TIDMFSTA
RNS Number : 6827G
Fuller,Smith&Turner PLC
17 November 2022
STRICTLY EMBARGOED
UNTIL 7AM THURSDAY 17 NOVEMBER 2022
FULLER, SMITH & TURNER P.L.C.
("Fuller's", the "Company", or the "Group")
Financial results for the 26 weeks to 24 September 2022
Good momentum - well-placed to deliver long-term growth
Financial and Operational Highlights
Unaudited Unaudited Audited
26 weeks 26 weeks ended 52 weeks
ended 25 September ended
24 September 26 March
2022 2021 2022
GBPm GBPm GBPm
---------------------------- ------------- -------------- ---------
Revenue and other income 168.9 116.3 253.8
EBITDA(1) 28.9 22.8 44.3
Adjusted profit before
tax(2) 9.8 4.6 7.2
Statutory profit before
tax 10.7 10.6 11.5
Basic earnings per share(3) 13.13p 5.76p 11.59p
Adjusted earnings per
share(3) 12.48p 6.09p 9.79p
Dividend per share 4.68p 3.90p 11.31p
Net debt excluding lease
liabilities(4) 129.2 131.5 131.9
---------------------------- ------------- -------------- ---------
All figures above are from continuing operations.
1 Pre-separately disclosed earnings before interest, tax,
depreciation, profit on disposal of plant and equipment and
amortisation.
2 Adjusted profit before tax is the profit before tax excluding separately disclosed items.
3 Per 40p 'A' or 'C' ordinary share. Adjusted EPS is calculated
using earnings attributable to equity shareholders after tax
excluding separately disclosed items. Basis EPS includes separately
disclosed items.
4 Net debt excluding lease liabilities comprises cash and
short-term deposits, bank overdraft, bank loans, debenture stock
and preference shares.
-- Revenues grew to GBP168.9 million (H1 2022: GBP116.3 million)
as the business recovered from the impact of covid related
restrictions on trade
-- Like for like sales in the first half have grown by 20%
compared to the prior year, with Central London growing by 67%
-- Adjusted profit before tax increased to GBP9.8 million (H1
2022: GBP4.6 million) as the benefit of the sales recovery exceeded
inflationary increases in the cost base
-- Net debt is at GBP129.2 million (H1 2022: GBP131.5 million)
with the cash generated by the business funding investment in the
estate and returns to shareholders
-- Significant capacity to invest in growth with a four year
GBP200 million bank facility effective from May 2022
-- Interim dividend of 4.68p declared, representing a 20% increase on last year.
Strategic Highlights
-- Sales momentum continues, despite the temporary disruption
caused by ongoing train and tube strikes
-- Digital transformation work completed with new look websites
and enhanced consumer marketing capability
-- Continued strong performance in our hotels with revenue per
available room ("RevPAR") increasing by 17% against H1 2020 to
GBP94.65
-- Implementing a wide range of energy reduction initiatives as
part of our Life is too good to waste programme
-- Maintained investment in the estate, with GBP12 million
invested in the period to enhance capital values and drive further
growth
-- Impact of new central finance system reflected in more agile decision making
-- Delivering on our long-term strategy while evolving to reflect changes in consumer behaviour.
Current Trading
-- Like for like sales for the seven weeks to 12 November 2022
up 13% versus prior year despite the challenging environment
-- Strong like for like sales growth across Central London - up
20% for the seven weeks to 12 November 2022
-- Christmas bookings are strong and additional uplift expected from the World Cup
Chief Executive Simon Emeny said:
"Following on from a good first half performance, we have
maintained our forward momentum in the seven weeks post the period
end, with like for like sales up by 13% against the same period
last year. As commuters return to their offices and international
tourists once again visit the Capital, our Central London and City
sites have seen like for like sales for the first seven weeks of
the second half rise by 20% against the prior year, despite the
impact of tube and train strikes.
"While we look forward to our first Christmas free of
restrictions for three years, and the added bonus of a FIFA World
Cup, we are trading in an increasingly challenging environment.
Cost pressures from energy bills, wage and food inflation, and
increasing interest rates continue to impact us and all businesses
in the hospitality sector. Our teams are working hard to manage
these pressures, while ensuring we continue to deliver an
outstanding experience for our customers.
"We are a long-term business, with excellent foundations both in
terms of the strength of our Balance Sheet and our predominately
freehold estate, and we have the talent, desire and drive to
deliver future growth and success."
-Ends-
For further information, please contact:
Fuller, Smith & Turner P.L.C.
Simon Emeny, Chief Executive 020 8996 2000
Neil Smith, Finance Director 020 8996 2000
Georgina Wald, Corporate Comms Manager 020 8996 2198
Instinctif Partners
Justine Warren 020 7457 2010
Notes to Editors:
Fuller, Smith & Turner PLC is the premium pubs and hotels
business that is famous for beautiful and inviting pubs with
delicious fresh food, a vibrant and interesting range of drinks,
and engaging service from passionate people. Fuller's has 208
managed businesses, with 1,043 boutique bedrooms, and 178 Tenanted
Inns. The estate is predominately located in the South of England
(44% of sites are within the M25) and stretches from our London
heartland to the Jurassic Coast via the New Forest. Our Managed
Pubs and Hotels include seven stunning hotels in the Cotswolds, and
Bel & The Dragon - seven exquisite country inns located in the
Home Counties. In summary, Fuller's is the home of great pubs,
outstanding hospitality and passionate people, where everyone is
welcome and leaves that little bit happier than they arrived.
Photography is available from the Fuller's Press Office on 020
8996 2000 or by email at pr@fullers.co.uk .
This statement will be available on the Company's website,
www.fullers.co.uk . An accompanying presentation will be available
from 12 noon on 17 November 2022.
FULLER, SMITH & TURNER P.L.C.
FINANCIAL RESULTS FOR THE 26 WEEKSED 24 SEPTEMBER 2022
CHAIRMAN'S STATEMENT
I am very pleased with the progress the Executive Team and all
at Fuller's have achieved over the first six months of the new
financial year. Despite the turbulent political landscape,
inflation at a 40 year high and Putin's devastating war in Ukraine,
Fuller's has driven a 45% increase in revenue, more than doubled
underlying profits and delivered an increased interim dividend for
our shareholders.
While much of the credit for this success is due to the focus
and commitment of the Executive Team, I would like to publicly
thank each and every one of our dedicated team members. They make
the real difference to our customers and to our success. Despite
the stop-start nature of the last couple of years, and the ongoing
disruption caused by train and tube strikes that disproportionately
impact the Fuller's business, our amazing team members come to
work, support each other and deliver a great Fuller's experience to
our customers. They are all heroes in their own way.
Across our Managed Pubs and Hotels, we continue to invest in our
iconic buildings and our people. While many competitors may start
to rein back on investments in training and in the fabric and
furnishings, we will not. Fuller's is, and always has been, a
company with a long-term strategy and vision - which means
consistently offering outstanding food and drink, in a beautiful
pub with a warm welcome from well-trained team members - and that
is what we do best.
The support we provided for our Tenants from the very start of
the pandemic is reflected in the continued success of our Tenanted
Inns. I am delighted that 92% of our Tenants are on a substantive
agreement and our Tenanted support team provides an exceptional
level of assistance, help and encouragement for our entrepreneurial
Tenants.
Finally, I am delighted to see the rewards materialising from
our investment in digital transformation and a new central finance
system. In today's world, the best companies need access to
detailed information, enabling agile and quick decision making. The
time and money invested in these two large-scale projects has
provided the former - and our talented team is adept at using it to
deliver the latter.
Since the start of the financial year, the country has had two
monarchs, three prime ministers, four chancellors and five rises in
the Bank of England interest rate. Energy prices continue to
fluctuate and there is much uncertainty around the financial
markets. In such uncertain times, Fuller's is a beacon of
stability. We have survived turbulent times before, have excellent
clarity of vision and strategy, and I know Simon Emeny and the team
are in an excellent place to maintain and increase Fuller's forward
momentum.
DIVID
The Board is pleased to announce an interim dividend of 4.68p
(H1 2022: 3.90p) per 40p 'A' and 'C' ordinary share and 0.468p (H1
2022: 0.390p) per 4p 'B' ordinary share. This will be paid on 3
January 2023 to shareholders on the share register as at 16
December 2022. This payment equates to 60% of the 2019 payment and
continues our return to a progressive dividend policy.
Michael Turner
Chairman
16 November 2022
CHIEF EXECUTIVE'S REVIEW
OVERVIEW
We have continued to build momentum since the start of the
financial year. Sales across Central London, a key part of our
balanced business, continue to grow as people head back to their
offices and international tourists return - and although the
ongoing rail and tube disputes have temporarily impacted us
disproportionately, we remain confident in the future and resilient
in the present.
A year makes a lot of difference. Looking back to the first half
last year, we have seen revenues increase by 45% to GBP168.9
million (H1 2022: GBP116.3 million) and adjusted profit before tax
more than double to GBP9.8 million (H1 2022: GBP4.6 million). The
digital transformation project and roll out of the new finance
system that were completed as we began the new financial year are
delivering the anticipated benefits to the business and, while
there are clearly hurdles ahead, we are in good shape.
