Mitchells & Butlers plc · LSE:MAB
Mitchells & Butlers — FY2014 Earnings Presentation
39 slides from Mitchells & Butlers's earnings presentation, 2014
Slide 1: Full Year Results 2014
Full Year Results 2014 Bob Ivell Chairman
Slide 2: Financial Review
Financial Review 2014 Tim Jones Finance Director
Slide 3: Income statement
Income statement (Pre exceptional items) FY 2014 FY 2013 £m £m Revenue 1,970 1,895 +4.0% Operating costs (1,657) (1,585) Operating profit 313 310 +1.0% Interest (141) (139) Profit before tax 172 171 - Earnings per share 32.6p 32.2p +1.2% Operating margin 15.9% 16.4% -0.5 ppts Financial Review 2014 —
Slide 4: Like-for-like sales growth
Like-for-like sales growth Week 1-28 Week 29-52 Week 1-52 Week 1-8 FY 2014 FY 2014 FY 2014 FY 2015 Food 0.9% 0.5% 0.7% 3.3% Drink 1.3% (0.4%) 0.5% 1.4% Total 1.1% 0.1 0.6% 2.4% Financial Review 2014 —4—
Slide 5: Like-for-like volume and price trends
Like-for-like volume and price trends Food Drink 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% (2.0%) (2.0%) (4.0%) (4.0%) (6.0%) FY10 FY11 FY12 FY13 FY14 (6.0%) FY10 FY11 FY12 FY13 FY14 Volume Price/Spend Financial Review 2014 —5—
Slide 6: EBIT movement
EBIT movement +£3m (£1m) (£2m) +£16m (£5m) +£6m (£14m) Remodel FY13 Direct cost Like-for-like FY13 new FY14 new FY14 Orchid closure IT projects £310m inflation* trading openings openings £313m costs *Direct costs include wages and salaries, utilities and goods for resale Financial Review 2014 —6—
Slide 7: Interest charge
Interest charge Sept 2014 Sept 2013 £m £m Finance costs (132) (130) Finance revenue 1 2 Net pensions finance charge (10) (11) Total interest (141) (139) - Net pensions finance charge now reported in adjusted earnings - Expected charge for FY 2015 is £16m Financial Review 2014 —7—
Slide 8: Group cash flow
Group cash flow FY 2014 FY 2013 £m £m EBITDA 422 420 Working capital / non cash items 18 (9) Pension deficit contributions (49) (40) Cash flow from operations 391 371 Maintenance & infrastructure capex (120) (100) Net interest paid (135) (126) Tax and other (34) (32) Free cash flow before exceptiona
Slide 9: Group net debt
Group net debt Sept 2014 Sept 2013 £m £m Securitisation debt1 (2,066) (2,124) Liquidity facility (147) - Cash & other 227 101 Securitised net debt (1,986) (2,023) Cash 28 264 Group net debt (1,958) (1,759) Net Debt : EBITDA2 4.5x 4.2x Notes: 1) Includes currency derivatives hedging balance sheet deb
Slide 10: Property
Property - Freehold and long leasehold properties valued annually - 20% of sites inspected per annum - Short leaseholds assessed for impairment - Total value of £3.7bn (FY 2013 £3.4bn) £m (pre tax) FY 2014 FY 2013 Income statement Revaluation (25) (12) Other impairment (11) (17) Balance sheet Revalu
Slide 11: Capital expenditure
Capital expenditure FY 2014 FY 2013 £m £m Maintenance and infrastructure 120 100 Expansionary 42 28 Total capital expenditure 162 128 - Increased investment in key infrastructure projects - Acceleration of successful remodel programme - Expect increased expansionary spend in FY 2015 to c£65m, includ
Slide 12: New EPOS Systems
New EPOS Systems - Live in more than 1,300 sites - Rollout due to complete by Summer 2015 - Productivity benefits shown in terms of hours per pub per week Full service Part table service/ Bar service only restaurants part bar service (eg, Nicholson’s, Heartland) (eg. Harvester, Miller & Carter) (eg.
Slide 13: Expansionary capital expenditure and number of sites
Expansionary capital expenditure FY 2014 FY 2011-14 Investmenta 25 No.of Sites EBITDA ROI Freehold 20 £27m 8 13% acquisitions Number of sites 15 Leasehold £15m 15 18% acquisitions 10 Conversions £3m 8 16% 5 Total £45m 31 16% 0 H1 H2 H1 H2 FY 13 FY 14 Notes: a: Spend relating to new and converted sit
Slide 14: Orchid integration - conversions and synergies
Orchid integration - conversions and synergies 35.0 25.0 15.0 Synergies Closure costs FY 2015 No closure Synergies FY 2016 costs FY 2017 Acquired Conversions Conversions Conversions - Excludes like-for-like growth - Conversions completed and synergies realised throughout FY 2015 and FY 2016 - Closur
Slide 15: Key messages
Key messages - Total sales growth of 4% based on turnaround in volumes - EPS increase of 1.2% - Increased investment laying foundations for future growth - Purchase and integration of Orchid - Acceleration of remodels - Replacement of key IT systems - Increased new site openings Financial Review 201
Slide 16: Business Review
Business Review 2014 Alistair Darby Chief Executive
Slide 17: Good to Great - our objectives
Good to Great - our objectives - Like-for-like sales growth ahead of the market - Robust margins - Attractive investment returns - Lower net debt / EBITDA - Dividend reinstated Business Review 2014 —17—
Slide 18: Grow our share of the eating & drinking out market
Opportunity Grow our share of the eating & drinking out market by leveraging our brands & scale to deliver great value guest experiences Mitchells & Butlers: c3% share of a £78bn market Business Review 2014 —18—
Slide 19: What will Mitchells & Butlers look like in FY16?
