J D Wetherspoon Plc · LSE:JDW
J D Wetherspoon — H1 2006 Earnings Presentation
26 slides from J D Wetherspoon's earnings presentation, Mar 3, 2006
Slide 1: J.D. Wetherspoon Plc Interim Results
J.D. Wetherspoon Plc Interim Results 3 March 2006
Slide 2: Highlights - Six Months to 22 January 2006
Highlights -Six Months to 22 January 2006 • Turnover up 1% to £406.3m • Operating profit up 15% to £39.7m • Profit before tax up 21% to £27.4m • Earnings per share up 31% to 10.6p • Free cash flow per share 17.6p (2005: 17.4p) • 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 28.2 28.5 28 27 26.4 26 24.7 25 23.5 24 23 22 21 20 2001 2002 2003 2004 2005 2006 H1 2
Slide 4: Like For Like Sales/Profits
Like For Like Sales/Profits % H1 2006 2005 2004 2003 2002 2001 Bar - (1.4) 2.9 2.1 3.5 6.2 Food (0.6) 2.1 4.2 11.4 9.9 11.4 Total Sales (0.3) (0.6) 3.4 4.1 5.0 7.5 LFL Profits 3.7 (4.0) (0.7) (0.9) 3.8 7.0 3
Slide 5: Operating Margins - Summary
Operating Margins - Summary H1 2006 H1 2005 FY 2005 % of % of % of £000 Sales £000 Sales £000 Sales Turnover 406,326 - 403,341 - 809,861 - Pub Operating Profit 77,916 19.2 74,140 18.4 152,505 18.8 Head Office Costs (15,681) (3.9) (16,908) (4.2) (31,428) (3.9) Share incentive plan (811) (0.2) (405) -
Slide 6: IFRS (Full Year Impact)
IFRS (Full Year Impact) £m • P&L impact minimal - depreciation 0.9 - lease incentives 0.2 Increase in PBT £1.1m • Shareholders’ funds - depreciation 0.9 - lease incentives (4.8) - hedging (11.5) - tax on hedging 3.4 - taxation (14.2) - dividends 4.9 Reduction in SF £(21.3)m 5
Slide 7: Cash Flow
Cash Flow H1 H1 FY 2006 2005 2005 Cash from operations 60,826 62,002 123,460 Interest and tax (22,350) (18,937) (36,697) Investments in existing pubs (6,695) (8,180) (14,173) Investment in own shares (SIP) (1,765) (1,989) (3,816) Free cash flow 30,016 32,896 68,774 Dividends (4,749) (4,839) (7,520)
Slide 8: Financial - Funding
Financial - Funding H1 H1 FY 2006 2005 2005 Net debt / EBITDA 2.8 2.8 2.8 Interest cover (times) 3.2 2.9 2.9 Fixed charge cover (times) - statutory 1.7 1.6 1.6 - excluding 2.3 2.3 2.3 depreciation 7
Slide 9: New Banking Facility
New Banking Facility • 5 year facility • Expanded bank group • Total facilities £472m • Attractive terms 8
Slide 10: ROC/CROCCE/ROE
ROC/CROCCE/ROE H1 H1 FY 2006 2005 2005 • P&L return on capital 10.2% 8.8% 9.2% • Crocce 11.5% 11.2% 11.7% • P&L return on equity 14.0% 10.5% 11.5% • Cash return on equity 13.9% 13.6% 14.3% Detailed calculations included in appendix D 9
Slide 11: Industry faces 90% increase in gas prices
, sidies j | ENERGY CRUNCH: As Britain’s manufacturers face s®aring prices, Europe cracks GOWN On su Industry faces 90% increase in gas prices 10
Slide 12: 2007 cost outlook
2007 • Utilities increase circa £8m based on current market rates • Minimum wage +6% (October 2006) • Increased re-investment 11
Slide 13: Trading Update
Trading Update • High weekly sales • Sensible action on cost base • Innovation/continuous improvement • Continued focus on cash flow 12
Slide 14: Responsible Retailing
Responsible Retailing • Responsible drinking – Spirits pricing – 2 for 1 offers – Timed promotions • 2005 Responsible Drinks Retailing award 13
Slide 15: Progress
Progress • Training awards • Toilet awards • Design awards • Good Beer Guide • Cask Marque • Healthy eating award (kids menu) 14
Slide 16: Non-Smoking
Non-Smoking • 49 pubs at February 2006 • 37 conversions • 12 new • Average cost of conversion £50k 15
Slide 17: Non-Smoking
Non-Smoking • Q2 performance (3 months to 22 January) – Sales down 7.6% – Food mix 39% – Machines mix 3.5% – Pub operating margin down 4% • Future plans – Scotland (38 pubs – 26 March 2006) – New openings, existing conversions pipeline – Wait for legislation (Summer 2007) 16
Slide 18: Coffee Rip-Off
Coffee Rip-Off 17
Slide 19: New Licensing Legislation
New Licensing Legislation • Standard hours 9am – midnight • Focus on breakfasts / coffee • No increase in alcohol drinks consumption • General behaviour trends 18
Slide 20: Current Trading and Outlook
Current Trading and Outlook • February – (+1.9%) LFL sales • Continued focus on costs • H2 challenges - Scotland - World Cup • Investment where necessary • Smoking bans ahead • Confident of longer term prospects 19
Slide 21: Appendices
Appendices A - 10 Year Financial Graphs B - 10 Year Trends C - Capital Trends D – ROC/CROCCE/ROE Calculations 20
Slide 22: 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 23: JDW - Financial Trends
Appendix B JDW - Financial Trends H1 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sales per pub (£000) 786 848 872 904 1,004 1,040 1,093 1,169 1,239 1,246 1,261 EBITDA per pub (£000) (1) 177.6 190.8 184.9 188.0 203.8 205.9 207.4 201.9 204.4 195.7 202 Number of pubs 146 194 252 327 428 522
Slide 24: Capital Trends
Appendix C Capital Trends H1 1999 2000 2001 2002 2003 2004 2005 2006 Size (sq.ft.) – openings 3,037 3,217 3,713 3,808 3,721 4,317 4,176 3,643 Number of openings 84 101 94 87 45 28 13 5 % which are freehold 58 67 75 53 56 43 54 - Freehold average cost (£k) 427 465 506 597 511 640 873 - Average develo
Slide 25: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE H1 H1 2006 2005 £000 £000 Profit after tax (e) 18,072 15,362 Add: interest (f) 12,339 12,021 Profit pre-interest (g) 30,411 27,383 Add: deferred tax 908 558 Depreciation 21,136 22,072 Cash return (h) 52,455 50,013 • P&L return on capital [(g)/average (c)] 10.2% 8.8% • CROC
Slide 26: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE H1 FY 2006 2005 £000 £000 Shareholder funds per balance sheet 228,127 246,745 Add: cum losses on disposal 15,033 15,033 : hedging provision 11,464 - (a) 254,624 261,778 Add: net debt (b) 339,999 334,145 Capital employed (c) 594,623 595,923 Add: deferred tax provision 84,12