
Shepherd Neame
Interim results for the 26 weeks to 25 December 2021
Shepherd Neame,
A strong rebound in sales, a return to profits and the payment of an interim dividend
· Revenue has recovered to the same level as the first half of financial year 2020[1] with
· Underlying EBITDA[3] rose substantially to
· Statutory profit before tax was
· Underlying basic earnings per share[4] was 15.9p (H1 2021 restated2: loss per share of (28.6p))
· Interim dividend of 3.50p declared, - the first dividend since October 2019
· Net assets per share[5] increased from
Objectives achieved
· Successfully remobilised the business after the disruption of the pandemic and recovered demand
· Generated significant cash to normalise our debt and leverage. Net debt excluding lease liabilities[6] as at 25 December 2021 was
· Net debt excluding lease liabilities6 as at 26 March 2022 was
· Appointment of Managing Director, Pubs. Jonathon Swaine joins us in the summer
Operational performance
|
Performance H1 2022 vs H1 20212 |
Performance H1 2022 vs H1 20201 |
Retail like-for-like sales[8] |
+80.7% |
-11.2% |
Like-for-like tenanted income[9] |
+70.5% |
-5.6% |
Total beer volume[10] |
+23.6% |
+5.7% |
Own beer volume[11] |
+10.5% |
-4.0% |
· Retail Pubs and Hotels (64 pubs): Like-for-like retail sales8 were 89% of 20201 in the 26 weeks, but over 100% in restriction free periods. Most central
· Tenanted Pubs (232 pubs): Like-for-like tenanted income9 was 94% of 20201 in the 26 weeks, but again traded at or above 20201 levels when restriction free. High levels of support during the pandemic has led to low levels of licensee turnover
· Brewing and Brands: Good sales momentum with total beer volumes10 +5.7% vs 20201. Own beer volumes11 were -4.0% vs 20201. In January 2022 we concluded a new agreement to transfer all Singha production to Faversham in phases over the next few months
· Operational challenges around skills shortages, driver shortages, supply chain disruption, substantial inflation and impact of Omicron during the peak festive season
Current trading
· For the 13 weeks to 26 March 2022, retail like-for-like sales8 were 110% of equivalent periods in 20201
· For the 9 weeks to 26 February 2022, like-for-like tenanted income9 was 97% of equivalent periods in 20201
· For the 13 weeks to 26 March 2022, total beer volumes10 were -0.6% vs equivalent period in 20201. Own beer volumes11 were -1.3% vs equivalent period in 20201
Outlook
· Demand is encouraging and current performance is in line with expectation
· Fundamentals of the business remain strong and business in good shape, notwithstanding ongoing operational and inflationary challenges
· Strong portfolio of pubs across the South East (85% freehold) with increasing economic activity anticipated in our heartland in the coming years
Jonathan Neame, CEO of Shepherd Neame, said:
"I am pleased to report a strong rebound in the first half of the year despite ongoing restrictions and operational challenges during the period. We are now back to pre-pandemic trading levels, have strong cash flow and have returned to profitability.
Our business is in good shape and has traded well following the lifting of all restrictions. However, the current economic uncertainties are putting inflationary pressure on the sector which will impact margins.
We have a robust and resilient business and a strong platform from which to build. We move forward with confidence and are pleased that we can now resume investment across our business at pre-pandemic levels. To support this we have strengthened our management team with a highly experienced and proven operator to help take the pub business forward.
We are looking to the future with cautious optimism and are excited about delivering an uninterrupted Easter and summer for the first time in 3 years."
30 March 2022
ENQUIRIES
Shepherd Neame |
Tel: 01795 532206 |
Jonathan Neame, Chief Executive |
|
Mark Rider, Chief Financial Officer |
|
|
|
Instinctif Partners |
Tel: 020 7457 2020 |
Matthew Smallwood |
|
NOTES FOR EDITORS
Shepherd Neame is
At the reporting date, the Company operated 302 pubs, of which 232 were tenanted or leased, 64 managed and 6 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,
Shepherd Neame's shares are traded on the AQUIS Exchange Growth Market. See http://www.aquisexchange.com/ for further information and the current share price.
For further information on the Company, see www.shepherdneame.co.uk.
Interim statement
Overview
I am pleased to report a strong rebound in the 26 weeks to 25 December 2021. This is in spite of ongoing restrictions for part of this trading period and many other challenges since re-opening.
Our revenue has now recovered to the same level as in the first half of the 2020 financial year, pre-pandemic. We have returned to profitability, are able to declare a dividend and our net debt (excluding lease liabilities) is the lowest it has been at any reporting date since June 2018. Importantly, we expect to return to within the pre-pandemic covenant tests at the end of March 2022. At this juncture, the CLBILS (Coronavirus Large Business Interruption Loan Scheme) loan will fall away and the business will return to its prior state, able to resume investment and so start to move forward once again.
This company has been fully tested in the last two years, but this recovery demonstrates the financial and operational resilience of the business, as well as the flexibility and skill of a dedicated and loyal team.
This performance is achieved in spite of real, and unexpected, difficulties. Specifically, we have faced:
· Skills shortages in many pubs and a dearth of applicants for critical roles such as kitchen staff
· Supply chain challenges, both importing and exporting goods to and from the
· Driver shortages in road haulage which have impacted our beer deliveries
· Substantial inflation in CO2 and energy and energy-related products
· The impact of the Omicron variant at our peak trading period
The cumulative effect of these factors is that we have incurred higher costs year to date than we expected. Our margins have therefore not yet recovered to their previous levels. We expect this inflationary environment to persist for at least the next 12 months and until supply chains have normalised and energy prices eased.
Financial Results
Revenue was
Underlying operating profit was
Underlying basic earnings per share was 15.9p (H1 20211: loss per share of (28.6p)).
Net assets per share increased from
Dividend
I am delighted that the Board feels our recovery is sufficiently well established for it to be able to declare the first dividend since October 2019 of 3.50p per share. While this is below the level of the last interim dividend paid by the Company in early 2019, it is a statement of confidence that a degree of normality has returned and that, subject of course to economic and medical vagaries, we are firmly on the way back to prospering as a company for all our stakeholders.
The dividend will be paid on 22 April 2022 to those shareholders on the register at 8 April 2022.
Financing, Cash flow and Net Debt
Since the summer we have traded as well as could be expected and generated
We have maximised our cash flow by restricting capital expenditure to
Throughout the pandemic our net debt (excluding lease liabilities) has remained within our pre-COVID-19 facilities. At no stage have we needed the additional
Managing Director, Pubs
Since the period end, the Board has appointed Jonathon Swaine to the new role of Managing Director, Pubs. Jonathon is an experienced and proven operator in the hospitality and pub sector. Prior to the last three years as Managing Director, Retail at the Rank Group Plc, he has spent the majority of his career in the pub industry, initially at Bass (1997-2005), before joining Fuller, Smith and Turner Plc for 14 years.
During his time at Fuller's he had various roles, latterly as Managing Director, Fuller's Inns from 2012 to 2019. He joins us in the summer.
Tenanted and Retail Pub Operations
Overview
As at 25 December 2021, the Company owned 302 pubs (June 2021: 310) of which 232 (June 2021: 235) are tenanted or leased and 64 (June 2021: 65) are retail pubs. Six (June 2021: 10) are operated as free-of-tie investment properties. 85% of our pubs are freehold.
During the period we have transferred two tenanted pubs to retail pubs and one to investment property. We have sold five investment properties and three retail pubs that no longer fit our strategy, for total proceeds of
Unsurprisingly, we have not invested in any major capital projects during this period but have focused instead on our external signage and decoration programme. We have maintained our pubs at a high level, and, as we approach the spring, will roll out further investments in stretched tents and outside spaces.
Since re-opening in April 2021, pubs have continued to receive support from the Government in the form of a lower rate of VAT, business rates relief and hospitality grants. As we move to a post-pandemic world, this support is being progressively removed. VAT will revert to 20% from April and business rates relief will continue for a further year for our tenanted pubs. At the same time National Minimum Wage increases and National Insurance Contributions will increase. This transition to higher taxes coincides with a significant increase in our costs, driven principally by energy prices. All these factors will put pressure on price and margin.
