DJ Shepherd Neame Limited Announcement of Interim Results
TIDMSHEP
RNS Number : 9059Y
Shepherd Neame Limited
08 March 2012
8 March 2012
SHEPHERD NEAME LIMITED
ANNOUNCEMENT OF INTERIM RESULTS
Shepherd Neame, the Kent-based brewer and pub operator, today announces results for the 26 weeks ended 24 December 2011.
Highlights include:
-- Turnover up 9.2% to GBP67.4m (2010: GBP61.7m) -- Operating profit up 4.2% to GBP6.7m (2010: GBP6.4m) -- Earnings per GBP1 share up 5.6% to 28.2p (2010: 26.7p) -- Interim dividend 4.90p per GBP1 'A' Ordinary Share (2010: 4.80p) -- Strong performance in managed houses with like-for-like sales up 10.2% - Like-for-like sales in the eight weeks to February 18th up 5.2% -- Average EBITDA per tenanted pub up 2.3% - Like-for-like EBITDA down 0.5% (2010: down 3.0%) -- Total beer volume up 6.8% (2010: up 0.6%) - Own beer volume up 5.6% (2010: down 0.7%) driven by premium bottled ales and Asahi
Miles Templeman, Chairman, commented:
"This has been a strong trading performance, reflecting the success of increasing the investment in our pubs and brands and our drive for continuous improvements in service, offer, product quality and the experience for our customers.
Our business has demonstrated it is well positioned to succeed in this difficult economic environment which will continue to dominate consumer behaviour for a considerable time to come, and so we maintain a cautious outlook.
But when the conditions are right, consumers will still want to go out for a meal or a drink, celebrate a special occasion or take a weekend break. In 2012, there is much to celebrate with the Diamond Jubilee, the UEFA European Football Championships and, of course, the Olympics, which will present good opportunities for our business."
FOR FURTHER INFORMATION PLEASE CONTACT:
Shepherd Neame Limited Jonathan Neame, Chief Executive Tel: 01795 532206 Miles Templeman, Chairman Tel: 01795 532206 --------------------------------- -------------------- Kreab Gavin Anderson Deborah Walter / Clotilde Gros Tel: 020 7074 1800 --------------------------------- -------------------- REGIONAL & TRADE MEDIA CONTACT: Edwards Harvey Ltd Pip Clarkson Tel: 01622 604600 --------------------------------- --------------------
Note: The directors of Shepherd Neame Limited accept responsibility for this announcement.
NOTES FOR EDITORS
Shepherd Neame is a regional brewer and pub owner based in Faversham, Kent. Established in 1698, it is Britain's oldest brewer and employs over 1,000 people.
The Company retails its own beers, on draught and in bottles, under a range of highly successful brand names, including:
-- Spitfire - One of the fastest growing premium bottled ales in the UK with national distribution on draught (4.2% abv) and in bottle (4.5% abv) - supported by a multi award-winning 'Bottle of Britain' advertising campaign.
-- Bishops Finger- Connoisseur premium ale (5.4% abv), nationally distributed in all major supermarkets - one of the country's leading bottled ales.
-- Master Brew- Widely distributed draught ale (3.7% abv) - a 'local hero' brand mainly sold in Kent.
-- Whitstable Bay -light organic bottled ale accredited by the Soil Association (4.5% abv) with national distribution.
-- Hurlimann - Swiss lager (4.8% abv), UK trademark owned by Shepherd Neame.
The company also brews lagers under licence or contract:
-- Asahi Super Dry- Japan's number one beer (5% abv), which is produced under an exclusive licence for brewing, sales and marketing.
-- Kingfisher - The number one Indian lager brand produced under licence from United Breweries of India (4.8% abv) and distributed in the majority of UK Indian restaurants.
-- Sam Adams - The number one US Craft beer from Boston Beer Company (4.8% abv). Due to be brewed under licence from April 2012
-- Sun Lik - Draught Chinese lager in the UK (5% abv) and brewed under licence from the Hong Kong Brewery Ltd, part of the San Miguel brewing company.
-- Oranjeboom Pilsener - Lager brewed under licence from United Dutch Breweries (3.9% abv), with wide distribution in the South East.
