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Whitbread the UK’s leading hospitality company

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  1. Whitbread the UK’s leading hospitality company

  2. John Banham chairman

  3. Today’s agenda • Interim results • Business review

  4. Whitbread todaythe UK’s leading hospitality company • Four years of good progress • Strong positions in growing markets • Scale c.10 million customers a month • Outperforming competitors • Good sales momentum

  5. Interim results • Good H1 results • Strong like-for-like sales, continuing • 10% growth in earnings • Acquisitions performing well • Increased dividend

  6. 1 No. Whitbread - the UK’s leading hospitality company in hotels in restaurants in health & fitness

  7. Good four-year performance • Sales growth • Earnings • Returns

  8. Total Whitbread 4.2 Compound sales growth H1 2004 vs H1 2000

  9. £m Double digit earnings growth* *PAT as published

  10. ROCE % YOY improvement in group ROCE(PBIT, pre-exceptionals and goodwill amortisation: year end assets)

  11. Good time for business review • Group has made good progress • Business is strong • New CEO • New top management team • Major opportunities for growth in scale and returns We are poised for the next chapter…

  12. David Richardson finance director

  13. Summary of 6 months to 2 September 2004 2004/5 2003/4 Δ% £m £m Sales 1,027.1 981.6 4.6 Operating profit 173.1 161.0 7.5 PBTA 151.6 138.9 9.1 PBT 147.4 134.7 9.4 EPS (adjusted)*35.31p 31.99p 10.4 Dividends 6.90p 6.15p 12.2 * Pre-exceptionals, pre-goodwill

  14. Premier Lodge*July 25 to September 2 £m Sales 15.4 Operating profit 4.5 Interest (3.1) PBT 1.4 Assets553 * Includes 19 pub restaurants

  15. Business results Sales growthProfit growth Total Like-for-like % % % Premier Travel Inn 24.2 n/a 28.2 excl.Premier Lodge 10.7 6.5 16.4 Marriott 0.9 4.8 1.4 Pub restaurants (0.6) 0.7 (9.2) High street restaurants 6.7 2.7 52.5 David Lloyd Leisure 9.3 4.0 11.0

  16. Business results Margins MAT ROCE 2004/5 2003/4 2004/5 2003/4 % % % % Premier Travel Inn 35.3 33.5 14.8 12.8 excl. Premier Lodge Marriott 18.8 18.7 6.2 6.1 Pub restaurants 15.9 17.4 10.1 11.0 High street restaurants 5.5 3.9 25.3 19.7 David Lloyd Leisure 24.1 23.7 9.7 9.4

  17. Premier Travel Inn • Strong like-for-like sales • Occupancy growth • Rate growth • Room expansion • Premier Lodge • Name change • Integration going well

  18. Marriott • Sales and profit growth • Occupancy growth • Rate recovery • 2003/4 includes £2.2m profit from Swallow • Courtyard Hotels included in H1. Sale expected • Returns below WACC • Outlook better

  19. Pub restaurants • Slower like-for-like sales growth • 1st half Beefeater conversions • Brewsters • Brewers Fayre working well and expanding • Numbers now strengthening • Second half better

  20. High street restaurants • Continued strong progress on profit • Pizza Hut, Costa, TGIF going well • 2nd half growing, but more slowly

  21. David Lloyd Leisure • Strong profit growth • Membership net gain • 4 UK clubs to open in 2005/6 • Netherlands, Belgium and Spain

  22. Cash flow6 months to September 2004 £m 2004/5 2003/4 Operating profit (pre exceptionals) 152 138 Depreciation/amortisation 68 62 Dividends received 4 4 Maintenance capex (including systems) (71) (71) Business free cash153 133 Investment in new sites (52) (37) Premier acquisition (548) - Divestment of sites/businesses 3 44 Business cash (444) 140 Interest (23) (26) Tax (20) (15) Dividends paid (48) (42) Working capital/non cash* (40) (21) Net cash (outflow)/inflow(575) 36 * Not analysed by business

  23. Cash flowbusiness split 2004/5 £m Premier Pub High st. Central MarriottTravel Inn rest. rest. DLL /other Operating profit 33 48 49 5 26 (9) Depreciation 21 13 14 7 10 3 Dividends - - - - - 4 Maintenance capex (14) (6) (35) (4) (8) (4) Business free cash40 55 28 8 28 (6) Investment - (14) (11) (7) (20) - Acquisition - (548) - - - - Divestment - - 3 - - - Business cash*40 (507) 21 1 8 (6) * Before int. tax dividends and working capital movement

