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 Preliminary Results – 26 November 2009
Slide 2: Key Messages
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 performance. Positioned well. 2
Slide 3: Financial Highlights
Financial Highlights 52 weeks ended 26 September 2009 Growth Revenue £1,958m 2.6% EBITDA* £428m (10.3)% Operating profit* £300m (12.5)% Net Interest* £166m 0.6% Profit before tax* £134m (23.9)% EPS* 23.6p (23.9)% Strong sales growth impacted by cost pressures * Before exceptional items and other adj
Slide 4: Exceptional Items & Other Adjustments
Exceptional Items & Other Adjustments £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) Exceptional pension credit 44 Finance charge from pensions (6) Interest on tax credits 4 Exceptional i
Slide 5: Like-for-Like Sales Growth
Like-for-Like Sales Growth 3.2% 1.6% 1.0% FY 08 FY 09 1st 8 weeks FY 10 Increasing like-for-like sales growth 5
Slide 6: Like-for-Like Sales Growth
Like-for-Like Sales Growth % 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% Good growth in food and drink • 33 weeks to include the entire Easter period ** Week 34-52 6
Slide 7: Operating Performance
Operating Performance 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 items and othe
Slide 8: Key Operating Statistics
Key Operating Statistics Same outlet food sales up 3.1% Same outlet drink sales up 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 Improving trajectory on margins Note: all figures relate to Retail 8
Slide 9: Retail Operating Profit Movement
Retail Operating Profit Movement +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
Outlook for FY10 Costs Food and drinks inflation continues Further duty increases expected £20m additional regulatory costs Energy costs decrease by around £10m Target £20m of efficiency gains Inflationary costs lower than previous years 10
Slide 11: FY09 Capital Expenditure
FY09 Capital Expenditure Focus on maintenance £86m spent on maintenance capex £36m of expansionary capex ROI on last two years investments at 13% Total capex in FY10 estimated at £140m Good returns on capex 11
Slide 12: Cash Flow (a)
Cash Flow (a) FY09 £m EBIT 300 Depreciation & amortisation 128 EBITDA 428 Working capital / non cash items 22 Maintenance capex (86) £(129)m Expansionary capex (43) Disposals 72 Additional pension contributions (24) Operating Cash Flow after Net Capex* 369 * Before exceptional items 12
Slide 13: Cash Flow (b)
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 Continuing strong operating cash flows * Before exceptional items 13
Slide 14: Group Debt and Outstanding Facilities
Group Debt and Outstanding Facilities 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 +£86m +£105m Net debt £135m lower 14
Slide 15: Balance Sheet
Balance Sheet Net debt : EBITDA 6.1x Book gearing* 72% Interest cover** 1.8x Fixed charge cover*** 2.0x IAS 19 pension deficit £130m Property value £4.5bn Balance sheet underpins operating performance EBITDA is before exceptional items and other adjustments * Net debt / (net assets + net debt) ** Ex
Slide 16: Summary
Summary Challenging economic conditions Increasing MAB like-for-like sales 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 posi
Slide 17: Adam Fowle, Chief Executive
Adam Fowle Chief Executive Preliminary Results – 26 November 2009
Slide 18: Mitchells & Butlers Performance
Mitchells & Butlers Performance Trading improved through FY09 Value and volume strategy delivering in recession FY10 started well Mitchells & Butlers in a strong position Performing well in challenging markets 18
Slide 19: Improving H2 Performance
Improving H2 Performance H1 H2 Like-for-like sales 1.2% 2.1% Change in operating margin % (3.2)% pts (1.1)% pts Change in Retail EBIT (16.8)% (2.4)% Performance maintained into FY10 19
Slide 20: Like-for-Like Sales by Segment
Like-for-Like Sales by Segment 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% Growing like-for-like trajectory * Wks 1-33 to include the entire Easter period ** Wks 34-52 to exclude the entire Easter period 20
Slide 21: Drivers of Residential Growth
Drivers of Residential Growth Strong performance driven by main brands Proven customer appeal with: - Good quality, value-for-money food - Extensive quality drinks range - Consistent & efficient service - High amenity levels A focus on driving cash gross margin 21
Slide 22: High Street Market Conditions
High Street Market Conditions London in growth Late night business trending towards flat Polarisation on the high street - Youth unemployment impact on drinks focussed pubs - Demand for value food continues to grow Exploiting food led growth opportunities 22
Slide 23: Food Value Growth vs Market
Food Value Growth vs Market 10% 8% 6% Food Value Growth (%) MAB like-for-like value 4% 2% 0% -2% Total Market* -4% -6% Pub market* -8% -10% Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Outperformance widening in Q4 Source: CREST data, the NPD Group and Company 23
Slide 24: Beer Market Volume Outperformance
Beer Market Volume Outperformance MAT percentage change in volume 2.0% MAT percentage change in volume 0.0% -2.0% MAB* -4.0% -6.0% -8.0% On-Trade -10.0% Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Continuing large market share gains *Same outlet like-for-like Source: BBPA, Company 24
Slide 25: Investment in Amenity
Investment in Amenity Total capital invested of £122m 1,260 projects < £40k completed 575 larger projects > £40k supporting growth Customer preferences help direct investment Effective use of capex driven by customer demands 25
Slide 26: Strategic Priorities
Strategic Priorities Exploiting long term growth of the eating out market Enhancing shareholder value by - growing profits at the unit level - exploiting the growth potential of MAB brands Supporting value creation with operational capability 26
Slide 27: New Channels: Market Position
New Channels: Market Position City and Value Suburban 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
New Channels Metrics City and Value Suburban 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 Driving net operating margins * incl VAT ** Per pub per week 28
Slide 29: Underpinning Operating Margins
Underpinning Operating Margins Increasing purchasing scale - 574m drinks - 129m meals A focus on efficient operations - Productivity - Stock & Waste management - Overhead A focus on improving net operating margins 29
Slide 30: Continuous Operational Development
Continuous Operational Development Detailed customer insight: 635,000 feedback forms Kitchen Skills Academy & 2 food development centres Over 1,400 NVQs undertaken in one year Staff cost ratio maintained in last 5 years despite - £50m of employment cost pressures - Food sales mix from 30% to 41% Ope
Slide 31: Current Trading Update
Current Trading Update First 8 weeks: 3.2% growth Residential sales up 4.4% High Street sales flat “Other” sales improving Net margins recovering Improved current trading 31
Slide 32: Likelihood of Eating Out in Next 6 Months
Likelihood of Eating Out in Next 6 Months 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% Feb Mar Apr May Jun Jul Aug Sep Oct More than before Less than before Net Likelihood to Eat Out Improved consumer confidence Source: Company 32
Slide 33: Outlook
Outlook First half - Eating and drinking out under pressure - Cost outlook improved - Consumer confidence has stabilised Second half - Low visibility of post election consumer environment Second half outlook uncertain 33
Slide 34: Conclusion
Conclusion Best brands underpinned by best locations Robust trading with relatively low ticket spend Strong market share gains Operational focus is continuing to deliver sales and improving net margins Mitchells & Butlers well positioned 34
Slide 35: Questions & Answers
Questions & Answers Preliminary Results – 26 November 2009