Whitbread - the leisure business

1
Whitbread - the leisure business
October 2001
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John Banham

• Chairman

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Whitbread - the leisure business
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David Richardson

• Finance Director

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Whitbread

• Successful demerger of Pubs and Bars
• Significant progress in future Whitbread

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Pubs and Bars

• Completed May 2001
• Headline 1,625m
• Shareholder gain 487m
• Gain taken directly to reserves
• Share consolidation

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Operating profit
6 months to 1 September 2001 vs 6 months to 2
September 2000

• 
  m
  
• Marriott/Swallow 42.4 5.7
• Travel Inn 31.5 9.4
• Pub restaurants 44.2 10.0
• High Street restaurants 3.1 19.2
• Sports, health fitness 16.0 24.0
• future Whitbread divisions 137.2 10.1
• Pubs and Bars 30.5
• Beer and other drinks 11.3
• Central Services, etc. (7.0)
• Operating profit 172.0 (25.7)

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Segmental analysis future Whitbread

• 
  m
  m
• 
  6 months to September 2001
  6 months to September 2000
  
  Sales EBITDA Profit Assets
  Sales EBITDA Profit
  Assets
• Hotels
• Marriott/Swallow 204 63 42 1,243 200 58 40 1,165
• Travel Inn 88 39 32 449 80 36 29 398
• Restaurants
• Pub restaurants 299 58 44 803 282 54 40 784
• High St restaurants 237 12 3 168 220 10 3 156
• Sports, health fitness 80 26 16 442 66 22 13 416
  
• Total future Whitbread 908 197 137 3,105 848 180
  125 2,919

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Proforma future Whitbread

• 
  m
  m
• 
  6 months
  6 months Growth
• 
  to 1 September
  to 1 September
• 
  2001/2
  2000/1
• Sales 908 848 7.1
• Operating profit Hotels 74 69 7.3
• Restaurants 47 43 10.5
• David Lloyd Leisure 16 13 24.0
• Central costs (7) (6) (20.6)
• future Whitbread operating profit 130 119 9.4
• Estimated interest (30) (28) (7.5)
• Estimated profit before tax 100 91 10.0

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Analysis of Whitbread cash flow
6 months to 1 September 2001

• 
  m
  m m
• 
  
  Continuing Past
• 
  Total
  Whitbread Whitbread
• Cash flow from operations 180.2 149.9 30.3
• Dividends received 0.2 0.2
• Interest costs etc. (34.9) (33.0) (1.9)
• Taxation (36.7) (18.0) (18.7)
• Capital expenditure (162.0) (147.1) (14.9)
• Acquisitions disposals 462.1 462.1
• Dividends (113.3) (31.3) (82.0)
• Net cash inflow/outflow 295.6 (79.3) 374.9

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Exceptional costs

• 
  
  m
• Disposal of Pubs and Bars
• transaction costs 14.4 restructuring
  costs 5.9
• Loss on sale of business 3.7
• Loss on sale of fixed assets 0.1
• 24.1

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Deferred tax

• 
  
  m
• Liability on FRS19 basis at 3 March 2001 165.4
• Transferred with Pubs and Bars (38.7)
• 126.7
• Deferred taxes provided in half year 11.0
• Deferred taxes as at 1 September 2001 137.7

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Future capex
Continuing businesses estimates

• m May
  estimate 1st half 2nd half Full
  year 2002/3
• Marriott 75-90 50 20 70 45-60
• Travel Inn 70-80 25 35 60 65-80
• Restaurants 90-110 45 30 75 45-65
• David Lloyd Leisure 50-60 25 30 55 45-85
• Other 10-25 5 5 10 5-15
• 295-365 150 120 270 200-300

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Confirmation

• Standard information for half year Hotels
  Restaurants Sports, health fitness

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Whitbread - the leisure business
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David Thomas

• Chief Executive

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Whitbreads value agenda

• Strong first-half trading
• Potential of new business is clear
• Good progress on value levers
• Action now to enhance future value

