REG - Fuller,Smith &Turner - Half Year Results
13/11/2024 07:00
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RNS Number : 9806L Fuller,Smith&Turner PLC 13 November 2024
13 NOVEMBER 2024
FULLER, SMITH & TURNER P.L.C.
("Fuller's", the "Company", or the "Group")
Financial results for the 26 weeks to 28 September 2024
Delivering our strategic objectives today to grow the business for tomorrow
Financial and Operational Highlights
Unaudited Unaudited Audited
26 weeks 26 weeks ended 52 weeks ended
ended 30 September 30 March
28 September
2024 2023 2024
£m £m £m
Revenue and other income 194.1 188.8 359.1
Adjusted EBITDA(1) 37.6 34.8 60.8
Adjusted profit before tax(2) 17.6 14.5 20.5
Statutory profit before tax 29.0 14.9 14.4
Basic earnings per share(3) 37.44p 17.65p 15.16p
Adjusted earnings per share(3) 21.81p 17.16p 24.48p
Dividend per share 7.41p 6.63p 17.75p
Net debt excluding lease liabilities(4) 128.2 129.4 133.1
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
· Like for like sales for our Managed Pubs & Hotels in H1 up 5.2%,
demonstrating continued market outperformance
· Adjusted profit before tax increased by 21% to £17.6 million (H1
2024: £14.5 million)
· Statutory profit before tax of £29.0 million (H1 2024: £14.9
million) - significant increase reflects book profit of £17.2 million arising
from the disposal of The Mad Hatter hotel
· Net debt of £128.2 million (H1 2024: £129.4 million) with cash
generated from the business, combined with strategic disposals, invested in
enhancing the existing estate, acquiring Lovely Pubs and financing shareholder
returns
· Interim dividend increased by 12% to 7.41p (H1 2024: 6.63p)
· Continued share buyback programme, with 1.2 million 'A' shares
repurchased in the period. When complete, later this financial year, the
buyback programme will have repurchased the 6.5 million 'A' shares that were
issued in 2021 as part of an equity placing.
Strategic Highlights
· An excellent first half of the year with growth in all areas
o Food like for like sales increased by 5.5%
o Drink like for like sales increased by 4.9%
o Accommodation like for like sales increased by 4.9%
· Invested £10.0 million across the estate, including a
transformational development at The Head of the River in Oxford
· Completed the sale of 37 non-core tenanted pubs to Admiral Taverns
for £18.3 million, resulting in a more profitable and sustainable tenanted
business with average EBITDA per site up 12%
· Completed the sale of The Mad Hatter for a total consideration of
£20 million
· Acquired Lovely Pubs - seven stunning pubs in affluent Warwickshire
villages for £22.5 million
· Continued significant investment in our bespoke leadership training
programme, Lead Your Way, for our General Managers and support centre
managers, with Head Chefs scheduled to start in the second half of the year
Current Trading
· Like for like sales for first 32 weeks of the year up 5.4%
· Exciting £20 million capex programme planned for H2
· Despite fresh challenges presented by the budget, we look forward to
the future with optimism
Chief Executive Simon Emeny said:
"We have had a great start to the year - delivering on all five pillars of our
strategy and ensuring that we succeed in our purpose, to create experiences
that nourish the soul. In our Managed Pubs and Hotels, we have delivered like
for like sales growth of 5.2% - ahead of the industry's CGA RSM Hospitality
Business Tracker on average by two percentage points - and our adjusted profit
before tax has risen by 21%.
"Our estate is in amazing shape. The sale of 37 non-core tenanted pubs to
Admiral Taverns for £18.3 million, followed by the acquisition of the Lovely
Pubs business on a multiple of 7.25x EBITDA for £22.5 million, gives us 185
outstanding Managed Pubs and Hotels and 153 excellent Tenanted Inns. Without a
shadow of doubt, our estate has never been in such good shape, and we continue
to invest to maintain our quality, with £10 million of capital expenditure in
the first half.
"We will be investing a further £20 million in our estate during the second
half, including substantial schemes at The Drayton Court in West Ealing, The
Chamberlain in the City and the Bel & The Dragon in Odiham. We also
continue to look at appropriate opportunities to drive our long-term strategy
of growing the estate.
"Following our strong first half results, we have continued to build on our
momentum with like for like sales for the 32 week period rising by 5.4%. This
sustained underlying performance, combined with the added benefit from our
Lovely Pubs acquisition and encouraging Christmas bookings up 15%, provides us
with confidence that we are on track to meet current market expectations for
the financial year.
"In summary, everything that is in our control is going well. We have an
outstanding, predominately freehold, well-invested estate, a driven and
motivated team - who are supported by continuous development - and a clear,
consistent strategy. We are in excellent shape, and despite the fresh
challenges presented by the Chancellor's recent budget, we remain positive and
optimistic about the future."
-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 2025
Trading update: 15 January 2025
Full year results announcement FY 2025: 11 June 2025
AGM: 22 July 2025
Half year results announcement FY 2026: 12 November 2025
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 185 managed businesses, with 1,025 boutique bedrooms, and 153 Tenanted
Inns. The Fuller's pub estate stretches from Brighton to Birmingham and from
Bristol to the Greenwich Peninsula. Our Managed Pubs and Hotels include
Cotswold Inns & Hotels - seven stunning hotels in the Cotswolds, Bel &
The Dragon - six exquisite modern English inns with boutique rooms located in
the Home Counties, and Lovely Pubs - seven beautiful village inns in
Warwickshire. 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 13 November 2024.
FULLER, SMITH & TURNER P.L.C.
FINANCIAL RESULTS FOR THE 26 WEEKS ENDED 28 SEPTEMBER 2024
CHAIRMAN'S STATEMENT
It has been a very successful first half to the new financial year. Simon
Emeny and the team have delivered great results and a fantastic new addition
to the Fuller's family, in the form of Lovely Pubs.
Our superb estate, with many iconic pubs in great locations, has always been
the centrepiece of Fuller's success. The recent changes we have made through
the sale of our non-core Tenanted pubs to Admiral Taverns and the acquisition
of Lovely Pubs - seven stunning sites that sit neatly within the geographic
boundaries of our estate - mean that our portfolio of pubs and hotels is the
best it has ever been.
But it is not the pubs that make Fuller's successful - that is thanks to our
amazing people. I take real pride in seeing the investments we make, at all
levels, to ensure we recruit, retain and develop them. They make the
difference to our customers and, therefore, to our results and I would like to
take this opportunity to personally thank them for their continued hard work
and dedication. They are a source of inspiration to us all.
