Roger Carr. Chairman. 19 May 2004

Transcription

1 Roger Carr Chairman 19 May 2004

2 Karim Naffah Finance Director 19 May 2004

3 Financial Highlights Turnover 823m up 4% EBITDA 197m up 3% Operating profit 140m up 2% Profit before tax 88m down 5% Adjusted EPS* 10.0p up 16% Interim dividend per share 2.85p * Adjusted to exclude exceptional items comparative, proforma figures 3

4 Interim Results - Summary HY 04 HY 03* m m EBITDA % Operating Profit % Interest (52) (44) PBT % Tax (29) (30) Earnings % EPS 10.0p 8.6p % Average no. of shares 591m 734m Note: All numbers are stated pre-exceptional items * Proforma 4

5 Presentational Points to Note FRS 5 Turnover recorded net of coupons and staff discounts Sales comparative reduced by 4m no profit impact Treatment of Easter Straddles period end vs. entirely in H2 last year Like for likes quoted for 32 weeks Reporting to Debt Investors First public reporting Covers securitised estate from 13 November

6 Operating Performance HY 04 HY 03 m m Turnover Pubs & Bars % Restaurants % SCPD % % Operating Profit* Pubs & Bars % Restaurants % SCPD % Note: 2003 turnover restated on the adoption of the Amendment to FRS 5 * Before exceptional items 6

7 Key Operating Statistics* Food sales : up 6% Food mix 29.5% sales : up 0.4% points Outlet staff costs : constant at 24% of sales Retail staff productivity Contribution per staff hour held constant Support cost savings of 5m Net retail operating margin 17% *All figures MAB Retail; 2003 restated for FRS5 7

8 Operating Profit Movement 137m* m* H Trading Support Costs External Costs Easter H *Includes 1m EBIT from SCPD in both years 8

9 Retail Sales Growth 6% + 5.3%* 5% 4% + 3.4%* + 4.4% 3% 2% 1% 0% H H H UNINVESTED SAME OUTLET TOTAL SALES 84% of pubs +10% = 94% of pubs +6% = 100% of pubs Same outlet = uninvested + invested All comparatives restated for the amendment to FRS 5 * 32 weeks 9

10 Like-for-Like Sales H1 04 H2 03 Same Outlet (i.e. Invested + Uninvested) Residential + 6.4% + 3.3% High Street + 3.1% - 0.6% Total + 5.3% + 1.8% Uninvested Residential + 4.4% + 0.8% High Street + 1.3% - 3.0% Total + 3.4% - 0.1% H1 like for likes reflect wks 1-32 to include Easter in both periods. H2 like for likes reflect wks All figures restated for the amendment to FRS 5 10

11 Balancing Sales Growth & Margin H Uninvested LFL Sales + 3.4% Average Selling Price* c.- 3% Movement in Gross Margin (%) Movement in LFL Gross Profit ( ) -ve +ve *Food & Drink 11

12 H Expansionary Capital Locals Residential Pub Restaurants 8m 16m Drinks led Food led 3m 0m High Street City Centre Restaurants Note: UK only and excludes Hollywood Bowl at 2m 12

13 Performance by Segment Locals Residential Pub Restaurants Inc. ROI 16% Inc. ROI 14% Drinks led Food led Inc. ROI 14% Inc. ROI 9% High Street City Centre Restaurants Note: UK only excludes Hollywood Bowl Cumulative 1bn expansionary investment over the last 10 years 13

14 Net Cashflow (a) HY 04 m EBITDA 197 Working capital movement 44 Maintenance Capital Expenditure (48) Expansionary Capital Expenditure (29) Disposals 29 Additional pension contributions (40) Other items 2 Net Operating Cashflow

15 Net Cashflow (b) HY 04 m Net Operating Cashflow 155 Net interest paid (45) Tax paid (9) Normal Dividends Paid (29) Special Dividend (501) Securitisation Costs* (26) Other Items 1 Net cash flow ** (454) * Includes 4m operating exceptionals ** Before 11m of bond repayments 15

