Code of Practice – Version Dated 19 December 2013

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Code of Practice – Version Dated 19th

December 2013

This Code of Practice dated 19th December 2013 supersedes all previous Codes of Practice

issued by Shepherd Neame Ltd. Legal Status of Shepherd Neame Code of Practice This Code of Practice adheres to the guidelines produced by the British Beer and Pub Association (BBPA) for the industry and is accredited by the industry accreditation panel, the British Institute of Innkeeping Benchmarking & Accreditation Services Limited (BIIBAS). A full copy of our Code of Practice will be provided to all new and existing tied tenants and lessees, and any successors in title. Our Code of Practice incorporates the provisions of the BBPA’s Industry Framework Code (IFC). The IFC places a number of obligations on us as a company, all of which are included within our Code of Practice and upon which you can rely in your dealings with Shepherd Neame. However, there are certain additional provisions within our Code of Practice, which are supplemental to the provisions of the IFC. These additional provisions involve “added value” services we provide for our licensees. Adherence to the IFC is a binding term of all of our new tied tenancy agreements and tied leases, and is therefore legally enforceable. The IFC is binding on both Shepherd Neame and its tenants and lessees, and may be used in pursuance of a claim of non-compliance. Our existing tenants and lessees may also have the benefit of our Code of Practice and the provisions of the IFC by invoking an open and unlimited offer accepting its terms. This can be done by signing an agreement at any time and your Business Development Manager will be glad to assist in this respect. Alternatively, the provisions and benefits of the IFC can be relied upon if a tenant or lessee initiates a complaint through PICAS (Pub Independent Conciliation and Arbitration Service) or commences court proceedings with reliance on the provisions of the IFC. Where our Code is incorporated into a lease or tenancy agreement, it will be binding on successors in title, either through an assignment of the lessee’s interest or a disposal of the landlord’s interest to another company. This will be effected automatically by way of Deed of Variation as part of the disposal process at the Landlord’s expense. A copy of the IFC is available on the Shepherd Neame website. The IFC, which underpins this Code of Practice, can only be altered/revised by the Pub Governing Body. Types of Agreement Operated by Shepherd Neame 1. Traditional Three Year “Brewers” Tenancy The Three Year Agreement is tied and has full Landlord and Tenant Act protection. It is

not assignable. The operation of such tenancies is set out in Section One of this Code. Traditional “Brewers” Tenancy Contracted out of Landlord and Tenant Act This agreement is for a fixed term, tied and is not assignable. The operation of such

tenancies is set out in Section One of this Code.

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2. Fixed Term Lease Agreements Fixed Term Lease Agreements are tied and have full Landlord and Tenant Act protection.

They are assignable. The operation of such leases is set out in Section Two of this Code.

3. Short Term Agreements Short Term Agreements are for a duration of no more than one year. Terms are flexible

and these agreements do not fall under the provisions of the IFC or Shepherd Neame Code of Practice.

Shepherd Neame Tenancy Agreements and Leases are fair and reasonable and comply with the relevant legal requirements.

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Section One – Tenancy Agreements

Pre-Entry Requirements for Applicants - Personal Licence which is a prerequisite for Designated Premises Supervisors - Completion of Pre-Entry Awareness Training (to be completed at least five working days before

substantive terms are agreed) - Confirmation that proper independent professional advice has been taken: a. Legal advice on agreement to be entered into b. Financial advice on financial element of Business Plan

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- Independent preparation of Business and Financial Plans to be agreed at final interview, as: a. Realistic b. Stress tested to allow for possibility of reduced trade The Business Plan will set out proposals for operation of the house being applied for. The Financial Plan will estimate profitability over a three year period, setting out income,

margins and costs. - Confirmation that research has been carried out into local economy and local competition. - Waiver may be applied in respect of pre-entry requirements for tenants who are multiple

retailers or where three years recent experience of running successful licensed businesses can be demonstrated (or relevant business management experience) or who have held successful existing tenancy with Shepherd Neame. This will be recorded by way of an exemption agreement.

Pre-Entry Requirements for Shepherd Neame Provision of Public House Specific Information: - Description of Premises and Trading facilities - Three year trading volume history

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- AWP income and number of machines sited - Guide Rent and Service Charge - Current Rateable Value and estimated rates payable - Current Council Tax banding - Summary of Premises Licence and house specific conditions

1 Useful information in preparing Financial Plans can be obtained from benchmarking reports issued

by BBPA, FLVA and ALMR. There is RICS guidance on rental valuations. 2 Where trading information is not available, this will be explained.