In addition, I am delighted that we have continued with our share buyback
programme. It has been a great use of capital and once completed we will have
successfully repurchased the 6.5 million 'A' shares that were issued in 2021
as part of an equity placing. As at 28 September 2024, we had completed 66% of
the planned repurchases at an average price of £6.03, which represents a 27%
discount to the £8.30 price of the equity placing.
The Chancellor's recent budget gave me cause to reflect that, over the years,
we have seen our wonderful industry plundered for an ever-increasing amount of
tax - and once again, history has repeated itself. While other sectors replace
human interaction with automated systems, hospitality continues to provide an
introduction to the working environment not just for future publicans and
hoteliers - but also the business leaders and, indeed, politicians of
tomorrow.
The changes to Employers' National Insurance, coming on top of the cumulative
impact of other wage and business rate increases, will cause particular pain,
and has been brought about by the Chancellor's inadvisable promise not to
increase taxes on individuals. The Chancellor's actions are a direct attack on
those labour-intensive industries that are the lifeblood of our economy,
whilst leaving the large City institutions, that can afford to pay their
share, almost completely untouched. The unintended consequences of these
actions will be to drive inflation higher, put pressure on wages, and will
drive many businesses to the wall. I hope the Government will reflect on its
decisions and appreciate the incredible contribution hospitality, farming, and
small businesses make to so much more than just the Treasury coffers.
DIVIDEND
The Board is pleased to announce an interim dividend of 7.41p (H1 2024: 6.63p)
per 40p 'A' and 'C' ordinary share and 0.741p (H1 2024: 0.663p) per 4p 'B'
ordinary share. This will be paid on 2 January 2025 to shareholders on the
share register as at 13 December 2024.
Michael Turner
Chairman
12 November 2024
CHIEF EXECUTIVE'S REVIEW
OVERVIEW
We have had a great start to the year - delivering on all five pillars of our
strategy and ensuring that we succeed in our purpose, to create experiences
that nourish the soul. In our Managed Pubs and Hotels, we have delivered like
for like sales growth of 5.2% - ahead of the industry's CGA RSM Hospitality
Business Tracker on average by two percentage points - and our adjusted profit
before tax has risen by 21%.
Our estate is in amazing shape. The sale of 37 non-core tenanted pubs to
Admiral Taverns for £18.3 million, followed by the acquisition of the Lovely
Pubs business on a multiple of 7.25x EBITDA for £22.5 million, gives us 185
outstanding Managed Pubs and Hotels and 153 excellent Tenanted Inns. Without a
shadow of doubt, our estate has never been in such good shape, and we continue
to invest to maintain our quality, with £10 million of capital expenditure in
the first half. In addition, the sale of The Mad Hatter for a total
consideration of £20 million ensures that we still have a strong balance
sheet to allow us to take advantage of further organic and inorganic
opportunities, in line with our capital allocation framework.
TRADING UPDATE
Alongside this proactive portfolio management, our core estate has performed
well in the first six months with like for like increases in food, drink and
accommodation. Supported by excellent marketing and digital communications,
our offer is resonating well with our customers. The work undertaken to drill
down even further into the behaviours of our core customers and targeting the
right marketing to the right people at the right time, is delivering good
results.
We have always been a Company with a long-term vision and a robust and stable
strategy. We aim to achieve our goals by delighting our customers, inspiring
our people, enhancing our estate, evolving our business and owning our impact
- and we have made good progress across all these areas.
Delighting our Customers
While we have always focused on giving our customers great reasons to visit -
through delicious, locally-sourced, freshly cooked food on the menu, an
interesting range of drinks on the bar, and by hosting innovative events which
attract new and existing customers alike - we have made excellent progress in
honing and improving the way we communicate these.
This process starts by having a comprehensive and detailed knowledge of our
key customer groups. Across the business, we understand which customer
personas frequent which of our various styles of pub, and by using Wi-Fi,
social media and till data, combined with an understanding of our customers'
spending patterns and behaviours, we can deliver excellent and relevant
reasons to visit, tailored to our customers' preferences, which build loyalty
and maximise spend.
Through this process, we can help our pubs to create memorable, stylish and
relevant events and promote them through our customer database - optimising
this commercially significant channel. We have 1.7 million contactable
customers on the database and another 3.1 million who are socially available
and can be communicated with via Instagram, Facebook and LinkedIn.
Underpinning this, our digital infrastructure enables us to monitor customer
behaviour, and as we refine our understanding of what drives success, we will
continue to increase sales and attract similar customers. The final piece of
this jigsaw comes through delivering engaging content with beautiful and
captivating visuals through online advertising and social media posts, so we
can effectively target both existing customers and future lookalike audiences
with a similar guest profile.
Growing our Business
During the period, we have seen growth in all areas - food, drink and
accommodation. Food like for like sales have risen by 5.5% and drink by 4.9%.
Accommodation like for like revenue is up 4.9%, while RevPAR has risen by 6%
and our Average Room Rate has increased to £138 (H1 2024: £127).
We have seen a real emphasis on the finer details of our food offering to
ensure menus are developed with customer needs in mind. This, in turn, has
improved the marketability of our excellent dishes and our recently launched
Sunday Roast campaign - Sunday's Pride - in which we are returning this pub
classic to hero status, is a great example and plays to our strengths.
Looking at the way our customers spend, and the places in which they choose to
do so, has also opened new opportunities and encouraged us to push initiatives
we know our customers like - such as prix fixe menus across some of our rural
estate. It is early days, but we are excited by the opportunity to use this to
build lunch and early evening trade. Running a similar offer across a number
of sites also allows us to better leverage marketing opportunities such as
paid social media.
In the drinks arena, we have continued to build on our premium drinks range
and one of the outcomes of this is a continued growth in cocktail sales. Total
sales have risen in the period by 6.7% against prior year. Cocktails now
account for a third of our spirits sales and the value of our cocktail sales
has grown by 271% since pre-Covid. This illustrates the premium nature of our
customer base and our ability to deliver the quality drinks they seek.
We have accelerated sales through the use of Attensi, our online training
platform, to ensure our teams are constantly up to date with the latest
perfect serves and are regularly reminded of some of the fundamentals. During
the period, we launched a new cask ale campaign - building sales in an area
where the authenticity of our heritage plays to our advantage. We have
supported this with a consumer campaign (#OnlyInThePub) targeting a younger
demographic, featuring beautiful imagery and targeted online ads, reinforced
with information and training. It is supporting cask ale sales and, in those
sites where the majority of team members have completed the online training,
sales are a further 5% ahead.
