Report of Fuller’s AGM – 21st July 2022

On 21 July 2022, I travelled to London to attend the AGM of Fuller, Smith & Turner PLC, better known as Fuller’s. The AGM was held at one of their own pubs, the George IV on Chiswick High Road.

The meeting commenced at 11.00 and the chairman introduced those members of the board who would be seeking re-election. He then went through a detailed timeline of events since the beginning of the covid outbreak, detailing not only the restrictions imposed at various times and the impact on the company’s ability to operate, but also how this presented an opportunity to further invest in the estate and refurbish closed venues. Although the pandemic interrupted the company’s long history of progressively increasing dividends, these have now resumed and the company remains optimistic for the future.

He went through the trading statement that had been issued to the stock exchange that morning, detailing trading in the first 16 weeks of the financial year. Sales are up by 3% on pre-pandemic levels and debt is down. The company will soon open a second site landside at Heathrow Terminal 2 to complement the existing (and very successful) airside pub ‘London’s Pride’. He went through a recent revaluation exercise the directors have undertaken to identify the value of the company’s freehold estate. The results suggest, based on the director’s estimates, the estate is worth approaching £1bn, around £400m more than the book value shown in the accounts. At the higher valuation, the net asset value of each share would be £13.80, rather than the £7.27 based on the book value.

The meeting was opened up to questions, and I asked for an update on the company’s experience of cask ale sales since reopening. The chairman responded by thanking the club for its many years of support, before handing to the chief exec for a more detailed response. The CEO said that the company remains committed to cask ale and, while demand has not recovered to pre-covid levels, they are seeking to promote the style and have a range of interesting guest ales lined up for distribution through the estate.

Questions from other shareholders included:

  • A request for more detail about the revaluation methodology.
  • A question on the balance of the estate between city and country locations.
  • A comment on the exclusion of private shareholders from the share placing (the chairman pointed out that the shares are now available in the market for less than the placing price, so no-one has lost out).
  • A query on the changed qualification criteria for the shareholder ‘Indulgence’ card. (The company secretary explained that, although new shareholders need to hold 1,000 shares, the 500 share threshold has been rolled-over for existing shareholders).

Following the meeting, shareholders present were given two free pints of London Pride, which I enjoyed in the beer garden, along with a number of other members of the club who were present in their capacity as individual shareholders.

Overall, the company appears to be coping with both recovery from the pandemic, and the recent difficult economic circumstances.

Ian Brindley – CMIC Committee Member

Report of City Pub Group AGM – 8th June 2022

On 8 June 2022 I travelled to London to attend the AGM of the City Pub Group. The company operates 41 pubs in London, the South of England and Wales. The majority of the pubs serve cask ales and a number have microbreweries attached. The AGM was held at Aragon House, one of the company’s West London pubs. The meeting was attended by all the board members and around 20 shareholders.

The meeting started with the Chairman presenting encouraging recent trading figures and an update on new openings, before inviting shareholders questions. I asked about recent trends in cask ale sales, and for additional detail on the sites that the company intends to acquire from the Mosaic pub group over the next 12 months. The Chairman replied that, while there had been some disruption to cask ale supplies during the pandemic, this had been somewhat mitigated by the company’s use of local suppliers. The company’s focus remains on maintaining quality, and this has sometimes meant reducing the range of ales available, while still offering a good variety. The company is planning to acquire 10 sites from Mosaic, all of which stock cask ales. Subsequent to the meeting, the company supplied me with a list of the 10 sites.

Other shareholders asked questions about beer prices, acquisition opportunities, the income split between food, drink & accommodation, and the potential for a shareholder loyalty card.

After the meeting, there was a good opportunity to speak to members of the board over a light lunch in the beer garden. I queried the fact that the company’s most recent opening does not offer cask ale. I was advised that within 50 yards the company has another pub offering a good range of cask ales, and the company was keen to differentiate the new opening from their existing site in order to attract new customers.

Overall, I felt it was a good meeting and an opportunity to find out more about one of our investments.

Ian Brindley 

CMIC Committee Member

Report of Shaftesbury AGM – 4th February 2022

On 4th February 2022 I travelled to London to attend the AGM of Shaftesbury, the West End property company and owner of the freehold of a number of pubs.

