REG - Fuller,Smith &Turner - Half-Year Results
18/11/2021 07:00
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RNS Number : 7488S Fuller,Smith&Turner PLC 18 November 2021
FULLER, SMITH & TURNER P.L.C.
("Fuller's", the "Company", or the "Group")
Financial results for the 26 weeks to 25 September 2021
Financial and Operational Summary
· Business is rebuilding well - profitable first half, despite only
being free of restrictions for nine full weeks of the period
· Business is cash-generative, and trade is continually increasing
· Started the financial year with all pubs and hotels closed - gradual
reopening from April, with all sites reopened in July
· £52 million equity placing successfully completed in April 2021 to
strengthen the Balance Sheet and ensure the Company exited the pandemic in a
strong position
· Continue to face well-documented industry cost pressures - but
business is well funded and in a good position to tackle headwinds
· Business remains firmly underpinned by our predominately freehold
estate of iconic, high quality pubs and hotels
· Interim dividend payment of 3.90p per 'A' and 'C' ordinary share,
reflecting the reopening of our estate, return to profitability and reduction
in net debt.
H1 2022 H1 2021
£m £m
Revenue and other income 116.3 45.6
EBITDA(1) 22.8 (3.7)
Group statutory profit/(loss) before tax 10.6 (23.0)
Adjusted profit/(loss) before tax(2) 4.6 (22.2)
Adjusted EPS(3) 6.09p (32.42)p
Basic EPS(3) 5.76p (33.69)p
Net debt excluding lease liabilities(4) 131.5 187.4
All figures above are from continuing operations except for Group statutory
profit/(loss) before tax which includes discontinued operations in H1 2021.
1 Pre-separately disclosed earnings before interest, tax, depreciation,
profit on disposal of plant and equipment and amortisation.
2 Adjusted profit/(loss) before tax is the profit/(loss) before tax excluding
separately disclosed items.
3 Per 40p 'A' or 'C' ordinary share. Adjusted EPS is calculated using
earnings attributable to equity shareholders before tax excluding separately
disclosed items. Basis EPS includes separately disclosed items.
4 Net debt comprises cash and short-term deposits, bank overdraft, bank
loans, CCFF, debenture stock and preference shares.
Strategic Update
· Used period of closure and quieter trading to continue investing in
our predominately freehold estate, ensuring our pubs and hotels are in
excellent condition
· Built on consumer demand for a premium experience with
transformational refurbishments - including opening our first new Bel &
The Dragon site at The Red Lion, Wendover
· Invested in our infrastructure - new finance system, Microsoft
Business Central, due to go live on Monday 22 November 2021
· Further development underway for our booking engines, pub websites
and CRM system to improve the customer's digital booking journey,
communication and internal connectivity between systems
· Maintained excellent relationships and worked in partnership with our
suppliers to optimise availability
· Continued support and development of our team members, including an
improved remuneration and benefits package
· Hired first Head of Sustainability to put our Life's too good to
waste policy at the heart of everything we do.
Current Trading and Outlook
· Managed like for like sales for seven weeks to 13 November 2021 at
90% of 2019 levels
· Tenanted Inns performing ahead of plan
· Rural pubs and hotels continue to perform above 2019 levels
· Excellent performance from Cotswold Inns & Hotels
· Central London pubs showing steady growth - which will benefit from
the further return of international tourists
· Low level of net debt, reduced by £3.3 million to £128.2 million
since the period end
· New Bel & The Dragon site planned for The George & Dragon at
Westerham
· Company in excellent shape to continue to deliver long-term strategy
and take advantage of selected opportunities.
Chief Executive Simon Emeny said: "While the first half of this financial year
has been a story of slowly returning to some semblance of what was known as
normality, I am proud of what we have achieved. We have used the time wisely,
planning for the future, further improving our already robust infrastructure
and focusing on our people, our properties, our supplier relationships and our
systems.
"Like for like sales in our Managed Pubs and Hotels continue to grow steadily
and for the seven weeks to 13 November 2021 stand at 90% of 2019 levels.
Christmas bookings are in good shape and there is clearly continued appetite
from our customers to get out and socialise with friends and family.
"During the second half of the year, we will continue to develop our business
through investment in property and infrastructure. At our pubs and hotels,
this will include further winterisation projects at sites including The Head
of the River in Oxford and The Red Lion in Barnes, as well as transformational
schemes at The White Star Hotel in Southampton among others. In a further
commitment to continually premiumising our offer, we will also be rolling out
our next Bel & The Dragon at The George & Dragon in Westerham.
"Our infrastructure projects will also be coming to fruition in the coming
months, starting with the roll out of Microsoft Business Central, our new
finance package, which goes live on Monday 22 November 2021 - just in time for
the arrival of our new Finance Director, Neil Smith, who comes with a wealth
of relevant industry experience and starts at the end of November. We will
complete our wider digital transformation projects with upgraded pub websites
and our improved CRM system providing a fantastic digital shop window and even
more targeted communications based on our customers' existing behaviours.
"We are pleased with the steady growth we are seeing across our pubs and
hotels and we will benefit as international tourists return and office workers
continue to head back to their desks and colleagues. There are a number of
well-documented issues facing the industry as a whole and, while we are not
immune, we are a long-standing business that is well funded, backed by a
substantial, predominately freehold estate, and has the benefit of experience
to help us navigate through.
"Our vision and strategy are clear, consistent and relevant. We have a
well-balanced business in both style and geography and we have a first-class
team of dedicated people right across the Company. Fuller's has, and always
will have, a long-term view and a strategic plan that reflects that - and we
will continue to deliver it."
-Ends-
For further information, please contact:
Fuller, Smith & Turner P.L.C.
Simon Emeny, Chief Executive 020 8966 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 210 managed businesses, with 1,027 boutique bedrooms, and 174
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 15
iconic Ale & Pie pubs, 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 2198 or by
email at pr@fullers.co.uk (mailto:pr@fullers.co.uk) .
This statement will be available on the Company's website, www.fullers.co.uk
(http://www.fullers.co.uk) . An accompanying presentation will also be
available from 12.00 on 18 November 2021.
FULLER, SMITH & TURNER P.L.C.
FINANCIAL RESULTS FOR THE 26 WEEKS ENDED 25 SEPTEMBER 2021
CHAIRMAN'S STATEMENT
Against a backdrop that needs no introduction, I am pleased with the progress
the Company has made during the first half of this financial year. All our
pubs and hotels are open, the Company is cash-generative and our Managed and
Tenanted businesses are in excellent shape to continue to deliver future
growth.
It has been a trying time for our team members, our management, our customers
and our suppliers - but we have all pulled together. Across the estate, our
team members have shown a huge degree of dedication, commitment and loyalty to
Fuller's, crossing counties to help out in pubs where the recruitment issues
are more acute. Meanwhile our suppliers have rewarded our commitment to
fairness and partnership by helping to limit our exposure to the supply chain
issues that have blighted many of our competitors.
Simon Emeny and his Executive Team have displayed agility and flexibility as
we have had to tweak our offer in line with changing consumer behaviour. How
much of this behaviour change is permanent is yet to be seen - but there is no
doubt that, for example, standing at the bar is currently less in demand,
while being served at a table is definitely proving more popular.