Retail Pubs and Hotels
For the 26 weeks to 25 December 2021, our retail pubs achieved like-for-like sales at 89% of 20202 levels. Within this period, in July and December, both lockdown or semi-lockdown months, we achieved only 79% and 74% respectively of 20202 levels. In the other months during the period, we achieved close to 100% of 20202 levels of trade.
We have 19 retail pubs in
In recent years pre-COVID-19, trade has been increasingly focused around peak trading periods, namely Easter, the summer and Christmas. It is sobering to think that we have not enjoyed a restriction-free peak period since 2019. We are confident that these periods should be stronger this year and that the return to offices will be at a faster rate than in the late summer/early autumn 2021.
Tenanted Pubs
Trade in our tenanted pubs has followed the same pattern as in retail, with a weak July and December, when restrictions were in place, followed by good trade in the autumn. Volumes were impacted by the supply chain difficulties throughout.
Same outlet like-for-like tenanted income was 94% of 20202 levels for the period as a whole, but in the unrestricted periods in the autumn income levels were at or above the equivalent months. For the periods where restrictions were in place, we provided a 10% discount on rent and helped our licensees secure grants.
We have fully supported our licensees to navigate their way through lockdown and the restart. Consequently, the turnover of licensees has remained low throughout and where we have had changes we have been able to attract good quality applicants. We have again registered good scores overall in the industry benchmark survey, the Licensee Index, and continue to enjoy good relationships with our partners.
Brewing and Brands
The underlying trends in this division are encouraging. Volume has been good. Total beer volumes were +5.7% vs 20202. Our own beer volume was -4.0% vs 20202.
We have enjoyed good momentum in the on-trade with many new customers both in our heartland and in national sales. Export has been encouraging as many markets re-open, although in recent weeks we have had to cease sales to
However, profitability is impacted in the short term by the logistics challenges and high one-off costs in certain areas such as CO2, energy and international freight. We expect some of these costs to ease over the coming year, though we are likely to face materially higher prices for cereal and energy-related products as our contracts renew.
In 2019, we started importing Singha Beer, the number one beer in
Investment Property
As at 25 December 2021, the Company owns investment property valued at
Outlook and Current Trading
Our objectives during this period have been to re-mobilise our business, generate cash and normalise our debt and leverage.
This has not been easy. We have faced many unexpected challenges and frustrations along the way which have resulted in missed sales opportunities or high one-off costs. And, after all the effort to re-build momentum, the arrival of the Omicron variant was particularly dispiriting at a key trading period.
But, in spite of this, we have been successful in reducing the debt and restoring the balance sheet strength to pre-pandemic levels. This is a considerable achievement and provides us with the platform for renewing investment and dividend.
Since Plan B restrictions were lifted and office workers started to return to their place of work, trade has picked up significantly as we move into 'living with Covid', as evidenced by trade in the second half.
For the 13 weeks to 26 March 2022, sales in our retail pubs were 110% of 20202 levels. For the 9 weeks to 26 February 22, same outlet like-for-like tenanted income was 97% of 20202. For the 13 weeks to 26 March 2022, total beer volumes were -0.6% vs 20202. Our own beer volume was -1.3%% vs 20202.
The aftermath of this crisis will continue to impact us for a while yet, as it is likely that consumers will be affected by the inflationary pressures facing the economy and that disposable income will be squeezed. Further, we now face a new crisis in
We have rebuilt a strong platform for the Company and look forward to the future with optimism. However, consumer confidence is expected to remain fragile. We must remain agile whilst focusing on taking the right decisions for the long term health of the business.
Jonathan Neame
Chief Executive
1 H1 2021 is the first half of the financial period of the 52 weeks to the 26 June 2021. This first half equated to the 26 weeks ended 26 December 2020.
2 The periods referred to are the comparative month(s) during the financial year 52 weeks to 27 June 2020.
Group income statement
For the 26 weeks ended 25 December 2021
|
|
Unaudited |
Restated unaudited |
Audited 52 weeks ended 26 June 2021 |
||||
|
Note |
Underlying results £'000 |
Items excluded from underlying results £'000 |
Total statutory £'000 |
Underlying results £'000 |
Items excluded from underlying results £'000 |
Total statutory £'000 |
Total statutory £'000 |
Revenue |
3 |
78,729 |
- |
78,729 |
50,943 |
- |
50,943 |
86,884 |
Other income |
3 |
121 |
- |
121 |
465 |
- |
465 |
2,839 |
Operating charges |
2,3 |
(72,903) |
451 |
(72,452) |
(53,649) |
(1,798) |
(55,447) |
(100,270) |
Operating profit/(loss) |
3 |
5,947 |
451 |
6,398 |
(2,241) |
(1,798) |
(4,039) |
(10,547) |
Net finance costs |
2,4 |
(2,915) |
- |
(2,915) |
(2,854) |
(202) |
(3,056) |
(6,288) |
Fair value movements on financial instruments charged to profit and loss |
2,4 |
- |
95 |
95 |
- |
(87) |
(87) |
115 |
Total net finance costs |
|
(2,915) |
95 |
(2,820) |
(2,854) |
(289) |
(3,143) |
(6,173) |
Profit on disposal of property |
2 |
- |
1,487 |
1,487 |
- |
61 |
61 |
221 |
Investment property fair value movements |
2 |
- |
300 |
300 |
- |
(64) |
(64) |
87 |
Profit/(loss) before taxation |
|
3,032 |
2,333 |
5,365 |
(5,095) |
(2,090) |
(7,185) |
(16,412) |
Taxation |
5 |
(687) |
(406) |
(1,093) |
878 |
402 |
1,280 |
(1,379) |
Profit/(loss) after taxation |
|
2,345 |
1,927 |
4,272 |
(4,217) |
(1,688) |
(5,905) |
(17,791) |
Earnings/(loss) per 50p ordinary share |
7 |
|
|
|
|
|
|
|
Basic |
|
|
|
28.9p |
|
|
(40.0)p |
(120.5)p |
Diluted |
|
|
|
28.5p |
|
|
(40.0)p |
(120.5)p |
All results are derived from continuing activities.
