Join our community of smart investors

Fuller, Smith & Turner shuts doors and weighs ditching dividend

The pub group expects a significant hit to trading
Fuller, Smith & Turner shuts doors and weighs ditching dividend

Fuller, Smith & Turner (FSTA) has shuttered its managed and tenanted pub estate following the government’s social distancing instructions last week to the pub and leisure sector.

IC TIP: Hold at 650p

Fuller’s management said that it was unable to provide financial guidance given the uncertainty hanging over its ability to reopen its estate, in an update that was sparse in numbers. Along with delays to its capital expenditure, the group said that it “will also be carefully considering our dividend policy in due course”. It paid out £10.9m in equity dividends over its 2019 financial year, and paid £6.8m in half-year dividends to shareholders in January. Earlier this month, Fuller’s also announced its intention to buy back ordinary shares, having launched a £69m buyback programme in September 2019. 

Fuller’s expects a “material reduction” in trading, but emphasised the strength of its balance sheet and its “significant liquidity headroom”. Its December half-year results disclosed that as of 28 September 2019 it had £210m in available borrowing facilities, of which £151.7m was available until August 2021, £33.3m was available until August 2020, and £25m of which expired in October 2019. It had undrawn facilities of £170m, with a further £44.2m of cash on the balance sheet. But this cushion was reduced by the £69m buyback programme, a £24m contribution into the pension scheme and its £40m acquisition of Cotswold Inns & Hotels.