Mitchells & Butlers plc · LSE:MAB
Mitchells & Butlers — Six Continents — H1 2002 Earnings Presentation
73 slides from Mitchells & Butlers's earnings presentation, 2002
Slide 1: Six Continents
SIX CONTINENTS
Slide 2: Interim Results
Six Continents PLC Interim Results For the Half Year ended 13th April 2002
Slide 3: Sir Ian Prosser, Chairman
SIR IAN PROSSER Chairman 3
Slide 4: Business Results First Half 01/02
Six Continents PLC Business Results First Half 01/02 Operating Profit £m Six Continents Hotels 109 Down 41.1% Six Continents Retail* 146 Up 8.1% Soft Drinks 16 Up 45.5% * ongoing estate 4
Slide 5: Business Results First Half 01/02
Six Continents PLC Business Results First Half 01/02 Profit Before Tax* Down 28.2% Adjusted Earnings per share* Down 29.2% Dividend Up 2.9% * Before major exceptional items 5
Slide 6: Richard North, Finance Director
RICHARD NORTH Finance Director 6
Slide 7: Americas RevPAR Performance
Six Continents Hotels Americas RevPAR Performance 10.0% 5.0% 0.0% Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 (5.0%) (10.0%) % Growth (15.0%) (20.0%) (25.0%) (30.0%) (35.0%) (40.0%) Crowne Plaza Holiday Inn Expr
Slide 8: RevPAR - Key US Cities
Six Continents Hotels RevPAR - Key US Cities* 30.0% 20.0% 10.0% 0.0% Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- 00 00 00 01 01 01 01 01 01 01 01 01 01 01 01 02 02 02 02 (10.0%) % Growth (20.0%) (30.0%) (40.0%) (50.0%) (60.0%) New York Chicago SFO M
Slide 9: RevPAR - Europe Key Countries
Six Continents Hotels RevPAR - Europe Key Countries Owned & Leased 30.0% 20.0% 10.0% 0.0% Oct- Nov- Dec- Jan-01 Feb- Mar- Apr-01 May- Jun-01 Jul-01 Aug- Sep- Oct- Nov- Dec- Jan-02 Feb- Mar- Apr-02 00 00 00 01 01 01 01 01 01 01 01 02 02 % Growth (10.0%) (20.0%) (30.0%) (40.0%) (50.0%) (60.0%) UK (exc
Slide 10: Holiday Inn UK RevPAR
Six Continents Hotels Holiday Inn UK RevPAR 10.0% 5.0% 0.0% -5.0% -10.0% % Growth -15.0% -20.0% -25.0% -30.0% -35.0% -40.0% Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 10
Slide 11: Six Continents Hotels Operating Profit
Six Continents Hotels Operating Profit Hotels H1 01/02 H1 00/01 Growth $m $m % Owned & Leased 4 43 - 90.7 Managed & Upscale Franchise 20 25 - 20.0 Midscale Franchise 83 98 - 15.3 Total Americas 107 166 - 35.5 EMEA 72 111 - 35.1 Asia Pacific 20 15 + 33.3 FelCor and Others 8 22 - 63.6 Central Overhead
Slide 12: Americas Owned & Leased Hotels
Six Continents Hotels Americas Owned & Leased Hotels z Miami and New York Inter-Continentals refurbishment completed z Chicago under refurbishment z 2nd Quarter Comparable Inter-Continental EBITDA: RevPAR flow-through of 1.8 times RevPAR Q1 01/02 Q2 01/02 H1 01/02 Inter-Continental - 38.9% - 11.1% -
Slide 13: Americas Managed & Upscale Franchise Hotels
Six Continents Hotels Americas Managed & Upscale Franchise Hotels RevPAR Q1 01/02 Q2 01/02 H1 01/02 Inter-Continental managed - 22.9% - 18.3% - 20.6% Crowne Plaza managed - 32.0% - 21.1% - 27.1% Crowne Plaza franchised - 20.3% - 12.9% - 16.6% Operating profit down 20.0% 13
Slide 14: Americas Midscale Franchise Hotels
Six Continents Hotels Americas Midscale Franchise Hotels Holiday Inn Holiday Inn Express Change in number of rooms available - 2.1% + 10.9% RevPAR: Q1 01/02 - 14.1% - 4.8% Q2 01/02 - 10.5% - 2.9% H1 01/02 - 12.3% - 3.9% Increase in Royalty Rates + 0.05% pts - 0.01% pts Operating profit down 15.3% 14
Slide 15: EMEA
Six Continents Hotels EMEA H1 01/02 H1 00/01 Decline % Reported ($m) 72 111 - 35.1 Sterling analysis: £m £m Owned & leased 37 60 - 38.3 Managed & franchised 13 17 - 23.5 Total £m 50 77 - 35.1 15
Slide 16: EMEA Owned & Leased
Six Continents Hotels EMEA Owned & Leased RevPAR Q1 01/02 Q2 01/02 H1 01/02 Inter-Continental -29.0% - 14.5% - 22.4% Crowne Plaza -20.0% - 14.2% -14.8% Holiday Inn Europe -13.9% -10.6% -12.3% Holiday Inn UK -17.2% -12.8% -15.1% z Key Upscale Properties Impacted by September 11th z Le Grand Inter-Con
