Slide 1: Interim Results 2009/10
Whithroad Interim Results 2009/10
Slide 2: Anthony Habgood, Chairman
Anthony Habgood Chairman
Slide 3: Christopher Rogers, Group Finance Director
Christopher Rogers Group Finance Director
Slide 4: Summary
Summary H1 2009/10 H1 2009/10 H1 2008/09 Change Underlying profit before tax £118.2m £121.5m (2.7)% Profit before tax, pre exceptional £110.5m £123.3m (10.4)% EPS underlying (diluted) 47.3p 49.1p (3.7)% Proposed interim dividend 9.65p 9.65p
Slide 5: Summary - Profit & Loss
Summary - Profit & Loss H1 2009/10 £m Revenue Profit from operations Central costs Interest Underlying profit before tax H1 2009/10 703.3 140.0 (9.2) (12.6) 118.2 H1 2008/09 682.2 146.5 (11.1) (13.9) 121.5 Change 3.1% (4.4)% 17.1% 9.4% (2.7)%
Slide 6: Summary - Underlying Profit & Loss
Summary - Underlying Profit & Loss H1 2009/10 £m H1 2009/10 H1 2008/09 Change Underlying profit before tax 118.2 121.5 (2.7)% Pension finance cost/credit - |AS 19 (7.7) 1.8 Profit before tax, pre exceptional 110.5 123.3 (10.4)% Taxation (34.1) (36.9) 7.6% Net profit, pre exceptional 76.4 86.4 (11.6)
Slide 7: Revenue by business segment
Revenue by business segment H1 2009/10 £m H1 2009/10 H1 2008/09 Change Hotels & Restaurants 548.8 555.1 (1.1)% Costa 155.4 128.9" 20.6% Less: inter-segment "“ (0.9) (2.1) Other - 0.37! Revenue 703.3 682.2 3.1% "Costa restated in 2008/09 by £5.7m to include sales to franchisees previously shown in ot
Slide 8: Openings H1 2009/10
Openings H1 2009/10 Hotels & Restaurants * Solus sites: 4 new locations with 761 rooms * Joint sites: 3 new locations with 316 rooms Costa * 93 net new units in UK; 21 equity and 72 franchise * 8 net new units overseas
Slide 9: Like-for-like sales
Like-for-like sales H1 2009/10 % H1 2009/10 H1 2008/09 Premier Inn (7.5) 10.1 Restaurants 1.8 45 Hotels & Restaurants (3.6) fF Costa 2.5 3.7 Total (2.7) 7.0
Slide 10: Hotels & Restaurants revenue
Hotels & Restaurants revenue H1 2009/10 £m H1 2009/10 H1 2008/09 Change Premier Inn revenue 312.1 311.0 0.4% Restaurants revenue” 236.7 244.1 (3.0)% Hotels & Restaurants 548.8 555.1 (1.1)% * Revenwe from joint site and stand alome restaurants +0
Slide 11: Profit by business segment
Profit by business segment H1 2009/10 £m H1 2009/10 H1 2008/09 Change Hotels & Restaurants - UK 129.1 140.7 (8.2)% Hotels & Restaurants - Overseas (1.7) (1.5) (13.3)% Total Hotels & Restaurants 127.4 139.2 (8.5)% Costa - UK 12.5 8.5 47.1% Costa - Overseas 0.1 (1.2) Total Costa 12.6 re 72.6% Profit f
Slide 12: Summary - Profit & Loss
Summary - Profit & Loss H1 2009/10 £m Revenue Profit from operations Central costs Interest Underlying profit before tax H1 2009/10 703.3 140.0 (9.2) (12.6) 118.2 H1 2008/09 682.2 146.5 (11.1) (13.9) 121.5 Change 3.1% (4.4)% 17.1% 9.4% (2.7)%
Slide 13: Interest charge
Interest charge H1 2009/10 £m H1 2009/10 H1 2008/09 Interest on borrowings (13.3) (16.0) Interest on deposits/investments 0.1 0.7 Other 0.6 1.4 Underlying interest charge (12.6) (13.9) Pension finance cost/credit — 1AS 19 (7.7) 1.8 Interest charge, pre exceptional (20.3) (12.1) * Average debt in fir
Slide 14: Exceptional items
Exceptional items H1 2009/10 £m H1 2009/10 H1 2008/09 Reorganisation costs (4.3) (0.9) Other (0.3) (0.2) Premier Inn rebranding - (5.1) Tax on exceptional items 13 3.6 Exceptional tax arising from HBA abolition - (43.9) Exceptional items (3.3) (46.5)
Slide 15: Cash flow
Cash flow H1 2009/10 £m H1 2009/10 H1 2008/09 Cashflow from operations 175 169 Cash capital expenditure (78) (149) Business acquisitions - (19) International investment (6) (10) Cashflow after investment 91 (9) Interest, tax and ordinary dividends (76) (73) Pension, special contribution - (50) Dispo
Slide 16: Capital expenditure
Capital expenditure H1 2009/10 £m H1 2009/10 Hi 2008/09 Hotels & Restaurants 68 131 Costa 10 17 Corporate/Discontinued 1 Total 78 149
Slide 17: Balance sheet
Balance sheet H1 2009/10 * Cash generation in period £17m; group debt at half year date falls to £607m * Facilities — £1,155m to Dec 2010 — £930m to Dec 2011 — £855m to Dec 2012 * IAS 19 pension deficit increases to £408m (£294m net of tax) - adverse movement in bond yields
Slide 18: Other Financial Items
Other Financial Items H1 2009/10 * Cost savings on plan * Capex of c.£165m for full year ¢ Effective tax rate of 30-31% * Full year pension fund interest charge £15.5m * 53 week year to the 4 March 2010
