Whitbread H2 2025 Earnings Report

Whitbread EPS Results

• Actual EPS: GBX 194.60
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Whitbread Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Whitbread Announcement Details

• Quarter: H2 2025
• Date: 5/1/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 3:00AM ET

Whitbread (LON:WTB) is the owner of Premier Inn, the UK’s biggest hotel brand, with 86,000 rooms in over 850 hotels and a growing presence in Germany with 10,500 rooms in 59 hotels, offering quality accommodation at affordable prices in great locations. People are at the heart of our business. We employ over 38,000 team members in over 900 Premier Inn hotels across the UK and Germany.

Whitbread H2 2025 Earnings Call Transcript

Key Takeaways

• Company remains on track with its five-year plan to deliver at least £300 m of incremental adjusted PBT by FY30 and has launched an accelerated £250 m share buyback over the next 12 months.
• In the UK, total accommodation sales were flat year-on-year through network expansion and commercial programs, while a 2 % reduction in the cost base kept EBITDA down just 3 %, and an accelerated growth plan will convert underperforming F&B outlets into 3.5 k profitable extension rooms.
• Germany delivered double-digit accommodation sales growth, reduced its adjusted loss to £11 m (from £36 m last year), and is set to achieve profitability of £5–10 m PBT in FY26 with a path to £70 m PBT by FY30 as its estate scales to 20 k rooms.
• The group generated £723 m of adjusted operating cash flow, maintained leverage at 3×, and continues to recycle capital—£137 m from property disposals and guiding net CapEx of £400–500 m—to fund growth and return £442 m to shareholders through dividends and buybacks.
• Efficiency and cost programs delivered £75 m of savings in FY25 and are now guiding £60 m for FY26, helping to offset inflation and improve margins across the estate.

Presentation

[Dominic Paul, Chief Executive Officer at Whitbread]

Good morning, everyone. I'm Dominic Paul, and I'd like to welcome you to Whitbread's full year twenty twenty five results presentation. Today's presentation will take place by remote webcast, followed by a live q and a session at 09:15AM UK time when Hemant Patel, our group CFO, and I will be happy to answer your questions. Details of how to join the call can be found on our website. I'll take you through the excellent progress we've made on our strategic plans during the year and a summary of our results.

[Dominic Paul, Chief Executive Officer at Whitbread]

I'll then hand over to Hemant, who will take you through our results in detail. I'll then cover the strategic initiatives which will add up to our five year plan, and Hemant will provide an update on capital allocation. But first of all, I will start with the highlights from our results and a summary of our strategic progress over the past year. Back in October 2024, we announced our five year plan to deliver a step change in our profits, margins, and returns. We're making excellent progress with strong momentum building across all of our key initiatives.

[Dominic Paul, Chief Executive Officer at Whitbread]

Whilst market demand has been softer over the past year, we are extending our outperformance versus the market in both The UK and Germany, thanks to our commercial programs. We're really pleased with the progress we're making in Germany and set for a breakthrough year delivering profitability in full year 2026. Our five year plan is on track to deliver incremental adjusted profit before tax of at least £300,000,000 per annum. And given our progress to date, we are increasingly confident, and we are now accelerating the planned returns with a further £250,000,000 share buyback to be completed over the next twelve months. Despite market demand, UK total accommodation sales were in line with last year, driven by continued network expansion and commercial initiatives.

[Dominic Paul, Chief Executive Officer at Whitbread]

In Germany, we made excellent progress this year, delivering double digit accommodation sales growth. This resulted in a much reduced loss of 11,000,000 versus £36,000,000 in the previous year. Despite the impact to inflation, our cost base reduced by 2%, reflecting the impact of our accelerating growth plan and our cost efficiencies. Whilst UK return on capital employed was back year on year at 12.9, it remains almost two percentage points higher than it was pre pandemic. While lower interest receivable meant that group PBT was back 14%, The strength of our vertically integrated model meant that group EBITDA was down just 3% year on year and still 37% up versus full year 2020.