16 Financing Closing Net Debt 1.7bn Net Debt : EBITDA* 4.5x Book Gearing** 51% Interest Cover 2.7x Securitisation FCF/Debt Service 2.0x * Based on EBITDA for FY 2003 **Net Debt / (Net Assets + Net Debt) 16

17 Strong Cash Returns 12 months to 10 April 2004 m CROCCE m NOPAT EBIT Depreciation/Amortisation 102 EBITDA 380 Cash Tax (at 22% of EBIT)* (61) (61) Cash Return Average Net Operating Assets 3,450 3,450 Accumulated Depreciation 273 Revaluations (735) 10% (735) 8% Goodwill written off Cash Capital Employed 3,038 2,765 *Unleveraged tax rate (estimated at c. 26% for FY 2004) 17

18 Dividends Interim 2.85p Final 6.65p Total 9.5p Progressive policy to deliver real dividend growth 18

19 Summary Good performance in first half Refinancing successfully completed Emphasis on organic growth is bearing fruit Tougher sales comparatives in second half Focus on cash and high investment returns Progressive dividend policy Commitment to most value creative use of cash 19

20 Tim Clarke Chief Executive 19 May 2004

21 Operational Delivery of Strategy Profitable Sales Growth Focus on best value experience Growing food sales and capturing drinks market share Efficiency gains from growing volumes Strategy on course and building momentum 21

22 Five Key Levers Consumer value proposition Optimal combination of price, volume and mix Cost efficiencies from unit and corporate scale Evolving consumer appeal of brands and formats Proactive estate development Drive earnings growth, cash returns and property appreciation 22

23 Estate Repositioning to Growth Segments Sales = 0.9bn* Sales = 1.5bn Machines 7% Accommodation & Other 2% Food 11% Food 29% 1994 Beer 69% H1 04 MAT Beer 35% Soft Drinks and Wines & Spirits 11% Machines 5% Accommodation & Other 6% Soft Drinks and Wines & Spirits 25% * Managed pub sales Integrated, informal food and drink offers 23

24 Strong Sales Performance 6% 5.8% 5% 4.8% 4.8% 4% 4.0% 3.9% 3% 2.8% 2% 1% 0% Adjusted for FRS 5 First 16 weeks wks First 16 weeks wks First 16 weeks wks Uninvested LFL Same Outlet LFL Total Sales 24

25 Gaining Share Among Managed Pubs MAB % Drink Share of Managed Market* % points *Beer, cider, soft drinks, FABs and spirits ** Period to 1 May 2004 Weeks 10-31** Weeks 25-31** Movement in Volume % Share Movement in Value % Share Source: AC Neilsen Pubtrack 25

26 Focus on Profitable Sales Growth Volume Growth key to driving higher asset productivity Unit scale economies of high take managed houses Average Weekly Takes + 7% to 14.7k per week Regulatory cost inflation exceeding consumer price inflation Volume growth from recruiting customers and increasing frequency Pursuing best combination of volume, price and mix enhancement Total food and drink volumes up 8% Average prices down 3% Profits growth best delivered by cash generative volume growth 26

27 Draught Beer Premiumisation Consumers trading up to Stella ( 0 to 100k barrels p.a.) Driving value on standard products 14% price reduction, 32% volume increase in Carlsberg Widening Range Introduction of Scot Co beers Good, better, best pricing architecture 27

28 Wines Proprietary brands in each main grape variety Own label sourced direct from the growers Silverland (own label) from 0% to 10% of wine volume Improving Consumer Choice 28

29 Soft Drinks Range extensions to meet changing customer tastes Fresh fruit juices available alongside packaged products Offer better value for money Harvester fresh juice servings doubled Product innovation to capture new market trends 29

