whitbread - the leisure business october 2001. john banham chairman

Whitbread - the leisure business

October 2001

John Banham

Chairman

Whitbread - the leisure business

David Richardson

Finance Director

Whitbread

•Successful demerger of Pubs and Bars

•Significant progress in future Whitbread

Pubs and Bars

•Completed May 2001

•Headline £1,625m

•Shareholder gain £487m

•Gain taken directly to reserves

•Share consolidation

Operating profit

£m %

Marriott/Swallow 42.4 + 5.7Travel Inn 31.5 + 9.4Pub restaurants 44.2 + 10.0High Street restaurants 3.1 + 19.2Sports, health & fitness 16.0 + 24.0

future Whitbread divisions 137.2 + 10.1

Pubs and Bars 30.5Beer and other drinks 11.3Central Services, etc. (7.0)

Operating profit 172.0 (25.7)

6 months to 1 September 2001 vs 6 months to 2 September 2000

Segmental analysis future Whitbread

£m £m

6 months to September 2001 6 months to September 2000 Sales EBITDA Profit Assets Sales EBITDA Profit Assets

HotelsMarriott/Swallow 204 63 421,243200 58 401,165Travel Inn 88 39 3244980 36 29 398

RestaurantsPub restaurants 299 58 44803282 54 40 784High St restaurants 237 12 3168220 10 3 156

Sports, health & fitness 80 26 1644266 22 13 416

Total – future Whitbread908 197 1373,105848180 1252,919

Proforma future Whitbread

£m £m %

6 months 6 months Growth

to 1 September to 1 September

2001/2 2000/1

Sales 908 848 7.1

Operating profit Hotels 74 69 7.3

Restaurants 47 43 10.5

David Lloyd Leisure16 13 24.0

Central costs (7) (6) (20.6)

future Whitbread operating profit 130 119 9.4

Estimated interest (30) (28) (7.5)

Estimated profit before tax 100 91 10.0

Analysis of Whitbread cash flow

£m £m £m

Continuing Past

Total Whitbread Whitbread

Cash flow from operations 180.2 149.9 30.3

Dividends received 0.2 0.2 –

Interest costs etc. (34.9) (33.0) (1.9)

Taxation (36.7) (18.0) (18.7)

Capital expenditure (162.0) (147.1) (14.9)

Acquisitions & disposals 462.1 462.1

Dividends (113.3) (31.3) (82.0)

Net cash inflow/outflow 295.6 (79.3) 374.9

6 months to 1 September 2001

Exceptional costs

£m

Disposal of Pubs and Bars– transaction costs 14.4– restructuring costs 5.9

Loss on sale of business 3.7

Loss on sale of fixed assets0.1

24.1

Deferred tax

£m

Liability on FRS19 basis at 3 March 2001 165.4

Transferred with Pubs and Bars (38.7) 126.7

Deferred taxes provided in half year11.0

Deferred taxes as at 1 September 2001137.7

Future capex

£m May estimate 1st half 2nd half Full year 2002/3

Marriott 75-90 50 20 70 45-60Travel Inn 70-80 25 35 60 65-80Restaurants 90-110 45 30 75 45-65David Lloyd Leisure 50-60 25 30 55 45-85Other 10-25 5 5 10 5-15

295-365 150 120 270 200-300

Continuing businesses estimates

Confirmation

•Standard information for half year– Hotels– Restaurants– Sports, health & fitness

Whitbread - the leisure business

David Thomas

Chief Executive

Whitbread’s value agenda

•Strong first-half trading

•Potential of new business is clear

•Good progress on value levers

•Action now to enhance future value

Like-for-like sales growth

•Marriott + 2.3%•Travel Inn + 3.0%•Brewers Fayre + 4.2%•Beefeater + 5.0%•David Lloyd Leisure + 20.0%

By major brand

Like-for-like sales growth

•Marriott/Swallow + 1.3%•Travel Inn + 3.0%•Pub restaurants + 4.5%•High Street restaurants + 2.7%•Sports, health & fitness + 18.2%

