preliminary results for the 52 weeks ended 26 june …...2017 2016* % turnover (£m) 60.7 48.1...
TRANSCRIPT
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PRELIMINARY RESULTS FOR THE 52 WEEKS
ENDED 24 JUNE 2017
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MILES TEMPLEMAN
CHAIRMAN
2017: A STRONG SET OF RESULTS AND A YEAR OF SIGNIFICANT
INVESTMENT
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Strong underlying performance in all operating divisions
Period of significant acquisition investment
Excellent progress made against strategic objectives
Development work to enhance own beer portfolio,
modernise brewing operation and streamline
management roles
A YEAR OF FURTHER GROWTH IN NET ASSETS AND DIVIDEND
PER SHARE
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Proposed final dividend of 22.73p taking total dividend to
28.35p
This represents underlying cover of 2.1 times.
Cover consistent with policy stated at share capital
reorganisation in 2014
Underlying cover at or above 2 times
Annual dividend increased from £3.2m to £4.2m since
share capital reorganisation
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MARK RIDER
FINANCE & IT DIRECTOR
PERFORMANCE HIGHLIGHTS
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Turnover 156.2 139.9
2017
£m
2016
£m %
Operating Profit 15.3 14.2 7.2
Net Finance Costs (4.1) (3.9)
Profit before Tax 11.2
Statutory Profit Before Tax
0.6 4.1
(5.0)
Tax Rate (%)
11.8 14.4
Earnings Per Share (pence)
21.8 21.8
Full Year Dividend per share (pence)
59.1 54.7
10.3
Total Items excluded from underlying results
27.50 28.35
8.0
3.1
Underlying results
Reconciliation to statutory profit
8.0
11.7
(18.0)
DIVISIONAL PERFORMANCE: MANAGED PUBS
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LFL sales growth +8.1% +4.4%
2017 2016* %
Turnover (£m) 60.7 48.1
Divisional operating profit (£m) 9.0 7.6 18.0
26.2
Underlying results
Fastest growing operating division following continued investment
Division has increased in size to 66 pubs (2016: 54 pubs)
6 pubs acquired including VGR purchase
8 pubs transferred from Tenanted including UES purchase
2 pubs transferred to Tenanted
*Segmental disclosure reflects how management monitor the performance of each division which has resulted in a
re-statement of the 2016 disclosure
MANAGED PUB OPERATING MARGIN REFLECTS INFLATION AND
INVESTMENT
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LFL sales of 3-4% required to cover future expected cost inflation
DIVISIONAL PERFORMANCE: TENANTED PUBS
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*Segmental disclosure reflects how management monitor the performance of each division which has resulted in a
re-statement of the 2016 disclosure
** LFL earnings before interest, tax, depreciation, amortisation and rent payable
LFL EBITDAR** growth +1.6% +2.7%
2017 2016* %
Turnover (£m) 34.4 33.5
Divisional operating profit (£m) 13.0 12.7 2.4
2.8
Underlying results
Good growth on 14 fewer pubs
Underlying operating profit reflects increased turnover offset by
higher repairs and decorations and depreciation
*Segmental disclosure reflects how management monitor the performance of each division which has resulted in a
re-statement of the 2016 disclosure
** Source: BBPA
DIVISIONAL PERFORMANCE: BREWING & BRANDS
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Own brewed volume ex contract growth +3.9% +0.3%
2017 2016* %
Underlying divisional EBITDA (£m)
59.8 57.3 Turnover (£m)
1.6 1.6
4.4
Underlying results
Divisional operating profit (£m)
3.9 4.0
Own beer output grew ahead of market** underpinned by a strong and
diverse brand portfolio
Underlying operating profit impacted by additional water recovery costs
(1.4)
(3.3)
CASH FLOW: INCREASE IN OPERATING CASH FLOW
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(4.3)
Underlying EBITDA* 23.4 21.7
Cash flow from operations 22.1 20.3
Interest and loan fees
(4.2)
Disposal proceeds 11.9
Internally Generated Free Cash 19.0 23.7
Core Capex (10.4)
Acquisitions (24.0) (4.7)
(4.7)
(13.2)
0.8 Net cash inflow/(outflow) (7.4)
5.9
(4.3)
Working Capital & other operating cash flows
Cash outflow from exceptional items
1.4
(0.1)
1.1
(0.2)
2017
£m
2016
£m
Dividends and purchase of own shares
Debt movements 19.0 (16.0)