Group statement of comprehensive income
For the 26 weeks ended 25 December 2021
|
Note |
Unaudited 26 weeks ended 25 December 2021 £'000 |
Restated unaudited 26 weeks ended 26 December 2020 £'000 |
Audited 52 weeks ended 26 June 2021 £'000 |
Profit/(loss) after taxation |
|
4,272 |
(5,905) |
(17,791) |
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
Gains arising on cash flow hedges during the period |
|
1,036 |
625 |
1,605 |
Income tax relating to these items |
5 |
(197) |
(119) |
(166) |
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
|
Unrealised gain on revaluation of property |
8 |
- |
15 |
31 |
Other comprehensive gains |
|
839 |
521 |
1,470 |
Total comprehensive income/(loss) |
|
5,111 |
(5,384) |
(16,321) |
Group statement of financial position
As at 25 December 2021
|
Note |
Unaudited 25 December 2021 £'000 |
Restated unaudited 26 December 2020 £'000 |
Audited 26 June 2021 £'000 |
Non-current assets |
|
|
|
|
Goodwill and intangible assets |
|
319 |
665 |
328 |
Property, plant and equipment |
8 |
277,694 |
292,848 |
285,063 |
Investment properties |
|
6,243 |
6,478 |
6,068 |
Other non-current assets |
|
2 |
5 |
5 |
Right-of-use assets |
9 |
46,570 |
48,738 |
47,311 |
|
|
330,828 |
348,734 |
338,775 |
Current assets |
|
|
|
|
Inventories |
|
9,068 |
6,145 |
7,320 |
Trade and other receivables |
|
17,795 |
12,926 |
15,360 |
Cash and cash equivalents |
|
4,041 |
18 |
5,560 |
Assets held for sale |
|
1,359 |
4,152 |
2,419 |
|
|
32,263 |
23,241 |
30,659 |
Current liabilities |
|
|
|
|
Trade and other payables |
|
(25,846) |
(21,710) |
(26,383) |
Borrowings |
10 |
(1,600) |
(92,483) |
(1,600) |
Lease liabilities |
9 |
(4,379) |
(5,092) |
(5,100) |
|
|
(31,825) |
(119,285) |
(33,083) |
Net current assets/(liabilities) |
|
438 |
(96,044) |
(2,424) |
Total assets less current liabilities |
|
331,266 |
252,690 |
336,351 |
Non-current liabilities |
|
|
|
|
Lease liabilities |
9 |
(53,021) |
(54,261) |
(53,226) |
Borrowings |
10 |
(84,818) |
- |
(94,765) |
Derivative financial instruments |
|
(4,280) |
(6,591) |
(5,414) |
Provisions |
12 |
(55) |
(498) |
(498) |
Deferred tax liabilities |
|
(14,390) |
(11,307) |
(13,101) |
|
|
(156,564) |
(72,657) |
(167,004) |
Net assets |
|
174,702 |
180,033 |
169,347 |
|
|
|
|
|
Capital and reserves |
|
|
|
|
Share capital |
|
7,429 |
7,429 |
7,429 |
Share premium account |
|
1,099 |
1,099 |
1,099 |
Revaluation reserve |
|
31 |
15 |
31 |
Own shares |
|
(745) |
(1,031) |
(1,010) |
Hedging reserve |
|
(2,685) |
(4,457) |
(3,524) |
Retained earnings |
|
169,573 |
176,978 |
165,322 |
Total equity |
|
174,702 |
180,033 |
169,347 |
Group statement of changes in equity
For the 26 weeks ended 25 December 2021
|
Note |
Share capital £'000 |
Share premium account £'000 |
Revaluation reserve £'000 |
Own shares £'000 |
Hedging reserve £'000 |
Retained earnings £'000 |
Total £'000 |
Balance at 26 June 2021 |
|
7,429 |
1,099 |
31 |
(1,010) |
(3,524) |
165,322 |
169,347 |
|
|
|
|
|
|
|
|
|
Profit for the period |
|
- |
- |
- |
- |
- |
4,272 |
4,272 |
Gains arising on cash flow hedges during the period |
|
- |
- |
- |
- |
1,036 |
- |
1,036 |
Tax relating to components of other comprehensive income |
5 |
- |
- |
- |
- |
(197) |
- |
(197) |
Total comprehensive income |
|
- |
- |
- |
- |
839 |
4,272 |
5,111 |
Accrued share-based payments |
|
- |
- |
- |
- |
- |
243 |
243 |
Distribution of own shares |
|
- |
- |
- |
16 |
- |
(15) |
1 |
Unconditionally vested share awards |
|
- |
- |
- |
249 |
- |
(249) |
- |
Balance at 25 December 2021 |
|
7,429 |
1,099 |
31 |
(745) |
(2,685) |
169,573 |
174,702 |
|
|
|
|
|
|
|
|
|
Balance at 27 June 2020 as restated |
|
7,429 |
1,099 |
17 |
(1,328) |
(4,963) |
182,982 |
185,236 |
Loss for the period |
|
- |
- |
- |
- |
- |
(5,905) |
(5,905) |
Gains arising on cash flow hedges during the period |
|
- |
- |
- |
- |
625 |
- |
625 |
Gains on revaluation of property, plant and equipment |
|
- |
- |
15 |
- |
- |
- |
15 |
Tax relating to components of other comprehensive income |
5 |
- |
- |
- |
- |
(119) |
- |
(119) |
Total comprehensive income/(loss) |
|
- |
- |
15 |
- |
506 |
(5,905) |
(5,384) |
Revaluation reserve realised on disposal of properties |
|
- |
- |
(17) |
- |
- |
17 |
- |
Accrued share-based payments |
|
- |
- |
- |
- |
- |
176 |
176 |
Distribution of own shares |
|
- |
- |
- |
104 |
- |
(99) |
5 |
Unconditionally vested share awards |
|
- |
- |
- |
193 |
- |
(193) |
- |
Balance at 26 December 2020 as restated |
|
7,429 |
1,099 |
15 |
(1,031) |
(4,457) |
176,978 |
180,033 |
Group statement of cash flows
For the 26 weeks ended 25 December 2021
|
Unaudited 26 weeks ended |
Restated unaudited 26 weeks ended 26 December 2020 |
Audited 52 weeks ended |
|||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Cash flows from operating activities (note 11) |
|
|
|
|
|
|
Cash generated from/(absorbed by) operations |
7,034 |
|
(3,200) |
|
1,630 |
|
Income taxes received |
- |
|
18 |
|
195 |
|
Net cash flow generated/(absorbed) by operating activities |
|
7,034 |
|
(3,182) |
|
1,825 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Proceeds from disposal of property, plant and equipment and investment properties |
8,031 |
|
1,179 |
|
4,526 |
|
Purchases of property, plant, equipment and lease premiums |
(2,670) |
|
(2,257) |
|
(3,878) |
|
Customer loan redemptions |
2 |
|
1 |
|
1 |
|
Net cash flow generated/(absorbed) by investing activities |
|
5,363 |
|
(1,077) |
|
649 |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Interest paid |
(2,285) |
|
(2,306) |
|
(4,796) |
|
Payments of principal portion of lease liabilities |
(1,632) |
|
(1,398) |
|
(3,930) |
|
Proceeds from borrowings |
- |
|
- |
|
2,000 |
|
Repayment of borrowings |
(10,000) |
|
(3,000) |
|
- |
|
Share option proceeds |
1 |
|
5 |
|
5 |
|
Net cash flow used in financing activities |
|
(13,916) |
|
(6,699) |
|
(6,721) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(1,519) |
|
(10,958) |
|
(4,247) |
Cash and cash equivalents at beginning of the period |
|
5,560 |
|
9,807 |
|
9,807 |
Cash and cash equivalents at end of the period |
|
4,041 |
|
(1,151) |
|
5,560 |
Notes to the financial statements
25 December 2021
1 Accounts
General information and basis of preparation
The consolidated interim financial statements, which are unaudited, do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. Statutory accounts for the 52 weeks ended 26 June 2021, upon which the auditors issued an unqualified opinion and did not make any statement under section 498 of the Companies Act 2006, 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).
The consolidated interim financial statements have been prepared in accordance with international accounting standards, in conformity with the requirements of the Companies Act 2006 (
The interim financial statements are presented in pounds sterling and all values are shown in thousands of pounds (£'000) rounded to the nearest thousand (£'000), unless otherwise stated.
The financial information for the 52 weeks ended 26 June 2021 is extracted from the statutory accounts of the Group for that year. The financial information for the 26 weeks ended 26 December 2020 was restated for material adjustments on adoption of IFRS during the 52 weeks ended 26 June 2021. For more information see note 16.
New accounting standards and accounting policies
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the 52 weeks ended 26 June 2021. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Amendments to accounting standards applied from 27 June 2021 were as follows:
· COVID-19 related rent concessions beyond 30 June 2021 - amendments to IFRS 16
· References to Conceptual Framework - amendments to IFRS 3
The application of these did not have a material impact on the Group's accounting treatment and has therefore not resulted in any material changes.
Going concern
The Board has adopted the going concern basis in preparing these accounts. When assessing the ability of the Group to continue as a going concern, the Board has considered the Group's financing arrangements, the continuing risks arising from the COVID-19 pandemic as well as other principal risks and uncertainties as disclosed in the Group's latest Annual Report, namely the cost pressures impacting the whole of the hospitality sector and the well documented supply issues that are impacting a wide range of industries, including our own.
At 25 December 2021, the Group had a strong balance sheet with 85% of the estate being freehold properties. The Group had cash in hand of
During the prior year, the Group agreed with its lending banks and private placement lenders to amend the financial covenants to a minimum liquidity level to be tested quarterly to June 2022, reverting to the original terms from the quarter to September 2022. The Group has met its legacy financial covenants for the quarter to March 2022, six months earlier than planned.
