Slide 1: FY20 Interim Results
FY20 Interim Results October 2019 FY20 INTERIM RESULTS | OCTOBER 2019
Slide 2: Contents
Contents Interim highlights Alison Brittain p3 Financial performance Nicholas Cadbury p7 Strategic update Alison Brittain p17 Appendices p32 2 FY20 INTERIM RESULTS | OCTOBER 2019
Slide 3: Strong strategic progress in challenging market conditions
Strong strategic progress in challenging market conditions 1 Challenging UK market conditions in H1, likely to remain in near-term Strong strategic progress in the UK with 90,000 open + committed rooms, 2 and new format trials underway Accelerating network growth in Germany with almost 8,000 open +
Slide 4: Interim highlights | Resilient financial performance
Interim highlights | Resilient financial performance UK & Ireland Germany Cumulative 955 new rooms 76,837 3 hotels now open 589 efficiency savings £215m rooms rooms opened in H1 FY20 in Germany since 2016 Strong Flat revenue discretionary cash £197m £1.1bn Direct bookings 100% growth* conversion Ret
Slide 5: Interim highlights | Short-term actions underway
Interim highlights | Short-term actions underway Capital discipline Pricing Product & efficiencies Constant review Maintaining Greater of pricing curves customer capital to reflect changes in preference allocation to demand scores Germany Improved Focus on B2B Optimising competitive loyal pricing at
Slide 6: Our plan | Strong focus on long-term value creating opportunities
Our plan | Strong focus on long-term value creating opportunities Highly compelling long-term Our unique model delivers Optimising our capital structural growth best-in-class performance & structure & capabilities to opportunities enables growth support long-term growth Optimise capability to Grow &
Slide 7: Financial Performance
FINANCIAL PERFORMANCE | Nicholas Cadbury – CFO 7 7 7 FY20 INTERIM RESULTS FY20 INTERIM | OCTOBER RESULTS | OCTOBER2019 2019
Slide 8: IFRS 16 recap | Non-cash financial reporting changes
IFRS 16 recap | Non-cash financial reporting changes Significant changes to statutory financial reporting Statutory reporting impact • New accounting standard for financial reporting of • Material impact to statutory reporting due to large lease agreements now adopted volume of long-term property le
Slide 9: Financial highlights | Resilient financial performance
Financial highlights | Resilient financial performance H1 FY19 H1 FY20 𝚫 • Revenue broadly flat through new capacity Revenue £1,079m £1,078m (0.1)% addition Adjusted EBITDAR £448m £427m (4.8)% • Weak market conditions impact like-for-like Adjusted PBT sales & operating leverage £266m £251m (5.6)%…
Slide 10: Operating performance | Flat revenues in tough market conditions
Operating performance | Flat revenues in tough market conditions H1 FY19 H1 FY20 𝚫 • UK revenue held flat due to capacity Revenue £1,079m £1,078m (0.1)% growth of 5% - UK & Ireland £1,077m £1,074m (0.3)% - Germany £2m £4m n.m. • Strong London growth 4.5% - Middle East £0m £0m n.m. • Weak regional…
Slide 11: Margins & ROCE | Sustainable economic model
Margins & ROCE | Sustainable economic model Efficiency programme offsetting inflation Growth investment & UK performance impacting ROCE (0.5)% (0.8)% (0.2)% (2.2)% (1.7)% 1.5% (0.6)% (1.3)% (0.4)% 2.3% 26.5% (1.1)% 13.3% (0.4)% 12.1% 23.7% 10.8% H1 F Y19 LFL + new Inflation Labo ur Rent Efficiency I
Slide 12: Cash generation | Strong & consistent to fund investments
Cash generation | Strong & consistent to fund investments EBIT £255m • Strong cash flow conversion of 97%, excluding one-off Costa Depreciation & amortisation £81m transaction & separation costs of £51 million Working capital £(10)m • Discretionary FCF used to fund: Transaction & - Continuing busine
Slide 13: Investment | Compelling opportunities to re-invest capital
Investment | Compelling opportunities to re-invest capital H1 H1 Last 2 Maturity Mature • Premier Inn’s maintenance site-level capital upholds the estate’s FY19 FY20 years duration ROCE consistent quality Maintenance, product improvement & IT £95m £78m £276m - - • Significant investment in new UK ca
Slide 14: Capital discipline | Appropriate leverage ensures investment agility
Capital discipline | Appropriate leverage ensures investment agility Maintaining an appropriate leverage position Diverse & flexible funding options H1 FY19 FY19 H1 FY20 Balanced debt maturity profile (Continuing + discontinued operations) USPP £359m Funds from operations (FFO) £953m £902m £659m @2.