Accommodation continues to perform well, and we have invested in sites like
The Head of the River in Oxford to build on the continued increase in
international tourism. Our work to drive direct bookings continues to be
successful and the return of large events such as Taylor Swift at Wembley have
helped to drive sales too. We expect the Oasis and Coldplay concerts next year
to do the same. We will also be investing in a number of our hotel sites in
the second half of the financial year to ensure we continue to advance the
quality of our accommodation offer.
Inspiring our People
We have undertaken one of the biggest leadership training programmes in our
history over the last 12 months with our Lead Your Way programme. The
investment in this industry-leading programme is substantial - with the course
running over a six-month period. All of our General Managers have either
started or completed the course. We are now rolling it out to our support
centre managers at Pier House and, in the second half of the year, our Head
Chefs will also be joining the programme.
We are investing further in our development kitchen site at Reading, creating
the Fuller's Kitchen Academy - a focal point for training and development that
will inspire our people, enhance recruitment and retention and drive ever
higher levels of creativity and service.
We are already seeing great results from the investments we make in our people
- in their development, their welfare and the package and benefits we offer -
as our labour turnover has reduced by a third over the last two years.
Enhancing our Estate
Our estate has never been in better shape thanks to the actions we have taken
over the last two years. The transfer of 23 managed pubs to our Tenanted Inns
division, followed by the sale of 37 tenanted pubs to Admiral Taverns has left
us with a first-class tenanted estate and the addition of the beautiful Lovely
Pubs estate to our Managed Pubs and Hotels division, has enhanced this part of
our business.
The Lovely Pubs estate consists of seven outstanding pubs, of which six are
freehold, set in beautiful, affluent Warwickshire villages. They fit perfectly
with Fuller's - having an offer that is set around outstanding customer
service, delicious freshly-cooked food and a premium drinks range, and one,
The Baraset Barn in Alveston, has 16 bedrooms. The pubs will be earnings
enhancing in their first year of acquisition and we are both delighted and
excited to welcome the business to the Fuller's family.
We have continued to invest in our core estate too, with £8.5 million
invested across our Managed Pubs and Hotels including two major schemes at The
Carpenters Arms in Sunninghill and The Head of the River in Oxford, where we
transformed the hotel rooms and the adjoining pub with its large riverside
garden.
We have always invested ahead of the curve - renovating our properties to
ensure we stay at the top of our game. The Head of the River was refurbished
at the start of the new financial year, ensuring it was ready for the arrival
of the summer tourist trade and in a position to command a substantially
higher room rate. The Carpenters Arms is a pub we acquired in March 2022 in
the affluent suburb of Sunninghill near Ascot. It is well-known locally for
its French restaurant - as well as having a traditional pub that shows a wide
range of live sport. We have invested in both of these discrete parts of the
pub, as well as in the lovely garden, and added touches that help to define
the different areas to improve the overall customer experience.
We have an exciting programme of investments to come - and expect to spend
circa £18 million on our Managed Pubs and Hotels in the second half. These
include large schemes at The Chamberlain Hotel in the City of London, and the
Bel & The Dragon in Odiham. We will also be carrying out a substantial
investment at The Drayton Court in West Ealing, where we are already on site,
and which benefits from being next to the newly opened Elizabeth Line station
with its excellent access to Central London and Heathrow.
Life is too good to waste
We are making good progress on the journey to our Net Zero target for Scope 1
& 2 emissions by 2030 and Scope 3 emissions by 2040. We have also
successfully reduced our overall energy consumption during the period, with
gas usage down 1.2% and electricity usage down 1.5%.
Following a successful trial of Grassroots beef - from cows that are farmed
using a farming process that is kinder to the environment - we are now rolling
it out across our Cotswolds Inns & Hotels and into a small number of
Fuller's pubs. Grassroots uses 52% less carbon than traditional beef farming
methods, the quality of the meat is exceptional, and we expect to roll this
out further over time.
We have also continued to roll out our programme of electrifying our kitchens,
and we have our first fully-electric hotel, The Head of the River in Oxford.
We have also installed our first two rapid EV charging points, at The
Hampshire Hog in Clanfield. We already have EV charging points at a number of
sites, but these rapid chargers can recharge a standard car in less than an
hour. We hope this will encourage customers to pop in for a coffee or a
sandwich - recharging the soul at the same time as the car!
Our annual inclusive football match, which we hold with our main charity
partner Special Olympics GB, raised £21,000 and we have matched fund raising
activities from a larger number of team members than ever before.
Finally, we have rolled out our new "Call Time on It" initiative - aimed at
ensuring all our team members feel safe, cared for, and respected. "Call Time
on It" ensures that we all know what is and isn't acceptable, in terms of
language and behaviour, and are there to speak up when things aren't quite
right. Whatever form it takes, if it makes someone feel uncomfortable - we are
determined to call time on it.
TENANTED INNS
Our Tenanted Inns have had a good start to the year with revenues up 7% and
operating profit increasing to £7.5 million (H1 2024: £6.9 million). Some of
this growth has arisen from our proactive asset management described earlier,
which has resulted in a further strengthening of the quality of the tenanted
estate. Average EBITDA per Tenanted pub has increased by 12% year on year, and
we are excited about the future for this part of the business.
We recruit entrepreneurial Tenants and are currently at 96% occupancy. We have
good relationships with our Tenants and will be rolling out a new online
support hub in the second half. This will serve as a centralised resource for
Tenants with helpful information on a whole range of topics including
compliance, risk assessments, marketing support, training and wellbeing. It
will bring everything, including ordering, together in one place, making life
easier for our busy Tenants. We will also be rolling out new websites across
the Tenanted Inns estate.
A good relationship is crucial to the success of both parties - and we further
encourage, support and develop this through tools such as our Community
Support Initiative. This half alone we have supported 36 community events in
the Tenanted Inns estate. We also continue to invest capital alongside our
Tenants with £1.5 million invested in the first half and a similar amount
earmarked for the second half.
FINANCIAL REVIEW
We are pleased to have delivered another strong set of financial results,
reflecting six months of significant progress, with adjusted profit before tax
growing by 21% to £17.6 million (H1 2024: £14.5 million).
As well as growing profits, we have delivered on our capital allocation
framework through investment in the estate, returns to shareholders and
enhancing the estate through acquisitions while reducing net debt and
leverage. In the first half, we paid a dividend of £6.5 million to
shareholders and £8.4 million was used for share buybacks as part of our
ongoing share buyback programme. This amounts to a total return to
shareholders of £14.9 million in the period, an increase of 55% on the prior
period.
