60448 Tal Wb Interims web version - Whitbread/media/Files/W... · T.G.I.Friday’s 12.6 Other exceptional items: Exceptional pension credit 10.0 Interest on debenture redemption (12.5)

Whitbread PLC

Interim results 2007/08

Anthony Habgood

Chairman

Christopher Rogers

Finance Director

SummaryH1 2007/08

H1 2007/08 H1 2006/07 % change

PBT from continuing £99.4m £87.7m 13.3%operations, pre exceptionals

EPS pre exceptionals 44.25p 30.72p 44.0%

Proposed interim dividend 9.10p 8.10p 12.3%

Summary – profit & lossH1 2007/08

£m H1 2007/08 H1 2006/07 % change

Revenue 605.8 623.6 (2.9)%

Profit from operations 130.0 120.0 8.3%

Central costs (12.9) (11.4) (13.2)%

Interest (17.7) (20.9) 15.3%

PBT from continuing 99.4 87.7 13.3%operations, pre exceptionals

Summary – profit & loss continuedH1 2007/08

£m H1 2007/08 H1 2006/07

PBT from continuing 99.4 87.7operations, pre exceptionals

Taxation (31.8) (29.9)

Net profit from continuing 67.6 57.8operations

Discontinued operations 19.0 16.6

Total profit pre exceptionals 86.6 74.4

Exceptionals 412.8 61.6

Profit for the year 499.4 136.0

Treatment of businesses within segmental analysis

• Premier Inn/Restaurants

• Re-classification of adjacency fee and breakfast income fromPremier Inn to Restaurants (detail in appendix)

• David Lloyd Leisure

• Profit disclosed within discontinued operations for both H1 2007/08and H1 2006/07

• T.G.I.Friday’s

• Profit from H1 2006/07 reclassified within discontinued operations

Revenue by business segment

* After restatement for breakfast sales amounting to £8.4m

£m H1 2007/08 H1 2006/07 % change

Premier Inn 264.1 230.8* 14.4%

Restaurants: retained estate 229.5 222.5* 3.1%

Costa 98.1 81.0 21.1%

Less: inter-segment revenue (1.5) (1.5)

Sales from Continuing Whitbread 590.2 532.8 10.8%

Pub Restaurants: disposal estate - 82.5

Other 15.6 8.3 88.0%

Revenue from continuing 605.8 623.6 (2.9)%operations

% H1 2007/08 H1 2006/07

Premier Inn 10.9 7.0

Restaurants 1.5 (0.8)

Costa 6.8 6.0

Total 6.3 3.3

Like-for-like sales

£m H1 2007/08 H1 2006/07 % change

Premier Inn - UK 95.6 78.6* 21.6%

Premier Inn – overseas (0.9) -

Total Premier Inn 94.7 78.6 20.5%

Restaurants 28.7 35.7* (19.6)%

Costa - UK 7.6 6.0 26.7%

Costa – overseas (1.0) (0.3) (233.3)%

Total Costa 6.6 5.7 15.8%

Profits from operations 130.0 120.0 8.3%

Profit by business segment

* After restatement for adjacency fee and breakfast income amounting to £5.7m

£m H1 2007/08 H1 2006/07 % change

Revenue 605.8 623.6 (2.9)%

Profit from operations 130.0 120.0 8.3%

Central costs (12.9) (11.4) (13.2)%

Interest (17.7) (20.9) 15.3%

PBT from continuing 99.4 87.7 13.3%operations, pre exceptionals

Summary – profit & loss continuedH1 2007/08

£m H1 2007/08 H1 2006/07

Interest on borrowings (24.4) (21.0)

Interest on deposits 2.7 0.6

Pension credit/(charge) 2.7 (1.0)

Other 1.3 0.5

Net interest charge (17.7) (20.9)

Continuing Interest charge

£m H1 2007/08 H1 2006/07

PBT from continuing 99.4 87.7operations, pre exceptionals

Taxation (31.8) (29.9)

