Slide 1: JD Wetherspoon Plc Preliminary Results 2007
JD WETHERSPOON PLC Preliminary Results 2007 7 September 2007
Slide 2: Highlights – Year to 29 July 2007
Highlights – Year to 29 July 2007 Reported Excluding 53 Results week last year* • Turnover £888.5m +5% +7% • Operating profit £91.1m +9% +12% • Profit before tax £62.0m +6% +9% • Earnings per share 28.1p** +17% +20% • Free cash flow per share 35.6p (2006: 42.1p) • Dividend per share 12.0p (2006: 4.7
Slide 3: Average Sales Per Pub Week
Average Sales Per Pub Week (including VAT) £000 30.6 31.0 30.0 29.0 29.0 28.0 28.2 28.0 26.4 27.0 26.0 25.0 24.0 23.0 22.0 21.0 20.0 2003 2004 2005 2006 2007 +3% compound growth over last 5 years. 3
Slide 4: Like for Like Sales/Profits
Like for Like Sales/Profits % 2007 2006 2005 2004 2003 Bar 3.3 2.2 (1.4) 2.9 2.1 Food 12.6 3.6 2.1 4.2 11.4 Machines 2.7 (1.4) (2.4) 6.1 3.0 Total LFL Sales 5.6 2.0 (0.6) 3.4 4.1 LFL Profits 7.0 5.9 (4.0) (0.7) (0.9) 4
Slide 5: Operating Margin - Summary
Operating Margin - Summary 2007 2007 2006 2006 £000 % of £000 % of Sales Sales Turnover 888,473 - 847,516 - Pub Operating Profit 172,946 19.5 162,349 19.2 Head Office Costs (35,207) (4.0) (32,860) (3.9) Share Incentive Plan (3,086) (0.3) (2,480) (0.3) Depreciation (43,946) (4.9) (43,393) (5.1) Gain
Slide 6: Pub Operating Margin
Pub Operating Margin • Gross margin improvement • Wages - pay rates - bonus payments • Operating costs - utilities (+£7.5m) - rent costs encouraging Increase of 30 basis points (100 basis points excluding utilities) 6
Slide 7: Non-Smoking - Scotland
Non-Smoking - Scotland First Month Q4 H1 Full Year April 2006 FY 2006 FY 2007 FY 2007 Sales: -Total +3.2 -0.3 5.3 5.2 - Bar -0.8 -3.4 2.1 1.8 - Food +12.8 +7.7 13.2 12.4 - Machines -8.4 -11.3 -0.1 5.6 LFL pub profit -5.4 -11.0 -1.3* +7.1* *includes impact of utilities Encouraging recovery after init
Slide 8: Non-smoking – Wales & Northern Ireland
Non-smoking – Wales & Northern Ireland Bar Food Machines Total Wales -2.1 +23.2 +1.8 +4.8 Northern Ireland -6.1 +23.5 -11.0 +1.6 Strong performance on food sales 8
Slide 9: Non-Smoking – Post July 1st
Non-Smoking – Post July 1st Total Company LFL Sales Bar Food Machines Total July +1.3% +24.8% +9.1% +5.3% August -3.2% +12.5% -1.2% +1.1% Following initial trends seen in Scotland? 9
Slide 10: Cash Flow
Cash Flow 2007 2006 Cash from operations 124,933 133,366 Interest and tax (47,020) (37,963) Re-financing costs - (1,412) Investment in existing pubs (24,046) (20,810) Investment in own shares (SIP) (1,488) (3,469) Free cash flow 52,379 69,712 Dividends (10,295) (7,367) Disposal proceeds 4,768 4,645
Slide 11: Capital Expenditure
Capital Expenditure 2007 openings £31.6m • Total £86.7m 2008 openings £26.3m Re-investment £28.8m • Re-investment £28.8m £6.8m non-smoking £4.2m refurbishments £16.1m fixtures and fittings £1.7m head office 11
Slide 12: Dividends
Dividends • In line with previous statement • 12.0p full year (2006: 4.7p) • Dividend cover 2.3* *Normalised EPS excluding tax credit 12
Slide 13: Allocation of Resources
Allocation of Resources £162m £130m £124m £116m £92m Dividends Buybacks Capex 2003 2004 2005 2006 2007 £319m invested in pubs Last 5 years £305m return to shareholders 13
Slide 14: Financial - Funding