During the period, our Finance Director Adam Councell decided to return to the
service sector and I am delighted to be welcoming his successor, Neil Smith,
to Fuller's and the Main Board on 30 November 2021. Neil is a seasoned Finance
Director with an impeccable pedigree in the hospitality sector. He will be an
excellent addition to the team, and we look forward to his imminent arrival.
I am delighted to be announcing the resumption of dividends for our
shareholders, with the payment of an interim dividend of 3.90p (H1 2021: nil)
per 40p 'A' and 'C' ordinary share and 0.39p (H1 2021: nil) per 4p 'B'
ordinary share. This will be paid on 4 January 2022 to shareholders on the
share register as at 17 December 2021. While this reflects the Company's
return to profitability and the reduction in net debt, the quantum reflects
the continued impact of the Covid-19 pandemic. This is the beginning of a
journey to restoring a full dividend in the future, subject to our continued
return to pre-pandemic trading levels and long-term growth.
Fuller's is a long-term business and is built to withstand changes in the
external environment. The last 18 months are testament to this - and I am very
proud that we remain in a great position as the global economy finds its way
post-pandemic. The benefits of a predominately freehold estate cannot be
underestimated, and the clear vision, values and purpose of the Company
continue to drive our strategic direction.
Finally, I would like to pay personal thanks to the excellent team of people
who work in our pubs and hotels, to our partners in our Tenanted Inns and to
all those who work in our support centre. They make this Company what it is,
they are our USP, and they make the Fuller's difference. Together we face the
future with confidence and optimism.
Michael Turner
Chairman
17 November 2021
CHIEF EXECUTIVE'S REVIEW
While the first half of this financial year has been a story of slowly
returning to some semblance of what was known as normality, I am proud of what
we have achieved. We have used the time wisely, planning for the future,
further improving our already robust infrastructure and focusing on our
people, our properties, our supplier relationships and our systems.
Since the gradual reopening of the hospitality sector in April, trading has
been steadily improving, with large numbers of staycationers in our rural pubs
and hotels, and a gradual return to work in the City. Sales are growing month
on month, we are generating cash and the business is moving in a positive
direction. Like for like sales for the seven weeks from the period end to 13
November are at 90% of 2019 levels and, with the further return of
international tourists and increasing numbers of office workers in Central
London and the City, we have a clear engine of growth to drive the business
forwards.
Fuller's has over 175 years of history and knowing what my predecessors have
navigated before me was inspiring and reassuring. We have remained true to our
values, while ensuring a degree of agility and flexibility that has enabled us
to achieve our goal of exiting the pandemic in the best possible position. We
have looked after our people, been fair to our Tenants and suppliers, and kept
our geographically balanced and iconic estate in first-class condition.
Among the many positives, I am pleased to report that we have returned to
profitability - with the period delivering revenue of £116.3 million and a
profit of £10.6 million. Our Managed Pubs and Hotels are all open and while
we are not immune to the well-documented industry challenges around
recruitment, we have loyal and dedicated team members who are pleased to be
back in their bars, doing what they do best and delivering an excellent
customer experience. Our Tenanted Inns are also delivering a solid profit
contribution. Our Tenants are well funded, keen to work with us to improve
their pubs and continue to rebuild trade, and - as ever -full of innovative
and exciting ideas.
Trading patterns have varied across our estate and it is no surprise that our
rural pubs and hotels have seen the highest sales growth - consistently
exceeding 2019 levels. The acquisition of Cotswold Inns & Hotels in
October 2019 could not have been better timed and it is worth noting that
these wonderful sites are not included in our like for like figures. In
Central London, where we naturally have a greater reliance on offices,
tourists and the arts, we anticipated that customers would be slower to return
- but momentum is growing and we expect that to continue as international
travel restrictions are relaxed and the number of days office workers spend at
their desks increases.
As a Company, we have continued to focus on infrastructure projects to improve
our systems and our digital connectivity with our customers and our sites,
while maintaining our continuous investment programme to ensure our pubs and
hotels are in great condition. We have had a laser-like focus on costs, but
not at the expense of looking after our people, our properties, our suppliers
and, most importantly, our customers. During the period, we have reviewed and
improved our remuneration and benefits package for our team members and
undertaken an employee engagement survey.
Finally, it is clear that consumer behaviour has evolved during the pandemic,
and I am very proud of the way our teams - both in our pubs and hotels and at
the support centre - have shown the agility and initiative to refine our
customer offering to reflect that evolving behaviour.
The evolving consumer landscape
There is no doubt that the Covid pandemic has influenced the way today's
customer behaves - but the overarching good news is that the customer is back,
has money to spend and is looking for a premium experience.
Fuller's is perfectly placed to deliver this - operating, as we always have,
at the premium end of the market. Recent developments, such as the
repositioning of The Red Lion in Wendover in July of this year, are a great
example of how we are capitalising on this trend. The site has benefited from
a substantial investment to convert it to our Bel & The Dragon format -
delivering an upgraded food offer, an improved wine range and boutique hotel
rooms that have seen the site hit record weeks and deliver solid sales. It has
been well received and reinforces our decision to expand our Bel & The
Dragon format further and carry out a similar scheme at The George &
Dragon in Westerham in the new year.
Some changes in behaviour are an acceleration of existing trends - such as the
move to healthier, vegan and flexitarian lifestyles. The demand for food
provenance has not gone away and we continue to see a significant increase in
demand for higher quality wine and cocktails.
Another good example of the way our customers' habits have evolved during the
pandemic is the reduction in demand for bar service - with many customers
currently preferring to be served at the table, even if they are only staying
for drinks. Customers are also much happier to be outside, both later and in
slightly lower temperatures - and our winterisation projects satisfy both of
these shifts, extending the outdoor trading season and creating additional
covers.
Across our Managed Pubs and Hotels, we have already committed £3.4 million in
our gardens and outside spaces with a range of structures from giant pergolas
to stretch tents, wigwams and everything in between. These projects have
weather-proofed a large number of additional covers and are proving very
popular with customers. They are a far cry from the traditional beer garden -
delivering a premium experience in exciting surroundings.
For the majority of our customers, their journey starts and finishes with a
digital touchpoint. We have seen a continual rise in the number of customers
who pre-book their tables, rooms and tickets for in-pub events, and we are
investing in a number of digital projects across the business. We are
upgrading our booking engines, our pub websites and our CRM system - impacting
both internal processes and our customer interface. Collectively, these
projects will improve the customer journey, simplify and integrate the booking
process for rooms and tables, allow us better sight of the customer basket -
and the ability to communicate with and market to our customers based on this
information, and improve the connectivity between all of these systems.
Our most immediate infrastructure project is the roll out of our new finance
system, Microsoft Business Central. This is going live on Monday 22 November
2021 and is a system that is designed for a pure pubs and hotels business. It
will simplify our internal finance processes and improve the quality of
business information available to the Company.
People first strategies
Whether it is team members, suppliers, tenants or customers - good
relationships, and maintaining those relationships during the most difficult
of circumstances, is a key principle for Fuller's. This commitment has proved
invaluable, particularly in dealing with the well-documented macro-issues of
recruitment shortages and supply chain challenges.