[Dominic Paul, Chief Executive Officer at Whitbread]

As a result, we continue to generate significant free cash flow that help fund our ongoing program of investment as well as £442,000,000 of shareholder returns in the year. Looking forward to 2026, we are continuing to execute at pace across our three strategic pillars whilst also delivering for our guests. First, in The UK, our commercial program is driving our outperformance and includes several new revenue opportunities. We will open 1,000 to 1,200 new rooms this year, and we are making great progress with our accelerating growth plan, opening the first of our new extension rooms and fully reversing the impact on full year 2025 profits this year. Second, in Germany, this is a breakthrough year for us in Germany, and we will reach adjusted profit before tax of between 5 to £10,000,000 this year.

[Dominic Paul, Chief Executive Officer at Whitbread]

Our brand is getting stronger, and our hotels are continuing to mature. Supported by our commercial program, we are delivering a strong trading performance that is ahead in the market. And we will also open 400 new rooms this year and continue to grow our pipeline. And third, we will continue to drive long term growth. We will recycle 250,000,000 to £300,000,000 worth of property this year to help fund our network expansion and accelerating growth plan whilst maintaining net CapEx between 400 to £500,000,000.

[Dominic Paul, Chief Executive Officer at Whitbread]

With tight control over our cost base, we expect to deliver £60,000,000 of efficiencies this year, up from £50,000,000 guided previously. And reflecting our increased confidence in our five year plan, we were accelerating the delivery of benefits. In addition to the recommended final dividend, have today announced a further £250,000,000 share buyback to be completed over the next twelve months. As I've already said, we're making excellent progress with our plans and increasingly confident about what they will deliver over the next five years. Our accelerating growth plan to optimize food and beverage at a number of sites and unlock 3,500 extension rooms will increase margins and returns for The UK business.

[Dominic Paul, Chief Executive Officer at Whitbread]

We will open at least 8,000 new high returning hotel rooms, taking us to 98,000 open rooms in The UK and Ireland. Together, these two elements will deliver over £220,000,000 of incremental PBT by full year 30. In Germany, we are making excellent progress and expect to have 20,000 rooms open by the end of full year 30. With increased scale and the continued maturity of our state and brand, we expect to reach £70,000,000 of PBT by full year thirty, an uplift of £80,000,000 versus full year 2025. We remain on track to deliver £250,000,000 worth of savings across the life of the plan.

[Dominic Paul, Chief Executive Officer at Whitbread]

We expect our commercial program to deliver positive like for like sales momentum in The UK and are confident in at least offsetting cost inflation over the life of the plan. Our goal is to do better than this. This plan is fully funded, and we will keep average net CapEx of £500,000,000, which is net of proceeds from property related transactions. We will recycle at least £1,000,000,000 of more mature capital of our sale and leasebacks and property disposals over the life of the plan, which I'll come back to talk about later. Bringing this all together, given our progress over the past year, we are confident that we will deliver as planned.

[Dominic Paul, Chief Executive Officer at Whitbread]

I will now hand over to Hewend, who will take you through our performance in more detail.

[Hemant Patel, CFO & Director at Whitbread]

Thank you, Dominic, and good morning, everyone. I'll start with an overview of the group numbers before covering The UK and Germany in a bit more detail, and then on to current trading. A robust trading performance in The UK and excellent progress in Germany meant that overall revenues were broadly in line with last year. The impact of continued network expansion and higher than expected gross inflation were largely mitigated by reductions in our cost base due to the accelerating growth plan and excellent progress in cost efficiencies, resulting in operating costs falling by 1%. As a result, adjusted EBITDA was down 3% at just over 1,000,000,000.