What will Mitchells & Butlers look like in FY16?
Slide 20: Five key market spaces
Five key market spaces PEECCIIA SSP ALL ALL CIIA OC SSO FFA AM KEETT MIILLY RK Y UP U MA PM AR AALL HH CII OOC EEA RRT SS TLL A AAN ND DAAYY D Y D RRY EEVVEE Business Review 2014 —20—
Slide 21: Our growth plan
Our growth plan SPECIAL Expansion: - Strong brand propositions - Attractive ROI UPMARKET SOCIAL FAMILY - Growing guest demand - Availability of sites Optimisation: - Cash generative businesses - Capital for amenity improvement EVERYDAY HEARTLAND SOCIAL Business Review 2014 —21—
Slide 22: Delivering the growth plan
Delivering the growth plan FY 2010 FY 2016 - Food-led brands - Premium occasions 70% 57% Sales - Orchid conversions 43% - Growth capital in 30% attractive market segments Business Review 2014 —22—
Slide 23: Hardwired guest behaviour
Hardwired guest behaviour “Every day I expect more for Top teams delivering excellent my hard-earned money” guest experiences & great value “I want the flexibility to eat & Offer extension for all day eating drink where & when it suits me” and drinking occasions “I look for reliable brands that Bran
Slide 24: Capitalising on these opportunities
Capitalising on these opportunities Top teams delivering excellent guest experiences & great value Exceptional people Offer extension for all day eating and drinking occasions Remodels Brands with a strong reputation for clear & consistent benefits Evolving brands Growth in attractive market segment
Slide 25: Exceptional people
Exceptional people - Good to Great culture - Blue Sky - Staff turnover at historical low of 78% Business Review 2014 —25—
Slide 26: Exceptional people: Calverley Arms
Exceptional people: Calverley Arms - Record-breaking year - Making the most of the sunshine ‘‘ofOnthepossibly the hottest two days year so far…we have rarely experienced such a friendly, hardworking group of staff… We were blown away by these people ’’ - FY 2014: - Sales growth +14.8% - Record-break
Slide 27: More time for guests and people
More time for guests and people - Blue Sky - EPOS - Getting to the heart of the issue - Greater speed - More time for people - More time for guests Business Review 2014 —27—
Slide 28: Remodels: profitable guest impact
Remodels: profitable guest impact - Substantive improvement of guest offer - Attractive ROIs - Heartland investment through reallocation of existing capital No. of Capex per EBITDA remodels site ROI % FY13 97 £182k >30% FY14 174 £202k >30% FY15 c200 Business Review 2014 —28—
Slide 29: Evolving brands: Toby Carvery
Evolving brands: Toby Carvery Top teams delivering excellent guest Market-leading NPS, clear guest experiences & great value promise: ‘Home of the Roast’ Offer extension for all day eating Breakfast ‘the Toby way’ in strong growth and drinking occasions >60k breakfasts per week Brands with a strong
Slide 30: Evolving brands: Toby Carvery
Evolving brands: Toby Carvery Business Review 2014 —30—
Slide 31: Evolving brands: Harvester
Evolving brands: Harvester Top teams delivering excellent guest Great value for families and experiences & great value friends £9.99 meal deal Offer extension for all day eating Strong breakfast offer. Bright and and drinking occasions modern environment Brands with a strong reputation Fresh salad o
Slide 32: Evolving brands: Harvester
Evolving brands: Harvester - Brand identity reflecting the informal, contemporary dining environment - Focus on freshness, quality, generosity and value Business Review 2014 —32—
Slide 33: Evolving brands: Harvester
Evolving brands: Harvester - Bright, modern and up to date feel with a warm, relaxed environment - Suitable for people looking for great value from their everyday dining occasions Business Review 2014 —33—
Slide 34: Evolving brands: All Bar One
Evolving brands: All Bar One Top teams delivering excellent guest Stylish bars for professionals experiences & great value NPS +6 ppts Offer extension for all day eating New locations and drinking occasions Earlier opening Offer evolution: sharing plates, wine Brands with a strong reputation & cockt
Slide 35: Evolving brands: All Bar One
Evolving brands: All Bar One INSIDE FRONT FOLD INSIDE BACK Brunch, together Small bites, big flavour Available until 4pm Available from noon B R e a K Fa s T sh A r i NG pL At e s str aW Ber r ies, eGGs roya le 7.00 Boost Breakfast (V) 6.50 BlueBer r ies, Ba na na Toasted english muffin Grilled mush
Slide 36: Our brands building momentum
Our brands building momentum - Turnaround in volume trajectory 2.0% FY 2013 FY 2014 in FY 2014 1.0% - Net promoter score improved by 4ppts to 63% 0.0% (1.0%) (2.0%) (3.0%) (4.0%) (5.0%) MAT like-for-like volumes: Food Drink (6.0%) Business Review 2014 —36—
Slide 37: Transforming earnings: Orchid
Transforming earnings: Orchid - Strong team - Solid performance - Substantive opportunities for Toby Carvery, Harvester and Miller & Carter conversions - Mutual knowledge transfer: carvery expertise, branding, All Inns, PKB, playbarns - Integration going to plan Business Review 2014 —37—
Slide 38: Expansion in attractive segments
Expansion in attractive segments - Investment prioritised: - All Bar One - Harvester - Miller & Carter - Toby Carvery - 23 new openings and 8 conversions in FY 2014 - Expansion brands: nationwide capacity of close to 1,200 outlets (current outlets: 455) Business Review 2014 —38—
Slide 39: Summary
Summary - Business gathering momentum: - Exceptional people - Investment in remodels and infrastructure - Evolving brands and offers - Strengthening volumes and NPS - Growth through Orchid and new sites - Well-placed to deliver increasing shareholder value. Business Review 2014 —39—