Net profit from continuing 67.6 57.8operations

Discontinued operations 19.0 16.6

Exceptionals 412.8 61.6

Profit for the year 499.4 136.0

Summary – profit & loss continuedH1 2007/8

£m H1 2007/08

Business disposals:

David Lloyd Leisure 384.1

T.G.I.Friday’s 12.6

Other exceptional items:

Exceptional pension credit 10.0

Interest on debenture redemption (12.5)

Other (1.2)

Corporation Tax on exceptionals (1.2)

Deferred Tax on exceptionals 21.0

Total net exceptional profit 412.8

Exceptional items

£m H1 2007/08 H1 2006/07

EBITDA 182 168

Working capital movements (15) 68

Cashflow from operations 167 236

Cash capital expenditure (134) (125)

Disposal of fixed assets (2) 455

Interest, tax and dividends paid (82) (72)

Interest and dividends received 4 1

Business cashflows (47) 495

Cash flowGroup year-on-year by items

£m H1 2007/08 H1 2006/07

Business cashflows (47) 495

Additional pension payments (50) (50)

Disposal/(acquisition) of businesses 982 249

Special dividend, share buybacks (22) (392)

Other 6 7

869 309

Non-cash share buyback accrual (270) -

Decrease in net debt 599 309

Cash flow – continuedGroup year-on-year by items

£m H1 2007/08 H1 2006/07

Premier Inn 57 63

Restaurants 40 27

Costa 16 11

Corporate/Discontinued 21 24

Total 134 125

CAPEX for the full year to be c.£300m

Capital expenditure

Balance sheet review update

• Commitment to increasing leverage remains

• Process begun with on-market buyback programme which has reached£174m as of 15 October

• Timing and appropriateness of asset-backed bond issues remains unclear

• £300m debentures repaid in September – facilities now stand at £980m

• On market buyback to continue; shareholder authority to be refreshedlater this year

Other financial items

• Pension deficit decreases from £196m at the 2006/07 year end to £25m• £50m cash injection in August

• Change in discount rates

• Effective tax rate on profit from continuing operations of 32.0%

• Premier Inn rebranding commenced; exceptional revenue cost of £13m,of which £10m in 2007/08

• Tulip Inns integration underway; small negative impact this financial year

• Food cost inflation more noticeable

Financial summary

• Sales from Continuing Whitbread up 10.8%

• Like-for-like sales up by 6.3%

• PBT from continuing operations, pre exceptionals up 13.3% to £99.4m

• EPS pre exceptionals up 44%

• Interim dividend up 12.3% to 9.10p

• Re-leveraging of the Group begun

Alan Parker

Chief Executive

Highlights in the first half 2007/08

• Continuing positive trends across all businesses• Premier Inn – market out performance

Sales up 14.4%

• Restaurants – 4th quarter of like-for-like growth

Profit per house up 23%

• Costa – outgrowing peers, net 118 new stores opened

Total now 825

• Successful disposal of David Lloyd Leisure for £925m

• Announced share buyback with £174m achieved to date

Premier InnInterim results 2007/08

£m 2007/08 2006/07 % change

Revenue 264.1 230.8 14.4%

Profit 94.7 78.6 20.5%

Like-for-like sales 10.9%

• Like-for-like occupancy up 1.3% points to 82.1%

• RevPar up 7.6% across the business to £41.34

• Operating margins improved by 1.8% points to 35.9%

• The Tulip Inn business acquisition – 2,000 rooms over the next 24 months

• On track to exceed full year UK room expansion target (3,000+)

Source: Hotstats by TRI Hospitality Consulting using a sampling approach

Premier InnThe hotel market

1st March to 31st August 2007

Average occupancy levels %

FY FY HY 2005/06 2006/07 2007/08

Occupancy 0.0 1.1 1.5

Average rate 5.2 4.5 5.6

Food & beverage 0.8 0.7 0.9

Extensions 1.1 1.9 2.9

Total like-for-like 7.1 8.2 10.9

Expansion 19.6 8.5 3.5

Total sales growth 26.7 16.7 14.4

Premier InnGrowth breakdown %

Premier InnRe-brand

• Stronger growth is set to continue for the next five years

Premier InnBritish domestic hotel market – demand forecast

Source: bdrc

Room nights

E E

Source: TRI Hospitality Consulting

• Premier Inn is the UK’s biggest hotel company but only has 5% of thetotal number of UK hotel rooms (710,000)