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- Summary of any regulatory enforcement or correspondence within past two years known to the Landlord

- Advice on known changes anticipated within local commercial environment within one mile

radius, including investment in nearby houses belonging to Shepherd Neame - Planning restrictions on use - Plans for development of premises - House specific flexibility of terms - Further advice where requested. If we are unable to provide such information, an explanation

will be given Tenancy Agreement Information - Tenure available - Length of agreement - Length and detail of rental terms - Extent of tie for drinks, AWP or any other products. There is a full tie for the supply of beer and

cider - Terms of letting, which will be fair, reasonable and in compliance with legal requirements Trading Information - Current Price List for tied goods - Advice if Price List is to be amended within timescale of advice to existing tenants - Discounts available - Payment for rent and goods is required to be by way of Direct Debit - Rent is paid weekly in arrears - Ten days credit is provided for goods, subject to there being no adverse accounts

Entry Process

Shepherd Neame will issue letting details, providing the information set out in Pre-Entry Requirements: - Applicants to view pub and private quarters, and assess local competition, together with trading

potential and potential profitability of pub. - Initial interview(s) held with Business Development Manager to explain terms and tenure on

offer, to discuss business proposals of applicant and to assess suitability and strength of application.

- Final interview held with Business Development Manager, Operations Manager and Director,

to discuss and agree Business and Financial Plans and to determine whether offer is to be issued.

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- Offer Letter (Heads of Terms), with detail of tenure and rent, together with landlord commitments, landlord requirements and any elements of conditionality.

- “Sign Up” will involve signing of Tenancy Agreement, payment of Trading and Dilapidation

deposits and discussion of arrangements leading to commencement of new tenancy.3

Start Up Requirements The following cash requirements are involved in taking on a new tenancy: - Payment of Trading Deposit (interest paid by Landlord at Base Rate less 1%) – where Base

Rate is 1% or less, no interest will be paid Payment of Dilapidation Deposit (interest paid by Landlord at Base Rate less 1%) – where

Base Rate is 1% or less, no interest will be paid - Purchase of Tenant’s Inventory - Inventory to be approved by Shepherd Neame - Inventory to be valued between licensed house brokers, acting on behalf of outgoing and

ingoing licensees - Purchase of Trade Stock and Glassware, valued between stock takers acting between

outgoing and ingoing licensees - Working Capital - An estimate of minimum capital requirement is provided in the letting details

3 Process is shown schematically in Appendix A.

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Operational Information Insurance Shepherd Neame is responsible for and does not levy a charge in respect of building insurance. The tenant is responsible for insuring plate glass, trade inventory, stock, contents, cash in machines, business interruption, personal contents and Public and Employers Liability. Property Risk Shepherd Neame (unless specified within Offer Letter) is responsible for the structure, infrastructure and external decorations and signage of houses. The tenant is responsible for maintaining the tenant’s inventory, internal decorations and maintenance of outside spaces. Appendix B provides a guide to repair liability. The repair liability may vary according to trading terms offered. Flow Meters Shepherd Neame reserves the right to operate Flow Meters at all tenanted houses. Appendix C provides protocol for the operation of Flow Meter equipment within the Shepherd Neame estate. AWPs Shepherd Neame does not receive any royalties from AWP suppliers. An income sharing arrangement applies to AWPs, unless otherwise specified. Where AWP income is shared, then the tenant’s share of income is not included in the rent assessment as “rentable” income. Where AWP income is not shared, income included in the rent assessment will be net of associated charges. There are no management or administration fees charged in relation to AWP income. Appendix D provides further information in respect of AWPs. Support Staff Employed by the Landlord Business Development Manager - The Business Development Manager (BDM) manages the trading relationship between

Landlord and Tenant and is the main point of contact for ensuring compliance with the IFC and dealing with day to day queries and requests.

- Shepherd Neame is committed to ensuring that BDMs undertake appropriate training to enable

professional development and award of relevant qualifications. Following appointment, BDMs are required within eighteen months to complete BII Level 4 qualification in Multiple Licensed Premises Management.

- BDMs are required to act in a professional and responsible manner in their dealings with

tenants. - BDMs are responsible for managing the induction process and advising on purchasing

benefits. BDMs are the point of contact for other support services and provide interface between tenants and the Company.

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- You can expect to see your BDM roughly once every eight weeks and you can contact your BDM at any time on his mobile phone and expect a response within forty-eight hours or an alternative contact number in the event of absence due to holiday or sickness.

Estates Department - Company Surveyors manage all repair, redecoration, signage and development works, carried

out by the Company at Tenanted Houses. - The Property Help Desk logs and manages all repair requests. - The Property Director is responsible for all rental negotiations. Technical Quality Department - The Technical Quality Department is responsible for monitoring beer quality in houses and for

the provision and maintenance of cellar cooling, beer dispense systems and bottle cabinets. - There is no charge for the provision of Technical Services (other than bottle cabinets). Credit Control Department - Credit Control manages the financial relationship between Landlord and Tenant. - Payment for goods and rent is by way of Direct Debit. Additional Support Staff Provide Assistance - Licensing: The Company holds and pays for the Premises Licence. - Digital Marketing: The Company provides a free website. - Marketing and ranging of beer and wine. - Advice on maximising catering opportunities. - Menu design. - Training

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- Customer Services takes your weekly order and advises on current promotions. Price Lists A current price list is always available on request.

