Shepherd Neame Limited Class A · AQUIS:SHEP
Shepherd Neame Limited Class A — FY2011 Earnings Presentation
56 slides from Shepherd Neame Limited Class A's earnings presentation, September 2011
Slide 1: Shepherd Neame Ltd Preliminary Results for the 52 weeks ended 25 June 2011
Shepherd Neame Ltd Preliminary Results for the 52 weeks ended 25 June 2011 1
Slide 2: Miles Templeman, Chairman
Miles Templeman Chairman 2
Slide 3: Overview
Overview • A successful year with … record turnover … record beer volume … net cash inflow … debt repaid ahead of schedule … significant pub revaluation surplus • Strong operational performance across the business driven by good results from recent investments • 2 prestigious coastal hotels purchase
Slide 4: Long term strategy
Long term strategy … • To strengthen a high quality integrated beer and pub business • By developing … … brewing and logistics operational excellence … the marketing of distinctive ale and speciality lager brands … a freehold estate of traditional pubs and hotels … with a strong consumer offer targe
Slide 5: Dividend per share
… driving growth in net assets and dividends for shareholders 35p Dividend per share Net Assets per share £14 Net Assets per share adjusted for 2011 pub valuation 30p £12 Net assets per share Dividend per share 25p £10 20p £8 15p £6 10p £4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 5
Slide 6: Growth in pub asset values over the longer term
… and growth in pub asset values over the longer term • Revaluation of Pub Estate 2011 – £68m surplus over 1997 book value (2004 : £25m surplus) • Process and Methodology – Licensed property only : 360 pubs – Directors’ valuation – Professional external valuer – Auditor review – Surplus not booked t
Slide 7: Financial Review, Ken Littlefair
Financial Review Ken Littlefair 7
Slide 8: Good results in 2011
Good results in 2011 +5.2% +3.3% +9.7% +17.0% +3.0% Turnover Operating Profit before *Adjusted Dividend Profit before tax and Earnings per share exceptionals exceptionals per share 2011 £121.3m £12.3m £8.0m 46.2p 23.80p 2010 £115.4m £11.9m £7.3m 39.5p 23.10p *Earnings per share before exceptional it
Slide 9: Operating profit before exceptionals is up 3.3%
Operating profit before exceptionals is up +3.3% 2011 £m 2010 £m Turnover 121.3 115.4 - Beer volume up in National and Local Free Trade - Strong managed food and accommodation sales Operating costs (109.0) (103.5) - Raw material unit costs up - Increased investment in property repairs Operating prof
Slide 10: Profit and Loss
Profit and Loss 2011 £m 2010 £m Operating Profit pre Exceptionals 12.3 11.9 Net finance charge (4.3) (4.6) Profit before tax and exceptionals 8.0 7.3 Impairment charge (non cash) (1.9) (0.5) Profit on sale of property 0.4 1.9 Profit before tax 6.5 8.7 Taxation (2.1) (2.4) Profit after tax 4.4 6.3 In
Slide 11: £1.8m net cash inflow
£1.8m net cash inflow 2011 £m 2010 £m EBITDA before share based payment 19.1 18.7 Working capital movements (0.6) 1.6 Net cash inflow from operations 18.5 20.3 Interest tax and dividends (9.2) (8.8) Cash inflow before investment 9.3 11.5 Disposals 2.5 5.9 Internally generated free cash 11.8 17.4 New
Slide 12: Cash generation sufficient to maintain capital base, acquire pubs and pay down debt
Cash generation sufficient to maintain capital base, acquire new pubs and pay down debt 30 25 20 £m Internally generated free cash 15 10 New Pub Additions 5 Brewery and IT Modernisation 0 Maintenance Capex (pubs/brewery/free trade loans) 2006 2007 2008 2009 2010 2011 2012F Internally Generated Free
Slide 13: £20.1m headroom on committed facilities at year end
£20.1m headroom on committed facilities at year end Long term facilities at year end £80m £60m term loan to 2026 £10m outstanding of term loan to 2014 £10m revolving credit facility to 2014 Committed overdraft facility £ 5m Total facility at year end £85m Net debt at year end £64.9m £60m term debt f
Slide 14: Balance sheet ratios strong
Balance sheet ratios strong 2011 £m 2010 £m Fixed assets 185.8 186.4 Other assets and provisions (1.4) (1.8) Net assets 184.4 184.6 Debt net of cash (64.9) (66.6) Shareholders’ funds 119.5 118.0 Off balance sheet property valuation 68.0 187.5 Net assets per share £9.33 £9.20 Gearing 54% 56% Debt : E
Slide 15: Chief Executive's Review, Jonathan Neame
Chief Executive’s Review Jonathan Neame 15
Slide 16: What makes Shepherd Neame different?