After due consideration of the matters set out above, the Directors are satisfied that there is a reasonable expectation that the Group has adequate resources to enable the accounts to be presented on the basis of the Group being a going concern.
2 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 'underlying operating profit', 'underlying profit before tax', 'underlying basic earnings per share', 'underlying earnings before interest, tax, depreciation, and amortisation' as presented provide a clear and consistent presentation of the underlying performance of the ongoing business for shareholders. Underlying profit is not defined by IFRS 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/credits which are either material or infrequent in nature and do not relate to the underlying performance;
· Fair value movements on financial instruments charged to profit and loss; and
· Taxation impacts of the above (see note 5).
|
26 weeks ended 25 December 2021 £'000 |
26 weeks ended 26 December 2020 £'000 |
52 weeks ended 26 June 2021 £'000 |
Underlying EBITDA |
11,337 |
3,351 |
7,710 |
Depreciation and amortisation |
(5,393) |
(5,571) |
(11,110) |
Free trade loan discounts |
(1) |
- |
- |
Profit/(loss) on sale of assets (excluding property) |
4 |
(21) |
(840) |
Underlying operating profit/(loss) |
5,947 |
(2,241) |
(4,240) |
Net underlying finance costs pre IFRS 16 |
(2,295) |
(2,212) |
(4,532) |
Net underlying finance costs |
(2,915) |
(2,854) |
(5,817) |
Underlying profit/(loss) before taxation |
3,032 |
(5,095) |
(10,057) |
|
|
|
|
Profit on disposal of properties |
1,487 |
61 |
221 |
Investment property fair value movements |
300 |
(64) |
87 |
Separately disclosed operating charges: |
|
|
|
Impairment of intangible assets, properties, right-of-use assets and assets held for sale |
(148) |
(1,201) |
(5,709) |
Restructuring costs |
- |
(709) |
(709) |
Other operating credits excluded from underlying results |
599 |
112 |
111 |
Separately disclosed finance costs: |
|
|
|
Cost related to putting in place CLBILS loan |
- |
(202) |
(201) |
Costs relating to the agreement of covenant waivers with our lenders |
- |
- |
(270) |
Fair value movements on financial instruments credited/(charged) to profit and loss |
95 |
(87) |
115 |
Profit/(loss) before taxation |
5,365 |
(7,185) |
(16,412) |
Separately disclosed operating charges:
During the 26 weeks ended 25 December 2021, separately disclosed operating charges comprise an impairment charge of
During the 26 weeks ended 26 December 2020, separately disclosed operating charges comprised an impairment charge of
During the 52 weeks ended 26 June 2021, separately disclosed operating charges comprised the amounts noted above for restructuring costs and the recovery of charges and the total impairment charge for the period of
Separately disclosed finance costs:
During the 26 weeks ended 25 December 2021, the Group recognised a credit of
During the 26 weeks ended 26 December 2020, the Group incurred
During the 52 weeks ended 26 June 2021, the Group incurred
3 Segmental reporting
The accounting policy for identifying segments is based on internal management reporting information that is regularly reviewed by the Chief Operating Decision Maker (CODM). The CODM is considered to be the Chief Executive Officer.
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 their customers:
· Brewing and Brands which comprises the brewing, marketing and sales of beer and other products;
· Retail 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.
As segment assets and liabilities are not regularly provided to the CODM, the Group has elected, as provided under IFRS 8 Operating Segments (amended), not to disclose a measure of segment assets and liabilities.
26 weeks ended 25 December 2021 |
Brewing and Brands £'000 |
Retail Pubs £'000 |
Tenanted Pubs £'000 |
Unallocated £'000 |
Total £'000 |
Revenue |
30,555 |
31,261 |
16,378 |
535 |
78,729 |
Other income1 |
- |
121 |
- |
- |
121 |
Underlying operating profit/(loss) |
39 |
4,572 |
5,676 |
(4,340) |
5,947 |
Items excluded from underlying results |
- |
- |
(124) |
575 |
451 |
Divisional operating profit/(loss) |
39 |
4,572 |
5,552 |
(3,765) |
6,398 |
|
|
|
|
|
|
Net underlying finance costs |
|
|
|
|
(2,915) |
Fair value movements on ineffective element |
|
|
|
|
95 |
Profit on disposal of property |
|
|
|
|
1,487 |
Investment property fair value movements |
|
|
|
|
300 |
Profit before taxation |
|
|
|
|
5,365 |
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
Capital expenditure - tangible and intangible assets |
604 |
774 |
891 |
264 |
2,533 |
Depreciation and amortisation pre IFRS 16 |
806 |
1,462 |
1,315 |
191 |
3,774 |
Depreciation and amortisation |
856 |
2,472 |
1,805 |
260 |
5,393 |
Impairment of property, plant and equipment, |
- |
- |
124 |
24 |
148 |
Underlying divisional EBITDA pre IFRS 16 |
840 |
6,107 |
7,124 |
(4,168) |
9,903 |
Underlying divisional EBITDA |
906 |
7,028 |
7,480 |
(4,077) |
11,337 |
Number of pubs |
- |
64 |
232 |
6 |
302 |
1 Other income includes Omicron Hospitality and Leisure Grants administered by local councils in response to the outbreak of the Omicron variant of COVID-19 in December 2021.
26 weeks ended 26 December 2020 |
Brewing and Brands £'000 |
Retail Pubs £'000 |
Tenanted Pubs £'000 |
Unallocated £'000 |
Total £'000 |
Revenue |
22,473 |
17,730 |
10,193 |
547 |
50,943 |
Other income2 |
- |
465 |
- |
- |
465 |
Underlying operating (loss)/profit |
(940) |
230 |
1,729 |
(3,260) |
(2,241) |
Items excluded from underlying results |
- |
(1,000) |
(160) |
(638) |
(1,798) |
Divisional operating (loss)/profit |
(940) |
(770) |
1,569 |
(3,898) |
(4,039) |
|
|
|
|
|
|
Net underlying finance costs |
|
|
|
|
(2,854) |
Finance costs excluded from underlying results |
|
|
|
|
(202) |
Fair value movements on ineffective element |
|
|
|
|
(87) |
Profit on disposal of property |
|
|
|
|
61 |
Investment property fair value movements |
|
|
|
|
(64) |
Loss before taxation |
|
|
|
|
(7,185) |
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
Capital expenditure - tangible and intangible assets |
531 |
1,008 |
549 |
56 |
2,144 |
Depreciation and amortisation pre IFRS 16 |
827 |
1,648 |
1,363 |
209 |
4,047 |
Depreciation and amortisation |
868 |
2,317 |
2,131 |
255 |
5,571 |
Impairment of property, plant and equipment, |
- |
321 |
126 |
41 |
488 |
Impairment of right-of-use assets |
- |
679 |
34 |
- |
713 |
Underlying divisional EBITDA pre IFRS 16 |
(112) |
830 |
2,911 |
(3,120) |
509 |
Underlying divisional EBITDA |
(60) |
2,555 |
3,862 |
(3,006) |
3,351 |
Number of pubs |
- |
69 |
232 |
15 |
316 |
2 Other income includes local restriction support grants administered by local councils in response to the various restrictions placed on trading between November 2020 and December 2020 as a result of the COVID-19 pandemic.
