REG - Fuller,Smith &Turner - Results for the 52 weeks to 26 March 2022
09/06/2022 07:00
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RNS Number : 2253O Fuller,Smith&Turner PLC 09 June 2022
STRICTLY EMBARGOED
UNTIL 7AM THURSDAY 9 JUNE 2022
FULLER, SMITH & TURNER P.L.C.
("Fuller's", the "Company", or the "Group")
Financial results for the 52 weeks to 26 March 2022
Return to profitable growth with a strengthened Balance Sheet
Financial and Operational Highlights
FY 2022 FY 2021
£m £m
253.8 73.2
Revenue
Group statutory profit/(loss) before tax 11.5 (59.2)
Adjusted profit/(loss) before tax(1) 7.2 (48.7)
Net debt(2) 131.9 218.1
Adjusted earnings per share(3) 9.79p (72.09)p
Basic earnings per share(4) 11.59p (87.31)p
Dividend per share(4) 11.31p Nil
All figures above are from continuing operations except for Group statutory
profit/(loss) before tax which includes discontinued operations in the prior
year
1 Adjusted profit/(loss) before tax is the profit/(loss) before tax
excluding separately disclosed items.
2 Net debt comprises cash and short-term deposits, bank overdraft, bank
loans, CCFF, debenture stock, preference shares and excludes IFRS 16 lease
liabilities.
3 Calculated using adjusted profit/(loss) after tax and the same weighted
average number of shares as for the basic earnings/(loss) per share and using
a 40p ordinary share.
4 Calculated on a 40p ordinary share.
· Revenues recovered to £253.8 million (2021: £73.2 million) despite
being significantly impacted during the year by coronavirus related closures,
restrictions and working from home guidance
· Adjusted profit before tax returning to growth at £7.2 million
(2021: loss £48.7 million)
· Net debt excluding leases reduced to £131.9 million and headroom for
future growth in place with new four-year £200 million bank facilities
· New Directors' valuation of the total property portfolio at £995.6
million, approximately £400 million above our current book value, which
implies an adjusted net asset value per share of £13.80, demonstrating the
underlying Balance Sheet strength of the business
· Return to a progressive dividend policy with a proposed final
dividend of 7.41p in addition to the interim dividend of 3.90p paid earlier in
the year.
Strategic Highlights
· Digital Transformation project delivered, improving the customer
experience and enhancing our analytical capabilities to target new and
existing customers
· Successfully implemented our new central finance system, which has
enhanced the quality and timeliness of business information
· Launched new recruitment platform and employer brand to help attract
and retain outstanding people
· Deployed our ESG strategy and honed our Life is too good to waste
programme
· Continued to maintain capital investment in the estate, with £26
million invested in the year to enhance capital values and drive growth
· Secured new four-year bank facilities to provide headroom for future
growth
· Strengthened and refined our long-term strategy to ensure we are
evolving and responding to changes in consumer behaviour and market dynamics.
Chief Executive Simon Emeny said:
"During the year we have returned to profitable growth with revenues of
£253.8 million and adjusted profit before tax of £7.2 million. It is
testament to the dedication and resilience of our team, across the business,
that we have managed to trade profitability under such difficult
circumstances.
"As a company, we have used the last two years wisely. While steering the
business through challenging trading conditions, we have also completed a
number of strategic projects that will deliver benefits over the coming years.
We have successfully honed our offer, completed a digital transformation
project, rolled out a new central finance system, delivered an employer brand
and new recruitment platform. We have also refined our branding and reviewed
and evolved our long-term strategy.
"The new strategic framework, driven by our purpose to create experiences that
nourish the soul, and the pillars that underpin it, will give everyone in the
company clear direction and ensure we work as a team, from our kitchens to our
boardroom, to deliver excellent results for all our stakeholders.
"In addition, we have worked hard to strengthen our Balance Sheet and
highlight how we will continue to deliver long-term value through the
application of our capital allocation framework. The completion of the bank
refinancing provides us with the headroom to grow and the Directors' valuation
of the estate demonstrates that the implicit net asset value per share of our
business is £13.80. Through the successful delivery of our strategic
objectives, we plan to grow this value over the long term.
"While the last financial year has adversely affected Fuller's - with some of
our key sites being the most impacted by the pandemic, we have built a
balanced business which positions us well to navigate the continued evolution
in consumer trends and behaviour. The current year has started well. We
welcome the gradual return of workers to the City and tourists to Central
London, which is now underway, and we are seeing steady growth in our total
weekly sales, which will have a positive impact in FY2023. Momentum in the
City and Central London continues to build, and we are confident that we will
see the benefits of our estate's composition come into play.
"In the first 10 weeks of the new financial year total sales are up 4% on pre
pandemic levels and are up 130% on the same period last year. On a
like-for-like basis, excluding closed periods, sales in the first 10 weeks of
the year are up 21.4% on last year. Furthermore, the investments we have made
in the last two years are not yet comparable and the return on our capex
projects will benefit the current year's results.
"Market conditions remain challenging with fragile consumer confidence and
well-documented high inflationary pressures. Our premium offering provides
some protection from inflation, however we are certainly not immune from its
effects. In common with our peers, we have seen significant increases in food
and utility costs and are proactively working with our suppliers, and actively
managing our offering, to mitigate the effects of inflation without impairing
the customer experience.
"We remain confident that, despite the current market challenges, we will
maintain our growth trajectory for revenues and profits and as such we are
pleased to announce a final dividend of 7.41p, which means a total dividend to
shareholders of £7.0 million for the year.
"In conclusion, we are looking back on a volatile year of highs and lows with
many moving parts - but we are starting the new financial year on a high. We
may be facing some bracing headwinds, especially around energy and inflation,
but we are well placed to tackle the issues with clear measures and solutions
in place.
"The great British pub has always been, and will always be, an affordable
treat and has proved its resilience over time with its position at the very
heart of the communities we serve. With an amazing team of people, great pubs
and a clear strategy, we look forward to the future with confidence and
excitement."
-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
Notes to Editors:
Fuller, Smith & Turner PLC is the premium pubs and hotels business that is
famous for beautiful and inviting pubs with delicious fresh food, a vibrant
and interesting range of drinks, and engaging service from passionate people.
Fuller's has 207 managed businesses, with 1,030 boutique bedrooms, and 178
Tenanted Inns. The estate is predominately located in the South of England
(44% of sites are within the M25) and stretches from our London heartland to
the Jurassic Coast via the New Forest. Our Managed Pubs and Hotels include 16
iconic Ale & Pie pubs, seven stunning hotels in the Cotswolds, and Bel
& The Dragon - seven exquisite country inns located in the Home Counties
(with an eighth due to open imminently). 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 also be
available from 12 noon on 9 June 2022.
FULLER, SMITH & TURNER P.L.C.
FINANCIAL RESULTS FOR THE 52 WEEKS ENDED 26 MARCH 2022
CHAIRMAN'S STATEMENT
Once again, the spectre of coronavirus has left its mark on our financial
performance. However, when we were allowed to trade fully, our customers came
back, and our teams delivered the Fuller's experience we are famous for. The
contribution of our team members across our estate is a real source of pride.
Their resilience in dealing with the constant highs and lows of the last two
years is outstanding and I pay tribute to each and every one of them.
From the gradual reopening of the hospitality sector on 12 April 2021, when we
could only open for groups of six and only outside, through 17 May 2021, when
we could allow that group of six inside, to the high of the so-called Freedom
Day last July, it was a delight to see our customers return. As we headed
towards Christmas, everything was looking increasingly positive. I cannot
express strongly enough my disappointment at the Government's handling of the
Omicron variant. Despite all the information from South Africa, the decision
to effectively close our businesses down at the busiest time of the year
disproportionally impacted hospitality and, over and above the financial cost,
set consumer confidence back six months at the precise moment it was beginning
to return to normal. The subsequent total removal of restrictions showed how
unnecessary they had been.
At Fuller's, under Simon Emeny's leadership, the Executive Team has used these
strange times to focus on high level, strategic projects, which will be
covered in the Chief Executive's Review. These projects will deliver financial
returns in the coming months and years, and put Fuller's in a great place for
the new financial year. We have refined our brand identity, there is a new
buzz that comes from the open plan and collaborative layout of our support
centre at Pier House, and the energy that has been sucked from us throughout
the pandemic has returned.
