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DJ Shepherd Neame Limited Interim Results

TIDMSHEP

RNS Number : 6919F

Shepherd Neame Limited

11 March 2020

INTERIM RESULTS

A strong performance in the tenanted estate

Turnover growth in all divisions

Shepherd Neame, Britain's Oldest Brewer and owner and operator of 320 high quality pubs in Kent and the South East, today announces results for the 26 weeks ended 28 December 2019.

Financial performance:

   --      Turnover in the period increased to GBP79.0m (2018: GBP76.5m), an increase of +3.3% 

-- Underlying operating profit(1) was up +1.1% at GBP8.0m (2018: GBP7.9m) and underlying profit before tax(2) was up +4.8% to GBP6.2m (2018: GBP5.9m) benefitting from lower interest charges

   --      Underlying basic earnings per share(3) are up +4.7% to 33.1p (2018: 31.6p) 
   --    Statutory profit before tax was GBP5.4m (2018: loss of GBP4.1m) 
   --      The Board is declaring an interim dividend of 6.00p   (2018: 5.87p), an increase of +2.2% 

Operational Highlights:

   --      Managed pubs (69) achieved a solid performance 
   -     Total managed sales grew by +4.3% to GBP37.0m (2018: GBP35.5m) 

- Like-for-like sales were up by +0.9% against strong comparatives in the prior year (2018: +4.1%)

   -     Average income(4) per managed pub grew by +1.4% (2018: +8.5%) 
   --      Tenanted pubs (239) continued to trade strongly despite fewer pubs 
   -     Average income per tenanted pub grew by +5.0% (2018: +4.0%) 

- Divisional underlying operating profit was up +1.7% to GBP6.7m (2018: GBP6.6m). Like-for-like tenanted pub income grew by +2.9% (2018: +2.2%)

   -     Winner of the Publican Award for Best Tenanted/Leased Company (up to 500 sites) 
   --      Own brand volume returned to growth 

- Own brand beer and cider volume grew ahead of the market at +3.3% (2018: -1.0%) during the period (versus market growth of +2.6%(5) )

   -     Divisional turnover grew by +3.5%, underlying operating profit was GBP0.4m (2018: GBP0.5m) 
   -     We have made a promising start to the new partnership for distributing Singha beer 

[1] Profit before net finance costs, 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.

2 Underlying operating profit less underlying net finance costs.

3 Underlying profit less attributable taxation divided by the weighted average number of ordinary shares in issue during the period. The number of shares in issue excludes those held by the company and not allocated to the employees under the Share Incentive Plan, which are treated as cancelled.

4 Calculated by dividing pub profit before depreciation, amortisation, rent and property costs and other cost allocations by the average number of divisional pubs trading in a financial period.

5 The British Beer and Pub Association.

Current Trading:

   --      For the 35 weeks to 29 February 2020: 
   -     Managed pub like-for-like sales up +0.6% 
   -     Like-for-like tenanted pub income up + 2.6% 
   -     Own brand beer and cider volumes up +4.4% 

Jonathan Neame, Chief Executive, commented:

"Shepherd Neame continues to benefit from a well-balanced business. These results demonstrate the strength of our tenanted pubs in a period where managed margin was held back by the challenging cost environment. We are pleased to see that own brand beer and cider volume is outperforming the market. As a result of this strategy we again have delivered a solid performance in the first half.

For the rest of the year, we remain concerned about the potential impact of the Covid-19 virus. We have seen no discernible change in customer behaviour to date. Looking forward it is impossible at this stage to gauge the likely impact, but should there be significant restrictions on travel and the movement of people in the coming months, that would have an inevitable bearing on our business and our supply chain.

Over the longer term, the quality and profile of the Company's brands and pubs will stand us in good stead and form an excellent platform from which to grow. We are confident we are building an even stronger business for the future."

March 2020

 
Shepherd Neame                        Tel: 01795 532206 
Jonathan Neame, Chief Executive 
Mark Rider, Finance and IT Director 
 
Instinctif Partners                  Tel: 020 7457 2020 
Matthew Smallwood 
Seb Holland 
 

NOTES FOR EDITORS

Shepherd Neame is Britain's oldest brewer. Established in 1698 and based in Faversham, Kent it employs around 1,900 people.

At the year end, the Company operated 320 pubs, of which 239 were tenanted or leased, 69 managed and 12 were held as investment properties under commercial free of tie leases. The pub estate ranges from inns and hotels to destination dining, great traditional and local community pubs.

The Company brews, markets and distributes its own beers to national and export customers under a range of highly successful brand names including traditional classics such as Spitfire and Bishops Finger as well as newer brands, such as Whitstable Bay, Bear Island and Orchard View Cider.

The Company also has partnerships with Boon Rawd Brewery Company for Singha beer, Thailand's original premium beer and with Boston Beer Company for Samuel Adams Boston Lager and Angry Orchard Hard Cider.

Shepherd Neame's shares are traded on the NEX Exchange Growth Market. See http://www.nexexchange.com/ for further information and the current share price.

For further information on the Company, see www.shepherdneame.co.uk.

CHAIRMAN'S STATEMENT

Interim Results

I am pleased to report another solid period in the 26 weeks ended 28 December 2019 with a strong performance in the tenanted estate and turnover growth in all divisions.

After an encouraging start to the financial year consumer spend was subdued through the autumn as a consequence of persistent wet weather and political uncertainty in the run up to the General Election. However, we enjoyed a buoyant festive period from mid-December and have made a good start to the second half of the year even though we are lapping a strong February.

In the last financial year, we identified two key objectives that will be of long term benefit to the Company:

-- acquire new sites in North Kent where there will be substantial economic development in the future, and

   --           expand our beer partnerships to sit alongside our modernised range. 

We have made progress against both these objectives. We have received planning permission and have purchased a site in Ebbsfleet and anticipate commencing the build phase in May 2020. The site will be named the Chalk Yard and will have 17 bedrooms and a pub and restaurant. It will be our largest single pub project to date. We anticipate opening in mid-2021.

Also in North Kent, we acquired The Crown, Rochester and intend to redevelop it in due course. This is in addition to the acquisition of the Horse and Groom, Wilmington in the prior year. In January 2020, we closed the Wharf at Crossways in Dartford for a major redevelopment of the pub.

The cumulative impact of these four investments in close proximity will transform the profile of the Shepherd Neame pub estate in this rapidly developing area.

On the beer side we commenced our distribution partnership for Singha Beer, Thailand's original premium beer, in September 2019. We are pleased with the initial response of customers to the brand and are positive about the opportunities this opens up for us in future years. Singha provides a useful complement to our Spitfire, Whitstable Bay and Bear Island ranges to make an exciting portfolio for our customers.

