Whitbread PLC: announces H1-2016 Trading Update

Dunstable / UK. (wbp) British Whitbread PLC on October 25 reported its trading performance for the six months to September 01 (H1/2016). The Company announced strong fundamentals and in line with expectations. Summary:

• Winning market share in both Premier Inn and Costa with Group total sales growth of 8.1 percent and like for like sales2 growth of 1.9 percent
• Premier Inn total sales growth of 8.9 percent and like for like sales2 up 2.4 percent
• Costa total sales growth of 10.7 percent, system sales up 11.9 percent and UK like for like sales2 up 2.3 percent
• Group underlying profit before tax1 rose 5.4 percent to 307.0 million GBP
• Premier Inn and Restaurants grew underlying operating profit by 8.9 percent to 271.5 million GBP
• Costa underlying operating profit decreased by 4.0 percent to 64.6 million GBP due to increased investments in the first half
• Exceptional items and non underlying adjustments before tax are a cost of 43.4 million GBP (2015/2016: cost 36.4 million GBP) 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 percent (at year end 2015/2016: 15.3 percent). This includes over 400 million GBP invested in future hotel openings.
• Cash generated from operations of 431.4 million GBP (2015/2016: 374.1 million GBP) funded capital investment4 of 329.0 million GBP (2015/2016: 293.2 million GBP)
• Strong balance sheet with half year net debt of 988.2 million GBP (at year end 2015/2016: 909.8 million GBP) with leverage maintained

Financial Highlights	H1 2016/2017	H1 2015/2016	Change
Total revenue (in million GBP)	1,555.9	1,439.8	+8.1%
Underlying profit before tax1 (in million GBP)	307.0	291.3	+5.4%
Profit for the period (in million GBP)	200.7	196.3	+2.2%
Underlying basic EPS1 (in GB Pence)	133.88	127.30	+5.2%
Total basic EPS (Pence)	111.42	108.99	+2.2%
Interim dividend (Pence)	29.90	28.50	+4.9%

.

Chief Executive’s Commentary

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 percent to 1.6 billion GBP. Our core brands of Premier Inn and Costa continue to win market share with total sales growing 8.9 percent and 10.7 percent and like for like sales up 2.4 percent and 2.3 percent 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 to 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».

Chairman’s Commentary

Richard Baker, Chairman, said: «Whitbread has delivered another good set of results with underlying profit before tax up 5.4 percent. 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 percent to 29.90p».

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.