Fuller, Smith & Turner P.l.c. Class A · LSE:FSTA
Fuller, Smith & Turner P.l.c. Class A — H1 2011 Earnings Presentation
42 slides from Fuller, Smith & Turner P.l.c. Class A's earnings presentation, November 2011
Slide 1: Fuller, Smith and Turner PLC Half Year Results
Fuller, Smith and Turner PLC Half Year Results for the 26 weeks ended 1 October 2011
Slide 2: Michael Turner, Chairman
Michael Turner Chairman
Slide 3: Agenda
Agenda • Strategy and Corporate Progress • Financial Results • Operations • 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 • Premium positioning • Pride in our brands • Continue to expand the business
Slide 5: Financial Highlights
Financial Highlights • Revenue up 6% to £128.2m • Adjusted PBT up 5% to £16.5m • Adjusted EPS up 8% to 21.48p • EBITDA up 4% to £25.0m • Interim dividend up 6% to 5.05p • Net debt / EBITDA at 1.9x on a pro forma basis
Slide 6: Corporate Progress
Corporate Progress • 12 pub acquisitions completed since last year end • Managed Pubs and Hotels LFL sales up 3.9% • Managed Pubs and Hotels profits up 1% • Tenanted Inns profits up 2% • Own Beer volumes up 2% • Beer Company profits up 12% • Beer Company MD recruited, starts 12th December Profit mea
Slide 7: Adjusted Half Year Profits
Adjusted Half Year Profits 20 18 16.5 15.7 16 14.1 14 12.1 12.0 12 £m 10 8 6 4 2 +11% -1% +18% +11% +5% 0 2007 2008 2009 2010 2011 Adjusted profits are profits before tax excluding exceptional items
Slide 8: Adjusted Half Year EPS
Adjusted Half Year EPS 25 21.5 20.0 20 Pence per 40p share 18.0 15.2 15.3 15 10 5 +13% +1% +17% +11% +8% 0 2007 2008 2009 2010 2011 Excluding exceptional items
Slide 9: Interim Dividend
Interim Dividend 6 5.05 5 4.75 4.50 Pence per 40p share 4 3 2.80 2.85 2 1 +8% +2% +5%# +6% +6% 0 2007 2008 2009 2010 2011 # 2009 % increase ignores the 1.50p rebasing of the interim dividend
Slide 10: James Douglas, Finance Director
James Douglas Finance Director
Slide 11: Group Performance
Group Performance H1 2011 H1 2010 £m £m Revenue 128.2 121.5 +6% Operating costs* (109.5) (103.4) +6% Operating profit* 18.7 18.1 +3% Net finance costs* (2.2) (2.4) -8% Adjusted profit* 16.5 15.7 +5% Depreciation 6.3 6.0 +5% EBITDA* 25.0 24.1 +4% * Excluding exceptional items
Slide 12: Managed Pubs and Hotels
Managed Pubs and Hotels Key Figures H1 2011 H1 2010 LFL sales +3.9% +3.3% Revenue £78.6m £74.8m +5% Operating costs* £68.2m £64.5m +6% Operating profit* £10.4m £10.3m +1% Operating margin 13.2% 13.8% Depreciation £4.3m £4.1m +5% EBITDA* £14.7m £14.4m +2% * Excluding exceptional items
Slide 13: Tenanted Inns
Tenanted Inns Key Figures H1 2011 H1 2010 LFL profits +1% +1% Revenue £13.7m £13.5m +1% Operating costs* £8.5m £8.4m +1% Operating profit* £5.2m £5.1m +2% Operating margin 38.0% 37.8% Depreciation £0.8m £0.8m level EBITDA* £6.0m £5.9m +2% * Excluding exceptional items
Slide 14: Fuller's Beer Company
Fuller’s Beer Company Key Figures H1 2011 H1 2010 Own Beer volumes +2% -2% Revenue £54.9m £51.3m +7% Operating costs £50.3m £47.2m +7% Operating profit £4.6m £4.1m +12% Operating margin 8.4% 8.0% Depreciation £1.2m £1.1m +9% EBITDA £5.8m £5.2m +12%
Slide 15: Exceptional Items
Exceptional Items H1 2011 H1 2010 £m £m Profit on sale of properties 0.6 1.6 Asset impairments & reversals 0.1 (0.9) Insurance gain - 0.4 Acquisition costs (0.6) - Abortive acquisition costs (0.4) - Mark to market of financial instruments (0.2) - Total exceptional items (0.5) 1.1 Tax on exceptional
Slide 16: Generation and Use of Cash
