Full Year Results 2014
Bob Ivell Chairman Financial Review 2014
Tim Jones Finance Director Income statement (Pre exceptional items)
FY 2014 FY 2013 £m £m
Revenue 1,970 1,895 +4.0%
Operating costs (1,657) (1,585)
Operating profit 313 310 +1.0%
Interest (141) (139)
Profit before tax 172 171 -
Earnings per share 32.6p 32.2p +1.2%
Operating margin 15.9% 16.4% -0.5 ppts
Financial Review 2014 —3— Like-for-like sales growth
Week 1-28 Week 29-52 Week 1-52 Week 1-8 FY 2014 FY 2014 FY 2014 FY 2015
Food 0.9% 0.5% 0.7% 3.3% Drink 1.3% (0.4%) 0.5% 1.4%
Total 1.1% 0.1 0.6% 2.4%
Financial Review 2014 —4— Like-for-like volume and price trends
Food Drink
8.0% 8.0%
6.0% 6.0%
4.0% 4.0%
2.0% 2.0%
0.0% 0.0%
(2.0%) (2.0%)
(4.0%) (4.0%)
(6.0%) FY10 FY11 FY12 FY13 FY14 (6.0%) FY10 FY11 FY12 FY13 FY14
Volume Price/Spend
Financial Review 2014 —5— EBIT movement
+£3m (£1m) (£2m) +£16m (£5m) +£6m (£14m)
Remodel FY13 Direct cost Like-for-like FY13 new FY14 new FY14 Orchid closure IT projects £310m inflation* trading openings openings £313m costs
*Direct costs include wages and salaries, utilities and goods for resale
Financial Review 2014 —6— Interest charge
Sept 2014 Sept 2013 £m £m Finance costs (132) (130) Finance revenue 1 2 Net pensions finance charge (10) (11) Total interest (141) (139)
- Net pensions finance charge now reported in adjusted earnings - Expected charge for FY 2015 is £16m
Financial Review 2014 — 7— Group cash flow
FY 2014 FY 2013 £m £m EBITDA 422 420 Working capital / non cash items 18 (9) Pension deficit contributions (49) (40) Cash flow from operations 391 371 Maintenance & infrastructure capex (120) (100) Net interest paid (135) (126) Tax and other (34) (32) Free cash flow before exceptional items 102 113 Expansionary capex (42) (28) Orchid acquisition (258) - Disposals 4 1 Cash exceptional items (5) (2) Net cash flow (199) 84 Mandatory bond amortisation (58) (55) Net cash flow after bond amortisation (257) 29
Financial Review 2014 —8— Group net debt
Sept 2014 Sept 2013 £m £m Securitisation debt1 (2,066) (2,124) Liquidity facility (147) - Cash & other 227 101 Securitised net debt (1,986) (2,023) Cash 28 264 Group net debt (1,958) (1,759) Net Debt : EBITDA2 4.5x 4.2x
Notes: 1) Includes currency derivatives hedging balance sheet debt 2) 2014 based on annualised EBITDA
Financial Review 2014 —9— Property
- Freehold and long leasehold properties valued annually - 20% of sites inspected per annum - Short leaseholds assessed for impairment - Total value of £3.7bn (FY 2013 £3.4bn)
£m (pre tax) FY 2014 FY 2013
Income statement Revaluation (25) (12) Other impairment (11) (17) Balance sheet Revaluation reserve 62 60 26 31
Financial Review 2014 — 10— Capital expenditure
FY 2014 FY 2013 £m £m Maintenance and infrastructure 120 100 Expansionary 42 28 Total capital expenditure 162 128
- Increased investment in key infrastructure projects - Acceleration of successful remodel programme - Expect increased expansionary spend in FY 2015 to c£65m, including Orchid (c£18m)
Financial Review 2014 — 11— New EPOS Systems - Live in more than 1,300 sites - Rollout due to complete by Summer 2015 - Productivity benefits shown in terms of hours per pub per week
Full service Part table service/ restaurants part bar service Bar service only (eg, Nicholson’s, Heartland) (eg. Harvester, Miller & Carter) (eg. Country Pubs) Productivity benefits (hours per pub per week saved): Management admin time 1.5 1.5 1.5 Reduced walk time for server 15 – – Payment speed 5 5 5 Non-financial benefits:
Kitchen management Food quality/NPS Food quality/NPS N/A Promotions Efficiency and flexibility Efficiency and flexibility Efficiency and flexibility Control environment Improved Improved Improved
Note: Approximate time savings only. Amounts vary by brand and individual site
Financial Review 2014 — 12— Expansionary capital expenditure
FY 2014 FY 2011-14 Investmenta 25 No.of Sites EBITDA ROI Freehold 20 £27m 8 13% acquisitions Leasehold 15 £15m 15 18% acquisitions 10 Conversions £3m 8 16%
Number of sites 5 Total £45m 31 16% 0 H1 H2 H1 H2 FY 13 FY 14
Notes: a: Spend relating to new and converted sites New Sites Conversions completed in the current year.
