Mitchells & Butlers plc · LSE:MAB
Mitchells & Butlers — H1 2013 Earnings Presentation
32 slides from Mitchells & Butlers's earnings presentation, May 23, 2013
Slide 1: Half Year Results
Half Year Results Bob Ivell Chairman 23 May 2013 1
Slide 2: Financial Review
Financial Review Tim Jones Finance Director Half Year Results 2013 23 May 2013 2
Slide 3: Income statement
Income statement (pre exceptional items and other adjustments) 28 weeks to 13 April H1 2013 H1 2012 £m £m Revenue 991 969 + 2.3% Operating costs (846) (831) +1.8% Operating profit 145 138 + 5.1% Interest (70) (70) - Profit before tax 75 68 + 10.3% Earnings per share 14.6p 12.5p + 16.8% Operating mar
Slide 4: Like-for-like sales growth
Like-for-like sales growth Week 1-17 Week 18-28 Week 1-28 Food 0.5% 2.9% 1.4% Drink (1.3%) (1.0%) (1.2%) Total (0.3%) 1.1% 0.3% • Volatility driven partly by weather impact • 1% LFL growth in most recent 5 weeks • Underlying growth continues at c 1% over extended periods • Strong performance on spec
Slide 5: Drivers of LFL food and drink sales
Drivers of LFL food and drink sales Food Drink 7% 6.4% 6% 5.1% 5% 4% Price / Volume 3% Price / Spend Volume 2% Spend 1% (4.7%) + 1.4% 0% (1.2%) -1% -2% (6.0%) Total LFL sales growth of 0.3% • Food same item price rises in line with inflation • Volume declines concentrated in value brands 5
Slide 6: EBIT movement
EBIT movement +£4m +£3m £145m H1 13 +£5m -£1m -£4m £138m H1 12 FY 12 new FY 13 new Restruc Service & Trading openings openings -turing amenity savings investment 6
Slide 7: Group cash flow
Group cash flow H1 2013 H1 2012 FY 2012 £m £m £m EBITDA 205 198 415 Working capital / non cash items 21 8 (28) Deficit pension contributions (20) (20) (40) Cash flow from operations 206 186 347 Maintenance & infrastructure capex (48) (48) (92) Net interest paid (63) (63) (129) Tax (13) (10) (25) Fre
Slide 8: Group net debt
Group net debt April 13 Sep 12 April 12 £m £m £m Securitisation debt (2,156) (2,177) (2,207) Cash & other 132 135 136 Securitised net debt (2,024) (2,042) (2,071) Cash 247 201 207 Group net debt (1,777) (1,841) (1,864) Net Debt : EBITDA* 4.3x 4.5x 4.6x Note: Multiple calculated using previous 12 mon
Slide 9: Capital expenditure
Capital expenditure Total estate capex of £59m (H1 2012: £90m) Maintenance and infrastructure maintained at £48m Expansionary capex reduced to £11m (H1 2012: £42m) Reduction to focus on returns & review of market dynamics Full year capex likely to be £120m-£125m (FY 2012: £147m) FY 2014 spend expect
Slide 10: Expansionary capex returns
Expansionary capex returns 70 60 New sites 50 Number Conversions of sites 40 30 20 10 0 H1 H2 H1 H2 H1 FY 11 FY 12 FY 13 H1 13 Capex H1 13 No of sites FY11-13 EBITDA ROI Freehold Acquisitions £5.6m 3 13% Leasehold Acquisitions £4.6m 5 19% Conversions £0.6m 2 16% Total £10.8m 10 17% 10
Slide 11: Pensions
Pensions 2 Pension triennial valuation dates 1.5 2035 Indexed gilts 1 Real Yield % 0.5 0 2007 2008 2009 2010 2011 2012 2013 -0.5 -1 £400m deficit as at 31 March 2010 Position and negotiations exacerbated by further Q1 2013 fall in gilt yields 10bp reduction in discount rate increases balance sheet d
Slide 12: First half results – key messages
First half results – key messages Strong profit growth: EBIT up 5%, EPS up 17% Margins up 40 bps to 14.6% Reduced expansionary capital expenditure of c £30m this year, increasing to £50m-£80m in medium term Expansionary capital returns stable at 17% Funding negotiations with pension trustee at early
Slide 13: Business Review
Business Review Alistair Darby Chief Executive Half Year Results 2013 23 May 2013 13
Slide 14: A strong and resilient business
A strong and resilient business Mitchells & Butlers Average weekly take £22.8k Food sales mix 51% Number of managed houses 1,582 Strategy: Focus on the growth in the eating out market Expand national brands that guests love Generate high returns on investment through scale advantage Develop exceptio
Slide 15: Long term sales trends
Long term sales trends £24k 55% £22k 50% 45% £20k 40% £18k 35% £16k 30% £14k 25% £12k 20% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 AWT (LHS) Food Mix (RHS) Consistent food focus and growth in sales 15
Slide 16: The value creation journey