We have had a busy first half enhancing the estate. We have invested a total
of £10 million in our existing properties, including 20 significant projects
with a further £20 million of investment planned in the second half of the
year. We also completed the sale of The Mad Hatter, Southwark for £20 million
(£17 million received in the period with a further £3 million to come in due
course), and we sold 37 non-core pubs to Admiral Taverns for £18.3 million.
These proceeds have been reinvested in acquiring the high quality, largely
freehold, Lovely Pubs business for an enterprise value of £22.5 million. This
proactive portfolio management, coupled with the 23 pubs transferred from
Managed to Tenanted in the prior year, leaves us with a great pub and hotel
estate which is in a strong financial position and yielding improving returns.
Managed Pubs and Hotels like for like sales increased by 5.2% on the prior
period, outperforming the market. Total revenue in the Managed Pubs and Hotels
division increased by 2.4% on the prior period. This headline growth is
affected by the transfer of 23 pubs from Managed to Tenanted over the course
of the last financial year. Excluding these transfers, total managed revenue
increased by 6.0%. All categories of revenue showed significant like for like
growth against the prior period, with food sales up by 5.5%, drink sales up by
4.9% and accommodation sales up by 4.9%.
As well as growing revenue, profitability within our managed business also
improved with operating margins growing from 14.7% to 15.7%. This was in part
helped by the continued reduction in utility costs through lower energy
consumption and unit rate reductions, but much of the decrease was delivered
through continued focus on cost management. In particular, food margins
significantly improved through cost deflation and enhanced menu development.
This resulted in an increase in adjusted operating profit of £2.3 million
from £25.4 million to £27.7 million.
Tenanted Inns revenue improved by 7% from £16.3 million to £17.5 million and
operating profit increased by 9% from £6.9 million to £7.5 million. As a
result of enhanced underlying trading and the active estate management in the
current and prior year, we have seen a 12% increase in the average EBITDA per
tenanted pub.
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.
These facilities are committed through to May 2027. The Group also has £20
million of debentures which are due for repayment in 2028. The Group's undrawn
committed facilities at 28 September 2024 were £81.3 million, with a further
£11.0 million of cash held on the Balance Sheet. Net debt (excluding leases)
was at £128.2 million (H1 2024: £129.4 million) which was down £4.9 million
from the net debt position at year end (FY2024: £133.1 million). At 28
September 2024, the Group's ratio of net debt to EBITDA was 2.3 times (H1
2024: 2.6 times). With significant headroom on facilities and covenants, we
have the scope to seek further opportunities, in line with our capital
allocation policy, when they arise.
Adjusted finance costs decreased to £6.6 million (H1 2024: £6.9 million)
despite the average cost of borrowing remaining high at 7.6% due to the Bank
of England base rates. The reduction from the prior year was partly due to the
repayment of the £6 million debenture in December 2023, which accrued
interest at 10.7%, and was aided by effective cash management, which delivered
lower average debt than in the previous period. The Group has a zero-premium
interest 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 gave some protection while the Bank of England
interest rate was at 525bps.
Separately disclosed items before tax was a credit of £11.4 million (H1 2024:
£0.4 million credit), which principally consists of the profit on disposal of
The Mad Hatter of £17.2 million, net of an impairment charge of £6.4
million, of which £5.4 million is in relation to the write down of 12
properties and a further £1.0 million on the write down of goodwill.
Tax has been provided at an effective rate before separately disclosed items
of 27.8% (H1 2024: 28.3%). The decrease in effective tax rate is mainly due to
the increased profit before tax and credit for future tax relief on employee
share acquisition. Disclosure on tax is set out in note 5.
The net impact of these items has resulted in basic earnings per share
increasing by 19.79p to 37.44p (H1 2024: 17.65p) and adjusted earnings per
share increasing by 4.65p to 21.81p (H1 2024: 17.16p).
The growth in earnings per share has enabled the Group to declare an interim
dividend of 7.41p (H1 2024: 6.63p), which is an increase of 12% on last year.
This level of dividend growth is in line with our desire to follow a
progressive pathway to a normalised dividend cover in excess of 2.5 times. In
addition to the dividend, the Group continues to buy back shares as part of a
6.5 million share buyback programme with 1.2 million shares repurchased in the
period. As at 28 September 2024, the Group had bought back a total of 4.3
million shares at an average price of £6.03 since September 2022.
The surplus on the defined benefit pension schemes has increased by £3.0
million from the year end and is now showing an accounting surplus of £20.3
million (30 March 2024: surplus £17.3 million, 30 September 2023: surplus
£13.1 million). This is predominately due to an increase in discount rate
from 4.85% to 5.10%, resulting in a decrease in the present value of the
scheme liabilities. As the Group has an unconditional right to refund under
the pension trust deed, an asset has been recognised at 28 September 2024.
CURRENT TRADING AND OUTLOOK
Following our strong first half results, we have continued to build on our
momentum with like for like sales for the 32 week period rising by 5.4%. This
sustained underlying performance, combined with the added benefit from our
Lovely Pubs acquisition and encouraging Christmas bookings up 15%, provides us
with confidence that we are on track to meet current market expectations for
the financial year.
We will be investing a further £20 million in our estate during the second
half, including substantial schemes at The Drayton Court in West Ealing, The
Chamberlain in the City and at the Bel & The Dragon in Odiham. We also
continue to look at appropriate opportunities to drive our long-term strategy
of growing the estate.
In summary, everything that is in our control is going well. We have an
outstanding, predominately freehold, well-invested estate, a driven and
motivated team - who are supported by continuous development - and a clear,
consistent strategy. We are in excellent shape, and despite the fresh
challenges presented by the Chancellor's recent budget, we remain positive and
optimistic about the future.