Financial Performance

Turnover in the period increased to GBP79.0m (2018: GBP76.5m), an increase of +3.3%, driven by higher sales in our managed pubs and brewing and brands businesses.

Underlying operating profit was up +1.1% to GBP8.0m (2018: GBP7.9m) and underlying profit before tax was up +4.8% to GBP6.2m (2018: GBP5.9m) benefitting from lower interest charges. Underlying basic earnings per share was up +4.7% to 33.1p (2018: 31.6p).

Statutory profit before tax was GBP5.4m (2018: loss of GBP4.1m). The prior year loss was incurred as a result of refinancing and the associated swap contract cancellation charge. The new debt structure provides certainty of funds, at a lower cost of debt and an improved maturity profile.

Operating charges - items excluded from underlying results

Since the half year, we have identified a transaction in one of our ledgers that gave us cause for concern. We investigated this thoroughly and extensively in consultation with external advisers and our auditors. We have uncovered a series of erroneous charges made against certain accounts, as a result of unlawful action by one employee, who was acting independently over a number of years.

This employee has now left the business and we are taking action to attempt to recover our loss. We are in the process of reimbursing fully all those accounts affected. A net charge of GBP0.5m has been recognised within items excluded from underlying results (see note 3).

The sums involved, although significant cumulatively, were not significant in any single year, and are not in aggregate material in the context of the Company's overall finances. We are confident that the matter is isolated and resolved. We have commissioned a full review of our internal controls in the area concerned and have implemented changes.

We have also recognised an impairment charge of GBP0.2m in respect of one property.

Capital and Investment

We continue to invest in the business for the long term. Capital expenditure was GBP8.1m (2018: GBP7.1m), including GBP1.4m (2018: GBP2.1m) on new site acquisitions and GBP6.7m (2018: GBP5.0m) invested in the pub estate and brewery.

We continue to manage our pub and investment property assets actively and have realised a total of GBP1.2m (2018: GBP1.5m) from disposals.

Tenanted and Managed Pub Operations

Overview

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DJ Shepherd Neame Limited Interim Results -2-

Our long term investment strategy is to grow through selective single site acquisitions in landmark or high footfall locations. Our recent acquisitions have been in urban areas with a large local catchment and high disposable income.

The Crown, Rochester meets these criteria and was acquired in September 2019. It is being run as a managed pub in a prominent location at the end of the High Street overlooking the River Medway. We see further potential for the site as this part of the town is regenerating and will benefit from substantial house building.

Meanwhile we continue to dispose of those smaller outlets which no longer fit our strategy, albeit the rate of disposal activity has slowed as the quality of our business has improved.

In the period, we acquired one managed pub (2018: two), disposed of two pubs (2018: nil), one investment property (2018: one) and two pieces of land, one with planning permission for residential development.

At the half year we operated 320 pubs (2018: 322) of which 239 are tenanted or leased (2018: 244), 69 are managed (2018: 68) and 12 (2018: 10) are operated under commercial free of tie leases.

Driving Footfall to our Pubs

We have invested GBP4.7m (2018: GBP3.3m) in capital expenditure to improve the look and feel of our pubs and a further GBP1.5m (2018: GBP1.5m) in repairs and decorations.

Our largest investment in the period was the transformation of the Woolpack, Banstead acquired in 2009. It has been operated under lease for most of the time since then. We transferred it to the managed estate in 2019 and have now invested GBP1.4m. This is an exceptional site in the centre of this affluent town south of London and is now a flagship operation for us in that area. Initial trade since it re-opened in December has been excellent.

In the last ten years we have acquired a number of other sites currently operated under lease and that may benefit from a change of operating model to managed. We will review the circumstances on an individual basis as and when they become available over the coming years.

Also, in the managed estate, we have redeveloped the Compton Cross, Soho. This was acquired in the previous financial year and re-opened under its original name of the Coach and Horses. This gives us another high profile site in central London.

In the second half we will continue with the programme to upgrade our bedroom stock in our inns and hotels. We plan to refurbish nine rooms at The Marine in Whitstable and eight rooms at the Royal Albion in Broadstairs.

In the tenanted estate, we have invested in major works at the Red Lion, Charing Heath and the Lord Nelson, Dover. At the former, we have converted a disused barn to create four letting rooms and upgraded the pub; with the latter we have transformed this well located pub now that the long awaited town centre redevelopment is complete.

The new signage scheme continues to gain momentum. We have now completed half the estate. The quality and extent of each scheme improves the whole time and has a real and positive impact on customer first impressions.

Developing our offer to enhance the customer experience

We drive footfall by presenting our pubs inside and outside in an appealing and stylish way. Once we have attracted customers we need to ensure that our offer is suited to today's customer needs and build loyalty to our pubs and brands.

In the last two years we have built our Rewards Club to engender loyalty with our customer base, and now regularly communicate offers on food and accommodation.

We have recruited more team members in the last six months to strengthen our digital and pub marketing capability. One of the initiatives that has been launched successfully is a series of walks around our rural pubs.

Overall pub performance continues to be driven by the shift to premium drinks sales as we continue to enhance our offer and expand the range. Managed like-for-like drink sales were up +1.8% (2018: +5.8%).

The eating out market remains very competitive and our food offer evolves to meet customers rapidly changing tastes. This now incorporates a much broader range of lower calorie, vegan and vegetarian dishes. We have also created a bespoke gluten-free burger for our managed estate.

We are always looking for ways to team with local producers. Under our Love Food campaign to champion local ingredients, we have worked with Faversham-based Karimix to create a bespoke Kentish tomato chutney. We encourage staff involvement to promote many of the great dishes we serve in our pubs via #shepsfood.

The introduction of the Ten Kites system for allergen control and communication has been welcomed by staff and customers alike. This provides interactive menus across our managed house websites and allows customers to use dietary and allergen filters to tailor their choice.

It is particularly pleasing to note that our efforts to drive our food business have been recognised as we were a finalist at the Publican Awards for Best Food Offer (Managed > 50 sites). Managed like-for-like food sales were down -0.7% (2018: +2.2%).

Accommodation remains in demand in spite of the consumer caution in the autumn but our rate of growth has slowed. Like-for-like accommodation sales were up +0.9% (2018: +0.7%). Occupancy improved to 81.6% (2018: 80.5%) and RevPAR(6) was up +1.4% at GBP74 (2018: GBP73).

