Slide 1: Preliminary Results 2005
Preliminary Results 2005
Slide 2: David Thompson, Chairman
Preliminary results 2005 David Thompson Chairman 1
Slide 3: Introduction
Introduction 1. Strong full year results • turnover and profit growth in each of our trading divisions 2. Successful integration of recent acquisitions • Burtonwood, Jennings and ECI integrated ahead of schedule • expected synergies from acquisitions exceeded 3. Earnings per share* up 11.3% • strong
Slide 4: Paul Inglett, Finance Director
Preliminary results 2005 Paul Inglett Finance Director 3
Slide 5: Profit and loss account
Profit and loss account 2005 % change • Turnover £m 597.3 +16.3 • Operating profit* £m 135.4 +19.9 • Operating margin* % 22.7 + 0.7 • Profit before tax* £m 90.1 +16.0 • Earnings per share* p 84.4 +11.3 • Dividend per share p 38.86 +10.0 * before goodwill and exceptional items 4
Slide 6: Consistent margin and sales growth
Consistent margin and sales growth Group operating margin 22.1 22.0 22.7 • consistent margin 21.6 20.3 growth despite +5.1% regulatory and cost 17.6 pressures. • good like-for-like sales, strong margins % Margin vs 2004 • Pathfinder +0.2% UPC +0.4% WDB Brands (0.4)% Group +0.7% 2000 2001 2002 2003 2
Slide 7: Changing shape of the business
Changing shape of the business Divisional profit split 2000 2005 Brands Brands 18% 13% Pathfinder UPC Pathfinder 43% 26% 56% UPC 44% No. of pubs Pathfinder 852 542 96% UPC 889 1,748 freehold 1,741 2,290 95% community 6
Slide 8: Updated segmental reporting
Updated segmental reporting Transfer Central Unadjusted Pricing Costs Restated Acquisitions Total £m £m £m £m £m £m Pathfinder 65.1 1.0 (4.8) 61.3 2.1 63.4 UPC 54.6 1.0 (2.1) 53.5 11.7 65.2 WDB Brands 21.6 (2.0) (1.6) 18.0 0.2 18.2 Central Costs (18.2) - 8.5 (9.7) (1.7) (11.4) 123.1 - - 123.1 12.3 1
Slide 9: Cashflow movements
Cashflow movements 2005 2004 £m £m Comments Net increase in debt (311) (92) Acquisitions 206 91 Exceptional items/refinancing 62 1 Disposals/FT loans inflow/other 5 (15) • £29m pension contribution in 2005 Investment capex 73 59 • Maintenance capex 2005: £25m; 2004: £23m Dividends, share issue/buyba
Slide 10: More efficient financing
More efficient financing Before After £m £m Debentures 245 - Bank facility 592 112 • £275m facility Loan notes 9 Cash in bank/securitisation (16) (41) 9 Securitisation - 792 • backed by 70% of pub estate Net debt 830 872 • reflects cost of redemption premium on debentures Pro-forma annual cost Cash
Slide 11: Strong balance sheet
Strong balance sheet 1. Balance sheet - tangible fixed assets £1.5bn - 96% of properties are freehold/long leasehold - NAV per share = £9.83 2. Revaluation gains £m - 2004: 169.5 - 2005: 58.5 228.0 = £2.95 per share 3. Basis of valuation - existing use basis - excluding ‘lotting premium’ Freehold ow
Slide 12: Prudent financing
Prudent financing 1. Future flexibility • £153m of headroom in existing bank facility • 30% of pub estate not securitised 2. Financing ratios* • debt: EBITDA 4.7x • interest cover 3.0x • 92% of debt fixed 3. Strong asset backing • 96% of pubs freeholds/long leaseholds • tangible fixed assets 1.8x ne
Slide 13: Ralph Findlay, Chief Executive
Preliminary results 2005 Ralph Findlay Chief Executive 12
Slide 14: Strategy
Strategy 1. W&DB strategy 2. Implementation 3. Acquisitions 13
Slide 15: W&DB strategy
W&DB strategy 1. Pub development throughout England and Wales 2. Mainly community estate offering protected market position • enhanced by licensing reform 3. High quality, well invested pubs in good locations • freehold ownership 4. Increasing share of growth segments • food, wines and spirits 5. Ma
Slide 16: W&DB strategy: a national business
W&DB strategy: a national business % Distribution of Investment Investment by region: £486m North North East East 5.0% £24m Yorkshire Yorkshire North North 9.9% £48m West West £139m 28.6% E. Mids E. Mids W Mids 11.7% East W Mids £57m East 15.0% Anglia £73m Anglia 2.5% Wales £12m Wales £40m 8.2% Lond
Slide 17: W&DB strategy: 95% community pubs
W&DB strategy: 95% community pubs Protected market position through licensing reform 1. 100% of the estate licensed post 24 November 2. > 95% of pubs have more flexible opening hours 3. Most pubs to open an extra 1-2 hours Thurs/Fri/Sat 4. No. of pubs with 24 hour opening = 0 Overall impact: modest
Slide 18: W&DB strategy: quality estate
W&DB strategy:quality estate 98.1 81.9 Capital investment 2002-2005 • Pathfinder Pubs 46.3 47.9 - major refurbishment of 56% of estate - 16 new sites/pubs acquired1 Capex • The Union Pub Company £m - major refurbishment of 30% of estate - 42 pubs acquired1 2002 2003 2004 2005 103.4 95.4 Disposal Est
Slide 19: W&DB strategy: targeting growth
