REG - Fuller,Smith &Turner - Half-Year Results
15/11/2023 07:00
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RNS Number : 4511T Fuller,Smith&Turner PLC 15 November 2023
STRICTLY EMBARGOED
UNTIL 7AM WEDNESDAY 15 NOVEMBER 2023
FULLER, SMITH & TURNER P.L.C.
("Fuller's", the "Company", or the "Group")
Financial results for the 26 weeks to 30 September 2023
Strong progress as revenues and profits continue to rise
Financial and Operational Highlights
Unaudited Unaudited Audited
26 weeks 26 weeks ended 53 weeks ended
ended 24 September 1 April
30 September
2023 2022 2023
£m £m £m
Revenue and other income 188.8 168.9 336.6
EBITDA(1) 34.8 28.9 51.8
Adjusted profit before tax(2) 14.5 9.8 12.7
Statutory profit before tax 14.9 10.7 10.3
Basic earnings per share(3) 17.65p 13.13p 12.98p
Adjusted earnings per share(3) 17.16p 12.48p 16.10p
Dividend per share 6.63p 4.68p 14.68p
Net debt excluding lease liabilities(4) 129.4 129.2 132.8
All figures above are from continuing operations.
1 Earnings before interest, tax, depreciation, amortisation, profit on
disposal of property, plant and equipment, and separately disclosed items.
2 Adjusted profit before tax is the profit before tax excluding
separately disclosed items.
3 Per 40p 'A' or 'C' ordinary share. Basic EPS is calculated using
earnings attributable to equity shareholders after tax including separately
disclosed items. Adjusted EPS excludes separately disclosed items.
4 Net debt excluding lease liabilities comprises cash and short-term
deposits, bank overdraft, bank loans, debenture stock and preference shares.
Financial and Operational Highlights (cont)
· Revenue up 12% to £188.8 million (H1 2023: £168.9 million), driven
by strong performances across the estate
· Like for like sales in H1 up 12.7%, demonstrating market
outperformance, substantially ahead of the industry's Coffer CGA Business
Tracker
· Adjusted profit before tax increased by 48% to £14.5 million (H1
2023: £9.8 million) - demonstrating strong profit conversion despite
inflationary challenges
· Net debt is at £129.4 million (H1 2023: £129.2 million) with cash
used to enhance the estate and finance shareholder returns
· Interim dividend increased in line with earnings to 6.63p (H1 2023:
4.68p), representing a 42% increase on last year
· Completed buy back of one million 'A' shares at an average price of
580p, and today announcing our intention to buyback an additional one million
'A' shares.
Strategic Highlights
· An excellent customer experience, resulting in like for like sales
growth across all areas during the first half
o Food sales up 15.5%
o Drink sales up 10.9%
o Accommodation sales up 13.4%
· Continuing to invest for the long-term
o Enhancing the estate with £9.0 million capital investment
o Significant pipeline of investments planned
o Increased investment in our people, including new leadership training
programme for all general managers
o Deployment of numerous ESG initiatives as part of our Life is too good to
waste programme
· Effective proactive portfolio management with 21 of 23 pubs earmarked
for transfer from managed to tenanted completed - remaining sites will
complete imminently
· Further strengthening of the Balance Sheet, with reduced leverage, and
headroom for acquisitions to drive long-term growth.
Current Trading
· Like for like sales for the 32 weeks to 11 November 2023 up 11.7%
· Primed for a strong Christmas with bookings already 11% ahead of prior
year.
Chief Executive Simon Emeny said:
"We have had a strong start to the year - delivering excellent financial
results and building a superb platform for future growth. While there are
still a number of macro-economic elements to navigate, certain external
factors are moving in our favour with office workers continuing to return to
their desks and the City becoming a seven day operation with increased leisure
spend at the weekend.
"There has been a welcome return of major events. Customers are increasingly
seeking premium experiences when they are spending their money, and we have
the benefit of the lucrative international tourist trade to come with inbound
tourism still below pre-covid levels.
"These factors play to our strengths which, combined with our teams'
operational excellence, have resulted in our like for like sales rising 12.7%
from the prior year - outperforming the market and well ahead of the
industry's Coffer CGA Business Tracker. There is demonstrable momentum and
positivity in the business, we have an amazing group of dedicated team
members, excellent leaders, and a keen focus on continuing to grow profitable
sales using all the levers available to us.
"We have continued with our strong progress since the period end, with like
for like sales for the first 32 weeks of the year growing by 11.7%. Trading in
the City continues to grow and although we cannot rule out further tube or
train strikes, we are looking forward to a good Christmas with bookings
currently 11% ahead of last year.
"Our capital investment programme for the year will see us undertaking a
number of large projects across the estate during the remainder of this
financial year, enhancing our iconic pubs and hotels. We will also continue to
invest in further development for our exceptional team members including the
roll out of a new online training platform, to support our face to face
learning, that will increase engagement.
"Fuller's has a long-term vision, strong values and a clear strategy - all
underpinned by our predominately freehold estate of iconic pubs in fantastic
locations. While there is still a challenging economic environment to
navigate, we have had a strong first half and with exciting plans in the
pipeline, we are looking forward to the second half of the year with
confidence."
-Ends-
For further information, please contact:
Fuller, Smith & Turner P.L.C.
Simon Emeny, Chief Executive
020 8996 2000
Neil Smith, Finance Director
020 8996 2000
Georgina Wald, Corporate Comms Manager
020 8996 2198
Instinctif Partners
Justine Warren
020 7457
2010
Forthcoming dates in the financial calendar:
Interim dividend payment: 2 January 2024
Trading update: 25 January 2024
Full year results announcement FY 2024: 13 June 2024
AGM: 23 July 2024
Half year results announcement FY 2025: 14 November 2024
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.
Our purpose in life is to create experiences that nourish the soul. Fuller's
has 183 managed businesses, with 1,015 boutique bedrooms, and 193 Tenanted
Inns. The Fuller's pub estate stretches from Brighton to Birmingham and from
Bristol to the Greenwich Peninsula, including 163 locations within the M25.
Our Managed Pubs and Hotels include Cotswold Inns & Hotels - seven
stunning hotels in the Cotswolds, and Bel & The Dragon - six exquisite
modern English inns located in the Home Counties. In summary, Fuller's is the
home of great pubs, outstanding hospitality and passionate people, where
everyone is welcome and leaves that little bit happier than they arrived.
Photography is available from the Fuller's Press Office on 020 8996 2000 or by
email at pr@fullers.co.uk (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 be available
from 12 noon on 15 November 2023.
FULLER, SMITH & TURNER P.L.C.
FINANCIAL RESULTS FOR THE 26 WEEKS ENDED 30 SEPTEMBER 2023
CHAIRMAN'S STATEMENT
I am very pleased to report that your Company has made excellent progress in
the first half of the year. While the cost-of-living crisis, train strikes and
conflict across the globe runs on, Fuller's continues to focus on the
long-term - delivering growing sales and profits and investing in our people,
our properties and a constantly evolving customer offer.
