Shepherd Neame Limited Class A · AQUIS:SHEP
Shepherd Neame Limited Class A — FY2013 Earnings Presentation
31 slides from Shepherd Neame Limited Class A's earnings presentation, September 2013
Slide 1: Preliminary Results for the 52 weeks ended 29 June 2013
Shepherd Neame Ltd Preliminary Results For the 52 weeks ended 29 June 2013
Slide 2: Miles Templeman, Chairman
Miles Templeman Chairman 1
Slide 3: 2013: A solid performance in difficult market conditions
2013: A solid performance in difficult market conditions Performance to 29 June 2013 highlights include: • Growth in turnover of 1.4% – 52 week year against a 53 week comparative • Operating profit before exceptional items level at £12.7m • Strong retail like for like sales and average EBITDAR growt
Slide 4: A year of further growth in net asset per share and dividend
A year of further growth in net asset per share and dividend • Final dividend per £1 share proposed at 20.15p, resulting in full year dividend 25.15p (2012: 24.5p) up 2.7% 3 • Net asset value per £1 share of £9.81 (2012: £9.61) up 2.1%
Slide 5: Business and Board reorganisation
Business and Board reorganisation • Beer Business key initiatives – Phased exit of contract brewing to best utilise plant capacity – Ten year logistics arrangement entered with Kuehne & Nagel Drinkflow Logistics • Reorganise Board around two divisions – Brewing and Brands – Retail and Tenanted Pubs
Slide 6: Business and Board reorganisation: Executive Board 2014
Business and Board reorganisation Executive Board 2014 Jonathan Neame Chief Executive Bill Brett Non-Executive Director Starts September 2013 Retail & Tenanted Brewing & Pubs Division Brands Division Nigel Bunting Retail & George Barnes Graeme Craig Tenanted Property & Mark Rider Brewing & Tom Falco
Slide 7: Mark Rider, Finance and IT Director
Mark Rider Finance and IT Director 6
Slide 8: Performance - Highlights
Performance - Highlights 2013 2012 % Before exceptional items £m £m Turnover 134.9 133.0 1.4 Operating Profit 12.7 12.7 - Net Finance Costs (4.7) ( 4.3) (8.9) Profit before Tax 8.0 8.4 (4.5) Tax Rate (%) 23.8 24.6 (0.8) EPS (pence) 48.1 49.8 (3.4) Full Year Dividend per £1 share (pence) 25.2 24.5 2.
Slide 9: Operating profit level at £12.7m, interest charges reflect acquisitions
Operating profit level at £12.7m, interest charges reflect recent acquisition activity 2013 2012 Before exceptional items £m £m Turnover 134.9 133.0 Operating Costs (122.2) (120.3) Operating Profit 12.7 12.7 Operating Margin 9.4% 9.6% Net Finance Costs (4.7) (4.3) Interest Cover 2.7 3.0 • Operating
Slide 10: Exceptional Items
Exceptional Items 2013 2012 £m £m Business Reorganisation (1.2) - Property Profits 0.3 0.6 Number of Pubs Disposed 6 12 Impairment Charge - - Total Exceptional Items (0.9) 0.6 • Total business and Board reorganisation exceptional estimated £1.7m over 2013 and 2014 - Cash impact £0.5m in 2013 and £0.
Slide 11: Cash flows
Cash flows 2013 2012 £m £m EBITDA 19.6 19.8 Cash flow from operations 19.0 19.9 Interest and tax (6.8) (7.7) Dividends and purchase of own shares (3.1) (3.6) Disposal proceeds 2.7 3.5 Internally Generated Free Cash 11.8 12.1 Core Capex (10.2) (7.7) Acquisitions (3.6) (15.6) Net cash (outflow) (2.0)
Slide 12: Financing position and borrowing capacity
Financing position and borrowing capacity • £60m term debt to 2026 fixed on swap at weighted average rate 5.94% to end of term • Medium term debt to 2017 of £28m remains at floating rate • Year end headroom of £10m plus overdraft 11
Slide 13: Balance Sheet maintains a strong position
Balance Sheet maintains a strong position 2013 2012 £m £m Fixed Assets 202.4 198.6 Other assets and Liabilities 1.8 0.4 Net debt (78.4) (75.8) Shareholders Funds 125.8 123.2 Net Debt : EBITDA 4.0 3.8 Gearing 62% 62% Net asset per £1 share 9.81 9.61 • Full year pro-forma excluding impact of acquisiti
Slide 14: Jonathan Neame, Chief Executive
Jonathan Neame Chief Executive 13
Slide 15: Overview
Overview • A satisfactory performance in the face of challenging market conditions – Strong like for like retail sales – Average EBITDAR growth in managed and tenanted – Volume growth in core brands • Positive actions taken – Beer portfolio development – New export opportunities – Business reorganis
Slide 16: Portfolio development: focus capacity on own beer and licensed brands
Portfolio development: To focus capacity on own beer and licensed brands where there are growth opportunities Heritage Mainstream Discovery/Craft Connoisseur Beers Regular Premium, World, For Special Occasions Beers Craft Beers 15
