SHEPHERD NEAME LTD AGM 13 OCTOBER 2017 MILES TEMPLEMAN CHAIRMAN - PowerPoint PPT Presentation

SHEPHERD NEAME LTD AGM 13 OCTOBER 2017

MILES TEMPLEMAN CHAIRMAN 2

2017: A STRONG SET OF RESULTS AND A YEAR OF SIGNIFICANT INVESTMENT  Strong underlying performance in all operating divisions  Period of significant acquisition investment  Excellent progress made against strategic objectives  Development work to enhance own beer portfolio, modernise brewing operation and streamline management roles 3

A YEAR OF FURTHER GROWTH IN NET ASSETS AND DIVIDEND PER SHARE Proposed final dividend of 22.73p taking total dividend to 28.35p   This represents underlying cover of 2.1 times. Cover consistent with policy stated at share capital reorganisation in 2014   Underlying cover at or above 2 times  Annual dividend increased from £3.2m to £4.2m since share capital reorganisation 4

MARK RIDER FINANCE DIRECTOR 5

PERFORMANCE HIGHLIGHTS 2017 2016 £m £m Underlying results % Turnover 156.2 139.9 11.7 Operating Profit 15.3 14.2 7.2 Net Finance Costs (4.1) (5.0) (3.9) Profit before Tax 11.2 10.3 8.0 Tax Rate (%) 21.8 21.8 Earnings Per Share (pence) 59.1 54.7 8.0 Full Year Dividend per share (pence) 28.35 27.50 3.1 Reconciliation to statutory profit Total Items excluded from underlying results 0.6 4.1 11.8 Statutory Profit Before Tax 14.4 (18.0) 6

DIVISIONAL PERFORMANCE: MANAGED PUBS 2017 2016* % Underlying results LFL sales growth +8.1% +4.4% 26.2 Turnover (£m) 60.7 48.1 18.0 Divisional operating profit (£m) 9.0 7.6  Fastest growing operating division following continued investment  Division has increased in size to 66 pubs (2016: 54 pubs)  6 pubs acquired including VGR purchase  8 pubs transferred from Tenanted including UES purchase  2 pubs transferred to Tenanted *Segmental disclosure reflects how management monitor the performance of each division which has resulted in a re-statement of the 2016 disclosure 7

DIVISIONAL PERFORMANCE: TENANTED PUBS 2016* 2017 % Underlying results +2.7% LFL EBITDAR** growth +1.6% Turnover (£m) 2.8 34.4 33.5 12.7 Divisional operating profit (£m) 13.0 2.4  Good growth on 14 fewer pubs  Underlying operating profit reflects increased turnover offset by higher repairs and decorations and depreciation *Segmental disclosure reflects how management monitor the performance of each division which has resulted in a re-statement of the 2016 disclosure ** LFL earnings before interest, tax, depreciation, amortisation and rent payable 8

DIVISIONAL PERFORMANCE: BREWING AND BRANDS % 2017 2016* Underlying results Own brewed volume ex contract growth +0.3% +3.9% Turnover (£m) 59.8 4.4 57.3 1.6 (1.4) Divisional operating profit (£m) 1.6 3.9 4.0 (3.3) Underlying divisional EBITDA (£m)  Own beer output grew ahead of market** underpinned by a strong and diverse brand portfolio  Underlying operating profit impacted by additional water recovery costs *Segmental disclosure reflects how management monitor the performance of each division which has resulted in a re-statement of the 2016 disclosure ** Source: BBPA 9

BALANCE SHEET: STRONG BALANCE SHEET SUPPORTS RECORD CAPITAL INVESTMENT 2016 2017 £m £m 280.2 Fixed Assets* 306.6 Other Assets and Liabilities (37.4) (36.2) (78.1) (60.1) Net Debt Shareholders Funds 191.1 183.9 3.3 2.8 Net Debt : Underlying EBITDA Balance Sheet Gearing 41% 33% £12.86 £12.38 Net assets per share  Long term £60m loan remains unchanged to 2026  Further revolving credit facility of £45m in place to 2020 * Includes 87% freehold pub estate and £6.8m of investment property 10

JONATHAN NEAME CHIEF EXECUTIVE 11

MARKET CONTEXT We have outperformed the market  LFL managed pub sales +8.1% vs  Peach Tracker Index of +1.4% Own beer ex contract volume  growth of +3.9% vs market -0.2% Whilst the weather conditions have  been favourable, with a long hot summer in 2016 and sunshine in spring 2017, market conditions have become progressively harder Customers seeking value and quality  experience 12

OUR STRATEGIC OBJECTIVES TO DEVELOP TO DRIVE OUR OFFER TO FOOTFALL TO ENHANCE THE CUSTOMER OUR PUBS EXPERIENCE OUR STRATEGIC OBJECTIVES TO CREATE TO ATTRACT, DEMAND AND RETAIN AND BUILD DEVELOP THE AWARENESS BEST PEOPLE FOR OUR BRANDS 13

FIVE YEAR REPOSITIONING OF ESTATE: CONTINUED ACTIVE PROPERTY MANAGEMENT Average EBITDAR per 2012 Acquisitions Transfers Disposals 2017 pub growth 310 9 (18) (48) 253 Tenanted +25.4% - Managed 44 13 9 66 +30.5% Investment - - (1) 9 8 properties (49) 22 - 354 327 Total  2017 pub ownership profile: 87% freehold 14

