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Interim Results 2006. Preliminary results 2005. David Thompson Chairman. 2. Interim results 2006. Strong first half results turnover and profit growth in each of our trading divisions 2. Increased operating margin despite significant cost pressures Earnings per share* up 10.0%

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slide2

Preliminary results 2005

David Thompson

Chairman

2

slide3

Interim results 2006

  • Strong first half results
      • turnover and profit growth in each of our trading divisions

2. Increased operating margin

      • despite significant cost pressures
  • Earnings per share* up 10.0%
      • strong growth in profit before tax
  • Dividend +10.0% to 14.52 pence per share
      • consistent with earnings growth, strong underlying cashflow

We remain confident in achieving a satisfactory out-turn for the year

* before exceptional items and adjusted for the impact of IFRS

3

slide4

Preliminary results 2005

Paul Inglett

Finance Director

4

slide5

Profit and loss account*

  • 20062005% change
  • Turnover £m 281.4 257.6 + 9.2
  • Operating profit £m 66.4 58.3 +13.9
  • Operating margin % 23.6 22.6 + 1.0
  • Profit before tax £m 40.2 35.6 +12.9
  • Earnings per share p 36.2 32.9 +10.0
  • Dividend per share p 14.52 13.20 +10.0

* before exceptional items and adjusted for the impact of IFRS

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slide6

Increased operating margin*

2006vs 2005Key drivers % %

Pathfinder Pubs 16.9 (0.6)

Union Pub Company 43.9 +1.6

WDB Brands 19.3 (0.8)

Central Costs (2.0) +0.1Group 23.6 +1.0

+ve flat buying in prices – food and drink - ve utilities +£2.5m- ve NMW +£1.0m- ve Sky +£0.4m

+ve higher proportion longer leases+ve synergies from acquisitions

- ve utilities +£0.5m - ve pricing pressure from further consolidation+ve benefits from acquisitions+ve higher proportion of tenanted profits

* before exceptional items and adjusted for the impact of IFRS

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slide7

Strong cashflow

20062005 £m£m% change

Cashflow from operating activities 99.2 57.6 + 72.2

Interest (21.0) (22.5)

Maintenance capex (14.0)(12.0)

Investment capex (36.8) (42.7)

Disposals/FT loans/other 14.1 11.1

Acquisitions (45.3) (129.1)

Dividends, shares bought/issued (22.3) (16.7)Net increase in debt (26.1) (154.3)

Free cashflow 64.2 23.1 +177.9

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slide8

Efficient financing structure

1. Net debt £m

Bank facility 153 • headroom of £112m

Securitisation 788• c70% of estate securitised

Loan notes 10

Cash in bank/securitisation (53)

898

2. Key financing ratios

Average interest rate <6.0%

% at fixed rate 88%

Interest cover* 3.0x

Net debt: EBITDA* 4.7x

Average debt maturity 15 yrs

* Proforma 12 months to March ‘06

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slide9

Financing capacity

  • 1. Interest
      • aim to maintain interest cover in range of 2.5x – 3.0x
  • 2. Impact on financing capacity
      • ability to finance pub acquisitions of up to £500m without recourse to equity
  • 3. Acquisition criteria
      • return above WACC
      • earnings enhancement
      • strategic fit

Flexibility to make acquisitions or further capital returns

9

slide10

Preliminary results 2005

Ralph Findlay

Chief Executive

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slide11

W&DB today

  • 1. Pub operator – 2,358 pubs
    • Pathfinder Pubs – 543* managed pubs
    • The Union Pub Company – 1,815* tenanted/leased pubs
    • situated across England and Wales
    • 95% community/neighbourhood estate, 95% freehold
  • 2. Brewer
    • leading ale brands
    • largest brewer of cask ale in the UK
  • 3. Vertically integrated business
    • clearly differentiated market position
    • consistent record of strong financial performance

* 93 pubs transferring to UPC in H2

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slide12

W&DB strategy

  • 1. Development of national, high quality pub estate
      • new build pubs/acquisition of existing pubs
      • pub refurbishment
      • predominantly community pubs
      • continued investment in people and skills
  • 2. Increase market share of WDB Brands’ beers
      • exploit benefits of integrated model
  • 3. Maintain a strong, efficient balance sheet
      • predominantly freehold ownership
      • long-term, low cost debt financing
      • gearing to reflect stable income, risks

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slide13

UPC in strong growth

86.4

  • 1. Growth through acquisition
    • 2005 - Burtonwood: 420 pubs
    • 2005 - Jennings: 128 pubs
    • 2006 - Celtic Inns: 63 pubs
  • 2. Organic growth
    • average profit per pub +4.4%
    • operating margin +1.6%
  • 3. Transfers from Pathfinder Pubs
    • 93 pubs transferring in H2

