Computer issues and unanticipated operational costs spook investors

Fuller Smith & Turner (FSTA) £10.20

Loss to date: 4.7%

Original entry point: Buy at £10.70, 14 February 2019


Pub and hotels group Fuller Smith & Turner (FSTA) admits that it has underestimated costs of ‘transitioning’ the beer business to Japanese brewer Asahi, which struck a deal in January to acquire the assets.

This mistake will result in full-year pre-tax profit to 28 March 2020 being flat on a comparable basis to last year at £31m.

What appears to have happened is that the migration to a new enterprise resource planning system (ERP) has taken longer to deliver benefits than anticipated, resulting in higher running costs.

The ERP issue further complicated the separation of the 174-year-old beer business, resulting in £3.4m of extra costs and the transition period extending to the end of May next year.

The impact appeared larger because analysts’ profit forecasts of £42m had gotten out of line with management expectations, which were closer to £37m.

Broker Liberum sees this event as a post-disposal ‘reset of the numbers’ rather than a profit warning.


SHARES SAYS: Don’t be put off by the setback. We believe the disposal makes strategic sense and once the current transition is complete, the group is well positioned for further growth.

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