[Hemant Patel, CFO & Director at Whitbread]

Having returned £442,000,000 to shareholders over the past year, lower interest receivable on our cash balances meant that adjusted profit before tax was £483,000,000. Adjusting items of a hundred and £16,000,000, much of which related to our accelerated growth plan, meant that restructuring profit before tax was £368,000,000. Our model continues to generate significant operating cash flow, and we were able to build on this with £137,000,000 of proceeds from property disposals. By recycling capital, we're funding our growth plans and investing in higher return opportunities. We've maintained a strong balance sheet with a least adjusted leverage of three times, which is within our stated threshold of three and a half times.

[Hemant Patel, CFO & Director at Whitbread]

I'll now run through the drivers behind this performance, starting with The UK. Despite the market demand backdrop, accommodation network expansion and a strong commercial program meant that accommodation sales were in line with last year. The reduction in food and beverage revenues because of our accelerating growth plan was unexpected, with the result that total UK revenues were three percent behind last year. While our shift to a more efficient food and beverage offering at a number of our sites and an increased level of efficiencies meant that UK operating costs fell by 2%, the reduction in revenue meant that pretax margins reduced to 18.8%, and UK adjusted profit before tax was 14% behind last year at £507,000,000. Even with lower levels of market demand than last year, we delivered a robust accommodation sales performance, and this was in part due to our centralized pricing approach and unique business model.

[Hemant Patel, CFO & Director at Whitbread]

Occupancy remained high at 81%, which was down just one percentage point versus the prior year and was five percentage points higher than before the pandemic. Thanks to our brand strength, trading expertise, and the benefit of several commercial initiatives that Dominic will come on to, we are pleased to have held average room rates at just under £80. The result was that while RevPAR was back 2%, total accommodation sales were flat at around £2,000,000,000, over 50% higher than pre pandemic. Overall occupancy was 1% behind the market, which reflected our conscious decision to maximize revenue in a number of catchments where we had the opportunity to drive rates and therefore RevPARs higher. Our ability to add more rooms to our estate and fill them at attractive prices meant we outperform the market on accommodation sales growth in both first and second half of f y twenty five.

[Hemant Patel, CFO & Director at Whitbread]

Outperforming on RevPAR growth in lower demand periods is more difficult, however, as we have more rooms to fill than anyone else. Whilst we outperformed the market on RevPAR during the first half, new commercial initiatives coupled with our trading expertise meant that we outperformed the market by point three percentage points on RevPAR growth in the second half. This is a position that I'm pleased to say has extended and increased into the current trading period. Now on to Germany. As you've already heard from Dominic, we're really pleased with our progress in Germany over the past year, and revenues were up 21% in sterling and 24% in local currency.

[Hemant Patel, CFO & Director at Whitbread]

This was driven by the increasing maturity of our hotels, improving our trading strategies, broadening our distribution, and growing brand awareness. Operating costs in the period increased to a hundred and £65,000,000, reflecting continued network expansion and cost inflation. However, with strong revenue growth, EBITDA increased by 58% to £66,000,000, and adjusted losses before tax reduced significantly to £11,000,000. Our cohort of more established hotels is continuing to mature as a key driver of our overall performance. With an increased profit for central overhead of £16,000,000 in the period, the cohort is on track to reach its targeted double digit return on capital employed when fully mature over the course of the next eighteen to twenty four months.

[Hemant Patel, CFO & Director at Whitbread]

Whilst Dominic will cover the key business drivers shortly, this slide highlights our outperformance versus the rest of the midscale and economy market in Germany. As you can see, both our more established cohort and our network as a whole are outperforming the market in terms of RevPAR growth. This reflects the continued maturity of both our hotels and brands, as well as our commercial initiatives that are important drivers of overall performance. RevPAR of our cohort of more established hotels grew by 17% in local currency, reinforcing the point that is not yet matured, giving us real confidence that it can and will grow further. Turning now to group cash flow.

