REG - Fuller,Smith &Turner - Final Results <Origin Href="QuoteRef">FSTA.L</Origin> - Part 3

Fuller Smith & TurnerAnnouncement

16/07/2015 09:36

- Part 3: For the preceding part double click  ID:nRSE3036Pb 

0.3                            0.4    -       -       
 Benefits paid                                         4.3                                                       3.7                          (4.3)                          (3.7)  -       -       
                                                       ________________________________________________________  
                                                       4.0                                                       3.3                          (2.2)                          (1.3)  1.8     2.0     
                                                       ________________________________________________________  
 Balance at end of the year                            (127.9)                                                   (110.8)                      103.5                          93.6   (24.4)  (17.2)  
                                                       ________________________________________________________  
 
 
11.   PRINCIPAL RISKS AND UNCERTAINTIES 
 
Regulatory Risks 
 
Fuller's operates in a highly regulated sector where government legislation
controls much of the way we do business and therefore the business model. Any
significant changes in policy could lead to a sudden change or the long term
decline of the business. The two key areas of consideration are the regulation
of the sale of alcohol and the Beer Tie. 
 
We carefully monitor legislative developments and review sales trends and
consumer habits to gauge the impact on our business. We participate in
industry initiatives aimed at the responsible promotion and retailing of
alcohol. We have diversified our offering to include soft drinks, coffee, food
and accommodation to reduce our reliance on alcohol based revenue. We continue
to monitor ongoing dialogue between the government and industry bodies. Our
directors are members of key industry bodies and committees. The industry
maintains a voluntary code of practice with tenants, which is regularly
reviewed and updated in consultation with numerous pub companies and industry
groups. Fuller's operates an internal code of practice that is more rigorous
than the current Industry code to ensure the transparency and openness of our
Tied agreements. We also provide marketing, training and promotional support
to help tenants run profitable and long term businesses. Enforced changes to
our tied arrangements by the government would necessitate changes to our
business model, with higher property rents and lower prices for the supply of
drinks being charged. 
 
Health and Safety 
 
The health and safety of the Group's employees and customers is a key concern
to us. We are required to comply with health and safety legislation, including
fire safety and food hygiene. Operating a large number of houses and sites
increases the complexity of ensuring the highest health and safety standards
are adhered to at all times. 
 
A Health and Safety Committee oversees the operation of the Group's health and
safety policies and procedures, and regularly updates its policies and
training programme to ensure all risks are identified and properly assessed
and that relevant regulation is adhered to. We report and investigate all
accidents and near misses. In our Managed Pubs and Hotels we have automatic
fire suppression systems in most of our kitchens to reduce fire risk.  All
staff receive food hygiene training as standard and regular kitchen
audits/checks ensure they comply with the standards expected from them.
Quality assurance checks on our core suppliers ensure hygiene standards have
been adhered to before produce even reaches our kitchens. 
 
Loss of premium position 
 
The Group operates in a premium market for both Fuller's Inns and The Fuller's
Beer Company. This positioning is key to the success of the business and the
achievement of the Group's strategic goals. The loss of the position would
have a significant impact on the Group's business model and financial
performance. 
 
This strategy has been agreed by the Board and communicated to key senior
staff in the company. In addition the Executive Committee approves all
significant new product development and acquisition decisions and therefore
controls key changes to the Group. There is a customer complaints system to
track and monitor the perception of our products and houses in the market
place to ensure we are meeting our premium position. 
 
Griffin Brewery Site 
 
The Group's headquarters and sole brewing facility are based at the Griffin
Brewery site in Chiswick. A disaster at this site would seriously disrupt
operations which would impact on the profitability of the Group. 
 
We take various measures to mitigate the impact of such an event. We
continually monitor fire safety and invest in capital projects to reduce the
risk of failure. We store recipes and yeast off-site and have informal
arrangements in place to use alternative facilities. 
 
Brands and Reputation 
 
Fuller's has a wide portfolio of brands and has established an excellent
reputation in the market. Principally, there is a risk that the Group's beer
could become contaminated at source or outlet, which could damage the
reputation of the brand and deter customers. 
 
The Group reduces product contamination risks to an acceptable level by
ensuring that the business is operated to the highest standards by maintaining
long term relationships with suppliers and by significant investment in
security, quality control and cleaning. The Group has in place product recall
procedures together with insurance coverage in the event of contamination. In
addition, the Group runs an active and continuous training programme covering
all aspects of the pub operations and provides its pubs with onsite technical
support. 
 
Information Technology 
 
The Group is increasingly reliant on its information systems to operate on a
daily basis and trading would be affected by any significant or prolonged
failure of these systems. The data held by the Group is a key business asset
and personal data protection is key. Any significant loss of data could lead
to a considerable interruption for the business and fines. 
 
To minimise this risk the IT function has a range of facilities and controls
in place to ensure that in the event of an issue normal operation would be
restored quickly. These include a formal Disaster Recovery Plan, on-line
replication of systems and data to a third party recovery facility and
external support for hardware and software. The IT systems in place follow
appropriate date protection guide lines to ensure the risk of both personal
and Company data loss is at an acceptable level. 
 
Loss of key management and staff 
 
The Group have a number of key staff who are critical to its success and
therefore there is a risk that if a number of these individuals were to leave
at the same time it may risk the delivery of the Group's strategy. 
 
The Group performs detailed succession planning to ensure that key roles are
considered to ensure appropriate cover is available. In addition the
remuneration policy is set up to ensure the key members of staff are
appropriately remunerated so they are not attracted to other competitor
businesses. 
 
Loss of Company values or a failure to adhere to them 
 
Fuller's is a company based on a strong set of values which are key to its
success and future. Should these be undermined or not adhered to, the
Company's unique position and long term future would be jeopardised. 
 
The Company has a unique culture due to its share structure and history which
ensures business decisions are taken for the long term benefit of the Company.
This culture also promotes a long term and collaborative approach that does
not lead to excessive risk taking. 
 
The share structure of the Company and Family shareholder representation on
the board and involvement in the Company's management ensure the values are
maintained and followed. Disruptive and short-term 3rd parties cannot easily
gain significant holdings and influence. 
 
12.   SHAREHOLDERS' INFORMATION 
 
Shareholders holding 40p 'C' ordinary shares are reminded that they have 30
days from 5 June 2015 should they wish to convert those 'C' shares to 'A'
shares.  The next available opportunity after that will be November 2015.  For
further details please contact the Company's registrars, Computershare on 0870
889 4096. 
 
Click on, or paste the following link into your web browser, to view the
associated PDF document. 
 
http://www.rns-pdf.londonstockexchange.com/rns/3036P_1-2015-6-4.pdf 
 
This information is provided by RNS
The company news service from the London Stock Exchange