Fuller's has always developed long-term relationships with suppliers - and to
ensure they are genuine mutually beneficial partnerships. During the pandemic,
we have worked hard to provide our suppliers with stock forecasts, to pay
upfront where necessary and to remember that they need supportive partnerships
too. The results speak for themselves, with Fuller's protected from the worst
of the supply chain fluctuations. The long-term supply agreement with Asahi
has prioritised the flow of beer to our Managed Pubs and Hotels, and our
Tenanted Inns, while our long-term commitment to suppliers such as Owton's
butchers has protected our meat supply and will ensure that beef, turkey and
potatoes are on our customers' plates over the key Christmas period.
The issues around recruitment have been widely reported and we are not immune
to the situation. These issues were predicted in 2016 at the time of the EU
Referendum and our continuous programme to develop talent internally gives us
some protection against the issues facing the hospitality sector and beyond.
It is a source of pride that well over half of our general managers (123 to be
precise) are internal appointments. A strong culture needs a high degree of
internal talent and with training programmes aimed at all levels of the
business, this tenet is at the heart of our people strategy. From the 100+
apprentices who are just starting on the Chef's Guild programme, to the 18
general managers who are undertaking a degree level apprenticeship, we have
the right training and development on offer across the business - built to be
appropriate, accessible and bespoke to the individual's needs and ambitions.
It is always paramount to also identify any areas for improvement - and to
that end we have undertaken an employee engagement survey to capture insights
from our people in a structured way. We have also listened to more general
feedback from our team members, which has resulted in an improved range of
benefits - including an exceptional health benefits package for all front-line
team members that will see them save on a range of services including
prescriptions and dental care - and better loyalty recognition with an
enhanced staff discount that increases with tenure of service.
A thriving Tenanted business
Our Tenants have excelled this year. We faced the pandemic together and, as a
result of our removal of all commercial rent while they were closed, our
Tenants are well funded and have invested, with us, in their properties. The
innovation shown by our entrepreneurial Tenants never ceases to amaze and they
have led the way in developing the most wonderful garden spaces and exciting
food offers, and in providing reasons for their customers to visit.
Demand to partner with Fuller's is high and we have Tenants on long-term
agreements in 98% of our sites, with a strong pipeline of prospective Tenants
including a number from outside the hospitality industry.
Our Tenanted Inns division remains an integral and cash-generative part of our
business. It was quick to return to profit as pubs started to reopen and
everything is pointing to a very healthy future.
A sustainability agenda underpinning all our activity
Environmental Social Governance (ESG) is at the heart of any company operating
today and we are sufficiently confident in our own plans to sign up to the
hospitality sector commitment to be net zero by 2030. As the first stage in
confirming our own commitment, we have taken on Ollie Rosevear, who joins us
from Costa Coffee, as our first Head of Sustainability.
We have had some easy wins around LED lights, used cooking oil for biofuel and
reducing deliveries by 60,000 journeys each year, and I am particularly
delighted to confirm that all our Managed Pubs and Hotels and our support
centre, Pier House, are now using 100% renewable energy.
ESG is not only about sustainability - and we are very proud of the work we
have always done, and continue to do, to support our local communities and
charity partners. This is an area that has been brought into even sharper
focus during the pandemic and I am constantly delighted by the endeavours our
team members undertake in the name of charity.
There is a strong ESG programme in place and I am looking forward to reporting
on our progress at year end. The importance of this area cannot be
underestimated.
FINANCIAL POSITION
These results were again impacted by the pandemic which limited us to
reopening outdoor space from 12 April 2021, opening indoor space but with
restrictions from 17 May 2021, and finally opening the full estate on 19 July
2021. The estate was only open for nine full weeks without restrictions during
this 26 week period. Despite this, Group revenue and other income was £116.3
million (H1 2021: £45.6 million) and profit before tax was £10.6 million (H1
2021: loss £23.0 million).
The like for like sales in our Managed Pubs and Hotels business for the first
half were 80% of 2019 levels, resulting in revenue of £104.4 million (H1
2021: £39.4 million) and an operating profit of £13.6 million (H1 2021: loss
£10.6 million). This is across our entire estate which covers rural areas,
which were well positioned to bounce back as soon as we were able to open, and
urban areas, predominately Central London and transport hubs, where sales
increased steadily as travel restrictions eased and people returned to
offices. The Tenanted business has remained consistently profitable when open,
regardless of any restrictions, and recorded an operating profit of £4.8
million (H1 2021: £1.3 million).
EBITDA was £22.8 million (H1 2021: loss £3.7 million) as the Group returned
to being cash generative. The Group generated cash from operating activities
of £47.9 million in the period (H1 2021: £5.2 million). This is primarily
from the increase in EBITDA recorded in the period but also impacted by the
improved working capital position from year end as a result of the estate
being reopened. However, given the period end date of 25 September 2021, the
month end payment run of c£12 million was paid out after the period end hence
the half year figure is flattered by that amount.
On 20 April 2021, the Group completed an equity placing which raised net
proceeds of £51.8 million. The proceeds of the equity placing, along with the
Group's existing facilities, were used to repay the Covid Corporate Financing
Facility (CCFF) on 12 May 2021. At the same time as the equity placing, the
Group also agreed an Amend and Extend refinancing of its debt facilities with
its relationship banks, extending the maturity of the £192 million facilities
to 19 February 2023.
The above factors resulted in net debt (excluding leases) decreasing by £87
million from year end to £131.5 million. Despite the decrease in net debt,
finance costs before leases increased to £3.7 million (H1 2021: £2.8
million) as the CCFF was repaid in May 2021 and replaced with the extended
bank facilities, which are at higher interest rates.
Separately disclosed items before tax were a credit of £6.0 million (H1
2021: charge £0.8 million), which principally consists of £4.2 million
profit on disposal of seven, mainly unlicensed, properties. Other costs
included in separately disclosed items are reorganisation costs of £0.3
million, incurred as a result of ongoing corporate restructuring, and a £2.1
million credit on the release of a provision, net of the final settlement
amount on the sale of the Fuller's Beer Business.
Tax has been provided for at an effective rate before separately disclosed
items of 19.6% (H1 2021: 19.4%). Overall, deferred tax liabilities have
increased by £8.9 million from year end to £14.2 million. Included within
this movement is a £5.1 million charge shown in tax on separately disclosed
items relating to the change in corporation tax rate which is expected to
come into effect from April 2023. A full analysis of the tax charge is set
out in note 5.
The net impact of these items results in basic earnings per share on
continuing operations increasing by 39.45p to 5.76p (H1 2021: -33.69p), with
adjusted earnings per share( 1 ) on continuing operations up by 38.51p to
6.09p (H1 2021: -32.42p).
The deficit on the defined benefit pension scheme has decreased by £8.6
million from the year end and is now showing an accounting surplus of £5.1
million (27 March 2021: deficit £3.5 million, 26 September 2020: deficit
£10.8 million). This is a result of the fair value of scheme assets
outperforming the small increase in the present value of the scheme
liabilities. As the Group has an unconditional right to a refund under the
pension trust deed, an asset can be recognised.
(1 )Excluding separately disclosed items
CURRENT TRADING AND OUTLOOK
Like for like sales in our Managed Pubs and Hotels continue to grow steadily
and for the seven weeks to 13 November 2021 stand at 90% of 2019 levels.
Christmas bookings are in good shape and there is clearly continued appetite
from our customers to get out and socialise with friends and family.
