PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 29 JUNE 2019 · REPOSITIONING THE PORTFOLIO TO GROWTH...

PRELIMINARY RESULTS FOR THE 52 WEEKS

ENDED 29 JUNE 2019

2019: A YEAR OF GOOD STRATEGIC PROGRESS

• Solid financial performance in line with expectations

• Well established, long term strategy to build all three business divisions

• Acquired new managed pubs in North Kent area due for major economic development

• Repositioned our brand portfolio to align with growth areas of the market

• Entered into new financing structure for the long term

• Agreed future changes to Board

• Previous year was a 53 week financial year

• Statutory turnover down -6.9%. Statutory profit before tax £3.5m (2018: £12.1m)

• On adjusted 52 v 52 week basis:

• Underlying profit before tax -0.3%1

• Underlying earnings per share level2

• Encouraging start to new financial year

2

1Operating profit excluding operating charges that are either material or infrequent in nature and do not relate to the underlying performance less underlying net finance costs 2Underlying profit less attributable taxation divided by the weighted average number of ordinary shares in issue during the period. The number of shares in issue excludes those held by the Company and not allocated to employees under the Share Incentive Plan, which are treated as cancelled

FUTURE BOARD CHANGES

3

• Richard Oldfield will become Chairman in October 2020

• Richard brings significant skills and

expertise in finance, investment

and governance

• Kevin Georgel will join the Board from July 2020 • Kevin has spent over 20 years

working in the UK brewing and

pub sector

FURTHER GROWTH IN NET ASSETS AND DIVIDEND PER SHARE

• Proposed final dividend of 24.21p taking total dividend to 30.08p (2018: 29.20p), an increase of 3.0%

• This represents underlying cover of 2.0 times (2018: 2.2 times), consistent with policy

4

*

*Net assets at the balance sheet date divided by the number of shares in issue being 14,857,500 50p shares

PERFORMANCE HIGHLIGHTS

5

2019 2018* 52 wk** 53 wk

Underlying results £m £m % %

Turnover 145.8 156.6 (5.0) (6.9)

Operating profit 15.3 16.1 (2.2) (5.0)

Net finance costs (3.9) (4.3) 7.4 9.2

Profit before tax 11.4 11.8 (0.3) (3.5)

Tax rate (%) 21.1 21.3

Earnings per share (pence) 60.9 63.0 - (3.3)

Full year dividend per share (pence) 30.08 29.20 3.0

Reconciliation to statutory profit

Total items excluded from underlying results (7.9) 0.3

Statutory profit before tax 3.5 12.1

*2018 was a 53 week year **excludes impact of 53rd week – these are not statutory figures

CASH FLOW:

CONSISTENT FREE CASH GENERATION FUNDS INVESTMENT

6

• Investment of free cash flow into acquisitions

• Continued transformation of estate

• Refinancing

Internally generated free cash 21.1 18.1

Core capex (10.3) (14.0)

Acquisitions including cash on acquisition of subsidiary (8.6) (0.7)

Settlement of derivative financial instruments and new cap (9.6) -

Debt movement 5.0 (2.0)

Net cash (outflow)/inflow (2.4) 1.4

2019 £m

2018* £m

*2018 was a 53 week year

IMPROVED FINANCING STRUCTURE

7

New structure provides: • Long term certainty as

the business looks for growth

• A lower cost of debt than the debt replaced

• Improved debt maturity

profile

• Head room at year end £25.5m

BALANCE SHEET:

CONTINUED GROWTH IN NET ASSETS PER SHARE

8

2019 2018

£m £m

Fixed assets 315.5 308.7

Other assets and liabilities (18.6) (15.8)

Net debt (82.0) (74.8)

Derivative Liability (6.8) (17.0)

Shareholders funds 208.1 201.1

Net debt: Underlying EBITDA 3.5 3.0

Balance sheet gearing 39% 37%

Net assets per share £14.01 £13.53

• As part of the refinancing exercise an off balance sheet directors valuation of the pub estate was

carried out as at June 2018 indicating a surplus over book value of £24m at that time