Slide 17: EMEA Managed and Franchised
Six Continents Hotels EMEA Managed and Franchised RevPAR Q1 01/02 Q2 01/02 H1 01/02 Inter-Continental - Managed - 19.6% - 1.5% - 9.8% Holiday Inn - Franchise - 5.4% - 1.9% - 3.7% Express - Franchise + 1.6% + 10.0% + 5.9% Overall operating profit down 23.5% 17
Slide 18: Asia Pacific
Six Continents Hotels Asia Pacific RevPAR Q1 01/02 Q2 01/02 H1 01/02 Owned & Leased - 21.1% - 12.5% - 16.9% Managed - 11.0% - 6.4% - 8.8% First time contribution from Inter-Continental Hong Kong $7m Operating profit up by 33.3% 18
Slide 19: Hotels Operating Profit
Six Continents Hotels Operating Profit H1 001/02 H1 01/00 Growth $m $m % Owned & Leased 4 43 - 90.7 Managed & Upscale Franchise 20 25 - 20.0 Midscale Franchise 83 98 - 15.3 Total Americas 107 166 - 35.5 EMEA 72 111 - 35.1 Asia Pacific 20 15 + 33.3 FelCor and Others 8 22 - 63.6 Central Overheads (45)
Slide 20: Retail Operating Profit
Six Continents Retail Operating Profit H1 01/02 H1 00/01 Growth £m £m % Restaurants 45 39 + 15.4 Pubs & Bars 101 96 + 5.2 Ongoing Business 146 135 + 8.1 Disposal to Nomura - 31 n/a Reported 146 166 - 12.0 20
Slide 21: Retail: Restaurants
Six Continents Retail Restaurants z Average number of trading outlets 617 z Sales up 12.5% to £321m Drinks sales up 6.9% Food sales up 15.8% z Like for like sales (uninvested) Core estate up 0.8% Development estate up 2.5% Operating profit up 15.4% to £45m 21
Slide 22: Retail: Pubs & Bars
Six Continents Retail Pubs & Bars z Average number of trading outlets 1,361 z Sales up 5.4% to £465m Drinks sales up 5.5% Food sales up 8.1% z Like for like sales (uninvested) Core estate branded outlets up 1.4% Core estate unbranded outlets down 1.1% Development estate down 5.2% Operating
Slide 23: Retail Development Estate
Six Continents Retail Development Estate z 337 re-opened, 16 in refurbishment z Target over 400 re-opened by year end z Sales uplifts over 40% versus last year of Allied ownership 23
Slide 24: Britvic Soft Drinks Results
Britvic Soft Drinks Results z Volumes up 3.5% z Average realised price per litre up 0.9% z Turnover up 4.3% to £291m z Profit margin up 1.6 percentage points Operating profit up 45.5% to £16m 24
Slide 25: Profit and Loss Account
Six Continents PLC Profit and Loss Account £m H1 01/02 H1 00/01 * Growth % Operating profit 275 365 - 24.7 Minor exceptionals (1) 1 - PBIT 274 366 - 25.1 Interest (32) (29) - 10.3 Tax (75) (104) + 27.9 Minority Interests (6) (5) - 20.0 Adjusted Earnings 161 228 - 29.4 Adjusted EPS 18.7p 26.4p - 29.2
Slide 26: Net Cash Flow
Six Continents PLC Net Cash Flow £m H1 H1 01/02 01/02 H1 H1 00/01 00/01 Operating Operating profit profit 275 275 365 365 Depreciation Depreciation 134 134 121 121 Working Working capital/Other capital/Other (91) (91) (53) (53) Capital Capital expenditure expenditure (net) (net) (301) (301) (285) (2
Slide 27: Balance Sheet
Six Continents PLC Balance Sheet £m Apr Apr 02 02 Sep Sep 01 01 Apr Apr 01 01 Net Net debt debt 1,335 1,335 1,001 1,001 840 840 Shareholder Shareholder equity equity ** 5,347 5,347 5,185 5,185 5,122 5,122 Gearing Gearing 25% 25% 19% 19% 16% 16% Market-cap gearing Market-cap gearing ** ** 21% 21% 19%
Slide 28: Tim Clarke, Chief Executive
TIM CLARKE Chief Executive 28
Slide 29: Hotels Growth Prospects
Six Continents Hotels Growth Prospects Market Forces Pace of RevPAR recovery Favourable supply trends RevPAR Management Actions Hotel rooms Revenue investment Renovated assets New Distribution 29
Slide 30: Cyclical Owned and Resilient Franchised
