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24 Oct 2017

Whitbread Plc Interim Results - 24 October 2017

Whitbread PLC results for six months to 31 August 2017

Significant strategic progress in the UK and Internationally

  • Over 2,000 new Premier Inn rooms opened in the UK in the first half and maturing well
  • New Costa breakfast and lunch ranges successfully launched throughout the UK
  • Premier Inn Germany accelerating new hotel pipeline – 1 open & 9 secured pipeline hotels
  • Costa South China joint venture partner buy-out in October for £35 million enabling full control
  • Efficiency programme gaining momentum with over £60 million delivered over last two years

Good financial performance in line with expectations and on track for the full year

H1 FY18

H1 FY17

Change

Revenue

£1,671m

£1,556m

7.4%

Underlying operating profit1

£342m

£320m

7.1%

Underlying profit before tax1

£328m

£307m

6.7%

Statutory operating profit

£336m

£282m

19.3%

Statutory profit before tax

£316m

£264m

19.9%

Underlying basic earnings per share1

143.7p

133.9p

7.4%

Statutory basic earnings per share

137.7p

111.4p

23.6%

Interim dividend per share

31.4p

29.9p

5.0%

Discretionary free cash flow2

£293m

£269m

9.3%

Capital expenditure

£269m

£329m

£60m

Return on capital3

15.4%

15.1%

30bps

  • Strong revenue growth of 7.4% and market share gains in both Premier Inn4 and Costa
  • Disciplined cost management enabling underlying profit growth of 6.7% to £328 million
  • Premier Inn underlying operating profit growth to £295 million, Costa constant at £65 million
  • Good discretionary free cash flow conversion of 86%, delivering £293 million to reinvest
  • Strong balance sheet with net debt5 reduced to £852 million
  • Return on capital increased 30 bps to 15.4%, despite scale of recent investment

Alison Brittain, Whitbread Chief Executive Officer, commented:

“I am pleased with the progress we have made in executing the plan we set out in November last year, with earnings per share up 7.4% in the half and return on capital of 15.4%. Our plan is based on growing in our core UK markets; focusing on structural growth opportunities for Premier Inn in Germany, Costa in China and Costa Express; and strengthening our capabilities and efficiency to deliver these attractive opportunities.

In our core UK markets, we have:

  • opened over 2,000 Premier Inn rooms in the last six months;
  • developed digital capabilities central to our operating model in Premier Inn, which has enabled new tools such as our automated trading engine and business booker;
  • increased the proportion of hotel customers booking with us directly to 95%;
  • strengthened new Costa store pipeline, focused on growth channels; and
  • developed product innovation capability in Costa which has already launched new breakfast and lunch ranges, combined with new coffees and cold drinks.

We have also made significant progress in simplifying our international business and creating platforms for sustainable growth over the longer term. This progress includes:

  • completion of the exit of non-core international operations, including hotels in India, Thailand, Singapore and Indonesia and our equity owned Costa business in France;
  • the buy-out of our joint venture partner for Costa in South China giving us full strategic and funding flexibility to unlock Costa’s potential in China; and
  • accelerating the expansion of Premier Inn in Germany, with nine hotels now in our committed pipeline in addition to our existing hotel, resulting in an open and secured pipeline of over 2,000 rooms.

This amount of change and growth requires us to manage and execute in a more efficient and technology enabled manner. Whitbread’s investment in improving shared capabilities are critical to enable both Premier Inn and Costa to deliver their plans in the UK and internationally. Work to improve our capabilities over the last two years has included:

  • building a strong management team, completed with the new Group Transformation Director;
  • creating a shared digital and technology infrastructure;
  • delivering over £60 million of efficiency savings over the last two years as part of our £150 million target with growing confidence on the long term potential; and
  • enhancing our property capability and strategy.

We have significant structural growth opportunities, in the UK and internationally, and confidence in our plans to capitalise on these opportunities. Despite the well known short term economic uncertainty, our performance in the first half was good and we expect to meet expectations for the full year. Although we remain cautious on the current environment, we are confident that ongoing disciplined allocation of capital and focus on executing our plans will deliver long term growth in earnings and dividends and a strong return on capital.”

Richard Baker, Whitbread Chairman commented:

“In the year that Whitbread celebrates its 275th birthday, I am pleased to see another good performance as we continue to invest in the compelling long-term opportunities available to our businesses. We have maintained a strong balance sheet and continue to generate excellent cash flow, which together provides the Board with confidence to increase the interim dividend to 31.4p.”

For more information please contact:

Investor queries

Matt Johnson, Whitbread PLC | matt.johnson@whitbread.com | +44 (0) 7848 146 761

Ann Hyams, Whitbread PLC | ann.hyams@whitbread.com | +44 (0) 7796 709 087

Matt Holman, Whitbread PLC | matt.holman@whitbread.com |+44 (0) 7712 243 322

Media queries

Anna Glover, Whitbread PLC | +44 (0) 7768 917 651

David Allchurch, Tulchan Communications | +44 (0) 20 7353 4200

Footnotes and definitions are contained immediately prior to the financial statements.

For photographs and video please visit our media library on www.whitbreadimages.co.uk.

A presentation for analysts will be at 9.30am on 24 October 2017 at Deutsche Bank, 1 Great Winchester Street, London, EC2N 2DB. A webcast of the presentation will be available through www.whitbread.co.uk/investors or https://3xscreen.videosync.fi/2017-10-24_whitbread.

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