I am delighted to see all our key metrics heading in the right direction.
Revenues have risen by 12%, adjusted profit before tax is up by 48%, and in
order to rebalance the interim dividend as a proportion of the total dividend,
we have increased the interim dividend payment by 42%, which also brings it
closer to pre-pandemic levels. Simon Emeny and the Executive Team are showing
strong leadership and the business is delivering across its strategic pillars.
While we are in great shape, the hospitality industry as a whole still needs
the support of Government. Forthcoming changes to business rates, including an
inflation-linked rise in the all-important business rates multiplier, will hit
the industry hard and while well-funded companies like Fuller's have the
bandwidth to withstand (albeit reluctantly) these increases, many will not. I
urge this Government - and any future incumbent - to consider the important
role that pubs play in delivering jobs and tax revenues, and their key role in
local communities and society as a whole.
One of the highlights of the first half of this financial year was the
promotion of our People & Talent Director, Dawn Browne, to the Main Board
in July. This was in recognition of the importance of people to our business,
and I am pleased to say she is already making an excellent contribution. In
addition, her team has undertaken a number of initiatives around leadership
training, diversity and inclusion, recruitment, development and retention -
with labour turnover rates improving significantly.
We are also making good inroads in hitting our Net Zero target by 2030. With a
large number of small changes we have already substantially reduced our
operational emissions - aided by switching to renewable energy sources - and
the accompanying savings in energy have been most welcome. It is in all our
interests to operate in a way that reduces our impact on resources and on the
planet and I look forward to seeing this work develop further.
Finally, I would like to thank the amazing team of people that work at
Fuller's for their contribution to these results. They are an inspiration from
the bar to the boardroom and it is their joie de vivre that continues to
deliver for our customers, for their colleagues, and for our shareholders.
DIVIDEND
The Board is pleased to announce an interim dividend of 6.63p (H1 2023: 4.68p)
per 40p 'A' and 'C' ordinary share and 0.663p (H1 2023: 0.468p) per 4p 'B'
ordinary share. This will be paid on 2 January 2024 to shareholders on the
share register as at 15 December 2023. This payment equates to 85% of the 2019
interim payment and continues our return to a progressive dividend policy.
Michael Turner
Chairman
14 November 2023
CHIEF EXECUTIVE'S REVIEW
OVERVIEW
We have had a strong start to the year - delivering excellent financial
results and building a superb platform for future growth. While there are
still a number of macro-economic elements to navigate, certain external
factors are moving in our favour with office workers continuing to return to
their desks and the City becoming a seven day operation with increased leisure
spend at the weekend.
There has been a welcome return of major events. Customers are increasingly
seeking premium experiences when they are spending their money, and we have
the benefit of the lucrative international tourist trade to come with inbound
tourism still below pre-covid levels.
These factors play to our strengths which, combined with our teams'
operational excellence, have resulted in our like for like sales rising 12.7%
from the prior year, outperforming the market and well ahead of the industry's
Coffer CGA Business Tracker. There is demonstrable momentum and positivity in
the business, we have an amazing group of dedicated team members, excellent
leaders, and a keen focus on continuing to grow profitable sales using all the
levers available to us.
While growing sales will generate profits in the near term, we continue to
invest in our long-term strategy - delighting our customers, inspiring our
people, enhancing our estate through investment, staying one step ahead by
constantly evolving our business and owning our impact. This strategy is
driven by the Executive Team and we are confident that its successful
execution will deliver sustainable growth for the future.
TRADING UPDATE
During the first half, we have ensured that everything we do, every decision
we make, and every training course we deliver has the customer at its heart.
Irrespective of location, we target a discerning consumer - and pride
ourselves on delivering delicious food, a first-class range of drinks,
beautiful bedrooms and outstanding hospitality, promoted using data from our
digital systems. This delights our customers, keeps them coming back for more
and takes market share from our competitors.
Giving our customers reasons to visit
As well as expecting an excellent offer as outlined above, the desire for a
premium experience is clear and customers are often looking for that extra
something to entice them to the pub. The range of events that we now offer
across the estate ensures that our customers have more reasons to visit than
ever. These include joint activations with our suppliers, cultural events that
bring theatre, opera and even panto to the pub, and an increased focus on
ensuring the pub is the best place to watch live sport outside of the stadium.
We use all the tools available to us to promote these activities including geo
and demographic targeted digital marketing with compelling content, regular
communication to our database of 1.7 million engaged customers, and in-pub
point of sale to cross-promote future offers and events. We know this is
working with pre-booked revenue for the half year rising by 9%.
Strong growth across food, drink and accommodation
We have been delighted to see like for like sales growth across all three main
revenue streams - food, drink and accommodation. Food like for like sales have
risen by 15.5% and drink by 10.9%. Accommodation like for like revenue is up
13.4%, while RevPAR has risen by 15% and Average Room Rate has increased to
£129 (H1 2023: £117).
While always delicious, the menu across our varied estate is carefully
targeted towards the local market - and we have a customer-driven approach to
menu design. I am delighted to see innovative new dishes being rolled out
including an exciting children's menu and a new brunch offer that is opening
up an additional trading day part in a number of sites.
We aim to provide flexibility within a framework for our kitchens, allowing
creativity in our food team and exciting options that are tailored for the
site, the kitchen and our customers. Dishes are designed through a
collaborative process involving chefs, managers, the food team and our
suppliers, and are supported by new photography and targeted digital and
social marketing, designed to tempt and tantalise the tastebuds of new and
existing customers.
We continue to leverage the benefits of our long-term supply agreement with
Asahi, while also working with a wide range of other suppliers across all
drink segments. Our tie up with Mirabeau delivered a real boost to rosé wine
sales over the summer, adding an incremental £1m of revenue. We outperform
the market in sales of beer and cider and are category leaders in cask ale - a
position we are aiming to emulate in wine, premium spirits and cocktails, and
this will be an area of development in the second half of the year.
Accommodation continues to perform well and the new booking engine we rolled
out across our Fuller's sites with rooms, Bel & The Dragon and Cotswold
Inns & Hotels is delivering further benefits around upselling and driving
direct bookings - which have increased by 18.6% against the prior year.
Investing for the future in our pubs and people
We are very proud of our premium position in the marketplace and during the
period we have invested £7.4 million across 80 Managed Pubs and Hotels. We
also completed major schemes at The Sanctuary House Hotel and The Admiralty,
which were started in the last financial year.
During the first half, we added six new bedrooms to The Counting House in
Cornhill. This fantastic scheme is realising benefits with the rooms opening
in early October and achieving occupancy levels of 95%. Post period end, we
acquired the freehold of The Crown in Islington, a pub we have operated for
many years.