Financial Review 2014 — 13 — Orchid integration - conversions and synergies
35.0
25.0
15.0 costs costs FY 2015 FY 2016 FY 2017 Closure Synergies Synergies Acquired No closure Conversions Conversions Conversions - Excludes like-for-like growth - Conversions completed and synergies realised throughout FY 2015 and FY 2016 - Closure costs impacting immediate profit growth - £12m charge within exceptional items in FY 2014
Financial Review 2014 — 14— Key messages
- Total sales growth of 4% based on turnaround in volumes
- EPS increase of 1.2%
- Increased investment laying foundations for future growth
- Purchase and integration of Orchid - Acceleration of remodels - Replacement of key IT systems - Increased new site openings
Financial Review 2014 — 15— Business Review 2014
Alistair Darby Chief Executive Good to Great - our objectives
- Like-for-like sales growth ahead of the market
- Robust margins
- Attractive investment returns
- Lower net debt / EBITDA
- Dividend reinstated
Business Review 2014 — 17— Opportunity
Grow our share of the eating & drinking out market by leveraging our brands & scale to deliver great value guest experiences
Mitchells & Butlers: c3% share of a £78bn market
Business Review 2014 — 18— What will Mitchells & Butlers look like in FY16?
Five key market
ECIA
SP ECIAL
P spaces S L
LL
AA I I
CC F O F
O AA
S S MM TT I E I
E L
L
K Y K Y
R R
A A
M
M
P P
U
U
LL H H
E IAA
E I
C A C
A
R O
R O
S
T S
T
L
L Y
Y
A
A
N AA
N
D
D D
D Y
Y
R
R EVVEE E
Business Review 2014 — 20— Our growth plan SPECIAL
Expansion: - Strong brand propositions - Attractive ROI UPMARKET SOCIAL FAMILY - Growing guest demand - Availability of sites
Optimisation: - Cash generative businesses - Capital for amenity improvement EVERYDAY HEARTLAND SOCIAL
Business Review 2014 — 21— Delivering the growth plan
FY 2010 FY 2016
- Food-led brands - Premium occasions 70% 57% Sales - Orchid conversions
43% - Growth capital in 30% attractive market segments
Business Review 2014 — 22— Hardwired guest behaviour
“Every day I expect more for Top teams delivering excellent my hard-earned money” guest experiences & great value
“I want the flexibility to eat & Offer extension for all day eating drink where & when it suits me” and drinking occasions
“I look for reliable brands that Brands with a strong reputation meet my needs” for clear & consistent benefits
Business Review 2014 — 23— Capitalising on these opportunities
Top teams delivering excellent guest experiences & great value Exceptional people
Offer extension for all day eating and drinking occasions Remodels
Brands with a strong reputation for clear & consistent benefits Evolving brands
Growth in attractive market segments Orchid and new sites
Business Review 2014 — 24— Exceptional people
- Good to Great culture - Blue Sky - Staff turnover at historical low of 78%
Business Review 2014 —25— Exceptional people: Calverley Arms
- Record-breaking year - Making the most of the sunshine ‘‘ On possibly the hottest two days of the year so far…we have rarely experienced such a friendly, hardworking group of staff… We were blown away by these people’’
- FY 2014: - Sales growth +14.8% - Record-breaking sales weeks - Staff turnover 16ppts better
Business Review 2014 — 26— More time for guests and people
- Blue Sky - EPOS - Getting to the heart of the issue - Greater speed - More time for people - More time for guests
Business Review 2014 — 27— Remodels: profitable guest impact
- Substantive improvement of guest offer - Attractive ROIs - Heartland investment through reallocation of existing capital
No. of Capex per EBITDA remodels site ROI %
FY13 97 £182k >30% FY14 174 £202k >30% FY15 c200
Business Review 2014 — 28— Evolving brands: Toby Carvery