[Hemant Patel, CFO & Director at Whitbread]

Our vertically integrated model and strong market position meant that we delivered adjusted operating cash flow of £723,000,000, helping to fund both our ongoing program of investment in future growth and shareholder returns. A more favorable property investment market meant that we were able to recycle a hundred and £37,000,000 of proceeds from property disposals and reduce net CapEx by around a hundred million pounds year on year without impacting our program of investment, including our accelerating growth plan. The net result was a total cash flow before shareholder returns of £260,000,000. Having returned £442,000,000 to shareholders via dividends and share buybacks, we made maintain a strong balance sheet with a net debt position of £483,000,000 and lease adjusted leverage of three times, which is below our threshold of three and a half times. Now on to current trading and f y 26 guidance.

[Hemant Patel, CFO & Director at Whitbread]

In The UK, both total accommodation sales and RevPAR were down one percent versus last year. Despite the volatility in the period due to the phasing of public holidays, we've seen a positive impact from our commercial initiatives, which have driven a two percentage point outperformance versus the market, both accommodation sales and RevPAR growth, as well as an increased RevPAR premium. In Germany, our strong performance has continued into the current trading period with total combination sales up 23% in local currency versus last year. The increasing maturity of our estate and brand together with our commercial initiatives meant that RevPAR for the total estate was 17% ahead of last year at €63. We've also now updated our f y twenty six guidance.

[Hemant Patel, CFO & Director at Whitbread]

I'll talk through some of the key parts, but a more detailed summary can be found in the appendix to this presentation. The phasing of new room projects means that we expect to open between 2,200 rooms in The UK, including five to 700 new AGP extension rooms. And in Germany, we expect to open around 400 rooms this year. With regard to efficiency, we've been able to bring forward a number of initiatives and now on track to deliver £60,000,000 of cost savings in FY twenty six versus our previous expectation of £50,000,000. As a result, we now expect net inflation to be at the lower end of the previously guided two to 3% range, and we expect to fully reverse the impact to f y twenty five profits relating to our accelerating growth plan.

[Hemant Patel, CFO & Director at Whitbread]

In line with our five year plan, we'll maintain net CapEx between 4 to £500,000,000 through restarting 250 to £300,000,000 of more mature property this year to help fund our network expansion and our AGP. I'll now hand back to Dominic to talk through our strategic priorities and future plans in more detail.

[Dominic Paul, Chief Executive Officer at Whitbread]

Thank you, Hemant. I will now take you through the progress we've made against our key initiatives and our plans for the coming year. The engine powering our strong market position and ambitious growth strategy is our vertically integrated model. As we own, operate, and manage all of our hotels, we capture and control all elements of the value chain. This differentiates us from many other hotel groups, and it's very difficult to replicate.

[Dominic Paul, Chief Executive Officer at Whitbread]

We are The UK's largest hotel brand with over 90% brand awareness, and our German business is growing rapidly. Our centralized pricing model is a real source of competitive advantage that, together with our enhanced digital capabilities, helps us to maximize revenue and sustain our outperformance versus the market. Ownership of our operations means we can continue to invest in our product and teams, giving our guests a high quality, great value experience every time they stay with us. And finally, the strength of our asset backed balance sheet gives us access to the best locations on more favorable terms and with full control over our state, including the option to recycle property and build extensions. Let me start with The UK.

[Dominic Paul, Chief Executive Officer at Whitbread]

Having launched our acceleration growth plan just over a year ago, and before I update on our progress, we have a short clip to show you that is introduced by Mark Anderson, our managing director for Property and International.

Food and beverage is really important to our Premier Inn guests, which is why in April 2024, we embarked on an exciting and transformative journey with our accelerated growth plan. This is a multiyear program designed to enhance our food and beverage offer by replacing just over 200 underperforming branded restaurants with a more efficient in house offer. At around half these sites, we're going to convert the former branded restaurant into a total of three and a half thousand new highly profitable hotel rooms. Now the remaining 100 or so sites, Once a new integrated restaurant has been built, we'll then look to exit the neighboring branded restaurant over the next year or so. We built the plan around two key objectives, improving the experience for Premier and guests and driving substantial returns for our shareholders.

