Slide 1: JD Wetherspoon PLC Preliminary Results 2010
JD WETHERSPOON PLC Preliminary Results 2010 10 September 2010
Slide 2: Highlights – Year to 25 July 2010
Highlights – Year to 25 July 2010 y Revenue £996.3m (2009: £955.1m) +4.3% y Like-for-like sales +0.1 % Before exceptional items: y Operating profit £100m (2009: £97.0m) +3.1% y Profit before tax £71.0m (2009: £66.2m) +7.3% y Earnings per share 34.9p (2009: 32.6p) +7.1% After exceptional items: y Ope
Slide 3: Average Sales Per Pub Week
Average Sales Per Pub Week (including VAT) £000 31 30.3 30.1 29.9 30.1 30 29.0 29 28.0 28.2 28 27 26.4 26 24.7 25 23.5 24 23 22 21 20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sales remain resilient 3
Slide 4: Profit before Tax & Exceptional Items
Profit before Tax & Exceptional Items £m 75 71.0 70 66.2 65 62.0 58.4 60 58.2 56.1 53.6 55 54.1 50 47.2 44.3 45 40 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Long term profit growth 4
Slide 5: Earnings per Share
Earnings per Share pence 35 34.9 32.6 30 28.1 27.6 25 24.1 20 17.7 16.9 16.6 17.0 14.2 15 10 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Improving earnings per share 5
Slide 6: Like-for-Like Sales/Profits
Like-for-Like Sales/Profits % 2010 2009 2008 2007 2006 Bar -0.8 +2.5 -4.3 +3.3 +2.2 Food +0.1 -0.4 +7.9 +12.6 +3.6 Machines +12.1 -7.5 -5.8 +2.7 -1.4 Total LFL sales +0.1 +1.2 -1.1 +5.6 +2.0 LFL profits -2.0 -1.7 -6.6 +7.0 +5.9 Investment in repairs impacts LFL profits 6
Slide 7: Operating Margin - Summary
Operating Margin - Summary 2010 2010 2009 2009 £000 % of £000 % of Sales Sales Turnover 996,327 - 955,119 - Pub profit (pre repairs) 217,549 21.8 207,520 21.7 Repairs (34,425) (3.5) (28,717) (3.0) Head office costs (35,908) (3.6) (34,137) (3.6) Share Incentive Plan (3,504) (0.4) (2,569) (0.3) Deprec
Slide 8: Operating Margin Excluding Exceptionals
Operating Margin Excluding Exceptionals y Gross margin broadly maintained – Tax increases absorbed y Staff costs higher – Investment in 7 am opening – Higher bonus payments y Operating costs – Lower utility rate in the first half – Higher repairs y Depreciation lower as % of sales Net decrease in un
Slide 9: Exceptional Items – Summary
Exceptional Items – Summary 2010 2009 £000 £000 Litigation - 1,565 Impairment 10,557 6,527 Aborted properties - 1,954 Loss on asset disposal - 2,450 Depreciation - 9,424 Total 10,557 21,920 Impairment of 18 sites. Total provision £18.1m across 32 sites on £1.3 billion asset base 9
Slide 10: Allocation of Resources
Allocation of Resources £10m £7m £76m £26m Dividends £8m £17m £78m Buybacks £12m £10m Capex £43m £75m £82m £61m £49m £39m £38m 2005 2006 2007 2008 2009 2010 Reinstatement of dividend, increased new openings and higher reinvestment 10
Slide 11: Capital Expenditure
Capital Expenditure FY10 FY09 £m £m Acquisition and developments costs Current year 45.2 32.0 Future year 12.5 5.8 New openings 57.7 37.8 Fixtures and fittings 12.8 7.2 Refurbishments 7.2 2.4 IT & related projects 4.1 1.4 Reinvestment 24.1 11.0 Total 81.8 48.8 Investment in new till system and incre
Slide 12: Movement in Net Debt inc. Finance leases
Movement in Net Debt inc. Finance leases £m y Free cash flow decreased to £71.3m FY09 Net debt 390.0 (2009: £99.5m). Free cash flow -71.3 – Decline in cash from operations due to exceptional working capital benefits HMRC claim -14.9 last year New pub capex 57.7 – Increased investment in existing pub
Slide 13: Debt Position