*Underlying profit before tax pre net finance costs, depreciation, amortisation, profit and loss
on sale of fixed assets excluding property and free trade loan discounts
Tax (2.6) (2.3)
BALANCE SHEET: STRONG BALANCE SHEET SUPPORTS RECORD
CAPITAL INVESTMENT
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191.1 183.9
3.3
(60.1)
Fixed Assets* 306.6
280.2
Other Assets and Liabilities (37.4) (36.2)
Net Debt
Shareholders Funds
Net Debt : Underlying EBITDA 2.8
Balance Sheet Gearing 41% 33%
2017
£m
2016
£m
Net assets per share £12.86 £12.38
(78.1)
Long term £60m loan remains unchanged to 2026
Further revolving credit facility of £45m in place to 2020
* Includes 87% freehold pub estate and £6.8m of investment property
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JONATHAN NEAME
CHIEF EXECUTIVE
MARKET CONTEXT
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We have outperformed the
market
LFL managed pub sales
+8.1% vs Peach Tracker
Index of +1.4%
Own beer ex contract
volume growth of +3.9%
vs market -0.2%
Whilst the weather
conditions have been
favourable, with a long hot
summer in 2016 and sunshine
in spring 2017, market
conditions have become
progressively harder
Customers seeking value
and quality experience
OUR STRATEGIC OBJECTIVES
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TO DRIVE
FOOTFALL TO
OUR PUBS
TO CREATE
DEMAND AND
BUILD
AWARENESS FOR
OUR BRANDS
TO ATTRACT,
RETAIN AND
DEVELOP THE
BEST PEOPLE
TO DEVELOP OUR
OFFER TO
ENHANCE THE
CUSTOMER
EXPERIENCE
TO DRIVE
FOOTFALL TO
OUR PUBS
TO DEVELOP OUR
OFFER TO
ENHANCE THE
CUSTOMER
EXPERIENCE
OUR STRATEGIC
OBJECTIVES
FIVE YEAR REPOSITIONING OF ESTATE: CONTINUED ACTIVE
PROPERTY MANAGEMENT
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Tenanted
Managed
Total
2012 Acquisitions Disposals 2017
2017 pub ownership profile: 87% freehold
Investment
properties
Transfers
Average
EBITDAR per
pub growth
310 9 (18) (48) 253 +25.4%
44 13 9 - 66 +30.5%
- - 9 (1) 8
354 22 - (49) 327
FIVE YEAR REPOSITIONING OF BRAND PORTFOLIO: CONTINUED
DEVELOPMENT
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BUILDING BRAND IDENTITY AND AWARENESS
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FIVE YEAR REPOSITIONING OF BUSINESS: BUILDING A
SUCCESSFUL MANAGED PUB BUSINESS
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Significant investment over
five years to build a
successful managed pub
business
Food sales now represent
33% of managed pub sales
Accommodation 10% of
managed turnover from a
total of 294 bedrooms in the
managed estate
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TO DRIVE FOOTFALL TO OUR OUR PUBS
TO DRIVE
FOOTFALL TO
OUR PUBS
We aim to drive footfall by designing
and developing unique pubs and hotels
with a ‘wow’ factor
DRIVING FOOTFALL TO OUR PUBS: STONG UNDERLYING PERFORMANCE
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DRIVING FOOTFALL TO OUR PUBS: ACQUISITION OF EIGHT NEW
PUBS FROM EI GROUP PLC
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The Farmhouse, West Malling Crown and Anchor, Shoreham
Sussex Oak, Warnham Kings Head, Guildford
DRIVING FOOTFALL TO OUR PUBS: ACQUISITION OF FIVE NEW PUB
RESTAURANTS FROM VGR
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Old Mill, Kennington
Swan and Dog, Great Chart
Oak on the Green, Bearsted
Chequers on the Green. High Halden
DRIVING FOOTFALL TO OUR PUBS: MAJOR INVESTMENT IN
MANOR FARM BARN, OSTRICH AND MINNIS BAY
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Minnis Bay Bar and Brasserie, Birchington
Manor Farm Barn, Southfleet
Ostrich, Colnbrook
DRIVING FOOTFALL TO OUR PUBS: TRANSFORMING THE
LOOK & FEEL OF OUR TENANTED ESTATE THROUGH
CONTINUED INVESTMENT
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Old House at Home, Dormansland
East Kent, Whitstable
Total spend on managed and
tenanted existing estate £10.7m
(2016: £9.5m)
Major tenanted investments at
East Kent, Whitstable, Plough,
Farnham and Old House at Home,
Dormansland
DRIVING FOOTFALL TO OUR PUBS: LOOKING AHEAD TO 2017/18
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Pier Five opened July 2017 at
Chatham Maritime
Earls at Maidstone, acquired
in 2017 year, will transfer from
tenanted to managed estate
Transformational investments
