Slide 1: J.D. Wetherspoon Plc Preliminary Announcement
J.D. Wetherspoon Plc Preliminary Announcement 3 September 2004
Slide 2: Highlights - Twelve Months to 25 July 2004
Highlights -Twelve Months to 25 July 2004 • Turnover up 8% to £787.1m • Operating profit up 4% to £77.6m • Profit before tax down 4% to £54.1m • Earnings per share up 4% to 17.7p • Free cash flow per share down 3% to 37.5p • Dividend per share increased by 10% 1
Slide 3: Openings - 2004 (28)
Openings- 2004 (28) Aberdeen Hartlepool Portsmouth Bath Keighley Skipton Birmingham Lincoln Sleaford Brighton Liverpool Solihull Burnham-on-Sea Loughborough Southport Daventry Manchester Stockley Park Castleford Morecambe Wallasey Chichester Pontypridd Wokingham Cwmbran Poole Worcester Durham 2
Slide 4: Average Sales Per Pub Week (including VAT)
Average Sales Per Pub Week (including VAT) £000 29 28.0 26.4 27 24.7 25 23.5 22.7 23 20.4 21 19 17 15 1999 2000 2001 2002 2003 2004 3
Slide 5: Like For Like Sales
Like For Like Sales % 2004 2003 2002 2001 2000 1999 Bar 2.9 2.1 3.5 6.2 13.8 11.6 Food 4.2 11.4 9.9 11.4 8.1 (2.1) Total Sales 3.4 4.1 5.0 7.5 12.4 8.6 LFL Profits (0.7) (0.9) 3.8 7.0 13.0 10.1 4
Slide 6: Trading
Trading • Strong H1 financial performance • Slower H2 sales growth • Stable H1/H2 operating margins 5
Slide 7: Trading
Trading • General pub pricing • Take-home market • Marketing initiatives 6
Slide 8: Marketing
Marketing : REAL THING = AB Vv % = | e 5 C per pint per pint GUEST ALES «1.59...
Slide 9: Marketing
Marketing • Range of soft drinks • Cappuccino • Continued success of food offer 8
Slide 10: Licensing Reform
Licensing Reform • Costs £1 million + • Period of disruption • New licenses • Extension of opening hours 9
Slide 11: New Pub Developments
New Pub Developments • 2004 Openings – 28 • Average size 4,300 sq. ft. (company ave. 3,500) • Outside drinking areas • Flexible smoking/non smoking areas 10
Slide 12: New Pub Sales Performance
New Pub Sales Performance • 2000/01 Pubs Sales £26.7k (+5.5%) • 2001/02 Pubs Sales £29.6k (+5.7%) • 2002/03 Pubs Sales £33.5k (+7.4%) • 2003/04 Pubs Sales £35.2k Sales per week including VAT 11
Slide 13: Pub Operating Margins (%)
Pub Operating Margins (%) 2004 2003 Gross margin 63.0 62.7 Staff costs (25.2) (24.5) Other pub costs (16.6) (16.3) Pub operating profit 21.2 21.9 12
Slide 14: Operating Margins - Summary
Operating Margins - Summary 2004 2003 % of % of £000 Sales £000 Sales Turnover 787,126 - 730,913 - Pub Operating Profit 167,090 21.2 160,030 21.9 Sale & leaseback rentals (8,348) (1.0) (7,801) (1.0) Head Office Costs (37,166) (4.7) (34,037) (4.7) Depreciation (43,948) (5.6) (43,209) (5.9) Operating
Slide 15: Cash Flow
Cash Flow 2004 2003 £000 £000 Cash from operations 128,874 130,565 Interest and tax (33,251) (31,419) Investments in existing pubs (20,590) (15,896) Free cash flow 75,033 83,250 Dividends (7,322) (5,438) Investment in own shares (SIP) (1,556) (153) Re-financing costs (1,325) - Disposal proceeds 7,89
Slide 16: Pub Investment Levels
Pub Investment Levels 2004 2003 2002 2001 2000 1999 Capital re-investment 2.6 2.2 3.1 3.3 3.9 3.3 Repairs 3.1 2.7 2.5 1.8 1.3 1.4 Total (% of sales) 5.7 4.9 5.6 5.1 5.2 4.7 Total (£k per pub) 71 58 62 53 52 42 15
Slide 17: Financial - Funding
