Slide 1: FY19 Full Year Results
FY19 Full Year Results April 2019 FY19 FULL YEAR RESULTS | APRIL 2019
Slide 2: Contents
Contents Full year highlights Alison Brittain p3 Financial performance Nicholas Cadbury p5 IFRS 16 Nicholas Cadbury p13 Return of proceeds Nicholas Cadbury p16 Strategic update Alison Brittain p19 Appendices p34 2 FY19 FULL YEAR RESULTS | APRIL 2019
Slide 3: Full year highlights | Significant strategic progress
Full year highlights | Significant strategic progress Sale of Costa to The Coca-Cola Company for £3.9 billion completed 1 with return of proceeds well underway Strong UK market share with current UK network of 76,000 rooms 2 & committed pipeline of 13,000 rooms 30% of total Premier Inn room pipeline
Slide 4: Full year highlights | Resilient financial performance
Full year highlights | Resilient financial performance UK & Ireland Germany Cumulative c.7,000 4,008 new rooms 76,171 Hamburg hotel pipeline efficiency savings £190m rooms opened in FY19 opened Feb 2019 rooms over last 3 years Strong Strong ROCE from 83% to discretionary cash £498m continuing 12.2%
Slide 5: Financial Performance
FINANCIAL PERFORMANCE | Nicholas Cadbury – CFO 5 5 5 FY19 FULLFY19 YEAR FULLRESULTS | APRIL YEAR RESULTS | APRIL2019 2019
Slide 6: Financial highlights | Resilient financial performance
Financial highlights | Resilient financial performance FY18 FY19 𝚫 • Revenue growth delivered from new Revenue £2,007m £2,049m 2.1% capacity addition Underlying PBT £432m £438m 1.2% • Disciplined cost management Non-underlying items £(6)m £(178)m n.m • Non-underlying items of £178 million PBT £426m
Slide 7: Operating performance | Resilient revenue & profit growth
Operating performance | Resilient revenue & profit growth FY18 FY19 𝚫 • Revenue growth of 2.0% driven by Revenue £2,007m £2,047m 2.0% capacity growth of 5.3% - UK & Ireland £2,000m £2,042m 2.1% - Germany £4m £5m n.m. • Accommodation sales growth of 3.5% - Middle East £3m £0m n.m. - Regions +2.5%…
Slide 8: Margins & ROCE | Attractive & sustainable economic model
Margins & ROCE | Attractive & sustainable economic model Efficiency programme offsetting inflation Consistently strong ROCE* on a growing base 29 0. 5 27 0. 45 (0.8)% 26.8 (0.1)% 25 0. 4 25.5 (1.1)% 23.8 23 0. 35 3.2% 21 22.2 0. 3 (1.0)% 19 20.2 0. 25 24.8% (0.6)% 24.4% 17 0. 2 15 0. 1 5 13.5% 12.9%
Slide 9: Cash generation | Strong & consistent to fund investments
Cash generation | Strong & consistent to fund investments Diverse & flexible funding options EBIT £599m 7 0 (continuing & discontinued operations) 60 94% 90% Depreciation & 50 amortisation £226m 87% 80% 83% 40 93% 30 Other non-cash £(10)m items 2 0 10 0 431 504 569 592 622 599 Working capital £(1)m
Slide 10: Investment | Compelling opportunities to re-invest capital
Investment | Compelling opportunities to re-invest capital Last 2 Maturity Mature • Premier Inn’s maintenance FY18 FY19 site-level capital upholds the estate’s years duration ROCE consistent quality Maintenance & product improvement £118m £151m £269m - - • Significant investment in new UK capacity d
Slide 11: Capital discipline | Appropriate leverage ensures investment agility
Capital discipline | Appropriate leverage ensures investment agility Maintaining an appropriate leverage position Diverse & flexible funding options (Continuing + discontinued ops) FY17 FY18 FY19 Balanced debt maturity profile USPP £359m Funds from operations (FFO) £883m £921m £902m @2.6-5.2% Adjust
Slide 12: FY20 outlook | Investing to access structural growth opportunity
FY20 outlook | Investing to access structural growth opportunity • UK economic & political environment, leading to weak hotel demand, especially in the regions • March 2020 Midscale & Economy market declining - Regions (c.80% of PI sales) = (1.5)% total accommodation sales / (4.4)% RevPAR Operating
Slide 13: IFRS 16
