Mitchells & Butlers Plc · LSE:MAB
Mitchells & Butlers — H1 2015 Earnings Presentation
34 slides from Mitchells & Butlers's earnings presentation, 2015
Slide 1: Half Year Results 2015
Slide 2: Financial Review H1 2015
Slide 3: Income statement
Income statement (Pre exceptional items) Revenue Operating costs H1 2014 H1 2015 +9.5% Operating profit Interest +4.1% Profit before tax +4.2% Earnings per share Operating margin +5.9% -0.8 ppts mitechen & Butlers Financial Review 2015
Slide 4: Like-for-like sales growth
Like-for-like sales growth mitechet sa & Butlers ee ee 8-28 Week 1-28 Week 1-32 Food 2.8% 5.2% 2.9% 2.5% Drink 0.4% 0.57 0.4% 0.3% Total 1.7% 1.8% 1.7% 1.4% cial Review 2015
Slide 5: Like-for-like volume and spend trends
Like-for-like volume and spend trends 8.0% 4.0% 2.0% 0.0% (2.0%) (4.0%) (6.0%) Food 8.0% 6.0% 4.0% 2.0% FYIO FYTT FYI2 FYI Volume FYI4 (20%) (4.0%) HIS (6.0%) mitechen & Butlers Drink 1 @ o. 4 a . “@ e 4 7 a ) J _% be FYIO FYT1 FYI2 FYI3. FYI4 HI1S @ Price/Spend
Slide 6: EBIT movement
EBIT movement +£3m (£3m) vtech — & Butlers + £6m (£5m) +£5m T T T T T T H114 Orchid Direct cost Like-for-like FY14 new FY15 new H115 £147m inflation* trading openings openings £153m
Slide 7: Group cash flow
Group cash flow EBITDA Working capital / non cash items Pension deficit contributions Cash flow from operations Maintenance & infrastructure capex Net interest paid Tax Free cash flow before exceptional items Expansionary capex Orchid acquisition and integration Other Net cash flow Mandatory bond am
Slide 8: Group net debt
Group net debt mechan & Butlers AD 0 en 0 AD 0 Securitisation debt! Liquidity facility Cash & other DL 27 d Securitised net debt (1,949) (1,986) (2,002) Cash 32 28 ) Group net debt (1,917) (1,958) (1,721) Net Debt : EBITDA? t é f Notes: 1) Includes currency derivatives hedging balance sheet debt 2)
Slide 9: Capital expenditure and returns
mitechen Capital expenditure and returns cela? Maintenance and infrastructure Expansionary Total capital expenditure - Increased maintenance capex due to Orchid, remodels and IT infrastructure - Expect c65 new sites and conversions in the current year - Returns include first six Orchid conversions 9
Slide 10: Orchid
Orchid mitehette2) & Butlers - Head office closed April 2015 realising annual cost savings of £6m - Conversion plan in progress - 21 converted sites now open (14 at half year) - Expect to complete c.40 in FY15 - Remaining conversions in FY16 - Initial post-conversion returns strong and in line with
Slide 11: Key messages
mitechen Key messages & Butlers - Continued growth in food volumes - Margins reflect Orchid and volume growth - Orchid integration on track - Significant IT projects completed - Adjusted earnings per share growth of 5.9%
Slide 12: ; Va a
; Va a 4 =AWHE MERLIN r i L
Slide 13: Our Good to Great Objectives
Our Good to Great Objectives rarer & Butlers - Like-for-like sales growth ahead of the market - Robust margins - Attractive investment returns - Lower net debt / EBITDA - Dividend reinstated Business Review 2015
Slide 14: Consumers are better off
Consumers are better off - Consumer confidence growing close to pre-recession levels - Real income growth forecast for 2015 and 2016 - Recent ASDA Income Trackers show increase of over 9% 6.0% 5.0% 40% 3.0% 2.0% 1.0% 0.0% (1.0%) (2.0%) (3.0%) (4.0%) RHS: Consumer confidence MB LHS: Consumer spending
Slide 15: Challenging recent months in our market
i i MitchetteC) Challenging recent months in our market ele Peach Tracker LFL sales growth — 3 month rolling average - Peach tracker LFLs: FY 2014 FY 2015 - Significant slowdown since Dec 2014 aah - March 2015: -0.3% - Average 1.7% since Oct 2014 - Restaurants outperforming pubs and pub-restaurants
Slide 16: Dynamic and demanding market conditions
Dynamic and demanding market conditions mitenents@) & Butlers - Consumers continue to carry a 180% 9 r 12% significant amount of personal debt - Consumers saving more - GfK Savings Index 8 points higher than LY in March - Catch up of previously delayed larger purchases - GfK Major Purchase Index 16
