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NOURISHING
THE SOUL
SINCE 1845
Annual
Report and
Accounts
2023
Living our purpose,Living our purpose,
Celebrating together Celebrating together
Being part of the Family
We are a family business in the
broadest sense, bringing that family
ethos and feeling to how we work.
One team, pulling together, in each
pub and hotel, and also together
across Fuller’s.
p.21p.21
Celebrating individuality
We nurture the individuality, spirit and
unique character of each person, pub,
and bedroom, because that’s what
makes us special.
p.25p.25
At Fuller’s, we create experiences
that nourish the soul, and
throughout this report we will
show how we do that through
acommitment to excellence
andaclear long-term strategy.
Doing things the right way
We have a deep pride for and a
genuine enjoyment of the business
we’re inand we apply care, quality
andintegrity to everything we do.
Always asking what’s next?
We have a restless passion to
continuously improve, experiment
andmake things better. We are
alwaysasking how we can do
moreforour people, our customers,
ourpubs andhotels.
What’s inside...
p.19p.19
p.23p.23
Strategic Report
Highlights 1
At a Glance 2
Where we Operate 4
Investment Proposition 6
Chairman’s Statement 8
Chief Executive’s Review 10
Business Model 14
Strategy 16
Key Performance Indicators 28
Financial Review 30
Risk Management 34
Principal Risks and Uncertainties 36
Sustainability Report 40
Task Force on Climate-related
Financial Disclosures
54
Stakeholder Engagement 62
Section 172 Statement 64
Non-Financial Information Statement 65
Governance
Chairman’s Introduction 66
Board of Directors 68
Corporate Governance Report 70
Nominations Committee Report 76
Audit and Risk Committee Report 81
Directors’ Remuneration Report 86
Directors’ Report 101
Directors’ Responsibilities Statement 104
Financial Statements
Independent Auditor’s Report 105
Group Income Statement 112
Group Statement of Comprehensive Income 113
Group Balance Sheet 114
Company Balance Sheet 115
Group Statement of Changes in Equity 116
Company Statement of Changes in Equity 117
Group Cash Flow Statement 118
Company Cash Flow Statement 119
Notes to the Financial Statements 120
Additional Information
Shareholder Information 166
Glossary 167
Five Years’ Progress 168
Highlights
Financial and Operational Summary
• Revenues grew 33% to £336.6 million (FY2022: £253.8 million) as the
businessrecoveredfrom the impact of Covid-related restrictions on trade
• Like-for-like sales in the year grew by 17.5% compared to prior year,
withCentralLondongrowing by 40.1%
• Adjusted profit before tax increased by 76% to £12.7 million (FY2022: £7.2 million)
• Net debt at £132.8 million (FY2022: £131.9 million) with cash generated by the business
funding investment in the estate and returns to shareholders
• Directors’ valuation of the total property portfolio in May 2022 at £995.6 million,
approximately £400 million above our current book value – giving implied adjusted
netasset value per share of £14.07
• Total dividend of 14.68p declared, representing a 30% increase on last year
• Board to keep further share buybacks under review in line with its capital
allocationframework.
Strategic Update
• Clear long-term strategy, with all elements contributing to growing sales momentum
andprofitability
• Maintained investment in the existing estate, with £25 million invested in the period
toenhance capital values and drive further growth
• Maximising our pubs’ potential through proactive portfolio management to ensure all
pubs are operated to deliver a great customer experience, while optimising our returns
– Three new pubs opened during the year – The Rising Sun in the New Forest, The
Willow in Bourton-on-the-Water, and The Queen’s Arms at Heathrow Terminal 2
– Four pubs transferred from Managed operations to Tenanted Inns in the year, with
afurther 23 identified, of which four transfers have already completed
– Small number of pubs earmarked for disposal
– Sale agreed on The Mad Hatter, Southwark, which will realise £20 million in value
anda profit on disposal of £17 million
• Continued investment in our people to develop the leaders of the future and deliver
bestin class service for our customers
• Dawn Browne, People & Talent Director, promoted to Main Board from 3 July 2023
• Implementing a wide range of energy reduction initiatives as part of our Life is too
goodtowaste programme.
FY2023
£m
FY2022
£m
Revenue and other income 336.6 253.8
EBITDA
1
51.8 44.3
Adjusted profit before tax
2
12.7 7.2
Statutory profit before tax 10.3 11.5
Basic earnings per share
3
12.98p 11.59p
Adjusted earnings per share
3
16.10p 9.79p
Dividend per share 14.68p 11.31p
Net debt excluding lease liabilities
4
132.8 131.9
All figures above are from continuing operations.
1 Earnings before interest, tax, depreciation, amortisation, profit on disposal of property, plant and
equipment, andseparately disclosed items.
2 Adjusted profit before tax is the profit before tax excluding separately disclosed items.
3 Per 40p ‘A’ or ‘C’ ordinary share. Adjusted EPS is calculated using earnings attributable to equity
shareholders after tax excluding separately disclosed items. Basic EPS includes separately
discloseditems.
4 Net debt excluding lease liabilities comprises cash and short-term deposits, bank overdraft, bank loans,
debenture stock and preference shares.
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OVERVIEW
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ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
At a Glance
Our purpose
WE CREATE EXPERIENCESTHAT
nourish the soul
Our mission
WE’RE CRAFTING A FAMILY
OFDISTINCTIVE PUBS
ANDHOTELS WHERE
PEOPLE
feel
they belong
Our
Sustainability
Pillars
OUR PEOPLE
See pages 52 to 53
OUR COMMUNITIES
See pages 48 to 51
Our people are what
makes Fuller’s special.
That’s why we work
hard to ensure we
create an environment
where they can be
theirtrueself.
Communities have
always been at the
heart of Fuller’s – it’s
what makes our pubs
more than just bricks
and mortar.
Cotswold Inns & Hotels
Fuller’s acquired Cotswold Inns & Hotels in October 2019 –
acollection of seven beautiful hotels, with a total of 201
bedrooms,inthe heart of the Cotswolds – one of the most
beautifulparts ofGreat Britain.
Specialising in traditional hospitality and incredibly popular for
weddings, the hotels offer the chance to get away from the hustle
and bustle of daily life in venues offering outstanding service, the
heartiest of breakfasts, the most delicate of afternoon teas and a
fantastic array of fresh food and excellent wines, beers and spirits.
Who we are
WE ARE THE PREMIUM PUBS AND HOTELS
BUSINESS THAT IS FAMOUS FOR BEAUTIFUL
AND
inviting
VENUES WITH DELICIOUS
FRESH FOOD, A
vibrant
AND
INTERESTING RANGE OF DRINKS,
beautiful
BEDROOMS AND ENGAGING
SERVICE FROM
passionate
PEOPLE
2 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
30%
23%
14%
33%
Fuller’s Managed
within M25
Fuller’s Tenanted
within M25
Fuller’s Managed
outside M25
Fuller’s Tenanted
outside M25
9%
91%
Managed
Tenanted
18%
40%
42%
Urban
Suburban
Rural
Managed Pubs and Tenanted Inns (%)*
Revenue by Division (%)*
Analysis of Managed revenue
urban/suburban/rural (%)*
OUR PLANET
See pages 42 to 45
We know that a healthy planet
is essential for the future of
humanity and small changes
collectively make a big
difference. We are on
ourjourney to Net Zero.
Our values
DOING THINGS THE RIGHT WAY
See page 19
BEING PART OF THE FAMILY
See page 21
CELEBRATING INDIVIDUALITY
See page 25
ALWAYS ASKING
WHAT’S NEXT?
See page 23
Bel & The Dragon
Fuller’s acquired Bel & The
Dragon in June 2018. It now
comprises seven stunning
country inns, across the
HomeCounties. This year, we
added TheGeorge & Dragon in
Westerham to the brand. Bel &
The Dragon offers outstanding
hospitality, incharacterful
buildings, with afocus on
world-class wines – including
many sold by the glass – and
high quality, fresh, seasonal
dishes that are both visually
stunning and delicious.
* As at 1 April 2023
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GOVERNANCE
66-104
LONDON
1
Where we Operate
Suburban
87
The number of Managed Pubs & Hotels
417
Number of bedrooms
Rural
39
The number of Managed Pubs & Hotels
402
Number of bedrooms
1
2
Acquisition: The Willow
Bourton-on-the-Water
We love iconic locations – and they don’t
come much more iconic than this amazing
village, known as The Venice of the Cotswolds.
A great addition that further builds our
presence in this affluent area.
OUR
diverse portfolio
ENCOMPASSES
SOME 377 PUBS AND HOTELS ACROSS LONDON
AND THESOUTH OF ENGLAND
4 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
LONDON
2
3
Our Pubs & Hotels
186
MANAGED
7
BEL & THE
DRAGON
7
COTSWOLD
INNS &
HOTELS
177
TENANTED
Urban
74
Number of Managed
Pubs&Hotels
205
Number of bedrooms
3
Operational
Highlights
Average number of employees
5,247
Number of covers
bookedoutdoors
97.7k
Number of people
onourdatabase
4.1m
RevPar in the year
£88.94
Pints soldduringthe year
20.3m
Year on year growth
incocktailsales
42%
Number of burgers
soldduringtheyear
860k
Rise in like-for-like
accommodationsales
24.7%
Refurbishment:
The George &Dragon,
Westerham
Having transferred this historic building from
our Tenanted Inns division, we completed
a£2.6m investment and it is now standing
proud in the centre of Westerham, as part
ofour Bel & The Dragon estate.
Rising from the ashes:
TheAdmiralty,
Trafalgar Square
After a major fire in July 2022, we
rebuilt The Admiralty – including
making it fully electric. Read more
on page 45.
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GOVERNANCE
66-104
Investment Proposition
WE HAVE A CLEAR STRATEGY
We operate a family of characterful pubs
and hotels in the South of England
• Our estate encompasses some 377 pubs
and hotels across London and theSouth
ofEngland
• We operate in the premium segment while
offering excellent value for money.
We source and create experiences
thatnourish the soul
• Most of our pubs are deeply entrenched in
their local communities with generations
of goodwill behind them. We are a regular
part of our customers’ lives, and we strive
to earnthe right to welcome them
backagain and again
WE OPERATE IN A MARKET
WITHOPPORTUNITIES
Demographic strengths
• In our heartland of London and the
SouthofEngland, incomes are traditionally
more resilient. Hospitality spend in our
regions is 13% greater than the UK
average, and incomes are circa 14%
higher. Our wide demographic also attracts
mature customers, manyof whom have
greater disposable incomes.
Customers are attracted by our premium offer
• Every week we welcome thousands of
people to our pubs and hotels, many being
WE ARE FAMILY, INSIDE AND OUT
Our multi-generation family business
extends a sense of belonging to all
ourstakeholders
• For customers, we maintain the cherished
ethos of ‘the local’
• Our people are also family. We create
meaningful career paths and invest in their
development. This shows in our senior
leadership where around 65% of our
general managers joined us at entry level
and have developed within the business
• Our pubs are operated locally, with
managers given the freedom to optimise
the décor and the offer according to local
characteristics. Thisextends to creating
engaging experiences, from open-air
Shakespeare to stand-up comedy
andopen mic nights.
Our teams are customer-centric, focused on
delivering outstanding quality and service
• Memorable hospitality demands great
people behind the bar and stars in the
kitchen. Our focus on quality and
servicehelps turn our customers
intopowerful ambassadors.
returning guests. Our customers look for
agreat experience and they appreciate
the benefit of our premium offer.
Leveraging digital opportunities
• An increasing digital awareness among our
customers allows us to get even closer to
them, and provide a tailored experience
which is smooth and seamless. We have
developed our digital infrastructure to utilise
robust user data and help enhance the
effectiveness of our targeted marketing.
Wehave also enhanced our online
presence, from booking tables, rooms
orevents through to ordering and paying.
• Much of our kitchen talent is also
home-grown and at our Chefs’ Guild we
set a clear pathway that can take kitchen
assistants right up to executive chef level.
We welcome over 100 apprentice chefs
each year, giving them an inspirational
start to careers in hospitality.
Great family businesses think andactlong term
• We are custodians of the Company, with
the clear goal of passing it onineven
better health than we found it. This means
managing our assets carefully, with the
collective strength of our portfolio
delivering increasing value.
OUR INVESTMENT PROPOSITION PUTS US IN A
POSITION OF
strength
AND
security
6 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
WE HAVE A CLEAR AND CONSISTENT
CAPITAL ALLOCATION FRAMEWORK TO
ENHANCE LONG-TERM VALUE CREATION
We invest in the long-term organic growth
of the business
• We invest annually to grow capital value,
and to drive returns.
A sustainable and progressive dividend
• With a planned cover range of 2.5-3.0x,
and growth in line with EPS growth to
drive dividend yield.
WE ACTIVELY MANAGE OUR
ASSETPORTFOLIO
The Company has a high quality portfolio
• Freehold ownership represents 92%
ofour asset value. Following the latest
valuation, this represents an asset value
of£995.6 million.
We deliver capital appreciation aswell
asearnings growth
• As custodians of the portfolio, weprotect
and enhance its quality withmaintenance
investment and lookfor opportunities to
enhance tradeand grow income through
investment. Each year we expect to invest
in the region of £20–30 millionimproving
the estate.
WE OWN OUR IMPACT BECAUSE
LIFEISTOO GOODTO WASTE
Our environment and our planet demand that
we take meaningful actionto protect them
• We aim to be Net Zero by 2030
(operational) and 2040 (supply chain)
• We will continue to source 100%
renewable energy
• We will reduce energy consumption
by25% and halve our gas usage.
We create spaces where communities are
welcomed, supported and can come together
• Each site encouraged to support at least
one local group each year
M&A opportunities
• With a disciplined approach to inorganic
investment and aview to increasing
long-term returns.
Leverage
• With a target of up to circa 3x net debt/
EBITDA. If achieved, surplus cash
maybereturned to shareholders.
Our strong Balance Sheet provides
uswithaccess to capital
• We haverecently agreed a new four
year£200 million bank facility. This
alsoprovides significant headroom to
continue our M&A strategy, building on
the successful Cotswold Inns & Hotels
andBel & The Dragon transactions
• We actively manage the property
portfolio to optimise returns – as
demonstrated by the recent transfers of
Managed pubs to Tenanted operations
• We continually gauge the performance
ofassets, considering fresh pub
propositions, or the option of disposals.
• We donate 1% of our profits to good
causes every year
• We create good job opportunities for
people with additional needs.
Our governance is designed to build trust
and ensure equal opportunities foreveryone
• A diverse place to work with no barriers to
entry and with clear development paths
• A place where everyone has a voice
• A place free from modern slavery
anddiscrimination of any kind.
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GOVERNANCE
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T
he 2020s is fast becoming the decade that has seen an
unprecedented use of the word unprecedented. A year
ago,Ireflected on the impact of the Omicron variant on our
business. Since then, the war in Ukraine has continued, food and
energy inflation, together with the cost of living in general, has
spiralled, we have seen strikes across a wide range of industries
and we have had three Prime Ministers, four Chancellors of the
Exchequer and fiscal statements that have taken the economy
inallmanner of directions.
Against this backdrop, your Company has delivered a good
performance, and in times of short-term upheaval, long-term
businesses come into their own. The Executive Team, under
theleadership and guidance of Simon Emeny, is implementing
ourstrategic plan to return to pre-pandemic levels of profitability
anddeliver long-term growth for the Company, our shareholders
andour team members.
With our clear purpose to create experiences that nourish the soul,
and five defined strategic pillars, our teams throughout the business
understand the role they play in our success and have the skill,
motivation and dedication to deliver it. Despite the twists and turns,
the stops and starts, they have continuously bounced back to delight
their customers and deliver an outstanding level of service. They are
the heart and soul of Fuller’s, and I would like to thank each and every
one of them for their loyalty and commitment.
MICHAEL TURNER —CHAIRMAN
“ WE COULD NOT
DO WHAT WE DO
WITHOUT THE
commitment
AND
dedication
OF OUR PEOPLE.”
Chairman’s Statement
8 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Underpinning our success is, and has always been, the strength
ofourexcellent, predominately freehold estate. We have always
maintained that operating both managed and tenanted models offers
a wide range of benefits, particularly around portfolio management.
And while I am always proud of all parts of the Fuller’s business, I was
particularly delighted to see the Tenanted Inns team pick up the award
for Best Tenanted Pub Company at this year’s Publican Awards.
We are seeing rising numbers of international tourists and ever more
workers returning to the City and this, combined with the actions we
are taking as part of the strategy to continue to improve profitability,
gives me confidence and optimism in the future.
As part of our ongoing succession planning, I am delighted to announce
that Dawn Browne has accepted our invitation to join the Board with
effect from 3 July 2023. Dawn joined Fuller’s in 2011 and, following
roles in the Learning & Development Team and a successful term as
Head of Operations for the City, has been our People & Talent Director
since 2019. As a people-centric business, and given her unique skillset,
she has an important role to play on the Board. Her in-depth knowledge
of our team members, alongside her operational experience, will
provide invaluable insight. We also look forward to her support to
help us to drive and prioritise diversity and inclusion, and to provide
visibility on matters around culture and organisational change. I know
her appointment will be extremely well received by the business.
+30%
Increase in total dividend per share
+33%
Increase in total Group revenue
Dividend
The Board is pleased to announce a final dividend of 10.0p
(FY2022: 7.41p) per 40p ‘A’ and ‘C’ ordinary share and 1.0p
(FY2022: 0.741p) per 4p ‘B’ ordinary share, representing a
year-on-year increase of 35%. This will be paid on 27 July 2023
toshareholders on the share register as at 23 June 2023.
Thetotaldividend of 14.68p (FY2022: 11.31p) per 40p ‘A’
and‘C’ordinaryshare and 1.468p (FY2022: 1.131p) per 4p ‘B’
ordinarysharerepresents a30% year-on-year increase and
continuesourreturn to a progressive dividend policy.
Michael Turner
Chairman
14 June 2023
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“ WE HAVE STARTED
THE
next chapter
IN OUR HISTORY.”
Overview
We have made good progress in the last year, with continued
investment in our people and properties, providing the perfect
post-Covid springboard for the future. Looking forwards, that future
looks very positive. We continue to build on our five strategic pillars,
investing in the areas that have the greatest impact on our business
and growing our profitability. We live by our values and our culture,
and despite having had a lot to contend with over the last year
–withinterruptions from tube and train strikes and high cost
inflationin energy, food and wages – our teams across the estate
aresuccessfully delivering experiences that nourish the soul.
There is clearly more to come too, as international tourism numbers
continue to rise, the rhythm of life grows louder across offices in our
towns and cities, and cost pressures stabilise. Ongoing rail strikes
are unhelpful – particularly in the Capital – but commuters are a
resilient bunch and the impacts, while detrimental financially, are
thankfully short-lived. Most importantly to Fuller’s is that we have
along-term vision, continuing to stick to the things we do best,
andthis is validated by our customers’ continued loyalty.
Strategic Review
We have forward momentum, a great team of people, we are
alreadybuilding on the 33% rise in total sales last year and have
started the new financial year with excellent like for like growth.
Wewill continue to achieve this through our long-term strategy –
delighting our customers, inspiring our people, enhancing our estate,
evolving ourbusiness and owning our impact. These strategic pillars
have not changed, and they provide a framework that allows us to
grow our business in a sustainable manner.
We are a proactive asset manager and have taken some significant
portfolio management decisions to evolve our estate, ensuring it
remains fit for the future. In order to improve and sustain returns in
thelong term, post year end we identified 23 of our Managed Pubs
totransfer across into our Tenanted Inns division – four of which
havemoved across already. We have also taken theopportunity
tocrystallise the value of The Mad Hatter in Southwark, which
SIMON EMENY —CHIEF EXECUTIVE
Chief Executive’s Review
10 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
wehave contracted to sell as part of a larger property redevelopment,
in a sale that will deliver Fuller’s £20 million in value on completion
nextyear. These funds, combined with our ambition to continue to
build our business, will allow us to grow both organically and
throughacquisition.
Like all businesses, margins have been increasingly squeezed due
tocost inflation, but we are addressing this through a programme of
action focused on delivering sales-led growth while keeping a tight
rein on costs.
Delight our customers
We are confident that a trip to the great British pub will always be
anaffordable luxury and part of our national psyche. But customers
have a choice, and they will choose to go to the pubs and hotels that
deliver an outstanding customer experience at a price the consumer
sees as good value.
In recent years, we have put a lot of effort and emphasis on the entire
customer journey – starting with the digital touchpoints that attract
the customer, through the in-pub experience around choice, service
delivery and reasons to visit, and finishing with the correct level of
follow up and future contact.
We are reaping the rewards of the digital transformation project
thatcompleted in the previous financial year, and which allows for
easy, low cost per customer communications to promote the great
activities that take place in our pubs. One of the activities that we will
be looking at for the coming year is to build our presence around a
premium sport experience – which will increase frequency of visit,
spend per head and help acquire new customers.
We know that there is a demand for premium sports occasions –
bothin terms of near-stadium packages such as at The Cabbage
Patch and The Turk’s Head, both at Twickenham, and when watching
live sport on the television. The pub is always seen as the next best
place to being inthe stadium for major sporting events and we will
begiving our customers amazing hospitality, bookable spaces,
greatmenus and atmosphere to build on these lucrative occasions,
incollaboration with our drinks partners – particularly Asahi, who
are one of the mainsponsors of this year’s Rugby World Cup.
To stay ahead of the competition, we are also in the process
ofafarmtofork project to ensure we keep our food offer fresh,
interesting andrelevant. This process has included some extensive
customer segmentation work, which will further help us to ensure
that we target the right offer, in the right style of venue, to the right
customer – driving sales and reducing the acquisition and retention
costs of new and existing customers.
+10%
Like for like food sales
Service with a smile
Food for thought
It’s our amazing people that make
thereal difference in our businesses
andyou can see how we invest in
ourpeopleon page 16.
We will be taking on over 100 chef
apprentices next year who will learn
their trade through our Chefs’ Guild
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Chief Executive’s Review Continued
£306.8m
Total revenue for Managed Pubs and Hotels
£30m
Operating profit f om our
ManagedPubsandHotels
Inspire our people
Hospitality is a people business and it is our amazing team members
at the front line that can make the biggest impact on our customers.
They will only deliver great service and an experience that nourishes
the soul if they are well-trained, highly motivated, happy and engaged.
During the last year, we have worked hard to ensure we are listening
toour teams across the business – so we were delighted that
response rates and levels of happiness and engagement rose
whenwe conducted our second Happiness Index survey. In addition,
wereceived a plethora of individual comments and suggestions –
allofwhich have been read, recorded and collated into common
themesand, in turn, shared and discussed by the Executive Team
sofuture actions can be taken. This is only one strand of our listening
strategy and is supported by new forums for our General Managers,
our Head Chefs and our support centre team and regular catch-up
sessions with Helen Jones, our designated Non-Executive Director
responsible for employee engagement.
During the year, we also had our largest graduation event for all
thoseundertaking development programmes, and our apprenticeship
programmes – both front of house and through our Chefs’ Guild
–continue to deliver excellent results with 200 apprentices trained
last year across six different programmes, making full use of our
Apprenticeship Levy. There is more to come, with an anticipated 220
apprenticeships in the coming year, and I am delighted to see more
ofour General Managers choosing to take onthe LEAP programme
degree level apprenticeship. This investment indevelopment, and
inparticular leadership, will secureour future success.
Enhance our estate
Operating both Managed and Tenanted pubs has always been a
keytenet of our strategy. It allows us to holistically curate our pub
estate, so we can operate individual sites under the business model
that works best for the pub and its customers, best for the Company,
and delivers the best return for our shareholders.
Over the years, we have always moved sites between the two
businesses, but moves normally happen on an individual basis.
Following 12 months of trading free of restrictions, and in light of
thechanging economics of running a pub, we undertook a detailed
review of the estate post year end – particularly around profitability
within our managed framework – and, as a result, decided to move
23pubs intoour Tenanted Inns division. Four of these transfers
havealready happened, with the remainder due to take place in
thecoming weeks.
In line with our values, we put our people first, and the majority
ofteam members in the impacted pubs could either remain in situ
with the new Tenant, apply to take on the Tenancy for themselves,
ormove to another Fuller’s managed site.
During the year we decided to exit a small number of leasehold sites,
including The Ship at Borough and The Inn of Court at Holborn, and
earmarked for disposal a handful of pubs which no longer satisfy
ourinternal returns criteria. We have also decided to accept an
offerof £20 million in value for The Mad Hatter in Southwark,
representing asignificant premium above its net book value of
£2.7 million. Thistransaction is due to complete in summer 2024.
Supporting all of this activity is our continued commitment to
maintaining high standards in our existing estate and developing
sites for the future. This is reflected with three new openings during
the year – The Rising Sun in the New Forest, The Willow in the idyllic
Cotswolds village of Bourton-on-the-Water, and The Queen’s Arms
at Heathrow Terminal 2.
In addition, we continue to invest to enhance the core pub estate.
Wewere delighted to reopen The Admiralty – the iconic and
onlypubon Trafalgar Square – following a £3.3 million rebuild
afteramajor fire last summer – and we recently completed
a£2.5 million investment at The Sanctuary House, near
WestminsterAbbey, reopening in time to welcome customers
forKingCharles III’scoronation.
Evolve our business
While we have a long-term strategy – we never stop monitoring
trends, societal changes, and the behaviour of existing and potential
customers. Reacting to those changes is imperative in delivering
continued growth and this has been reflected in the investments
wemade through our digital transformation project and that we
willmake as we continually review and hone our food offering.
12 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
In November, I was delighted to welcome Sam Bourke to the Executive
Team as Marketing Director. Sam has a long history in the hospitality
sector having previously worked for ETM, The Restaurant Group and
Wasabi. Sam is already adding value across the business with her
drive, enthusiasm, and clear focus on the key trading opportunities
that will deliver strong sales for our pubs and hotels.
As well as building on the opportunities provided through enhancing
our premium sports packages, the marketing team is also reviewing
our kids’ menus and ensuring our family proposition is best in class.
In addition, we are looking to capitalise on trading opportunities
during all parts of the day, for example with an elevated and indulgent
brunch offer.
The new Business Central finance system which was implemented
in2021 is delivering high quality information that aids the decision-
making process and with finance, marketing and operations working
in perfect harmony, we can make successful decisions based on our
knowledge of consumer trends, supported by hard data, excellent
supplier relationships, and outstanding operational capability.
Own our impact – because Life is too good to waste
Sustainability and decisions around our people, the planet and our
communities, are at the heart of everything we do – and while doing
things the right way has always been a Fuller’s value, it is now
absolutely part of business as usual.
We have a long-standing declared commitment to reach Net Zero by
2030 for our operational emissions and by 2040 for our supply chain.
We have made good progress on our target to increase recycling and
reuse, while driving down single use items, and we continue to send
zero waste to landfill. In addition, we are currently rolling out a
programme of sustainability champions to help us embed best
practice across the estate.
There are, of course, added benefits to our sustainability programme
with reductions in energy usage of 14% for gas and 13% for
electricity. New equipment in our pubs continually moves us away
from gas and both The Queen’s Arms at Heathrow and The Admiralty
are fully electric. Combined with the fact that all our electricity is
from renewable sources, that means these two pubs are exclusively
powered by zero carbon energy.
As well as our commitment to the environment, we continue to
investin our diversity and inclusion programme, with allseniorleaders
undertaking diversity and inclusion training. In a great example of
creating a virtuous circle, we are recruiting more team members
withintellectual disabilities through a programme supported by our
corporate charity partner, Special Olympics Great Britain. It is joined
up thinking that helps a company of our size punch far above its
weight in this area.
Tenanted Inns
One of the highlights of the year was seeing our excellent Tenanted
Team, under the leadership of Iain Rippon, pick up the award for
BestTenanted and Leased Pub Company (up to 500 sites) at this
year’s Publican Awards. It was great recognition for the excellent
work Iain and the team have done supporting our Tenants, especially
in the current inflationary cost environment.
We have always seen the benefit of operating both managed and
tenanted models. The latter allows pubs to remain within the Fuller’s
estate but with lower capex, lower costs and shared risk and reward,
enabling the innovative, entrepreneurial Tenants, which our pubs
attract, to benefit from Fuller’s operational expertise and vice
versa.The flexibility it facilitates to move pubs between the models
constantly proves useful to all parties and as well as the obvious
benefits of the 23 houses that are moving into the Tenanted division,
we see the benefits of moving in the other direction through sites
such as The George & Dragon in Westerham and The Plough at
EastSheen.
It has been particularly rewarding to see the success of those pubs
on turnover linked agreements, where we have added additional
marketing resource to help our Tenants build their business and
access the benefits that come from also having a Managed estate.
From Shakespeare and opera to panto, we can give our Tenanted
pubs access to revenue building reasons to visit.
Finally, it is training that is the key to running successful tenancies.
Atno cost to our Tenants, this currently includes a Fuller’s induction
day, covering the basics and introductions to key support team
members, social media and marketing courses delivered locally,
bespoke training for turnover agreement pubs, personal licence
courses, a business development day held by a third-party trainer,
and full access to the suite of FLOW online training. We also run an
excellent cellar course at the Fuller’s Brewery through our long-term
supply agreement with Asahi.
Current trading and outlook
We are delighted that our sales momentum has continued into the
new financial year and like for like sales for the first 10 weeks are
up13.9%. Our recent investments at The Willow, The Sanctuary
House and The Admiralty are outperforming our expectations,
andwe have exciting projects planned for this financial year
atTheCounting House in the City, The Forester in Ealing, and
TheRisingSun near Bashley.
I am more optimistic about the future than I have been since before
the pandemic. While the well-documented inflationary environment
has been a challenge, there are positive signs on the horizon. In
addition, we are ever hopeful of a resolution to the ongoing train
strikes to allow us to further benefit from the increasing numbers
ofoffice workers and international tourists returning to the Capital.
Fuller’s is, and has always been, about the long term. We have
anexcellent vision and strategy that signposts the direction the
Company is heading and what we will do to get there. We have a
clear pathway to further growth based on enhancing profitability
from our underlying business, proactively managing our property
portfolio to ensure we are getting the best returns, and continuing
toseek out appropriate acquisitions. We have astrong set of values
that guide us in how to get there, and we have an amazing team of
people who will deliver all of the above. Finally, we have a predominately
freehold estate, epitomised by iconic sites in outstanding locations.
I am excited by the opportunities ahead, optimistic about the future, and
confident in our ability to deliver excellent service to our customers,
careers for our people and returns for our shareholders.
Simon Emeny
Chief Executive
14 June 2023
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Business Model
14 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
CUSTOMER OFFER
We are famous for delicious, fresh, seasonal
foodand an extensive range of beers, wines,
spirits and soft drinks, as well as over 1,000
boutique bedrooms. We have a clear vision to
deliver memorable experiences that ensure our
customers leave happier than when they arrived.
PEOPLE
Our people make the real difference to our
business. Whether dealing with consumers
orcolleagues, they deliver outstanding service
from bar to boardroom. Our purpose is to create
experiences that nourish the soul – and we
striveto ensure that everyone knows the key
rolethey play in delivering that purpose, vision
and strategy.
ICONIC PROPERTIES
Our predominantly freehold estate is mainly
located in the South and South East of England.
Itis a great balance, with rural, suburban and
urban sites. It includes some truly iconic sites
such as The Still & West in Old Portsmouth and
The Churchill Arms in Notting Hill.
DIGITAL TECHNOLOGY
This encompasses a myriad of digital touch points
for the consumer in both pubs and hotels that,
toachieve optimal efficiency and a frictionless
journey, all need to be seamlessly interlinked.
Inaddition, continued development of our digital
technologies and systems further enhance our
customer knowledge and understanding and
create efficiencies in our internal processes.
FINANCIAL STRENGTH
Our strong Balance Sheet and prudent
approachto cash management ensure that
wearewell placed to grow both organically
andthrough acquisition.
MANAGED
ESTATE
TENANTED
INNS
Our resources How we create value
REINVESTMENT AND
REFURBISHMENT
Keeping our fantastic, iconic properties in
firstclass condition is a key tenet for Fuller’s,
and you can find out more on page 17.
Life is too good
to waste
Focused on our people, our communities,
andour planet, Life is too good towaste
is our commitment to sustainability and
underpins everything we do.
Our people are too
good to waste
Find out more
on pages 52 to 53
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We create
experiences
that nourish
the soul
Our purpose
REVENUES
Revenues come from four main
sources – primarily through
operations in our Managed Pubs
and Hotels and our Tenanted Inns,
but also through some unlicensed
property rental and through
rebates from suppliers.
CUSTOMERS
Our customers reward our efforts with their
tradeand their loyalty. They are ultimately the
reason for everything we do and you can see
more details about our commitment to delighting
our customers on page 16. Happy customers make
for happy team members and vice versa –itis the
ultimate virtuous circle.
PEOPLE
Our team members tell us that they enjoy
beingpart of the Fuller’s family and that they
appreciate our investment in their wellbeing. We
provide best-in-class training and development
programmes and genuine opportunities to develop
through internal career progression. Our policies
ensure that we have a respectful and inclusive
working environment and a consistent approach
to supporting our people.
COMMUNITIES
We strive to play a key role in the communities
and neighbourhoods in which we operate with
support for local events and groups. We support
anumber ofcharities, including Special Olympics
GB at a corporate level and, where possible, offer
matched funding for our team members where
they are undertaking fundraising activities.
SUPPLIERS
Having true partnerships with suppliers makes
areal difference – to both parties. We always look
to the long term and making commitments such
asforward buying helps both parties to plan for
the future with confidence and certainty. It also
allows us to work collaboratively to come up with
interesting, bespoke drinks and dishes to tantalise
our customers tastebuds, that are available only
at Fuller’s.
SHAREHOLDERS
This year, we have increased our final dividend
by35%, confirming our commitment to returning
to our progressive dividend policy. In addition,
shareholders with over 1,000 ‘A’ or ‘C’ ordinary
shares, or more than 10,000 ‘B’ ordinary shares
benefit from our Inndulgence Card scheme, giving
discounts in Fuller’s Managed Pubs and Hotels.
The value we share
Our communities
are too good
to waste
Find out more
on pages 48 to 51
Our planet is too
good to waste
Find out more
on pages 42 to 45
We have a highly
cash generative
business and a careful
approach to our
financial management.
SUPPLIER COLLABORATION
We work closely with our suppliers in the spirit of
mutual collaboration and often have bespoke products
on our bars and menus that are available only at Fuller’s.
Strategy at a Glance
WE’RE CRAFTING A
distinctive
FAMILY OF PUBSAND HOTELS WHERE
PEOPLE FEEL THEY belong
3
4
5
2
1
DELIGHT OUR CUSTOMERS INSPIRE OUR PEOPLE
1
Surprise and delight with
distinctiveservice
• Every venue will be an
individualexperience
• Every team member trained inservice
• An inspirational service coach
ateverysite
• Reward and recognition for greatservice
• Measure through Net Promoter Score
(“NPS”).
Tailor the experience in every
puband hotel
• Empower our leaders to deliver
ahighquality, flexible offering
thatfitslocal customer needs
• Indulgent, great British pub classics
with a modern twist, using seasonal
ingredients on the menu
• Broad selection of beers, wines and
spirits, plus artisan drinks ranges, served
byknowledgeable team members
• Beautiful bedrooms, individually styled
with the highest quality standards
• Delivering sector-leading like for like
sales growth.
Create a smoother
customerjourney
• Optimise customers’ digital
journeyforseamless interaction
• Continually evolve our bookings process
to integrate and improvefunctionality
• Improve digital methods of
communication and marketing
throughamulti-channel approach
• Measure by increase in traffic
tomicrosites and associated
conversion to sales.
Attract new customers and
increase visit frequency
• Refresh brand communications
• Extend our appeal to a broader
customer base
• Deliver experience-led events
todrivefrequency and spend
• Drive a culture to maximise sales
fromevent spaces.
2024 priorities
• Delivery of strong like for like salesgrowth
• Development and execution of
exceptional events and experiences
forour customers.
Create a workplace where
everyonefeels they belong
• Launch and deliver inclusion actionplan
• Train and develop our peopleininclusive
leadership
• Create an inclusive culture throughevents
• Create a network of 150 mental health first
aiders across the business.
Appreciate and value our colleagues
• Develop our listening culture using a range
of tools including The Happiness Index
survey, Fuller’s Forum, My Voice, and
Employee Resource Groups
• Fully embed our transparent pay
structureto attract, retain and
encouragedevelopment
• Evolve our distinctive benefits package.
Support and encourage career
development
• Focus on internal promotions,
particularlyatgeneral manager level
• Provide at least 100 apprentices with
careeropportunities every year
• Develop our chefs through the
Fuller’sChefs’ Guild.
Attract the best talent
• Grow our True to You employer brand
• Utilise Brilliant Recruitment, our new
recruitment system and practices
• Recruit for personality and train forskill.
2024 priorities
• Further enhance our leadership capabilities
with all General Managers participating in
our leadership development programme
• Implement actions arising from
ourHappiness Index survey.
2
See pages 18 to 19 for this
strategic pillar in action
See pages 20 to 21 for this
strategic pillar in action
16 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
EVOLVE OUR BUSINESS OWN OUR IMPACT
ENHANCE OUR ESTATE
Innovate to excite
futureconsumers
• Evolve and innovate our
proposition to adapt to changes
in consumer behaviour.
Grow our profitability
• Ensure our strategy is executed
acrossthe business to achieve our
likefor like sales growth ambition
• Grow EBITDA margins by growing
sales, effective labour management
and scheduling, and agile product
portfoliomanagement
• Mitigate central costs by improving
theefficiency of processes
• Leverage the full benefits of
ourinvestment in systems
tomaximiseefficiency.
Enhance our supplier
partnerships
• Build genuine long-term partnerships
• Source authentic food and drink
products, focusing around the seasons
• Continue our positive relationship
withAsahi
• Leverage the appeal of our customer
base and geographic position of
ourestate to retain and attract the
bestsuppliers.
2024 priorities
• As the market evolves, stay ahead
ofmarket trends through the use
ofdata insights
• Evolution of differentiated
day-part offering.
Take action to protect and
respectour planet
• Our planet is too good to waste.