Simon Emeny
Chief Executive
12 November 2024
Condensed Group Income Statement
For the 28 weeks ended 28 September 2024
Unaudited - 26 weeks ended Unaudited - 26 weeks ended Audited - 52 weeks ended
28 September 2024 30 September 2023 30 March 2024
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 2 194.1 - 194.1 188.8 - 188.8 359.1 - 359.1
Operating costs 3 (169.9) (7.8) (177.7) (167.4) - (167.4) (324.6) (6.8) (331.4)
Operating profit 24.2 (7.8) 16.4 21.4 - 21.4 34.5 (6.8) 27.7
Profit on disposal of properties 3 - 18.8 18.8 - - - - - -
Finance costs 4 (6.6) 0.4 (6.2) (6.9) 0.4 (6.5) (14.0) 0.7 (13.3)
Profit before tax 17.6 11.4 29.0 14.5 0.4 14.9 20.5 (6.1) 14.4
Tax 5 (4.9) (2.3) (7.2) (4.1) (0.1) (4.2) (5.8) 0.5 (5.3)
Profit for the period/year 12.7 9.1 21.8 10.4 0.3 10.7 14.7 (5.6) 9.1
Condensed Group Income Statement (continued)
For the 26 weeks ended 28 September 2024
Unaudited - 26 weeks ended Unaudited - 26 weeks ended Audited - 52 weeks ended
28 September 2024 30 September 2023 30 March 2024
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 21.81 37.44 17.16 17.65 24.48 15.16
Diluted 6 21.54 36.98 17.14 17.63 24.29 15.04
Earnings per share per 4p 'B' ordinary share
Basic 6 2.18 3.74 1.72 1.77 2.45 1.52
Diluted 6 2.15 3.70 1.71 1.76 2.43 1.50
Condensed Group Statement of Comprehensive Income
For the 26 weeks ended 28 September 2024
Unaudited
26 weeks ended Unaudited
28 September 2024 26 weeks ended Audited
£m 30 September 2023 52 weeks ended
£m 30 March 2024
£m
Note
Profit for the period/year 21.8 10.7 9.1
Items that may be reclassified to profit or loss
Net (loss)/gains on valuation of financial assets and liabilities (0.1) 0.4 -
Tax related to items that may be reclassified to profit or loss 5 - (0.1) -
Items that will not be reclassified to profit or loss
Net actuarial gains/(losses) on pension schemes 11 1.4 (3.1) (0.3)
Tax related to items that will not be reclassified to profit or loss 5 (0.3) 0.8 0.1
Other comprehensive income/(expense) for the period/year, net of tax 1.0 (2.0) (0.2)
Total comprehensive income for the period/year, net of tax 22.8 8.7 8.9
Condensed Group Balance Sheet
28 September 2024
Note Unaudited Unaudited
At At
28 September 2024 30 September 2023 Audited
£m £m At
30 March
2024
£m
Non-current assets
Intangible assets 27.3 28.7 28.6
Property, plant and equipment 8 580.3 580.5 581.9
Investment properties 1.3 1.5 1.5
Other financial assets - 0.5 0.1
Right-of-use assets 56.8 62.8 58.7
Retirement benefit obligations 11 21.6 14.5 18.7
Total non-current assets 687.3 688.5 689.5
Current assets
Inventories 4.1 4.0 4.0
Trade and other receivables 11.4 10.3 8.4
Current tax receivable 0.1 - 0.1
Cash and short-term deposits 10 11.0 10.2 12.2
Total current assets 26.6 24.5 24.7
Assets classified as held for sale 9 5.9 7.0 8.4
Total assets 719.8 720.0 722.6
Current liabilities
Trade and other payables (49.1) (49.3) (59.7)
Current tax payable - (0.5) -
Provisions (0.8) (0.5) (0.8)
Borrowings 10 - (6.0) -
Lease liabilities 10 (5.6) (4.8) (4.4)
Total current liabilities (55.5) (61.1) (64.9)
Non-current liabilities
Borrowings 10 (139.2) (133.6) (145.3)
Lease liabilities 10 (58.8) (64.0) (61.5)
Retirement benefit obligations 11 (1.3) (1.4) (1.4)
Deferred tax liabilities (24.8) (17.1) (18.2)
Total non-current liabilities (224.1) (216.1) (226.4)
Net assets 440.2 442.8 431.3
Condensed Group Balance Sheet (continued)
28 September 2024
Unaudited Unaudited
At At
28 September 2024 30 September 2023 Audited
£m £m At
30 March
2024
£m
Capital and reserves
Share capital 24.8 25.4 25.4
Share premium account 53.2 53.2 53.2
Capital redemption reserve 4.3 3.7 3.7
Own shares (31.0) (24.8) (32.9)
Hedging reserve (0.1) 0.3 -
Retained earnings 389.0 385.0 381.9
Total equity 440.2 442.8 431.3
Condensed Group Statement of Changes in Equity
For the 26 weeks ended 28 September 2024
Unaudited - 26 weeks ended 28 September 2024 Share Share Capital Own Hedging Retained Total
capital
premium
redemption
shares
reserve
earnings
£m
£m
account
reserve
£m
£m
£m
£m
£m
At 30 March 2024 25.4 53.2 3.7 (32.9) - 381.9 431.3
Profit for the period - - - - - 21.8 21.8
Other comprehensive (expense)/income for the period - - - - (0.1) 1.1 1.0
Total comprehensive (expense)/income for the period - - - - (0.1) 22.9 22.8
Dividends (note 7) - - - - - (6.5) (6.5)
Shares purchased to be held in ESOT or as treasury - - - (8.4) - - (8.4)
Shares released from ESOT and treasury - - - 0.1 - - 0.1
Share-based payment credits - - - - - 0.7 0.7
Tax credited directly to equity - - - - - 0.2 0.2
Cancellation of treasury shares (0.6) - 0.6 10.2 - (10.2) -
At 28 September 2024 24.8 53.2 4.3 (31.0) (0.1) 389.0 440.2
Unaudited - 26 weeks ended 30 September 2023
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 income/(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 credits - - - - - 1.1 1.1
At 30 September 2023 25.4 53.2 3.7 (24.8) 0.3 385.0 442.8
Condensed Group Statement of Changes in Equity
For the 26 weeks ended 28 September 2024
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 30 March 2024
At 1 April 2023 25.4 53.2 3.7 (21.3) - 381.6 442.6
Profit for the year - - - - - 9.1 9.1
Other comprehensive expense for the year - - - - - (0.2) (0.2)
Total comprehensive income for the period - - - - - 8.9 8.9
Shares purchased to be held in ESOT or as treasury - - - (12.4) - - (12.4)
Shares released from ESOT and treasury - - - 0.8 - (0.3) 0.5
Dividends (note 7) - - - - - (10.0) (10.0)
Share-based payment credits - - - - - 1.7 1.7
At 30 March 2024 25.4 53.2 3.7 (32.9) - 381.9 431.3
Condensed Group Cash Flow Statement
For the 26 weeks ended 28 September 2024
Note Unaudited Unaudited
26 weeks ended 26 weeks ended
28 September 2024 30 September 2023 Audited
£m £m 52 weeks ended
30 March
2024
£m
Profit before tax 29.0 14.9 14.4
Net finance costs before separately disclosed items 4 6.6 6.9 14.0
Separately disclosed items 3 (11.4) (0.4) 6.1
Depreciation and amortisation 2 13.4 13.4 26.3
37.6 34.8 60.8
Difference between pension charge and cash paid (1.4) (1.2) (2.6)
Share-based payment charges 0.7 1.1 1.7
Change in trade and other receivables (1.1) (1.0) 0.6
Change in inventories - 0.2 0.2
Change in trade and other payables (9.7) (3.4) 6.9
Cash impact of operating separately disclosed items 3 (0.7) 1.2 1.7
Cash generated from operations 25.4 31.7 69.3
Tax paid (1.4) - (1.0)
Cash generated from operating activities 24.0 31.7 68.3
Cash flow from investing activities
Purchase of property, plant and equipment (31.1) (9.0) (27.2)
Sale of property, plant and equipment and assets held for sale 36.4 0.1 -
Net cash inflow/(outflow) from investing activities 5.3 (8.9) (27.2)
