Fuller, Smith & Turner P.l.c. Class A · LSE:FSTA
Fuller, Smith & Turner P.l.c. Class A — H1 2017 Earnings Presentation
26 slides from Fuller, Smith & Turner P.l.c. Class A's earnings presentation, November 2016
Slide 1: Half Year Results for the 26 Weeks Ended 24 September 2016
Fuller, Smith & Turner PLC HALF YEAR RESULTS FOR THE 26 WEEKS ENDED 24 SEPTEMBER 2016
Slide 2: Highlights
HIGHLIGHTS A good performance in the face of increasing headwinds Managed LFL sales Revenue Adjusted profit Adjusted EPS Interim dividend H1 2017 £197.6m £22.8m 32.44p 7.25p +3.4% +11% +6% +6% 5% H1 2016 £177.7m £21.6m 30.74p 6.90p
Slide 3: Group Performance
GROUP PERFORMANCE H1 H1 2017 2016 £m £m Revenue 197.6 177.7 +11% Operating costs (171.4) (153.2) +12% Operating profit 26.2 24.5 +7% Net finance costs (3.4) (2.9) +17% Adjusted profit 22.8 21.6 +6% Depreciation and amortisation 10.1 8.8 +15% EBITDA 36.3 33.3 +9% All items are before exceptional item
Slide 4: Five Year History
FIVE YEAR HISTORY Adjusted profit* Adjusted EPS Interim dividend +39%† +52%† +44%† £22.8m 32.44p 7.25p £16.8m 22.78p 5.35p H1 2017 H1 2013 H1 2017 H1 2013 H1 2017 H1 2013 *Adjusted profits are before exceptional items and tax † 5 year growth rates
Slide 5: Exceptional Items
EXCEPTIONAL ITEMS H1 H1 2017 2016 £m £m Profit on sale of properties 0.5 1.6 Acquisition costs (0.6) (0.5) Reorganisation costs (0.6) – Deemed remuneration on the future purchase (0.3) (1.3) of shares in The Stable Onerous lease provision releases – 0.2 Pension scheme finance costs (0.4) (0.4) Total
Slide 6: A Balanced Business
A BALANCED BUSINESS Share of operating profit* • UK-centric businesses • Use mainly British raw materials in brewing, cider and food The Fuller’s Beer Company • Retail estate focusses on local provenance 14% • Better positioned for a weaker pound 23% 63% • Balanced and vertically Managed Pubs Tenant
Slide 7: Managed Pubs & Hotels
MANAGED PUBS & HOTELS H1 H1 2017 2016 £m £m LFL sales +3.4% +5.6% Revenue 130.8 121.9 +7% Operating costs* (112.8) (104.9) +8% Operating profit* 18.0 17.0 +6% Operating margin 13.8% 13.9% Depreciation and amortisation 7.4 6.3 +17% EBITDA 25.4 23.3 +9% * Excluding exceptional items.
Slide 8: Tenanted Inns
TENANTED INNS H1 H1 2017 2016 £m £m LFL profits -2% +3% Average EBITDA per pub +1% +2% Revenue 15.6 16.1 -3% Operating costs* (9.0) (9.4) -4% Operating profit* 6.6 6.7 -1% Operating margin 42.3% 41.6% Depreciation and amortisation 0.8 0.8 – EBITDA 7.4 7.5 -1% * Excluding exceptional items
Slide 9: The Fuller's Beer Company
THE FULLER’S BEER COMPANY H1 H1 2017 2016 £m £m Total beer and cider volumes -4% +1% Revenue 74.8 63.0 +19% Operating costs* (70.9) (59.4) +19% Operating profit* 3.9 3.6 +8% Operating margin 5.2% 5.7% Depreciation and amortisation 1.9 1.7 +12% EBITDA 5.8 5.3 +9% * Excluding exceptional items
Slide 10: Generation and Use of Cash
GENERATION AND USE OF CASH H1 H1 2017 2016 £m £m EBITDA 36.3 33.3 Working capital / other adjustments 3.3 4.6 Interest (3.0) (2.7) Tax (4.6) (4.0) Cash available for discretionary spend 32.0 31.2 Capex on existing estate and brewery (14.2) (10.1) Pub acquisitions* (6.5) (36.7) Pub and restaurant dev
Slide 11: Annual Capital Expenditure
ANNUAL CAPITAL EXPENDITURE 90 £81m 80 Corporate Acquisitions 70 £56m New Site 60 Development £49m Costs 50 Pub Acquisitions £38m 40 £31m Fuller's Inns (Existing 30 Estate Investment) 20 The Fuller's Beer Company 10 0 2013 2014 2015 2016 2017E
Slide 12: Strong Balance Sheet
STRONG BALANCE SHEET Borrowing Capacity • £210m available long-term facilities, additional £20m (24 September 2016) facility available until August 2017 • 63% of period end gross borrowings fixed or capped £45.5m • Average cost of gross borrowings for H1 2016/17 of 3.1% (H1 2015/16 : 3.3%) Available
Slide 13: Consistent Strategy
CONSISTENT STRATEGY • To deliver a distinctive customer experience across the whole Fuller’s estate • To grow by carefully targeted acquisitions and developments that enhance our premium business • To build a leaner cost base by investing and improving processes to increase efficiency • To grow the
Slide 14: Managed Pubs & Hotels
MANAGED PUBS & HOTELS • Consistent outperformance of LFL Growth Rates Peach Tracker 4 3.6% • Food sales continue to grow and 3.4% 3.3% 3.3% margins have increased 3 • Ongoing trend towards craft beer 2.5% and higher margin brands • Premium spirits, especially gin, grew 2 strongly during the first ha