30 Revenue and Product Yield Management Targeting market growth segments for volume gains Food volumes up 9% Soft drinks volumes up 10% Wines & spirits volumes up 13% Managing product range and pricing for mix margin benefits Beer volumes up 5%, Draught lager volumes up 10% PPL s : volume flat, PPS s : volume down 9% Increasing purchasing power 4% reduction on 60% of COGS re-negotiated To Maximise Gross Profits PPL = Premium Package Lager PPS = Premium Packaged Spirits 30

31 Cost Efficiencies: Staff Productivity Improvements in scheduling and base rosters Minimising hours required to service incremental volumes Kitchen work methods Sales training and product knowledge Trialling incentives link to sales performance 31

32 Residential Areas: 70% of Estate Integrated Food and Drink Offers Same outlet like for likes + 6.4% * Un-invested like for likes + 4.4% * Drinks Volume + 7.0% Drinks Price - 2.0% Food Volume + 9.0% Food Price Flat Growth driven by 5 key brands * 32 weeks 32

33 Residential Areas: Customer Demand Factors Real growth in eating out market Fast growing ancillary sales Wine Soft drinks Coffee Widening competitive gap driving beer market share Estate and brand strategy focused on opportunity 33

34 Pub Restaurants Toby Carvery, Washington Vintage Inns, Cunning Man, Reading Harvester, Barnet 34

35 Pub Restaurants: Evolving the Offers 35

36 Residential Pubs: Conversion Urban Residential Areas White Hart, Nottingham Sizzling Pub Co Mid-Market Suburbs Affluent London Villages Royal Oak, Halesowen Ember Inns Prince of Wales, Notting Hill Metropolitan Professionals 36

37 Residential Pubs: Sales Development 37

38 High Street/City Centre Market: 30% of Estate Circuit Venues Late evening Pubs for office staff, shoppers, tourists. Day time / early evening Central London Same outlet like for likes + 3.1% * Univested like for likes + 1.3% * Drinks volumes +10.0% Drinks prices -6.0% Rebasing price to generate volume gains * 32 weeks 38

39 High Street/City Centre Markets Draught Beer Range in London estate Goose pubs 39

40 Estate Development: Site by Site Approach Development of pipeline Tactical use of maintenance capex to evolve/refurb New build site acquisitions Expansion of Business Franchise model Extract value from non trading property Disposal 40

41 Acquisitions and Conversions Garden Gate, Hampstead Metropolitan Professionals Golden Retriever, Bracknell Vintage Inn 41

42 Evolution through Maintenance Capex Routine annual spend Royal Oak, Halesowen Ember Regular, small investment to maintain fabric of building and offer Brand / format refresh To keep offer current & ensure pub trades to full potential Every 4 7 years, in line with maintenance cycle All within depreciation Snuff Mill, Bristol Harvester 42

43 Business Franchises A partnership to maximise the trading potential of mid-sized pubs 52 properties at end of H1 Franchisee benefit: Accesses managed systems & infrastructure Favourable supply terms MAB benefit: share in trading upside through turnover fee Retain property appreciation Plans for c. 50 more over the next 6 months 43

44 Social and Regulatory Issues Licensing Act and the Guidelines Alcohol Harm Reduction Strategy Smoking in Public Places Gaming Regulation Select Committee Inquiry Well positioned to meet the changes 44

45 Market Growth Trends Consumer expenditure m CAGR (Actual) 1982 to Total (Nominal) 7.4%* Total (Real) 1.8% % 3.8% Eating Out* Beer Wine & Cider Spirits 5.8% Drinking Out 0.2% *including soft drinks Source: Office for National Statistics Lifestyles driving structural acceleration of market growth 45

46 Differentiated Strategy for Growth Quality estate targeting growth segments Integrated food and drink formats Scale advantages enable customer value proposition Power of retail marketing Focus on sustainable sales growth Driving earnings, cash returns and freehold appreciation Operating and financing strategy to reward shareholders 46

47 Questions & Answers 19 May 2004