Six Continents Hotels Cyclical Owned and Resilient Franchised z Owned: predominantly upscale business High operating leverage Exposure to long-haul travel z Franchised/Managed: largely midscale Low operating leverage Domestic/Intra-regional guests Focus on maximising owned profits recovery,
Slide 31: Americas Demand
Six Continents Hotels Americas Demand 112 110 index: Jan 1999 and May 1988 = 100 108 106 104 102 100 98 96 Gulf War 94 92 1990/91 recession 90 89 90 91 92 31
Slide 32: Americas Demand
Six Continents Hotels Americas Demand 112 110 index: Jan 1999 and May 1988 = 100 108 106 Demand May 1988 104 - April 1992 102 100 98 96 Sep 11 94 92 1990/91 recession 90 89 00 90 01 91 02 92 32
Slide 33: US RevPAR Recovery
Six Continents Hotels US RevPAR Recovery 10.0% All US Hotels Monthly ADR, Occupancy and RevPAR Performance 2001-2002 5.0% Year on Year Percentage Change 0.0% Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 -5.0% -10.0% -15.0% -20.0% -25.0% -30
Slide 34: Key Market RevPAR Drivers
Six Continents Hotels Key Market RevPAR Drivers z Economic recovery in the US z Air travel - March US domestic still down 10.5% Transatlantic down 13%-15% z US guest demand in key international cities London, Paris, Hong Kong, Frankfurt, Amsterdam z Continued performance in other segments US
Slide 35: RevPAR Recovery - Prospects
Six Continents Hotels RevPAR Recovery - Prospects z RevPAR recovery expected Return to cyclical economic trends following 9/11 Easing Autumn comparables Favourable medium-term US supply position z Uncertain pace of recovery Recovery of international travel European economic prospects z Man
Slide 36: Sales and Marketing Development
Six Continents Hotels Sales and Marketing Development z Driving international and corporate sales strengthened EMEA and Americas sales forces Focus on key multinational accounts z Cross-border advertising focus on European leisure market 36
Slide 37: Sales and Marketing Development
Six Continents Hotels Sales and Marketing Development 37
Slide 38: Sales and Marketing Development
Six Continents Hotels Sales and Marketing Development 38
Slide 39: Loyalty Programmes and New Delivery Channels
Six Continents Hotels Loyalty Programmes and New Delivery Channels z 1 million enrolments z 13.5 million members 39
Slide 40: Internet Price Guarantee
Six Continents Hotels Internet Price Guarantee 40
Slide 41: Systems Investment & Overhead Cost Savings
Six Continents Hotels Systems Investment & Overhead Cost Savings z Migration of all hotels to Holidex Plus z New generation Property Management Systems z HIRO upgrade z Re-engineering overheads 41
Slide 42: Big 10: Coming Out of Renovation
Six Continents Hotels Big 10: Coming Out of Renovation Completed Projects In Renovation Rooms Start Finish Rooms Miami 639 Chicago 1/00 11/02 844 New York 686 Le Grand 12/01 6/03 514 Vienna 453 Mayfair 12/02 7/04 290 Budapest 398 Cannes 1/03 10/04 338 Madrid 307 San Francisco 380 42
Slide 43: Holiday Inn UK Renovation
Six Continents Hotels Holiday Inn UK Renovation 2002 2003 2004 Total Rooms Upgrading 2,000 3,000 2,000 7,000 % of total Rooms 17% 25% 17% 60% 43
Slide 44: Holiday Inn UK - Integration Plan
Six Continents Hotels Holiday Inn UK - Integration Plan 2001 2002 2003 2004 Update People integration Complete Full integration Reservation system rollout PMS, 2-way interface, HIRO Upgrade service standard Complete Hallmarks introduction Re-brand hotels Complete Final few hotels converted 03/02 Reg
Slide 45: Organic Pipeline
Six Continents - Organic Pipeline Will be a Key Driver of Growth Owned Managed/Franchised Brand Rooms Rooms Total 420 8,925 9,345 314 8,849 9,163 400 19,512 19,912 357 24,924 25,281 145 2,909 3,054 1,636 65,119 66,755 45
Slide 46: Distribution Pipeline: Upscale