Slide 15: Recent trading | Challenging market conditions continuing
Recent trading | Challenging market conditions continuing UK Midscale & Economy accommodation sales growth Premier Inn has lower exposure to London (Annual room night demand) Accommodation Business London v Regions sales growth confidence index London 14% 30 London 3m 47m 12% 25 UK 10% Market Region
Slide 16: FY20 outlook | Consistent guidance with FY19 Results
FY20 outlook | Consistent guidance with FY19 Results • UK economic & political environment leading to sustained weak hotel demand, especially relating to business customers in the regions • Operational leverage leads to each 1% movement in RevPAR impacting PBT £12-15 million Operating • Net margin h
Slide 17: Strategic Update
STRATEGIC UPDATE | Alison Brittain – CEO Premier Plus 17 17 FY20 INTERIM RESULTS FY20 INTERIM | OCTOBER RESULTS | OCTOBER2019 2019
Slide 18: Our markets | Long-term structural growth opportunities
Our markets | Long-term structural growth opportunities UK – winning share from under-invested Germany – stand-out growth opportunity in Europe independents with 74% independent market share 10 0 0 6% 9% 11% 12% 90 136 142 145 150 154 158 162 172 12% 15% 80 18% 19% 52 55 58 Budget 62 67 71 76 80 bra
Slide 19: Our model | Delivering guests the best value-for-money
Our model | Delivering guests the best value-for-money • Leading value-for-money • Brand strength advantage Integrated trading • 98% direct booking • Largest UK network Scale • Low-cost customer • Economies of scale acquisition & retention • Hot food in all hotels • Superior network F&B model flexib
Slide 20: Product strength | Maintaining our customer appeal
Product strength | Maintaining our customer appeal The first choice for more travellers Excellent quality and value creates strong brand Hotel Consideration Would consider Purchase Intent Quality score 35 41% Hilton Premier Inn 18% 30 29% Travelodge 8% 25 Marriott 2019 22% Holiday Inn 20 2% 2016 19%
Slide 21: UK network strength | Optimising our network
UK network strength | Optimising our network Optimising our network Catchment case study: Preston • High degree of control over timing of extensions Preston East Pace of extension & • Some extensions postponed given Extend to 109 rooms refurbishment recent market conditions • Revisit as conditions i
Slide 22: Innovation | New Premier Plus room trial underway
Innovation | New Premier Plus room trial underway • 38 Premier Plus rooms refurbished in Trial two central London hotels underway • Plus rooms on separate guest floors Customer • Drives average room rate segmentation & commercial • Increases both business & leisure guest benefit satisfaction • Stron
Slide 23: Innovation | New formats extend catchment and customer reach
Innovation | New formats extend catchment and customer reach 11 hotels open: 8 London 1st hotel opened in 3 Edinburgh Cardiff Feb’19 • > 80% average occupancy • Innovative new format enabling further UK growth Performance & guest feedback • 50:50 business leisure mix • Simple rooms offered for custo
Slide 24: Germany | Building a pipeline to replicate the UK's success
Germany | Building a pipeline to replicate the UK’s success Building the German pipeline Hamburg has matured beyond expectations To be Occupancy (%) Organic acquired Total 90 Open and 3 hotels 17 hotels 20 hotels 70 trading (590 rooms) (2,770 rooms) (3,360 rooms) 50 Committed 18 hotels 5 hotels 23 h
Slide 25: Germany | Refurbishing acquired hotels to Premier Inn in 2020
Germany | Refurbishing acquired hotels to Premier Inn in 2020 Type of refurbishment for 13 hotels acquired in Feb 2020 will vary by hotel depending on current condition • Repaint and new artwork • New Premier Inn furnishings Full (TV, curtains, desk, sofa-bed) 1 Rebrand • New Premier Inn bed • Appro
Slide 26: Managing distribution | Driving high quality net RevPAR at low cost