During the meeting, I asked about the impact of covid restrictions on the company’s tenants, the current situation, and whether the company was seeing any opportunity to increase the size of its pub portfolio.

The company said that footfall in their areas was recovering, and they were pleased that they had been able to support tenants through the pandemic, meaning that all their tenants were still in place and trading.

After the formal meeting, I spoke to the relevant directors and managers, and we discussed the opportunities for increasing their pub portfolio. It appears that the opportunities to acquire freeholds in their operating areas are very infrequent, and the potential to change existing premises for pub/micropub/microbrewery use are very restricted due to local planning policies.

Overall, the company’s objectives for its estate are very much aligned with those of the club, with a wish to encourage interesting and niche operators rather than national brands. However, due to the issues mentioned, this will remain a long-term project.

Ian Brindley 

CMIC Committee Member

Report on Mitchells and Butlers AGM – 25th January 2022

The M&B AGM was held on 25 January 2022. The meeting took the form of a hybrid meeting, with both physical attendance allowed and virtual attendance possible via the Lumi platform. I attended the meeting virtually.

The meeting commenced at 9.00 am, and the chairman expressed disappointment that only 3 shareholders were present in the room. His disappointment was surprising, since the company had gone to great lengths to discourage attendance, by having an early start, offering no refreshments, and making it clear that there would be no opportunity to speak to directors after the meeting.

The chairman announced that any written questions submitted in advance of the meeting had been responded to, although he gave no details of the questions or answers.

In answer to questions raised from the floor, the company confirmed that:

  • there would be no dividend paid for at least 2 years, with the priority being payments into the pension fund and investment into the pub estate
  • there are no plans for a rights issue
  • the company is not considering selling any of the brands, believing that a balanced portfolio targeting a range of market segments provides the best balance of risk and reward as market conditions change.

The meeting concluded around 9.15

When the results of the voting were announced following the meeting, it was clear that there had again been a significant shareholder rebellion against a number of the proposals, particularly regarding the re-election of certain directors and the approval of director remuneration. The issue is that corporate governance best practice requires that the majority of directors are independent, and the majority of the current directors are nominated by the majority shareholder, meaning they are not independent. While the total votes cast secured their reappointment, a majority of independent shareholders (including CMIC), voted against.

Ian Brindley 

CMIC Committee Member

Report on Marston’s AGM – 25th January 2022

The Marston’s AGM was held on 25 January 2022 at the Farmhouse at Mackworth, a Marston’s pub/restaurant on the outskirts of Derby. The committee was represented by Ian Brindley and Chris Excell, other members of the club were also present in a personal capacity.

The meeting was scheduled to start at 10.00 am, and there was a good opportunity to meet with board members over tea & biscuits before the meeting began.

The Chief Exec delivered a presentation outlining performance over the last 12 months, and explaining the company’s plans for delivering growth through investing in the pub estate. Since transferring the brewing operation into a joint venture with Carlsberg, the company now sees itself as a focussed pub company with little exposure to the vagaries of city centre trade. Unlike other companies in the sector, they did not need to raise capital from shareholders during the pandemic, benefiting from the sale of the brewing business. They remain mindful of the importance of dividends to shareholders, but will not resume dividends until debt has been reduced to an acceptable level, and they are confident that any resumed dividend can be maintained. The CEO explained why he is confident that the share price will recover, as valuations gradually recover to previous levels.

Ian Brindley asked about cask ale sales since re-opening, and sought reassurance of the company’s commitment to cask ale. The CEO answered that cask sales had undoubtedly taken a hit following the pandemic, but he was confident they would recover. The company cannot promise to offer cask ales through all of its outlets, as the offer is driver by local customer demand. Where there is a market for cask ale, it will be delivered.

Following the meeting club members visited the bar, where Marston’s Wainwright and Thornbridge Jaipur were available on hand pull. Lunch was purchased in the restaurant, which was found to offer a diverse menu of well-presented food.

Overall, an encouraging meeting which did not give us any cause for concern about our investment.

Ian Brindley and Chris Excell

CMIC Committee Members

Report on Shepherd Neame AGM – 9th December 2021

The Shepherd Neame AGM was held in Faversham on 09 December 2021. Chris Excell and Ian Brindley attended on behalf of the committee and several other club members attended as shareholders in their own right. There were around 100 shareholders present in total.