52 weeks ended 26 June 2021 |
Brewing and Brands £'000 |
Retail Pubs £'000 |
Tenanted Pubs £'000 |
Unallocated £'000 |
Total £'000 |
Revenue |
42,018 |
27,068 |
16,748 |
1,050 |
86,884 |
Other income3 |
- |
2,839 |
- |
- |
2,839 |
Underlying operating (loss)/profit |
(1,287) |
983 |
2,343 |
(6,279) |
(4,240) |
Items excluded from underlying results |
- |
(4,816) |
(562) |
(929) |
(6,307) |
Divisional operating (loss)/profit |
(1,287) |
(3,833) |
1,781 |
(7,208) |
(10,547) |
|
|
|
|
|
|
Net underlying finance costs |
|
|
|
|
(5,817) |
Finance costs excluded from underlying results |
|
|
|
|
(471) |
Fair value movements on ineffective element |
|
|
|
|
115 |
Profit on disposal of property |
|
|
|
|
221 |
Investment property fair value movements |
|
|
|
|
87 |
Loss before taxation |
|
|
|
|
(16,412) |
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
Capital expenditure - tangible and intangible assets |
779 |
1,494 |
847 |
123 |
3,243 |
Depreciation and amortisation pre IFRS 16 |
1,662 |
3,280 |
2,698 |
386 |
8,026 |
Depreciation and amortisation |
1,752 |
4,629 |
4,248 |
481 |
11,110 |
Impairment of property, plant and equipment, |
- |
3,407 |
352 |
331 |
4,090 |
Impairment of right-of-use assets |
- |
1,409 |
210 |
- |
1,619 |
Underlying divisional EBITDA pre IFRS 16 |
449 |
2,855 |
5,150 |
(5,732) |
2,722 |
Underlying divisional EBITDA |
546 |
6,184 |
6,616 |
(5,636) |
7,710 |
Number of pubs |
- |
65 |
235 |
10 |
310 |
3 Other income includes local restriction support grants administered by local councils in response to the various restrictions placed on trading between November 2020 and March 2021 as a result of the COVID-19 pandemic.
4 Net finance costs
|
26 weeks ended 25 December 2021 Total statutory £'000 |
26 weeks ended 26 December 2020 Total statutory £'000 |
52 weeks ended 26 June 2021 Total statutory £'000 |
Finance income |
|
|
|
Interest income from financial assets |
- |
- |
(1) |
Finance costs |
|
|
|
Interest expense arising on: |
|
|
|
Financial liabilities at amortised cost - bank loans |
2,300 |
2,247 |
4,575 |
Financial liabilities at amortised cost - lease liabilities |
620 |
642 |
1,285 |
Other financial liabilities not at fair value through profit and loss |
- |
(22) |
(22) |
Unwinding of discounts on provisions |
(5) |
(13) |
(20) |
Finance costs expensed |
2,915 |
2,854 |
5,818 |
|
|
|
|
Underlying net finance costs |
2,915 |
2,854 |
5,817 |
|
|
|
|
Finance costs excluded from underlying results |
|
|
|
Cost related to putting in place CLBILS loan |
- |
202 |
201 |
Costs relating to the agreement of covenant waivers with our lenders |
- |
- |
270 |
Ongoing fair value movements on financial instruments |
(95) |
87 |
(115) |
Total finance costs excluded from underlying results |
(95) |
289 |
356 |
|
|
|
|
Net finance costs |
2,820 |
3,143 |
6,173 |
5 Taxation
|
26 weeks ended 25 December 2021 |
26 weeks ended 26 December 2020 |
52 weeks ended 26 June 2021 |
||||
Tax charged to the income statement |
Underlying results £'000 |
Excluded from underlying results £'000 |
Total statutory £'000 |
Underlying results £'000 |
Excluded from underlying results £'000 |
Total statutory £'000 |
Total statutory £'000 |
Current income tax credit |
- |
- |
- |
(860) |
(151) |
(1,011) |
(100) |
Deferred income tax charge/(credit) |
687 |
406 |
1,093 |
(18) |
(251) |
(269) |
1,479 |
Total tax charged/(credited) to the income statement |
687 |
406 |
1,093 |
(878) |
(402) |
(1,280) |
1,379 |
|
|
|
|
|
|
|
|
Tax charged to other comprehensive income |
|||||||
Deferred tax charge |
|
|
197 |
|
|
119 |
166 |
Total tax charged to other comprehensive income |
|
|
197 |
|
|
119 |
166 |
Taxation on the underlying result for the 26 weeks ended 25 December 2021 has been provided at 22.7% (2020: 17.2%) based on the current best estimate of the effective tax rate for the 52 weeks to 25 June 2022. The average statutory rate of corporation tax for the 52 weeks to
25 June 2022 is expected to be 19% (52 weeks to 26 June 2021: 19%).
An increase in the future main corporation tax rate to 25% from 1 April 2023, from the previously enacted 19%, was announced in the Budget on 3 March 2021, and substantively enacted on 24 May 2021. Therefore deferred tax assets and liabilities that are expected to reverse on or after 1 April 2023 have been calculated at the rate of 25% as at the reporting date.
6 Dividends
|
26 weeks ended 25 December 2021 £'000 |
26 weeks ended 26 December 2020 £'000 |
52 weeks ended 26 June 2021 £'000 |
Declared and paid during the year |
|
|
|
Final dividend for 2021: nil (2020: nil) per ordinary share |
- |
- |
- |
Dividends paid |
- |
- |
- |
The interim dividend, in respect of the period ended 25 December 2021, at a cost of
7 Earnings per share
|
26 weeks ended 25 December 2021 £'000 |
26 weeks ended 26 December 2020 £'000 |
52 weeks ended 26 June 2021 £'000 |
Profit/(loss) attributable to equity shareholders |
4,272 |
(5,905) |
(17,791) |
Items excluded from underlying results |
(1,927) |
1,688 |
9,602 |
Underlying profit/(loss) attributable to equity shareholders |
2,345 |
(4,217) |
(8,189) |
|
|
|
|
|
Number |
Number |
Number |
Weighted average number of shares in issue |
14,775 |
14,751 |
14,760 |
Dilutive outstanding options |
190 |
- |
- |
Diluted weighted average share capital |
14,965 |
14,751 |
14,760 |
|
|
|
|
Earnings/(loss) per 50p ordinary share |
|
|
|
Basic |
28.9p |
(40.0)p |
(120.5)p |
Diluted |
28.5p |
(40.0)p |
(120.5)p |
Underlying basic |
15.9p |
(28.6)p |
(55.5)p |
Underlying basic pre IFRS 16 |
21.5p |
(23.8)p |
(51.1)p |
The basic earnings/(loss) per share figure is calculated by dividing the profit/(loss) attributable to equity shareholders of the parent Company for the period by the weighted average number of ordinary shares in issue during the period.
Diluted earnings/(loss) per share have been calculated on a similar basis taking into account 190 (2020: nil) dilutive potential shares, which excludes shares held by trusts in respect of employee incentive plans and options.
Underlying basic earnings per share are presented to eliminate the effect of the underlying items and the tax attributable to those items on basic and diluted earnings per share.