• As accounts prepared under FRS102, IFRS16 is not currently applicable

THE STRATEGIC OPPORTUNITY

9

• A modern, well invested, balanced company

• A business that appeals to today’s consumer attitudes: independent, authentic,

community-focused

• A strong platform in beer and pubs with opportunities in both segments

• Geographically well located in the South East

• With a heartland where the population is expected to grow by more than 20% and become more affluent in the next 10 years

• Backed by a strong balance sheet and long term financing

THE ECONOMIC OPPORTUNITY

10

A LONG TERM BUSINESS

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Thinking for the long term

• Building high quality asset

base

• Recruiting new

consumers to our brands

and pubs

• Building the Shepherd

Neame brand

Investing for the long term

• Targeting investments in

areas of economic

growth in heartland

• Raising the standard of

our pubs

• Modernising brewery

infrastructure

Financing for the long

term

• No new facilities

required until 2023

• High proportion of

debt on fixed rates of

interest

• Portion of debt in

place to 2038 to

support infrastructure

developments

A CONSISTENT STRATEGY

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TO DEVELOP

OUR OFFER

TO ENHANCE

THE

CUSTOMER

EXPERIENCE

TO CREATE

DEMAND AND

BUILD

AWARENESS

FOR OUR

BRANDS

TO ATTRACT,

RETAIN AND

DEVELOP THE

BEST PEOPLE

TO DRIVE

FOOTFALL TO

OUR PUBS

OUR

STRATEGIC

OBJECTIVES

A DECADE OF TRANSFORMING THE PUB PROFILE

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Average income*

2009 Acquisitions Net transfers Disposals 2019 per pub growth

Tenanted 331 16 (17) (91) 239 +42.4%

Managed 49 21 - - 70 +72.1%

Investment properties - - 17 (4) 13

Total 380 37 - (95) 322

• 100% of the estate is in the affluent south east

• 85% of pub estate is freehold

• £8.8m of investment property

*Pub profit before depreciation, amortisation, rent payable, property costs and other cost allocations

TO DRIVE

FOOTFALL

TO OUR

PUBS

RE-INVESTING TO DRIVE UP THE QUALITY OF OUR PUBS

14

• Total realised from disposals: £34.8m

• Total invested in

acquisitions: £42.6m

• Total capital invested

in existing estate: £39.3m

TO DRIVE

FOOTFALL

TO OUR

PUBS

£9.8 MILLION INVESTED IN OUR EXISTING ESTATE: MANAGED PUBS

15

The Vine, Tenterden

The Vine, Tenterden Royal Albion, Broadstairs

Marine Hotel, Tankerton

TO DRIVE

FOOTFALL

TO OUR

PUBS

16

Neptunes Hall, Broadstairs

Royal Naval Reserve, Whitstable White Horse, Hawkinge

Royal Naval Reserve, Whitstable

£9.8 MILLION INVESTED IN OUR EXISTING ESTATE:

TENANTED PUBS TO DRIVE

FOOTFALL

TO OUR

PUBS

NEW PUBS ACQUIRED IN 2019

17

Cheshire Cheese, London Horse & Groom, Wilmington

Wheatsheaf, Farnham Horse & Groom, Wilmington

TO DRIVE

FOOTFALL

TO OUR

PUBS

GROWING IN AREAS OF LONG TERM DEVELOPMENT

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• The Crown at Rochester, a high street property in the heart of the riverside re-generation

• The Chalk Yard, a pub restaurant

hotel at Castle Hill in the centre of Ebbsfleet Garden City due to open 2021

TO DRIVE

FOOTFALL

TO OUR

PUBS

EXCELLENT PERFORMANCE IN MANAGED PUBS

19

Underlying results 2019 20182 52 wk3 53 wk

LFL sales growth1 +3.2% +1.3%

Turnover (£m) 68.8 65.3 +7.6 +5.3

Divisional underlying operating profit (£m) 9.2 8.7 +9.5 +6.0

TO DRIVE

FOOTFALL

TO OUR

PUBS

1 On a 52 vs 52 week basis 2 2018 was a 53 week year 3 Excludes impact of 53rd week. These are not statutory figures

CONSISTENT LIKE-FOR-LIKE PERFORMANCE IN TENANTED PUBS

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LFL income growth1 +2.3% +2.1%