Over the years we have acquired, developed and continually invested in our
wonderful iconic pubs. While others cut their investment programme during the
pandemic, Fuller's did the opposite. This has proved to be the right decision
and with pubs, people and systems aligned, we look forward to seeing the
fruits of our labours in the next financial year and beyond.
Our Tenanted Inns division is in a strong position, and I am delighted to see
a number of joint investments in this key part of our business. Our Tenants
are well funded, with debt at a very low level, and there is an energy and
positivity that is delivering good results. Our entrepreneurial Tenants are a
constant source of inspiration and the symbiotic relationship, with both parts
of our business learning from the other, continues to deliver mutual benefit.
During the year, we welcomed Neil Smith to the Board as Finance Director. Neil
joined us in November 2021, replacing Adam Councell, and comes with a wealth
of relevant experience, having previously held positions at Domino's Pizza and
Ei Group. Neil is already making an impact - as well as excellent financial
acumen, he has a clear head, thoughtful insight, empathy and good judgement,
all of which add further depth to both our Board and the Executive Team.
DIVIDEND
Finally, the Board is pleased to announce a final dividend of 7.41p (2021:
nil) per 40p 'A' and 'C' ordinary share and 0.74p (2021: nil) per 4p 'B'
ordinary share. This will be paid on 27 July 2022 to shareholders on the share
register as at 8 July 2022. The total dividend of 11.31p per 40p 'A' and 'C'
ordinary share and 1.13p per 4p 'B' ordinary share is over 50% of the 2019
dividend and marks a return to a progressive dividend policy.
Michael Turner
Chairman
8 June 2022
CHIEF EXECUTIVE'S REVIEW
OVERVIEW
While we are once again reporting on a year that has seen the devastating
impact of coronavirus, and the Government's over-zealous response, the future
is looking more positive. We didn't trade unfettered until July last year,
from which point customers were returning and success was impeded more by the
widely reported labour shortages than a lack of customers. Advice to work from
home returned in December, destroying the Christmas trade, but despite the
impact of Omicron, we ended the year where we expected to be financially,
having effectively only traded fully for around six months.
During the year, the Company generated revenues of £253.8 million (2021:
£73.2 million), with an adjusted profit before tax of £7.2 million (2021:
loss of £48.7 million). We have also reduced our net debt 1 (#_ftn1) to
£131.9 million (2021: £218.1 million). It is testament to the dedication and
resilience of our team, across the business, that we have managed to deliver
so much under such difficult circumstances.
As a Company, we have used the last two years wisely - undertaking a number of
projects that will deliver benefits over the coming years - and I will cover
these in more detail further on in this report. In short, we have successfully
honed our offer, completed a digital transformation project, rolled out a new
central finance system, and delivered an employer brand and new recruitment
platform.
From a financial perspective, we have completed a refinancing, on more
favourable terms, giving us £200 million of bank facilities, which provides a
great platform for future growth. We have also reviewed our capital allocation
strategy and completed a Directors' revaluation of our estate. The latter,
which has not been done since 1999, has highlighted the intrinsic value - just
shy of £1 billion - of our predominately freehold estate, around £400
million above our current book value. It is this solid financial foundation
that provides the base for Fuller's current and future success and moves our
net asset value from £7.27 per share to £13.80 per share.
We have also refined our branding. Having sold the Fuller's Beer Business in
2019, we need our look and feel to reflect our position as a leading, premium
pubs and hotels business. While the continued use of the Griffin reflects the
pride we have in our heritage and experience, the new look is cleaner, clearer
and more concise - a great representation of our business as a whole.
Finally, we have also reviewed our long-term strategy. Like any company, we
are cognisant that we need to evolve to meet the changing consumer environment
and ensure we remain relevant to both existing and potential customers. Much
remains the same, but we have tightened our focus on ensuring we continue that
evolution and further increased our commitments around the ESG agenda.
This work has been undertaken by the Executive Team as a whole and is based
around our existing values - which have not changed. We have a clear purpose,
to deliver experiences that nourish the soul, and to do that we are crafting a
family of distinctive pubs and hotels where people feel they belong.
Underpinning this are five strategic pillars and I look forward to reporting
on the delivery of this strategy both in this report and in the future.
While there are still some major external issues to deal with - particularly
around recruitment, inflation and energy - I am pleased and confident that we
have taken all the actions we can as a company to put us in the best possible
place to clear these hurdles and take Fuller's forward on the next leg of our
journey.
STRATEGIC AND BUSINESS REVIEW
Delight our customers
The first pillar of our strategy is to surprise and delight our customers with
the quality of our offer and distinctive service. One of our values is to
celebrate individuality and that allows our team members to tailor the
experience for our customers in every one of our pubs and hotels. In order for
a trip to a Fuller's pub to truly nourish the soul, it must match and exceed
the expectations of the customer - and those expectations will be very
different from a business lunch in the City to a romantic weekend in the
Cotswolds. Whatever the occasion, our team will be ready and waiting to
deliver the right experience at the right time.
Food is a key part of that customer experience, and our chefs, trained
in-house through our Chefs' Guild academy, continue to deliver interesting,
inspired and delicious dishes for our customers. Our focus on seasonal
ingredients, and a supply chain that is founded on mutual trust and support
with British-based suppliers and primarily local produce, is built on true
partnerships, and this has also helped us to mitigate some of the worst of the
well-documented supply chain issues across the wider industry.
Our connection with the Bocuse d'Or - the world's largest cooking contest -
has further helped us to delight our customers with a range of dishes,
available Only at Fuller's, and created by chefs including Simon Rogan and
former Fat Duck head chef, Ashley Palmer-Watts. We are also delighted to have
just agreed to work in partnership with Made in Hackney, a wonderful social
enterprise focused on plant-based food. We will be working together to improve
our plant-based choices - further underpinning our commitment to ensuring we
can also delight those customers on a vegetarian or vegan diet, or just
looking for a meat-free day.
Inspire our people
It is, without doubt, our people that make the real difference - and it will
be no surprise that this is a pillar of our strategy. The widely-reported
recruitment shortages faced across the industry have highlighted the benefits
of excellent training and development - allowing us to retain our best people,
which in turn helps to recruit new talent.
In order to inspire our people, we need to understand how they feel - to
ensure they feel part of the Fuller's family and have a voice within that
family. Consequently, during the year we ran our first employee engagement
survey for some years and this has shaped the people programme going forward.
In addition, we reviewed our benefits package across the business - driven by
feedback from team members regarding elements that would be of genuine benefit
and a feeling that loyalty could be better recognised. As a result, we now
have an industry-leading healthcare cash plan, a portal of benefits across a
range of retail and leisure providers, an improved discount in our Managed
Pubs and Hotels that increases with tenure of service, and a range of other
benefits such as access to mental health and wellbeing programmes.
We continue to grow and invest in our team members' development and in our
award-winning apprenticeship programme - with another 100 apprentices being
recruited this year. We have also aligned our internal development programmes
with the apprenticeship framework so that completion results in a nationally
recognised qualification. Our success is reflected in the fact that 123 of the
general managers in our Managed Pubs and Hotels business are internal
appointments.
Finally, all of this work is supported by a clear, identifiable employer brand
and a compelling employee proposition around reward and development. Through
this, we can use all our other channels to tell our stories and recruit the
best talent to shape through our development programme and, underpinned with a
new recruitment system which was launched at the start of this financial year,
we maintain our strong position to recruit, retain and develop the best
people.
Enhance our estate
The secure financial foundations of our business lie in our predominately
freehold estate of iconic sites across the South of England - and this is
reinforced by the recent Directors' valuation to the tune of £1 billion.
Throughout the pandemic, we have continued to invest in our capex programme,
spending £26 million during the year on a range of projects including
transformational refurbishments at The White Star Hotel in Southampton, The
Jack Horner - an Ale & Pie site in Tottenham Court Road, The Kingswood
near Banstead, an upgrade of the rooms at The Fox & Goose Hotel in Ealing,
and a total repositioning of The Saint (formerly The Fine Line) at Bow
Churchyard - the latter demonstrating our continued commitment to the City.
We acquired one new site during the year - The Carpenter's Arms in Sunninghill
- and disposed of two leases. In addition, one site - The Plough at East
Sheen - transferred from our Tenanted Inns estate to our Managed Pubs and
Hotels business. Post the year end, four sites have gone the other way - into
our Tenanted estate, reflecting the benefit of running both Managed and
Tenanted pubs. We will continue to flex our estate in this way while also
looking for suitable opportunities to grow both organically and through
acquisition and we currently have four sites in advanced stages of
negotiation.
