Fuller, Smith & Turner P.l.c. Class A · LSE:FSTA
Fuller, Smith & Turner P.l.c. Class A — FY2016 Earnings Presentation
33 slides from Fuller, Smith & Turner P.l.c. Class A's earnings presentation, June 2016
Slide 1: Fuller, Smith & Turner PLC Annual Results for the 52 Weeks Ended 26 March 2016
FULLER, SMITH & TURNER PLC ANNUAL RESULTS FOR THE 52 WEEKS ENDED 26 MARCH 2016
Slide 2: Agenda
AGENDA HIGHLIGHTS MICHAEL TURNER FINANCIAL REVIEW JAMES DOUGLAS STRATEGY & OPERATIONS REVIEW SIMON EMENY SUMMARY & OUTLOOK SIMON EMENY
Slide 3: Highlights: An Excellent Year
HIGHLIGHTS AN EXCELLENT YEAR MANAGED ADJUSTED ADJUSTED TOTAL ANNUAL REVENUE LFL SALES PROFIT EPS DIVIDEND FY 2016 £350.5m £40.9m 58.35p 17.90p +4.8% +9% +12% +13% +8% FY 2015 £321.5m £36.4m 51.51p 16.60p
Slide 4: Group Performance
GROUP PERFORMANCE 2016 2015 £m £m Revenue 350.5 321.5 +9% Operating costs (303.6) (279.2) +9% Operating profit 46.9 42.3 +11% Net finance costs (6.0) (5.9) +2% Adjusted profit 40.9 36.4 +12% Depreciation and amortisation 18.1 16.4 +10% EBITDA 65.0 58.7 +11% All items exclude exceptional income and c
Slide 5: Exceptional Items
EXCEPTIONAL ITEMS 2016 £m 2015 £m Profit on sale of properties 2.9 0.8 Acquisition costs (1.1) (1.2) Onerous lease provision releases/(charges) 0.2 (0.3) Deemed remuneration on the future purchase of shares in The Stable (2.2) - Asset impairments (0.8) - Pension fund curtailment gain - 1.2 Fair valu
Slide 6: Group Overview
GROUP OVERVIEW SHARE OF OPERATING PROFIT† FIVE YEAR HISTORY The Fuller’s 2011 2016 +39% Beer Company £40.9m +55% 14.6% 59.6% £29.4m 58.35p +52% 25.8% 37.54p 17.90p 11.80p Tenanted Inns Managed Pubs Ad Ad Fu & Hotels Pr just ofi ed t* EP just S ed Di ll Ye vid ar en d † Share of operating profit abov
Slide 7: Managed Pubs & Hotels
MANAGED PUBS & HOTELS 2016 2015† £m £m LFL sales +4.8% +6.3% Revenue 238.4 213.8 +12% Operating costs* (207.5) (187.5) +11% Operating profit* 30.9 26.3 +17% Operating margin 13.0% 12.3% Depreciation and amortisation 13.0 11.5 +13% EBITDA 43.9 37.8 +16% * Excluding exceptional items † Revised for cha
Slide 8: Margin Evolution
MARGIN EVOLUTION anaged Pubs & Hotels margin up M 0.7% on last year 15 Y20 F Improvements in both food and bar t% GP%, partly the result of food deflation rofi sp ros G Early adoption of NLW for staff in training ll % programmes, higher food mix y ro Pa es Impact of additional investment in year mit
Slide 9: Tenanted Inns
TENANTED INNS 2016 2015† LFL profits + 2% + 5% +2% +5% Average EBITDA per pub £83k £81k £m £m Revenue 31.5 31.4 Level Operating costs* (18.1) (18.0) +1% Operating profit* 13.4 13.4 Level Operating margin 42.5% 42.7% Depreciation and amortisation 1.6 1.6 Level EBITDA 15.0 15.0 Level * Excluding excep
Slide 10: The Fuller's Beer Company
THE FULLER’S BEER COMPANY 2016 2015† Total beer and cider volumes 1% + 4% £m £m Revenue 126.8 120.9 +5% Operating costs* (119.2) (113.3) +5% Operating profit* 7.6 7.6 Level Operating margin 6.0% 6.3% Depreciation and amortisation 3.5 3.3 +6% EBITDA 11.1 10.9 +2% *Excluding exceptional items † Revise
Slide 11: Generation & Use of Cash
GENERATION & USE OF CASH 2016 £m 2015 £m EBITDA 65.0 58.7 Working capital / other adjustments 5.6 2.5 Interest (5.3) (5.2) Tax (8.5) (8.3) Cash available for discretionary spend 56.8 47.7 Capex on existing estate and brewery (23.1) (23.0) Corporate acquisitions (2.7) (6.7) Pub acquisitions* (13.5) (
Slide 12: Borrowing Capacity