due to be carried out at the
Anchor, Yalding and the
Spitfire, West Malling
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TO DRIVE FOOTFALL TO OUR OUR PUBS
TO DEVELOP OUR
OFFER TO ENHANCE THE
CUSTOMER EXPERIENCE
We aim to enhance the customer
experience in our pubs by delivering
great fresh food, providing
accommodation of character and
offering an interesting range of products
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DEVELOPING OUR OFFER TO ENHANCE THE CUSTOMER EXPERIENCE: CONSISTENT STRONG TRADING
DEVELOPING OUR OFFER TO ENHANCE THE CUSTOMER
EXPERIENCE: GREAT FRESH FOOD
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UES transaction transfers five
pubs and management team
from tenanted to managed
Acquisition of UES and VGR
brings new skills and ideas
Successful new food offers at
Minnis Bay Bar and Brasserie,
and Ship and Trades, Chatham
Maritime
Pubs continue to be recognised
for their excellence: three pubs in UK’s top 50 gastropubs
DEVELOPING OUR OFFER TO ENHANCE THE CUSTOMER
EXPERIENCE: ACCOMMODATION OF CHARACTER
30 *Revenue Per Available Room
Ostrich, Colnbrook
Bell Hotel, Sandwich
Development at Ostrich,
Colnbrook added 11 new
bedrooms
Refurbishment of 37 bedrooms at Bell, Sandwich
and Botany Bay, Kingsgate
Occupancy grew to 79% (2016: 78%) and REVPAR*
continues to grow to £66
(2016: £63)
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TO ATTRACT,
RETAIN AND
DEVELOP THE
BEST PEOPLE
We aim to attract, retain and develop the
best people by understanding the potential
in everyone, inspiring them to achieve their
goals and building the loyalty and
engagement of our licensees, through the
professionalism of the support we provide
ATTRACTING, RETAINING AND DEVELOPING THE BEST PEOPLE
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Continued high performance in
independent survey of licensees
Recognition from BII* as one of
the top licensed trade training
providers
All managed pub staff have
personal development
programmes, 500 offline and
1700 online courses delivered
Increased investment in support
at Head Office
* British Institute of Innkeepers
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TO DRIVE FOOTFALL TO OUR OUR PUBS
TO CREATE
DEMAND AND BUILD
AWARENESS FOR
OUR BRANDS
We aim to create demand and
build awareness of our brands by
developing a range of distinctive
beers, instilling a passion for
quality and having great
engagement with our customers
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BREWING AND BRANDS: 2017 MARKET VOLUME OUTPERFORMANCE
Own beer volume ex
contract up 3.9%
Exciting brand launches
Investment of £0.7m in
restoring fabric and infrastructure of historic site
CREATING DEMAND AND BUILDING AWARENESS FOR OUR
BRANDS: EXTENSION OF SUCCESSFUL BRANDS
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Whitstable Bay collection grew 20.5%
(2016: 19.5%) and represents 10% of
own beer ex contract volumes
Spitfire range has returned to growth
of 2.2% (2016: -3.7%) and represents
22% of own beer ex contract
volumes
CREATING DEMAND AND BUILDING AWARENESS FOR OUR
BRANDS: DEVELOPMENT OF PREMIUM BRITISH BRANDS
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BREWING AND BRANDS: WE ARE BUILDING A SMALLER, HIGHER QUALITY BUSINESS FOLLOWING STRATEGIC REVIEW
Asahi licence to end in 2018
Modernise plant, drive cost
efficiency and productivity, and
allocate more of limited capacity
to own brands
Streamline management
structure. Director role no longer
required. Graeme Craig leaving
the business
Focus on parts of the market with
competitive advantage or strong
position
Volumes and turnover will fall,
targeting divisional underlying
EBITDA of £3.5m
SUMMARY AND CURRENT TRADING
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Good year for company
Underlying performance strong
High level of pub acquisition and
brand activity
Quality of operations continues to
improve
Steady progress since year end
against tough comparatives
LFL growth in managed pubs and
hotels +1.5% to 2 September 2017
LFL EBITDAR in tenanted pubs
+0.6% to 26 August 2017
Own brand volume ex contract
+4.4% to 2 September 2017
A high quality and sustainable
platform for the long term
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QUESTIONS