Shepherd Neame Ltd AGM 2014 Miles Templeman Chairman 2014: - - PowerPoint PPT Presentation

Shepherd Neame Ltd AGM 2014

BY APPOINTMENT TO: HIS ROYAL HIGHNESS THE PRINCE OF WALES SUPPLIER OF SPECIALIST ORDERS SHEPHERD NEAME LTD FAVERSHAM KENT

Miles Templeman Chairman

2014: Building a strong platform for the business to grow and develop

• Growth in turnover of 2.8%
• Growth in profits and earnings per share
• Operating profit before exceptional items

up 5.5% to £13.4m

• Basic EPS up 12.9% and EPS before

exceptional items up 16.9%*

• Statutory profit before tax up 8.7%
• Proposed final dividend of 20.75p per share

taking total dividends for the year up 3.0%

• Implementation of Business, Board and

Share Capital reorganisations

* 2013 restated for share capital reorganisation

2014: Successful implementation of changes to the Business and Board

• Business reorganisation
• Transfer of warehousing and logistics to KNDL October 2013
• Phased exit from contract brewing from October 2013

to December 2014

• Board reorganisation around two trading divisions

Graeme Craig – Brewing and Brands Director

• January 1st 2014

Nigel Bunting – Retail and Tenanted Operations Director

• July 1st 2014

George Barnes - Property and Services Director

• July 1st 2014

Share capital reorganisation completed to align the economic and voting rights

• f all shareholders
• Approved June 2014
• 11,457,500 ‘A’ shares and 68,000,000

‘B’ shares converted to new structure of 14,857,500 50p ordinary shares

• New shares listed on ISDX Growth Market

and CREST with simplified governance structure

• Improved marketability of shares whilst

retaining low cost dealing facility and tax advantages for shareholders

• All EPS and net assets per share metrics for

previous years restated as if new share structure was always in place

As reported in 2013 +3.0% +0.3x Impact of share capital reorganisation 2013 restated for new share structure

• (0.3)

37.1 1.6 (1.34) 1.9 Growth 1.9 25.90 9.81 (6.6) (5.9) 43.0 41.5 8.47 2014

Basic EPS Pence Pence Pence Times EPS Pre Exceptionals Dividend Per Share Dividend Cover Pre Exceptionals Net Assets Per Share

25.15

£

8.67 48.5 41.9 +12.9% +16.9% +2.4%

Key metrics restated for impact of share capital reorganisation

• Target dividend cover pre exceptionals in medium term is 2.0 times

48.1 25.15

A year of further growth in net assets per share and dividend

* Restated for share capital reorganisation ** In 2011 a market valuation of licensed property indicated a £68m surplus over book value at that time

10p 15p 20p 25p 30p 35p 2010 2011** 2012 2013 2014 Dividend per share £4 £6 £8 £10 £12 £14 Net assets per share Dividend per share Net Assets per share at book value*

Mark Rider Finance & IT Director

Turnover 138.7 134.9 2014 £m 2013 £m % Operating Profit 13.4 12.7 5.5 Net Finance Costs (4.6) (4.7) Profit before Tax 8.8 Statutory Profit Before Tax (1.1) (0.9) 1.1 Tax Rate (%) 7.7 7.1 EPS* (pence) 18.5 23.8 Full Year Dividend per ordinary share (pence) 48.5 41.5* 8.0 Total Exceptional Items 25.2 25.9 16.9 3.0

Before exceptional items Reconciliation to statutory profit

9.3 2.8 8.7

Performance highlights

* Restated for share capital reorganisation

Pub Turnover

Tenanted revenue

+2.2%

Managed revenue

+10.8%

Key drivers of trading performance Beer Volume

Core own and licensed Brands (excluding contract)

+6.1%

• 0.3%

Total own brewed volume (Kingfisher volume went from 18.6% to 13.5% of

• utput)

Operating profit* impacts from strategic initiatives

+£1.2m

• £0.5m
• £0.3m

Business and Board reorganisation Additional water recovery costs Increased investment in brand marketing

• £0.3m

Increased investment in property repairs and decorations 2014 2015 +£0.8m

• £0.5m
• £0.3m

* Before exceptional items

(0.9) Share capital reorganisation (0.5)

• (0.7)