Evolve our business
While our strategy may be designed for the long term, like all great
businesses it is imperative that we continue to evolve over time. We must
innovate to excite and attract future customers and grow our profitability
through encouraging more customers to visit our premium pubs and hotels more
often.
The key elements of this strategic pillar will be delivered through our
digital transformation project - the benefits of which will start to be
realised in the coming year. We know the value of data and the work we have
undertaken will vastly improve our connectivity across our various digital
touchpoints and, more importantly, create a seamless digital customer journey.
This completed project opens the door to better understanding of our customers
and their habits, better communication with them, and increases our ability to
identify and target like-minded potential customers. We expect this to grow
our contactable database by over 10%. Finally, the project will improve our
conversion rates - turning browsers into buyers, thus increasing our hotel
bookings, table reservations and function sales.
There are four workstreams to this digital transformation project - websites,
bookings, system integration and CRM - with each area bringing its own range
of benefits to the Company. Our new websites will be easier to maintain and
update, deliver a tailored customer journey through increased personalisation
and bespoke offers, which will drive loyalty. These new websites have already
gone live.
The new booking engine will allow customers to book all of their requirements
in one place, rather than booking a room and then having to book a table for
dinner separately. All the data will be held centrally - building on our
already successful single customer view database. The key benefit to building
a great booking engine - with strong marketing capabilities - is that it will
further increase direct bookings, reducing the commission fees paid to online
travel agents. This booking engine will run across Fuller's, Bel & The
Dragon and Cotswold Inns and Hotels, further strengthening our data. The new
booking journey is going live this month.
Finally, the system integration and the move to a new CRM system - Acteol
Adreemo - perfectly combines these initiatives. This new system will act as a
gateway for all our digital communications across the Company and will improve
the ability and methods of communication and marketing to our customers. The
increased visibility of data will allow us to cross sell between our brands,
deliver personalised communications and capture a wider set of data about
customers through the insight we will gain from their behaviour and spending
patterns. For our customers, the benefit is that they will receive relevant
marketing, tailored to them, which will drive frequency of spend and loyalty.
The first targeted emails under this system went out in April and we are very
excited by the possibilities this system will bring in the coming years.
Own our impact - because Life is too good to waste
The final pillar of our strategy - and the one that underpins all the others -
is our commitment to ESG and the work that has been carried out through our
Life is too good to waste campaign.
Focused on our planet, our people, and our communities, we are already seeing
a broad range of initiatives implemented under the stewardship of our first
Sustainability Director, Oliver Rosevear. While these will be covered in
greater detail in the Annual Report and Accounts, I would like to focus on a
couple of the areas around carbon footprint.
We have ambitious targets and are aiming to have Net Zero carbon emissions for
our operations by 2030, and within our supply chain by 2040. In October 2021
we committed to ensuring all Company-owned sites used 100% certified green
electricity, primarily wind and hydroelectricity.
We have also taken additional steps to tackle our energy consumption - which
is often hindered by the nature of our estate. We have many wonderful and
iconic pubs - but they are often old and listed buildings, which makes for an
interesting challenge and means they tend to be heated by natural gas or oil.
Before we can move to greener systems such as heat pumps, electric fryers and
induction hobs, we need to reduce our current electrical demand within these
sites through the use of LED lights, energy audits and monitoring systems,
cellar heat recovery units and educating our team members to ensure they take
responsibility for lowering our energy usage.
Finally, we have also undertaken a number of other steps to reduce our carbon
footprint and reduce waste. By 2025, we aim to recycle at least 75% of our
operational waste and divert 100% from landfill and by 2030, we aim to
eliminate all unnecessary plastic from our operation. Steps already taken
include glass-only bottles for water, working with our toiletry suppliers
across our accommodation businesses to introduce refillable bottles, trialling
a new reusable plastic cup system at certain pubs where plastic glasses are
used for big sporting occasions, and improving our recycling through a new
partnership with Veolia, the waste management and recycling solutions
business.
Tenanted Inns
Our Tenanted Inns remain a key part of our strategy and complement our
strategic framework and, as such, it seems fitting to add some further colour
on the performance of this part of the business. The Tenanted division has
remained consistently profitable when open, regardless of restrictions, with
EBITDA margins of 51.6%, delivering operating profit of £11.1 million. We
ended the year strongly with an increase in the number of Tenants on longer
agreements and very low levels of debt - substantially ahead of the industry
average.
The commitment we showed to our Tenants throughout the pandemic continued
during this year. Our approach, which saw us sharing the financial pain, led
to all those Tenants that had a garden opening as soon as they were allowed
(from 12 April 2021) and the remaining pubs following suit and opening at the
earliest opportunity. Our Tenants started this year in a strong financial
position, and this is reflected in the investments they have made, both
independently and jointly with Fuller's, in their pubs and businesses.
Our focus on five-year agreements - both on a traditional and turnover basis -
has continued to prove popular with our Tenants. To help grow sales in our
turnover pubs, we appointed a sales development manager to work with them,
ensuring standards remain high and there is a portfolio of customer-building
activity. This has been further supported across the estate with the relaunch
of our regular Tenant's Magazine, which has proved popular as a way of sharing
ideas, generating interest for new products and helping to build trade.
In the coming year, there will be a sharp focus on utility costs - with many
Tenants being forced to pay vastly inflated rates to renew their energy
contracts. In light of this, we are currently undertaking a trial project
whereby Tenants can acquire their utilities through Fuller's. The project is
in its infancy but will also further enhance Fuller's buying power making it a
win-win for both entities. It is early days, but the move is yet another
example of the symbiotic relationship that exists between Fuller's and its
Tenants.
FINANCIAL REVIEW
Income statement
The results for this financial year continued to be severely impacted by the
pandemic. The year began with the entire estate closed, from 12 April 2021
trading outdoors was allowed, indoor space opened from 17 May 2021 before all
restrictions were lifted and the entire estate reopened on 19 July 2021. The
Group began to build trading momentum as workers started to return to offices
and visiting tourist numbers began to increase.
In the run up to Christmas our bookings were in good shape, and we were
confident that December would be a strong month as customers could finally
celebrate unencumbered. However, on 8 December 2021, the Government announced
Plan B guidance following the rapid spread of the Omicron variant. This had a
severe impact on sales as it meant Christmas parties were cancelled and people
were once again advised to work from home. Fortunately, Omicron was
short-lived and by the end of January we started to see sales build week on
week, with like for like sales at 96% of pre-pandemic levels for the last week
of the financial year.
Group revenue and other income was £253.8 million for the financial year,
which was a 246% increase on FY2021, reflecting the steady momentum in sales
post restrictions. Adjusted profit before tax increased substantially from a
loss of £48.7 million in FY2021 to a profit of £7.2 million in the current
financial year. The increase was largely due to our ability to open the estate
to trade for more of the year. Both financial years were bolstered by support
from the Government through the Coronavirus Job Retention Scheme ("CJRS") and
the business rates holiday, as well as property grants. In FY2022, the Group
received £9.7 million, net of operating costs (2021: £45.9 million), through
such support.
In FY2022, costs were impacted by the sharp increase in utility costs,
predominately in the second half of the year. We were able to mitigate some of
that increase through the energy agreements we had in place from the beginning
of FY2022 which hedged 94% of our gas and 76% of our electricity pricing for
the entirety of FY2022. We have continued to hedge in FY2023 and have locked
in our pricing for Q1 FY2023 for both electricity and gas, and 50%/75%
respectively for the remainder of the year. Despite this, we still anticipate
utilities cost to increase by c.£4 million in FY2023.
Total net finance costs (before separately disclosed items) have increased by
£2.9 million to £11.3 million. The increase is largely due to higher
interest rate margins on the banking facilities. In the prior year, the Group
utilised the Covid Corporate Financing Facility ('CCFF'), which had an
interest rate margin of 64bps compared to an increased interest rate margin
agreed as part of the Amend and Extend in April 2021. The CCFF was repaid in
May 2021. This meant that the average cost of borrowing was 4.2% in the
current financial year compared to 2.5% in the prior year.
The net position on separately disclosed items of £4.3 million profit (2021:
£9.1 million expense) comprises £6.3 million of profits on the disposal of
12 predominately unlicensed properties, impairments of £3.3 million on six
properties, reorganisation costs of £0.8 million incurred as a result of
corporate reorganisation and the implementation of new infrastructure offset
by a £2.1 million credit on the release of a provision relating to the sale
of the Fuller's Beer Business.
