Shepherd Neame has reported like-for-like sales (lfls) up 3.7% in its managed estate for the 35 weeks to 2 March.
In its tenanted pubs portfolio, lfl EBITDAS grew 2.6%, while own brand beer and cider volumes were up 0.4%.
Chief executive Jonathan Neame said the new £107.5m funding facilities, first announced in October gave the company the “platform to capitalise on the significant infrastructure and population growth that is planned in our Kent heartland over the next decade”.
This morning the group released its interim results for the period to 29 December 2018, which showed a strong performance from its 68-strong managed pubs estate, which accounts for half of group revenue. Lfl sales for the year were up 4.1%, with average EBITDA per managed pub up 8.5%. Tenanted divisional turnover grew 0.7% with lfl EBITDAR growing 2.2%.
Lfl drink sales for the first half were +5.8% and lfl food sales up 2.2%.
The company said its brewing and brands business remained “in transition” after of the Asahi contract and some private label contracts including the Hatherwood range in Lidl. Total volume of brewed beer was down -30.8% or 36,000 barrels in the period of which 32,000 barrels related to the Asahi and Lidl contracts. Due to these lower volumes turnover declined -31.4% to £22.2m. Own brand beer and cider volume reduced by 1%.
Total revenue in the period fell £7.6m (-9.1%) to £76.5m, of which £9.2m related to the exit from Asahi and other private label contracts. Underlying operating profit was up 0.2% at £7.9m, while there was a statutory loss before tax was £4.1m, as a result of a one-off exceptional charge of £10.8m.
During the year, Shepherd Neame acquired the freehold of the Wheatsheaf, Farnham, from Red Mist Leisure and the Cheshire Cheese, near Temple, London - the third pub in central London the company has acquired in the last year.
The company has also secured a site to build a new pub hotel at Castle Hill in the centre of Ebbsfleet Garden City, which it anticipates will open in 2021 and trade as a managed pub.
The Woolpack, Banstead, transferred from the tenanted estate to the managed estate in February 2019.
During the period, Shepherd Neame invested £3.3m in capital expenditure to improve the look and feel of its pubs and a further £1.5m in repairs and decorations.
Chief executive Jonathan Neame said: ““The business derives its long-term strength and resilience from its three operating divisions. The managed pub performance has been strong, offset by lower brewing and brands volumes. The tenanted pubs have continued their robust underlying performance.
“Our managed pubs are the principal area of investment and of growth. The quality of this part of the business continues to rise with recent acquisitions and developments. The tenanted division is a well-balanced and high quality business that continues to attract great operators for us to partner. Brewing and brands is still in a period of transition and we are pursuing a number of good opportunities for future growth.
“The new financing package gives us the platform to capitalise on the significant infrastructure and population growth that is planned in our Kent heartland over the next decade.
“In spite of the risks associated with imminent departure from the EU, we remain confident that our long-term strategy positions the company well for the future.”
Peel Hunt analyst Douglas Jack said: “In H1, Shepherd Neame refinanced its debt, increasing its facility to £107.5m vs current net debt of £86m. This provides the basis to step-up expansion or make pub acquisitions if the right opportunities arise. We forecast the NAV/share reaching £16.64 in 2021E, including last year’s revaluation uplift.”
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