Create spaces for communities
toconnect and feel welcome
• Our communities are too good towaste.
Care for our people and foster
asense of belonging
• Our people are too good to waste.
2024 priorities
• Programme of work to support
commitment to Net Zero by 2030
• Investment in diversity and inclusion
programmes.
Care for our estate
• Continue to look after the fabric
ofourestate
• Utilise skills within the team and our
poolof designers to enhance our offer
• Continue to uphold the highest standards
in the industry
• Ensure the estate and capital value
areprotected for future generations.
Evolve through transformational
investment
• Maximise the potential of our estate by
evolving our pubs through investment
• Optimise our portfolio through active
asset management
• Constantly assess optimal operating
model for each site
• Work with and invest alongside our
Tenants to drive returns.
Invest in growing the estate
• Invest in markets where we alreadyexcel
• Add scale to our core premium pub and
hotel estate
• Complement the existing business
inhighincome, premium demographic
areas, with predominately freehold
assets, and in-filling geographical gaps.
2024 priorities
• Targeted capital investment of
£20-25 million to deliver returns
andenhance the value of our estate
• Effectively transition the planned
23 Managed Pubs and Hotels to
TenantedInns to deliver enhanced
returnswhile looking after our team
members andcustomers.
See pages 24 to 25 for this
strategic pillar in action
See pages 26 to 27 for this
strategic pillar in action
See pages 22 to 23 for this
strategic pillar in action
3
4
5
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1
Delight
OUR
CUSTOMERS
W
e live to create experiences
thatnourish the soul – making
memories and delighting our
customers. We do this through fresh and
delicious seasonal dishes, an amazing
array of premium and interesting drinks,
and beautiful, individually crafted
bedrooms. But what makes the real
difference is the welcome you receive
when you walk through the door – when
that is extra special, our teams know your
soul is well and truly nourished.
Tailor the
experience in
every
pub and hotel
Today’s consumer
expects the
personal touch
– whether that’s in
the digital comms
we send or the
burger we cook.
Strategy in Action
18 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Surprise and delight with
distinctive service
Attract new
customers
and
in
crease
visit frequency
Create a smoother customer journey
Q&A
Including
delightingdog
owners everywhere
with our dog
friendly pubs.
Is there anything better than spending time
withasmile on your face? That’s the difference
agreat pub, with great people, can make. It’s
morethan food and drink – it’s leaving happier
thanyou arrived.
We have over one million opted in customers on
ourdatabase – and we tailor our communications
tomatch the things we know they like to do. In
addition, our pubs have the ability to communicate
directly with their own customers about the brilliant
events that are going on in our pubs.
Link to Values:
Doing things the right way
We love it when our team members
dothe right thing and to reward them,
we make a point of recognising those
tiny noticeable things (“TNT”) that
ladder up to make all the difference
indelighting our customers. From
driving stranded customers to Peppa
Pig World, to sending a terminally ill
customer up ina Spitfire, those TNT
moments are rewarded with vouchers,
recognition and team nights out.
Outside of the obvious financial metrics, how do you know your
customers are delighted?
Hospitality is a people business – and it’s one of the few sectors where a smile
on a customer’s face really is the best gauge of how well you are doing. Our
team members live for good feedback and that’s why we use Net Promoter
Scores as one of our bonus measures. It’s also the reason we introduced the
TNT programme, which gives us a quick and meaningful way to thank our team
members for going the extra mile. It’s our people that set us apart from the
competition and they are at their best when they are delighting our customers.
How will you deliver on this strategic pillar?
Building on the points above, we have launched an internal initiative around
Bethe Difference. By embracing the Be the Difference philosophy and
focusing on delivering TNTs, we demonstrate our commitment to providing
exceptional experiences for every customer. We understand that it’s the small
touches and the genuine interactions that truly leave a lasting impression.
Ourpeople are the driving force behind our success, and by consistently going
above and beyond, we can foster customer loyalty, positive word-of-mouth,
and an enduring reputation as a hospitality provider that truly cares. If we get
that right, we will easily deliver on this strategic objective again and again.
Fred Turner, Retail Director
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2
Inspire
OUR PEOPLE
Create a workplace where
everyone feels they belong
Appreciate and value
our colleagues
Together we are the difference,
and that’s why we make sure our
colleagues can recognise and
reward the achievements of their
peers with our TNT initiative.
This year has seen our work
around diversity and inclusion
take big steps in the right
direction and there’s a lot
moretocome.
Strategy in Action
Continued
O
ur people are absolutely at the
heart of what we do. Together,
wemake the difference and they
are the people who create the experiences
thatnourish the soul. We aim to create
aworkplace where everyone feels they
belong and where training, development
and career progression are available, and
encouraged, for all. We thrive off each
other too – it’s what gives us energy, what
makes us special, and what helps us build
a fun, exciting and sustainable business.
“ There’s no script, it’s all
aboutbeing yourself.”
— Alex, Head Chef
20 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Link to Values:
Celebrating Individuality
Being Part of the Family
At Fuller’s, being True to You is very
important to us. We believe everyone
should feel able to be themselves, and
we do this by celebrating individuality.
But this isn’t just about diversity
andinclusion – this is about how we
express ourselves at work too and
welove encouraging creativity and
innovation in the workplace. One of
ourother key values is being part
ofthefamily – and for us, diversity
andinclusion is the point on a Venn
diagram where these two values meet.
At Fuller’s, we want to celebrate all
individuals and we want everyone
tofeel part of the family.
Support and encourage
career development
Attract the best talent
Many of our team members
have never had a graduation.
But we make sure we hold one
for everyone who undertakes
aFuller’s apprenticeship or
development course.
Recruitment has called for
some new thinking in recent
times, which is why we
arenow actively targeting
people over 50 through our
partnership with Rest Less.
Q&A
What have been your key areas of focus over the last
financialyear?
We have had a major focus on recruitment over the last year, and it is
reapingrewards. We relaunched our recruitment website and partnered
withrecruitment specialists Harri, which has combined to improve the overall
process and has led to more engaged candidates. Alongside this has been our
continued focus on development, which we know improves key metrics like
retention rates and happiness. We love to recognise successful development
too, and it was amazing to have 300 graduates at Troxy in East London last
November for a brilliant graduation ceremony.
What are you most excited about looking forwards?
I love watching people develop and progress – I find it incredibly rewarding
and I am really proud of the opportunities we offer. This year, we will support
220 apprentices undertaking a number of different programmes from entry to
degree level, work with our partners Rest Less to recruit more people over 50
and the charity Only a Pavement Away, to provide careers to those who are
homeless or in danger of being homeless. I am particularly proud of the work
we are doing with Special Olympics GB, to provide sustainable employment
topeople with intellectual disabilities. I want Fuller’s to be a place where
everyone can have can a fulfilling career, whatever that looks like for them.
Dawn Browne, People & Talent Director
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3
Enhance
Strategy in Action Continued
OUR ESTATE
W
e are very fortunate to have
suchan amazing line-up of
iconic pubs in some of England’s
best-known and most beautiful locations.
From The Red Lion on Whitehall to The
White Buck at Burley in theheart of the
New Forest and out to our stunning sites
inthe Cotswolds, our pubs stand proud.
This predominately freehold estate
provides thesolid foundation on which
ourCompany is built – and we pride
ourselves on the love, care and attention
wegive to these properties.
Reopening the Admiralty
A new pub in the heart
of
t
he Cotswolds
Investing in the outdoors too
Following a large fire in July last year,
wewere delighted to get the Fire Brigade
back – this time to reopen The Admiralty
following a £3.3 million refurbishment.
We have continued with our winterisation
projects, increasing the amount of outdoor
covers that can be pre-booked throughout
the year.
22 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Where have you been investing this year?
We have added some really great sites to our Managed Pubs and Hotels
business during the year – including The Rising Sun near Bashley, in the
heartof the New Forest, The Willow at Bourton-on-the-Water, which is
knownas the Venice of the Cotswolds, and The Queen’s Arms, which is
landside at Heathrow Terminal 2 and a fantastic sister site to the very
successful London’s Pride. We’ve also transferred two pubs from
TenantedtoManaged operations, The Plough at East Sheen and The
George&Dragon inWesterham. The latter is now part of our Bel & The
Dragonbrand, has 13 stunning bedrooms and a terrace with amazing views.
What are your priorities for the coming year?
We are in the middle of transferring a number of pubs from our Managed
toTenanted business, which will be completed in the near future. We are
alsotaking advantage of an amazing opportunity to sell The Mad Hatter
aspartofawider property development in the area. The latter will realise
around £20 million in value – far above the net book value of the property.
Inaddition, we will continue to invest in our core estate – including the
addition of a furthersix bedrooms at The Counting House on Cornhill and
amajor bedroom refurbishment at The Chamberlain, to capitalise on the
continued post-Covid revival of London.
Creating unique and memorable
ex
periences in magical spaces
Investing in beautiful bedrooms
The Sanctuary House by Westminster
Abbey really was fit for a king when it
reopened after a £2.5 million bedroom
scheme, in time for the Coronation.
Weddings are becoming
increasingly important, and
wehave beautiful spaces fit
forany nature of celebration.
Q&A
“ Taking opportunities
toenhance the fabric
ofour wonderful estate
is always one of my
keypriorities.”
— Peter Turner, Property Director
Link to Values:
Doing things the right way
Always asking what’s next?
We take great pride in the schemes
wecarry out and always want to ensure
we respect the historical integrity and
enhance the ambience when we carry
out an investment. We are always
looking to improve too – as can be seen
at The Admiralty, where we took the
opportunity of making the pub fully
electric. A great example of looking
forward and doing things the right way.
Peter Turner, Property Director
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4
Evolve
Strategy in Action Continued
W
hile we have nearly 180 years
ofhistory behind us, we are
always looking to the future
toensure we remain relevant to our current
and potential customers. We are constantly
innovating our proposition to stay ahead
of,and respond to, changes in consumer
behaviour. Evolution is not just about
change though – it’s also about ensuring
our strategy helps us to continually grow
sales and profitability. We are focused
ongrowing our customer base and basket,
constantly strengthening our supplier
relationships and leveraging the appeal
ofour amazing pubs to successfully grow
in a sustainable manner.
Grow our profitability
Enhance our supplier partnerships
Our long-term supply agreement with
Asahi puts us in a great position for
theRugby World Cup in the autumn,
where Asahi is a key sponsor.
By enhancing our wine lists, we have
given our customers a wider and more
interesting range to choose from and
improved our profit margin.
OUR BUSINESS
24 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
As the newest member of the Executive Team, where do you
see yourpriorities?
I’m really excited by the opportunities available and I have already identified
three key areas where I think we can quickly make an impact – premium sports
occasions, brunch and the lucrative family market. We’ve got great plans for
each, and I’m looking forward to reporting on our progress in the future. If
youjust take the first of these, research shows that although a number of our
customers enjoy watching sport in our pubs, there is a greater percentage who
would like to do so more often with the right offer in place. My team is working
collaboratively across the business to build a first class sports environment
forour customers where our customers wish to enjoy it. And with the Rugby
World Cup this autumn, it’s the perfect time to get this offer right.
Is there a lot more that can be done in the digital space?
Definitely. The digital transformation that was completed before I joined is
already delivering results. We can now easily split our data by segment –
providing the right offer, for the right customer, at the right time, and it has
given us much better sales lead management with pre-booked sales already
up20% on pre-Covid levels. I’m now looking forward to seeing how we can
further harness its power to drive party, corporate and special occasion
bookings, where I think there is a big opportunity across our fantastic pubs
and hotels estate.
Improved use of the
data available
Innovate to excite future consumers
We are still realising further benefits
from the digital transformation project,
smoothing the customer journey and
helping increase pre-booked sales.
We are looking at our food offer from
farm to fork and you can already see
the improvements in our spring/
summer menu – with more to come.
Q&A
Link to Values:
Celebrating Individuality
Always asking what’s next?
We evolve our business at site level
byenabling our pubs to personalise
their offer with a range of events and
activities from comedy and panto to
opera and Jane Austen. Combined
withthis is a laser focus on the future
for the next big trends to make sure
weare always ahead of the game.
Sam Bourke, Marketing Director
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5
impact
Strategy in Action
Continued
Take action to protect
and respect our planet
Putting
sustainability
front and centre
Care for our people and foster
a sense of belonging
We continue to reduce energy
use and are on course for Net
Zero by 2030 (operations) and
2040 (supply chain).
Our partnership with
Green Goblet reusable
plastic glasses has
removed a vast quantity
ofsingle use plastic.
Diversity and inclusion training has
been completed by the Board,
Executive Teamand Senior
Managers, and will be rolled out
throughout the Company.
#BeingPartOfTheFamily.
O
ur Life is too good to waste strategy
launched in January 2020 and has
developed each year. It underpins
the other four areas of strategy and is fairly
and squarely part of business as usual.
Itcovers three distinct areas – our people,
our communities and our planet – with
each area having its own committee, led
bya member of the Executive Team. From
aholistic approach to our main charity
partner, Special Olympics GB, which
combines raising funds with improving
employment prospects for people with an
intellectual disability (“ID”), to substantial
improvements in reducing our carbon
footprint, we are taking ownership of
ourimpact and making life better for us,
ourcustomers, our neighbourhoods and
theenvironment.
OWN OUR
26 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
What are you most of proud of achieving during the year?
I’m really proud of the progress we have made in reducing our energy usage
and the changes we have made in our kitchens. We have seen electricity
consumption fall by 13% and gas fall by 14%. We have also opened two fully
electric pubs – The Admiralty on Trafalgar Square and The Queen’s Arms at
Heathrow. Asourelectricity all comes from renewable sources, this means
these twopubs are exclusively powered by net zero carbon energy. That really
excites me.
What are your key priorities for the coming year?
We are on the cusp of really unlocking our plans to recruit more team members
with an intellectual disability. At The Cabbage Patch, General Manager Stuart
Green is leading the way and has already provided work or work experience
formore than 100 young adults with IDs – and we are now ready to roll out
similar schemes across further pubs. We are working with Special Olympics,
and its athlete leaders, to raise awareness of the opportunities available and
to help our teams understand how they can best support someone with an ID.
This isafantastic example of ESG truly embedding itself in the business. We
raisedover £450,000 for Special Olympics GB last year, providing even more
sporting opportunities for people with IDs. By bringing them into sustainable
employment, we create a truly virtuous circle. That is what ESG should be
allabout.
Q&A
Link to Values:
Doing things the right way
Always asking what’s next?
Protecting the planet is non-negotiable,
so when we are looking to the future,
we always have one eye on making
sure we consider the impact on our
people, our communities and our planet.
That’s why we add charging points for
electric cars when we do an investment
scheme with a car park and why more
and more of our pubs will become fully
electric – helping us get to Net Zero.
Take action to protect
and respect our planet
“ Unemployment among
people with intellectual
disabilities stands at 94%, so
it’s amazing to have a corporate
partner that raises money
and developssustainable
employment opportunities”
— Colin Dyer, CEO, Special Olympics GB
We are trialling a premium draught
tonic solution in some sites, which has
resulted in the removal of 35,000 glass
bottles from our supply chain.
Oliver Rosevear, Sustainability Director
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WE USE FINANCIAL
INDICATORS TO
MONITOR OUR
progress
INDELIVERING
AGAINST OUR
STRATEGY
TOCREATE
long-term
sustainable
VALUE FOR ALL
STAKEHOLDERS.
Non-financial performance metrics are used
withinthe business, including employee
engagement and satisfaction scores,
customerNPSand environmental targets.
Key Performance Indicators
REVENUE AND OTHER INCOME
£336.6m
Definition
Revenue and other income comprises sales
of goods and services, accommodation
income and rental income. We have two
main revenue segments: Managed Pubs
andHotels and Tenanted Inns.
Why is it important for Fuller’s?
Revenue and other income drives the overall
business, resulting in cash generation,
which allows for investment in our estate,
our people, rewards to our stakeholders
andacquisitions.
Performance in FY2023
Revenue and other income increased by
33% compared with FY2022, with a 34%
increase in Managed Pubs and Hotels
revenue and an increase of19% in
Tenanted Inns revenue. This increase
isdriven by the improved ability to trade
inFY2023, compared to the prior year
when trading was still restricted because
of the pandemic.
ADJUSTED PROFIT BEFORE INCOME TAX
£12.7m
Definition
Adjusted profit before tax is profit before
taxexcluding separately disclosed items
asshown in the Income Statement.
Why is it important for Fuller’s?
The Directors believe that this measurement
of profitability allows stakeholders to analyse
trends and performance without being
impacted by separately disclosed items.
Performance in FY2023
Adjusted profit increased by 76%
comparedto FY2022. The increase
waslargely due tothe improved
abilitytotrade in FY2023, particularly
inLondon as people returned to offices
and international tourism recovered. In
theprior year trading was restricted for
part ofthe year because of the pandemic.
Adjusted profit in the current year was
impacted by the inflationary environment
with costs such as utilities, food and staff
costs increasing significantly in the year.
ADJUSTED EARNINGS PER SHARE (“EPS”)
16.10p
Definition
Adjusted earnings per share is profit after
tax excluding separately disclosed items
attributable to equity holders of the Group
divided by the weighted average number
ofordinary shares in issue during the year
and using a 40p ordinary share.
Why is it important for Fuller’s?
This measure shows how much money
theGroup is generating for its shareholders.
Ittakes into consideration changes in profit
and loss and the effects of new shares
issued but excludes the impact of separately
disclosed items. It is an important variable
indetermining our share price.
Performance in FY2023
Adjusted earnings per share increased
by64% compared to FY2022 in line with
growth in adjusted profit before tax.
NET DEBT EXCLUDING LEASE LIABILITIES
£132.8m
Definition
Net debt comprises cash and short-term
deposits, bank overdraft, bank loans,
debenture stock and preference shares.
Netdebt is pre IFRS 16 and therefore does
not include lease liabilities.
Why is it important for Fuller’s?
This measure helps shareholders to
determine the level of debt and the
overallfinancial stability of the Group.
Performance in FY2023
Net debt (excluding leases) was at
£132.8 million (FY2022: £131.9 million).
Thisis only a marginal increase from last
year astheGroup has delivered on its
capital allocation framework through
investment in the estate and returns
toshareholders through both dividends
andshare buybacks.
2
023
336.6
253.8
73.2
2
022
2
021
2
023
16.10
9.79
(72.09)
2
022
2
021
2
023
132.8
131.9
218.1
2
022
2
021
2
023
12.7
7.2
(48.7)
2
022
2
021
28 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
REVENUE AND OTHER INCOME
£336.6m
Definition
Revenue and other income comprises sales
of goods and services, accommodation
income and rental income. We have two
main revenue segments: Managed Pubs
andHotels and Tenanted Inns.
Why is it important for Fuller’s?
Revenue and other income drives the overall
business, resulting in cash generation,
which allows for investment in our estate,
our people, rewards to our stakeholders
andacquisitions.
Performance in FY2023
Revenue and other income increased by
33% compared with FY2022, with a 34%
increase in Managed Pubs and Hotels
revenue and an increase of19% in
Tenanted Inns revenue. This increase
isdriven by the improved ability to trade
inFY2023, compared to the prior year
when trading was still restricted because
of the pandemic.
ADJUSTED PROFIT BEFORE INCOME TAX
£12.7m
Definition
Adjusted profit before tax is profit before
taxexcluding separately disclosed items
asshown in the Income Statement.
Why is it important for Fuller’s?
The Directors believe that this measurement
of profitability allows stakeholders to analyse
trends and performance without being
impacted by separately disclosed items.
Performance in FY2023
Adjusted profit increased by 76%
comparedto FY2022. The increase
waslargely due tothe improved
abilitytotrade in FY2023, particularly
inLondon as people returned to offices
and international tourism recovered. In
theprior year trading was restricted for
part ofthe year because of the pandemic.
Adjusted profit in the current year was
impacted by the inflationary environment
with costs such as utilities, food and staff
costs increasing significantly in the year.
ADJUSTED EARNINGS PER SHARE (“EPS”)
16.10p
Definition
Adjusted earnings per share is profit after
tax excluding separately disclosed items
attributable to equity holders of the Group
divided by the weighted average number
ofordinary shares in issue during the year
and using a 40p ordinary share.
Why is it important for Fuller’s?
This measure shows how much money
theGroup is generating for its shareholders.
Ittakes into consideration changes in profit
and loss and the effects of new shares
issued but excludes the impact of separately
disclosed items. It is an important variable
indetermining our share price.
Performance in FY2023
Adjusted earnings per share increased
by64% compared to FY2022 in line with
growth in adjusted profit before tax.
NET DEBT EXCLUDING LEASE LIABILITIES
£132.8m
Definition
Net debt comprises cash and short-term
deposits, bank overdraft, bank loans,
debenture stock and preference shares.
Netdebt is pre IFRS 16 and therefore does
not include lease liabilities.
Why is it important for Fuller’s?
This measure helps shareholders to
determine the level of debt and the
overallfinancial stability of the Group.
Performance in FY2023
Net debt (excluding leases) was at
£132.8 million (FY2022: £131.9 million).
Thisis only a marginal increase from last
year astheGroup has delivered on its
capital allocation framework through
investment in the estate and returns
toshareholders through both dividends
andshare buybacks.
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NEIL SMITH —FINANCE DIRECTOR
Group Revenue increased by 33% to £336.6 million (FY2022:
£253.8 million). Both financial years had periods when trade was
disrupted, with train and tube strikes in the current financial year
andCovid restrictions in the prior year. The train and tube strikes
were particularly detrimental in Central London, where a significant
proportion of our estate is situated, with commuters choosing to
work from home. We estimate that the strike action has reduced
sales by in excess of £5 million in the financial year.
The trading environment during the year was very challenging.
Thewar in Ukraine caused our energy costs to increase substantially.
Even with hedging arrangements in place, and reduced usage, our
total energy costs increased to £14.2 million, compared to £7.6 million
in theprior year. We have had to manage significant foodand drink
inflation, and growing wage costs as a result of labour shortages at
the start of the year, as well as the increase in National Living Wage.
This national inflationary environment has also led to the Bank of
England raising interest rates,with our finance costs rising by nearly
10% from the prior year. Despite this background, the Group has
delivered an adjusted profit of £12.7 million, up by 76% on the prior
year (FY2022: £7.2 million).
“ DESPITE A CHALLENGING
TRADING ENVIRONMENT
WE HAVE DELIVERED
SALES GROWTH OF
33% AND INCREASED
ADJUSTED PROFIT
BEFORETAX BY 76%.”
Financial Review
30 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
The financial year to 1 April 2023 comprised 53 weeks of trading,
whereas theprior year represented 52 weeks. The additional week
oftrade contributed £5.7 million of Group revenues and £0.3 million
Group adjusted profit.
In our Managed Pubs and Hotels business, like for like sales have
grown by 17.5% compared to the prior year, with total sales increasing
by 34%. Like for like sales in our Central London sites have risen by
40.1%, demonstrating both workers and tourists are returning to
London andcontinue to do so.
Adjusted EBITDA for the Managed Pubs and Hotel business was
£53.4 million which represents an increase of 11% on the prior year
(FY2022: £48.0 million). However, adjusted EBITDA margin declined
from 21.0% to 17.4%, reflecting the impact of increased energy and
labour costs. Additionally, in the prior year, the UK Government was
providing some support due to the pandemic. VAT rates for food and
accommodation were at 5% and then 12.5%, but increased back to
20% in the current year. We also received some support grants in
theprior year, which were not repeated in the current year.
Tenanted Inns revenue grew by 19% from £25.0 million to £29.8 million.
Adjusted EBITDA margin improved from 51.6% to 52.0%. The low cost
base of the Tenanted business means that it is a highly profitable
partof the Group and continues to trade strongly despite the
economicbackdrop.
During the year, the Group refinanced its banking facilities with
newunsecured facilities of £200 million, comprising a revolving credit
facility of £110 million and a term loan of £90 million. These facilities
have been agreed for a tenure of four years through to May 2026.
Thenew facilities bear interest at a margin dependent on the leverage
covenant plus a base rate of SONIA. In the year, interest rates have
increased sharply with SONIA increasing from 60bps tojust
under420bps. In order to mitigate the risk of high SONIA rates, on
2 September 2022, the Group entered into a zero-premium cap and
collar over £60 million of the term facility. This instrument is in place
for a three-year period to hedge some of the variability in interest
rates. The Group sold a floor of 310bps and bought a cap of 500bps,
which gives some protection should SONIA exceed 500bps.
Finance costs
Total net finance costs (before separately disclosed items) have
increased by £1.1 million to £12.4 million. The increase is due to the
rising Bank of England base rate partially offset by the improved
margins secured on the new bank facilities as part of the refinancing
inMay 2022. This means that the average cost of borrowing was
7.0% in the current financial year compared to 4.2% in the prior year.
Separately disclosed items
The net position on separately disclosed items of £2.4 million expenses
(FY2022: £4.3 million credit) comprises £11.8 million of profits on the
disposal of nine predominately unlicensed properties, impairments
of£14.3 million on 22 properties, costs of£0.5 million incurred as a
result of corporate reorganisation, offset by a £0.8 million credit in
respect of a historical VATprovision.
Tax
The underlying effective tax rate was 22.8% (FY2022: 16.7%) as some
movements are at the current corporation tax rate of 19% and other
are at the future tax rate of 25%. Separately disclosed items have an
effective tax rate of 20.8% (FY2022: 74.4%) resulting in an overall tax
rate of 23.3% (FY2022: 38.3%).
During the year, the significant tax revenues the Group generates
forthe Government rose by 70%. For the 53 weeks ended 1 April
2023, the total tax contribution of the Group to the UK Exchequer
was£80.0 million (FY2022: £47.2 million) in taxes borne and taxes
collected on behalf of colleagues, customers and suppliers. This
significant increase is predominately in VAT payments due to the
increase in sales, along with the increase in output VAT rate from
ablended 8.75% in FY2022 on food and accommodation sales back
tothe normalised rate of 20% in FY2023.
Total tax collected (£m)
FY2022 FY2023
14.7
37.0
19.0
15.9
11.0
14.4
8.6
7.2
1.0
0.9
-2.5
-20
Employer’s NI
Other taxes and Apprenticeship Levy
Business rates
Corporation tax
PAYE and Employees’ NIVAT
0
20
40
60
80
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Pension
The net defined benefit pension scheme accounting surplus has
increased by £0.3 million to £14.6 million (FY2022: £14.3 million surplus)
as a result of both a decrease in present value of pension obligations
as the discount rate increased from 3.0% to 4.75%, andasimilar
quantum of decline in the fair value of scheme assets. InApril 2023,
the 2022 triennial valuation was concluded, and theCompany agreed
to continue to pay contributions into thePlanin line with the existing
recovery plan. Under this plan, deficit reduction contributions started
at £2.2 million per annum inJuly2022. As of January 2023, the deficit
reduction contributions have increased to £2.4 million.
Shareholders’ return
The proposed final dividend of 10.00p per ‘A’ and ‘C’ ordinary share
(FY2022: 7.41p), together with the interim dividend of 4.68p per share
already paid makes a total of 14.68p per share, which is an increase of
30% and marks a return to a progressive dividend policy. The middle-
market quotation of the Company’s ordinary shares at the end of the
financial year was 465p. The highest price during the year was 650p,
while the lowest was 444p. The Company’s market capitalisation at
1 April 2023 was £282.6 million (FY2022: £383.9 million).
Capital allocation framework
The Group’s capital allocation framework aims to enhance
shareholder value whilst targeting leverage at no more than 3x
netdebt/EBITDA. The table below summarises the framework
inwhich the Group will do this.
Policy Targets and Philosophy Outlook
Invest in long-
term organic
growth
Returns-based
approach to capital
investment
Annual investment
of£10-15 million on
maintenance capex and
£10-15 million on trade
enhancing capex
Sustainable
andprogressive
dividend
Normalised dividend
cover range of 2.5-3x
Progressive dividend
growth in line with EPS
growth to drive dividend
yield for investors
Invest in
additional
growth
opportunities
Disciplined approach
to assessing
investment
opportunities
IRR used to measure
themerits of one-off
investments in assets
orM&A
Targeting
leverage of 3x
net debt/EBITDA
Strong Balance
Sheet maintained –
target leverage at
nomore than 3x
net debt/EBITDA
Recent refinancing provides
certainty offunding
If within our leverage
target, then surplus cash
may enable additional
shareholder returns
including share buybacks
Cash flow and net debt
Net debt (excluding leases) was at £132.8 million (FY2022:
£131.9 million). This is only a marginal increase from last year
astheGroup has delivered on its capital allocation framework
through investment in the estate and returns to shareholders.
Atotalof £30.7 million was invested in the estate in the year–
including three new acquisitions, The Queen’s Arms at Heathrow,
TheRising Sun, near Bashley in the heart of the New Forest, and
TheWillow in Bourton-on-the-Water. The improvement in EBITDA
has meant that net debt/EBITDA is now at 3x, which is in line with
ourcapital allocation framework.
Cash flow
FY2023
£m
EBITDA 51.8
Interest (8.7)
Tax –
Working capital and share transactions (2.9)
Pension contributions (2.3)
Cash available for discretionary spend 37.9
Capital expenditure (30.7)
Separately disclosed items (0.5)
Property disposals and lease surrenders 13.9
Dividends (7.5)
Share buyback (4.7)
Cash flow 8.4
Non cash movement (1.7)
Net debt movement 6.7
Source of finance
Bank debt 119.4
Other debts 27.5
Cash (14.1)
Net debt before lease liabilities 132.8
Lease liabilities 73.1
Total net debt 205.9
Sources of finance
During the year, the Group refinanced its banking facilities with new
unsecured banking facilities of £200 million, comprising a revolving
credit facility of £110 million and a term loan of £90 million. These
facilities have been agreed for a tenure of four years through to
May2026. The new facilities bear interest at a margin dependent
onthe leverage covenant plus a base rate of SONIA.
The Group’s financing is a mix of bank debt, debentures, cumulative
preference shares, overdraft, cash and short-term deposits as
disclosed in notes 22, 24 and 26 to the financial statements. Other
financial assets and liabilities such as trade receivables and payables
arise through the Group’s operating activities. The Group does not
trade in financial instruments.
Financial Review Continued
32 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Financial risks and treasury policies
The Group operates a centralised treasury function, which controls
cash management and borrowings and the Group’s financial risks.
The objectives of the function are to manage the Group’s financial
risk, to secure cost effective funding for the Group’s operations,
andto minimise the adverse effects of fluctuations in the financial
markets on the value of the Group’s financial assets and liabilities,
onreported profitability, and on the cash flows of the Group.
Transactions of a speculative nature are prohibited. The Group’s
treasury activities are governed by policies approved and monitored
bythe Board.
Going concern statement
The Group’s business activities, together with the factors likely
toaffect its future development, performance and position are set
outin the Strategic Report on pages 1 to 65. The financial position
ofthe Company, its cash flows, net debt and borrowing facilities, and
the maturity of those facilities are set out above on pages 147 to 159.
In addition, there are further details in the financial statements on
the Group’s financial risk management, objectives and policies in
note 25. The Directors have outlined the assessment approach for
going concern in the accounting policy disclosure in note 1 to the
financial statements. Following that review, the Directors have
concluded that it is appropriate for the Group to adopt thegoing
concern basis in preparing its financial statements.
Viability statement
The Corporate Governance Code requires that the Directors have
considered the viability of the Group over an appropriate period of
time selected by them. The Directors have chosen to assess this over
three financial years through to March 2026 as this aligns with the
Group’s strategic planning, which was reviewed and approved as
part of the refinancing process. This three year plan is supported by
the forecasts that are presented and approved by the Board. It takes
into consideration the Group’s current position and the potential
impact of the principal risk documented on pages 36 to 39 in the
Strategic Report. The most significant risks impacting the forecasts
are the recovery of the UK economy and cost inflation, specifically
food, utilities and wage costs. These factors will also have an impact
on consumer behaviour and consequentially sales volumes.
Management have prepared, and the Board has considered two
keyscenarios:
A “base case” is the Board approved Budget for FY2024 which forms
part of the three year plan to FY2026. The base case assumes there
iscontinued impact from cost inflation specifically food, utilities
andlabour in FY2024 but these start to ease as we move into FY2025
and FY2026. Under this scenario, the Group would have sufficient
resources and headroom on its covenants through the duration of
theviability period.
A “downside case” which assumes that sales volume reduce by 10%
and costs across food, staff and interest continue to rise at a much
higher rate. Again, the model assumes that these cost pressures
alleviate during FY2025 and FY2026. The model also assumes that
train strikes are more frequent than experienced in FY2023 but are
resolved in the longer term. In this ‘downside case’, management
would implement mitigating actions such as overhead cost reduction
and reduction of capital expenditure and other property spend
toonly essential. Under this scenario, the Group would still have
sufficient resources and headroom on its covenants through the
duration of the period.
At 1 April 2023, the Group’s Balance Sheet comprises of 92% ofthe
estate value being freehold properties and available headroom on
facilities of £79.5 million and £14.1 million of cash and resulting net
debt of £132.8 million.
During the year, the Group has secured a new facility of £200 million,
split between a RCF 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 remained
until November 2022. From December 2022 (and tested quarterly
thereafter), the covenant suite consists of net debt to EBITDA
(leverage) and EBITDA to net finance charges. See further details
innote 24 to the financial statements.
Taking account of the Company’s current position, principal risks
facing the business and the sensitivity analysis discussed above,
aswell as the potential mitigating actions that the company could
take, the Board expects that the Company will be able to continue in
operation and meet its liabilities as they fall due over the three year
period of assessment.
Further details on the forecast process and assumptions can be
found in note 1 to the financial statements.
Neil Smith
Finance Director
14 June 2023
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 33
FINANCIAL STATEMENTS
105-165
OVERVIEW
0-03
STRATEGIC REPORT
04-65
ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
Risk Management Governance Framework
The risk management process is operated by the Executive Team, supported by the Head of Risk, and is overseen by the Audit and Risk
Committee and the Board, which is further supported by the external audit process.
Governance Role Output
Board
• Oversees the risk management and internal
controlsprocesses
• Defines the Group’s risk appetite and assesses
theprincipalrisks
• Final approval
Audit and Risk
Committee
• Provides guidance and direction and supports the Board
inthe management of risk
• Reviews the effectiveness of the risk management
strategyand internal controls process
• Recommendations
tothe Board
Executive
Team
• Responsible for day to day operational implementation
oftherisk management strategy
• Provides advice and guidance to the business areas
• Considers emerging risks
• Accountable to the Audit and Risk Committee and Board
• Group risk register
• Principal risk reviews
• Audit and Board reports
Business Risk
Management
• Implements and maintains risk management procedures
• Maintains risk registers including identification of risk,
mitigating controls and actions
• Division and
Department risk
registers
Task Force on
Climate-related Financial
Disclosures Working
Group
• Oversees climate specific risks and integrates mitigation
controls and actions into the wider risk strategy
• TCFD report and
climate-related risk
mitigation approach
Risk Management
M
anaging risks effectively is key to ensuring that we
achieve our strategic objectives in the long term and
continue to deliver the high standards our customers, our
people and our shareholders expect. Risk arises both as a natural
consequence of doing business and in the pursuit of our strategy.
Our risk management approach is governed through a robust
framework and we follow a consistent process for the identification
and review of risk. The Board reviews these risks in the knowledge
that currently unknown, non-existent or immaterial risks could turn
out to be significant in the future, and ensures that a robust
assessment has been performed.
Role of the Board
The Board is responsible for effective risk management and oversees
a governance model that incorporates an integrated assurance
model. It also formally articulates theGroup’soverarching appetite
and tolerance for risk.
Through our risk governance structures, frameworks, processes and
reporting mechanisms, Directors are provided with the information
and insight needed to make a robust assessment of the Group’s most
material risks and to understand how they are being mitigated and
managed in line with the Board’s stated risk appetite and tolerance.
The Board is responsible for monitoring the Group’s culture to ensure
it encourages openness and transparency across the business,
which directly supports effective risk management.
34 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Risk Appetite
The Group’s approach is to take a long-term view of its business and
to assess all risks accordingly, while ensuring we take opportunities
to deliver economic reward in line with the Group’s strategy, asfollows:
• Risks should be managed consistently and in line with the Group’s
strategy, financial objectives and guiding principles
• Opportunities should only be pursued where the scope for appropriate
reward is supported by an informed assessment of risk
• Risks should be actively managed and monitored through the
appropriate allocation of management and other resources.
Risk Management Process
The Executive Team follows a clear, simple and robust process to
identify the Group’s most significant risks, incorporating both
top-down and bottom-up assessments:
• Both the Managed and Tenanted businesses as well as the support
centre functions prepare their material risks in registers which are
reviewed on a half yearly basis by the Executive Team
• This also includes a review of the climate-related risks considered
over short, medium and long-term horizons. The detail of our
climate-related risks are disclosed in our TCFD reporting on
pages54 to 61
• We use a risk categorisation framework to analyse the
riskregisters
• The risks identified through this mechanism that are considered
most significant, in terms of their materiality to the Group, are
recorded in the Group risk register
• Emerging risks are discussed regularly by the Executive Team
andescalated to the Audit and Risk Committee as required
• In addition, the Audit and Risk Committee conducts a deep dive
onspecific risk areas based on the judgement of the Committee,
looking at: changes in risk likelihood; changes in the materiality
ofimpact; any changes to the mitigation; and controls that are
inplace
• Every principal risk is assessed to see whether it could have
amaterial strategic or commercial impact, either on its own
oraspart of a multiple risk scenario
• The Executive Team ensures principal risks are managed
appropriately, monitored and reported internally andexternally
• At each half year, the Executive Team considers and challenges
whether risks are being managed to the tolerance approved by
theBoard, using principal risk reports to monitor how far material
financial, operational and compliance controls and mitigations
have been implemented, their effectiveness, and how close the
current net risk rating is to our risk tolerance
• The outcomes of half yearly reviews considered by the Executive
Team are reported to the Audit and Risk Committee and the Board,
with particular focus on risks that are outside tolerance, and
actions areagreed
• Principal risk reviews also support the Audit and Risk Committee
and Board in monitoring andreviewing the effectiveness of the
Group’s internal controlframework.