Top teams delivering excellent guest Market-leading NPS, clear guest experiences & great value promise: ‘Home of the Roast’
Offer extension for all day eating Breakfast ‘the Toby way’ in strong growth and drinking occasions >60k breakfasts per week
Brands with a strong reputation Strong brand & consistency, for clear & consistent benefits communicated with clarity
Business Review 2014 —29— Evolving brands: Toby Carvery
Business Review 2014 —30— Evolving brands: Harvester
Top teams delivering excellent guest Great value for families and experiences & great value friends £9.99 meal deal
Offer extension for all day eating Strong breakfast offer. Bright and and drinking occasions modern environment
Brands with a strong reputation Fresh salad offer. Grilled, not fried. for clear & consistent benefits Service experience
Business Review 2014 — 31— Evolving brands: Harvester - Brand identity reflecting the informal, contemporary dining environment - Focus on freshness, quality, generosity and value
Business Review 2014 — 32— Evolving brands: Harvester - Bright, modern and up to date feel with a warm, relaxed environment - Suitable for people looking for great value from their everyday dining occasions
Business Review 2014 —33— Evolving brands: All Bar One
Top teams delivering excellent guest Stylish bars for professionals experiences & great value NPS +6 ppts
Offer extension for all day eating New locations and drinking occasions Earlier opening
Offer evolution: sharing plates, wine Brands with a strong reputation & cocktail masterclasses, modern for clear & consistent benefits breakfast offer
Business Review 2014 —34— Evolving brands:INSIDE FRONT All Bar One FOLD INSIDE BACK FOLD
Brunch, together Small bites, big flavour The main event Available until 4pm Available from noon Available from noon
BReaKFasT Bu RGeR s shAriNG pLAtes All served in a sesame brioche bun with fries and a dill gherkin
straWBerries, eGGs royale 7.00 Boost Breakfast (V) 6.50 BlueBerries, Banana Toasted english muffin Grilled mushrooms, free range Any 3 for £16 / Any 5 for £26 BBQ Pulled Pork Grilled ChiCken skinny BurGer 8.50 and Granola (V) 4.50 topped with smoked salmon, poached egg, plum tomatoes and homemade BurGer 10.50 Our Classic Burger served with With Greek-style yoghurt free range poached eggs avocado on toast, with houmous We recommend 3 per person or 5 between two Beef BurGer 11.50 With smoked back bacon, half a bun, avocado and salad and hollandaise sauce and sweet chilli Topped with applewood cheese avocado and our signature — 522 calories full Breakfast 7.75 + Pan-fried potato hash with and our signature burger sauce burger sauce Cumberland sausages, smoked eGGs BenediCt 6.50 spinach and onion 2.00 GinGer teriyaki seaBass CeViChe 7.50 make it your o Wn back bacon, free range eggs, Toasted english muffin topped ChiCken skeWers 6.00 With fresh coriander and BaCon jam homemade Butternut sQuash & Add one of the following to portobello mushroom, plum with ham, free range poached hot-smoked seVern With pickled vegetables and sesame seeds pomegranate seeds Beef BurGer 10.50 sultana BurGer (V) 10.50 any burger: tomatoes, baked beans and toast eggs and hollandaise sauce & Wye salmon, — 351 calories — 240 calories Topped with applewood cheese With houmous, grated carrot, + Monterey Jack cheese 1.00 + Pan-fried potato hash with aVoCado and ro Cket A traditional Peruvian method where and our signature burger sauce rocket, beetroot and sweet + Grilled halloumi 2.00 spinach and onion 2.00 smoked haddoCk on toast 7.50 houmous duo With fish is cured in aromatic citrus juices Bacon jam is a slightly sweet, spicy chilli sauce + Chopped avocado 1.00 florentine 7.2 5 With horseradish crème fraîche Crystal Bread (V) 5.50 sauce with a distinct smoky flavour + smoked