Fuller’s has reported excellent financial results for the 52 weeks ended 29 March 2014, and its focus on quality throughout its estate and offerings is clearly a success with customers – see below for more on how it achieves this.
Simon Emeny, Chief Executive of Fuller’s, commented:
“Approaching the end of my first full year as Chief Executive, I am pleased to report that Fuller’s has had another very strong year. As a company, we know our strength is in operating at the premium end of the market and we have a clear vision of where we are going and how we will get there.
“Fuller’s Inns has had an excellent year with like for like sales in the Managed business rising by 8.3% and Tenanted like for like profits rising by 2%. It’s been a year of change for the Fuller’s Beer Company, with foundation blocks being laid for the future. Several new initiatives have come into play during the period including the acquisition of Cornish Orchards, the launch of Frontier, the purchase of the UK distribution rights to Sierra Nevada and the launch of Westside Drinks.
“We are looking forward with anticipation and excitement to the forthcoming year. Investment is taking place in all areas of the Company and we continue to be pleased with the impact that it is having on the business.
“The combination of a high quality estate, premium brands and a healthy balance sheet puts us in an excellent position going forward.”
Financial Highlights
- Adjusted earnings per share up 11% to 46.94p (2013: 42.18p)
- Adjusted profit before tax up 10% to £34.1 million (2013: £31.1 million)
- Revenue up 6% to £288.0 million (2013: £271.5 million)
- EBITDA up 6% to £54.5 million (2013: £51.2 million)
- Final dividend up 11% to 9.30p (2013: 8.35p)
- Net debt to EBITDA 2.5 times (2013: 2.6 times)
Operational Indicators
- Industry leading like for like sales growth of 8.3% in Managed Pubs and Hotels
- Particularly strong growth in food and accommodation, with like‐for‐like sales in both areas rising by 10.4%
- Tenanted Inns like for like profits increased by 2%
- Total Beer and Cider volumes rose by 1%
Strategy Update
- Portfolio development continues with addition of Frontier, the new craft lager, Cornish Orchards cider and Sierra Nevada
- Increased capacity at Cornish Orchards by 60%
- Acquired three new sites and opened Cams Mill, Fareham
- Tenanted Division wins Tenanted Pub Company of the Year at the Publican Awards
Current Trading
- Managed Pubs & Hotels like for like sales +8.0%
- Tenanted like for like profits +4%
- Fuller’s Beer Company volumes +10%
- Purchase of three new freehold sites including two Thames riverside locations
- Opened London’s Pride at Heathrow Terminal 2: The Queen’s Terminal
Chief Executive’s Review
Simon Emeny’s Review takes a thorough look at all areas of the business, including food sales – an important and growing source of revenue and profit – accommodation, and acquisitions and developments, which we report below.
Food sales
“Our food sales, driven by a continued focus on food that is fresh, locally‐sourced where possible and prepared by trained chefs on site, have risen by 10.4% on a like for like basis.
“Food continues to rise in importance throughout the Fuller’s estate and this has led us to increase our focus on food marketing and improve the training programmes and career structure we have in place. As well as the chef‐led kitchen teams in the pubs, we have a team of nine Executive Chefs under the stewardship of our Head of Food. This year has seen our chef development programme extended to include more junior team members, with the aim of producing home‐grown Executive Chefs for the future.”
Accommodation
“Accommodation has had a great year too with like for like sales across our 622 boutique bedrooms also rising by 10.4% – a figure that is particularly impressive following a year that benefitted from the Olympic Games in our London heartland. We have improved the customer journey on our online booking system and this is reaping rewards with initial results showing a 60% increase in bookings coming through this medium.”
Targeted Acquisitions and Developments
“This year has seen some great additions to the Fuller’s estate for both the Managed and Tenanted divisions. In July 2013, we added The White Hart, Southwark to our Tenanted estate while November saw the addition of two new managed pubs, The Distiller’s in Hammersmith and the opening of Cams Mill, a large development on the Fareham estuary. In March, we were delighted to acquire The Albannach – an iconic site on London’s Trafalgar Square – and in April we started the new financial year with the announcement of two new riverside sites in Fulham and Greenwich and the purchase in May of The Windmill in Portishead, near Bristol. All four of these latter additions will operate within our Managed Pubs division.
London’s Pride at T2
“The coming financial year will see us reaping the rewards of much of this investment. London’s Pride – our pub at the Queen’s Terminal, Heathrow (Terminal 2), opened on 4 June 2014 and we are looking forward to building on our transport hub expertise from The Parcel Yard at King’s Cross. London’s Pride includes a number of new features such as a section for Grab and Go food to be eaten on the plane and we will be retailing travel and food books within the pub. With an investment cost of £1.7 million, the pub has 200 covers and will be serving contemporary pub food, which has been designed with the modern traveller in mind. The design takes airport pubs to a whole new level and much is made within the pub of Fuller’s heritage and the site’s close proximity (8.3 miles) to the Brewery.
The Albannach to become The Admiralty
“Following on from the very successful conversion of The Red Lion on Whitehall to our Ale & Pie format, we will be carrying out a similar project on The Albannach in Trafalgar Square, which will be unveiled as The Admiralty in October. With more than a nod to its location and the presence of Admiral Nelson, the pub will benefit from the high footfall in this area, offering a winning combination of great beer and delicious pies to tourists and locals alike.
Riverside pubs
“Finally, three new riverside pubs will be opening on the Thames in the new financial year. One over the Ait by Kew Bridge will open in the autumn of 2014, closely followed by the site at Fulham Reach, overlooking the Harrods Depository and providing great views of life on the river. The Sail Loft at Greenwich – part of the new Capital Quay Development – will open in spring 2015. We also purchased The Windmill at Portishead in May 2014 – a popular dining pub with panoramic views across the Severn Estuary to Wales.
Rising capital expenditure
“We have invested a total of £38.1 million on capital expenditure during the year – which represents a rise of 29% against last year. We have taken the opportunity to bring forward investment on refurbishments while sales have been strong and this is particularly true in the second half of the year, which has seen 16 major schemes, making a total of 28 for the year.
“Several of the projects undertaken during the year have included upgrading the accommodation and, in some cases, adding additional bedrooms. In the coming year we are looking to undertake a large project at The Mad Hatter, close to Blackfriars Bridge, which will add an additional 15 bedrooms. We pride ourselves on offering a better experience and our added design touches ensure we stand out from the bland, standardised offerings that characterise parts of the British hotel scene.”