• Branded budget hotel rooms account for only 13% of the market

Premier InnPremier Inn as a proportion of total hotel supply

25%23%13%Branded budget sector bynumber of rooms (%)

1.1 million155,00091,865Branded budget sector(rooms)

4.4 million662,000710,062Total hotel market (rooms)

USFranceUK

Premier InnBudget hotel market comparison

Source: TRI Hospitality Consulting, 2007

Premier InnInternational expansion – filling the gap for value hotels in selected markets

Picture of Dubai – to be added/consideredPicture of Dubai – to be added/considered

• Gulf JV¹, target of30 hotels and some5,000 rooms

• Dubai opening on trackfor Spring 2008

• Indian JV², plan is toopen 80 hotels and some12,000 rooms

• Evaluating opportunitiesin other countries

¹ With Emirates ² With Emaar – MGF, one of India’s leading real estate developers

¹ Revenue and profit decline due to disposal of 235 restaurants in 2006/07 for £497m on 28/07/2006

RestaurantsInterim results 2007/08

£m 2007/08 2006/07 % change

Revenue¹ 229.5 305.0 (24.8%)

Profit¹ 28.7 35.7 (19.6%)

Like-for-like sales 1.5%

• 4 consecutive quarters of positive like-for-like sales growth

• Continuing revenue up 3.1%

• Profit per house up by an average of 23%

• Good progress made on remodelling sites• Beefeater completed• Focus on rest of the estate

% Food sales discount: indexed vs 2005/06

RestaurantsManaging for efficiency

%

BeefeaterContinued improvement

• Beefeater remodellingcomplete

• Market leading awareness

• H1 underlying profitper house up 47%

• Like-for-like coversup 10.2%

• Continued menudevelopment

• H2 11 Beefeatersconverted from Brewers Fayre andfirst new restaurant to open in six years

Market leading awareness

Fayre and

• 5 successful new openings

• Breakfast offering improved– total covers up 10%,like-for-like H1 on H1

• Almost half new rooms onWhitbread’s land bank

RestaurantsThe co-located model

£m 2007/08 2006/07 % change

Revenue 98.1 81.0 21.1%

Profit 6.6 5.7 15.8%

Like-for-like sales 6.8%

• Fastest growing and now largest coffee shop chain in the UK

• Profit up 15.8% led by UK profit up 26.7%

• UK margins improved by 0.5% points to 8.1%

• International investment for the future

CostaInterim results 2007/08

• Food offeringimproved,capture ratecontinues toimprove

• All our foodis GM andhydrogenatedfat free

CostaImproved food offering

CostaNew store layoutNew store layout

Source: bdrc

07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00

Sales £ Hours

Sales per hour 2007-08 Target schedules 2006-07 Average schedule

CostaScope to improve productivity

Employee hours

• A more studied approach to labour scheduling

CostaKey areas targeted for growth

• Significant scope for further UK growth supported by demographicanalysis

• Where Costa not yet represented

• Where Costa is under-represented

• Significant opportunities in new evolving markets

• Retail parks

• Travel gateways

• Supermarkets

• Target of 1,000 stores (700 UK, 300 internationally) by Spring 2008

CostaTesco agreement

CostaPoints of differentiation

Whitbread - well positioned for sustainable growth

• Portfolio: Now a focused hospitality company with leading brandsoperating in large scale value markets

• Premier Inn• UK market leader, consistent like for like growth , outperforming peers

• Significant further UK growth potential

• Excellent long term scope in international markets, filling a gap for quality budget hotels

• Restaurants• Strong underlying profit increase, significant scope to further improve returns