A number of presentations were delivered by members of the board who did a good job in providing updates on recent trading and an explanation of the impact of changes in accounting standards using language that was easy to follow. The Chairman reported that the company was in a strong financial position thanks to strict financial controls and a reduction in capital expenditure.  Two hotels that relied mainly upon business led bookings have been sold whilst those that benefit from staycation business are doing very well, the London pubs business has bounced back faster than expected and most are open for open for business as usual.

After the presentations there were a number of questions that were answered by the board.

Following the meeting a buffet lunch was provided together with an opportunity to sample some of the company’s ales and to meet informally with the board. Overall, we would consider the company’s performance to be satisfactory, especially in the circumstances.

Ian Brindley and Chris Excell

CMIC Committee Members

Report on The Beer Consortium AGM – 11th November 2021

Needless to say, the Company has been through a difficult time, but all the venues are now up and running again and, with the exception of one, trading profitably.  Indeed, although there will be no dividend this time the board anticipate that they will be able to resume payments next year.  A new office block close to the Barley Twist for 4,000 plus HMRC staff is due to open within the next 12 months, which should help boost trade, failing which there is an early get out clause for the property.

Going forward, the Company intends to concentrate on maximising value out of the existing estate rather than any thought of acquisitions.  Two special resolutions regarding a conflict of interest affecting three of the directors, including Colin Wilde (MD of Castle Rock), who recently took over as chairman, were put to the meeting and approved.  These related to the fact that all three are also directors of Lady Bay Inns (a similar, crowd funded, single pub co-managed by CRB) and Castle Rock Brewery (who also manage the Beer Consortium pubs), in order to satisfy the Companies Act 2006.

The meeting concluded with a few excellent pints of Harvest Pale.

 

John Westlake – CMIC Committee Member

Report on Loungers AGM – 15 October 2021

On Friday 15th October I travelled to Guildford to attend the AGM of Loungers. The company operates 150 Lounge cafe-bars and 31 Cosy Club restaurant-bars and, prior to the pandemic, cask ale was available in a number of the Cosy Clubs. However, the committee had received reports that since reopening very little cask ale was now being sold, so I attended the AGM to raise the issue with the board. I wanted to find out if the reduction in availability was temporary while the economy continues to recover, or if a strategic decision had been made to exit the cask ale market.

I was the only shareholder who attended the meeting, so I was able to ask a question during the formal part of the meeting and then speak to the Chief Executive and Finance Director afterwards.

The CEO said that availability of cask is not something they’ve discussed at board level and no strategic decision has been made. They don’t want to compromise on quality so there have been times during the last 18 months where it’s not been possible to stock. They see their drinks offer as being customer led and the CEO believes that there are some venues where cask is still available, although he agreed to check. He agreed that they will have a discussion about cask over the next couple of months and then provide a more considered response.

The club’s committee will continue to engage with the company and use our shareholding as a means to encourage them to make cask ale more widely available through their large and growing state. However, depending on future updates from the company, we will continue to evaluate whether our continued shareholding remains consistent with our policy to invest ‘in shares of companies whose activities include brewing and/or retailing real ale’.

 

Ian Brindley – CMIC Committee Member

Committee activity during lockdown(s)

Since March 2020, for all the obvious reasons, it hasn’t been possible for members of the Committee to physically attend investee AGMs, Special Meetings etc in the normal way. Many such meetings have, however, continued to take place ‘virtually’ and Committee members have tried to attend on that basis where possible. As examples, during 2020 CMIC was represented at Thwaites, Hydes and Shepherd Neame AGMs.

In addition to this, formal questions were also submitted by CMIC to the Loungers’ and City Pub Group AGMs, as well as to Marston’s in respect of, firstly, their JV announcement with Carlsberg and, secondly, their recent AGM. Answers have been provided both formally and informally (see below).

Wetherspoons Q+A are posted on its own website: see https://www.jdwetherspoon.com/investors-home/general-meetings

Loungers Q & A

We submitted the following question to the AGM which was held on 16/10/20:

Following the resumption of trading, has the company continued to make available traditional cask conditioned ales at its Cosy Club outlets, and what progress has the company made towards extending the availability of cask conditioned ales throughout the Loungers estate?

