Fuller, Smith & Turner Plc - Interim Results

 

FULLER, SMITH & TURNER P.L.C.

("Fuller's" or "the Company")

Financial results for the 26 weeks ended 28 September 2019

A solid start for our focused premium pubs and hotels business

Financial Highlights

  • £164.5 million profit from the sale of the Fuller's Beer Business
  • Revenue* up 6% to £174.8 million (H1 2019: £165.0 million)

Comparable basis, excluding the impact of IFRS 16*:

  • Adjusted profit[1] was level at £17.9 million (H1 2019: £17.9 million)
  • Adjusted earnings per share[2] up 1% to 26.17p (H1 2019: 25.83p)
  • EBITDA[3] was £30.2 million (H1 2019: £30.6 million) 

Statutory results, post IFRS 16:

  • Statutory profit before tax for total Group operations of £176.2 million (H1 2019: £20.8 million), after separately disclosed items of £158.2 million
  • Basic earnings per share for total Group operations of 315.73p (H1 2019: 29.65p
  • Interim dividend level at 7.80p per 'A' and 'C' 40p ordinary share (H1 2019: 7.80p) 

*Figures are for continuing operations only. Prior year numbers have been restated for the reallocation of central overhead recharges (refer to Note 1)

Operational Indicators

  • Good performance from Managed Pubs and Hotels with like for like sales[4] growth of 2.7% (H1 2019: +4.1%)
  • Tenanted revenue increased 3%, like for like profits reduced 3% (H1 2019: +4%) 

Strategy Update

  • Completion of the sale of the Fuller's Beer Business to Asahi Europe Ltd for £250 million
  • Delivery of Transitional Services Agreement (TSA) with Asahi due to complete in May 2020
  • Long-Term Supply Agreement (LTSA) with Asahi in place
  • Successfully completed £69 million return of capital to our shareholders and £24 million voluntary contribution to the defined benefit pension scheme
  • Focus on operating margin with plans in place to reduce central costs
  • Further investment in our estate with 58 closure weeks and seven major projects completed
  • New Executive Team in place to take the business forward

Current Trading and Outlook

  • Managed Pubs and Hotels like for like sales up 2.1% with total revenue up 5.1% for the first 36 weeks
  • Tenanted Inns like for like profits down 2% for the first 36 weeks
  • Completed the acquisition of Cotswold Inns & Hotels, including seven stunning freehold country inns and hotels in the Cotswolds for £40 million
  • Planning underway to replace brewery-focused ERP system with a proven, appropriate and simplified accounting system
  • Excited by the future - the right team in the place to build the business and take advantage of appropriate, relevant and exciting opportunities

Commenting on the results, Chief Executive Simon Emeny said:

"The first half of this year has seen the biggest transformation in Fuller's history. It has been a time of unprecedented change - and not without its challenges - but we have made good progress and we have a clear view and plan for the next steps in our journey from vertically integrated brewer and retailer to focused premium pubs and hotels business.

"Since completing the sale of the Beer Business at the end of April, we have put a new Executive Team in place - designed for the business as it is today. We have signed a Long-Term Supply Agreement with Asahi to protect the status of Fuller's beers on our bars, while also forging new and exciting relationships with other interesting suppliers. Post period end, we have also completed the return of capital to our shareholders and made a voluntary contribution to our defined benefit pension scheme to the tune of £69 million and £24 million respectively.

"Finally, we have secured new offices, in our Chiswick heartland, which we will move to in the spring. And to cap off the first stage in our modern history we have, post the period end, completed the excellent acquisition of Cotswold Inns & Hotels - seven iconic and beautiful freehold sites in the Cotswolds and two vibrant bars in Birmingham's city centre.

"For the 36 weeks to 7 December 2019, like for like sales in our Managed Pubs and Hotels have risen 2.1% and total sales have increased 5.1%. In our Tenanted Inns, like for like profits are down 2%. These are solid results in the context of consumer unease reflecting the ongoing political and Brexit uncertainty.

"We hope that the incoming Government helps us to continue to grow our business by overhauling the business rates system, ensuring a manageable level of wage inflation and creating an immigration system that allows us to recruit and invest in excellent team members from both home and abroad.

"There are a number of exciting new sites in the pipeline including The White Horse at Wembley, The Windjammer at Royal Dock and The Parcel Office at Liverpool Street Station as well as our first addition to Bel & The Dragon, which will be in an existing Tenanted site in Westerham, Kent. Major schemes will also be undertaken at The Mayfly in Stockbridge and The Bear at Burton near Christchurch, where we will be adding a further 10 bedrooms, taking our total to 1,038.

"Fuller's is well funded, has a clear vision, a distinctive strategy, a portfolio of extremely high quality assets and an excellent culture - which stands us in good stead to navigate further political and economic turbulence. Against this backdrop, and with an excellent and engaged team of people, we are poised to deliver further growth for our shareholders and our team members, and to ensure even more customers can enjoy all that Fuller's has to offer."