Managed Pub performance

Total divisional turnover in the managed estate grew by +4.3% to GBP37.0m (2018: GBP35.5m). Divisional underlying operating profit declined marginally by -0.2% to GBP5.4m (2018: GBP5.4m). Ongoing cost inflation means that margins are under continued pressure with same outlet like-for-like sales up by +0.9% against strong comparative figures from the prior year (2018: +4.1%). Average income per managed pub grew by +1.4% (2018: +8.5%).

Tenanted Pub Performance

Total divisional turnover in the tenanted estate grew by +1.3% (2018: +0.7%) to GBP18.4m (2018: GBP18.1m) despite a fewer number of pubs. Divisional underlying operating profit was up +1.7% to GBP6.7m (2018: GBP6.6m). We continue to invest in repair and decorations at a high rate although the rate of increase is levelling out as the quality of overall maintenance and presentation of our pubs is at a high level. Like-for-like tenanted pub income grew by +2.9% (2018: +2.2%). Average income per tenanted pub grew by +5.0% (2018: +4.0%).

The sector continues to suffer from high cost inflation from rates and national minimum wage increases. It is therefore welcome to hear recent Government announcements of extending rate relief for smaller pubs.

In independent surveys of our licensees we score highly across all areas including in the communication and understanding our Business Development Managers have of our Pubs and the extensive personal support they provide to our licensees.

As a consequence of the huge strides we have made in the quality of our tenanted pubs in recent years, we were delighted to win the Publican Award for Best Tenanted/Leased Company (up to 500 sites).

Creating demand and building awareness for our brands

In the last year, we took a number of measures to refresh and modernise our core brand portfolio. These measures are beginning to bear fruit, as our own brand beer and cider volume grew by +3.3% (2018:-1.0%) ahead of the market.

We have had a promising start to the new partnership with Boon Rawd Brewery Company to distribute Singha Beer. The partnership commenced at the end of the summer with a phased transition from the previous supplier. The brand is strong in its Thai restaurant base but is also backed by high level sponsorship activity. This gives us a credible and exclusive world lager to enhance our portfolio.

To support these portfolio developments we have strengthened our heartland on-trade sales team. We are also in the process of introducing a comprehensive online ordering platform, which will be operational in the next few months.

In the brewery, we continue to invest in quality enhancements and have committed to the installation of a new yeast propagation plant at a total cost of GBP0.5m. This will be operational by year end.

As the market for packaged products changes, particularly in the light of environmental concerns, so do the needs of our customers. As such we are reviewing our small packaging capability.

(6) Revenue per Available Room

Brewing and brands performance

Total divisional turnover grew by +3.5%, with divisional underlying operating profit of GBP0.4m (2018: GBP0.5m).

We saw growth in our own brands portfolio and overall turnover growth was enhanced by the new partnership with Singha beer. However, total own brewed volumes fell by -7.9% with the final impact of exiting the Lidl own brand contract in the prior year.

Investment Property

As at 28 December 2019, the Company owns investment property valued at GBP8.3m (June 2019: GBP8.8m).

Our appeal against the refusal of planning consent for 50 houses on land outside Faversham was dismissed. Nevertheless we believe that this land has long term development prospects and will continue to promote the site through the local planning process.

Dividend

The Board is declaring an interim dividend of 6.00p (2018: 5.87p), an increase of 2.2%. The dividend will be paid on 2 April 2020 to those shareholders on the register at 20 March 2020.

Outlook and Current Trading

This has been a satisfactory trading period considering the challenging conditions of the autumn. The tenanted performance has been strong. Recent developments in the brewing and brands business now appear to be bearing fruit and we are optimistic about the potential of some of our recent initiatives.

The managed pubs division has performed well but it has been harder to generate like-for-like sales growth in this period. We are excited about the new developments at the Wharf and Woolpack and by the long term potential of the Chalk Yard.

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March 11, 2020 03:00 ET (07:00 GMT)

DJ Shepherd Neame Limited Interim Results -3-

Since the half year (and for the 35 weeks to 29 February 2020), like-for-like tenanted pub income has remained strong at +2.6% (2018: +2.6%), own brand beer and cider volumes are up +4.4% (2018: +0.4%) and same outlet like-for-like managed pub sales are up +0.6% (2018: +3.7%).

For the rest of the year, we remain concerned about the potential impact of the Covid-19 virus. We have seen no discernable change in customer behaviour to date. Looking forward it is impossible at this stage to gauge the likely impact, but should there be significant restrictions on travel and the movement of people in the coming months, that would have an inevitable bearing on our business and our supply chain.

Over the longer term, the quality and profile of the Company's brands and pubs will stand us in good stead and form an excellent platform from which to grow. We are confident we are building an even stronger business for the future.

Miles Templeman

Chairman

   CONSOLIDATED PROFIT AND LOSS            ACCOUNT   26 weeks ended 28 December 2019 
 
                                                                                                                                     Audited 
                                                                                                          Unaudited                 52 weeks 
                                                            Unaudited                             26 weeks ended 29 December           ended 
                                                 26 weeks ended 28 December 2019                             2018               29 June 2019 
                                                                 Items                                     Items 
                                                              excluded                                  excluded 
                                                                  from                                      from 
                                               Underlying   underlying         Total     Underlying   underlying       Total           Total 
                                                  results      results     statutory        results      results   statutory       Statutory 
                                     note         GBP'000      GBP'000       GBP'000        GBP'000      GBP'000     GBP'000         GBP'000 
----------------------------------  ----------  ---------  -----------  ------------  -------------  -----------  ----------  -------------- 
 Turnover                              4           79,035            -        79,035         76,500            -      76,500         145,801 
 Operating charges                               (71,020)        (648)      (71,668)       (68,571)            -    (68,571)       (130,711) 
------------------------------------  --------  ---------  -----------  ------------  -------------  -----------  ----------  -------------- 
 Operating profit                      4            8,015        (648)         7,367          7,929            -       7,929          15,090 
------------------------------------  --------  ---------  -----------  ------------  -------------  -----------  ----------  -------------- 
 Finance costs                         3,5        (1,843)            -       (1,843)        (2,040)      (9,820)    (11,860)        (13,721) 
 Fair value movements on financial 
  instruments charged to profit and 
  loss                                   3,5            -        (112)         (112)              -        (991)       (991)           (952) 
------------------------------------  --------  ---------  -----------  ------------  -------------  -----------  ----------  -------------- 
 Net finance costs                     3,5        (1,843)        (112)       (1,955)        (2,040)     (10,811)    (12,851)        (14,673) 
 Profit on disposal of property        3                -          280           280              -          663         663           2,848 
 Investment property fair value 
  movements                            3                -        (297)         (297)              -          139         139             206 
------------------------------------  --------  ---------  -----------  ------------  -------------  -----------  ----------  -------------- 
 Profit/(loss) before taxation                      6,172        (777)         5,395          5,889     (10,009)     (4,120)           3,471 
 Taxation                              6          (1,297)          104       (1,193)        (1,237)        1,961         724           (882) 
------------------------------------  --------  ---------  -----------  ------------  -------------  -----------  ----------  -------------- 
 Profit/(loss) after taxation                       4,875        (673)         4,202          4,652      (8,048)     (3,396)          2, 589 
------------------------------------  --------  ---------  -----------  ------------  -------------  -----------  ----------  -------------- 
 Earnings/(loss) per 50p ordinary 
  share                                7 
 Basic                                                                         28.5p                                 (23.1)p           17.6p 
 Diluted                                                                       28.3p                                 (22.9)p           17.5p 
 Underlying basic                                                              33.1p                                   31.6p           60.9p 
-----------------------  ----------------  ---  --------------------------  --------  -----  -------------------  ----------  -------------- 
 