(1.2) Total Exceptional Items (1.3) Business and Board reorganisation (1.2) (1.1) Property profits No of pubs disposed 0.2 0.3 4 6 2014 £m 2013 £m

Exceptional items: No further costs expected on reorganisations

Total exceptional costs Property impairment (0.1)

128.8 125.8 3.5 (78.4) Fixed Assets 202.7 202.5 Other assets and Liabilities (2.4) 1.7 Net debt Shareholders Funds Net Debt : EBITDA 4.0 Balance Sheet Gearing 56% 62% (71.5) 2014 £m 2013 £m

Balance Sheet strengthened through reduced debt and leverage

• £60m term debt to 2026 remains fixed to end of term
• Flexible medium term debt facility to 2017 of £28m remains at floating rate

Jonathan Neame Chief Executive

• Marketplace has improved with total UK beer

volume up 3.8%

• greater consumer confidence
• improved weather
• lower taxation on beer
• Market for pubs has improved
• drinkers and diners returning to pubs
• atmosphere, product range and great

fresh food key drivers

• objective is to provide a memorable

experience

• Consumer increasingly motivated by beer
• wider flavour profiles and new styles of

beer

• renewed interest in craft and local

production

Market context

• A strong trading performance
• record EBITDA and strong cash flow
• strong growth in tenanted LFL

EBITDAR and managed LFL sales

• volume growth from core own and

licensed beer excluding contract volume

• Good progress against strategy
• Continued investment in estate and

disposal of non sustainable assets

• Cost savings from Business reorganisation

reinvested in marketing, brand support and pub repairs and decorations

• Beer portfolio development

Overview of 2014

OUR STRATEGIC OBJECTIVES

ATTRACTING AND RETAINING CUSTOMERS TO OUR QUALITY BEERS PROVIDING A DISTINCTIVE RANGE OF COMPLEMENTARY PRODUCTS DRIVING FOOTFALL TO OUR PUBS ATTRACTING AND RETAINING THE BEST PEOPLE

Our strategic objectives

• We have invested £5.1m (2013:

£4.6m) improving the look and feel of our pubs and £2.0m (2013: £1.7m) in repairs and

• decorations. Total £7.1m (2013:

£6.3m)

• The Botany Bay Hotel,

Kingsgate and The Bell Hotel, Sandwich were successfully redeveloped in the year

• We disposed of 4 pubs that did

not fit with our long term strategy

Driving footfall to our pubs: Continued investment in improving the estate

0.3% (0.5)% 4.4% 2012 2013 2014

Tenanted and Leased Pubs LFL EBITDAR growth

7.6% 3.3% 8.9% 2012 2013 2014 Managed Pubs and Hotels LFL Turnover growth

Driving footfall to our pubs: Hotel investment

• Continued success of Marine Hotel following redevelopment in 2013
• The Botany Bay Hotel and The Bell Hotel redeveloped in 2014
• Royal Wells Hotel development due in 2015 at a cost of around £2m

Driving footfall to our pubs: Increase in investment of £0.6m to £3.7m in Tenanted estate

Tenanted Managed

Total 377

(62) 2007 Acquisitions Transferred Disposals 2014

• 87% freehold
• 100% in London and the South East

328 21 11 49 12 (12) 32 (62) 299 48 347

Evolution of pub estate

Attracting and retaining the best people

• Improvements in recruitment and

induction process

• Greater investment in bespoke

training and business support

• Flexible agreements, good

commercial propositions

• Matched investment schemes
• Resulting in
• Tenanted applications up
• Tenanted estate fully let at

year end

• Licensee satisfaction

scores up

Providing a distinctive range of complementary products: leveraging retail skills

• Continued focus on food offer through

food development team

• We influence > 100 Tenanted sites
• New Coffee and Ale House brand

launched

• Improved machines, ingredients,

quality audits

• Wine list strengthened, around 75% of

wine sales in our pubs are exclusive to Shepherd Neame

Providing a distinctive range of complementary products: Strong managed pubs and hotel performance

• Food LFL +10.4% (2013: +5.0%)
• Footfall +8.3%
• Spend per head £11.48 (2013:

£11.23)

• Increased accommodation marketing
• Accommodation LFL +9.7% (2013:

+7.9%)

• Occupancy 76% (2013: 73%)
• RevPAR £52 (2013: £48)

Attracting and retaining customers to our quality beers

• Successful re-launch of Whitstable Bay range
• Re-launch of seasonal ale range
• Occasional and event beers launched under No 18