They sent us the following reply:

We have continued throughout the year to stock cask ale in the majority of our Cosy Clubs and across a number of Lounges where the level of demand provides sufficient throughput and allows us to sell the cask conditioned ale in the right condition.  The impact of Covid-19 has impacted certain sites more than others, and where demand has fallen below levels that allow us to maintain the quality of cask conditioned ale we have on occasion had to temporarily suspend stocking.  I very much look forward to putting those days behind us. Many thanks for your continued support.

Marston’s Q & A

  1. Following the transfer of the breweries into the joint venture with Carlsberg, can you confirm your continued commitment to serving traditional cask ales throughout your estate?
  2. Will you be using your influence as a significant minority shareholder in the Carlsberg joint venture to ensure the existing breweries remain open, enabling the continued supply and distribution of a range of authentic regional cask ales?

Thank you for submitting your questions to the Board for our AGM.

  1. Cask ales are very important to us and our customers. Marston’s pubs are committed to selling a broad range of beers that our guests/customers want, whether that is cask ale, craft beers or lager.
  2. The CMBC beer business has a strategy of driving a portfolio of brands/beers including regional beers with heritage and provenance.  The success of Marston’s Beer Company in driving that strategy is one of the attractions of the business to Carlsberg. As was the case before the deal, that is not a guarantee that every brewery will stay open – that depends on demand, but that was always the case.

Report on HOP BACK Brewery AGM

I attended the Annual General Meeting of Hop Back Brewery on 16/03/20 together with fellow committee member Neil Kellett.  The meeting was held in the Sultan Public House in Wimbledon prior to the pub’s opening time.

John Gilbert opened the meeting by saying that he could make absolutely no predictions about the long-term effects of COVID-19 except that the company had strength in its cash reserves and intended to ride the storm and look after the staff.

A couple of shareholders queried the wisdom of paying a dividend, but it was decided that as the company is cash rich the dividend could be paid as normal.

Looking to the future it was announced that there are plans to upgrade a number of pubs that are in need of improvement and this will be done on a one by one basis.  A new Head Brewer has been appointed and he is keen to try some limited-edition beers.  There are no plans to go down the keg road.

After the meeting we adjourned to the bar for a few beers.

Chris Excell – CMIC Committee Member

Report On Wetherspoon AGM

I attended the Annual General Meeting and a General Meeting of J D Wetherspoon on Thursday 21st November.

The meeting was held in a new venue this year in the City of London and this proved to be very popular with those attending. A poll vote was taken and your committee voted in favour of all resolutions. The results of the poll were announced on the company’s web site later in the day once all votes had been counted. Each resolution was carried with a large majority in favour of each one.

After the AGM a General Meeting was held for the approval of waiver of Rule 9 of the Takeover Code, put simply under rule 9 of the code any person or persons holding not less than 30% of the voting rights but not more than 50% of the voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person. This resolution was passed on a poll vote by those entitled to vote.

After the two meetings a Q&A session was held, questions were asked on a range of subjects ranging from how many pubs have coffins? (Apparently one does), another asked whether pubs could be equipped with emergency generators so that they do not have to close during power cuts. In response to other questions the board agreed to look into possibility of providing sanitary wear dispensers in Ladies lavatories, confirmed that 90% of staff are on fixed hours contracts and that all hotels are owned on a freehold basis.

Chris Excell – CMIC Committee Member

Report On Loungers AGM

On 16 October 2019 I travelled to Guildford to attend the first AGM of the recently listed Loungers plc. The company operates 157 sites under the ‘Lounge’ and ‘Cosy Club’ brands. Lounges are neighbourhood café/bars combining elements restaurants, pubs and coffee shops, generally located in secondary suburban high streets and small town centres. Cosy Clubs are more formal bars/restaurants offering reservations and table service but share many similarities with the Lounges and are typically located in city centres and large market towns. At the date of the AGM there were 130 lounges and 27 cosy clubs nationwide. The meeting was held at the Cosy Club in Guildford.