 
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

26 weeks ended 28 December 2019

 
                                                                                                       Unaudited 
                                                                                                        26 weeks    Audited 
                                                                                                           ended   52 weeks 
                                                                                            Unaudited         29      ended 
                                                                                       26 weeks ended   December    29 June 
                                                                                     28 December 2019       2018       2019 
                                                                                              GBP'000    GBP'000    GBP'000 
--------  -----------  ---  ---  --------------------------------------------------------------------  ---------  --------- 
Profit/(loss) after taxation                                                                    4,202    (3,396)      2,589 
-----------------------------------------------------------  --------------   ------  ---------------  ---------  --------- 
Gains arising on cash flow hedges during 
 the period                                                                                       426        567        248 
Transfers to the profit and 
 loss account on cash flow 
 hedges                                                                                             -     10,866     10,660 
Tax relating to components of other 
 comprehensive income                                                                            (83)    (2,008)    (1,931) 
-----------------------------------------------------------  --------------   ------  ---------------  ---------  --------- 
Other comprehensive gains                                                                         343      9,425      8,977 
-----------------------------------------------------------  --------------   ------  ---------------  ---------  --------- 
Total comprehensive income                                                                      4,545      6,029     11,566 
-----------------------------------------------------------  --------------   ------  ---------------  ---------  --------- 
 
 
   CONSOLIDATED BALANCE SHEET   As at 28 December 2019 
 
                                                   Unaudited    Unaudited        Audited 
                                                    26 weeks     26 weeks       52 weeks 
                                                       ended        ended          ended 
                                                 28 December  29 December        29 June 
                                                        2019         2018           2019 
                                                     GBP'000      GBP'000        GBP'000 
--------------------------------------    ------------------  -----------  ------------- 
Fixed assets 
Intangible fixed assets                                  775          564            760 
Tangible fixed assets                                317,019      310,367        314,728 
Investments and loans                                      6           18             10 
----------------------------------------  ------------------  -----------  ------------- 
                                                     317,800      310,949        315,498 
  --------------------------------------  ------------------  -----------  ------------- 
Current assets 
Stocks                                                 8,004        6,416          7,111 
Debtors                                               15,999       16,329         12,945 
Deferred tax asset                                       975          983          1,058 
Cash at bank and in hand                               3,270        2,894            116 
----------------------------------------  ------------------  -----------  ------------- 
                                                      28,248       26,622         21,230 
  --------------------------------------  ------------------  -----------  ------------- 
Creditors: amounts falling due within 
 one year 
Bank loans and overdrafts                                  -            -          (933) 

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DJ Shepherd Neame Limited Interim Results -4-

Creditors                                           (26,474)     (23,267)       (23,096) 
----------------------------------------  ------------------  -----------  ------------- 
                                                    (26,474)     (23,267)       (24,029) 
  --------------------------------------  ------------------  -----------  ------------- 
Net current assets/(liabilities)                       1,774        3,355        (2,799) 
----------------------------------------  ------------------  -----------  ------------- 
Total assets less current liabilities                319,574      314,304        312,699 
----------------------------------------  ------------------  -----------  ------------- 
Creditors: amounts falling due after 
 more than one year 
Bank loans                                          (87,211)     (89,088)       (81,160) 
Derivative financial instruments                     (6,739)      (6,769)        (6,822) 
Deferred lease liability                             (2,620)      (2,423)        (2,547) 
Provisions for liabilities                          (13,956)     (12,821)       (14,073) 
----------------------------------------  ------------------  -----------  ------------- 
Net assets                                           209,048      203,203        208,097 
----------------------------------------  ------------------  -----------  ------------- 
 
  Capital and reserves 
Called-up share capital                                7,429        7,429          7,429 
Share premium account                                  1,099        1,099          1,099 
Revaluation reserve                                   71,394       73,532         71,858 
Own shares                                           (1,367)      (1,806)        (1,551) 
Hedging reserve                                      (4,647)      (4,542)        (4,990) 
Profit and loss account                              135,140      127,491        134,252 
----------------------------------------  ------------------  -----------  ------------- 
Equity shareholders' funds                           209,048      203,203        208,097 
----------------------------------------  ------------------  -----------  ------------- 
 
   CONSOLIDATED STATEMENT OF CHANGES IN EQUITY    26 weeks ended 28 December 2019 
 
 
                                    Called-up     Share     Revaluation               Own        Hedging        Profit 
                                        share   premium         reserve            shares        reserve           and 
                                      capital   account                                                           loss 
                                                                                                               account       Total 
--------------------------- 
                                      GBP'000   GBP'000         GBP'000           GBP'000        GBP'000       GBP'000     GBP'000 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
Balance at 29 June 2019                 7,429     1,099          71,858           (1,551)        (4,990)       134,252     208,097 
Profit for the period                       -         -               -                 -              -         4,202       4,202 
Gains arising on cash flow 
 hedges during the period                   -         -               -                 -            426             -         426 
Tax relating to components 
 of other comprehensive 
 income                                     -         -               -                 -           (83)             -        (83) 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
Total comprehensive income                  -         -               -                 -            343         4,202       4,545 
Ordinary dividends paid                     -         -               -                 -              -       (3,573)     (3,573) 
Revaluation reserve 
 realised 
 on disposal of properties                  -         -           (464)                 -              -           464           - 
Accrued share-based 
 payments                                   -         -               -                 -              -           256         256 
Purchase of own shares                      -         -               -             (290)              -             -       (290) 
Distribution of own shares                  -         -               -               314              -         (301)          13 
Unconditionally vested 
 share 
 awards                                     -         -               -               160              -         (160)           - 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
Balance at 28 December 2019             7,429     1,099          71,394           (1,367)        (4,647)       135,140     209,048 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
 
