REG - Fuller,Smith &Turner - Half year results <Origin Href="QuoteRef">FSTA.L</Origin> - Part 2
24/11/2017 07:05
- Part 2: For the preceding part double click ID:nRSX4005Xa
2.9 - - - 2.9
Unaudited - 26 weeks ended Managed TenantedInns £m The Fuller'sBeer Company £m Unallocated1£m Total£m
24 September 2016 Pubsand Hotels£m
Revenue
Segment revenue 130.8 15.6 74.8 - 221.2
Inter-segment sales - - (23.6) - (23.6)
Revenue from third parties 130.8 15.6 51.2 - 197.6
Segment result 18.0 6.6 3.9 (2.3) 26.2
Operating separately disclosed items (1.5)
Operating profit 24.7
Profit on disposal of properties 0.5
Net finance costs (3.8)
Profit before tax 21.4
Other segment information
Capital expenditure on property, plant and equipment 16.3 1.0 1.8 - 19.1
Business combinations 9.2 - 0.3 - 9.5
Depreciation and amortisation 7.4 0.8 1.9 - 10.1
Impairment of property - - - - -
1 Unallocated expenses represent primarily the salary and costs of central
management.
Audited - 53 weeks ended Managed Pubsand Hotels£m TenantedInns£m The Fuller'sBeer Company £m Unallocated1£m Total £m
1 April 2017
Revenue
Segment revenue 261.3 31.2 147.9 - 440.4
Inter-segment sales - - (48.4) - (48.4)
Revenue from third parties 261.3 31.2 99.5 - 392.0
Segment result 32.4 13.2 8.0 (4.1) 49.5
Operating separately disclosed items (3.1)
Operating profit 46.4
Profit on disposal of properties 0.9
Net finance costs (7.4)
Profit before tax 39.9
Other segment information
Capital expenditure on property, plant and equipment 26.0 2.1 6.9 - 35.0
Business combinations 19.3 - 1.5 - 20.8
Depreciation and amortisation 15.7 1.6 3.7 - 21.0
Impairment of property - - - - -
1 Unallocated expenses represent primarily the salary and costs of
central management.
3. Separately Disclosed Items
Unaudited 26 weeks ended 30 September2017£m Unaudited 26 weeks ended 24 September2016£m Audited53 weeksended1 April2017£m
Amounts included in operating profit:
Acquisition costs (0.1) (0.6) (1.3)
Impairment of properties (2.9) - -
Replacement of core IT systems (1.5) - -
Reorganisation costs - (0.6) (1.5)
Deemed remuneration on the future purchase of shares in The Stable - (0.3) (0.3)
Total separately disclosed items included in operating profit (4.5) (1.5) (3.1)
Profit on disposal of properties 4.8 0.5 0.9
Separately disclosed finance costs:
Finance charge on net pension liabilities (note 10) (0.5) (0.4) (0.8)
Total separately disclosed items before tax (0.2) (1.4) (3.0)
Separately disclosed tax:
Change in corporation tax rate (note 5) - 1.0 1.0
Profit on disposal of properties (0.9) - -
Other items 0.9 0.2 0.7
Total separately disclosed tax - 1.2 1.7
Total separately disclosed items (0.2) (0.2) (1.3)
Acquisition costs of £0.1 million during the 26 weeks ended 30 September 2017
(24 September 2016: £0.6 million, 1 April 2017: £1.3 million) relate to
transaction costs on property acquisitions.
The property impairment charge of £2.9 million during the 26 weeks ended 30
September 2017 relates to the write down of assets of three sites to their
recoverable value. There were no property impairment charges during the 26
weeks ended 24 September 2016 or the 53 weeks ended 1 April 2017.
The expenditure in relation to the upgrade of core IT systems of £1.5 million
relates to the costs associated with the development of a new ERP system for
the Group. The costs incurred primarily relate to consultancy and incremental
additional staff costs to support the project.
There were no reorganisation costs during the 26 weeks ended 30 September
2017. The reorganisation costs of £1.5 million incurred in the 53 weeks ended
1 April 2017 were principally incurred within The Fuller's Beer Company and
relate to staff.
The profit on disposal of properties of £4.8 million during the 26 weeks ended
30 September 2017 (24 September 2016: £0.5 million, 1 April 2017: £0.9
million) and relates to the disposal of 11 licensed properties. In the 53
weeks ended 1 April 2017, 6 licensed properties were disposed of, generating a
profit of £0.9 million.