The overall effective tax rate of 38.3% (2021: 16.6%) is due to the change in
corporation tax rate which is expected to come into effect from April 2023.
This has resulted in deferred tax liabilities increasing by £3.3 million and
the movement has been shown in tax on separately disclosed items as it is
unrelated to underlying trade.
Balance sheet
In April 2021, the Group completed an equity placing which raised net proceeds
of £51.8 million. The proceeds of the equity placing, along with the Group's
existing facilities, were used to repay the £100 million of commercial paper
drawn under the CCFF on 12 May 2021. At the same time as the equity placing,
the Group also agreed an Amend and Extend Refinancing of its existing debt
facilities with its relationship banks, extending the maturity of the £192
million facilities to 19 February 2023.
Since year end, the Group has refinanced all its banking facilities with a new
unsecured £200 million facilities agreement for a tenure of four years, split
between a revolving credit facility of £110 million and a term loan of £90
million.
The Group has also completed a Directors' valuation of the entire property
estate. The outcome of the valuation was a total value of £995.6 million,
which is c.£400 million higher than the net book value of £592.7 million
included with the accounts. This would imply an increase in the current Net
Asset Value per share from £7.27 to £13.80. We have not changed our
accounting policies with regard to asset valuations but thought it useful for
all stakeholders to provide a current assessment of the valuation of the
Group's property portfolio.
Overall net debt at 26 March 2022 had decreased by £86.2 million to £131.9
million, excluding leases, which was largely due to the equity placing in
April 2021 which raised net proceeds of £51.8 million, but also the
improvement in EBITDA in the year. Including leases, net debt has decreased by
£95.4 million to £212.6 million, reflecting a reduction in lease liabilities
of £9.2 million mainly driven by the unwind of the liabilities but also
partially due to some further rent concessions received in the first quarter
of FY2022.
The defined benefit pension scheme deficit has decreased by £17.8 million to
a £14.3 million accounting surplus (2021: £3.5 million deficit) as the fair
value of scheme assets stayed largely in line with prior year but the present
value of pension obligations decreased substantially. The present value of
pension obligations decreased by £17.7 million to £129.6 million, which was
driven by an increase in the discount rate from 1.95% to 3.00%. As the Group
has an unconditional right to a refund under the pension trust deed, an asset
can be recognised. Standard deficit recovery payments of £2.3 million were
also made during the financial year.
Capital allocation framework
The Board has reviewed and refined its capital allocation framework with the
aim of enhancing shareholder value while targeting leverage at around 3x net
debt/EBITDA.
The framework provides stakeholders with clarity on where and why we will
deploy capital. We will continue to invest in the long-term growth of the core
estate applying a returns-based approach to the c.£20-30 million planned
annual investment. In addition, we will maintain a sustainable and progressive
dividend with the aim of operating at a normalised dividend cover range of
2.5-3.0 times. Inorganic growth opportunities will be considered on a
disciplined internal rate of return basis and finally, should all other uses
of cash be satisfied and we are operating at our desired leverage level, then
other forms of return to shareholders, including resumption of share buybacks,
will be considered.
CURRENT TRADING AND OUTLOOK
While the last financial year has adversely affected Fuller's - with some of
our key sites being the most impacted by the pandemic, we have built a
balanced business which positions us well to navigate the continued evolution
in consumer trends and behaviour. The current year has started well. We
welcome the gradual return of workers to the City and tourists to Central
London, which is now underway, and we are seeing steady growth in our total
weekly sales, which will have a positive impact in FY2023. Momentum in the
City and Central London continues to build, and we are confident that we will
see the benefits of our estate's composition come into play.
In the first 10 weeks of the new financial year total sales are up 4% on pre
pandemic levels and are up 130% on the same period last year. On a
like-for-like basis, excluding closed periods, sales in the first 10 weeks of
the year are up 21.4% on last year. Furthermore, the investments we have made
in the last two years are not yet comparable and the return on our capex
projects will benefit the current year's results.
Market conditions remain challenging with fragile consumer confidence and
well-documented high inflationary pressures. Our premium offering provides
some protection from inflation, however we are certainly not immune from its
effects. In common with our peers, we have seen significant increases in food
and utility costs and we are proactively working with our suppliers and
actively managing our offering to mitigate the effects of inflation without
impairing the customer experience.
We remain confident that, despite the current market challenges, we will
maintain our growth trajectory for revenues and profits and as such were
pleased to announce a final dividend of 7.41p, which means a total dividend
return to shareholders of £7.0 million for the year.
In conclusion, we are looking back on a volatile year of highs and lows with
many moving parts - but we are starting the new financial year on a high. We
may be facing some bracing headwinds, especially around energy and inflation,
but we are well placed to tackle the issues with clear measures and solutions
in place.
The work we have undertaken in the last year implementing our digital
transformation project, launching a new recruitment platform, undertaking a
Directors' revaluation of the estate and completing the refinancing of our
bank facilities puts us in a great place to tackle the future.
The strategic framework, driven by our purpose to create experiences that
nourish the soul, and the pillars that underpin it will give everyone in the
Company clear direction and ensure we work cohesively as a team, from our
kitchens to our boardroom, to deliver excellent results for all our
stakeholders.
The great British pub has always been, and will always be, an affordable treat
and has proved its resilience over time with its position at the very heart of
the communities we serve. With an amazing team of people, great pubs and a
clear strategy, we look forward to the future with confidence and excitement.
Simon Emeny
Chief Executive
8 June 2022
Fuller, Smith & Turner P.L.C.
Financial Highlights
For the 52 weeks ended 26 March 2022
( )
52 weeks 52 weeks ended
ended 27 March
26 March
2022 2021
£m £m
Revenue 253.8 73.2
EBITDA(1) 44.3 (13.1)
Group statutory profit/(loss) before tax 11.5 (59.2)
Adjusted profit/(loss) before tax(2) 7.2 (48.7)
Net debt excluding lease liabilities(3) 131.9 218.1
Adjusted earnings/(loss) per share(4) 9.79p (72.09)p
Basic earnings/(loss) per share(5) 11.59p (87.31)p
Dividend per share(5) 11.31p -
All figures are for continuing operations except for Group statutory
profit/(loss) which includes discontinued operations in the prior year.
1 Earnings before separately disclosed items, interest, tax,
depreciation and amortisation.
2 Adjusted profit/(loss) before tax is the profit/(loss) before tax
excluding separately disclosed items.
3 Net debt comprises cash and short-term deposits, bank overdraft,
bank loans, CCFF, debenture stock and preference shares.
4 Calculated using adjusted profit/(loss) after tax and the same
weighted average number of shares as for the basic earnings/(loss) per share
and using a 40p ordinary share.
5 Calculated on a 40p ordinary share.
Fuller, Smith & Turner P.L.C.
Condensed Group Income Statement
For the 52 weeks ended 26 March 2022
52 weeks ended 26 March 2022 52 weeks ended 27 March 2021
Note Before separately disclosed items Separately disclosed items Total Before separately disclosed items Separately disclosed items Total
£m £m £m £m £m £m
Continuing
Revenue 2 253.8 - 253.8 73.2 - 73.2
Operating costs (235.3) (2.0) (237.3) (113.7) (14.8) (128.5)
Other income 2 - - - 0.2 - 0.2
Operating profit/(loss) 18.5 (2.0) 16.5 (40.3) (14.8) (55.1)
Finance costs 4 (11.3) - (11.3) (8.4) (0.1) (8.5)
Profit on disposal of properties 3 - 6.3 6.3 - 5.8 5.8
Profit/(loss) before tax 7.2 4.3 11.5 (48.7) (9.1) (57.8)
Tax 5 (1.2) (3.2) (4.4) 8.9 0.7 9.6
Profit/(loss) for the year from continuing operations 6.0 1.1 7.1 (39.8) (8.4) (48.2)
Net loss from discontinued operations after tax - - - (0.5) (0.9) (1.4)
Profit/(loss) for the year 6.0 1.1 7.1 (40.3) (9.3) (49.6)
Fuller, Smith & Turner P.L.C.