 
                                    Called-up     Share     Revaluation               Own        Hedging        Profit 
                                        share   premium         reserve            shares        reserve           and 
                                      capital   account                                                           loss 
                                                                                                               account       Total 
--------------------------- 
                                      GBP'000   GBP'000         GBP'000           GBP'000        GBP'000       GBP'000     GBP'000 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
Balance at 30 June 2018                 7,429     1,099          73,532           (1,588)       (13,967)       134,547     201,052 
Loss for the period                         -         -               -                 -              -       (3,396)     (3,396) 
Gains arising on cash flow 
 hedges during the period                   -         -               -                 -            567             -         567 
Transfers to the profit and 
 loss account on 
 termination 
 of interest rate swaps                     -         -               -                 -          9,875             -       9,875 
Transfers to the profit and 
 loss account on hedge 
 ineffectiveness 
 of remaining interest rate 
 swaps                                      -         -               -                 -            991             -         991 
Tax relating to components 
 of other comprehensive 
 income                                     -         -               -                 -        (2,008)             -     (2,008) 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
Total comprehensive income                  -         -               -                 -          9,425       (3,396)       6,029 
Ordinary dividends paid                     -         -               -                 -              -       (3,475)     (3,475) 
Accrued share-based 
 payments                                   -         -               -                 -              -           185         185 
Purchase of own shares                      -         -               -             (595)              -             -       (595) 
Distribution of own shares                  -         -               -               210              -         (203)           7 
Unconditionally vested 
 share 
 awards                                     -         -               -               167              -         (167)           - 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
Balance at 29 December 2018             7,429     1,099          73,532           (1,806)        (4,542)       127,491     203,203 
---------------------------  ----------------  --------  --------------  ----------------  -------------  ------------  ---------- 
 
 
   CONSOLIDATED CASH FLOW STATEMENT   26 weeks ended 28 December 2019 
 
                                                   Unaudited              Unaudited                  Audited 
                                                    26 weeks               26 weeks                 52 weeks 
                                                       ended                  ended                    ended 
                                                 28 December            29 December                  29 June 
                                                        2019                   2018                     2019 
                                      GBP'000        GBP'000   GBP'000      GBP'000        GBP'000   GBP'000 
-----------------------------------  --------  -------------  --------  -----------  -------------  -------- 
Net cash flows from operating 
 activities 
 (note 9)                                             10,347                  9,316                   22,497 
Cash flows from investing 
activities 
Proceeds of sale of tangible fixed 
 assets                                 1,230                    1,508                       7,825 
Purchase of tangible fixed assets     (7,985)                  (7,074)                    (13,710) 
Purchase of intangible fixed assets      (92)                        -                           - 
Customer loan redemptions                   1                       58                          61 
Acquisition of subsidiaries             (151)                        -                     (5,594) 
Cash acquired on acquisition                -                        -                         347 
Net cash flows from investing 

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DJ Shepherd Neame Limited Interim Results -5-

 activities                                          (6,997)                (5,508)                 (11,071) 
Cash flows from financing 
activities 
Dividends paid                       (3,573)                   (3,475)                     (4,341) 
Interest paid                        (1,413)                   (1,436)                     (3,526) 
Settlement of derivative financial 
 instruments                               -                   (9,386)                     (9,610) 
Repayment of long-term loans               -                  (54,500)                    (54,500) 
New long-term loans                    6,000                    67,500                      59,500 
Issue costs of new long-term loans         -                     (654)                       (815) 
Purchase of own shares                 (290)                     (595)                       (595) 
Share option proceeds                     13                         7                          19 
                                     -------                  --------               ------------- 
Net cash flows from financing 
 activities                                              737                (2,539)                 (13,868) 
-----------------------------------  -------  --------------  --------  -----------  -------------  -------- 
Net increase/(decrease) in cash 
 and cash equivalents                                  4,087                  1,269                  (2,442) 
-----------------------------------  -------  --------------  --------  -----------  -------------  -------- 
Cash and cash equivalents at 
 beginning 
 of the period                                         (817)                  1,625                    1,625 
-----------------------------------  -------  --------------  --------  -----------  -------------  -------- 
Cash and cash equivalents at end 
 of the period                                         3,270                  2,894                    (817) 
-----------------------------------  -------  --------------  --------  -----------  -------------  -------- 
 
 
   NOTES TO THE ACCOUNTS   28 December 2019 

1 Interim Statement

The financial information contained in this interim statement, which is unaudited, does not constitute statutory accounts as defined in s434 of the Companies Act 2006. Statutory accounts for the 52 weeks ended 29 June 2019, upon which the auditors issued an unqualified opinion, have been filed with the Registrar of Companies. The financial information comprises the results of Shepherd Neame Limited (the Company) and its subsidiaries (the Group).

2 Accounting Policies

The consolidated interim accounts have been prepared under FRS 104 Interim Financial Reporting and on the basis of the accounting policies set out in the statutory accounts for the 52 weeks ended 29 June 2019, except for the adoption of FRS 102.18 regarding intangible assets other than goodwill, as of 30 June 2019. The amendments to FRS 102 following the Triennial Review (December 2017) have been adopted in the period but no material changes have arisen as a result of this.

FRS 102.18 Intangible assets other than goodwill

The Group adopted FRS 102.18 on 30 June 2019 prospectively. Accordingly, the information presented for

comparative periods has not been restated and is       presented, as previously reported. 

FRS 102.18 covers accounting for all intangible assets other than goodwill and intangible assets held by an entity for sale in the ordinary course of business.

Intangible assets with finite useful lives are carried at cost less accumulated amortisation and impairment losses. Amortisation is recognised on a straight-line basis over the estimated useful life of between three and five years. Provision is made for any impairment.

3 Non-GAAP reporting measures

Certain items recognised in reported profit or loss before tax can vary significantly from year to year and therefore create volatility in reported earnings which does not reflect the underlying performance of the Group. The Directors believe that the "underlying operating profit", "underlying profit before tax", "underlying basic earnings per share", "underlying earnings before interest, tax, depreciation, and amortisation" presented, provide a clear and consistent presentation of the underlying performance of ongoing business for shareholders. Underlying profit is not defined by FRS 102 and therefore may not be directly comparable with the "adjusted" profit measures of other companies. The adjusted items are:

   --            Profit or loss on disposal of properties; 
   --            Investment property fair value movements; 

-- Operating and finance charges which are either material or infrequent in nature and do not relate to the underlying performance; and

   --            Fair value movements on financial instruments charged to profit and loss. 
 