8 Property, plant and equipment
Group and Company |
Freehold properties £'000 |
Leasehold properties under 50 years £'000 |
Plant, machinery, vehicles and containers £'000 |
Fixtures and fittings £'000 |
Assets under construction £'000 |
Total £'000 |
Valuation or cost |
|
|
|
|
|
|
At 27 June 2020 |
257,486 |
2,030 |
36,446 |
94,260 |
1,963 |
392,185 |
Additions |
90 |
55 |
415 |
2,430 |
145 |
3,135 |
Revaluation |
4 |
16 |
- |
- |
- |
20 |
Disposals |
(1,380) |
- |
- |
(2,170) |
(672) |
(4,222) |
Transfers |
71 |
2 |
245 |
885 |
(1,203) |
- |
Transfers to investment property |
(1,708) |
(15) |
- |
(86) |
(3) |
(1,812) |
At 26 June 2021 |
254,563 |
2,088 |
37,106 |
95,319 |
230 |
389,306 |
Additions |
33 |
102 |
271 |
1,844 |
204 |
2,454 |
Disposals |
(6,050) |
(39) |
(16) |
(4,178) |
(12) |
(10,295) |
Transfers |
- |
- |
20 |
246 |
(266) |
- |
Transfers to assets held for sale |
(354) |
- |
- |
(130) |
- |
(484) |
Transfers to investment property |
(325) |
- |
- |
(198) |
- |
(523) |
At 25 December 2021 |
247,867 |
2,151 |
37,381 |
92,903 |
156 |
380,458 |
|
|
|
|
|
|
|
Accumulated depreciation and impairment |
||||||
At 27 June 2020 |
10,124 |
880 |
29,978 |
53,860 |
46 |
94,888 |
Charge for period |
549 |
70 |
1,057 |
6,160 |
- |
7,836 |
Impairment |
3,162 |
28 |
- |
437 |
1 |
3,628 |
Revaluation |
(11) |
- |
- |
- |
- |
(11) |
Disposals |
(331) |
- |
- |
(1,502) |
- |
(1,833) |
Transfers to investment property |
(224) |
- |
- |
(41) |
- |
(265) |
At 26 June 2021 |
13,269 |
978 |
31,035 |
58,914 |
47 |
104,243 |
Charge for period |
287 |
85 |
514 |
2,841 |
- |
3,727 |
Impairment |
59 |
- |
- |
15 |
- |
74 |
Disposals |
(1,695) |
(41) |
(16) |
(3,231) |
(1) |
(4,984) |
Transfers to assets held for sale |
(8) |
- |
- |
(85) |
- |
(93) |
Transfers to investment property |
(73) |
- |
- |
(130) |
- |
(203) |
At 25 December 2021 |
11,839 |
1,022 |
31,533 |
58,324 |
46 |
102,764 |
|
|
|
|
|
|
|
Net book values |
|
|
|
|
|
|
At 25 December 2021 |
236,028 |
1,129 |
5,848 |
34,579 |
110 |
277,694 |
At 26 June 2021 |
241,294 |
1,110 |
6,071 |
36,405 |
183 |
285,063 |
At 27 June 2020 |
247,362 |
1,150 |
6,468 |
40,400 |
1,917 |
297,297 |
Impairment considerations
The Group has performed an assessment of whether any indicators of impairment exist. This assessment included a review of internal and external indicators and the Group has concluded that no impairment indicators existed at 25 December 2021.
The loss of trade following the COVID-19 pandemic was considered an indicator of impairment at 26 December 2020. There will be an impairment if the recoverable amount is lower than carrying value. The recoverable amount is taken as the higher of the fair value less costs to sell and its value in use. The same assumptions to calculate value in use were used for right-of-use assets as for property, plant and equipment. During the 26 weeks ended 25 December 2021, the Group recognised a charge of
9 Lease liabilities and right-of-use assets
Set out below are the carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the period:
|
Right-of-use assets £'000 |
Lease liabilities £'000 |
As at 27 June 2020 |
46,262 |
55,860 |
Additions |
401 |
383 |
Lease amendments - rent concessions |
(492) |
(733) |
Lease amendments - other1 |
6,015 |
5,461 |
Depreciation |
(3,256) |
- |
Impairment |
(1,619) |
- |
Accretion of interest |
- |
1,285 |
Payments |
- |
(3,930) |
Net carrying value as at 26 June 2021 |
47,311 |
58,326 |
Additions/(disposals) |
265 |
(418) |
Lease amendments - rent concessions |
- |
(145) |
Lease amendments - other1 |
653 |
649 |
Depreciation |
(1,659) |
- |
Accretion of interest |
- |
620 |
Payments |
- |
(1,632) |
Net carrying value as at 25 December 2021 |
46,570 |
57,400 |
Right-of-use assets predominantly relate to leasehold properties, along with motor vehicles and other equipment.
1 Lease amendments include lease terminations, modifications, reassessments and extensions to existing lease arrangements.
10 Borrowings
|
25 December 2021 £'000 |
26 December 2020 £'000 |
26 June 2021 £'000 |
Bank loans |
52,000 |
58,169 |
62,000 |
Other loans |
35,000 |
35,000 |
35,000 |
Less: capitalised loan arrangement fees |
(582) |
(686) |
(635) |
Total borrowings |
86,418 |
92,483 |
96,365 |
|
|
|
|
Analysed as: |
|
|
|
Borrowings within current liabilities |
1,600 |
92,483 |
1,600 |
Borrowings within non-current liabilities |
84,818 |
- |
94,765 |
|
86,418 |
92,483 |
96,365 |
Borrowings at the end of the reporting period comprise a 20-year private placement of loan notes of
The
The
The five-year revolving credit facility with Lloyds Bank plc and Santander
The Group has a
During 2020, the Group's banking lenders Lloyds Bank plc and Santander
At the end of the reporting period,
The Company's loans and overdraft are secured by a first floating charge over the Company's assets.
11 Notes to the Cash Flow Statement
a Reconciliation of operating profit/(loss) to cash generated by operations
|
26 weeks ended 25 December 2021 |
26 weeks ended 26 December 2020 |
52 weeks ended 26 June 2021 |
||
|
Underlying results £'000 |
Excluded from underlying results £'000 |
Total £'000 |
Total £'000 |
Total £'000 |
Operating profit/(loss) |
5,947 |
451 |
6,398 |
(4,039) |
(10,547) |
Adjustment for: |
|
|
|
|
|
Depreciation and amortisation |
5,393 |
- |
5,393 |
5,571 |
11,110 |
Impairment of property, plant and equipment |
- |
74 |
74 |
488 |
3,628 |
Impairment of intangible assets |
- |
- |
- |
- |
328 |
Impairment of right-of-use assets |
- |
- |
- |
713 |
1,619 |
Impairment of assets held for sale |
- |
74 |
74 |
- |
134 |
Share-based payments expense |
243 |
- |
243 |
176 |
428 |
(Increase)/decrease in inventories |
(1,748) |
- |
(1,748) |
2,085 |
910 |
(Increase) in debtors and prepayments |
(2,485) |
- |
(2,485) |
(1,681) |
(5,280) |
(Decrease) in creditors and accruals |
(426) |
(457) |
(883) |
(6,534) |
(1,548) |
Free trade loan discounts |
1 |
- |
1 |
- |
- |
(Profit)/loss on sale of assets (excluding property) |
(4) |
- |
(4) |
21 |
840 |
Interest received |
3 |
- |
3 |
- |
3 |
Income tax received |
- |
- |
- |
18 |
195 |
Fair value movements on financial assets |
(32) |
- |
(32) |
- |
5 |
Net cash inflow/(outflow) from operating activities |
6,892 |
142 |
7,034 |
(3,182) |
1,825 |
b Reconciliation of movement in cash to movement in net debt
Group and Company |
26 weeks ended 25 December 2021 £'000 |
26 weeks ended 26 December 2020 £'000 |
52 weeks ended 26 June 2021 £'000 |
Opening cash and overdraft |
5,560 |
9,807 |
9,807 |
Closing cash and overdraft |
4,041 |
(1,151) |
5,560 |
Movement in cash in the period |
(1,519) |
(10,958) |
(4,247) |
Cash from increase in bank loans |
- |
- |
(2,000) |
Cash used to repay bank loans |
10,000 |
3,000 |
- |
Movement in loan issue costs |
(53) |
(52) |
(103) |
Movement in net debt resulting from cash flows |
8,428 |
(8,010) |
(6,350) |
Net debt at beginning of the period |
(90,805) |
(84,455) |
(84,455) |
Net debt (excluding lease liabilities) |
(82,377) |
(92,465) |
(90,805) |
Current lease liability |
(4,379) |
(5,092) |
(5,100) |
Non-current lease liability |
(53,021) |
(54,261) |
(53,226) |
Statutory net debt |
(139,777) |
(151,818) |
(149,131) |
c Analysis of net debt
Group and Company |
June 2021 £'000 |
Cash flow £'000 |
Repayment of loans £'000 |
Non-cash £'000 |
December 2021 £'000 |
Cash and cash equivalents |
5,560 |
(1,519) |
- |
- |
4,041 |
Debt due in less than one year |
(1,600) |
- |
- |
- |
(1,600) |
Debt due after more than one year |
(94,765) |
- |
10,000 |
(53) |
(84,818) |
Net debt (excluding lease liabilities) |
(90,805) |
(1,519) |
10,000 |
(53) |
(82,377) |
Lease liabilities |
(58,326) |
1,632 |
- |
(706) |
(57,400) |
Statutory net debt |
(149,131) |
113 |
10,000 |
(759) |
(139,777) |
Non-cash movements in lease liabilities comprises lease additions and modifications of
