Whitbread the UK

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Whitbread the UKs leading hospitality company
2
John Banham

• chairman

3
Todays agenda

• Interim results
• Business review

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Whitbread todaythe UKs 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

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Interim results

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

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Whitbread - the UKs leading hospitality company
in hotels in restaurants in health fitness
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Good four-year performance

• Sales growth
• Earnings
• Returns

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Compound sales growth H1 2004 vs H1 2000
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Double digit earnings growth
PAT as published
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YOY improvement in group ROCE(PBIT,
pre-exceptionals and goodwill amortisation year
end assets)
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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

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David Richardson

• finance director

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Summary of 6 months to 2 September 2004

• 2004/5 2003/4 ?
• 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
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Premier LodgeJuly 25 to September 2

• m
• Sales 15.4
• Operating profit 4.5
• Interest (3.1)
• PBT 1.4
• Assets 553

Includes 19 pub restaurants
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Business results

• Sales growth Profit 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

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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

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Premier Travel Inn

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

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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

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David Lloyd Leisure

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

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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
cash 153 133 Investment in new
sites (52) (37) Premier acquisition (548) - Divest
ment 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
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Cash flowbusiness split 2004/5

• m Premier Pub High st. Central
• Marriott Travel 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 cash 40 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
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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

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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
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Pointers for the full year

• Business review
• Courtyard by Marriott
• Beefeater 1st/2nd half
• Marriott Q1 2005/6
• Britvic IPO
• IFRS

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(No Transcript)
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Alan Parker

• chief executive

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The next chapter

• building on success

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Whitbread - the UKs 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
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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

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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

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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

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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

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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

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David Lloyd Leisure

• Leading market position
• Good returns in mature sites
• Growth potential
• UK 75 clubs by 2008
• International Netherlands, Belgium, Spain

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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

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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 interestMiddle and Far East

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High street restaurants

• Organic growth potential
• Pizza Hut
• Grow to 800 units
• TGI Fridays
• Menu and décor rejuvenation
• Trial new store format

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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
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One Whitbread added value
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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)

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Use of proceeds

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

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High performance

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

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Building on success

• Faster growth
• Higher ROCE
• Greater synergies
• Improve shareholder returns

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Whitbread the UKs leading hospitality company