In the 26 weeks to 24 December 2011 Shepherd Neame sold 151,000 brewers' barrels of beer (43.5 million pints) including 129,000 brewers' barrels of own brewed and packaged beer (37.1 million pints). In the last financial year to 25 June 2011 Shepherd Neame sold 276,000 brewers' barrels of beer (79.5 million pints) including 239,000 brewers' barrels of own brewed and packaged beer (68.9 million pints)). The majority of these sales were made in the UK although the Company also exports to more than 20 countries including Sweden, Italy and Ireland.
The Company as at 8 March 2012 operates 352 pubs in the South East, of which 307 were tenanted or leased and 45 managed. The pub estate ranges from food-led destination houses and hotels to historic coaching inns and traditional community 'locals'.
Shepherd Neame's shares are traded on PLUS Market. See www.plusmarketsgroup.com for further information and the current share price. For further information on the Company, see www.shepherdneame.co.uk.
CHAIRMAN'S STATEMENT
Results
I am pleased to report strong trading for the 26 weeks to 24 December 2011. This performance reflects the success of increasing the investment in our pubs and brands and our drive for continuous improvements in service, offer, product quality and the experience for our customers.
With this strong performance, our business has demonstrated it is well positioned to succeed in this difficult economic environment where consumers are selective in their discretionary spending and will seek out the best overall offer and value for money.
Turnover has increased by 9.2% to GBP67.4m. Operating profit is up by 4.2% to GBP6.7m and earnings before interest, tax, depreciation and amortisation (EBITDA) and before free trade loan discounts is up 5.0% to GBP10.2m (2010: GBP9.7m). Profit before tax and exceptionals has increased by 7.2% but profit on sale of property was lower than last year at GBP0.2m (2020 GBP0.5m). This has resulted in an increase in statutory profit before tax of 1.8% to GBP4.8m.
Total cash invested in capital expenditure during the period was GBP11.7m (2010: GBP5.3m) including the purchase of two hotels for GBP7.6m. However, capital requirements in the current year to maintain the existing asset base remain low following several years of investment in our infrastructure.
Dividend
The directors have declared an interim dividend for the year ending 30 June 2012 of 4.90p (2010: 4.80p) on the GBP1 'A' Ordinary Shares and 0.098p (2010: 0.096p) on the 2p 'B' Ordinary Shares, an increase of 2.1%. The dividend will be payable on 30 March 2012 to shareholders on the register as at 23 March 2012.
Board of Directors
On 28 February Mark Rider was appointed as Finance and IT Director. Mark replaces Ken Littlefair on the Board following his retirement.
Mark joins us from J Sainsbury plc, where he has been Head of Finance, Food, since 2008. Mark joined Sainsbury's in 2001 and has held a number of senior finance roles, including Head of Financial Planning and Corporate Finance and Group Financial Controller. Prior to joining Sainsbury's, Mark qualified as a Chartered Accountant with PricewaterhouseCoopers (UK).
I would like to thank Ken for his outstanding contribution to the company over the past 12 years. Ken joined us in 2000 and has played a significant role in the company's progress, particularly in modernising and developing our IT systems, improving business processes and the quality of management information flow. We wish him well in his retirement.
Operational Review
Revenue mix continues to change within our business and growth in this period has again been driven by food and accommodation sales in our managed pubs and by a strong performance in national on and off sales.
On the back of our strong trading we have chosen to increase our expenditure in marketing and brands support and revenue expenditure in our pub estate with the purpose of strengthening our beer and pub business in the future.
Total beer volume grew by 6.8% (2010: +0.6%) with own beer volume up by 5.6% (2010: -0.7%). The main drivers for growth continue to be our premium bottled ales and Asahi.
The beer market remains extremely competitive with overall volume decline but we have been able to maintain our brand strength through relentless focus on the quality of our product, sales support and customer service. Our systems are first class and enable us to drive continuous improvement in our supply chain.
I am particularly pleased that our performance in this area has again been recognised with our staff named as Team of the Year at the European Supply Chain Excellence Awards 2011.
A key challenge for our beer business in this year though is significant inflation in malting barley, glass and utilities. This challenge is compounded by year-on-year above inflation duty increases.
At the half year we operated 355 pubs of which 45 are managed and 310 tenanted. During the period we have acquired two managed houses, transferred one to tenancy and disposed of six smaller tenanted pubs.
In our managed houses like-for-like sales grew by a very strong 10.2% (2010: +3.6%) over the period. Like-for-like food sales grew by 14.6% (2010: +6.4%), accommodation sales by 9.0% (2010: +5.3%) and liquor sales by 8.5% (2010: +2.3%).Key sales drivers for growth have been increased occupancy rates and revenue per available room (RevPAR) in our inns and hotels and growth in food spend per head.