The well-documented increases in energy, food, labour and
interest costs are having an obvious impact - but balanced against
this we are looking forward to our first Christmas free of
restrictions for three years and the anticipated boost from the
FIFA World Cup.
STRATEGIC AND BUSINESS REVIEW
During the period, the team has focused on the five key
strategic pillars that will deliver our promise to create
experiences that nourish the soul. A clear strategy and long-term
vision have always been at the heart of Fuller's success. They
provide clarity across the business and ensure everyone is working
in unison to achieve a common goal.
Delight our customers
Our core customer has certain demographic characteristics that
will provide some protection from the worst of the current
financial pressures. Our pub estate is predominately situated in
affluent locations and our typical customer tends to have a higher
household income. We over-index by 48% in attracting customers with
a household income of over GBP75k. In addition, we over-index in
all groups with a household income over GBP40k.
A visit to the pub remains an affordable treat and pubs have
always proven to be highly resilient in previous economic
downturns. Today's customer expects a great experience and a good
reason to visit and this is an area that we have focused on for
several years with unique and exciting in-pub events such as the
popular Shakespeare in the Garden and, this year, Opera in the
Garden. During the first half, these two programmes alone have
delivered over GBP500k in incremental sales - and we have similar
initiatives planned for the winter and beyond including a Christmas
Concert with Rogue Opera and productions of the Charles Dickens
classic, A Christmas Carol.
While a great pint of London Pride continues to be the mainstay
of a Fuller's pub, thanks to our long-term supply agreement with
Asahi, sales of cocktails continue to rise - growing by 36% in
volume terms. These deliver a strong profit opportunity for pubs
and add to the theatre of a visit to a Fuller's pub or hotel.
Customers are also increasingly aware of the social and
environmental impact of the money they spend - and our continued
partnerships with UK suppliers and social enterprises help deliver
on this emotive need. A new partnership with leading UK winery,
Bolney Estate, has led to a number of supper club events focused
around these delicious wines. Meanwhile, our new plant-based burger
with Made in Hackney - a local community food kitchen in East
London - has been well received by customers with 50p for every
burger sold going to this excellent social enterprise.
Inspire our people
Our people remain the key to our success and our commitment to
home-grown talent and a comprehensive training framework continues
to underpin all our activity. During the first six months we have
delivered 2,500 training days with 177 team members currently
undergoing apprenticeships.
We have also relaunched our industry-leading Service Coach
programme with 176 Service Coaches across our Managed Pubs and
Hotels and we are delighted to have just held our biggest ever
graduation ceremony with 300 graduates being recognised. Their
achievements include courses completed in a wide range of
disciplines from back and front of house apprenticeships to
Management Development Training and degree-level programmes.
Retaining our team members is critical and following the launch
of our Happiness Index engagement survey we have made changes to
reflect their feedback. This has included earlier issuing of rotas
and improvements to our benefits package. The roll out of the
Medicash Healthcare Cash Plan to all employees with over one year's
service has been particularly well received and we are unique in
our sector in providing a medical benefit of this nature.
The move to Harri as our recruitment system partner has improved
our recruitment process with a 500% increase in the number of
applications and a decrease in the time from enquiry to the
potential recruit starting work. We have also improved our
recruitment landing page on our website, with over 150,000 views
during the period.
One of the side effects of the pandemic was the decline in the
number of over 50s working in our business - with many taking early
retirement. Older workers have always made a valuable contribution
to our teams, and we have partnered with Rest Less - an online
community of nearly one million over 50s - to attract older workers
who may feel their retirement decisions were premature.
Enhance our estate
Active management of our property assets is crucial to our
long-term success and the backing of our property portfolio, which
is 92% freehold, provides the financial stability that ensures we
can consistently deliver our long-term vision and strategy. It is
worth remembering that our property portfolio is not recorded in
our accounts at current valuation. A Directors' valuation was
completed in March which valued the estate at GBP995.6 million -
around GBP400 million over the value recorded in the accounts -
implying a net asset value per share of GBP13.80(1) .
Movement between our Managed and Tenanted estates ensures that
we can maximise the profit potential of an individual site. During
the period, four pubs moved into the Tenanted Inns estate. We will
also sell a small number of assets where we do not see long-term
value in ownership. In the first half of the year, we disposed of
four properties for a total of GBP7 million at a premium to their
book value. Post the period end, we have realised a further GBP6
million from disposals.
We have also acquired three new sites - two during the period
and one post period end. We were delighted to open The Queen's
Arms, landside at The Queen's Terminal, Heathrow, at the end of
July - a site which sits perfectly alongside London's Pride, our
airside business at the same terminal. We also acquired The Rising
Sun - an attractive site near New Milton in the New Forest. Post
the period end, we completed the purchase of a wonderful site in
the pretty Cotswold village of Bourton-on-the-Water. This will open
in the spring, following a full refurbishment, as The Willow and is
a great addition to our Cotswold businesses.
During the last recession, we continued to invest in our estate
while our competitors did not - ensuring that we were first out of
the blocks as trading strengthened and consumer confidence grew. We
will again continue with our investment plans and have invested
GBP12 million in the first half including schemes at The Lord
Northbrook in Lee, The Vaults in Southsea and The George &
Dragon in Westerham - a former tenancy which is now part of our Bel
& The Dragon brand, adding another 13 bedrooms to our Managed
estate.
Evolve our business
While the pub has retained its role in British life for
centuries, businesses must evolve and the digital transformation
project we undertook during lockdown plays a crucial role in
attracting new customers, communicating reasons to visit to both
existing and potential customers, and improving the digital journey
for all.
To support the excellent activities and events that are taking
place in our pubs, we sent out almost six million emails across
over 200 campaigns, ensuring customers hear from Fuller's - or
their favourite pub - at least once a month. The information fed
back from our system tells us that customers who receive email
marketing are more likely to visit within 30 days than those who
have not. A tight and well-managed digital journey enables us to
track response rates and associated spend, measure the return on
investment, identify the offers and events that really entice the
customers in and help us build lookalike audiences that we can
target through digital ads and targeted campaigns.
Another element of our digital transformation project is our new
hotel booking engine. This has delivered several revolutionary
benefits - especially around our aim of reducing our reliance on,
and the commission paid to, online travel agents ("OTA"). We have
already seen a 20% increase in the value of website direct bookings
against H1 2020, excluding Cotswold Inns & Hotels.
The new platform integrates with metasearch platforms such as
Google, Trivago and TripAdvisor - which means that a customer
searching for a hotel in a certain area can be served via a link to
our direct booking site, rather than being enticed primarily to an
OTA. As well as avoiding the financial commission, this also allows
us to build direct contact with our customer - and to suggest
alternative Fuller's hotels if their preferred choice is fully
booked.
The next stage of development for the online hotel journey is
through a loyalty scheme roll out, which will allow regular
customers who have signed up to our loyalty programme to see a
bespoke discount on the best online rate. This will provide another
reason to book direct, while ensuring we still honour our pricing
commitments to our OTA partners.
It is an exciting time for Fuller's as we continue to develop
the way we deliver great offers to our customers and promote our
fantastic pub and hotel experiences to the wider world. To take us
on the next stage of this journey, we have also hired an
experienced retail marketer and I am delighted that Sam Bourke will
be joining us at the end of November. Sam joins from Wasabi and has
previously held positions at The Restaurant Group and ETM, and I
know she is going to be a great addition to the Executive Team.
Own our impact - because Life is too good to waste
The ESG agenda has been an important part of our strategy for
many years, but energy consumption has never been under such
scrutiny as it is today. The work we started some years ago had
already helped to reduce our energy consumption, but we are now
ramping up our investment in energy saving and it is delivering
tangible benefits.
Across the estate, we are to invest GBP0.5 million over the next
12 months delivering a wide range of energy saving measures which
we expect to reduce consumption by 5% per annum and save over
GBP0.6 million in the first year alone. The specific elements
include improved cellar controls and remote beer coolers, more
efficient maintenance of fridges and cellars, heat recovery and the
use of an endotherm additive, which improves convection in our hot
water systems.
Supporting this activity is a behavioural change programme as
human nature is still a key factor in energy consumption. Finally,
we have also identified a further 28 kitchens that are suitable for
conversion to electricity in the near future. Our bid to reduce our
carbon footprint and achieve Net Zero is ongoing, but this year has
seen us take major steps in the right direction.
The Life is too good to waste programme covers people and
communities and we have made good progress with our programme
around diversity with the Executive Team undertaking an inclusive
leadership programme, the launch of our first menopause policy, and
the roll out of a diversity survey so we can identify areas for
improvement.
We have also continued to deliver for our communities with
ongoing support for Special Olympics GB, our key corporate charity,
as well as further support for Onside Hammersmith, a youth facility
in West London, and the DEC Ukraine appeal.