70.4

37.9

£m

29.8

Stable business, predictable cashflow

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slide14

Acquisition of Celtic Inns

  • 70 pubs
  • £43.1m acquisition cost
  • acquired 17 March 2006

Rose & Crown, Nether Stowey, Somerset

White Lion, Tenterden, Kent

  • EBITDA £4.5m
  • effective multiple 9.6x
  • predominantly freehold, community estate
  • situated South Wales and Southern England

The Cayo Arms Hotel, Cardiff

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slide15

Response to rising costs, competition

  • Rising costs – impact c£5k per pub p.a.
    • energy
    • labour
    • Sky TV
  • 2. Competitive pricing environment
    • value for money offers more prevalent in the on-trade
    • continued challenge from cut-price deals in supermarkets
  • Response of good tenants/lessees
    • manage price, mix and margin
    • actively manage other costs
    • develop the pub offer

Estate quality and tenant/operator relationships matter

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slide16

More business support (1)

  • 1. More tenants/lessees attending ‘The Skills Pool’
    • RAPPID (5 days)
    • NCPLH (1 day)
    • Drinks, Drunks, Rocks and Your Role
  • 2. Launch of UniOn - intranet
    • online ordering
    • marketing and promotional tools
    • training courses
    • supplier offers
  • 3. Preparation for the smoking ban
    • significant investment planned 2006/07

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slide17

Recognition

Social responsibility

Development

More business support (2)

17

2

slide18

Estate composition: year-end 2006

No. of pubs

  • 1. Community locals 226
    • Bostin’ Locals
    • Taverner’s Carveries
    • Traditional Locals
  • 2. Great food pubs 140
    • Service That Suits
    • Two for One
    • Quality Food Pubs
  • Pitcher & Piano 27
  • Town Centre Traders 50
  • Acquisitions/new builds 20
  • 463

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slide19

High quality segmented pub estate (1)

Bostin’ Locals

● Something for everyone ● They know me, I know them

● Easier than eating at home ● A great place to watch sport

Taverner’s Carvery

● A pub, not a restaurant ● Fresh food● A real deal ● Mum’s cooking on demand

Llangewydd Arms, Bridgend

Loom & Shuttle, Kidderminster

Two For One

● A budget deal ● No compromises, irresistible prices

● Well appointed pubs ● Great food, huge choice

  • Service That Suits
  • ● Restaurant meal at pub prices ● Everyday special treat
    • ● Menu choice and quality ● Personal service

College Farm, Watchfield

Ye Olde Saracen’s Head, Balsall Common

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slide20

High quality segmented pub estate (2)

Town Centre

●The gathering place ●A clean & safe venue

● Great food & service

Pitcher & Piano

●Cool, contemporary, city & party● To be conspicuous

● Premium food, drink & service ●True retail brand

Bell at Mill Hill

Richmond

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slide22

Acquisitions: delivering in 2006/07

No. of sites

Planning granted - 7

Planning submitted - 10

Allowance for refusals -(3)

Deals in legals - 3

Trading pubs - 3

Expected openings - 20

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slide23

Trading pub acquisitions

  • Bure Farm, Bicester
      • £1.8m investment
      • £21k AWT
      • 18% ROC
  • Boundary, South Normanton
      • £1.9m investment
      • £20k AWT
      • 15% ROC

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slide24

7.9

6.8

6.6

6.4

6.2

5.9

%

Increasing market share*

  • 1. All trade channels
      • WDB Brands has 7.6%of the UK ale market and growing
      • The UK beer market declined by c2% (last 12 months)
  • 2.Premium and standard ale
      • Premium ale performing strongerthan standard ale
      • Premium ale stronger in off-tradethan standard ale

15.5

12.6

11.1

6.5

%

5.8

5.6

24

*Source: industry estimates 12 months MAT data to March ‘06

slide26

Smoking ban: industry impact

  • Timing of ban- England June ‘07, Wales Dec ‘06?
  • 2. Winners and losers
    • - winners: well invested, well located pubs
    • - losers: pubs with little amenity, limited capacity for investment
  • 3. Positive action will mitigate impact-positive retailing vs defensive approach
  • - adapt to changing consumer profile

Avoid complacency: act early

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slide27

W&DB action

  • Ahead of the game
    • - c900 pubs sold over 5 years
    • - significant investment already completed
    • - all plans will be completed by June 2007
  • Positive retailing
    • - outdoor investment: gardens, patios, decor
    • - continued development of food offers, both managed and tenanted pubs
  • Co-ordinated activity
    • - cross-divisional smoking group
    • - deriving value from integrated model