Financial - Funding 2004 2003 Net debt / EBITDA 2.8 2.6 Gearing (%) – post FRS19 117 97 – pre FRS19 95 81 Interest cover (times) 3.3 4.0 Fixed charge cover (times) - statutory 1.8 1.9 - excluding 2.4 2.7 depreciation Revised £250m banking facility (total facilities £412m) 16
Slide 18: Underlying Economic Profits
Underlying Economic Profits 2004 2003 £’000 £’000 PBT 54,074 56,139 Add: Depreciation 43,948 43,209 Less: Capital invested in existing pubs (20,590) (15,896) Economic profit 77,432 83,452 Cash tax (13,165) (13,317) Economic profit after tax on cash basis 64,267 70,135 17
Slide 19: ROC/CROCCE/ROE
ROC/CROCCE/ROE 2004 2003 • P&L return on capital 9.3% 8.9% • Crocce 12.6% 13.0% • P&L return on equity 11.4% 11.5% • Cash return on equity 15.7% 17.1% Detailed calculations included in appendix D 18
Slide 20: Financial Issues
Financial Issues • Exceptional loss • Share buybacks • Share option replacement plan • International accounting standards 19
Slide 21: Accounting Policies
Accounting Policies • Refurbishment versus repairs • Capitalised HO costs • Capitalised interest • Refinancing fees • Share options • Free cash flow double accounting earnings 20
Slide 22: Current Trading and Outlook
Current Trading and Outlook • August sales: LFL flat, total company +3% • Summer sales slowdown • Ongoing competitive pricing initiatives • Anticipated cost pressures (labour, utilities, licensing reform) • Profit impact for year ending 31 July 2005 • Challenging competitive and political climate fo
Slide 23: Summary
Summary • Continued growth in average pub sales levels • Ongoing innovation e.g. non-smoking areas • Unique staff incentive scheme • Committed management team • Continued strong cash generation 22
Slide 24: Appendices
Appendices A - 10 Year Financial Graphs B - 10 Year Trends C - Capital Trends D – ROC/CROCCE/ROE Calculations 23
Slide 25: 10 Year Summary
Appendix A 10 Year Summary Average Sales Per Pub Week (including VAT) Number of Pubs £000 700 635 643 608 30 28.0 600 26.4 522 28 26 24.7 500 23.5 428 24 22.7 22 19.7 20.4 400 19.2 327 20 17.8 300 252 18 15.9 194 16 200 146 14 110 12 100 10 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 0 £ milli
Slide 26: JDW - Financial Trends
Appendix B JDW - Financial Trends 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Sales per pub (£000) 619 702 786 848 872 904 1,004 1,040 1,093 1,169 1,239 EBITDA per pub (£000) (1) 135.6 149.5 177.6 190.8 184.9 188.0 203.8 205.9 207.4 201.9 204.4 Number of pubs 87 110 146 194 252 327 428 52
Slide 27: Capital Trends
Appendix C Capital Trends 1998 1999 2000 2001 2002 2003 2004 Size (sq.ft.) – openings 3,401 3,037 3,217 3,713 3,808 3,721 4,317 Number of openings 68 84 101 94 87 45 28 % which are freehold 49 58 67 75 53 56 43 Freehold average cost (£k) 463 427 465 506 597 511 640 Average development cost (£k) 965
Slide 28: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE 2004 2003 £000 £000 Profit after tax (e) 35,347 36,395 Add: interest (f) 23,554 18,844 Profit pre-interest (g) 58,901 55,239 Add: deferred tax 5,562 6,427 Depreciation 43,948 43,209 Cash return (h) 108,411 104,875 • P&L return on capital [(g)/average (c)] 9.3% 8.9% • CROCC
Slide 29: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE 2004 2003 £000 £000 Shareholder funds per balance sheet 288,954 318,327 Add: cum losses on disposal 8,424 2,351 (a) 297,378 320,678 Add: net debt (b) 337,559 308,860 Capital employed (c) 634,937 629,839 Add: deferred tax provision 66,244 62,419 Cumulative depreciation 207,