BORROWING CAPACITY 250 •A dditional £30m facility arranged in Other Net Debt / Cash January 2016 with HSBC to August 2020 32.0 • Committed facilities 200 Bank Debt - £160m across four banks 39.0 until August 2020 Available Committed Long 150 Term Facilities - £50m until August 2019 - £20m until Augu
Slide 13: Annual Capital Expenditure
ANNUAL CAPITAL EXPENDITURE The Fuller’s 90 Beer Company Fuller’s Inns £81m 80 £76m Pub Acquisitions Pub Development Costs 70 Corporate Acquisitions 60 £56m 50 £38m £40m 40 £31m 30 20 10 0 2012 2013 2014 2015 2016 2017E 2017E represents the current capital expenditure forecast for the year to March 2
Slide 14: A Clear Strategic Plan
A CLEAR STRATEGIC PLAN WITH OUR CORE VALUES AT THE CENTRE Long-term, clearly communicated strategy Constantly look to improve Anticipate trends quality and delight to stay ahead of the game customers ED PUBS & H AG OT N EL A Fuller’s Values TED INNS • M S•T • Doing things the right way HE FULLE • Be
Slide 15: Achievements
ACHIEVEMENTS • Strong financial performance - driven by investments in the estate, people and food • Continued focus on training and development, awarded Company of the Year and Employer of the Year by our peers • Purchase / development of six new pubs • Success of recent strategic investments - Cor
Slide 16: Our People Drive Our Business
OUR PEOPLE DRIVE OUR BUSINESS • Exceptional people with outstanding service are our key differentiator • Winner of Best Pub Employer at The Publican Awards 2016 • Record number of training days • Investment made in new leadership programme • High proportion of internal promotions – over 70% of appoi
Slide 17: Tomorrow's Consumer
TOMORROW’S CONSUMER • Is looking for authenticity and genuine provenance • Expects the unusual, new flavours, new formats, new food experience – and is prepared to pay a higher price when they find it • Has a diverse lifestyle – focusing on occasion based eating and drinking • Decisions are driven b
Slide 18: New Sites in New Trading Areas
NEW SITES IN NEW TRADING AREAS • Changes to transport infrastructure are creating new attractive neighbourhoods • Five new pubs purchased (four freeholds): - The Great Northern Railway, Hornsey - The Lord Northbrook, Lee - The Queen’s Head, Kingston - The King’s Head, Earl’s Court - The Sutton Arms,
Slide 19: Pubs with Individuality for Discerning Customers
PUBS WITH INDIVIDUALITY FOR DISCERNING CUSTOMERS • Our long-standing model of creating bespoke pubs with personality matches the consumer demands of today • Allows each pub to meet the needs of the community it serves • A total of £20m invested in existing pubs, including 18 significant refurbishmen
Slide 20: Taking The Stable to a Wider Audience
TAKING THE STABLE TO A WIDER AUDIENCE Bridport Weymouth Bristol Southampton Plymouth Birmingham Kew Riverside Three sites Poole Whitechapel Bath (relocated) Cheltenham Exeter at advanced Bath Winchester Cardiff Bournemouth stages Newquay Falmouth March H1 November December April H1 H2 2015 2015/16 2
Slide 21: New Premium Brands
NEW PREMIUM BRANDS • Expanded our range of chilled and filtered beers available in keg format, catering for a wide range of tastes: - Montana Red, our new American red rye ale - Fuller’s IPA – another addition to our craft keg range - Wild River, Black Cab Stout and Frontier in 330ml craft cans • Co
Slide 22: Routes to a Fragmented Market
ROUTES TO A FRAGMENTED MARKET • Consumers want a wider range of premium brands and use a wider range of venues • Westside Drinks targeting specialist bars and restaurants in the South East • Increased presence at street food and other festivals – 1,350 event days for Frontier during the year • Capit
