Shepherd Neame Ltd Preliminary Results

Shepherd Neame 

Preliminary results for the 52 weeks to 25 June 2022

Shepherd Neame, Britain's Oldest Brewer and owner and operator of over 300 high quality pubs in Kent and the Southeast, today announces results for the 52 weeks ended 25 June 2022.

The period under review has been dominated by the impact of COVID-19 in the first half and by the effects of the war in Ukraine in the second half. In this context, we are pleased to have achieved the strong rebound in sales and profits.

Significant growth in revenue, a return to profits and final dividend recommended

 Statutory profit before tax was £7.4m (2021: loss of £(16.4)m)

 Basic earnings per share was 42.5p (2021: loss per share of (120.5)p)

 Underlying basic earnings per share[1] was 39.4p (2021: loss per share of (55.5)p)

 EBITDA[2] rose significantly to £23.4m (2021: £7.7m)

 Final dividend of 15.00p recommended which together with the interim dividend of 3.50p, makes a total of 18.50p for 2022 (2021: nil; 2019: 30.08p)

 Net assets per share[3] increased from £11.40 as at 26 June 2021 to £11.94 as at 25 June 2022

 Tight cash management has resulted in net debt, excluding lease liabilities[4], being reduced to pre-pandemic levels, allowing for the resumption of investment in the existing estate and new pubs. Net debt, excluding lease liabilities 4 , as at 25 June 2022 was £75.3m (2021: £90.8m) 

Strong operational performance

 Retail Pubs and Hotels (63 pubs):

· Total retail like-for-like sales[5] were -8% vs 2019[6] and +130% vs 2021 for the 52 weeks to 25 June 2022 with footfall outside London near normal and strong in our coastal estate

· Retail like-for-like sales 5 inside the M25 (25 pubs and hotels) were

-30% vs 2019 6 and +263% vs 2021. Outside of the M25 (38 pubs and hotels), retail like-for-like sales 5 were +1% vs 2019 6 and +104% vs 2021

· Total like-for-like drink sales were -16% vs 2019 6 and +168% vs 2021 and like-for-like food sales were -1% vs 2019 6 and +94% vs 2021

· Total like-for-like accommodation sales were +25% vs 2019 6 and +111% vs 2021

· Four high quality pubs acquired post year-end for £6.7m

 Tenanted Pubs (231 pubs): Following our strong support during the pandemic, like-for-like tenanted pub income[7] was +1% vs 2019 6 and +119% vs 2021

 Brewing and Brands:

· Good sales momentum with total beer volumes[8] +7% vs 2019 6 and +27% vs 2021

· Own beer volumes[9] were -8% vs 2019 6 and +16% vs 2021

 The business is largely protected from the worst of the energy inflation through fixed price contracts at below market rate: the brewery through to 2024 and retail pubs through to March 2023

Encouraging trading over the summer

· For the 13 weeks to 24 September 2022, retail like-for-like sales 5  were level with 2020[10] and +9.4% vs the 2022[11] financial year

· For the 13 weeks to 24 September 2022, retail like-for-like sales 5 inside the M25 (25 pubs and hotels) were -11.0% vs 2020 10 and +50.6% vs 2022 11 . Outside of the M25 (38 pubs and hotels), retail like-for-like sales 5 were +4.7% vs 2020 10 and -0.4% vs 2022 11

· For the 9 weeks to 27 August 2022, like-for-like tenanted pub income 7  was +2.9% vs 2020 10 and +12.8% vs 2022 11

· For the 13 weeks to 24 September 2022, total beer volumes 8  were +5.6% vs 2020 10 and +1.2% vs 2022 11 . Own beer volumes 9 were +4.4% vs 2020 10 and +14.4% vs 2022 11

Outlook

· Fundamentals of the business remain strong. Demand is encouraging and the business is in good shape. Short term may be challenging with many political and economic uncertainties ahead

· Government assistance on energy costs for consumers and for business is warmly welcomed but further material inflation still anticipated in the coming year

· Business is well placed for the long term as our geographic heartland is undergoing significant infrastructure development and we continue to seek good opportunities to enhance our portfolio of high-quality pubs

Jonathan Neame, CEO of Shepherd Neame, said:

“Shepherd Neame has rebounded well from the challenges of the last two years – a testament to the strength of the business model and depth of talent across the business.

The Company has strengthened its balance sheet through tight cash management and net debt reduction and continues to evolve operationally to meet changes in the market.

Our business is in good shape and has traded well through the summer. Whilst we are cautious about the winter ahead and the inflationary environment, we retain an optimistic view for the business and continue to seek investment and acquisition opportunities for the long term.”

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