We have several large and exciting investment schemes scheduled for the second
half of the year. These include projects at The Alice Lisle in Ringwood, The
Head of the River in Oxford, The Manor at Moreton-in-Marsh, The Forester in
Ealing - which was a recent Tenanted to Managed transfer - The Rising Sun in
the New Forest and The Pilot at Greenwich. We look forward to updating on
these investments at the full year.
I could not be prouder of the amazing teams that work in our pubs and we have
increased our training budget by 25% to continue to invest in them. In the
first half, we have delivered 2,059 training days, recruited 88 new
apprentices, and started the roll out of a new leadership development
programme for all general managers across the business. It is always rewarding
to be recognised by your peers and we are delighted to be shortlisted in three
categories in the forthcoming BII NITA training awards.
Ultimately, the success of our activities around recruitment and development
is measured in happiness, engagement and retention. Having just completed our
latest Happiness Index employee survey, we are very pleased to be reporting an
increase in participation rates, happiness and engagement scores for the
second year running. Even more pleasing is that labour turnover rates are now
below pre-pandemic levels.
Life is too good to waste
Across the business, we have made excellent progress during the half year
across our Life is too good to waste programme. We continue to deliver for our
corporate charity, Special Olympics Great Britain, and have raised over
£122,000 for this excellent cause in the first half.
I am very pleased with the progress we have made around the diversity, equity
and inclusion agenda too. We launched our Inclusion Action Plan, completed
inclusive leadership development for all senior leaders and operations
managers and rolled out menopause training that was accessible to all those in
the business.
We are making headway on our route to Net Zero by 2030 for Scope 1 and 2
emissions and have had our near-term science-based emissions reduction target
for Scope 1, 2 and 3 approved by the Science Based Targets initiative. Our
work in this area is underpinned by new systems of measurement including smart
meters and energy dashboards in all our Managed Pubs and Hotels. We now have
11 fully electric kitchens in place, we've increased the amount of cooking oil
recycling that takes place, progressed refillable water solutions and added
30kW solar panels to the roof of Pier House (our support centre office), as
well as a raft of other solutions.
While doing the right thing for the planet, we have also seen a decrease in
gas usage of 8.5% and a reduction in electricity consumption of 5% in the
period, on top of substantial reductions last year. We have been recognised
for the work undertaken in this area with a BII Sustainability Award and a
Green Tourism Award for five Fuller's sites with rooms, and all seven Cotswold
Inns & Hotels sites.
TENANTED INNS
It has been an excellent first half for the Tenanted Inns division, which has
delivered revenues of £16.3 million and profits of £6.9 million. We have
completed the transfer of 21 of the 23 sites earmarked to move from Managed to
Tenanted and the last two transfers are imminent. Moving these 23 sites to the
Tenanted model is expected to add £1 million of incremental profit
contribution.
We continue to undertake joint schemes with our Tenants, with the Company
investing £1.6 million across 23 sites in the first half. We now have 54
tenanted pubs operating with turnover based contracts - which allows us to
share in non-beer revenues.
Finally, we have improved our Tenanted website, specifically improving the
listings of pubs to let, and moved to a new recruitment system. These elements
in tandem have freed up additional resource in the Tenanted team which will
allow us to further support Tenants on turnover agreements to grow their
businesses which is, of course, mutually profitable.
FINANCIAL REVIEW
Group revenue and other income increased by 12% to £188.8 million (H1 2023:
£168.9 million) and adjusted profit has increased by 48% to £14.5 million
(H1 2023: £9.8 million).
Managed Pubs and Hotels revenue increased by 12% with like for like sales up
by 12.7% compared with the prior year. Operating profit in Managed Pubs and
Hotels increased from £18.0 million to £25.4 million with operating margin
improving from 11.7% to 14.7% despite the continued inflationary environment.
This improvement in operating margin is through a focus on sales growth and
operational excellence.
Tenanted Inns revenue improved by 8% to £16.3 million (H1 2023: £15.1
million) and EBITDA increased to £8.3 million (H1 2023: £7.8 million).
EBITDA margin slightly declined from 51.7% to 50.9% largely due to one-off
costs associated with the transfer of sites from Managed Pubs and Hotels to
Tenanted Inns.
The Group has unsecured banking facilities of £200 million, split between a
revolving credit facility of £110 million and a term loan of £90 million.
During the period, the Group agreed with its lenders to extend these
facilities for a further year through to May 2027. The Group also has £26
million of debentures, £6 million of which is due for repayment in December
2023 and will be repaid out of the Group's current facilities. The Group's
undrawn committed facilities at 30 September 2023 were £86.5 million, with a
further £10.2 million of cash held on the balance sheet.
Net debt (excluding leases) was at £129.4 million (H1 2023: £129.2 million)
and was down £3.4 million from net debt at year end. The Group has delivered
on its capital allocation framework through investment in the estate and
returns to shareholders. A total of £9.0 million was invested in the existing
estate in the period, a dividend of £6.1 million was paid to shareholders,
and £3.5 million was used for share buybacks as part of a one million share
buyback programme which completed in November.
The Group has continued to strengthen its Balance Sheet during the period with
a ratio of net debt to pro forma EBITDA reducing to 2.6 times (down from 3.0
times at year end) and significant headroom on its facilities. This will be
further boosted with the sale of The Mad Hatter, Southwark, in July 2024 which
will realise £20 million in value.
Adjusted finance cost increased to £6.9 million (H1 2023: £5.8 million) with
average cost of borrowing increasing from 5.4% to 7.6% due to the increase in
Bank of England base rates. The Group has a zero-premium cap and collar over
£60 million of the term facility. This instrument is in place for a
three-year period to September 2025 to hedge some of the variability in
interest rates. The Group sold a floor of 310bps and bought a cap of 500bps
which has given some protection from the Bank of England rate since it
increased to 525bps on 3 August 2023.
Separately disclosed items before tax were a credit of £0.4 million (H1 2023:
£0.9 million credit) which principally consists of a release of a VAT
provision of £1.1 million on settlement of a claim, £0.4m credit received as
part settlement of an ongoing legal claim, and £0.4 million interest credit
on the Group's pension surplus. Net of this is an impairment charge of £1.5
million recognised in relation to the write down of three properties and one
right-of-use asset to their recoverable value.
Tax has been provided at an effective rate before separately disclosed items
of 28.3% (H1 2023: 21.4%). The increase in the effective tax rate is mainly
due to the increase in the corporation tax from 19% to 25% which came into
effect in April 2023. The main driver of the increase in effective tax
rate on adjusted profits over the standard rate of tax is a result
of non-deductible depreciation on assets that do not qualify for capital
allowances. Disclosure on tax is set out in note 5.
The net impact of these items results in the basic earnings per share
increasing by 4.52p to 17.65p (H1 2023: 13.13p) and adjusted earnings per
share increasing by 4.68p to 17.16p (H1 2023: 12.48p).