Debt Position 2010 2009 y Net debt/ EBITDA* 2.7 2.7 y Interest cover (times) 3.1 2.4 y Interest cover pre-exceptional (times)* 3.4 3.1 y Fixed charge cover (times) - statutory 1.7 1.5 - excluding depreciation 2.1 2.0 - statutory excluding exceptionals 1.8 1.7 - excluding depreciation and exceptional
Slide 14: Banking Facilities
Banking Facilities y 4 year non-amortising £530m facility from the end of March 2010. Total facilities £550m (including overdraft) y £400m swaps to 2014 – £250m swap expiring in 2014 – £150m swap expire in 2016 – Average interest cost of swaps 5.5% y Unutilised banking facilities and cash balances o
Slide 15: Dividends
Dividends y 19p total dividend (2009: 0p) – 12p full year dividend paid – 7p special dividend to partly compensate for no dividend last year – Dividend cover excluding special dividend and exceptional items is 2.9 times y Paid on 1st April 2010 Dividends reinstated 15
Slide 16: Preliminary Results 2010 – John Hutson, CEO
JD WETHERSPOON PLC Preliminary Results 2010 John Hutson - CEO
Slide 17: Business Update
Business Update y Property update y Reinvestment strategy y New openings y 7 am update y People and training y Awards and recognition y Current trading and outlook 17
Slide 18: Property Update
Property Update FY10 FY09 y Average cost of development Trading pubs at start of FY 731 694 £0.86m, currently lower than Freehold pubs opened 15 13 historical average Leasehold pubs opened 32 26 y Closures as result of Terminal 2 and Closures/Disposals -3 -2 Stansted Express Bar Total trading pubs 7
Slide 19: Development Pipeline
Development Pipeline No. of Stage Description Projects y Strong pipeline Properties under consideration 238 y Opportunity to procure Offers subject to negotiation, planning and 54 licensing quality sites at a good Contracts exchanged 33 price Ready for development 14 y Site selection remains Total 3
Slide 20: Re-Investment Strategy
Re-Investment Strategy 2009/ 10 y Reinvestment spend more than doubled year on year y Increase in refurbishment of toilets, carpets and furniture y Rollout of EPOS till system accelerated 2010/ 11 y Continue to upgrade our pubs y EPOS rollout to be extended further and fully rolled out by July 2011
Slide 21: The Alexander Graham Bell, Edinburgh
The Alexander Graham Bell, Edinburgh Open Date: 4 June 2010 Acquired from: TCG Customer Area: 3,380 sq.ft Development Costs: £585k 21
Slide 22: The Black Horse, Northfield
The Black Horse, Northfield Open Date: 23 July 2010 Acquired from: Punch Taverns Customer Area: 5,992 sq.ft Development Costs: £1,766k 22
Slide 23: The White Hart, Aylesbury
The White Hart, Aylesbury Open Date: 2 July 2010 Acquired from: Chicago Rock Customer Area: 4,099 sq.ft Development Costs: £830k 23
Slide 24: The Broken Bridge, Pontefract
The Broken Bridge, Pontefract Opened: 18 June 2010 Acquired from: Independent landlords Customer Area: 5,123 sq.ft Development Costs: £1,178k 24
Slide 25: 7 am Update
7 am Update y Open at 7 am for breakfast from the 28th of April y Over 1 million breakfasts and coffees served a week y A 40% increase in breakfasts and coffees year on year, of which, over 30% has come since launch y Hours investment has increased staff costs y Broadly neutral on operating profit b
Slide 26: Improvements In The Business
Improvements In The Business Palladium, Llandudno Benjamin Satchwell, West Gate Inn, Leamington Spa Canterbury Lord Wimborne, Poole 26
Slide 27: People & Training