IFRS 16 | Nicholas Cadbury – CFO 13 13 13 FY19 FULL YEAR FY19 FULLRESULTS | APRIL YEAR RESULTS | APRIL2019 2019
Slide 14: IFRS 16 | Non-cash financial reporting changes in FY20
IFRS 16 | Non-cash financial reporting changes in FY20 Background to IFRS 16 What’s changing? • New accounting standard for financial • Recognition of significant lease liability & reporting of lease agreements ‘right of use’ asset on the balance sheet • To be adopted for periods beginning on or • R
Slide 15: IFRS 16 | Significant changes to statutory financial reporting
IFRS 16 | Significant changes to statutory financial reporting Balance sheet impact Statutory reporting impact Pre- Add lease Add right - liability of-use asset Post- 𝚫 • Indicative view of impact to statements based on Indicative FY19 impact IFRS 16 (+/- 100) (+/- 100) IFRS 16 (+/- 100) leases as…
Slide 16: Return of Proceeds
RETURN OF PROCEEDS | Nicholas Cadbury - CFO 16 16 FY19 FULL YEAR FY19 FULLRESULTS | APRIL YEAR RESULTS | APRIL2019 2019
Slide 17: Return of proceeds | At least £2.5 billion to be returned
Return of proceeds | At least £2.5 billion to be returned Use of £3.9 billion Costa sale proceeds At least £2.5 billion to be returned to shareholders Total proceeds £3,900m Share buyback • Initial programme <£500 million 1 programme • £383 million repurchased so far Separation & underway • Initial
Slide 18: Return of proceeds | Buyback programme & tender offer
Return of proceeds | Buyback programme & tender offer Costa Sale Buybacks Capital Full-Year Tender offer AGM & GM Tender offer Completion started Markets Day Results circular 19 June completion 3 January 17 January 13 February 30 April Jan’19 Feb’19 Mar’19 Apr’19 May’19 Jun’19 Jul’19 Aug’19 Sep’19 O
Slide 19: Strategic Update
STRATEGIC UPDATE | Alison Brittain – CEO 19 19 FY19 FULL YEAR FY19 FULLRESULTS | APRIL YEAR RESULTS | APRIL2019 2019
Slide 20: Our mission | The world's best budget hotel business
Our mission | The world’s best budget hotel business World’s strongest hotel brand UK’s favourite hotel 7% 10-year Sales CAGR 7% 10-year EBIT CAGR ~80% 83% cash conversion occupancy Strong return on capital 97% rooms booked directly Best-in-class operations Strong financial performance 20 FY19 FULL
Slide 21: Structural growth opportunity | Winning share in fragmented markets
Structural growth opportunity | Winning share in fragmented markets 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% Budget 52 55 58 62 67
Slide 22: Our model | Rewards flexibility & through-cycle focus
Our model | Rewards flexibility & through-cycle focus Premier Inn delivers long-term sustainable performance 0 .2 • We have delivered long-term growth at good ROCE 2 00 0 .18 0 .16 • We performed well in the last 15 0 0 13.3% 13.5% 13.4% 0 .14 recession 12.9% 13.0% 12.7% 12.4% 12.4% 12.4% • Our stru
Slide 23: Our model | Vertically integrated to deliver quality & value-for-money
Our model | Vertically integrated to deliver quality & value-for-money Hotel industry value chain Property Property Hotel Inventory Brand development ownership operation distribution Premier Inn’s unique, vertically integrated model Delivering quality & value-for-money for customers whilst creating
Slide 24: Our purpose | Delivering guests the best value-for-money
Our purpose | Delivering guests the best value-for-money • Leading value-for-money • Strongest hotel brand advantage Integrated trading • 97% direct booking • Largest UK network Scale • Low-cost customer • Economies of scale acquisition & retention • Hot food in all hotels • Superior network F&B mod
Slide 25: 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 Solar panels • Whitbread’s hotels are all •
Slide 26: UK network strength | Sustainable growth at attractive ROCE
UK network strength | Sustainable growth at attractive ROCE Updated line-of-sight to >110,000 UK rooms Strong unit economics combined with significant capacity growth (100 bed non-London hotel) • >89,000 room committed network £m Detailed • Postcode-level analysis catchment • Detailed mapping of exi