Turnover (£m) 35.0 35.4 +1.0% (1.0)%

Divisional underlying operating profit (£m) 13.0 13.2 +0.2% (2.0)%

TO DRIVE

FOOTFALL

TO OUR

PUBS


DEVELOPING OUR FOOD OFFER

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• Number of new initiatives • Improved presentation of top dishes

• Expanded range of healthy, vegan or low

calorie options

• Improvements in how food offer

communicated

• Use of local food suppliers where possible

• Continue ways of working to improve speed of service #shepsfood

TO DEVELOP

OUR OFFER

TO ENHANCE

THE

CUSTOMER

EXPERIENCE

CREATING ROOMS WITH CHARACTER

22

• Refurbished 31 bedrooms out of 294 in managed estate

• The Chalk Yard in Ebbsfleet will add

17 rooms to our estate

• Occupancy in 2019 77% (2018: 79%)

and RevPAR £68 (2018: £67)

TO DEVELOP

OUR OFFER

TO ENHANCE

THE

CUSTOMER

EXPERIENCE

TRAINING AND DEVELOPING TOMORROW’S TEAM

23

• Launched apprenticeship scheme

for chefs and pub managers

• New system to support training and personal development

• On site champions for coffee,

service and social media

• Delighted with results from KAM media industry survey of licensee satisfaction

• Comprehensive compliance

package launched to support licensees

TO

ATTRACT,

RETAIN AND

DEVELOP

THE BEST

PEOPLE

REPOSITIONING THE PORTFOLIO TO GROWTH AREAS

OF THE MARKET

24

• Market evolving with world lager and craft in growth

• Cask and premium bottled ale in decline

• Demand for taste and flavour and

more hop-forward beers

• Shepherd Neame Own Brand beer

and cider volume up +0.5% • Own beer down -23.3%

• Asahi and Lidl contracts

accounted for 40,000 barrels of

the variance

TO CREATE

DEMAND

AND BUILD

AWARENESS

FOR OUR

BRANDS

MODERNISING SPITFIRE AND REFRESHING

WHITSTABLE BAY

25

TO CREATE

DEMAND

AND BUILD

AWARENESS

FOR OUR

BRANDS

INTRODUCING NEW BRANDS

26

TO CREATE

DEMAND

AND BUILD

AWARENESS

FOR OUR

BRANDS

BUILDING NEW PARTNERSHIPS

27

• In August 2019 entered into new partnership with Boon Rawd

Brewery to import and distribute Singha beer, Thailand’s original beer

• Exciting world lager in our sales portfolio which appeals to

younger, discerning and adventurous customers

• Brand is backed by top level sponsorships at Chelsea FC and Moto GP

• Good opportunities for growth over medium term

TO CREATE

DEMAND

AND BUILD

AWARENESS

FOR OUR

BRANDS

BREWING AND BRANDS: A YEAR OF TRANSITION

28


Own brand beer and cider volume1 +0.5% (0.9)%

Turnover (£m) 40.7 54.4 (23.9)% (25.1)%

Divisional operating profit (£m) 0.9 2.3 (58.4)% (59.9)%

Underlying divisional EBITDA (£m) 3.0 4.4 (31.2)% (33.3)%

TO CREATE

DEMAND

AND BUILD

AWARENESS

FOR OUR

BRANDS


ENCOURAGING START TO THE NEW YEAR

29

• Shepherd Neame is a well balanced

business with opportunities in beer and pubs

• Excellent performance in managed pubs and a year of transition in brewing and brands