4 Appendix E sets out training courses provided for tenants.

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Rent a. Initial Guide Rent is prepared in accordance with RICS guidelines and will be based on

Fair Maintainable Trade (FMT), achieved by a Reasonably Efficient Operator taking into account location, range of external and internal facilities, business potential, private accommodation, local competition and reasonable business costs, including those specific to the house involved.

b. Rent Assessment Statement is agreed at the final interview, providing a guide (shadow

profit and loss) to potential profitability. This statement will incorporate actual costs, where known, turnover and margins will reflect the price list which will be effective. It will provide sufficient detail for critical consideration.

Third party professional advice should be obtained before accepting the offer, setting out

the agreed rent. Sample rent assessment is shown in Appendix F. c. Standard Rent Review takes place when a rental term comes to an end. The timetable

is: - Warning of rent review is issued no less than eight months before effective date of

review. - Initial proposal is issued no less than five months before effective date of rent review. - Where required, rental negotiations will commence no less than two months before

effective date of review. The rent proposal will be prepared in good faith in accordance with RICS guidelines as

then current, based on FMT and market rent, but disregarding goodwill and approved tenant’s improvements. As part of the process of the rent proposal, your premises will have been visited during the preceding three months.

We recommend that on receipt of the rent proposal, appropriate professional advice be

sought and that industry benchmarking reports be consulted. The rent assessment, incorporating shadow profit and loss will provide sufficient detail for

you to take professional advice and carry out benchmarking comparisons. d. Non Standard Rent Reviews may be carried out during a rental term: i. In conjunction with proposal for capital investment to be carried out at your house

by the Company. ii. In the event of a material change in circumstance beyond your control, adversely

affecting the viability of your business. iii. In the event of our agreed terms of trading being altered by legislation. e. Rents may be increased or reduced at review. Rents are not subject to indexation. All rent assessments will be produced in good faith by a properly competent individual. Information that may be used in third party determination of rent will not be unreasonably

withheld and will be provided on request, subject to confidentiality restrictions.

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Developments Licensees should not carry out structural alteration works without first having obtained formal consent to do so. The grant of consent is entirely at the discretion of the Brewery. Contracted Out Tenancies We will advise no less than 12 months before the conclusion of the fixed term, whether we wish to negotiate terms for a further fixed period. If it is intended to enter into a further contracted out fixed term, then the process for agreeing a new rent will be as for a standard rent review above. Conclusion of Tenancy Notice by Tenant - Six months’ notice can be issued by the tenant in writing at any time without penalty. - When you leave your pub, we will produce a “Final Account”, which will include all monies due

to the Company, including trading account, rental account, outstanding loans and any dilapidation charges, together with any other charges due under the terms of your Tenancy Agreement. We will credit any deposits held by the Company, together with interest earned, less tax.

If your Final Account is in credit, then the credit will be paid to you within twenty working days

of the changeover day. If there are monies owed on the Final Account, then we have the right to set the value of your

inventory, stock and deposits against the outstanding sum. - If a successor tenant has not been appointed, we will purchase the trade inventory from you. - If it is proposed to levy a charge for dilapidations, we will provide a breakdown of the proposed

charge within six weeks of receipt or issue of notice. - In the event of a material breach of covenant by the tenant, the Company can either issue

between one and three months’ notice to quit or commence forfeiture proceedings. Disputes Rent In what we hope is the unlikely event that a rent review cannot be agreed between the Licensee and the Brewery, there is a formal procedure for rental determination set out in the Tenancy Agreement. Rental determination, by way of arbitration, is both time consuming and costly, and we have therefore agreed that such disputes can be referred to the Pub Independent Rent Review Scheme (PIRRS) – www.pirrscheme.com – which provides a fixed low cost independent rental determination service. If this occurs: - The fixed low cost of determination under PIRRS is shared. - The decision of PIRRS is final and binding on both parties. - Once determination by PIRRS has been agreed, determination by arbitration is no longer

available to either party. - Shepherd Neame is fully supportive of the PIRRS scheme.