This has been a strong performance by the retail estate, but of particular note has been the performance of recent investments in the Crown Inn, Blackheath, the Ship & Trades, Chatham Maritime, and the Conningbrook Hotel, Ashford.
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In December, like-for-like sales grew by 17.7% against weather affected comparables in 2010. Some Christmas trade in December 2010 was displaced to January 2011 and as anticipated, our rate of growth has slowed marginally in January and February 2012 with like-for-like sales for the eight weeks to 18 February up by 5.2% (2010: +11%).
Our strategy is to make selective acquisitions of the highest quality pubs and hotels within our heartland when they become available and, as we develop our skills in food and accommodation, we feel increasingly confident to make further investments in these areas.
Our investments in recent years have undoubtedly strengthened our business. During the period we acquired two prestigious coastal hotels, The Bell Hotel in Sandwich and the Fayreness in Kingsgate, for GBP7.6m, adding 67 letting rooms to our retail estate. In February we have acquired another well known freehold pub, The Camden Arms Hotel, Pembury for GBP2.3m. This has 15 letting rooms and will continue to operate as a lease in the tenanted estate. We now have a total of 468 letting rooms in our managed and tenanted estate.
Tenanted trade has seen considerable improvement in trend in this period. For the 26 weeks to 24 December like for like EBITDA per pub was -0.5% (2010: -3.0%). Average EBITDA per pub has grown by 2.3% as we continue to sell smaller less sustainable outlets and invest in the rest of the estate.
We continue to increase our capital and revenue investment in the tenanted estate and have carried out a number of successful refurbishments, notably the Imperial in Southborough, the Gate Inn, Marshside, the Horse and Groom, Ramsgate and the Bear Inn, Faversham. We will continue this programme of refurbishments in the second half. During the period we have realised GBP1.5m (2010: GBP2.2m) from the proceeds of assets sales including six tenanted pubs and one unlicensed property.
Outlook and Summary
The uncertain economic environment will continue to dominate consumer behaviour for a considerable time to come and so we maintain a cautious outlook.
But when the conditions are right, consumers still want to go out for a meal or a drink, celebrate a special occasion or take a weekend break. In 2012, there is much to celebrate with the Diamond Jubilee, the UEFA European Football Championships and, of course, the Olympics. The changing role of our pub estate and our proximity to London is well suited to the tourist market and, although it is difficult to determine exactly what impact these events will have, they present good opportunities for our business.
Our long-term aim is to ensure that our beer and pub business provides the offer consumers want at home or in the pub, both in the summer of 2012 and beyond, and I believe the company is making good progress towards this end.
M H Templeman
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
26 weeks ended 24 December 2011
Unaudited Unaudited Audited
26 weeks 26 weeks ended 52 weeks
ended ended
24 December 25 December 25 June
2011 2010 2011
GBP'000 GBP'000 GBP'000
---- ------------------------------ --------- ----- ------------- --------------- ----------
Turnover 67,436 61,731 121,346
Operating charges before exceptional
item (60,773) (55,339) (109,094)
Operating exceptional items
(note 3) - - (1,915)
------------------------------------ --------- ----- ------------- --------------- ----------
Operating profit 6,663 6,392 10,337
Profit on sale of property 235 457 419
------------------------------------ --------- ----- ------------- --------------- ----------
Profit on ordinary activities
before interest 6,898 6,849 10,756
Interest receivable and similar
income 3 4 32
Interest payable and similar
charges (2,097) (2,134) (4,303)
------------------------------------ --------- ----- ------------- --------------- ----------
Profit on ordinary activities
before taxation 4,804 4,719 6,485
Taxation (note 4) (1,205) (1,325) (2,090)
------------------------------------ --------- ----- ------------- --------------- ----------
Profit for the period after
taxation 3,599 3,394 4,395
------------------------------------ --------- ----- ------------- --------------- ----------
Earnings per GBP1 nominal share
value (note 5)
Basic 28.2p 26.7p 34.4p
Basic before profit on sale
of property and exceptional
items 26.8p 23.1p 46.2p
Diluted 28.1p 26.5p 34.2p
------------------------------------ ------------ ------------- --------------- ----------
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
26 weeks ended 24 December 2011.
There are no recognised gains or losses other than the profit attributable to the shareholders of the Company of GBP3,599,000 for the 26 weeks ended 24 December 2011 (26 weeks ended 25 December 2010 - GBP3,394,000 and 52 weeks ended 25 June 2011 - GBP4,395,000).