Yard Brewhouse branding

• Phased exit from contract brewing to focus

production on core own and licensed brands

Attracting and retaining customers to our quality beers: Evolution of beer portfolio

Heritage Core Discovery Growth +7.7% Growth +1.1% Growth +0.1% New Developments 2015

Attracting and retaining customers to our quality beers: Increased investment in brand activity

• Increase in marketing spend of

£0.3m behind Armstrong and Miller

• Increased digital and social media

presence

• KNDL deal has enabled geographical

expansion

• National sales force strengthened

and Head Office functions realigned to give single business focus

• Good export growth
• Turnover +24%
• We export to 35 countries

• Strong trading year
• Cost saving from reorganisations reinvested
• Good start to new year against very strong

comparable period

• Tenanted LFL EBITDAR to 30 August 2014

up 2.6%

• Managed house LFL sales to 6 September

2014 up 4.1%

• Total beer volume to 6 September 2014 down

13.5%. Expected to flatten out during the year

Summary and current trading

Strategic overview: positioning for future growth

• Strong pipeline of development
• pportunities in existing Tenanted

and Managed estate

• Further growth potential from

recent investments

• Pursue economic single site
• pportunities
• Beer portfolio aligned to

marketplace

• Focus on development of core

and own licensed brands

Questions?

Resolutions

To receive the Annual Report and Accounts Resolution 1

Resolution 1 To receive the Annual Report and Accounts

No of Shareholders No of Votes % For + Discretion 293 3,300,599 93.63 Against Other Discretion 19 224,465 100.00 6.37 Withheld 23.68% of total votes cast by proxy

To declare a final dividend Resolution 2

Resolution 2 To declare a final dividend

No of Shareholders No of Votes % For + Discretion 293 3,300,599 93.63 Against Other Discretion 19 224,465 100.00 6.37 Withheld 23.68% of total votes cast by proxy

To propose the re-election of Mr N J Bunting as a Director Resolution 3

Resolution 3 To propose the re-election of Mr N J Bunting as Director

No of Shareholders No of Votes % For + Discretion 290 3,284,359 93.18 Against 2 16,000 Other Discretion 19 224,465 100.00 0.45 6.37 Withheld 2 23.68% of total votes cast by proxy 240

To propose the re-election of Mr J H Leigh-Pemberton as a Director Resolution 4

Resolution 4 To propose the re-election of Mr J H Leigh-Pemberton as a Director

No of Shareholders No of Votes % For + Discretion 285 3,267,396 92.78 Against 4 29,914 Other Discretion 19 224,465 100.00 0.85 6.37 Withheld 6 23.68% of total votes cast by proxy 3,289

To propose the re-election of Mr O W A Barnes as a Director Resolution 5

Resolution 5 To propose the re-election of Mr O W A Barnes as a Director

No of Shareholders No of Votes % For + Discretion 286 3,265,965 92.78 Against 4 29,608 Other Discretion 19 224,465 100.00 0.84 6.38 Withheld 5 23.68% of total votes cast by proxy 5,026

To propose the re-election of Mr M H Templeman as a Director Resolution 6

Resolution 6 To propose the re-election of Mr M H Templeman as a Director

No of Shareholders No of Votes % For + Discretion 287 3,268,075 92.78 Against 5 29,808 Other Discretion 19 224,465 100.00 0.85 6.37 Withheld 3 23.68% of total votes cast by proxy 2,716

To re-appoint Deloitte LLP as the Auditor and authorise the Directors to fix their remuneration Resolution 7

Resolution 7 To re-appoint Deloitte LLP as the Auditor and authorise the Directors to fix their remuneration

No of Shareholders No of Votes % For + Discretion 283 3,277,725 93.15 Against 7 16,666 Other Discretion 19 224,465 100.00 0.47 6.38 Withheld 4 23.68% of total votes cast by proxy 6,008

To authorise the Company to make market purchases of ordinary shares of 50p each Resolution 8

Resolution 8 To authorise the Company to make market purchases of

• rdinary shares of 50 pence each

No of Shareholders No of Votes % For + Discretion 279 3,270,146 92.96 Against 12 23,326 Other Discretion 19 224,465 100.00 0.66 6.38 Withheld 4 23.68% of total votes cast by proxy 7,127