back bacon 1.50 VeGetarian With spinach and a cheese and a free range poached egg Traditional and CoPPa ham deli Board 6.25 ClassiC homemade + Bacon jam 1.50 Breakfast (V) 7.75 sauce, topped with rocket Pimentón de la Vera houmous served with crystal bread, Beef BurGer 9.50 + Mango salsa 1.00 Vegetarian sausages, free range and plum tomatoes Grilled CamemBert Pimentón de la Vera paprika is roquito chilli pepper pearls and Topped with our signature + Camembert 2.00 eggs, portobello mushroom, plum tostada (V) 5.50 famed for its distinctive smoky taste sun blazed tomato tapenade burger sauce tomatoes, baked beans and toast Buttermilk With plum tomatoes and basil PanCakes (V) 6.00 szeChuan Coated Patatas BraVas (V) 5.25 eGGs florentine (V) 5.50 With maple syrup, banana, CumBerland sausaGe CrisPy Calamari 6.00 Our take on a spanish classic. Toasted english muffin blueberries and strawberries or smoked BaCk BaCon Garnished with red chilli and served with a romesco sauce made from topped with sautéed spinach, + smoked back bacon 1.50 sandWiCh 4.75 served with a wasabi dip red peppers, almonds and pine nuts FaVOu RITes free range poached eggs and served on granary bread Szechuan pepper is actually a dried berry, hollandaise sauce smoked BaCk BaCon famed for its fiery, lemony aroma. Our coating Caramelised Potato hash 5.50 contains chopped lemon, Szechuan pepper, CaulifloWer (V) 5.25 riB eye steak 16.00 temPura CharGrilled With spinach and a free range coriander and fennel seeds With Greek-style yoghurt and harissa served with chimichurri, fish and ChiPs 10.00 half ChiCken 11.00 poached egg watercress and sweet potato fries Fresh cod cooked in With a peri peri dip and wasabi salmon BrusChetta 7.50 Confit duCk and smoked Chimichurri is a South American tempura with mushy peas raw slaw. served with fries salmon marinated in fresh lime, with ChiCken rillette 7.00 sauce packed with chilli, parsley, and tartare sauce or salad coriander and crème fraîche With plum and balsamic chutney oregano and garlic. Does amazing BRunCH COCKTa Ils on chargrilled bread things to grilled meat all Bar one ChiCken katsu Business Review 2014 L A zy brUNch Bread Basket (V) 5.00 —35— + Tempura onion rings 1.50 Pad thai ( V) 9.00 Curry 11.50 Pesto lavash and crystal bread + Béarnaise sauce, garlic butter With rice noodles, red peppers, served with a rich curry sauce mimosa 5.50 miChelada 6.95 with a balsamic dip or peppercorn sauce 1.25 sweet chilli sauce, pak choi, Katsu is a Japanese cooking method Prosecco and orange juice Cîroc grape vodka, tomato any Breakfast Lavash is a thin, soft flatbread + Garlic & chilli prawns 3.00 sugar snaps, broccoli, egg where chicken is coated in crisp juice and sierra nevada pale and a BrunCh popular in Middle Eastern countries and chopped peanuts panko breadcrumbs Bloody mary 6.95 ale. spiced the way you like it C o Cktail Quinoa & edamame — 439 calories Cîroc grape vodka, for £10 Bean salad ( V) 7.50 + Roast chicken and giant farro & mushroom tomato juice and a dash Breakfast With mixed baby leaf, cherry prawn cracker 3.00 risotto (V) 9.25 of Tempranillo Cabernet. martini 6.50 Alternatively, choose a Softail tomatoes and cucumber, served + King prawns and giant served with a poached free range spiced the way you like it Cîroc grape vodka, orange with a light lemon dressing prawn cracker 4.00 egg and rocket liqueur, peach schnapps, A £2 supplement applies s h A re & e xpLOre A LittLe bit MOre? — 462 calories + Beef fillet tail and giant + Grilled chicken breast 3.00 red snaPPer 6.50 marmalade and orange juice to the Full and + Grilled halloumi 2.00 prawn cracker 5.00 Typically used in Italian cuisine, Opihr Oriental spiced gin Vegetarian breakfasts Wait! There’s more. + Grilled