Six Continents Hotels Distribution Pipeline: Upscale 9,000 Rooms Landmark Inter-Continentals in key cities Boston, Beijing, Seattle, Jakarta Others under negotiation in US and Asia 9,000 Rooms Over 20 Crowne Plaza openings expected this year: 15% system expansion New owned hotels: Brussels air
Slide 47: Distribution Pipeline: Midscale
Six Continents Hotels Distribution Pipeline: Midscale 20,000 Rooms Owned new prototype Holiday Inns in US Growing pipeline in EMEA/Asia Pacific: 8,000 rooms 3,000 Rooms Continue to grow Staybridge US density 25,000 Rooms Owned development in Germany: 20 hotels Accelerating development in U
Slide 48: Hotel Values
Six Continents Hotels Hotel Values 2001 2002 2003 Americas (10%) (3%) 9% EMEA (2%) 1% 4% Asia Pacific (5%) - - Source: HVS International 48
Slide 49: Hotels Summary
Six Continents Hotels - Summary z Action to defend profits Upscale exposure Resilient franchise Maintained investment plans z Driving future growth RevPAR recovery Revenue investment & cost re-engineering Big 10 Inter-Continentals Holiday Inn UK Organic pipeline 49
Slide 50: Retail
Six Continents Retail z 2,000 pubs, bars and restaurants - AWT £14.2k up 6% z Defending margins against cost pressures z Driving high sales uplifts and returns from development pipeline z Exploiting segment opportunities to gain market share Well positioned as industry capacity cycle continues to im
Slide 51: Retail: An Improving Environment
Six Continents Retail An Improving Environment z Overall demand growing at 2.5% p.a. in real terms z 40% of pubs in highly leveraged ownership z Cash extraction / under investment in maintenance z Net capital employed likely to be flat in real terms Demand Growth is Outpacing New Supply 51
Slide 52: Target Retail Market - £18bn Sales
Six Continents Retail Target Retail Market - £18bn Sales* Residential Pubs Pub 53% 17% Restaurants Cash extraction High demand growth Low amenity levels Limited site availability Drinks Food led led Supply out-pacing High demand growth strong demand Low barriers to entry 16% 14% Bars Restaurants Cit
Slide 53: Brand Development: Target Segments
Six Continents Retail Brand development: Target segments Residential Pubs Pub 42% Restaurants 27% Drinks Food led led Bars Restaurants 27% City Centre 4% Note: Percentages represent split of SCR UK outlets (excluding Bowling, Bowling, Hotels) 53
Slide 54: Conversions/Acquisitions 2002
Six Continents Retail Conversions/Acquisitions 2002* Residential Pubs Pub Restaurants + 155 + 43 outlets outlets Drinks Food led led + 43 +6 outlets outlets Bars Restaurants City Centre *Excludes Alex, bowls and hotels 54
Slide 55: Brand Development
Six Continents Retail Brand Development z Innovation: NPD “Castle” - Affluent residential area pubs Nicholson’s - West End and city pubs Sizzling Pub Co - Food locals Arena - Entertainment locals Flares - 70’s bar z Evolution of established brands Harvester, Toby 55
Slide 56: Site Acquisitions
Six Continents Retail Site Acquisitions Harvester 56
Slide 57: Leveraging Scale Economies
Six Continents Retail Leveraging Scale Economies 01/02 00/01 H1 H1 Unit Scale Average sales/outlet £14.2k £13.4k No outlets sales > £20k 367 305 Brand Scale Brands >50 outlets 838 676 Corporate Scale Operating Margin 18.5% 18.4% 57
Slide 58: Base Profit Drivers
Six Continents Retail Base Profit Drivers z Regulatory-driven costs absorbed £20m this year: estimated £9m in 02/03 z Like-for-like performance Price/volume trade off Central London and High Street versus Suburbs z Defending margins Purchasing scale Retail staff productivity Reducing ove
Slide 59: Conversion Potential
Six Continents Retail Conversion Potential H1 01/02 Branded 1,090 15% Operating format 65 returns Individual character 140 Identified pipeline 600 59
Slide 60: Growing the Business