What makes Shepherd Neame different? • Diverse beer portfolio aligned to growth sectors of the market • Modernised, efficient brewery • Excellent systems, quality and service levels • High quality, food-led pub estate • Intimate local market knowledge • Opportunities arising from local economy regen
Slide 17: We have continued to outperform the national beer market
We have continued to outperform the national beer market … Total beer volume UK Market * Shepherd Neame 2007/08 -2.8% -2.7% 2008/09 -7.0% +6.3% 2009/10 -1.4% +4.8% 2010/11 -7.1% +4.0% 2011/12 (12 weeks) +6.9% * Source : BBPA 17
Slide 18: Aligning our beer portfolio to growth areas in the market
… as we align our beer portfolio to growth areas in the market Standard Lager Premium Lager World Lager Speciality Standard Ales Premium Ales Speciality 18
Slide 19: Good brand volume growth in key brands
… and so achieve good brand volume growth in key brands 2011 2010 • Total beer volume +4.0% +4.8% • Own beer volume +2.6% +3.8% Total 239,000 barrels 233,000 barrels • Key brand performance - Spitfire +2.3% -0.9% - Bishops Finger +3.9% +18.9% - Asahi +16.8% +5.0% 19
Slide 20: Increased investment in marketing and brand support
Our sales are backed by increased investment in marketing and brand support • New website and digital marketing platform launched October 2010 • New brand, digital marketing and communications team established • Strong partnerships in sport, art, entertainment and community events 20
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Slide 22: ALL AREAS
ALL AREAS
Slide 23: Sunset Ritual presents the MTV closing event
SUNSET RITUAL PRESENTS THE MTV CLOSING EVENT 03.09.201 1 Asahi @ BLUE SUNSET RITUAL ANANE & LOUIE VEGA DIN BLUE MARLIM IBIZA IN WELCOMING THE GLOBAL SOUNDS OF SUNSET NITUAL & AN EVENING WITH THE VEGA'S TOOO TERAY JOSH MILAN (BLAZE). USK FISCHER LUESSTO QUINTERO (PERCUSSIONIST) GNDY WIZELLE BLACK COF
Slide 24: Slide 24
Slide 25: aan
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Slide 26: Supported by consistently high beer quality
… supported by consistently high beer quality • Since 2008 we have won - 20 awards for beer quality - 11 awards for packaging quality • 2011 Brewing Industry International Awards Asahi Overall Champion Lager 26
Slide 27: Supply chain and customer service excellence
… and supply chain and customer service excellence • Our recent supply chain, systems and plant modernisation has resulted in – high bottling line efficiency – improved beer freshness – higher stock turns – improved order fill – improved capacity utilisation – higher customer satisfaction 27
Slide 28: Index of raw material costs
We have contained raw material costs in an inflationary environment in 2011, but these are anticipated to increase in 2012 150 140 Index of raw material costs 130 120 110 100 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 28
Slide 29: Selective high quality acquisitions in Kent, London and South East
We continue to make selective high quality acquisitions in Kent, London and South East … Tenanted/ Managed Total Additions Disposals Leased 2007/08 328 47 375 5 7 2008/09 331 49 380 15 10 2009/10 320 45 365 0 15 2010/11 315 44 359 2 8 2011/12 310 46 356 2 5 Freehold 316 • 2 tenanted acquisitions : P
Slide 30: Improving the profile of our pub estate
… and to improve the profile of our pub estate Type # Profile Strategy Strong Food Offer Great Pub/Great Food 81 50:50 mix Locally sourced food (inc. 5 hotels) Premium Casual Dining Premium liquor brands Regular Pub/ 102 Wet 75:25 Develop food offer Traditional Food ___ Traditional pub food Invest i
Slide 31: Great Pub, Great Food: 81 Pubs
Great Pub, Great Food : 81 Pubs 31
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Slide 34: Regular Pub, Traditional Food: 102 Pubs
Regular Pub, Traditional Food : 102 Pubs 34
Slide 35: Sere WP Oram, Z45
Sere WP Oram, Z45
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Slide 37: Town/City/London Mainstream Bar: 53 Pubs
Town/City/London Mainstream Bar : 53 Pubs 37
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Slide 40: Community Wet Led: 123 Pubs
Community Wet Led : 123 Pubs 40
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Slide 43: We have increased our pub investment year on year
We have increased our pub investment year on year In 2011 we carried out • Capital developments 81 • Ex decs/major repairs 67 43
Slide 44: Developed the food offer in our managed pubs
… and developed the food offer in our managed pubs 2008 2009 2010 2011 • Food spend per head £8.55 £8.71 £8.55 £9.12 • Over 1 million meals served per annum • Menu engineering, recipe control, menu design • Food procurement and catering equipment benefits shared with tenants 44
Slide 45: Grown accommodation sales across the pub estate
… and grown accommodation sales across the pub estate Number of bedrooms Tenanted Managed Total 2008 186 207 393 2009 199 194 393 2010 204 180 384 2011 204 180 384* Managed REVPAR 2008 £35.36 2009 £33.35 2010 £34.53 2011 £37.73 * Ensuite 342 45
Slide 46: Long term strategy has resulted in strong pub performance
This long term strategy has resulted in a strong pub performance Same Outlet Like for Like 2009 2010 2011 Managed Houses Liquor +2.8% -0.7% +5.6% Food +0.4% +3.9% +11.1% Accommodation -4.1% +0.1% +9.7% Total +1.6% +0.7% +7.4% Average EBITDAR/ managed pub +2.4% +8.5% Tenanted Houses Like for like EBI
Slide 47: Acquired two prestigious coastal hotels
Since the year end we have acquired two prestigious coastal hotels - acquisition cost £7.6m - 66 additional letting rooms - total bedroom stock now 450 47
Slide 48: The Fayreness Hotel, Kingsgate – 29 bedrooms
The Fayreness Hotel, Kingsgate – 29 bedrooms 48
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Slide 51: The Bell Hotel, Sandwich – 37 bedrooms
The Bell Hotel, Sandwich – 37 bedrooms 51
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Slide 54: Continued good progress in the new year
We have made continued good progress in the new year 12 weeks to September 17th Beer volume +6.9% Like for like retail sales +6.5% 54
Slide 55: Summary
Summary • Long term strategy and investment has delivered – Strong beer sales – Stronger portfolio and improved marketing – Growth in food and accommodation sales – Asset backed, cash generation • But, short term horizon is uncertain – cost inflation – weak economic outlook – offset by local economy
Slide 56: Questions?
Questions? 56