Fuller,Smith&Turner PLC - Half Year Results

Financial Highlights

·     Revenue up 6% to £222.1 million (2017/18: £209.3 million)

·     EBITDA1 up 2% to £38.2 million (2017/18: £37.6 million)

·     Adjusted profit before tax2 down 1% to £23.6 million (2017/18: £23.8 million)

·     Adjusted earnings per share3 down 1% at 33.83p (2017/18: 34.22p)

·     Interim dividend up 3% to 7.80p (2017/18: 7.55p)

·     Proforma net debt to EBITDA4 of 3.1 times (2017/18: 2.8 times).

Operational Indicators

·     Good performance from Managed Pubs and Hotels with like for like sales rising 4.1% (2017/18: 3.6%), total profits reflect high number of 92 closure weeks (2017/18: 29 weeks) due to investment in estate

·     Strong results from Tenanted Inns with like for like profit increasing 4% (2017/18: 3%), four pubs sold and a rise in average EBITDA per pub of 2%

·     Total beer and cider volumes for The Fuller's Beer Company rose marginally by 0.2% (2017/18: 1%), with revenue up 7% and operating profit up 9%.

1.   Pre-separately disclosed earnings before interest, tax, depreciation, loss on disposal of plant and equipment, and amortisation

2.    Adjusted profit before tax is the profit before tax excluding separately disclosed items. Statutory profit before tax was £20.8 million (2017/18: £23.6 million)

3.     Calculated using adjusted profit after tax and the same weighted average number of shares as for the basic earnings per share and using a 40p ordinary share. Basic earnings per share were 29.65p (2017/18: 35.12p)

4.     Proforma net debt to EBITDA is calculated on a 12 month basis adjusting as appropriate for acquisitions and disposals

Strategy Update

·     Acquired 10 excellent new sites - including six Bel & The Dragon country inns in the Home Counties and four City bars that fill geographical gaps in our estate

·     Front-loaded investment programme to maintain our premium position and excellent customer offer

·     Continued good progress in our Tenanted division, with 23 pubs on the new turnover agreement and four pubs sold as part of our strategic review

·     Further developments in The Fuller's Beer Company to build a sustainable business that is fit for the future with full integration of the Dark Star Brewing operation, increased collaboration projects and Pilot Brewery coming on stream

·     Final stages of development of new ERP IT system, which went live post the period end.

Current Trading and Outlook

·     Managed Pubs and Hotels like for like sales up by 4.4% for 33 weeks

·     Tenanted Inns like for like profit rose 2% for 33 weeks

·     Total beer and cider volumes increased 0.5% for 33 weeks.

Commenting on the results, Chief Executive Simon Emeny said: "I am pleased to be reporting another good performance. Each division is delivering growth and we continue to benefit from having a well-balanced business. Our excellent management team has further strengthened the business through a clear vision, a strong set of values and a commitment to growth through offering an outstanding customer experience and recruiting, developing and retaining the best people.

"While our revenues have continued to grow, we experienced a small drop in Group profits - however, this should be taken in context. We made a conscious decision to front-load our investment programme - impacting our profitability by £0.9 million. Although we would have seen profit increase had we not taken this action, we believe this is the right decision and ensures our estate is in the best possible position to benefit from the busy Christmas period and beyond.

"In the 33 weeks since 1 April 2018, like for like sales in our Managed Pubs have risen 4.4%, while like for like profit in our Tenanted Inns is up 2% and total beer and cider volumes in The Fuller's Beer Company are marginally up 0.5%.

"Since the period end, we have opened The Albert Arms in Esher, with six bedrooms, and added seven new bedrooms to The Fox & Goose, Hanger Lane, while a further 28 bedrooms are due to come on stream before the year end. We will also be opening The Signal Box at Euston Station in December.

"The second half of the year is also an exciting time for The Fuller's Beer Company. We are installing our new canning line at Dark Star, will be brewing our second suite of Fuller's & Friendscollaboration beers and building on the early work of our Fuller's First initiative to grow the share of our own beers in our Managed and Tenanted estates. We will also be optimising and driving business benefits from the new ERP system and launching an online B2B sales platform.

"Finally, it would be impossible to look forward to the second half of the year without reference to Brexit, which is due to happen on the penultimate day of our financial year. Facing uncertainty is never easy, but Fuller's is an exceptionally well-established operation and benefits from a balanced business model which is designed to be flexible enough to adapt to changing trends and markets yet resilient enough to weather any storm. With a first-class team of people, a well-invested pub estate and a portfolio of outstanding brands, we are ready and able to face the future."


I am pleased to be announcing a solid set of results in a continued challenging environment. Our total revenue has risen by 6% to £222.1 million (2017/18: £209.3 million) although our adjusted profit is down a marginal 1% to £23.6 million (2017/18: £23.8 million). This reflects a considered decision to invest the majority of this year's capital expenditure programme in the first half.

As a company with a very long-term view, we continue to invest for the future both in terms of capital projects within our premium pub portfolio and in the development of our people. During the last recession we maintained our investment programmes, winning customers and increasing market share. We believe in ensuring that our excellent pub estate, our breweries and our teams are in the best position to continue to deliver outstanding service to our customers and to grow in the future.

As a result of our decision to invest, our adjusted earnings per share, a metric that is always of interest to our shareholders, was down slightly by 1% to 33.83p (2017/18: 34.22p). However, our dividend payment has increased by 3% - continuing the upward trajectory our dividend payments have taken since the 1950s.

Our Managed Pubs and Hotels continue to generate the majority of our revenue and profit and it is pleasing to see like for like sales rise 4.1% (2017/18: 3.6%). Our consistently strong offer of delicious, fresh, seasonal food, an outstanding portfolio of premium brands, well-invested pubs in stunning locations and exemplary customer service continues to create memories and customer experiences that keep our guests happy and coming back for more.

It has also been a good year for our Tenanted Inns. The new turnover agreement continues to prove popular and successful for both our Tenants and the Company. This year, like for like profit in this part of the business rose 4% (2017/18: 3%). Engagement with our Tenants is good and I am delighted to see so many taking advantage of access to more favourable purchasing terms through our food suppliers and back of house support.

It has been a busy year for The Fuller's Beer Company too - with the integration of Dark Star Brewing, a rebrand for Frontier and some great sponsorships for our iconic London Pride brand. The Pilot Brewery located at Chiswick is now fully operational and our new ERP (enterprise resource planning) IT system is up and running. The range of beers which The Fuller's Beer Company is producing are more exciting than ever and it is fantastic to see Chiswick taking its place at the heart of London's vibrant beer scene. We would also like to thank the Chancellor of the Exchequer for getting the second half of the year off to a great start with a freeze in beer duty - this was wonderful recognition for the contribution brewing and pubs make to the UK economy.

As ever, it is our people who deliver this success. They are an amazing team and I am proud to work with them. I would like to thank them all for their hard work, commitment and dedication.


The Board is pleased to announce an increase of 3% in the interim dividend to 7.80p (2017/18: 7.55p) per 40p 'A' and 'C' ordinary share and 0.780p (2017/18: 0.755p) per 4p 'B' ordinary share. This will be paid on Wednesday 2 January 2019 to shareholders on the register as at Friday 7 December 2018.

Michael Turner


22 November 2018