Shepherd Neame reports profit progress as investment and premiumisation strategy pays off: Shepherd Neame, Britain’s oldest brewer and owner and operator of a 327 pub estate, has reported turnover increased by 11.7% to £156.2m (2016: £139.9m) in the 52 weeks to 24 June. Underlying operating profit was up 7.2% at £15.3m (2016: £14.2m). Underlying profit before tax was up 8.0% to £11.2m (2016: £10.3m). Statutory profit before tax was £11.8m (2016: £14.4m) primarily due to high, one off profits on property disposals in 2016. The company reported ‘investment, modernisation and premiumisation have driven sales outperformance in underlying business with managed pubs like-for-like sales growth of 8.1%, and own beer volume growth of 3.9%, both substantially ahead of the market. The company stated: “Like-for-like tenanted Ebitdar  was up 1.6%. A total of 14 pubs were acquired at a cost of £24.8m in the year including five from Village Green Restaurants and eight from EI Group continuing the strategy of enhancing the quality of our estate. Proceeds of £5.9m have been raised from disposal of 15 pubs. Over five years, 22 pubs have been acquired and 49 sold, transforming our estate and driving average Ebitdar  per managed pub up by 30.5% and per tenanted pub up by 25.4%.(There has been) continued investment of £10.7m across estate to ensure every pub has high standards and a unique character with an attractive offer for customers. Accommodation remains a key theme and an incremental revenue stream – occupancy is growing and now stands at 79% (2016:78%) and RevPAR at £66 (2016: £63). The first phase of the modernisation programme of the brewery (has been) completed. New, premium British brands launched and costs (have been) streamlined to mitigate the impact of the Asahi contract termination in February 2018. Strategy to move to smaller and higher quality Brewing and Brands business focused on own beers. We have made steady progress in the new financial year albeit with colder and unsettled weather compared to 2016. In the ten weeks to 2 September, like-for-like managed sales were up 1.5% (2016: 8.2%) and total beer volume excluding contract was up 4.4% (2016: 1.2%). In the nine weeks to 26 August, like-for-like tenanted Ebitdar  was up 0.6% (2016: 2.2%).” Jonathan Neame, chief executive, said: “This has been a good year for the company with strong underlying performance and some great acquisitions that add real value to the company. We are pleased with the strategic and operational progress made in all areas of our business. We are mindful of the political and economic backdrop, but our strategic focus on investing for the long term, innovating and consistently delivering great pub environments and outstanding service for our customers will stand us in good stead. We remain confident that the actions that have been taken and our relentless pursuit of excellence will continue to deliver good long-term returns for our shareholders.” Chairman Miles Templeman said: “The performance has been good in all operating divisions in the company and excellent progress has been made against our strategic objectives. I have been particularly impressed by the pace of change in the business in recent years as the team modernise the pubs and brands portfolio and innovate to address the continuous challenge to enhance the customer experience. Our growth primarily comes from reinvesting year after year in our core business and from driving ever greater efficiency and excellence in execution. This year has been notable for a strong underlying performance, some excellent work to enhance our own brand portfolio, important steps to modernise the brewing operation and a period of significant investment with the acquisition of 14 new pubs. The core strengths of Shepherd Neame lie in a strong sense of family, a distinct individual character, and a passion for quality, for high standards and for making continuous improvements within a consistent strategic framework. These characteristics deliver a strong and sustainable business for the long-term benefit of shareholders. Equally important is our ability to take advantage of good opportunities when they arise and to be responsive to changes in the market.” Templeman reported that: “As part of the transition from brewing Asahi Super Dry, the role of brewing and brands director is no longer required. Graeme Craig is consequently stepping down from his role as a Director in September 2017 and will be leaving the business. Graeme has made a considerable contribution to the business since joining in 2006. He has greatly developed and enhanced the brand portfolio, and consolidated the sales, marketing and production activities into a single brewing and brands division. I would like to thank him for what he has done and wish him well for the future. We are streamlining our management roles in this area. We have recently appointed Andy Pinnock as head of sales and Giles Hilton as head of customer relations. We are currently recruiting a head of marketing, brands and communications and a head of production, as Richard Frost retires in 2018. These senior positions will report to the chief executive.”

Diageo issues trading commentary ahead of AGM 2017: Diageo has issued trading commentary ahead of its AGM. Ivan Menezes, chief executive, said: “Our business continues to strengthen through improved marketing, innovation, and commercial execution, and we are well set up to deliver in line with our expectations. We expect the H1 organic net sales growth rate will be impacted by the later timing of Chinese New Year and by the expected impact of the highway ban in India. Our productivity work continues to move at pace. As previously announced, we are up-weighting our investment behind US Spirits and scotch, and as a result we expect our organic operating margin expansion will be weighted towards H2. Our expectations on overall performance for the year remain unchanged. Underlying momentum and progress in implementing productivity gives us continued confidence in our ability to deliver sustainable growth. We re-affirm our expectation of mid-single digit top line growth and 175bps of organic operating margin improvement over the three years ending 30 June 2019.”

Peel Hotels secures new loan facility: Peel Hotels has entered into a £9,900,000 five-year term loan facility with Allied Irish Bank. The facility was drawn down in full yesterday and attracts a rate of interest of 2.7% above LIBOR for the relevant Interest Period. The company stated: “As specified in the announcement by the company on 20 July 2017 of its final results for the financial year ended 29 January 2017, the facility will be used by the company to repay the group’s existing facilities with the Royal Bank of Scotland as well as the remaining balances of the director’s loans and loan notes. The director’s loans and Loan Notes are being repaid in accordance with their terms and the board’s strategy to reduce the company’s debt servicing obligations. Completion of the facility provides a solid foundation for the company to deliver its strategic plans by preserving the group’s debt facilities, resetting financial covenant headroom and extending maturities to five years from the date of draw down. The revised financing structure will result in a significant reduction in financial charges going forward. Savings in the 2018/19 financial year are estimated to be not less than £160,000, provided that LIBOR remains unchanged.” Robert Peel, chairman of the company, said: “I am delighted that we have closed our new financing arrangements with Allied Irish Bank. We expect this new facility to provide significant savings in the costs of finance and to improve our cash flow and reduce our net debt.”