Generation and Use of Cash H1 2011 H1 2010 £m £m EBITDA 25.0 24.1 Share based payment 1.0 1.1 Working capital / other (0.2) 0.1 Pension (0.5) (0.2) Interest and refinancing costs (2.1) (2.4) Tax (4.4) (3.6) Cash available for discretionary spend 18.8 19.1 Capex excluding pub acquisitions (8.1) (6.1)
Slide 17: Borrowing Capacity
Borrowing Capacity H1 2011 YE 2011 H1 2010 • £30m new facility with £m £m £m Rabobank agreed in August 50.5 • Co-terminal in May 2015 33.5 34.5 with existing facilities Available • Banks now commit £120m Committed split equally across 4 banks Facilities • Freedom to add further funding for acquisiti
Slide 18: Annual Capital Expenditure
Annual Capital Expenditure 51.2 50 44.1 40 Development Costs on New Pubs 30 24.2 21.7 New Pubs 18.5 20 Fuller's Inns 12.0 Fuller's Beer 10 Company and Central 0 2007 2008 2009 2010 2011 2012E 2012E represents the current estimate of capital expenditure for the 52 weeks to 31 March 2012 and includes
Slide 19: Simon Emeny, Group Managing Director
Simon Emeny Group Managing Director
Slide 20: Our Retail Estate
Our Retail Estate Managed Pubs Tenanted Total and Hotels Inns 3 April 2011 162 196 358 Additions 4 3 7 Disposals - (4) (4) 1 October 2011 166 195 361 Additions 5 - 5 Disposals (1) - (1) 25 November 2011 170 195 365 • Of 12 additions since 3 April, seven are freehold and five are leasehold • 99 new b
Slide 21: Pub Acquisitions – Development Opportunities
Pub Acquisitions – Development Opportunities • Under exploited sites • Acquisition cost of £2.8m • Future investment spend of £4.4m • Both currently closed for The White Swan Hotel, Stratford-upon-Avon redevelopment, pre-opening costs being incurred in current year • 49 bedrooms when redevelopment c
Slide 22: Pub Acquisitions – London Gems
Pub Acquisitions – London Gems Image of Lamb & Flag The Cabbage Patch, Twickenham • Previously run by sole traders • Fuller’s brand will add value • Sites will respond positively to the investment that we will make in H2 and deliver profits next year • Both leases – option to buy freehold of Lamb &
Slide 23: Pub Acquisitions – Tenanted Inns
Pub Acquisitions – Tenanted Inns • Quality freeholds • £6.0m acquisition cost • Great London locations The Seven Stars, Carey Street WC2 The Coach & Horses, Soho The Plough, East Sheen
Slide 24: Pub Acquisitions – Post Period End
Pub Acquisitions – Post Period End • Five Managed Pubs and Hotels acquired from Marston’s for £16.0m on 1 November • High turnover managed houses in excess of £6m p.a. • Two freehold, three leasehold The Wellington, Waterloo • Four Central London, one Home Counties • 58 bedrooms • Sites will respond
Slide 25: Refurbishment
Refurbishment • Creating characterful individual pubs to reflect our food and drink offer • Enhancing estate to realise full potential of individual sites with a focus on: • Maximising food potential • Boutique bedrooms • Outside seating areas • Function rooms The Iron Duke, Mayfair
Slide 26: Refurbishment
Refurbishment The Pilot, Chiswick The King’s Head, Guildford The Thomas a Becket, Worthing The Six Bells, Thame The Stonemason’s Arms, Hammersmith
Slide 27: Managed Pubs and Hotels Components of Invested LFL Sales
Managed Pubs and Hotels Components of Invested LFL Sales • Food and Accommodation continue to grow fastest 8% 1% LFL growth rates 29% Drinks +3.1% Food +4.4% Accommodation +10.8% 62% Drinks TOTAL +3.9% Food Accommodation Other
Slide 28: Food