While Special Olympics' key goal is to provide sporting activity
for people with intellectual disabilities, our inclusion strategy
also creates an environment to provide employment opportunities. In
a great example of how we can build a holistic relationship, our
recent annual Fuller's football tournament had unified teams for
the first time - with every team including Fuller's team members
and at least one Special Olympics athlete. This helped to bring
down barriers, built confidence on both sides, and brought together
several strands of our ESG strategy.
Tenanted Inns
Our Tenanted Inns continue to be an integral, highly profitable
and cash-generative part of our business - delivering a profit
contribution during the period of GBP6.8 million (H1 2022: GBP4.8
million). It provides opportunities for us to move sites between
Tenanted and Managed as and when deemed appropriate and we can
share best practice in both directions.
We have invested GBP2.0 million in our Tenanted Inns during the
period and we will continue to undertake joint projects with
well-funded Tenants. Over 90% of our pubs are on substantive
agreements and we will be taking learnings from our energy saving
initiatives in the Managed estate to roll out across our Tenanted
Inns too.
It is good to return, post covid, to some of the more fun
activities that should be an integral part of any hospitality
business and, to that end, it was great to see so many entering our
first Tenants' Glorious Gardens competition. The winner was The
Plough in Norwood Green, a great example of the way in which an
entrepreneurial Tenant builds and personalises their business.
FINANCIAL REVIEW
Group revenue and other income increased by 45% to GBP168.9
million (H1 2022: GBP116.3 million). The prior year was impacted by
covid restrictions on trade through part of the period, whilst the
current year has been affected by the tube and rail strikes. We
estimate that the strike action has reduced sales by GBP1.4 million
in the first half of the year.
The current trading environment is challenging. The uncertainty
over the UK economy, driven in part by the continued war in
Ukraine, has resulted in high levels of inflation and energy costs
increasing exponentially. This in turn has contributed to
increasing interest rates. These factors together have put
additional strain on consumers' disposable income. However, against
this background, the Group has delivered an adjusted profit of
GBP9.8 million, more than doubling the adjusted profit from the
prior year (H1 2022: GBP4.6 million).
In our Managed Pubs and Hotels business, like for like sales
have grown by 20% compared with the prior year, with total sales
increasing by 47%. Compared to pre-pandemic levels (PY-2), like for
like sales were at 96%, as momentum in the City grew over the
period. For the seven weeks post period end they are at 101%,
demonstrating continued growth.
While overall EBITDA was GBP28.9 million, it is worth noting
that EBITDA for the Managed Pubs and Hotels business was GBP30.0
million, which represents an increase of 18% from prior year (H1
2022: GBP25.4 million). However, EBITDA margin fell from 24.3% to
19.5%. This is predominately for three reasons. The VAT rate on
food and accommodation has increased from 5% in the prior period to
20% in the current period, utilities has increased by GBP3.1
million from the prior year, equating to a 2% decline in margin,
and thirdly, in the prior year we received a number of grants from
the Government as well as a business rates holiday for part of the
period. On a like for like basis, EBITDA margin would have been
24.8% compared with the prior year of 24.3% however, given the
nature of the adjustments, the current reported margin is more
reflective of future expectations for margins.
Tenanted Inns revenue grew from GBP11.9 million to GBP15.1
million in the current period representing a 27% increase in sales.
EBITDA margin also improved from 47.1% to 51.7%. The low cost base
of the Tenanted Division means that it is a highly profitable part
of the Group and continues to trade strongly despite the economic
backdrop.
Central costs were GBP9.2 million in the period which was an
increase of GBP0.7 million on the prior period, mainly due to
increased payroll costs as recruitment was paused during lockdowns.
While the quantum of central costs was up, the percentage to
overall revenue was down from the prior period at 5.4% (H1 2022:
7.3%).
During the period, the Group refinanced all its banking
facilities and agreed a new unsecured banking facility of GBP200
million, split between a revolving credit facility of GBP110
million and a term loan of GBP90 million. These facilities have
been agreed for a tenure of four years through to May 2026. The new
facilities bear interest at a margin dependent on the leverage
covenant plus a base rate of SONIA. During the period, interest
rates have increased sharply with SONIA increasing from 60bps to
just over 200bps and this trend is expected to continue. Therefore,
on 2 September 2022, the Group entered into a zero-premium cap and
collar over GBP60 million of the term facility. This instrument is
in place for a three year period to hedge some of the variability
in interest rates. The Group sold a floor of 310bps and bought a
cap of 500bps which gives some protection should SONIA exceed
500bps.
Net debt (excluding leases) was at GBP129.2 million (H1 2022:
GBP131.5 million). This is only a marginal decrease from last year
as the Group has delivered on its capital allocation framework
through investment in the estate and returns to shareholders. A
total of GBP11.8 million was invested in the existing estate in the
period, a dividend of GBP4.6 million was paid to shareholders, and
two new pubs were acquired - The Queen's Arms at Heathrow's
Terminal 2 and The Rising Sun at New Milton, in the heart of the
New Forest. The improvement in EBITDA has meant that net
debt/EBIDTA is now at 3x, which is in line with our capital
allocation framework.
The adjusted finance cost increased to GBP5.8 million (H1 2022:
GBP5.3 million) mainly due to the rising base rate in the current
period but also in the prior period the Group had utilised the
Covid Corporate Financing Facility ("CCFF") for the first couple of
months which was at a significantly lower interest rate.
Separately disclosed items before tax were a credit of GBP0.9
million (H1 2022: GBP6.0 million credit) which principally consists
of GBP5.5 million profit on the disposal of four unlicensed
properties net of a cost of GBP1.1 million on the surrender of two
leases. Other costs included in the separately disclosed items were
reorganisation costs of GBP0.5 million, which largely relate to the
refinancing and a corporate restructuring, and an impairment charge
of GBP2.7 million in respect of four properties.
Tax has been provided at an effective rate before separately
disclosed items of 21.4% (H1 2022: 19.6%). The increase in the
effective tax rate is due to the movement in deferred tax which has
been provided at an effective rate based upon the higher rate of
corporation tax of 25% which is due to come into effect in April
2023. Disclosure on tax charge is set out in note 5.
The net impact of these items results in the basic earnings per
share increasing by 7.37p to 13.13p (H1 2022: 5.76p) and adjusted
earnings per share increasing by 6.39p to 12.48p (H1 2022:
6.09p).
The growth in earnings per share has enabled us to declare an
interim dividend of 4.68p (H1 2022: 3.90p), which is an increase of
20% on last year. In addition to the dividend, we announced on 20
September 2022 our intent to repurchase one million 'A' ordinary
shares, which we expect to complete within the next few weeks.
The surplus on the defined benefit pension schemes has increased
by GBP6.1 million from the year end and is now showing an
accounting surplus of GBP20.4 million (26 March 2022: surplus
GBP14.3 million, 24 September 2021: surplus GBP5.1 million). This
is a result of the decrease in the present value of the scheme
liabilities being significantly higher than the decrease in the
fair value of scheme assets. The present value of the scheme
liabilities decreased by GBP35.8 million to GBP93.8 million (26
March 2022: GBP129.6 million), which was driven by an increase in
the discount rate from 3.00% to 5.20%. As the Group has an
unconditional right to refund under the pension trust deed, an
asset of GBP20.4 million has been recognised at 24 September
2022.
CURRENT TRADING AND OUTLOOK
Following on from a good first half performance, we have
maintained our forward momentum in the seven weeks post the period
end, with like for like sales up by 13% against the same period
last year. As commuters return to their offices and international
tourists once again visit the Capital, our Central London and City
sites have seen like for like sales for the first seven weeks of
the second half rise by 20% against the prior year, despite the
impact of tube and train strikes.
While we look forward to our first Christmas free of
restrictions for three years, and the added bonus of a FIFA World
Cup, we are trading in an increasingly challenging environment.
Cost pressures from energy bills, wage and food inflation, and
increasing interest rates continue to impact us and all businesses
in the hospitality sector. Our teams are working hard to manage
these pressures, while ensuring we continue to deliver an
outstanding experience for our customers.
We are a long-term business, with excellent foundations both in
terms of the strength of our Balance Sheet and our predominately
freehold estate, and we have the talent, desire and drive to
deliver future growth and success.
Simon Emeny
Chief Executive
16 November 2022
Fuller, Smith & Turner P.L.C.
