Interim Results Thursday 24th May 2001

Transcription

1 Interim Results Thursday 24th May 2001

2 SIR IAN PROSSER CHAIRMAN

3 BASS PLC Divisional Results First Half 00/01 * 3 Operating Profit ( m) Bass Hotels & Resorts* 185 Up 26.7% Bass Leisure Retail** 135 Up 2.3% Britvic Soft Drinks 11 Up 22.2% * 6 months to 31st March 2001 ** Ongoing business underlying growth of 8.7%

4 BASS PLC Key Events 4 Sale of 988 Pubs 625m Acquisition of Posthouse 810m

5 RICHARD NORTH FINANCE DIRECTOR

6 BASS PLC Highlights 6 Turnover * 2,093m +19.7% Operating profit* 365m +9.6% Profit before tax** 337m +4.0% Earnings per share** 28.3p +5.6% Dividend per share 10.4p +3.0% * continuing operations ** adjusted to exclude major exceptional items

7 BASS HOTELS & RESORTS Operating Profit $m H1 00/01 H1 99/00 Growth Americas Owned and leased hotels (4.4)% Managed & upscale franchise % NA Midscale franchise % Sub Total % EMEA Owned and leased hotels % Managed & franchised hotels % Sub Total % Asia Pacific % FelCor and others % Central services (39) (41) 4.9% Goodwill Amortisation (6) (1) - 7 Total 269* %* *at constant exchange rate $282m and 18.5%

8 BASS HOTELS & RESORTS Americas - Owned & Leased 8 Operating profit down 4% Miami, Chicago and New York in refurbishment San Francisco and New York markets soft First time contributions from San Juan and Austin Inter-Continentals

9 BASS HOTELS & RESORTS Americas - Managed & Upscale Franchise 9 Operating profit up 92% First time contribution from Bristol $10m before goodwill amortisation of $4m Revpar performance in North America - Inter-Continental up 3.2% - Crowne Plaza down 0.5%

10 BASS HOTELS & RESORTS North America - Midscale Franchise 10 Holiday Inn Holiday Inn Express Change in number of rooms -1.7% +11.6% Increase in RevPAR +2.1% +4.0% Increase in royalty rates +0.03% pt +0.08% pt Operating profit up 5.4%

11 BASS HOTELS & RESORTS EMEA - Effect of Exchange Rates 11 H1 00/01 H1 99/00 Depreciation Versus The Dollar $ : Euro % : $ % Note: equivalent exchange rates for the 2nd half of 99/00 were $:Euro ; $:

12 BASS HOTELS & RESORTS EMEA - Owned & Leased 12 Overall operating profit up 6.1% Strong RevPAR performance - Inter-Continental up 6% - Crowne Plaza up 7% - Holiday Inn up 11% At constant exchange rates profits up by 19.5%

13 BASS HOTELS & RESORTS EMEA - Managed & Franchised 13 Overall operating profit flat At constant exchange rates profit up by 8.3% Management/franchise system increased by 19 properties RevPAR performances - Inter-Continental up 2.3% - Crowne Plaza up 0.3% - Holiday Inn up 5.2%

14 BASS HOTELS & RESORTS Asia Pacific 14 Operating profit up 36% RevPAR - Inter-Continental down 1.8% - Crowne Plaza up 0.1% - Holiday Inn up 9.4%

15 BASS HOTELS & RESORTS Operating Profit $m H1 00/01 H1 99/00 Growth Americas Owned and leased hotels (4.4)% Managed & upscale franchise % NA Midscale franchise % Sub Total % EMEA Owned and leased hotels % Managed & franchised hotels % Sub Total % Asia Pacific % FelCor and others % Central services (39) (41) 4.9% Goodwill Amortisation (6) (1) - 15 Total 269* %* *at constant exchange rate $282m and 18.5%

16 BASS LEISURE RETAIL Summary Results 16 m H1 00/01 H1 99/00 Growth Restaurants % Pubs & Bars % Ongoing Business % Disposals Other 7 - Reported %

17 BASS LEISURE RETAIL Ongoing Business 17 m H1 00/01 H1 99/00 Growth As reported % Preopening and closure 15 6 costs Underlying growth rate %

18 BASS LEISURE RETAIL Restaurant Division 18 Average number of outlets unchanged Sales up 5.9% to 288m - Drinks sales up 3.9% - Food sales up 9.4% Like for like sales (uninvested) - Branded outlets up 0.9% Pre-opening and closure costs 6m higher Profits unchanged at 39m