Risk Assessment
We rate risks by considering their potential financial and non-
financial impacts and the likelihood that they will happen, using a
consistent rating grid to compare and prioritise risks. The risk rating
takes into account the controls and mitigations in place to reduce
thelikelihood and/or impact of the risk, its implementation status
andeffectiveness. Risk ratings are regularly reviewed to consider
whether the external or internal context, strategy, business
objectives or resources available to manage the risk have changed.
The suitability of the controls and mitigations are reviewed through
robust reporting and monitoring which creates a feedback loop
enabling a continuous improvement process to be in place
regardingrisk management. This includes reviewing ownership
andaccountability of risks and controls across the Executive and
Management teams.
Assessment of Emerging Risks
As well as assessing ongoing risks, we continue to consider how
thebusiness could be affected by emerging risks. Our Executive
Team and department heads horizon-scan to monitor any potential
disruptions that could dramatically change our industry and/or
ourbusiness, from both a risk and opportunity perspective, to
understand the changing landscape and take appropriate actions.
Itis often possible to predict the potential impacts of emerging
risks,but it is more challenging to predict their likelihood, timing
andvelocity.
Changes to Risk Scores Versus Prior Year
Coronavirus
We have seen an improving risk outlook on the impact of Covid-19.
The UK has fully opened up and international tourism is recovering.
On5 May 2023, the WHO agreed that the disease no longer fits the
definition of a Public Health Emergency of International Concern.
Wehave therefore reduced the likelihood of a pandemic impacting
our business but remain alert to the potential risks. We continue to
monitor global health issues and their potential impact as part of our
horizon scanning and emerging risk process.
Recruitment and Retention
Our vacancy levels are at the lowest they have been post-pandemic
and whilst recruitment and retention remains a significant challenge
across the industry, the mitigating actions we have taken have meant
that the risk to the business has lessened over the last year.
Supply Chain
While we continue to face a degree of uncertainty due to the ongoing
situation in Ukraine, we see the supply chain situation easing in the
future. The combination of returning to business as usual post-Covid,
better access to data, and support from key suppliers has resulted in
improved forecasting and management of stock.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 35
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105-165
OVERVIEW
0-03
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04-65
ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
Principal Risks and Uncertainties
Principal risks
1. Economic Uncertainty MOVEMENT
Owner Description Control and Risk Mitigation
Chief Executive
The inflationary environment, cost
ofliving increases and the threat
ofrecession could have an impact
ondemand.
In addition, the impact of strike action
–particularly transport strikes – has a
significant impact on our city centre sites.
We closely monitor our cash flow to ensure we maintain an
appropriate level of liquidity, continue to keep a diversified
estateand review the composition.
Our core customer group is typically at higher income levels,
whichhelps mitigate some of the effects of inflationary pressures
on ourbusiness.
We are able to adjust our variable cost base to reduce the impact
ofstrike action on our overall profitability.
Risk Key
New Decrease Increase No change
The following heatmap sets out the impact and likelihood scores for our principal risks and further detail of these risks and emerging risks is set
out in the table below. The analysis is not intended to be a comprehensive list of all risks actively managed by the business. The key financial
risks are detailed in note 26 to the financial statements.
Annual impact to profit before tax
LIKELIHOOD
IMPACT
Risks
1
Economic Uncertainty
2
Consumer Demand Shifts
3
Information Technology/Cyber Security
4
Financing
5
Cost Inflation
6
Supply Chain
7
Recruitment & Retention
8
Health & Safety
9
Future Pandemic
10
Sustainability & Environment
2
1
3
4
5
6
8
10
9
7
36 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
2. Consumer Demand Shifts MOVEMENT
Owner Description Control and Risk Mitigation
Marketing
Director
The Group’s success is attributable
toitsability to anticipate and react
toconsumer demand.
In recent years, we have seen
changes including but not limited
toworking from home, the demand
shift in city venues vs rural, and
food delivery services. There
isacontinued trend towards
healthy andlifestyle choices
whichcould impactdemand. As
noted above, this is alsoimpacted
by economic uncertainty.
Management monitor and research consumer trends, gather consumer feedback
through Net Promoter Score surveys, online andsocial media reviews, and
customer complaints.
We analyse retail pricing and market share data to ensure we arecompetitive
butstill premium.
The balance of our estate across both city and rural locations allowsus to
manage demand shifts.
Our digital transformation now enables us to increase frequencyandspend
fromexisting customers, and to targetnew customers.
3. Information Technology/Cyber Security MOVEMENT
Owner Description Control and Risk Mitigation
Finance
Director
The Group is increasingly reliant
onits information systems to
operate, and trading would be
affected by any significant or
prolonged failures and/ordata loss.
In addition, the sophistication of
cyber attacks continues toincrease.
Our IT function has a range of facilities and controls in place to ensure that, in
theevent of an issue, normal operation would be restored quickly. These include
aformal IT Recovery Plan, online replication of systems and backup datacentres,
andexternal support for hardware and software. We continue to introduce more
preventive measures to reflect the increased risk. These include external reviews
of our IT controls and a range of assessment and training for all team members who
have access to our network.
4. Financing MOVEMENT
Owner Description Control and Risk Mitigation
Finance
Director
Interest rates may increase,
adversely impacting profit, and/or
there could be arisk of breaching
financial covenants. There is a risk
that we are unable to find suitable
financing when required.
Our current financing facility runs until May 2026 and we maintain good
relationships with our current lenders. The predominately freehold nature of
ourbusiness means we have the ability to offer more certainty than many in our
sector when raising finance, and alternative financing approaches are available.
We closely monitor our cash flow and control of investments to ensure we
maintain appropriate levels of debt cover. We have an interest rate cap and
collarin place to mitigate some of the impact of rising rates.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 37
FINANCIAL STATEMENTS
105-165
OVERVIEW
0-03
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04-65
ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
5. Cost Inflation MOVEMENT
Owner Description Control and Risk Mitigation
Finance
Director
There is a risk of rising input
costsacross all areas, including
food anddrink, utilities and staff
costs. This hasbeen accelerated
bythecurrent global economic
environment and the war in Ukraine.
Staff costs could be impacted by
further changes to the National
Living Wage, atightening of labour
supply, and the demand for higher
wages due to the costofliving
increases and inflation.
We regularly monitor prices using relevant commodity databases, review
forwardlooking inflation and all key contracts are competitively tendered.
Wehaveincreased the frequency of our margin monitoring internally, and our
retailprice monitoring compared with our competitors. This allows us to act
quicklyif there are significant changes in input costs.
Our property management platform allows us to control propertycosts.
Our preference is to have long-term agreements in place and we have recently
agreed deals across the majority of our drinks suppliers. Wehave a Long-Term
Supply Agreement (“LTSA”) in place with Asahi Europe & International Ltd
forthesupply of beer, cider and other beverages to 2029, which caps the increase
tobelow CPI.
The majority of our energy use is covered by fixed-term prices. Forthe 2024 financial
year, we are fully hedged for both gas and electricity.
We aim to mitigate the risk of staff cost increases through operational efficiency
and continued optimisation of staffing levels.
6. Supply Chain MOVEMENT
Owner Description Control and Risk Mitigation
Finance
Director
There is a risk that failure in our
supplychain may damage customer
satisfaction and could impact the
profitability of the Group. Any large
scale issue with out of stock items
could have an impact on trade in
ourbusinesses.
We have also identified a potential
long term risk to our supply chain
asa result of climate change.
The LTSA in place with Asahi Europe & International Ltd for the supply of beer,
ciderand other beverages ensures that products will meet certain brand
performance metrics, and the supply service is subject to key performance
indicators (“KPIs”).
All other key suppliers are subject to service and quality KPIs which are monitored
on a monthly basis. Our preference is for long-term agreements which enable strong
relationships, and we work with smaller suppliers to ensure that they grow healthy
sustainable businesses outside of their agreement with Fuller’s.
We have a reputation of honesty, trust and fairness, and our long-term collaborative
approach has meant our suppliers continue to fulfil our needs. Given the ongoing
difficulties in supply, these relationships, coupled with our ability to replace and
adapt our customer offering, help us to mitigate supply chain challenges. We seek
tounderstand more about products at risk as a result of climate change and look
toidentify ways to mitigate this risk over time.
7. Recruitment & Retention MOVEMENT
Owner Description Control and Risk Mitigation
People
&Talent
Director
The recruitment and retention of high
calibre employees is fundamental
toour ability to deliver a distinctive
experience for our customers,
andtosupport our growth agenda.
The challenging recruitment market
for hospitality is likely to continue
for roles held by support centre
employees, who may viewa
careerwithinhospitality as
lessattractivethan other parts
oftheeconomy currently.
We invest heavily in our people, offering them real career paths. We are able to
differentiate ourselves from the competition and ensure that we remain an employer
of choice in a challenging market. The opportunity tojoin at a junior level, e.g. as an
apprentice, complete our Chefs’ Guild Scholarship, and progress to either Head Chef
or General Manager is very appealing. We continue to develop our apprenticeship
and development programmes, have a competitive pay and reward structure,
andrun asuccessful inhouse recruitmentfunction.
We have succession plans in place for key Senior Management roles and have
drawn upon these when selecting an Executive Team to deliver the Board’s strategy
for our pubs and hotels focused business.
Principal Risks and Uncertainties Continued
38 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
8. Health & Safety MOVEMENT
Owner Description Control and Risk Mitigation
Retail
Director
The health and safety of our
employees and customers, and
thegeneral public when on our
estate, isakey priority for us.
There is a risk that we do not
adhere tothehighest health
andsafety standards, further
increased by the large number
ofsites weoperate.
There is a risk of a customer
suffering from our staff failing
todeliver our allergens policies
andprocedures.
We have a comprehensive training programme in place for our employees
covering all aspects of health and safety.
All sites complete a risk assessment and are required to undertake detailed
weekly and monthly compliance checks which are then subject to review
byourin-house health and safety team. The allergen procedures we have
implemented to manage the risks arecontinuously reviewed to ensure
controlsremain appropriate.
We continue to utilise the services of expert third party health and safety
consultants to undertake annual audits covering food, fire and general
healthandsafety risks on all our sites and to perform detailed investigations
ininstances where an incident does occur.
9. Future Pandemic MOVEMENT
Owner Description Control and Risk Mitigation
Chief
Executive
The Covid-19 outbreak had a
seismicimpact on our industry,
mostobviously through the closure
of all our pubs and hotels followed
by theenforced social distancing
and otherrestrictions. Thereisa
riskofsubsequent pandemics,
eitherentirely new strains of a
virusor evolutions of the current
strain, anda government strategy
inresponse to this that negatively
impacts the business.
We closely monitor our cash flow to ensure we maintain an appropriate level
ofliquidity, continue to keep a diversified estate andreview the composition in
the light of recent events, negotiating more flexibility into leases going forward,
keeping strong ties withgovernment, building on our pandemic response plan,
and maintainingand enhancing our flexibility in our customer offering and
operationalprocedures.
We have successfully emerged from Covid-19, which gives us confidence that we
could do so again.
10. Sustainability & Environment MOVEMENT
Owner Description Control and Risk Mitigation
Chief
Executive
Climate change risk could impact
our supply chain. Uncertainties
over how these risks will evolve
could reduce revenues and profit.
This could alsoimpact trust and
reputation amongcustomers,
investors and otherstakeholders.
The Group is contributing to the Net Zero Carbon Roadmap to Net Zero by 2030
forScope 1 and 2 and 2040 for Scope 3. We are already working on energy usage
and supplier engagement to mitigate carbon emissions.
Our TCFD reporting helps us to identify and assess key risks and opportunities and
the impacts of climate change to our business. We intend to further analyse the
potential climate-related risks to our business and seek to mitigate these over time.
We have implemented our Life is too good to waste programme which is across
ourpeople, communities and planet.
Our Sustainability Director has identified a programme of changes and initiatives
inour pubs, hotels and support centre to help us grow in a sustainable way.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 39
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105-165
OVERVIEW
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ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
14%
Reduction in gas usage
£10k
Raised for Made in Hackney
57%
Happiness Index response rate
13%
Reduction in electricity usage
6.5k
Special Olympics GB athletes supported
100
Mental Health Champions
100%
Waste diverted from landfil
2,000
Miles walked for Special Olympics GB
963
My Voice comments
285k
Litres of waste cooking oil collected
94%
Unemployment rate among those with IDs
7.6
Average happiness score
OUR PLANET
See pages 42 to 45
OUR COMMUNITIES
See pages 48 to 51
OUR PEOPLE
See pages 52 to 53
2023 Highlights
Sustainability Report
WE ARE
COMMITTED TO
ALWAYS DOING
THINGS THE
right way
FOR OUR
PEOPLE, OUR
COMMUNITIES,
AND THE PLANET.
40 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
LIFE IS TOO GOOD TO WASTE
Fuller’s approach to becoming a more sustainablebusiness
We protect and respect the things that matter and, when we work together – the Fuller’s family, our customers, and our suppliers
–there’sno limit to what we can achieve. Taking small steps together we intend to make a big difference because we know that
Lifeistoogood to waste.
OUR PLANET OUR COMMUNITIES OUR PEOPLE
Fuller’s knows that a healthy planet is
essential to the future ofourbusiness,
people and communities. We know
that small changes can collectively
make a big difference. We are
committed tomaking better choices
– behind the bar, in the kitchen, and
inour support centre.
Communities have always been at
theheart of Fuller’s and through
ourcharity links and community
initiatives, we want to continue
tohelpthem thrive. Our pubs and
hotels have never just been bricks
andmortar –they’re places where
communities meet and connect. They
are places everyone can feel welcome.
We all have a role to play in supporting
our communities and reigniting a true
sense of community spirit.
Our people are what makes Fuller’s
special. That’s why we’re focused on
looking after them – ensuring they have
a sense of belonging and a belief that
we truly care abouttheir wellbeing,
aswell asopportunities togrow.
We’re committed to creating inclusive
workplaces so our people feel confident
tobring their whole selves to work.
We’re thinking ahead – offering genuine
work opportunities will make sure
people can build something incredible
now and for their future.
LIFE IS
too good
TO WASTE
O
U
R
p
l
a
n
e
t
O
U
R
c
o
m
m
u
n
i
t
i
e
s
O
U
R
p
e
o
p
l
e
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OUR PLANET
Sustainability Report Continued
In October 2021, we committed to procuring 100% renewable
energyacross our Managed estate and our support centre,
PierHouse –sourced from wind, solar and hydroelectricity.
Thischange cut our carbon emissions in half overnight.
In March 2022, the focus on reducing energy became ever more
essential as energy prices surged – increasing energy costs
bycircatwo times those of the previous year. By targeting
highenergyareas of the business, including kitchen extract,
refrigerationand the lighting and heating of our pubs, we aimed
tosignificantly reduce ourconsumption of electricity and gas.
All our managed sites have been fitted with smart electricity and
gasmeters, allowing us to monitor and act on high energy usage.
OurIT team developed a pub managers’ online tool to help the team
understand how and when they were using energy and to identify
opportunities to save energy throughout the day and night. Alongside
this, we also launched a series of training and engagement guides
forGeneral Managers, Head Chefs and their teams – to share the
opportunities to save energy through behavioural change. We also
worked with team members to create videos showing how small
changes could make a big difference. Finally, we set a bonused reduction
target with our General Managers and Senior Management team
toensure they remained focused on the task in hand.
To support our teams on their journey, we engaged with Hospitality
Energy Saving consultants to carry out energy audits – to optimise
energy usage in sites and help teams understand how they can
reduce energy. The results of these visits were shared with the
General Managers, Operations Managers, and Surveyors to ensure
action was taken. In the second half of the year, we began follow
upcoaching calls with our General Managers to take them through
theresults of the audit and review how their efforts to reduce
energywere progressing.
I
n 2021, Fuller’s joined 27 other hospitality businesses to
createaRoadmap for Hospitality to Net Zero. As a collective,
weannounced we would achieve Net Zero by 2040 – with a
commitment to achieve Net Zero for operational emissions by 2030.
With this in mind, we set out our own roadmap to achieve this
ambitious goal. During FY2022, we mapped out our carbon footprint
across our operations and supply chain. In our baseline year, FY2020,
26% ofFuller’s carbon footprint related to Scope 1 and 2 operational
emissions with the other 74% arising in our supply chain and
Tenantedestate.
As a business we recognise the importance of aligning our response
tothe climate crisis with the latest climate science. We have therefore
aligned our emission reduction targets with the Science Based Targets
initiative (“SBTi”). These targets – which will cover ourScope 1, 2
and 3 emissions –have been submitted for validation with SBTi and
we are currently awaiting approval.
42 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
While behavioural change has helped to reduce energy usage,
wealso needed to ensure we invested in our estate to help our team
tobetter control energy usage. Over the past few years, Fuller’s had
already transitioned to LED lights both internally and externally in
spaces such as car parks. However, we continue to review where
better lighting controls and motion sensors can be implemented
aspart of planned refurbishments of our pubs and hotels.
Heating accounts for over 50% of the gas used in our sites.
Tolimitgasusage across the winter, we carried outproactive
boilerservices – resetting controls to the correct timeperiods
andtemperature. We also added an organic additive, EndoTherm,
toour heating systems to improve the efficiency of heat transfer
fromradiators.
Our pubs typically generate hot water using standard gas fired
boilers. We now have five sites where the hot water is generated
byan air source heat pump system – which takes waste heat from
our cellar cooling condenser and uses it to create hot water. This
notonly reduces gas demand but utilises heat which typically
wouldhave gone to waste. We are looking at other sites where
wecan implement this technology over time.
We recognised that cellar cooling can be responsible for over
20%ofan average pub’s energy usage. We worked with our cellar
services team to identify controls which can reduce energy usage.
Onour remote beer coolers, we have added smart timers which
switch off the refrigeration overnight. This can save up to 25% of
electricity overnight without impacting the beer quality. This same
technology has also been embedded into our post mix coolers by our
beverages partner Britvic. We have also changed the temperature
controls on our cellar cooling unit to achieve the right temperature
where the beer is stored rather than the ambient temperature of
thecellar. This again keeps the beer at the right temperature while
reducing energy usage by 20%. We are also using these works
asanopportunity to ensure all our cellar equipment is running
atitsoptimum.
Kitchens also require a significant amount of gas and electricity to
power equipment. We’ve been working with our chefs to consider
how and when they switch on equipment to save energy. We have
also been trialling new electrical kitchen equipment to reduce our
requirement for gas and ultimately reduce carbon emissions. We
haveseveral sites where we have swapped from gas to induction
hobs. We find the new induction hobs only require power for a tenth
ofthe time that a typical gas hob would be required – as they only
switch on when in contact with a pan. We believe transition to induction
cooking is not only environmentally beneficial but financially too, as
well as reducing the heat in the kitchen for ourchefs.
Our support centre, Pier House, now hosts 104 solar panels on the
roof – these will generate around 10% of the power requirements
forthe building.
As a result of all these initiatives, we have reduced energy usage
todate by 13% for electricity and 14% for gas. This has resulted in
a948-tonne reduction in carbon emissions. We expect to see further
savings as the projects continue to roll out over the coming months.
In order to achieve Net Zero in our operations by 2030, we need to
transition away from high carbon fuels such as mains gas, oil and
liquefied petroleum gas (“LPG”). Our approach is to develop energy
efficient, electrically powered pubs where possible to dramatically
reduce our reliance on these fuels. In August 2022, we opened our
first all electric pub – The Queen’s Arms in Heathrow Terminal 2.
TheAdmiralty reopened in April 2023 following a refit due to a fire.
As part of the refurbishment, the pub is now fully electric – with
acommitment to only procure 100% renewable electricity, it is
powered by a zero carbon energy source. The Willow in Bourton-on-
the-Water, our newest pub located in the Cotswolds, is also kitted
out with energy saving equipment throughout – all lighting, heating
andcooling, and the majority of the kitchen equipment, are all
powered by renewable energy sources. These sites are helping us to
define how we electrify more of our pubs and hotels moving forward.
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Sustainable travel
As part of our commitment to the planet and our people, we
recognise the need to encourage more sustainable travel for
ourteams and guests. We have 7KW fast electric vehicle (“EV”)
chargers installed in 15 locations within the Fuller’s estate and
arelooking to expand this network over the next 12 months.
We’vealsoinstalled 10new EV charge points at Pier House.
Thisgives our teams and guests more opportunities to charge
theirEV vehicles when they visit our support centre.
We also look at ways to support our teams in moving to more
sustainable forms of travel. We have recently launched an EV
salarysacrifice scheme with Octopus Energy to create better
accessfor employees to electric cars. In addition, wehave a
cycletowork discount scheme and a partnership with Lime
whichoffers our London-based team members 50% off when
theyridea Lime e-bike ore-scooter.
Streamlined Energy and Carbon Reporting
This report details our Greenhouse Gas (“GHG”) emissions and energy use for FY2023 under the Streamlined Energy and Carbon Reporting
(“SERC”) requirements.
Methodology:
We have collated data relating to our Scope 1, Scope 2, and partial Scope 3 emissions and energy use for activities over which we have
financial control. All of our emissions and energy use relate to UK activities. Our GHG emissions were calculated in line with HM Government
Environmental Reporting and the GHG Protocol methodology.
The table below summarises emissions and energy use for FY2023:
FY2023 FY2022
2
FY2021 FY2020
Scope 1 Energy Consumption kWh
39,121,389 43,047,445 23,590,317 –
Scope 2 Energy Consumption kWh
32,767,748 30,438,473 18,503,251 –
Scope 3 Energy Consumption kWh
1,025,618 827,6 09 202,476 –
Total Energy Consumption kWh
72,914,756 74,313,526 42,296,044 83,555,406
Scope 1 emissions tCO
2
e 7,669 8,119 4,419 8,436
Scope 2 emissions tCO
2
e 6,337 6,463 4,314 8,902
Scope 3 emissions tCO
2
e 253 928 48 –
Gross Scope 1, 2 and 3 emissions tCO
2
e 14,259 15,511 8,781 17,338
Net Scope 1, 2 and 3 emissions tCO
2
e
1
7,922 11,911 8,781 17,3 38
Turnover £m 336.6 253.8 73.2 342.0
Gross Intensity Ratio: tCO
2
e / turnover £m 42.4 61.1 120.0 50.7
Net Intensity Ratio: tCO
2
e / turnover £m
1
23.5 46.9 120.0 50.7
1 From October 2021, we have purchased 100% renewable electricity and therefore associated emissions can be deducted from the gross total to give net Scope 1, 2
and 3 emissions as stated above.
2 FY2022 figures have been restated following the availability of additional data. Year on year comparison is distorted due to the impact of Covid-19 on trading in
FY2021 and FY2022, resulting in reduced energy consumption.
The largest single element is gas consumption, which is predominately used for heating and kitchen equipment. When compared to
electricity, gas will often have higher emissions, but will be significantly lower in cost.
Scope 2 consumption has increased slightly compared to FY2022 due to electrification and the addition of new sites. Scope 1 emissions
have reduced when compared to FY2022 due to lower gas and LPG consumption. Scope 3 emissions from employee-owned vehicles has
reduced significantly when compared to FY2022.
There is a significant reduction in both gross and net intensity metrics, due to the increased turnover reported, the reduction in Scope 1
and Scope 3 emissions and the full reporting period being covered by renewable electricity supply for the first time.
Reduce, Reuse, Recycle
We are committed to reducing the amount of material resource
weuse to operate our business and follow the principle of
reducing,reusing, and recycling wherever possible.
Reduce
We recognise that reducing the volume of waste created in the first
place is the most sustainable way to operate. Over the past year,
wehave tested and implemented a number of initiatives.
We have been working with our beverage partner Britvic to trial
anew premium tonic dispenser in four of our London pubs. The
dispense unit supplies a number of styles of tonic from the London
Essence range. Introducing this unit has helped to significantly
reduce the number of glass tonic bottles used in these sites. During
the four site trial, we were able to reduce the number of glass tonic
bottles by 35,000 – avoiding 6.7 tonnes of glass waste and reducing
delivery road miles by 27,000km. We are looking to implement this
solution into a number of sites in the coming year.
44 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
In September 2022, we introduced a reusable cup scheme with
eventsolutions experts, Green Goblet. The scheme was launched in
partnership with two of our key drinks suppliers, Asahi and Sipsmith.
The cups are being used in our pubs during major events such as
theSix Nations, the Boat Race and football match days. We will also
utilise them in our gardens during the summer. The reusable cups will
replace single use plastic cups which have historically been usedfor
large outdoor events where glassware isn’t suitable for operational
and health and safety reasons. Using the Green Goblet cups will
savetens of thousands of single use plastic cups going towaste
during these events. We trialled the reusable cups in some of our
popular rugby pubs, near Twickenham Stadium, during the Autumn
Internationals in November 2022. By doing so, we saved over 65,000
single use plastic cups from being used – across just fivepubs. Green
Goblet will also ensure the cups are professionally washed and dried
after each event – saving time, energy and water for the pubs. It is a
simple solution to eliminating one form of single useplastics.
After the Government’s recent announcement on the imminent
banning of single useplastics in England, rolling out the Green Goblet
cups means we’re ahead of the curve. This solution also demonstrates
Fuller’s commitment to being an environmentally responsible
organisation inreducing waste, encouraging reuse, andpushing
towards acircular economy to reduce our impact on the planet.
Reuse
In order to keep our pubs and hotels in great condition, we are
continuously carrying out refurbishments of our existing estate
aswell as acquiring new sites such as The Willow in Bourton-on-
the-Water. We keep many unwanted items taken from our pubs and
use them in new propertiesrather than sending them off for
recycling. Where relevant, we will remove, refurbish and repair
existing items for use in future projects.
Recycle
In March 2022, Fuller’s moved its waste management to Veolia,
tosignificantly increase access to recycling forour pubs and hotels.
The majority of our sites now have access to mixed, glass and food
recycling – which has seen our recycling rate increase from 35%
to57%.
Veolia’s team is working closely with our sites to encourage better
segregation of waste and looking at innovative ways to recycle more.
We are also pleased to confirm that 100% of the waste collected is
being diverted from landfill.
Several of our sites have taken the initiative to collect used coffee
grounds and offer them to some of our customers who are keen
gardeners as an alternative to compost. The nitrate levels in the
coffee act as a natural soil improver and it’s an opportunity for this
waste product to be used in a more sustainable way.
Many of our sites work with our oil recyclers Olleco to collect waste
cooking oil. Olleco recycles this oil creating a biodiesel product used
to fuel vehicles. Over the past 12 months, it has collected 285,258
litres of oil from our pubs and hotels. This product reduces emissions
from vehicles by up to 88%.
The Admiralty
In the kitchen, electric induction hobs, powered by a renewable
energy source, have been installed to reduce the amount of
energy used. This also reduces the heat in the kitchen for our
chefs and reduces the amount of extraction required. We also
have highly efficient electric fryers and grills in place to allow
better control ofenergy by our chefs. The induction hobs, and
salamander grills that have also been installed, draw energy
when inuse rather than being on all the time. We have installed
apower monitoring and management system that reduces
energy use byturning high demand equipment on and off
withoutaffectingtrade.
The pub has heat recovery technology – where heat produced
bythecellar cooling is captured and converted into hot water
forthe site. The heating, air conditioning and ventilation systems
utilise industry leading equipment – boasting high energy
efficiency, allzoned throughout the pub and thermostatically
controlled. Plus, allthe lighting in The Admiralty is low energy
LED – with timer clocks to manage use.
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Severn & Wye
Severn & Wye is one of our seafood suppliers and creates our
iconicLondon Porter smoked salmon in its Gloucestershire
smokery. Severn & Wye is committed to purchasing raw material
from both asustainable and responsible supply base, wherever
possible. Severn & Wye never purchase fish from species recorded
on any endangered species list or with an Marine Conservation
Society (“MCS”) rating greater than 3.
Severn & Wye fully supports the commitment of the farmed
salmonfeed suppliers in their efforts to achieve zero net
deforestation through the cultivation of soy contained within
itsfeed.In order to achieve this, Severn & Wye only sources
rawmaterials that are certified as sustainable by schemes such
asProTerra or the Round Table on Sustainable Soy. This year, it
participated in the responsible soy mapping through sustainability
consultants 3Keel, assessingthe use of soy in feed in the supply
chain – with an aim toreduce deforestation caused by soy in the
foodindustry.
Likewise, where palm oil is used within the feed, it must be
certified to theRSPO principles and criteria, and must come
through segregated supply chains.
Our supply chain is responsible for over 62% of our carbon
emissions and our suppliers are the key to us reducing our impact
on the planet. Fuller’s has always been proud of the relationships
we hold with our suppliers and their willingness to support us on
our mission. More than ever, this year, our suppliers have been
working hard on their own sustainability journeys and these
initiatives are helping usand them to strive for a better planet
andstronger communities.
Direct Seafoods
“ Sourcing fish responsibly is paramount to our business.
Wepassionately believe in promoting the most sustainable
products available to us. We work closely with our fish and
seafood suppliers, both mainstream and specialist. We have
linkswith NGOs such as MSC to develop and market sustainable
alternatives. We only ship fishacross the country if they are not
available locally; minimum foodmiles means maximum freshness.
A significant amount of seafood is wild caught which can lead
tooverfishing, unwanted by-catch and destructive catch
methods. Wetake the view that we need to work within the
industry to guide our customers towards sustainable choices.
Our Seafood Sustainability principles dictate that we:
1. Seek third party independent accreditation wherever
possible and give preference to suppliers that are accredited.
2. We demand to know the source and origin of the
seafoodwesell and endeavour to shorten the supply
chainwhereverpossible.
3. We never knowingly sell products that damage the
environment or risk the survival of a species without
aplanto rectify the products’ sustainability credentials.
We believe that the process of investigating sustainability
options for customers is a task without end. Nothing will ever
remain completely sustainable and often unsustainable choices
may become sustainable through proper management. Therefore,
we treat the search as a journey rather than a destination.”
Direct Seafoods was the first seafood business to join the Ethical
Trading Initiative (“ETI”). The ETI is an allegiance of companies,
trade unions andNGOs that promotes respect for workers’ rights
around the globe. Itsvision is a world where all workers are free
from exploitation and discrimination, and enjoy conditions of
freedom, security, andequity.
OUR SUPPLIERS’
SUSTAINABILITY JOURNEYS:
PROTECTING THE PLANET
THROUGH
partnership
46 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Asahi
Asahi plans to become carbon neutral within its breweries by
2030 and to engage its suppliers and partners to reduce carbon
emissions of its products across the whole supply chain by 30%
in the same period. Asahi’s ultimate commitment is to achieve
Net Zero emissions across its entire supply chain by 2050. By
2025, allelectrical energy that it uses in its breweries will be
coming fromrenewable sources.
“ By the year 2030, our ambition is that all of our breweries will be
carbon neutral, all the packaging we use recyclable, ingredients
coming from sustainable sources and we will continue to be the
best in class in water consumption, while fostering partnerships
across our supply chains, as well as in the communities where
we operate.”
Water is an absolutely crucial ingredient in brewing beer. Asahi’s
aimis to make sure that it secures plentiful water of good quality.
Over the past decade, Asahi has cut its water consumption to
alevel which is the best in class not only in Europe, but also
worldwide. By 2030, it aims to reach an average consumption
inEurope of 2.75 litres of water per litre of beer brewed in every
single brewery it operates in Europe.
By 2030, Asahi will only use containers and secondary packaging
that is reusable or fully recyclable, and made chiefly from
recycled content.
Asahi’s Draught Technical Services team recently moved its
10-vehicle fleet to plug-in hybrid electric vehicles (PHEVs). In an
average year, the Draught Technical Services team covers 200k
miles, generating a carbon output of around 67 tonnes per year.
As a result of the switch to PHEV petrol vehicles, the estimated
annual carbon output of the team should now be 22 tonnes –
cutting emissions bytwo thirds.
While keeping a keen eye on EV and hydrogen development,
stopgap alternatives are being considered such as sustainably
sourced HVO biofuel to directly replace diesel. Not only would
this cut emissions, but it would help reduce air pollution in
urbanareas.
Sipsmith: Proud to be a B Corp
In May 2021, Sipsmith achieved its B Corp certification and
continues to maintain its high standards of social and ethical
performance, public transparency and legal accountability –
both in the sector asone of the first gin distilleries to have B
Corpand within the wider business community.
Sipsmith continues to source its electricity from renewable
sources, eliminating Scope 2 emissions. It harnessed the
power of cold water in the winter to reduce its energy use
during distilling. Sipsmith continues to improve the efficiency
of its steam generation by detecting and eliminating leaks.
“ Flex-hex packaging was trialled for our single use bottles
during2022, where 1.5k bottles were sent out. The feedback
from customers was positive, with no complaints about
breakages. Building on this success, we will be redesigning
ourpackaging for the new bottle once our existing packaging
stock has been used.”
“ London Interdisciplinary School conducted research on behalf
of Sipsmith to identify opportunities for us to collaborate with
local businesses, researching possible uses for effluent and
botanical by-products. For botanicals, recommendations
included partnerships with sustainable fashion houses or
otherB Corp companies. For the reuse of effluent, the report
recommended it was spread on the land, sent to an anaerobic
digestion plant or further research could be conducted into
itsuse in emerging technologies.”
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Special Olympics GB
Since 2018, Special Olympics GB has been our main charity partner.
Special Olympics GB provides opportunities for year-round, all-
ability sports programmes for more than 10,000 athletes of all ages
with intellectual disabilities – to help transform lives through sport.
Since the beginning of our partnership, Fuller’s support has allowed
Special Olympics GB to deliver its work to more than 6,500 athletes
at 95 all-ability, inclusive sports clubs – covering 27 sports across
England, Scotland and Wales. This provides nearly 13,000 regular,
hour-long sporting sessions per year, all delivered by a team of
morethan 3,800 volunteers.
OUR CHARITY PARTNERS:
OUR
communities
FULLER’S HAS BEEN ACTIVE IN ITS
local communities
SINCE 1845 AND TODAY, WE HAVE A
COMMITMENT OF DONATING
1%
OF OUR ANNUAL PROFITS TO
CHARITY. WE SUPPORT A
wide
range
OF CHARITIES.
48 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
What is an intellectual disability?
Intellectual disability (“ID”) is a disability characterised by significant
limitations both in intellectual functioning (reasoning, learning,
problem solving) and in adaptive behaviour – which coversa range
ofeveryday social and practical skills. This disability originates
before the age of 18.
There are 1.5 million children and adults with an intellectual
disabilityin Great Britain. It is the most common disability in
theUK.It’s caused by the way the brain develops and examples
include Down’s Syndrome and types of autism.
People with an ID are often socially excluded and many are bullied.
They have a shockingly lower life expectancy and 78% donot take
part in any sport.
How does Fuller’s support Special Olympics GB?
We raise money on a corporate level in a number of ways including:
• 50p from every children’s meal purchased is donated
• Our annual charity fundraiser. In 2023, we held our second Bridge
Walk – 98 Fuller’s and Special Olympics GB colleagues walked
21 miles, from The Swan in Staines to One Over the Ait in Brentford
– raising £20,000.
Pennies
Pennies is a digital upgrade of the traditional charity box, designed
tofit with our increasingly cashless lifestyles. It gives customers
inour Managed Pubs and Hotels the opportunity to give a few pence
tocharity when paying by card with the press of a button to round
upto the nearest pound.
We have partnered with Pennies since July 2019. Last year, our
customers donated £205,050 – proving that small donations go
along way.
Of the money raised through our Pennies donations, 90% of this
iscurrently donated to Special Olympics GB and the remaining
10%goes to Pennies, a registered charity – to help it grow
moreopportunities for UK consumers to give digital pennies
toUKcharities.
• Annual charity football tournament. In 2022, 16 teams from
acrossFuller’s – and our partners – played in a six-a-side
footballtournament. We raised £10,000 on the day.
• 90% of our Pennies donations go to Special Olympics GB.
• We support all our pubs and team members across the
Companytoraise money in their own way.
Employment project
Employment within the ID community has, unfortunately, been
exceedingly low. Recently, the number of those with an ID who
havegained and are within employment has dropped beneath 6%.
We are working with Special Olympics GB to offer employment
opportunities to people with IDs – with an initial goal of hiring at
least20 individuals with IDs in Fuller’s pubs and hotels by the end of
the summer. We will work with Special Olympics GB to co-create an
employment pathway for those with IDs to work in our pubs and hotels.
A select cohort of pubs has attended workshops alongside Special
Olympics athletes – with the aim of creating this employment path
together, to ensure the project is sustainable and beneficial for
everyone. Throughout the project, we will take on feedback to
offerinsight on how we can scale this up for all of our sites to use.
Stuart Green, General Manager of The Cabbage Patch in
Twickenham, has been employing people with IDs for a number
ofyears and provides first hand insight into the benefits they
canbring to our teams.
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Made in Hackney
Our recent partnership with Made in Hackney, a community
cookery school and emergency food support service, kicked
offwith Made in Hackney’s plant-based burger launching across
Fuller’s estate – with 50p for every burger sold being donated
back to the charity.
Made in Hackney’s expert chefs developed the recipe for the
plant-based burger to be a delicious and nutritious, wholefoods
alternative to imitation meat. The burger patty comprises a
selection of tasty and healthy ingredients – including mushrooms,
beetroot, quinoa and more. Topped with a smoked cheese
alternative, tahini-dressed kale, balsamic beef tomatoes and
asecret sauce – the result is a mouth-watering treat that’s
goodfor you and the planet.
Since its launch in August, over £10,000 has been raised
sofarthrough sales of the plant-based burger. Additionally,
plant-based burgers are significantly less carbon intense than
those made ofbeef – using roughly 60% less carbon. We’ve
soldaround 20,000 Made in Hackney burgers, producing
60fewertons of carbon emissions than an equivalent
numberofburgers made from beef.
Our partnership with Made in Hackney won the Best Community
orCharity Initiative at the Restaurant Marketer and Innovator
Awards 2023.
OnSide
In 2019, Fuller’s committed to investing £150,000 into a new
youthzone in the Borough of Hammersmith and Fulham. The
project is being delivered by national charity, OnSide, which
operates 14 youth zones across the UK.
Based in White City, Hammersmith and Fulham Youth Zone
willbepart of an innovative education hub, known as EdCity.
