Fuller, Smith & Turner P.l.c. Class A · LSE:FSTA
Fuller, Smith & Turner P.l.c. Class A — H1 2020 Earnings Presentation
28 slides from Fuller, Smith & Turner P.l.c. Class A's earnings presentation, November 2019
Slide 1: Half Year Results for the 26 weeks ended 28 September 2019
HALF YEAR RESULTS FOR THE 26 WEEKS ENDED 28 SEPTEMBER 2019
Slide 2: Highlights
HIGHLIGHTS A SOLID START FOR OUR FOCUSED PUBS AND HOTELS BUSINESS ADJUSTED PROFIT MANAGED LFL SALES REVENUE BEFORE TAX ADJUSTED EPS INTERIM DIVIDEND H1 2020 £174.8M £17.9M 26.17P 7.8P +2.7% +6% Level +1% Level H1 2019* £165.0m £17.9m 25.83p 7.8p All figures above are from continuing operations and o
Slide 3: Prior Year Rebasing
PRIOR YEAR REBASING H1 2018/19 FY 2018/19 Group adjusted profit £23.6m £43.2m ▪ Divisional profit figure Beer division £3.7m £6.8m ▪ Portion of central overheads Allocated overheads £2.0m £3.3m previously allocated to the Beer division, not transferred to Asahi Rebased group adjusted £17.9m £33.1m p
Slide 4: Group Performance
GROUP PERFORMANCE H1 2020 H1 2019 YoY Comparable basis, continuing operations £m £m Growth Commentary Revenue 174.8 165.0 +6% ▪ Operating profit reduced 4% Operating costs* (154.5) (143.9) +7% due to the impact of higher business rates, wage inflation Operating profit* 20.3 21.1 -4% and pension auto
Slide 5: Half Year Profit Bridge
HALF YEAR PROFIT BRIDGE H1 2019/20 H1 2018/19 rebased adjusted profit £17.9m ▪ Small reduction in Managed operating profit due Managed operating profit £0.5m to cost pressures and increased maintenance costs ▪ Small reduction in Tenanted operating profit due Tenanted operating profit £0.4m to strong
Slide 6: Managed Pubs and Hotels
MANAGED PUBS AND HOTELS H1 2020 H1 2019 YoY £m £m Growth Commentary LFL sales growth +2.7% +4.1% Operating profit [x]of due to ▪ Good LFL growth 2.7%, Revenue 156.8 149.4 +5% impact buildingofon refurbishments strong prior period Operating costs* (134.7) (126.8) +6% ▪ Revenue growth of 5% Operating
Slide 7: 10 Year Progression of Our Managed Business
10 YEAR PROGRESSION OF OUR MANAGED BUSINESS 10 YEARS OF STRONG GROWTH REVENUE ADJUSTED PROFIT +119%† +87%† Commentary ▪ Revenue has increased 119% over the last 10 years from a £22.1m combination of strong LFL £156.8m growth and acquisitions ▪ Adjusted profit has increased £17.1m 87% over the last 1
Slide 8: Tenanted Inns
TENANTED INNS H1 2020 H1 2019 YoY £m £m Growth Commentary LFL profit -3% +4% Average EBITDA per pub -4% +2% ▪ LFL profit down 2.8%, Revenue 16.0 15.6 +3% following strong prior period which included the football Operating costs* (9.4) (8.6) +9% World Cup Operating profit* 6.6 7.0 -6% ▪ Another perio
Slide 9: The Sale of the Fuller's Beer Business
THE SALE OF THE FULLER’S BEER BUSINESS • Sale of the entire Fuller’s Beer Business to Asahi Europe Ltd (AEL) for an enterprise value of £250m, completed 27 April 2019 • Sale included all Fuller’s beers, cider and soft drinks production, The Griffin Brewery, Cornish Orchards, Dark Star, Nectar Import
Slide 10: Separately Disclosed Items
SEPARATELY DISCLOSED ITEMS H1 2020 H1 2019 £m £m Commentary Continuing operations: ▪ Profit on the sale of the Fuller’s Replacement of core IT systems and Beer Business recognised of (1.9) (3.1) £164.5m. £7.0m of costs reorganisation costs associated with the sale were Property related items (1.0) 0
Slide 11: Cashflows and Net Debt
CASHFLOWS AND NET DEBT H1 2020 Pre IFRS 16 £m Commentary Net debt at 30 March 2019 (245.2) EBITDA pre IFRS 16 30.2 ▪ Since the period end, £69m has been returned to shareholders, Interest and tax (10.0) Cotswold Inns & Hotels has been purchased for £40m and £24m Working capital, pension and other* (
Slide 12: Strong Financial Position
STRONG FINANCIAL POSITION • Net debt at 28 September 2019 of £23.0m pre IFRS 16 Available Facilities • Committed bank facilities of £210m 28 September 30 March 2019 2019 • £216.6m available (including cash) £11.0m • Average cost of gross borrowings for H1 2020 of 3.0% £31.0m (H1 2019: 2.8%) £44.2m C
Slide 13: Financial Summary
FINANCIAL SUMMARY • Strong Managed like for like sales growth • Group performance for H1 in line with last year’s rebased profit • Current challenges impacting FY2020: • Delivery of Transitional Services Agreement for Asahi • Resolution of ERP system inefficiency • Continuing cost pressures • Adapti
Slide 14: Strategy and Operations Review
STRATEGY AND OPERATIONS REVIEW
Slide 15: Post-Transaction Progress Update
POST-TRANSACTION PROGRESS UPDATE • Transitional Services Agreement with Asahi in place and expected to run until May 2020 on existing ERP system • Long-term supply agreement with Asahi is working well and ensures Fuller’s pubs are the home of Fuller’s beers • Successfully completed a £69m return of
