysis - UK estate
Property analysis - UK estate Timing of delivery of hotel rooms pipeline % Tenure split in year Freehold & % of pipeline 2012/13 2013/14 2014/15 Post completion of the pipeline 66% of rooms will be freehold & long leasehold, 34% will be leasehold
Slide 21: Continued focus on returns
Continued focus on returns . 2011/12 2010/11 ROCE % % Hotels & Restaurants 12.4 12.3 Costa 32.4 28.3 Group 13.6 1259 * Growth in returns underpinned by good cost control * ROCE is defined as underlying profit before interest and tax for the year divided by net assets before tax, pensions deficit and
Slide 22: Pension
Pension * Triennial review is not yet complete * IAS 19 pension deficit £599m (£485m net of tax) at year end; compares to £488m (£394m net of tax) last year end * Deficit movement mainly relates to increase scheme liabilities, driven by the discount rate which has fallen by 0.95% pts * £95.4m paymen
Slide 23: Other financial items: 2011/12
Other financial items: 2011/12 * Underlying effective tax rate for 2011/12 26.4% * Sale and leaseback transaction of £53.8m, achieving a profit on book of £24.2m * New facilities arranged
Slide 24: Other financial items: debt profile and maturities
Other financial items: 2011/12 908 : si Debt profile Maturities 650 650 £m 258 84 Total facility | Bank debt Private 2016 §=2017 2018 2019 2020 »2020 placement * Private placement average rate 4.8% * Bank facility margin achieved 0.9%
Slide 25: Other financial items: 2012/13
Other financial items: 2012/13 Cash capex forecast of c.£300m for 2012/13 Effective tax rate for 2011/12 c.26%, falling to c.25% in 2012/13 Full year pension fund interest charge for 2012/13 £18.0m A sale and leaseback of similar size to 2011/12 planned
Slide 26: Summary
Summary * Underlying profit before tax £320.1m +11.3% * EPS, underlying 134.05p +15.2% * Proposed full year dividend 51.25p +15.2% * Whitbread an investment grade business underpinned by robust operating cashflows
Slide 27: Andy Harrison, Chief Executive
Andy Harrison Chief Executive
Slide 28: Growing Premier Inn UK and International
Growing Premier Inn UK and International Improved Restaurant Performance Another outstanding year for Costa New ‘Good Together’ targets Current trading and outlook
Slide 29: A positive year: Hotels & Restaurants
A positive year Whitbread Hotels & Restaurants Total sales up +5.3%; like for like sales growth +1.8% Profit up +4.3% to £295.6m ROCE up 0.1% from 12.3% to 12.4% Record new organic room growth of 4,430 On track for 65,000 UK rooms 2016 milestone — 47,274 rooms plus committed pipeline of 10,500 rooms
Slide 30: Market more challenging: regions underperforming London
Market more challenging: Regions underperforming London 2011/12 Revpar growth - Midscale and Economy* 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% Pd1 Pd2 Pd3 Pd4 Pd5 Pd6 Pd7 Pd8 Pd9 Pd10 Pd11 Pdi2 ~~ Pdi Total UK Greater London UK Regions * Based on STR Global
Slide 31: Outperforming competitive set
Outperforming competitive set pias -0.5 -1.0 i | Greater London UK Regions | Greater London UK Regions { Greater London UK Regions * Based on STR Global Revpar outperformance vs Midscale and Economy* H1 H2 1.0 0.5 7 4 Greater London FY 2011/12 ia UK Regions Premier inn Driven by Value and product co
Slide 32: A strong brand getting stronger
A strong brand getting stronger % of respondents Net Recommend by score 70% 66% | | 9-10 * Guest recommend total of 814,000 responses for 2011/12 60% + 50% + 40% > 30% 5 9 25% 23% 20% 7 9% 14% 11% "| Et 0-6 7-8 0% Net Recommend score Blast year @This year BDRC ‘Most Improved Brand of the Year 2012’
Slide 33: Advertising
Aeveresing New ad received well Better media buying achieving 24% extra reach Refurbishment 13,000 rooms over 2011/12 and 2012/13 Capex of £70m 2 Premier Inn
Slide 34: Dynamic pricing evolving
Dynamic pricing evolving 2008 (2 prices & event pricing ) ( vaunehed and enhanced dynamic pricing ladders ) £29 Premier Offers, primarily weekends & holiday periods 2010 Rollout of dynamic pricing ladders e H1 2011/12 Trialled 2 tier pricing system of ‘Premier Flexible’ and Premier Saver H1 2012/13
Slide 35: Premier Flexible and Saver
Premier Flexible and Saver 2 Premier Inn You searched for Rates a Premier Flexible Amend up to ipm on arrival day Arriving on 02 +) {Mayl2 + } > Search again | | Premier Saver Pre-pay, no amends or refunds 30 hotels found «Week «Day MAY 2012 Day >» Week » —_—_ Central (East) £58 £82 £76 £74 £65 £67
