Whitbread the UK’s leading hospitality company

Whitbread the UK’s leading hospitality company

John BanhamJohn Banhamchairmanchairman

Today’s agendaToday’s agenda

•Interim results

•Business review

Whitbread todaythe UK’s leading hospitality companyWhitbread todaythe UK’s 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

Interim resultsInterim results•Good H1 results

— Strong like-for-like sales, continuing— 10% growth in earnings— Acquisitions performing well

• Increased dividend

Whitbread - the UK’s leading hospitality companyWhitbread - the UK’s leading hospitality company

11No.

in hotelsin restaurantsin health & fitness

in hotelsin restaurantsin health & fitness

Good four-year performanceGood four-year performance•Sales growth•Earnings •Returns

Compound sales growth H1 2004 vs H1 2000Compound sales growth H1 2004 vs H1 2000

4.5

13.3

15.0

15.2

0 2 4 6 8 10 12 14 16

4.5

13.3

15.0

15.2

0 2 4 6 8 10 12 14 16

Total Whitbread 4.2Total Whitbread 4.2

Double digit earnings growth*Double digit earnings growth*

131

147

164

100

110

120

130

140

150

160

170

2001/2 (continuingWhitbread)

2002/3 (restated) 2003/4

131

147

164

100

110

120

130

140

150

160

170

2001/2 (continuingWhitbread)

2002/3 (restated) 2003/4

£m£m

*PAT as published

YOY improvement in group ROCE(PBIT, pre-exceptionals and goodwill amortisation: year end assets)

YOY improvement in group ROCE(PBIT, pre-exceptionals and goodwill amortisation: year end assets)

10.4%

9.7%

9.0%

6

8

10

12

2001/2 (continuingWhitbread)

2002/3 (restated) 2003/4

10.4%

9.7%

9.0%

6

8

10

12

2001/2 (continuingWhitbread)

2002/3 (restated) 2003/4

ROCE %ROCE %

•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…

Good time for business reviewGood time for business review

David RichardsonDavid Richardsonfinance directorfinance director

Summary of 6 months to 2 September 2004Summary of 6 months to 2 September 2004

2004/5 2003/4 Δ%

£m £m

Sales 1,027.1 981.6 4.6

Operating profit 173.1 161.0 7.5PBTA 151.6 138.9 9.1PBT 147.4 134.7 9.4

EPS (adjusted)* 35.31p 31.99p 10.4Dividends 6.90p 6.15p 12.2

* Pre-exceptionals, pre-goodwill

Premier Lodge*

July 25 to September 2Premier Lodge*

July 25 to September 2

£m

Sales 15.4

Operating profit 4.5

Interest (3.1)

PBT 1.4

Assets 553

* Includes 19 pub restaurants

Business resultsBusiness results Sales growth Profit

growth Total Like-for-like

% % %

Premier Travel Inn 24.2 n/a 28.2excl.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

Business resultsBusiness results Margins MAT ROCE

2004/5 2003/4 2004/5 2003/4

% % % %

Premier Travel Inn 35.3 33.5 14.8 12.8excl. 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

Premier Travel InnPremier Travel Inn•Strong like-for-like sales

— Occupancy growth— Rate growth

•Room expansion

•Premier Lodge

•Name change

• Integration going well

Marriott 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

•Slower like-for-like sales growth— 1st half Beefeater conversions— Brewsters

•Brewers Fayre working well and expanding

•Numbers now strengthening

•Second half better

Pub restaurantsPub restaurants

High street restaurantsHigh street restaurants•Continued strong progress on profit

•Pizza Hut, Costa, TGIF going well

•2nd half growing, but more slowly

David Lloyd LeisureDavid Lloyd Leisure•Strong profit growth

•Membership net gain

•4 UK clubs to open in 2005/6

•Netherlands, Belgium and Spain

Cash flow6 months to September 2004Cash flow6 months to September 2004

* Not analysed by business

£m 2004/5 2003/4Operating profit (pre exceptionals) 152 138Depreciation/amortisation 68 62Dividends received 4 4Maintenance capex (including systems) (71) (71)Business free cash 153 133

Investment in new sites (52) (37)Premier acquisition (548) -Divestment of sites/businesses 3 44Business 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

Cash flowbusiness split 2004/5Cash 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 3Dividends - - - - - 4Maintenance 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

ExceptionalsExceptionals2004/5 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

Capital expenditureCapital expenditureFull year Full year

H1 estimate 2003/4

£m £m £m

Marriott 14 35-40 41Premier Travel Inn* 20 40-50 37Pub restaurants 46 75-80 61High street restaurants 10 25-30 15David Lloyd Leisure 32 60-65 59Central/other 2 - 17Total 124 235-265 230

Includes new site capital 52 105-130 78* Excluding Premier Lodge capital

Pointers for the full yearPointers for the full year•Business review

•Courtyard by Marriott

•Beefeater 1st/2nd half

•Marriott Q1 2005/6

•Britvic IPO

• IFRS

Alan ParkerAlan Parkerchief executivechief executive

building on successbuilding on success

The next chapterThe next chapter

Whitbread - the UK’s leading hospitality companyWhitbread - the UK’s 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

Building on successBuilding 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

Commitment to improving shareholder returnsCommitment to improving shareholder returns• Investment in businesses capable of generating significant growth and economic profit

•Release and return capital

•Grow dividends ahead of earnings

Investing for growthInvesting 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

•Growth sector with potential

•Clear sector leader post acquisition—Occupancy, market share and economic

profit

•Continued organic growth—35,000 rooms by 2008

Premier Travel InnPremier Travel Inn

•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

MarriottMarriott

•Leading market position

•Good returns in mature sites

•Growth potential — UK: 75 clubs by 2008— International: Netherlands, Belgium,

Spain

David Lloyd LeisureDavid Lloyd Leisure

•Growth marketplace

•Brand consolidation

Pub restaurantsPub restaurants

Brewers Fayre•Integration of Brewsters (147 sites)

•Target growth to 500 units by 2008

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

Beefeater•Integration of Out & Out (31 sites)

•Remodelling to be confirmed next year

•Sale of some tail sites

•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 interest:

Middle and Far East

Costa CoffeeCosta Coffee

•Organic growth potential

•Pizza Hut— Grow to 800 units

•TGI Friday’s— Menu and décor rejuvenation— Trial new store format

High street restaurantsHigh street restaurants

Cost synergiesCost synergies• £30 million annual Better Ways of Working

savings over 2 years£m

Management structures 5Finance 4IT 2HR 2Marketing 2Supply chain 4Offices/other 5Premier Travel Inn integration* 6

30

* Already announced

People

Property

ProcessProcurement

One Whitbread added valueOne Whitbread added value

Hotels

Health & Fitness

Restaurants

Planned realisation of assetsPlanned 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%)

•Return over half to shareholders— Method and amount determined as disposals

effected

•Reduce debt

•Reduce pension deficit

• Increase dividends progressively

Use of proceedsUse of proceeds

High performance High performance •New top team:

— HR - Angie Risley— Development (growth/property) - Desmond

Taljaard— IT - Ben Wishart— Pub Restaurants - Phil Urban— Marriott - Patrick

Dempsey— TGI Friday’s - Tim

Hammond— Commercial (marketing/supply chain) - Paula

Vennells— Finance— Communications

• ‘No Limits’ culture change programme

Building on successBuilding on success•Faster growth

•Higher ROCE

•Greater synergies

• Improve shareholder returns

Whitbread the UK’s leading hospitality company

Whitbread the UK’s leading hospitality company