FIVE YEAR REPOSITIONING OF BRAND PORTFOLIO: CONTINUED DEVELOPMENT 15

BUILDING BRAND IDENTITY AND AWARENESS 16

FIVE YEAR REPOSITIONING OF BUSINESS: BUILDING A SUCCESSFUL MANAGED PUB BUSINESS  Significant investment over five years to build a successful managed pub business  Food sales now represent 33% of managed pub sales  Accommodation 10% of managed turnover from a total of 294 bedrooms in the managed estate 17

TO DRIVE FOOTFALL TO OUR PUBS We aim to drive footfall by designing and developing unique pubs and hotels with a ‘wow’ factor 18

DRIVING FOOTFALL TO OUR PUBS: STRONG UNDERLYING PERFORMANCE 19

DRIVING FOOTFALL TO OUR PUBS: ACQUISITION OF EIGHT NEW PUBS FROM EI GROUP PLC Crown and Anchor, Shoreham The Farmhouse, West Malling Kings Head, Guildford Sussex Oak, Warnham 20

DRIVING FOOTFALL TO OUR PUBS: ACQUISITION OF FIVE NEW PUB RESTAURANTS FROM VGR Oak on the Green, Bearsted Old Mill, Kennington Swan and Dog, Great Chart Chequers on the Green. High Halden 21

DRIVING FOOTFALL TO OUR PUBS: MAJOR INVESTMENT IN MANOR FARM BARN, OSTRICH AND MINNIS BAY Manor Farm Barn, Southfleet Ostrich, Colnbrook Minnis Bay Bar and Brasserie, Birchington 22

DRIVING FOOTFALL TO OUR PUBS: TRANSFORMING THE LOOK & FEEL OF OUR TENANTED ESTATE THROUGH CONTINUED INVESTMENT Total spend on managed and  tenanted existing estate £10.7m (2016: £9.5m) Major tenanted investments at East  Kent, Whitstable, Plough, Farnham and Old House at Home, Dormansland Old House at Home, Dormansland East Kent, Whitstable 23

DRIVING FOOTFALL TO OUR PUBS: LOOKING AHEAD TO 2017/18  Pier Five opened July 2017 at Chatham Maritime  Earls at Maidstone, acquired in 2017 year, will transfer from tenanted to managed estate  Transformational investments due to be carried out at the Anchor, Yalding and the Spitfire, West Malling 24

TO DEVELOP OUR OFFER TO ENHANCE THE CUSTOMER EXPERIENCE We aim to enhance the customer experience in our pubs by delivering great fresh food, providing accommodation of character and offering an interesting range of products 25

DEVELOPING OUR OFFER TO ENHANCE THE CUSTOMER EXPERIENCE: CONSISTENT STRONG TRADING 26

DEVELOPING OUR OFFER TO ENHANCE THE CUSTOMER EXPERIENCE: GREAT FRESH FOOD  UES transaction transfers five pubs and management team from tenanted to managed  Acquisition of UES and VGR brings new skills and ideas  Successful new food offers at Minnis Bay Bar and Brasserie, and Ship and Trades, Chatham Maritime  Pubs continue to be recognised for their excellence: three pubs in UK’s top 50 gastropubs 27

DEVELOPING OUR OFFER TO ENHANCE THE CUSTOMER EXPERIENCE: ACCOMMODATION OF CHARACTER Development at Ostrich, Bell Hotel, Sandwich  Colnbrook added 11 new bedrooms Refurbishment of 37 bedrooms at  Bell, Sandwich and Botany Bay, Kingsgate Occupancy grew to 79% (2016: Ostrich, Colnbrook  78%) and REVPAR* continues to grow to £66 (2016: £63) *Revenue Per Available Room 28

TO ATTRACT, RETAIN AND DEVELOP THE BEST PEOPLE We aim to attract, retain and develop the best people by understanding the potential in everyone, inspiring them to achieve their goals and building the loyalty and engagement of our licensees, through the professionalism of the support we provide 29

ATTRACTING, RETAINING AND DEVELOPING THE BEST PEOPLE  Continued high performance in independent survey of licensees  Recognition from BII* as one of the top licensed trade training providers  All managed pub staff have personal development programmes, 500 offline and 1700 online courses delivered  Increased investment in support at Head Office 30

TO CREATE DEMAND AND BUILD AWARENESS FOR OUR BRANDS We aim to create demand and build awareness of our brands by developing a range of distinctive beers, instilling a passion for quality and having great engagement with our customers 31

BREWING AND BRANDS: 2017 MARKET VOLUME OUTPERFORMANCE  Own beer volume ex contract up 3.9%  Exciting brand launches  Investment of £0.7m in restoring fabric and infrastructure of historic site 32

CREATING DEMAND AND BUILDING AWARENESS FOR OUR BRANDS: EXTENSION OF SUCCESSFUL BRANDS  Whitstable Bay collection grew 20.5% (2016: 19.5%) and represents 10% of own beer ex contract volumes  Spitfire range has returned to growth of 2.2% (2016: -3.7%) and represents 22% of own beer ex contract volumes 33

CREATING DEMAND AND BUILDING AWARENESS FOR OUR BRANDS: DEVELOPMENT OF PREMIUM BRITISH BRANDS 34