Condensed Group Income Statement
For the 26 weeks ended 24 September 2022
Unaudited - 26 weeks ended Unaudited - 26 weeks ended Audited - 52 weeks ended
24 September 2022 25 September 2021 26 March 2022
--------------------------------------- ---------------------------------------------- ---------------------------
Before Before Before
separately Separately separately Separately separately Separately
disclosed disclosed disclosed disclosed disclosed disclosed
items items Total items items Total items items Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ---- ---------- ------------------ ------- ---------- ---------- ------- ------------- ------------------ -------
Revenue 2 168.9 - 168.9 116.3 - 116.3 253.8 - 253.8
Operating
costs 3 (153.3) (3.2) (156.5) (106.4) 1.8 (104.6) (235.3) (2.0) (237.3)
------------ ---- ---------- ------------------ ------- ---------- ---------- ------- ------------- ------------------ -------
Operating
profit 15.6 (3.2) 12.4 9.9 1.8 11.7 18.5 (2.0) 16.5
Profit on
disposal of
properties 3 - 4.4 4.4 - 4.2 4.2 - 6.3 6.3
Finance
costs 4 (5.8) (0.3) (6.1) (5.3) - (5.3) (11.3) - (11.3)
------------ ---- ---------- ------------------ ------- ---------- ---------- ------- ------------- ------------------ -------
Profit
before tax 9.8 0.9 10.7 4.6 6.0 10.6 7.2 4.3 11.5
Income Tax
expenses 5 (2.1) (0.5) (2.6) (0.9) (6.2) (7.1) (1.2) (3.2) (4.4)
------------ ---- ---------- ------------------ ------- ---------- ---------- ------- ------------- ------------------ -------
Profit for
the
period/year 7.7 0.4 8.1 3.7 (0.2) 3.5 6.0 1.1 7.1
------------ ---- ---------- ------------------ ------- ---------- ---------- ------- ------------- ------------------ -------
Fuller, Smith & Turner P.L.C.
Condensed Group Income Statement (continued)
For the 26 weeks ended 24 September 2022
Unaudited -- 26 weeks ended Unaudited -- 26 weeks ended Audited -- 52 weeks ended
24 September 2022 25 September 2021 26 March 2022
------------------------------ ------------------------------ -------------------------------
Before
separately Before Before
Separately separately Separately separately Separately
disclosed disclosed disclosed disclosed disclosed disclosed
Note items items Total items items Total items items Total
----------- ---- ----------- ---------- ----- ----------- ---------- ----- ----------- ---------- ------
Earnings
per share
per 40p 'A'
and 'C'
ordinary
share Pence Pence Pence Pence Pence Pence
----------- ---- ----------- ---------- ----- ----------- ---------- ----- ----------- ---------- ------
Basic 6 12.48 13.13 6.09 5.76 9.79 11.59
Diluted 6 12.42 13.07 6.07 5.74 9.73 11.51
Earnings
per share
per 4p 'B'
ordinary
share
----------- ---- ----------- ---------- ----- ----------- ---------- ----- ----------- ---------- ------
Basic 6 1.25 1.31 0.61 0.58 0.98 1.16
Diluted 6 1.24 1.31 0.61 0.57 0.97 1.15
----------- ---- ----------- ---------- ----- ----------- ---------- ----- ----------- ---------- ------
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Comprehensive Income
For the 26 weeks ended 24 September 2022
Audited
Unaudited Unaudited 52 weeks ended
26 weeks ended 26 weeks ended 26 March
24 September 2022 25 September 2021 2022
GBPm GBPm GBPm
Note
---------------------------------------------------- ---- ------------------- ------------------- ----------------
Profit for the period/year 8.1 3.5 7.1
---------------------------------------------------- ---- ------------------- ------------------- ----------------
Items that may be reclassified to profit or loss
Net gains on valuation of financial assets and
liabilities 1.2 0.3 0.5
Tax related to items that may be reclassified to
profit or loss 5 (0.3) (0.1) (0.1)
---------------------------------------------------- ---- ------------------- ------------------- ----------------
Items that will not be reclassified to profit or
loss
Net actuarial gains on pension schemes 11 4.8 7.5 15.5
Tax related to items that will not be reclassified
to profit or loss 5 (1.2) (1.8) (3.8)
---------------------------------------------------- ---- ------------------- ------------------- ----------------
Other comprehensive income for the period/year, net
of tax 4.5 5.9 12.1
---------------------------------------------------- ---- ------------------- ------------------- ----------------
Total comprehensive income for the period/year, net
of tax 12.6 9.4 19.2
---------------------------------------------------- ---- ------------------- ------------------- ----------------
Fuller, Smith & Turner P.L.C.
Condensed Group Balance Sheet
24 September 2022
Unaudited Unaudited Audited
At At At
24 September 25 September 26 March
2022 2021 2022
Note GBPm GBPm GBPm
------------------------------- ---- ------------- ------------- ----------
Non-current assets
Intangible assets 29.3 28.9 29.5
Property, plant and equipment 8 591.8 588.4 592.7
Investment properties 1.6 1.9 1.6
Other financial assets 1.0 - -
Right-of-use assets 69.2 77.5 73.8
Retirement benefit obligations 11 22.0 5.1 16.2
------------------------------- ---- ------------- ------------- ----------
Total non-current assets 714.9 701.8 713.8
------------------------------- ---- ------------- ------------- ----------
Current assets
Inventories 4.3 3.2 3.6
Trade and other receivables 17.9 12.4 10.7
Current tax receivable 0.1 3.9 0.6
Cash and short-term deposits 10 20.4 16.2 15.6
Total current assets 42.7 35.7 30.5
------------------------------- ---- ------------- ------------- ----------
Assets classified as held
for sale 9 8.3 8.1 5.4
------------------------------- ---- ------------- ------------- ----------
Total assets 765.9 745.6 749.7
------------------------------- ---- ------------- ------------- ----------
Current liabilities
Trade and other payables (63.1) (58.0) (57.1)
Provisions (0.5) (0.5) (0.5)
Borrowings 10 - - (120.0)
Other Financial Liabilities - - (0.1)
Lease Liabilities 10 (6.0) (7.2) (6.8)
Total current liabilities (69.6) (65.7) (184.5)
------------------------------- ---- ------------- ------------- ----------
Non-current liabilities
Borrowings 10 (149.6) (147.7) (27.5)
Lease liabilities 10 (71.6) (76.6) (73.9)
Other financial liabilities - (0.3) -
Retirement benefit obligations 11 (1.6) - (1.9)
Deferred tax liabilities (16.4) (14.2) (12.7)
Total non-current liabilities (239.2) (238.8) (116.0)
------------------------------- ---- ------------- ------------- ----------
Net assets 457.1 441.1 449.2
------------------------------- ---- ------------- ------------- ----------
Fuller, Smith & Turner P.L.C .
Condensed Group Balance Sheet (continued)
24 September 2022
Unaudited Unaudited Audited
At At At
24 September 25 September 26 March
2022 2021 2022
GBPm GBPm GBPm
---------------------- -------------- ------------- ----------
Capital and reserves
Share capital 25.4 25.4 25.4
Share premium account 53.2 53.2 53.2
Capital redemption
reserve 3.7 3.7 3.7
Own shares (16.6) (16.7) (16.6)
Hedging reserve 0.8 (0.3) (0.1)
Retained earnings 390.6 375.8 383.6
----------------------- -------------- ------------- ----------
Total equity 457.1 441.1 449.2
----------------------- -------------- ------------- ----------
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Changes in Equity
For the 26 weeks ended 24 September 2022
Share Capital
Share premium redemption Own Hedging Retained
capital account reserve shares reserve earnings Total
Unaudited - 26 weeks ended 24 September 2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
At 26 March 2022 25.4 53.2 3.7 (16.6) (0.1) 383.6 449.2
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
Profit for the period - - - - - 8.1 8.1
Other comprehensive income for the period - - - - 0.9 3.6 4.5
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
Total comprehensive income for the period - - - - 0.9 11.7 12.6
Dividends (note 7) - - - - - (4.6) (4.6)
Share-based payment charges - - - - - 0.1 0.1
Tax charged directly to equity (note 5) - - - - - (0.2) (0.2)
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
At 24 September 2022 25.4 53.2 3.7 (16.6) 0.8 390.6 457.1
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
Unaudited - 26 weeks ended 25 September 2021
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
At 27 March 2021 22.8 4.2 3.7 (17.0) (0.5) 366.3 379.5
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
Profit for the period - - - - - 3.5 3.5
Other comprehensive income for the period - - - - 0.2 5.7 5.9
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
Total comprehensive income for the period - - - - 0.2 9.2 9.4
Issue of share capital 2.6 49.0 - 0.2 - - 51.8
Shares released from ESOT and treasury - - - 0.1 - - 0.1
Share-based payment charges - - - - - 0.3 0.3
At 25 September 2021 25.4 53.2 3.7 (16.7) (0.3) 375.8 441.1
-------------------------------------------- -------- -------- ----------- -------- -------- ----------- ------
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Changes in Equity (continued)
For the 26 weeks ended 24 September 2022
Share Capital
Share premium redemption Own Hedging Retained
capital account reserve shares reserve earnings Total
Audited - 52 weeks ended 26 March 2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ -------- -------- ----------- --------- -------- ----------- -------
At 27 March 2021 22.8 4.2 3.7 (17.0) (0.5) 366.3 379.5
------------------------------------------ -------- -------- ----------- --------- -------- ----------- -------
Profit for the year - - - - - 7.1 7.1
Other comprehensive income for the year - - - - 0.4 11.7 12.1
------------------------------------------ -------- -------- ----------- --------- -------- ----------- -------
Total comprehensive income for the period - - - - 0.4 18.8 19.2
Issue of share capital 2.6 49.0 - 0.2 - - 51.8
Shares released from ESOT and treasury - - - 0.2 - - 0.2
Dividends (note 7) - - - - - (2.4) (2.4)
Share-based payment charges - - - - - 0.8 0.8
Tax credited directly to equity (note 5) - - - - - 0.1 0.1
At 26 March 2022 25.4 53.2 3.7 (16.6) (0.1) 383.6 449.2
------------------------------------------ -------- -------- ----------- --------- -------- ----------- -------
Fuller, Smith & Turner P.L.C.