The meeting started with a brief update on trading which had been released that morning and rapidly moved onto the formal business. I introduced myself and told the board a little about the investment club before asking about the company’s approach to the retailing of cask ales. The Chief Exec informed me that cask ale is generally available at the Cosy Club outlets but not in the Lounges. This was a matter that the board had discussed only recently and, while they would like to make cask ale available at more of their outlets, they are concerned about the quality issues that might be associated with low throughput. They are supportive of the objective and continue to actively explore the options.

After the meeting I spoke further with members of the board. I was able to confirm that, where cask ales are available, these are sourced locally from nearby breweries.

The company remains one to watch as they continue to expand rapidly and expect to open 25 new sites during the current financial year.

Ian Brindley – CMIC Committee Member

Report On Shepherd Neame’s AGM

I attended the Annual General Meeting of Shepherd Neame & Co. along with committee members Neil Kellett and Ian Brindley.

We were given very informative presentations by the management team, results were broadly in line with expectations and on a like for like basis sales in both managed and tenanted pubs were up on the previous year with like for like managed drink sales up 4.3%. There is no intention of moving away from the present model of a mix of managed and tenanted pubs and own brewed beers.

Total beer volumes fell by 23.3 percentage points which was expected as a result of the impact of the loss of the Asahi and Lidl contracts. The company believes that whilst the beer market is evolving at a rapid rate there is a clear role for an independent brewer of Shepherd Neame’s size based in the South East of England with their skills and heritage. Growth in the overall beer market has largely been driven by world lager whilst cask and premium bottled beer have declined.

The company’s portfolio has been strengthened by a new image for the flagship Spitfire brand and the successful Whitstable Bay range. The Bear Island range has been introduced alongside the Cask Club with a series of collaboration ales with leading craft brewers, this month’s offering being Northern Lights, a blueberry IPA in collaboration with St Erik’s brewery of Sweden. We were given the opportunity to sample this beer after the meeting along with other Shepherd Neame brews.

Total dividends for the year amounted to 30.08 pence per share up from 29.20 pence per share in 2018. The company currently operates 322 pubs of which 239 are tenanted, 70 are managed on 13 are let on a commercial free of tie basis.

Chris Excell – CMIC Committee member

Report On The Greene King AGM

On 6 September 2019 Greene King (GK) held their AGM at Newmarket Racecourse. Committee members Ian Brindley and Chris Excell were in attendance, together with a number of club members and 200-300 other shareholders.

The Chairman, Philip Yea, opened the meeting by speaking about the proposed all-cash bid for GK that had recently been announced.

Takeover Panel rules placed limits on what could be said, but within that he was reasonably forthcoming both in his statement and answers to questions

The proposed acquirer, CK Asset Holdings Ltd (CKA), (quoted on the HK Stock Exchange), already owns the freehold of 156 former Spirit pubs occupied by GK, having bought them from a third party in 2016. As a result of this association they have built up knowledge of GKs operations, leading them to conclude that they would like to acquire the whole GK Group.

The Chairman pointed out that the offer was not solicited by the Board, and that any decision to accept the offer would be made by shareholders at a further meeting. It was expected that full details would be circulated to shareholders later in September.

The offer appeared to represent good value for shareholders, although it was not just a matter of price. The Board had considered the value of the offer compared to the returns expected under GKs current plans and expectations.

It appears that there had been some close and deep discussions with CKA as to their intentions for the GK brand, Bury St Edmunds (headquarters and brewery), employment at Bury and Burton, the pension scheme, and more (like honouring shareholders discount vouchers until August 2020).

Assurances had been received in writing and verbally though strategy would no doubt evolve with the new ownership and management.

The Board was recommending acceptance. He also pointed out that the acquirer was not taking on any debt to fund the offer, which provided some degree of protection for GK, if acquired.

Other points raised included:(a)that the Dunbar brewery was not explicitly referred to.(b)that there was no plan to change the business mix between brewing, and managed or tenanted pubs(c)that it was a sterling offer and no change was expected irrespective of movement against other currencies.(d)despite one trenchant call (while acknowledging that the cash offer was good, deploring the loss of independent UK ownership) the Board were not ashamed and wouldn’t be resigning.(e)that though there might well be tax implications for shareholders there would be no alternative to the cash offer. Shareholders would have to take their own advice on this.(f)and pensioner discounts etc., would be looked at.