Financial - Funding 2007 2006 Net debt/ EBITDA 3.2 2.8 Interest cover (times) 3.1 3.3 Fixed charge cover (times) - statutory 1.8 1.8 - excluding 2.3 2.3 depreciation 14
Slide 15: Banking Facilities
Banking Facilities • UK banking facility £415m – Matures December 2010 – 10 participating lenders • US private placement $140m - £87m – Matures September 2009 – Fully hedged • Total facilities £522m (including overdraft) • Interest rate hedging £150m (July 2009) 15
Slide 16: Property
Property • Monitor opportunities / developments • Currently 42% freehold • Current market uncertainty 16
Slide 17: ROC/CROCCE/ROE
ROC/CROCCE/ROE 2007 2006 • P&L return on capital 11.7%* 11.1% • Crocce 12.2% 12.0% • P&L return on equity 20.2%* 16.5% • Cash return on equity 15.5% 14.8% *Excludes one-off deferred tax credit Detailed calculations in appendix D 17
Slide 18: Trading Performance
Trading Performance • Record weekly sales per pub • Modest margin improvement • Uncertainty regarding non-smoking 18
Slide 19: Stanley Jefferson
Stanley Jefferson THE STANLEY JEFFERSON OPENING MON. 7th May 19
Slide 20: The Bishop’s Mill
The Bishop’s Mill 20
Slide 21: Marketing - Spirits
Janae £9 7Q ome £2, 7 OR sue i 85: DOUBLE wo) 85 21
Slide 22: Marketing
Marketing Great range of juices Choose from: © NEW pomegranate ¢ fresh orange «apple cranberry NEW Shloer NEW Appletiser flavours white grape * red grape (counts as 1-a-day fruit) white grape, mango & passion fruit J20 Pepsi 140z glass flavours orange & passion fruit go large with a pint apple & mel
Slide 23: Marketing
Marketing E 79 i Over 600 regional Finest Guest Ales ales sold nationally. Featuring ales such as: Britain’s No.1 supporter of microbreweries. 23
Slide 24: Developing Product Mix
Developing Product Mix Ma Ma Ma ch ch c ine hin in s es es Food Food 5% Food 7 6% 17% % 21% 27% Bar Bar Bar 76% 73% 68% 1997 2002 2007 (Sales £139m) (Sales £601m) (Sales £888m) Food sales per week up to £8.2k from £3.3k over 10 years 24
Slide 25: Real Ale
Real Ale • The biggest beer and wine festivals in the world – 1.6m pints of real ale in 14 days and 1.3m glasses of wine in 14 days. • JDW continues to support local brewers with over 400 regularly supplying to JDW pubs. 25
Slide 26: On Trade Comparisons
On Trade Comparisons • Total on trade wine sales (AC Nielsen): – +3% to May 2007 – JD Wetherspoon wine sales +9.4% • Real ale sales (AC Nielsen Jan 2007): – Decline of 3% – JD Wetherspoon real ale sales +10.8% • Soft drinks represents 15.3% of JDW bar sales • Food/soft drinks/coffee around 50% of sa
Slide 27: The Environment
The Environment • Recycling cooking oil into Bio Diesel • Scottish deliveries transported from Daventry by train. • Pub recycling has exceeded 11,000 tonnes in 3 years. • Pilot glass recycling scheme - Government backing to extend to all pubs. • Distribution centre carbon neutral in 12 months. • Mel
Slide 28: Bio Diesel Truck and Train
| “uming Clean & Green Thstuekrunson recycled cooking oil wetherspoon
Slide 29: Bonus Payments
Bonus Payments • £19m paid in year on staff bonus plus free shares. • Pub managers 29% / assistant managers 16% / staff 11%* • Single pub manager average remuneration £42,000** • Overall JDW 15% pay-out* • John Lewis 18% pay-out*** * Average % of salary paid in bonus and free shares. ** Includes bas
Slide 30: JDW – Did you know?