Slide 36: Flexible and Saver
Flexible and Saver Illustrative pricing structure £100 - * Trial shows £90 - revpar uplift £80 — More competitive rates at longer lead £70 ~ times s £60 - — Customers value 5 £50 flexibility and pay = premium at all lead £40 ~ times £30 — Rolling out to full £20 estate £10 £0 56 49 42 35 28 21 14 7
Slide 37: UK growth programme on track
UK growth programme on track Total market Premier Inn share 678,000 rooms 679,000 rooms 705,000 rooms 2007 2010 2016 ™ Branded Budget ® Other Branded @ Independent Premier Inn Premier Inn UK* 43,219 wus Committed Unconfirmed 2015/16 pipeline 2010/11 2011/12 2012/13 * Excluding Republic of Ireland
Slide 38: Growing in London
Growing in London 2 Premier inn Premier Inn share’ 13-14,000 Attractive economics EBITDA of a leasehold room in London is significantly higher than the regions 10,525 3,862 7,225 Rooms Rooms 2011/12 Total including 2016 target committed pipeline Central London ™ Greater London excl. Central London @
Slide 39: Good investment returns
Good investment returns ROCE* 25.0% 1 c.1,000 rooms 20.0% + c.1,600 rooms 15.0% + c.900 rooms 10.0% + 5.0% + 10 new sites 15 new sites 9 new sites 0.0% + 7-12 months 13-24 months 25-36 months *ROCE = site profitability / fixed assets NBV, based on new organic standalone and joint site investments
Slide 40: International: growing in emerging markets
International: growing in emerging markets ‘Capital right’ approach — Building owned hotels to establish brand presence and prove business model — Future development predominantly ‘capital light’ — Faster roll out, lower investment and better returns Experienced management team to execute strategy T
Slide 41: Premier Inn Middle East
2 Premier inn 4 hotels (1,058 rooms) Premier Inn well established LFL Revpar up 24.3% Top Trip Advisor ratings, ahead of Ibis (9 hotels of which 5 in Dubai) and Holiday Inn Express (4 hotels) JV with Emirates Group small net profit Excellent guest scores (70% rate 9 or 10 a yy out of 10) Development
Slide 42: India - Building in a fragmented market
India - Building in a fragmented market * 2 hotels (238 rooms) * Fragmented market - Ibis 4 hotels and * LFL Revpar up 3.1% Country Inn 16 (franchised) * Excellent guest scores (67% rate 9 or 10 ¢ LFL Occupancy up 7.2% out of 10) S S Development * Pune opens 2013 * Goa opens 2013 * Chennai opens 201
Slide 43: Restaurants
Restaurants Improved H2 performance 7 6.4 4.2 3.6 23 7 ; O04 ” 5 H1 2010/11 H2 2010/11 H1 2011/12 H2 2011/12 6 4.8 5 4 3 M@LFL sales (%) MLFL covers (%)
Slide 44: Roll out of Buffet Place
Roll out of Buffet Place, with Brewers Fayre 95 sites, with 71 conversions in 2011/12 Further 25 to come Sales uplift of 6% on conversion Focus on breakfast Breakfast offer promoted beyond hotel guests Breakfast sales up 23% in H2, increase of 10 breakfasts/site/day Costa bean to cup machine rollout
Slide 45: Driving operational excellence
Driving operational excellence * Focused restaurant team * 1,700 team members trained in 3 Skills Academies * Fortnightly Mystery Guest programme * Guest Net Recommend up 4% in H2
Slide 46: Working hard to mitigate cost pressures
Working hard to mitigate cost pressures Expected Menu management inflation: Better procurement Labour +2.5% Food +5.0% Labour scheduling Selective price increases
Slide 47: Brewers Fayre
Brewers Fayre Driving capital Ss efficiencies * Opened 23 new sites over the past 3 years — Delivering +7% ahead of target sales — ROCE on track * Refurbishment programme — 242 sites over the past 3 years — Average cost of £97,000 per site
Slide 48: Another great year: Costa
Another great year COSTA * System sales up 24% to £819m’ « System stores grew 18% to 2,203 * UK LFL growth of 5.5% * Express machines up 36% to 1,192 * Underlying profit up 38% to £69.7m * ROCE of 32.4%' up from 28.3% * Pre IFRIC excluding internal sales. t Includes Coffee Nation, Segmental EBIT/seg
Slide 49: Costa brand preference
COSTA “If these three brands were next to each other, which would you choose?” YouGov 2012 COSTA | ae cia Starbucks [7 tii aii Cafe Néro | 10% (+ 0% pts)
Slide 50: Five year growth milestones
Five year growth milestones COGTA Base Target Implied annual 2011/12 actual 2010/11 2015/16 growth growth Stores 1,871 3,500 System sales £659m £1.3bn 15% 24% PBIT £50.1m~ £100m 15% 38% Costa Express 877 3,000 425 6221 + 622 Costa Express conversions, 315 net additions, total of 1,192 machines end o
