interim results presentation 26 august 2004
DESCRIPTION
Interim Results Presentation 26 August 2004. Brian Wallace Deputy Group Chief Executive and Group Finance Director. Hilton Group plc - Summary of Performance. Half year to 30 June. 2004 £m. 2003 £m. Variance B(W). Hotels67.1 56.119.6% Betting153.7 101.851.0% - PowerPoint PPT PresentationTRANSCRIPT
Interim Results Presentation26 August 2004
Brian WallaceDeputy Group Chief Executive
and Group Finance Director
3
Hilton Group plc - Summary of Performance
(1) Before goodwill amortisation and exceptional items
2004£m
2003£m
VarianceB(W)
Hotels 67.1 56.1 19.6%
Betting 153.7 101.8 51.0%
Central costs and income (6.8) (6.6) (3.0)%
Operating profit (1) 214.0 151.3 41.4%
Interest (24.3) (40.8) 40.4%
Profit before tax (1) 189.7 110.5 71.7%
Effective tax rate (1) 15.5% 22.0%
EBITDA (1) 280.0 220.0 27.3%
EPS (1) 10.1p 5.5p 83.6%
Half year to 30 June
4
Taxation
Normal tax charge:
Tax charge at 15.5% on profit before tax,
exceptional items and goodwill amortisation 29.4
Exceptional tax credit:
Tax on exceptional items -
Exceptional tax credit (9.0)
Total tax charge 20.4
£m
5
Hotels Worldwide RevPAR 2004 vs 2003
Like for Like Hotels, Constant Currencies
12.6%
18.9%
7.8%
11.7%
4.2%
11.1%
(3.3)%
(10)%
(5)%
0%
5%
10%
15%
20%
25%
Jan Feb Mar Apr May June July
Occupancy % pts growth
Rate growth
RevPAR growth
6
Worldwide RevPAR by Ownership Type
1.3%
6.5% 6.2%8.3%
10.0%
23.5%
4.9%
8.3%
14.6%
0%
5%
10%
15%
20%
25%
Owned & Fixed lease Contingent lease Management contract
Like for Like Hotels, Constant Currencies
RevPAR growth 2004 vs 2003 - first half
Q1 Q2 H1 Q1 Q2 H1 Q1 Q2 H1
7
Hotels - Cost Management
(1) Before goodwill amortisation and exceptional items
Total£m
Increasing revenue
£m
Declining revenue
£mFirst Half
Revenue movement 101.3 124.8 (23.5)
GOP movement (1) 54.8 72.0 (17.2)Incremental conversion 54.1% 57.7% 26.8%
Rental & Owners return (36.5)Property taxes / rates (2.3)Insurance (0.9)Other (3.5)
Operating profit increase (1) 11.6
Like for Like, Constant Currencies
8
UK Hotels RevPAR 2004 vs 2003
(5)%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Jan Feb Mar Apr May June July
London
Provinces
Total UK
Like for Like
9
Europe (Hilton brand) - RevPAR by Country
Like for Like, Constant Currencies, First Half
3.9%
(8.4)%
(3.0)%
8.5%
0.4%
3.1%
6.2%
(3.6)%
0.3%
(10)%
(8)%
(6)%
(4)%
(2)%
0%
2%
4%
6%
8%
10%
Germany France Benelux
Q1 Q2 H1
Q1
Q2
H1 Q1
Q2 H1
10
Scandic RevPAR 2004 vs 2003
6.0%
0.4%
9.2%
(4.7)%
(2.0)%
7.1%
(5.5)%
(10)%
(8)%
(6)%
(4)%
(2)%
0%
2%
4%
6%
8%
10%
Jan Feb Mar Apr May June July
Occupancy % pts growth
Rate growth
RevPAR growth
Like for Like Hotels, Constant Currencies, Scandic Acquired
RevPAR growth 2004 vs 2003
11
Scandic Performance 2004 vs 2003
(a) At constant currencies
(b) Includes support office costs not allocated to individual hotels
2004Actual
£mOther (a) (b)
£m
Revenue 242.4 11.6 (7.4) 1.1 247.7 (a)
GOP 76.0 5.9 (6.3) (0.9) 74.7 (a)
Inc. conversion 50.9% 14.9%
Costs (69.7) (1.3) 1.7 0.7 (68.6)
Profit 3.4 4.6 (4.6) (0.2) 3.2 (a)
Disposal of Pandox 2.9 -
Exchange translation - (0.3)
6.3 2.9
Like for like revenue
gainers (a)
£m
2003Actual
£m
Like for like revenue losers (a)
£m
Half year to 30 June
12
Worldwide Betting
UK Retail 338.0 274.6 119.6 83.1
Ireland & Belgium 35.9 33.4 7.0 5.5
Telephone Betting - excluding high rollers 25.9 14.9 11.8 5.0 - high rollers - (1.6) - (1.2)
25.9 13.3 11.8 3.8
eGaming 44.7 30.8 12.1 6.2
Vernons 10.6 10.5 3.2 3.2
Worldwide Betting 455.1 362.6 153.7 101.8
Gross Win2004 2003£m £m
(1) Before goodwill amortisation and exceptional items
Operating Profit (1)
2004 2003£m £m
Half year to 30 June
13
UK Retail
(1) Excluding machines
2004£m
2003£m
VarianceB(W)
Gross win 338.0 274.6 23.1%
Duty / Gross profits tax (50.2) (40.2) (24.9)%
Other costs (168.2) (151.3) (11.2)%
Operating profit 119.6 83.1 43.9%
Staff costs per slip 34.29p 31.72p (8.1)%
Stake per slip (1) £8.37 £8.24 1.6%
• First half OTC growth of 14% benefited from good results at Ascot, Cheltenham and Euro 2004.• Machines gross win grew 62% to £83.8m with average number of FOBTs at 4,363 (2003: 2,230).