Consolidated Balance Sheet
As at 24 December 2011
Unaudited Unaudited Audited
24 December 25 December 25 June
2011 2010 2011
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ---------
Fixed assets
Intangible fixed assets - 36 18
Tangible fixed assets 190,611 185,021 184,093
Investments and loans 1,382 1,649 1,541
--------------------------------------- ------------ ------------ ---------
191,993 186,706 185,652
--------------------------------------- ------------ ------------ ---------
Current assets
Stock 5,107 4,940 4,843
Debtors 20,484 18,302 18,343
Cash 80 2,410 4,588
--------------------------------------- ------------ ------------ ---------
25,671 25,652 27,774
--------------------------------------- ------------ ------------ ---------
Creditors: amounts falling due within
one year
Bank loans and overdrafts (3,017) (940) -
Creditors (20,455) (17,703) (19,760)
--------------------------------------- ------------ ------------ ---------
(23,472) (18,643) (19,760)
--------------------------------------- ------------ ------------ ---------
Net current assets 2,199 7,009 8,014
--------------------------------------- ------------ ------------ ---------
Total assets less current liabilities 194,192 193,715 193,666
Creditors: amounts falling due after
more than one year
Bank loans (69,556) (69,729) (69,506)
Provision for liabilities - deferred
tax (4,132) (4,846) (4,616)
--------------------------------------- ------------ ------------ ---------
Net Assets 120,504 119,140 119,544
--------------------------------------- ------------ ------------ ---------
Capital and reserves
Called up share capital 12,818 12,818 12,818
Share premium account 1,439 1,439 1,439
Revaluation reserve 13,471 14,233 14,046
Reserve for own shares held (730) (869) (855)
Profit and loss account 93,506 91,519 92,096
--------------------------------------- ------------ ------------ ---------
Equity shareholders' funds 120,504 119,140 119,544
--------------------------------------- ------------ ------------ ---------
These financial statements have not been audited (see note 1).
CONSOLIDATED CASH FLOW STATEMENT
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26 weeks ended 24 December 2011
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
24 December 2011 25 December 2010 25 June 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- -------- ---------- ------------ --------
Net cash inflow from
operating activities
(note A) 8,880 7,205 18,470
Returns on investment
and servicing of finance
Interest paid (2,067) (2,180) (4,246)
Interest received 8 1 26
--------- -------- ------------
(2,059) (2,179) (4,220)
Taxation paid (1,401) (1,059) (2,052)
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (11,666) (5,294) (9,811)
Proceeds of sales of
tangible fixed assets 1,451 2,156 2,510
Additional loans to customers (143) (132) (323)
Customer loan redemptions 157 25 191
--------- -------- ------------
(10,201) (3,245) (7,433)
Equity dividends paid (2,431) (2,343) (2,958)
------------------------------- --------- --------- -------- ---------- ------------ --------
Net cash (outflow)/inflow
before financing (7,212) (1,621) 1,807
Financing
Purchase of own shares (313) - -
Short-term loans 3,000 - -
Repayment of long term
loan - (3,750) (5,000)
Movement in cash during
the period (4,525) (5,371) (3,193)
------------------------------- --------- --------- -------- ---------- ------------ --------
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
26 weeks ended 24 December 2011
A Reconciliation of operating profit to net cash inflow from operating activities
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
24 December 25 December 25 June
2011 2010 2011
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------- ------------- -------------
Operating profit 6,663 6,392 10,337
Depreciation and amortisation 3,153 3,074 6,209
Impairment provision - - 1,915
Charge for share based payments credited
to reserves 105 129 147
(Increase)/decrease in stocks (264) (93) 4
Increase in debtors and
prepayments (2,139) (1,240) (1,272)
(Increase/(decrease) in creditors and
accruals 969 (1,318) 647
Free trade loan discounts 186 152 284
Loss on sale of assets (excluding
property) 207 109 199
------------------------------------------ ------------- ------------- -------------
2,217 813 8,133
------------------------------------------ ------------- ------------- -------------
Net cash inflow from operating
activities 8,880 7,205 18,470
------------------------------------------ ------------- ------------- -------------
B Reconciliation of cash flows to movement in net debt
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
24 December 25 December 25 June
2011 2010 2011
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ ----------
Opening cash and overdraft 4,588 7,781 7,781
Closing cash and overdraft 63 2,410 4,588
------------------------------- ------------ ------------ ----------
Decrease in cash during the
period (4,525) (5,371) (3,193)
Short-term loans (3,000) - -
Repayment of long-term loan - 3,750 5,000
Amortisation of loan issue
costs (50) (88) (175)
------------------------------- ------------ ------------ ----------
Movement in net debt during
the period (7,575) (1,709) 1,632
Net debt at beginning of the
period (64,918) (66,550) (66,550)
------------------------------- ------------ ------------ ----------
Net debt at end of the period (72,493) (68,259) (64,918)
------------------------------- ------------ ------------ ----------
These financial statements have not been audited (see note 1).
