UK: Fuller, Smith & Turner Plc aims for new acquisition on its solid financial standing

Fuller, Smith & Turner Plc’s CEO said the pub owner and brewer would consider making larger acquisitions following the successful purchase of George Gale & Co in 2005, Reuters released November 24.

Fuller said it expected a good second-half performance and that Gale had been the biggest contributor to a 30 percent increase in adjusted profit for the first half of its financial year.

The brewer of London Pride posted adjusted profit of ₤10.9 million for the six months to September 30 and an increase in turnover of 35 percent to ₤91.1 million.

Chief Executive Michael Turner told Reuters that Fuller could afford brewers worth significantly more than the ₤83 million it spent on acquiring Gale's and its estate of 111 pubs in December 2005.

"We aren't very heavily geared and could borrow significantly more if we want to, and the banks have been very pleased with this acquisition and would back us going forward," said Turner in a telephone interview on Friday.

Turner said Fuller would look at like-minded, family-run brewers who could gain from economies of scale. Fuller reported that like for like sales for the estate, including Gale's pubs, grew 4.3 percent for the six-month period. Fuller saw a profit increase of 65 percent to ₤13.8 million for its 362 pubs and hotels as it invested ₤6.6 million in its estate during the first half.

The firm said Gale's trading pattern provided a summer balance to Fuller's previously winter-weighted business. Turner added the acquisition allowed Fuller to supply its beers throughout Hampshire, and it was introducing them on demand.

Turner said he expected a UK-wide ban on smoking in enclosed spaces to have an impact on a minority of its pubs, but it is improving food facilities and outside areas to offset this. "We think over a period of maybe 12 months the benefits will outweigh the disadvantages," he said.

Shares in Fuller lost 4.2 percent to 1490 pence by 9:55 a.m., valuing the company at ₤199 million, having closed at an all-time high of 1,555 pence November 23.

Broker Charles Stanley reduced its rating on the stock to "hold" from "buy" because of the recent share performance. But it said the results were strong and expected pretax profit, excluding exceptional items and amortisation, of ₤21.5 million for the full year. The firm said it expected to invest in new pubs in the second half, adding to the five acquisitions already due for completion in that period.

Fuller increased its dividend by 15 percent to 6.47 pence.

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