The growth in earnings per share has enabled the Group to declare an interim
dividend of 6.63p (H1 2023: 4.68p), which is an increase of 42% on last year,
in line with the 38% increase in adjusted earnings per share. In addition to
the dividend, the Group announced in July 2023 the intent to repurchase one
million 'A' ordinary shares, which it has just recently completed. Today, the
Group has announced its intention to buyback an additional one million 'A'
ordinary shares.
The surplus on the defined benefit pension schemes has decreased by £1.5
million from the year end and is now showing an accounting surplus of £13.1
million (1 April 2023: surplus £14.6 million, 24 September 2022: surplus
£20.4 million). This is predominately as a result of a decrease in the fair
value of scheme assets from £113.4 million to £103.8 million. The present
value of the scheme liabilities also decreased due to an increase in the
discount rate from 4.75% to 5.60%. As the Group has an unconditional right to
refund under the pension trust deed, an asset has been recognised at 30
September 2023.
CURRENT TRADING AND OUTLOOK
We have continued with our strong progress since the period end, with like for
like sales for the first 32 weeks of the year growing by 11.7%. Trading in the
City continues to grow and although we cannot rule out further tube or train
strikes, we are looking forward to a good Christmas with bookings currently
11% ahead of last year.
Our capital investment programme for the year will see us undertaking a number
of large projects across the estate during the remainder of this financial
year, enhancing our iconic pubs and hotels. We will also continue to invest in
further development for our exceptional team members including the roll out of
a new online training platform, to support our face to face learning, that
will increase engagement.
Fuller's is a great company with a superb team of dedicated people at all
levels. We have a long-term vision, strong values and a clear strategy and all
of this is underpinned by our predominately freehold estate of iconic pubs in
fantastic locations.
While there is still a challenging economic environment to navigate, we have
had a strong first half. With exciting plans in the pipeline, we are looking
forward to the second half of the year with confidence.
Simon Emeny
Chief Executive
14 November 2023
Fuller, Smith & Turner P.L.C.
Condensed Group Income Statement
For the 26 weeks ended 30 September 2023
Unaudited - 26 weeks ended Unaudited - 26 weeks ended Audited - 53 weeks ended
30 September 2023 24 September 2022 1 April 2023
Note Before Separately Total Before Separately Total Before Separately Total
separately
disclosed
£m
separately
disclosed
£m
separately
disclosed
£m
disclosed
items
disclosed
items
disclosed
items
items
£m
items
£m
items
£m
£m
£m
£m
Revenue 2 188.8 - 188.8 168.9 - 168.9 336.6 - 336.6
Operating costs 3 (167.4) - (167.4) (153.3) (3.2) (156.5) (311.5) (14.2) (325.7)
Operating profit 21.4 - 21.4 15.6 (3.2) 12.4 25.1 (14.2) 10.9
Profit on disposal of properties 3 - - - - 4.4 4.4 - 11.8 11.8
Finance costs 4 (6.9) 0.4 (6.5) (5.8) (0.3) (6.1) (12.4) - (12.4)
Profit before tax 14.5 0.4 14.9 9.8 0.9 10.7 12.7 (2.4) 10.3
Tax 5 (4.1) (0.1) (4.2) (2.1) (0.5) (2.6) (2.9) 0.5 (2.4)
Profit for the period/year 10.4 0.3 10.7 7.7 0.4 8.1 9.8 (1.9) 7.9
Fuller, Smith & Turner P.L.C.
Condensed Group Income Statement (continued)
For the 26 weeks ended 30 September 2023
Unaudited - 26 weeks ended Unaudited - 26 weeks ended Audited - 53 weeks ended
30 September 2023 24 September 2022 1 April 2023
Note Statutory Statutory Statutory
Adjusted Adjusted Adjusted
Earnings per share per 40p 'A' and 'C' ordinary share Pence Pence Pence Pence Pence Pence
Basic 6 17.16 17.65 12.48 13.13 16.10 12.98
Diluted 6 17.14 17.63 12.42 13.07 16.07 12.96
Earnings per share per 4p 'B' ordinary share
Basic 6 1.72 1.77 1.25 1.31 1.61 1.30
Diluted 6 1.71 1.76 1.24 1.31 1.61 1.30
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Comprehensive Income
For the 26 weeks ended 30 September 2023
Unaudited
26 weeks ended Unaudited
30 September 2023 26 weeks ended Audited
£m 24 September 2022 53 weeks ended
£m 1 April 2023
£m
Note
Profit for the period/year 10.7 8.1 7.9
Items that may be reclassified to profit or loss
Net gains on valuation of financial assets and liabilities 0.4 1.2 0.1
Tax related to items that may be reclassified to profit or loss 5 (0.1) (0.3) -
Items that will not be reclassified to profit or loss
Net actuarial (losses)/gains on pension schemes 11 (3.1) 4.8 (2.5)
Tax related to items that will not be reclassified to profit or loss 5 0.8 (1.2) 0.6
Other comprehensive (expense)/income for the period/year, net of tax (2.0) 4.5 (1.8)
Total comprehensive income for the period/year, net of tax 8.7 12.6 6.1
Fuller, Smith & Turner P.L.C.
Condensed Group Balance Sheet
30 September 2023
Note Unaudited Unaudited
At At
30 September 2023 24 September 2022 Audited
£m £m At
1 April
2023
£m
Non-current assets
Intangible assets 28.7 29.3 29.0
Property, plant and equipment 8 580.5 591.8 583.3
Investment properties 1.5 1.6 1.5
Other financial assets 0.5 1.0 0.1
Right-of-use assets 62.8 69.2 66.4
Retirement benefit obligations 11 14.5 22.0 16.1
Total non-current assets 688.5 714.9 696.4
Current assets
Inventories 4.0 4.3 4.2
Trade and other receivables 10.3 17.9 10.2
Current tax receivable - 0.1 0.7
Cash and short-term deposits 10 10.2 20.4 14.1
Total current assets 24.5 42.7 29.2
Assets classified as held for sale 9 7.0 8.3 7.0
Total assets 720.0 765.9 732.6
Current liabilities
Trade and other payables (49.3) (63.1) (54.6)
Current tax payable (0.5) - -
Provisions (0.5) (0.5) (0.5)
Borrowings 10 (6.0) - (6.0)
Lease liabilities 10 (4.8) (6.0) (4.8)
Total current liabilities (61.1) (69.6) (65.9)
Non-current liabilities
Borrowings 10 (133.6) (149.6) (140.9)
Lease liabilities 10 (64.0) (71.6) (67.0)
Retirement benefit obligations 11 (1.4) (1.6) (1.5)
Deferred tax liabilities (17.1) (16.4) (14.7)
Total non-current liabilities (216.1) (239.2) (224.1)
Net assets 442.8 457.1 442.6
Fuller, Smith & Turner P.L.C.