Condensed Group Cash Flow Statement
For the 26 weeks ended 24 September 2022
Unaudited Unaudited Audited
26 weeks ended 24 September 26 weeks ended 25 September 52 weeks ended 26 March
2022 2021 2022
Note GBPm GBPm GBPm
--------------------------- ---- --------------------------- --------------------------- -------------------------
Profit before tax 10.7 10.6 11.5
Net finance costs before
separately disclosed items 4 5.8 5.3 11.3
Separately disclosed items 3 (0.9) (6.0) (4.3)
Depreciation and
amortisation 2 13.3 12.9 25.8
--------------------------- ---- --------------------------- --------------------------- -------------------------
28.9 22.8 44.3
Difference between pension
charge and cash paid (1.1) (1.2) (2.3)
Share-based payment charges 0.2 0.3 0.8
Change in trade and other
receivables (7.4) (1.0) 0.5
Change in inventories (0.7) (1.2) (1.5)
Change in trade and other
payables 5.6 28.5 28.8
Cash impact of operating
separately disclosed items 3 (0.3) (0.3) (1.9)
--------------------------- ---- --------------------------- --------------------------- -------------------------
Cash generated from
operations 25.2 47.9 68.7
Tax received - - 2.5
--------------------------- ---- --------------------------- --------------------------- -------------------------
Cash generated from
operating activities 25.2 47.9 71.2
Cash flow from investing
activities
Purchase of property, plant
and equipment and
intangible assets (14.9) (8.4) (25.8)
Sale of property, plant and
equipment, investment
property and assets held
for sale 6.7 4.8 10.0
--------------------------- ---- --------------------------- --------------------------- -------------------------
Net cash outflow from
investing activities (8.2) (3.6) (15.8)
--------------------------- ---- --------------------------- --------------------------- -------------------------
Cash flow from financing
activities
Receipts on release of own
shares to option schemes - 0.1 0.1
Interest paid (3.9) (2.9) (7.2)
Preference dividends paid (0.1) (0.1) (0.1)
Net proceeds of equity
placing - 51.8 51.8
Equity dividends paid (4.6) - (2.4)
Repayment of commercial
paper under CCFF 10 - (100.0) (100.0)
Drawdown of bank loans 3.0 13.1 12.6
Payment of Loan arrangement
fees (1.5) (1.2) (1.2)
Surrender of leases (0.4) (1.9) (1.9)
Principal elements of lease
payments 10 (4.7) (4.1) (8.6)
--------------------------- ---- --------------------------- --------------------------- -------------------------
Net cash (outflow) from
financing activities (12.2) (45.2) (56.9)
--------------------------- ---- --------------------------- --------------------------- -------------------------
Net movement in cash and
cash equivalents 10 4.8 (0.9) (1.5)
--------------------------- ---- --------------------------- --------------------------- -------------------------
Cash and cash equivalents
at the start of the period 15.6 17.1 17.1
--------------------------- ---- --------------------------- --------------------------- -------------------------
Cash and cash equivalents
at the end of the
period/year 10 20.4 16.2 15.6
--------------------------- ---- --------------------------- --------------------------- -------------------------
Fuller, Smith & Turner P.L.C.
Notes to the Condensed Financial Statements
For the 26 weeks ended 24 September 2022
1. Half Year Report
Basis of Preparation
The half year financial statements for the 26 weeks ended 24
September 2022 have been prepared in accordance with the Disclosure
and Transparency Rules ("DTRs") of the Financial Conduct Authority
and with International Accounting Standard ("IAS") 34, Interim
Financial Reporting and should be read in conjunction with the
Annual Report and Financial Statements for the 52 weeks ended 26
March 2022.
The half year financial statements do not constitute full
accounts as defined by Section 434 of the Companies Act 2006. The
figures for the 52 weeks ended 26 March 2022 are derived from the
published statutory accounts. Full accounts for the 52 weeks ended
26 March 2022, including an unqualified auditor's report which did
not make any statement under Section 498 of the Companies Act 2006,
have been delivered to the Registrar of Companies.
The Directors have adopted the going concern basis in preparing
these accounts after assessing the Group's principal risks, which
are predominately the uncertainty over the UK economy and the cost
pressures impacting the UK from food inflation, rising staff costs
and utility prices and, in turn, the effect the cost of living
crisis is having on consumer spending. The Directors are confident
that the Group has sufficient liquidity to withstand these ongoing
challenges for the 12- month going concern assessment period to
November 2023 (the 'going concern period').
The continued uncertainty over the UK economy casts uncertainty
as to the future financial performance and cash flows of the Group.
When assessing the ability of the Group to continue as a going
concern, the Directors have considered the Group's financing
arrangements, the pattern of trading in the first half of the
financial year, the possibility of further trading disruptions
caused by the tube and train strikes and the principal risks and
uncertainties as disclosed in the Group's latest Annual Report.
At 24 September 2022, the Group had a strong Balance Sheet with
92% of the estate being freehold properties along with available
headroom on undrawn facilities of GBP76.5 million and GBP20.4
million of cash resulting in net debt (excluding leases) of
GBP129.2 million. During the period, the Group secured a new
facility of GBP200 million, split between a revolving credit
facility of GBP110 million and a term loan of GBP90 million, for a
tenure of four years to May 2026. Under the new agreement, the
minimum liquidity covenant of GBP10 million tested monthly remains
until November 2022. From December 2022 (and tested quarterly
thereafter) the covenant suite will consist of net debt to EBITDA
(leverage) and EBITDA to net finance charges.
The Group has modelled financial projections for the going
concern period based upon two scenarios, the base case and the
severe but plausible ('downside'). The base case is the Board
approved forecast for FY 2023 as well as the first eight months of
FY 2024 plan which forms part of the Board approved three-year
plan. The base case assumes that costs will be impacted
predominately by the increase in energy prices as well as other
cost inflation currently seen. It also assumes as a result of the
cost of living crisis there will be some impact on consumer
confidence and hence volumes. Under this scenario there would be
liquidity headroom and all covenants would be complied with for the
duration of the going concern period.
The Group has also modelled a downside scenario whereby sales in
the Managed Division drop by c5% from that assumed in the base case
and inflation continues at an even higher rate than in the base
case, specifically utilities (12% increase from base in FY 2024)
and staff costs increase in order to retain staff. A similar
decline is also assumed in the Tenanted Division. The model still
assumes that investment in the estate will remain at the same
levels as the base, that no further disposals of properties will
happen, and a bonus will still be paid. These are all mitigating
factors that the Group has in its control. Under this scenario the
Group will still have sufficient resources and headroom on its
covenants throughout the assessment period.
Given the uncertainties surrounding the UK economy, the Group
has also performed a reverse stress test to assess at which point
the Group would breach its covenants or not have sufficient
liquidity in the assessment period. To cause a breach in the
covenants in June 2023, a decline in EBITDA of 41% would be
required from the base case forecast which would represent a
significant decline in sales combined with additional increase in
costs beyond the downside assumptions, the Directors believe that
this combination of adverse factors is implausible at the current
time. The reduction in sales or increase in costs to breach the
covenant any earlier is thought to be too remote as the covenant is
tested on a rolling 12 months and therefore most of that period has
been actualised. The model does not assume there would be any
disposals. At no point through the assessment period would the
Group not have sufficient liquidity.
The Directors have concluded that in both the base and downside
scenarios, the Group has sufficient debt facilities to finance
operations for the going concern assessment period and it would not
be in breach of any of its covenants and that the combination of
adverse events that would trigger a covenant breach are highly
unlikely at the current time.
After due consideration of the matters set out above, the
Directors are satisfied that there is a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the going concern assessment period to November
2023.
The half year financial statements were approved by the
Directors on 16 November 2022.
New Accounting Standards
The accounting policies adopted in the preparation of the half
year financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements
for the 52 weeks ended 26 March 2022. The Group has not early
adopted any standard, interpretation or amendment that has been
issued but is not yet effective.
Taxation
Taxes on income in the interim periods are accrued using the tax
rate that is expected to be applicable to total annual earnings for
the full year in each tax jurisdiction based on substantively
enacted or enacted tax rates at the interim date.
