J D Wetherspoon Plc · LSE:JDW
J D Wetherspoon — FY2020 Earnings Presentation
35 slides from J D Wetherspoon's earnings presentation, Oct 16, 2020
Slide 1: JD Wetherspoon PLC Preliminary Results 16 October 2020
JD Wetherspoon PLC Preliminary Results 16 October 2020
Slide 2: The alternative to lockdown is mainstream
The alternative to lockdown is mainstream BBC isn’t telling us the full story on Covid The corporation is sticking to ministers’ line that ‘the science’ supports their policy when the truth is far more complex Matthew Parris – Sat 3 October Britain's Covid-19 strategy simply adds up to many more job
Slide 3: Britain's Covid-19 Strategy Simply Adds Up To Many More Jobless People
“Britains Covid-19 Strategy Simply Adds Up To Many More Jobless People” 15 October 2020, Larry Elliot, Guardian Economics Editor • Lockdown damaging and counter–productive with no guarantee of success but rise in unemployment is , in contrast, certain. • Opinion now spilt on what to do next - lockdo
Slide 4: Background
Background • Average food hygiene score of 4.96 out of 5 • 758 pubs (out of 781) have a score of 5 • £13.1m spent on safety measures before reopening • £33m spent on bonuses and free shares, 98% paid to staff below board level and 87% to pub staff • Top Employer UK for the 17th consecutive year (Top
Slide 5: Financial Summary
Financial Summary 2020 2019 Var% 2018 20172 2016 2015 2014 2013 20122 2011 Revenue 1,262.0 1,818.8 -30.6% 1,693.8 1,660.8 1,595.2 1,513.9 1,409.3 1,280.9 1,197.1 1,072.0 (£m) Like-for-like sales -29.5% +6.8% +5.0% +4.0% +3.4% +3.3% +5.5% +5.8% +3.2% +2.1% (Loss)/profit before tax and property gains
Slide 6: Average Weekly Sales Per Pub (including VAT)
Average Weekly Sales Per Pub (including VAT) £000 48.0 48 46.5 46 44.4 44 41.7 42 39.0 40 37.4 38 36.0 36 34.0 34 32.3 31.1 32 30 28 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 5
Slide 7: Underlying Earnings Per Share (pence)
Underlying Earnings Per Share (pence)* pence 76.5 80.0 70.2 66.6 70.0 60.0 48.0 47.6 44.7 43.8 50.0 41.3 35.3 40.0 30.0 20.0 -35.9 10.0 0.0 -10.0 -20.0 -30.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *Underlying earnings per share are before exceptional items and exclude gains/losses on prop
Slide 8: Like-for-like Performance
Like-for-like Performance % 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Bar -29.3 +5.8 +5.1 +3.1 +3.3 +1.2 +2.7 +3.8 +2.8 +1.7 Food -30.1 +8.3 +5.1 +5.7 +3.5 +7.3 +12.0 +10.9 +4.8 +4.2 Fruit/slot -20.9 +10.3 +2.9 -1.2 -2.2 -2.8 -3.1 +0.4 -2.8 -3.9 machines Hotel -38.7 +3.9 +2.3 +9.9 +9.7 +24.2
Slide 9: 10 Year Operating Profit
10 Year Operating Profit £m 2020 2019 2018 20171 2016 2015 2014 2013 20121 2011 Turnover 1,262.0 1,818.8 1,693.8 1,660.8 1,595.2 1,513.9 1,409.3 1,280.9 1,197.1 1,072.0 Pub profit (pre repairs) 214.2 349.7 338.6 330.6 288.3 285.4 284.4 259.0 245.4 226.8 Repairs (75.9) (76.9) (71.3) (66.2) (54.9) (53
Slide 10: Summary of Exceptional Items
Summary of Exceptional Items 2020 2019 £000 £000 Operating exceptional items Covid-19 29,091 – Gaming machine settlement (15,890) – 13,201 – Exceptional property losses Disposal programme (see next slide) 8,151 4,108 Other property losses Impairment of property, plant and equipment 23,904 2,252 Impa
Slide 11: Covid-19 timeline
Covid-19 timeline • 20 Mar 2020 All pubs closed by the government • Apr – Jul 2020 £13.1m investment in safety measures for staff and customers - Perspex floor/till screens, sanitiser stations, external furniture, masks, gloves, thermometers, customer posters/signage, • 04 Jul 2020 First pubs reopen
