Slide 1: Interim Results
Interim Results The White House, Leicester 2013
Slide 2: Kirk Davis, FD
Kirk Davis FD 15 March 2013 The Six Bells, Lymington
Slide 3: Financial Summary
Financial Summary 26 weeks to 27/01 H1 2013 H1 2012 Change Revenue £626.4m £569.4m +10.0% Like-for-like sales +6.9% +2.1% Operating profit £52.1m £53.1m -2.0% Operating margin 8.3% 9.3% -1.0% Profit before tax £34.8m £35.8m -2.7% Earnings per share 20.8p 20.2p +3.0% Free cash flow per share 18.7p 27
Slide 4: Average Sales Per Pub Week
Average Sales Per Pub Week (including VAT) Record Average Sales Per Pub Week 4
Slide 5: Like-for-like Performance
Like-for-like Performance % H1 H1 H2 2013 2012 2012 2012 2011 2010 2009 2008 • Bar +4.1 +3.4 +2.3 +2.8 +1.7 -0.8 +2.5 -4.3 • Food +13.4 +0.1 +9.2 +4.8 +4.2 +0.1 -0.4 +7.9 • Machines +4.4 -3.8 -1.9 -2.8 -3.9 +12.1 -7.5 -5.8 • Total LFL sales +6.9 +2.1 +4.2 +3.2 +2.1 +0.1 +1.2 -1.1 • LFL Profit +0.0 +
Slide 6: Changing Sales Mix Over Last 10 Years
Changing Sales Mix Over Last 10 Years Long-term growth in food mix 6
Slide 7: Operating Margin - Summary
Operating Margin - Summary H1 2013 H1 2013 H1 2012 H1 2012 £000 % of £000 % of Sales Sales • Turnover 626,397 569,375 • Pub profit (pre repairs) 123,242 19.6 117,623 20.6 • Repairs (22,794) (3.6) (20,073) (3.5) • Head office costs (19,631) (3.1) (18,245) (3.2) • Share Incentive Plan (3,068) (0.5) (2
Slide 8: Cost Increases
Cost Increases • Tax increases: excise duty, business rates and machine duty • Bar and food supplies increased in the range of 3% to 4% • Staff costs increased due to our investment in labour and bonuses • Utility costs have increased by 14%, due to price increases of 6% (predominantly in Brioche Fr
Slide 9: Allocation of Resources
Allocation of Resources £123m £161m £90m £59m £108m £164m £159m £71m £46m Reduction in capital expenditure due to fewer new openings 9
Slide 10: Capital Expenditure
Capital Expenditure HY13 HY12 £m £m Acquisition and development costs Current year 15.0 39.1 Future year 4.1 2.6 New openings 19.1 41.7 Fixtures and fittings 6.7 8.1 Refurbishments 6.3 5.7 Business and IT projects 4.2 5.0 Reinvestment 17.2 18.8 Total 36.3 60.5 Continued investment in the core estate
Slide 11: Movement in Net Debt inc. Finance leases
Movement in Net Debt inc. Finance leases £m Free cash flow decreased to £22.6m FY12 Net debt 462.6 (2012: £34.9m). The decrease in free Free cash flow (22.6) cash flow was driven by the one-off year end working capital benefit of £15.0m New pub capex 19.1 that was expected to, and has, reversed. D
Slide 12: Debt Position
Debt Position H1 H1 FY 2013 2012 2012 Net debt/EBITDA 2.99 2.99 2.96 Interest cover (times) 3.02 2.92 2.68 Interest cover pre exceptional (times) 3.02 3.07 3.07 Fixed charge cover (times) statutory 1.68 1.67 1.57 excluding depreciation 2.18 2.15 2.05 excluding depreciation and exceptionals 2.18 2.20
Slide 13: Financial Summary
Financial Summary The Railway Hotel, Lytham • Robust financial performance • Operating margin decline reflects increasing tax and cost pressures on pub profit conversion • Continued strong cash generation The Railway Hotel, Lytham • Unutilised banking facilities and cash balances of £118.2m as at 27
Slide 14: John Hutson, CEO
John Hutson CEO The Cribbar, Newquay The Cribbar, Newquay
Slide 15: Business Update
Business Update W G Grace, Bristol • Property • People • Market update • Continued improvement • Cost outlook • Taxation • Current trading and outlook W G Grace, Bristol 15
Slide 16: Property Update
Property Update Average cost of development £1.4m, in line with last year 871 pubs opened as of 15 March 2013 HY FY 13 12 10 pubs on site as of 15 March 2013 Trading pubs at start of FY 860 823 Freehold pubs opened 1 18 We now anticipate opening approximately 30 pubs this financial year Leas
Slide 17: "It's a People Thing"
“It’s a People Thing” • Increased investment in our circa 29,000 employees • Dedicated employee website & e-learning suite • Catering Academy • Apprenticeship Programme • Over 800 employees on an apprenticeship programme • 6 programmes at Level 2 & Level 3 • Success rate in line with national averag
Slide 18: Market Update
