Slide 1: Interim Results 4 March 2005
J.D. Wetherspoon Plc Interim Results 4 March 2005
Slide 2: Highlights - Six Months to 23 January 2005
Highlights -Six Months to 23 January 2005 • Turnover up 4% to £403.3m • Operating profit down 11% to £34.4m • Profit before tax down 20% to £22.3m • Earnings per share down 14% to 7.7p • Free cash flow per share down 11% to 19.3p • Dividend per share increased by 10% 1
Slide 3: Average Sales Per Pub Week (including VAT)
Average Sales Per Pub Week (including VAT) £000 29 28.0 28.4 26.4 27 24.7 25 23.5 22.7 23 20.4 21 19 17 15 1999 2001 2003 2005H1 2
Slide 4: Like For Like Sales/Profit (%)
Like For Like Sales/Profit (%) H1 FY FY FY 2005 2004 2003 2002 Bar (1.3) 2.9 2.1 3.5 Food 4.9 4.2 11.4 9.9 Total Sales 0.3 3.4 4.1 5.0 LFL Profits (5.9) (0.7) (0.9) 3.8 3
Slide 5: Trading
Trading • Pricing environment • Cost pressures - minimum wage - utilities - licensing reform • Continued focus on standards 4
Slide 6: General
General • Product range (e.g. draught lager) • Real ale - 630 Cask Marque pubs - 120 pubs in the Good Beer Guide 2005 • Design awards (including 38 awards for toilets in 2004) • Training awards - NITA Manager Development (3rd year) 5
Slide 7: Licensing Reform
Licensing Reform • Slow progress/red tape • Change to opening hours • Costs • P&L impact 6
Slide 8: Turl’s Green (Lloyds), Bradford
Turl’s Green (Lloyds), Bradford 7
Slide 9: George’s Meeting House, Exeter
George’s Meeting House, Exeter 8
Slide 10: Waterend Barn, St. Albans
Waterend Barn, St. Albans 9
Slide 11: Non-Smoking Plans
Non-Smoking Plans • All new pubs (3 so far) • Circa 60 existing by May 2005 • Full conversion by May 2006 10
Slide 12: Non-smoking Pubs
Non-smoking Pubs Abraham Derby, Merry Hill Centre* The Grid Inn, Southfields The Roebuck Inn, Nottingham Back of Beyond, Reading ** The King & Castle, Windsor The Sennockian, Sevenoaks Becketts Bank, Leeds The King of Wessex, Bath ** The Sir John Oldcastle, Farringdon George's Meeting House, Exeter
Slide 13: Sales
Sales • Sales mix • New pub sales • Highest ever average weekly sales 12
Slide 14: Pub Operating Margins (%)
Pub Operating Margins (%) H1 H1 FY 2005 2004 2004 Gross margin 63.6 62.9 63.0 Staff costs (26.1) (24.9) (25.1) Other pub costs (17.5) (16.8) (16.6) Sale and leaseback (1.1) (1.0) (1.1) Pub operating profit 18.9 20.2 20.2 13
Slide 15: Operating Margins - Summary
Operating Margins - Summary H1 2005 H1 2004 FY 2004 % of % of % of £000 £000 £000 sales Sales Sales Turnover 403,341 - 388,964 - 787,126 - Pub Operating Profit 76,233 18.9 78,506 20.2 158,742 20.2 Head Office Costs (18,941) (4.7) (18,058) (4.7) (37,017) (4.7) Share Incentive Plan (405) (0.1) - - (14
Slide 16: Cash Flow
Cash Flow H1 2005 H1 2004 FY 2004 £000 £000 £000 Cash from operations 62,002 69,289 128,874 Interest and tax (15,382) (17,168) (33,251) Investments in existing pubs (8,180) (8,148) (20,590) Investment in own shares (SIP) (1,989) - (1,556) Free cash flow 36,451 43,973 73,477 Dividends (4,839) (4,700)
Slide 17: Pub Investment Levels
Pub Investment Levels H1 2005 2004 2003 2002 2001 2000 Capital re-investment (% of sales) 2.0 2.6 2.2 3.1 3.3 3.9 Repairs (% of sales) 3.1 3.1 2.7 2.5 1.8 1.3 Total (% of sales) 5.1 5.7 4.9 5.6 5.1 5.2 Total (£k per pub) 64 71 58 62 53 52 16
