Shepherd Neame Limited Class A · AQUIS:SHEP
Shepherd Neame Limited Class A — Shareholder Meeting (October 2012)
52 slides from Shepherd Neame Limited Class A's shareholder meeting presentation, October 2012
Slide 1: Shepherd Neame Ltd AGM October 2012
Shepherd Neame Ltd AGM October 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: 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 Div
Slide 8: 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 de
Slide 9: 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) ( 6.
Slide 10: 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 10 Internally ge
Slide 11: 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 12: Jonathan Neame, Chief Executive
Jonathan Neame Chief Executive 12
Slide 13: 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 14: 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 15: 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 15 2011/12 was a 53 week year 2010/11 and 2009/10 w
Slide 16: 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% 16
Slide 17: 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 17
Slide 18: Optimise efficiency and maintain product quality
…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 18
Slide 19: Brand sponsorship activities around arts, music and sport
We have supported our Brands with sponsorship activities around arts, music, entertainment and sporting events 19
Slide 20: 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 21: 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 22: We have increased our investment in pubs for the third consecutive year
We have increased our investment in pubs for the third consecutive year 22
Slide 23: Refurbishing 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 24: 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 24
Slide 25: Developing 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 25
Slide 26: Acquisitions in our heartland: 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 26
Slide 27: Good outside space and 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 27
Slide 28: Our portfolio is evolving within 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 Pub / So me Fo o d Great Pub / Great Fo o d • Target EBITDA for Tenanted 300 156 111 To tal ac
Slide 29: 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% 29 Total capex includes cost of acquisition
Slide 30: 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% 30 Total capex includes cost of acquisition
Slide 31: Purchase of the Royal Wells Hotel and Beau Nash
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
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Slide 33: 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 34: Questions?
Questions? 34
Slide 35: Relative Performance: TSR vs key market indices
Shepherd Neame TSR vs. key market indices since October 1992 TSR performance over twenty years (rebased to 100) TSR performance over twenty years (rebased to 100) 1,800.0 Shepherd FTSE All Share FTSE Small Cap AIM¹ 1,600.0 1,400.0 1,200.0 1,000.0 800.0 +634.9% 600.0 +393.3% +376.3% 400.0 200.0 (25.5
Slide 36: Relative Performance: TSR vs large peers
Shepherd Neame TSR vs. large peers since October 1992 TSR performance over twenty years (rebased to 100) TSR performance over twenty years (rebased to 100) 1,800 Shepherd Neame Large peers¹ 1,600 1,400 1,200 1,000 800 +634.9% 600 400 +226.8% 200 RELATIVE PERFORMANCE 0 Oct-92 Feb-94 Jun-95 Oct-96 Feb
Slide 37: Relative Performance: TSR vs small peers
Shepherd Neame TSR vs. small peers since October 1992 TSR performance over twenty years (rebased to 100) TSR performance over twenty years (rebased to 100) 1,800 Shepherd Neame Small peers¹ 1,600 1,400 1,200 1,000 800 +634.9% +517.4% 600 400 200 RELATIVE PERFORMANCE 0 Oct-92 Feb-94 Jun-95 Oct-96 Feb
Slide 38: Resolutions
Resolutions 38
Slide 39: Resolution 1: Receive the Annual Report and Accounts
Resolution 1 To receive the Annual Report and Accounts 39
Slide 40: Resolution 1 voting results
Resolution 1 To receive the Annual Report and Accounts No. of No. of Shareholders Votes % For + Discretion 302 35,909,211 99.91 Against 0 0 0.00 Other Discretion 11 30,574 0.09 100.00 Withheld 4 4,008,858 45.23% of total votes cast by proxy 40
Slide 41: Resolution 2: Declare a final dividend
Resolution 2 To declare a final dividend 41
Slide 42: Resolution 2 voting results
Resolution 2 To declare a final dividend No. of No. of Shareholders Votes % For + Discretion 304 35,912,211 99.91 Against 0 0 0.00 Other Discretion 11 30,574 0.09 100.00 Withheld 2 4,005,858 45.24% of total votes cast by proxy 42
Slide 43: Resolution 3: Re-election of Miles Templeman
Resolution 3 To propose the re-election of Miles Templeman as a Director 43
Slide 44: Resolution 3 voting results
Resolution 3 To propose the re-election of Miles Templeman as a Director No. of No. of Shareholders Votes % For + Discretion 287 27,477,677 68.96 Against 15 12,335,865 30.96 Other Discretion 11 30,574 0.08 100.00 Withheld 4 104,527 50.15% of total votes cast by proxy 44
Slide 45: Resolution 4: Re-election of Randall Nicol
Resolution 4 To propose the re-election of Randall Nicol as a Director 45
Slide 46: Resolution 4 voting results
Resolution 4 To propose the re-election of Randall Nicol as a Director No. of No. of Shareholders Votes % For + Discretion 285 27,470,230 68.78 Against 16 12,435,865 31.14 Other Discretion 11 30,574 0.08 100.00 Withheld 5 11,974 50.26% of total votes cast by proxy 46
Slide 47: Resolution 5: Re-election of Graeme Craig
Resolution 5 To propose the re-election of Graeme Craig as a Director 47
Slide 48: Resolution 5 voting results
Resolution 5 To propose the re-election of Graeme Craig as a Director No. of No. of Shareholders Votes % For + Discretion 290 31,243,213 86.94 Against 12 4,664,700 12.98 Other Discretion 11 30,574 0.09 100.00 Withheld 4 4,010,156 45.23% of total votes cast by proxy 48
Slide 49: Resolution 5: Election of Mark Rider
Resolution 5 To propose the election of Mark Rider as a Director 49
Slide 50: Resolution 6 voting results
Resolution 6 To propose the election of Mark Rider as a Director No. of No. of Shareholders Votes % For + Discretion 289 31,232,464 87.88 Against 12 4,275,379 12.03 Other Discretion 11 30,574 0.09 100.00 Withheld 5 4,410,226 44.73% of total votes cast by proxy 50
Slide 51: Resolution 7: Reappoint the Auditors
Resolution 7 To reappoint the Auditors and to authorise the Directors to fix their remuneration 51
Slide 52: Resolution 7 voting results
Resolution 7 To reappoint the Auditors No. of No. of Shareholders Votes % For + Discretion 294 27,774,079 88.02 Against 7 3,749,897 11.88 Other Discretion 11 30,574 0.10 100.00 Withheld 6 8,394,093 39.71% of total votes cast by proxy 52