Slide 19: Summary
Summary * Underlying profit before tax £118.2m down 2.7% * EPS, underlying 47.3p down 3.7% ¢ Proposed interim dividend 9.65p * Costs well controlled and underpinning results * Half year debt down £17m to £607m
Slide 20: Alan Parker, Chief Executive Officer
Alan Parker Chief Executive Officer
Slide 21: Resilient first half results
(Nhithead Resilient first half results * Highlights * Delivering on our priorities ¢ Preparing for growth * Outlook ” Premicrien oN
Slide 22: Highlights
(Whitbread Highlights In tough trading conditions: ¢ Premier Inn outperformed on revpar * Pub restaurants showed good like-for-like growth * Costa delivered outstanding results - profits up 73% « Strong cost control * 10,000 room pipeline * _ Premicrien- a ia} |:
Slide 23: Maintaining our strategy while delivering on our priorities
Maintaining our strategy while delivering on our priorities
Slide 24: Three key priorities
(Jhitbread Three key priorities 1. Outperforming the competition 2. Achieving cash flow neutrality 3. Increasing efficiency and reducing costs ” Premicrien oar
Slide 25: 1. Outperforming the competition
1. Outperforming the competition
Slide 26: Commercial actions
Commercial actions * Business account expansion * Premier Offers from £29 per room ¢ Third party distribution * Dynamic pricing * Strengthened national sales force * New TV, press and online advertising campaign e) Premicria. ia} I:
Slide 27: Premier Offers from £29
Slide 28: Dynamic pricing
Dynamic pricing * Automated, demand led pricing * Minimal implementation costs ¢ Flexible pricing according to demand * 100% of sites live by year end * Benefits starting in H2 — Weekend occupancy — Premiums for high demand periods watt At ps yp
Slide 29: Premier Inn: Stabilising revpar
2 Premier inn Stabilising revpar % change in like-for-like revpar
Slide 30: Regional revpar outperformance
Regional revpar outperformance Premier inn om + ™ 44% 4 4% 4 . un + Year-on-year revpar variance Ape May jun Jul Aug H1 Mar © Premier Inn Total Hotel Market (Budget & Full Service) excluding London Source: TRI Hotstats September 2009
Slide 31: First choice budget hotel for business travellers
2 First choice budget hotel for Au business travellers 152" choice or Inn Net position Prefer to avoid Pleased to use
Slide 32: Improving weekend occupancy
2m Improving weekend occupancy mua vs budget competitors 65 We have recently been ahead of 55 the competition on weekend revpar 45 4 1 3 24 i | I ; Budget competitors i Revpar £ : —} -1 Mar Apr Ma Jun ! 1 P Y i : Occupancy % 24 i 3 ! 1 44 i 5: 1 6 i 7: ' 8 i -9 + ! -10 4 “11 5 42 + Launch of Premier
Slide 33: Joint sites deliver good ROCE
Joint sites deliver good ROCE - even in recession % 18 Three years to maturity Recession 16 Joint sites total ROCE 14 12 10 8 6 4 2 0 2006/07 2007/08 2008/09 2009/10 H1 MAT Premier Inn/pub restaurants joint sites (13) opened © 2005/06 © 2006/07 Pre central coats. 2009/10 calculated to H1 Moving Annu
Slide 34: Slide 34
Slide 35: Pub restaurants leading performance
Pub restaurants leading performance * Joint sites offer sales and cost synergies * Favourable locations ¢ Well invested estate * 6.8% cover growth * Customer satisfaction high * Margins in line with competitors ” Premicrien oar
Slide 36: Pub restaurant brands focused on value
Pub restaurant brands focused on value peiwnd the focd the tre Number of sites 130 The UK's No.1 Core offering chargrill restaurant Flaming Good meal deals: Valse Deots Daytime €5.95/£7.95 Evening £9.95 Value Deals ' as % of total covers sm Average food spend £10.95 per head (inc VAT) wit 108 Pub fo
Slide 37: Pub restaurant like-for-like performance
Pub restaurant like-for-like performance in the market 8.0% Year-on-year sales variance 6.0% 4.0% ido Mar Apr May Jun Jul Aug 0.0% "Market @ Whitbread Sowree: Coffer Peach Business Tracker im association with UBS and KPMG, Augwst 2009
Slide 38: Costa: Not all coffee shops are the same
! CO$TA Not all coffee shops are the same dott OF 10 PR ER COSTA
Slide 39: Costa: Sales and profit growth
CO§TA Sales and profit growth Sales im Profit £m 300 30 Sales CAGR 19.0% 250 25 200 ~ 20 Profit CAGR 19.1% 150 "| 15 100 10 SO > $ 0 0 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10* ——Sales —~Profit * Moving Annual Total to half year ”