Condensed Group Income Statement (continued)
For the 52 weeks ended 26 March 2022
Group Note 52 weeks ended
26 March 52 weeks ended
2022 27 March
Pence 2021
Pence
Earnings/(loss) per share per 40p 'A' and 'C' ordinary share
Basic 6 11.59 (89.84)
Diluted 6 11.51 (89.84)
Adjusted 6 9.79 (73.00)
Diluted adjusted 6 9.73 (73.00)
Earnings/(loss) per share per 4p 'B' ordinary share
Basic 6 1.16 (8.98)
Diluted 6 1.15 (8.98)
Adjusted 6 0.98 (7.30)
Diluted adjusted 6 0.97 (7.30)
Continuing operations
Earnings/(loss) per share per 40p 'A' and 'C' ordinary share
Basic 6 11.59 (87.31)
Diluted 6 11.51 (87.31)
Adjusted 6 9.79 (72.09)
Diluted adjusted 6 9.73 (72.09)
Earnings/(loss) per share per 4p 'B' ordinary share
Basic 6 1.16 (8.73)
Diluted 6 1.15 (8.73)
Adjusted 6 0.98 (7.21)
Diluted adjusted 6 0.97 (7.21)
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Comprehensive Income
For the 52 weeks ended 26 March 2022
52 weeks ended 26 March 52 weeks ended 27 March
2022 2021
£m £m
Note
Profit/(loss) for the year 7.1 (49.6)
Items that may be reclassified to profit or loss in subsequent years (net of
tax)
Net gains on valuation of financial assets and liabilities 0.5 0.5
Tax related to items that may be reclassified to profit or loss 5 (0.1) (0.1)
Items that will not be reclassified to profit or loss in subsequent years (net
of tax)
Net actuarial gains/(losses) on pension schemes 12 15.5 (1.0)
Tax related to items that will not be reclassified to profit or loss 5 (3.8) 0.2
Other comprehensive gains/(losses) for the year, net of tax
12.1 (0.4)
Total comprehensive income/(expenses) for the year, net of tax
19.2 (50.0)
Fuller, Smith & Turner P.L.C.
Condensed Group Balance Sheet
26 March 2022
Note At 26 March 2022
£m
At 27 March 2021
£m
Non-current assets
Intangible assets 29.5 27.3
Property, plant and equipment 8 592.7 590.2
Investment properties 1.6 3.1
Retirement benefit obligations 12 16.2 -
Right-of-use assets 10 73.8 81.9
Total non-current assets 713.8 702.5
Current assets
Inventories 3.6 2.1
Trade and other receivables 10.7 11.5
Current tax receivable 0.6 4.0
Cash and short-term deposits 11 15.6 17.1
Total current assets 30.5 34.7
Assets classified as held for sale 5.4 9.6
Total assets 749.7 746.8
Current liabilities
Trade and other payables (57.1) (28.7)
Provisions (0.5) (4.0)
Borrowings 11 (120.0) (207.7)
Lease liabilities 10 (6.8) (6.7)
Other financial liabilities (0.1) -
Total current liabilities (184.5) (247.1)
Non-current liabilities
Borrowings 11 (27.5) (27.5)
Lease liabilities 10 (73.9) (83.2)
Other financial liabilities - (0.7)
Retirement benefit obligations 12 (1.9) (3.5)
Deferred tax liabilities (12.7) (5.3)
Total non-current liabilities (116.0) (120.2)
Net assets 449.2 379.5
Fuller, Smith & Turner P.L.C.
Condensed Group Balance Sheet (continued)
26 March 2022
Note At 26 March 2022 At 27 March 2021
£m £m
Capital and reserves
Share capital 25.4 22.8
Share premium account 53.2 4.2
Capital redemption reserve 3.7 3.7
Own shares (16.6) (17.0)
Hedging reserve (0.1) (0.5)
Retained earnings 383.6 366.3
Total equity 449.2 379.5
Fuller, Smith & Turner P.L.C.
Condensed Group Statement of Changes in Equity
For the 52 weeks ended 26 March 2022
Share Share Capital Own Hedging Retained Total
capital
premium
redemption
shares
reserve
earnings
£m
£m
account
reserve
£m
£m
£m
£m
£m
At 28 March 2020 22.8 4.2 3.7 (17.1) (0.9) 417.1 429.8
Loss for the year - - - - - (49.6) (49.6)
Other comprehensive income/(expense) for the year - - - - 0.4 (0.8) (0.4)
Total comprehensive income/(loss) for the year - - - - 0.4 (50.4) (50.0)
Shares released from ESOT and treasury - - - 0.1 - (0.1) -
Share-based payment credits - - - - - (0.3) (0.3)
At 27 March 2021 22.8 4.2 3.7 (17.0) (0.5) 366.3 379.5
Profit for the year - - - - - 7.1 7.1
Other comprehensive income for the year - - - - 0.4 11.7 12.1
Total comprehensive income for the year - - - - 0.4 18.8 19.2
Issue of share capital 2.6 49.0 - 0.2 - - 51.8
Shares released from ESOT and treasury - - - 0.2 - - 0.2
Dividends (note 7) - - - - - (2.4) (2.4)
Share-based payment charges - - - - - 0.8 0.8
Tax credited directly to equity - - - - - 0.1 0.1
At 26 March 2022 25.4 53.2 3.7 (16.6) (0.1) 383.6 449.2
Fuller, Smith & Turner P.L.C.
Condensed Group Cash Flow Statement
For the 52 weeks ended 26 March 2022
Note 52 weeks ended
26 March
2022
£m 52 weeks ended
27 March
2021
£m
Profit/(loss) before tax for continuing operations 11.5 (57.8)
Net finance costs before separately disclosed items 4 11.3 8.4
Separately disclosed items 3 (4.3) 9.1
Depreciation and amortisation 25.8 27.2
44.3 (13.1)
Difference between pension charge and cash paid (2.3) (2.3)
Share-based payment charges/(credit) 0.8 (0.3)
Change in trade and other receivables 0.5 (0.4)
Change in inventories (1.5) 1.7
Change in trade and other payables 28.8 (6.4)
Cash impact of operating separately disclosed items 3 (1.9) (1.5)
Cash generated from/(absorbed by) operations 68.7 (22.3)
Tax received 2.5 3.4
Cash generated from/(absorbed by) operating activities - continuing operations 71.2 (18.9)
Cash absorbed by operating activities - discontinued operations - (0.4)
Net cash generated from/(absorbed by) operating activities 71.2 (19.3)
Cash flow from investing activities
Purchase of property, plant and equipment and intangibles (25.8) (16.5)
Sale of property, plant and equipment, right-of-use assets and assets held for 10.0 10.8
sale
Cash absorbed by investing activities - continuing operations (15.8) (5.7)
Cash generated from investing activities - discontinued operations - 0.3
Net cash (outflow) from investing activities (15.8) (5.4)
Cash flow from financing activities
Receipts on release of own shares to option schemes 0.1 -
Interest paid (7.2) (4.5)
Preference dividends paid 7 (0.1) (0.1)
Equity dividends paid 7 (2.4) -
Net proceeds from equity placing 51.8 -
(Repayment)/drawdown of the CCFF 11 (100.0) 99.4
Drawdown/(repayment)of bank loans 11 12.6 (64.0)
Surrender of leases (1.9) -
Principal and interest elements of lease payments 10 (8.6) (9.2)
Payment of loan arrangement fees (1.2) -
Fuller, Smith & Turner P.L.C.
Condensed Group Cash Flow Statement (continued)
For the 52 weeks ended 26 March 2022
Note 52 weeks ended
26 March 2022
£m
52 weeks ended
27 March 2021
£m
Cash (absorbed by)/generated from financing activities - continuing operations (56.9) 21.6
Cash absorbed by financing activities - discontinued operations - (0.1)
Net cash (outflow)/inflow from financing activities (56.9) 21.5
Net movement in cash and cash equivalents (1.5) (3.2)
Cash and cash equivalents at the start of the year 11 17.1 20.3
Total cash and cash equivalents at the end of the year 11 15.6 17.1
Fuller, Smith & Turner P.L.C.
Notes to the Condensed Financial Statements
For the 52 weeks ended 26 March 2022
1. Preliminary statement
The consolidated financial statements of Fuller, Smith & Turner P.L.C. for the 52 weeks ended 26 March 2022 were authorised for issue by the Board of Directors on 8 June 2022.
The financial information presented does not constitute the Group's annual
report and accounts for either the 52 weeks ended 26 March 2022 or the 52
weeks ended 27 March 2021 within the meaning of Section 435 of the Companies
Act 2006, but is derived from those accounts. The Group's statutory accounts
for 2021 have been delivered to the Registrar of Companies and those for 2022
will be delivered following the Company's annual general meeting. The
independent auditor's reports on both the 2022 and 2021 accounts were not
qualified or modified, however the 2021 accounts drew attention to material
uncertainties in respect of going concern. The independent auditor's reports
for both 2022 and 2021 did not contain any statements under Section 498 of the
Companies Act 2006.