Condensed Group Balance Sheet (continued)
30 September 2023
Unaudited Unaudited
At At
30 September 2023 24 September 2022 Audited
£m £m At
1 April
2023
£m
Capital and reserves
Share capital 25.4 25.4 25.4
Share premium account 53.2 53.2 53.2
Capital redemption reserve 3.7 3.7 3.7
Own shares (24.8) (16.6) (21.3)
Hedging reserve 0.3 0.8 -
Retained earnings 385.0 390.6 381.6
Total equity 442.8 457.1 442.6
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Changes in Equity
For the 26 weeks ended 30 September 2023
Unaudited - 26 weeks ended 30 September 2023 Share Share Capital Own Hedging Retained Total
capital
premium
redemption
shares
reserve
earnings
£m
£m
account
reserve
£m
£m
£m
£m
£m
At 1 April 2023 25.4 53.2 3.7 (21.3) - 381.6 442.6
Profit for the period - - - - - 10.7 10.7
Other comprehensive expense for the period - - - - 0.3 (2.3) (2.0)
Total comprehensive income for the period - - - - 0.3 8.4 8.7
Dividends (note 7) - - - - - (6.1) (6.1)
Shares purchased to be held in ESOT or as treasury - - - (3.5) - - (3.5)
Share-based payment charges - - - - - 1.1 1.1
At 30 September 2023 25.4 53.2 3.7 (24.8) 0.3 385.0 442.8
Unaudited - 26 weeks ended 24 September 2022
At 26 March 2022 25.4 53.2 3.7 (16.6) (0.1) 383.6 449.2
Profit for the period - - - - - 8.1 8.1
Other comprehensive income for the period - - - - 0.9 3.6 4.5
Total comprehensive income for the period - - - - 0.9 11.7 12.6
Dividends (note 7) - - - - - (4.6) (4.6)
Share-based payment charges - - - - - 0.1 0.1
Tax charged directly to equity (note 5) - - - - - (0.2) (0.2)
At 24 September 2022 25.4 53.2 3.7 (16.6) 0.8 390.6 457.1
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Changes in Equity
For the 26 weeks ended 30 September 2023
Share Share Capital Own Hedging Retained Total
capital
premium
redemption
shares
reserve
earnings
£m
£m
account
reserve
£m
£m
£m
£m
£m
Audited - 53 weeks ended 1 April 2023
At 26 March 2022 25.4 53.2 3.7 (16.6) (0.1) 383.6 449.2
Profit for the year - - - - - 7.9 7.9
Other comprehensive expense for the year - - - - 0.1 (1.9) (1.8)
Total comprehensive income for the period - - - - 0.1 6.0 6.1
Shares purchased to be held in ESOT or as treasury - - - (4.8) - - (4.8)
Shares released from ESOT and treasury - - - 0.1 - - 0.1
Dividends (note 7) - - - - - (7.4) (7.4)
Share-based payment credits - - - - - (0.4) (0.4)
Tax charged directly to equity (note 5) - - - - - (0.2) (0.2)
At 1 April 2023 25.4 53.2 3.7 (21.3) - 381.6 442.6
Fuller, Smith & Turner P.L.C.
Condensed Group Cash Flow Statement
For the 26 weeks ended 30 September 2023
Note Unaudited Unaudited
26 weeks ended 26 weeks ended
30 September 2023 24 September 2022 Audited
£m £m 53 weeks ended
1 April
2023
£m
Profit before tax 14.9 10.7 10.3
Net finance costs before separately disclosed items 4 6.9 5.8 12.4
Separately disclosed items 3 (0.4) (0.9) 2.4
Depreciation and amortisation 2 13.4 13.3 26.7
34.8 28.9 51.8
Difference between pension charge and cash paid (1.2) (1.1) (2.3)
Share-based payment charges 1.1 0.2 (0.4)
Change in trade and other receivables (1.0) (7.4) 2.5
Change in inventories 0.2 (0.7) (0.6)
Change in trade and other payables (3.4) 5.6 (3.0)
Cash impact of operating separately disclosed items 3 1.2 (0.3) (0.5)
Cash generated from operations 31.7 25.2 47.5
Tax received - - -
Cash generated from operating activities 31.7 25.2 47.5
Cash flow from investing activities
Purchase of property, plant and equipment (9.0) (14.9) (30.7)
Sale of property, plant and equipment, investment property and assets held for 0.1 6.7 16.0
sale
Net cash outflow from investing activities (8.9) (8.2) (14.7)
Cash flow from financing activities
Purchase of own shares (3.5) - (4.8)
Receipts on release of own shares to option schemes - - 0.1
Interest paid (5.1) (3.9) (8.7)
Preference dividends paid (0.1) (0.1) (0.1)
Equity dividends paid (6.1) (4.6) (7.4)
(Repayment)/drawdown of bank loans (7.0) 3.0 -
Payment of loan arrangement fees (0.4) (1.5) (1.5)
Surrender of leases 10 - (0.4) (2.1)
Principal elements of lease payments 10 (4.5) (4.7) (9.8)
Net cash outflow from financing activities (26.7) (12.2) (34.3)
Net movement in cash and cash equivalents 10 (3.9) 4.8 (1.5)
Cash and cash equivalents at the start of the period 14.1 15.6 15.6
Cash and cash equivalents at the end of the period/year 10 10.2 20.4 14.1
Fuller, Smith & Turner P.L.C.
Notes to the Condensed Financial Statements
For the 26 weeks ended 30 September 2023
1. Half Year Report
Basis of Preparation
The half year financial statements for the 26 weeks ended 30 September 2023
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 53 weeks
ended 1 April 2023.
The half year financial statements do not constitute full accounts as defined
by Section 434 of the Companies Act 2006. The figures for the 53 weeks ended 1
April 2023 are derived from the published statutory accounts. Full accounts
for the 53 weeks ended 1 April 2023, including an unqualified auditor's report
which did not make any statement under Section 498 of the Companies Act 2006,
have been delivered to the Registrar of Companies.
The Directors have adopted the going concern basis in preparing these accounts
after assessing the Group's principal risks, which are predominately the
uncertainty over the UK economy and the cost pressures impacting the UK from
food inflation, rising staff costs and utility prices and, in turn, the effect
the cost-of-living crisis is having on consumer spending. The Directors are
confident that the Group has sufficient liquidity to withstand these ongoing
challenges for the 12-month going concern assessment period to November 2024
(the 'going concern period').
The continued uncertainty over the UK economy makes it difficult to forecast
the future financial performance and cash flows of the Group. When assessing
the ability of the Group to continue as a going concern, the Directors have
considered the Group's financing arrangements, the pattern of trading in the
first half of the financial year, the possibility of further trading
disruptions caused by the tube and train strikes and the principal risks and
uncertainties as disclosed in the Group's latest Annual Report.
At 30 September 2023, the Group had a strong Balance Sheet with 92% of the
estate being freehold properties along with available headroom on undrawn
facilities of £86.5 million and £10.2 million of cash resulting in net debt
(excluding leases) of £129.4 million. The Group has unsecured banking
facilities of £200 million, split between a revolving credit facility of
£110 million and a term loan of £90 million. Under the facilities agreement,
the covenant suite (tested quarterly) consists of net debt to adjusted EBITDA
(leverage) and adjusted EBITDA to net finance charges.