Slide 18: Financial - Funding
Financial - Funding H1 H1 FY 2005 2004 2004 Net debt / EBITDA 2.9 2.6 2.8 Gearing (%) – post FRS19 113 103 117 – pre FRS19 92 85 95 Interest cover (times) 2.9 3.6 3.3 Fixed charge cover (times) - statutory 1.6 1.8 1.8 - excluding 2.3 2.5 2.4 depreciation 17
Slide 19: Underlying Economic Profits
Underlying Economic Profits H1 2005 H1 2004 FY 2004 £000 £000 £000 PBT 22,344 27,822 54,074 Add: Depreciation 22,522 21,887 43,948 Less: Capital invested in existing pubs (8,180) (8,148) (20,590) Economic profit 36,686 41,561 77,432 Cash tax (6,705) (6,858) (13,165) Economic profit after tax on cash
Slide 20: ROC/CROCCE/ROE
ROC/CROCCE/ROE H1 H1 FY 2005 2004 2004 • P&L return on capital 8.4% 9.2% 9.3% • Crocce 11.2% 12.7% 12.6% • P&L return on equity 9.7% 11.5% 11.4% • Cash return on equity 13.6% 16.0% 15.7% Detailed calculations included in appendix D 19
Slide 21: Financial Issues
Financial Issues • Exceptional loss - pub disposals - distribution arrangements • Share buybacks • International accounting standards 20
Slide 22: Current Trading and Outlook
Current Trading and Outlook • February LFL sales: -1.9%, total company +2.1% • Highest ever weekly pub sales • Costs review – ongoing benefit • Continued investment in key areas (wages/repairs) • Non-smoking plan • Strong underlying cash flow 21
Slide 23: Appendices
Appendices A - 10 Year Financial Graphs B - 10 Year Trends C - Capital Trends D – ROC/CROCCE/ROE Calculations 22
Slide 24: 10 Year Summary
Appendix A 10 Year Summary Average Sales Per Pub Week (including VAT) Number of Pubs 649 £000 700 643 635 608 28.4 30 28.0 600 522 28 26.4 26 24.7 500 23.5 428 24 22.7 22 20.4 400 327 19.2 19.7 20 17.8 300 252 18 194 16 200 146 14 12 100 10 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0 1996 19
Slide 25: JDW - Financial Trends
Appendix B JDW - Financial Trends H1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Sales per pub (£000) 702 786 848 872 904 1,004 1,040 1,093 1,169 1,239 1,256 EBITDA per pub (£000) (1) 149.5 177.6 190.8 184.9 188.0 203.8 205.9 207.4 201.9 204.4 190.9 Number of pubs 110 146 194 252 327 428
Slide 26: Capital Trends
Appendix C Capital Trends H1 1998 1999 2000 2001 2002 2003 2004 2005 Size (sq.ft.) – openings 3,401 3,037 3,217 3,713 3,808 3,721 4,317 4,244 Number of openings 68 84 101 94 87 45 28 6 % which are freehold 49 58 67 75 53 56 43 33 Freehold average cost (£k) 463 427 465 506 597 511 640 563 Average dev
Slide 27: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE H1 H1 2005 2004 £000 £000 Profit after tax (e) 14,571 18,285 Add: interest (f) 12,021 10,739 Profit pre-interest (g) 26,592 29,024 Add: deferred tax 1,068 2,679 Depreciation 22,522 21,887 Cash return (h) 50,182 53,590 • P&L return on capital [(g)/average (c)] 8.4% 9.2% • C
Slide 28: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE H1 FY 2005 2004 £000 £000 Shareholder funds per balance sheet 288,763 288,954 Add: cum losses on disposal 14,774 8,424 (a) 303,537 297,378 Add: net debt (b) 327,347 337,559 Capital employed (c) 630,884 634,937 Add: deferred tax provision 66,282 66,244 Cumulative depreciati