Named WEST (standing for ‘Where Everyone Sticks Together’)
bylocal young people, it will be open to young people from
across Hammersmith and Fulham. They will have access to
allthefantastic facilities for a cost of £5 for an annual
membership and 50p per visit.
The WEST youth zone will be a brand new, purpose-built building
buzzing with energy and crammed with incredible facilities. It willbe
staffed by skilled and dedicated youth workers who truly believe in
young people – helping them see what they can achieve, and giving
them the skills, confidence and ambition togo for it.
Fuller’s is committed to a long-term relationship with the WEST
Youth Zone and is looking at further opportunities to support it
through volunteering, career opportunities and hospitality
skillstraining.
50 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Only a Pavement Away
We work with Only a Pavement Away – a charity which provides
stability through employment for those who are homeless or in
danger of being homeless. We support the charity with its
fundraising activities, for example, the annual Fill a Flask event
– where volunteers walk the streets of London and other cities
offering water to rough sleepers in the summer. Volunteers also
raise awareness of the charity and the opportunities available
tothose who may be struggling to find employment due to their
personal circumstances.
We hosted the Pedalling for Pubs 10k Base Camp challenge
atThe Admiralty where three static bikes were set up and
participants cycled 10k each in support of those taking on
themain challenge.
Only a Pavement Away’s head office is based in the offices above
The Barrowboy and Banker, London Bridge – which we provide
tothe charity rent free.
Local community support
The Builder’s Arms in Croydon raised
over £1,000 through a hamper raffle and
used the funds raised to purchase nine
trolley-loads of goodies for the Esther
Community Enterprise Food Bank.
The Grove Lock in Leighton
Buzzard raised £2,000 for
Linsdale School Parent, Teacher,
Friends Association (PTFA) at its
annual fireworks event. Money was
raised on the night through generous
donations from customers, a bake
sale and a charity raffle.
Our pubs are active members within their communities and oftentake
partin fundraising activities for local charities and organisations.
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Sustainability Report Continued
DIVERSITY AND
INCLUSIONCHARTER
F
uller’s recently signed the British
Beer and Pub Association’s (“BPPA”)
Diversity and Inclusion charter – as
part of our commitment tobeing Open to All.
The pledge signifies Fuller’s aim of ensuring
ourpubs are inclusive spaces and taking a
zero-tolerance approach to harassment or
discrimination of any kind.
The diversity and inclusion charter looks
toenact real, long-term change across the
brewing and pub industry. Our commitment
to inclusion is for our team members and our
customers. We want you to feel comfortable
and safe whenever you’re in a Fuller’s pub
– whether you are there as a team member
or customer.
We know that we still have work to do to
achieve this goal. Therefore, we are looking
at the steps we can take to ensure everyone
feels a sense of belonging in our pubs.
We recently launched the Equality of Voice
survey – so that we can understand how our
teams feel about diversity and inclusion at
Fuller’s and understand more about the
demographics of our team.
OUR People
52 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Feedback
In our employee Happiness Index survey, we saw significant
improvement across response rates and average happiness and
engagement scores since 2021.
A year ago, we launched My Voice – a platform for our team members
to give honest and anonymous feedback on how they’re feeling. This
was a result of teams sharing in our first Happiness Index survey that
they did not feel they had a voice and their opinions were sometimes
not being heard.
We launched the Fuller’s Forum – which gives our teams the
opportunity to have their say about what happens in Fuller’s. The
Fuller’s Forum is made up of 12 General Managers from across our
Managed estate who meet every few weeks. Each member of the
Forum represents a group of their fellow General Managers – who
are encouraged to approach their Forum reps with any feedback
theyhave about the business. The Forum is run jointly by the support
centre and operations. Our designated Non-Executive Director
responsible for employee engagement, Helen Jones, also now attends
the meetings. The Forum has created atwo-way communication path
between the team members in our pubs andhotels, and the teams in
our support centre.
The Fuller’s Forum has been a great success and, therefore, we are
launching a Forum for our Head Chefs as well as one for our Pier
House colleagues.
We have launched a First Impressions survey which invites new
members to the Fuller’s family to share their experiences pre-joining
and then their experience through their induction phase.
Mental Health Champions
Our teams’ overall wellbeing is important to us and to help us support
our teams, we have introduced our Mental Health Champions – 100
team members from across our Managed Pubs and Hotels who have
been trained to help their colleagues with mental health support.
TheMental Health Champions help Fuller’s promote a positive mental
health culture in our sites by regularly talking about mental health to
tackle the stigma around it. They are encouraged to be open and to
talk to their colleagues about the importance of mental health.
Our Mental Health Champions have all attended a one day course to
ensure they are equipped with the knowledge and skills to help their
colleagues. Some of our Champions will soon be attending a two day
course to become Mental Health First Aiders.
In January 2023, we held our first Mental Health Champions
conference – a virtual event where all Champions were invited
tofurther helpthem in their role. The conference covered a range
oftopics – including where they can access support and self help
exercises, followed by a session with the Licensed Trade Charity.
Menopause Policy
On 18 October 2022, World Menopause Day, we launched our
Menopause Policy. We are now in a world where we are living longer
and working longer, and it is our responsibility to ensure that anyone
transitioning through menopause is fully supported at work. By
talking about menopause openly, raising awareness and putting
theright support in place, we may be able to get to a place where
menopause is no longer seen as taboo and those going through this
transition face no barriers at work.
The policy outlines what the menopause is, typical symptoms one
might experience and line management guidance on how to have
supportive, open communications.
Rest Less
Fuller’s launched a new partnership with Rest Less – a digital
community and advocate for people in their 50s, 60s and older – to
reach out to potential older workers. We posted specific positions on
Rest Less’ job board right across its businesses and geographical area.
We have always had a number of older workers in Fuller’s, but
thisisthe first time we have specifically targeted this group with
abespoke campaign. Older workers have a lot to offer us –andwe
have a lot to offer them, with shift lengths and work patternsto suit.
We are very much a people business, and the oldergeneration brings
an exceptional level of customer service andconsumer interaction.
My Fuller’s
My Fuller’s is the home of our employee benefits. Team members
canaccess discounts from a range of providers – from well-known
retailers to holidays, insurance, days out, restaurants and more.
We’ve recently increased the number of providers offering discounts,
streamlined the process so it’s easier to use andincreased the
discount available with many of the providers.
International Women’s Day
We held our first ever International Women’s Day menu dish
competition, with the winning dish – a superb banana bread from
KiahEnticknap of The Queen’s Head in Kingston – taking pride of
place on menus across our Managed Pubs and Hotels during the
month of March. A 50p donation for each dish sold, facilitated by
Workfor Good, was given to Refuge – the country’s largest single
provider of specialist support to women and their children
experiencing domestic abuse.
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Task Force on Climate-related Financial Disclosures (“TCFD”)
Introduction
We are pleased to present our second annual report in line with the recommended disclosures of the TCFD for the year ended 1 April 2023. This
year marked a significant evolution in our TCFD reporting activities, as we followed the plan that we set out last year and continued to develop
our work in this area. We have refreshed our assessment of our climate-related risks and opportunities, evolved our analysis of how we expect
these to impact our business, and undertaken scenario analysis for the first time to gain further insights into some of our key climate risks.
Thisyear’s report reflects this significant work and the progress that we have made. However, we view our reporting activities for TCFD
asaniterative process, and while we have made a good start, we are continuing to mature our approach and understanding in this area
ofourbusiness to enhance our disclosures on climate-related risks and opportunities.
The table below summarises where we have responded to each of the TCFD disclosure recommendations in this report.
TCFD disclosure recommendations
FY2023
compliance Page reference for disclosure
Governance
a. Describe the board’s oversight of climate-related risks
andopportunities.
Page 55
b. Describe management’s role in assessing and managing
climate-related risks and opportunities.
Page 55
Strategy
a. Describe the climate-related risks andopportunities the
organisation hasidentified over the short, medium, andlong term.
Pages 56 to 59
b. Describe the impact of climate-related risks and opportunities on
theorganisation’s businesses, strategy, andfinancial planning.
Pages 56 to 59
c. Describe the resilience of the organisation’s strategy, taking
intoconsideration different climate-related scenarios,
includinga2°Corlowerscenario.
Pages 56 to 59
Risk Management
a. Describe the organisation’s processes foridentifying
andassessingclimate-related risks.
Pages 34 to 39 and 60
b. Describe the organisation’s processes formanaging
climate-relatedrisks.
Pages 34 to 39 and 60
c. Describe how processes for identifying, assessing, and
managingclimate-related risks are integrated into the
organisation’s overall riskmanagement.
Pages 34 to 39 and 60
Metrics & Targets
a. Disclose the metrics used by the organisation to assess climate-
related risks and opportunities in line with its strategy and risk
management process.
Pages 60 to 61
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse
gas (“GHG”)emissions and the related risks.
Page 44
c. Describe the targets used by the organisation to manage climate-
related risksand opportunities andperformance against targets.
Pages 60 to 61
54 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Governance
Our approach to the governance of sustainability and climate-related
matters, and in particular the associated risks and opportunities,
isrooted in our commitment to sustainability and our belief that
implementing both top-down and bottom-up structures ensures
wecan deliver on our strategy, with responsibility integrated
appropriately throughout our business.
The Board
At Fuller’s, the Board has overall responsibility and accountability
forall of our risks and opportunities, which includes those that are
climate-related. The Board considers our climate-related issues as
part of its broader role in ensuring our ability to perform in both the
short and long term. The Board considers material climate-related
issues when reviewing strategic projects and business objectives,
such as the acquisition of a new site or the undertaking of major
refurbishments, to understand potential operational impacts and
ensure that Fuller’s can continue to perform as expected. The Board’s
consideration of such issues is informed by advice from senior leaders
within the business, including the Sustainability and Property Directors.
The Audit andRisk Committee supports the Board in its consideration
of climate-related risks through its oversight of our integrated risk
management assurance model and continues to monitor the potential
materiality and impact of climate-related risks for the business through
its role in our ongoing risk management. Climate-related risks are
presented to the Audit and Risk Committee on an annual basis,
whichis a key element of the new approach to TCFD that we have
implemented this year.
Executive Team
The Chief Executive is the designated Board member responsible
forall sustainability matters, including climate change, and leads
onour Life is too good to waste sustainability strategy. With regards
to TCFD, the Finance Director acts as the Board member responsible
for overseeing our work in this area.
Our Executive Team is assisted in their delivery of oursustainability
and climate work, including our Life is too good towaste strategy,
bythe Sustainability Director, the Environment Committee, and
othersenior leaders within the business (seefurtherdetails below).
Briefings on our sustainability work, including our climate-related
risks and opportunities and progress against our targets and objectives,
are provided to the Board by theSustainability Director, who attends
the Environment Committee and leads our programme of work on
climate change.
Performance against our sustainability agenda, which includes
targets for our climate work, also forms part of the criteria for
theremuneration of our Executive Team. Further detail can be
foundon page 92.
Senior Leadership and internal stakeholders
Our Sustainability Committees as detailed on page 74 are responsible
for establishing our targets and objectives, providing oversight and
monitoring progress against key environmental andsocial sustainability
initiatives in collaboration with relevant departments, such as our
property and purchasing functions. TheEnvironment Committee
ischaired by the Retail Director, Fred Turner, who also sits on the
Board, and it is tasked withensuring that we make progress against,
and achieve, our climate-related targets andobjectives.
This year, to further progress our work in this area, we formed a TCFD
Working Group. This group consists of relevant management-level
stakeholders from across the business and acts as the key forum for our
work on assessing climate-related risks and opportunities. In the next
year, we plan to formally integrate this Working Group as a sub-
committee of our Environment Committee, with our Sustainability
Director responsible for convening the group to progress our TCFD
programme of work moving forward. As the Board member responsible
for our TCFD work, the Finance Director receives regular briefings
from the Sustainability Director on the output of our TCFD programme
of work. As our day to day lead on sustainability, our Sustainability
Director also works with several departments across the business
toensure that we deliver on our broader sustainability objectives.
Fuller, Smith & Turner PLC Board
Audit and Risk Committee
Executive Team
Business Departments
TCFD
Working
Group
Sustainability
Director
Environment
Committee
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1 As described by TCFD, transition risks are “risks related to the transition to a lower-carbon economy” while physical risks are “risks related to the physical impacts of
climate change” (TCFD, 2017) available at www.fsb-tcfd.org/publications
2 NGFS Scenarios available at www.ngfs.net/ngfs-scenarios-portal
TCFD Continued
Strategy
Approach to Strategy disclosures
As we have further developed our TCFD work this year, we are now
able to disclose what we deem to be the key climate-related risks for
our business and the opportunities in the transition to a low carbon
economy that we feel we are well-positioned to pursue. We define
key climate-related risks as those that we consider potentially
material to Fuller’s, its investors, and its other stakeholders.
Our approach to identifying, assessing, and managing these
climate-related risks is set out in the Risk Management section
ofthis disclosure (see page 60). In line with guidance from the
TCFD,wecategorise our risks as transition risks and physical risks
1
.
Alongside this, we have also identified the periods in which we see
these risks materialising as potential impacts on the business. These
periods are defined as: short (1-5 years); medium (5-15 years); and
long (>15 years). We view this categorisation of potential timeframes
as appropriate for the nature of the climate-related risks assessed
and how we view the life of our physical assets and business models,
which generally require an analytical lens that goes beyond normal
business planning cycles.
We recognise the need to identify risks early and implement actions
to mitigate any potential impacts on our business and on the planet.
We also firmly believe that, by being proactive, we can position
ourselves well to seize the opportunities presented by the
transitionto a lower carbon economy.
Scenario Analysis
We have also engaged this year in our first scenario analysis to
enhance our understanding of how some of the business’s key
climate-related risks may develop over time under different
scenarios. As a key recommendation of the TCFD and an evolving
area, we recognise this is a complex exercise which will continue
todevelop significantly in the coming years. For our initial scenario
analysis this year, we used the scenario analysis tools and
framework set out by the Network for Greening the Financial
System(“NGFS”). The NGFS represents a group of central banks
andsupervisory bodies that share best practice and contribute
tothedevelopment of environment and climate risk management
inthe financial sector. The NGFS has broadened the intended
audience for its work to include corporates, and its framework
forscenario analysis represents a useful starting point for
organisations such asours.
In this year’s scenario analysis, we qualitatively assessed our key
risks, and for some selected risks, we have also begun to explore
quantitative analysis. To analyse our risks, in line with TCFD
guidance, we used three scenarios defined by NGFS – ‘Current
Policies’, ‘Delayed Transition’ and ‘Net Zero 2050’ – which represent
a diverse set of scenarios covering different potential global warming
levels
2
. We have begun to assimilate the results from this work internally
to deepen our understanding of climate-related risks in the business
and inform our approach to their assessment moving forward. As
climate scenario analysis represents a relatively new process for
us,we look forward to continuing to develop our approach in this
area and further enhance our understanding andinsight on climate-
related risks in the coming years.
Our identified climate-related risks and opportunities
The following climate-related risks and opportunities are those
thatwe have identified as key for Fuller’s to consider over short,
medium, and long-term time horizons. For the risks outlined here,
wehave described how we define each risk and, in turn, how we
think each one could affect our business. We have also identified
various mitigation activities alongside each risk. These mitigation
actions are either already in place, in the process of being implemented
or are being considered as part of our strategy and financial planning.
These mitigation actions will also be revisited andadapted over time
to ensure that the business’s strategy is resilient to the potential
effects of such climate-related risks. From our work conducted
sofarto assess all our climate-related risks and the mitigations
wehave in place, or are planning, we have reviewed the resilience
ofour strategies in light of them. On this basis, we have not identified
any material concerns with respect to the resilience of our strategies
and we do not currently view climate-related risks as a material
concern to the business in the short term.
Risks
Risk
Type
ofrisk?
Risk
sub-
category Timeframe
How do we define this risk and
see it impacting our business? Mitigation Activities
Introduction
of a carbon
tax
Transition Policy Medium The introduction by the UK
Government of mandatory
carbonpricing.
This risk could lead to a direct
costtothe business based on
ourdirect Scope 1 and Scope 2
operational emissions.
• We are awaiting validation of
ourscience-based targets and
areintheprocess of implementing
areductions strategy for our
GHGfootprint.
• Our decarbonisation actions include
moving to 100% renewable energy
supply for our Managed estate;
pursuing electrification of sites
where possible; shifting to low-GWP
refrigerants; and transitioning the
company car fleet to electric vehicles.
56 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Risk
Type
ofrisk?
Risk
sub-
category Timeframe
How do we define this risk and
see it impacting our business? Mitigation Activities
Legislative
changes to
support
climate
change
initiatives
Transition Policy Medium The introduction by the UK government
of mandatory policies to support
thetransition to net zero in 2050
(e.g.more stringent legal requirements
for minimum energy performance
standards in commercial properties).
This could result in increased costs
asthe business adapts to comply
withany new legislation (e.g. the
needto invest in our properties to
raiseEnergy Performance Certificate
(“EPC”) ratings). This could also lead to
an increased risk of costs associated
withnon-compliance.
• Regarding proposed legislation
onincreased EPC standards, we
areaware of our Tenanted estate’s
current performance and the
changes that would be required.
• The implementation of our climate
and broader sustainability strategy,
by lowering our overall impacts,
should also put us in a good
positionto respond to potential
legislative changes.
• Our Sustainability Director works
with external consultants and
industry bodies to monitor potential
legislation that may impact our
business and regularly meets with
the Executive Team and the Board to
keep them informed of any relevant
developments and how the business
may need to respond.
Energy price
volatility
Transition Market Medium The fluctuation of energy prices
aseconomic conditions, supply
availability and changing weather
patterns affect the energy market.
This could result in increased
operating costs for properties in our
Managed estate. In our Tenanted
estate, under extreme energy price
rises, this could result in a loss of
income if tenants were unable to
meetthe obligations of their leases.
• We are exploring opportunities to
secure long-term electricity supply
for our Managed estate through
on- and off-site renewable
installations, such as a power
purchasing agreement (“PPA”).
• We are implementing an energy
efficiency strategy across our
Managed estate to reduce on-site
energy consumption.
• We engage with our Tenanted
estate to help them effectively
manage their energy use and costs.
Increased
supply chain
disruption
Physical /
Transition
Chronic /
Market
Medium /
Long
Disruption in global supply chains
arising as a second-order effect of
either physical or transition risks.
This risk could lead to increased
procurement costs and, in some
cases,the reduced availability
ofproducts for our sites.
• We continue to pursue a diversified
supplier base, which allows the
business to adapt to potential
disruption more effectively.
• We also regularly engage with
oursuppliers to understand the
challenges facing them and have
recently begun to explicitly engage
on sustainability issues, including
climate, to understand what actions
suppliers are taking to address their
own impacts.
• We have a flexible food and drink
menu offering as a business, which
prevents over-reliance on any single
product/category of product.
• We use local and seasonable
produce where possible.
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Risk
Type
ofrisk?
Risk
sub-
category Timeframe
How do we define this risk and
see it impacting our business? Mitigation Activities
Flooding Physical Acute /
Chronic
Short Increased inland and coastal flooding
due to more frequent and severe
precipitation and rising sea levels.
This risk would primarily affect
properties in the estate that are in
flooding-prone areas and result in
costs for the business associated
withrepairs and business interruption,
where these are not covered by
insurance. In the longer term, the
business could also see increases
ininsurance premiums and reduced
asset values for sites that are highly
impacted by flood risk.
• We are already aware of the risk
exposure of our estate at a property
level, for both inland and coastal
flooding, and have suitable
insurance provisions in place.
• For those properties considered
particularly exposed to this risk,
weengage with local partners,
suchas the Environment Agency,
toimplement mitigation measures,
including flood defences or dredging,
where possible. The business has
also invested in these sites to improve
their resilience, for example, through
the installation of site flood defences.
• We plan to actively evaluate our
exposure for certain at-risk
properties in the medium to long
termand explore how this can
bemitigated appropriately.
Water stress
and Drought
Physical Acute /
Chronic
Medium Drought events and/or prolonged
periods of abnormally dry weather
leading to water scarcity.
This risk could lead to increased
operating costs for properties in
ourManaged estate as the cost
ofwater supply increases. In some
cases, business interruptions costs
may also arise where localised
droughts severely impact water
availability on sites. This risk could
also lead to disruption in our supply
chain. For example, it could disrupt the
supply of key beverages, such as beer.
• We continue to manage the water
use of our properties by proactively
identifying and repairing leaks in
partnership with our water
consultants, and we are investing
inthe estate to improve water use
efficiency through the installation
oflow flow taps, showers and
toilets. We also work with our
landscaping contractors to minimise
our use of water through the
installation of drip watering for
hanging baskets and planters.
• A detailed assessment of our property
estate will be conducted tounderstand
the full risk potentiallyposed by water
stressanddrought, and how
thismightvary across sites.
• We are in discussions with our
majorsupplier, Asahi, who are
aware of this risk and are taking
mitigating actions.
Heat stress Physical Chronic Medium Prolonged periods of abnormally
hotweather affecting the operation
ofFuller’s sites.
This could affect our business through
(temporary) changes in customer
demand during sustained periods
ofhot weather and the need for
increased capital investment to
manage the impact of hotter
weatheron our properties.
• We continue to invest in our estate
and, where appropriate, we are
looking into glazing and shading
opportunities as part of our site
development work
• We have also been installing air
conditioning units in affected sites
to mitigate the impact of heat on
both our customers and our people.
TCFD Continued
58 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Risk
Type
ofrisk?
Risk
sub-
category Timeframe
How do we define this risk and
see it impacting our business? Mitigation Activities
Storm
damage
Physical Acute Medium Site damage or interruption of service
caused by extreme weather such as
high winds, heavy rain or snowstorms.
This risk could lead to increased
costsassociated with repair or
business interruption, where these
arenot covered by insurance. Further,
extreme weather may also lead to
afall in customer demand if visiting
sitesbecomes undesirable or unsafe.
• Through our insurance provisions,
we are aware of the risk exposure of
our property estate to storm damage
• We carry out annual property and
maintenance reviews to ensure that
our estate is in a good condition and
that appropriate action has been
taken where necessary to mitigate
any property-specific storm risks.
Opportunities
Opportunity Category Timeframe
How do we define this opportunity
and see it impacting our business?
Changing consumer
expectations and demand
Market / Reputation Medium The demand from consumers for ‘greener’ menu options
isapotential trend that we are well positioned to respond
togiven our flexible menu offering and our continued
implementation of the Life is toogood to waste strategy.
Ourrecent work with Made in Hackney, for example,
hasdemonstrated the opportunity to create both social
andenvironmental value in considering new and less
environmentally impactful dishes. This could generate
market and reputational advantages in responding to
changing customer expectations and meeting new demands.
Site investment – reduced
costs, increased efficiency
Operations Medium Investment in our sites to meet our climate targets and
respond to potential legislative requirements could realise
reductions in our operating costs in the medium to long term.
We continue to explore, where appropriate, shifts to
renewable energy on- and off-site; the electrification of
kitchens and hot water heating; and the adoption of energy
efficiency measures for our sites. Such investments could
also contribute to mitigating multiple climate-related risks
for Fuller’s and help to future-proof our business for a more
uncertain world.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 59
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ADDITIONAL INFORMATION
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GOVERNANCE
66-104
TCFD Continued
Risk Management
Fuller’s views the effective management of our risks as key to
ensuring that we achieve our strategic objectives in the long term,
while delivering the high standard that our customers, our people,
and our shareholders expect. Climate-related risks are treated as
asubset of our wider corporate risks, and they are integrated into
our robust corporate risk assessment framework and approach.
Wecontinually monitor these risks and review our climate-related
risks on an annual basis. While we assess our climate-related risks
individually, as part of our TCFD work, we also consider them as part
of our broader assessment of sustainability and climate change-
related risk. This overall assessment is included within our corporate
risk register and represents our overall evaluation of the individual
climate-related risks identified in this report, alongside other
sustainability related risks (see page 39). The Chief Executive
holdsresponsibility for this broader risk category. The responsibility
for addressing the individual climate-related risks and opportunities,
identified in this report and accounted for within this category,
sitswith the Executive Team, Sustainability Director, Environment
Committee, and the TCFD Working Group. We believe thatthis
approach ensures we have a top-down understanding of climate-
related risks and opportunities within the business, which is
reinforced by bottom-up systems to support the oversight of
suchrisks by the Board and Executive Team.
Our assessment of our climate-related risks and opportunities is
informed by, and builds on, our approach to other corporate risks,
with appropriate adjustments made where necessary to reflect the
unique and complex nature of climate-related risks. This year, our
newly formed TCFD Working Group, with the support of external
advisors, acted as our key forum for identifying and assessing our
climate-related risks. Through meetings of key stakeholders from
across our business departments, we identified our potentially
relevant risks and then considered their potential materiality to the
business. For those risks deemed relevant to us in this process, the
Working Group undertook an assessment of their potential likelihood,
impact and timeframes, closely aligned with how we assess our
other corporate risks. The outcomes of this work were then tested
for robustness, with input from external advisors and members
oftheWorking Group, the Executive Team and the Audit and Risk
Committee. The relevant risks identified through this process have
been reported in this year’s disclosure and, from this, our Working
Group has considered our existing and potential mitigations, which
have alsobeen fed back to the Executive Team.
Metrics and Targets
We continue to track our performance across the business using
several climate-related metrics. This year, we are pleased to have
formally committed to set near-term company-wide emissions
reductions in line with climate science via the Science Based Targets
initiative (“SBTi”). These targets, which will cover our Scope 1, 2 and 3
emissions have been submitted for validation with SBTi and are
currently awaiting approval. This marks a significant step forward
forus and, in the coming year, we will be working to further develop
our data systems to enable regular reporting and tracking of progress
against these targets. While we already report annually onour Scope 1
and 2 emissions (see metrics and targets table below), our focus in the
coming year will be on continuing to work with our strategic partners
and suppliers to improve the accuracy and reliability of the data that
we collect internally and externally, and toevolve our reporting on
Scope 3 emissions. Our metrics and targets are outlined below:
Metric/Target Current, and historical, performance Future delivery plans
Net Zero across our operational
emissionsby 2030, and across
oursupplychain by2040
• Delivered an 8% reduction in gross
operational carbon emissions in FY2023
(Scope 1 and 2).
• The introduction of 100% renewable
energyled to a net carbon emissions
reduction of 49% vs FY2022.
• Continued investment into energy
efficiency measures on our sites.
• Continuing to explore the electrification of
our sites to remove the use of natural gas.
• Developing a comprehensive transition
plan to map out in the longer term our
pathway to Net Zero.
• Working with strategic partners and
suppliers to improve accuracy and
reliability of the data we collect to
evolveour Scope 3 emissions reporting.
Secure 100% renewable
electricitysupplylong term
• From October 2021, purchased 100%
renewable electricity.
• Exploring the implementation of on- and
off-site renewables for our properties.
By 2025 we aim to recycle at
least75%ofour operational waste
anddivert 100% from landfill
• Increased from 35% to 57% in FY2023. • Further implementation of food
wasteandglass collection for all
sites,where feasible.
• Introduction of a training programme to
encourage correct waste segregation
on-site.
• Introduction of a food waste reduction
programme to support redistribution
beforerecycling.
60 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Metric/Target Current, and historical, performance Future delivery plans
By 2030 we aim to reduce our overall
energy usage by at least 25%
• Like for like reduction of 13.4% in electricity
and 14.3% in gas consumption in FY2023 vs
our baseline year of FY2020.
• Continued investment into energy
efficiency measures in our properties and
an education initiative and behavioural
change programme to help our team
reduceusage.
By 2030 we aim to eliminate the use of
natural gas, oil and LPG where feasible
• 14.4% reduction in the use of natural gas in
FY2023, achieved though the implementation
of energy efficiency measures and the
transition to more electric kitchens and
hotwater and heating systems in our
property estate.
• Investment plans for sites using LPG
andoil to transition to electric kitchens
and hot water and heating systems.
• Where eliminating oil and gas is not
possible due to building constraints,
wewill focus on implementing reduction
measures and upgrading heating systems
to be more efficient.
By 2030 we aim to eliminate all
unnecessary plastics from our operation.
• Implementation of Green Goblet reusable
cupsfor major events to replace single-use
plastic cups
• Working with our suppliers to transition
away from single-use plastic items,
primarily in our hotel estate.
Other internal metrics that we track include packaging waste
output;waste processing and destination; and water consumption.
For thesemetrics, we continue to assess our performance against
short, medium and long-term targets, which we have set in our
Lifeistoo good to waste strategy.
Our climate-related metrics and targets are an area that we continue
to develop and expand. While several of the targets mentioned above
link to transition risks, such as such as a potential carbon tax and our
focus on achieving GHG emissions reductions, we are looking to
incorporate further metrics and targets in the coming year, particularly
those focused on physical climate risks. The significant progress that
we have made this year indisclosing our climate-related risks and
how they relate to our business highlights the potential for new
metrics to reflect how we are performing in mitigating these risks or
seizing the opportunities, such as our exposure to flood risk across
the business and investment in our estate to increase its sustainability.
We also recognise that, as a business that has committed to Net Zero
through the Hospitality Industry’s Net Zero Roadmap, it is important
that we set out how we plan to achieve this target. We welcome the
development of guidance on transition plans through the Transition
Plan Taskforce, and this is an area that we will be working on further
in the coming year. We have already outlined some of our plans
toelectrify our estate and improve its performance, and this is
something that we will be expanding on to outline how we intend
toachieve Net Zero across all emissions scopes by 2040.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 61
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OVERVIEW
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ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
Stakeholder Engagement
Stakeholder What matters How we engage and respond
We welcome thousands of people to our pubs and hotels each
week and strive to deliver positive and memorable experiences
that nourish the soul, and where everyone leaves happier than
when they arrived.
• Vibrant and well-maintained venues at the heart of the community
• Outstanding customer service
• Fresh seasonal food and extensive drinks range
• Value for money.
We regularly review and act on customer feedback from across a range of channels to better
understand what is important to our customers, to identify changing habits and trends, and
toimprove our offering. We undertake regular audits of our pubs and hotels to ensure high
operational standards are maintained and have a programme of continuous investment
across our estate.
Read more about our
engagement with our
customers on page 16
We have more than 5,400 colleagues across 200 Managed Pubs
and Hotels and support centre roles. Our people are what makes
Fuller’s special, and they each play a critical role in the success
ofthe business. They make the experience for our customers
anddeliver our business strategy at every level.
• Fair and equitable pay and benefits
• An inclusive, diverse, and respectful working environment
• Open and transparent communication and being heard
• Opportunities for personal and career development.
Our people are our biggest asset, and we continually strive to engage, develop and
retainthem. During the year, we further reviewed and enhanced our benefits package
andemployee policies, formalised our Fuller’s Forum listening group, introduced our
MentalHealth Champions to support employee wellbeing, expanded our employee
engagement surveys, and continued to develop our diversity and inclusion programme.
Read more about how we
engage with our people
on pages 52 to 53
We support 177 Tenanted businesses. Our Tenants are an
extension of the Fuller’s team, although they have autonomy
inrunning their own business. We aim to recruit Tenants who
share our values and philosophy.
• Affordable rents and mutually beneficial contracts
• Well-maintained buildings and facilities
• Open communication and engagement
• Business support and development.
We have a team of Business and Sales Development Managers led by an experienced
Director of Tenanted Operations, who ensure that our Tenants are in the best place
tooperate a successful business that delivers a good return for both parties. During
theyear, we have provided support to help our Tenants deal with rising energy prices.
Wewere delighted to be named Tenanted Pub Company of the Year (up to 500 sites) at the
Publican Awards in recognition of the excellent relationship we have withour Tenants.
Read more about how we
engage with our Tenants
on page 13
Our shareholders range from founding family members to retail
shareholders and large institutional investors. They own our
business and provide us with the capital that enables us to
progress our strategy.
• Robust operating and financial performance supported
byastrongstrategy
• Sustainable income and capital growth
• Progressive dividend policy
• ESG performance
• Directors’ remuneration.
We maintain a regular dialogue with all our shareholders. We actively engage with them
aspart of our investor roadshows following our half year and full year results presentations,
and we are easily accessible to respond to questions and feedback throughout the year.
Allshareholders are encouraged to attend our AGM, and relevant Company announcements,
reports and documentation are readily available via a dedicated section of our website.
Shareholders receive a copy of The Griffin, our quarterly inhouse magazine.
Read more about how
weengage with our
shareholders on page 72
An excellent supply chain is a key tenet of our business and
welook for genuine partnerships that provide a real point
ofdifference.
• Prompt and fair payments
• Ethical and fair dealings thatprotect human rights
andhealthandsafety
• Open communication andtransparency.
We aim to develop long-term relationships with our key suppliers and build a solid
relationship with them that allows for mutually beneficial collaboration. We work with
ourfood and drink suppliers to monitor consumer trends and changing tastes to allow
ustoevolve and adapt our offer and menus to reflect these macro trends.
Read more about how we
engage with our suppliers
on pages 46 to 47
The Great British pub has always been at the heart of the community
and we strive to have a positive and lasting impact on the communities
in which we operate by being a responsible business, and a good
neighbour, supporting worthy causes, providing employment and
minimising our environmental impact.
• Engaging with industry bodies and national policy makers
• Acting fairly and ethically
• Providing employment opportunities
• Supporting community and charitable causes
• Reducing the environmental impacts of our activities including
carbon emissions, energy and water
• Complying with legislation.
We regularly meet with both our local MPs and other legislative stakeholders, including
through membership of both the British Beer and Pub Association and UKHospitality,
andcontribute to consultations on issues that impact our sector. Our sustainability strategy
Life is too good to waste is a key principle of our overall business strategy and outlines our
approach to engaging with our communities, the environment and our people.
Read more on how
weengage with
ourcommunities
onpages48 to 51
CUSTOMERS
PEOPLE
TENANTS
SHAREHOLDERS
SUPPLIERS
COMMUNITIES
Active engagement with our stakeholders helps deliver better outcomes and supports the long-term sustainability of our business.
Ourkeystakeholders and a summary of what matters to them and how we engage and respond are set out below.
62 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Stakeholder What matters How we engage and respond
We welcome thousands of people to our pubs and hotels each
week and strive to deliver positive and memorable experiences
that nourish the soul, and where everyone leaves happier than
when they arrived.
• Vibrant and well-maintained venues at the heart of the community
• Outstanding customer service
• Fresh seasonal food and extensive drinks range
• Value for money.
We regularly review and act on customer feedback from across a range of channels to better
understand what is important to our customers, to identify changing habits and trends, and
toimprove our offering. We undertake regular audits of our pubs and hotels to ensure high
operational standards are maintained and have a programme of continuous investment
across our estate.
Read more about our
engagement with our
customers on page 16
We have more than 5,400 colleagues across 200 Managed Pubs
and Hotels and support centre roles. Our people are what makes
Fuller’s special, and they each play a critical role in the success
ofthe business. They make the experience for our customers
anddeliver our business strategy at every level.
• Fair and equitable pay and benefits
• An inclusive, diverse, and respectful working environment
• Open and transparent communication and being heard
• Opportunities for personal and career development.
Our people are our biggest asset, and we continually strive to engage, develop and
retainthem. During the year, we further reviewed and enhanced our benefits package
andemployee policies, formalised our Fuller’s Forum listening group, introduced our
MentalHealth Champions to support employee wellbeing, expanded our employee
engagement surveys, and continued to develop our diversity and inclusion programme.
Read more about how we
engage with our people
on pages 52 to 53
We support 177 Tenanted businesses. Our Tenants are an
extension of the Fuller’s team, although they have autonomy
inrunning their own business. We aim to recruit Tenants who
share our values and philosophy.
• Affordable rents and mutually beneficial contracts
• Well-maintained buildings and facilities
• Open communication and engagement
• Business support and development.
We have a team of Business and Sales Development Managers led by an experienced
Director of Tenanted Operations, who ensure that our Tenants are in the best place
tooperate a successful business that delivers a good return for both parties. During
theyear, we have provided support to help our Tenants deal with rising energy prices.
Wewere delighted to be named Tenanted Pub Company of the Year (up to 500 sites) at the
Publican Awards in recognition of the excellent relationship we have withour Tenants.
Read more about how we
engage with our Tenants
on page 13
Our shareholders range from founding family members to retail
shareholders and large institutional investors. They own our
business and provide us with the capital that enables us to
progress our strategy.
• Robust operating and financial performance supported
byastrongstrategy
• Sustainable income and capital growth
• Progressive dividend policy
• ESG performance
• Directors’ remuneration.
We maintain a regular dialogue with all our shareholders. We actively engage with them
aspart of our investor roadshows following our half year and full year results presentations,
and we are easily accessible to respond to questions and feedback throughout the year.
Allshareholders are encouraged to attend our AGM, and relevant Company announcements,
reports and documentation are readily available via a dedicated section of our website.
Shareholders receive a copy of The Griffin, our quarterly inhouse magazine.
Read more about how
weengage with our
shareholders on page 72
An excellent supply chain is a key tenet of our business and
welook for genuine partnerships that provide a real point
ofdifference.
• Prompt and fair payments
• Ethical and fair dealings thatprotect human rights
andhealthandsafety
• Open communication andtransparency.
We aim to develop long-term relationships with our key suppliers and build a solid
relationship with them that allows for mutually beneficial collaboration. We work with
ourfood and drink suppliers to monitor consumer trends and changing tastes to allow
ustoevolve and adapt our offer and menus to reflect these macro trends.
Read more about how we
engage with our suppliers
on pages 46 to 47
The Great British pub has always been at the heart of the community
and we strive to have a positive and lasting impact on the communities
in which we operate by being a responsible business, and a good
neighbour, supporting worthy causes, providing employment and
minimising our environmental impact.
• Engaging with industry bodies and national policy makers
• Acting fairly and ethically
• Providing employment opportunities
• Supporting community and charitable causes
• Reducing the environmental impacts of our activities including
carbon emissions, energy and water
• Complying with legislation.
We regularly meet with both our local MPs and other legislative stakeholders, including
through membership of both the British Beer and Pub Association and UKHospitality,
andcontribute to consultations on issues that impact our sector. Our sustainability strategy
Life is too good to waste is a key principle of our overall business strategy and outlines our
approach to engaging with our communities, the environment and our people.