The new Chief Executive Nick Mackenzie was introduced to shareholders. He appeared knowledgeable and expressed his passion any number of times for pubs, brewing, people, culture, and customer experience and (and perhaps is genuinely passionate about) GK.

His extensive background, having qualified as a chartered surveyor, included Bass in the 1990s, Allied Domecq, Diageo, and then 17 years with Merlin Entertainment (rollercoasters and working visitor attractions were particularly highlighted).

He amplified Philip Yea’s brief initial summary on the last financial year and reading of the trading update (see appended) (GK had outperformed the market – though noticeably avoided was any straight competitor or peer comparators – and referenced the good weather), commented on the 2018/19 results (carefully positioning himself as not having been there of course) and provided comment on some key important metrics, and on targets.

Emphasis was given to the strong brands of beers and pubs, and the high-quality assets, and that work on the GK brand and culture had started. He particularly identified Net Promoter and Trip Advisor Scores and further improving Customer Experience, people management and training, avoiding discounting, strong drinks growth, and improving the quality of the estate. 116 pubs had been disposed of in 18/19 realising 17.1 x EBITDA value, with investment in new sites (7 with £22M capex) and 79 sites were ‘brand optimised’ at a cost of £20M.

Priorities included fitness for the future (digital tools for management, apps for employee comms and customer ordering), control of pub costs and efficiency, and active estate management – the right pub in the right sector.

There were surprisingly few (?) questions about the proposed takeover. Most questions were about matters of detail and a couple related to specific locations or pubs.

As far as is possible to tell, the Board appeared to offer full and frank answers. While the proposed acquirer has indicated that they intend to maintain the present group structure, the question about the future of the Belhaven Brewery revealed that there have been no assurances about its future post takeover.

Some rumblings could be detected talking to other (and small long-term) shareholders, and there was a degree of resignation and sadness. The matter, as one questioner put it, would be decided by the big shareholders with little or no consideration of the small shareholders interests. It was a bit subdued both during the meeting and over lunch.

As votes were taken on the formal resolutions of the meeting, it was noted that almost a third of votes had been cast against the approval of the remuneration report. This seems to have been related to the terms on which Rooney Anand had been compensated on resigning as chief executive earlier this year (see below).

Following the meeting, shareholders enjoyed a buffet lunch and an opportunity to sample a range of the company’s cask ales including IPA, Abbot, and Yardbird, and in the bottle Strong Suffolk Dark Ale, Belhaven Twisted Thistle IPA, Belhaven Black, and others.

Your committee members took the opportunity to speak to the Company Secretary to find out what aspects of the remuneration report had caused concern. We were informed that the retiring Chief Exec had been with the company many years and his contract did not contain certain restrictive clauses that would be expected in modern contracts. The CEO had agreed to accept a number of non-contractual restrictions on his departure terms for which enhanced terms had been offered (see pages 75-76 and 89 of the annual report). This had resulted in one of the city voting advisory bodies recommending a vote against the report, and this advice had been followed by a number of institutional shareholders.

On departure, shareholders were presented with a ‘goody bag’ of the company’s products. Club members then enjoyed further refreshment at several of the pubs including a Marston’s pub and a Greene King managed house in the town of Newmarket.

Ian Brindley, Chris Excell – CMIC Committee member

Dominic Pinto – Club member

Report On The Brasserie Renard AGM

The AGM took place upstairs in a community centre above a closed pub in Pecrot, about 15km from Leuven.

There were about 50 shareholders in attendance out of the total of 300 “cooperateurs” in this locally owned cooperative producer of organic beers.

The latest beer to be produced is a bottle conditioned beer called Grezienne (the local area is called Grez Doiceau). This has immediately become the brewery’s best seller. It is an 8% bottle conditioned triple blond beer – par for the course in Belgium.

The brewer and company boss, Stephane Vlaminck, conducted the meeting which lasted an hour and 40 minutes. He was able to answer all questions without a problem !

Highlights of the company’s performance :-

~ a loss of 81,274 Euros was reported for the year to 31 December 2018, on sales of 263,776 Euros

~ the detailed business plan indicated a breakeven situation by 2021

~ there are over 100 customers + sales from the brewery

~ 24 cooperateurs were growing hops in their gardens which will be used in the brewing process !