http://www.pirrscheme.com/

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Other Disputes Including Code of Practice Complaints should be submitted in writing to your Business Development Manager. If your complaint has not been resolved (or is not in the process of resolution) within ten working days, then you may seek escalation to the Tenanted Operations Manager, with further escalation after ten working days to the Tenanted Director, and ultimately, the Chief Executive Officer of Shepherd Neame. In the event that you have not been able to reach resolution of a problem or dispute with us, after going through our Company’s own dispute resolution procedures, or we have failed to respond in accordance with internal procedures, you may refer the problem to PICAS (irrespective of any terms within your tenancy). As with PIRRS, both parties, by signing terms and conditions to enter PICAS, agree to be bound by the decision of the PICAS Panel. However, this does not forfeit your right to seek further redress through the Law Courts. You may make an application to PICAS, where you believe that the Company has not complied with the terms of the IFC or its own Code of Practice, or where the behaviour of the Company has not reflected the intentions set out in the Code. Rental issues should be referred to PIRRS, but all other matters can be raised through PICAS. Full details of the application process and the procedures to follow when referring a complaint to PICAS are available from the PICAS website www.picaservice.com or on our website at www.shepherdneame.co.uk. We are committed to the professional standards enshrined in these Codes and to the operation of both PIRRS and PICAS, which is a pre-requisite of accreditation of our Code. Restrictive Covenants Shepherd Neame reserves the right to impose restrictive covenants on public houses as part of the sale process.

http://www.picaservice.com/

http://www.shepherdneame.co.uk/

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Section Two – Lease Agreements

Background Shepherd Neame operate a limited number of tied leases. Generally, these are houses acquired from other operators, with lease agreements in place. These leases are of varied origin and differing terms. When Shepherd Neame purchases public houses held on leasehold terms, the existing tenure and terms are maintained, although we are always prepared to discuss conversion to tenancy. It is not currently the intention of Shepherd Neame to convert any tenanted houses to leasehold tenure. Should this policy be changed, this section of the Code will be redrafted for accreditation. This section details those elements of the Code, which differ from the tenanted Code in Section One. Rent Review Timetable Warning of rent review issued no less than eight months before due date. Rent proposal to include rent assessment to be provided no less than five months before due date. Target for agreement is within three months after due date. If rent not agreed within three months after due date and extension to negotiation period not agreed, then lessee can refer the rent review to PIRRS. The rent proposal will be prepared in good faith in accordance with RICS guidelines as then current, based on FMT and market rent, but disregarding goodwill and approved tenant’s improvements. As part of the process of the rent proposal, your premises will have been visited during the preceding three months. The rent assessment will be signed off by the Director responsible as having been drafted in accordance with RICS guidelines. We recommend that on receipt of the rent proposal, appropriate professional advice be sought and that industry benchmarking reports be consulted. Where appropriate, the effect of indexation over the period covered by the rent review should be taken into account. The rent assessment, incorporating shadow profit and loss will provide sufficient detail for you to take professional advice and carry out benchmarking comparisons. Assumptions within the rent assessment model will be explained and, where available, supporting evidence will be provided. Upward only rent review provisions will not be enforced and this can be confirmed by way of side letter or Deed of Variation at the cost of the Lessee. Alternatively, a new agreement, without UORR, can be provided on no less favourable terms. Renewal Where the principle of renewal is agreed between parties, rental negotiation, timetable and procedures will be as for rent review. Upwards only rent reviews will not be included in renewed agreements.

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Indexation Where specified in the lease, rent is subject to indexation in accordance with the Retail Price Index on an annual basis. Indexation may result in an increase or reduction in rent and should be taken into account when considering rent proposals. Property Risk Leases are held on full repair and insuring terms, with the lessee responsible for repair, maintenance and decoration of the premises as a whole. Individual leases describe whether the repair liability is to put or keep the premises in repair. Insurance The cost of building insurance is charged to the lessee. There is a separate charge for building insurance and full details of the cover and excess will be provided. The charge will be reduced (price matched) where the availability of the provision of equivalent quality cover at a lower cost can be demonstrated.. Assignment - Responsibility of Shepherd Neame - To respond promptly to request for consent to assign. - To carry out dilapidation survey within four weeks of request to assign. - To meet with proposed assignee and determine whether assignee is suitable. - To instruct solicitors (at the cost of the lessee) to prepare necessary legal documentation to

enable the assignment to proceed. - Responsibilities of Lessee (Assignor) - To disclose trading information and all information necessary to enable prospective assignee

to make an informed judgement on taking on the house. - To ensure the prospective assignee has completed appropriate pre-entry training, holds a

Personal Licence and has taken appropriate professional advice in connection with Business and Financial Plans for the premises

5.

Authorised Guarantee Agreement must be entered into in advance of assignment, unless a release fee of £3,000 excluding VAT or 5% of premium plus VAT is paid, whichever is the greater. - Responsibilities of Assignee (Prospective Lessee) - To inspect premises thoroughly and seek independent professional advice on the structure. - To seek professional advice when preparing Business and Financial Plans.

5 This requirement may be varied if so approved by Shepherd Neame on receipt of evidence of

relevant experience of proposed assignee.