Working fast, working smart, working together

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slide28

Defensive spend

  • Defensive spend is better than doing nothing ………
  • …….. but new customers will not be attracted

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slide31

Smoking ban: key points

Our pubs are well positioned

- >85% have gardens/outside trading areas - food is 30% of retail turnover and growing - we have already disposed of the ‘vulnerable’ pubs

2. We started investment plans early

- £5m invested in 250 Pathfinder schemes 2003-2005

- 20 smoke-free sites trading positively - £3m invested in 400 UPC schemes by September 2006

3. We have clear investment plans in place for 2006/07

- £5m on 300 Pathfinder Pubs outlets

- £7m on 1,050 Union Pub Company outlets

4. Group benefits from our business model

Our aim: neutralise the risks, maximise the opportunities

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slide32

Summary of interim results

  • 1. Strong interim results
      • effective implementation of organic development strategies
      • successful integration of acquisitions
  • 2. Strong balance sheet
      • prudently financed, with debt capacity
      • more flexible financing post securitisation
  • 3. Current trading
      • in line with expectations, recent LFL sales +2.5% in Pathfinder
      • pressure on discretionary spend, set to continue
      • we remain confident in achieving a satisfactory out-turn for the year

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Appendix 1Key financials

2006 2005*% change

Turnover £m 153.1 147.3 + 3.9

EBITDA £m 36.3 35.3 + 2.8

Operating profit £m 25.9 25.8 + 0.4 Operating margin % 16.9 17.5 (0.6)

* restated for reallocation of central overheads, changes to transfer pricing and impact of IFRS

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Appendix 2Key financials

20062005*% change

Turnover £m 86.4 70.4 +22.7EBITDA £m 42.8 34.2 +25.1

Operating profit £m 37.9 29.8 +27.2

Operating margin % 43.9 42.3 +1.6

* restated for reallocation of central overheads, changes to transfer pricing and impact of IFRS

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slide36

Appendix 3 Key financials

20062005*% change

Turnover £m 41.9 39.9 +5.0 EBITDA £m 11.6 11.1 +4.5 Operating profit £m 8.1 8.0 +1.3

Operating margin % 19.3 20.1 (0.8)

* restated for reallocation of central overheads, changes to transfer pricing and impact of IFRS

36

slide37

Appendix 4

Impact of IFRS restatement (1)

Profit and loss account

Interim Mar 05 Year to Sept 05

Profit Profit PBT Tax after tax PBT Tax after tax£m £m £m £m £m £m

UK GAAP 36.0 (11.1) 24.9 90.1 (26.5) 63.6

Pensions (0.5) 0.2 (0.3) (0.6) 0.2 (0.4)

Share based payments 0.1 (0.3) (0.2) 0.2 (1.8) (1.6)Pre-exceptional IFRS profit 35.6 (11.2) 24.4 89.7 (28.1) 61.6

Exceptionals under UK GAAP (3.4) 1.0 (2.4) (42.2) 12.0 (30.2)

Revaluation/other (1.7) - (1.7) (0.4) - (0.4)

Goodwill 3.6 - 3.6 7.1 - 7.1

Deferred tax - 0.4 0.4 - 1.0 1.0Exceptionals under IFRS (1.5) 1.4 (0.1) (35.5) 13.0 (22.5)

Post exceptional IFRS profit 34.1 (9.8) 24.3 54.2 (15.1) 39.1

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Appendix 5

Impact of IFRS restatement (2)

Balance sheet: net assets

As at Mar ’05 As at Sept ’05

£m £m £m £m

UK GAAP 704.3 758.5

Deferred tax (90.7) (89.9)

Pensions (45.8) (45.9)

Dividends 10.1 19.8

Revaluation 52.0 -

Goodwill 3.6 7.1

Share based payments 3.2 2.5 (67.6)(106.4)

IFRS636.7 652.1

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slide39

Appendix 6 Additional information and guidance

  • Average number of shares in H1 2006 77.3m
  • Number of shares in issue as at 26 May 2006 77.2m
  • Additional dilutive number of shares 0.6m
  • Full year2006
  • Forecast tax rate 30.0% - 30.5%
  • Capex forecast : Existing business £60m
  • : New builds/sites £25m
  • : Pub acquisitions £10m
  • £95m
  • Forecast disposal proceeds £20m+

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slide40

Appendix 7 Website addresses

Website addresses:www.pathfinderpubs.co.uk

www.wdbbrands.co.uk

www.theunionpubcompany.co.uk

For a pdf version of this presentation please visit our Group website on:

www.wdb.co.uk

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