W&DB strategy: targeting growth 1. In Pathfinder Pubs - food sales now c30% of Pathfinder Pubs turnover (1999: 17%) - average like-for-like food sales growth 2002-2005: 7.2% - more highly developed offer, better value 2. For the Group - wine +25.7%, spirits +26.1% in 2005 - improved range, merchandi
Slide 20: Implementation
Implementation Pathfinder Pubs - balance of like-for-like sales growth and margin management - 20 new outlets per year - continuous development through pub refurbishment The Union Pub Company - continuous improvement in average pub performance - extension of 21 year ‘Open House’ lease - enhanced ten
Slide 21: Implementation: Pathfinder Pubs
Implementation: Pathfinder Pubs 3.6 Like-for-like sales 2002-2005 3.2 3.0 2.8 • average growth = 3.2% • includes Wizard Inns 2005 % 2002 2003 2004 2005 20.0 Operating margin* 2005 vs 2004 19.8 • wet gross margin +0.7% % 19.5 • food gross margin +1.1% • utilities +40% 19.1 • Sky TV +25% 2002* 2003* 2
Slide 22: Implementation: Pathfinder Pubs
Implementation: Pathfinder Pubs New build: Pitcher & Piano, Southampton • opened 7 July 2005 • 999 year lease, peppercorn rent • cost: £2.4m • average weekly turnover £30k • expected EBIT return 15% Pub refurbishment: Anglers, Walton on Thames • opened 25 July 2005 • cost: £200k • average weekly tur
Slide 23: Implementation: The Union Pub Co
Implementation: The Union Pub Co 2002 Now 2008 • % long lease 2% 41% 60% • % on full tie - 66% 90% • 1,500 training days delivered • c400 approved tenants on waiting list • launch of intranet for on-line ordering • 260 development schemes • average licensee contribution = £22k/development • schemes
Slide 24: Implementation: WDB Brands
Implementation: WDB Brands • growth in premium ale: +14.8% • out-performance vs ale market: +11.6% • 16% share of UK premium cask ale market • £2m investment in Marston’s brewhouse • brewing Draught Bass since February 2005 • brew 25% of all premium cask ale sold in UK • average utilisation across 3
Slide 25: Acquisitions
Acquisitions 1. Excellent fit • 93% freehold assets, 95% community pubs • complementary geography 2. Fast integration • integration complete within 3 months of acquisition 3. Development potential • investment eg. Anglers, Walton on Thames (Wizard Inns) • extension of Open House leases (Burtonwood)
Slide 26: Acquisitions
Acquisitions Wizard Burtonwood Jennings Total EBITDA* multiple 8.4x 9.7x 8.4x 7.7x Goodwill £m 9.1 (5.5) 8.8 12.4 Synergies: anticipated £m 2.5 3.0 2.0 7.5 actual £m 2.8 3.5 2.3 8.6 Speed of Integrations: anticipated 10 wks 17 wks 9 wks actual 8 wks 12 wks 6 wks 25 * historic, post-overhead, post sy
Slide 27: W&DB Strategy: smoking
W&DB Strategy: smoking 1. Proposed legislation intended to apply from mid 2007 • distinguishes between food/non food pubs • exempts private members clubs • provision of discrete smoking rooms ‘under review’ 2. Actions taken in advance of legislation • positioning of estate (investment, disposals 200
Slide 28: Summary
Summary 1. Strong full year results • effective implementation of organic development strategies • successful integration of acquisitions 2. Strong balance sheet • prudently financed, with debt capacity • more flexible financing post securitisation 3. Current trading • in line with expectations – po
Slide 29: Appendices
Appendices 28
Slide 30: Pathfinder Pubs: key financials
Appendix 1 Pathfinder Pubs: key financials 2005 2004* % change Turnover £m 317.4 275.2 EBITDA £m 83.0 70.9 +15.3 Operating profit £m 63.4 54.6 +17.1 Operating margin % 20.0 19.8 +0.2 +16.1 * restated for reallocation of central overheads and changes to transfer pricing 29
Slide 31: The Union Pub Co: key financials
Appendix 2 The Union Pub Co: key financials 2005 2004* % change Turnover £m 153.3 118.2 +29.7 EBITDA £m 74.5 57.9 +28.7 Operating profit £m 65.2 49.8 +30.9 Operating margin % 42.5 42.1 +0.4 30 * restated for reallocation of central overheads and changes to transfer pricing
Slide 32: WDB Brands: key financials
Appendix 3 WDB Brands: key financials 2005 2004* % change Turnover £m 126.6 120.3 +5.2 EBITDA £m 24.7 23.5 +5.1 Operating profit £m 18.2 17.8 +2.2 Operating margin % 14.4 14.8 (0.4) 31 * restated for reallocation of central overheads and changes to transfer pricing
Slide 33: Additional information and guidance
Appendix 4 Additional information and guidance • Average number of shares in 2005 75.4m • Number of shares in issue as at 2 December 2005 77.2m • Additional dilutive number of shares 0.6m 2006 • Forecast tax rates 30.0% - 31.0% • Capex forecast : Existing business £50m : New builds/sites £33m : Pub
Slide 34: Additional information and guidance
Appendix 5 Additional information and guidance Website addresses: www.pathfinderpubs.co.uk www.wdbbrands.co.uk www.theunionpubcompany.co.uk For a pdf version of this presentation please visit our Group website on: www.wdb.co.uk 33
Slide 35: Preliminary Results 2005
W&DB Strategy: smoking Preliminary Results 2005