Slide 15: Distinctive Pub & Hotel Experience – Creating Compelling Reasons to Visit
DISTINCTIVE PUB & HOTEL EXPERIENCE – CREATING COMPELLING REASONS TO VISIT • Engaged staff, recruited for personality, create great memories and deliver excellent customer service • In-house training programmes are building home grown teams, reducing labour turnover and offering genuine career paths
Slide 16: Distinctive Pub & Hotel Experience – Focus on Fresh Food
DISTINCTIVE PUB & HOTEL EXPERIENCE – DEFINED BY A FOCUS ON FRESH FOOD • Chef’s Guild programme continues to grow • 127 chefs and kitchen team members actively participating at the half year • Investments in Head Chefs has seen labour turnover drop by 36% during the period • Continue to build Only at
Slide 17: Target Acquisitions & Redevelopments – Investing in Our Pubs
TARGET ACQUISITIONS & REDEVELOPMENTS – INVESTING IN OUR PUBS • Acquired The Gun, an iconic riverside pub in Docklands • Overlooking The O2 arena and with an outstanding reputation for high quality food • Acquired The Half Moon, Herne Hill – an area where we are currently under represented • Historic
Slide 18: Target Acquisitions & Redevelopments – Investing in Accommodation
TARGET ACQUISITIONS & REDEVELOPMENTS – INVESTING IN ACCOMMODATION • Accommodation continues to deliver good returns • Redeveloped two sites including the addition of rooms • The Queen’s Head, Kingston – refurbished with the addition of 10 new rooms • The Princess Royal, Farnham – added six new rooms
Slide 19: The Stable
THE STABLE • The cathedral to cider and pizza • Acquired an additional 25%, taking our investment to 76% • Attracts a younger, more female demographic than the core Fuller’s business • Great team of highly engaged and dedicated Stablehands • Opened three new sites in the first half • Whitechapel • K
Slide 20: Tenanted Inns – Building a Business for the Future
TENANTED INNS – BUILDING A BUSINESS FOR THE FUTURE • Focus on developing our Tenanted Inns to reflect the Fuller’s vision • Wide range of pubs, from high end food houses to community locals • Invest in back and front of house at the right sites to beat the competition • Recruit entrepreneurial tenan
Slide 21: The Fuller's Beer Company
THE FULLER’S BEER COMPANY • Craft keg range has seen strong growth, attracting new drinkers • Frontier continues to grow, supported by innovative digital marketing and further exposure to new consumers at festivals • Strong six months for Cornish Orchards with launch of Cornish Orchards Blush on dra
Slide 22: Premium Brand Portfolio with a Focussed Strategic Plan
PREMIUM BRAND PORTFOLIO WITH A FOCUSSED STRATEGIC PLAN • Recruiting new drinkers with interesting beers • Wide range of exciting premium brands from Fuller’s • Promote our reputation as an innovative brewer, through collaboration brews, our cask ale portfolio and speciality products like Vintage Ale
Slide 23: Current Trading and Outlook
CURRENT TRADING AND OUTLOOK • Current trading • Managed LFL sales up 2.6% for 33 weeks • Tenanted LFL profits down 2% for 33 weeks • Total beer & cider volumes down 5% for 33 weeks • Facing increasing headwinds with an uncertain economic and political environment and added cost pressures • Six devel
Slide 24: Summary
SUMMARY • A good performance in a challenging market • Adjusted PBT up 6% to £22.8m • Adjusted EPS up 6% to 32.44p • Dividend up 5% to 7.25p • Developing our winning strategy with a focus on: • Delivering a distinctive customer experience across the whole Fuller’s estate • Growing by carefully targe
Slide 25: Appendix – Reconciliation to Statutory Profit
APPENDIX – RECONCILIATION TO STATUTORY PROFIT H1 H1 2017 2016 £m £m Adjusted profit 22.8 21.6 +6% Exceptional items (1.4) (0.4) Profit before tax 21.4 21.2 +1% Tax on adjusted profit (4.9) (4.4) Tax on exceptional items 1.2 (0.1) Profit after tax 17.7 16.7 +6% Adjusted EPS 32.44p 30.74p +6% Basic EP
Slide 26: Appendix – Fuller's Inns
APPENDIX – FULLER’S INNS 26 Mar Acquired / Disposed Transfers 24 Sept Acquired / 18 Nov Within the 2016 developed 2016 developed 2016 M25 Managed Pubs & Hotels 191 2 – 2 195 1 196 61% Tenanted Inns 200 – (2) (2) 196 – 196 28% Total Fuller’s 391 2 (2) – 391 1 392 The Stable 13 3 – – 16 1 17 Total Gro
Fuller, Smith & Turner — H1 2017 Earnings Presentation on 6ix