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Surrender Surrender of your lease can only take place with the agreement of Shepherd Neame. In cases of surrender, a dilapidation charge will be made and an early release fee of not more than twelve months rent will be charged. Landlord’s Option to Purchase Some lease agreements operated by Shepherd Neame contain a “buy back” provision. These vary according to the lease format.

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Links to Important Organisations Shepherd Neame Ltd www.shepherdneame.co.uk British Beer and Pub Association (BBPA) www.beerandpub.com British Institute of Innkeeping (BII) www.bii.org Association of Licensed and Multiple Retailers (ALMR) www.almr.org Federation of Licensed Victuallers Association (FLVA) www.flva.com Pub Independent Conciliation and Arbitration Service (PICAS) www.picaservice.com Pub Independent Rent Review Scheme (PIRRS) www.pirrscheme.com Shepherd Neame Ltd 17 Court Street FAVERSHAM Kent ME13 7AX Telephone: 01795 532206 Fax: 01795 538907 Email: [email protected] Web Address: www.shepherdneame.co.uk Registered Number: 138256 Recruitment Hotline: 01795 542132


http://www.beerandpub.com/

http://www.bii./

http://www.almr.org/

http://www.flva.com/

http://www.picaservice.com/

http://www.pirrscheme.com/

mailto:[email protected]


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Appendix A: The Tenancy Process

View Web Site (Shepherd Neame) Obtain details of houses available

Decide on house(s) you wish to apply for Obtain copy of letting details

Carry out due diligence View house at different trading times

View and assess competition

Contact Brewery to register interest by email or by telephone

Complete PEAT Training (if new to industry) Obtain Personal Licence

Arrange Financing

Obtain, complete and submit application form

Business discussion with Business Development Manager FIRST INTERVIEW

Further due diligence Complete Business and Financial Plans

External Financial Verification/Advice Interview with Tenanted Trade Director and/or Operations Manager

Business Development Managers SECOND INTERVIEW

OFFER LETTER

External Legal Advice

“Sign Up” with Business Development Manager: Pay Deposits, Sign Contract, Sign Tenancy Agreement

Instruct Broker/Stock Taker

Ensure mandatory training completed

Agree change date

Arrange insurance and register for VAT

Place initial order

TAKE ON TENANCY

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Appendix B: Guide to Inventory Ownership/Repair Liability Standard Tenancy

INVENTORY/REPAIR GUIDE TENANTS BREWERY

OWNERSHIP RESPONSIBILITY RESPONSIBILITY OWNERSHIP

AMENITY SIGNS

Internal

External

AUDIO EQUIPMENT

(including amplifier equipment,

microphones, record players,

tape recorders)

BARBECUE

BAR COUNTERS

and back fittings

BEAMS

Structural

Decorative

BEAM AND STANCHION

CASINGS

BEER SKIDS/BUMP PADS

BLINDS

Internal

External

BOILERS

Proof of service/maintenance

will be required on request by

the Company/Insurers

Annual Landlord safety check

BEER RAISING EQUIPMENT

BEER DISPENSE EQUIPMENT

BEER LINES

BOUNDARY GATES, WALLS

& FENCES

Internal fences (new & repairs)

BRIC-A-BRAC/DECORATIVE

ITEMS

BURGLAR ALARM SYSTEM

(including wiring)

BUILT-IN CUPBOARDS AND

WARDROBES

EXTRACTOR CANOPY

(see Bar Counter)

(see Kitchen Extract)

CARPETS

(including all loose coverings to

floors I.e. rugs, mats.

CAR PARKS

Resurfacing & renewing gravel surface

Bay markings. Keeping clean and tidy

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CATERING EQUIPMENT

(excl. Extraction Canopies)

CATERING (Crockery/Utensils etc)

CEILING

(But decoration)

CELLAR HEATERS (Portable)

CELLAR CEILINGS

Insulation of and underdraining

Decoration

CELLAR PUMP-Hand or Electric

(all pipework to be included but not sump)

CELLAR COOLING EQUIPMENT

CELLAR WALLS

(But decoration)

CELLAR ACCESS

Provision of safety ropes in

Trade/Servery areas

CELLAR FLAPS

CELLAR CURTAINS

CENTRAL HEATING SYSTEMS

i.e. Radiators, Piping:See Boilers

CO2 / MIXED GAS CYLINDERS

Storage/Securement

COAL/COKE BUNKERS

CESSPOOL/SEPTIC/SOAKAWAYS

Emptying

COLD WATER MAINS

(up to and including man water

storage tanks)

CONNECTION OF DRAINS TO

SEWER

COOLED SHELVES/COLD CABINETS

Rent Payable

COOLING UNITS

COMPRESSOR

CROCKERY

CURTAINS

(including Rails etc)