Read more on how
weengage with
ourcommunities
onpages48 to 51
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 63
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OVERVIEW
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STRATEGIC REPORT
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ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
Stakeholder Engagement
Section 172 Statement
This section outlines how, as required by Section 172 of the Companies Act 2006 (the “Act”), the Directors have acted in a way they consider,
ingood faith, promotes the success of the Company for the benefit of its members as a whole, while having regard to the matters set out in
Section 172(1)(a) to (f).
The Board strives to ensure that its decision making is consistent and aligned to our purpose, values and strategy. During the year, the
Directors consider that, in complying with their statutory duties, they had regard to:
The likely consequences of any decision in the long term
A
For Fuller’s and the Board, this has always been an integral part of our culture. As a long-established family business,
thelong term for Fuller’s means much more than normal business modelling entails. It is at the heart of all decisions taken
by the Board and is underpinned by our value of always asking what’s next?
The interest of the Company’s employees
B
Our people are what makes Fuller’s special and our commitment to their personal development is reflected through our value of
celebrating individuality. Each and every one plays a key role in the success of the Company. Details of the normal engagement
process with employees can be found in the Stakeholder Engagement section on page 62 to 63, the Sustainability Report on
pages 52 to 53 and the Corporate Governance Report on page 71.
The need to foster the Company’s business relationship with suppliers, customers and others
C
The Board believes that successfully delivering our strategy requires strong mutually beneficial relationships, in line with our
value of being part of the family, with our Tenants, suppliers and customers, and with industry bodies that further the interests
of the sector as a whole. More details of engagement can be found in the Sustainability Report and Stakeholder Engagement
on pages 46 to 51 and 62 to 63.
The impact of the Company’s operations on the community and the environment
D
We are committed to always doing the right thing for our communities and the environment through our sustainability strategy
Life is too good to waste. Details can be found from page 40.
The desirability of the Company maintaining a reputation for high standards of business conduct
E
Fuller’s is well regarded as a business because it has a consistent record of always doing things the right way – one of the
mostenduring key values of the business. This is integral to our culture.
The need to act fairly as between members of the Company
F
The unique capital structure of Fuller’s as a partly listed company has always required the Board to balance the interests
ofadiverse shareholder base. The focus on the long term is well understood by the Company’s shareholders themselves.
The Board recognises the value of engaging with all its stakeholders and building strong relationships with them, to understand what matters
to them and their changing needs, which helps inform strategic decision making and ensures our long-term success. More information about
our key stakeholders and how we engage with them can be found on pages 62 and 63.
SHARE BUYBACK PROGRAMME DIVIDEND
Principal Decisions Taken During the Year
Factors considered:
A
E
F
The share buyback programme, announced in September 2022,
to buyback one million ‘A’ ordinary shares completed in February
2023. The Board considered the effective management and
utilisation of cash and the need to balance planned investment
into the business, alongside internal and external opinion
andfeedback from shareholders on the preferred use of cash.
The Board supported the use of proceeds from the disposal of
non-core assets in the year and agreed that the share buyback
programme was aligned to our strategy of long-term sustainable
growth and delivering value for our shareholders.
Factors considered:
A
E
F
During the year, the Board declared an interim dividend of 4.68p
per ‘A’ and ‘C’ ordinary share and 0.468p per ‘B’ ordinary share
and is recommending a final dividend of 10.0p per ‘A’ and ‘C’
ordinary share and 1.0p per ‘B’ ordinary share.
The Board considered if declaring an interim and final dividend
supported the long-term sustainable success of the Company.
Following the return to profitability during FY2022 and the
increase in revenue and growth in earnings per share during
theyear the Board decided it was appropriate to pay dividends
in the year, in line with the stated intention to return to a
progressive dividend policy.
64 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
IMPACT OF INFLATIONARY PRESSURES ON OUR PEOPLE, CUSTOMERS,
SUPPLIERS AND COMMUNITIES
ESTATE RATIONALISATION
Factors considered:
A
B
C
E
During the year, the Board has continued to monitor the impact
ofinflationary pressures on our people, customers, suppliers,
and our communities.
To support our colleagues, we shifted our pay structures to
ensure that all are paid above the National Minimum Wage or the
National Living Wage depending on their age. Pay increases of
between 6% and 11% have been granted in 2023, following a 3%
increase in 2022, and the earlier award date of April (previously
June) has been retained. Following a review of benefits, the
Board supported the introduction of salary sacrifice for our
defined contribution pension scheme and extending medical
benefits to all team members with more than one year’s service
through a healthcare cash plan.
We have delayed increasing prices where possible during the
year, but it has not been possible to absorb all cost increases
while ensuring the business remains profitable. When necessary,
the Board have carefully considered the need to balance rising
costs against ensuring that our suppliers receive a fair price for
the goods they provide and that for our customers a visit to our
pubs always remains an affordable treat.
Non-Financial Information Statement
The table below, together with signposts to other relevant sections of the Annual Report and Fuller’s website, constitutes the Company’s
non-financial information statement, in compliance with Sections 414CA and 414CB of the Companies Act 2006.
Reporting requirement Key policies/standards/frameworks For additional information
Business model Business Model on pages 14 and 15
Principal risks and
impactonbusiness
Risk Management on pages 34 to 39
Non-financial Key
PerformanceIndicators
Strategic Report on pages 16 and 17
Sustainability Report on pages 40 to 53
Environmental matters Sustainability strategy – Our environment
Responsible Sourcing Policy*; Environmental Policy*
Sustainability Report from page 40
TCFD Report on pages 54 to 61
Employees Sustainability strategy – Our people
People policies including flexible working; parental
leaveincluding maternity, paternity and adoption leave;
mental wellbeing; employee conduct; recruitment,
training and development; and health and safety.
Whistleblowing Policy
Sustainability Report on pages 52 to 53
Stakeholder Engagement on pages 62 to 63
Corporate Governance Report on page 71
Social matters Sustainability strategy – Our people, environment,
andcommunities; Gender Pay Gap reporting*
Sustainability Report from page 40
Human rights Modern Slavery Statement*
Privacy policies in relation to employees, customers*
and tenants*
Stakeholder Engagement on pages 62 to 63
Directors’ Report on page 102
Anti-corruption and
anti-bribery matters
Anti-Bribery and Corruption Policy (covering gifts
andhospitality); Responsible Sourcing Policy*
Whistleblowing Policy
Audit and Risk Committee Report
on pages 84 to 85
* Available at www.fullers.co.uk
2023 Strategic Report
The Group’s Strategic Report, encompassing pages 1 to 65, was approved by the Board and signed on its behalf by:
Simon Emeny
Chief Executive
14 June 2023
Factors considered:
A
B
C
D
E
A key part of our strategy has always been to maintain both
aManaged and Tenanted business, allowing us to constantly
review and holistically manage our pub estate, operating individual
sites under the business model that works best for thepub and
best for Fuller’s. Following 12 months’ trading with no restrictions
and combined with the changing economics of running a pub, we
undertook a strategic review of the whole estate to ensure it
provided the best composition for the long term. As a result of this
review, the decision was made to move 23 of our Managed Pubs
and Hotels into the Tenanted Inns division. We have also decided
to exit a small number of leasehold sites and earmarked a handful
of pubs for disposal.
The Board considered the needs of impacted employees and
ensured that appropriate plans were in place to communicate
thechanges clearly and transparently and to support employees
throughout the transfer process.
The Board is of the view that pubs being transferred will thrive
aspart of the Tenanted business and will deliver a better financial
return for thepub, for Fuller’s and ultimately our shareholders, and
in the case ofdisposals, no value was seen in retaining ownership
of these pubs. The changes will put Fuller’s in the strongest position
to continue building, growing, and enhancing the estate.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 65
FINANCIAL STATEMENTS
105-165
OVERVIEW
0-03
STRATEGIC REPORT
04-65
ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
Dear Shareholder,
I am pleased to present our Corporate Governance Report for the
year ended 1 April 2023.
As described in my Chairman’s Statement, there has continued to
beunprecedented disruption to our business on a number of fronts.
Despite the challenges we have faced, we have a clear pathway
tofurther growth which has remained the focus of the Board.
Fundamental to supporting the delivery of our purpose, vision
andstrategy for the long-term benefit of all our stakeholders, is
toensure we maintain good and appropriate governance. Details
ofour well-established corporate governance framework and
compliance with the UK Corporate Governance Code are set out
inthefollowingpages.
The Board met regularly during the year and, following two years of
disruption, has welcomed the return to in-person meetings, both at
Pier House and within the retail estate, and a more regular meeting
schedule. Our Board Committees have been busy during the year
andfurther detail of their work is reported on pages 76 to 100.
Iwouldlike to thank my fellow Board members and theExecutive
Team for their significant contribution through the twists and turns
throughout the year.
The role oftheNominations Committee, which I chair, has been
broadened tofurthersupport the Board in its work with regard to
Board composition, succession planning and initiatives on diversity
and inclusion, as detailed on pages 77 to 79. Ourdevelopment and
progress in the important area of diversity and inclusion will be
further supported by the Nominations Committee in the coming year
as we look to review the Board’s policies and objectives, and increase
our oversight of diversity and inclusion objectives across the business.
As a people focused business, engagement with our team members
isalways high on the agenda. Throughout the year we have exposure
to talent as members of the Executive Team and Senior Management
are invited to make presentations to the Board on key business and
strategic projects. Board members also make time to visit our sites
and meet team members so we can hear their views first-hand and
wenow also benefit from employee insights provided by Helen Jones,
our designated Non-Executive Director responsible for employee
engagement. More about Helen’s role and employee engagement
canbe read on page 71.
“ I WOULD LIKE TO
THANK MY FELLOW
BOARD MEMBERS
FOR THEIR
SIGNIFICANT
contributions
DURING THE YEAR.”
Chairman’s Introduction to Governance
66 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
We have an embedded approach to sustainability across our
people,communities and planet, and we know that governance
around sustainability is fundamental to the success of the business
and ensures we can deliver on our strategy. To drive this important
agenda item, the Board puts sustainability at the front and centre
ofdecision making and proactively manages risks and opportunities.
We have continued to receive regular updates on sustainability
matters from our Executive Team and Oliver Rosevear, our Sustainability
Director, throughout the year and, with the support of the Audit and
Risk Committee, we have evolved our TCFD reporting. Our TCFD
Report can be found on pages 54 to 61.
We have a group of Directors with the skills required to run this
business and a good balance of experience, independence and
knowledge, as outlined on pages 68 to 69.
As reported in my Chairman’s Statement, I am delighted to welcome
Dawn Browne to the Board with effect from 3 July 2023. We are a
people focused business and the Board will benefit from her knowledge
of our team members and operational experience. We very much look
forward to working with Dawn.
At an Executive level, the business was also pleased to welcome
Sam Bourke as Marketing Director in November 2022. She brings
awealth of knowledge of hospitality retail marketing and a focus
oncustomer engagement and experience to the Executive Team.
Following the external Board evaluation in 2022, our review this year
was carried out by our Senior Independent Director, Juliette Stacey.
Iam pleased to report that the results show that the Board and its
Committees continue to be working effectively. We are currently
developing an action plan in response to the feedback identified in
the evaluation. Further details of the evaluation and progress against
our action plan from last year can be found on pages 79 and 80.
Our AGM this year will once again be held at The George IV in
Chiswick, London, on 20 July 2023 and, along with my Board
colleagues, Ilookforward to meeting you on the day and answering
any questions you may have about the business.
Michael Turner
Chairman
14 June 2023
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Board of Directors
Chairman
Executive Directors
Michael Turner
N
Non-Executive Chairman
Date appointed to the Board: January 1985
Experience: Michael brings an in-depth
understanding and knowledge of this long-
established family business and extensive
experience in leadership and executive
management. A Chartered Accountant with
international experience, Michael joined Fuller’s
in1978, initially running the Wine Division as Wine
Director. Appointed Marketing Director in 1988,
Managing Director in 1992, Chief Executive in 2002
and Chairman in 2007. Chairman of the British Beer
and Pub Association 2008-2010. Master of the
Worshipful Company of Vintners 2011-2012.
Key external appointments: None
Simon Emeny
Chief Executive
Date appointed to the Board: May 1998
Experience: Simon has a detailed knowledge
ofFuller’s operations gained through his 25 year
experience with the Group and valuable commercial
expertise in consumer-focused businesses. Joined
in 1996 from Bass plc where he held a variety of
senior operational and strategic planning roles.
Appointed to the Board as Retail Director in May
1998, Managing Director, Fuller’s Inns in July 2006,
Group Managing Director in November 2010 and
Chief Executive in July 2013. Previously Senior
Independent Director and Chair of the Remuneration
Committee of Dunelm Group plc. An economics
graduate and alumnus of Harvard Business School.
Key external appointments: Non-Executive Director
of The National Gallery Company Limited and
UKHospitality, and Senior Independent Director
ofWH Smith PLC.
Neil Smith
Finance Director
Date appointed to the Board: November2021
Experience: As well as extensive financial
experience in hospitality and consumer-focused
businesses, Neil has strong commercial expertise,
including business and strategic development.
Previously served as Chief Financial Officer of
Domino’s Pizza Group PLC and, prior to this, Chief
Financial Officer of Ei Group plc (formerly Enterprise
Inns plc). Neil has also held senior financial roles at
Compass Group plc, Virgin Media, Telewest Global
Inc. and Somerfield plc. Qualified as a Chartered
Accountant with PwC.
Key external appointments: None
Fred Turner
Retail Director
Date appointed to the Board: June 2019
Experience: Fred has a strong financial background
and a deep understanding of Fuller’s operations
having worked in a number of roles in the business.
Joined the Company in 2013 as an Operations
Manager for Fuller’s Inns. Appointed Head of
Tenanted Operations in 2015 and Tenanted Director
in 2018. Qualified as a Chartered Accountant with
Grant Thornton UK LLP. Civil engineering graduate.
Key external appointments: None
Top to bottom: Sir James Fuller; Rachel
Spencer, Richard Fuller, Juliette Stacey,
Robin Rowland, Fred Turner, Neil
Smith, Simon Emeny, Michael Turner
andHelen Jones
68 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Key to Committee membership:
A Audit and Risk Committee
N Nominations Committee
R Remuneration Committee
Committee Chair
Chairman
Executive Directors
Non-Executive Directors
Independent Non-Executive Directors
11%
33%
23%
33%
Male
Female
78%
22%
44%
12%
44%
0-3 years
3-6 years
+9 years
Board composition Board gender balance Board tenure
Non-Executive Directors
Helen Jones A N
R
Independent Non-Executive Director
Date appointed to the Board: March 2019
Experience: Helen has over 35 years of commercial
andgeneral management experience in consumer-
focused businesses. She brings valuable operations,
marketing and branding expertise, and also remuneration
committee chair experience in otherplcs. In light
ofher background, Helen is thedesignated Director
responsible for employee engagement forFuller’s.
Formerly Group Executive Director ofCaffèNero
and Managing Director of Zizzi, theItalian casual
dining chain, and Non-Executive Director ofinternational
fast-dining restaurant group VapianoSE.
Key external appointments: Senior Independent
Director and Chair of the Environmental, Social
andGovernance Committee of Halfords Group plc,
Non-Executive Director and Chair of the Remuneration
Committees of Virgin Wines UK Plc and Premier Foods
plc. She is also the workforce engagement director
forHalfords and Premier Foods.
Juliette Stacey
A
N R
Senior Independent
Non-Executive Director
Date appointed to the Board: March 2018
Experience: Juliette has over 30 years’ leadership
experience with a strong finance background.
Shebrings extensive knowledge of business and
strategic (including M&A) development, listed
company experience and risk management. She is
an experienced audit committee chair. Former Chief
Executive of Mabey Holdings Limited. Former Chief
Operating Officer (UK and Europe) and previously
Finance Director (Commercial UK) of Savills plc.
Qualified as a Chartered Accountant with Ernst
&Young LLP and is a Fellow of the Royal Institution
ofChartered Surveyors.
Key external appointments: Non-Executive Director
and Chair of the Audit Committees of Renishaw PLC
and Sanderson Design Group plc, and Non-Executive
Director of Willmott Dixon Holdings Limited.
Sir James Fuller, BT N
Non-Executive Director
Date appointed to the Board: June 2010
Experience: James has a deep understanding of the
Fuller’s business and provides a key link with family
shareholders. Served in The Life Guards from 1991
to1998. Employed by the Company from 1998 to
2003, working in the Tied and Managed Pub estate,
and has since been running his own business.
Key external appointments: None
Richard Fuller
Non-Executive Director
Date appointed to the Board: December2009
Experience: Richard has a deep understanding of
the Fuller’s business and operations, having worked
for the Company since 1984. Appointed a Divisional
Director in 1992 and to the Board in December 2009,
with responsibility initially for sales then, additionally,
personnel, corporate affairs and government relations.
Became Non-Executive Director in February 2020.
AGMP graduate of Harvard Business School. Master
of the Worshipful Company of Brewers 2020-2022.
Key external appointments: Non-Executive Chair
ofboth the Cotswold Cider Company and Kempton
Park Racecourse.
Robin Rowland, OBE A N R
Independent Non-Executive Director
Date appointed to the Board: March 2020
Experience: Robin brings over 35 years’ experience
in the restaurant and food and beverage sectors,
and has strong financial, commercial expertise,
andbusiness and strategic development experience.
Previously Chairman and Chief Executive of YO!
Sushi, and Non-Executive Director of Marstons PLC
and Tortilla. Awarded an OBE in 2015 for outstanding
services to hospitality.
Key external appointments: European Partner
ofTriSpan Private Equity with Chairman and
Non-Executive Director roles with five portfolio
companies: Mowgli, Pho, Rosa Thai, Rosa Mexicano
(USA) and Thunderbird. Independent Non-Executive
Director at Caffè Nero and UKHospitality.
Rachel Spencer
Company Secretary
Date appointed to the Board: January 2021
Experience: Rachel is an experienced company
secretary and has significant corporate governance,
regulatory and compliance expertise. Previously
held positions at a number of other listed companies,
including Invensys PLC, Aldermore Group PLC (both
the listed entity and the regulated bank) and, most
recently, Clarkson PLC. Fellow of the Institute of
Chartered Secretaries and Administrators. Rachel
serves as a trustee to the Fuller, Smith & Turner
Pension Plan.
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Corporate Governance Report
The pages that follow in this Governance section explain how we have complied with and applied the Code during the year.
Board leadership and company purpose
Statement of Compliance with the UK Corporate Governance Code 2018 (“the Code”)
The Board is committed to maintaining effective corporate governance and integrity, enabling us to deliver our strategy for the long-term benefit
of all our stakeholders. With this in mind, the Company has applied the main principles of the Code throughout the year. However, given the
structure of the Group – we are a listed public company but still very much a family-controlled concern – there are some provisions of the Code
where we do not comply but where we do consider our governance framework remains appropriate. These are summarised in the table below.
The Code can be found on the Financial Reporting Council’s website at www.frc.org.uk
Code Provision Detail of non-compliance Further information
Principle 2: division of responsibilities
11 At least half of the Board,
excluding the Chairman,
arenot independent
Non-Executive Directors.
The Board considers that membership is well balanced with the right mix of skills and
experience. The presence of Non-Executive Directors who are long-standing family
shareholders is important in this professionally run family business.
Principle 3: composition, succession and evaluation
18 Directors are not subject
toannual re-election.
In accordance with the Company’s Articles of Association (“Articles”), all Directors are
subject to election by shareholders at the first AGM after their appointment and to re-
election at three yearly intervals. As part of the annual Board effectiveness review, the
performance of the Directors is evaluated and forms the recommendation in the Notice of
AGM as to why the Company believes an individual Director should be re-elected. In view
ofthe Company’s size, its ownership structure and its history, the Board is not minded to
move to annual re-election of Directors but will keep this requirement under review.
19 Chairman has been in post for
more than nine years.
The Board considers that the Chairman’s knowledge and understanding of this long-
established family business and its requirements is extremely valuable.
Principle 5: remuneration
38 Pension contribution rates
for the Chief Executive
andRetail Director are not
aligned with those available
to the workforce.
Given the pension rate for the Chief Executive and Retail Director represents an existing
contractual commitment, the Board does not consider it appropriate to make a reduction
atthis stage. However, whenever any new Executive Director is appointed, the pension
opportunity will be aligned with the policy for the majority of the workforce. This was
theposition with the Finance Director who was appointed in November 2021.
Role of the Board
Led by the Chairman, the Board is collectively responsible to the
shareholders for the performance and long-term success of the Group,
as well as to other stakeholders for the wider impact we have.Its role
includes the establishment, review and monitoring ofthe Company’s
strategy, approval of major acquisitions, disposals and capital
expenditure, setting the Company’s purpose and values, overseeing the
Group’s systems of internal controls, governance andrisk management,
and ensuring that the appropriate resources are in place to deliver these.
The Board has an established governance framework which ensures
we meet our responsibilities and enables effective decision making.
An overview of the governance framework is set out on page 74.
A formal schedule of matters reserved for the Board is in place.
TheBoard has delegated some of its responsibilities to mandated
Committees, each of which operates under written terms of reference
approved by the Board and reviewed annually. Committee Chairs report
to the Board on their activities following meetings, and the minutes
of those meetings are made available to Board members (other than
if there is a conflict of interest in respect of any particular matter).
Board meetings enjoy open dialogue, and constructive challenge on
all issues is encouraged. With a good information flow between and
prior to Board meetings, decisions are made in a timely manner after
appropriate questions are dealt with.
The Board delegates all operational matters and execution of the
strategy to the Chief Executive, who is supported by the Executive
Team (which comprises the Executive Directors, the Marketing
Director, the People & Talent Director, and the Property Director)
who collectively make up the Executive Committee. As set out in
thegovernance framework on page 74, three sub-committees
reportinto the Executive Committee and are responsible for
reviewing and approving capital related projects and investments
and central costs, and driving and monitoring progress against
theLife is too good to waste strategy. Regular updates from these
sub-committees are reported to the Executive Committee.
Purpose, values and culture
The Board is responsible for establishing the Company’s purpose,
values and strategy, and for defining, monitoring and overseeing
theCompany’s culture to ensure that they are aligned. Our purpose
ofcreating experiences that nourish the soul underpins our values
ofdoing things the right way, being part of the family, celebrating
individuality and always asking what’s next, and it defines our
culture and everything that we do.
The Board, through the Executive Directors, strives to ensure that
everyone understands the key role they play in delivering our purpose,
vision and strategy. In March 2023, senior team members from across
the business came together for the annual Senior Managers Conference,
‘Fuller’s Future’, following its relaunch in2022. The event provided an
70 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
opportunity for the Executive Teamtore-articulate the Company’s
purpose and values after ayearofchallenging trading conditions, and
to outline the key strategic priorities for the year ahead. In May 2023,
following the unprecedented times we have faced, we relaunched our
General Managers Conference, which provided our operational team
leaders with the same opportunity as well as an occasion to reconnect
with colleagues and celebrate achievement.
The Board monitors the values and culture of the business through
anumber of channels, including regular updates to the Board on
operational performance and health and safety reporting, the results
of employee engagement surveys and action plans, and the approval
of key policies. The Board also receives regular updates from the
designated Non-Executive Director responsible for employee
engagement. Directors regularly visit our pubs and hotels in apersonal
capacity, outside of formal Board visits, which gives them a true
insight into how our values and culture are embedded across the
business and the guest experience our teams deliver.
Engagement with employees
The Board receives regular updates on employee matters throughout the
year from the Executive Directors, from the designated Non-Executive
Director responsible for employee engagement, and through briefings
on key employee matters provided by the People & Talent Director. The
Chief Executive has continued to deliver vlogs to the business, first
introduced in 2020 in response to the Covid-19 pandemic, to keep
everyone informed of key events and activity across the business
andkey decisions taken by the Executive Committee and the Board.
In March 2022, the Board approved the appointment of Helen Jones
as the designated Non-Executive Director responsible for employee
engagement. During the year, Helen has worked with the People &
Talent Director to develop her role and connections with the wider
business. This has included.
• providing advice and guidance on employee engagement initiatives
• attending Fuller’s Future, the General Managers Conference and
similar events across the business
• becoming a regular attendee of the Fuller’s Forum meetings –
toread more about the work of the Fuller’s Forum, go to page 53
• reviewing feedback from various listening channels including
theHappiness Index survey; My Voice; recruitment and induction
surveys; and exit interviews and Glass Door reviews
• providing regular reports to the Board on the themes emerging
from the different listening channels, any relevant matters and
concerns that may arise through the role.
We provide opportunities for the Non-Executive Directors to spend time
in the business with members of the Executive Team and Operations
team. This helps to keep Non-Executive Directors up to date with the
operations in our pubs and hotels and provides them with an opportunity
to engage directly with a broad range of our team members and hear
valuable feedback. Attendance at events such as the Fuller’s Future
and General Managers Conference, as well as the ‘Long Service
Celebration’ to recognise employees reaching a service milestone of
more than 15 years, provides Non-Executive Directors with another
opportunity to engage with employees.
The Board recognises the benefits of encouraging employee share
ownership, and the Company offers employees the opportunity to
purchase shares in the Company at a discounted price through its
Sharesave plan. The Company Secretary and the Executive Directors
keep all employees, including employee shareholders, informed of
publicly available financial updates andgovernance changes such
asnew Director appointments.
Q. How do you ensure the voice of employees
isheardin the Boardroom?
During the year, I was invited to join the Fuller’s Forum meetings,
following their establishment in 2022, and I have attended a
number of meetings in the year. I also meet on a quarterly basis
with the People & Talent Director and the People Experience
Manager to review feedback from our listening channels and to
discuss emerging themes. I always encourage colleagues to be
honest when providing their feedback – both positive and negative
–and I really appreciate how open they have been with their
comments. Listening to the employee voice and providing a link
tothe Board is a responsibility I take very seriously. In addition
tomore informal updates throughout the year, I provide a formal
report on a bi-annual basis highlighting the key themes from my
various engagement activities including what’s working well for
colleagues but also, importantly, those of concern which the
Company should address. As the Chair of the Remuneration
Committee, I also find it particularly helpful in the context of
executive pay to gain insight on pay and benefit matters for
discussion with my fellow Committee members.
Q. How do you ensure you don’t just listen but
thataction is taken?
The results of the Happiness Index survey and other survey and
listening channel outputs are carefully reviewed and considered
by the Board. Associated action plans are regularly reviewed by
the Board and are incorporated into functional area engagement
plans. For FY2023, employee engagement and satisfaction,
measured by reference to improvement in the results of the
Happiness Index survey, was also incorporated as an objective for
the annual bonus for Executive Directors and the Executive Team.
Q. What were the key highlights this year?
During the year, we have created a culture of listening and
havestrengthened trust with our colleagues through regular
communication and consistent language, committing to actions
and closing feedback loops, as evidenced by our improved employee
engagement score. An added highlight for me personally is how
Ihave been so warmly welcomed by members of the Fuller’s
Forumand following the success of its launch, I look forward to
theestablishment of and participating in forum groups for our
Head Chef and support centre colleagues, which will broaden
ourengagement across other areas of the business.
Q. What are the Board’s areas of focus going forward?
Diversity and inclusion is a key area of focus for the Board for the
coming year. Following the launch of the Equality of Voice survey
inSeptember 2022, we have a better understanding of how our
colleagues currently feel about diversity and inclusion at Fuller’s
and have better insight of our demographics. Feedback from this
survey will inform our company-wide inclusion plan and will help
shape our strategy. As part of this work, we need to ensure that
the voices of allour colleagues are heard and that everyone feels
asense of belonging.
Q&A
Helen Jones, designated
Non-Executive Director responsible
for employee engagement
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Engagement with shareholders
The Company has an ongoing programme of individual meetings with
institutional shareholders, allowing it to update shareholders on the
performance of the business and the strategy for the future, and to give
them an opportunity to discuss corporate governance matters. The
Company’s brokers also contact key shareholders to establish if they
would like to see the Chief Executive and Finance Director in the days
following the presentation of the preliminary and half year results.
The Chairman, Richard Fuller and Sir James Fuller are the key
contacts with the Company’s family shareholders and Sir James
Fuller has a specific role to keep in touch with those shareholders.
The Senior Independent Director and the other Non-Executive
Directors are all willing to attend meetings with shareholders or to be
contacted by shareholders should they have any concerns which have
not been resolved through the normal channels. All Board members
receive feedback from the results presentations and meetings with
shareholders, enabling them to keep in touch with shareholder opinion.
The Board supports the use of the AGM to communicate, in particular,
with private investors, and the Chairman and Chief Executive make a
detailed presentation to shareholders updating them on the Company’s
performance and progress. The Board is keen to encourage institutional
investors to attend the meeting, in line with the duties setout in the
Stewardship Code for institutional shareholders. Should they have
concerns over any issues being voted upon at the AGM, they canthen
meet the Directors and discuss them in person. The Chairman arranges
for the Committee Chairs to answer relevant questions at themeeting
and encourages all Directors to be present.
The 2022 AGM was held at The George IV, in Chiswick, in July.
Shareholders were given the opportunity to ask questions ahead
ofthe meeting, using adedicated email address if they were unable
to attend in person. Toenable all shareholders to vote on all resolutions
in proportion totheir shareholding, voting at the 2022 AGM was, in
line with best practice, conducted by way of a poll.
Shareholders can opt to receive Company communications such
asthe Annual Report electronically in PDF format, either via email
orfrom our website, or continue to receive a hard copy in the post.
The Board continues to encourage shareholders to consider moving
to electronic communications to benefit from timely and secure
communications and to help reduce the cost and environmental
impact of our communications. Annual Reports and other key
communications are also made available on request from the
Company Secretary, should beneficial shareholders have difficulties
receiving documentation via their nominee providers.
Engagement with stakeholders
The Board recognises the importance of building strong relationships
with its key stakeholders to ensure we understand how our decisions
may impact them. We therefore actively encourage and carry out
engagement with our key stakeholders to understand their views,
predominately through the Executive Directors, who ensure that the
Board is kept informed of any key issues or changes, which helps to
inform our decision making. Our Section 172 statement outlined on
pages 64 and 65 explains how the Board’s duty to promote the success
of the Company takes into account stakeholder considerations.
Corporate Governance Report Continued
Board activity
Key strategic matters considered by the Board in the year under review and to date included:
Standing agenda items
• Reports from the Executive Directors and Company Secretary covering
operational,financial and governance matters in the period
• Employee engagement reports
• Reports from the Audit and Risk, Remuneration
andNominationsCommittees
• Monthly management accounts
Q1 FY2023
• Group refinancing of banking facilities
• Directors’ valuation of the estate
• FY2022 Board evaluation feedback and agreed areas of focus
• FY2022 Results Announcement and Annual Report and Accounts,
includingriskreview
• FY2022 Final dividend payment
• Inflation and supply chain pricing increases, including
energymanagement
• Re-appointment of Richard Fuller and Sir James Fuller
asNon-Executive Directors
• Re-appointment of Michael Turner as Chairman
Q2 FY2023
• Appointment of Sir James Fuller to the Nominations Committee
• Group interest rate hedging arrangements
• Anti-Bribery and Corruption Policy
• Review of long term market trends and our strategic response
• Inflation and supply chain pricing increases, including
energymanagement
• Modern Slavery Statement
Q3 FY2023
• FY2023 Interim Results, including risk review
• FY2023 Interim dividend payment
• Cyber security update
Q4 FY2023
• Employee engagement survey outcomes and action plans
• FY2024 Group-wide remuneration proposal
• Nominations Committee terms of reference
• Diversity and inclusion training
• Estate rationalisation plan
• Tax Strategy Statement
• FY2024 budget
• Environmental Policy and Responsible Sourcing Statement
• Annual review of Board governance documents
• Re-appointment of Helen Jones as Non-Executive Director
Q1 FY2024
• FY2023 Board evaluation report
• FY2023 Results Announcement and Annual Report and Accounts,
including risk review
• FY2023 Final dividend payment
• Appointment of Dawn Browne to the Board
72 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
The Board holds at least six meetings a year, with additional
meetings scheduled as required. Meetings are held in-person at
theGroup’s support centre, Pier House, and also within the retail
estate. Board calls which are scheduled to provide business updates
between meetings are also held.
An annual programme of agenda items is agreed with the Board in
advance of the start of the financial year. It is developed from the
matters reserved for the Board, strategic objectives and the financial
calendar, and provides a framework to ensure that key matters are
addressed. The process for agreeing the final agenda is managed by
the Company Secretary in consultation with the Chairman and with
input from the Chief Executive.
The programme includes updates from each of the Executive Directors
and the Company Secretary on matters for which they are responsible.
It also includes presentations from members of the Executive Team and
Senior Management. This gives the Board exposure to talent in the
business while also providing an opportunity to engage in the key areas
being worked on and agreed strategic projects. Presentations during
the year have included information about further developing our people
and sustainability strategies, our food and drink proposition, and our
Bel& The Dragon, Cotswold Inns & Hotels, and Tenanted Inns Divisions,
utilities risk strategy and cyber security. These sessions also enable the
Board to provide feedback and guidance to the individual presenting.
In addition to scheduled meetings, the Board also meets every
yearfor an in-depth review of the Group’s strategy, which includes,
among other things, discussions about market trends, consumer
market, competitor landscape and capital structure. This year,
thestrategy day was held over two days in south-west London.
TheBoard was joined by members of the Executive Team to
providetheir views on the strategy, together with external
speakerswho provided input on the economic forecast for the
UK,sector and consumer trends, and investor considerations.
As well as the dialogue within the boardroom, the independent
Non-Executive Directors communicate privately, under the leadership
of theSenior Independent Director, without the Executive Directors
andother Non-Executives present. All Non-Executive Directors
alsomeet informally with the Chairman and the Chief Executive on
aregular basis. These meetings allow for the review of issues faced
bythe business, the continuation of dialogue on strategic issues,
thediscussion of Board appointments when appropriate, succession
planning, and the provision of support to the Chairman and the Chief
Executive in their roles.
Division of responsibilities
Board balance and independence
The Board currently comprises the Chairman, three Executive
Directors, and five Non-Executive Directors, of which two, Sir James
Fuller and Richard Fuller, and the Chairman Michael Turner, are family
members. The other three Non-Executive Directors, all of whom are
deemed independent under the Code, are experienced business
leaders, and collectively all of the Non-Executives bring a wide range
ofskills and experience to the Board. Although at least half of the
Board(excluding the Chairman) does not comprise independent
Non-Executive Directors, the Board considers it is well balanced
asithas the right number of members for the size of the Group, with
representation of the founding families on the Board being considered
very important in a company with a high proportion of family shareholders.
The Directors agree that no one individual dominates discussions and
that each makes a full and positive contribution.
Board and Committee structure
The Board has overall responsibility for governance across the
Groupand set out on the next page is the Company’s governance
framework. There is clear differentiation between the roles of
Chairman, Chief Executive and Senior Independent Director, and the
particular responsibilities of Board members are also set out below. The
responsibilities of the Chairman, Chief Executive and Senior Independent
Director, and the terms of reference of the Board Committees are set out
in writing andare available on the Company’s website.
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The Board
Acting as a sounding board
tothe Chairman and an
intermediary for Non-Executive
Directors when necessary
Being available to shareholders
if they wish to raise concerns
outside of the usual
communication channels
Evaluating the Chairman’s
performance as part
oftheannual Board
evaluationprocess
Advising the Board on all
corporate governance matters
and ensuring good governance
practices are followed throughout
the Group
Supporting the Chairman and
Non-Executive Directors with
theirresponsibilities
Communications with
shareholders and organisation
ofthe AGM
All Directors have access to the
advice ofthe Company Secretary
Providing independent
judgement, knowledge and
commercial experience to
discussions and decision making
Providing oversight of the
Group’sstrategy
Providing constructive
challengeto theExecutive
Directors and scrutinising
theirperformance against
agreedperformanceobjectives
Board Committees
Audit and Risk Committee
Monitors the integrity of the financial
reporting for the Group, manages the
relationship with the external auditors, and
oversees the effectiveness of the risk
management and internal control systems
Remuneration Committee
Sets the Remuneration Policy for the
Chairman and the Executive Directors, and
also reviews the remuneration framework
for other Senior Management
Nominations Committee
Responsible for leading the process for
appointment of Directors for approval by
theBoard, succession planning, reviewing
thestructure, size and composition of
theBoard and overseeing diversity
andinclusion initiatives
Executive Committee
The Chief Executive is supported by the Executive Team consisting of the Executive Directors, the Marketing Director,
thePeople&TalentDirectorandthe Property Director
Approvals Committee
Responsible for reviewing and approving
central costs, support centre staffing
changes and material procurement contracts
Sustainability Committees
Responsible for developing the Group’s
sustainability strategy around our people,
communities and the planet, and providing
oversight of key sustainability initiatives,
targets and objectives
Investment Committee
Responsible for reviewing and approving
capital related projects and investments
Senior Independent Director
Is responsible for:
Non-Executive Directors
Are responsible for:
Leading the Board and
maintaining aculture of
openness, debate and
constructive challenge
Setting the agenda, style
andtone ofBoardmeetings
Monitoring the Board’s
effectiveness
Ensuring effective
communication with the
Group’s shareholders and
otherstakeholders
Managing the Group’s financial
affairs and supporting the
ChiefExecutive in the
management of the Group
Overseeing the implementation
of strategyand monitoring the
performance of thebusiness
Providing regular updates
totheBoard onall financial
matters of significance
Facilitating two-way
communication between the
Board and the workforce
through various employee
engagement initiatives
Ensuring that information
feeding into the Board’s
decision-making process
reflects the views of employees
Day to day management of the
business of theGroup
Developing and implementing
the Group’sstrategy agreed
bythe Board
Delivering the Group’s
sustainability strategy
Ensuring effective
communication with the
Group’sshareholders and
otherstakeholders
Managing the Group’s
operational affairs
andsupporting the
ChiefExecutive in the
management of the Group
Overseeing the implementation
of strategy and monitoring the
performance of thebusiness
Providing regular updates to the
Board onall operational matters
of significance
Chairman
Is responsible for:
Chief Executive
Is responsible for:
Retail Director
Is responsible for:
Finance Director
Is responsible for:
Non-Executive Director
responsible for employee
engagement
Is responsible for:
Company Secretary
Is responsible for:
Governance Framework
Corporate Governance Report Continued
74 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Board and Committee meetings
The table below shows the attendance of Directors at Board and Committee meetings held during the year under review.