There was no deemed remuneration on the future purchase of shares in The
Stable during the 26 weeks ended 30 September 2017. Deemed remuneration on the
future purchase of shares in The Stable relates to the remuneration element of
the increase in the estimated value of the option remaining on The Stable
group of companies.
The cash impact of operating separately disclosed items before tax for the 26
weeks ended 30 September 2017 was £1.7 million cash outflow (24 September
2016: £1.0 million cash outflow, 1 April 2017: £2.4 million cash outflow).
4. Finance Costs
Unaudited 26 weeksended30 September2017£m Unaudited 26 weeksended 24 September2016£m Audited 53 weeksended1 April2017£m
Interest expense arising on:
Financial liabilities at amortised cost - loans and debentures 2.8 3.1 6.2
Financial liabilities at amortised cost - preference shares 0.1 0.1 0.1
Total interest expense for financial liabilities 2.9 3.2 6.3
Unwinding of discount on provisions - 0.2 0.3
Total finance costs before separately disclosed items 2.9 3.4 6.6
Finance charge on net pension liabilities (note 3) 0.5 0.4 0.8
Total finance costs 3.4 3.8 7.4
5. Taxation
Unaudited 26 weeksended30 September2017 £m Unaudited 26 weeksended24 September2016 £m Audited53 weeks ended 1 April2017£m
Tax on profit on ordinary activities
Current income tax:
Corporation tax 4.9 5.2 9.6
Amounts over provided in previous years - - (0.1)
Total current income tax 4.9 5.2 9.5
Deferred tax:
Origination and reversal of temporary differences - (0.5) (1.0)
Change in corporation tax rate (note 3) - (1.0) (1.0)
Amounts over provided in previous years - - (0.1)
Total deferred tax - (1.5) (2.1)
Total tax charged in the Income Statement 4.9 3.7 7.4
Unaudited 26 weeksended30 September2017£m Unaudited 26 weeksended24 September2016£m Audited53 weeks ended 1 April2017£m
Tax relating to items charged/(credited)
to the Statement of Comprehensive Income
Deferred tax:
Change in corporation tax rate - 0.3 0.3
Tax charge/(credit) on valuation gains/(losses) of financial assets and liabilities 0.1 (0.2) -
Tax charge/(credit) on actuarial gains/(losses) on pension scheme 0.6 (3.3) (2.4)
Tax charge/(credit) included in the 0.7 (3.2) (2.1)
Statement of Comprehensive Income
Tax relating to items charged/(credited) directly to equity
Deferred tax:
Reduction in deferred tax liability due to indexation (0.1) - (0.1)
Share-based payments 0.1 - -
Current tax:
Share-based payments (0.2) - (0.1)
Tax charge/(credit) included in the Statement of Changes in Equity (0.2) - (0.2)
The taxation charge is calculated by applying the Directors' best estimate of
the annual effective tax rate to the profit for the period.
During the 53 weeks ended 1 April 2017, the Finance Act 2016 received Royal
Assent. The main impact was the reduction of the UK corporation tax rate from
18% to 17% from 1 April 2020. The impact in the 53 weeks to 1 April 2017 was a
credit to separately disclosed items in the Income Statement of £1.0 million
and a charge to the Statement of Comprehensive Income of £0.3 million.
6. Earnings Per Share
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
30 September 24 September 1 April
2017 2016 2017
£m £m £m
Profit attributable to equity shareholders 19.4 17.7 32.7
Separately disclosed items net of tax (0.5) 0.2 1.2
Adjusted earnings attributable to equity shareholders 18.9 17.9 33.9
Number Number Number
Weighted average share capital 55,236,000 55,171,000 55,223,000
Dilutive outstanding options and share awards 488,000 799,000 636,000
Diluted weighted average share capital 55,724,000 55,970,000 55,859,000
40p 'A' and 'C' ordinary share Pence Pence Pence
Basic earnings per share 35.12 32.08 59.21
Diluted earnings per share 34.81 31.62 58.54
Adjusted earnings per share 34.22 32.44 61.39
Diluted adjusted earnings per share 33.92 31.98 60.69
4p 'B' ordinary share Pence Pence Pence
Basic earnings per share 3.51 3.21 5.92
Diluted earnings per share 3.48 3.16 5.85
Adjusted earnings per share 3.42 3.24 6.14
Diluted adjusted earnings per share 3.39 3.20 6.07
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 1,747,950
(24 September 2016: 1,779,926 and 1 April 2017: 1,760,953).
