Mitchells & Butlers plc · LSE:MAB
Mitchells & Butlers — FY2009 Earnings Presentation
35 slides from Mitchells & Butlers's earnings presentation, Nov 26, 2009
Slide 1: Preliminary Results – 26 November 2009
Jeremy Townsend Finance Director P li i Preliminary Results R lt – 26 N November b 2009
Slide 2: Key Messages
K M Key Messages Good like-for-like sales growth Abnormal levels of cost inflation Strong focus on cost management Continued debt reduction Challenging economic environment Robust R b t performance. f Positioned P iti d well. ll 2
Slide 3: Financial Highlights
Fi Financial i l Highlights Hi hli ht 52 weeks ended 26 September 2009 Growth Revenue £1,958m 2.6% EBITDA* £428m (10.3)% Operating profit profit* £300m (12 5)% (12.5)% Net Interest* £166m 0.6% Profit before tax* £134m (23.9)% EPS* 23 6 23.6p (23 9)% (23.9)% St Strong sales l growth th impacted i t d
Slide 4: Exceptional Items & Other Adjustments
E Exceptional ti l Items It & Other Oth Adjustments Adj t t £m Operating Profit Loss on swap closure (95) Less amounts charged to prior periods 40 (55) Property valuation adjustments (123) Loss on property disposals (8) E Exceptional ti l pension i credit dit 44 Finance charge from pensions (6) Inte
Slide 5: Like-for-Like Sales Growth
Lik f Lik Sales Like-for-Like S l Growth G th 3.2% 1.6% 1.0% FY 08 FY 09 1st 8 weeks FY 10 I Increasing i like-for-like lik f lik sales l growth th 5
Slide 6: Like-for-Like Sales Growth
Lik f Lik Sales Like-for-Like S l Growth G th % FY09 FY09 FY09 FY10 H1* H2** Total 8 weeks Food 2.5% 4.1% 3.1% 5.9% Drinks 1.7% 2.0% 1.8% 2.0% Other (8.8%) (8.4%) (8.7%) (2.7%) Total 1.2% 2.1% 1.6% 3.2% G d growth Good th in i food f d and d drink di k • 33 weeks to include the entire Easter period
Slide 7: Operating Performance
O Operating ti Performance P f FY09 FY08 £ £m £ £m Revenue Pubs & Bars 958 954 0.4% Restaurants 999 939 6.4% Retail 1957 1893 3.4% SCPD 1 15 1,958 1,908 2.6% Operating Profit* Pubs & Bars 159 176 (9.7)% Restaurants 141 156 (9.6%) Retail 300 332 (9.6%) SCPD - 11 300 343 (12.5)% * Before exceptional i
Slide 8: Key Operating Statistics
K O Key Operating ti StStatistics ti ti Same outlet food sales up 3.1% Same outlet drink sales upp 1.8% Gross margin down 1.5% points Cash gross margin up 1.3% Outlet staff costs 24.3% of sales Retail operating margin down 2.2% points I Improving i trajectory t j t on margins i Note: all figures rel
Slide 9: Retail Operating Profit Movement
R t il Operating Retail O ti Profit P fit Movement M t +15 Total acquired (8) sites (30) Disposals Regulatory Costs +15 Trading £332m* (24) FY08 Food & Energy £300m* FY09 Good trading performance offset by inflationary costs * Before exceptional items and other adjustments 9
Slide 10: Outlook for FY10 Costs
O tl k for Outlook f FY10 C Costs t Food and drinks inflation continues Further dutyy increases expected p £20m additional regulatory costs Energy costs decrease by around £10m Target £20m of efficiency gains I fl ti Inflationary costs t lower l than th previous i years 10
Slide 11: FY09 Capital Expenditure
FY09 Capital C it l Expenditure E dit Focus on maintenance £86m spent p on maintenance capex p £36m of expansionary capex ROI on last two years investments at 13% Total capex in FY10 estimated at £140m G Good returns on capex 11
Slide 12: Cash Flow (a)
C h Fl Cash Flow (a) ( ) FY09 £m EBIT 300 Depreciation & amortisation 128 EBITDA 428 Working capital / non cash items 22 Maintenance capex (86) £(129)m E Expansionary i capex (43) Disposals 72 Additional pension contributions (24) Operating Cash Flow after Net Capex* 369 * Before exceptional items 1
Slide 13: Cash Flow (b)
C h Fl Cash Flow (b) FY09 £m Operating cash flow after net capex 369 Net interest paid (160) Issue of share capital 4 Net Cash Flow* 213 Exceptional cash flow items (93) Tax credits 21 C ti i strong Continuing t operating ti cash h flows fl * Before exceptional items 13
Slide 14: Group Debt and Outstanding Facilities
G Group Debt D bt and d Outstanding O t t di Facilities F iliti Sept 09 Sept 08 Feb 08 £ £m £ £m £ £m Securitisation debt (2,319) (2,361) (2,391) Cash / other 102 140 76 Unsecured drawings (383) (514) (595) Net debt ((2,600)) ((2,735)) ((2,910)) Unsecured facility £550m £600m £700m Headroom +£167m +
Slide 15: Balance Sheet
B l Balance Sh Sheett Net debt : EBITDA 6.1x Book ggearing* g 72% Interest cover** 1.8x Fixed charge cover*** 2.0x IAS 19 pension deficit £130m Property value £4.5bn B l Balance sheet h t underpins d i operating ti performance f EBITDA is before exceptional items and other adjustments * Net debt / (
Slide 16: Summary
Summary Challenging economic conditions Increasing g MAB like-for-like sales g growth Significant cost pressures but decreasing next year Strong cash flows with net debt decreasing Focus on maintaining amenity in whole estate Continuing operational improvements generating competitive advantage Well
Slide 17: Adam Fowle, Chief Executive – Preliminary Results
Adam Fowle Chief Executive P li i Preliminary Results R lt – 26 N November b 2009
Slide 18: Mitchells & Butlers Performance
Mit h ll & Butlers Mitchells B tl Performance P f Trading improved through FY09 Value and volume strategy delivering in recession FY10 started well Mit h ll & B Mitchells Butlers tl iin a strong t position iti P f Performing i well ll in i challenging h ll i markets k t 18