Slide 40: 2. Achieving cash flow neutrality
2. Achieving cash flow neutrality
Slide 41: Managing tightly and prudently
Managing tightly and prudently 2008/09 outflow 2009/10 inflow
Slide 42: 3. Increasing efficiency and reducing costs
3. Increasing efficiency and reducing costs
Slide 43: Structural savings
Structural savings * Three year structural saving programme of £25m — £13m in 2009/10 — Total savings £20m pa by year end Savings achieved by — Merging hotel and restaurant divisions — Outsourcing programme — Simpler systems and processes — Benchmarking all central costs aft Premicrien =
Slide 44: Additional operating cost control measures
Additional operating cost control measures * Detailed cost review in every unit « Standardised operational structures ¢ New labour scheduling system * Procurement review — Food; Laundry; Utilities * Group IBFC held * No impact on customer service/product quality ” Premicrien oar
Slide 45: Preparing for growth
Preparing for growth
Slide 46: Long term expansion
Long term expansion * Over 200 towns and markets where Premier Inn has no presence ¢ Further opportunity in London « Site acquisition and construction costs down * Office and residential developers less active * Window of opportunity e) Premicrien- a ia} |:
Slide 47: Secured growth
Secured growth * Pipeline — 75 hotels — 10,000° rooms of which 7,000 committed leases and 3,000 land banked ¢ Equivalent to 3 years growth 2006/07 - 2008/09 ” Premicrien oar * Includes openings 2000t10
Slide 48: Costa UK target store openings 2009/10
CO$TA UK target store openings 2009/10 180 1,000* store opens this month Equity Franchise Total
Slide 49: Costa UK multiple growth opportunities
COSTA UK multiple growth opportunities * Balanced portfolio across high street, retail parks, shopping malls and airports * New Store locations with strong corporate partners — Tesco - in store — Hilton - in hotet — Moto - motorways — Esso - service areas — Compass - contract catering ~ Premicrien =
Slide 50: Costa International breakthrough
CO§TA International breakthrough * Maiden profit in H1 * Sales up 21.5% year on year ¢ Will open c.70 sites in the second half * Further equity investment during H2 * Focus on penetration in existing markets ¢ Bring China, Russia and Central Europe to scale ” Premicrien oN
Slide 51: Summary and outlook
Summary and outlook
Slide 52: Summary
Summary * Building strong hospitality brands in value-for-money sectors ¢ Resilient first half results * Delivering on priorities * Commercial action plan continues * Looking ahead to prepare for growth * _ Premicrien- a ia} I:
Slide 53: Outlook
Outlook * Tough trading conditions continue * Group momentum building ¢ Costa trading strongly * Robust performance in pub restaurants * Improving trend at Premier Inn * Confident about outturn for the year e) Premicrien- a ja} |:
Slide 54: Appendix
Appendix epee er
Slide 55: Standard Information
Standard Information ( } itt { Hotels & Restaurants Sonn vin tm 176.2 14 noe @rc em we “5 198.0 8.2 wet tm w« “0 16 "WO, Met Asiets Em 956.1) W246 TAG 296.5 Jott * | [ ] Sales ~ Joint Sines tm 72.6 3.5 710.7) 663.) erc in 4 160.4 ma 74 wc Lim 109.4 145 204.4 58 Met Assets tm 1,290.5 1109 1265 1020 V
Slide 56: Standard Information
Standard Information Hotels & Restaurants cont. Sey opecating meats ARR (Toral) Occupancy (Fotal) Wield (Total) Like for Like Sates Growth Pi Like for Like Sates Growth REST Operating Margin ROCE * Sumber of Rooms Sotus Maranged ~ Joint Verfures Amocute > Franchise 0 Management Contract Total Solus
Slide 57: Standard Information
Standard Information Costa Headline financials Sales ESITDA from Operations EET from Operations Net Assets Cath Capital Expenditure Key Operating Measures Like for Like Sales Growth Operating Margin ROCE '- UK ROCE * - Totak Business Outlet details » Equity ~ UK Franchise Total UK international JV?
Slide 58: Standard Information
Standard Information General Achieved Room Rate (ARR) Income after fixed costs (LAFC) income before fixed costs (IBFC) Joint Sites like-for-like sales Occupancy ROCE (Return on Capital) Solus Sites Yield Whitbread. Hotel accommodation income divided by the number of rooms occupied by guests Hotel op