Interim Results

Interim results for the 26 weeks to 24 December 2022

Shepherd Neame, Britain's Oldest Brewer and owner and operator of 301 high quality pubs in Kent and the Southeast, today announces results for the 26 weeks ended 24 December 2022.

The period under review has seen continuing strong consumer demand, but is dominated by significant inflationary pressures which have impacted margins, with Brewing and Brands remaining challenging. Our investment programme has now resumed, with many projects that are essential for the future development of the Company underway. 

This time last year, the Board restored the dividend for the first time post-pandemic and have increased it again.
 

Record revenue in H1, in spite of economic headwinds

  • Revenue was £85.3m (H1 2022: £78.7m; H1 20201 restated: £79.0m), an increase of +8.4% vs H1 2022
  • Statutory profit before tax was £5.5m (H1 2022: £5.4m; H1 20201 restated: £5.3m), an increase of +1.8% vs H1 2022
  • Underlying profit before tax2 was £3.5m (H1 2022: £3.0m; H1 20201 restated: £6.0m), an increase of +15.5% vs H1 2022
  • Cashflow has remained robust. Net debt, excluding lease liabilities3, is level at £82.8m (H1 2022: £82.4m; H1 20201 restated: £85.4m)
  • Basic earnings per share was 28.9p (H1 2022: 28.9p; H1 20201 restated: 27.9p)
  • Underlying basic earnings per share4 was 18.7p (H1 2022: 15.9p; H1 20201 restated: 32.4p)
  • Net assets per share5 were £12.12 (H1 2022: £11.76; H1 20201 restated: £14.06)
  • Interim dividend of 4.00p per share declared (H1 2022: 3.50p; H1 20201 restated: nil), an increase of +14.3% vs H1 2022
     

Operational performance
 

Performance
H1 2023 vs H1 2022		 Performance
H1 2023 vs H1 2020¹
Retail like-for-like sales6 +11.9% +1.2%
Like-for-like tenanted income7 +7.1% +1.5%
Total beer volume8 -0.9% +4.7%
Own beer volume9 +12.7% +8.2%

  • Retail Pubs and Hotels (67 pubs) revenue grew by +18.0%
     
    • Total retail sales up +18.0% to £36.9m (H1 2022: £31.3m) 
    • Retail like-for-like sales6 were +11.9% vs H1 2022 and +1.2% vs H1 20201
    • Retail like-for-like sales6 inside the M25 were up +39.1%, outside the M25 +3.4% vs H1 2022, reflecting increased footfall in London as people return to their offices
    • Retail sales growth mainly driven by drink sales with like-for-like sales up +27.4% vs H1 2022
    • Food like-for-like sales reduced by -3.3% vs H1 2022
    • Accommodation like-for-like sales down -8.6% vs H1 2022. RevPAR was up +2.6% vs H1 2022 at £90
    • Divisional operating profit was up +2.4% at £4.7m (H1 2022: £4.6m)
       
  • Tenanted Pubs (229 pubs) remained resilient during the period
     
    • Like-for-like tenanted pub income7 was +7.1% vs H1 2022 and +1.5% vs H1 20201
    • Divisional revenue was £17.4m (H1 2022: £16.4m) and operating profit was £6.9m (H1 2022: £5.6m)
       
  • Brewing and Brands: sales maintained, but margins impacted by exceptional inflationary pressures
     
    • Total beer volumes8 were down -0.9% vs H1 2022 and up +4.7% vs H1 20201
    • Own beer volumes9 were up +12.7% vs H1 2022 and +8.2% vs H1 20201
    • Divisional revenue maintained at £30.3m (H1 2022: £30.6m), with an operating loss of £0.4m (H1 2022: £0.0m)
       

New long term financing put in place

  • At the end of February 2023, we had total committed facilities of £114.3m and headroom of £32.8m. 69% of our committed facilities are at a fixed rate, with all debt medium and long term
     

Current trading and outlook

  • For the 12 weeks to 18 March, retail like-for-like sales was +12.8% vs 202210  and +13.0% vs 202011
  • Like-for-like tenanted pub income for the nine weeks to 25 February was +4.9% vs 202210 and +1.7% vs 202011
  • Total beer volume for the 12 weeks to 18 March was -5.5% vs 202210 and -6.5% vs 202011. Own beer volume was -3.0% vs 202210 and -1.8% vs 202011
  • Fundamentals of the business remain strong and the business is in good shape. Demand is encouraging but we expect further cost inflation in the second half and into next financial year. 
  • Measures announced in the budget to reduce alcohol duty on beer in pubs, are most welcome

Jonathan Neame, CEO of Shepherd Neame, said:

“We have an excellent pub estate with considerable potential, well established brands, a loyal customer base, and a high profile within the individual communities we serve. All these factors will stand us in good stead as the cost of living crisis eases and the economy returns to growth."

22 March 2023

1  H1 2020 is the first half of the financial period of the 52 weeks to the 27 June 2020. This first half equated to the 26 weeks ended 28 December 2019, restated on an IFRS basis
2  Profit/(loss) before any profit or loss on the disposal of properties, investment property fair value movements and operating charges which are either material or infrequent in nature and do not relate to the underlying performance
3  Net debt excluding lease liabilities comprises cash, bank overdrafts, bank and other loans less unamortised loan fees
4  Underlying profit/(loss) less attributable taxation divided by the weighted average number of ordinary shares in issue during the period. The numbers of shares in issue excludes those held by the Company and not allocated to employees under the Share Incentive Plan which are treated as cancelled
5  Net assets at the reporting date divided by the number of shares in issue being 14,857,500 50p shares
6  Retail like-for-like sales includes revenue from the sale of drink, food and accommodation but excludes machine income. Like-for-like sales performance is calculated against a comparable 26 week period in the prior year for pubs that were in the estate in the same period within both years
7  Tenanted income calculated to exclude from both periods those pubs which have not been in the estate throughout the two periods. The principal exclusions are pubs purchased or sold, pubs which have closed, and pubs transferred to or from our retail business. Income is calculated against a comparable 26 week period in the prior year for pubs that were trading in both 26-week periods
8  Shepherd Neame branded, licensed, foreign, customer own-label and contract beer and cider sales volumes
9  Shepherd Neame branded, licensed, customer own-label and contract beer and cider sales volumes, including Singha beer which the Company commenced brewing in March 2022
10  The periods referred to for financial year 2022 are the comparative month(s) of January, February and March 2022 which are during the financial year 52 weeks to 25 June 2022
11  The periods referred to for financial year 2020 are the comparative month(s) of January, February and March 2020 which are during the financial year 52 weeks to 27 June 2020. The UK went into lockdown due to COVID-19 on 23 March 2020
 

Enquiries

Shepherd Neame     Tel: 01795 532206
Jonathan Neame, Chief Executive    
Mark Rider, Chief Financial Officer    
    
Instinctif Partners    Tel: 020 7457 2020
Matthew Smallwood    
 

For full details click the PDF below: 

Shepherd Neame Interim Report