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Wed 26th Sep 2018 - Update: Shepherd Neame and St Austell results, Leon, SSP
Shepherd Neame reports turnover and profit up: Shepherd Neame, Britain’s oldest brewer and owner and operator of 321 pubs in Kent and the South East (68 managed, 242 tenanted and 11 commercial free of tie leases), has reported turnover increased by 0.2% to £156.6m (2017: £156.2m) in the 53 weeks to 30 June 2018. Statutory profit before tax was up 2.9% to £12.1m (2017: £11.8m). The company reported three ‘transformational’ investments in the managed estate, with a total investment of £10.2m (2017: £8.3m) in capital expenditure to improve the look and feel of our tenanted and managed pubs and £2.8m (2017: £2.4m) in repairs and decorations. It bought two pubs in central London, the Samuel Pepys and the Savoy Tap and since the year end has acquired the Wheatsheaf, Farnham, a third pub in central London, the Cheshire Cheese, and entered a contract to build a new pub hotel in the centre of the Ebbsfleet Garden City development. It stated: “Over the last five years 22 pubs have been acquired and 51 sold, transforming our pub profile. Managed pubs (68 pubs) turnover grew by +7.7% to £65.3m (2017: £60.7m) with like-for-like sales growth of +1.3%, which is ahead of the market and set against a tough comparative of +8.1% in the previous year. Managed pubs underlying operating profit was impacted by cost pressures and was down slightly at £8.7m (2017: £9.0m). The Coffer Peach Business Tracker recorded like-for-like sales growth for pubs and restaurants at +0.7% for the 12 months to June 2018. Tenanted pubs (242 pubs) had another strong year with like-for-like Ebitdar up +2.1% (2016: +1.6%) and average Ebitdar per pub up +5.8% (2017: +5.6%). Higher profits in Brewing and Brands during period of transition to focus strategy on our own beer and cider brands. Whilst turnover reduced by -8.9% to £54.4m (2017: £59.8m) due to the end of the Asahi contract, divisional underlying operating profit grew by +46.9% to £2.3m (2017: £1.6m).” It reported a ‘strong start to the new financial year benefiting from the sustained period of warm weather in July and August’. For the 11 weeks to 15 September 2018, like-for-like managed sales were up +5.1% (2017: +1.4%). In the nine weeks to 1 September 2018 like-for-like tenanted Ebitdar was up +6.2% (2017: +0.6%) and own brand beer and cider volume was up +6.4% (2017: -6.5%) Jonathan Neame, chief executive of Shepherd Neame said: “Shepherd Neame is a strong business with an enviable track record of delivering consistent growth and this year is no exception. We have made further good progress against our strategic objectives and some great individual investments in our pubs. We have also successfully re-positioned our beer business away from contracts to focus on our own beer and cider brands. A key strength of the company is the balance between the different financial and market characteristics of each division which gives resilience even in more challenging market conditions. We have made some great acquisitions, during the year and since the year end, which further strengthens our managed estate and positions us well for the anticipated economic growth in our heartland over the next 15 years. We have started the new year well as we have benefited from the warm summer weather, in particular in our coastal sites The coming year has more political and economic uncertainty than most of us can remember. But, whatever the short-term impact, we believe that we are well positioned to take advantage of opportunities that arise in our local region and in the wider industry.”

St Austell Brewery reports ‘consolidation year’ as profits slip: St Austell Brewery has reported turnover grew 10.3% to £167.3m in the 52 weeks to 30 December 2017. Operating profit before other items fell 1.1% to £13.8m and profit before tax and other items was down 3.4% to £12.5m. Chairman Will Michelmore said: “We achieved a record turnover in the period of £169.3m, 10.3% up on last year in part due to a full year’s trading of Bath Ales and the Pier House Hotel. But the results have been impacted by the lower than expected performance of the former Bath Ales beer brands and recently acquired managed pubs not yet trading at expected levels. This was compounded by the delayed re-opening of the Chain Locker in Falmouth following a major refurbishment. This has led to our operating profit before other items being marginally lower than in 2016. Our profitability has been affected by a variety of market pressures This include higher costs , increased competition and weakening consumer confidence. Many of the higher costs were outside our control such as the Apprenticeship Levy, the increase in the National Living Wage, higher business rates and food cost inflation. Other cost increases were required to strengthen the company and lock-in previous growth.” Non-executive director Jonathan Neame stepped down in May after 16 years on the board. Michelmore added: “It has been a year of consolidation and one in which we have built a stronger platform for the future of the business. Our strategy continues to focus on investing for the long-term success of the business to deliver growth in earnings and dividends per share. The market conditions in which we operate have been a challenge but our core business remains robust. We have had a promising start to 2018 and I am cautiously optimistic about the year ahead.” Chief executive James Staughton reported the company’s managed division saw like-for-like sales up by 3.1% in the year whilst its tenanted sites achieved average Ebitda per pub growth of 4.6%. 

Leon awarded three stars for sustainabilty: Leon has achieved the Sustainable Restaurant Association’s top mark of three stars – the only brand in the food-to-go market to be awarded the accolade for its sustainable practices. The company stated: “Against a backdrop of climate change, resource shortages, and uncertainty over supply in post-Brexit Britain, sustainability has never been a more pressing issue. The SRA judges a business’ sustainability against a ten-point sustainability framework under three main pillars of Sourcing (40%), Society (30%) and Environment (30%). Three stars are only awarded to businesses who achieve 70% or above, and Leon’s score of 74% demonstrates the attention given to each pillar. Leon was founded with the mission to make it easy for everyone to eat well, live well, and be kind to the planet. Compostable boxes and bags were joined by compostable coffee cups in November 2016, and biodegradable cutlery and paper straws earlier this year. An ongoing trial with Can O water is the next step in Leon’s aim to reduce plastics. Beyond this, Leon-owned restaurants are powered with 100% green energy from renewable sources and, where LEON controls its own waste management, the brand ensures zero waste-to-landfill. A partnership with Bio Bean, a sustainable tech start-up, ensures that Leon’s used coffee grounds are repurposed into bio fuel and the business is focused on continuing to promote more sustainable practices in both producers and customers. For a week in October, Leon will run a special coffee offer where all its guests bringing reusable cups into the restaurants will be rewarded with a completely free coffee.”

SSP Group reports Fourth Quarter in line with expectations: SSP Group, the operator of food and beverage outlets in travel locations worldwide, announces a pre close trading update, ahead of its financial year ending 30 September 2018, covering the period from 1 July 2018 to 30 September 2018. The company stated: “Trading in the fourth quarter has been in line with our expectations, with like-for-like sales growth continuing at a similar level to that seen in the third quarter. Our expectations for like-for-like sales growth in the full year remain unchanged at between 2% and 3%. Like-for-like sales growth has been driven largely by increased passenger numbers in the air sector. Trading in the rail sector has remained soft during the year. Net contract gains for the full year are expected to be around the top end of the previously announced range of 4.5% – 5.0%. Net contract gains have continued to be driven by strong growth in North America and on-going progress in the Rest of the World. The acquisitions of TFS in India and Stockheim are performing well and are expected to add approximately 1.5% to revenue in the full year. Looking forward, whilst a degree of uncertainty always exists around passenger numbers in the short term, we are well placed to continue to benefit from the structural growth opportunities in our markets and to create further shareholder value. Trading results from outside the UK are converted into Sterling at the average exchange rates for the period. Our estimate of the overall impact on revenue of the movement of foreign currencies (principally the Euro, US Dollar, Swedish Krona, and Norwegian Krone) during the full year 2018 compared to the 2017 average is expected to be just under -2%.”

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