19 BASS LEISURE RETAIL Pubs and Bars Division 19 Average number of outlets down 0.9% Sales up 0.5% to 441m - Drinks sales up 1.3% - Food sales down 1.6% Like for like sales (uninvested) - Branded outlets down 2.2% - Unbranded outlets down 3.5% - Development estate down 7.8% Pre-opening and closure costs 3m higher Profits up 3m to 96m

20 BASS LEISURE RETAIL Returns* 20 Outlet Level Outlet Level Returns** Returns** Overall 00/01 New Sites Restaurants 15.3% 19.5% Pubs & Bars 18.3% 22.6% Total 17.0% 20.8% * excludes Development Estate ** defined as profit before interest, central overhead and tax as a % of book value (excluding incremental revaluations since 1992)

21 BASS LEISURE RETAIL Development Estate conversions complete at half year end 178 now open; 30 on site - On track for 300 by year end 92m invested in outlets now open

22 BASS LEISURE RETAIL Development Estate 22 Food, Drink & Accommodation AWT % Allied Last Year 1998/99 BLR Pre-Conversion BLR Post-Conversion

23 BRANDED DRINKS Britvic Soft Drinks Results 23 Volumes up 0.3% Turnover up 3.3% Average realised price per litre up 3.1% Operating profit up 22% to 11 million

24 BASS PLC 28 weeks ended 15 April m H1 00/01 H1 99/00 Growth Operating profit % Exceptional Items (33) (16) PBIT Interest (29) (84) Tax (104) (87) Minority Interests (4) (3) Earnings Earnings per share* 28.3p 26.8p +5.6% * Adjusted for exceptional items

25 BASS PLC Net Cash Flow 00/01 25 m H1 00/01 H1 99/00 Operating profit Depreciation Working capital/other (53) (26) Trade loans - 10 Capital expenditure (net) (285) (302) Operating cash flow Interest (36) (50) Taxation (70) (77) Dividends (201) (198) Normal cash flow (159) (78) Major acquisitions/disposals (165) (337) Net Cash Flow (324) (415)

26 BASS PLC Balance Sheet 26 m Apr 01 Sep 00 Apr 00 Net debt ,441 Shareholder equity 5,369 5,379 4,130 Market-cap gearing* 12% 6% 37% Interest cover (adjusted) 12.6x 6.0x 4.9x * Based on share prices of 800p, 665p and 750p respectively

27 TIM CLARKE Chief Executive

28 BASS PLC Overview 28 Strong brand portfolio Two hospitality businesses - Hotels focus on brand distribution to capture travel growth - Retail focus on high returns from brand conversion pipeline Strong financial position to take advantage of opportunities Rigorous investment criteria

29 BASS PLC Investment Criteria 29 NPV Positive Above WACC returns by Year 3 Earnings enhancing in first full year of ownership

30 BASS PLC Hospitality - Brand Strategy 30 Apply own brands to assets with growth potential - Building brand distribution and marketing scale - Adding value to property assets - Brand revenue premiums driving conversion returns Investment in brand offer development and revenue delivery Improvement in infrastructure support and cost efficiency

31 BASS PLC Hospitality - Investment Strategy 31 Capital expenditure behind proven brands to drive distribution Acquisitions, subject to stated financial criteria - Ex-Allied pubs, Posthouse,, Inter-Continental Hong Kong Upgrading prime assets with long-term potential - Big 10 Inter-Continentals, Restaurant sites Recycling property capital from ex-growth assets - Sale of 988 pubs, Chateau Lascombes

32 BASS HOTELS & RESORTS Expanding Global Distribution - Last 6 Months 32 Hotels Added Current Total Upscale Inter-Continental Crowne Plaza* Midscale Holiday Inn* Express Staybridge Suites ,000 rooms across 93 countries * Including Posthouse properties to be converted

33 BASS HOTELS & RESORTS Profit Mix 1999/2000 (incl. Posthouse pro-forma) Americas EMEA 47% 49% Managed & Franchised Managed & Franchised Owned & Leased Asia Pacific 4% Managed & Franchised 33 Owned & Leased O & L * excludes FelCor/Other, central overheads and goodwill amortisation

34 BASS HOTELS & RESORTS Americas Region hotels and 361,410 rooms in total 28% market share of US midscale rooms revenue Predominantly franchise and management business - More resilient to slow-down in economic cycle 26% of profit from 38 owned/leased hotels - mainly 16 upscale hotels in key markets Conversion of ex-bristol leases to management contracts