Slide 51: Managing for growth
Managing for growth * Four divisions, strong teams — focus by customer and geography Costa EMEI UK Retail Equity stores Costa Enterprises Europe, Middle East and India Costa Express Individual franchise Corporate Partnerships System Sales System Sales System Sales £455m £183m £152m 20% growth 43% gr
Slide 52: UK Retail
UK Retail STORE DESIGN
Slide 53: Store design and like for like sales
Metro - Cardinal Place London Bullring Birmingham COSTA LFL sales by age 9% 6% 6% 5% Consistent LFL growth by region and channel Refurbished 128 stores in 2011/12 (incl. 46% of Central London sites)
Slide 54: Costa Enterprises
Costa Enterprises COSTA Costa Express machines Excellent customer reaction 1,192 — Rebrands up c.20% * 2012/13: 1.000 new machines — Shell: 500+ machines 970 * Partnership with Kraft to launch Costa ‘At Home’ 877 222 2011 2012 ™Coffee Nation Costa Express
Slide 55: Costa International net new stores
88 net new stores in 2011/12 Total: 647 stores Top three areas: India - 95 stores Poland - 93 stores UAE - 80stores
Slide 56: China - accelerating growth
China - accelerating growth CO§TA * 69 net new stores in Strong store growth 2011/12 * Break-even performance aa in H2 2012/13 21 i * 100 net store openings —_— in 2012/13 2007/08 2009/10 2011/12 2012/13 2015/16 LFL sales (%) Store margin (%) 33% 17% 12% 20% 5 LJ 2009/10 2010/11 2011/12 2009/10 2010
Slide 57: China - exciting opportunities
China- exciting opportunitiesCO$TA @ Changchun y e. a a = os f. Target Population ae baa Shijiazhuang @ a 4 a cities (m) today today g a Tier1@ 4 70 4 115 ~@ .\ Tier2@ 35 270 12 47 Ne = Tier 3 @ 109 480 2 2 Hefei @ ® — 6 oe Total 148 820 18 164 oe. - ~ "yoda ei e Prom J * Combined population c.820m
Slide 58: Good Together targets 2016/17
Coed 1OCE THER... Targets 2016/17 Teams and Customer community wellbeing Job Creation ; + Accreditation and * 25% carbon * 10,000 new UK jobs sustainable supply of: reduction* Charitable Activity ~ WEY BeAaxirediction * £5m charitable fund - Timber in water” raising by WHR a consumption + Costa Foun
Slide 59: Current trading and outlook
EAT SLEEP & DRINK Current trading and outlook wuitsreap * Trading in new financial year — Premier Inn and Restaurants positive LFL sales growth — Costa continues good momentum * Trading variable month by month — Also affected by phasing of Bank Holidays and the Olympics * Continuing network growth i
Slide 60: Good progress, much opportunity
EAT SLEEP & DRINK Good progress, much WHITBREAD opportunity * Building strong brands to outperform competition — Delivering for Premier Inn and Costa — Restaurants work in progress * Seize our profit growth opportunities — Premier Inn on track — Restaurants growing with joint sites — Costa ahead * V
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Slide 62: Appendix
Appendix EAT SLEEP & DRINK WHITBREAD
Slide 63: Standard Information
Standard Information General Achieved Room Rate (ARR) Income before fixed costs (IBFC) Income after fixed costs (IAFC) Joint Sites Like for like sales Occupancy ROCE Solus Sites Revpar/yield EAT SLEEP & DRINK WHITBREAD Hotel accommodation income divided by the number of rooms occupied by guests Hote
Slide 64: Standard Information - Hotels & Restaurants
Standard Information EAT SLEEP & DRINK Hotels & Restaurants WHITBREAD Full Year Full Year 2011/12 2010/11 Solus Including International ' Sales £m 444.6 403.8 IBFC £m 254.5 231.2 IAFC * £m 137.1 125.3 Net Assets * £m 1,007.7 965.3 Joint * Sales £m 794.7 768.9 IBFC £m 343.4 340.4 IAFC £m 236.4 238.1
Slide 65: Standard Information - Hotels & Restaurants continued
Standard Information EAT SLEEP & DRINK Hotels & Restaurants cont. WHITBREAD Full Year Full Year 2011/12 2010/11 Number of Rooms Solus : - Managed 24,981 22,479 - Associate 282 282 - Franchise & Management Contract 449 449 Total Solus 25,712 23,210 Joint Sites 21,717 20,164 Total UK & Ireland 47,429
Slide 66: Standard Information - Costa
Standard Information EAT SLEEP & DRINK Costa WHITBREAD Full Year Full Year 2011/12 2010/11 System Sales - Total £m 819.3 659.0 Sales - Total £m 541.9 425.0 EBITDA from Operations £m 97.3 75 Underlying EBIT from Operations ' £m 69.7 50.5 Total Net Assets £m 215.3 178.3 Cash Capital Expenditure - Tota