12 Provisions for liabilities
|
25 December 2021 £'000 |
26 December 2020 £'000 |
26 June 2021 £'000 |
Historic taxation provision |
55 |
498 |
498 |
A provision of
25 December 2021 has been updated to reflect the true liability to the Company.
13 Capital commitments
Contracts for capital expenditure not provided for in the accounts amounted to
14 Related party transactions
George Barnes is an Executive Director of Shepherd Neame Limited. Mr A J A Barnes, a close member of George Barnes' family, is a partner at Barnes Solicitors LLP. During the 26 weeks ended 25 December 2021, Barnes Solicitors LLP provided legal services at a cost of
Nigel Bunting, an Executive Director of Shepherd Neame Limited, is also a Director of Davy and Company Limited. During the 26 weeks ended 25 December 2021, the Group did not purchase any goods (2020: nil) but made sales to the value of
Kevin Georgel, a Non-Executive Director of Shepherd Neame Limited, is also a Director of St Austell Brewery Company Limited. During the 26 weeks ended 25 December 2021, the Group did not purchase any goods (2020: nil) or make any sales (2020: nil) to St Austell Brewery Company Limited. At the end of the reporting period, no balance (2020: nil) was owed by Shepherd Neame Limited to St Austell Brewery Company Limited (2020: nil) and no balance was owed to the Group by St Austell Brewery Company Limited (2020:
Hilary Riva, a Non-Executive Director of Shepherd Neame Limited, is also a Director of the Alexander Centre CIC. During the 26 weeks ended 25 December 2021, the Group purchased goods to the value of
All the transactions referred to above were made in the ordinary course of business on an arm's-length basis and outstanding balances were not overdue. There is no overall controlling party of Shepherd Neame Limited.
15 events after the reporting period
On 30 March 2022 the Company cancelled its
16 Explanation of transition to IFRS
Transition to IFRS
The financial statements for the 52 weeks ended 26 June 2021 were presented in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. The last full year financial statements under FRS 102 were for the 52 weeks ended 27 June 2020 and the date of transition to IFRS was 29 June 2019. A description of the nature of change for all relevant accounting policies can be found in the Annual Report for the 52 weeks ended 26 June 2021.
Set out below are the FRS 102 to IFRS equity reconciliations for the Group at 26 December 2020 (last interim statements prepared under FRS 102) and loss reconciliation for the 26 weeks to 26 December 2020.
Group reconciliation of income statement for the 26 weeks ended 26 December 2020
|
FRS 102 Restated £'000 |
Goodwill £'000 |
Assets held for sale £'000 |
Leases £'000 |
Impairment £'000 |
Expected credit loss £'000 |
Government Grants £'000 |
IFRS £'000 |
Revenue |
50,943 |
- |
- |
- |
- |
- |
- |
50,943 |
Other income |
4,378 |
- |
- |
- |
- |
- |
(3,913) |
465 |
Operating charges |
(59,940) |
59 |
(61) |
1,317 |
(713) |
(22) |
3,913 |
(55,447) |
Operating loss |
(4,619) |
59 |
(61) |
1,317 |
(713) |
(22) |
- |
(4,039) |
Finance costs |
(2,414) |
- |
- |
(642) |
- |
- |
- |
(3,056) |
Fair value movements on financial instruments charged to profit and loss |
(87) |
- |
- |
- |
- |
- |
- |
(87) |
Net finance costs |
(2,501) |
- |
- |
(642) |
- |
- |
- |
(3,143) |
Profit on disposal of property |
37 |
- |
- |
24 |
- |
- |
- |
61 |
Investment property fair value movements |
(114) |
- |
50 |
- |
- |
- |
- |
(64) |
Loss before taxation |
(7,197) |
59 |
(11) |
699 |
(713) |
(22) |
- |
(7,185) |
Taxation |
1,265 |
- |
4 |
(128) |
135 |
4 |
- |
1,280 |
Loss after taxation |
(5,932) |
59 |
(7) |
571 |
(578) |
(18) |
- |
(5,905) |
Group reconciliation of Statement of Comprehensive Income for the 26 weeks ended 26 December 2020
|
FRS 102 Restated £'000 |
Goodwill £'000 |
Assets held for sale £'000 |
Leases £'000 |
Impairment £'000 |
Expected credit loss £'000 |
Government Grants £'000 |
IFRS £'000 |
Loss after taxation |
(5,932) |
59 |
(7) |
571 |
(578) |
(18) |
- |
(5,905) |
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
Gains arising on cash flow hedges during the period |
625 |
- |
- |
- |
- |
- |
- |
625 |
Income tax relating to these items |
(119) |
- |
- |
- |
- |
- |
- |
(119) |
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
Unrealised gain on revaluation of property |
15 |
- |
- |
- |
- |
- |
- |
15 |
Other comprehensive gains |
521 |
- |
- |
- |
- |
- |
- |
521 |
Total comprehensive loss |
(5,411) |
59 |
(7) |
571 |
(578) |
(18) |
- |
(5,384) |
Group reconciliation of equity as at 26 December 2020
|
FRS 102 Restated £'000 |
Goodwill £'000 |
Assets held for sale £'000 |
Leases £'000 |
Impairment £'000 |
Expected credit loss £'000 |
Reclassification £'000 |
IFRS £'000 |
Non-current assets |
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
490 |
175 |
- |
- |
- |
- |
- |
665 |
Property, plant, and equipment |
296,300 |
- |
(1,135) |
(3,067) |
750 |
- |
- |
292,848 |
Investment properties |
9,507 |
- |
(3,029) |
- |
- |
- |
- |
6,478 |
Other non-current assets |
5 |
- |
- |
- |
- |
- |
- |
5 |
Right-of-use assets |
- |
- |
- |
58,333 |
(9,595) |
- |
- |
48,738 |
Total non-current assets |
306,302 |
175 |
(4,164) |
55,266 |
(8,845) |
- |
- |
348,734 |
Current assets |
|
|
|
|
|
|
|
|
Inventories |
6,145 |
- |
- |
- |
- |
- |
- |
6,145 |
Trade and other receivables |
12,274 |
- |
- |
588 |
- |
19 |
45 |
12,926 |
Cash and cash equivalents |
63 |
- |
- |
- |
- |
- |
(45) |
18 |
Assets held for sale |
- |
- |
4,152 |
- |
- |
- |
- |
4,152 |
Total current assets |
18,482 |
- |
4,152 |
588 |
- |
19 |
- |
23,241 |
Current liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
(21,703) |
- |
- |
(7) |
- |
- |
- |
(21,710) |
Borrowings |
(92,483) |
- |
- |
- |
- |
- |
- |
(92,483) |
Lease liabilities |
- |
- |
- |
(5,092) |
- |
- |
- |
(5,092) |
Total current liabilities |
(114,186) |
- |
- |
(5,099) |
- |
- |
- |
(119,285) |
Net current liabilities |
(95,704) |
- |
4,152 |
(4,511) |
- |
19 |
- |
(96,044) |
Total assets less current liabilities |
210,598 |
175 |
(12) |
50,755 |
(8,845) |
19 |
- |
252,690 |
Non-current liabilities |
|
|
|
|
|
|
|
|
Lease liabilities |
(2,766) |
- |
- |
(51,495) |
- |
- |
- |
(54,261) |
Derivative financial instruments |
(6,591) |
- |
- |
- |
- |
- |
- |
(6,591) |
Provisions |
(1,057) |
- |
- |
559 |
- |
- |
- |
(498) |
Deferred tax liabilities |
(13,168) |
- |
4 |
39 |
1,823 |
(5) |
- |
(11,307) |
|
(23,582) |
- |
4 |
(50,897) |
1,823 |
(5) |
- |
(72,657) |
Net assets |
187,016 |
175 |
(8) |
(142) |
(7,022) |
14 |
- |
180,033 |
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
|
Share capital |
7,429 |
- |
- |
- |
- |
- |
- |
7,429 |
Share premium account |
1,099 |
- |
- |
- |
- |
- |