Slide 17: Our key market spaces
Our key market spaces Mitchells ©) — = & Butlers mie & Butlers
Slide 18: Delivering the growth plan
Delivering the growth plan mcrtts€) FY 2010 i FY 2016 - Growth capital in attractive market segments: - Organic growth - Single-site acquisitions - Orchid conversion plan
Slide 19: Implementing the growth plan - H1
Implementing the growth plan - H1 michelin & Butlers SPECIAL j Investment directed towards attractive market spaces: - 9 acquisitions UPMARKET SOCIAL FAMILY - 8 Orchid conversions - 8 conversions Optimising for cash generation: - | conversion - 6 Orchid conversions yr NM eyeRyoay HEARTLAND SOCIAL
Slide 20: Business Review
Business R
Slide 21: Hardwired guest behaviour: consumer expectations
“Every day | expect more for Top teams delivering excellent my hard-earned money” guest experiences & great value “| want the flexibility to eat & Offer extension for all day eating drink where & when it suits me” and drinking occasions reputation Business Review 2015
Slide 22: Hardwired guest behaviour
. . nate Hardwired guest behaviour & Butlers “Every day | expect more for Top teams delivering excellent my hard-earned money” guest experiences & great value
Slide 23: Top teams delivering excellent guest experiences & great value
Top teams delivering excellent guest experiences & great value - Guest-focused teams: - Staff turnover at new low of 77% - New and improved apprenticeship programme - Ways of working to focus on guests: - EPOS system rollout completed - Good to Great drives better results - Value equation tailored b
Slide 24: Hardwired guest behaviour
, . sétechen Hardwired guest behaviour & Butlers “| want the flexibility to eat & drink where & when it suits me” Offer extension for all day eating and drinking occasions Business Rev
Slide 25: Offer extension for all day eating and drinking occasions
Offer extension for all day eating and mitchetts@) i ng 3 zs & Butlers drinking occasions 250 r 1,200 - Average week: “000 200 - 230,000 breakfasts - 320,000 coffees 150 4 ~ - Significant profit generation, 600 with some % margin impact m4 400 - Wide range of offers across brands and formats 50 4 co
Slide 26: Offer extension for all day eating and drinking occasions
. ; G Offer extension for all day eating and Mitchells ©) drinking occasions COOKED: CONTINENTAL BREAKFAST "£4.99 Business Review 2015
Slide 27: Hardwired guest behaviour
- . wittchet Hardwired guest behaviour & Butlers “| look for reliable brands that Brands with a strong reputation meet my needs” for clear & consistent benefits Business Review 20
Slide 28: Brands with a strong reputation for clear & consistent benefits
Brands with a strong reputation for clear mitchetts@) z a & Butlers & consistent benefits - Market growth continues to come from the branded sector - Adding value through our brands: - Reliability - Consistency - Fresh food - Outstanding value Business Rev
Slide 29: Halfway House and Toby Carvery
HALFWAY HOUSE AWT £22k fA TOBY | AWT £36k
Slide 30: Hobby Horse
HOBBY HORSE AWT £17k
Slide 31: Food growth momentum
Food growth momentum - Continued strong food volume growth - Occasion development and disciplined pricing - Net promoter score improved by 2ppts to 65% nittchetD & Butlers FY 2013 FY 2014 FY 2015 MAT like-for-like volumes: [ll Food [Ml Drink Business Reviev
Slide 32: Like-for-like sales
Like-for-like sales wit e & Butlers FY 2013 FY 2014 FY 2015 4.0% > 3.0% 4 2.0% + - Closing relative gap to Peach tracker 0.0% H1 H2 H1 H2 H1 (MN Gaptomarket [EI Average monthly Peach tracker [J MAB Business Re
Slide 33: Outlook
Outlook mitehette2) & Butlers - Dynamic and demanding market conditions - Focus on value, flexibility and brands - Measured and targeted initiatives to win market share - Strengthening food volumes and like-for-like sales - Well-placed to grow further shareholder value
Slide 34: Questions