Fuller’s delivers on all fronts

Fuller’s delivers on all fronts

Fuller, Smith & Turner has reported comprehensively on the 26 weeks ended 29 September 2012, a period that indicates continuing growth, progress and performance.

Financial Performance

• Revenue up 8% to £137.9 million (2011: £128.2 million)

• Adjusted profit before tax up 4% to £17.1 million (2011: £16.5 million)

• Adjusted earnings per share up 8% to 23.14p (2011: 21.48p)

• EBITDA up 8% to £26.9 million (2011: £25.0 million)

• Interim dividend up 6% to 5.35p (2011: 5.05p)

• Net debt to EBITDA 2.7 times (2011: 1.9 times)

Corporate Progress

• Two pubs acquired in the period and a further two since the half year end

• Managed Pubs and Hotels like for like sales up 1.6%; profits up 5%

• Managed Pubs and Hotels delivered a good performance despite an unprecedented

number of non‐trading weeks due to redevelopment

• Tenanted Inns profits up 19%; like for like profits up 1%

• Total Beer volumes up 1%; profits down 7% due to increased depreciation from

prior year’s investment in conditioning tanks

• Last year’s acquisitions are making good progress and demonstrating encouraging

momentum

Commenting on the results, Michael Turner, Chairman of Fuller’s, said:

“Despite what has been an extraordinary six months, I am pleased to announce a strong set of results, driven by a very encouraging performance from the exciting acquisitions we have made over the past year and a half.

“Our revenues rose by 8% to £137.9 million (2011: £128.2 million) and adjusted profit before

tax (excluding exceptional items) increased by 4% to £17.1 million (2011: £16.5 million). Our

adjusted earnings per share increased by 8% to 23.14p (2011: 21.48p).

“Managed Pubs and Hotels, our largest division, has delivered a robust performance against

the backdrop of a unique combination of events in London and the wettest summer in 100

years, with profits up 5% and like for like sales up 1.6%. The 13 Managed pubs purchased last year have seen considerable focus and investment in this period and their performance in recent months has been particularly encouraging. There is gathering momentum as these pubs climb towards their full trading potential.

Operating profit in our Tenanted Inns division increased by 19%. Growth was driven by the

17 pubs acquired last year and like for like profits increased 1%. Revenue rose by 15% and

our operating margin was up by 1.5% as a result of our proven strategy of adding pubs at the

top end of our estate.

The Fuller’s Beer Company saw total beer volumes increase by 1%. EBITDA was level with

last year however operating profit was down 7% due to increased depreciation from our

significant investment in additional conditioning tanks to increase capacity for the Export

and Off Trade channels last year. This additional capacity will facilitate anticipated growth

over the coming years and is not yet fully utilised.

The British brewing and pub industry continues to contribute a disproportionate amount to

government revenues as a result of excessive tax increases over the past five years. This

short‐sighted policy puts at risk the overwhelmingly positive impact the industry has on

employment and local community life. The Group paid total taxes and other government

levies of £114 million over the 12 months to September 2012, representing a staggering 36%

of total Group revenues including VAT for the same period. I would urge the government to

rethink this damaging policy in advance of the 2013 budget.

Continuing our consistent strategy of investing in high quality assets where they are

available, we are delighted to have acquired a further four carefully selected pubs since the

year end. The Windmill, Waterloo and The Grand Central, Brighton joined our Tenanted

division during the first half and a further two excellent pubs in Bath, The Huntsman and The

Crystal Palace, were acquired for our Managed estate on 1 November 2012.

“Whilst the economic outlook remains uncertain, we are confident that the business is well

placed for the future, with a healthy balance sheet and a successful long term strategy. The

2012 London Olympic Games showcased our vibrant capital city and generated fantastic

goodwill and publicity around the world. We have no doubt that Fuller’s historic London

heritage and iconic brands will receive an enduring boost for many years to come from this

unique summer.”

Current trading and prospects

“Over the 33 weeks to 17 November 2012 like for like sales in our Managed Pubs and Hotels

increased by 2.1%, Tenanted Inns like for like profits were level and our total beer volumes

were level.

“Trading in the last seven weeks should be viewed in the context of the “Indian

summer” of October last year. We are looking forward to the months ahead and in

particular the important Christmas trading period.

“Total capital expenditure for the year is expected to be around £32 million, with any further

pub acquisitions beyond the four completed to date being in addition to this. We have a

number of major investments underway or planned in the second half of the year, although

the closures required will be more comparable to prior periods than the first half. We will

continue to pursue our selective acquisitions strategy as attractive opportunities arise.