2. Segmental Analysis
Managed
Pubs Tenanted
Unaudited - 26 weeks ended and Hotels Inns Unallocated(1) Total
24 September 2022 GBPm GBPm GBPm GBPm
Revenue
--------------------------------- ------------ -------- -------------- -----
Sales of goods and services 135.2 10.8 - 146.0
Accommodation income 17.8 - - 17.8
--------------------------------- ------------ -------- -------------- -----
Total revenue from contracts
with customers 153.0 10.8 - 163.8
Rental income 0.8 4.3 - 5.1
--------------------------------- ------------ -------- -------------- -----
Revenue 153.8 15.1 - 168.9
--------------------------------- ------------ -------- -------------- -----
Segment result 18.0 6.8 (9.2) 15.6
Operating separately disclosed
items (3.2)
--------------------------------- ------------ -------- -------------- -----
Operating profit 12.4
Profit on disposal of properties 4.4
Net finance costs (6.1)
--------------------------------- ------------ -------- -------------- -----
Profit before tax 10.7
--------------------------------- ------------ -------- -------------- -----
Other segment information
Additions: property, plant and
equipment 12.9 2.0 0.1 15.0
Depreciation and amortisation 12.0 1.0 0.3 13.3
Impairment of property 2.7 - - 2.7
EBITDA 30.0 7.8 (8.9) 28.9
--------------------------------- ------------ -------- -------------- -----
Managed
Pubs Tenanted
Unaudited - 26 weeks ended and Hotels Inns Unallocated(1) Total
25 September 2021 GBPm GBPm GBPm GBPm
Revenue
--------------------------------- ------------ -------- -------------- -----
Sales of goods and services 92.0 8.9 - 100.9
Accommodation income 10.5 - - 10.5
Total revenue from contracts
with customers 102.5 8.9 - 111.4
Rental income 1.9 3.0 - 4.9
Revenue 104.4 11.9 - 116.3
--------------------------------- ------------ -------- -------------- -----
Segment result 13.6 4.8 (8.5) 9.9
Operating separately disclosed
items 1.8
--------------------------------- ------------ -------- -------------- -----
Operating Profit 11.7
Profit on disposal of properties 4.2
Net finance costs (5.3)
--------------------------------- ------------ -------- -------------- -----
Profit before tax 10.6
Other segment information
Additions: property, plant and
equipment 5.8 0.4 - 6.2
Depreciation and amortisation 11.8 0.8 0.3 12.9
EBITDA 25.4 5.6 (8.2) 22.8
--------------------------------- ------------ -------- -------------- -----
1 Unallocated expenses represent primarily the salary and costs of central management.
2. Segmental Analysis (continued)
Managed
Pubs Tenanted
Audited - 52 weeks ended and Hotels Inns Unallocated(1) Total
26 March 2022 GBPm GBPm GBPm GBPm
Revenue
------------------------------------- ----------- -------- -------------- --------
Sale of goods and services 205.1 17.9 - 223.0
Accommodation income 21.9 - - 21.9
------------------------------------- ----------- -------- -------------- --------
Total revenue from contracts
with customers 227.0 17.9 - 244.9
Rental income 1.8 7.1 - 8.9
------------------------------------- ----------- -------- -------------- --------
Revenue 228.8 25.0 - 253.8
------------------------------------- ----------- -------- -------------- --------
Segment result 24.7 11.1 (17.3) 18.5
Operating separately disclosed
items (2.0)
------------------------------------- ----------- -------- -------------- --------
Operating Profit 16.5
Profit on disposal of properties 6.3
Net finance costs (11.3)
------------------------------------- ----------- -------- -------------- --------
Profit before tax 11.5
------------------------------------- ----------- -------- -------------- --------
Other segment information
Additions: assets held for sale,
property, plant and equipment 20.2 2.3 2.6 25.1
Depreciation and amortisation 23.3 1.8 0.7 25.8
Impairment of property, right-of-use
assets, and goodwill 3.0 0.3 - 3.3
EBITDA 48.0 12.9 (16.6) 44.3
------------------------------------- ----------- -------- -------------- ------
1 Unallocated expenses represent primarily the salary and costs of central management.
3. Separately Disclosed Items
Unaudited Unaudited Audited
26 weeks ended 24 September 26 weeks ended 25 September 52 weeks ended 26 March
2022 2021 2022
GBPm GBPm GBPm
----------------------------- ----------------------------- ----------------------------- -------------------------
Amounts included in operating
profit:
Reorganisation costs (0.5) (0.3) (0.8)
Impairment of properties,
right-of-use assets and
intangible assets (2.7) - (3.3)
Release of provision on final
settlement of Beer Business - 2.1 2.1
Total separately disclosed
items included in operating
profit (3.2) 1.8 (2.0)
----------------------------- ----------------------------- ----------------------------- -------------------------
Profit on disposal of
properties 4.4 4.2 6.3
----------------------------- ----------------------------- ----------------------------- -------------------------
Separately disclosed finance
costs:
Finance credit on net pension
surplus (note 11) 0.2 - -
Finance charge on the write
down of arrangement fees (0.5) - -
Total separately disclosed
finance costs (0.3) - -
----------------------------- ----------------------------- ----------------------------- -------------------------
Total separately disclosed
items before tax 0.9 6.0 4.3
----------------------------- ----------------------------- ----------------------------- -------------------------
Separately disclosed tax:
Profit on disposal of
properties (0.7) (1.1) (1.3)
Change in tax rates - (5.1) (3.3)
Other items 0.2 - 1.4
----------------------------- ----------------------------- ----------------------------- -------------------------
Total separately disclosed
tax (0.5) (6.2) (3.2)
----------------------------- ----------------------------- ----------------------------- -------------------------
Total separately disclosed
items 0.4 (0.2) 1.1
----------------------------- ----------------------------- ----------------------------- -------------------------
The reorganisation costs of GBP0.5 million during the 26 weeks
ended 24 September 2022 (25 September 2021: GBP0.3 million, 26
March 2022: GBP0.8 million) were largely incurred as a result of
the Group corporate restructure, mainly due to Group refinancing in
the period. The tax impact of the reorganisation costs is
recognised in other items.
The profit on disposal of properties of GBP4.4 million during
the 26 weeks ended 24 September 2022 (25 September 2021: GBP4.2
million, 26 March 2022: GBP6.3 million) consists of GBP5.5 million
for the disposal of four unlicensed properties which had been
classified as assets held for sale prior to the sale, net of GBP1.1
million of costs associated with the surrender of leases on two
properties.
The property impairment charge of GBP2.7 million during the 26
weeks ended 24 September 2022 (25 September 2021: GBPNil, 26 March
2022: GBP3.3 million) relates to the write down of four licensed
properties to their recoverable value.
The cash impact of operating separately disclosed items before
tax for the 26 weeks ended 24 September 2022 was GBP0.3 million
cash outflow (25 September 2021: GBP0.3 million cash outflow, 26
March 2022: GBP1.9 million cash outflow).
4. Finance Costs
Unaudited Unaudited Audited
26 weeks ended 24 September 26 weeks ended 25 September 52 weeks ended 26 March
2022 2021 2022
GBPm GBPm GBPm
----------------------------- ---------------------------- ---------------------------- -------------------------
Finance costs
----------------------------- ---------------------------- ---------------------------- -------------------------
Interest expense arising on:
Financial liabilities at
amortised cost - loans and
debentures (4.2) (3.6) (8.1)
Financial liabilities at
amortised cost - preference
shares (0.1) (0.1) (0.1)
Financial liabilities at
amortised cost - lease
liabilities (1.5) (1.6) (3.1)
----------------------------- ---------------------------- ---------------------------- -------------------------
Total finance costs before
separately disclosed items (5.8) (5.3) (11.3)
----------------------------- ---------------------------- ---------------------------- -------------------------
Finance credit on net pension
surplus (note 11) 0.2 - -
Finance charge on the write
down of arrangement fees (0.5) - -
Total finance costs (6.1) (5.3) (11.3)
----------------------------- ---------------------------- ---------------------------- -------------------------
5. Taxation
Unaudited Unaudited Audited
26 weeks ended 24 26 weeks ended 25 September 52 weeks ended 26 March
September 2022 2021 2022
GBPm GBPm GBPm
---------------------------- --------------------------- ---------------------------- -------------------------
Tax on profit on ordinary
activities
Current income tax:
Current tax on profit for
the period 0.5 0.1 0.2
Adjustment for current tax
on prior periods - - 0.6
---------------------------- --------------------------- ---------------------------- -------------------------
Total current income tax 0.5 0.1 0.8
---------------------------- --------------------------- ---------------------------- -------------------------
Deferred tax:
Origination and reversal of
temporary differences 2.0 1.9 2.2
Change in corporation tax
rate - 5.1 3.3
Adjustments for deferred tax
on prior periods 0.1 - (1.9)
Total deferred tax 2.1 7.0 3.6
---------------------------- --------------------------- ---------------------------- -------------------------
Total tax charged in the
Income Statement 2.6 7.1 4.4
---------------------------- --------------------------- ---------------------------- -------------------------
Tax relating to items
charged to the Statement of
Comprehensive Income
Deferred tax:
Valuation gains on financial
assets and liabilities 0.3 0.1 0.1
Net actuarial gains on
pension scheme 1.2 1.8 3.8
---------------------------- --------------------------- ---------------------------- -------------------------
Tax charge included in the
Statement of Comprehensive
Income 1.5 1.9 3.9
---------------------------- --------------------------- ---------------------------- -------------------------
Tax relating to items
charged/(credited) directly
to equity
Deferred tax:
Share-based payments 0.2 - (0.1)
Tax charge/(credit) included
in the Statement of Changes
in Equity 0.2 - (0.1)
---------------------------- --------------------------- ---------------------------- -------------------------
The taxation charge is calculated by applying the Directors'
best estimate of the annual effective tax rate to the profit for
the period/year.
