Shepherd Neame Limited Class A · AQUIS:SHEP
Shepherd Neame Limited Class A — FY2012 Earnings Presentation
37 slides from Shepherd Neame Limited Class A's earnings presentation, December 2012
Slide 1: Preliminary Results for the 53 weeks ended 30 June 2012
Shepherd Neame Ltd Preliminary Results for the 53 weeks ended 30 June 2012 1
Slide 2: Miles Templeman, Chairman
Miles Templeman Chairman 2
Slide 3: 2012: A strong performance…
2012: A strong performance… • A successful year with – record turnover, EBITDA and beer volume – strong earnings per share growth – Investment in seven individually selected high quality pubs and hotels – medium term financing in place to 2017, long term financing unchanged • Operational highlights
Slide 4: …And a year of progress against our long term strategy
…And a year of progress against our long term strategy • To strengthen a high quality integrated beer and pub business • To develop – a freehold estate of traditional pubs, inns and hotels all within Kent, London and the South East – a portfolio of premium ale, craft and world lager brands – brewing
Slide 5: Dividend per share
This strategy continues to drive growth in net assets and dividends for shareholders 35p Dividend per share Net Assets per share £14 Net Assets per share adjusted for 2004 & 2011 pub valuations 30p £12 Net assets per share Dividend per share 25p £10 20p £8 15p £6 10p £4 2002 2003 2004 2005 2006 2007
Slide 6: Mark Rider, Finance and IT Director
Mark Rider Finance and IT Director 6
Slide 7: Performance - Highlights
Performance - Highlights 2012 2011 % £m £m Turnover 133.0 121.3 9.6 Operating Profit before exceptional items 12.7 12.3 3.7 Net Finance Costs (4.3) (4.3) Net Exceptional Items 0.6 ( 1.5) Profit Before Tax 9.1 6.5 39.7 Tax Rate 23.3 32.2 Basic EPS before exceptional items 49.8 46.2 7.8 Full Year Divi
Slide 8: Key Drivers of Turnover Growth of 9.6%
Key Drivers of Turnover Growth of 9.6% • Strong retail sales up 14.5% enhanced by the impact of new acquisitions. Tenanted turnover up 2.2% • Beer volumes up 5.6% through new distribution of core brands and marketing activity • 53 week financial year contributed 2.2%, Excise Duty 1.1% • Good underly
Slide 9: Operating Profits up 3.7%, interest costs in line with prior year
Operating Profits up 3.7%, interest costs in line with prior year 2012 2011 Before exceptional items £m £m Operating Costs (120.3) (109.1) Operating Profit 12.7 12.3 Operating Margin 9.6% 10.1% Net Finance Costs (4.3) (4.3) Interest Cover 3.0 2.9 • Operating costs and margin reflects – an active dec
Slide 10: Exceptional items – Continued property profits, no impairment in 2012
Exceptional items – Continued property profits, no impairment in 2012 2012 2011 £m £m Property Profits 0.6 0.4 Number of Pubs Disposed 12 8 Impairment Charge - ( 1.9) Net Exceptional Items 0.6 ( 1.5) Property Profits • Continued disposal of small £3.0m pubs at a profit to reinvest in larger outlets
Slide 11: Strong operating cash flows and £23.3m total capital investment
Strong operating cash flows and £23.3m total capital investment 2012 2011 £m £m EBITDA 19.8 18.9 Cash flow from operations 19.9 18.5 Interest and tax ( 7.7) ( 6.2) Dividends and purchase of own shares ( 3.6) ( 3.0) Disposal proceeds 3.5 2.5 Internally Generated Free Cash 12.1 11.8 Core Capex ( 7.7)
Slide 12: Strong cash flow allowing opportunistic acquisitions
Strong cash flow allowing opportunistic acquisitions 30 No. of 25 5 year total to 2012 £m Pubs 20 Acquisition capex 40.8 29 Disposal Proceeds 21.3 52 £m 15 10 5 0 2008 2009 2010 2011 2012 Maintenance Capex Brewery and IT Modernisation New Pub Additions Internally generated free cash 12 Internally ge
Slide 13: New medium term financing in place to 2017, long term financing to 2026 unchanged
New medium term financing in place to 2017, long term financing to 2026 unchanged £m Total long-term facilities Term loan to 2026 60 Term loan to 2017 (£12m drawn at year end) 20 Revolving credit facility to 2017 10 Committed overdraft facility 5 Total facilities 95 Year end net debt 75.8 •£60m term
Slide 14: Strong asset base supports higher short-term leverage
Strong asset base supports higher short-term leverage 2012 2011 £m £m Fixed Assets 198.6 185.7 Other assets and Liabilities 0.4 (1.3) Net debt ( 75.8) ( 64.9) Shareholders Funds 123.2 119.5 Net Debt : EBITDA 3.8 3.4 Gearing 62% 54% Net asset per £1 share 9.61 9.33 • Full year pro-forma: – Net debt :
Slide 15: Jonathan Neame, Chief Executive
Jonathan Neame Chief Executive 15
Slide 16: A year of progress against our long term strategy
A year of progress against our long term strategy To strengthen a high quality integrated • Strong Retail sales enhanced by new beer and pub business acquisitions • Tenanted trade return to growth • Strong beer sales driven by new distribution of core brands and marketing activity To develop: • a fr
Slide 17: We continue to outperform the national beer market
We continue to outperform the national beer market through growth in premium bottled ale and world lager Total Beer Volume Growth 6.3% 5.6% 5.2% • Growth of premium bottled ale 4.6% 4.8% 4.0% 2.6% – Spitfire (3.1)% 3.9% (0.9)% (1.2)% • World Lagers -2.7% (2.4)% (6.7)% – Asahi (6.9)% 2008 2009 2010 2
Slide 18: Consistent performance of core brands now complemented by smaller brands
