Fuller, Smith & Turner P.L.C. Class A · LSE:FSTA
Fuller, Smith & Turner P.L.C. Class A — H1 2005 Earnings Presentation
51 slides from Fuller, Smith & Turner P.L.C. Class A's earnings presentation, December 2005
Slide 1: Fuller, Smith and Turner PLC Interim Results
Fuller, Smith and Turner PLC Interim Results For the 6 months to 1st October 2005
Slide 2: Michael Turner, Chief Executive
Michael Turner Chief Executive
Slide 3: Agenda
Agenda Strategy Corporate Progress Key Financial Data Fuller’s Inns The Fuller’s Beer Company Corporate Acquisition Prospects
Slide 4: Consistent Strategy
Consistent Strategy Fundamental objective to maximise shareholder returns by generating high quality, sustainable earnings • Long term focus • Culture of style not fashion • Passion for quality • Pride in our premium brands • Continuing steady growth across the estate
Slide 5: Corporate Progress
Corporate Progress First Half • Beer Company profits up 6% • A good performance from Managed Pubs profits up 10% • Managed LFL sales up 4.4% • Tenanted Inns profits up 9% • Hotel profits up 7%
Slide 6: Financial Highlights
Financial Highlights Reported & restated under IFRS • Turnover up 4% to £67.4m (2004: £64.5m) • Normalised* profits before tax up 5% to £8.4m (2004: £8.0m) • Exceptional profits on disposal nil (2004: £0.5m) • Profit before tax down 1% to £8.4m (2004: £8.5m) • Normalised* EPS up 7% to 25.29p (2004:
Slide 7: Normalised Interim Profits
Normalised Interim Profits Restated under IFRS 99 88 8.4 77 7.8 8.0 7.5 66 6.3 £m 55 44 33 22 11 -11% +20% +4% +2% +5% 00 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005
Slide 8: Normalised Interim EPS
Normalised Interim EPS Restated under IFRS 30 30 25 25 Pence per share 25.3 20 20 22.9 23.6 20.2 15 15 16.7 10 10 55 -11% +21% +13% +3% +7% 00 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005
Slide 9: Interim Dividend
Interim Dividend 66 55 5.4 5.6 Pence per share 5.1 4.8 44 4.5 33 22 11 +2% +6% +7% +5% +5% 00 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005
Slide 10: Paul Clarke, Finance Director
Paul Clarke Finance Director
Slide 11: Financial Strengths
Financial Strengths • Good cash generation combined with high quality asset base • Focus on earnings growth • Prudent accounting policies • Strategy that has delivered significant shareholder returns
Slide 12: Key Figures
Key Figures Reported & restated under IFRS Sept Sept Sept Sept 2005 2005 2004 2004 Net Debt £32.3m £20.1m Gearing 21.0% 13.6% Net Assets £154.3m £147.5m Net Assets Per Share £6.91 £6.60 EBITDA £13.8m £13.0m Interest Cover* 9.2 x 10.2 x Effective Tax Rate* 32.3% 32.7% ** Based Based on on normalised
Slide 13: Statutory Profit Reconciliation
Statutory Profit Reconciliation Reported & restated under IFRS Sept Sept Sept Sept 2005 2005 2004 2004 £m £m £m £m Normalised profit 8.43 7.99 Preference dividend (0.06) Exceptional profits on disposal 0.48 Statutory pre-tax profit 8.37 8.47
Slide 14: Annual Capital Expenditure
Annual Capital Expenditure Existing Estate Only 35 35 30.2 30.2 30 30 26.2 26.2 26.8 26.8 25 25 Fuller’s Fuller’s Inns Inns £m 20 18.3 18.3 17.5 17.5 20 15 Beer Beer Company Company 15 12.0 12.0 and and Central Central 10 10 55 00 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 Projected
Slide 15: Gales Acquisition Key Financials
Gales Acquisition Key Financials ££m m Implied Implied multiple* multiple* For year to 29 January 2005 Sales 39.5 2.3 x EBITDA 6.5 14.2 x Margin % 16.5% EBITA 5.0 18.3 x Margin % 12.0% EBITDA (post synergies) 9.5 9.7 x ** Implied Implied multiples multiples are are based based on on an an enterprise
Slide 16: Financing the Acquisition