Cash flow from financing activities
Purchase of own shares (8.4) (3.5) (12.4)
Receipts on release of own shares to option schemes 0.1 - 0.5
Interest paid (5.0) (5.1) (10.4)
Preference dividends paid (0.1) (0.1) (0.1)
Equity dividends (6.5) (6.1) (10.0)
paid
(Repayment)/drawdown of bank loans (6.3) (7.0) 4.5
Payment of loan arrangement fees - (0.4) (0.4)
Repayment of debenture - - (6.0)
Principal elements of lease payments 10 (4.3) (4.5) (8.7)
Net cash outflow from financing activities (30.5) (26.7) (43.0)
Net movement in cash and cash equivalents 10 (1.2) (3.9) (1.9)
Cash and cash equivalents at the start of the period 12.2 14.1 14.1
Cash and cash equivalents at the end of the period/year 10 11.0 10.2 12.2
Notes to the Condensed Financial Statements
For the 26 weeks ended 28 September 2024
1. Half Year Report
Basis of Preparation
The half year financial statements for the 26 weeks ended 28 September 2024
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 30 March 2024.
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
30 March 2024 are derived from the published statutory accounts. Full accounts
for the 52 weeks ended 30 March 2024, 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 and uncertainties as previously
disclosed in the Group's latest Annual Report. 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 pattern of
trading in the first half of the financial year, the possibility of further
trading disruptions caused by the tube strikes and the impact of rising staff
costs. 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 2025 (the 'going concern period').
As at 28 September 2024, the Group Balance Sheet comprises pubs and hotels of
which 87% are freehold properties and has available headroom on facilities of
£81.3 million in addition to £11.0 million of cash and resulting net debt of
£128.2 million (excluding leases). 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) consist of net debt to adjusted EBITDA (leverage) and
adjusted EBITDA to net finance charges.
The Group has modelled financial projections for the going concern period,
which is defined as the 12-month period from the date of approval of these
financial statements to 22 November 2025, based upon two scenarios, the 'base
case' and the 'downside case'. The base case is the Board approved FY2025
forecast as well as the first eight months of the FY2026 plan which forms part
of the Board approved three-year plan. The base case assumes that sales will
continue to grow, but with modest food and drink volume growth. The base case
also assumes that food and drink inflationary pressures continue to ease and
inflation returns to normalised levels. However, the base case assumes that
staff costs will be impacted by National Living Wage increases as presented in
the Chancellor's Budget, resulting in continued wage inflation across all job
roles. The base case scenario indicates that the Group will have sufficient
resources to continue to settle its debts as they fall due and operate well
within its covenants for the going concern assessment period.
The Group has also modelled a 'downside case' which assumes that food and
drink volume reduces sales revenue by 10% in FY2025 and 5% in FY2026 from the
'base case', staff cost inflation will rise higher than forecasted in the
'base case' and the Group will be impacted by additional tube and train
strikes during our busy Christmas trading period. In this 'downside case',
management would implement mitigating actions such as a reduction of capital
expenditure and other property spend to essential maintenance and a decrease
in bonus pay out. Under this scenario, the Group would still have sufficient
resources to settle liabilities as they fall due and headroom on its covenants
through the duration of the period.
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 considered
implausible.
Under both the base and downside scenarios modelled, the Group would have
sufficient headroom on its facilities throughout the going concern assessment
period. Additionally, under the downside scenario there are further mitigating
actions which the Group has in its control to either improve EBITDA or reduce
net debt, such as further reduction in capital investment and bonuses, and the
disposal of licensed and unlicensed properties.
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 2025 and have therefore adopted the going
concern basis in the preparation of these financial statements.
The half year financial statements were approved by the Directors on 12
November 2024.
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 30
March 2024. 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
28 September 2024
and Hotels Inns £m £m
£m £m
Revenue
Sales of goods and services 155.0 12.7 - 167.7
Accommodation income 20.9 - - 20.9
Total revenue from contracts with customers 175.9 12.7 - 188.6
Rental income 0.7 4.8 - 5.5
Revenue 176.6 17.5 - 194.1
Segment result 27.7 7.5 (11.0) 24.2
Operating separately disclosed items (7.8)
Operating profit 16.4
Profit on disposal of properties 18.8
Net finance costs (6.2)
Profit before tax 29.0
Other segment information
Additions: property, plant and equipment 30.3 1.5 0.1 31.9
Depreciation and amortisation 11.4 1.6 0.4 13.4
Impairment of property and intangible assets 6.4 - - 6.4
Adjusted EBITDA 39.1 9.1 (10.6) 37.6
Unaudited - 26 weeks ended Tenanted Unallocated(1) Total
30 September 2023
Managed Pubs Inns £m £m
and Hotels £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
Profit on disposal of properties -
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 1.3 0.2 - 1.5
Adjusted EBITDA 37.1 8.3 (10.6) 34.8
Audited - 52 weeks ended Managed Pubs Tenanted Unallocated(1) Total
30 March 2024
and Hotels Inns £m £m
£m £m
Revenue
Sale of goods and services 288.1 24.1 - 312.2
Accommodation income 35.5 - - 35.5
Total revenue from contracts with customers 323.6 24.1 - 347.7
Rental income 1.7 9.7 - 11.4
Revenue 325.3 33.8 - 359.1
Segment result 41.6 13.7 (20.8) 34.5
Operating separately disclosed items (6.8)
Operating Profit 27.7
Profit on disposal of properties -
Net finance costs (13.3)
Profit before tax 14.4
Other segment information
Additions: property, plant and equipment 23.0 3.9 0.1 27.0
Depreciation and 22.4 3.0 0.9 26.3
amortisation
Impairment of property, right-of-use assets net of reversal of impairments 5.1 3.2 - 8.3
Adjusted EBITDA 64.0 16.7 (19.9) 60.8
1 Unallocated expenses represent primarily the salary and costs of central
management and support services. Unallocated capital expenditure relates to
additions to the support centre and central systems.