Consistent performance of core brands now complemented by smaller brands 2010 2011 2012 2010 2011 2012 Volume Growth (0.9)% 2.3% 5.7% Volume Growth 8.4% 16.8% 20.4% 2010 2011 2012 Volume Growth 18.8% 3.9% (9.1)% Good performance from smaller brands 18 2011/12 was a 53 week year 2010/11 and 2009/10 w
Slide 19: Benefits from prior year investments: Bottling Line
We continue to derive benefits from prior year investments: Bottling Line Year of Investment 2009 Total Capex £3.2m Volume uplift 41% 19
Slide 20: We continue to invest in people and process to mitigate cost inflation
We continue to invest in people and process to mitigate cost inflation… • Investment in refrigeration due to regulatory development • Investment in water recovery plant to reduce water consumption and mitigate future waste water charges • Total estimated capex £2.7m in 2013 20
Slide 21: To optimise efficiency and maintain product quality to highest standard
…To optimise efficiency and maintain product quality to highest standard • 41 awards won for quality since 2008 • 12 awards won in 2012 including: – BBI Gold medal: 1698 – International Beer Challenge Gold medal: Late Red 21
Slide 22: Brand sponsorship activities around arts, music, entertainment and sporting events
We have supported our Brands with sponsorship activities around arts, music, entertainment and sporting events 22
Slide 23: Significant progress against our objectives across the pub estate
Significant progress against our objectives across the pub estate Managed Houses Tenanted Estate Operational Objectives • Accelerate menu • Refine consumer offer development in line with segmentation • Grow RevPAR • Develop food business • Maximise digital • Increase licensee platform support Invest
Slide 24: Continued strong delivery across Managed Houses and the Tenanted Estate
This has led to continued strong delivery across Managed Houses and the Tenanted Estate Managed Houses Tenanted Estate 14.0% 5.0% 12.6% 4.1% 4.0% 12.0% 10.9% 3.0% 2.7% 10.0% 2.0% 0.8% 8.0% 7.4% 7.6% 1.0% 0.3% 0.0% 6.0% -1.0% 4.0% -2.0% 2.7% -3.0% 2.0% (3.0)% 0.7% -4.0% (3.8)% 0.0% -5.0% 2010 2011 20
Slide 25: We have increased our investment in pubs for the third consecutive year
We have increased our investment in pubs for the third consecutive year 25
Slide 26: We continue to refurbish our letting rooms to drive occupancy and RevPAR
We continue to refurbish our letting rooms to drive occupancy and RevPAR Managed Houses 2012 Accommodation LFL 7.0% RevPAR £43 RevPAR growth 13.2% • 476 letting rooms at year end: – Managed Houses 246 – Tenanted 230 • we operate individual inns and hotels with character. We are not – A branded hotel
Slide 27: We continue to develop the food offer in our pubs
We continue to develop the food offer in our pubs Managed Houses 2012 Food LFL 10.9% Ave spend / head £11.23 Spend / head growth 23.1% • New development chef within Tenancies 27
Slide 28: We continue to develop our digital platform and social media engagement
We continue to develop our digital platform and social media engagement • Increased feature, functionality and capacity • Personalised engagement via social media • Search engine optimisation • Improved usage via mobile devices • Increased dwell time 28
Slide 29: Acquisitions are all based in our heartland, are character pubs, inns and hotels
Acquisitions are all based in our heartland, are character pubs, inns and hotels… Camden Arms, Pembury Bell Hotel, Sandwich Fayreness Hotel, Kingsgate 29
Slide 30: … with good outside space and five enjoy excellent coastal locations
… with good outside space and five enjoy excellent coastal locations Zetland Arms, Deal Kings Head, Deal Old Neptune, Whitstable Old City Bar, Canterbury 30
Slide 31: Our portfolio is evolving whilst maintaining an excellent freehold estate
As a result of this investment strategy our portfolio is evolving whilst maintaining an excellent freehold estate in Kent, London and South East 400 375 pubs 354 pubs Co mmunity Wet 350 M ainstream Regular P ub / So me Fo o d Great P ub / Great Fo o d • Target EBITDA for Tenanted 300 156 111 To tal
Slide 32: Benefits from prior year investments: pub acquisitions
We continue to derive benefits from prior year investments: pub acquisitions Year of Acquisition 2009 No. of pubs 13 Acquisition cost £14.9m Total Capex £16.8m EBITDA uplift 29% 32 Total capex includes cost of acquisition
Slide 33: Benefits from prior year investments: hotel investment
We continue to derive benefits from prior year investments: hotel investment Year of Acquisition 2007 Fully Developed 2009 Acquisition cost £2.8m Total Capex £4.3m EBITDAR uplift 102% 33 Total capex includes cost of acquisition
Slide 34: Purchase of the Royal Wells Hotel and Beau Nash at Tunbridge Wells
Since the year end we have purchased the Royal Wells Hotel and Beau Nash pub at Tunbridge Wells • Transaction completed on 24th September • Beau Nash pub adjoins the main hotel premises and is to be operated as a single unit • Property adds 23 bedrooms to the estate and has development potential for
Slide 35: 35
35
Slide 36: Summary
Summary • Current trade promising – Managed House LFLs for first 12 weeks +5.1% – Beer volumes for first 12 weeks in line with 11/12 – Tenanted LFL EBITDAR for first 9 weeks grew 2.5% • Long term strategy and investment has delivered – Strong performance – High quality pub estate – Growth in food an
Slide 37: Questions?
Questions? 37