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 53 weeks
ended ended ended
30 September 24 September 1 April
2017 2016 2017
£m £m £m
Declared and paid during the period
Final dividend paid in period 6.4 6.1 6.1
Interim dividend paid in period - - 4.0
Equity dividends paid 6.4 6.1 10.1
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 7.55 7.25 7.25
Final - - 11.55
7.55 7.25 18.80
The pence figures above are for the 40p 'A' and '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 of 7.55p (2016: 7.25p) for the
40p 'A' ordinary shares and 40p 'C' ordinary shares, and 0.755p (2016: 0.725p)
for the 4p 'B' ordinary shares, with a total estimated cost to the Company of
£4.2 million (2016: £4.0 million).
8. Property, Plant and Equipment
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
30 September 24 September 1 April
2017 2016 2017
£m £m £m
Net book value at start of period 557.5 533.8 533.8
Additions 14.3 17.4 35.9
Acquisitions - 6.5 16.6
Disposals - (0.6) (3.2)
Impairment loss (2.9) - -
Transfer to assets held for sale - (1.5) (5.9)
Transfer from investment property - - 0.5
Depreciation provided during the period (10.5) (9.7) (20.2)
Net book value at end of period 558.4 545.9 557.5
During the 26 weeks ended 30 September 2017, the Group recognised a charge of
£2.9 million (24 September 2016: £nil, 1 April 2017: £nil) in respect of the
write down in value of three sites to their recoverable value.
9. Analysis of Net Debt
Unaudited - 26 weeks ended 30 September 2017 At Cash Non At
1 April flows cash1 30 September
2017 £m £m 2017
£m £m
Cash and cash equivalents:
Cash and short-term deposits 15.3 (6.3) - 9.0
15.3 (6.3) - 9.0
Debt:
Bank loans2 (193.7) 11.0 (0.1) (182.8)
Other loans (0.2) - - (0.2)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (221.4) 11.0 (0.1) (210.5)
Net debt (206.1) 4.7 (0.1) (201.5)
1 Non-cash movements relate to the amortisation of arrangement fees,
arrangement fees accrued and corporate acquisitions.
2 Bank loans net of arrangement fees.
Unaudited - 26 weeks ended 24 September 2016 At Cash Non At
26 March flows cash1 24 September
2016 £m £m 2016
£m £m
Cash and cash equivalents:
Cash and short-term deposits 6.2 2.3 - 8.5
6.2 2.3 - 8.5
Debt:
Bank loans2 (177.0) (6.5) (0.1) (183.6)
Other loans (0.2) - - (0.2)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (204.7) (6.5) (0.1) (211.3)
Net debt (198.5) (4.2) (0.1) (202.8)
Audited - 53 weeks ended1 April 2017 At Cash Non At
26 March flows cash1 1 April
2016 £m £m 2017
£m £m
Cash and cash equivalents:
Cash and short-term deposits 6.2 9.1 - 15.3
6.2 9.1 - 15.3
Debt:
Bank loans2 (177.0) (16.5) (0.2) (193.7)
Other loans (0.2) - - (0.2)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (204.7) (16.5) (0.2) (221.4)
Net debt (198.5) (7.4) (0.2) (206.1)
1 Non-cash movements relate to the amortisation of arrangement fees,
arrangement fees accrued and corporate acquisitions.
2 Bank loans net of arrangement fees.
10. Retirement Benefit Obligations
The amount included in the Balance Sheet arising from the Group's obligations in respect of its defined benefit retirement plan UnauditedAt30 September2017£m UnauditedAt24 September2016£m AuditedAt1 April2017£m
Fair value of Scheme assets 111.9 108.7 111.4
Present value of Scheme liabilities (145.5) (150.1) (149.3)
Deficit in the Scheme (33.6) (41.4) (37.9)
Key financial assumptions used in the valuation
of the Scheme
Rate of increase in salaries n/a n/a n/a
Rate of increase in pensions in payment 3.30% 2.90% 3.30%
Discount rate 2.70% 2.30% 2.60%
Inflation assumption - RPI 3.30% 2.90% 3.30%
Inflation assumption - CPI 2.30% 1.90% 2.30%
Mortality Assumptions
The mortality assumptions used in the valuation of the Scheme as at 30
September 2017 are as set out in the financial statements for the 53 weeks
ended 1 April 2017.