Slide 16: Current Priorities
CURRENT PRIORITIES • Key priority is to reduce our central costs and overheads – Complete the TSA by May 2020 – Replace the brewery-focused ERP system with a proven, appropriate and simplified accounting system – Complete the move to our new offices – Further align and streamline our support functio
Slide 17: A Strategy for the Future
A STRATEGY FOR THE FUTURE • Based around our culture, our values, and a dedication to delivering a memorable experience that ensures Every Customer Leaves Happy • Warm and engaging service from people with genuine passion, delivered by attracting and retaining the best people • Taking real pride in
Slide 18: Strategy in Action: Cotswold Inns & Hotels
STRATEGY IN ACTION: COTSWOLD INNS & HOTELS • A great example of our strategy in action – sites that fit with our expertise and geographical footprint • Consideration of £40m underpinned by seven superb freehold sites in the Cotswolds – paid from existing banking facilities • Cost synergies expected
Slide 19: Managed Pubs and Hotels
MANAGED PUBS AND HOTELS Like for Like Performance 8 • Good performance against strong comparatives with like 6 for like sales rising 2.7% and growth in all three categories 4 – Food sales rose 3.2% 2 0 – Drink sales up 1.3% – Accommodation sales increased 7.4% • Growth impacted by cost pressures – e
Slide 20: Attracting and Retaining the Best People
ATTRACTING AND RETAINING THE BEST PEOPLE • Continue to invest in our people and develop home-grown talent – Nearly 3,000 people have undertaken development, either online, in situ or at a class, during the period – 124 trained Mental Health First Aiders – 288 team members have completed a progressio
Slide 21: Investing for the Future
INVESTING FOR THE FUTURE • Continued investment, both back and front of house, in our existing estate to maintain our premium position • Completed seven major schemes including – The Anglers in Teddington – The Bishop on the Bridge in Winchester – The Mason’s Arms in Battersea • Added 10 new hotel r
Slide 22: Improving Our Customers' Digital Journey
IMPROVING OUR CUSTOMERS’ DIGITAL JOURNEY • Overall goal of ensuring all digital activity drives increased footfall or spend per head • Successful digital-led campaign trialled at three sites, increasing direct bedroom bookings by 5-10% each month • New websites for our Beautiful Bedrooms including a
Slide 23: Tenanted Inns
TENANTED INNS • Performance reflects the strong comparatives from last year and increased maintenance costs with like for like profits down 3% • Turnover agreement pubs outperformed those on standard tenancies • Added and invested in four sites from the Managed estate • Appointed Iain Rippon as Head
Slide 24: Summary
SUMMARY • An unprecedented period of change for our business • Good performance from our Managed Pubs and Hotels business with like for like sales growth across food, drink and accommodation • Added one new site during the period – The Trinity at Borough • Innovative events and marketing programme i
Slide 25: Outlook
OUTLOOK • Current trading for the last 36 weeks – Managed like for like sales up 2.1%; Total sales up 5.1% – Tenanted like for like profits down 2% • Successful acquisition of Cotswold Inns & Hotels – including seven stunning freehold sites in the Cotswolds • Clear strategy in place to deliver excel
Slide 26: Appendix – Fuller's Estate
APPENDIX – FULLER’S ESTATE 30 Mar Acquired 28 Sept Acquired 12 Dec Within 2019 /new Disposed Transfers 2019 /new 2019 the M25 Managed Pubs & 204 – – 2 206 9 215 58% Hotels Tenanted Inns 180 1 – (2) 179 – 179 28% Total Fuller’s 384 1 – – 385 9 394 44% The Stable 17 – (1) – 16 – 16 Total Group 401 1 –
Slide 27: Appendix - Impact of IFRS 16 Accounting for Leases
APPENDIX - IMPACT OF IFRS 16 ACCOUNTING FOR LEASES ▪ Applied this year for first time Impact on H1 2020 ▪ Changes accounting for leases so that most leases are £m recognised as a right-of-use asset by the lessee Operating costs reduction 5.3 ▪ Operating lease expense is replaced by depreciation and
Slide 28: Appendix - Reconciliation to Statutory Profit
APPENDIX - RECONCILIATION TO STATUTORY PROFIT Post IFRS16 Pre IFRS16 YoY H1 2020 H1 2020 H1 2019 Growth £m £m £m Pre IFRS 16 Adjusted profit (continuing operations) 17.4 17.9 17.9 Level Separately disclosed items (6.3) (3.2) (2.8) Profit before tax (continuing) 11.1 14.7 15.1 -3% Tax on adjusted pro
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