The Group financial statements are presented in Sterling and all values are shown in millions of pounds (£m) rounded to the nearest hundred thousand pounds, except when otherwise indicated. The accounting policies used have been applied consistently, except where set out below, and are described in full in the statutory financial statements for the 52 weeks ended 26 March 2022, which will be mailed to shareholders on or before 23 June 2022 and delivered to the Registrar of Companies. The financial statements will also be available from the Company's registered office: Pier House, 86-93 Strand-on-the-Green, London, England, W4 3NN, and on its website, from that date.
Going concern
The Directors have prepared the 2022 financial statements on a going concern
basis after assessing the Group's financing arrangement and other principal
risks and uncertainties.
At 26 March 2022, the Group had a strong Balance Sheet with 92% of the estate
being freehold properties and available headroom on facilities of £72.0
million and £15.6 million of cash and resulting pre IFRS 16 net debt of
£131.9 million. At year end, the Group had existing facilities of £192
million.
The Group completed an equity placing on 20 April 2021 which raised net
proceeds of £51.8 million. The proceeds of the equity placing, along with the
Group's existing facilities, were used to repay the CCFF on 12 May 2021. At
the same time as the equity placing, the Group also agreed an Amend and Extend
Refinancing of its existing debt facilities with its relationship banks,
extending the maturity of the £192 million facilities to 19 February 2023 and
amending the financial covenants to a minimum liquidity level of £10 million
to be tested monthly until 31 March 2022.
Since year end, the Group has secured a new facility of £200 million, split
between a revolving credit facility of £110 million and a term loan of £90
million, for a tenure of four years to May 2026. Under the new agreement, the
minimum liquidity covenant of £10 million tested monthly remains until
November 2022. From December 2022 (and tested quarterly thereafter) the
covenant suite will consist of net debt to EBITDA (leverage) and 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 June 2023, based upon two scenarios, the base case and
the downside scenario. The base case scenario indicates that it will have
significant resources, to continue to settle its debts as they fall due and
operate well within its covenants for the going concern assessment period. The
base case is the Board approved FY2023 budget as well as the Q1 FY2024 plan
which forms part of the Board approved three-year plan. The base case assumes
that there will still be some impact felt, particularly in urban areas, from
the pandemic and costs will be impacted by the level of inflation currently
seen and the increase in the national minimum wage.
The Group has also modelled a downside scenario whereby sales drop by c.7%
from that assumed in the base case and inflation continues at an even higher
rate than in the base case specifically utilities (10% increase from base) and
food inflation (3% higher peak than the base case). Under this scenario the
Group will still have sufficient resources and headroom on its covenants
throughout the assessment period.
1. Preliminary statement (continued)
The Group has also performed a reverse stress case which has shown that the
Group could withstand a further 5% fall in sales, a further 5% increase in
food inflation and another 10% increase in utilities during October - February
2023 compared to the downside scenario, before the covenant levels would be
exceeded on 31 December 2022. The model assumes increased costs for this
period as October 2022 is when the energy price cap is expected to increase
again, and it is assumed this will have an impact on consumers and hence sales
volumes. The stress test represents a 39% decline in EBITDA and therefore the
Directors believe the scenario to be remote.
Under both the base case and downside scenarios modelled the Group would have
sufficient headroom on its facilities throughout the going concern assessment
period. Additionally, neither the downside scenario or the reverse stress
test include any mitigating factors which the Group have in their control to
either improve EBTIDA or reduce net debt such as disposals of licensed and
unlicensed properties, reduction in capex spend to only essential maintenance
and decision not to pay dividends and bonuses.
The Directors have also determined that, over the period of the going concern
assessment, there is not expected to be a significant impact on the Group
because of climate change.
At the half year two material uncertainties were reported: (1) the refinance
of the debt was not formalised which presented a material uncertainty; and (2)
that under a severe but not implausible scenario of further government imposed
closures, the Group's forecast showed it would be able to withstand two months
of closure before it would forecast a breach of its leverage covenant at June
2022. The matters that gave rise to the above uncertainties have been
resolved either in the year or post year end. On this basis, along with the
facts and circumstances 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, being the 12
months from the date of signing these financial statements through to June
2023.
2. Segmental Analysis
Operating Segments
For management purposes, the Group's operating segments are:
- Managed Pubs and Hotels, which comprises managed pubs, managed
hotels, Bel & The Dragon and Cotswold Inns & Hotels.
- Tenanted Inns, which comprises pubs operated by third parties
under tenancy or lease agreements.
The most important measure used to evaluate the performance of the business is
adjusted profit, which is the profit before tax, adjusted for separately
disclosed items. The operating segments are organised and managed separately
according to the nature of the products and services provided, with each
segment representing a strategic operating unit. The Managed Pubs and Hotels
operating segments have been aggregated to one reportable segment on the basis
they have similar economic characteristics. Economic indicators assessed in
determining that the aggregated operating segments share similar
characteristics include expected future financial performance, operating and
competitive risks, and return on capital. As such the operating segments meet
the aggregation criteria in paragraph 12 IFRS 8 Operating Segments (amended).
As segment assets and liabilities are not regularly provided to the Chief
Operating Decision Maker ("CODM"), the Group has elected, as provided under
IFRS 8 Operating Segments (amended), not to disclose a measure of segment
assets and liabilities.
52 weeks ended 26 March 2022 Managed Pubs Tenanted Unallocated(1) Total continuing operations
and Hotels Inns £m £m
£m £m
Revenue
Sale of goods and services 205.1 17.9 - 223.0
Accommodation income 21.9 - - 21.9
Total revenue from contracts with customers 227.0 17.9 - 244.9
Rental income 1.8 7.1 - 8.9
Revenue 228.8 25.0 - 253.8
Segment result 24.7 11.1 (17.3) 18.5
Operating separately disclosed items (2.0)
Operating profit 16.5
Profit on disposal of properties 6.3
Net finance costs (11.3)
Profit before tax 11.5
Other segment information
Additions to property, plant and equipment and intangible assets 20.2 2.3 2.6 25.1
Depreciation and amortisation 23.3 1.8 0.7 25.8
Impairment of property 3.0 0.3 - 3.3
2. Segmental Analysis (continued)
52 weeks ended 27 March 2021 Tenanted Unallocated(1) Total continuing operations
Inns £m £m
Managed Pubs £m
and Hotels
£m
Revenue
Sale of goods and services 56.6 6.9 - 63.5
Accommodation income 5.9 - - 5.9
Total revenue from contracts with customers 62.5 6.9 - 69.4
Rental income 1.5 2.3 - 3.8
Revenue 64.0 9.2 - 73.2
Other income - - 0.2 0.2
Segment result (26.1) 1.2 (15.4) (40.3)
Operating separately disclosed items (14.8)
Operating loss (55.1)
Profit on disposal of properties 5.8
Net finance costs (8.5)
Loss before income tax (57.8)
Other segment information
Additions to property, plant and equipment and intangible assets 12.6 0.7 1.1 14.4
Depreciation and amortisation 24.7 1.8 0.7 27.2
Impairment of property, right-of-use assets, assets held for sale, and 11.3 1.6 - 12.9
goodwill
1 Unallocated expenses represent primarily the salary and costs of central
management. Unallocated revenue represents Transitional Services Agreement
("TSA") income while unallocated capital expenditure relates to additions to
the head office and additions to IT development costs.
3. Separately Disclosed Items
The Group presents separately disclosed items on the face of the Income
Statement for those material items of income and expense which, because of the
nature or expected infrequency of the events giving rise to them, merit
separate presentation to allow shareholders to understand better the elements
of financial performance in the year.
52 weeks ended
26 March 2022
£m 52 weeks ended
27 March 2021
£m
Amounts included in operating profit/(loss):
Reorganisation costs (0.8) (1.9)
Impairment of intangible assets, properties and right-of-use assets (3.3) (12.9)
Release of provision on final settlement of the Beer Business 2.1 -
Total separately disclosed items included in operating profit/(loss) (2.0) (14.8)
Profit on disposal of properties 6.3 5.8
Separately disclosed finance costs:
Finance charge on net pension liabilities - (0.1)
Total separately disclosed finance costs - (0.1)
Total separately disclosed items before tax 4.3 (9.1)
Exceptional tax:
Profit on disposal of properties (1.3) (0.2)
Change in tax rate (3.3) -
Other items 1.4 0.9
Total separately disclosed tax (3.2) 0.7
Total separately disclosed items 1.1 (8.4)
The reorganisation costs of £0.8 million during the 52 weeks ended 26 March
2022 (2021: £1.9 million) were largely incurred as a result of a corporate
reorganisation of the Group, costs associated with the loan refinancing and
licence costs associated with the implementation of a new finance system.