chicken breast 3.00 farro is similar to barley. It’s and tomato juice. spiced Explore with #AllBarOneMenu Fries topped with bacon jam 3.75 + King prawns 4.00 a Mediterranean alternative the way you like it on Twitter and Instagram Parmesan & rosemary fries 3.75 to risotto rice Sweet potato fries 3.75 Fries 3.00 A nice little chopped salad 3.50 J u ICes All Bar One house salad 3.50 s OFtA i L s Wasabi raw slaw 3.00 DesseRTs NAchO s pLAtter aPPle 2.50 VirGin mojito 3.00 elderfloWer fizz Churros 6.50 Caramel British Cheese Fresh mint, lime and sugar 2.75 / Jug 9.00 oranGe 2.50 homemade Dusted with cinnamon sugar and CheeseCake 5.00 Board 10.00 with Fever-Tree ginger ale Elderflower cordial, lemonade naChos (V) 9.00 served with a mini saucepan of served with raspberry British Brie, shropshire Blue, and apple juice CranBerry 2.50 Topped with Monterey Jack cheese, dulce de leche. enough to share coulis and crème fraîche Double Gloucester and mature PeaCh melBa sour cream, guacamole, Churros, popular in Latin America, Cheddar. served with chutney, 2.75 / Jug 9.00 fine and dandy 2.75 tomato 2.50 jalapeños and tomato salsa are the Spanish take on a doughnut Praline crystal bread and biscuits. Raspberry and white peach purée, The traditional Dandelion & + BBQ pulled pork Profiteroles 5.00 enough to share topped with lemonade Burdock livened up a little PineaPPle 2.50 and mango salsa 2.00 ColomBian ChoColate With toffee pieces, toffee with Fever-Tree ginger beer BroWnie 5.00 sauce, caramel popcorn VirGin southside manGo & served with vanilla bean and whipped cream Vine 3.00 sour Cherry, Passion fruit 2.50 ice cream Fresh mint and grapes muddled red GraPe & with agave nectar, topped with soda hiBisCus fizz 2.75 An indulgent mix of cherry, VirGin mary 2.75 red grape and hibiscus, Tomato juice, lemon juice and spice topped with soda (V) means it’s vegetarian. all our food is prepared in a kitchen where nuts, cereals containing gluten and other allergens are present and our menu descriptions do not include all ingredients. If you have a food allergy or intolerance, please let us know before ordering. Full allergen information for food and drink is available, upon request. Our fish has been carefully filleted; however some small bones may disCoVery dishes remain. Fish dishes may contain small bones. Showcasing trends, flavours and ingredients from around the world
aBODn14P1/BRMPB2/23
FOLD FOLD
Dark Nights 14 Brunch Menu
Cyan Magenta Yellow Black Pantone All Bar One 1:1 872U
463mm x 310mm flat size ABO1099 155mm x 310mm when folded Magenta indicates cutter/folds and should not print
August 15, 2014 10:43 AM Litho 01
Our brands building momentum
- Turnaround in volume trajectory 2.0% FY 2013 FY 2014 in FY 2014 1.0% - Net promoter score improved by
4ppts to 63% 0.0%
(1.0%)
(2.0%)
(3.0%)
(4.0%)
(5.0%) MAT like-for-like volumes: Food Drink (6.0%)
Business Review 2014 —36— Transforming earnings: Orchid
- Strong team
- Solid performance
- Substantive opportunities for Toby Carvery, Harvester and Miller & Carter conversions
- Mutual knowledge transfer: carvery expertise, branding, All Inns, PKB, playbarns
- Integration going to plan
Business Review 2014 — 37— Expansion in attractive segments
- Investment prioritised: - All Bar One - Harvester - Miller & Carter - Toby Carvery
- 23 new openings and 8 conversions in FY 2014
- Expansion brands: nationwide capacity of close to 1,200 outlets (current outlets: 455)
Business Review 2014 —38— Summary
- Business gathering momentum:
- Exceptional people - Investment in remodels and infrastructure - Evolving brands and offers - Strengthening volumes and NPS - Growth through Orchid and new sites
- Well-placed to deliver increasing shareholder value.
Business Review 2014 —39—