During the period, the Group agreed with its lenders to extend these
facilities for a further year through to May 2027. The Group also has £26
million of debentures of which £6 million is due for repayment in December
2023 and will be repaid out of the Group's current facilities.
The Group has modelled financial projections for the going concern period
based upon two scenarios, the base case and the severe but plausible
('downside case'). The base case is the Board approved forecast for FY 2024 as
well as the first eight months of the FY 2025 plan which forms part of the
Board approved three-year plan. The base case assumes that costs will be
impacted predominately by the cost inflation currently seen. It also assumes
as a result of the continued cost of living challenges there will be some
impact on consumer confidence and hence volumes. Under this scenario there
would be liquidity headroom and all covenants would be complied with for the
duration of the going concern period.
The Group has also modelled a downside scenario whereby sales in the Managed
Division drop by c.4% from that assumed in the base case and inflation
continues at an even higher rate than in the base case. The model still
assumes that investment in the estate will remain at the same levels as the
base, that no further disposals of properties will happen, and there is no
reduction in overhead spend. These are all mitigating factors that the Group
has in its control. Under this scenario the Group will still have sufficient
resources and headroom on its covenants throughout the assessment period.
Given the uncertainties surrounding the UK economy, the Group has also
performed a reverse stress test to assess at which point the Group would
breach its covenants or not have sufficient liquidity in the assessment
period. The reduction in sales or increase in costs to breach the covenant is
thought to be too remote that those scenarios are therefore considered
implausible.
The Directors have concluded that in both the base and downside scenarios, the
Group has sufficient debt facilities to finance operations for the going
concern assessment period and it would not be in breach of any of its
covenants and that the combination of adverse events that would trigger a
covenant breach are highly unlikely at the current time.
After due consideration of the matters set out above, the Directors are
satisfied that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the going concern
assessment period to November 2024.
The half year financial statements were approved by the Directors on 14
November 2023.
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 53 weeks ended 1
April 2023. 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
30 September 2023
and Hotels Inns £m £m
£m £m
Revenue
Sales of goods and services 151.9 11.8 - 163.7
Accommodation income 19.8 - - 19.8
Total revenue from contracts with customers 171.7 11.8 - 183.5
Rental income 0.8 4.5 - 5.3
Revenue 172.5 16.3 - 188.8
Segment result 25.4 6.9 (10.9) 21.4
Operating separately disclosed items -
Operating profit 21.4
Net finance costs (6.5)
Profit before tax 14.9
Other segment information
Additions: property, plant and equipment 6.4 1.7 0.1 8.2
Depreciation and amortisation 11.7 1.4 0.3 13.4
Impairment of property and right-of-use assets 1.3 0.2 - 1.5
EBITDA 37.1 8.3 (10.6) 34.8
Unaudited - 26 weeks ended Tenanted Unallocated(1) Total
24 September 2022
Managed Pubs Inns £m £m
and Hotels £m
£m
Revenue
Sales of goods and services 135.2 10.8 - 146.0
Accommodation income 17.8 - - 17.8
Total revenue from contracts with customers 153.0 10.8 - 163.8
Rental income 0.8 4.3 - 5.1
Revenue 153.8 15.1 - 168.9
Segment result 18.0 6.8 (9.2) 15.6
Operating separately disclosed items (3.2)
Operating profit 12.4
Profit on disposal of properties 4.4
Net finance costs (6.1)
Profit before tax 10.7
Other segment information
Additions: property, plant and equipment 12.9 2.0 0.1 15.0
Depreciation and amortisation 12.0 1.0 0.3 13.3
Impairment of property 2.7 - - 2.7
EBITDA 30.0 7.8 (8.9) 28.9
2. Segmental Analysis (continued)
Audited - 53 weeks ended Managed Pubs Tenanted Unallocated(1) Total
1 April 2023
and Hotels Inns £m £m
£m £m
Revenue
Sale of goods and services 271.6 21.2 - 292.8
Accommodation income 33.7 - - 33.7
Total revenue from contracts with customers 305.3 21.2 - 326.5
Rental income 1.5 8.6 - 10.1
Revenue 306.8 29.8 - 336.6
Segment result 30.0 13.2 (18.1) 25.1
Operating separately disclosed items (14.2)
Operating Profit 10.9
Profit on disposal of properties 11.8
Net finance costs (12.4)
Profit before tax 10.3
Other segment information
Additions: property, plant and equipment 25.2 4.7 0.1 30.0
Depreciation and amortisation 23.4 2.3 1.0 26.7
Impairment of property, right-of-use assets and goodwill 12.5 1.8 - 14.3
EBITDA 53.4 15.5 (17.1) 51.8
1 Unallocated expenses represent primarily the salary and costs of central
teams and management.
3. Separately Disclosed Items
Unaudited Unaudited
26 weeks ended 26 weeks ended Audited
30 September 2023 24 September 2022 53 weeks ended
£m £m 1 April
2023
£m
Amounts included in operating profit:
Reorganisation costs - (0.5) (0.5)
Impairment of properties, right-of-use assets and intangible assets (1.5) (2.7) (14.3)
Insurance claim 0.4 - (0.2)
VAT provision release 1.1 - 0.8
Total separately disclosed items included in operating profit - (3.2) (14.2)
Profit on disposal of properties - 4.4 11.8
Separately disclosed finance costs:
Finance credit on net pension surplus (note 11) 0.4 0.2 0.5
Finance charge on the write down of arrangement fees - (0.5) (0.5)
Total separately disclosed finance costs 0.4 (0.3) -
Total separately disclosed items before tax 0.4 0.9 (2.4)
Separately disclosed tax:
Profit on disposal of properties - (0.7) (1.0)
Change in tax rates - - 0.5
Other items (0.1) 0.2 1.0
Total separately disclosed tax (0.1) (0.5) 0.5
Total separately disclosed items 0.3 0.4 (1.9)
The impairment charge of £1.5 million (24 September 2022: £2.7 million, 1
April 2023: £14.3 million) relates to the write down of three properties and
one right-of-use asset to their recoverable value.
The insurance claim of £0.4 million relates to the part settlement of a legal
claim that the Group has brought against its insurers in relation to the
pandemic. The matter is still ongoing. In the prior year ending 1 April 2023,
£0.2m is the write off of property, plant and equipment net of insurance
monies claimed.
The VAT provision release relates to the unwind of a provision on the
settlement of a VAT claim.
The cash impact of operating separately disclosed items before tax for the 26
weeks ended 30 September 2023 was £1.2 million cash inflow (24 September
2022: £0.3 million cash outflow, 1 April 2023: £0.5 million cash outflow).