Financing the Acquisition • Post acquisition debt structure – Existing debentures £27.1m – New debt facilities £130.0m – Anticipated interest cost on new facilities <6.0% • Fuller's will not be over-leveraged – Net debt / EBITDA <3.5x* – EBITA / interest cover >3.5x* ** In In the the first first ful
Slide 17: Simon Emeny, Retail Director
Simon Emeny Retail Director
Slide 18: Retail Split
Retail Split April April Net Net Additions Additions Net Net Sept Sept 2005 2005 // Sales Sales Transfers Transfers 2005 2005 Managed Pubs 118 +5 -3 120 Tenanted Pubs 118 +1 +3 122 Hotels 8 nil nil 8 244 6 nil 250
Slide 19: Pub Acquisitions
Pub Acquisitions • The Wine Vaults, Southsea Managed • The Head of Steam, NW1 Managed • The Stonemason’s Arms, W6 Managed • The Pilot, W4 Managed • The Mason’s Arms, SW8 Managed • The Grand Union, W9 Managed • The Paper Mill, Hertfordshire Managed • The Blue Boar, Poole Tenanted
Slide 20: The Paper Mill
The Paper Mill
Slide 21: Fuller's Inns Key Figures
Fuller’s Inns Key Figures Reported & restated under IFRS Sept Sept Sept Sept 2005 2005 2004 2004 Turnover* £51.4m £48.7m + 5% Profit £8.4m £7.6m + 10% EBITDA £11.8m £10.8m + 9% ** Restated Restated to to exclude exclude excise excise duty duty on on tenanted tenanted sales sales
Slide 22: Managed Pubs
2 Managed Pubs
Slide 23: Managed Pubs Trading Patterns
Managed Pubs Trading Patterns • Turnover for the period up 4% • LFL* turnover up 4.4% • Strong City trading saw LFL* sales up 7% • Food continues to grow with sales up 9% • Cask ale sales up 10% and wine sales up 5% • 13 major projects undertaken in the first half (2004:16) ** Uninvested Uninvested
Slide 24: Managed Pubs Investment Programme
Managed Pubs Investment Programme Sept Sept Sept Sept 2005 2005 2004 2004 £m £m £m £m Investment in existing estate: Capital 3.0 2.7 Repairs and maintenance 2.0 2.2 Investment in new properties 12.6 Total 17.6 4.9
Slide 25: Tenanted Inns
a tse ee » Tenanted Inns FU LER'S
Slide 26: Tenanted Inns Trading Patterns
Tenanted Inns Trading Patterns • Average turnover per pub level • Average profit per pub up 3% • One new acquisition made in first half • The four pubs acquired last year performing well • Three pubs transferred from managed estate
Slide 27: Fuller's Hotels
Fuller’s Hotels
Slide 28: Fuller's Hotels Trading Patterns
Fuller’s Hotels Trading Patterns • Strong first half with profits up 7% • RevPar up 9% • Chamberlain, Brigstow and White Hart maintain strong performance • The Red Lion in Hillingdon now performing well
Slide 29: Fuller's Hotels Key Figures
Fuller’s Hotels Key Figures Sept Sept Sept Sept 2005 2005 2004 2004 Number of Rooms 513 513 level Average Room Rate £68.82 £65.80 +5% Occupancy 68% 64% +7% RevPar £45.60 £42.27 +9%
Slide 30: Fuller's Inns Summary
Fuller’s Inns Summary A good first half with profits 10% up on last year • Eight acquisitions, two more contracts exchanged • Managed LFL sales up 4.4% • City outlets trading strongly with LFL sales up 7% • Tenanted Inns continue to perform well with profits up 9% • A strong first half for Hotels wi
Slide 31: Gales Acquisition Combined Estate
Gales Acquisition Combined Estate Fuller's Fuller's Gales Gales Combined Combined Managed 128 42 170 Tenanted 122 69 191 Total 250 111 361 As As at at November November 2005 2005
Slide 32: Gales Acquisition Retail Fit
Gales Acquisition Retail Fit • Estate is an excellent complementary fit – Little adaptation – High quality – Predominantly freehold – Well invested – Similar customer profile – Strong focus on style and quality – Virtually no overlap
Slide 33: High Quality Estate
Gales Acquisition High Quality Estate Red Red Lion, Lion, Chalton Chalton Old Old Custom’s Custom’s House, House, Alice Alice Lisle, Lisle, Ringwood Ringwood Gunwharf Gunwharf Quays Quays
Slide 34: John Roberts, Beer and Brands Director