• Beefeater success highlights scale of improvement achievable post remodelling

• Maximising Premier Inn competitive advantage

• Costa• UK market leader with significant further opening opportunities

• Improving food capture rate

• Excellent international growth opportunities

Whitbread PLC

Interim results 2007/08

Appendix

Standard InformationPremier Inn HY 2007/08 HY 2006/07

HY HY FY

Headline Financials Hotel Details 2007/08 2006/07 2006/07

Sales £m 264.1 230.8 Number of Rooms

- Managed 16,046 15,570 16,306

PBITDA £m 113.9 95.1 - Whitbread Pub Restaurants 16,024 14,508 14,937

- Joint Venture 281 281 281

PBIT £m 94.7 78.6 - Franchise & Management Contract 1,082 1,079 1,079

33,433 31,438 32,603

Net Assets £m 1,262.2 1,179.7 Number of Hotels

- Managed 177 175 176

Cash Capital Expenditure £m 57.3 63.1 - Whitbread Restaurants 287 272 279

- Joint Venture 1 1 1

Key Operating Measures - Franchise & Management Contract 28 28 28

493 476 484

ARR £ £50.76 £48.03

Occupancy % 81.4% 80.0%

Yield £ £41.34 £38.42

Like for Like Sales Growth % 10.9% 7.0%

IBFC Margin % 55.9% 54.2%

Operating Margin % 35.9% 34.1%

PBIT Per Room £ 2,949 2,596

ROCE (MAT) % 13.7% 12.0%

Standard InformationRestaurants

HY HY FY

Headline financials Outlet details 2007/08 2006/07 2006/07

- Beefeater 134 133 134

Sales £m 229.5 305.0 - Brewers Fayre 268 262 265

Pub Restaurants 402 395 399

PBITDA £m 41.3 50.0

Numbers with adjacent Premier Travel Inns

PBIT £m 28.7 35.7

- Beefeater 93 90 93

Net Assets £m 595.6 559.8 - Brewers Fayre 194 182 186

Capital expenditure £m 39.6 27.3

Key operating measures

Like-for-like sales % 1.5% (0.8)%

Operating margin % 12.5% 11.7%

ROCE (MAT) % 7.6% 13.2%

HY 2007/08 HY 2006/07*

* includes results from disposal estate and a write back of depreciation of £2.9m on the 235 assets

held for sale. ROCE based on period end net assets which excludes disposal estate.

Standard InformationPremier Inn and Restaurants

Impact of Breakfast and Adjacency Fee in H1 2006/07

£m

Sales as reported 239.2 296.6

Breakfast sales (8.4) 8.4

Restated sales 230.8 305.0

Operating profit as reported 84.3 30.0

Breakfast profit (2.8) 2.8

Adjancency fee (2.9) 2.9

Restated operating profit 78.6 35.7

Premier Inn Restaurants

Standard InformationCosta Coffee

HY HY FY

Headline financials Outlet details 2007/08 2006/07 2006/07

UK Equity 459 382 416

Sales £m 98.1 81.0 UK Franchise 144 96 116

International 222 147 175

PBITDA £m 12.7 10.7 Costa Coffee 825 625 707

PBIT £m 6.6 5.7

Net Assets £m 70.6 57.3

Capital expenditure £m 16.1 11.2

Key operating measures

Like-for-like sales % 6.8% 6.0%

Operating margin % 6.7% 7.0%

ROCE (MAT) % 26.5% 25.4%

HY 2007/08 HY 2006/07

General

Like-for-like sales Period over period change in total sales, less sales generated bybusinesses acquired or disposed of and retail outlets opened or closedduring 2006/07 and 2007/08

Return on Capital Profit before interest, tax and exceptional items (less tax, interest andexceptional items on joint ventures and associates) divided by periodend net assets

Premier Inn

Achieved Room Rate (ARR) Hotel accommodation income divided by the number of roomsoccupied by guests

Occupancy Number of hotel bedrooms occupied by guests expressed as apercentage of the number of bedrooms available in the period

Yield Also known as "revenue per available room" this hotel measure isachieved by multiplying the ARR by the occupancy rate

Income before fixed costs Hotel operating profit before directly attributable fixed costs (such asrent, rates, insurance, etc) and central costs divided by hotel sales

Profit per room Hotel operating profit (after allocating central costs) divided by thenumber of rooms available)