                                                           Unaudited           Unaudited         Audited 
                                                      26 weeks ended            26 weeks        52 weeks 
                                                         28 Dec 2019               ended           ended 
                                                                             29 Dec 2018         29 June 
                                                                                                    2019 
                                                             GBP'000             GBP'000         GBP'000 
---------------------------------------------  ---------------------  ------------------  -------------- 
Underlying EBITDA                                             12,198              12,106          23,673 
Depreciation and amortisation                                (4,167)             (4,124)         (8,298) 
Free trade loan discounts                                        (3)                (19)            (25) 
Loss on sale of assets (excluding property)                     (13)                (34)            (92) 
---------------------------------------------  ---------------------  ------------------  -------------- 
Underlying operating profit                                    8,015               7,929          15,258 
Net underlying finance costs                                 (1,843)             (2,040)         (3,901) 
---------------------------------------------  ---------------------  ------------------  -------------- 
Underlying profit before taxation                              6,172               5,889          11,357 
 
Profit on disposal of properties                                 280                 663           2,848 
Investment property fair value movements                       (297)                 139             206 
Operating charges - items excluded from 
 underlying results                                            (648)                   -           (168) 
Settlement of interest rate swaps associated 
 with refinancing                                                  -             (9,386)         (9,386) 
Write-off of unamortised finance costs 
 following refinancing                                             -               (434)           (434) 
Ongoing fair value movements on financial 
 instruments charged to profit and loss                        (112)               (991)           (952) 
---------------------------------------------  ---------------------  ------------------  -------------- 
Profit/(loss) on ordinary activities before 
 taxation                                                      5,395             (4,120)           3,471 
---------------------------------------------  ---------------------  ------------------  -------------- 
 

Operating charges - items excluded from underlying results comprise:

a) An impairment charge of GBP156,000 in respect of one property transferred from tenanted pubs to investment property in the period. The charge of GBP168,000 for the 52 weeks ended 29 June 2019 comprised a net impairment loss in respect of five licensed properties to write them down to their recoverable amount and the reversal of impairment of two licensed properties.

b) A one-off net charge of GBP492,000 relating to the correction of erroneous charges made against certain accounts as a result of unlawful action by one employee, acting independently.

These entries were made in the period July 2008 to September 2019 and the majority of the charges related to previous accounting periods. Since the sums involved, although significant cumulatively, were not significant in any single year, and are not in aggregate material in the context of the Company's overall finances, the directors feel that it is appropriate to recognise the charge within items excluded from underlying results, in the current period.

The gross value of the erroneous charges amounted to GBP861,000. However, this exposure has been reduced by GBP369,000 in respect of the net write-off of associated debt not recovered by the Company in the prior accounting periods.

The net balance represents repayments due, and we are in the process of reimbursing fully all those accounts affected, together with interest. We are taking action to attempt to recover our loss.

Additional charges in respect of fees relating to this matter will be recognised in the accounts for the full year to give a total charge in the region of GBP950,000, subject to recoveries.

Finance costs - items excluded from underlying results

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DJ Shepherd Neame Limited Interim Results -6-

During the 26 weeks ended 29 December 2018, GBP37,500,000 of term loan was repaid and the Group entered into new financing arrangements. The Group also terminated interest rate swap contracts totalling GBP35,000,000 for net cash consideration of GBP9,386,000 in connection with the repayment of the loan. As a result, other finance costs excluded from underlying results included GBP9,386,000 in respect of settled interest rate swap liabilities and GBP434,000 of unamortised finance costs relating to the previous facility which have been written off. Finance costs excluded from underlying results included GBP991,000 in respect of the ineffective portion of the movement in fair value interest rate swaps.

The non-underlying finance charges for the 52 weeks ended 29 June 2019 comprised GBP9,386,000 and GBP434,000 noted above and GBP952,000 in respect of the ineffective portion of the movement in fair value interest rate swaps.

4 Segmental reporting

The Group has three operating segments, which are largely organised and managed separately according to the nature of the products and services provided and the profile of the customers:

-- Brewing and Brands which comprises the brewing, marketing and sales of beer and other products;

   --            Managed Pubs; and 

-- Tenanted Pubs which comprises pubs operated by third parties under tenancy or tied lease agreements.

Transfer prices between operating segments are set on an arm's length basis.

 
                                                Brewing 
                                             and Brands       Managed Pubs       Tenanted 
                                                                                     Pubs  Unallocated       Total 
26 weeks ended 28 December 2019                 GBP'000            GBP'000        GBP'000      GBP'000     GBP'000 
------------------------------------  -----------------  -----------------  -------------  -----------  ---------- 
Turnover                                         23,027             36,962         18,355          691      79,035 
------------------------------------  -----------------  -----------------  -------------  -----------  ---------- 
Underlying operating profit                         366              5,353          6,690      (4,394)       8,015 
Items excluded from underlying 
 results                                              -                  -          (156)        (492)       (648) 
------------------------------------  -----------------  -----------------  -------------  -----------  ---------- 
Divisional operating profit                         366              5,353          6,534      (4,886)       7,367 
 
Net underlying finance costs                                                                               (1,843) 
Fair value movements on ineffective 
 element of cash flow hedges                                                                                 (112) 
Profit on disposal of property                                                                                 280 
Investment property fair value 
 movements                                                                                                   (297) 
------------------------------------  -----------------  -----------------  -------------  -----------  ---------- 
Profit on ordinary activities before 
 taxation                                                                                                    5,395 
------------------------------------  -----------------  -----------------  -------------  -----------  ---------- 
 
Other segment information 
Capital expenditure - tangible and 
 intangible fixed assets                            832              4,103          2,401          552         7,888 
Depreciation and amortisation                       842              1,724          1,324          277         4,167 
Underlying divisional EBITDA                      1,215              7,089          8,001      (4,107)        12,198 
Number of pubs                                        -                 69            239           12           320 
 
 
 
  4 Segmental reporting continued 
                                            Brewing 
                                                and      Managed        Tenanted 
                                             Brands         Pubs            Pubs  Unallocated       Total 
26 weeks ended 29 December 2018             GBP'000      GBP'000         GBP'000      GBP'000     GBP'000 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Turnover                                     22,239       35,454          18,114          693      76,500 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Underlying operating profit                     462        5,362           6,576      (4,471)       7,929 
Items excluded from underlying                    -            -               -            -           - 
results 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Divisional operating profit                     462        5,362           6,576      (4,471)       7,929 
 