A year into the journey, we submitted planning applications now for the majority of affected sites, and of which more than half have already been approved. And we've started to build new in house restaurants, replacing the old branded restaurants with hotel extensions. The first of our new integrated restaurants are already open, such as here in Margate in Kent, and the feedback from our guests has been fantastic. We're on track to open the new hotel rooms as planned, with three and a half thousand contributing to our overall goal of reaching 98,000 open bedrooms in The UK and Ireland by February 2013. Once complete, we expect the plan to deliver incremental profits to Whitbread of at least £100,000,000 per year, improving the offer for our guests and delivering increased profits, margins, and returns for our shareholders.

[Dominic Paul, Chief Executive Officer at Whitbread]

As you just heard from Mark, we are making great progress with over 70% of all schemes in planning, and 50% of these are already approved. Building has commenced, and by the end of full year 2026, we expect to open between 500 to 700 new higher returning extension rooms. Having already sold 38 sites, we are on track to exit the remaining affected branded restaurants over the next twelve months as planned. To bring the benefits of our plan to life, we've shown here the impact of the change on our Harrogate South Hotel, which had a loss making branded restaurant acting as a drag on the site of Waterstones. By converting the branded restaurant into a net 22 bedroom extension with an integrated restaurant inside the hotel, we expect to deliver a significant uplift to site level profitability that will drive higher returns.

[Dominic Paul, Chief Executive Officer at Whitbread]

We will open the first of our new extension rooms this year and expect to fully reverse the one off impact to full year 2025 profit of between 20 to £25,000,000. Once complete, the plan will deliver incremental profit versus full year 2025 of at least £100,000,000, increasing our UK margins and returns. Now following the pandemic, there has been a structural reduction in UK hotel supply. This reflects both the ongoing migration of demand from non branded to branded hotels and the significant decline in the number of independents. Having updated our previous analysis, we don't expect hotel supply to recover to 2019 levels until at least 2027.

[Dominic Paul, Chief Executive Officer at Whitbread]

With supply remaining below pre pandemic levels, there is a clear opportunity for Premier Inn to take further profitable share of The UK hotel market and drive our returns higher. Our committed and future pipeline, together with extension rooms unlocked through our accelerating growth plan, means we expect to reach at least 98,000 rooms by full year 30. As we progress towards our long term potential of up to a 25,000 rooms across The UK and Ireland, the pace at which we open new rooms will be determined by the level of returns that we can extract. We will extend our market position and open at least 8,000 new rooms in The UK and Ireland by full year thirty. Our committed pipeline is expected to drive higher profits because these rooms are more heavily weighted towards London and the Southeast, driving higher levels of RevPAR.

[Dominic Paul, Chief Executive Officer at Whitbread]

They are a high mix of freeholds, and the average hotel size is larger than uncommon to stay driving higher profitability per room. A hub by Premier Inn format was developed to open up new city center location for us that we were previously unable to access. We now have 18 hub hotels open across London and Edinburgh, which are performing strongly. This format offers a more compact, digitally advanced in room experience at a great price in prime city center locations and has proven very popular with guests. As you can see from the graph on the right, our Clark and World hub is a brilliant example of a large freehold site in Central London that has driven higher profitability per room than our current open estate.

[Dominic Paul, Chief Executive Officer at Whitbread]

We see significant potential with the Hub brand. And over the next few years, we expect to have 5,000 open Hub rooms across The UK driving high levels of return. Moving on now to our commercial program. We have a number of initiatives that will help us to drive positive like for like sales momentum and keep us ahead of a wider market. With over 90% brand awareness, Premier Inn remains The UK's number one hotel brand.

[Dominic Paul, Chief Executive Officer at Whitbread]

However, we are not complacent and have continued to invest in our brand and the launch of our latest integrated marketing campaign. We are also diversifying our digital marketing activity across more channels, and this is increasing the impact of our campaigns and reducing our cost per acquisition. We are broadening our addressable customer base. Our business to business proposition is performing strongly with good growth in both business booker and travel management company revenues versus full year 2024. We are strengthening our travel management company relationships and are also testing an inbound only trial using online travel agents, which is giving us access to new international demand.