Slide 27: Integrated trading | Driving higher quality net RevPAR
Integrated trading | Driving higher quality net RevPAR Gross Customer Delivering higher quality revenue Acquisition channel RevPAR - acquisition = Net RevPAR % of impact costs impact bookings • Domestic, short-stay guests have high travel frequency Direct: PI.com Low • Booking directly results in su
Slide 28: Everyday efficiency | Delivering on extended ambition
Everyday efficiency | Delivering on extended ambition Strong delivery so far & ambition remains Focused separation of Costa Initial 5-year £150m • Significant work already delivered target since Transaction announced FY17-19 Whitbread Costa £45m - shared service teams re-aligned achievement £145m -
Slide 29: Innovation | New formats have potential to increase UK runway
Innovation | New formats have potential to increase UK runway 1st hotel opened in 1,900 rooms in Cardiff Feb’19 London & Edinburgh • Smaller, high-spec room design in city centre locations • Innovative new format enabling further UK growth • Enables Premier Inn to secure good ROC in high land • Simp
Slide 30: Germany | Building a pipeline to replicate the UK's success
Germany | Building a pipeline to replicate the UK’s success Building the German pipeline Long-term opportunity to replicate UK success To be • Use of freehold, leasehold and acquisition Organic acquired Total Site selection enables superior site access Open and 2 hotels 13 hotels 15 hotels Market-le
Slide 31: Germany | A new team to support a transformational year ahead
Germany | A new team to support a transformational year ahead Local team structure to build a successful brand At least 20 hotels by the end of 2020 Grow market share through Acquired as part of Foremost Hospitality transaction M&A new site acquisitions & M&A Berlin x1 Hamburg x2 opportunities Colog
Slide 32: Our plan | A proven strategy to create sustainable shareholder value
Our plan | A proven strategy to create sustainable shareholder value We have highly compelling Our unique model delivers We are optimising our capital long-term structural growth best-in-class performance & structure & capabilities to opportunities enables growth support long-term growth Focus on ou
Slide 33: Questions
QUESTIONS | Alison Brittain & Nicholas Cadbury 33 33 FY19 FULL YEAR FY19 FULLRESULTS | APRIL YEAR RESULTS | APRIL2019 2019
Slide 34: Appendices
Appendices I Definitions p35 II Supporting IFRS 16 information p36 III Supplementary information p37 IV Cautionary statement p38 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 35: Appendix I | Definitions
Appendix I | Definitions Accommodation sales Premier Inn accommodation revenue excluding non-room income such as food and beverage Adjusted net debt Net debt adjusted for cash not readily available Average room rate (ARR) Accommodation revenue divided by the number of rooms occupied by guests Based
Slide 36: Appendix II | Supporting IFRS 16 information
Appendix II | Supporting IFRS 16 information Example property lease with a rent review every 5yrs • Lease interest front-end weighted over term • Combined charge of depreciation + interest higher than cash rent in early years, reducing PBT & EPS • Strong balance sheet provides favourable £ lease ter
Slide 37: 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-reports-and-presentations. This information includes: A. Property network B. Sales, profit & return on capit
Slide 38: 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 39: Contacts
CONTACTS Matthew Johnson Director – Strategy, IR & Communications matt.johnson@whitbread.com Ann Hyams Senior Manager – IR ann.hyams@whitbread.com Amit Mistry Manager – Strategy & IR amit.mistry@whitbread.com +44 7848 146 761 +44 7796 709 087 +44 7540 150 350 Whitbread PLC | Whitbread Court, Houghto