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Like-for-like sales growth
By major brand

• Marriott 2.3
• Travel Inn 3.0
• Brewers Fayre 4.2
• Beefeater 5.0
• David Lloyd Leisure 20.0

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Like-for-like sales growth
By reporting segment

• Marriott/Swallow 1.3
• Travel Inn 3.0
• Pub restaurants 4.5
• High Street restaurants 2.7
• Sports, health fitness 18.2

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Business hotels
Market outperformance by Revpar
London
Provinces

5.2
3.5
UK hotel market
- 4.3
Marriott
9.4

• Marriott yield premium up from 17 to 20

Hotels
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The London effect

• London Provinces Total
• Occupancy 77.4 74.6 75.4 - 1.7
• Achieved room rate 118.50 69.87 83.34 3.3
• Yield 91.74 52.15 62.83 1.0
• Operating profit 8.9 36.6 20.6

Hotels
Core Marriott
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Marriott
Profit per room improvement
March 2001
6.3
August 2001
k
Hotels
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Swallow proves its value
First tranche

• 10 conversions (1,469 rooms)
• Occupancy 1.3
• Achieved room rate 8.4
• Yield 10.4

Hotels
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Travel Inn
Brand performance

• Like-for-like sales 3.0
• Like-for-like occupancy 86.0
• Rooms growth 14,186 to 15,106
• 100 guarantee
• Internet bookings

Hotels
25
Pub restaurants
Like-for-like sales

• By segment 4.5
• Brewers Fayre 4.2
• Beefeater 5.0

Restaurants
Excluding Travel Inn
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Brewers Fayre

• Total sales 6.8
• Like-for-like sales 4.2
• Operating margin growth 16.8 to 18.5
• Operating profit 17.6

Restaurants
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Beefeater

• Comparable Beefeater Sales 6.0
• Operating profit 7.4
• Total Beefeater Sales 5.0
• Operating profit 8.5
• Out and Out 27 sites
• Average sales growth of 15

Restaurants
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High Street restaurants growth

• Sales 8.0
• UK like-for-like sales Pizza Hut
  6.9 Costa 6.2 Café Rouge 5.3 TGI
  Fridays 2.8 Bella Pasta 0.9 Total
  UK 4.4
• Germany 7.3
• Total like-for-like sales 2.7
• Operating profit 19.2

Restaurants
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Improving asset quality

• Disposal of tail sites
• Finalise High Street brand review

Restaurants
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High Street brand review

• Pelican brands to be sold(75 Café Rouge, 65
  Bella Pasta, 8 Mamma Amalfi, 5 others total
  153)
• Flexible mechanism manage outside Restaurants
  division
• Whitbread team to focus on major brands and
  value drivers

Restaurants
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Sports, health fitness

• Sales 21
• Like-for-like sales 18
• Operating profit 24

Sports, health fitness
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UK health fitness operators
Like-for-like sales
6 months to 30 June
6 months to 30 April
6 months to 30 June
3 months to 30 September
6 months to 30 June
6 months to 31 August

Sports, health fitness
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David Lloyd brand
Market outperformance

• Membership growth 12 to 248,000
• Non-fee income 13
• Membership retention 78 MAT

Sports, health fitness
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David Lloyd Leisure
Improving club returns

• Developing clubs year-on-year profit growth
  4.5m (250)
• New clubs - reduced time to maturity
• Pre-opening members average 1,780

Sports, health fitness
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Like-for-like sales
September/October

• Marriott - 4.7
• London -24.6
• Provinces 3.9
• Travel Inn 5.6
• Brewers Fayre 7.9
• Beefeater 5.2
• David Lloyd Leisure 16.7

September only
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Trading outlook
Management action

• Continue driving returns from existing assets
• Reduce discretionary and overhead costs
• Flexibility to defer 150m capex primarily on
  new site expansion

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future Whitbread
Prospects

• Strength of major brands
• Strong indications of market outperformance
• Good progress on value levers
• Prompt response to new circumstances

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future Whitbread