[Dominic Paul, Chief Executive Officer at Whitbread]

I mentioned earlier that one of the key benefits of our vertically integrated model is our centralized pricing and our in house trading expertise. Despite a more challenging trading environment over the past year, by optimizing and refining our pricing, we have still been able to increase room rates on peak demand nights whilst ensuring that we maintain our value proposition on lower demand nights to maximize revenues. Following the rollout of our new reservation system last year, we have unlocked new digital capabilities that are helping to drive positive sales momentum. We are simplifying the booking journey and providing guests with even more choice, driving ancillary revenues. Having rolled out our room with a view concept, we are seeing a six pound RevPAR uplift on average for these rooms versus a standard room in the same hotel.

[Dominic Paul, Chief Executive Officer at Whitbread]

Customer engagement is a big area of opportunity for us, And through upgrades to our premium app, enhanced CRM tools, and new email campaigns, we are increasing conversion and driving incremental revenue. We're really encouraged by the progress we're making. And as you can see from the graph on this slide, once these initiatives started to land, we began to outperform the market on RevPAR. This has continued into the current trading period when we have extended our outperformance versus the rest of the market. Whilst forward visibility on market demand remains limited, we are confident that through our commercial plans, we can drive positive like for like sales momentum and sustain our outperformance versus the market.

[Dominic Paul, Chief Executive Officer at Whitbread]

Now what is our customer offer and how we are maintaining our positions in UK's favorite hotel brand driven by our reputation for high quality and great value? We're rolling out our standard room format called I d five, which is attracting higher guest scores, and we've also reduced the required refurbishment cost without compromising the in room experience. We are opening more premier plus and twin rooms that command a RevPAR uplift versus a standard room in the same hotel. In food and beverage, our integrated Ground floor concept is delivering higher guest scores. And for those brands and restaurants unaffected by the accelerating growth plan, we have a number of initiatives in place to help drive sales and profitability.

[Dominic Paul, Chief Executive Officer at Whitbread]

And finally, we are continuing to look after our teams, maintaining high levels of engagement and employee satisfaction, which is helping to drive great guest satisfaction scores. Helping to mitigate high cost inflation, we've made excellent progress on efficiency this year, delivering £75,000,000 worth of savings in full year 2025. We've also increased our guidance to £60,000,000 in full year 2026, delivering a total of £250,000,000 across the life and the plan. Whilst there are no silver bullets, the program reflects multiple initiatives across the business that, taken together, add up to a lot, including better labor scheduling, both in housekeeping and front of house teas, the rollout of new technology such as robot vacuums, and unlocking further saves to our new reservation system. Now onto our plans in Germany.

[Dominic Paul, Chief Executive Officer at Whitbread]

Germany is a significant growth opportunity for the group. The investment case is highly attractive with a large fragmented market and no clear market leader, and we are on course to replicate our UK success. We've grown rapidly over the last few years. And with 11,000 open rooms and a further 7,000 rooms in our committed pipeline, we are building a meaningful presence. With a hundred hotels open and committed in prime city center locations and with a good freehold leasehold mix, we are on track to reach 20,000 open rooms by full year 30, and we're on course to achieve our long term ambition of becoming the number one hotel brand in Germany.

[Dominic Paul, Chief Executive Officer at Whitbread]

Having started from scratch back in 2016, we're making great progress in building the Premier Inn brand. Our brand awareness has increased to 19%. And as you can see here, we are closing the gap to our competitors. Our high quality proposition is resonating very well. And on the right hand side, you can see that we're driving great guest scores, which is increasing guest loyalty.