A range of beers was sampled after the meeting.

Neil Kellett – CMIC Committee member

Report On The Fullers AGM

I attended the Annual General Meeting of Fuller, Smith and Turner which was held at the George IV in Chiswick on 4th September.

Michael Turner gave an interesting presentation giving the history of the brewing business since the late 1960s when Fullers were a small brewery in a business dominated by the likes of Watneys, Bass, Allied Brewers, Scottish and Newcastle and Whitbread to the situation now where the market is dominated by Multi-Nationals such as Molson Coors and In Bev. He mentioned that names like Beavertown, Camden Town and Sharps are now owned by Multi-Nationals. He gave particular thanks to the efforts and support of CAMRA over the years.It was announced that there will be an EGM on 1 October for shareholders to approve a distribution of £1.25 per share as a result of the sale of the brewing business to Asahi.Questions from the floor were mainly related in some way to the sale of the brewing business, including pension deficit and the recently introduced computer system. Overall the feeling for the future was very positive.After the meeting we adjourned to the bar for a couple of free pints each and a few paid for ones after that.

Chris Excell – CMIC Committee member

Greene King – AGM TRADING UPDATE

A couple of members have enquired how CMIC intends to vote its shares at the upcoming shareholders’ meeting to approve/reject the recent offer from CK Asset Holdings. At its recent September meeting, your Committee decided to vote against acceptance of the offer.

Greene King Trading statement for the 18 weeks to 1 September 2019

At its AGM today, Greene King will make the following trading statement for the 18 weeks to 1 September 2019.

Like-for-like (LFL) sales in Pub Company grew 1.5% over the last seven weeks1 and, on a two year basis, were up 2.4%, demonstrating the continued momentum in Pub Company as a result of our ongoing focus on improving value, service and quality. LFL sales were down 1.8% for the first 18 weeks, reflecting the tough comparatives of last year’s successful World Cup and good weather. On a two year basis, LFL sales for the first 18 weeks were up 1.0%.

LFL net income in Pub Partners was down 4.2% for the first 16 weeks, driven by softer LFL beer sales following last year’s comparatives. In Brewing & Brands, total beer volumes were down 6.5% for the first 18 weeks and own-brewed volumes were down 7.9%.

We are on track with our cost mitigation programme and expect to limit net inflation this financial year to £10-20m. We also continue to make progress on our refinancing programme and in June we prepaid the remaining £93m Spirit A4 bonds. We remain on track with our disposal programme and expect to dispose of 85-95 pubs this year, generating disposal proceeds of £45-55m from which we will fund the opening of eight new pubs.

On 19 August 2019, Greene King announced a recommended cash acquisition for the company by CK Noble (UK) Limited. Under the terms of the acquisition, each Greene King shareholder will be entitled to receive 850 pence in cash.

In addition, the acquisition allows for the distribution of the previously announced final dividend for the 52 weeks ended 28 April 2019 of 24.4 pence per Greene King share to be paid (subject to approval by Greene King shareholders at today’s AGM) on 13 September 2019 to Greene King shareholders on the register as at the close of business on 9 August 2019.

1 Weeks 1-11 2018 included football World Cup trading; weeks 12-18 2018 did not.

Report On The Restaurant Group AGM

On 17 May I attended the Restaurant Group AGM. The meeting was held in London, at offices a short distance from Trafalgar Square.

Whilst the Club’s interest in the company primarily relates to the Brunning and Price pub operation, the compny also operates a number of well known restaurant chains including Garfunkel’s, Frankie & Benny’s and Chiquito. During the year, the company undertook a significant rights issue to raise capital to purchase the Wagamama chain. Fellow Committee member Chris Excell was also in attendance.

The Chairman reported like for like sales in line with expectations, and said the Board are comfortable with current performance, remaining focused on achieving the expected benefits of the Wagamama acquisition.

When the opportunity arose for questions, I introduced myself as represnting the Club and outlined who we are and our interest in the company. I asked about their future pub acquisition strategy (as they had acquired a further 21 pubs during the year), and also their ambtions for Wagamama. The chief exec replied that they have very demanding criteria for their acquisitions, buying oly a very small number of the hundreds of pubs they consider each year. The Brunning & Price branding is also carried out discreetly, with each pub allowed to retain its individual character and heritage.