Net underlying finance costs                                                                      (2,040) 
Finance costs excluded from 
 underlying 
 results                                                                                          (9,820) 
Fair value movements on ineffective 
 element of cash flow hedges                                                                        (991) 
Profit on disposal of property                                                                        663 
Investment property fair value 
 movements                                                                                            139 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Loss on ordinary activities before 
 taxation                                                                                         (4,120) 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
 
  Other segment information 
Capital expenditure - tangible and 
 intangible fixed assets                        404        3,977           1,986          772          7,139 
Depreciation and amortisation                 1,006        1,628           1,215          275          4,124 
Underlying divisional EBITDA                  1,516        6,988           7,797      (4,195)         12,106 
Number of pubs                                    -           68             244           10            322 
 
                                            Brewing      Managed        Tenanted 
                                         and Brands         Pubs            Pubs  Unallocated       Total 
52 weeks ended 29 June 2019                 GBP'000      GBP'000         GBP'000      GBP'000     GBP'000 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Turnover                                     40,742       68,777          35,033        1,249     145,801 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Underlying operating profit                     923        9,215          12,950      (7,830)      15,258 
Items excluded from underlying 
 results                                          -          140           (308)            -       (168) 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Divisional operating profit                     923        9,355          12,642      (7,830)      15,090 
Net underlying finance costs                                                                      (3,901) 
Finance costs excluded from 
 underlying 
 results                                                                                          (9,820) 
Fair value movements on ineffective 
 element of cash flow hedges                                                                        (952) 
Profit on disposal of property                                                                      2,848 
Investment property fair value 
 movements                                                                                            206 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
Profit on ordinary activities 
 before 
 taxation                                                                                           3,471 
-----------------------------------  --------------  -----------  --------------  -----------  ---------- 
 
Other segment information 
Capital expenditure - tangible and 
 intangible fixed assets                      1,105       13,647           4,216        1,203      20,171 
Depreciation and amortisation                 1,979        3,282           2,479          558       8,298 
Underlying divisional EBITDA                  2,968       12,517          15,460      (7,272)      23,673 
Number of pubs                                    -           70             239           13         322 
 
 
 
5 Net finance costs 
                                                      26 weeks ended 28 Dec              26 weeks             52 weeks 
                                                              2019                          ended                ended 
                                           Underlying          Excluded                    29 Dec 
                                              results   from underlying        Total         2018 
                                                                results    statutory        Total         29 June 2019 
                                                                                        statutory      Total statutory 

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DJ Shepherd Neame Limited Interim Results -7-

                                              GBP'000           GBP'000      GBP'000      GBP'000            GBP'000 
-----------------------------------------  ----------  ----------------  -----------  -----------  ----------------- 
Interest payable: Bank loans and 
 overdrafts                                     1,829                 -        1,829        2,058              3,938 
Investment income : Income from fixed 
 asset investments                                  -                 -            -         (15)               (18) 
Other finance income : Unwinding of 
 discounts on provisions                           14                 -           14          (3)               (19) 
Settlement of interest rate swaps 
 associated 
 with refinancing                                   -                 -            -        9,386              9,386 
Write-off of unamortised finance costs 
 following refinancing                              -                 -            -          434                434 
Ongoing fair value movements on financial 
 instruments charged to profit and loss             -               112          112          991                952 
-----------------------------------------  ----------  ----------------  -----------  -----------  ----------------- 
Net finance costs                               1,843               112        1,955       12,851             14,673 
-----------------------------------------  ----------  ----------------  -----------  -----------  ----------------- 
 
 
6 Taxation                26 weeks ended 28 December                26 weeks ended 29 December                52 weeks 
                                      2019                                     2018                              ended 
                                      Excluded                                   Excluded                      29 June 
                                          from                                       from                         2019 
                     Underlying     underlying       Total      Underlying     underlying       Total            Total 
                        results        results   statutory         results        results   statutory        statutory 
                        GBP'000        GBP'000     GBP'000         GBP'000        GBP'000     GBP'000        GBP'000 
-------------------  ----------  -------------  ----------  --------------  -------------  ----------  ------------- 
Corporation tax           1,420          (110)       1,310           1,355        (2,030)       (675)            497 
Deferred tax              (123)              6       (117)           (118)             69        (49)            385 
-------------------  ----------  -------------  ----------  --------------  -------------  ----------  ------------- 
Total tax 
 charged/(credited) 
 to profit and loss 
 account                  1,297          (104)       1,193           1,237        (1,961)       (724)            882 
-------------------  ----------  -------------  ----------  --------------  -------------  ----------  ------------- 
 

Taxation has been provided at 21% (2018: 21%) based on the estimated effective tax rate for the 52 weeks to 27 June 2020. The average statutory rate of corporation tax for the 52 weeks to 27 June 2020 is expected to be 19% (52 weeks to 29 June 2019: 19%).

In the 26 weeks ended 29 December 2018, taxation on items excluded from underlying results included a corporation tax credit of GBP2,054,000 in respect of the charge to the profit and loss account on the cancellation of interest rate swaps.

 
 
  7 Earnings per share 
                                                    26 weeks ended  26 weeks      52 weeks 
                                                                       ended         ended 
                                                       28 Dec 2019    29 Dec  29 June 2019 
                                                                        2018 
                                                           GBP'000   GBP'000       GBP'000 
--------------------------------------------------  --------------  --------  ------------ 
Profit/(loss) attributable to equity shareholders            4,202   (3,396)         2,589 
Items excluded from underlying results                         673     8,048         6,367 
--------------------------------------------------  --------------  --------  ------------ 
Underlying earnings attributable to equity 
 shareholders                                                4,875     4,652         8,956 
--------------------------------------------------  --------------  --------  ------------ 
 
 
                                                            Number    Number        Number 
--------------------------------------------------  --------------  --------  ------------ 
Weighted average number of shares in issue                  14,725    14,723        14,717 
Dilutive outstanding options                                   122       126           114 
--------------------------------------------------  --------------  --------  ------------ 
Diluted weighted average share capital                      14,847    14,849        14,831 
--------------------------------------------------  --------------  --------  ------------ 
Earnings/(loss) per 50p ordinary share 
--------------------------------------------------  --------------  --------  ------------ 
Basic                                                        28.5p   (23.1)p         17.6p 
Diluted                                                      28.3p   (22.9)p         17.5p 
Underlying basic                                             33.1p     31.6p         60.9p 
--------------------------------------------------  --------------  --------  ------------ 
 

The earnings per share calculation is based on earnings from continuing operations and on the weighted average ordinary share capital which excludes shares held by trusts in respect of employee incentive plans and options.