[Dominic Paul, Chief Executive Officer at Whitbread]

Across full year twenty twenty five, we're with the second highest scoring brand, seeing a significant step up year on year. And our commercial program is driving increased revenues and contributing to our market outperformance through several initiatives. First, we continue to improve our trading strategies, in particular for event nights, which are a key feature of the German market. Second, we are optimizing our ancillary revenue offer and enhancing the online booking journey to include product add ons such as early check-in. We are also optimizing the on-site free, including a self-service shop trial that is resonating well with our guests.

[Dominic Paul, Chief Executive Officer at Whitbread]

And third, we are broadening our distribution to maximize our reach, allowing us to drive RevPAR growth and increase brand awareness. We're really pleased with our progress. This year will be a breakthrough year, and we are on course to deliver profitability of between 5,000,000 to £10,000,000. As we look further ahead, our cohort of more established hotels is underpinning our confidence in the medium term outlook in Germany. The cohort, which is not yet chilled, is continuing to achieve double digit RevPAR growth and is outperforming the wider market.

[Dominic Paul, Chief Executive Officer at Whitbread]

Our five year plan is on track. By full year thirty, with our growing estate and progressive maturity, we expect to deliver adjusted profits of £70,000,000. In the same year, we also expect to reach double digit returns on our current open portfolio of 11,000 rooms. As our estate and brand continue to mature, we will see a further increase in profits, margins, and returns beyond full year 30. We are proving that the Premier Inn brand can travel internationally, which may open up opportunities in the future, which is an exciting prospect.

[Dominic Paul, Chief Executive Officer at Whitbread]

Moving on to the third pillar of our strategy, enabling long term growth. In the context of our five year plan, we wanted to remind you of our property strategy. There were several commercial and financial benefits from our flexible property approach, which include maximizing our chances of securing the best sites in the best locations whilst minimizing the risk of cannibalization so that we drive strong returns. Operational flexibility means we can optimize returns from a site so that once mature, we can recycle the capital into higher returning opportunities. And being able to earn our significant development profits through disposals via sale and leasebacks.

[Dominic Paul, Chief Executive Officer at Whitbread]

And supporting a strong financial covenant, helping to secure more favorable terms with landlords and financing terms with lenders. And with the evidence from the sale and leasebacks completed during the year, we've instructed our external property valuers to complete a current market valuation of our freehold and long leasehold estate based on individual seven leasebacks transaction values. This is the same approach that was used to produce the last market valuation of 4,900,000,000.0 to 5,800,000,000.0 that was completed in 2018. Our value creation cycle is summarized here. Our already strong covenant means we can secure high quality sites to generate excellent returns, which in turn attracts outside funding and offers us a chance to recycle capital, and so the cycle continues.

[Dominic Paul, Chief Executive Officer at Whitbread]

We segment our estate into five distinct groups shown here on the left of the slide. As you can see, there was a natural progression from top to bottom as the sites mature over time. As the site moves through this flow, if it has strong yield potential, there is an opportunity for us to recycle the capital to drive higher returns. And on the right, we've summarized how the mix of our state has changed versus twenty nineteen. As a property investment market has been more challenged post pandemic, we have been able to use our balance sheet to secure attractive freehold sites.

[Dominic Paul, Chief Executive Officer at Whitbread]

At the same time, whilst we haven't been able to recycle as much property as we would have done otherwise, that opportunity is opening up now, and the proportion of our freeholds that are in the strong yield potential category has increased. As a result, and having maximized returns from between 20 to 30% of our more mature hotels with strong yield potential, we are looking to recycle the capital into new high returning opportunities such as our accelerating growth plan. Some recent examples of this include Deansgate in Manchester, which we received profits on disposal of over £20,000,000 and the sale and leaseback of two properties that we completed during the year for a total consideration of £56,000,000 at an average yield of 4.1%. In both cases, having extracted full value from the hotel on each site, there was an opportunity to drive returns even higher by monetizing the asset, in both cases, through a third party developer. Having completed a 30 seven million pounds of disbursement in full year 2025, we are planning to realize between 250,000,000 to 300,000,000 pounds in full year 2026 with at least 1,000,000,000 pounds of more mature property to be recycled as part of our five year plan.