By reporting segment

Hotels

Business hotelsMarket outperformance by Revpar

-10

-5

0

5

UK hotel market

Marriott

+ 3.5

+ 5.2

- 4.3

– 9.4

London Provinces%

•Marriott yield premium up from 17% to 20%

Hotels

The London effect

• London Provinces Total

•Occupancy 77.4% 74.6% 75.4% - 1.7%

•Achieved room rate£118.50£69.87£83.34+

3.3%

•Yield £91.74 £52.15 £62.83+

1.0%

•Operating profit – 8.9% + 36.6%+ 20.6%

* Core Marriott

*

Hotels

MarriottProfit per room improvement

8.4

7.9

7.5 7.6 7.7 7.8 7.9 8 8.1 8.2 8.3 8.4 8.5 £k

August 2001

March2001

+6.3%

Hotels

Swallow proves its value

•10 conversions (1,469 rooms)

•Occupancy + 1.3%

•Achieved room rate + 8.4%

•Yield + 10.4%

First tranche

Travel Inn

•Like-for-like sales + 3.0%

•Like-for-like occupancy 86.0%

•Rooms growth 14,186 to 15,106

•100% guarantee

•Internet bookings

Brand performance

Hotels

Restaurants

Pub restaurants

By segment + 4.5%

Brewers Fayre + 4.2%

Beefeater + 5.0%

Like-for-like sales *

* Excluding Travel Inn

Restaurants

Brewers Fayre

Total sales + 6.8%

Like-for-like sales + 4.2%

Operating margin growth 16.8% to 18.5%

Operating profit + 17.6%

Restaurants

Beefeater

Comparable Beefeater Sales+6.0%

Operating profit +7.4%

Total Beefeater Sales +5.0% Operating profit – 8.5%

Out and Out 27 sitesAverage sales growth of 15%

Restaurants

High Street restaurants growth

•Sales + 8.0%•UK like-for-like sales – Pizza Hut + 6.9%

– Costa + 6.2%– Café Rouge+ 5.3%– TGI Friday’s + 2.8%– Bella Pasta – 0.9%

Total UK + 4.4%– Germany – 7.3%

•Total like-for-like sales + 2.7%

•Operating profit + 19.2%

Restaurants

Improving asset quality

•Disposal of tail sites

•Finalise High Street brand review

High Street brand review

•Pelican brands to be sold(75 Café Rouge, 65 Bella Pasta, 8 Mamma Amalfi, 5 others – total 153)

•Flexible mechanism – manage outside Restaurants division

•Whitbread team to focus on major brands

and value drivers

Restaurants

Sports, health & fitness

Sports, health & fitness

•Sales +21%

•Like-for-like sales +18%

•Operating profit +24%

Sports, health & fitness

UK health & fitness operatorsLike-for-like sales

13.0

10.5

7.5

6.0

20.0

15.0

0 5 10 15 20

David Lloyd

Holmes Place

LA Fitness

Dragons

Fitness First

Esporta

%

6 months to 30 June

6 months to 30 April

6 months to 30 June

3 months to 30 September

6 months to 30 June

6 months to 31 August

Sports, health & fitness

David Lloyd brand

•Membership growth + 12% to 248,000

•Non-fee income + 13%

•Membership retention 78% MAT

Market outperformance

David Lloyd Leisure

•Developing clubs year-on-year profit growth +£4.5m (+250%)

•New clubs - reduced time to maturity

•Pre-opening members average 1,780

Improving club returns

Sports, health & fitness

Like-for-like sales

•Marriott - 4.7%– London -24.6%– Provinces +3.9%

•Travel Inn + 5.6%

•Brewers Fayre + 7.9%

•Beefeater + 5.2%

•David Lloyd Leisure * + 16.7%

September/October

* September only

Trading outlook

•Continue driving returns from existing

assets

•Reduce discretionary and overhead costs

•Flexibility to defer £150m capex – primarily on new site expansion

Management action

future Whitbread

•Strength of major brands

•Strong indications of market

outperformance

•Good progress on value levers

•Prompt response to new circumstances

Prospects

future Whitbread