3. Separately Disclosed Items
Unaudited Unaudited
26 weeks ended 26 weeks ended Audited
28 September 2024 30 September 2023 52 weeks ended
£m £m 30 March
2024
£m
Amounts included in operating profit:
Impairment of properties, right-of-use assets and intangible assets net of (6.4) (1.5) (8.3)
reversals of impairment
Insurance and legal claims (0.7) 0.4 0.4
VAT provision release - 1.1 1.1
Acquisition costs (0.7) - -
Total separately disclosed items included in operating profit (7.8) - (6.8)
Profit on disposal of properties 18.8 - -
Separately disclosed finance costs:
Finance credit on net pension surplus (note 11) 0.4 0.4 0.7
Total separately disclosed finance credits 0.4 0.4 0.7
Total separately disclosed items before tax 11.4 0.4 (6.1)
Separately disclosed tax:
Profit on disposal of properties (2.7) - -
Other items 0.4 (0.1) 0.5
Total separately disclosed tax (2.3) (0.1) 0.5
Total separately disclosed items 9.1 0.3 (5.6)
The impairment charge of £6.4 million (30 September 2023: £1.5 million, 30
March 2024: £8.3 million) relates to the write down to their recoverable
value of nine properties (£3.9 million), three assets held for sale
properties (£1.5 million) and the write down of goodwill (£1.0 million).
The insurance and legal claims of £0.7 million relates to the settlement of a
legal dispute.
The acquisition costs of £0.7 million are professional fees incurred as part
of the acquisition of Lovely Pubs, refer to Note 8 for further detail.
The cash impact of operating separately disclosed items before tax for the 26
weeks ended 28 September 2024 was £0.7 million cash outflow (28 September
2023: £1.2 million cash inflow, 30 March 2024: £1.7 million cash inflow).
4. Finance Costs
Unaudited Unaudited
26 weeks ended 26 weeks ended Audited
28 September 2024 30 September 2023 52 weeks ended
£m £m 30 March
2024
£m
Finance costs
Interest income from financial assets 0.2 0.1 0.3
Interest expense arising on:
Financial liabilities at amortised cost - loans and debentures (5.2) (5.5) (11.1)
Financial liabilities at amortised cost - preference shares (0.1) (0.1) (0.1)
Financial liabilities at amortised cost - lease liabilities (1.5) (1.4) (3.1)
Net finance costs before separately disclosed items (6.6) (6.9) (14.0)
Finance credit on net pension liabilities (note 11) 0.4 0.4 0.7
Net finance costs (6.2) (6.5) (13.3)
5. Taxation
Unaudited Unaudited
26 weeks ended 26 weeks ended
28 September 2024 30 September 2023 Audited
£m £m 52 weeks ended
30 March
2024
£m
Tax on profit on ordinary activities
Current income tax:
Current tax on profit for the period/year 1.0 1.2 1.7
Total current income tax 1.0 1.2 1.7
Deferred tax:
Origination and reversal of temporary differences 6.4 3.1 4.0
Amounts over provided in previous years (0.2) (0.1) (0.4)
Total deferred tax 6.2 3.0 3.6
Total tax charged in the Income Statement 7.2 4.2 5.3
Analysed as:
Before separately disclosed items 4.9 4.1 5.8
Separately disclosed items 2.3 0.1 (0.5)
Total tax charged in the Income Statement 7.2 4.2 5.3
Tax relating to items charged/(credited) to the Statement of Comprehensive
Income
Deferred tax:
Valuation gains on financial assets and liabilities - 0.1 -
Net actuarial gains/(losses) on pension scheme 0.3 (0.8) (0.1)
Tax charge/(credit) included in the Statement of Comprehensive Income 0.3 (0.7) (0.1)
Tax relating to items credited directly to equity
Deferred tax:
Share-based payments (0.2) - -
Tax credit included in the Statement of Changes in Equity (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 52 weeks ended
28 September 2024 30 September 2023 30 March
£m £m 2024
£m
Profit attributable to equity shareholders 21.8 10.7 9.1
Separately disclosed items net of tax (9.1) (0.3) 5.6
Adjusted earnings attributable to equity shareholders 12.7 10.4 14.7
Number Number Number
Weighted average share capital 58,229,000 60,610,000 60,043,000
Dilutive outstanding options and share awards 720,000 70,000 482,000
Diluted weighted average share capital 58,949,000 60,680,000 60,525,000
40p 'A' and 'C' ordinary share Pence Pence Pence
Basic earnings per share 37.44 17.65 15.16
Diluted earnings per share 36.98 17.63 15.04
Adjusted earnings per share 21.81 17.16 24.48
Diluted adjusted earnings per share 21.54 17.14 24.29
4p 'B' ordinary share Pence Pence Pence
Basic earnings per share 3.74 1.77 1.52
Diluted earnings per share 3.70 1.76 1.50
Adjusted earnings per share 2.18 1.72 2.45
Diluted adjusted earnings per share 2.15 1.71 2.43
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 4,850,874
(30 September 2023: 2,843,217, 30 March 2024: 3,410,735).
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 52 weeks
ended ended ended
28 September 30 September 30 March
2024 2023 2024
£m £m £m
Declared and paid during the period
Interim paid in the period for 2024 - - 3.9
Final dividend paid in the period for 2023 - 6.1 6.1
Final dividend paid in the period for 2024 6.5 - -
Equity dividends paid 6.5 6.1 10.0
Dividends on cumulative preference shares (note 4) 0.1 0.1 0.1
Pence Pence Pence
Dividends per 40p 'A' and 'C' ordinary share
declared in respect of the period
Interim 7.41 6.63 6.63
Final - - 11.12
7.41 6.63 17.75
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 7.41p (HY2024: 6.63p) and 0.741p
(HY2024: 0.663p) for the 4p 'B' ordinary shares.