Director Board
1
Audit and Risk
Committee
Nominations
Committee
Remuneration
Committee
Michael Turner 13/13 – 4/4 –
Simon Emeny 13/13 – – –
Neil Smith 13/13 – – –
Fred Turner
2
12/13 – – –
Sir James Fuller
3
13/13 – 3/3 –
Richard Fuller
4
10/13 – – –
Helen Jones
2
12/13 4/4 4/4 4/4
Robin Rowland
2
12/13 4/4 4/4 4/4
Juliette Stacey 13/13 4/4 4/4 4/4
1 Includes scheduled and ad hoc meetings.
2 Unable to attend one ad-hoc meeting called at short notice due to prior commitments.
3 Sir James Fuller was appointed as a member of the Nominations Committee on 18 July 2022.
4 Unable to attend one scheduled meeting due to a long standing arrangement and two ad hoc meetings called at short notice due to prior commitments.
Time commitment
The Board is satisfied that all Directors can devote sufficient time
totheir roles to discharge their duties effectively. All Directors
arerequired to seek permission before accepting any external
appointments so that, amongst other things, the Board can be
satisfied that they will continue to have sufficient time available
todevote to the Company. Further, the Nominations Committee
considers the time commitments of proposed candidates prior to
appointment to the Board to ensure that they are able to dedicate
sufficient time to the role.
Conflicts of interest
The Board has adopted a procedure, in accordance with the
Company’s Articles, to consider and, if it sees fit, to authorise
situations were a Director to have an interest that conflicts, or
maypossibly conflict, with the interests of the Company. Directors
have acontinuing duty to update any changes to their conflicts of
interest. The Company maintains a register of authorised conflicts
ofinterest which is reviewed at least annually and authorisations
reconfirmed. The Board may impose certain limits or conditions
whengivingauthorisation.
Advice for the Board
All Directors have access to the advice and services of the Company
Secretary, whose appointment and removal is a matter for the whole
Board. There is also a formal procedure in place under which Board
members can, at the Company’s expense, obtain independent
professional advice should they decide it is necessary in order to
fulfil their responsibilities as Directors. The Company Secretary is
responsible to the Board for ensuring that Board procedures are
complied with. The Directors are satisfied that any concerns they
raise at Board meetings are recorded in the minutes. The Company
maintains appropriate insurance cover in respect of legal action
against its Directors and officers.
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NOMINATIONS
COMMITTEE
At a glance
Nominations Committee Report
MICHAEL TURNER
CHAIR OF THE NOMINATIONS COMMITTEE
Key Activities During the Year
• Reviewed and updated the Committee’s terms of reference
andmembership, including the appointment of Sir James Fuller
tothe Committee
• Reviewed the Board composition, supported by the development
of the Board skills matrix
• Monitored the changes to the Listing Rules and Disclosure
Guidance and Transparency Rules regarding gender and
diversityrequirements
• Considered succession planning at the Board and received
briefings on changes to the Executive Committee and other
keyleadership roles
• Recommended the re-appointment of Helen Jones as a
Non-Executive Director, Chair of the Remuneration Committee
andthedesignated Director responsible for employee engagement
atthe expiry of her term
• Facilitated the annual Board evaluation process for FY2023
• Recommended the appointment of Dawn Browne, People &
TalentDirector, to the Board with effect from 3 July 2023.
Members
Michael Turner (Chair), Juliette Stacey, Sir James Fuller,
HelenJones, Robin Rowland
Number of
meetings
held
Number of
meetings
attended
Michael Turner (Chair) 4 4
Juliette Stacey 4 4
Sir James Fuller (appointed 18 July 2022) 3 3
Helen Jones 4 4
Robin Rowland 4 4
Key Duties of the Committee
• Lead the process for appointment and re-appointment of Directors,
for approval bytheBoard
• Regularly review the size, structure and composition of the Board
andits Committees
• Consider succession planning for the Board and Executive
Committee positions
• Oversee the development of the Company’s policy and initiatives
on diversity and inclusion
• Oversee Board induction, training and professional development
• Assist the Chairman and Senior Independent Director with the
implementation of the annual Board evaluation.
“We continue to oversee
development of the Board’s
policy and initiatives on
diversity and inclusion.”
76 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Dear Shareholder,
As Chair of the Nominations Committee, I am pleased to present the
Nominations Committee Report for the year ending 1 April 2023.
The Nominations Committee comprises our three Independent
Non-Executive Directors, Helen Jones, Robin Rowland and
JulietteStacey, and Non-Executive Director, Sir James Fuller,
whowas appointed to theCommittee in July 2022. I was delighted
towelcome James to theNominations Committee, particularly
asheis the key contact with family shareholders so can offer
adifferent perspective during discussions. The majority of
membersare considered independent and, in the event of any
matters discussed concerning my role, I would absent myself,
andJuliette Stacey as Senior Independent Director would chair
themeeting, in line with the Code requirements. The Chief Executive
attends meetings by invitation and the Company Secretary acts
assecretary to the Nominations Committee.
As reported in my Chairman’s Statement, as part of our ongoing
succession planning, I am pleased to announce that, on the
recommendation of the Nominations Committee, the Board
approvedthe appointment of Dawn Browne to the Board with
effectfrom 3 July 2023. We are a people focused business and
herin-depth insight of people matters as well as operational
experience will be invaluable to the Board. A customised induction
programme is being developed to support her in her new role.
As outlined in last year’s report, the Board agreed that the role
oftheNominations Committee would be broadened to further
support the Board in its work with regard to Board composition,
succession planning and initiatives on diversity and inclusion.
Duringthe year, revised terms of reference were developed by the
Committee and adopted by the Board. The Nominations Committee
met four times during the year. Key matters discussed at the meetings
included a comprehensive review of the composition of the Board;
succession planning for the Board and Executive Committee;
consideration ofchanges to the Listing Rules and Disclosure
Guidance and Transparency Rules regarding gender and diversity
requirements; there-appointment ofNon-Executive Director
HelenJones; and the Board evaluation process for FY2023.
During the year ahead, the Nominations Committee will continue to
focus onlonger-term succession planning to ensure that appropriate
succession arrangements are in place for the Board and Executive
Committee members. The Nominations Committee will also continue to
oversee development of the Board’s policy and initiatives on diversity
and inclusion, and consider our approach to collecting numerical data
across the business to both monitor progress againstinitiatives and
tocomply with reporting requirements.
Michael Turner
Chair of the Nominations Committee
14 June 2023
Composition, Succession and Evaluation
Board Composition
Details of the Directors, including their qualifications, experience
andother commitments, are set out on pages 68 and 69. There were
no changes to the Board during the year.
Following the adoption of the revised Nominations Committee terms
ofreference, the Committee, on behalf of the Board, is responsible
forcontinually assessing the composition of the Board and its
Committees to ensure there is the right balance of skills and
experience. The composition of the Board and its Committees is
alsoconsidered as part of the annual Board evaluation. During the
year, the Nominations Committee undertook a comprehensive
reviewof the composition of the Board, taking into account the
skills,experience, diversity and tenure of the Directors. Thereview
was supported by the development and introduction of aBoard skills
matrix to capture the current skills and expertise of theBoard and
toassist the Nominations Committee in its discussions regarding
future Board composition and succession planning. The matrix
demonstrates, along with the Director biographies on pages 68 to69,
that the Directors have a range of relevant skills and experience,
andthe Nominations Committee is satisfied that theBoard has
thenecessary mix of skills and subject matter expertise, further
supported by the expertise of the Executive Committee members
andfunctional heads.
While at least half of the Board, excluding the Chairman, is not
independent as stipulated by the Code, the Committee believes that
the presence of Non-Executive Directors who are long-standing
family shareholders is important. The Nominations Committee also
acknowledges that the Chairman has been in post beyond nine years;
however, theNominations Committee considers that the Chairman’s
knowledge and understanding of this long-established family
business and its requirements are extremely valuable. In line with
theCode and letters of appointment, independent Non-Executive
Directors serve no more than nine years and the chart below
summarises their current tenure and unexpired terms.
Independent Non-Executive Director Tenure
20202018
Juliette Stacey
Helen Jones
2022 2024 2026 20
30
2028
Current term ends Nine year rule
Robin Rowland
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Induction and Professional Development
On appointment, the Nominations Committee will, in conjunction with
the Chairman and the Company Secretary, ensure that new Directors
undertake a tailored induction programme. This would typically consist
of an introduction to the Board and the Executive Team, visitsto pubs
and hotels across the estate, an induction reference material pack,
briefings ongovernance requirements and legal andregulatory
obligations asa Director, and access to independentadvisors.
Directors are encouraged to attend training courses, industry
forumsand specialist briefings relevant to their role throughout the
year. The Company Secretary, in consultation with the Chairman and
Nominations Committee, has developed a Learning and Development
programme for the Board and arranges for external speakers and
specialists, such as the Company’s brokers and legal advisors,
tojoinBoard meetings to brief the Board on topics of interest as
appropriate. During the year, the Board received a refresher on
Directors’ duties and the Market Abuse Regulation presented by
theCompany’s legal advisors to ensure that Directors continue to
understand their obligations. In line with our commitment to create
inclusive spaces where everyone – employees and customers – feel
they belong, WiHTL facilitated a session on diversity and inclusion.
For the year ahead, future topics will include sustainability and
climate competence, cyber security and developments intechnology.
Executive Directors are permitted to hold one other paid directorship,
with the Board’s consent, as the Board believes that experience
ofhow other boards work enhances the Directors’ contribution to
theCompany.
Succession Planning
Succession planning is a key issue for a business that has very low
turnover amongst its Senior Management and is still very much a
family-controlled concern while also being a public listed company.
Following the adoption of the revised Nominations Committee terms
of reference, succession planning and the development of talent has
become a key focus of the Nominations Committee, and is a standing
agenda item at each meeting. During the year, the Committee has
reviewed and updated the plan that is in place for the succession
ofkey roles. Talented and“critical to retain” individuals have been
identified, and each individual has their own development plan,
owned by the individual and supported and overseen by their leader
and the People Team. Development plans are grounded in data from
assessments and feedback, and external partners and experts are
engaged to support development where required.
Role descriptions and personal specifications for key Board positions,
including the Chairman and Chief Executive, have been reviewed by
the Committee and updated to reflect the needs of the business and
to support longer-term succession planning.
During the year ahead, the Nominations Committee will continue to
focus on longer-term succession planning to ensure that appropriate
succession arrangements are in place for the Board and Executive
Committee members.
Election and Re-election
The Nominations Committee is responsible for recommending to the
Board the appointment of new Directors and the re-appointment of
existing Directors.
As outlined in last year’s report, the Nominations Committee
recommended the re-appointment of Sir James Fuller, whose three
year term expired in May 2022, for a further three years, to May 2025.
The Committee also considered the re-appointment of Helen Jones
as Non-Executive Director, Chair of the Remuneration Committee
and the designated Director responsible for employee engagement,
whose three year term expired during the year, and recommended
that her term be renewed for a further two years, to March 2025. On
the recommendation of the Nominations Committee, the Board has
approved the appointment of Dawn Browne as a Director with effect
from 3 July 2023.
At every AGM, one-third of the Directors are subject to retirement
byrotation. In addition, if any Director has, at the start of the AGM,
been in office for more than three years since their appointment or
re-appointment, they shall retire at that AGM and offer themselves
for re-election. At the AGM in July 2023, Dawn Browne and Helen
Jones will offer themselves for election/re-election following their
appointment/re-appointment by the Board. Robin Rowland and
Juliette Stacey will retire by rotation and offer themselves for
re-election. The Board is of the opinion that each Director standing for
election or re-election makes an effective and valuable contribution
to the Company towards its long-term sustainable success.
The Nominations Committee has considered the Code requirement
forDirectors to be subject to annual re-election. In view of the
Company’s size, its ownership structure and its history, the Board
agreed with the Nominations Committee not to move to annual
re-election of Directors but will keep this requirement under review.
Diversity and Inclusion
The Board is committed to diversity and inclusion at both the Board
level and across the business. Whilst the Board is alert to the need to
ensure diversity in all its forms is promoted, it believes appointments
should be made on merit and does not want to adopt targets that may
affect its ability to make the right decision for the business and all its
stakeholders. As and when Board vacancies arise and, should the
support of an executive search firm be required, the Board and the
Nominations Committee will ensure that it only uses firms that have
signed up to their industry’s Voluntary Code ofConduct.
Diversity and inclusion has been a focus of the business in the year.
Fuller’s has signedthe British Beer and Pub Association’s (“BPPA”)
diversity and inclusion charter and our aim is to ensure all our venues
are inclusive spaces and that we have a zero-tolerance approach
toharassment ordiscrimination of any kind. Inclusive leadership
training has been introduced for the Executive Team and our senior
leaders and, as part of this work, a company-wide inclusion plan
hasbeen developed. Going forward, the Nominations Committee
willundertake areview ofthe Board’s policy and objectives, and
increase its oversight ofdiversity and inclusion objectives across
thebusiness, and anannual report on diversity and inclusion
initiatives willbepresented tothe Nominations Committee by
thePeople &Talent Director.
Nominations Committee Report Continued
78 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
The Board is aware of the changes to the Listing Rule introduced
bythe Financial Conduct Authority (“FCA”) around setting targets
inrelation to Board diversity and the disclosure of diversity and
inclusion metrics at the Board and Executive Committee level going
forward. Currently, the Board does not meet the target of having
women make up at least 40% of the Board or having at least one
Board member from a non-white ethnic minority background. Juliette
Stacey is our Senior Independent Director and therefore there is at
least one woman in asenior Board position, as defined in the rules.
The Committee is cognisant of the disclosure requirements and we
are currently collecting numerical data regarding ethnic background
and gender identity or sex at the Board and Executive Committee
level and across the business to enable reporting next year when
webecome in scope.
In line with the Code, the Nominations Committee has reviewed
thegender balance of those in Senior Management, considered
tobethe Executive Committee members, and their direct reports
at1 April 2023, as illustrated on the right. Details on the gender
balance across the Board and all-employees is also disclosed.
Board Evaluation
The annual Board and Committee evaluation continues toprovide
avaluable opportunity for the Board to reflect on how itoperates,
enabling it to improve its effectiveness and that of its Committees.
Following the completion of an in-depth external review for FY2022,
on the recommendation of the Nominations Committee, for FY2023,
the Board completed an internal evaluation process between
Marchand May this year, led by the Senior Independent Director.
Theevaluation consisted of a questionnaire which probed how
theBoard had operated during the year under review and included
the performance of the Board as whole and its Committees, the
effectiveness of the Executive Directors and Non-Executive
Directors, key learnings from the year in review and considerations
forfuture areasof focus.
Outcomes and recommendations from FY2023 evaluation
The consolidated output was finalised in June 2023. Overall,
feedback was positive and demonstrated that the Board and
itsCommittees were considered tobe working effectively.
Further,theBoard was considered to comprise relevant skills
andexperience, and all Directors were committed to the success
ofthe Company.
As would be expected, there were some opportunities identified
byBoard members to increase effectiveness to ensure that the
Company benefits from the combined expertise and insight of
theBoard. Work has begun on developing an action plan and, once
approved by the Board, the recommendations will be incorporated
ina tracker, alongside any ongoing recommendations from the prior
year, to monitor progress.
Male 7
Female 2
78%
22%
Directors
Male 20
Female 18
47%
53%
Executive Team and their direct reports
Male 2,871
Female 2,515
47%
53%
All Employees
(excluding Directors and Executive Team)
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Nominations Committee Report Continued
Update on FY2022 Evaluation Recommendations
Progress made against the recommendations arising from the Boardevaluation completed at the end of FY2022 are set out in the table below.
Recommendation Progress update
Provide further opportunities for Board members
toconnect with the business
Following the re-introduction of Board visits in the second half of 2021, the Board
spent the day in trade visiting several pubs and hotels in Hampshire in June 2022.
Board members have also been partnered with members of the Operations team
to facilitate days in the Fuller’s estate and were invited to attend the Fuller’s
Future and General Managers Conference.
Broaden the role of the Nominations Committee The terms of reference of the Nominations Committee have been reviewed
andthe duties of the Committee expanded to include responsibility for Board
composition, succession planning, training and development, evaluation and
initiatives on diversity and inclusion.
Review the approach to Board learning Responsibility for Board training and development has been delegated to
theNominations Committee. The Committee has established a Learning
andDevelopment programme and identified topics for inclusion, with regular
sessions scheduled throughout the year.
Develop the Board’s oversight of people
andsustainabilitymatters
Updates from the Sustainability Director to the Board have been formalised,
withupdates on sustainability matters now being presented to the Board on a
regular basis. Helen Jones, as designated Non-Executive Director responsible for
employee engagement provides a formal report bi-annually totheBoard on the
outcomes of her engagement with colleagues across thebusiness and the results
of the annual Happiness Index survey are presented totheBoard by the People &
Talent Director. The Chief Executive also keepstheBoardappraised ofkey people
and sustainability matters throughout the year. Goingforward an annual report on
diversity and inclusion initiatives will be presented to the Nominations Committee
by the People & Talent Director.
80 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
AUDITAND RISK
COMMITTEE
At a glance
Audit, Risk and Internal Control
Audit and Risk Committee Report
JULIETTE STACEY
CHAIR OF THE AUDIT AND RISK COMMITTEE
• Reviewed all matters relating to the half year and full year results
announcements, including reports presented by the external
auditors (EY) and assessment of key judgements and accounting
policies, and assessed whether taken as a whole the Annual
Report was fair, balanced and understandable
• Conducted a review of the effectiveness of the external audit
process and external auditor, and recommended EY’s re-appointment
• Reviewed and recommended to the Board for approval the revised
Anti-Bribery and Corruption Policy
• Reviewed and confirmed the appropriateness of the Policy on
Auditor Independence and Provision of Non-Audit Services
• Reviewed and recommended to the Board for approval the Tax
Strategy Statement for the year ended 31 March 2023
• Considered reports on key areas of compliance, including data
protection, employee relations, health and safety, cyber security,
and whistleblowing
• Conducted an annual review of the Audit and Risk Committee’s
effectiveness and terms of reference
• Reviewed the outputs of the FRC’s inspection of the FY2022
auditconducted by EY
• Oversaw the development of our TCFD reporting (the TCFD
Reportis set out on pages 54 to 61)
• Considered changes to the half year review process
• Reviewed EY’s plan for the FY2023 audit, terms of engagement
andproposed fee.
Members
Juliette Stacey (Chair), Helen Jones, Robin Rowland
Number of
meetings
held
Number of
meetings
attended
Juliette Stacey (Chair) 4 4
Helen Jones 4 4
Robin Rowland 4 4
Key Duties of the Audit and Risk Committee
• Monitors the integrity of the financial reporting for the Group
• Manages the relationship with the external auditors
• Oversees the effectiveness of the risk management and internal
control systems.
Key Activities During the Year
• Reviewed the effectiveness of the Group’s internal controls
andrisk management systems and assessed the need for an
internal auditfunction
• Monitored the progress in the documentation of the Group’s
internal control framework to identify enhancements to controls
• Received updates on specific risk areas, including cyber risk
andITcontrols, and an extensive review of our supply chain
toevaluate supplier, performance and service
• Reviewed the Group’s principal risks register ahead of the
announcement of the half year and full year results
“Our work during the year has focused
on the impacts of the challenging trading
environment. While we are more optimistic
about the future, monitoring any ongoing
disruption will continue to be a key agenda
item over the next year.”
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Dear Shareholder,
I am pleased to present the Audit and Risk Committee Report for
theyear ended 1 April 2023.
As you will have noted, the Committee’s name has changed since
thelast report, which underlines our wider focus on theGroup’s risk
and control environment, alongside the oversight that we maintain
over the statutory audit and the relationship with the external auditors.
Our work during the year has focused on the impacts of the challenging
trading environment and national inflationary environment, cost of living
crisis, and disrupted trading due to tube and rail strike action. In particular,
we have reviewed and robustly challenged management’s assessment of
various trading scenarios and management of risks given the uncertain UK
economic environment. The Audit and Risk Committee is satisfied that the
factors considered and assumptions used are appropriate to support the
going concern and viability of the business going forward and, while as
aBoard we are more optimistic about the future, monitoring any ongoing
disruption will continue to be a key agenda item over the next year.
Ernst & Young LLP (“EY”) are conducting their third audit following
theirappointment in 2021. Both the Audit and Risk Committee and
management have an open and transparent relationship with EY.
Wewelcome the fresh perspective and robust challenge they continue
to provide to the Audit and Risk Committee’s deliberations. We were
also pleased that the outcome of the FRC’s inspection of EY’s FY2022
audit was in the top classification, with no key findings and only limited
improvements required. We are supportive of EY’s re-appointment
which shareholders will be asked to vote on at the 2023 AGM.
During the year, the Audit and Risk Committee considered the
Government’s audit and governance reform agenda and has received
regular updates from EY and management following the publication
ofthe draft Audit Reform Bill ahead of the introduction of the Audit,
Reporting and Governance Authority (“ARGA”). We have developed
ourown roadmap for those changes we consider appropriate to
enhance our internal control environment and each element is being
process mapped and documented to provide assurance to the Audit
andRiskCommittee to aid future reporting and transparency.
We recognise the importance to all our stakeholders in understanding
and managing the climate related risks and opportunities to our business
and supply chain, and this is the second year that we have reported
against the recommendations of the Task Force on Climate-related
Financial Disclosures (“TCFD”). Supported by our Sustainability Director,
we have evolved our TCFD reporting and, given the ever-evolving
requirements in this area and changing market landscape, we now have
an annual update and training session on climate risk included on
theCommittee’s agenda. You can read the full TCFD Report on
pages54 to 61.
I will be attending the AGM on 20 July 2023 and I look forward to
answering any questions about the work of the Audit and Risk Committee.
Juliette Stacey
Chair of the Audit and Risk Committee
14 June 2023
Committee Membership
The Audit and Risk Committee comprises three independent Non-
Executive Directors and has a good balance of skills, with competence
and experience in the sector in which the Group operates. The Chair
ofthe Audit and Risk Committee is a Chartered Accountant and has
abroad range of experience in senior finance roles, and is therefore
considered to meet the requirement under the Code that at least
onemember should have recent and relevant financial experience.
TheAudit and Risk Committee is advised internally by the Company
Secretary, Rachel Spencer, who also acts as secretary to
theCommittee.
Meeting Attendance
All meetings are attended by the external auditors and the Company
Secretary, and regular attendees include the Chairman, Chief Executive,
Finance Director, Group Financial Controller and Head of Risk. Other
Senior Management attend relevant meetings at the Audit and Risk
Committee Chair’s request or submit reports as required by the agenda.
The Audit and Risk Committee meets at least once a year with the
external auditors, without management present, to discuss any
matters they may wish to raise. The Audit and Risk Committee Chair
also meets separately with the Finance Director and auditors outside
of the formal meeting programme, which helps to identify key areas
offocus and emerging issues that may need to be added to the Audit
and Risk Committee’s agenda.
Key Activities
The Audit and Risk Committee has a detailed annual meeting planner
which sets out the key items to be covered at its scheduled meetings.
This includes reviewing the financial statements and announcements,
monitoring changes in accounting practices and policies, and
reviewing decisions with a significant element of judgement.
At each meeting, an update on risk management and internal controls is
presented, together with reports on compliance with health and safety,
employee relations, data protection and cyber security. In light of the
impact of inflation and tube and rail strikes ontrading during the year,
there has continued to be focus around potential risks arising from any
ongoing economic and operational uncertainty.
The Audit and Risk Committee keeps abreast of regulatory and
governance developments as part of ongoing reporting from the
auditors and the Company Secretary.
The effectiveness of the Audit and Risk Committee formed part of the
Board evaluation process described in the Nominations Committee
Report on page 79.
Financial Reporting and Significant Judgement
The Audit and Risk Committee monitors the integrity of the financial
information published in the interim and annual financial statements
and considers the extent to which suitable accounting policies have
been adopted, presented and disclosed.
During its review of the Group’s financial statements for the period
to1 April 2023, the Audit and Risk Committee has reviewed the key
judgements applied in the preparation of the consolidated financial
statements, including those communicated by the auditors during their
reporting. These are described in the accounting policies detailed in
note 1 to the financial statements. The Board was made fully aware
ofanysignificant financial reporting issues and judgements made
inconnection with the preparation of the financial statements.
Audit and Risk Committee Report Continued
82 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
The key issues and judgements considered by the Audit and Risk Committee are detailed in the table below:
Key accounting judgement How the issue was addressed
Going concern
The Audit and Risk Committee considered the appropriateness of the decision to adopt the
going concern basis of reporting in the preparation of the financial statements. The Audit
andRisk Committee reviewed two scenarios – the “base case” and the downside “severe
butplausible” case, as well as the reverse stress test and the mitigations available to the
Group, as disclosed in note 1 to the financial statements. The Audit and Risk Committee has
challenged the assumptions used in each scenario and is satisfied that, even under a severe
but plausible scenario, the Group has adequate resources for the going concern assessment
period and supports the Group adopting the going concern basis.
Impairment testing
ofpropertyassets
The Audit and Risk Committee considered the proposed impairment of property assets for
both the Half Year Report and the Annual Report.
The Audit and Risk Committee challenged management’s approach, in particular the
methodology and inputs used to estimate both value in use and fair value less cost to sell for
site level impairment reviews, including challenging the underlying trading forecasts. The
Audit and Risk Committee also reviewed the disclosures in the Annual Report to ensure their
appropriateness. The Audit and Risk Committee was satisfied with the approach presented by
management, the judgements made for those properties at risk of impairment and the related
disclosures in the 2023 Annual Report and Accounts.
Separately disclosed items
The Audit and Risk Committee considered the nature of items classified as “separately
disclosed items” in the financial statements. The Audit and Risk Committee was satisfied
thatthe items management proposed to be shown as separately disclosed items were not
linked to the underlying trading of the Group. Separately disclosed items include:
• costs relating to the corporate reorganisation of the Group
•
pr
ofit or loss on property disposals
• impairment on properties.
In addition, the Audit and Risk Committee reviewed these disclosures within the 2023
AnnualReport and Accounts to ensure they clearly identified and reconciled to the relevant
GAAP measure.
Pension accounting
The pension liability is sensitive to the actuarial assumptions applied in measuring future cash
outflows. The use of assumptions such as discount rate and inflation, which have an impact on
the valuation of the defined benefit pension scheme, was assessed by the Audit and Risk
Committee. The Audit and Risk Committee was satisfied with the proposed accounting
treatment and disclosures of the Group’s defined benefit plan in the financial statements.
Going Concern and Viability Statement
The Audit and Risk Committee assessed in detail the going concern
and viability reviews undertaken by management, as detailed in
theFinancial Review on page 33. This involved looking at potential
revenues, costs and cash flow modelling on both a prudent base
case and downside case scenario where there was much greater
uncertainty. The Audit and Risk Committee was satisfied with the
approach presented by management, including the judgements
madein the estimation of future cash flows and the Group’s
financing, and considering the high proportion of freehold
propertythat underpins the estate.
In addition, the Audit and Risk Committee has reviewed the Group’s
assessment of viability over a period greater than 12 months. The
Audit and Risk Committee considered the potential financial impact
of the Group’s principal risks and uncertainties, including the impact
of climate change and climate change legislation on the Group’s
operations. The Audit and Risk Committee has concluded that the
factors considered and assumptions used are appropriate in
assessing the Group’s viability.
Internal Control and Risk Management
The Board has overall responsibility for the Group’s system of
internal control and management of risks and for reviewing its
effectiveness. The system was designed to provide reasonable
butnot absolute assurance of:
• the mitigation of risks which might cause the failure of
businessobjectives
• no material misstatements or losses
• the safeguarding of assets against unauthorised use or disposal
• the maintenance of proper accounting records and the reliability
offinancial information used within the business or for publication
• compliance with applicable laws and regulations.
The Directors’ statement on the Company’s system of internal
controls is set out on the next page.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 83
FINANCIAL STATEMENTS
105-165
OVERVIEW
0-03
STRATEGIC REPORT
04-65
ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
At the start of the year, the Audit and Risk Committee discussed
theCompany’s risk management process and, on behalf of the
Board,considered the Group’s principal risks which had been
reviewed bytheindividual risk owners and, where applicable,
themitigating actions and controls had been updated and the risk
ratingupdated. Any significant changes to risks were discussed
ineach subsequent Audit and Risk Committee meeting.
During the year, a selection of key risks were presented to either
theAudit and Risk Committee or the Board. This has included risks
around increasing focus on sustainability issues, including climate
change risk, and IT security and cyber security.
The Group maintains business continuity plans and normally tests
the resilience of these plans on an annual basis. During the year
acrisis management test of all emergency communication groups
was completed to ensure that call tree procedures work. In addition,
a scenario planning exercise was undertaken to test the actions
should an announced or unannounced power blackout occur.
TheBoard and Audit and Risk Committee consider the thorough
responses bythe Executive Team and the broader management
teams to significant challenges they have faced during the year –
including themajor fire at the Admiralty in July 2022, supply chain
issues, thechallenging trading environment due to inflation and the
UK economic uncertainty, and the repeated disruption to trading due
totube and rail strike action – as solid evidence of the effectiveness
of existing disaster recovery and business continuity plans.
The Finance team is responsible for theappropriate maintenance of
financial records and processes that ensure all financial information
is relevant, reliable, in accordance with the applicable laws and
regulations, and distributed both internally and externally ina
timelymanner.
The new finance system, launched in November 2021, has simplified
the accounting process and control framework. It has improved
controls on expenditure and has enabled more insightful reporting
tobe used by both finance and operational management, as well
asincreasing the quality of our budgeting process. The Investment
Committee and Approvals Committee, two sub-committees of
theExecutive Committee, further strengthen controland scrutiny
ofcosts across the business below Board level authority. The
Investment Committee is responsible for reviewing and approving
capital related projects and investments and for completing
post-investment appraisals. The Approvals Committee isresponsible
for reviewing and approving central costs, support centre staffing
changes and material procurement contracts. TheFinance Director
chairs both committees and provides regular updates to the
Executive Committee, and to the Audit and Risk Committee
andtheBoard as required.
Throughout the period, the Executive Directors provided relevant and
timely financial commentary to supplement the financial reporting,
ensuring the Audit and Risk Committee and the Board were informed
of the financial position and results of the Group.
The Audit and Risk Committee and the Board have considered the
effectiveness of the Group’s system of internal controls. Key elements
of the system of internal control designed to address significant risks
and uncertainties, as documented on pages 34 to35, include:
• clearly defined levels of responsibility and delegation throughout
the Group, together with well-structured reporting lines up to
theBoard
• the preparation of annual budgets for each division, including
commentary on key business opportunities and risks
• the reviews by the Executive Team of actual monthly results
against budget, together with commentary on significant variances
and updates of both profit and cash flow expectations for the year
• a detailed investment approval process requiring Board
authorisation for all major projects
• post-implementation appraisals of major capital
expenditureprojects as requested by the Board
• regular reporting of legal and accounting developments to
theBoard
• regular review of the Group’s risk register and discussion of
significant risks by the Audit and Risk Committee and the Board,
whichamong other things take account of the significance of
environmental, social and governance matters to the business
• regular reporting of compliance with, dataprotection and health
and safety, and the monitoring of accident statistics and the
results of health and safety audits.
Internal Audit
The Group does not have a dedicated internal audit function but uses
its own Finance team and Retail Audit team, augmented with external
specialists as required, to provide assurance regarding the strength
of the control environment and risk management.
The team of retail business auditors monitor, in particular,
thecontrols over stock and cash in the Managed Pub estate,
Bel&The Dragon sites, and Cotswold Inns & Hotels. The function
reports into the Head of Risk who attends all meetings of the Audit
and Risk Committee to provide an update on the activities of the
Retail Audit team.
External resource is used when specialist advice is required on
anyareas of risk or controls where the Audit and Risk Committee
considers the business may be exposed. The Audit and Risk
Committee received regular reports covering third party audits
onhealth and safety and food safety matters.
For FY2024, the Audit and Risk Committee confirmed that the
existingarrangements of internal audit remained appropriate.
Climate Risk and TCFD Disclosure
The Audit and Risk Committee is responsible for overseeing that
theeffects and consequences of climate change are adequately
reflected in our financial statements. Climate-related risks are
presented to the Audit and Risk Committee on an annual basis,
whichis a key element of the new approach to TCFD that has
beenimplemented this year. In addition a training session on
theevolving requirements around climate risk has been added
totheannual meeting planner.
The Audit and Risk Committee reviewed and agreed that the TCFD
disclosures set out on pages 54 to 61 were appropriate and that
theassumptions used in the financial statements are consistent
withthese disclosures.
Whistleblowing
The Audit and Risk Committee is responsible for reviewing
theadequacy and security of the Company’s arrangements for
employees and contractors to raise concerns about any suspected
wrongdoing, as set out in the Company’s Whistleblowing Policy.
TheCompany has in place mechanisms for concerns to be raised
inconfidence internally andanonymously through the appointment
ofan independent whistleblowing service operated by Safecall.
Audit and Risk Committee Report Continued
84 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Any whistleblowing reports are reported immediately to the Audit
and Risk Committee Chair and, following investigation, to the full
Audit and Risk Committee and, at least annually, to the Board.
Astanding report is tabled at each Audit and Risk Committee meeting
providing an update on employee relation matters in the period,
which allows the Audit and Risk Committee to identify anytrends.
Anti-Bribery and Corruption
To prevent bribery and corruption, the Group has a policy which
allemployees and contractors must follow. This includes guidance
around the acceptance of gifts and hospitality. The policy sets out
our commitment to conducting business in an honest and ethical
manner and our zero tolerance approach to bribery and corruption
from our people and any third parties, including customers
andsuppliers.
External Audit
Ernst & Young LLP were first appointed in 2021, following a tender
process, to conduct the audit of the Group’s financial statements for
the financial year to 27 March 2021, and this is its third year auditing
the Group’s Annual Report. In accordance with best practice and
professional standards, the external auditor is required to adhere
toa rotation policy whereby the audit engagement partner is rotated
at least every five years. The FY2023 audit is the third year of Rachel
Savage’s tenure as lead audit engagement partner.
The auditors are invited to attend all meetings of the Audit and Risk
Committee and report on the plan and approach for the full year audit
and half year review.
The Audit and Risk Committee Chair meets the auditors on a regular
basis during the year and the Audit and Risk Committee meets with
the auditors, without management present, at least annually in order
to allow both the members of the Audit and Risk Committee andthe
auditors to raise any issues directly and to discuss the auditors’ remit.
The Audit and Risk Committee reviewed the effectiveness of EY’s
performance of the external audit process, taking into account:
• the quality and scope of the audit plan, and evaluation of delivery
and performance against the plan
• qualifications, efficiency and performance of the audit team
• the communication between the Company and EY
• EY’s understanding of the Group’s business and industry sector
• the results of the FRC’s Audit Quality Inspection Report on EY
• any specific observations arising from the FRC’s inspection of the
FY2022 audit conducted by EY.
After considering these matters, the Audit and Risk Committee was
satisfied with the effectiveness of the year end audit process and
recommended to the Board that EY be re-appointed at the Company’s
AGM on 20 July 2023.
During the year, the Company complied with the provisions of the
Statutory Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Process and Audit Committee
Responsibilities) Order 2014.
Auditor Independence and Non-Audit Services
Auditor independence and objectivity are safeguarded by a number
of control measures, and a formal written policy was approved in
January 2021 and reviewed during the course of the year to confirm
its continued appropriateness. The Policy sets out processes for
assessing independence and objectivity, including disclosure
requirements of the auditors, restrictions on the employment
oftheauditors’ former employees and the circumstances in which
theauditors may be permitted to undertake non-audit services.
The Policy is in line with the recommendations set out in the FRC’s
Guidance on Audit Committees and the requirements of the FRC’s
Revised Ethical Standard 2019 (the “Standard”). In respect of
non-audit services, only a very short list of non-audit services is
nowpermitted under the Standard, which are detailed in the Policy,
and all spend has to be approved by the Audit and Risk Committee,
which ensures full visibility.
In FY2023, the fees paid to EY for audit services were £465,000. No
fees were paid for non-recurring audit services (FY2022: £366,500
including £55,000 for non-recurring audit services). During the year,
fees paidto EY for non-audit services included £45,000 for the review
of the FY2023 half year results announcement and £5,000 for the
completion ofa compliance certificate from the auditors required
under the terms ofthe 6.875% Debenture Stock 2018 Trust Deed.
In line with the approach taken by many companies, it has been
agreed that EY will no longer be engaged to provide a review opinion
in accordance with International Standard on Review Engagements
2410 (UK) on the half year results. The auditors will continue to
attend all meetings of the Audit and Risk Committee, including the
discussions to approve the half year results and will conduct limited
agreed upon procedures for the benefit of the directors.
Fair, Balanced and Understandable
The Audit and Risk Committee reviewed whether the 2023 Annual
Report, taken as a whole, was fair, balanced and understandable, and
also whether it provided the information necessary for shareholders
to assess the Company’s position and performance, business model
and strategy. In making its assessment, the Audit and Risk
Committee took the following into account:
• A timetable for the production of the 2023 Annual Report was
agreed by the Finance team and the auditors, with overall
co-ordination of the report being overseen by the Finance Director
• Each section of the report was prepared by a member of
management with appropriate knowledge and experience,
including representatives from finance, communications,
companysecretariat and risk
• Management’s views on each of the key judgements, which
werethen discussed by the Audit and Risk Committee
• Reports and feedback from the auditors which were presented
tothe Audit and Risk Committee
• Board members received drafts of the report for review, which
provided an opportunity to provide comments and ensure
messaging was cohesive.
Following its review, the Audit and Risk Committee confirmed
totheBoard that the 2023 Annual Report was fair, balanced and
understandable, and the Board’s statement is set out on page 104.