Managing distribution | Driving high quality net RevPAR at low cost Gross Customer Ongoing review of optimal distribution Acquisition channel RevPAR - acquisition = Net RevPAR impact % of bookings impact costs • Results in superior profitability through sustainably lower acquisition costs Direct: Lo
Slide 27: Capabilities & efficiency | On plan to deliver £45 million efficiencies
Capabilities & efficiency | On plan to deliver £45 million efficiencies Strong delivery so far & ambition remains Significant savings already delivered Initial 5-year International sourcing and supply chain team £150m target • New sourcing and supply-chain office in Shanghai FY17-19 Whitbread Costa
Slide 28: Capabilities & efficiency | Costa separation complete
Capabilities & efficiency | Costa separation complete Transitional Support Transaction Head office Return of Services service execution reorganisation surplus capital Arrangement separation May 2018 to January 2019 April 2019 July 2019 Underway January 2019 • Small internal • Services include: • Pre
Slide 29: A force for good | Integrated throughout our operating model
A force for good | Integrated throughout our operating model Opportunity Community Responsibility Being a place where everyone Making meaningful contributions Treating people and the planet can reach their potential to the communities we serve with respect • >£15 million raised for Great • Opened ou
Slide 30: Strategic priorities | Accelerated pace of delivery continuing
Strategic priorities | Accelerated pace of delivery continuing 1 Manage & optimise shorter-term UK tactical trading 2 Optimisation of UK network growth & product segmentation 3 Integration of acquired hotels in Germany & further pipeline development Relentless focus on improving our capabilities whi
Slide 31: Questions
QUESTIONS | Alison Brittain & Nicholas Cadbury 31 31 FY20 INTERIM RESULTS FY20 INTERIM | OCTOBER RESULTS | OCTOBER2019 2019
Slide 32: Appendices
Appendices I Definitions p33 II Supporting IFRS 16 information p34 III Supplementary information p35 IV Cautionary statement p36 Whitbread ADR programme – WTDBY Whitbread has established a sponsored Level I American Depositary Receipt (ADR) programme for which Deutsche Bank perform the role of depos
Slide 33: Appendix I | Definitions
Appendix I | Definitions Accommodation sales Premier Inn accommodation revenue excluding non-room income such as food and beverage Adjusted basic EPS Adjusted profit attributable to the parent shareholders divided by the basic weighted average number of ordinary shares Adjusted net (cash) / debt Net
Slide 34: Appendix II | Supporting IFRS 16 information
Appendix II | Supporting IFRS 16 information H1 FY20 IFRS 16 impact on Balance Sheet H1 FY20 impact Pre- Add lease Add right-of- Post- IFRS 16 liabilities* use-asset* IFRS 16 Pre-IFRS 16 Post-IFRS 16 Variance Total assets £5,656m - £2,124m £7,780m EBITDAR £427m £427m - Total liabilities £(1,557)m £(
Slide 35: Appendix III | Supplementary information
Appendix III | Supplementary information Further information is available in a supporting supplementary information pack (in Microsoft Excel format) from www.whitbread.co.uk/investors/results-centre. This information includes: A. Hotel estate B. Sales, profit & return on capital C. IFRS 16 adjustmen
Slide 36: Appendix IV | Cautionary statement
Appendix IV | Cautionary statement Nothing contained in this presentation is intended to constitute an offer, invitation or inducement to engage in an investment activity for the purposes of the prohibition on financial promotions under the Financial Services and Markets Act 2000. In making this pre
Slide 37: Contacts
CONTACTS Matthew Johnson Director – Strategy & IR matt.johnson@whitbread.com Ann Hyams Senior Manager – IR ann.hyams@whitbread.com Amit Mistry Manager – Strategy & IR amit.mistry@whitbread.com Anastasia Pittas Analyst – Strategy & IR anastasia.pittas@whitbread.com +44 7848 146 761 +44 7796 709 087 +