Whitbread interim results – 25th October 2016

25 Oct 2016 Financial & business

STRONG FUNDAMENTALS, IN LINE WITH EXPECTATIONS

Whitbread PLC results for six months to 1 September 2016

• Winning market share in both Premier Inn and Costa with Group total sales growth of 8.1% and like for like sales2 growth of 1.9%
• Premier Inn total sales growth of 8.9% and like for like sales2 up 2.4%
• Costa total sales growth of 10.7%, system sales up 11.9% and UK like for like sales2 up 2.3%
• Group underlying profit before tax1 rose 5.4% to £307.0 million
• Premier Inn and Restaurants grew underlying operating profit by 8.9% to £271.5 million
• Costa underlying operating profit decreased by 4.0% to £64.6 million due to increased investments in the first half
• Exceptional items and non underlying adjustments before tax are a cost of £43.4 million (2015/16: cost £36.4 million) predominantly relating to the estimated costs associated with Premier Inn International’s withdrawal from India and South East Asia
• Group return on capital3 of 15.1% (at year end 2015/16: 15.3%). This includes over £400m invested in future hotel openings.
• Cash generated from operations of £431.4 million (2015/16: £374.1 million) funded capital investment4 of £329.0 million (2015/16: £293.2 million)
• Strong balance sheet with half year net debt of £988.2 million (at year end 2015/16: £909.8 million) with leverage maintained

Alison Brittain, Chief Executive, said:

“This is another good set of results from Whitbread and we continue to deliver strong growth, with total Group sales increasing 8.1% to £1.6 billion. Our core brands of Premier Inn and Costa continue to win market share with total sales growing 8.9% and 10.7% and like for like sales up 2.4% and 2.3% respectively.

In April this year, I identified three strategic priorities to develop our business: to grow and innovate in our core UK businesses; to focus on our strengths to grow internationally; and to build the capability and infrastructure to support long-term growth. This strategy will enable us to deliver continued growth, maintain good returns on capital and create sustainable value for our shareholders. In addition, through continued investment in our business we are creating new jobs and through our training and apprenticeship programmes we are supporting our teams to develop skills and progress their careers.

I am pleased to report that we have made good progress in delivering on our three strategic priorities. We will be smoothing the phasing of our openings this year and plan to open c.3,700 new UK Premier Inn rooms and 230-250 new coffee shops worldwide. We are passionate about offering great value, outstanding service and high quality products to our customers and are investing more in driving product and digital innovation. In our hotels business, we are expanding the network of our new ‘hub by Premier Inn’ city centre hotels and making progress in consolidating and rejuvenating our restaurant brands. In Costa we are trialling new ‘finer’ coffee concepts, introducing a new fresher food range and making good progress rolling out our Costa Pronto and Drive Thru formats.

Internationally, in Premier Inn we are focusing on the Middle East and German markets and the process of exiting our operations in India and South East Asia is underway. In the first half, we have ramped up investment in our core systems and infrastructure as this is key to securing our future growth, achieving cost efficiency and sustaining our market-leading brand positions.

Whilst it is early in the second half and there is uncertainty in the UK’s economic outlook, we expect to deliver in line with full year expectations.”

Richard Baker, Chairman, said:

“Whitbread has delivered another good set of results with underlying profit before tax up 5.4%. We are continuing to invest in our brands to maintain our leadership positions, whilst our strong balance sheet and cash flow generation has enabled us to increase the dividend by 4.9% to 29.90p.”

For further information contact:

Whitbread

Nicholas Cadbury, Group Finance Director +44 (0) 20 7806 5491

Anna Glover, Director of Communications +44 (0) 1582 844 244

Joanne Russell, Director of Investor Relations +44 (0) 1582 888 633

Tulchan

David Allchurch + 44 (0) 20 7353 4200

For photographs and videos, please visit the corporate media library:

www.whitbreadimages.co.uk

A presentation for analysts will be held at Deutsche Bank, Winchester House, 1 Great Winchester Street, EC2N 2DB London. The presentation is at 9.30 am and a live webcast of the presentation will be available through the investors’ section of the website or via the following link: https://3xscreen.videosync.fi/2016-10-25_whitbread

Read the full press release here

1 Underlying profit before tax and underlying EPS

Underlying profit before tax excluding amortisation of acquired intangibles, exceptional items and the impact of the pension finance cost as accounted for under IAS 19. Underlying EPS represents the earnings per share based on the above underlying profit definition and the tax thereon.

2 Like for like sales and system sales are stated pre-IFRIC 13 adjustment for Premier Inn – UK and Ireland, Costa and Restaurants – UK.

3 Return on capital is the return on invested capital which is calculated by dividing the moving annual total underlying profit before interest and tax for the period by net assets at the balance sheet date adding back debt, taxation liabilities and the pension deficit.

4 Including investments in business combinations.