4. Finance Costs
Unaudited Unaudited
26 weeks ended 26 weeks ended Audited
30 September 2023 24 September 2022 53 weeks ended
£m £m 1 April
2023
£m
Finance costs
Interest income from financial assets 0.1 - 0.2
Interest expense arising on:
Financial liabilities at amortised cost - loans and debentures (5.5) (4.2) (9.6)
Financial liabilities at amortised cost - preference shares (0.1) (0.1) (0.1)
Financial liabilities at amortised cost - lease liabilities (1.4) (1.5) (2.9)
Total finance costs before separately disclosed items (6.9) (5.8) (12.4)
Finance credit on net pension liabilities (note 11) 0.4 0.2 0.5
Finance charge on the write down of arrangement fees - (0.5) (0.5)
Total finance costs (6.5) (6.1) (12.4)
5. Taxation
Unaudited Unaudited
26 weeks ended 26 weeks ended
30 September 2023 24 September 2022 Audited
£m £m 53 weeks ended
1 April
2023
£m
Tax on profit on ordinary activities
Current income tax:
Current tax on profit for the period 1.2 0.5 -
Adjustment for current tax on prior periods - - -
Total current income tax 1.2 0.5 -
Deferred tax:
Origination and reversal of temporary differences 3.1 2.0 3.6
Adjustments for deferred tax on prior periods (0.1) 0.1 (1.2)
Total deferred tax 3.0 2.1 2.4
Total tax charged in the Income Statement 4.2 2.6 2.4
Analysed as:
Before separately disclosed items 4.1 2.1 2.9
Separately disclosed items 0.1 0.5 (0.5)
Total tax charged in the Income Statement 4.2 2.6 2.4
Tax relating to items (credited)/charged to the Statement of Comprehensive
Income
Deferred tax:
Valuation gains on financial assets and liabilities 0.1 0.3 -
Net actuarial (losses)/gains on pension scheme (0.8) 1.2 (0.6)
Tax (credit)/charge included in the Statement of Comprehensive Income (0.7) 1.5 (0.6)
Tax relating to items charged directly to equity
Deferred tax:
Share-based payments - 0.2 0.2
Tax charge 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/year.
6. Earnings Per Share
Continuing operations Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended
30 September 2023 24 September 2022 1 April
£m £m 2023
£m
Profit attributable to equity shareholders 10.7 8.1 7.9
Separately disclosed items net of tax (0.3) (0.4) 1.9
Adjusted earnings attributable to equity shareholders 10.4 7.7 9.8
Number Number Number
Weighted average share capital 60,610,000 61,712,000 60,875,000
Dilutive outstanding options and share awards 70,000 275,000 90,000
Diluted weighted average share capital 60,680,000 61,987,000 60,965,000
40p 'A' and 'C' ordinary share Pence Pence Pence
Basic earnings per share 17.65 13.13 12.98
Diluted earnings per share 17.63 13.07 12.96
Adjusted earnings per share 17.16 12.48 16.10
Diluted adjusted earnings per share 17.14 12.42 16.07
4p 'B' ordinary share Pence Pence Pence
Basic earnings per share 1.77 1.31 1.30
Diluted earnings per share 1.76 1.31 1.30
Adjusted earnings per share 1.72 1.25 1.61
Diluted adjusted earnings per share 1.71 1.24 1.61
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 2,843,217
(24 September 2022: 1,741,713, 1 April 2023: 2,134,152).
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 after 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
2023 2022 2023
£m £m £m
Declared and paid during the period
Interim paid in the period for 2023 - - 2.8
Final dividend paid in the period for 2022 - 4.6 4.6
Final dividend paid in period for 2023 6.1 - -
Equity dividends paid 6.1 4.6 7.4
Dividends on cumulative preference shares (note 4) 0.1 0.1 0.1
Pence Pence Pence
Dividends per 40p 'A' and 'C' ordinary share
declared in respect of the period
Interim 6.63 4.68 4.68
Final - - 10.00
6.63 4.68 14.68
The pence figures above are for the 40p 'A' ordinary shares and 40p 'C'
ordinary shares. The 4p 'B' ordinary shares carry dividend rights of one-tenth
of those applicable to the 40p 'A' ordinary shares. Own shares held in the
employee share trusts do not qualify for dividends as the Trustees have waived
their rights. Dividends are also not paid on own shares held as treasury
shares.
The Directors have declared an interim dividend for the 40p 'A' ordinary
shares and 40p 'C' ordinary shares of 6.63p (2023: 4.68p) and 0.663p (2023:
0.468p) for the 4p 'B' ordinary shares.
8. Property, Plant and Equipment
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
30 September 24 September 1 April
2023 2022 2023
£m £m £m
Net book value at start of period/year 583.3 592.7 592.7
Additions 8.2 15.0 30.0
Disposals (0.2) - (1.2)
Impairment loss net of reversals (1.1) (2.7) (13.4)
Transfers to assets classified as held for sale - (3.9) (5.7)
Depreciation provided during the period (9.7) (9.3) (19.1)
Net book value at end of period/year 580.5 591.8 583.3
During the 26 weeks ended 30 September 2023, the Group recognised a charge of
£1.1 million (24 September 2022: £2.7 million, 1 April 2023 : £13.4
million) in respect of the write down in value of its properties to their
recoverable value.
The Group considers each trading outlet to be a cash generating unit ("CGU")
and each CGU is reviewed at each reporting date for indicators of impairment.
In assessing whether an asset has been impaired, the carrying amount of the
CGU is compared to its recoverable amount. The recoverable amount is the
higher of its fair value less costs to sell ("FVLCS") and its value in use.
The Group uses a range of methods for estimating FVLCS which include applying
a market multiple to the CGU EBITDA and, for leasehold sites, present value
techniques using a discounted cash flow method.
For the purposes of estimating the value in use of CGUs, management have used
a discounted cash flow approach. The calculations use cash flow projections
based on the following plans covering a four-year period.
The key assumptions used by management are:
• A long-term growth rate of 2.0% (1 April 2023: 2.0%) was
used for cash flows subsequent to the four-year approved budget/forecast
period.
• An EBITDA multiple is estimated based on a normalised
trading basis and market data obtained from external sources. This resulted in
an average multiple of 10.5x (freehold 11.8x) on the Managed estate and 10.9x
on the Tenanted estate.
• The discount rate is based on the Group's weighted average
cost of capital, which is used across all CGUs due to their similar
characteristics. The pre-tax discount rate is 10.5% (1 April 2023: 10.3%).
Impairments are recognised where the property valuation is also lower than the
CGU's carrying value for those determined to be at risk of impairment. This is
measured as the difference between the carrying value and the higher of FVLCS
and its value in use. Where the property valuation exceeds the carrying value,
no impairment is required.