Slide 17: Discovery/Craft Classic Collection
Discovery/Craft Classic Collection New product development 16
Slide 18: Investment in brands
Investment in brands Movember Partnership Ground naming rights Comedy Duo Armstrong & Miller Serpentine Gallery Future Contemporaries Party Soul 2 Soul Watergate Varsity Match Twickenham 17 Bay Concert
Slide 19: Core brand performance: Ahead of the market
Core brand performance: Ahead of the market 2011 2012 2013 Volume Growth 2.3% 5.7% 2.7% 2011 2012 2013 2011 2012 2013 Volume Growth 16.8% 20.4% 9.4% Volume Growth 3.9% (9.1)% 1.0% 2012/13 growth rates on a 52 week comparable basis. 2011/12 was a 53 week year 18 * Own beer volume adjusted to exclude
Slide 20: Phased exit of Kingfisher contract mitigated by new growth opportunities
Phased exit of Kingfisher contract mitigated by new growth opportunities • Phased exit from contract brewing Kingfisher lager – 18.6% of own beer 2013 – Brewing ends December 2014 • We expect discontinued contract volume will be covered by new brand and sales initiatives • New export agreement into
Slide 21: Business reorganisation
Business reorganisation • March 2013 - 15 roles in Beer Business consolidated • July 2013 - 10 year agreement for distribution and warehousing services • Shepherd Neame continue to own site which becomes key part of KNDL network • Increased expansion opportunities outside heartland • Transfer of ope
Slide 22: Progress against long term pub strategy
Progress against long term pub strategy Objective Progress Improve quality and average • 26 pubs and hotels acquired, 51 earnings of pub and hotel estate sold since 2008 • Strong average EBITDAR per pub growth Build retail mix • Retail turnover 30% higher in 2013 than 2008 Grow accommodation busines
Slide 23: We own many of the best freehold pubs in Kent, London and South East
We own many of the best freehold pubs in Kent, London and South East. • Total investment in pubs £9.9m (2012: £20.6m) - Acquisitions £3.6m (2012: £15.4m) - Maintenance/development Capex £4.6m (2012: £3.7m) - Repairs £1.7m (2012: £1.5m) - Disposals £2.7m (2012: £3.5m) • Over last 5 years average EBIT
Slide 24: Pub performance robust in difficult On Trade market conditions
Pub performance robust in difficult On Trade market conditions • UK market On Trade volumes down -4.9% (2012: -3.4%) - Wet and dull Summer in 2012. Cold Spring in 2013 - Olympics 2012 below expectations - Consumer caution • Retail liquor LFL 2.0% (2012: 6.2%) 23
Slide 25: Food offer development has driven an increase in customer numbers
Food offer development has driven an increase in customer numbers Managed Houses 2013 Food LFL 5.0% Ave spend / head £11.23 Spend / head growth - 24
Slide 26: Hotel investment strategy
Hotel investment strategy • Acquisition of Royal Wells Hotel and Beau Nash for £3.6m • Redevelopment of Marine Hotel, Tankerton - £1.4m spend in 2013 • Major bedroom upgrades - The Royal Hotel, Deal - The Dog & Bear Hotel, Lenham - The Sun Inn, Faversham • 2014 – 15 investment plans - The Bell Hotel
Slide 27: Room refurbishment has supported an increase in occupancy and RevPAR
Room refurbishment has supported an increase in occupancy and RevPAR Managed Houses 2013 Accommodation LFL 7.9% Occupancy 73% Occupancy Growth 7% RevPAR £48 RevPAR Growth 11.6% • 501 letting rooms at year end: – Managed Houses 270 – Tenanted 231 26
Slide 28: Tenanted investment strategy
Tenanted investment strategy • Total investment in our tenanted estate £3.1m (2012: £2.6m) • We provide turnkey service to develop pub design interiors, provide fixtures & fittings with pre and post opening training & support 27
Slide 29: Supporting our Licensees
Supporting our Licensees • We have evolved our tenanted support with 9 new initiatives and services, for example – Catering advisory, menu design and bespoke coffee supply package – Enhanced range of national lagers and guest beers – New induction programme for for licensees and online training • Up
Slide 30: Summary
Summary • Challenging year but creditable performance • Decisive action to position the business for higher returns • Current trade strong….. … but we do not expect it to continue at this rate of growth through winter – Managed House LFL for first 10 weeks up 10.2% – Tenanted LFL EBITDAR up 1.7% – T
Slide 31: Questions?
Questions? BRITAIN'S OLDEST BREWER 30