CUTLERY

DAMP PROOFING

DART BOARDS

DECORATIONS

Internal Decorations

External Decorations/Tenant to wash down

Accommodation

Decoration of Cellars

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DEMOLITION OF BUILDINGS

(Internal or external)

DITCHES AND DYKES

Cleaning & maintenance of

DISPLAY CABINETS not cooled

DOOR BELLS

(Including bells, bellpushes and

wiring from mains, if installed)

DOMESTIC FURNITURE

(not inventory item)

DOORS

Easing & Adjusting

Locks & door furniture

Door closers (incl. floor springs)

DRAINS

New/renewing/repairing

Unblocking/cleaning/jetting

(unless structural fault)

DRAPERY

ELECTRIC FIRES

Portable

Built In

ELECTRIC LIGHT

FITTING/SHADES/BULBS

ELECTRIC LIGHT FITTINGS

EMERGENCY

ELECTRICAL WIRING

EXTERNAL DECORATIONS

EXTERNAL REPAIRS

(usually associated with external

decorations but also carried out

as running repairs)

Repairs/renewal/demolition of

Chimney Stacks

Renew Roofs

Renew flashings/Valley Gutters

Renew Rainwater goods

Rainwater goods unblocking

and/or cleaning

EXCAVATIONS

FANS

Chimney Fans

Fixed Extractor Fans (including

shutters ducting enclosures and

equipment)

Kitchen fans - see Kitchen Extract

Free standing

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FASCIA LIGHTING - Bulbs Tenant

FIRE ALARM SYSTEM

FIRE DOORS

FIRE EXTINGUISHERS AND

FIRE FIGHTING EQUIPMENT

FIRE ESCAPE STAIRS (external)

FIRE BACKS

FIRE SURROUNDS/MANTELS

FIXED SHELVING

(including shelving in Wine &

Spirits Stores & including all metal

shelving)

FLOODLIGHTING

(to car parks etc)

FLOOR BOARDS

FLOOR COVERINGS

Synthetic (including Lino, PVC

composition tiles and jointless

flooring, cork treads, altro or similar, risers &

flooring Ferrado nosings to stair cases,

excluding quarry tiles, asphalt,mosaic & wood)

Preparation/Latex screed to receive

coverings

FLOOR SCREEDING

FLOWER BASKETS/WATERING

SYSTEMS

FLY SCREENS/INSECT KILLERS

FLUE LININGS

FOOT RAILS

FOUNDATIONS

FURNITURE

(All loose goods incl. fixed seating)

GARDEN

GAS FIRES

Portable (not part of built-in surround)

Built-in

GAS RADIATORS

Portable

GAS LIGHT FITTINGS

(and all gas services including gas

brackets and mantles where initially

installed)

GAS SERVICES

GLASS (including insurance)

GLASS RACKS (Bar Servery)

Wood or Metal

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GLASS WASHERS

Including and waste

GLASSES

GREASE TRAPS

GUTTERS/DRAIN PIPES

HAND DRYERS

HEDGES/TREES

Trimmings and lopping of (Subject to

Tree Preservation Orders)

HEATERS

(including off peak electric storage

heaters)

HOISTS-Legal Requirement

ICE MAKING CABINETS

(Free standing) Installation

IMMERSION HEATERS & HOT

WATER Tanks and Cylinders

INSPECTION CHAMBERS

Lifting,inspection,cleaning & greasing

INTERNAL REPAIRS

Repairs to floor screed, floor boards

and skirting

Repairs to ceilings,wall plaster & tiling

Repairs to doors,architraves, window

boards

INTERCOM SYSTEM

INTERNAL TELEPHONE

(including instruments/wiring)

INTERNAL DECORATIONS

INTERNAL FINISHES & F & F

Floor coverings except quarry tiles

Quarry tiles and skirtings

Wall Tiling

Decorations & preparation of all

ceilings, woodwork and pipework

KITCHEN UNITS

Cupboards, worktops etc

KITCHEN EXTRACT

Fans, canopy and ducting

LANDSCAPING

Planting and Turfing

Tenant also to maintain, cut & trim

LETTING FURNISHING & SUNDRIES

LIFTS, HOISTS

(Proof of servie/maintenance will be

required on request by Company/

Insurers)

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LEGAL REQUIREMENT

LOCKS

Locks and door furniture

LINO

MENU FRAMES

External

METAL COWLS TO CHIMNEY STACKS

MIRRORS & BATH FITTINGS

MOVEABLE FENDERS

MOVEABLE WINDOW DISPLAY

FITTINGS

NOTICE BOARDS

OIL FIRES

Portable (Not part of built-in surround)

OPTICS

PANIC BOLT (or similar equiipment)

PARTITIONING to ceiling height

PELMETS (with curtains)

