Mitchells & Butlers plc · LSE:MAB
Mitchells & Butlers — FY2013 Earnings Presentation
34 slides from Mitchells & Butlers's earnings presentation, Nov 26, 2013
Slide 1: Full Year Results
Full Year Results Bob Ivell Chairman 26 November 2013 1
Slide 2: Financial Review
Financial Review Tim Jones Finance Director Full Year Results 2013 26 November 2013 2
Slide 3: Income statement
Income statement (pre exceptional items and other adjustments) FY 2013 FY 2012 52 weeks £m 53 weeks £m Revenue 1,895 1,889 Operating costs (1,583) (1,585) Operating profit 312 304 Interest (128) (138) Profit before tax 184 166 Earnings per share 34.9p 30.5p Operating margin 16.5% 16.1% 3
Slide 4: Income statement
Income statement (pre exceptional items and other adjustments) FY 2013 FY 2012 52 weeks £m 52 weeks £m Revenue 1,895 1,855 + 2.2% Operating costs (1,583) (1,558) Operating profit 312 297 + 5.1% Interest (128) (135) Profit before tax 184 162 + 13.6% Earnings per share 34.9p 29.8p + 17.1% Operating ma
Slide 5: Like-for-like sales growth
Like-for-like sales growth Week 1-28 Week 29-52 Week 1 - 52 Week 1 – 8 FY 2013 FY 2013 FY 2013 FY 2014 Food 1.4% 0.0% 0.8% 0.1% Drink (1.2%) 0.9% (0.2%) (0.4%) Total 0.3% 0.6% 0.4% 0.1% • Continued strong performance on special occasions – more key calendar events in H1 • Warm weather benefitted dri
Slide 6: Drivers of LFL food and drink sales
Drivers of LFL food and drink sales Food +0.8% Drink (0.2%) 6% 5.1% 5% 4.2% 4% Price / Volume Price / 3% Spend Volume 2% Spend 1% (4.3%) -1% (4.4%) Total LFL sales growth of 0.4% • Further spend gains from price, brand mix and upselling • Volume declines moderating in recent weeks 6
Slide 7: EBIT movement
EBIT movement +£6m £312m (£1m ) FY 2013 +£11m +£4m (£5m) £297m FY 2012 Trading Service & Restruc FY 12 new FY 13 new amenity -turing openings openings investment savings • Operating margin up 0.5 percentage points to 16.5% 7
Slide 8: Exceptional items
Exceptional items FY 2013 FY 2012 £m £m Bid defence - (6) Restructuring and reorganisation IT infrastructure - (7) Support operations - (7) Operating exceptionals - (20) Property valuation & impairment (12) (35) Other property impairment (17) (12) Impairment of goodwill - (5) IAS19 pensions finance
Slide 9: Group cash flow
Group cash flow FY 2013 52 weeks FY 2012 53 weeks £m £m EBITDA 422 415 Working capital / non cash items (11) (28) Deficit pension contributions (40) (40) Cash flow from operations 371 347 Maintenance & infrastructure capex (100) (92) Net interest paid (126) (129) Tax and other (32) (25) Free cash fl
Slide 10: Group net debt
Group net debt Sep 13 Sep 12 £m £m Securitisation debt1 (2,124) (2,177) Cash & other 101 135 Securitised net debt (2,023) (2,042) Cash 264 201 Group net debt (1,759) (1,841) Net Debt : EBITDA2 4.2x 4.5x Notes: 1) Includes derivatives hedging balance sheet debt 2) FY12 EBITDA is for 52 weeks 10
Slide 11: Capital expenditure
Capital expenditure Total estate capex of £128m (FY 2012: £147m) Maintenance capex of £88m (FY 2012: £83m) Infrastructure capex increased to £12m (FY 2012: £9m), due to beginning of rollout of new pub systems Expansionary capex reduced to £28m (FY 2012: £55m) FY 2014 spend expected to increase Enhan
Slide 12: Expansionary capex returns
Expansionary capex returns 70 60 New sites Number 50 Conversions of sites 40 30 20 10 0 H1 H2 H1 H2 H1 H2 FY 11 FY 12 FY 13 FY 13 Investments1 FY 13 No of sites FY11-13 EBITDA ROI Freehold Acquisitions £11m 4 13% Leasehold Acquisitions £11m 12 18% Conversions £2m 6 16% Total £24m 22 17% Note 1: Rela
Slide 13: Property
Property Freehold and long leasehold properties valued annually 20% of sites inspected p.a. Moderator removed for inner London sites Short leaseholds assessed for impairment Slight increase in overall multiples to 8.0x EBITDA (FY 12 7.8x) £m (pre tax) FY 2013 FY 2012 Income statement Revaluation (12
Slide 14: Pensions
Pensions Funding Discussions continue between the Company and the Trustees regarding the latest triennial valuation Regulatory timetable to reach agreement by June 2014 Accounting Prior year balance sheets restated following recent FRRP guidance (recognising schedule of contributions as a liability)
Slide 15: Key messages
Key messages Strong profit growth: EBIT up 5%, EPS up 17% Operating margin up 0.5 percentage points to 16.5% Reduced expansionary capital expenditure of £28m this year, increasing to £50m-£80m in medium term Expansionary capital returns stable at 17% Funding negotiations with pension trustee continu