Food • LFL sales up 4.4% • Point of difference is freshly cooked food • 26% of main meals sold are blackboard specials • Pub classics such as Fish & Chips and Homemade Pies make up 34% of mains sold • Average retail price of main meal sold is £9.15
Slide 29: Accommodation
Accommodation The Drayton Court, Ealing • 475 rooms at September 2008 • 554 rooms at end of Half Year • We expect to have 612 from completed acquisitions at the end of the financial year • 70% of bookings now online and this is driving occupancy • LFL occupancy up 4% • LFL average room rate up 4%
Slide 30: Tenanted Inns
Tenanted Inns
Slide 31: Tenanted Inns
Tenanted Inns Average H1 EBITDA per pub £’000 • LFL profits +1% 30.8 31 • Average EBITDA +5.5% 30 29.2 29 28.6 28.5 • Our tenants stay an average 28 of 6 ½ years 27 • New initiatives such as 26 mystery shopper improving 25 retail standards 24 23 • Continued investment in 22 trading areas 21 -0.4% +2
Slide 32: Fuller's Beer Company
Fuller’s Beer Company oe ee, [FULLERSP’
Slide 33: Brewery Investment
Brewery Investment • Construction of new conditioning tanks complete • Added 30,000 barrels of capacity for bottled beer market • New capacity will enable volume growth in Off Trade and Export markets • Flexibility for further expansion • Brewery has seen 4 major projects with a combined spend of £9
Slide 34: Fuller's Beer Company Beer Volumes
Fuller’s Beer Company Beer Volumes 2011 2010 Own Beer ‘000 brls ‘000 brls Free On Trade 52.0 53.0 -2% Fuller’s Inns 20.2 19.6 +3% Off Trade 18.6 19.1 -3% Exports 18.7 15.4 +21% Total Own Beer 109.5 107.1 +2% Foreign Beer 58.9 59.0 level Total Beer 168.4 166.1 +1%
Slide 35: When in London…
When in London… • New high profile advertising across: – 200 black cabs – 125 London buses on key routes – 500 roadside, rail and underground poster sites • QR code for the smartphone website www.wheninlondon.com • Bar staff uniforms, branded glassware
Slide 36: Exports
Exports • 110% volume growth over 5 years • 1 in 6 barrels now exported • Conditioning tanks investment secures platform for growth • 75% of volume sold to six countries H1 exported volumes ’000 brls 20 18.7 • Target to grow Russia and 15.4 Far East 15 11.5 12.3 10.7 • Top three export brands are 10
Slide 37: New Product Development
New Product Development • Current launches Black Cab Stout Mighty Atom • Successful seasonal beers Spring Sprinter Summer Ale • Continuing popular series Past Masters Vintage Ale Brewer’s Reserve No. 3 • Strong future pipeline
Slide 38: Summary
Summary • Adjusted profits increased by 5% • Own Beer volumes up 2% driven by exports leading to 12% rise in Beer Company profits • Managed Pubs and Hotels profits up 1% with 3.9% LFL sales growth • Tenanted Inns profits up 2% • Highest level of investment underway across the business since Gales ac
Slide 39: Slide 39
Slide 40: UK Beer Duty
UK Beer Duty • 1 million employed by UK beer and pub industry contributing £21 billion to the economy • UK Beer Duty has increased 35% since March 2008 • UK Beer volumes down 13% over the same period • Overseas duties – UK is 8 times higher than France – 11 times higher Germany and Spain • Current i
Slide 41: Prospects
Prospects • Another good performance • 2012 will be 52 week year (2011 was 53 weeks) • Managed LFL sales up 3.8% for 33 weeks • Own beer volumes up 1% for 33 weeks • “When In London” campaign aimed at recruiting new drinkers to London Pride • Strong balance sheet with good cash generation • Long ter
Slide 42: Whatever You Do, Take Pride
7, WHATEVER YOU DO, TAKE PRIDE. = =
Fuller, Smith & Turner — H1 2011 Earnings Presentation on 6ix