Wood/Fabric

PLAY (CHILDRENS EQUIPMENT)

Annual safety inspection required

PLUMBING

Grease Traps

Pipes

Tenant to maintain all pipework and

plumbing including wastes, taps,

minor leaks, joints etc

Boiler, new & replacement

External plumbing

Non-return valves - equipment

installations and general pipework

POOL TABLES (may be rented)

PRICE LISTS

PUBLIC ADDRESS SYSTEMS

PUB GAMES EQUIPMENT

(except AWP, Pool, Bar Billiards)

PUMPS

Sewer pump installation

Cellar installation/sump pump

QUARRY TILES

REFRIGERATORS

Including Display cabinet

Walk-in Fridge Units

REPOINTING

RETAINING WALLS

RETILE ROOFS

RE-UPHOLSTERING

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REWIRING See electrical wiring

ROOFS - including roof timber, parapets

New/Reapir

SAFES

SANDWICH BOARDS (A BOARDS)

to company specification

SEATING - fixed & loose

SEWER CONNECTION

SEWAGE DISPOSAL UNIT

Tenant to desludge

SHEDS OR TIMBER GARAGE

SHELVING

Fixed

Moveable

SHORING AND PROTECTION WORKS

SINKS AND BASINS

Trading and non-trading areas

SIGNS

Brown signs

External signs

(including amenity, illuminated/painted

signs, lanterns, lamps-all supporting brackets

sign foils, fascias and tethering)

Tenant to clean

Identity Signs

Replacement of bulbs, tubes & starters

and cleaning

Remote directional

(Subject to tenant obtaining owner's

permission, consent from local Authority &

paying fees as required)

SKIRTINGS

SMOKE DETECTORS

(Public & Private recommended)

SOLID FUEL STOVES

STILLAGES

STRUCTURAL FLOOR

(including boarding)

SERVICES

Main supply (gas, water, electricity up to entry

point into house)

Internal supplies (gas & water)

Cold water storage tanks

Header tanks to hot water/central heating

system

Renewal of internal suppliers (gas & water)

New electrical wiring

Socket outlet & switches

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TABLEWARE Crockery, cutlery, tableware

TANKING & INJECTION TREATMEMT

TO BASEMENT CELLAR & WALLS

Decoration

TAPE RECORDERS

TELEPHONE

(See internal telephone)

TILLS

TOILETS (See also Urinals)

TV SETS/SATELLITE TELEVISION

INSTALLATION (Local authority consent

may be required

UPHOLSTERY OF SEATING

(Fixed and loose)

New Work

Re-upholstery of existing seating

URINALS excluding pipework & cistermisers

VENTILATION PLANT

(Minor ducting, and enclosures to

equipment

VENTILATION FILTERS

New Installation

Replacements

VERMIN CONTROL

Eradication of rats, mice, wasps, fleas

VIDEO SYSTEMS

WALLS & PARTITION WALLS

(Non-moveable)

WALL PANELLING (New Work)

WASHING UP MACHINES

Supply & Installation

WASH HAND BASINS

See sinks

WASTE DISPOSAL UNITS

(Free standing & fixed to sinks)

WATER HEATERS

Gas/Electric (including immersion

heater fixed in hot water tanks)

WATER CONTROL DEVICES

i.e. 'Cistermisers' including non-return

valves

WATER SOFTENERS

New & maintenance

WEB-SITES

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WINDOWS/SKYLIGHTS/ROOF LIGHTS

New Windows

Pane replacement (like for like)

Ease & adjustment/repairs/renewals

to stays/fasteners/sash weights/locks

bolts/sash cords

WINE CABINET

WIRING - See Electical Wiring

WIREGUARDS TO WINDOWS

LANTERN LIGHTS ETC

(including snowguards)

WC SUITES

WOOD BLOCK FLOOR

(See Floor Covering)

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Appendix C: Flow Meters

Shepherd Neame reserves the right to install at their cost flow metering equipment. This equipment enables us to monitor throughput of draught beer and cider sold and therefore assess sales performance at individual houses. Flow meters may also be installed to monitor the throughput of draught minerals. The information generated can be useful for the operation of your business, particularly in respect of: - Stock control - Planning staff rotas - Ensuring line cleaning is carried out regularly - Proving compliance with Licensing requirements Your BDM will arrange for the provision of this information at your request. The flow meter enables sales to be compared with purchases and can therefore provide primary evidence of purchases outside the tie. Purchasing outside the tie represents a fundamental breach of covenant, which may result in forfeiture of the tenancy agreement. In the event that flow monitor information indicates the possibility of goods being purchased in breach of your agreement, your BDM will discuss this issue with you. In the event that there is secondary evidence of buying out arising from cellar inspections, purchasing patterns or proof of third party delivery, then we reserve the right to charge a penalty in accordance with the terms of your tenancy agreement. You will be advised of the penalty charge, which will then be recovered through your trading account. If the flow meter equipment is to be recalibrated, you will be invited to attend the recalibration.