6. Earnings Per Share
Unaudited Unaudited Audited
26 weeks ended 24 September 26 weeks ended 25 September 52 weeks ended 26 March
2022 2021 2022
Continuing operations GBPm GBPm GBPm
------------------------------ ----------------------------- ----------------------------- ------------------------
Profit attributable to equity
shareholders 8.1 3.5 7.1
Separately disclosed items net
of tax (0.4) 0.2 (1.1)
------------------------------ ----------------------------- ----------------------------- ------------------------
Adjusted earnings attributable
to equity shareholders 7.7 3.7 6.0
------------------------------ ----------------------------- ----------------------------- ------------------------
Number Number Number
------------------------------- ---------- ---------- ----------
Weighted average share capital 61,712,000 60,762,000 61,264,000
Dilutive outstanding options
and share awards 275,000 204,000 413,000
------------------------------- ---------- ---------- ----------
Diluted weighted average share
capital 61,987,000 60,966,000 61,677,000
------------------------------- ---------- ---------- ----------
40p 'A' and 'C' ordinary
share Pence Pence Pence
---------------------------- ----- ----- -----
Basic earnings per share 13.13 5.76 11.59
Diluted earnings per share 13.07 5.74 11.51
Adjusted earnings per share 12.48 6.09 9.79
Diluted adjusted earnings
per share 12.42 6.07 9.73
---------------------------- ----- ----- -----
4p 'B' ordinary share Pence Pence Pence
---------------------------- ----- ----- -----
Basic earnings per share 1.31 0.58 1.16
Diluted earnings per share 1.31 0.57 1.15
Adjusted earnings per share 1.25 0.61 0.98
Diluted adjusted earnings
per share 1.24 0.61 0.97
---------------------------- ----- ----- -----
For the purposes of calculating the number of shares to be used
above, 'B' shares have been treated as one-tenth of an 'A' or 'C'
share. The earnings per share calculation is based on earnings from
continuing operations and on the weighted average ordinary share
capital which excludes shares held by trusts relating to employee
share options and shares held in treasury of 1,741,713 (25
September 2021: 1,766,681, 26 March 2022: 1,744,564).
Diluted earnings per share is calculated using the same earnings
figure as for basic earnings per share, divided by the weighted
average number of ordinary shares outstanding during the period
plus the weighted average number of ordinary shares that would be
issued on the conversion of all the dilutive potential ordinary
shares into ordinary shares.
Adjusted earnings per share is calculated on profit before tax
excluding separately disclosed items and on the same weighted
average ordinary share capital as for the basic and diluted
earnings per share. An adjusted earnings per share measure has been
included as the Directors consider that this measure better
reflects the underlying earnings of the Group.
7. Dividends
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
24 September 25 September 26 March
2022 2021 2022
GBPm GBPm GBPm
----------------------------------- ------------- ------------- ---------
Declared and paid during the
period
Interim paid in the period for
2022 - - 2.4
Final dividend paid in period
for 2022 4.6 - -
Equity dividends paid 4.6 - 2.4
----------------------------------- ------------- ------------- ---------
Dividends on cumulative preference
shares (note 4) 0.1 0.1 0.1
----------------------------------- ------------- ------------- ---------
Pence Pence Pence
----------------------------------- ------------- ------------- ---------
Dividends per 40p 'A' and 'C'
ordinary share
declared in respect of the period
Interim 4.68 3.90 3.90
Final - - 7.41
----------------------------------- ------------- ------------- ---------
4.68 3.90 11.31
----------------------------------- ------------- ------------- ---------
The pence figures above are for the 40p 'A' ordinary shares and
40p 'C' ordinary shares. The 4p 'B' ordinary shares carry dividend
rights of one-tenth of those applicable to the 40p 'A' ordinary
shares. Own shares held in the employee share trusts do not qualify
for dividends as the Trustees have waived their rights. Dividends
are also not paid on own shares held as treasury shares.
The Directors have declared an interim dividend for the 40p 'A'
ordinary shares and 40p 'C' ordinary shares of 4.68p (2022: 3.90p)
and 0.468p (2022: 0.390p) for the 4p 'B' ordinary shares.
8. Property, Plant and Equipment
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
24 September 25 September 26 March
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------- ------------- ------------- ---------
Net book value at start of period/year 592.7 590.2 590.2
Additions 15.0 6.2 22.7
Impairment loss net of reversals (2.7) - (3.3)
Transfers to assets classified
as held for sale (3.9) (1.5) (1.5)
Transfers from assets classified
as held for sale - 2.4 2.5
Depreciation provided during
the period (9.3) (8.9) (17.9)
Net book value at end of period/year 591.8 588.4 592.7
--------------------------------------- ------------- ------------- ---------
During the 26 weeks ended 24 September 2022, the Group
recognised a charge of GBP2.7 million (25 September 2021: GBPnil
million, 26 March 2022: GBP3.3 million) in respect of the write
down in value of its properties to their recoverable value.
The Group considers each trading outlet to be a cash generating
unit ("CGU") and each CGU is reviewed at each reporting date for
indicators of impairment. Where trading is not in line with the FY
2023 budget because of the current challenging trading environment,
this has been determined as an indicator of impairment. In
assessing whether an asset has been impaired, the carrying amount
of the CGU is compared to its recoverable amount. The recoverable
amount is the higher of its fair value less costs to sell ("FVLCS")
and its value in use.
The Group uses a range of methods for estimating FVLCS which
include applying a market multiple to the CGU EBITDA and, for
leasehold sites, present value techniques using a discounted cash
flow method. A Directors' valuation was performed, using these
techniques, as at 26 March 2022 whereby 20% of the properties were
independently verified by a third party. That valuation has been
used as the basis for the FVLCS as at 24 September 2022.
For the purposes of estimating the value in use of CGUs,
management have used a discounted cash flow approach. The
calculations use cash flow projections based on the following plans
covering a five-year period.
The key assumptions used by management are:
-- A long-term growth rate of 2.0% (26 March 2022: 2.0%) was
used for cash flows subsequent to the five-year approved
budget/forecast period.
-- An EBITDA multiple is estimated based on a normalised trading
basis and market data obtained from external sources. This resulted
in an average multiple of 10.5x (freehold 11.8x) and the Managed
estate and 10.9x on the Tenanted estate.
-- The discount rate is based on the Group's weighted average
cost of capital, which is used across all CGUs due to their similar
characteristics. The pre--tax discount rate is 9.5% (26 March 2022:
8.6%).
Impairments are recognised where the property valuation is also
lower than the CGU's carrying value for those determined to be at
risk of impairment. This is measured as the difference between the
carrying value and the higher of FVLCS and its value in use. Where
the property valuation exceeds the carrying value, no impairment is
required.
8. Property, Plant and Equipment (continued)
The value in use calculations are sensitive to the assumptions
used. The Directors consider a movement of 1.5% in the discount
rate and 0.5% in the growth rate to be reasonable with reference to
current market yield curves and the current economic conditions.
The additional impairment/(reversal) is set out as follows:
GBPm
Increase discount rate by 1.5% 16.2
------
Decrease discount rate by 1.5% (8.3)
------
Increase growth rate by 0.5% (2.8)
------
Decrease growth rate by 0.5% 3.9
------
The additional CGUs that would need to be considered for
impairment would have their FVLCS determined in order to conclude
on whether an impairment is required. A general decrease in
property values across the portfolio would have a similar effect to
that set out above i.e. any reduction in property values would lead
to assets being at risk of impairment. In the current year, a
decrease of 5% in the FVLCS would have led to an additional
impairment of GBP1.2 million for the CGUs where recoverable amount
has been assessed on FVLCS.
9. Assets held for sale
Unaudited Unaudited Audited
26 weeks 26 weeks 26 weeks
ended ended ended
24 September 25 September 26 March
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------- ------------- ------------- ---------------------
Assets held for sale at the start
of the period/year 5.4 9.6 9.6
Assets disposed of during the year (1.0) (1.7) (4.6)
Assets transferred to property, plant
and equipment - (2.4) (2.5)
Assets transferred from investment
property - 1.1 1.4
Assets transferred from property,
plant and equipment 3.9 1.5 1.5
-------------------------------------- ------------- ------------- ---------------------
Assets held for sale at the end of
the period/year 8.3 8.1 5.4
-------------------------------------- ------------- ------------- ---------------------
10. Analysis of Net Debt
At At
26 March Cash Non 24 September
Unaudited - 26 weeks 2022 flows cash(1) 2022
ended 24 September 2022 GBPm GBPm GBPm GBPm
---------------------------- --------- ------ -------- -------------
Cash and cash equivalents:
Cash and short-term
deposits 15.6 4.8 - 20.4
---------------------------- --------- ------ -------- -------------
15.6 4.8 - 20.4
---------------------------- --------- ------ -------- -------------
Financial liabilities
Lease liabilities (80.7) 4.7 (1.6) (77.6)
(80.7) 4.7 (1.6) (77.6)
Debt:
Bank loans(2) (120.0) (1.5) (0.6) (122.1)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (147.5) (1.5) (0.6) (149.6)
----------------------------- --------- ------ -------- -------------
Net debt (212.6) 8.0 (2.2) (206.8)
----------------------------- --------- ------ -------- -------------
On 27 May 2022, the Group secured a new facility of GBP200
million, split between a revolving credit facility of GBP110
million and a term loan of GBP90 million, for a tenure of four
years to May 2026. The new facilities bear an interest rate margin
dependent on leverage covenant plus SONIA. Under the new agreement,
there is a minimum liquidity requirement of GBP10 million until
November 2022. From December 2022, there will be a covenant suite
which will consist of net debt to EBITDA (leverage) and EBITDA to
net finance charges to be tested quarterly.