35 BASS HOTELS & RESORTS Americas - Midscale Strategy 35 Aggressive quality programme over last 5 years - 29% growth in RevPAR (vs 17% for competitive segment) 30% RevPAR premium - 70% business mix Competitors starting to follow suit Focus on value engineered development prototype to regenerate future growth Holiday Inn - Atlanta Airport

36 BASS HOTELS & RESORTS Americas - Midscale Strategy 36 Holiday Inn Express - Alberta, Canada Rapid expansion to 86,087 rooms Strong royalty streams and high front-end fees during build up Historical rate of growth will slow down 296 hotels 23,400 rooms in pipeline

37 BASS HOTELS & RESORTS Americas - Midscale Strategy 37 Established new product with 30 properties Successful expansion despite tighter financing environment 39 hotels already in pipeline - 35 franchised

38 BASS HOTELS & RESORTS Americas - Midscale Strategy 38 Build existing RevPAR advantage Strong marketing programmes in place - New Mark TV advertising for Holiday Inn - Companion Flies Free promotion and Youth Soccer programme - Upweighting TV advertising for Express and billboard coverage - Priority Club enrolment drive this summer - Incremental AmEx direct mail campaign Funding from brand system and business partners

39 BASS HOTELS & RESORTS Americas - Upscale Strategy 39 Small scale US brand position currently Modernisation of key properties underway Focus on new build/ owned/jv projects in major city locations Mexico City

40 BASS HOTELS & RESORTS Americas - Upscale Strategy 40 [photo] Regional brand critical mass reached - 93 hotels Accelerating franchise pipeline - 19 hotels Crowne Plaza Cincinnati - Ohio Development of MC/JV pipeline following Bristol acquisition - 5 hotels

41 BASS HOTELS & RESORTS EMEA Strategy hotels and 106,500 rooms following Posthouse acquisition Up from 126 hotels and 25,000 rooms since 1991 Cross border travel within Europe growing at 8% p.a. Competitive revenue advantage of international brands Growth of consumer usage of loyalty programmes and international reservation systems Fragmented market of sub-scale domestic brands

42 BASS HOTELS & RESORTS EMEA Strategy 42 Inter-Continental and Crowne Plaza : 22 in pipeline Owned/leased and MC/JV key city and airport development, e.g. Munich, Warsaw, Birmingham NEC, Blackfriars Warsaw

43 BASS HOTELS & RESORTS EMEA Strategy 43 Holiday Inn and Express Disneyland : Paris Holiday Inn 76 in pipeline Franchise and MC growth to develop scale in key markets Flagship HI owned investment of $57m at Disneyland Paris Initial owned new build Express investment in Germany and Spain

44 BASS HOTELS & RESORTS European Consolidation and Posthouse m acquisition on 7.9x EBITDA meets investment criteria Domestic midscale leadership in key out-bound market Pre-deal expectations confirmed after 7 weeks ownership : 7 fewer disposals Rapid integration : Rebranding scheduled for 2nd half 2001 Projected RevPAR uplifts will be demonstration of value added by global brand to domestic asset owners

45 BASS HOTELS & RESORTS Asia Pacific hotels and 42,525 rooms Largest branded operator in region Pipeline of 21 hotels Management contract pipeline in China accelerating SPHC brand conversions proceeding to plan Acquisition returns in line with appraisal

46 BASS HOTELS & RESORTS Inter-Continental - Hong Kong room hotel Flagship for the brand in top 5 world city Strengthen BHR s leading position in China Multiple of x EBITDA Meets investment criteria

47 BASS HOTELS & RESORTS Approach to Property Ownership 47 Own or lease 186 of 3,209 hotels (5.8%) Own or lease 41,290 out of 510,442 rooms (8.0%) Own / lease proportion of profits, (incl Posthouse 99/00 pro forma) (54%) Capital employed per hotel $1.6m per room $10,000

48 BASS HOTELS & RESORTS Capital Allocation 48 We will invest capital in brand and region specific distribution objectives Secure strategic sites - primarily upscale Drive domestic distribution - to secure mass conversions Develop prototypes Recycle capital

49 BASS HOTELS & RESORTS Summary 49 Expanding brand distribution - Organic pipeline currently 69,000 rooms Revenue uplifts from Posthouse conversions and Big 10 modernisation programme Management action to withstand slower economic conditions Acquisition opportunities to add value

50 BASS LEISURE RETAIL Repositioning to High Take Branded Outlets 50 Focus on growth segments Development of brand and outlet level scale economies Improved asset productivity and resilient margins 2000 outlets - AWT 13.1k Over 900 branded outlets - AWT 17.3k - Accounting for over 50% of sales - Positive like-for-like profits growth