During the second half of the year, we will continue to develop our business
through investment in property and infrastructure. At our pubs and hotels,
this will include further winterisation projects at sites including The Head
of the River in Oxford and The Red Lion in Barnes, as well as transformational
schemes at The White Star Hotel in Southampton among others. In a further
commitment to continually premiumising our offer, we will also be rolling out
our next Bel & The Dragon at The George & Dragon in Westerham.
Our infrastructure projects will also be coming to fruition in the coming
months, starting with the roll out of Microsoft Business Central, our new
finance package, which goes live on Monday 22 November 2021 - just in time for
the arrival of our new Finance Director, Neil Smith, who comes with a wealth
of relevant industry experience and starts at the end of November. We will
complete our wider digital transformation projects with upgraded pub websites
and our improved CRM system providing a fantastic digital shop window and even
more targeted communications based on our customers' existing behaviours.
On top of this activity plan, it is essential that our offer in the pub
delivers on the day and with a cohesive plan of action around Winter Tipples -
delivering high quality cocktails that are perfect for colder days - and
interesting in-pub activity such as comedy nights and a production of A
Christmas Carol, we are well placed to deliver premium, exciting and memorable
experiences.
We are pleased with the steady growth we are seeing across our pubs and hotels
and we will benefit as international tourists return and office workers
continue to head back to their desks and colleagues. There are a number of
well-documented issues facing the industry as a whole and, while we are not
immune, we are a long-standing business that is well funded, backed by a
substantial, predominately freehold estate, and has the benefit of experience
to help us navigate through.
Our vision and strategy are clear, consistent and relevant. We have a
well-balanced business in both style and geography and we have a first-class
team of dedicated people right across the Company. Fuller's has, and always
will have, a long-term view and a strategic plan that reflects that - and we
will continue to deliver it.
Simon Emeny
Chief Executive
17 November 2021
Financial Highlights
For the 26 weeks ended 25 September 2021
( )
Unaudited Unaudited Audited
26 weeks ended 25 September 26 weeks ended 26 September 52 weeks ended 27 March
2021 2020 2021
£m £m £m
Revenue and other income 116.3 45.6 73.4
EBITDA(1) 22.8 (3.7) (13.1)
Adjusted profit/(loss) before tax(2) 4.6 (22.2) (48.7)
Statutory profit/(loss) before tax 10.6 (23.0) (57.8)
Basic earnings per share(3) 5.76p (33.69)p (87.31)p
Adjusted earnings per share(3) 6.09p (32.42)p (72.09)p
Net debt excluding lease liabilities(4) 131.5 187.4 218.1
All figures above are from continuing operations except where stated.
1 Pre-separately disclosed earnings before interest, tax, depreciation,
profit on disposal of plant and equipment and amortisation.
2 Adjusted profit/(loss) before tax is the profit/(loss) before tax
excluding separately disclosed items.
3 Per 40p 'A' or 'C' ordinary share. Adjusted EPS is calculated using
earnings attributable to equity shareholders before tax excluding separately
disclosed items. Basis EPS includes separately disclosed items.
4 Net debt comprises cash and short term deposits, bank overdraft, bank
loans, CCFF, debenture stock and preference shares
Condensed Group Income Statement
For the 26 weeks ended 25 September 2021
Continuing operations Note Unaudited Restated(1) Audited
26 weeks ended 25 September 2021 Unaudited 52 weeks ended 27 March
£m 26 weeks ended 26 September 2020 2021
£m £m
Revenue 2 116.3 45.4 73.2
Operating costs before separately disclosed items (106.4) (63.5) (113.7)
Other income 2 - 0.2 0.2
Adjusted operating profit/(loss) 2 9.9 (17.9) (40.3)
Operating separately disclosed items 3 1.8 (1.0) (14.8)
Operating profit/(loss) 11.7 (18.9) (55.1)
Finance costs before separately disclosed items 4 (5.3) (4.3) (8.4)
Financing separately disclosed items 3,4 - 0.2 (0.1)
Profit on disposal of properties 3 4.2 - 5.8
Profit/(loss)before tax 10.6 (23.0) (57.8)
Adjusted profit/(loss) before tax 4.6 (22.2) (48.7)
Total separately disclosed items 3 6.0 (0.8) (9.1)
Profit/(loss) before tax 10.6 (23.0) (57.8)
Income tax (expense)/credit 5 (7.1) 4.4 9.6
Analysed as:
Underlying trading (0.9) 4.3 8.9
Separately disclosed items 3 (6.2) 0.1 0.7
Profit/(loss) for the period/year from continuing operations 3.5 (18.6) (48.2)
Net profit/(loss) after tax from discontinued operations - (1.2) (1.4)
Profit/(loss) for the period/year 3.5 (19.8) (49.6)
1 Refer to note 14 for details of restatement.
Condensed Group Income Statement (continued)
For the 26 weeks ended 25 September 2021
Group Note Unaudited Restated(1) Audited
26 weeks ended 25 September 2021 Unaudited 52 weeks ended 27 March
Pence 26 weeks ended 26 September 2020 2021
Pence Pence
Earnings/(loss) per share per 40p 'A' and 'C' ordinary share
Basic 5.76 (35.87) (89.84)
Diluted 5.74 (35.87) (89.84)
Earnings/(loss) per share per 4p 'B' ordinary share
Basic 0.58 (3.59) (8.98)
Diluted 0.57 (3.59) (8.98)
Continuing operations
Earnings/(loss) per share per 40p 'A' and 'C' ordinary share
Basic 6 5.76 (33.69) (87.31)
Diluted 6 5.74 (33.69) (87.31)
Earnings/(loss) per share per 4p 'B' ordinary share
Basic 6 0.58 (3.37) (8.73)
Diluted 6 0.57 (3.37) (8.73)
1 Refer to note 14 for details of restatement.
Condensed Group Statement of Comprehensive Income
For the 26 weeks ended 25 September 2021
Unaudited
26 weeks ended 25 September 2021 Restated(1)
£m Unaudited Audited
26 weeks ended 26 September 2020 52 weeks ended 27 March
£m 2021
£m
Note
Profit/(loss) for the period/year 3.5 (19.8) (49.6)
Items that may be reclassified to profit or loss
Net gains on valuation of financial assets and liabilities 0.3 0.5
0.2
Tax related to items that may be reclassified to profit or loss 5 (0.1)
(0.1) -
Items that will not be reclassified to profit or loss
Net actuarial gains/(losses) on pension schemes 11 (1.0)
7.5 (7.1)
Tax related to items that will not be reclassified to profit or loss 5 0.2
(1.8) 1.3
Other comprehensive income/(loss) for the period/year, net of tax
5.9 (5.6) (0.4)
Total comprehensive income/(loss) for the period/year, net of tax
9.4 (25.4) (50.0)