Slide 12: Covid-19 support measures
Covid-19 support measures • Furlough rebate (£124.2m for FY20) • Reduced VAT rate on food and non-alcoholic drinks • Business rates suspended • VAT payment deferrals • £250k local authority grants • “Eat Out to Help Out” scheme (August) 11
Slide 13: COVID-19
COVID-19 • Approximately 46 million customer visits to pubs since reopening in July 2020 • Over 16 million track & trace registrations – for most of the time, only the lead person in each group has needed to register (excludes NHS APP registrations) • 429 employees (of 43,000) have tested positive f
Slide 14: Management Actions
Management Actions The company implemented an extensive set of measures to safeguard the business. These include: • Operational reductions. The company closed its pubs and hotels, putting them, in effect, into 'hibernation' in which ongoing costs, for example utilities, are minimised. • Capital Expe
Slide 15: Management Actions (continued)
Management Actions (continued) • Board salary reductions. The board volunteered to take the following reductions: Tim Martin - 50%; John Hutson - 50%; Ben Whitley 38%; Su Cacioppo - 42%; each of the non-executive directors - 50%. • Repairs and maintenance. Reduced from an annualised run rate of £83
Slide 16: Allocation of Resources
Dividend Allocation of Resources Freehold reversions and investment properties £13m £15m Share buybacks £8m £24m £15m £13m Capex on new and £14m existing pubs £22m £16m £89m £13m £25m £5m £36m £5m £13m £15m £98m £8m £52m £33m £23m £77m £54m £28m £15m £8m £6m £5m £154m £151m £121m £113m £115m £94m £9
Slide 17: Cash Capital Expenditure
Cash Capital Expenditure £m 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 New Openings: Acquisition and development costs: Current year 18.6 19.8 32.0 27.2 38.6 76.5 64.5 40.4 57.2 74.0 Future year 31.8 7.5 14.4 13.1 16.6 30.5 33.2 12.8 10.4 9.0 Freehold reversions and investment 98.5 77.2 16.3
Slide 18: Movement in Net Debt
Movement in Net Debt £m 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Opening Net debt 737.0 726.2 696.3 650.8 601.1 556.6 474.2 462.6 437.7 388.4 Free cash flow 58.9 (97.0) (93.4) (107.9) (90.5) (109.8) (92.9) (65.3) (91.5) (78.8) Disposal of fixed assets (4.8) (9.3) (4.7) (19.6) (22.5) (0.7) (
Slide 19: Property Update
Property Update 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Trading pubs at start of FY 879 883 895 926 951 927 886 860 823 775 Freehold pubs opened 2 4 6 9 10 24 31 14 18 34 Leasehold pubs opened – 1 – 1 6 6 15 15 22 16 Closures/disposals (9) (9) (18) (41) (41) (6) (5) (3) (3) (2) Total tradi
Slide 20: IFRS 16 – impact
IFRS 16 – impact Profit and loss impact £m EBITDA £58.5 Depreciation £(48.7) Operating profit £9.8 Disposal of leases £1.1 Interest £(21.5) Profit before tax £(10.6) Tax £2.0 Profit after tax £(8.6) Balance sheet impact £m Right-of-use assets £514.2 Net lease liabilities £(541.9) Other £27.7 Based o
Slide 21: "It's a People Thing"
“It’s a People Thing” • Over 43,000 employees of which over 13,000 are shareholders • Manager retention: 2020 2013 2008 Pub Manager 12 yr 11 mth 9 yr 8 mths 7 yr 1 mth Kitchen Manager 9 yr 5 mths 6 yr 5 mths 4 yr 7 mths • Recognised as one of ‘Britain’s Top Employers’ in a Guardian publication for 1
Slide 22: Changing Sales Mix since 2000