 
8 Dividends 
                                                        26 weeks    26 weeks      52 weeks 
                                                           ended       ended         ended 
                                                          28 Dec      29 Dec  29 June 2019 
                                                            2019        2018 
                                                         GBP'000     GBP'000       GBP'000 
 -----------------------------------------------------  --------  ----------  ------------ 
 Final dividend for 2019: 24.21p (2018: 23.45p) per 
  ordinary share                                           3,573       3,475         3,475 
 Interim dividend for 2019: 5.87p per ordinary share           -           -           866 
 -----------------------------------------------------  --------  ----------  ------------ 
 Dividends paid                                            3,573       3,475         4,341 
 -----------------------------------------------------  --------  ----------  ------------ 
 
 
 
 9 Notes to the cash flow statement 
 (a) Reconciliation of operating profit 
  to cash generated by operations 
                                                          26 weeks ended 28 
                                                               Dec 2019 
                                                                                         26 weeks    52 weeks 
                                                                  Excluded                  ended       ended 
                                                                      from                 29 Dec     29 June 
                                                 Underlying     underlying                   2018        2019 
                                                    results        results      Total       Total       Total 
                                                    GBP'000        GBP'000    GBP'000    GBP' 000    GBP' 000 
-----------------------------------------------  ----------  -------------  ---------  ----------  ---------- 
Operating profit                                      8,015          (648)      7,367       7,929      15,090 
Adjustment for: 
Depreciation and amortisation                         4,167              -      4,167       4,124       8,298 
Impairment of tangible fixed assets                       -            156        156           -         652 
Reversal of impairment on tangible fixed 
 assets                                                   -              -          -           -       (484) 
Share-based payments expense                            256              -        256         185         396 
(Increase)/decrease in stocks                         (893)              -      (893)         425       (254) 
(Increase)/decrease in debtors and prepayments      (3,096)              -    (3,096)     (1,716)       1,168 
Increase/(decrease) in creditors and accruals         2,067            492      2,559       (443)       (938) 
Free trade loan discounts                                 3              -          3          19          25 
Loss on sale of assets (excluding property)              13              -         13          34          92 
Interest received                                         -              -          -          15          18 
Income tax paid                                       (185)              -      (185)     (1,256)     (1,566) 
-----------------------------------------------  ----------  -------------  ---------  ----------  ---------- 
Net cash inflow from operating activities            10,347              -     10,347       9,316      22,497 
-----------------------------------------------  ----------  -------------  ---------  ----------  ---------- 
 
 
   (b)    Reconciliation of movement in cash to movement in net debt 
 
 
                                                 26 weeks                    52 weeks 
                                                    ended      26 weeks         ended 

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DJ Shepherd Neame Limited Interim Results -8-

                                                   28 Dec         ended       29 June 
                                                     2019   29 Dec 2018          2019 
                                                  GBP'000      GBP' 000      GBP' 000 
-----------------------------------------------  --------  ------------  ------------ 
Opening cash and overdraft                          (817)         1,625         1,625 
Closing cash and overdraft                          3,270         2,894         (817) 
-----------------------------------------------  --------  ------------  ------------ 
Movement in cash in the period                      4,087         1,269       (2,442) 
Cash from increase in bank loans                  (6,000)      (67,500)      (59,500) 
Cash used to repay bank loans                           -        54,500        54,500 
Movement in loan issue costs                         (51)           334           262 
-----------------------------------------------  --------  ------------  ------------ 
Movement in net debt resulting from cash flows    (1,964)      (11,397)       (7,180) 
Net debt at beginning of the period              (81,977)      (74,797)      (74,797) 
-----------------------------------------------  --------  ------------  ------------ 
Net debt at end of the period                    (83,941)      (86,194)      (81,977) 
-----------------------------------------------  --------  ------------  ------------ 
 

(c) Analysis of net debt

 
                                                                            New  Amortisation 
                                                                      long-term            of       December 
                                         June 2019     Cash flow          loans   issue costs           2019 
                                           GBP'000       GBP'000        GBP'000       GBP'000        GBP'000 
--------------------------   ---------------------  ------------  -------------  ------------  ------------- 
Cash                                           116         3,154              -             -          3,270 
Bank overdraft                               (933)           933              -             -              - 
---------------------------  ---------------------  ------------  -------------  ------------  ------------- 
Cash and cash equivalents                    (817)         4,087              -             -          3,270 
Debt due after more than 
 one year                                 (81,160)             -        (6,000)          (51)       (87,211) 
---------------------------  ---------------------  ------------  -------------  ------------  ------------- 
Total                                     (81,977)         4,087        (6,000)          (51)       (83,941) 
---------------------------  ---------------------  ------------  -------------  ------------  ------------- 
 

10 Capital expenditure and commitments

In the 26 weeks ended 28 December 2019, there were additions to tangible and intangible fixed assets on an accruals basis of GBP7,888,000 (2018: GBP7,139,000). In the financial period, there were disposals of tangible fixed assets with a net book value of GBP963,000 (2018: GBP880,000). As at 28 December 2019, capital commitments contracted, but not provided for by the Group, amounted to GBP1,077,000 (2018: GBP544,000).

11 Related party transactions

Jonathan Neame, Chief Executive of Shepherd Neame Limited, is Chairman of Visit Kent Limited. During the 26 weeks ended 28 December 2019, fees and sponsorship activity paid to Visit Kent Limited amounted to GBP6,000 including VAT (2018: nil). There was a balance owed to Shepherd Neame Limited by Visit Kent Limited at 28 December 2019 of GBP2,000 (2018: nil).

George Barnes is an executive director of Shepherd Neame Limited. Mr A J A Barnes, a close member of George Barnes' family , was up until 31 December 2019 a partner of Clarke Barnes Solicitors LLP, which provided legal services in respect of Group properties during the period at a cost of GBP13,000 including VAT and disbursements to third parties (2018: GBP11,000). No balance was owed to the partnership by Shepherd Neame Limited as at 28 December 2019 (2018: nil).

Nigel Bunting, an executive director of Shepherd Neame Limited, is also a director of Davy and Company Limited. During the period, the Group did not purchase any goods (2018: nil) and made sales to the value of GBP97,000 (2018: GBP146,000) to Davy and Company Limited and its associated companies. At 28 December 2019, the balance owed by Shepherd Neame Limited to the Davy Group of companies was nil (2018: nil) and the balance owed to the Group by the Davy Group of companies, including VAT, was GBP21,000 (2018: GBP31,000).

All the transactions referred to above were made in the ordinary course of business and outstanding balances were not overdue. There is no overall controlling party of Shepherd Neame Limited.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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