J D Wetherspoon Plc · LSE:JDW
J D Wetherspoon — FY2005 Earnings Presentation
25 slides from J D Wetherspoon's earnings presentation, Sep 2, 2005
Slide 1: J.D. Wetherspoon Plc Preliminary Results
J.D. Wetherspoon Plc Preliminary Results 2 September 2005
Slide 2: Highlights - Twelve Months to 24 July 2005
Highlights -Twelve Months to 24 July 2005 • Turnover up 3% to £809.9m • Operating profit down 9% to £70.4m • Profit before tax down 15% to £46.1m • Earnings per share down 7% to 16.4p • Free cash flow per share 37.1p (2004: 36.7p) • Dividend per share increased by 10% 1
Slide 3: Openings - 2005 (13)
Openings- 2005 (13) Birmingham* Liverpool Airport Bradford Peterborough* Cardiff Spalding* Carlisle St. Albans* Exeter* Stourbridge Gatwick Airport Swindon* Kendal* * Non-smoking 2
Slide 4: Average Sales Per Pub Week (including VAT)
Average Sales Per Pub Week (including VAT) £000 29 28.0 28.2 28 27 26.4 26 24.7 25 23.5 24 23 22 21 20 2001 2002 2003 2004 2005 3
Slide 5: Like For Like Sales/Profits
Like For Like Sales/Profits % 2005 2004 2003 2002 2001 Bar (1.4) 2.9 2.1 3.5 6.2 Food 2.1 4.2 11.4 9.9 11.4 Total Sales (0.6) 3.4 4.1 5.0 7.5 LFL Profits (4.0) (0.7) (0.9) 3.8 7.0 4
Slide 6: Marketing
Marketing • Lavazza– Italy’s favourite coffee (70 beans/cup) • Wine - house wine biggest selling on-trade brand • Cider – 14 independent products (6 medal winners) • Perry – 20% of market (80% excluding Babycham) • Pimms – 200% increase in volumes • Beer festivals - National (>3 million pints) - Loc
Slide 7: Continued Food Development
Continued Food Development • Menu masters award for kids menu: - choice/ value/nutritional • Local produce: Exmoor beef/Cumbrian lamb • Enhanced menu trial: - paella/venison casserole/haddock florentine • Being good/healthy options/five a day • Continued success of club formats e.g. - steak club vol
Slide 8: Licensing Reform
Licensing Reform • 2005 costs £1.3 million + internal time • 100% conversion applications made • Extra hours trading 7
Slide 9: Non-Smoking
Non-Smoking • 36 pubs at 31 August 2005 – 7 new – 29 conversions • Average cost of conversion £50-60k • Target circa 50 by end of 2005 • Review progress early 2006 8
Slide 10: Non-Smoking
Non-Smoking • August LFL sales minus 7% • Operating margins - high food mix - increase in labour costs • Some smokers leave on change • Build up new trade over time 9
Slide 11: Sales
Sales • Weekly sales £28.2k • Food mix 25% • Machine sales 5% 10
Slide 12: Operating Margins - Summary
Operating Margins - Summary 2005 2004 % of % of £000 Sales £000 Sales Turnover 809,861 - 787,126 - Pub Operating Profit 152,284 18.8 154,920 19.7 Head Office Costs (31,428) (3.9) (33,045) (4.2) Share incentive plan (985) (0.1) (149) - Licensing reform costs (1,330) (0.2) (150) - EBITDA 118,541 14.6
Slide 13: Costs
Costs • Staff costs • Utilities (£4m increase) • Repairs/capital re-investment • HO costs 12
Slide 14: Cash Flow
Cash Flow 2005 2004 £000 £000 Cash from operations 123,460 128,874 Interest and tax (36,697) (33,251) Investments in existing pubs (14,173) (20,590) Investment in own shares (SIP) (3,816) (1,556) Free cash flow 68,774 73,477 Dividends (7,520) (7,322) Re-financing costs - (1,325) Interest received 3,
Slide 15: Financial - Funding
Financial - Funding 2005 2004 Net debt / EBITDA 2.8 2.8 Gearing (%) – post FRS19 129 117 – pre FRS19 102 95 Interest cover (times) 2.9 3.3 Fixed charge cover (times) - statutory 1.6 1.8 - excluding 2.3 2.4 depreciation 14
Slide 16: ROC/CROCCE/ROE
ROC/CROCCE/ROE 2005 2004 • P&L return on capital 8.8% 9.3% • Crocce 12.0% 12.6% • P&L return on equity 10.6% 11.4% • Cash return on equity 14.9% 15.8% Detailed calculations included in appendix D 15
Slide 17: Exceptional Items
Exceptional Items • Loss on disposal (8 pubs) 2,306 • Distribution 2,984 • Impairment of trading pubs 1,068 • Restructuring 859 • Non-trading properties 163 £7,380k 16
Slide 18: IFRS
IFRS No Issues Will Impact Possible • Pensions • Deferred tax on • Interest rate property gains hedging • Share options • No accrued dividends • Leases • Goodwill • Lease incentives 17
Slide 19: Current Trading and Outlook
Current Trading and Outlook • August – (1.7%) LFL sales • Cost initiatives • 2006 challenges • Marketing activity • New menu launch • Strong underlying cash generation 18
Slide 20: Appendices
Appendices A - 10 Year Financial Graphs B - 10 Year Trends C - Capital Trends D – ROC/CROCCE/ROE Calculations 19
Slide 21: 10 Year Summary
Appendix A 10 Year Summary Number of Pubs Average Sales Per Pub Week (including VAT) 700 643 655 £000 635 608 30 28.0 28.2 600 522 28 26.4 26 24.7 500 23.5 428 24 22.7 400 22 20.4 327 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 22: JDW - Financial Trends
Appendix B JDW - Financial Trends 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Sales per pub (£000) 786 848 872 904 1,004 1,040 1,093 1,169 1,239 1,246 EBITDA per pub (£000) (1) 177.6 190.8 184.9 188.0 203.8 205.9 207.4 201.9 204.4 195.7 Number of pubs 146 194 252 327 428 522 608 635 643 655 %
Slide 23: Capital Trends
Appendix C Capital Trends 1999 2000 2001 2002 2003 2004 2005 Size (sq.ft.) – openings 3,037 3,217 3,713 3,808 3,721 4,317 4,176 Number of openings 84 101 94 87 45 28 13 % which are freehold 58 67 75 53 56 43 54 Freehold average cost (£k) 427 465 506 597 511 640 873 Average development cost (£k) 941
Slide 24: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE 2005 2004 £000 £000 Profit after tax (e) 30,409 35,347 Add: interest (f) 24,329 23,554 Profit pre-interest (g) 54,738 58,901 Add: deferred tax 1,377 5,562 Depreciation 48,157 43,948 Cash return (h) 104,272 108,411 • P&L return on capital [(g)/average (c)] 8.8% 9.3% • CROCC
Slide 25: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE 2005 2004 £000 £000 Shareholder funds per balance sheet 259,884 288,954 Add: cum losses on disposal 14,528 8,424 (a) 274,412 297,378 Add: net debt (b) 334,145 337,559 Capital employed (c) 608,557 634,937 Add: deferred tax provision 67,495 66,244 Cumulative depreciation 206