Market Update 2 Where we sit down and eat - BRITAIN’S MOST VISITED PUB & CASUAL DINING BRANDS Claimed usage in last 6 months Nov 11 May 12 Oct 12 Wetherspoons 41% 44% 40% Pizza Hut 31% 41% 30% Harvester 27% 29% 28% Pizza Express 23% 26% 22% Nandos 20% 26% 20% Frankie & Benny's 19% 25% 19% Toby 15% 1
Slide 19: Britain's favourite big brand
Britain’s favourite big brand If the following brands were available in the same location, which would be your first choice to eat at? (ranked by % of adults choosing each brand) The Nightjar, Ferndown (out of a list of 16 – May October the top 6 ) 2012 2012 Wetherspoons 10% 11% Nandos 11% 9% Harves
Slide 20: Continued Improvement
Continued Improvement • 256 pubs are in the 2013 CAMRA Good Beer Guide • Raised over £6.8 m for CLIC Sargent (for children with cancer) • Loo Awards – UK Winner (Individual Category entries) – National Winner for Scotland (Individual Category entries) – National Winner for Wales for the Accessible T
Slide 21: Cost Outlook
Cost Outlook • Tax increases: excise duty, business rates and machine duty • Higher utilities pricing and consumption • Increased investment in staffing to support catering and higher staff bonuses • Continue to focus on maintaining well- Pub name, invested estate for the long-term benefit Town of t
Slide 22: Unsustainable tax regime
Taxation 2013 2012 First Half First Half £m £m VAT 126.1 115.6 Alcohol duty 74.6 65.6 PAYE and NIC 34.7 32.8 Business rates 23.4 21.0 Corporation tax 8.6 9.0 Machine duty 1.8 1.6 Fuel duty 1.0 1.3 Carbon tax 1.3 1.2 Climate change levy 0.8 0.6 Stamp duty 0.3 0.6 Landfill tax 0.6 0.6 Premise licence
Slide 23: Current Trading and Outlook
Current Trading and Outlook • LFL sales for the six weeks to 10 March 2013 increased by 7.3% with total sales growth of 9.9% • Largest ever ale festival expected this spring 3rd–21st April • Continuing pressure from increased taxation and operating costs • Continue to expect a reasonable outcome for
Slide 24: Appendix
Appendix The White House, Leicester
Slide 25: Appendices
Appendices Pork, leek & chive sausages • A 10 year overview • B 10 year financial trends • C 10 year capital trends • D1 ROC/CROCCE/ROE calculations • D2 ROC/CROCCE/ROE calculations • E Cash flow • F SWAP maturity profile 25
Slide 26: 10 Year Overview
Appendix A 10 Year Overview 26
Slide 27: 10 Year Financial Trends
Appendix B 10 Year Financial Trends H1 H1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012 2013 Sales per pub (£000) 1,169 1,239 1,246 1,283 1,354 1,333 1,344 1,335 1,360 1,401 688 726 EBITDA per pub (£000) (1) 201.9 204.4 195.7 205.6 219.0 211.6 212.9 205.8 198.7 194.9 98.8 95.9 Number of pub
Slide 28: 10 Year Capital Trends
Appendix C 10 Year Capital Trends H1 H1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012 2013 Size (sq.ft.) – Openings 3,721 4,317 4,176 3,928 3,855 3,618 3,359 3,781 3,572 3,325 3,305 4,076 Number of openings 45 28 13 9 18 23 39 47 50 40 20 5 % which are freehold 56 43 54 22 61 57 33 32 68 45
Slide 29: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE 12 months to 12 months to Jan 2013 Jan 2012 £000 £000 Profit after tax, before exceptional items (a) 56,915 55,650 Add: interest (b) 34,887 35,487 Profit pre-interest (c) 91,802 91,137 Add: deferred tax (2,851) (4,973) Depreciation 51,050 46,627 Cash return (d) 140,001 132
Slide 30: ROC/CROCCE/ROE
Appendix D2 ROC/CROCCE/ROE H1 H1 2013 2012 £000 £000 Shareholder funds per balance sheet 193,873 181,090 Add: cumulative losses on disposal 65,965 55,805 : hedging provision 56,755 64,518 (e) 316,593 301,413 Add: net debt (f) 469,930 456,630 Capital employed (g) 786,523 758,043 Add: deferred tax pro
Slide 31: Cash Flow
Appendix E Cash Flow H1 H1 FY 2013 2012 2012 £000 £000 £000 Free Cash Flow 22,583 34,920 91,542 Dividends (10,021) (10,475) (15,544) Proceeds on Disposal - 250 887 Investment in new pubs (19,054) (41,666) (75,348) (6,492) (16,971) 1,537 Issue of new shares - 46 95 Share Buy Backs - - (22,711) (6,492
Slide 32: Swap Maturity Profile
Appendix F Swap Maturity Profile Swap Value From To Weighted Average % £400m 29 Jul 2012 12 Nov 2014 5.5% £400m 12 Nov 2014 31 Jul 2016 3.6% £400m 31 Jul 2016 31 Jul 2018 2.4% 32
Slide 33: Questions
The Kingfisher, Poynton The Kingfisher, Poynton Questions The Berg Drinks System at Poynton The Kingfisher, Poynton 33