51 BASS LEISURE RETAIL Growth Prospects 51 Strong brand portfolio adding value to conversions of 550 ex-allied sites complete with over 50% uplifts Strategic withdrawal from smaller beer dependent locals - 6,500 sold since Removal of drag on growth Growth opportunities from brand development uplifts - Majority of 1,000 unbranded sites with conversion potential

52 BASS LEISURE RETAIL Estate Repositioning k % of Sales k k Food Draught Beer Average Weekly Take Key

53 BASS LEISURE RETAIL Improving market conditions 53 Growth in eating and drinking out + 4% p.a. Decline in on-trade beer volumes Industry restructuring - Move from 70% of pubs held by public equity in 1990 to 15% by year-end Maintenance capital shifted to lessees - reduction in investment Falling new expansionary capex

54 BASS LEISURE RETAIL Capital Recycled net book value 1.95 bn Released 1.5bn from disposals Organic expansionary capex 1.3 bn Raised core EBITDA returns on capital by 2% points Acquired ex-allied pubs for 0.9 billion - on-track to deliver

55 BASS LEISURE RETAIL High returns from brand uplifts 55 Branded development is key source of value creation Returns substantially above WACC fully sustained after 6 years of brand investment Subsequent small moves in like for like sales marginal relative to scale of development value creation

56 BASS LEISURE RETAIL Structure 56 BLR total 13.1k AWT Restaurant Group - Suburban - City Centre Pubs & Bars - Suburban - High Street 555 branded outlets ( 18.2k AWT) 366 branded outlets ( 16.0K AWT) 102 unbranded outlets ( 10.4k AWT) 1,038 unbranded outlets ( 9.7K AWT)

57 BASS LEISURE RETAIL Restaurant Group - Suburban Pub Restaurants 57 Harvester -St. Albans Vintage Inn - Crooked Chimney, Welwyn Garden City Harvester, Toby Carvery and Vintage Inns Economies of scale - Marketing - Food supply chain LFL sales growth and LFL margin improvement New sites showing strong AWT s - 26k and returns - 18% Further roll-out opportunities through conversion and site acquisition

58 BASS LEISURE RETAIL Uplifts on former Allied sites 58 Food, Drink & Accommodation k 23.5k k 14.0k k Harvester - 12 Vintage Inns - 22 Toby - 14 Under Allied Management Post-conversion 26.0k

59 BASS LEISURE RETAIL Restaurant Group - City Centre 59 Brands - All Bar One, Browns, Alex (Germany) UK: Strong brands - AWT over 24k - ROI over 19% Germany: First mover advantage as brands emerge Further roll-out opportunities through site acquisition - Browns / All Bar One new sites showing high AWTs - 33k - Alex expanding rapidly - 23 sites now from 11 in 1999

60 BASS LEISURE RETAIL Pubs & Bars - High Street 60 Premium - O Neill s, Edwards and It s a Scream Proven brands with high takes and returns Pressure on LFL sales, margins improved Selected additional sites in key locations New openings - 31k AWT - over 30% ROI Value - Goose 31 now open Roll-out potential Edwards - Bold St, Liverpool

61 BASS LEISURE RETAIL Pubs & Bars - Suburban Locals 61 Ember Inns Newly developed brand - High quality amenity in local pubs - AWT 15k Significant roll-out opportunities through conversion - 85 now open up from 52 in October Ember - Royal Oak, Halesowen

62 BASS LEISURE RETAIL Uplifts on former Allied sites 62 Food, Drink & Accommodation k 15.8k O Neills k 10.6k It s A Scream k 15.0k Goose k 14.0k Ember Inns - 40 Under Allied Management Post conversion

63 BASS LEISURE RETAIL Unbranded Estate 63 Pipeline for future branding/formatting New brands/formats under development - Sports/entertainment - Local food - London professionals offer Strategy - Defend like for like profits in short-term - Review sites against emerging site criteria - Convert suitable sites or manage for value

64 BASS LEISURE RETAIL Central Economies 64 Purchasing and supply chain gains Overhead reduction - Process re-engineering Staff productivity - Employment cost as % sales decrease Increased brand marketing - Positive results from Harvester, Toby, Hollywood Bowl - and O Neills

65 BASS LEISURE RETAIL Summary 65 Repositioned for the future Strong brand portfolio - High takes - Holding high returns Pipeline of conversion sites - Significant conversions - uplifts Focus on returns/value creation

66 BASS PLC Outlook 66 Short term effects of US slow-down Strong management action on revenue and costs to mitigate impact Improved medium term supply/demand balance in our markets