Six Continents Retail Growing the business z Improving industry environment z Leveraging scale and driving efficiencies z Exploiting segment opportunities Main focus on suburbia z Flow of new product development z Further growth from strong conversion pipeline and selective site acquisitions 60
Slide 61: Six Continents PLC Outlook
Six Continents PLC z Strong growth prospects Favourable industry cycle Benefit of continued investment z Short-term outlook z Corporate investment strategy 61
Slide 62: Tim Clarke, Chief Executive
TIM CLARKE Chief Executive 62
Slide 63: Supplementary Information
Supplementary Information 1
Slide 64: Investment
Six Continents PLC - Investment £m H1 01/02 H1 00/01 Gross Disposals Net Gross Disposals Net Hotels 183 (22) 161 134 (10) 124 Retail 146 (19) 127 173 (6) 167 Soft Drinks 16 (1) 15 15 (6) 9 Other - (2) (2) 4 (19) (15) Group 345 (44) 301 326 (41) 285 2
Slide 65: Cumulative KPIs Owned/Leased & Managed Q2 01/02
Six Continents Hotels Cumulative Key Performance Indicators Owned/Leased & Managed Q2 01/02 Owned & Leased Managed Occ % ADR $ RevPAR $ Occ % ADR $ RevPAR $ Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Inter-Continental 59.0% 1.1% 170.01 -12.8% 100.27 -11.1% 53
Slide 66: Cumulative KPIs Franchised & Total Q2 01/02
Six Continents Hotels Cumulative Key Performance Indicators Franchised & Total Q2 01/02 Franchised Total Occ % ADR $ RevPAR $ Occ % ADR $ RevPAR $ Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Inter-Continental 50.5% -7.0% 120.85 -4.4% 61.06 -16.0% 53.7% -4.7% 1
Slide 67: Cumulative KPIs Owned/Leased & Managed H1 01/02
Six Continents Hotels Cumulative Key Performance Indicators Owned/Leased & Managed H1 01/02 Owned & Leased Managed Occ % ADR $ RevPAR $ Occ % ADR $ RevPAR $ Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Inter-Continental 58.3% -6.6% 167.18 -19.2% 97.54 -27.4% 51
Slide 68: Cumulative KPIs Franchised & Total H1 01/02
Six Continents Hotels Cumulative Key Performance Indicators Franchised & Total H1 01/02 Franchised Total Occ % ADR $ RevPAR $ Occ % ADR $ RevPAR $ Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Inter-Continental 47.4% -7.6% 116.75 -2.3% 55.39 -15.9% 52.0% -7.5% 1
Slide 69: Hotels System Size at March 2002
Six Continents Hotels - System Size at 31 March 2002 Owned & Leased Managed Franchised Total Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Inter-Continental 9 3,936 15 4,659 19 5,142 43 13,737 Crowne-Plaza 7 2,761 23 7,870 72 19,412 102 30,043 Holiday Inn 8 2,665 59 17,580 1,092 201,305 1,159
Slide 70: Hotels Revenues H1 01/02
Six Continents Hotels - Revenues H1 01/02 H1 H1 Growth on 01/02 00/01 Last Year $m $m % AMERICAS Owned and leased hotels 214 280 -23.6 Managed & upscale franchise 75 421 -82.2 NA Midscale franchise 125 138 -9.4 Total AMERICAS 414 839 -50.7 EMEA Owned and leased hotels 490 378 29.6 Managed & franchis
Slide 71: Retail Outlet Numbers H1 01/02
Six Continents Retail - Outlet Numbers H1 01/02 00/01 Disposals Acquisitions Conversions H1 02 Restaurants Vintage Inns 179 11 190 Harvester 150 1 (2) 149 All Bar One 54 (1) 53 Toby Carvery 64 4 68 Innkeepers Fayre 16 0 16 Express by Holiday Inn 18 2 0 20 Browns 13 1 0 14 Alex (managed) 30 7 0 37 52
Slide 72: Retail Sales and Profit Data H1 01/02
Six Continents Retail - Sales and Profit Data H1 01/02 £m Restaurant Pubs & Bars Total Food Sales 174 53 227 Food Sales Mix % 54 11.5 28.8 Drink Sales 125 355 480 Total Sales 321 465 786 Operating Profit 45 101 146 10
Slide 73: Retail Current Estate
Six Continents Retail - Current Estate Unbranded Branded Restaurants Sales/Week £16.0k £19.3k Outlets 106 547 Pubs & Bars Sales/Week £10.3k £15.4k Outlets 869 542 Six Continents Retail - Average Number of Trading Outlets H1 01/02 H1 00/01 Restaurants 617 583 Pubs & Bars 1,361 1,358 11