The value creation journey 3 1 2 3 2 1 1 Right size (done in FY 12) 2 Balanced transformation (in progress) 3 Acceleration (ahead) Transformation whilst safeguarding profit growth 16
Slide 17: The market
The market £75bn eating and drinking out market From sandwiches to fine dining Majority unbranded Branded space growing fastest MAB is <3% of a large & fragmented market Source: NPD CREST; CGA 17
Slide 18: Market insight
Market insight world External factors shaping future demand Macroeconomic review & industry commentators consumer The consumer opportunity –attitudes, needs, behaviours 8,000 consumer interviews about 14,000 occasions The competitive context competition Brand positioning review - external brand MAB
Slide 19: A five star approach to attractive markets
A five star approach to attractive markets Special £22bn M&C, Country Upmarket social £8bn Pubs, Family £5bn Browns All Bar One, Castle, Harvester, Nicholson’s, Toby Alex Crown, Oak Tree, Ember, Sizzling O’Neill’s Pubs Heartland £4bn Everyday social £2bn Source: Internal research Focus on substantia
Slide 20: Brand expansion strategy
Brand expansion strategy Most attractive spaces Attractive market spaces Special Upmarket social Family Focused Return on brand investment Superior guest offers proposition Good ROIs Clear pipeline for growth Site availability Expansion dependent on all criteria 20
Slide 21: Example: Toby Carvery
Example: Toby Carvery Attractive space: Family (extended) Average Weekly Pre-eminent Take: £29k carvery offer Suburban locations: good availability 21
Slide 22: Different strategies for different markets
Different strategies for different markets Special £22bn Invest & expand Invest & expand M&C, Country Upmarket social £8bn Pubs, Family £5bn Browns All Bar One, Castle, Harvester, Nicholson’s, Toby Alex Crown, Oak Tree, Ember, Sizzling Protect & compete Pubs O’Neill’s Optimise & invest Heartland £4b
Slide 23: Different strategies for different markets
Different strategies for different markets Brand/format Like-for- Capital Cash optimisation like sales deployment generation Invest & expand Largely brand Optimise & invest Largely format Protect & compete Format - - Growth through market-specific strategies 23
Slide 24: What creates value at MAB
What creates value at MAB Exceptional people... Outstanding operators of scale brands and formats... Which guests love... Leading to market leadership and profit growth Profit through people, guests and operational practices 24
Slide 25: Four priorities
Four priorities Consistent priorities to drive profits and returns 25
Slide 26: Our people
Our people Ways of Working → Good to Great Shift of focus to front line Redesigned training schemes Guest service Food capability New talent development framework 1,500 apprenticeships Increase engagement and retention 26
Slide 27: Our practices
Our practices Safe ‘Scores on the Doors’ – Food Hygiene Ratings Efficient Retail technology building on IT infrastructure Labour scheduling improvements Cost effective Purchasing Maximise scale efficiency Focus on outstanding operation of restaurants and pubs 27
Slide 28: Our guests
Our guests 65% Further investment in service 60% Net promoter score + 4% 55% What matters to guests 50% Trust builders Loyalty builders 45% FY 2011 FY 2012 FY 2013 40% Guest satisfaction Net Promoter Score Developing superior guest understanding to act on Note: Guest satisfaction is % of guests that
Slide 29: Our guests: Miller & Carter example
Our guests: Miller & Carter example Trust builders Loyalty builders • Make guests feel valued & special • Deliver meals in timely manner • Stunning steak • Personal acknowledgment • Perfect drinks with added value • Payment without delay Increase Increase revisit % recommendation % Growing net promo
Slide 30: Our profits
Our profits Restructuring savings delivered in full High operating margin, up 40 bps in H1 Guest satisfaction supports LFLs Protect margins & seek to expand Operational plans will deliver long term value 30
Slide 31: Conclusion
Conclusion Strong foundations Business transformation progressing well ‘5 star’ approach to attractive market spaces Clear operational priorities Well positioned to deliver sustainable growth 31
Slide 32: Q&As
Q&As Half Year Results 2013 23 May 2013 32