At At
Unaudited - 26 weeks 27 March Cash Non 25 September
ended 25 September 2021 flows cash(1) 2021
2021 GBPm GBPm GBPm GBPm
--------------------------- --------- ------ ----------------------- -------------
Cash and cash equivalents:
Cash and short-term
deposits 17.1 (0.9) - 16.2
--------------------------- --------- ------ ----------------------- -------------
17.1 (0.9) - 16.2
--------------------------- --------- ------ ----------------------- -------------
Financial liabilities
Lease liabilities (89.9) 4.1 2.0 (83.8)
(89.9) 4.1 2.0 (83.8)
Debt:
Bank loans(2) (107.9) (11.9) (0.4) (120.2)
CCFF (99.8) 100.0 (0.2) -
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
--------------------------- --------- ------ ----------------------- -------------
Total borrowings (235.2) 88.1 (0.6) (147.7)
--------------------------- --------- ------ ----------------------- -------------
Net debt (308.0) 91.3 1.4 (215.3)
--------------------------- --------- ------ ----------------------- -------------
10. Analysis of Net Debt (continued)
At At
27 March Cash Non 26 March
Audited - 52 weeks 2021 flows cash(1) 2022
ended 26 March 2022 GBPm GBPm GBPm GBPm
--------------------------- --------- ------ -------- ---------
Cash and cash equivalents:
Cash and short-term
deposits 17.1 (1.5) - 15.6
--------------------------- --------- ------ -------- ---------
17.1 (1.5) - 15.6
--------------------------- --------- ------ -------- ---------
Financial liabilities
Lease liabilities (89.9) 8.6 0.6 (80.7)
(89.9) 8.6 0.6 (80.7)
Debt:
Bank loans(2) (107.9) (11.4) (0.7) (120.0)
CCFF (99.8) 100.0 (0.2) -
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
--------------------------- --------- ------ -------- ---------
Total borrowings (235.2) 88.6 (0.9) (147.5)
--------------------------- --------- ------ -------- ---------
Net debt (308.0) 95.7 (0.3) (212.6)
--------------------------- --------- ------ -------- ---------
1 Non-cash movements relate to the amortisation of arrangement
fees, arrangement fees accrued and movement in lease
liabilities.
2 Bank loans net of arrangement fees and cashflows include the payment of arrangement fees.
11. Retirement Benefit Obligations
Unaudited Unaudited Audited
The amount included in the Balance At At At
Sheet arising from the Group's 24 September 25 September 26 March
obligations in respect of its 2022 2021 2022
defined benefit retirement plan GBPm GBPm GBPm
------------------------------------ ------------- ------------- ---------
Fair value of Scheme assets 114.2 155.7 143.9
Present value of Scheme liabilities (93.8) (150.6) (129.6)
------------------------------------ ------------- ------------- ---------
Surplus in the Scheme 20.4 5.1 14.3
------------------------------------ ------------- ------------- ---------
The net position of the defined benefit retirement plan for the
26 weeks ended 24 September 2022 shows a surplus of GBP20.4
million. In accordance with IFRIC 14, the Group is able to
recognise an asset as it has an unconditional right to a refund of
any surplus in the event of the plan winding down.
Included within the total present value of Group and Company
Scheme liabilities of
GBP93.8 million (25 September 2021: GBP150.6 million, 26 March
2022: GBP129.6 million) are liabilities of
GBP1.6 million (25 September 2021: GBP2.1 million, 26 March
2022: GBP1.9 million) which are entirely
unfunded. These have been shown separately on the Balance Sheet
as there is no right to offset the
assets of the funded Scheme against the unfunded Scheme.
Key financial assumptions used
in the valuation
of the Scheme
-------------------------------- --------- ----------- ---------
Rate of increase in pensions
in payment 3.65% 3.50% 3.75%
Discount rate 5.20% 1.85% 3.00%
Inflation assumption - RPI 3.70% 3.55% 3.80%
Inflation assumption - CPI (pre 2.8%/3.7% 2.65%/3.55% 2.9%/3.8%
2030/post 2030)
-------------------------------- --------- ----------- ---------
Mortality Assumptions
The mortality assumptions used in the valuation of the Scheme as
at 24 September 2022 are as set out in the financial statements for
the 52 weeks ended 26 March 2022.
Unaudited Unaudited Audited
At At At
24 September 25 September 26 March
2022 2021 2022
Assets in the Scheme GBPm GBPm GBPm
------------------------------ ------------- ------------- ---------
Corporate bonds 19.8 29.2 25.0
Index linked debt instruments 18.6 37.9 26.0
Overseas equities 31.1 30.9 31.5
Alternatives 41.6 39.3 56.5
Cash 0.6 14.5 1.6
Annuities 2.5 3.9 3.3
------------------------------ ------------- ------------- ---------
Total market value of assets 114.2 155.7 143.9
------------------------------ ------------- ------------- ---------
11. Retirement Benefit Obligations (continued)
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
24 September 25 September 26 March
Movement in surplus/(deficit) 2022 2021 2022
during period GBPm GBPm GBPm
------------------------------- ------------- ------------- ---------
Surplus/(deficit) in Scheme at
beginning of the period 14.3 (3.5) (3.5)
Movement in period:
Net interest cost (note 3) 0.2 - -
Net actuarial gains 4.8 7.5 15.5
Contributions 1.1 1.1 2.3
Surplus in Scheme at end of
the period 20.4 5.1 14.3
------------------------------- ------------- ------------- ---------
On 1 January 2015 the plan was closed to future accruals.
12. Post Balance Sheet Event
Following the period end, the Company has entered into an
arrangement to repurchase up to one million of 'A' ordinary shares
in the Company.
Post the period end, the Company completed the purchase of a
site in the Cotswold village of Bourton-on-the-Water for GBP2.5
million. The Company has also disposed of an unlicenced site for
GBP5.5 million.
13. Principal Risks and Uncertainties
In the course of normal business, the Group continually assesses
and takes action to mitigate the various risks encountered that
could impact the achievement of its objectives. Systems and
processes are in place to enable the Board to monitor and control
the Group's management of risk, which are detailed in the Corporate
Governance Report of the Annual Report and Financial Statements
2022. The principal risks and uncertainties and their associated
mitigating and monitoring controls which may affect the Group's
performance in the next six months are not substantially different
from those detailed on pages 34 to 39 of the Annual Report and
Financial Statements 2022, and are available on the Fuller's
website, www.fullers.co.uk.
The most significant risk is the current economic downturn which
has been moved from an emerging risk into the main risk register.
The economic downturn within the UK and global uncertainty created
by the impact of covid and the ongoing war in Ukraine impact many
of our identified principal risks, including increased inflationary
pressure, supply chain uncertainty and emerging and continuing
changes to consumer demand. The controls and mitigations we have in
place to address our risks remain effective in reducing the impact
on the business. We are well placed to withstand these pressures
and ultimately withstand long periods of uncertainty through the
strength of our Balance Sheet. Our strong financial position
supports our long-term strategy that focuses on ensuring we develop
and retain the best people, build strong relationships with our
suppliers and deliver a premium experience with the agility to
respond to both short and long-term changes in consumer
behaviour.
14. Shareholders' information
Shareholders holding 40p 'C' ordinary shares are reminded that
they have 30 days from 17 November 2022 should they wish to convert
those 'C' shares to 'A' shares. The next available opportunity
after that will be June 2023. For further details, please contact
the Company's registrars, Computershare, on 0870 889 4096.
15. Statement of Directors' Responsibilities
The Directors confirm, to the best of their knowledge, that this
condensed set of financial statements gives a true and fair view of
the assets, liabilities, financial position and profit or loss of
the issuer or the undertakings included in the consolidation as a
whole and has been prepared in accordance with IAS 34, Interim
Financial Reporting, as adopted by the United Kingdom. The interim
management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the financial statements
and a description of the principal risks and uncertainties for the
remaining six months of the financial year
-- disclosure of material related party transactions in the
first six months and any material changes to related party
transactions.
By order of the Board
MICHAEL TURNER SIMON EMENY
CHAIRMAN CHIEF EXECUTIVE
16 NOVEMBER 202 2
(1) Excludes the impact of deferred taxation
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END
IR FZMMMNVKGZZM
(END) Dow Jones Newswires
November 17, 2022 02:00 ET (07:00 GMT)
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