67 BASS PLC 67 Strong brands Leadership positions Growth and returns Geographic diversity

68

69 BASS PLC S1 Investment m 00/01 99/00 Gross Disposals Net Gross Disposals Net Hotels & Resorts 134 (10) (2) 128 Leisure Retail 173 (6) (18) 113 Soft Drinks 15 (6) 9 18 (7) 11 Other 4 (19) (15) 20 (2) 18 Continuing Ops 326 (41) (29) 270 Discontinued (1) 32 Group 326 (41) (30) 302 Trade Loans (32) (10)

70 BASS HOTELS & RESORTS S2 Distribution - H Number of Hotels Number of Rooms Americas Owned & Leased 38 10,911 Managed & Upscale Franchise ,238 NA Midscale Franchise 2, ,261 EMEA Owned & Leased* 55 14,771 Managed and Franchised ,438 Asia Pacific ,525 TOTAL 3, ,144 *Excluding Posthouse, 79 hotels and 12,298 rooms

71 BASS HOTELS & RESORTS S3 Distribution - H Number of Hotels Number of Rooms Americas Owned & Leased 30 9,846 Managed & Upscale Franchise ,473 NA Midscale Franchise 2, ,700 EMEA Owned & Leased 55 14,591 Managed and Franchised ,885 Asia Pacific ,978 TOTAL 2, ,473

72 BASS HOTELS & RESORTS Geographic Distribution - 00/01 S4 Americas EMEA Asia Total Pacific , ,063 Additions Removals* (42) (11) 3 (50) ,463 ** ,130 * net of reinstatements ** excludes the 79 Posthouse hotels

73 BASS HOTELS & RESORTS Geographic Distribution - 00/01 S5 Americas EMEA Asia Total Pacific ,357 92,305 41, ,064 Additions 10,864 3, ,538 Removals* (6,811) (1,420) 773 (7,458) ,410 **94,209 42, ,144 * net of reinstatements ** excludes the 12,298 Posthouse rooms

74 BASS HOTELS & RESORTS Occupancy, Rate and RevPAR S6 Occupancy % Rate $ RevPAR $ 00/01 99/00 00/01 99/00 00/01 99/00 Growth AMERICAS* - Inter-Continental % - Crowne Plaza % - Holiday Inn % - Express % EMEA - Inter-Continental % - Crowne Plaza % - Holiday Inn % - Express % Asia Pacific - Inter-Continental % - Crowne Plaza % - Holiday Inn % * North Americas only

75 BASS HOTELS & RESORTS Revenues - Half Year to 30th March S7 $m 00/01 99/00 Growth Americas Owned and leased hotels % Managed & Upscale franchise % NA Midscale franchise % Sub Total % EMEA Owned and leased hotels % Managed & franchised hotels % Sub Total % Asia Pacific % Total 1, %

76 BASS HOTELS & RESORTS Full Year 2000 S8 $m Revenue Operating Profit Americas Owned and leased hotels Managed & upscale franchise NA Midscale franchise Sub Total 1, EMEA Owned and leased hotels Managed & franchised hotels Sub Total Asia Pacific FelCor and others - 25 Central services - (73) Goodwill Amortisation - (8) Total 2,

77 BASS HOTELS & RESORTS Margins - Explanatory Note S9 Owned and leased hotel margins affected by refurbishments Managed and franchised margins very different Overall margins materially affected by mix changes Americas managed and upscale franchise changed by Bristol leases Currently leases have all hotel revenues included in turnover From 1st July, these change to management contracts, so reported turnover will fall and margins increase

78 BASS LEISURE RETAIL Branded Outlets S10 Restaurants Apr 01 Sept 00 Increase Harvester Toby Carvery Vintage Inns Innkeeper s Fayre All Bar One Browns Holiday Inn Express Alex (Managed) Other Total Restaurants

79 BASS LEISURE RETAIL Branded Outlets (continued) S11 Pubs & Bars Apr 01 Sept 00 Increase O Neills Edwards It s A Scream Goose Hollywood Bowl Ember Inns Other Total Pubs & Bars Total of branded outlets

80 BASS LEISURE RETAIL Total Managed Estate at April 01 S12 Outlet Numbers Restaurants 555 Pubs & Bars 366 Total Branded 921 Unbranded* 1,140 Total 2,061 *includes unconverted Development Estate

81 BASS LEISURE RETAIL Managed Outlet Numbers - 00/01 S13 Outlet Numbers Managed ,033 Outlets disposed (992) Outlets acquired/built ,061