UK pub group Fuller Smith & Turner (FSTA) reported like-for-like sales growth of 4.9% from its managed pubs and hotels estate for the year to 31 March 2019.

This implies 5.7% growth over the last 10 weeks. It makes a pleasant change from a hospitality industry leaking growth lately as operators blame tough comparatives from last year, and this summer's relatively slow and damp beginnings.

Investors seem somewhat relievied, bidding the share price nearly 3% higher to £10.95.

A YEAR OF TRANSFORMATION

The company has been through a lot of operational changes in the last few months.

In January, Fuller announced the sale of its beer company to Asahi of Japan for £250m, a transformational move for the 174-year old company.

Instead it has signed a long-term supply agreement with Asahi to give continued access to its iconic London Pride and Frontier beers, as well as Asahi beverages.

The company has also rolled out a new IT system, after operating the old one for the last 28 years, and is moving to a new headquarters in January 2020.

The appointment of new finance director Adam Councell, who begins work in August, will also complete changes to the management team.

READ MORE ABOUT FULLER SMITH & TURNER HERE

Despite all this upheavel the underlying business seems to be in rude health, with industry beating like-for-like sales growth.

Managed Pubs and Hotels now represents two thirds of revenues and 80% of profits. Revenues were up 8% to £293.8m, leading to operating profits up 5% to £35.1m.

STRONGER FINANCIAL POSITION

The company has indicated that it will return between £50m to £69m of cash to shareholders over the coming months, but is yet to decide whether that will be through a special dividend or share buy-back. Things should be clearer in due course once the finance director has taken up his post and had a look at the business.

The net sale proceeds from the sale of the beer business will leave the company with net debt of £21.7m, compared with net debt of £245.2m at the year end.

This places the company in a good position to invest in the pubs and hotels estate as well as giving it fire-power to make acquisitions.

Investors will need to be patient to see which direction the new management team decide to take the company, and may provide a catalyst for the shares.

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Issue Date: 25 Jul 2019