Slide 16: Business Review
Business Review Alistair Darby Chief Executive Full Year Results 2013 26 November 2013 16
Slide 17: Average weekly take per pub
Consistent growth in sales and food mix £25k AWT: £22.9k Average weekly take per pub 2% £20k AWT: £14.3k 51% £15k 10% £10k 30% £5k AWT +4.9% pa 47% 60% £0k FY 2003 FY 2013 Drink Food Other High quality, food led, managed estate Note: AWT is average weekly take per pub and excludes VAT 17
Slide 18: What creates value at M&B
What creates value at M&B Exceptional people... Outstanding operators of scale brands and formats... Which guests love... Leading to market leadership and profit growth Profit through people, guests and operational practices 18
Slide 19: Four priorities
Four priorities Consistent priorities to drive profits and returns 19
Slide 20: The value creation journey
The value creation journey 3 1 2 3 2 1 1 Right size (done in FY 12) 2 Balanced transformation (in progress) 3 Acceleration (ahead) Transformation whilst safeguarding profit growth 20
Slide 21: Highlights
Highlights Reduction in retail staff turnover Investment in guest facing systems Industry leading guest research driving brand action Clear approach to capital allocation 17% EPS growth Reshaping the business for future growth 21
Slide 22: Our people
Our people Key performance indicator: FY 11 FY 12 FY 13 Staff turnover 85% 82% 78% Engagement: 82% GMs, 78% retail 3,400 NVQ enrolments/completions 1,600 apprentices at year end Stability up at all levels Improved recruitment, retention and development 22
Slide 23: Our practices
Our practices Re-engineering operational roles Administrators → leaders and coaches Objective: more time with people and guests Improved service at peak times Food hygiene rating scores improving Continued focus on core operations and scale benefits 23
Slide 24: New pub systems drive guest experiences
New pub systems drive guest experiences Handheld devices Web Buzzers & integration pagers Integrated Kitchen payment Management devices Table Tills Management 125 sites y/e, 319 now, 1,600 FY15 24
Slide 25: Market and strategy overview
Market and strategy overview Special £22bn Invest & expand Invest & expand Upmarket social £8bn Family £5bn Protect & compete Optimise & invest Heartland £4bn Everyday social £2bn Brand/format Like-for-like Capital Cash optimisation sales deployment generation Invest & expand Largely brand O
Slide 26: Our guests
Our guests 65% KPI: Net promoter +4% to 59% 60% Guest satisfaction +3% to 62% 55% Trust and loyalty builders established for each brand 50% Guest dashboards rolled out 45% FY 2011 FY 2012 FY 2013 40% Guest satisfaction Net Promoter Score Brand priorities built on guest insight Note: Guest satisfacti
Slide 27: Guest dashboard
Guest dashboard Live guest feedback to every restaurant and pub 27
Slide 28: Protect & compete: Heartland
Protect & compete: Heartland Putting value first: Crown - best priced main meal £4.40 £4.19 £4.19 £4.20 £3.99 £4.00 £3.89 £3.80 £3.69 £3.60 £3.40 1 Nov 11 1 May 12 1 Nov 12 1 May 13 1 Nov 13 Volume trend: 28
Slide 29: Protect & compete: Heartland
Protect & compete: Heartland Putting value first: Introduction of £3.69 main meals in Crown BT and Sky Sports distribution broadened Great value drinks promotions Simpler operational structure, common guest base Proud to lead on cost - to deliver great value for our guests Re-establish value and com
Slide 30: Optimise and invest: Raising appeal of existing estate
Optimise and invest: Raising appeal of existing estate Trial, prove then roll out at speed Directing capital into attractive market spaces Meaningful impact on our guests Accelerating remodel programme 30
Slide 31: Expand through new openings
Expand through new openings 16 new openings – 6 Toby, 5 Harvester, 2 M&C, 2 Alex, 1 Browns New location types e.g. All Bar One Euston Station Pipeline expanding for FY 2014 and beyond Investing capital for attractive returns 31
Slide 32: Our profits
Our profits 18% 16% Discounting optimised 14% 12% Substantial purchasing gains 10% Operating margin up 0.5 ppts 8% 6% Operational leverage benefits 4% 2% Strong EPS growth 0% Revenue Operating PBT EPS profit Strong financial performance whilst transforming M&B Note: All measures quoted before except
Slide 33: Conclusion
Conclusion Strong profit performance Business transformation on track New systems in roll out Clear guest insight Well positioned for future growth 33
Slide 34: Q&As
Q&As Full Year Results 2013 26 November 2013 34