• New financing gives platform for growth

• Encouraging start to new financial year

• Total managed sales growth +4.7%

and LFL managed sales up +1.6% to

14 September

• Shepherd Neame own brand beer

and cider volume up +5.8% to 14

September

• LFL tenanted pub income up +2.7%

to 31 August

QUESTIONS

RESOLUTIONS

31

RESOLUTION 1

To receive the Annual Report and

Accounts

32

RESOLUTION 1

TO RECEIVE THE ANNUAL REPORT AND ACCOUNTS

33

No of

shareholders

No of

Votes

For + Discretion 205 2,857,547 100.00%

Against - - 0.00%

100.00%

Withheld - -

19.23% of total votes cast by proxy

RESOLUTION 2

34

To declare a final dividend

RESOLUTION 2

TO DECLARE A FINAL DIVIDEND

35

No of

shareholders

No of

Votes

For + Discretion 205 2,857,547 100.00%

Against - - 0.00%

100.00%

Withheld - -


RESOLUTION 3

36

To re-elect Mr J B Neame as a Director

RESOLUTION 3

TO RE-ELECT MR J B NEAME AS A DIRECTOR

37


No of

shareholders

No of

Votes

For + Discretion 201 2,832,279 99.97%

Against 1 959 0.03%

100.00%

Withheld 3 24,309

RESOLUTION 4

38

To re-elect Mr G H A Barnes as a Director

RESOLUTION 4

TO RE-ELECT MR G H A BARNES AS A DIRECTOR

39

No of

shareholders

No of

Votes

For + Discretion 199 2,818,489 99.47%

Against 4 15,058 0.53%

100.00%

Withheld 2 24,000


RESOLUTION 5

40

To re-elect Mr M H Templeman as a

Director

RESOLUTION 5

TO RE-ELECT MR M H TEMPLEMAN AS A DIRECTOR

41


No of

shareholders

No of

Votes

For + Discretion 191 2,803,593 98.56%

Against 9 40,820 1.44%

100.00%

Withheld 6 13,134

RESOLUTION 6

42

To re-elect Mr W J Brett as a Director

RESOLUTION 6

TO RE-ELECT MR W J BRETT AS A DIRECTOR

43

No of

shareholders

No of

Votes

For + Discretion 191 1,870,096 98.46%

Against 8 29,155 1.54%

100.00%

Withheld 6 958,296


RESOLUTION 7

44

To re-elect Mrs H S Riva as a Director

RESOLUTION 7

TO RE-ELECT MRS H S RIVA AS A DIRECTOR

45


No of

shareholders

No of

Votes

For + Discretion 200 2,831,636 99.93%

Against 3 1,861 0.07%

100.00%

Withheld 3 24,050

RESOLUTION 8

46

To re-elect Mr R J Oldfield as a Director

RESOLUTION 8

TO RE-ELECT MR R J OLDFIELD AS A DIRECTOR

47

No of

shareholders

No of

Votes

For + Discretion 198 2,829,577 99.95%

Against 2 1,552 0.05%

100.00%

Withheld 5 25,418


RESOLUTION 9

48

To re-appoint Deloitte LLP as the auditor

of the Company

RESOLUTION 9

TO RE-APPOINT DELOITTE AS AUDITOR OF THE COMPANY

49


No of

shareholders

No of

Votes

For + Discretion 196 2,827,631 99.10%

Against 6 25,599 0.90%

100.00%

Withheld 3 4,317

RESOLUTION 10

50

To authorise the Directors to determine

the auditor’s remuneration

RESOLUTION 10

TO AUTHORISE THE DIRECTORS TO DETERMINE THE AUDITOR’S REMUNERATION

51

No of

shareholders

No of

Votes

For + Discretion 201 2,833,255 99.15%

Against 3 24,190 0.85%

100.00%

Withheld 1 102


RESOLUTION 11

52

To authorise the Company to make

market purchases of ordinary shares of 50

pence each

RESOLUTION 11 TO AUTHORISE THE COMPANY TO MAKE MARKET PURCHASES OR ORDINARY SHARES OF 50 PENCE EACH

53


No of

shareholders

No of

Votes

For + Discretion 195 2,826,489 99.06%

Against 9 26,843 0.94%

100.00%

Withheld 2 4,215

PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 29 JUNE 2019 · REPOSITIONING THE PORTFOLIO TO GROWTH...

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Transcript of PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 29 JUNE 2019 · REPOSITIONING THE PORTFOLIO TO GROWTH...