full year results 2015 - mbplc.com · full year results 2015 bob ivell chairman . financial review...
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Full Year Results 2015
Bob Ivell Chairman
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Financial Review 2015
Tim Jones Finance Director
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Income statement (Pre-exceptional items)
FY 2015 £m
FY 2014 £m
Revenue 2,101 1,970 +6.6%
Operating costs (1,773) (1,657)
Operating profit 328 313 +4.8%
Interest (129) (131)
Pensions finance charge (15) (10)
Profit before tax 184 172 +7.0%
Operating margin 15.6% 15.9% (0.3 ppts)
Earnings per share 35.7p 32.6p +9.5%
Financial Review 2015 – 3 –
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Like-for-like sales growth
Week 1 – 32 FY 2015
Week 33 – 52 FY 2015
Week 1 – 52 FY 2015
Week 1 – 8 FY 2016
Food 2.5% 1.0% 1.9.% (2.1%)
Drink 0.3% (1.4%) (0.4%) (1.2%)
Total 1.4% 0.0% 0.8% (1.6%)
Financial Review 2015 – 4 –
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Like-for-like volume and spend trends
FY10
0.0%
(2.0%)
(4.0%)
(6.0%)
2.0%
4.0%
6.0%
8.0%
FY11 FY12 FY13 FY14 FY15
0.0%
(2.0%)
(4.0%)
(6.0%)
2.0%
4.0%
6.0%
8.0%
FY11 FY12 FY13 FY14FY10 FY15
Food Drink
Volume Price / spend
Financial Review 2015 – 5 –
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EBIT movement
FY14 £313m
FY15 £328m
Orchid Direct cost
inflationa
Like-for-like
trading
FY14 new openings
FY15 new openings
Note: a Direct costs include wages and salaries, utilities and goods for resale
Financial Review 2015 – 6 –
£5m (£10m)
£15m
£6m (£1m)
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Interest charge
FY 2015 £m
FY 2014 £m
Finance costs (130) (132)
Finance revenue 1 1
Net pensions finance charge (15) (10)
Total interest (144) (141)
• Expected net pensions finance charge for FY 2016 is £12m
Financial Review 2015 – 7 –
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Group cash flow FY 2015 £m
FY 2014 £m
EBITDA 439 422
Working capital / non cash items 48 18
Pension deficit contributions (86) (49)
Cash flow from operations 401 391
Maintenance & infrastructure capex (116) (120)
Net interest paid (127) (135)
Tax (25) (34)
Free cash flow before exceptional items 133 102
Expansionary capex (46) (42)
Orchid acquisition and integration (1) (263)
Other 3 4
Net cash flow 89 (199)
Group net debt (1,870) (1,958)
Net debt: EBITDA 4.3x 4.5x
Financial Review 2015 – 8 –
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Dividend
Financial Review 2015 – 9 –
FY 2015 £m
FY 2014 £m
Net cash flow 89 (199)
Mandatory bond amortisation (61) (58)
Add back: one-off pension contribution 40 -
Surplus cash 68 (257)
• Criteria set out in pensions agreement met
• Recommended 5 pence per share final dividend
• Represents 2/3 ongoing full-year payout
• Policy to be progressive
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Property
• Freehold and long leasehold properties valued annually
• 20% of sites inspected per annum
• Short leaseholds assessed for impairment
• Total value of £4.2bn (FY 2014 £4.2bn)
FY 2015 £m
FY 2014 £m
Income statement Revaluation (54) (25)
Other impairment (11) (11)
Balance sheet Revaluation reserve 25 62
(40) 26
Financial Review 2015 – 10 –
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Capital expenditure and returns FY 2015
£m FY 2014
£m
Maintenance and infrastructure 116 120
Expansionary 46 42
Total capital expenditure 162 162
• 14 new sites and 51 conversions completed in FY 2015
• FY 2016 guidance: increased maintenance capex through accelerated remodel spend, similar level of expansionary activity
FY 2015 FY 2012–2015 EBITDA ROI
Investmenta No. of sites
Freehold acquisitions £10m 4 14%
Leasehold acquisitions £10m 10 18%
Conversions £23m 51 22%
Total £43m 65 18%
Note: a Spend relating to new and converted sites completed in the current year
Financial Review 2015 – 11 –
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Orchid
Financial Review 2015 – 12 –
• 41 conversions completed
• Head office closed, support functions absorbed
• Increased EBIT contribution of £5m in FY 2015
Acq
uire
d
15.0
25.0
35.0
Con
vers
ions
Syn
ergi
es
Clo
sure
co
sts
FY
201
5
Con
vers
ions
Syn
ergi
es
FY
201
6
Con
vers
ions
Syn
ergi
es
FY
201
7
Note: Annualised EBITDA excluding like-for-like sales growth
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Key messages
• Like-for-like sales growth of 0.8% following weak Q4
• Strong earnings growth of 9.5%
• Orchid integration on track
• Final dividend reinstated at 5 pence per share
• Like-for-like sales down 1.6% in the first eight weeks of FY 2016
Financial Review 2015 – 13 –
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Business Review 2015
Phil Urban Chief Executive
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Agenda
• Introduction
• External landscape
• M&B: my observations
• My priorities
• Summary
Business Review 2015 – 15 –
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External landscape
Business Review 2015 – 16 –
The market Consumers National living wage
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• Increasingly competitive market - Large number of new entrants - Good quality - Located on our doorstep
• Entrants will grow the market over time
Business Review 2015 – 17 –
The market
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• Increasingly high demands
- Value - Service - Availability
• Always connected
Business Review 2015 – 18 –
Consumers
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• Significant impact on the industry
• Nobody can ‘control’ their way out of NLW
• Rounded and iterative approach required
- Efficiency
- Brand propositions
- Price
- Consumer opportunity
Business Review 2015 – 19 –
National living wage
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M&B: my observations
• Giant of the industry
Business Review 2015 – 20 –
• Quality people
• Freehold asset backing
• Portfolio of best brands and locations
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So why have results not been stronger?
Business Review 2015 – 21 –
Strong brands and assets
Engaging culture
Strong infrastructure
Significant scale
Unbalanced portfolio
Lacking commercial
edge
Slow to innovate
Lack of pace
BUT BUT BUT BUT
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How do we address these issues?
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My priorities
Business Review 2015 – 23 –
Build a more balanced business
Instil a more commercial culture
Increase the pace of execution and innovation
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Business Review 2015 – 24 –
• Clearly targeted brand propositions
• Balanced portfolio
• Right brand, right site
Build a more balanced business
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Business Review 2015 – 25 –
• Results-orientated culture
• Focus on profitable sales
• Simplify to drive pace
Instil a more commercial culture
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Business Review 2015 – 26 –
• Upgrade digital innovation • Encourage trials and NPD
Increase the pace of execution and innovation
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My priorities
Business Review 2015 – 27 –
Build a more balanced business
Instil a more commercial culture
Increase the pace of execution and innovation
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Questions