Half year to 30 June
14
Telephone Betting (excluding high rollers)
(1) Active customers are those who placed a bet during the period
2004£m
2003£m
VarianceB(W)
Gross win 25.9 14.9 73.8%
Gross profits tax (3.8) (2.2) (72.7)%
Other costs (10.3) (7.7) (33.8)%
Operating profit 11.8 5.0 136.0%
Average stake per call £79.77 £77.75 2.6%
Salary cost per call 70.0p 67.2p (4.2)%
No. of calls (000’s) 3,334 3,060 9.0%
Active customers (000’s) (1) 102.2 91.9 11.2%
Half year to 30 June
15
Active customers (000’s) (1)
Sportsbook 231 151 53.0%
Casino 66 36 83.3%
Poker 33 14 135.7%
On-line registrations (000’s) 213 153 39.2%
eGaming
2004£m
2003£m
VarianceB(W)
Gross win 44.7 30.8 45.1%
Gross profits tax (2.7) (1.5) (80.0)%
Other costs (29.9) (23.1) (29.4)%
Operating profit 12.1 6.2 95.2%
(1) Active customers are those who placed a bet during the period
Half year to 30 June
16
Hilton Group plc - Cash Flow
2004£m
2003£m
Cash inflow from operating activities 255.6 226.5Interest, tax and dividends paid (126.6) (155.9)
Free cash flow 129.0 70.6Capital expenditure (88.8) (101.8)Free cash flow after capex 40.2 (31.2)Intangible (betting shop licence) additions (13.6) (2.1)Proceeds from asset sales 12.6 0.8Acquisitions / disposals 1.3 -Exchange and other movements (1) 81.1 (85.8)
Net borrowings movement 121.6 (118.3)Opening net borrowings (1,147.7) (1,164.8)
Closing net borrowings (1,026.1) (1,283.1)(1) Includes £74.7m favourable exchange (2003: £88.5m adverse)
Half year to 30 June
17
Analysis of 2004 Capital Expenditure
£mHotels
Acquisition linked development:
Sydney (refurb) 18.7
Dusseldorf (refurb) 2.5
21.2
Other 35.7
Total Hotels 56.9
LivingWell 3.6
60.5
Worldwide Betting
Development – operating assets 7.8
FOBTs 7.0
Other (including TVs £2.6m, Ireland inc. EPOS £2.4m) 9.8
eGaming / Telephone betting 3.7
28.3
Total Group 88.8
David MichelsGroup Chief Executive
20
Chart of Past EPS
5
6
7
8
9
10
11
H1 2001 H1 2002 H1 2003 H1 2004
Earnings per Share (p)
21
Recent Trading - Betting
“A good year, so far, with growth in all three areas”
22
Recent Trading - Hotels
London
Japan
Canada
Germany
Holland
France
UK Provinces
Caribbean
Australia
Belgium
Sweden
Norway
Finland
Middle East
South America
Turkey
Rest of Asia
Egypt
23
Property
£2.3bn of hotel assets
24
Hilton’s Central London Occupancy (11 hotels) – First 7 months
Like for Like Hotels
70%
71%
72%
73%
74%
75%
76%
77%
78%
79%
80%
2001 2002 2003 2004
25
Hilton and Scandic Brand Websites
(excludes Third party Website bookings)
Res
erva
tion
s
0
10,000
20,000
30,000
40,000
50,000
60,000
J an-03 Feb-03 Mar-03 Apr-03 May-03 J un-03 J ul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 J an-04 Feb-04 Mar-04 Apr-04 May-04 J un-04
Brand Websites Linear (Brand Websites)
Launch of localised websites
26
Pipeline Growth
Openings 2004 London Waldorf, UK
Odawara, JapanHelsinki Kalastajatorppa, FinlandBali, Indonesia (Conrad)7 x Trident by Hilton, IndiaMumbai Towers, IndiaNewcastle Gateshead, UKParis Arc de Triomphe, FranceMiami, USA (Conrad)Shenzhen, ChinaSanto Domingo, Dominican RepublicSan Salvador, El SalvadorKuala Lumpur, MalaysiaHilton Barbados, CaribbeanCebu, Philippines
Openings 2005
Jeddah Palace, Saudi ArabiaValencia, SpainVenice, ItalyCasablanca Airport, MoroccoPhuket, Thailand (Conrad)Sharm Nabq, EgyptHilton Diagonal Mar, SpainWarsaw, PolandDubrovnik, CroatiaSydney, AustraliaEvian, FranceHilton Malabo, Equatorial GuineaDublin Airport, IrelandTokyo, Japan (Conrad)Hilton Beirut, LebanonMillennium Hilton Bangkok, ThailandHilton Seychelles Resort, SeychellesDenarau, Fiji
27
Capital Expenditure 2005
• £110m - £120m on hotels
• Less than £100m on betting but will still invest to grow the business
28
Fixed Odds Betting Terminals (FOBTs)
• 21% reduction in transactions per terminal since the introduction of the Code of Conduct
• There is an increase of 7% in the average stake per transaction
• Net effect is a 16% decline in the average weekly gross win per terminal to June
29
Over-the-Counter
Over-the-counter business up 14%
30
eGaming
31
Telephone Betting
First half profits more than double
32
Anthony Harris
33
Hilton University
34
Outlook
Hotels – “difficult to forecast, but cautiously optimistic”
Betting – “continued growth, but at a slower rate than the first half”
Interim Results Presentation26 August 2004