Slide 19: Improving H2 Performance
I Improving i H2 P Performance f H1 H2 Lik f lik sales Like-for-like l 1 2% 1.2% 2 1% 2.1% Change in operating margin % (3.2)% pts (1.1)% pts Change in Retail EBIT (16.8)% (2.4)% P f Performance maintained i t i d into i t FY10 19
Slide 20: Like-for-Like Sales by Segment
Lik f Lik Sales Like-for-Like S l by b Segment S t H1 09* H2 09** FY09 FY10 (8 wks) Residential 2.0% 3.3% 2.5% 4.4% High Street 0.3% (1.0)% (0.2)% Flat Total 1.2% 2.1% 1.6% 3.2% G Growing i like-for-like lik f lik trajectory t j t * Wks 1-33 to include the entire Easter period ** Wks 34-52 to exclud
Slide 21: Drivers of Residential Growth
Di Drivers off Residential R id ti l Growth G th Strong performance driven by main brands Proven customer appeal pp with: - Good quality, value-for-money food - Extensive quality drinks range - Consistent & efficient service - High amenity levels A ffocus on d driving i i cash h gross margin i 21
Slide 22: High Street Market Conditions
Hi h Street High St t Market M k t Conditions C diti London in growth Late night g business trending g towards flat Polarisation on the high street - Youth unemployment impact on drinks focussed pubs - Demand for value food continues to grow E l iti food Exploiting f d led l d growth th opportunitie
Slide 23: Food Value Growth vs Market
F d Value Food V l Growth G th vs Market M k t 10% 8% 6% wth (%) MAB like-for-like value 4% d Value Grow 2% 0% -2% Total Market* Market -4% 4% Food -6% Pub market* -8% -10% 10% Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 O Outperformance f widening in Q4 Q Source: CREST data, the NPD Group and C
Slide 24: Beer Market Volume Outperformance
B Beer M Market k tVVolume l O Outperformance t f MAT percentage change in volume 2.0% age change iin volume 0.0% -2.0% MAB* -4.0% MAT percenta -6.0% -8.0% On-Trade M -10.0% 10 0% Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 C ti i large Continuing l market k t share h gains i *Same outlet like-
Slide 25: Investment in Amenity
I Investment t t in i Amenity A it Total capital invested of £122m 1 260 projects < £40k completed 1,260 575 larger projects > £40k supporting growth C Customer preferences f h l di help direct iinvestment Effective Eff ti use off capex driven di by b customer t demands d d 25
Slide 26: Strategic Priorities
St t i Priorities Strategic P i iti Exploiting long term growth of the eating out market Enhancing shareholder value by - growing profits at the unit level - exploiting l iti ththe growth th potential t ti l off MAB b brands d Supporting S ti value l creation ti with ith operational ti l capability
Slide 27: New Channels: Market Position
N New Ch Channels: l M Market k tPPosition iti City and Value Suburban Co ntr Country Key driver Price Quality of visit Stay at Pub and Alternatives home Restaurant Full table Service Efficiency service Focussing business on customer groups 27
Slide 28: New Channels Metrics
N New Ch Channels l Metrics M ti City and Value Suburban Co ntr Country Food spend per £4.76 £7.35 £9.94 head* Food volumes 1,150 2,050 1,050 (meals)** Avg drinks price* £1.82 £1.94 £2.54 Customer price Higher Higher/Lower Lower sensitivity D i i nett operating Driving ti margins i * incl VAT ** Per
Slide 29: Underpinning Operating Margins
U d Underpinning i i Operating O ti Margins M i Increasing purchasing scale - 574m drinks - 129m meals A focus on efficient operations - Productivity - Stock & Waste management - Overhead O h d A ffocus on iimproving i nett operating ti margins i 29
Slide 30: Continuous Operational Development
C ti Continuous O Operational ti l Development D l t Detailed customer insight: 635,000 feedback forms Kitchen Skills Academy & 2 food development centres Over 1,400 NVQs undertaken in one year S ff cost ratio Staff i maintained i i d iin llast 5 years d despite i - £50m of employment cost pressures
Slide 31: Current Trading Update
C Current tTTrading di Update U d t First 8 weeks: 3.2% growth Residential sales up 4 4.4% 4% High Street sales flat “O h ” sales “Other” l iimproving i Net margins recovering I Improved d currentt trading t di 31
Slide 32: Likelihood of Eating Out in Next Months
Lik lih d off Eating Likelihood E ti Out O t in i Next N t 6 Months M th 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% 30% Feb Mar Apr May Jun Jul Aug Sep Oct More than before Less than before Net Likelihood to Eat Out Improved consumer confidence f Source: Company 32
Slide 33: Outlook
O tl k Outlook First half - Eating and drinking out under pressure - Cost outlook improved - Consumer C confidence fid h has stabilised bili d Second half - Low visibility of post election consumer environment Second S d half h lf outlook tl k uncertain t i 33
Slide 34: Conclusion
C Conclusion l i Best brands underpinned by best locations Robust trading with relatively low ticket spend Strong market share gains Operational O ti l focus f is i continuing ti i tto deliver d li sales l and d improving net margins Mit h ll & Butlers Mitchells B tl well ll positioned iti d 34
Slide 35: Questions & Answers
Questions & Answers P li i Preliminary Results R lt – 26 N November b 2009