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Appendix D: AWPs/SWPs/Prize

The tenant must use an approved nominated supplier, as decided by the Company from time to time, for the following machines: - AWP Cat C and D: Tenant share of income after deduction of HMRC Taxes 33.33% The level of share reflects the fact that the Company pays the rent for machines and bears the

cost of shortfall, if there are insufficient funds to pay the rent after deduction of the tenant’s share.

- SWP with Cat C or D Games: Tenant share of income by agreement, but no less than 25%

after operator share - SWP Skill Only: Tenant share 50% of income after deduction of HMRC Taxes and operator

share - Video and/or Other Prize: Tenant share 50% of income after deduction of HMRC Taxes and

operator share No other prize or lottery machines will be permitted without Company consent. The Company will ensure that with regard to the machines stated above: - Our approved suppliers have the correct Gaming Commission accreditations - All suppliers’ Government Taxes are accounted for - All tenants are legally authorised for the machines sited on their premises The tenant will be responsible for accounting to HMRC the Machine Games Duty due. The Company will retain the services of a machine management company, whose duties will include: - Advising tenant on how to maximise income from machines - Ensuring that tenants receive all income due from machines - Ensuring that all approved suppliers provide a satisfactory level of collections and services - Monitoring and assessing changes within machine technology and make available to tenant if

appropriate - Monitoring and assessing individual machine performance to ensure tenants have the best

available choice of machines The tenant is free of tie and can use any supplier for the following types of machines: - Pool (site rent payable to Company) - Juke Box/CD - Non-Prize Video - Bar Billiards - Football Tables - Pin Tables

- 27 -

The tenant is therefore responsible for ensuring that the supplier is properly paid, licensed and VAT/Duties accounted for. Shepherd Neame receives no royalty payments or management fees from the suppliers of AWPs and SWPs. AWP Collection Example

Left on Site Banked

Cash in Box 175.00

Less MGD 20% 35.00 35.00

140.00

Tenant’s Share 33.33% 46.66 46.66

93.34

Less Rent 47.50 47.50

Brewery Share 45.85 45.85

VAT on Rent 20% (9.50) 9.50

VAT on Brewery Share 20% (9.17) 9.17

62.99 112.01

Breakdown

Left on Site Banked

Tenant share 46.66

Due to HMRC-MGD 35.00

Due from/to HMRC-VAT (18.67) 18.67

Operator 47.50

Brewery 45.84

62.99 112.01

- 28 -

Appendix E: Training Provided

The following mandatory induction training must be undertaken before you take on your pub: - APLH – Cost: £180 including certification - PEAT (if new to the industry) After you have taken on your pub: - Personalised Induction Programme, including the following courses: - BII Award in Beer and Cellar Quality – Cost: £50 - Financial Management – Cost: £50 - Level 2 – Food Safety in Catering – Cost: £50 - Level 2 – Health & Safety – Cost: £50 Further training is recommended: - Level 2 – Fire Safety – Cost: £50 - Level 2 – Emergency First Aid – Cost: £50 - Level 3 – Food Safety – Cost: £200 Additional Support The following support is offered: - Online learning package for you and your staff, with modules currently including: Food Safety Level 2: - Customer Services - Age Verification - Under Age Sales Prevention - Award for Licensed Premises Staff - Drug Awareness - Conflict Management - Equality and Diversity - Disability Awareness - COSHH - Coca Cola Perfect Serve - Coca Cola Perfect Mix - Coffee Skills - Cask Marque Bar Excellence - Cellar Management - Front of House Food Safety - Front of House Health & Safety - HACCAP - Health & Safety - Fire Awareness - Manual handling - Interview Skills - Staff appraisal Skills - Time Management - Stock Management - Money Laundering Awareness - Bribery Act Awareness These training modules are provided by CPL and unlimited access to all courses is provided for an annual subscription of £250.

- 29 -

Appendix F: Rent Assessment

The ………………..

Fair Maintainable Trade Turnover

Product Volume £ per Volume Unit Turnover

Cask Beer

Draught Lager

Stout

Draught Cider

Bottled and Other

Wine

Spirits

Minerals/Crisps, etc as % Turnover Above

Total

Gross Margin

Category % Margin Turnover

Wet Trade

Catering

Letting

AWP (if free of tie)

Other

Total

Costs

Category Cost Margin

Staff

Utilities

Repair

Entertainment

Operational

Rates Payable

Interest % on £K

Total

Net Divisible Balance - % Bid - Rent NB: Where premises are tied for AWPs, profit to include AWP share.

Documents

Code of Practice – Version Dated 19 December 2013