The £2.1 million credit is the release of the provision, net of the final
settlement amount on the sale of the Fuller's Beer Business.
The property impairment charge of £3.3 million during the 52 weeks ended 26
March 2022 (2021: £12.9 million) relates to the write down of six licensed
properties (2021: 37 licensed properties) to their recoverable value.
The profit on disposal of properties of £6.3 million during the 52 weeks
ended 26 March 2022 (2021: £5.8 million) relates to the disposal of 12
predominately unlicensed properties (2021: seven properties).
The 2021 Budget in March last year announced an increase in the UK corporation
tax rate to 25% with effect from 1 April 2023. This was substantively enacted
on 24 May 2021. The UK corporation rate increase has resulted in an increase
to the deferred tax liability of £3.3 million. This has been recognised
3. Separately Disclosed Items (continued)
within separately disclosed items in the tax charge for the period as it is
unrelated to underlying trading and is one off in nature.
The cash impact of operating separately disclosed items before tax for the 52
weeks ended 26 March 2022 was £1.9 million cash outflow (27 March 2021: £1.5
million cash outflow).
4. Finance Costs
52 weeks ended
26 March 2022 52 weeks ended
£m 27 March 2021
£m
Finance Costs
Interest expense arising on:
Financial liabilities at amortised cost - loans and debentures(1) (8.1) (5.3)
Financial liabilities at amortised cost - preference shares (0.1) (0.1)
Financial liabilities at amortised cost - lease liabilities (3.1) (3.0)
Total finance costs before separately disclosed items (11.3) (8.4)
Finance charge on net pension liabilities (note 3) - (0.1)
Total finance costs after separately disclosed items (11.3) (8.5)
(1)In the prior year, interest expense on loans and debentures is shown net of
£0.6 million of grant income recognised in relation to the CCFF.
5. Taxation
Group
52 weeks ended
26 March 2022 52 weeks ended
£m 27 March 2021
£m
Tax charged/(credited) in the Income Statement
Current income tax:
Current tax on profit/(loss) for the year 0.2 (1.0)
Adjustments for current tax on prior periods 0.6 (0.5)
Total current income tax expense/(credit) 0.8 (1.5)
Deferred income tax:
Origination and reversal of temporary differences 2.2 (8.1)
Change in corporation tax rate 3.3 -
Adjustments for deferred tax on prior periods (1.9) -
Total deferred tax expense/(benefit) 3.6 (8.1)
Total tax charged/(credited) in the Income Statement 4.4 (9.6)
Analysed as:
Before separately disclosed items 1.2 (8.9)
Separately disclosed items 3.2 (0.7)
4.4 (9.6)
Reconciliation of the Total Tax Charge/(Credit)
The tax expense in the Income Statement for the year is higher (2021: tax credit is lower) than the standard rate of corporation tax in the UK of 19% (2021: 19%). The differences are reconciled below:
52 weeks ended
26 March 2022
£m 52 weeks ended
27 March 2021
£m
Profit/(loss) from continuing operations before income tax expense/(credit) 11.5 (57.8)
Accounting profit/(loss) multiplied by the UK standard rate of corporation tax 2.2 (11.0)
of 19% (2021: 19%)
Items not (taxable)/deductible for tax purposes (0.3) 0.5
Current and deferred tax (over) provided in previous years (1.3) (0.5)
Net movements in respect of property 0.5 1.4
Change in corporation tax rate 3.3 -
Total tax charged/(credited) in the Income Statement 4.4 (9.6)
5. Taxation (continued)
Deferred tax relating to items charged/(credited) to the Income Statement 52 weeks ended 52 weeks ended
26 March 2022
27 March 2021
£m
£m
Deferred tax depreciation (0.8) (0.6)
Unrealised capital gains (on PP&E) 5.2 (0.4)
Retirement benefit obligations 1.6 1.6
Tax losses (2.8) (7.4)
Other (0.7) (0.1)
Corporate interest restriction 1.1 (1.2)
Deferred tax in the Income Statement 3.6 (8.1)
Tax relating to items charged/(credited) to the
Statement of Comprehensive Income
Deferred tax:
Valuation gains on financial liabilities 0.1 0.1
Net actuarial gains/(losses) on pension scheme 3.8 (0.2)
Total tax charged/(credited) in the Statement of Comprehensive Income 3.9 (0.1)
Tax relating to items credited directly to equity
Deferred tax:
Share-based payments (0.1) -
Total tax credited to equity (0.1) -
6. Earnings/(Loss) Per Share
Group
52 weeks ended 52 weeks ended
26 March 2022 27 March 2021
£m £m
Profit/(loss) attributable to equity shareholders 7.1 (49.6)
Separately disclosed items net of tax (1.1) 9.3
Adjusted earnings/(loss) attributable to equity shareholders 6.0 (40.3)
Number Number
Weighted average share capital 61,264,000 55,207,000
Dilutive outstanding options and share awards 413,000 139,000
Diluted weighted average share capital 61,677,000 55,346,000
40p 'A' and 'C' ordinary share Pence Pence
Basic earnings/(loss) per share 11.59 (89.84)
Diluted earnings/(loss) per share 11.51 (89.84)
Adjusted earnings/(loss) per share 9.79 (73.00)
Diluted adjusted earnings/(loss) per share 9.73 (73.00)
4p 'B' ordinary share Pence Pence
Basic earnings/(loss) per share 1.16 (8.98)
Diluted earnings/(loss) per share 1.15 (8.98)
Adjusted earnings/(loss) per share 0.98 (7.30)
Diluted adjusted earnings/(loss) per share 0.97 (7.30)
6. Earnings/(Loss) Per Share (continued)
Continuing operations 52 weeks ended
27 March 2021
52 weeks ended £m
26 March 2022
£m
Profit/(loss) attributable to equity shareholders 7.1 (48.2)
Separately disclosed items net of tax (1.1) 8.4
Adjusted earnings/(loss) attributable to equity shareholders 6.0 (39.8)
Number Number
Weighted average share capital 61,264,000 55,207,000
Dilutive outstanding options and share awards 413,000 139,000
Diluted weighted average share capital 61,677,000 55,346,000
40p 'A' and 'C' ordinary share Pence Pence
Basic earnings/(loss) per share 11.59 (87.31)
Diluted earnings/(loss) per share 11.51 (87.31)
Adjusted earnings/(loss) per share 9.79 (72.09)
Diluted adjusted earnings/(loss) per share 9.73 (72.09)
4p 'B' ordinary share Pence Pence
Basic earnings/(loss) per share 1.16 (8.73)
Diluted earnings/(loss) per share 1.15 (8.73)
Adjusted earnings/(loss) per share 0.98 (7.21)
Diluted adjusted earnings/(loss) per share 0.97 (7.21)
For the purposes of calculating the number of shares to be used above, 'B'
shares have been treated as one-tenth of an 'A' or 'C' share. The earnings
per share calculation is based on earnings from continuing operations and on
the weighted average ordinary share capital which excludes shares held by
trusts relating to employee share options and shares held in treasury of
1,744,564 (2021: 1,777,248).
Diluted earnings per share amounts are calculated using the same earnings
figure as for basic earnings per share, divided by the weighted average number
of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all the
dilutive potential options into ordinary shares.
Adjusted earnings per share are 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. Adjusted earnings per
share measures have been included as the Directors consider that these
measures better reflect the underlying earnings of the Group.
7. Dividends
52 weeks ended
52 weeks ended 27 March 2021
26 March 2022 £m
£m
Declared and paid during the period
Equity dividends on ordinary shares:
Final dividend for 2021: 0p (2020: 0p) - -
Interim dividend for 2022: 3.90p (2021: 0p) 2.4 -
Equity dividends paid 2.4 -
Dividends on cumulative preference shares (note 4) 0.1 0.1
Proposed for approval at the Annual General Meeting
Final dividend for 2022: 7.41p (2021: 0p) 4.6 -
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.