1 Refer to note 14 for details of restatement.
Condensed Group Balance Sheet
For the 26 weeks ended 25 September 2021
Note Unaudited Restated(1)
At 25 September 2021 At 26 September 2020
£m £m Audited
At 27
March
2021
£m
Non-current assets
Intangible assets 28.9 27.3 27.3
Property, plant and equipment 8 588.4 607.5 590.2
Investment properties 1.9 3.9 3.1
Other non-current assets - 0.1 -
Right-of-use assets 77.5 88.9 81.9
Retirement benefit obligations 11 5.1 - -
Total non-current assets 701.8 727.7 702.5
Current assets
Inventories 3.2 3.1 2.1
Trade and other receivables 12.4 11.5 11.5
Current tax receivable 3.9 4.1 4.0
Cash and cash equivalents 10 16.2 18.0 17.1
Total current assets 35.7 36.7 34.7
Assets classified as held for sale 9 8.1 8.3 9.6
Total assets 745.6 772.7 746.8
Current liabilities
Trade and other payables (58.0) (43.2) (28.7)
Provisions 12 (0.5) (4.1) (4.0)
Borrowings 10 - (177.9) (207.7)
Lease liabilities 10 (7.2) (8.0) (6.7)
Total current liabilities (65.7) (233.2) (247.1)
Non-current liabilities
Borrowings 10 (147.7) (27.5) (27.5)
Lease liabilities 10 (76.6) (86.1) (83.2)
Other financial liabilities (0.3) (0.8) (0.7)
Retirement benefit obligations 11 - (10.8) (3.5)
Deferred tax liabilities (14.2) (9.7) (5.3)
Total non-current liabilities (238.8) (134.9) (120.2)
Net assets 441.1 404.6 379.5
1 Refer to note 14 for details of restatement
Condensed Group Balance Sheet (continued)
For the 26 weeks ended 25 September 2021
Note Unaudited Restated(1)
At 25 September 2021 At 26 September 2020
£m £m Audited
At 27
March
2021
£m
Capital and reserves
Share capital 13 25.4 22.8 22.8
Share premium account 13 53.2 4.2 4.2
Capital redemption reserve 3.7 3.7 3.7
Own shares (16.7) (17.0) (17.0)
Hedging reserve (0.3) (0.7) (0.5)
Retained earnings 375.8 391.6 366.3
Total equity 441.1 404.6 379.5
1 Refer to note 14 for details of restatement.
Condensed Group Statement of Changes in Equity
For the 26 weeks ended 25 September 2021
Unaudited - 26 weeks ended 25 September 2021 Share Share Capital Own Hedging Retained Total
capital
premium
redemption
shares
reserve
earnings
£m
£m
account
reserve
£m
£m
£m
£m
£m
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
Equity placing 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
Unaudited - 26 weeks ended 26 September 2020 (restated)
At 28 March 2020 (restated) 22.8 4.2 3.7 (17.1) (0.9) 417.1 429.8
Loss for the period - - - - - (19.8) (19.8)
Other comprehensive income/(loss)for the period - - - - 0.2 (5.8) (5.6)
Total comprehensive income/(loss) for the period - - - - 0.2 (25.6) (25.4)
Shares purchased to be held in ESOT or as treasury - - - - - - -
Shares released from ESOT and treasury - - - 0.1 - (0.1) -
Dividends (note 7) - - - - - - -
Share-based payment charges - - - - - 0.1 0.1
Tax charged directly to equity (note 5) - - - - - 0.1 0.1
At 26 September 2020 22.8 4.2 3.7 (17.0) (0.7) 391.6 404.6
Condensed Group Statement of Changes in Equity (continued)
For the 26 weeks ended 25 September 2021
Share Share Capital Own Hedging Retained Total
capital
premium
redemption
shares
reserve
earnings
£m
£m
account
reserve
£m
£m
£m
£m
£m
Audited - 52 weeks ended 27 March 2021 (restated)
At 28 March 2020 22.8 4.2 3.7 (17.1) (0.9) 417.1 429.8
Loss for the year - - - - - (49.6) (49.6)
Other comprehensive income/(expense) for the year - - - - 0.4 (0.8) (0.4)
Total comprehensive income/(expense) for the year - - - - 0.4 (50.4) (50.0)
Shares purchased to be held in ESOT or as treasury - - - - - - -
Shares released from ESOT and treasury - - - 0.1 - (0.1) -
Share-based payment charges - - - - - (0.3) (0.3)
Total transactions with owners - - - 0.1 - (0.4) (0.3)
At 27 March 2021 22.8 4.2 3.7 (17.0) (0.5) 366.3 379.5
1 Refer to note 14 for details of restatement.
Condensed Group Cash Flow Statement
For the 26 weeks ended 25 September 2021
Note Unaudited Unaudited
26 weeks ended 25 September 2021 26 weeks ended 26 September 2020
£m £m Audited
52 weeks ended 27 March
2021
£m
Profit/(loss) before tax for continuing operations 10.6 (23.0) (57.8)
Net finance costs before separately disclosed items 4 5.3 4.3 8.4
Separately disclosed items 3 (6.0) 0.8 9.1
Depreciation and amortisation 2 12.9 14.2 27.2
22.8 (3.7) (13.1)
Difference between pension charge and cash paid (1.2) (1.1) (2.3)
Share-based payment charges 0.3 0.1 (0.3)
Change in trade and other receivables (1.0) 0.7 (0.4)
Change in inventories (1.2) 0.6 1.7
Change in trade and other payables 28.5 6.3 (6.4)
Cash impact of operating separately disclosed items 3 (0.3) (0.8) (1.5)
Cash generated/(absorbed by) operations 47.9 2.1 (22.3)
Tax received - 3.6 3.4
Cash generated from operating activities 47.9 5.7 (18.9)
- continuing operations
Cash (absorbed by)/generated from operating activities - discontinued - (0.5) (0.4)
operations
Cash generated/(absorbed by) operating activities 47.9 5.2 (19.3)
Cash flow from investing activities
Purchase of property, plant and equipment and intangible assets (8.4) (7.3) (16.5)
Sale of property, plant and equipment and assets held for sale 2.2 - 10.8
Sale of investment property 2.6 - -
Cash absorbed by investing activities - continuing operations (3.6) (7.3) (5.7)
Cash generated investing activities - discontinued operations - 0.3 0.3
Net cash outflow from investing activities (3.6) (7.0) (5.4)
Cash flow from financing activities
Receipts on release of own shares to option schemes 0.1 - -
Interest paid (2.9) (2.4) (4.5)
Preference dividends paid (0.1) (0.1) (0.1)
Net proceeds of equity placing 13 51.8 - -
(Repayment)/issue of commercial paper under CCFF (100.0) 99.4 99.4
Repayment/(drawdown) of bank loans 13.1 (93.0) (64.0)
Cost of refinancing (1.2) - -
Surrender of leases (1.9) - -
Principal elements of lease payments 10 (4.1) (4.3) (9.2)
Cash (absorbed)/generated by financing activities continued (45.2) (0.4) 21.6
Cash absorbed by financing activities discontinued - (0.1) (0.1)
Net cash (outflow) from financing activities (45.2) (0.5) 21.5
Net movement in cash and cash equivalents 10 (0.9) (2.3) (3.2)
Cash and cash equivalents at the start of the period 17.1 20.3 20.3
Cash and cash equivalents at the end of the period/year 10 16.2 18.0 17.1
Notes to the Condensed Financial Statements
For the 26 weeks ended 25 September 2021
1. Half Year Report
Basis of Preparation
The half year financial statements for the 26 weeks ended 25 September 2021
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 27 March 2021.
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
27 March 2021 are derived from the published statutory accounts. Full accounts
for the 52 weeks ended 27 March 2021, 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 Board has adopted the going concern basis in preparing these accounts
after assessing the Group's principal risks including the continuing risks
arising from coronavirus as well as the cost pressures impacting the sector
from rising staff costs and utility prices. The Board is confident that the
Group has sufficient liquidity and the ability to access resources when the
Group needs to refinance to withstand these ongoing challenges for the going
concern assessment period to March 2023.
