IT's war at Sheps

by Andrew Pring Change the way you run the company, or I will encourage shareholders to sell up and put the company into outside hands. That was the dramatic threat issued this week by Stuart Neame, who last Thursday resigned from Shepherd Neame after nearly 20 years as vice-chairman following a clash over strategy and company culture with his cousin, the chairman Bobby Neame, and Bobby's son, managing director Jonathan Neame. Speaking to the Morning Ad-vertiser on Tuesday, after his laptop and mobile phone had been repossessed by two directors in what he called a "dawn raid", Stuart Neame said: "It would be easy to put the company into play by inviting outside offers for family shares. That would mean shares currently costing £6 would rise to £12 and selling them would be very tempting for shareholders ­ especially if they feel the directors are losing money that could be used to raise dividends. "That's a last resort, and I sincerely hope I would not have to go down that route. My hope is that the board listens to what I've been saying and gets brewing and the pubs side back on an even keel within the next year. But if they don't, then I'll definitely wave the red card at next year's agm." Stuart Neame's stunning attack on his fellow board members follows discussions six weeks ago with property director George Barnes, which the former vice- chairman says showed Shepherd Neame could make over £11m a year just by leasing out its 380-odd pubs. As the company's most recent annual results showed pre-tax profits of £8.4m for the whole company, Stuart Neame said he concluded that this showed a notional company annual "loss" of around £3m. Stuart Neame said he was also concerned that too much money was being spent advertising Spitfire on television. The £500,000, he claims, was having no effect on sales: the dramatic sales rises were more due to deals with JD Wetherspoon. Additionally, Stuart Neame said he was concerned at the investment programme for the 70 managed pubs and the brewery's new £2m warehouse and the entire contract-brewing strategy. Neame was unable to raise these concerns fully with the board because at the same time he had fallen out with the chairman over his delayed retirement. Stuart Neame wanted Bobby to go at 70, which is next February. But Bobby was keen to stay on ­ Stuart says until he had done 50 years service, which would be 2006, though the chairman now hopes to bow out in October 2005. As the board members disagreed with him over the retirement plans, Stuart Neame felt obliged to resign. In an address to the board and 400 shareholders at the agm last week, Stuart Neame said his resignation was a "final warning" that major changes must now be made urgently. He said: "All of us wish the company to survive. But although the company makes good profits from owning property, our brewing and pub operations are not profitable. "The uncomfortable truth is that the company would make much more profit if it did not brew beer and run pubs. No one wants to do that, but the policies that cause this ­ such as spending too much to grow too fast ­ must be changed if the brewery is to survive." Shepherd Neame managing director Jonathan Shepherd was dismissive of his former vice-chairman's statements. "Stuart is entitled to do what he thinks fit, but we feel the shareholders have given a resounding level of support. "We are all saddened and disappointed and wished it hadn't happened, but the board has always felt happy in its performance and strategy. We don't recognise any of Stuart's figures. "The £11m rental figure is a spurious extrapolation from a corridor conversation and is nowhere near a proper analysis. Brewing is making a profit ­ the Spitfire advertising is working, as you can see from the latest sales rise of 24.9% ­ and the managed pubs are delivering like-for-like figures that are in line with the industry. We have no intention of changing." Stuart Neame received no pay-off at departure. l The break-up in full ­ p2 Stuart Neame says: l Brewing and pubs "not profitable" at Shepherd Neame

Company spending too much on Spitfire ads and managed pubs l Chairman Bobby Neame holding back urgent culture change l Company needs restructuring to keep asset strippers at bay l He has no interest in being chairman Shepherd Neame says: l Company is highly profitable l Advertising essential to Spitfire's sales success l Managed pubs in line with industry profitability l Bobby Neame has board's backing to continue as chairman l Stuart Neame wanted to be chairman