8. Property, Plant and Equipment
Group Land & buildings - owned & used Land & buildings - owned & acting as lessor Plant, machinery Fixtures & fittings Total
£m £m & vehicles £m £m
£m
Cost
At 28 March 2020 498.4 109.2 6.5 168.9 783.0
Additions 0.6 - - 13.2 13.8
Disposals (1.4) (0.3) - (0.6) (2.3)
Disposals of discontinued operations (6.8) - (0.1) (7.6) (14.5)
Transfer to assets held for sale (8.1) (1.1) (0.1) (2.3) (11.6)
At 27 March 2021 482.7 107.8 6.3 171.6 768.4
Additions 11.3 1.8 - 9.6 22.7
Disposals (1.3) - - (1.9) (3.2)
Transfer to assets held for sale (1.5) - - (0.4) (1.9)
Transfer from assets held for sale 2.4 - - 0.6 3.0
At 26 March 2022 493.6 109.6 6.3 179.5 789.0
Depreciation and impairment
At 28 March 2020 43.7 7.5 1.8 112.3 165.3
Provided during the year 3.9 0.7 - 14.0 18.6
Disposals (0.2) - - (0.6) (0.8)
Disposals of discontinued operations (4.7) - - (5.8) (10.5)
Impairment loss 7.4 1.6 - - 9.0
Transfer to assets held for sale (0.9) (0.1) (0.1) (1.9) (3.0)
Reclassification of impairment to right-of-use-assets (0.4) - - - (0.4)
At 27 March 2021 48.8 9.7 1.7 118.0 178.2
Provided during the year 4.2 0.6 - 13.1 17.9
Disposals (1.3) - - (1.9) (3.2)
Impairment loss 3.3 - - - 3.3
Transfer to assets held for sale (0.1) - - (0.3) (0.4)
Transfer from assets held for sale - - - 0.5 0.5
At 26 March 2022 54.9 10.3 1.7 129.4 196.3
Net book value at 26 March 2022 438.7 99.3 4.6 50.1 592.7
Net book value at 27 March 2021 433.9 98.1 4.6 53.6 590.2
Net book value at 28 March 2020 454.7 101.7 4.7 56.6 617.7
9. Impairment
Group 2022 2021
£m £m
Impairment losses
Intangible assets - 0.6
Property, plant and equipment 3.3 9.0
Right-of-use assets - 1.6
Assets held for sale - 0.2
Lease receivable - 1.5
Total net impairment charge 3.3 12.9
During the 52 weeks ended 26 March 2022, the Group recognised an impairment
loss of £3.3 million (2021: £9.0 million) on property, plant and equipment
and £nil (2021: £1.6 million) of impairment on right-of-use assets in
respect of the write down of six properties where their asset values exceeded
the higher of fair value less costs to sell or their value in use. The
impairment losses were driven principally by changes in the local competitive
environment in which the pubs are situated.
10. Leases
Amounts recognised in the Balance Sheet
Group 2022 2021
£m £m
Right-of-use assets
Properties 73.1 81.3
Equipment 0.6 0.2
Vehicles 0.1 0.4
73.8 81.9
Lease liabilities
Current 6.8 6.7
Non-current 73.9 83.2
80.7 89.9
10. Leases (continued)
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Group Property Equipment Vehicles Total
£m £m £m £m
Net carrying value as at 27 March 2021 81.3 0.2 0.4 81.9
Lease amendments - rent concessions (2.6) - - (2.6)
Lease amendments - other(1) 1.3 1.1 (0.2) 2.2
Depreciation (6.9) (0.7) (0.1) (7.7)
Net carrying value as at 26 March 2022 73.1 0.6 0.1 73.8
(1) Lease amendments include lease terminations, modifications, reassessments and extensions to existing lease agreements.
11. Analysis of Net Debt
52 weeks ended 26 March 2022 At 27 March Cash Non- At 26 March 2022
2021
flows
cash(1)
£m
£m
£m
£m
Cash and cash equivalents:
Cash and short-term deposits 17.1 (1.5) - 15.6
17.1 (1.5) - 15.6
Financial liabilities:
Lease liabilities (89.9) 8.6 0.6 (80.7)
(89.9) 8.6 0.6 (80.7)
Debt:
Bank loans(2) (107.9) (11.4) (0.7) (120.0)
CCFF (99.8) 100.0 (0.2) -
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (235.2) 88.6 (0.9) (147.5)
Net debt (308.0) 95.7 (0.3) (212.6)
11. Analysis of Net Debt (continued)
52 weeks ended 27 March 2021 At 28 March 2020 Cash Non- At 27 March 2021
£m
£m
flows cash(1)
£m
£m
Cash and cash equivalents:
Cash and short-term deposits 20.3 (3.2) - 17.1
20.3 (3.2) - 17.1
Financial liabilities
Lease liabilities (112.9) 9.2 13.8 (89.9)
(112.9) 9.2 13.8 (89.9)
Debt:
Bank loans(2) (171.7) 64.0 (0.2) (107.9)
CCFF - (99.4) (0.4) (99.8)
Debenture stock (25.9) - - (25.9)
Preference shares (1.6) - - (1.6)
Total borrowings (199.2) (35.4) (0.6) (235.2)
Net debt (291.8) (29.4) 13.2 (308.0)
(1) Non-cash movements relate to the amortisation of arrangement fees,
arrangement fees accrued and movements in lease liabilities.
(2 )Bank loans net of arrangement fees and cashflows include the payment of
arrangement fees.
12. Retirement Benefit Obligations
The amount included in the Balance Sheet arising from the Group's obligations
in respect of its defined benefit retirement plan are:
2021
2022 £m
£m
Fair value of Scheme assets 143.9 143.8
Present value of Scheme liabilities (129.6) (147.3)
Surplus/(deficit) in the Scheme 14.3 (3.5)
12. Retirement Benefit Obligations (continued)
Defined benefit obligation Fair value of Scheme assets Net defined benefit surplus/(deficit)
2022 2021 2022 2021 2022 2021
£m £m £m £m £m £m
Balance at beginning of the year (147.3) (128.5) 143.8 123.8 (3.5) (4.7)
Included in profit and loss
Net interest cost (2.8) (3.0) 2.8 2.9 - (0.1)
(2.8) (3.0) 2.8 2.9 - (0.1)
Included in Other Comprehensive Income
Actuarial gains/(losses) relating to:
Actual return less expected return on Scheme's assets - - 0.6 19.5 0.6 19.5
Experience gains/(losses) arising on Scheme liabilities 14.9 (20.5) - - 14.9 (20.5)
14.9 (20.5) 0.6 19.5 15.5 (1.0)
Other
Employer contributions - - 2.3 2.3 2.3 2.3
Benefits paid 5.6 4.7 (5.6) (4.7) - -
5.6 4.7 (3.3) (2.4) 2.3 2.3
Balance at end of the year (129.6) (147.3) 143.9 143.8 14.3 (3.5)
Key assumptions
The key assumptions used in the 2022 valuation of the Scheme are set out
below:
2022 2021
Key financial assumptions used in the valuation of the Scheme
Rate of increase in pensions in payment 3.75% 3.35%
Discount rate 3.00% 1.95%
Inflation assumption - RPI 3.80% 3.40%
Inflation assumption - CPI (pre 2030/post 2030) 2.9%/3.8% 2.5%/3.4%
2022 2021
Years Years
Mortality assumptions
Current pensioners (at 65) - males 22.2 22.2
Current pensioners (at 65) - females 24.5 24.4
Future pensioners (at 65) - males 23.6 23.5
Future pensioners (at 65) - females 25.9 25.9
12. Retirement Benefit Obligations (continued)
Assets in the Scheme 2022 2021
£m £m
Corporate bonds 25.0 25.5
Index linked debt instruments 26.0 28.3
Overseas equities 31.5 30.6
Alternatives(1) 56.5 53.7
Cash 1.6 1.9
Annuities 3.3 3.8
Total market value of assets 143.9 143.8
(1) Alternatives is composed of holdings in diversified growth investment
funds.
13. Post Balance Sheet Events
On 27 May 2022, the Group successfully completed the refinance of its debt
facilities of £192 million, which were due to mature in February 2023. The
new debt facilities consist of a £90 million term loan and a £110 million
revolving credit facility provided by a syndicate of seven banks. The new
facilities have an initial maturity date of 27 May 2026 with an option to
extend by a further year. The facilities are unsecured, and the borrowing cost
of the facilities is determined by the level of Company leverage.
1 Pre IFRS 16
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