During the course of the meeting, several shareholders spoke highly of the Brunning & Price pubs, having very much enjoyed their visits. The Committee hald a meeting at one of these pubs in Chester and were also impressed.

Overall we remain very happy with the company’s management of their pubs, but it is too early to judge if the expected benefits of Wagamama will be achieved.

Ian Brindley – CMIC Committee member

Fuller, Smith & Turner AGM

On 24 April 2019 I travelled to London to attend the Fuller’s shareholder meeting called to consider the proposal to sell the brewery to Asahi of Japan. Being a major transaction, the approval of shareholders was required in order for the plans to proceed. We hold 300,650 shares in the company, and the committee had resolved that we would vote against the proposal to sell the beer business and brewery, and abstain on additional proposals relate to director’s remuneration.

The meeting was held at a law firm’s offices in the city, and there were about 60-70 shareholders in attendance, including Chris Excell and myself from the CMIC committee, and a number of club members who attended as shareholders in their own right.

At the start of the meeting, the chairman outlined the reasons for the proposals, and then opened the meeting to questions. There were many contributions from the floor, most speaking against the proposals. It took about 90 minutes for everyone to have their say. I spoke on behalf of the club and detailed our concerns about what the potential long term impact on cask ale production that might result from the change of ownership of the brewery. In reply, the chairman thanked the club for their support over the years and emphasised that Asahi recognise the heritage of the beers they are buying, are sincere in their ambition to protect that heritage and would not want anything to happen to the brewery having spent such a large sum on acquiring it.

When it came to the voting, the proposals were narrowly approved on a show of hands. Had the proposals not been approved, the chairman would have called a poll vote, so that the votes of the shareholders not present could have been counted. The proxy votes lodged in advance of the meeting were displayed, showing that if a poll had been called the proposals would have been carried by a significant margin.

After the meeting we retired to a nearby Fuller’s pub and sampled some London Pride, which will continue to be brewed at Chiswick but will, after 27 April 2019, be owned by Asahi.

Ian Brindley – CMIC Committee Member

Report On The New River REIT PLC AGM

Roughly 30 shareholders present. By far the majority of questions related to the commercial investments (shopping centre and convenience store assets) or the plc itself rather than the pub portfolio.

The balance sheet is unsecured and the quarterly dividend (not covered) held. The Loan to Value remains stable at 37% based on March 2019 valuations and Funds From Operations growth is on target. Group assets are c£1.3bn. Share price has been adversely affected by negative sentiment to high street retail but NRR’s assets are specialised at community level. The Woodford shareholding (c15%) has been placed with institutional shareholders post year end.

I initiated questions regarding the pubs and had conversations with the Chair and Finance Director after the meeting. They regard the latest BBPA data as indicating a stabilisation in pub numbers and estimate the equilibrium number to be around 45,000 pubs. Currently own 665 community pubs which are 98% occupied, 92% wet led and 95% under leased or tenanted model. During the year bought 298 pubs from Hawthorn, 76 from Heineken (Star) and 2 individual ones : disposed of 40 pubs (including 22 let to Marstons) and 13 pieces of pub land. Most of the sales were to occupiers. 2 pubs were converted into convenience stores. Of the current portfolio no more than 10 pubs have been identified for disposal or conversion and they stated that they are not looking to knock down pubs. Recent examples are a conversion of the Sea View Inn in Poole becoming 10 flats and a convenience store and a sale of a pub in Chorley to become a child nursery (an outcome which was welcomed by the local residents). Most convenience stores are built on surplus land and are not conversions. The self-imposed limit to pub exposure was originally 20% of gross asset value but following Hawthorn and the integration of their management team the guideline has been raised to c30%.

They are actively monitoring the market and looking to acquire wet led pubs which fit their model. NRR are attracted to the cash flows pubs generate notwithstanding the high management overheads but pricing the purchase correctly is important. Scale-based synergies are coming through. The announced Stonegate /EI deal strongly supports NRR’s valuations and the prices they have paid. Although not currently on the agenda the Board has thought about floating off the pub company once sufficient scale has been reached.

John Hattersley – CMIC Committee Chairman