JDW – Did you know? • Fetzer is twice the size of Blossom Hill in the managed on- trade. • JD Wetherspoon are Lavazza’s biggest single customer. • Over 650 pubs - 90 per cent of the estate Cask Marque accredited. • 119 pubs listed in CAMRAs Good Beer Guide 2007. • Worlds biggest seller of Kopparberg
Slide 31: Pipeline
Pipeline • 10 on site • 13 permissions in place • 43 deals agreed subject to permits • 131 in negotiation • 197 total pipeline 31
Slide 32: 2008 Considerations
2008 Considerations • Non-smoking impact on sales • Food sales mix 30% already • Minimum wage +3% (October 2007) • Utilities benefit circa £5m • Increasing interest rates 32
Slide 33: Current Trading and Outlook
Current Trading and Outlook • August total Company sales +3.6% (LFL +1.1%) • Short-term uncertainties • Long term – non-smoking beneficial to industry • Strong pipeline / investment opportunities • 1000-1500 pubs still the target Confident of longer term prospects 33
Slide 34: Appendices
Appendices A - 10 Year Financial Graphs B - 10 Year Trends C - Capital Trends D - ROC/CROCCE/ROE Calculations 34
Slide 35: 10 Year Summary
Appendix A 10 Year Summary Number of Pubs Average Sales Per Pub Week (including VAT) 700 657 671 655 635 643 £000 608 30.6 600 31 29.0 28.0 28.2 522 29 26.4 27 500 24.7 428 25 23.5 22.7 23 400 19.7 20.4 327 21 19 300 252 17 15 19 9 8 19 9 9 2000 2001 2002 2003 2004 2005 2006 2007 200 1998 1999 2000
Slide 36: JDW - Financial Trends
Appendix B JDW - Financial Trends 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sales per pub (£000) 872 904 1,004 1,040 1,093 1,169 1,239 1,246 1,283 1,354 EBITDA per pub (£000) (1) 184.9 188.0 203.8 205.9 207.4 201.9 204.4 195.7 205.6 219.0 Number of pubs 252 327 428 522 608 635 643 655 657 67
Slide 37: Capital Trends
Appendix C Capital Trends 1999 2000 2001 2002 2003 2004 2005 2006 2007 Size (sq.ft.) – openings 3,037 3,217 3,713 3,808 3,721 4,317 4,176 3,637 3,855 Number of openings 84 101 94 87 45 28 13 9 18 % which are freehold 58 67 75 53 56 43 54 22 61 Freehold average cost (£k) 427 465 506 597 511 640 873 6
Slide 38: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE 2007 2006 £000 £000 Profit after tax 46,834 39,901 Less: deferred tax credit 5,472 - Underlying PAT (e) 41,362 39,901 Add: interest (f) 29,089 25,228 Profit pre-interest (g) 70,451 65,129 Add: deferred tax 2,192 422 Depreciation 43,946 43,393 Cash return (h) 116,589 108,94
Slide 39: ROC/CROCCE/ROE
ROC/CROCCE/ROE Appendix D2 2007 2006 £000 £000 Shareholder funds per balance sheet 172,607 201,575 Add: cum losses on disposal 13,884 13,884 : hedging provision 1,318 7,151 (a) 187,809 222,610 Add: net debt (b) 433,805 355,630 Capital employed (c) 621,614 578,240 Add: deferred tax provision 79,400 8