- |
1,099 |
Revaluation reserve |
69,637 |
- |
- |
- |
- |
- |
(69,622) |
15 |
Own shares |
(1,031) |
- |
- |
- |
- |
- |
- |
(1,031) |
Hedging reserve |
(4,457) |
- |
- |
- |
- |
- |
- |
(4,457) |
Retained earnings |
114,339 |
175 |
(8) |
(142) |
(7,022) |
14 |
69,622 |
176,978 |
Total equity |
187,016 |
175 |
(8) |
(142) |
(7,022) |
14 |
- |
180,033 |
Group reconciliation of cash flows for the 26 weeks ended 26 December 2020
|
FRS 102 £'000 |
Goodwill £'000 |
Assets held for sale £'000 |
Leases £'000 |
Impairment £'000 |
Expected credit loss £'000 |
Reclassification £'000 |
IFRS £'000 |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Cash generated from operations |
(4,607) |
- |
- |
1,398 |
- |
- |
9 |
(3,200) |
Income taxes received |
18 |
- |
- |
- |
- |
- |
- |
18 |
Net cash generated by operating activities |
(4,589) |
- |
- |
1,398 |
- |
- |
9 |
(3,182) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Proceeds from disposal of property and equipment |
1,179 |
- |
- |
- |
- |
- |
- |
1,179 |
Purchases of property, equipment and lease premiums |
(2,257) |
- |
- |
- |
- |
- |
- |
(2,257) |
Purchase of intangible assets |
- |
- |
- |
- |
- |
- |
- |
- |
Customer loan redemptions |
1 |
- |
- |
- |
- |
- |
- |
1 |
Net cash used in investing activities |
(1,077) |
- |
- |
- |
- |
- |
- |
(1,077) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Interest paid |
(2,306) |
- |
- |
- |
- |
- |
- |
(2,306) |
Payments of principal portion of lease liabilities |
- |
- |
- |
(1,398) |
- |
- |
- |
(1,398) |
Repayment of borrowings |
(3,000) |
- |
- |
- |
- |
- |
- |
(3,000) |
Share option proceeds |
5 |
- |
- |
- |
- |
- |
- |
5 |
Net cash generated by financing activities |
(5,301) |
- |
- |
(1,398) |
- |
- |
- |
(6,699) |
|
|
|
|
|
|
|
|
|
Net movement in cash and cash equivalents |
(10,967) |
- |
- |
- |
- |
- |
9 |
(10,958) |
Cash and cash equivalents at beginning of the period |
9,861 |
- |
- |
- |
- |
- |
(54) |
9,807 |
Cash and cash equivalents at end |
(1,106) |
- |
- |
- |
- |
- |
(45) |
(1,151) |
Company reconciliation of equity as at 26 December 2020
|
FRS 102 Restated £'000 |
Goodwill £'000 |
Assets held for sale £'000 |
Leases £'000 |
Impairment £'000 |
Expected credit loss £'000 |
Reclassification £'000 |
IFRS £'000 |
Non-current assets |
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
490 |
175 |
- |
- |
- |
- |
- |
665 |
Property, plant, and equipment |
296,300 |
- |
(1,135) |
(3,067) |
750 |
- |
- |
292,848 |
Investment properties |
9,507 |
- |
(3,029) |
- |
- |
- |
- |
6,478 |
Other non-current assets |
26 |
- |
- |
- |
- |
- |
- |
26 |
Right-of-use assets |
- |
- |
- |
58,333 |
(9,595) |
- |
- |
48,738 |
Total non-current assets |
306,323 |
175 |
(4,164) |
55,266 |
(8,845) |
- |
- |
348,755 |
Current assets |
|
|
|
|
|
|
|
|
Inventories |
6,145 |
- |
- |
- |
- |
- |
- |
6,145 |
Trade and other receivables |
12,274 |
- |
- |
588 |
- |
19 |
45 |
12,926 |
Cash and cash equivalents |
63 |
- |
- |
- |
- |
- |
(45) |
18 |
Assets held for sale |
- |
- |
4,152 |
- |
- |
- |
- |
4,152 |
Total current assets |
18,482 |
- |
4,152 |
588 |
- |
19 |
- |
23,241 |
Current liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
(21,724) |
- |
- |
(7) |
- |
- |
- |
(21,731) |
Borrowings |
(92,483) |
- |
- |
- |
- |
- |
- |
(92,483) |
Lease liabilities |
- |
- |
- |
(5,092) |
- |
- |
- |
(5,092) |
Total current liabilities |
(114,207) |
- |
- |
(5,099) |
- |
- |
- |
(119,306) |
Net current liabilities |
(95,725) |
- |
4,152 |
(4,511) |
- |
19 |
- |
(96,065) |
Total assets less current liabilities |
210,598 |
175 |
(12) |
50,755 |
(8,845) |
19 |
- |
252,690 |
Non-current liabilities |
|
|
|
|
|
|
|
|
Lease liabilities |
(2,766) |
- |
- |
(51,495) |
- |
- |
- |
(54,261) |
Derivative financial instruments |
(6,591) |
- |
- |
- |
- |
- |
- |
(6,591) |
Provisions |
(1,057) |
- |
- |
559 |
- |
- |
- |
(498) |
Deferred tax liabilities |
(13,168) |
- |
4 |
39 |
1,823 |
(5) |
- |
(11,307) |
|
(23,582) |
- |
4 |
(50,897) |
1,823 |
(5) |
- |
(72,657) |
Net assets |
187,016 |
175 |
(8) |
(142) |
(7,022) |
14 |
- |
180,033 |
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
|
Share capital |
7,429 |
- |
- |
- |
- |
- |
- |
7,429 |
Share premium account |
1,099 |
- |
- |
- |
- |
- |
- |
1,099 |
Revaluation reserve |
69,637 |
- |
- |
- |
- |
- |
(69,622) |
15 |
Own shares |
(1,031) |
- |
- |
- |
- |
- |
- |
(1,031) |
Hedging reserve |
(4,457) |
- |
- |
- |
- |
- |
- |
(4,457) |
Retained earnings |
114,339 |
175 |
(8) |
(142) |
(7,022) |
14 |
69,622 |
176,978 |
Total equity |
187,016 |
175 |
(8) |
(142) |
(7,022) |
14 |
- |
180,033 |
[1] The periods referred to for financial year 2020 are the comparative month(s) during the financial year 52 weeks to 27 June 2020
[2] H1 2021 is the first half of the financial period of the 52 weeks to the 26 June 2021. This first half equated to the 26 weeks ended 26 December 2020. All comparatives have been restated on an IFRS basis. A description of the nature of change for all relevant accounting policies can be found in the Annual Report for the 52 weeks ended 26 June 2021
[3] Profit before tax pre net finance costs, depreciation, amortisation, profit or loss on sale of fixed assets excluding property and free trade loan discounts
[4] Underlying profit/(loss) less attributable taxation divided by the weighted average number of ordinary shares in issue during the period (see note 7). The numbers of shares in issue excludes those held by the Company and not allocated to employees under the Share Incentive Plan which are treated as cancelled
[5] Net assets at the reporting date divided by the number of shares in issue being 14,857,500 50p shares
[6] Net debt excluding lease liabilities comprises cash, bank overdrafts, bank and other loans less unamortised loan fees
[7] Coronavirus Large Business Interruption Loan Scheme
[8] Retail like-for-like sales includes revenue from the sale of drink, food and accommodation but excludes machine income. Like-for-like sales performance is calculated against a comparable 26 week period in the prior year for pubs that were trading in both 26-week periods
[9] Tenanted income calculated to exclude from both years those pubs which have not been trading throughout the two years. The principal exclusions are pubs purchased or sold, pubs which have closed, and pubs transferred to or from our retail business. Income is calculated against a comparable 26 week period in the prior year for pubs that were trading in both 26-week periods
[10] Shepherd Neame branded, licensed, customer own-label and contract beer and cider sales volumes
[11] Shepherd Neame branded beer and cider sales volumes excluding licensed, customer own-label and contract volumes
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