Juliette Stacey
Chair of the Audit and Risk Committee
14 June 2023
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 85
FINANCIAL STATEMENTS
105-165
OVERVIEW
0-03
STRATEGIC REPORT
04-65
ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
REMUNERATION
COMMITTEE
At a glance
Remuneration
Directors’ Remuneration Report
HELEN JONES
CHAIR OF THE REMUNERATION COMMITTEE
Key Activities During the Year
• Reviewed performance under the Long-Term Incentive Plan
(“LTIP”) and Executive Share Option Scheme (“ESOS”) awards
granted in 2020 and confirmed vesting outcomes
• Set Executive Director objectives and bonus targets for
FY2023and approved proposals for the Executive Team
andDivisional Directors
• Agreed the targets for the annual FY2023 LTIP awards and
FY2023ESOS awards
• Approved pay increases for FY2023 for Executive Directors,
Executive Team and Divisional Directors taking into account
thepay review for the wider workforce
• Considered remuneration arrangements for the wider workforce
inthe context of the current cost of living crisis
• In conjunction with the Board, received regular reports on
Group-wide remuneration for FY2023 and wider workforce
remuneration arrangements and issues
• Reviewed the Group’s gender pay gap reporting for FY2022
• Approved an invitation under the Group’s all employee
Sharesave(“SAYE”) Scheme for FY2023
• Approved the remuneration arrangements for the incoming
Marketing Director
• Reviewed the Chairman’s fee
• Noted remuneration proposals for the wider workforce for
FY2024,implemented with effect from 1 April 2023
• Reviewed the independence and effectiveness of the
Remuneration Committee advisor, Deloitte
• Conducted an annual review of the Remuneration Committee
terms of reference.
Members
Helen Jones (Chair), Juliette Stacey, Robin Rowland
Number of
meetings
held
Number of
meetings
attended
Helen Jones (Chair) 4 4
Juliette Stacey 4 4
Robin Rowland 4 4
Key Duties of the Committee
• Sets the Remuneration Policy for the Chairman, Executive
Directors, Executive Team members and Divisional Directors
• Determines the total remuneration package (including pensions,
service agreements and termination payments) of the Chairman
and Executive Directors and, in consultation with the Chief
Executive, determines the total remuneration package of the
members of the Executive Team and Divisional Directors
• Reviews workforce remuneration and related policies.
“One of our key focus areas is to ensure
the Executive Directors are appropriately
rewarded for implementing our strategic
plan and delivering long-term growth for
the Company and all our stakeholders .”
86 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Dear Shareholder,
On behalf of the Board, I am pleased to present the Remuneration
Report for the year ended 1 April 2023.
Against the backdrop of a challenging trading background, the Group
has delivered sales growth of 33% with revenues of £336.6m and
adjusted profit of £12.7 million, up by 76% on the prior year. The
increase was largely due to improved ability to trade in FY2023,
particularly in London as people returned to offices and international
tourism recovered. While sales and profit growth has been strong, it
was held back by significant external factors such as rising energy,
food and labour costs and the impact of train and tube strikes. This
resulted in the outcome for the year being below original expectations
which is reflected in no payouts being awarded against variable
elements of pay as detailed below.
Going forward, one of the key focus areas for the Remuneration
Committee is to ensure that our Executive Directors are appropriately
rewarded for implementing our strategic plan to return to pre-pandemic
levels of profitability and deliver long-term growth for the Company
and all our stakeholders.
Directors’ Remuneration Policy (“Policy”)
Our remuneration philosophy is to incentivise management to drive
business performance to deliver sustained and profitable growth. We
presented our revised Policy to shareholders at the AGM in 2021, where
we received strong support with a vote in favour of 86.15%. The Policy
is intended to cover the three year period to the AGM in 2024 and it was
applied consistently during the year ended 1 April 2023. The Remuneration
Committee did not exercise any discretion to adjust remuneration
outcomes in the year. No changes are proposed to the Policy for FY2024.
Incentive Outcomes for FY2023
The annual bonus for FY2023 was based 80% on Group adjusted
profitbefore tax (pre IFRS 16) performance and 20% on individual
strategic performance. Group adjusted profit (pre IFRS 16) was
£13.6million, which was below the minimum financial target.
Performance against individual strategic objectives was assessed
and, while these objectives had been fully achieved, the Remuneration
Committee agreed with the recommendation of the Executive
Directors that no bonus should be paid.
The performance targets for the LTIP and ESOS awards granted in
October 2020 and January 2021 respectively, which were based on
Group adjusted EPS before tax performance for the LTIP, and Group
adjusted EBITDA performance for the ESOS measured over the period
to FY2023, were not met and therefore the awards will lapse in full.
Executive Director Remuneration for FY2024
Salary
The Remuneration Committee reviewed carefully the approach
takenfor the wider workforce when considering salary increases
forExecutive Directors, given the significant cost pressures faced
bycolleagues over the last 12 months. Salary increases across
theGroup consisted of increases of between 6% and 11%, with those
earning the least receiving the largest increases to support those most
impacted by increasing costs. Base salaries for Executive Directors
have been increased by 6% in line with the lowest increase for the
wider workforce. In light of the increasing pressures on the cost
ofliving, the implementation of pay increases across the wider
business was brought forward in 2022, to take effect from 1 April
andthis change has been retained for 2023, although the normal
review date of 1 June remains in place for the Executive Directors.
Annual bonus
The maximum annual bonus will continue to be 100% ofbase salary,
based 80% on Group adjusted profit before tax (pre IFRS 16) performance
and 20% on individual strategic objectives.
Long term incentive awards
The maximum LTIP award will continue to be 125% of base salary
forthe Chief Executive and Retail Director, and 100% for the Finance
Director, based on the achievement of EPS performance for FY2026.
Awards under the ESOS will be granted to Executive Directors with
reference to the increased tax efficient limit which has increased
from £30,000 to £60,000 with effect from 6 April 2023.
Non-Executive Director Fees
The Remuneration Committee reviewed the Chairman’s fee during
theyear and determined that a reduction was appropriate. The
Chairman’s fee was therefore reduced from £250,000 per annum to
£210,000 per annum effective 1 January 2023. Non-Executive Director
fees were last reviewed by the Board in November 2021 and remain
unchanged forFY2024.
Employee Engagement and Support
The Remuneration Committee receives updates on workforce
payand benefits throughout the Group and considers workforce
remuneration as part of the review of executive remuneration. The
agreed average annual pay increase for all employees was taken into
account by the Remuneration Committee when agreeing pay reviews
for the Executive Directors, Executive Team and Divisional Directors.
We have taken a number of steps to help our employees through
boththe impact of the pandemic and the current cost of living crisis.
These include a shift in our pay structures to ensure that all our
employees are paid above the National Minimum Wage or the National
Living Wage depending on their age; implementing salary sacrifice for
our defined contribution pension scheme; extending medical benefits
to all team members with more than one year’s service through a
healthcare cash plan; and continuing to offer theWagestream App,
which gives all employees the chance totakesalary ahead of payday,
negating the need for expensive payday loans.
Shareholder Engagement
The Remuneration Committee welcomes ongoing shareholder
dialogue. Our intention is that shareholder views will be sought when
there is any significant change to Directors’ remuneration. Should
shareholders have any concerns about the Policy, the Remuneration
Committee Chair will endeavour to meet with them, as appropriate,
tounderstand and respond to any issues they may have.
I hope that you find the report clear and comprehensive and
thatithelps demonstrate how Directors’ remuneration is linked
totheperformance of the Company. On behalf of the Remuneration
Committee, I would like to thank shareholders for your continued
support and feedback over the year and I hope that you are able to
support the resolution on the Annual Report on Remuneration being
presented at this year’s AGM on Thursday 20 July 2023.
Helen Jones
Chair of the Remuneration Committee
14 June 2023
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 87
FINANCIAL STATEMENTS
105-165
OVERVIEW
0-03
STRATEGIC REPORT
04-65
ADDITIONAL INFORMATION
166-186
GOVERNANCE
66-104
Annual Report on Remuneration
This Annual Report on Remuneration from pages 86 to 100 will be put to an advisory shareholder vote at the Company’s AGM on Thursday20 July 2023.
Directors’ Remuneration Policy
We presented our Remuneration Policy (the “Policy”) to shareholders at the AGM in 2021, where we received strong support with a vote
infavour of 86.15%. This Policy covers the three year period until the AGM in 2024 and it was applied consistently during the year ended
1 April2023. The full Policy can be found on pages 58 to 68 of the 2021 Annual Report and is available in the Investor section of our website
(www.fullers.co.uk). The table below provides a summary of the main elements of the Policy for Executive Directors:
+ =
SALARY BENEFITS PENSION
ANNUAL
BONUS
LTIP
&
RECOVERY
LTIP
ESOS
TOTAL
REMUNERATION
FIXED VARIABLE
Remuneration Philosophy and Principles
In developing the Policy, the Remuneration Committee considered the key principles set out in Provision 40 of the UK Corporate Governance
Code. The Remuneration Committee believes that the Policy is clear and transparent and aligned with our culture. In normal years, we operate
asimple incentive framework of an annual bonus, an LTIP award, and an ESOS award, subject to maximum award levels set by HMRC. Award
levels are capped with pay-out linked to performance against a limited number of measures which are linked to our strategy. Stretching but
fairtargets are set. This ensures that potential reward outcomes are clear and aligned with performance achieved, with the Remuneration
Committee having the discretion to adjust pay-outs where this is not considered to be the case.
Pay levels are set taking into account external market levels as well as internal practice to ensure pay remains competitive while being
equitable within the Company. Malus and clawback and discretion provisions, LTIP holding periods and shareholding guidelines, including
post-employment, are in place to mitigate reputational and other risks.
Remuneration arrangements are determined throughout the Group based on the same principle: that the remuneration policies and practices
should be aligned to the Company’s purpose and values, support the delivery of the strategy and promote long-term sustainable success.
FIXED
Key features Implementation in FY2023 Implementation in FY2024
Base Salary
Reflects the importance
ofthe role to the business
and the experience the
individual brings to it
Reviewed annually with increases
normally effective from 1 June
Increases will normally be in line
with increases across the Group
Increased by 3% from 1 June 2022
inlinewiththewider workforce
• Chief Executive – £525,300
• Finance Director – £363,000
• Retail Director – £210,000
Increased by 6% from
1 June2023 inline with the
wider workforce increase
• Chief Executive – £556,500
• Finance Director – £385,000
• Retail Director – £222,500
Benefits
Provides competitive
benefits which also
protect the individual
andprovides preventative
care for them
The Company offers Executive
Directors a range of benefits
consistent with the role
Taxable benefits included:
• a car allowance
• private medical insurance
• optional cash vouchers for use in Fuller’s pubs
and hotels
Non-taxable benefits included:
• life assurance and permanent health insurance
• Group-wide employee benefits, such as an
employee discount linked to length of service
and all-employee share plans
No changes proposed
Directors’ Remuneration Report Continued
88 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
FIXED
Key features Implementation in FY2023 Implementation in FY2024
Pension
Provides an
appropriatelevel of
retirement benefits
Executive Directors are either
deferred members of the
Company’s defined benefit
pension plan (closed to future
accruals), the defined contribution
plan or receive a cash allowance
in lieu of pension
The Chief Executive received an annual cash
allowance in lieu of pension and the Retail Director
received an annual pension contribution of 17.5%
ofbase salary
The Finance Director received an annual cash
allowance in lieu of pension of 5% of base salary in
line with the policy for the majority of the workforce
No changes proposed
For any new Executive Director
appointed to the Board,
thepension opportunity will
beinline with the policy for
themajority of the workforce
VARIABLE
Key features Implementation in FY2023 Implementation in FY2024
Annual Bonus
Incentivises achievement
of annual financial
objectives and delivery
ofthe business strategy
Maximum opportunity of 100%
ofsalary based on annual
performance targets
Any bonus earned in excess
of75% of salary will normally
bedeferred into shares for
threeyears
The maximum bonus award for Executive
Directors was 100% of base salary based 80%
onGroup adjusted profit before tax (pre IFRS 16)
and 20% onindividual strategic performance
Bonus pay-out:
• Chief Executive – nil
• Retail Director – nil
• Finance Director – nil
Executive Directors will have
amaximum opportunity of
100% of salary for FY2024
The annual bonus will be
based 80% on Group adjusted
profit before tax (pre IFRS 16)
and 20% on individual
strategic performance
LTIP
Incentivises the
delivery of long-term
sustainable returns
forallshareholders
The maximum annual award
inrespect of a financial year
is125%of base salary
Awards vest based on
performance over three
financialyears
Normally 25% of awards vest for
threshold levels of performance
Recovery LTIP awards (granted
ona one-off basis in 2022) have
amaximum opportunity of 250%
ofbase salary
The Chief Executive and Retail Director were
granted awards of 125% of salary and the
Finance Director was granted an award of
100%of base salary
Awards were based on pre-tax adjusted EPS
performance for FY2025 of:
• Threshold – EPS of 49.93p
• Maximum – EPS of 60.15p
Awards will be granted at
125% of base salary to the
Chief Executive and the Retail
Director and 100% of base
salary to the Finance Director
Awards will be based on
pre-tax adjusted EPS
performance for FY2026 of:
• Threshold – EPS of 39.78p
• Maximum – EPS of 55.9p
ESOS
Aligns interests of
Executive Directors
withthose of
shareholders
andincentivises
deliveryoflong-term
sustainablereturns
Executive Directors may be
granted market value options
uptoa maximum total value
setbyHMRC
Options vest based on
performance over three
financialyears
Once vested, options must
beexercised before the
10thanniversary of grant
Awards made to the Finance and Retail
Directorsup to the maximum value set
byHMRCat the time of award
No award made to the Chief Executive as
optionsheld were equal to the maximum
totalvalue set by HMRC at the time of
award(previously £30,000)
Awards were based on adjusted EPS
performance for FY2025 of 49.93p.
Awards will be granted
toExecutive Directors, to
theextent they are eligible,
upto the maximum value
setby HMRC
Awards will be based
onpre-tax adjusted
EPSperformance for
FY2026of23.58p
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Statement of implementation of Remuneration Policy for FY2024
This part of the Directors’ Remuneration Report sets out how the Policy will be operated in the coming year.
Base Salaries
The Executive Directors’ base salaries have been increased by 6% in line with the lowest increase received across the wider workforce. The
Remuneration Committee reviewed carefully the approach taken for the wider workforce when considering salary increases for Executive
Directors, given the significant cost pressures faced by colleagues over the last 12 months. Salary increases across the business consisted of
increases of between 6% and 11%, with those earning the least receiving the largest increases to support those most impacted by increasingcosts.
In 2022, in light of the increasing pressures on the cost of living, the implementation of pay increases across the wider business was brought
forward to take effect from 1 April and this change has been retained in 2023, although the normal review date of 1 June remains for the
Executive Directors, other members of the Executive Team and Divisional Directors.
Salary increases for the Executive Directors from 1 June 2023 are therefore as follows:
Chief Executive – £556,500
Finance Director – £385,000
Retail Director – £222,500
Benefits
No changes to Executive Directors’ benefits are proposed for FY2024.
Annual Bonus
For FY2024, we intend to operate an annual bonus in line with our normal Policy. The maximum annual bonus will be 100% of base salary
forallDirectors. The annual bonus will be based 80% on Group adjusted profit before tax (pre IFRS 16) performance and 20% on individual
strategic performance.
Targets are considered to be commercially sensitive and have therefore not been disclosed. Our intention is to disclose targets in the FY2024
Directors’ Remuneration Report, provided that these are no longer considered to be commercially sensitive at that time.
LTIP
The Remuneration Committee intends to continue to grant LTIP awards for FY2024 to ensure that management are aligned with shareholders
and incentivisedto deliver long-term performance. Awards will be granted at the Policy level of 125% of base salary to the Chief Executive
andtheRetail Director, and 100% of base salary to the Finance Director. The Remuneration Committee is aware of shareholder guidance
regarding reviewing award levels where there has been a fall in share price. We are not planning to reduce grant sizes given the significant
need to continue to motivate and retain management. However, the Remuneration Committee retains discretion to adjust vesting outcomes
ifitconsiders that there have been any “windfall” gains.
The LTIP will be based on pre-tax adjusted EPS performance as the Remuneration Committee considers that this provides a clear objective
formanagement and supports our strategy. The portion of the LTIP award that vests for threshold performance will be 25% of maximum.
ForFY2024 LTIP awards, EPS targets have been set as absolute pence targets for FY2026 as set out below.
We want to measure the performance of our Executive Directors against a criterion that aligns the Executive Directors’ interest with the
long-term interests of our shareholders. We believe that an earnings per share measure is more appropriate than a simple profit measure
asthelatter could be improved, for example, by the issuance of shares to raise cash or to finance an acquisition, having a consequent diluting
effect on existing shareholders’ interests. Additionally, given the aim of encouraging long-term performance, we believe that the earnings
pershare figure should not reflect short-term non-trading impacts on profit, whether positive or negative, for example, profits or losses on the
sale offreehold properties, and such items should be adjusted for. Lastly, given that changes in tax rates are unrelated to Executive Directors’
performance, we believe that any earnings per share measure for the LTIP should be based on pre-tax earnings.
The awards will be subject to clawback provisions and a two year post-vesting holding period.
Pre-tax adjusted EPS targets for the FY2024 awards are proposed as follows:
Threshold
(25% vesting)
Maximum
(100% vesting)
Pre-tax adjusted EPS pence in FY2026
1
39.78p 55.90p
1 Vesting increases on a straight-line basis between Threshold and Maximum.
These targets were set taking into account internal and external expectations of performance and the Committee considers that these targets
are appropriately stretching taking into account the macroeconomic context.
Directors’ Remuneration Report Continued
90 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
ESOS
The Remuneration Committee intends to grant ESOS awards to Executive Directors up to the increased HMRC limit of £60,000. The Awards
willbe based on pre-tax adjusted EPS performance for FY2026 of 23.58p.
Pension and Benefits
No changes are proposed to the pension and benefits provision for Executive Directors for FY2024.
The Chief Executive receives an annual cash allowance in lieu of pension of 17.5% of base salary and the Retail Director receives an annual
pension contribution of 17.5% of base salary. The Remuneration Committee is aware of shareholder guidance that pensions for Executive
Directors should be aligned with the wider workforce. However, given the current rate represents an existing contractual commitment,
theRemuneration Committee does not consider it appropriate to make a reduction at this stage. The Remuneration Committee will keep
thisapproach under review.
As previously advised, the pension opportunity for new Executive Directors appointed to the Board will be in line with the maximum employer
contribution available for the majority of the workforce. Accordingly, the Finance Director, appointed in November 2021, receives an annual
cash allowance in lieu of pension of 5% of base salary.
Implementation of Remuneration Policy for FY2023
This part of the Directors’ Remuneration Report sets out the Directors’ remuneration paid in respect of FY2023. Sections in the report not
specifically stated as audited are not subject to audit.
Single Total Figure of Remuneration Table (audited)
Salary/Fees Taxable benefits
1
Annual bonus
2
LTIP/Options
3
Pension Total variable Total fixed Total
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
Simon Emeny 523 509 25 25 0 312 0 0 91 89 0 312 639 623 639 935
Neil Smith
4
361 119 23 7 0 69 0 0 18 6 0 69 402 132 402 201
Fred Turner 209 203 23 23 0 125 0 0 37 36 0 125 269 262 269 387
Michael Turner 241 250 27 27 – – – – – – – – 268 277 268 277
Sir James Fuller 55 51 – – – – – – – – – – 55 51 55 51
Richard Fuller 50 46 – – – – – – – – – – 50 46 50 46
Helen Jones 70 64 – – – – – – – – – – 70 64 70 64
Robin Rowland 60 56 – – – – – – – – – – 60 56 60 56
Juliette Stacey 80 76 – – – – – – – – – – 80 76 80 76
1 Taxable benefits include a car allowance, family private medical insurance and cash vouchers for use in Fuller’s pubs and hotels.
2 The annual bonus in respect to FY2022 was paid in cash.
3 LTIP/Options may include the value transferred to Directors from the LTIP, ESOS and SAYE Schemes. For LTIP and ESOS, the benefit is calculated as the share price at
the year end less the exercise price multiplied by the number of vested options. For SAYE, the benefit is calculated as the share price at the grant date less the exercise
price, multiplied by the number of shares under option being purchased.
4 From his appointment on 30 November 2021.
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Base salary
Executive Directors’ base salaries were increased by 3% in line with the increase received across the wider workforce, effective 1 June 2022.
Benefits
Executive Directors received taxable benefits which include a car allowance, private medical insurance and optional cash vouchers for use in
Fuller’s pubs and hotels. Executive Directors also received other non-taxable benefits including life assurance and permanent health insurance
and other Group-wide employee benefits, such as an employee discount linked to length of service and all-employee share plans.
Annual bonus (audited)
The annual bonus for the year was based 80% on Group adjusted profit before tax and 20% on individual strategic objectives.
The following sets out details of actual performance against the targets set:
Financial targets (80%)
Threshold Target Maximum
Measure
% of financial
target
Required
performance
% of financial
target
Required
Performance
% of financial
target
Required
performance
Actual
performance
Pay-out as % of
max
Group adjusted profit
before tax (pre IFRS 16)
10% £25.9m 50% £28.8m 100% £31.7m £13.6m nil
Individual strategic performance (20%)
The non-financial element of the bonus for FY2023 was dependent on personal performance against non-financial strategic objectives
approved by the Remuneration Committee. The table below summarises the achievements against each of those objectives.
Strategic performance measure Outcome
1. Employee engagement and satisfaction
Measured by reference to increasing the overall response
ratetotheannual Happiness Index survey and improving
theoverallengagement score
Exceeded – The overall response rate and score for the
2022HappinessIndex survey increased from prior year
2. Customer Satisfaction
Measured by an enhancement in NPS score
Exceeded – The overall NPS for the year increased from FY2022
3. Sustainability Agenda
Measured with reference to a reduction in energy usage in
FY2023anda reduction in Scope 1 and 2 emissions for FY2023.
Exceeded – Reduction in like for like electricity and gas usage of
13%and 14% respectively against the baseline of FY2020 and
areduction in Scope 1 and 2 emissions of 8% against FY2022
The Remuneration Committee discussed the formulaic outturns of the financial targets and individual strategic performance objectives in the
context of the Group’s overall performance and shareholder return performance. The Remuneration Committee noted the significant progress
that had been made against the strategic objectives, which would have resulted in an award of 100% against individual strategic performance,
but as the financial target was not met and, on the recommendation of the Executive Directors, it was decided no bonus should be paid.
Directors’ Remuneration Report Continued
92 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
LTIP awards vesting in respect of FY2023 (audited)
LTIP awards granted in October 2020 were based on pre-tax Group adjusted EPS performance for FY2023. The EPS targets were not met and
therefore these awards will lapse. The Remuneration Committee did not exercise any discretion in relation to the LTIP outcome. The following
sets out details of performance against targets set:
Target set
Performance measure
Minimum
(25% vesting)
Maximum
(100% vesting) Value of award Actual performance Value of award
LTIP Pre-tax Group
adjusted EPS
50.16p 61.09p Percentage vest of
original grant:
Minimum – 25%
Maximum – 100%
20.86p nil
ESOS awards vesting in respect of FY2023 (audited)
ESOS awards granted in January 2021 were based on a Group EBITDA performance target for FY2023 of £47 million. TheEBITDA target
wasnotmet and therefore awards will lapse. No awards are held by Executive Directors.
Total pension entitlements
Michael Turner and Richard Fuller are pensioners of the defined benefit Company pension plan, which is closed to future accrual, under
theDirectors’ section.
Simon Emeny became a deferred member of the defined benefit Company pension plan, under the main section, when the plan closed to future
accruals on 1 January 2015. Prior to closure, he received a salary supplement of 17.5% of the excess of his base salary over the earnings cap
foruse as part of his retirement planning. Following closure of the pension plan, Simon Emeny is paid an annual salary supplement of 17.5%
ofhis salary by the Company.
During the year, Neil Smith was paid an annual cash allowance of 5%, in line with the Policy. Fred Turner received an annual pension contribution
of 17.5%, in line with his existing contractual arrangements.
Executive Directors who receive a cash allowance are required to use the supplement as part of their overall retirement planning. They are also
normally expected to contribute 8% of their salary to their pension or another investment vehicle. The Remuneration Committee considers that
the Policy operated as intended during the year.
Scheme Interests Awarded During the Financial Year (audited)
In respect of the 53 week period ended 1 April 2023, the following share awards were granted:
Director
Type of
award
Number of ‘A’
shares
Number of ‘B’
shares
Face value at grant
£000
1
Date of grant
Performance
period end
2,3
% of award grant
vesting at minimum
threshold
Simon Emeny LTIP 87,754 219,386 657 05/07/2022 31/03/2025 25%
Total 87,754 219,386 657
Neil Smith LTIP 48,513 121,282 363 05/07/2022 31/03/2025 25%
ESOS 5,000 – 30 05/07/2022 31/03/2025 100%
Total 53,513 121,282 393
Fred Turner LTIP 35,081 87,704 263 05/07/2022 31/03/2025 25%
ESOS 834 – 5 05/07/2022 31/03/2025 100%
Total 35,915 87,704 268
1 Face values have been calculated using the actual grant price of £5.99 per ‘A’ ordinary share and an assumed share price of £0.599 per ‘B’ ordinary share for the LTIP,
being the average share price during the five dealing days ending immediately before the date of grant, and £6.00 per ‘A’ ordinary share for the ESOS, being the share
price on the day immediately before the date of grant.
2 The LTIP awards are subject to a pre-tax adjusted EPS performance condition, with the targets set on an absolute basis and measured over a period of three years.
25%of the awards vest for pre-tax adjusted EPS of 49.93p in FY2025, with 100% vesting for pre-tax adjusted EPS of 60.15p (straight-line vesting in-between).
3 The ESOS awards are subject to a pre-tax adjusted EPS performance condition, with the target set on an absolute basis and measured over a period of three years,
of49.93p in FY2025.
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Non-Executive Directors’ Fee
Non-Executive Directors receive a basic fee and additional fees for further duties and the Chairman receives a basic fee. The Remuneration
Committee reviewed the Chairman’s fee during the year and, in consultation with the Chairman, agreed that a reduction was appropriate.
TheChairman’s fee was reduced from £250,000 per annum to £210,000 per annum effective 1 January 2023. Non-Executive Director fees
werelast reviewed by the Board in November 2021 and remain unchanged for FY2024.
A summary of the current fee structure for the Non-Executive Directors, including the Chairman, is set out below:
Base fee
Senior
Independent
Director Committee Chair
Committee member
(Audit and
Remuneration)
Family
Shareholder
Liaison Total
Michael Turner £210,000 – – – – £210,000
Sir James Fuller £50,000 – – – £5,000 £55,000
Richard Fuller £50,000 – – – – £50,000
Helen Jones £50,000 – £10,000 £10,000 – £70,000
Robin Rowland £50,000 – – £10,000 – £60,000
Juliette Stacey £50,000 £10,000 £10,000 £10,000 – £80,000
Payments to Past Directors (audited)
There were no payments made to past Directors in the period.
Payments on Loss of Office in Prior Year (audited)
No payments were made in respect of loss of office in respect of the financial year ended 1 April 2023.
Executive Share Ownership
The Company has share ownership guidelines for Directors which state that Executives should hold shares worth at least 200% of their salary.
Accordingly, until their guideline is met, Executives are expected to retain:
• all shares they hold in the Share Incentive Plan (“SIP”)
• all shares they acquire as a result of exercising SAYE options
• all shares that they acquire as a result of exercising options under the ESOS net of the cost of those options
• at least 50% of any post-tax and National Insurance vested shares under the LTIP and the Bonus and Deferred Bonus Plan (“BDBP”).
Based on the share price on 1 April 2023 of £4.65, Simon Emeny held shares with a value of 211% of salary, Fred Turner held shares with a value
of 340% of salary and Neil Smith held shares with a value of 8% of salary. All of the Executive Directors’ shareholdings therefore already meet
the guideline with the exception of Neil Smith, who joined the Company on 30 November 2021.
Executive Directors will normally be expected to maintain a minimum shareholding of 200% of base salary (or actual shareholding if lower) for
the first 12 months following departure from the Board and 100% of base salary (or actual shareholding if lower) for the subsequent 12 months.
The Remuneration Committee retains discretion to waive this guideline if it is not considered appropriate in the specific circumstances.
Directors’ Remuneration Report Continued
94 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Directors’ Shareholdings (audited)
Directors’ share interests
Beneficial
interest at
1 April
2023
1
Non-beneficial
interest at
1 April
2023
1
Beneficial
interest at
26 March
2022
Non-beneficial
interest at
26 March
2022
Simon Emeny
‘A’ ordinary 40p shares 130,472 – 130,472 –
‘B’ ordinary 4p shares 1,055,684 – 1,055,684 –
‘C’ ordinary 40p shares 2,000 – 2,000 –
Neil Smith
‘A’ ordinary 40p shares 6,000 – 6,000 –
Fred Turner
‘A’ ordinary 40p shares 2,571 – 1,471 –
‘B’ ordinary 4p shares 502,400 – 496,050 –
‘C’ ordinary 40p shares 100,819 – 100,819 –
2nd preference £1 shares 4,342 – 4,324 –
Michael Turner
‘A’ ordinary 40p shares 271,378 – 271,378 –
‘B’ ordinary 4p shares 3,056,388 – 3,050,243 –
‘C’ ordinary 40p shares 624,260 – 624,260 –
2nd preference £1 shares 71 – 71 –
Sir James Fuller
‘A’ ordinary 40p shares 88,942 – 88,942 –
‘B’ ordinary 4p shares 10,486,379 – 10,486,379 –
‘C’ ordinary 40p shares 2,703,003 621,050 2,702,003 621,050
Richard Fuller
‘A’ ordinary 40p shares 15,267 893,937 13,267 872,937
‘B’ ordinary 4p shares 3,065,726 10,935,015 3,065,726 10,935,015
‘C’ ordinary 40p shares 20,000 – 20,000 –
2nd preference £1 shares 303 7,499 303 7,499
Helen Jones
‘A’ ordinary 40p shares 2,970 – 2,970 –
Robin Rowland
‘A’ ordinary 40p shares 7,165 – 7,165 –
Juliette Stacey
‘A’ ordinary 40p shares 2,454 – 2,454 –
1 There were no changes in the interests of any Director to 14 June 2023.
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Scheme Interests Outstanding at the Year-End (audited)
Executive Directors’ share options
Director Scheme
1,2, 3
As at 26
March 2022 Granted Exercised Lapsed
As at 1 April
2023
Exercise
price
Date of
grant
Performance
period end
Exercisable
from Expiry date
Simon Emeny ESOS 3,296 – – – 3,296 £9.10 01/07/13 31/03/16 01/07/16 30/06/23
SAYE 6,896 – – – 6,896 £4.35 30/09/20 n/a 01/12/25 01/06/26
Total 10,192 – – – 10,192
Neil Smith ESOS – 5,000 – – 5,000 £6.00 05/07/22 31/03/25 05/07/25 04/07/32
Total – 5,000 – – 5,000
Fred Turner ESOS 2,590 – – – 2,590 £9.65 30/06/14 31/03/17 30/06/17 29/06/24
ESOS 520 – – (520) – £9.61 15/01/20 31/03/22 15/01/23 14/01/30
ESOS – 834 – – 834 £6.00 05/07/22 31/03/25 05/07/25 04/07/32
SAYE 6,896 – – – 6,896 £4.35 30/09/20 n/a 01/12/25 01/06/26
Total 10,006 834 – (520) 10,320
1 The ESOS and SAYE are both tax-advantaged share option schemes.
2 SAYE options are normally exercisable for a period of six months from the maturity date at an option price that is discounted by 20% of the average market price for the
three days prior to grant.
3 The ESOS performance conditions are disclosed in note 27 to the financial statements.
4 It is intended that in July 2023, Fred Turner will surrender vested awards granted to him on 30 June 2014 under the ESOS and will be eligible to receive an award under
theESOS in 2023 up to the revised HRMC limit to £60,000.
Vested but unexercised options
Executive Directors’ Long-Term Incentive Plan
Director
Total held at
26March 2022 Awarded Vested Lapsed
Total held at
1 April 2023
1
Simon Emeny
‘A’ ordinary shares 337,849 87,754 – (45,785) 379,818
‘B’ ordinary shares 844,624 219,386 – (114,464) 949,546
Neil Smith
‘A’ ordinary shares 104,360 48,513 – – 152,873
‘B’ ordinary shares 260,902 121,282 – – 382,184
Fred Turner
‘A’ ordinary shares 130,559 35,081 – (13,735) 151,905
‘B’ ordinary shares 326,403 87,704 – (34,339) 379,768
1 Includes annual LTIP awards and the one-off Recovery LTIP awarded to Executive Directors during FY2022. The performance conditions are disclosed in note 27
tothefinancial statements.
Directors’ Remuneration Report Continued
96 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Directors’ Service Contracts and Letters of Appointment
Executive Directors have rolling service contracts terminable on no more than one year’s notice served by the Company or Director. In
theevent of early termination, Executive Directors are entitled to a payment equal to the salary due for the unexpired period of their notice,
payable in monthly instalments, subject to mitigation. Simon Emeny’s contract has been in place for a number of years and in the event of
earlytermination, he would be entitled to a payment equal to his base salary and the value of all benefits for the unexpired period of his
notice,without any reduction for mitigation.
The Chairman and Non-Executive Directors serve the Company on the basis of renewable letters of appointment which can be terminated
bywritten notice by either party. No compensation is awarded on termination.
The following sets out the date of the Executive Directors’ service contracts and Non-Executive Directors’ dates of appointment:
Executive Directors Date of contract Notice period
Simon Emeny 13 January 1999 12 months
Neil Smith 16 June 2021 12 months
Fred Turner 23 May 2019 12 months
Non-Executive Directors Date of appointment Term expires
Michael Turner
1
1 July 2013 June 2025
Juliette Stacey 21 March 2018 July 2024
Sir James Fuller 1 June 2010 May 2025
Richard Fuller
2
1 February 2020 January 2025
Helen Jones 12 March 2019 March 2025
Robin Rowland 24 March 2020 March 2024
1 Michael Turner was first appointed to the Board as an Executive Director in January 1985 and became Non-Executive Chairman on 1 July 2013.
2 Richard Fuller was first appointed to the Board as an Executive Director in December 2009 and was appointed as a Non-Executive Director on 1 February 2020.
Service contracts and letters of appointment are available for inspection at the AGM and at the Company’s registered office.
External Directorship Fees
The Board may give approval for Executives to hold one paid non-executive role and to retain any related fees paid.
Simon Emeny is the Senior Independent Director of WH Smith PLC, for which he receives and retains an annual fee of £78,000.
Performance Graph and Table
The graph below shows a comparison of the Total Shareholder Return (“TSR”) for the Company’s listed ‘A’ ordinary shares for the last
10financial years against the TSR for the companies in the FTSE All Share Index. The Company is a constituent of this Index and therefore
theRemuneration Committee considers that it is an appropriate choice for this report.
Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22
Mar 23
2,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Fuller, Smith & Turner P.L.C. FTSE All Share Source: Thomson Data stream
Fuller, Smith & Turner P.L.C. 7,068
FTSE All Share 16,868
4,000
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 97
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The table below shows the total remuneration figure for the Chief Executive over the last 10 financial years and the annual bonus and LTIP
pay-out for each year as a percentage of the maximum available:
2014
1
2015 2016 2017 2018 2019 2020
2
2021
3
2022 2023
Single figure total
remuneration (£000) 977 1,244 1,418 1,097 1,089 687 600 590 935 639
Annual bonus
4
77% 76% 85% 41% 48% 48% nil nil 61% nil
LTIP 64% 96% 100% 100% 56% nil nil nil nil nil
1 Simon Emeny was appointed as Chief Executive in July 2013. This single total figure comprises the remuneration received by him in the financial year, hence, includes
remuneration for the three months prior to this promotion.
2 One-third of the annual bonus was due to pay-out, reflecting the Company’s strong like for like sales performance vs the Peach Tracker. However, in light of the broader
business circumstances following the outbreak of coronavirus in 2020, the Remuneration Committee and the Executive Directors agreed that it was not appropriate to
pay this portion of the annual bonus.
3 Total remuneration includes the Chief Executive’s voluntary 25% reduction in salary from 1 April 2020 to 30 June 2020.
4 Annual bonus as a percentage of the maximum available.
Percentage Change in Remuneration of Directors and Employees
The table below shows the percentage change in the remuneration (based on salary, benefits and annual bonus) of the Board of Directors
compared with that of the average of all employees of the Company taken as a whole. The Chairman and Non-Executive Directors do not receive
any variable pay.
FY2022-FY2023 FY2021-FY2022 FY2020-FY2021
Change in
annual salary/
fees
10
Change in
annual taxable
benefits
Change in
annual bonus
1
Change in
annual salary/
fees
10
Change in
annual taxable
benefits
Change in
annual bonus
1
Change in
annual salary/
fees
Change in
annual taxable
benefits
Change in
annual bonus
1
Average of all employees
2,3
3.3% (12.2)% 100% 2.3% (17.0)% (100)% 1.0% (1.6)% (1.2)%
Simon Emeny 2.8% 0.2% 100% 8.4% 0.3% nil% (4.0)% (0.1)% nil%
Neil Smith
4
– – – – – – – – –
Adam Councell
5
– – – (44.6)% (49.5)% nil% – – –
Fred Turner
6
2.8% 0.6% 100% 8.4% 1.0% nil% – – –
Michael Turner
7
(3.7)% 0.8% n/a 6.7% 1.3% n/a (6.2)% 1.5% n/a
Sir James Fuller 7.3% n/a n/a 9.3% n/a n/a (6.2)% n/a n/a
Richard Fuller
8
8.1% n/a n/a 9.6% n/a n/a (73.9)% (93.8)% n/a
Helen Jones
8
9.4% n/a n/a 10.1% n/a n/a (4.5)% n/a n/a
Robin Rowland
9
6.7% n/a n/a 9.1% n/a n/a – n/a n/a
Juliette Stacey
8
4.9% n/a n/a 8.4% n/a n/a (0.7)% n/a n/a
1 Reflects the increase or decrease in the percentage of annual salary paid out as bonus. In the prior year no bonus was paid out and therefore the bonus as a percentage
of salary has increased by 100% as a bonus was paid in the current year.