8. Property, Plant and Equipment (continued)
The value in use calculations are sensitive to the assumptions used. The
Directors consider a movement of 1.5% in the discount rate and 0.5% in the
growth rate to be reasonable with reference to current market yield curves and
the current economic conditions. The additional impairment/(reversal) is set
out as follows:
£m
Increase discount rate by 1.5% 19.2
Decrease discount rate by 1.5% (15.9)
Increase growth rate by 0.5% (4.8)
Decrease growth rate by 0.5% 5.2
The additional CGUs that would need to be considered for impairment would have
their FVLCS determined in order to conclude on whether an impairment is
required. A general decrease in property values across the portfolio would
have a similar effect to that set out above i.e. any reduction in property
values would lead to assets being at risk of impairment. In the current year,
a decrease of 5% in the FVLCS would have led to an additional impairment of
£2.8 million for the CGUs where recoverable amount has been assessed on
FVLCS.
9. Assets held for sale
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended
30 September 24 September 1 April
2023 2022 2023
£m £m £m
Assets held for sale at the start of the period/year 7.0 5.4 5.4
Assets disposed of during the year - (1.0) (3.7)
Assets transferred from property, plant and equipment - 3.9 5.7
Impairment of assets - - (0.4)
Assets held for sale at the end of the period/year 7.0 8.3 7.0
10. Analysis of Net Debt
Unaudited - 26 weeks ended 30 September 2023 At Cash Non At
1 April
flows
cash(1)
30 September
2023
£m
£m
2023
£m
£m
Cash and cash equivalents:
Cash and short-term deposits 14.1 (3.9) - 10.2
14.1 (3.9) - 10.2
Financial liabilities
Lease liabilities (71.8) 4.5 (1.5) (68.8)
(71.8) 4.5 (1.5) (68.8)
Debt:
Bank loans(2) (119.4) 7.4 (0.1) (112.1)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (146.9) 7.4 (0.1) (139.6)
Net debt (204.6) 8.0 (1.6) (198.2)
As of 30 September 2023, the Group has agreed a one-year extension of its
£200m unsecured facility from 27 May 2026 to 27 May 2027.
At Cash Non At
26 March
flows
cash(1)
24 September
2022
£m
£m
2022
£m
£m
Unaudited - 26 weeks ended 24 September 2022
Cash and cash equivalents:
Cash and short-term deposits 15.6 4.8 - 20.4
15.6 4.8 - 20.4
Financial liabilities
Lease liabilities (80.7) 5.1 (2.0) (77.6)
(80.7) 5.1 (2.0) (77.6)
Debt:
Bank loans(2) (120.0) (1.5) (0.6) (122.1)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (147.5) (1.5) (0.6) (149.6)
Net debt (212.6) 8.4 (2.6) (206.8)
10. Analysis of Net Debt (continued)
Audited - 53 weeks ended 1 April 2023 At Cash Non At
26 March
flows
cash(1)
1 April
2022
£m
£m
2023
£m
£m
Cash and cash equivalents:
Cash and short-term deposits 15.6 (1.5) - 14.1
15.6 (1.5) - 14.1
Financial liabilities
Lease liabilities (80.7) 11.9 (3.0) (71.8)
(80.7) 11.9 (3.0) (71.8)
Debt:
Bank loans(2) (120.0) 1.5 (0.9) (119.4)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (147.5) 1.5 (0.9) (146.9)
Net debt (212.6) 11.9 (3.9) (204.6)
1 Non-cash movements relate to the amortisation of arrangement fees,
arrangement fees accrued and movement in lease liabilities.
2 Bank loans are net of arrangement fees and cashflows include the payment
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
30 September 24 September 1 April
2023 2022 2023
£m £m £m
Fair value of Scheme assets 103.8 114.2 113.4
Present value of Scheme liabilities (90.7) (93.8) (98.8)
Surplus in the Scheme 13.1 20.4 14.6
The net position of the defined benefit retirement plan for the 26 weeks ended
30 September 2023 shows a surplus of £13.1 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.
Included within the total present value of Group and Company Scheme
liabilities of
£90.7 million (24 September 2022: £93.8 million, 1 April 2023: £98.8
million) are liabilities of
£1.4 million (24 September 2022: £1.6 million, 1 April 2023: £1.5 million)
which are entirely
unfunded. These have been shown separately on the Balance Sheet as there is no
right to offset the
assets of the funded Scheme against the unfunded Scheme.
Key financial assumptions used in the valuation
of the Scheme
Rate of increase in pensions in payment 3.25% 3.65% 3.20%
Discount rate 5.60% 5.20% 4.75%
Inflation assumption - RPI 3.25% 3.70% 3.20%
Inflation assumption - CPI (pre 2030/post 2030) 2.35%/3.25% 2.8%/3.7% 2.3%/3.2%
Mortality Assumptions
The mortality assumptions used in the valuation of the Scheme as at 30
September 2023 are as set out in the financial statements for the 53 weeks
ended 1 April 2023.
Assets in the Scheme Unaudited Unaudited Audited
At At At
30 September 24 September 1 April
2023 2022 2023
£m £m £m
Corporate bonds 43.5 19.8 56.4
Index linked debt instruments 30.4 18.6 28.7
Overseas equities 6.9 31.1 6.6
Alternatives 19.7 41.6 19.0
Cash 1.1 0.6 0.3
Annuities 2.2 2.5 2.4
Total market value of assets 103.8 114.2 113.4
11. Retirement Benefit Obligations (continued)
Movement in surplus during period Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
ended ended ended
30 September 24 September 1 April
2023 2022 2023
£m £m £m
Surplus in Scheme at beginning of the period 14.6 14.3 14.3
Movement in period:
Net interest cost (note 3) 0.4 0.2 0.5
Net actuarial (losses)/gains (3.1) 4.8 (2.5)
Contributions 1.2 1.1 2.3
Surplus in Scheme at end of the period 13.1 20.4 14.6
On 1 January 2015 the plan was closed to future accruals.
12. 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 2023. The principal risks and uncertainties and their associated
mitigating and monitoring controls which may affect the Group's performance in
the next six months are not substantially different from those detailed on
pages 34 to 39 of the Annual Report and Financial Statements 2023, and are
available on the Fuller's website, www.fullers.co.uk.
The challenging economic environment within the UK and beyond continues to
impact many of our identified principal risks, including increased
inflationary pressure, supply chain uncertainty and changes to consumer
demand. The controls and mitigations we have in place to address our risks
remain effective in reducing the impact on the business. We are well placed
to withstand these pressures and ultimately withstand long periods of
uncertainty through the strength of our Balance Sheet. Our strong financial
position supports our long-term strategy that focuses on ensuring we develop
and retain the best people, build strong relationships with our suppliers and
deliver a premium experience with the agility to respond to both short and
long-term changes in consumer behaviour.
13. Shareholders' information
Shareholders holding 40p 'C' ordinary shares are reminded that they have 30
days from 15 November 2023 should they wish to convert those 'C' shares to 'A'
shares. The next available opportunity after that will be June 2024. For
further details, please contact the Company's registrars, Computershare, on
0870 889 4096.
14. 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
14 NOVEMBER 2023
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