[Dominic Paul, Chief Executive Officer at Whitbread]

This will be through a combination of disposals, sale and leasebacks, and forward funding arrangements by the one completed on our recently opened Marriott Bonhub. Our force for good program holds us accountable for delivering meaningful change across our three key pillars of opportunity, community, and responsibility. It is embedded across all areas of our business strategy, including property, and the recent opening of our latest hotel in Cambridge is a great example of this. By preserving the exterior structure of the former office building and redesigning the interior, we were able to develop a high quality, a 25 bed hotel to our latest specifications. By prioritizing refurbishment of the new construction, we now have a fantastic hotel right in the center of Cambridge, including an integrated restaurant, whilst at the same time minimizing our emissions.

[Dominic Paul, Chief Executive Officer at Whitbread]

And across our three force for good pillars, we're delivering positive change in the local community, including the creation of new jobs. As with all of our new hotels, we are focused on using green energy and reducing water usage through technology. I'll now pass back to Henrik who will provide update on capital allocation.

[Hemant Patel, CFO & Director at Whitbread]

Thank you, Dominic. Our capital allocation framework is unchanged. Our disciplined approach and focus on attracting returns mean that we can strike an appropriate balance between investing in high returning growth opportunities and returning excess capital to shareholders. As a reminder, there are four priorities in our framework. First, maintaining an investment grade credit rating is a source of strategic advantage for us.

[Hemant Patel, CFO & Director at Whitbread]

We will keep lease adjusted leverage below our threshold of three and a half times. Second, to continue to invest in high returning growth opportunities and using proceeds from property related disposals to keep average net CapEx at a maximum of £500,000,000 per annum across the life of our five year plan. Third, continue to grow dividends in line with earnings. Lastly, return excess capital to shareholders. Today, we've announced a further £250,000,000 share buyback to be completed over the next twelve months.

[Hemant Patel, CFO & Director at Whitbread]

Our business is highly cash generative. In line with our capital allocation framework, we use this to fund high returning growth to drive shareholder returns. Since April 2023, we returned £1,200,000,000 to shareholders. While the phasing of our five year plan means that the generation of £300,000,000 of incremental profits and £2,000,000,000 of shareholder returns is somewhat back end loaded, given the excellent progress made over the past year, we're increasingly certain in this execution. This confidence allows us to accelerate the delivery of these returns to shareholders.

[Hemant Patel, CFO & Director at Whitbread]

As well as keeping the total dividend per share the same as last year, despite lower profits in f y twenty five, we've also announced £250,000,000 share buyback to be competed over the next twelve months. I'll now hand back to Dominic. Thank you, Helen.

[Dominic Paul, Chief Executive Officer at Whitbread]

I realize we have covered a lot today, so I'll end with a brief summary. As I said at the beginning of the presentation, I'm really pleased with the pace at which we are executing, and I'm increasingly confident that we will deliver a step change in our profits, margins, and returns. Our momentum is building. And despite what's been a softer trading environment, our commercial initiatives are contributing to market outperformance. We're really pleased with our progress in Germany, and we're set to deliver profitability in full year 2026.

[Dominic Paul, Chief Executive Officer at Whitbread]

We are on track, and our plan is set to deliver incremental annual adjusted profit before tax at least £300,000,000 by full year 30 and more than £2,000,000,000 available for shareholder returns. And reflecting our confidence in delivery, we are now accelerating the planned shareholder returns with a £250,000,000 share buyback announced today to be completed over the next twelve months. Thank you for joining us this morning. Hemant and I will host a q and a session starting at 09:15AM UK time, and we look forward to taking your questions then. You may find the details of how to join the call on our website.

[Dominic Paul, Chief Executive Officer at Whitbread]

You.

Participants

Executives

• Dominic Paul, Chief Executive Officer
• Hemant Patel, CFO & Director

Analysts