Shepherd Neame profits surge

Shepherd Neame, the regional brewer and pub operator, this morning revealed it had achieved a record turnover and beer volumes as it unveiled a 25.5% increase in profit before tax of £8.7m.

Turnover grew by 5.4% to £115.4m, said the company, which is the country's oldest brewer, as it reported its preliminary results for the year to 26 June. Operating profit before exceptionals was also up by 25% to £11.9m.

Performance for the start of the year has also continued in the same vein with beer volumes up by 0.3% in the 13 weeks to 25 September and like-for-like retail sales growth of 3.5%.

Miles Templeman, Shepherd Neame's chairman, said: "This has been a successful year for Shepherd Neame. We have achieved record turnover, record beer volume and strong net cash inflow against a background of a weak UK economy and challenges facing our industry.

"The pubs and brewery are well invested and the brand portfolio is well regarded and in growth. The business is highly cash generative, has robust long-term financing in place and has ample facilities to take advantage of future market opportunities."

For the year, the company said that total beer volumes were up by 4.8% and that own beer volumes had also improved by 3.8%.

This was driven by a strong performance from Spitfire, Bishop's Finger and Asahi Super Dry, said Shepherd Neame.

The group also experienced a 0.7% hike in retail like-for-like sales, 3.9% growth in like-for-like food sales and average income per tenanted pub was up by 1.3%.

Investment​

Investment in capital expenditure during the year was £8m, including £1.4m as the final instalment on its new bottling line, compared with £26.4m in 2009.

It said that investment in 2009 was high due to the purchase of 15 pubs and the completion of a major programme to modernise its brewery.

In August, Shepherd Neame repaid and canceled £3.75m of the £15m five-year term loan that it took out in May 2009 to fund the acquisition of pubs from Punch Taverns. The payment was made in advance of the re-payment schedule and reduces the group's total long-term facilities from £85m to £81.25m.

At the year end Shepherd Neame operated 365 pubs and hotels of which 322 are freehold. Of these 45 were managed and 320 tenanted or leased.

It said that the average earnings before interest, tax, depreciation and amortisation before rent payable (ebitdar) of its managed estate had grown by 2.4% and in its tenanted and leased estate by 1.3%.

The business​

In a statement, Jonathan Neame, the group's chief executive, said: "As the quality and reputation of our pub business grows, so does the number of enquiries to run our pubs. These are up by 33%, whilst the number of vacancies has reduced slightly during last year.

"As last year, though, trading has been most difficult in some of our smaller community local pubs, particularly those located in the less affluent areas of the Kent coastal towns. Here, beer volumes and AWP income remain under pressure."

In its tenanted estate, Shepherd Neame said that trade revenue was up 1.8%. Like-for-like ebitda per pub fell by 3.8%.

Excluding the 35 pubs sold or previously identified for sale, the core estate like-for-like ebitda per pub was down 2.8%, added the group.

At its managed side, the company said it had been particularly please with food sales. Footfall grew by 8.2%, however spend per head did drop by 1.8%.

Earnings per share were up 11.6% to 49.9p and the company said it would pay a final dividend per £1 share of 18.35p, making a total dividend per £1 share 23.1p, up 2.9%.