John Roberts Beer and Brands Director
Slide 35: Fuller's Beer Company Key Figures
Fuller’s Beer Company Key Figures Reported & restated under IFRS Sept Sept Sept Sept 2005 2005 2004 2004 Turnover* £23.3m £22.9m + 2% Profit £3.6m £3.4m + 6% EBITDA £4.4m £4.2m + 5% ** Restated Restated to to exclude exclude excise excise duty duty
Slide 36: Beer Volumes
Fuller’s Beer Company Beer Volumes 2005 2005 2004 2004 ‘000 ‘000 brls brls ‘000 ‘000 brls brls Free On Trade 69.8 72.7 - 4% Fuller’s Inns 43.1 42.8 + 1% Off Trade 14.0 13.7 + 2% Exports 7.1 6.2 + 15% Total Beer 134.0 135.4 - 1% Own Beer 94.2 95.9 - 2%
Slide 37: Comparison with UK Market
Fuller’s Beer Company Comparison with UK Market Fuller’s Fuller’s (UK (UK only) only) UK UK Market* Market* Total Beer - 2% - 1% Total Ale - 3% - 7% Off Trade Ale + 1% - 4% On Trade Ale - 4% - 8% Cask Ale - 4% - 7% ** Source Source :: BBPA BBPA
Slide 38: London Pride
Fuller’s Beer Company London Pride • The UK’s leading premium ale • Increased market share in all trade sectors • Creative marketing initiatives continue • New listings this Autumn
Slide 39: Discovery Blonde Beer
Discovery Blonde Beer • Major new brand launched in May 2005 • Comprehensive support package • Excellent results so far • Attracting lager drinkers in pubs • Listings in Sainsbury’s, Tesco and Waitrose
Slide 40: Other Key Brands
Other Key Brands • ESB – successfully re-launched last Autumn – cask and bottles in good growth – can launched in November 2005 • Organic Honey Dew – bottle volumes continue to impress – keg launch adds further volume • Speciality beers – Seasonal beers, London Porter, Vintage Ale
Slide 41: Discovery Blonde Beer promotion
\\ 3 Boating Standard Join the cricket celebrations with the Standard | FREE PINT OF BEER FOR EVERY READER: Your next pint of Discovery Blonde Beer | could win you a helicopter ride or a trip on the London Eye _.' DISCOVERY rf > — ‘2 a= - — WL PEPRESHING GLONDL SEER PRON FULLER'S
Slide 42: Brewery Investment
Fuller’s Beer Company Brewery Investment £2m invested in new kegging line
Slide 43: Fuller's Beer Company Summary
Fuller’s Beer Company Summary A good performance with profits up 6% • Market share up in all channels • The Wine Division continues to perform well with profits up 11% • Continuing investment in brands and the Brewery
Slide 44: George Gale & Co. Ltd
& \ > i ad r é Ghia ’ » Gis Dae WBron y + . 2s el A at) nd AK “\ee eres fren a \ fi * f hey 2) s r \ y \ . erecta t | iGecea Gale & Co. Ltd www.gales.co.uk
Slide 45: Ashes Pride!
»d®@, Ashes Pride! ULLERS| LF
Slide 46: Summary of Corporate Acquisition
Summary of Corporate Acquisition • Recommended cash offers for Gales • Fully diluted equity value of £82.7m • Implied enterprise value of £91.8m • Completion expected early December • Strategic acquisition for Fuller’s – excellent estate of 111 pubs – excellent beer brands – clear synergies identifi
Slide 47: Excellent Geographical Fit
Excellent Geographical Fit Fuller’s Fuller’s Estate Estate
Slide 48: Excellent Geographical Fit
Excellent Geographical Fit Fuller’s Fuller’s Estate Estate Gales Gales Estate Estate
Slide 49: Corporate Fit
Corporate Fit • Prudent accounting policies • Similar culture • Similar values • Quality estate – well managed – well invested – well sited • Excellent beer brands • Scale benefits
Slide 50: Prospects
Prospects • All areas performing well • Continued organic investment in pub estate • Dream acquisition of Gales – c£3m* of synergies • Earnings enhancing in first full financial year** • Continuing to increase shareholder value • Exciting future *This *This statement statement ofof estimated estimat
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Fuller, Smith & Turner — H1 2005 Earnings Presentation on 6ix