  24. Exceptionals 2004/5 2003/4 £m £m Profit/loss on site disposals (0.3) (8.9) Interest - (3.3) Tax - 23.5 Exceptional costs(0.3) 11.3

  25. Capital expenditure Full year Full year H1 estimate 2003/4 £m £m £m Marriott 14 35-40 41 Premier Travel Inn* 20 40-50 37 Pub restaurants 46 75-80 61 High street restaurants 10 25-30 15 David Lloyd Leisure 32 60-65 59 Central/other 2 - 17 Total 124 235-265 230 Includes new site capital 52 105-130 78 * Excluding Premier Lodge capital

  26. Pointers for the full year • Business review • Courtyard by Marriott • Beefeater 1st/2nd half • Marriott Q1 2005/6 • Britvic IPO • IFRS

  27. Alan Parker chief executive

  28. The next chapter building on success

  29. Whitbread - the UK’s leading hospitality company • 10 million customer visits per month • Half UK adult population claims to have used a Whitbread brand last year* *Source: NOP Omnibus 2004

  30. Building on success • Planned £800 million realisation of assets • Return of surplus cash to shareholders • Faster growth in dividends • Strategic priority to grow return on capital • New site investment in high returning businesses • New Marriott management model • Pub restaurants brand consolidation • £30 million annualised cost savings programme • New top management team

  31. Commitment to improving shareholder returns • Investment in businesses capable of generating significant growth and economic profit • Release and return capital • Grow dividends ahead of earnings

  32. Investing for growth • £150-200m new site capital expenditure p.a. • Increased consumer focus to drive sales • International development on solid UK base • Continued focus on existing businesses

  33. Premier Travel Inn • Growth sector with potential • Clear sector leader post acquisition • Occupancy, market share and economic profit • Continued organic growth • 35,000 rooms by 2008

  34. Marriott • Unacceptably low ROCE • New management business model • Phased sale and manage back - up to 50% of Marriott assets • Achieving economic profit • Driven by market recovery & continued efficiencies

  35. David Lloyd Leisure • Leading market position • Good returns in mature sites • Growth potential • UK: 75 clubs by 2008 • International: Netherlands, Belgium, Spain

  36. Pub restaurants • Growth marketplace • Brand consolidation • Brewers Fayre • Integration of Brewsters (147 sites) • Target growth to 500 units by 2008 • Beefeater • Integration of Out & Out (31 sites) • Remodelling to be confirmed next year • Sale of some tail sites

  37. Costa Coffee • High return on capital • Strong organic growth • UK base for fast-paced international growth • UK: 50 sites per year to 500 by 2008 • Strong international interest:Middle and Far East

  38. High street restaurants • Organic growth potential • Pizza Hut • Grow to 800 units • TGI Friday’s • Menu and décor rejuvenation • Trial new store format

  39. Cost synergies • £30 million annual Better Ways of Working savings over 2 years £m Management structures 5 Finance 4 IT 2 HR 2 Marketing 2 Supply chain 4 Offices/other 5 Premier Travel Inn integration* 6 30 * Already announced

  40. People Restaurants Hotels Health & Fitness Procurement Process Property One Whitbread added value

  41. Planned realisation of assets • £800+ million over next two years • Marriott sale & manage back in 05/06 & 06/07 • Sale of Courtyard by Marriott hotels • Sale of London Chiswell Street site • Sale of German restaurants & hotel • Sale of tail end pub restaurants • Britvic IPO (23.75%)

  42. Use of proceeds • Return over half to shareholders • Method and amount determined as disposals effected • Reduce debt • Reduce pension deficit • Increase dividends progressively

  43. High performance • New top team: • HR - Angie Risley • Development (growth/property) - Desmond Taljaard • IT - Ben Wishart • Pub Restaurants - Phil Urban • Marriott - Patrick Dempsey • TGI Friday’s - Tim Hammond • Commercial (marketing/supply chain) - Paula Vennells • Finance • Communications • ‘No Limits’ culture change programme

  44. Building on success • Faster growth • Higher ROCE • Greater synergies • Improve shareholder returns

  45. Whitbread the UK’s leading hospitality company