C Analysis of changes in net debt
June Cash flow Amortisation December
of issue
2011 costs 2011
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ---------- -------------- ---------
Cash 4,588 (4,508) - 80
Bank overdrafts - (17) - (17)
Debt due within one year - (3,000) - (3,000)
-------------------------- --------- ---------- -------------- ---------
4,588 (7,525) - (2,937)
Debt due after more than
one year (69,506) - (50) (69,556)
--------------------------
Total (64,918) (7,525) (50) (72,493)
-------------------------- --------- ---------- -------------- ---------
These financial statements have not been audited (see note 1).
NOTES TO THE ACCOUNTS - 26 weeks ended 24 December 2011
1. Interim statement
The financial information contained in this interim statement, which is unaudited, does not constitute statutory accounts as defined in S435 of the Companies Act 2006. Statutory accounts for the 52 weeks ended 25 June 2011, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.
2. Accounting policies
The interim accounts have been prepared on the basis of the accounting policies set out in the statutory accounts for the 52 weeks ended 25 June 2011.
As a result of the acquisition of the entire share capital of The Place Sandwich VCT Ltd, which operated the Bell Hotel Sandwich, consolidated accounts have been prepared for both the period under review and prior period and full year comparatives. A consolidated balance sheet was not required to be presented in the prior period's annual report. The Group financial statements consolidate the financial statements of Shepherd Neame Limited and all its subsidiaries. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group gains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries are prepared using consistent accounting policies to those of the parent company. All intercompany balances and transactions, including unrealised profits arising from them, are eliminated.
3. Operating Exceptional
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There were no operating exceptional items in the period. The charge in the 52 weeks ended 25 June 2011 relates to an impairment charge in respect of 13 licensed properties to write them down to recoverable amount.
4. Taxation
24 December 2011 25 December 25 June 2011
2010
GBP'000 GBP'000 GBP'000
-------------- ----------------- ------------ -------------
Corporation
tax 1,437 1,398 2,393
Deferred tax (232) (73) (303)
-------------- ----------------- ------------ -------------
1,205 1,325 2,090
-------------- ----------------- ------------ -------------
Taxation before exceptional items has been provided at 29% (2010 - 31%) based on the estimated effective tax rate for the 53 weeks to 30 June 2012.
5. Earnings per share
The earnings per share are calculated on profit after taxation of GBP3,599,000 (2010 - GBP3,394,000) and on 12,742,000 shares (2010 - GBP12,727,000) being the weighted average number of ordinary shares in issue during the period, adjusted for shares held in respect of employee incentive plans and options. The diluted earnings per share are calculated on the average number of shares in issue during the period adjusted by 55,000 shares (2010 - 100,000).
The earnings per share before profit on sale of property and exceptional items are calculated on profit after tax and before profit on sale of property GBP3,415,000 (2010 - GBP2,937,000).
6. Dividends
24 December 2011 25 December 2010 25 June 2011
Declared and paid in the period GBP'000 GBP'000 GBP'000
----------------------------------- ----------------- ----------------- -------------
GBP1 "A" ordinary shares
Final dividend for 2011: 19.00p
(2010: 18.35p) 2,173 2,093 2,094
Interim dividend for 2011: 4.80p - - 549
----------------------------------- ----------------- ----------------- -------------
2,173 2,093 2,643
----------------------------------- ----------------- ----------------- -------------
2p "B" ordinary shares
Final dividend for 2011: 0.380p
(2010: 0.367p) 258 250 250
Interim dividend for 2011: 0.096p - - 65
----------------------------------- ----------------- ----------------- -------------
258 250 315
----------------------------------- ----------------- ----------------- -------------
Dividends paid 2,431 2,343 2,958
----------------------------------- ----------------- ----------------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
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