8. Property, Plant and Equipment
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
28 September 30 September 30 March
2024 2023 2024
£m £m £m
Net book value at start of period/year 581.9 583.3 583.3
Additions 31.9 8.2 27.0
Disposals (16.7) (0.2) (0.3)
Impairment loss net of reversals (3.9) (1.1) (7.0)
Transfers to assets classified as held for sale (2.7) - (1.4)
Depreciation provided during the period (10.2) (9.7) (19.7)
Net book value at end of period/year 580.3 580.5 581.9
During the 26 weeks ended 28 September 2024, the Group recognised a charge of
£3.9 million (30 September 2023: £1.1 million, 30 March 2024: £7.0 million)
in respect of the write down in value of its properties to their recoverable
value.
Included in additions is £22.9 million in relation to the acquisition of
Lovely Pubs, consisting of six freehold and one leasehold property. The
acquisition has been accounted for as an asset acquisition using the optional
concentration test under IFRS 3 in which substantially all the fair value of
the gross assets acquired is concentrated in a group of similar identifiable
assets.
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% (30 March 2024: 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) for 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 10.7% (30 March 2024: 10.7%).
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.
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 52 weeks ended
28 September 30 September 30 March
2024 2023 2024
£m £m £m
Assets held for sale at the start of the period/year 8.4 7.0 7.0
Assets disposed of during the period/year (3.7) - -
Assets transferred from property, plant and equipment 2.7 - 1.4
Impairment of assets (1.5) - -
Assets held for sale at the end of the period/year 5.9 7.0 8.4
10. Analysis of Net Debt
Unaudited - 26 weeks ended 28 September 2024 At Cash Non At
30 March
flows
cash(1)
28 September
2024
£m
£m
2024
£m
£m
Cash and cash equivalents:
Cash and short-term deposits 12.2 (1.2) - 11.0
12.2 (1.2) - 11.0
Financial liabilities
Lease liabilities (65.9) 4.3 (2.8) (64.4)
(65.9) 4.3 (2.8) (64.4)
Debt:
Bank loans(2) (123.8) 6.3 (0.2) (117.7)
Debenture stock (19.9) - - (19.9)
Preference shares (1.6) - - (1.6)
Total borrowings (145.3) 6.3 (0.2) (139.2)
Net debt (199.0) 9.4 (3.0) (192.6)
At Cash Non At
1 April
flows
cash(1)
30 September
2023
£m
£m
2023
£m
£m
Unaudited - 26 weeks ended 30 September 2023
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)
Audited - 52 weeks ended 30 March 2024 At Cash Non At
1 April
flows
cash(1)
30 March
2023
£m
£m
2024
£m
£m
Cash and cash equivalents:
Cash and short-term deposits 14.1 (1.9) - 12.2
14.1 (1.9) - 12.2
Financial liabilities
Lease liabilities (71.8) 8.7 (2.8) (65.9)
(71.8) 8.7 (2.8) (65.9)
Debt:
Bank loans(2) (119.4) (4.1) (0.3) (123.8)
Debenture stock (25.9) 6.0 - (19.9)
Preference shares (1.6) - - (1.6)
Total borrowings (146.9) 1.9 (0.3) (145.3)
Net debt (204.6) 8.7 (3.1) (199.0)
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 Audited
in respect of its defined benefit retirement plan
Unaudited At At
At 30 September 30 March
28 September 2023 2024
2024 £m £m
£m
Fair value of Scheme assets 112.9 103.8 112.3
Present value of Scheme liabilities (92.6) (90.7) (95.0)
Surplus in the Scheme 20.3 13.1 17.3
The net position of the defined benefit retirement plan for the 26 weeks ended
28 September 2024 shows a surplus of £20.3 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 £92.6 million (30 September 2023: £90.7 million, 30 March
2024: £95.0 million) are liabilities of £1.3 million (30 September 2023:
£1.4 million, 30 March 2024: £1.4 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 Unaudited Unaudited Audited
of the Scheme
At At At
28 September 30 September 30 March
2024 2023 2024
£m £m £m
Rate of increase in pensions in payment 3.05% 3.25% 3.05%
Discount rate 5.10% 5.60% 4.85%
Inflation assumption - RPI 3.10% 3.25% 3.10%
Inflation assumption - CPI (pre 2030/post 2030) 2.20%/3.10% 2.35%/3.25% 2.2%/3.10%
Mortality Assumptions
The mortality assumptions used in the valuation of the Scheme as at 28
September 2024 are as set out in the financial statements for the 52 weeks
ended 30 March 2024.
Assets in the Scheme Unaudited Unaudited Audited
At At At
28 September 30 September 30 March
2024 2023 2024
£m £m £m
Corporate bonds 46.2 43.5 46.0
Index linked debt instruments 32.8 30.4 31.6
Overseas equities - 6.9 8.0
Alternatives 20.6 19.7 20.8
Cash 11.1 1.1 3.6
Annuities 2.2 2.2 2.3
Total market value of assets 112.9 103.8 112.3
Movement in surplus during period Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
28 September 30 September 30 March
2024 2023 2024
£m £m £m
Surplus in Scheme at beginning of the period 17.3 14.6 14.6
Movement in period:
Net interest cost (note 0.4 0.4 0.7
3)
Net actuarial gains/(losses) 1.4 (3.1) (0.3)
Contributions 1.4 1.2 2.6
Administration expenses (0.2) - (0.3)
Surplus in Scheme at end of the period 20.3 13.1 17.3
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 2024. The principal risks and uncertainties and their associated
mitigating and monitoring controls which may affect the Group's performance in
the next six months are consistent with those detailed on pages 33 to 36 of
the Annual Report and Financial Statements 2024, and are available on the
Fuller's website, www.fullers.co.uk.
We previously identified that legislative changes following a change of UK
Government represented an emerging risk to the business. Following Labour's
success at the general election in July 2024, the publication of the
Employment Rights Bill and the Budget announcement on 30 October 2024, we are
beginning to have a clearer picture of the legislative changes that could
affect our business. As a progressive employer, we are confident that we will
be able to navigate the reforms to the employment law, indeed "Inspiring Our
People" is one of the Group's strategic pillars and the business will always
aim to be an employer of choice. Increasing taxation on employment through
higher Employers' National Insurance contributions is not welcome and will
inevitably lead to increased inflationary pressure, but we are a resilient and
robust business that will continue to deal with such challenges from a
long-term perspective.
We believe that 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 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 13 November 2024 should they wish to convert those 'C' shares to 'A'
shares. The next available opportunity after that will be June 2025. For
further details, please contact the Company's registrars, Computershare, on
0370 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
12 NOVEMBER 2024
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