Slide 23: Investment in Nectar Imports
INVESTMENT IN NECTAR IMPORTS • Acquired 51% of Nectar Imports Limited on 31 December 2015 • Expands our geographic footprint • Provides opportunity for another route to market for our brands • Offers a full range of craft products with single drop one-day delivery for customers • Similar culture and
Slide 24: Delicious Food, Premium Brands, the Best Customer Service
DELICIOUS FOOD, PREMIUM BRANDS, THE BEST CUSTOMER SERVICE • Excellent like for like sales LIKE FOR LIKE SALES 10 • Delicious freshly-prepared food from highly engaged chefs 8 6.9% • Premium drinks range designed to meet and exceed our customers’ expectations 6 4.8% 4.3% • Tougher trading in our hote
Slide 25: Securing Our Long-Term Future
SECURING OUR LONG-TERM FUTURE • Fuller’s remains a predominantly freehold business – 88% of our pubs • Purchase of three freeholds of existing businesses in the year • Another freehold purchase will complete in June • With the purchase of Kew Riverside in April 2016, Fuller’s now owns five of The St
Slide 26: Cask Ale - The Heart of Fuller's
CASK ALE - THE HEART OF FULLER’S A BEER • Cask ale delivers a flavour keg will never match I V E A S AS AL • London Pride Made of London campaign C I T Y continued, using iconic photography of London THE E W S I T • London Marathon Official Beer status agreed A T B R TH for a further three years • B
Slide 27: A Differentiated Tenanted Partnership
A DIFFERENTIATED TENANTED PARTNERSHIP • We are below the threshold for the Market Rent Only legislation • Like for like profits up 2% and total profits level, despite sale of five pubs in year • Our tenants are talented entrepreneurs and our collaborative approach benefits both partners • The winner
Slide 28: Current Trading & Outlook
CURRENT TRADING & OUTLOOK • Current trading – Managed LFL sales up 2.7% for 10 weeks – Tenanted LFL profits down 2% for 10 weeks – Total beer & cider volumes down 5% for 10 weeks • Value enhancing investments – The Stable, Whitechapel, opened on 22 April 2016 and Kew Riverside site acquired – Record
Slide 29: Summary
SUMMARY • An excellent year – Adjusted PBT up 12% to £40.9m – Adjusted EPS up 13% to 58.35p – Dividend up 8% to 17.90p • Acquired or developed six new pubs, opened six new Stable sites and purchased majority stake in Nectar • Securing our long term future – Purchase of key freeholds – Secured six ne
Slide 30: If it isn't ... it's not on the menu
“IF IT ISN'T IT’S NOT ON THE MENU” ae — =e Luke Emmess, Head Chef The Still & West, Southsea "ale @FULLERSKITCHEN WE TAKE TASTE PERSONALLY
Slide 31: Every dish is a ... dish
oe - - “EVERY © ' a DISH ISA DISH” KI TCH EN i —- Gavin Sinden, Head Chef The Stonemasons Arms, Hammersmith 5 (G] @FULLERSKITCHEN WE TAKE TASTE PERSONALLY
Slide 32: Appendix - Reconciliation to Statutory Profit
APPENDIX - RECONCILIATION TO STATUTORY PROFIT 2016 2015 £m £m Adjusted profit 40.9 36.4 +12% Exceptional items (1.7) (0.3) Profit before tax 39.2 36.1 +9% Tax on adjusted profit (8.4) (7.9) +5% Exceptional tax 2.2 0.1 Profit after tax 33.0 28.3 +17% Adjusted EPS 58.35p 51.51p +13% Basic EPS 59.25p 5
Slide 33: Appendix - Fuller's Inns
APPENDIX - FULLER’S INNS 28 March Acquired/ Disposed/ 26 March Acquired/ Disposed/ 10 June Within 2015 developed Transferred 2016 developed Transferred 2016 the M25 Managed Pubs 188 4 (1) 191 - 2 193 61% & Hotels Tenanted Inns 203 2 (5) 200 - (3) 197 28% Total Fuller’s 391 6 (6) 391 - (1) 390 The St
Fuller, Smith & Turner — FY2016 Earnings Presentation on 6ix