Shepherd Neame reports steep rise in pre-tax profit and record turnover

The company, which also reported record EBITDA, saw like-for-like managed sales rise 7.6% (drinks, +6.2%; food, +10.9%, accommodation, +7%), while its tenanted estate returned to growth, with same outlet like-for-likes up 0.3%. Total beer volume for the 53 weeks grew 5.6%, and own beer volume increased 5.2%.

Meanwhile, the firm announced that it has refinanced its medium term loan facility “to provide a robust financing platform for the company's growth plans”. Its medium term loan facility increased from £10m to £20m and will now expire with its £10m revolving credit facility in May 2017. “The existing £60m term loan remains unchanged and matures in 2026. Excluding the overdraft facility, this brings Shepherd Neame's total long and medium term committed credit facilities to £90m.”

Pre-tax profit for the year, in which it bought seven sites, was £9.1m (2011: £6.5m). Operating profit before exceptionals grew 3.7% to £12.7m and basic earnings per share increased 58.7% to 54.6p.

In its tenanted estate, revenue grew 2.2% and profit contribution rose 1.2%, against a 3.1% decline in the period year, despite operating fewer outlets. EBITDAR per pub increased 2.7%, reflecting its strategy of replacing smaller sites with higher turnover outlets, and also due to increased investment in its core pubs, Shepherd Neame said; 26 sites tenanted were refurbished in the period.

Total managed revenues grew 14.5%, with profit contribution up 25.2%.

“We have seen excellent individual performances in particular at the Crown Hotel, Blackheath following the refurbishment in 2011; the Spanish Galleon in Greenwich, following the re-opening of the Cutty Sark and development of an innovative fish bar within the pub; and the Jamaica Wine House, after the redevelopment of the basement into a wine bar. The Millers Arms, Canterbury; The Crown Inn, Chislehurst; and Mabel's Tavern, London have also enjoyed notable increases in trade.”

Average food spend in the division increased from £9.12 to £11.23, while RevPar grew 13.2% to £43.

The company said it had made a “promising” start to the current financial year, with manage like-for-likes up 5.1% in the 12 weeks to 22 September, beer volumes level with the prior year and same outlet like-for-like EBITDAR in the tenanted estate up 2.5%.

“This has been a satisfactory performance considering that the much anticipated boost to tourism from the London 2012 Olympics did not materialise - indeed, except for a handful of individual pubs situated near event locations, trade in London was generally down on the same period last year - and the wet and dull weather that we experienced in the early part of the summer continued into July,” the company said.

Jonathan Neame, chief executive, said: "This has been another successful year for the company. Our beer, food and accommodation sales have all enjoyed strong growth for the second year in a row and the tenanted estate performance has been encouraging.

“Our strategy to invest in our pubs and brands during the economic downturn has strengthened the company, improved its competitive position and enhanced our reputation with consumers. Recent pub acquisitions have been successful and this has enabled us to take another step forward this year with some further excellent purchases, which provides a good platform for the future.”