Changing Sales Mix since 2000 100% 6% 5% 4% 4% 3% 3% 90% 18% (£4.2k)* 25% 29% 33% 35% 80% (£6.9k)* (£8.7k)* (£14.6k)* 36% (£11.1k)* (£16.6k)* 70% 60% Hotel/Other 50% Machines Food 40% 76% Bar (£17.2k)* 70% 66% (£19.7k)* 63% 61% (£19.8k)* 60% 30% (£21.4k)* (£25.5k)* (£28.1k)* 20% 10% 0% 2000 2005 200
Slide 23: Taxation
Taxation* 2020 2019 2018 2017 2016 2015 2014 2013 2012 £m £m £m £m £m £m £m £m £m VAT 244.3 357.9 332.8 323.4 311.7 294.4 275.1 253.0 241.2 Alcohol duty 124.2 174.4 175.9 167.2 164.4 161.4 157.0 144.4 136.8 PAYE and NIC 106.6 121.4 109.2 96.2 95.1 84.8 78.4 70.2 67.1 Business rates 39.5 57.3 55.6 53
Slide 24: Current Trading and Outlook
Current Trading and Outlook • Like-for-like sales in the first 11 weeks have been 15.0% below last year • 10pm curfew and introduction of ‘table service only’ have been particularly damaging for trade • The outlook for pubs over the remainder of the current financial year is even more unpredictable
Slide 25: Questions
wetherspoon Questions
Slide 26: Appendices
wetherspoon Appendices
Slide 27: Appendices
Appendices • A 10 year overview • B 10 year financial trends • C 10 year debt overview • D1 ROC/CROCCE/ROE calculations • D2 ROC/CROCCE/ROE calculations • E Pub disposal programme • F Swap maturity profile 26
Slide 28: 10 Year Overview
Appendix A 10 Year Overview Number of pubs £ millions Turnover 1000 1,800 950 1,600 900 850 1,400 800 1,200 1,819 927 951 1,661 1,694 926 1,595 750 886 895 883 879 872 1,514 823 860 1,409 1,000 1,262 700 1,281 1,072 1,197 650 800 600 600 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 20
Slide 29: 10 Year Financial Trends
Appendix B 10 Year Financial Trends 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Sales per pub (£000) (1) 2,017 2,075 1,921 1,807 1,694 1,620 1,562 1,476 1,401 1,360 EBITDA per pub (£000) (2) 139.9 253.3 248.0 229.0 209.2 200.9 204.5 200.9 194.9 198.7 Number of pubs 872 879 883 895 926 951 927
Slide 30: 10 Year Debt Overview
Appendix C 10 Year Debt Overview 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net debt/EBITDA 9.48* 3.36 3.39 3.39 3.47 3.37 3.21 2.88 2.96 2.98 (EBITDAR - Reinvestment)/Fixed charge 1.01* 2.26 2.25 2.21 2.14 1.97 1.79 1.88 1.75 1.74 Interest cover (times) -1.33 3.72 4.19 3.72 2.92 2.73 3.11 2.
Slide 31: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE 2020 2019 £000 £000 Shareholders equity per accounts 325,199 316,812 Deferred tax balances 26,521 31,073 Interest rate swaps valuations 82,194 49,072 Impairment balances 44,058 19,675 Net book value of revalued assets (4,939) (5,334) Adjusted shareholders equity (a) 473,03
Slide 32: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE 2020 2019 £000 £000 EBITDA (cash return) (e) 86,150 219,327 Depreciation and amortisation (f) (79,639) (81,811) EBIT (g) 6,511 137,516 Interest (40,606) (35,057) Profit before tax (34,095) 102,459 Current tax (h) 588 (22,484) Profit after cash tax (i) (33,507) 79,975 Defer
Slide 33: Summary of pub disposal programme
Appendix E Summary of pub disposal programme The company has offered several of its sites for sale. At the year end, a further 8 (2019: 8) sites had been sold. The company closed one pub in the year that fell outside the scope of the disposal programme. 2020 2019 £000 £000 Disposal programme Loss on
Slide 34: Swap Maturity Profile
Appendix F Swap Maturity Profile Swap Value From To Weighted Average % £770m 02 July 2018 29 Jul 2021 2.42% £770m 30 July 2021 30 July 2023 1.61% £770m 31 July 2023 30 July 2026 1.10% £770m 31 July 2026 30 June 2028 1.33% £770m 01 July 2028 29 March 2029 1.32% 33
Slide 35: wetherspoon
wetherspoon 34