The coronavirus pandemic, and its continuing impact on the hospitality sector
and the wider 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 Board has considered the Group's
financing arrangements, the pattern of trading since fully reopening on 19
July 2021, the possibility of restrictions being reinstated and other
principal risks and uncertainties as disclosed in the Group's latest Annual
Report. These include cost pressures impacting the whole of the hospitality
sector such as rising staff costs, energy prices further increasing and the
well-documented supply issues that are impacting a wide range of industries
including our own.
At 25 September 2021, the Group had a strong Balance Sheet with 91% of the
estate being freehold properties with available headroom on facilities of
£71.0 million and £16.2 million of cash result net debt (excluding leases)
of £131.5 million. At year end, net debt excluding leases was £218.1 million
so has reduced by £87 million.
The Group completed an equity placing on 20 April 2021 which raised net
proceeds of £51.8 million. The proceeds of the equity placing, along with the
Group's existing facilities, were used to repay the CCFF on 12 May 2021. At
the same time as the equity placing, the Group also agreed an Amend and Extend
refinancing of its existing debt facilities with its relationship banks,
extending the maturity of the £192 million facilities to 19 February 2023 and
amending the financial covenants to a minimum liquidity level to be tested
monthly until 31 March 2022. In June 2022 the Group will revert to a covenant
suite of net debt to EBITDA (leverage) and EBITDA to net finance charges.
In undertaking a going concern review, the Board has considered two main
scenarios prepared by management which go out to March 2023 "the going concern
assessment period". The going concern assessment period has been determined as
16 months from date of signing to include the expiry date of existing bank
facilities which is just outside the minimum 12 month period for going concern
considerations.
A "base case" assumes the estate is open fully throughout FY22 but continues
to be impacted by reductions in international travel, slow return to offices
and consumer confidence. This is marginally offset by an increase in weddings,
staycations and a small increase in suburban areas as people stay at home to
work. The base case also considers the cost pressures facing the sector and
the impact they could have on the Group. The forecast assumes steady
improvement in trading, returning to pre-coronavirus levels by the end of
FY23. Under this scenario there would be liquidity headroom and all covenants
would be compiled for the duration of the going concern period.
A "downside case" assumes four months of restrictions akin to those
experienced in October 2020 - "rule of six", table ordering and working from
home - for the period December 2021 to March 2022. In April 2022, it is
assumed that those restrictions would be lifted, and trading would return in
line with the base case scenario. Under this "downside case" there would be
liquidity headroom and all covenants would be compiled with for the duration
of the going concern assessment period. In the downside scenario no government
support is assumed.
Given the uncertainties surrounding the pandemic, 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. The model
shows that the Group would be able to withstand two months of lockdown -
December and January - but if the lockdown were to be extended further the
Group would breach the June 2022 covenant when it reverted to net debt to
EBITDA coverage. The Board is confident that if the country were to go into
lockdown then is would be able to obtain a revision of the covenants as it was
able to in the past. The Group would have sufficient liquidity headroom
throughout the period under this scenario.
The Board has concluded that in both the "base case" and "downside" scenario,
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. However, as there is an unlikely but not implausible chance that
another national lockdown could be enforced, and the Group could only
withstand two months before there would be a breach of its covenant, this
creates a material uncertainty.
Furthermore, the Group's finance facilities expire in February 2023 and whilst
the Board is confident of the Group's ability to secure a refinance, in light
of the plausibility of further restrictions and/or lockdowns combined with no
refinance agreement being in place at this time, a further material
uncertainty exists in relation to this future refinancing event that may cast
doubt over the Group's ability to continue as a going concern.
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 March 2023. However, under a severe but not implausible
scenario, where the country is put into lockdown for over two months the Group
would breach its leverage covenant in June 2022. This combined with the
requirement for the Group to secure a refinance of their facilities beyond
February 2023, creates material uncertainties that may cast doubt on the
Group's ability to continue as a going concern. The interim financial
statements do not reflect any adjustments that would be required to be made if
they were prepared on a basis other than the going concern basis.
The half year financial statements were approved by the Directors on 17
November 2021.
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 27
March 2021. 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
Unaudited - 26 weeks ended Managed Pubs Tenanted Unallocated(1) Total continuing operations
25 September 2021
and Hotels Inns £m £m
£m £m
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
Unaudited - 26 weeks ended Managed Pubs Tenanted Unallocated(1) Total continuing operations
25 September 2021
and Hotels Inns £m £m
£m £m
Revenue
Sales of goods and services 34.9 4.9 - 39.8
Accommodation income 3.5 - - 3.5
Total revenue from contracts with customers 38.4 4.9 - 43.3
Rental income 1.0 1.1 - 2.1
Revenue 39.4 6.0 - 45.4
Other income - - 0.2 0.2
Segment result (10.6) 1.3 (8.6) (17.9)
Operating separately disclosed items (1.0)
Operating loss (18.9)
Profit on disposal of properties -
Net finance costs (4.1)
Loss before tax (23.0)
Other segment information
Additions: property, plant and equipment 6.5 0.3 0.5 7.3
Depreciation and amortisation 12.6 0.9 0.7 14.2
1 Unallocated expenses represent primarily the salary and costs of central
management. Unallocated revenue represents TSA income.
Audited - 52 weeks ended Managed Pubs Tenanted Unallocated(1) Total
27 March 2021
and Hotels Inns £m continuing operations
£m £m £m
Revenue
Sale of goods and services 56.6 6.9 - 63.5
Accommodation income 5.9 - - 5.9
Total revenue from contracts with customers 62.5 6.9 - 69.4
Rental income 1.5 2.3 - 3.8
Revenue 64.0 9.2 - 73.2
Other income - - 0.2 0.2
Segment result (26.1) 1.2 (15.4) (40.3)
Operating separately disclosed items (14.8)
Operating loss (55.1)
Profit on disposal of properties 5.8
Net finance costs (8.5)
Loss before tax (57.8)
Other segment information
Additions: assets held for sale, property, plant and equipment 12.6 0.7 0.5 13.8
Depreciation and 24.7 1.8 0.7 27.2
amortisation
Impairment of property, right-of-use assets and goodwill 11.3 1.6 - 12.9
1 Unallocated expenses represent primarily the salary and costs of
central management. Unallocated revenue represents TSA income.
3. Separately Disclosed Items
Continuing operations Unaudited Unaudited
26 weeks ended 25 September 2021 26 weeks ended 26 September 2020 Audited
£m £m 52 weeks ended 27 March
2021
£m
Amounts included in operating profit/(loss):
Reorganisation costs (0.3) (1.0) (1.9)
Impairment of properties, right-of-use assets and intangible assets - - (12.9)
Release of provision on final settlement of Beer Business 2.1 - -
Total separately disclosed items included in operating profit/(loss) 1.8 (1.0) (14.8)
Profit on disposal of properties 4.2 - 5.8
Separately disclosed finance costs:
Finance charge on net pension liabilities (note 11) - - (0.1)
Finance credit on the cancellation of interest rate swaps - 0.2 -
Total separately disclosed finance costs - 0.2 (0.1)
Total separately disclosed items before tax 6.0 (0.8) (9.1)
Separately disclosed tax:
Profit on disposal of properties (1.1) - (0.2)
Change in tax rates (5.1) 0.1 0.9
Total separately disclosed tax (6.2) 0.1 0.7
Total separately disclosed items 0.2 (0.7) (8.4)
The reorganisation costs of £0.3 million during the 26 weeks ended 25
September 2021 (26 September 2020: £1.0 million, 27 March 2021: £1.9
million) were largely incurred as a result of the Group corporate restructure.