People & Training • Company employs over 22,000 people in full and part-time positions. An increase of over 2,400 jobs in the last 12 months • A further 250 new pub openings planned in the next 5 years creating more jobs • Comprehensive award winning employee training system. Over 15,000 training de
Slide 28: Awards and Recognition
Awards and Recognition y ‘Pub Company of the Year’ from the Publican y Winner of 2010 ‘Best Town and Local Pub Menu’ at the Menu Innovation and Development Awards y 144 pubs recognised in the Loo of the Year awards y 193 pubs recommended in CAMRA Good Beer Guide 2010 y We were given an award for ‘Le
Slide 29: Current Trading and Outlook
Current Trading and Outlook y Record sales in 6 weeks to 5th September 2010: – Total sales + 7.6% – LFL sales + 1.5% y Opportunities remain for profitable investment y Increased reinvestment and continuing maintenance y Increased investment in pubs staffing and support y Impact of future tax increas
Slide 30: Appendices
Appendices A - 10-year financial graphs B - 10-year trends C - Capital trends D - ROC/CROCCE/ROE calculations E - Cash flow 30
Slide 31: 10-Year Summary
Appendix A 10-Year Summary Number of Pubs 800 731 775 Average Sales Per Pub Week (including VAT) 694 700 643 655 657 671 £000 635 608 30.3 30.1 29.9 30.1 30 29.0 600 28.0 28.2 522 26.4 24.7 500 23.5 25 400 20 300 200 15 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2001 2002 2003 2004 2005 2006
Slide 32: JDW - Financial Trends
Appendix B JDW - Financial Trends 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sales per pub (£000) 1,040 1,093 1,169 1,239 1,246 1,283 1,354 1,333 1,344 1,335 EBITDA per pub (£000) (1) 205.9 207.4 201.9 204.4 195.7 205.6 219.0 211.6 212.9 205.8 Number of pubs 522 608 635 643 655 657 671 694 73
Slide 33: Capital Trends
Appendix C Capital Trends 2002 2003 2004 2005 2006 2007 2008 2009 2010 Average size (sq.ft.) – openings 3,808 3,721 4,317 4,176 3,928 3,855 3,618 3,359 3,781 Number of openings 87 45 28 13 9 18 23 39 47 % which are freehold 53 56 43 54 22 61 57 33 32 Freehold average cost (£k) 597 511 640 873 625 75
Slide 34: ROC/CROCCE/ROE
Appendix D ROC/CROCCE/ROE 2010 2009 y P&L return on capital 12.4%* 12.0%* y Crocce 10.8%* 11.2%* y P&L return on equity 20.0%* 20.6%* y Cash return on equity 12.6%* 13.5%* * Excludes exceptional items and fair value movement on financial derivatives Detailed calculations in appendix D Returns broadl
Slide 35: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE 2010 2009 £000 £000 Profit after tax 40,778 25,299 Add: exceptional items 10,557 19,902 Underlying PAT (e) 51,335 45,201 Add: interest (f) 28,998 30,846 Profit pre-interest (g) 80,333 76,047 Deferred tax (credit) / charge (2,029) (484) Depreciation 43,699 45,096 Cash retur
Slide 36: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE 2010 2009 £000 £000 Shareholders’ funds per balance sheet 162,142 167,693 Add: exceptional items 47,817 37,260 : hedging provision 61,391 35,996 (a) 271,350 240,949 Add: net debt (b) 388,391 390,024 Capital employed (c) 659,741 630,973 Add: deferred tax provision 75,579 77
Slide 37: Cash Flow
Appendix E Cash Flow 2010 2009 £’000 £’000 Cash from operations 153,405 171,850 Interest and tax (51,860) (55,354) Investment in existing pubs (24,072) (10,999) Investment in own shares (SIP) (6,129) (6,003) Free cash flow 71,344 99,494 HMRC Gaming Claim Settlement 14,941 Dividends (26,174) (10,439)