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Wed 25th Sep 2019 - Update: Shepherd Neame results, Admiral acquisition and Shaftesbury trading
Shepherd Neame reports managed like-for-likes up 1.6% in most recent 11 weeks as turnover and profit falls in ‘transitional’ year: Kent brewer and retailer Shepherd Neame has reported like-for-like sales in its managed estate for the 11 weeks to 14 September 2019 were up 1.6% with total sales in the division up 4.7% Like-for-like tenanted Ebitdar increased 2.7% for the nine weeks to 31 August. It comes as Shepherd Neame reported turnover fell 6.9% to £145.8m for the year ending 29 June 2019, compared with £156.6m the year before – in what it described as a “transitional year”. In order to fund the business for the long term and ‘to take advantage of any opportunities that may arise over the next few years”, the business refinanced its debt facilities. As a result a one-off exceptional charge of £10.8m was incurred. Statutory profit before tax therefore was £3.5m, compared with £12.1m. Capital expenditure during the year was £19.3m, up from £14.7m the year before, made up of £9.0m in new site acquisitions and £10.3m in investment in its pub estate and brewery. Of the full-year results, the company stated: “Managed pubs (70 pubs) account for nearly half of group turnover and have been the focus of significant investment in recent years Like-for-like sales grew 3.2% (2018: +1.3%). Average income per managed pub grew 6.6% (2018: down 1.8%). Despite ongoing cost inflation, underlying managed pub margin increased by 20 basis points to 13.4%. Tenanted pubs (239 pubs) continued to trade well. Like-for-like tenanted pub income grew by 2.3% (2018:+2.1%). Average income per tenanted pub grew 3.3% (2018: 5.8%). Brewing and brands is in transition following the loss of the Asahi and Lidl contracts. Own beer volume was down-23.3% (2018: down 10.6%). Shepherd Neame own brand beer and cider volume grew 0.5% (2018: down 0.9%). We have modernised and expanded our portfolio. A new partnership was entered into in August with the Boon Rawd Brewery Company to import and distribute Singha Beer, Thailand's original premium beer. The business is strongly cash generative and underlying Ebitda was robust. Margins in the business as a whole have continued to increase, as the mix of our business changes, with underlying operating profit margin at 10.5% (2018: 10.3%) and underlying Ebitda margin at 16.2% (2018: 15.7%).” Jonathan Neame, chief executive of Shepherd Neame said: “Shepherd Neame remains well positioned in the sector, with great pub assets, an exciting and evolving beer portfolio, an excellent brand reputation and a heartland presence in Kent that will benefit from considerable economic development in the next ten years. Our strong balance sheet and long term financing gives us a great platform to take advantage of any opportunities that arise. Our managed pubs have achieved substantial growth in turnover and profit. The tenanted pub estate has maintained its impressive like-for-like performance. Brewing and brands performance has, as expected, been more challenging this year, but we are excited by the potential of our emerging portfolio. We are a modern, well invested, financially strong and balanced business with a strategy designed to deliver long-term value for shareholders. We have transformed our business in recent years to increase our exposure to the growth areas of the market. We are encouraged by how the new year has started and remain cautiously optimistic about the company's prospects despite the uncertainties ahead.”

Admiral Taverns acquires 150-strong Heineken package: Admiral Taverns, the C&C Group and Proprium Capital-backed group, has reached an agreement to acquire a portfolio of 150 tenanted community pubs from Heineken-owned Star Pubs & Bars. On Friday (20 September), Propel revealed Admiral Taverns was closing in on a deal for the pub package that was put on the market in July. It has now confirmed the deal, which will take Admiral Taverns’ estate to 950 sites across England, Scotland and Wales. Supported by investors Proprium Capital Partners and C&C Group, Admiral Taverns has championed its ambitions to grow its estate and recently welcomed new chief executive Chris Jowsey to lead the business through the next phase of its development. Jowsey said: “We are delighted to announce another important step forward in our strategy and ambitions for the business. Admiral has a strong track record of integrating new acquisitions and these new pubs will significantly increase our presence across the UK. Core to Admiral’s approach is our commitment to invest behind our pubs and licensees, supporting them to build vibrant social hubs that can thrive at the heart of their local communities. Through this acquisition we are delighted to be able to bring so many new dedicated licensees into our business. On behalf of the team I would like to officially welcome them all to Admiral and look forward to building our long-term working partnerships.” In September the company also completed its relocation to new headquarters in Chester to better accommodate its expanding operations and support teams. CBRE acted on behalf of Heineken on the deal. 
Shaftesbury reports F&B tenants see year-on-year sales rise with sector now accounting for 38% of income: Property landlord Shaftesbury, which owns 306 restaurants, pubs and cafes in the West End, has said its food and beverage operators have, on average, reported increased year-on-year sales for the quarter ended 30 June 2019. Shaftesbury stated: “Over recent years, our strategy has been to increase the number of interesting casual dining and leisure concepts in our popular, high-footfall locations to meet growing interest and spending on leisure activities. Food, beverage and leisure is an important driver of footfall, dwell-time and trading in our villages and now accounts for 38% of our income, up from 28% ten years ago. Over that same period, the proportion of income from retail has fallen from 42% to 32%. Our long-established tenant selection strategy focuses on interesting, innovative concepts and independent businesses, rather than formulaic formats and national chains. Consequently, we have been largely unaffected by high-profile retail and restaurant failures and restructurings. In the financial year to date, tenant insolvencies have accounted for less than 2% of portfolio ERV and, where space has been handed back, it has re-let well. During the period since 1 April 2019, leasing activity has been robust, rents continue to be achieved at or above ERV and lease incentive levels have remained stable. Vacancy remains low and consistent with our long-term average; much of our available space is under offer. At Central Cross, there are now just two shops available, one of which is under offer. Earlier this month, the Seven Dials Market opened in Thomas Neal's Warehouse, a 23,000 square foot Victorian warehouse in the heart of Seven Dials. The concept is a hybrid operation providing an exciting line-up of street food concepts, a bar and a market selling fresh produce. This has increased the food and beverage offer in Seven Dials, further improving this popular and distinctive village destination.” Work has now begun on its 77,100 square foot mixed-use scheme at 72 Broadwick Street will provide new retail, restaurant and leisure space alongside extended and refurbished office accommodation and 15 new apartments on the top floor. The project, costing circa £32m, will take about two years with completion in phases from late 2020. Currently it has more than 40 other schemes under way, a number of which will complete over the coming three to six months. The company also continues to investigate and progress new schemes to “improve the rental prospects and value of our buildings”, in particular by identifying opportunities to reconfigure some of its larger shops and restaurants to take advantage of demand for smaller space. Chief executive Brian Bickell said: “Our exceptional 15.2 acre portfolio, located in some of the busiest parts of the West End, continues to perform well. The small to medium-sized space we mostly provide, combined with our modest rental levels, are a considerable advantage in the current market, attracting good levels of interest. Our long-established tenant selection strategy has ensured we have been largely unaffected by high-profile retail and restaurant failures and restructurings. We continue to convert our portfolio's reversionary potential into contracted income, whilst delivering further long-term growth in rental values. During the period since 1 April 2019, leasing activity has been robust, rents continue to be achieved at or above ERV and lease incentive levels have remained stable. Vacancy remains low and consistent with our long-term average; much of our available space is under offer. Despite the uncertain political and macroeconomic backdrop, London's global city status continues to draw businesses and visitors from across the world, reinforcing the West End's long-term appeal and prospects.”

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