The profit on disposal of properties of £4.2 million during the 26 weeks
ended 25 September 2021 (26 September 2020: nil) relates to the disposal of
seven mostly licensed properties which were held as assets held for sale at
year end. £1.4 million of this balance relates to the release of a lease
liability on surrender of two properties that were previously impaired, net of
surrender costs.
The £2.1 million credit is the release of a provision, net of the final
settlement amount on the sale of the Fuller's Beer Business.
The 2021 Budget in March this year announced an increase in the UK corporation
tax rate to 25% with effect from 1 April 2023. This was substantively enacted
on 24 May 2021. The UK corporation rate increase has resulted in an increase
to the deferred tax liability of £5.1 million. This has been recognised
within separately disclosed items in the tax charge for the period as it is
unrelated to underlying trading and is one off in nature.
The cash impact of operating separately disclosed items before tax for the 26
weeks ended 25 September 2021 was £0.3 million cash outflow (26 September
2020: £0.8 million cash outflow, 27 March 2021 £1.5 million cash outflow).
4. Finance Costs
Unaudited Unaudited
26 weeks ended 25 September 2021 26 weeks ended 26 September 2020 Audited
£m £m 52 weeks ended 27 March
2021
£m
Finance costs
Interest expense arising on:
Financial liabilities at amortised cost - loans and debentures (3.6) (2.7) (5.3)
Financial liabilities at amortised cost - preference shares (0.1) (0.1) (0.1)
Financial liabilities at amortised cost - lease liabilities (1.6) (1.5) (3.0)
Total interest expense for financial liabilities (5.3) (4.3) (8.4)
Total finance costs before separately disclosed items (5.3) (4.3) (8.4)
Finance charge on net pension liabilities (note 11) - - (0.1)
Finance credit on the expiry/cancellation of interest rate swaps - 0.2 -
Total finance costs (5.3) (4.1) (8.5)
5. Taxation
Continuing operations Unaudited Restated
26 weeks ended 25 September 2021 Unaudited
£m 26 weeks ended 26 September 2020 Audited
£m 52 weeks ended 27 March
2021
£m
Tax on profit/(loss) on ordinary activities
Current income tax:
Corporation tax 0.1 - (1.0)
Amounts over provided in previous years - (0.5) (0.5)
Total current income tax 0.1 (0.5) (1.5)
Deferred tax:
Origination and reversal of temporary differences 1.9 (3.9) (8.1)
Change in corporation tax rate 5.1 - -
Total deferred tax 7.0 (3.9) (8.1)
Total tax charged/(credited) in the Income Statement 7.1 (4.4) (9.6)
Tax relating to items charged/(credited) to the Statement of Comprehensive
Income
Deferred tax:
Tax charge on valuation gains on financial assets and liabilities 0.1 - 0.1
Tax charge/(credit) on actuarial gains on pension scheme 1.8 (1.3) (0.2)
Tax charge/(credit) included in the 1.9 (1.3) (0.1)
Statement of Comprehensive Income
Tax relating to items credited directly to equity
Deferred tax:
Share-based payments - (0.1) -
Tax credit included in the Statement of Changes in Equity - (0.1) -
The taxation charge is calculated by applying the Directors' best estimate of
the annual effective tax rate to the profit/(loss) for the period/year.
6. Earnings/(Loss) Per Share
Continuing operations Unaudited Unaudited Audited
26 weeks ended 25 September 2021 26 weeks ended 26 September 2020 52 weeks ended 27 March
£m £m 2021
£m
Profit/(loss) attributable to equity shareholders 3.5 (18.6) (48.2)
Separately disclosed items net of tax 0.2 0.7 8.4
Adjusted earnings/(loss) attributable to equity shareholders 3.7 (17.9) (39.8)
Number Number Number
Weighted average share capital 60,762,000 55,205,000 55,207,000
Dilutive outstanding options and share awards 204,000 287,000 139,000
Diluted weighted average share capital 60,966,000 55,492,000 55,346,000
40p 'A' and 'C' ordinary share Pence Pence Pence
Basic earnings/(loss) per share 5.76 (33.69) (87.31)
Diluted earnings/(loss) per share 5.74 (33.69) (87.31)
Adjusted earnings/(loss) per share 6.09 (32.42) (72.09)
Diluted adjusted earnings/(loss) per share 6.07 (32.42) (72.09)
4p 'B' ordinary share Pence Pence Pence
Basic earnings/(loss) per share 0.58 (3.37) (8.73)
Diluted earnings/(loss) per share 0.57 (3.37) (8.73)
Adjusted earnings/(loss) per share 0.61 (3.24) (7.21)
Diluted adjusted earnings/(loss) per share 0.61 (3.24) (7.21)
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 1,766,681
(26 September 2020: 1,779,745, 27 March 2021: 1,777,248).
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
25 September 26 September 27 March
2021 2020 2021
£m £m £m
Declared and paid during the period
Interim paid in the period for 2021 - - -
First dividend paid in period for 2021 - - -
Equity dividends paid - - -
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 3.90 - -
3.90 - -
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 of 3.90p (2020: nil) for the
40p 'A' ordinary shares and 40p 'C' ordinary shares, and 0.39p (2020: nil) for
the 4p 'B' ordinary shares, with a total estimated cost to the Company of
£2.4 million (2020: nil).
8. Property, Plant and Equipment
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
25 September 26 September 27 March
2021 2020 2021
£m £m £m
Net book value at start of period/year 590.2 617.7 617.7
Reclassification of prior year impairment to right-of-use asset - 0.4 0.4
Additions 6.2 7.3 13.8
Disposals - (3.7) (5.5)
Impairment loss net of reversals - - (9.0)
Transfers to assets classified as held for sale (1.5) (4.9) (8.6)
Transfer from assets classified as held for sale 2.4 - -
Depreciation provided during the period (8.9) (9.3) (18.6)
Net book value at end of period/year 588.4 607.5 590.2
During the 26 weeks ended 25 September 2021, the Group recognised a charge of
£nil (26 September 2020: £nil, 27 March 2021: £9.0 million) in respect of
the write down in value of number of sites to their recoverable value.
9. Assets held for sale
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 26 weeks ended
25 September 25 September 25 September
2021 2021 2021
£m £m £m
Assets held for sale at the start of the period/year 9.6 2.6 2.6
Assets disposed of during the year (1.7) - (3.1)
Assets transferred to property, plant and equipment (2.4) 4.9 -
Assets transferred from investment property 1.1 0.8 1.7
Assets transferred from property, plant and equipment 1.5 - 8.6
Impairment of assets - - (0.2)
Assets held for sale at the end of the period/year 8.1 8.3 9.6
10. Analysis of Net Debt
Unaudited - 26 weeks ended 25 September 2021 At Cash Non At
27-Mar flows cash(1) 25 September
2021 £m £m 2021
£m £m
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 (83.8)
(89.9) 4.1 2 (83.8)
Debt:
Bank loans(2) (107.9) (11.9) (0.4) (120.2)
CCFF (99.8) 100 (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) 91.3 1.4 (215.3)
On 31 March 2021, the Group agreed an Amend and Extend refinancing of its
existing debt facilities with its relationship banks, extending the maturity
of the £192 million facilities to 19 February 2023 and amending the financial
covenants to a minimum liquidity level to 31 March 2022.