Assets in the Scheme At 30 September 2017£m At 24 September 2016£m At1 April2017£m
Corporate bonds 21.8 22.8 21.8
UK equities 24.4 27.2 20.5
Overseas equities 24.9 23.6 26.3
Alternatives 35.9 29.5 37.0
Property - 1.0 -
Cash 1.4 0.9 2.3
Annuities 3.5 3.7 3.5
Total market value of assets 111.9 108.7 111.4
Movement in deficit during period UnauditedAt30 September2017£m UnauditedAt24 September2016£m AuditedAt1 April2017£m
Deficit in Scheme at beginning of the period (37.9) (23.5) (23.5)
Movement in period:
Current service cost - (0.2) (0.3)
Net interest cost (0.5) (0.4) (0.8)
Net actuarial gains/(losses) 3.7 (17.9) (14.6)
Contributions 1.1 0.6 1.3
Deficit in Scheme at end of the period (33.6) (41.4) (37.9)
On 1st January 2015 the plan was closed to future accruals.
11. 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 2017. 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 consistent with those detailed on pages 28 and 29 of
the Annual Report and Financial Statements 2017, and are available on the
Fuller's website: www.fullers.co.uk.
The Group continues to face challenges in the light of the political and
economic uncertainty as Brexit negotiations progress. The exact nature and
process of the UK's exit from the EU are unknown but are expected to impact
freedom of movement of EU nationals; cause fluctuations in foreign exchange
rates; lead to changes to input prices and interest rates; and precipitate a
slowdown in the UK economy; all of which may impact the Group. The Group
continues to plan for the potential outcomes of the UK's exit from the EU in
order to limit any negative impacts on the Group's operations and financial
performance.
The health, safety and well-being of employees and customers remains top of
the Group's strategic priorities and we recognise that acts of terrorism over
a prolonged period could reduce consumer confidence. Managing a large
portfolio of houses and sites increases the complexities of ensuring the
highest health and safety standards are adhered to and that appropriate
emergency contingency plans exist. The Group's headquarters and sole brewing
facility are located at the Griffin Brewery, therefore safety at this site is
key and any disaster would seriously impact profitability.
Fuller's has a wide portfolio of brands and has established a reputation for
offering premium products. The way in which we respond to changes in consumer
demand is crucial. Failure to anticipate these changes and innovate will
result in declining market share for the Group. There is a risk that
contamination of our products at source or outlet could damage the reputation
of the brand and impact customers' perceptions of Fuller's as a premium
position company. This positioning is key to the success of the business and
any change to this would significantly impact the Group's performance.
The success and future of the Group is determined by its key management and
staff who adhere to a strong set of values. Should key management leave the
Group, or employees fail to uphold Fuller's key principles, delivery of the
Group's strategy could be jeopardised.
Fuller's operates in a highly regulated sector and changes in government
policy could result in additional cost pressures, as has been experienced in
recent months with rises in business rates, the Apprenticeship Levy and the
National Living Wage.
The Group is increasingly reliant on its information systems, with any
prolonged failure resulting in disruption to operations. Data and systems
security is also vital, as any loss of data could result in reputational
damage to the Group.
12. Shareholders' Information
Shareholders holding 40p 'C' ordinary shares are reminded that they have 30
days from
24 November 2017 should they wish to convert those 'C' shares to 'A' shares.
The next available
opportunity after that will be June 2018. For further details, please contact
the Company's registrars, Computershare on 0370 889 4096.
13. 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 European Union.
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; and
· 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 James Douglas
Chairman Finance
Director
23 November 2017
Independent Review Report to the Members of Fuller Smith & Turner P.L.C.
Introduction
We have reviewed the condensed set of financial statements in the half yearly
financial report of Fuller, Smith & Turner P.L.C. for the twenty six weeks
ended 30 September 2017 which comprises the Condensed Group Income Statement,
Condensed Group Statement of Comprehensive Income, Condensed Group Balance
Sheet, Condensed Group Statement of Changes in Equity, Condensed Group Cash
Flow Statement and the related explanatory notes. We have read the other
information contained in the half yearly financial report which comprises the
Chairman's Statement and Chief Executive's Review, and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company's members, as a body, in accordance
with International Standard on Review Engagements (UK and Ireland) 2410,
'Review of Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we might state to
the Company's members those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company's members as a body, for our review work, for
this report, or for the conclusion we have formed.
Directors' responsibilities
The half yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the Annual Financial Statements of the Group are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this half yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed set of
financial statements in the half yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the twenty six weeks ended 30 September 2017 is not
prepared, in all material respects, in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
GRANT THORNTON UK LLP
AUDITOR
LONDON
23 November 2017
This information is provided by RNS
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