The CCFF was repayable in May 2021 and was repaid using the Group's available
facilities and the proceeds of the equity placing.
At Cash Non At
28 March
flows
cash(1)
26 September
2020
£m
£m
2020
£m
£m
Unaudited - 26 weeks ended 26 September 2020
Cash and cash equivalents:
Cash and short-term deposits 20.3 (2.3) - 18.0
20.3 (2.3) - 18.0
Financial liabilities
Lease liabilities (112.9) 4.4 14.4 (94.1)
(112.9) 4.4 14.4 (94.1)
Debt:
Bank loans(2) (171.7) 93.0 (0.1) (78.8)
CCFF - (99.4) 0.3 (99.1)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (199.2) (6.4) 0.2 (205.4)
Net debt (291.8) (4.3) 14.6 (281.5)
Audited - 52 weeks ended 27 March 2021 At Cash Non At
28 March
flows
cash(1)
27 March
2020
£m
£m
2021
£m
£m
Cash and cash equivalents:
Cash and short-term deposits 20.3 (3.2) - 17.1
20.3 (3.2) - 17.1
Financial liabilities
Lease liabilities (112.9) 9.2 13.8 (89.9)
(112.9) 9.2 13.8 (89.9)
Debt:
Bank loans(2) (171.7) 64.0 (0.2) (107.9)
CCFF - (99.4) (0.4) (99.8)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (199.2) (35.4) (0.6) (235.2)
Net debt (291.8) (29.4) 13.2 (308.0)
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.
11. Retirement Benefit Obligations
The amount included in the Balance Sheet arising from the Group's obligations Unaudited Unaudited Audited
in respect of its defined benefit retirement plan
At At At
25 September 26 September 27 March
2021 2020 2021
£m £m £m
Fair value of Scheme assets 155.7 142.8 143.8
Present value of Scheme liabilities (150.6) (153.6) (147.3)
Surplus/(deficit) in the Scheme 5.1 (10.8) (3.5)
The net position of the defined benefit retirement plan for the 26 weeks ended
25 September 2021 shows a surplus of £5.1 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.
Key financial assumptions used in the valuation
of the Scheme
Rate of increase in pensions in payment 3.50% 3.05% 3.35%
Discount rate 1.85% 1.50% 1.95%
Inflation assumption - RPI 3.55% 3.05% 3.40%
Inflation assumption - CPI (pre 2030/post 2030) 2.65%/3.55% 2.15% 2.5%/3.4%
Mortality Assumptions
The mortality assumptions used in the valuation of the Scheme as at 25
September 2021 are as set out in the financial statements for the 52 weeks
ended 27 March 2021.
Assets in the Scheme Unaudited Unaudited Audited
At At At
25 September 26 September 27 March
2021 2020 2021
£m £m £m
Corporate bonds 29.2 31.2 25.5
Index linked debt instruments 37.9 24.2 28.3
Overseas equities 30.9 27.7 30.6
Alternatives 39.3 53.5 53.7
Cash 14.5 2.0 1.9
Annuities 3.9 4.2 3.8
Total market value of assets 155.7 142.8 143.8
Movement in deficit during period Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
25 September 26 September 27 March
2021 2020 2021
£m £m £m
Deficit in Scheme at beginning of the period (3.5) (4.7) (4.7)
Movement in period:
Net interest cost - - (0.1)
Net actuarial gains/(losses) 7.5 (7.1) (1.0)
Contributions 1.1 1.0 (2.3)
Surplus/(deficit) in Scheme at end of the period 5.1 (10.8) (3.5)
On 1 January 2015 the plan was closed to future accruals.
12. Provisions
Group and Company Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 26 weeks ended
25 September 26 September 27 March
2021 2020 2021
£m £m £m
Balance at beginning of the year 4.0 4.1 4.1
Utilised (1.4) - (0.1)
Released (2.1) - -
Balance at end of the year 0.5 4.1 4.0
Analysed as:
Due withing one year 0.5 4.1 4.0
Due in more than one year - - -
0.5 4.1 4.0
For further details on the released provision refer to note 3.
13. Share Capital
On 20 April 2021, the Company made an equity placement of 6,469,300 'A' shares
for an offer price of 830p, generating gross proceeds of £53.7 million.
Expenses of £2.1 million were incurred and have been offset in the share
premium account leaving net proceeds of £51.6 million.
At the same time, the Company also provided 'B' ordinary shareholders with the
opportunity to purchase 'B' ordinary shares held in treasury pro-rata to their
holding of 'B' ordinary shares. 230,094 'B' shares were purchased out of
treasury shares for proceeds of £0.2 million.
14. Prior year adjustment
The Group identified an error within its assessment of deferred tax and how it
was being calculated on property, plant and equipment ("PP&E"). Management
had understated the base cost of PP&E recoverable on a sales basis and not
recognised a deferred tax liability on a use basis. Additionally, an
adjustment was recognised to goodwill for the acquisition of Bel & The
Dragon as a result of incorrect application of the initial recognition
exemption. This was identified at year end but dates back to prior to the
earliest period presented within these interim statements. The 26 September
2020 balances therefore have been restated in these interim statements. In
addition the income statement tax credit has been increased by £0.5 million
to record a return to provision true up in H1 2021 when the tax return in
question was submitted to HMRC (previously recorded in H2 2021).
The financial impact of the errors identified are as follows:
26 Weeks ended 26 September 2020 Reported Adjusted Restated
£m £m £m
Current tax receivable 3.8 0.3 4.1
Deferred tax liabilities (13.7) 4.0 (9.7)
Retained earnings (388.1) (3.5) (391.6)
Goodwill 28.1 (0.8) 27.3
Income Statement for 26 weeks ended 26 September 2020:
Reported Adjusted Restated
£m £m £m
Loss before tax (23.0) - (23.0)
Tax 3.9 0.5 4.4
Loss after tax (continuing operations) (19.1) 0.5 (18.6)
15. 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 2021. 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 28 to 30 of the Annual Report and Financial Statements 2021, and are
available on the Fuller's website, www.fullers.co.uk.
The most significant risk has been the impact of the coronavirus pandemic.
However other risks, which were already part of our principal risks, have
become more prevalent. These include but are not limited to: the constrained
availability of labour within the UK impacting hospitality directly, and
manufacturing and logistics; the impact of cost inflation; supply chain
issues; changes in consumer demand; and wage cost inflation. The controls and
mitigations we have in place to address these 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.
16. Shareholders' information
Shareholders holding 40p 'C' ordinary shares are reminded that they have 30
days from 18 November 2021 should they wish to convert those 'C' shares to 'A'
shares. The next available opportunity after that will be June 2022. For
further details, please contact the Company's registrars, Computershare, on
0870 889 4096.
17. 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 OFFICER
17 NOVEMBER 2021
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