2 The employee comparator group excludes employees not employed by the parent company.
3 The change in taxable benefits is principally due to the phasing out of company cars into a car allowance benefit since 2020.
4 Neil Smith was appointed on 30 November 2021 part way through the comparative year, therefore the annual comparison from FY2022 to F Y2023 is not relevant.
5 Adam Councell was appointed on 27 August 2019 and resigned on 30 September 2021.
6 Fred Turner was appointed on 1 June 2019.
7 Michael Turner’s fee was reduced from £250,000 to £210,000 per annum from 1 January 2023.
8 A number of Non-Executive Directors changed roles in FY2020 (Richard Fuller, Juliette Stacey and Helen Jones), which impacted the year on year comparison.
9 Robin Rowland was appointed on 24 March 2020.
10 Board members took a voluntary pay decrease between April 2020 and June 2020. Non-Executive Director fees were also increased from 1 January 2022.
Directors’ Remuneration Report Continued
98 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
CEO Pay Ratio
The following table sets out CEO pay ratio figures, in respect of the financial year ended 1 April 2023.
Year Method
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
FY2023 Option B 30.8:1 26.0:1 18.9:1
FY2022 Option B 49.1:1 43.6:1 30.7:1
FY2021 Option B 35.7:1 33.2:1 23.8:1
FY2020 Option B 33.0:1 32.6:1 31.6:1
The decrease in the pay ratio between FY2023 and FY2022 is predominately driven by the CEO receiving a bonus in relation to FY2022 whereas
in the current year no bonuses were paid.
The relevant individuals have been identified using Option B, as defined under the relevant regulations, which the Remuneration Committee
considered to be the most appropriate methodology based on the availability of data at the time the Annual Report was published. The
respective single figure values for each individual for FY2023 have then been calculated. No estimates were required, and no elements ofpay
were omitted in calculating the relevant single figures. The figures do not include amounts paid to individuals in respect of their tronc share.
The single figure values for individuals immediately above and below the identified employee at each quartile within the Gender Pay Gap
analysis were also reviewed. The chosen individuals were reviewed to determine if they were representative of the 25th percentile, median
and 75th centile employees. Where the chosen individual had left the business or had changed roles during the financial year, an alternative
employee was used for the calculations. The alternative employee used in each instance was the closest employee to the relevant percentile,
who was considered representative of that percentile. For the 53 weeks ended 1 April 2023, alternative employees were selected for the 25th,
median and 75th percentile.
Year Supporting information
Chief
Executive
25th percentile pay
ratio Median pay ratio
75th percentile pay
ratio
FY2023 Salary £522,750 £20,777 £24,531 £33,096
Total pay £639,543 £20,777 £24,618 £33,802
Relative Importance of Spend on Pay
The graph below shows the total remuneration for the Group’s employees compared with other key financial indicators:
Capital
expenditure
and business
combinations
2
Remuneration Dividends
and share
buybacks
Taxes
payable to
HMRC
1
0
£m
2023
2022
60
40
20
80
100
120
1 Taxes payable to HMRC is based upon tax incurred in the year and includes corporation tax, VAT, PAYE, NI, duty, stamp duty, non-domestic rates, property licences,
environmental levies and machine game duty.
2 Capital expenditure (including business combinations) represents cash paid in the year.
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The Remuneration Committee
The Remuneration Committee consists entirely of Independent Non-Executive Directors and the members during the period were Helen Jones
(Chair), Juliette Stacey and Robin Rowland. Its terms of reference are available on the Company’s website. The Chairman of the Company,
Michael Turner, and the Chief Executive, Simon Emeny, are invited to attend the Committee meetings and to advise, where appropriate, on
theremuneration and performance of the Executive Directors and related matters, except in circumstances where their own remuneration
isbeing discussed. Members of the Remuneration Committee have no personal financial interest in the Company, other than as shareholders
and Directors. The Remuneration Committee is advised internally by the Company Secretary, Rachel Spencer, who also acts as secretary to
theCommittee.
Employee Engagement
The Remuneration Committee receives updates on workforce pay and benefits throughout the Group and considers workforce remuneration
aspart of the review of executive remuneration. The Remuneration Committee will take into account any feedback on executive remuneration
provided by the People & Talent Director and any relevant feedback from employee surveys. As part of her role as Non-Executive Director
responsible for employee engagement, the Remuneration Committee Chair engages with employees which also provides an opportunity for
feedback on remuneration matters. Share ownership amongst employees is encouraged and awards were made under the SAYE scheme
duringthe course of the year. This tax-advantaged scheme allows employees to participate as shareholders and aligns their interests with
those of other shareholders.
Independent Advisors
Deloitte LLP was appointed by the Remuneration Committee in June 2019 and, during the year under review, provided the Remuneration
Committee and the Company with advice in connection with remuneration matters as well as the Company’s LTIP and share option schemes.
Deloitte is a founding member of the Remuneration Consultants’ Group (“RCG”), which is responsible for the development and maintenance
ofthe voluntary Code of Conduct that clearly sets out the role of executive remuneration consultants and the professional standards by
whichthey advise their clients. Fees are charged on a time and expenses basis and totalled £7,750 (plus VAT) during FY2023 (FY2022: £26,620
(plus VAT)). During the year, Deloitte also provided other unrelated tax advice to the Company.
The Remuneration Committee is satisfied that advice received from Deloitte during the year was objective and independent and that all
individuals who provided remuneration advice to the Remuneration Committee have no connections with Fuller’s or its Directors that may
impair their independence. TheRemuneration Committee reviewed the potential for conflicts of interest and judged that there were appropriate
safeguards against such conflicts.
XPS Pension Group provides the Company with advice on matters relating to the defined benefit Company pension plan (now closed).
XPSPension Group is authorised and regulated by the Financial Conduct Authority and its actuaries are also separately required to abide
byActuarial Profession Standards which include the requirement for them to provide objective and independent advice.
Committee Evaluation
The Remuneration Committee reviews its performance with Board members and other participants, through the annual Board evaluation.
Seefurther information on page 79.
Statement of Voting at Annual General Meeting
The results of the shareholder votes at the AGM on 23 September 2021 in respect of the Directors’ Remuneration Policy and at the AGM on
21 July 2022 in respect of the Directors’ Remuneration Report were as follows:
Resolution text
Number of
votes cast for
Percentage of
votes cast for
Number of votes
cast against
Percentage of
votes cast against
Total
votes cast
Number of votes
withheld
Approval of Remuneration Report 2022 88,580,372 80.69% 21,192,410 19.31% 109,772,782 68,505
Approval of Remuneration Policy 2021 89,801,044 86.15% 14,436,237 13.85% 104,237,281 5,833,531
The Directors’ Remuneration Report, encompassing pages 86 to 100, was approved by the Board and signed on its behalf.
Helen Jones
Chair of the Remuneration Committee
14 June 2023
Directors’ Remuneration Report Continued
100 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Directors’ Report
The Directors present their report to shareholders together with the
audited financial statements for the 53 weeks ended 1 April 2023. The
Directors’ Report (pages 101 to 103) and the Strategic Report (pages
1to 65) together constitute the management report for the purpose
ofRule 4.1.8R of the Disclosure Guidance and Transparency Rules.
Other information relevant to the report, including information
relevant pursuant to the Companies Act 2006 and UK Listing Rule
9.8.4R, isincorporated.
As permitted by legislation, some of the matters required to be
included in the Directors’ Report have instead been included in the
Strategic Report as the Board considers them to be of strategic
importance. Specifically, these are:
Information Reported in Pages
Future business developments Strategy 16 and 17
Employee engagement Stakeholder
Engagement
Sustainability
Report
62 and 63
52 and 53
Engagement with suppliers,
customers and others
Stakeholder
Engagement
62 and 63
Emissions reporting Sustainability
Report
44
Annual General Meeting
The 2023 AGM will be held at 11am on Thursday 20 July 2023 at The
George IV, 185 Chiswick High Road, London, W4 2DR. The Notice of
Meeting which sets out the resolutions to be proposed has been
posted to shareholders and is available on the Company’s website
atwww.fullers.co.uk.
Articles of Association
The Company’s Articles of Association were adopted in 2014. In
accordance with the Companies Act 2006, the Articles of Association
may only be amended by a special resolution of shareholders in a
general meeting.
Directors
The names and biographical details of the Directors who served on
the Board and Board Committees during the financial year and up to
the date of this report are given on pages 68 and 69. All Directors
served for the full year.
Appointment and retirement of Directors
The Articles state that the Board may appoint Directors and that
atthe subsequent AGM, shareholders may elect any such Director.
Alternatively, the Company may directly appoint a Director. The Articles
also contain the power for the Company to remove any Director by
special resolution and appoint someone in his or her place by ordinary
resolution. There are various other circumstances under the Articles
which would mean that the office of a Director would be vacated,
including if he or she resigns, or becomes of unsound mind orbankrupt.
At every AGM, one-third of the Directors who are subject to retirement
by rotation or, if their number is not three or any multiple of three, then
the number nearest to but not exceeding one-third shall retire from
office, but if there is only one Director who is subject to retirement
byrotation, he or she shall retire. In addition, if any Director has at
thestart of the AGM been in office for more than three years since
hisorher last appointment or re-appointment, he or she shall retire
atthatAGM.
Powers of the Directors
Subject to the Company’s Memorandum and Articles of Association and
UK legislation, the business of the Company is managed by the Board,
which may exercise all the powers of the Company. The Articles of the
Company have a section entitled “Powers and Duties of the Board”
which sets out powers such as the rights to establish local boards, to
appoint agents, to delegate and to appoint persons with the designation
“Director” without implying that the person is a Director of the Company.
There are further sections of the Articles entitled “Allotment of Shares”
setting out the Board’s power to issue shares and purchase the
Company’s own shares, and “Borrowing Powers” setting out the
provisions concerning the Company’s power to borrow and give security.
The Directors have been authorised to allot and issue ordinary shares.
These powers are exercised under authority of resolutions of the
Company passed at its AGM.
Directors’ indemnities and insurance
The Articles of Association provide the Directors with indemnities in
relation to their duties as Directors, including qualifying third party
indemnity provisions (within the meaning of the Companies Act).
TheCompany purchases Directors and Officers liability insurance,
which gives appropriate cover for any legal action brought against its
Directors. This insurance also covers the Trustees of the Company’s
defined benefit pension scheme.
Directors’ interests
Details of all Directors’ interests as at the end of the financial year are
setout in the Directors’ Remuneration Report on pages 95 to 96.
Dividends
The Company paid an interim dividend of 4.68p per ‘A’ and ‘C’ ordinary
share of 40p each and 0.468p per ‘B’ ordinary share of 4p each on
3 January 2023 (FY2022: 3.90p per A’ and ‘C’ ordinary share of 40p
eachand 0.39p per ‘B’ ordinary share of 4p each). The Directors now
recommend a final dividend of 10.0p per ‘A’ and ‘C’ ordinary share of
40peach and 1.0p per ‘B’ ordinary share of 4p each. This makes a total
dividend for the financial year of 14.68p per ‘A’ and ‘C’ ordinary share of
40p each and 1.468p per ‘B’ ordinary share of 4p each (FY2022: 11.31p
per ‘A’ and ‘C’ ordinary share of 40p each and 1.13p per ‘B’ ordinary share
of 4p each).
The total proposed final dividend on ordinary shares will be £6.1 million,
which together with the 2023 interim dividend payment of £2.8 million
and the £120,000 of cumulative preference share dividends paid in
the year, will result in total dividend payments of £9.0 million.
Employees
The Company is committed to treating all of its employees and job
applicants equally. No employee or potential employee receives less
favourable treatment or consideration on the grounds of race, colour,
religion, nationality, ethnic origin, sex, sexual orientation, marital
status, or disability. We give full consideration to applications for
employment from disabled persons where the requirements of the
job can be adequately fulfilled by people with disabilities. We
endeavour to retain the employment of, and arrange suitable
retraining for, any employee who becomes disabled during their
employment as well as providing training, career development
andpromotion to disabled employees wherever appropriate.
During the year, the Company maintained arrangements to provide
employees with information on matters of concern to them, to
regularly consult employees for views on matters affecting them,
toencourage employee involvement in the Company’s performance
through share schemes, and to make all employees aware of financial
and economic factors affecting the performance of the Group.
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External Auditor
The auditors, Ernst & Young LLP, were appointed by the Directors
in2021 following a formal tender process. Ernst & Young LLP have
indicated their willingness to continue in office, and a resolution
thatthey be re-appointed will be proposed at the AGM.
Human Rights
The Board has overall responsibility for ensuring the Company upholds
and promotes respect for human rights. We respect all human rights
and regard those rights relating to non-discrimination, fair treatment
and respect for privacy to be most relevant in conducting our business.
The Company seeks to anticipate, prevent and mitigate any potential
negative human rights impacts as well as enhance positive impacts
through our policies and procedures and, in particular, through our
policies regarding employment, equality and diversity, treating our
stakeholders and customers fairly, and information security. Group
policies seek to ensure that employees comply with the relevant
legislation and regulations in place to promote good practice.
We are committed to ensuring that there are no forms of modern
slavery within our operations or supply chains. In line with the
Modern Slavery Act 2015, we publish an annual Modern Slavery
Statement on our website.
Information Required under the Listing Rules
For the purposes of LR9.8.4R, the information required to be disclosed
by the LR9.8.4R can be found in the Annual Report in the following
locations and is hereby incorporated by reference into this
Directors’Report:
• Information about long-term incentives is disclosed in the
Directors’ Remuneration Report on page 96.
• Information about any waiver of dividends or future dividends
byashareholder is disclosed on page 102.
Political Donations
The Group does not make political donations.
Post-Balance Sheet Events
There were no post-balance sheet events.
Purchase of Own Shares
At the AGM held on 21 July 2022, the Company was given authority
topurchase up to 3,982,025 ‘A’ ordinary shares to be held as treasury
shares to be used in connection with, among other purposes, the
LTIP and/or other share option schemes. Shareholders will be asked
to give a similar authority to purchase shares up to 10% of the ‘A’
ordinary capital at the 2023 AGM.
The Company’s maximum issued ordinary share capital during the
year was £25,381,446, comprising 41,082,339 ‘A’ ordinary shares,
89,052,625 ‘B’ ordinary shares and 13,466,013 ‘C’ ordinary shares.
During the year, the Company purchased a total of one million ‘A’
ordinary shares at a total cost of £4,819,569 (exclusive of stamp
duty). These share purchases represented 0.7% of the Company’s
maximum issued ordinary share capital and 2.4% of the Company’s
‘A’ ordinary share capital.
11,300 ‘A’ ordinary shares held in treasury were allocated to
participants of the Savings Related Share Option Scheme, and
Executive Share Option Scheme on exercise of options, generating
net cash proceeds of £60,816.70. As at 1 April 2023, a total of
2,251,818 ‘A’ ordinary shares and a total of 4,327,915 ‘B’ ordinary
shares are held as treasury shares.
Share Capital
Information on the Company’s financial instruments, capital structure
and related restrictions is given in notes 25 and 26 to the financial
statements. Details of significant shareholdings are set out below.
As at 1 April 2023, Computershare Trustees Limited held a total of
159,543 ‘A’ ordinary shares on behalf of employees of the Company
who are participants in its SIP. This represents 0.41% of the issued ‘A’
ordinary share capital (excluding shares held in treasury). Adividend
waiver is in place in respect of the shares that have not been
allocated to participants. In respect of the shares that have been
allocated, Computershare Trustees Limited exercises voting rights in
relation to those shares, having consulted with the participants
about their voting intentions.
As at 1 April 2023, the Fuller, Smith & Turner Employee Share
Ownership Trust held 316,441 ‘B’ ordinary shares and 5,935 ‘C’
ordinary shares in the Company. A dividend waiver is in place to
cover the entire holding. The Trustees do not exercise the voting
rights attached to shares held in the Trust.
Substantial Shareholdings
The Company had been notified under the Disclosure Guidance and Transparency Rules of the following holdings of voting rights of its listed
issued share capital:
‘A’ ordinary shares of 40p each
% of total voting rights
As at
1 Apr 2023
As at
13 June 2023
BlackRock, Inc 9.97 9.97
Lansdowne Partners (UK) LLP 8.40 8.40
Ameriprise Financial, Inc. (Columbia Threadneedle) 4.68 4.68
It should be noted that these holdings may have changed since the Company was notified of them as notification of any change is not required
until the next notifiable threshold is crossed.
Directors’ Report Continued
102 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
The Company is also aware of the following interests in 3% or more of the voting rights in the two classes of its unlisted share capital:
‘B’ ordinary shares of 4p each
As at
1 April 2023
As at
13 June 2023
Mr A W M Mitchell & Burges Salmon Trustees Ltd
1
14.85 14.85
Mr R H F Fuller & Mr P J Turner & Mr P A Sheils
1
7.66 7.66
Mr A G F Fuller 5.74 5.74
Mr R H F Fuller & Mr P A Sheils & Mr P J Turner
1
4.62 4.62
Mr R D Inverarity 3.62 3.62
Dunarden Limited 3.60 3.60
Mr G F Inverarity 3.48 3.48
Mr M J Turner 3.39 3.39
Miss S M Turner 3.33 3.33
Mr R H F Fuller 3.08 3.08
Mr T J M Turner 3.00 3.00
‘C’ ordinary shares of 40p each
As at
1 April 2023
As at
13 June 2023
Mr A W M Mitchell & Burges Salmon Trustees Ltd
1
33.31 33.31
Mr T J M Turner 6.66 6.66
Miss S M Turner 5.64 5.64
Mr P A R Carter & Sir J H F Fuller
1
4.61 4.61
Sir J H F Fuller & Mr A W M Mitchell
1
4.43 4.43
Mrs D M St. C Turner 3.32 3.32
Mr C D W Williams 3.25 3.25
1 Shares held for the benefit of a Trust.
Significant Agreements
The Group has entered into a number of agreements with the major brewers operating in the UK under which it buys beer, and these
agreements may be terminated by the other party should the Group undergo a change of control.
In the event of a change of control, the Company is obliged to notify its main bank lenders of such. The lenders shall not be obliged to fund
anynew borrowing requests and the facilities will lapse after 30 days from the change of control if terms on which they can continue have
notbeen agreed. All borrowings including accrued interest will become repayable within 10 days of such a lapse.
The service agreements of the Executive Directors include provisions regarding a change of control. Further details are included in the
Directors’ Remuneration Policy published in the 2021 Annual Report.
By order of the Board
Rachel Spencer
Company Secretary
14 June 2023
Fuller, Smith & Turner P.L.C.
Pier House
86-93 Strand-on-the-Green
London W4 3NN
Registered in England under number: 241882
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Directors’ Responsibilities Statement
Statement of Directors’ Responsibilities inRespect
ofthe Financial Statements
The Directors are responsible for preparing the Strategic Report,
theAnnual Report, the Remuneration Report, and the Group and
Company financial statements in accordance with applicable
UnitedKingdom law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors have elected
toprepare the financial statements in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs and profit or loss of the Group and
Company for the financial period.
Under the Financial Conduct Authority’s Disclosure Guidance
andTransparency Rules, Group financial statements are required
tobe prepared in accordance with International Financial Reporting
Standards (“IFRSs”). In preparing the Group and Company financial
statements, the Directors are required to:
• select suitable accounting policies in accordance with IAS 8
Accounting policies, changes in accounting estimates and errors
and then apply them consistently;
• present information, including accounting policies, in a
mannerthat provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on
the Group and Company financial position and financial performance;
• make an assessment of the Company’s ability to continue as a
going concern;
• state that the Group and Company have complied with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and IFRSs subject to any material departures
disclosed and explained in the financial statements; and
• make judgements and estimates that are reasonable and prudent.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time
thefinancial position of the Group and Company, and enable them
toensure that the financial statements and the Remuneration Report
comply with the Companies Act 2006 and applicable regulations,
including the requirements of the Listing Rules and the Disclosure
and Transparency Rules (“DTR”) and in the case of the Group
financial statements, with Article 4 of the IAS Regulation. They are
also responsible for safeguarding the assets of the Group and, hence,
for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for preparing the Annual Report in
accordance with applicable law and regulations. The Directors are
responsible for the maintenance and integrity of the corporate and
financial information included on the Company’s website. Legislation
in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Statement as to Preparation of Financial Statements
The Directors confirm, to the best of their knowledge:
• that these financial statements, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and IFRSs, give a true
and fair view of the assets, liabilities, financial position and profit
of the Group and Company taken as a whole;
• that the Annual Report and the Strategic Report include a fair
review of the development and performance of the business and
the position of the Group and Company taken as a whole, together
with a description of the principal risks and uncertainties that they
face; and
• that they consider the Annual Report and the financial statements,
taken as a whole, provides the information necessary to assess
the Company’s performance, business model and strategy, and is
fair, balanced and understandable.
The Directors of Fuller, Smith & Turner P.L.C. are listed on pages 68
and 69.
Directors’ Statement as to Disclosure of Information
toAuditors
The Directors who were members of the Board at the time of
approving the Directors’ Report are listed on pages 68 and 69.
Havingmade enquiries of fellow Directors and of the Company’s
auditors, each of these Directors confirms that:
• to the best of each Director’s knowledge and belief, there is no
information relevant to the preparation of this report of which the
Company’s auditors are unaware; and
• each Director has taken all the steps a Director might reasonably
be expected to have taken to be aware of any relevant audit
information and to establish that the Company’s auditors are
aware of that information.
On behalf of the Board
Michael Turner
Chairman
14 June 2023
104 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Independent Auditor’s Report
to the members of Fuller, Smith & Turner P.L.C
Opinion
In our opinion:
• Fuller, Smith & Turner P.L.C.’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view of the state
of the Group’s and of the Company’s affairs as at 1 April 2023 and of the Group’s profit for the 53 week period (the ‘period’) then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the Company financial statements have been properly prepared in accordance with UK adopted international accounting standards as applied in accordance
with section 408 of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Fuller, Smith & Turner P.L.C (the ‘Company’) and its subsidiaries (the ‘Group’) for the 53 week period ended 1 April 2023
(the ‘period’) which comprise:
Group Company
Group balance sheet as at 1 April 2023 Company balance sheet as at 1 April 2023
Group income statement for the 53 week period then ended Company statement of changes in equity for the 53 week period then ended
Group statement of comprehensive income for the 53 week period then ended Company cash flow statement for the 53 week period then ended
Group statement of changes in equity for the 53 week period then ended Related notes 1 to 29 to the financial statements including a summary
ofsignificant accounting policies
Group cash flow statement for the 53 week period then ended
Related notes 1 to 29 to the financial statements, including a summary
ofsignificant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and as
regards the parent company financial statements, as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with theserequirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Company and we remain independent of the Group and
the Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of
accounting included:
• We confirmed our understanding of the Group’s going concern assessment process and Management’s related Board memoranda;
• The audit engagement partner increased her time directing and supervising the audit procedures on going concern and utilised corporate finance specialists,
with relevant hospitality sector expertise, to assist in assessing the assumptions employed;
• We validated the covenants and terms of the debt facilities in the model to executed debt agreements and re-performed the calculation of the Net Debt and
Interest cover covenants against the terms of these agreements;
• We assessed the appropriateness of the duration of the going concern review period to 29 June 2024, which is a period of at least 12 months from the date
of approval of the financial statements, and considered whether there are any known events or conditions that will occur beyond the period;
• We obtained the cash flow forecast models (base case, downside, stress and reverse stress test) to 29 June 2024, used by the Board in its assessment,
reviewing their arithmetical accuracy, whether they have been approved by the Board and considering the Group’s historical forecasting accuracy for periods
when the Group’s pubs were able to trade without restrictions due to Covid-19;
• With the assistance of our hospitality sector specialists, we challenged the cash flow forecasts with reference to historical trends and considered any
evidence or market forecasts that contradict the assumptions in management’s forecasts;
• We assessed the consistency of the base case cash flows with the cash flow forecasts used within our impairment and deferred tax recoverability assessment;
• We challenged the integrity of the models used by re-performing calculations and testing of formulas applied throughout;
• We confirmed the calculation of the reverse stress test scenario;
• We enquired of any climate change commitments in the going concern period and challenged whether any associated cash outflows should be included
within the forecasts;
• We read the Board minutes to identify any matters that may impact the going concern assessment; and
• We assessed the appropriateness of the going concern disclosures in describing the risks associated with the Group’s ability to continue as a going concern
for the review period to 29 June 2024.
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Independent Auditor’s Report
to the members of Fuller, Smith & Turner P.L.C Continued
The key observations we communicated to the Audit and Risk Committee were that following the amend and extend refinancing arrangements agreed
inMay2022, the Group has committed borrowing facilities and available liquidity through the going concern period (under both the base case and downside
case).Inmanagement’s base case and sensitised scenarios (which reflect a slowdown in customer spending influenced by the current cost of living crisis
andcost pressures on margin from the well documented cost increases), the Group remains in compliance with its covenants, through the going concern
period.In addition, based on the reverse stress testing, the events that would lead to the covenants being compromised were considered of remote
likelihoodby management.
Going concern has also been determined to be a key audit matter.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,
maycast significant doubt on the Group and Company’s ability to continue as a going concern for the period to 29 June 2024.
In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because
not all future events or conditions can be predicted, this statement is not a guarantee as to the Group or Company’s ability to continue as a going concern.
Overview of our audit approach
Audit scope • We performed an audit of the complete financial information of the Group, which accounted for 100% of the profit before
taxation, 100% of revenue and 100% of total assets. Our approach to scoping and resulting coverage is consistent with 2022.
Key audit matters • Going concern
• Impairment of property, plant and equipment and right-of-use assets
• Management override in the recognition of revenue
Materiality • Overall Group materiality of £1.68 million (2022: £1.27 million) which represents 0.5% of Group revenue.
An overview of the scope of the Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each company within
theGroup. Taken together, this enables us to form an opinion on the consolidated financial statements. The Group’s operations are based solely in the United
Kingdom with a single head office and finance function and therefore all audit procedures are completed by one audit team at this location.
We take into account size, risk profile, the organisation of the Group and effectiveness of Group-wide controls, changes in the business environment, the
potential impact of climate change and other factors such as recent external and internal audit results when assessing the level of work to be performed.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant accounts in the
financial statements we performed full scope audit procedures over 100% of the Group’s results for the 53 week period ended 1 April 2023 and 100% ofthe Group’s
total assets at that date. We obtained an understanding of the entity-level controls of the Group which assisted us in identifying and assessing risks of material
misstatement due to fraud or error, as well as assisting us in determining the most appropriate audit strategy. This approach is consistent with the prior period.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group. The Group has determined that the most significant future impacts fromclimate
change on its operations will be from higher sourcing costs/supply issues for ingredients affected by increased extreme weather events impacting harvests and the
risk of increased extreme weather events (e.g. flooding) in the UK causing reduced footfall/pub closures and impacting staff travel and wellbeing. These are explained
in the Task Force for Climate related Financial Disclosures on pages 54 to 61 and in the principal risksand uncertainties. They have also explained their climate
commitments on page 42. All of these disclosures form part of the “Other information,” rather than the audited financial statements. Our procedures on these
unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained
in the course of the audit or otherwise appear to be materially misstated, inline with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential material impact on
itsfinancial statements.
The Group has explained in the basis of preparation (note 1 of the financial statements) how it has reflected the impact of climate change in their financial statements.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s assessment of the impact
ofclimate risk, physical and transition, its climate commitments, the effects of material climate risks disclosed on pages 56 to 59 and the significant
judgements and estimates disclosed in note 1. As part of this evaluation, we performed our own risk assessment, supported by our climate change internal
specialists, to determine the risks of material misstatement in the financial statements from climate change which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability and associated disclosures.
Whereconsiderations of climate change were relevant to our assessment of going concern, these are described above.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a key audit matter.
106 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period
and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on
these matters.
Risk Our response to the risk
Key observations communicated
to the Audit and Risk Committee
Impairment of property, plant and
equipment (PPE) and right-of-use
assets (ROUA)
Refer to the Audit and Risk Committee
Report (page 83); Accounting policies
(page 123); and Note 13 of the
Consolidated Financial Statements
(page 141)
As at 1 April 2023, the carrying
valueofPPE is £583.3 million
(2022: £592.7 million) and
right-of-use asset is£66.4 million
(2022: £73.8 million).
The challenging trading environment
driven by high levels of cost inflation
and changes in consumer spending
habits arising from the ‘cost of living’
crisis, has been identified as an
indicator of impairment.
Impairment for tangible assets
(PPEandROUA) is tested on the basis
of each individual cash generating
unit(CGU) – an individual pub site.
There is a risk that pubs may not
achieve the anticipated business
performance to support their carrying
value. This could lead to an impairment
charge that has not been recognised
bymanagement.
Significant judgement is required in
forecasting future cash flows of each
pub, the long-term growth rate and
therate at which cash flows are
discounted. For a portion of the pub
estate where the value-in-use model
may indicate an impairment charge,
anoverlay based on the market value
approach is performed which involves
significant judgement in determining
the fair value of these pubs.
The impairment charge is classified
asa separately disclosed item in the
Income Statement.
We gained an understanding through a walkthrough of the process and controls
management has in place over the impairment process.
We validated that the methodology of the impairment exercise is consistent
withthe requirements of IAS 36 Impairment of Assets, including appropriate
identification of cash generating units and the allocation of central service costs
inthe value in use calculations.
We tested the arithmetical accuracy and integrity of the impairment model and
confirmed that the forecasts were consistent with the Board approved forecasts
and those used in the going concern assessment.
We agreed the carrying value of each CGU back to the fixed asset register.
Below we summarise the procedures performed in relation to the key judgements
for the tangible (PPE and ROUA) assets impairment review:
• In respect of the cost inflation and consumer spending habit assumptions
onboth short-term trading and the longer-term growth rate, we compared
management’s assumptions against external economic forecasts and actual
performance from the last year.
• We also performed sensitivity analysis based on reasonable possible changes
to key assumptions determined by management being revenue, discount rate
and long-term growth rate. We assessed that the reasonably possible change
inassumptions applied by management were appropriate by reference to the
ranges independently established by our work.
• We used our internal valuations specialists to support our assessment of the
discount rate and long-term growth rate applied to cash flows by independently
determining an acceptable range of values for each assumption.
• Where management’s pub impairment assessment was based on the
fairvalueapproach, we obtained an external property valuation from
management’s specialists on a sample of pubs and reviewed the methodology
applied and audited the key assumptions that form part of the valuation in
lightof recent transactions in the market with the assistance of our internal
valuation specialists.
We assessed the disclosures in notes to the financial statements against the
requirements of IAS 36 Impairment of Assets, in particular the requirement to
disclose further sensitivities for CGUs where a reasonably possible change in a key
assumption would cause an impairment. We also assessed the related separately
disclosed item accounting treatment by reference to the Company’s accounting
policy, industry practice and the FRC guidance.
Based on our audit procedures
we have concluded the
impairment charge of
£14.3million is appropriately
determined. We highlighted
that a reasonably possible
change in certain key
assumptions including sales
forecasts and risk adjustment
factors could lead to material
additional impairment charges.
We concluded appropriate
disclosures had been included
by management for the above
assumptions and that the
impairment is appropriately
presented as separately
disclosed items given
marketpractice.
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Risk Our response to the risk
Key observations communicated
to the Audit and Risk Committee
Management override in the
recognition of revenue
Refer to the Accounting policies
(page126) and Note 3 of the
financialstatements (page 131)
The Group recorded revenue of
£336.6 million in the period
(2022: £253.8 million), including
£306.8 million in the Managed houses
segment (2021: £228.8 million) and
£29.8 million in the Tenanted Inns
segment (2022: £25.0 million).
The vast majority of the Group’s
revenuetransactions are non-complex,
with no judgement applied over the
amount recorded.
We consider the significant risk
relatingto fraud in revenue recognition
to be around management override
ofcontrols and topside journals
torevenue in the managed and
tenanted estate.
For managed houses, revenue
istypically comprised of a large number
of low value transactions. Although
there is little management judgement
involved, there is a risk that manual
topside adjustments could be posted
which could result in revenue being
overstated or not recorded. For
Tenanted Inns there is also a risk that
manual topside adjustments could be
posted to revenue.
We performed a walkthrough of each of the Group’s significant revenue processes,
including the recording of manual journal adjustments, and assessed the design
effectiveness of the key controls that are in place.
We applied correlation data analysis over the Group’s entire revenue journal
population to identify how much of the Group’s revenue is converted to cash
postings and to isolate non-standard revenue transactions for further analysis,
focusing our testing on higher risk transactions identified. We determined the
higher risk journal entries to be the adjustments made at or near the end of the
reporting period, post-closing adjustments and other adjustments made to record
transactions outside the normal course of business and performed substantive
procedures to obtain sufficient appropriate audit evidence that those entries were
properly supported and approved.
We searched for any topside journals to revenue, but none were identified.
We performed cut-off testing procedures including review of post period end cash
receipts and journals, and an analytical review of significant variances to the prior
year, to assess for completeness.
We concluded that revenue
was reasonably stated.
We did not identify any
instances of management
override in relation to revenue.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our
audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the
users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group and Company to be £1.68 million (2022: £1.27 million), which is 0.5% (2022: 0.5%) of Group revenue. We believe that
Group revenue continues to an appropriate materiality basis due to its prominence in financial reporting to the Group’s equity and debt stakeholders in the
context of the Group which has not returned to a normalised level of profit.
Independent Auditor’s Report
to the members of Fuller, Smith & Turner P.L.C Continued
108 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality
was 75% (2022: 75%) of our planning materiality, namely £1.26 million (2022: £0.95 million). We have set performance materiality at this percentage as we did
not anticipate a significant level of audit differences following our FY2022 audit.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of £84,000 (2022: £64,000), which is
set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative
considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors
are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.
If,based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent
withthe financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or
• the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
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Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating
tothe Group and Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out
on page 120;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is appropriate set out on page 33;
• Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its liabilities set out on page 120;
• Directors’ statement on fair, balanced and understandable set out on page 104;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 104;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 83; and
• The section describing the work of the Audit and Risk Committee set out on page 82.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 104, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing,
asapplicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due
tofraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent
towhich our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and Company and determined that the most
significant are Companies Act 2006, Health & Safety and food hygiene laws, Minimum Wage regulations, Money Laundering regulations and the UK
Corporate Governance Code 2018.
• We understood how the Company is complying with those frameworks by making inquiries of management, those charged with governance, those
responsible for legal and compliance procedures and the Company Secretary. We corroborated our inquires through inspection of board minutes and
correspondence with regulatory authorities and through attendance at Audit and Risk Committee meetings.
• We assessed the susceptibility of the Group and Company’s financial statements to material misstatement, including how fraud might occur by making
inquiries of management, those charged with governance and various other individuals within the financial reporting function. We corroborated these inquiries
by inspecting board minutes, internal audit reports and findings, reports to the Group’s internal whistleblowing hotline and by understanding both the Group’s
bonus scheme structure and the expectations of investors and analysts, to understand areas in which individuals may be incentivised to commit fraud.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved making
inquiries as described above, inspecting minutes of all significant board and committee meetings, reading correspondence with regulatory authorities,
testing manual journal entries with higher risk characteristics and testing unusual or non-standard transactions.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Independent Auditor’s Report
to the members of Fuller, Smith & Turner P.L.C Continued
110 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Other matters we are required to address
• Following the recommendation from the Audit and Risk Committee, we were appointed by the Company on 27 January 2021 to audit the financial statements
for the year ended 27 March 2021 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is three years, covering the years ended 27 March 2021 to
01 April 2023.
• The audit opinion is consistent with the additional report to the Audit and Risk Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body,
forour audit work, for this report, or for the opinions we have formed.
Rachel Savage (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
14 June 2023
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Group Income Statement
for the 53 weeks ended 1 April 2023
53 weeks ended 1 April 2023 52 weeks ended 26 March 2022
Note
Before
separately
disclosed
items
£m
Separately
disclosed
items
£m
Total
£m
Before
separately
disclosed
items
£m
Separately
disclosed
items
£m
Total
£m
Revenue 3 3 3 6. 6 – 3 3 6. 6 2 5 3.8 – 2 5 3.8
Operating costs 4,5 (3 11. 5) (14 . 2) (3 2 5 .7) (23 5 .3) (2 .0) (2 3 7. 3)
Operating profit 2 5 .1 (14 . 2) 10 . 9 18 . 5 (2 .0) 16 . 5
Finance costs 5,6 (1 2 . 4) – (12 . 4) (11. 3) – (11 . 3)
Profit on disposal of properties 5 – 11. 8 11. 8 – 6.3 6 .3
Profit before tax 12 .7 (2 . 4) 10 . 3 7. 2 4.3 11. 5
Tax 7 (2 . 9) 0 . 5 (2 . 4) (1. 2) (3.2) (4 .4)
Profit for the year 9.8 (1. 9) 7. 9 6.0 1.1 7. 1
Earnings per share per 40p ‘A’ and ‘C’ ordinary share
Pence Pence Pence Pence
Basic 8 16 .10 12 . 9 8 9 .79 11. 5 9
Diluted 8 16. 0 7 12. 9 6 9 .7 3 11. 5 1
Earnings per share per 4p ‘B’ ordinary share
Basic 8 1. 6 1 1. 3 0 0.98 1.1 6
Diluted 8 1. 6 1 1. 3 0 0.97 1.1 5
112 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Group Statement of Comprehensive Income
for the 53 weeks ended 1 April 2023
Note
53 weeks
ended
1 April
2023
£m
52 weeks
ended
26 March
2022
£m
Profit for the year 7. 9 7. 1
Items that may be reclassified to profit or loss in subsequent years (net of tax)
Net gains on valuation of financial assets and liabilities 25 0 .1 0.5
Tax related to items that may be reclassified to profit or loss 7 – (0 .1)
Items that will not be reclassified to profit or loss in subsequent years (net of tax)
Net actuarial (losses)/gains on pension schemes 22 (2 . 5) 15 . 5
Tax related to items that will not be reclassified to profit or loss 7 0. 6 (3.8)
Other comprehensive (losses)/gains for the year, net of tax (1. 8) 1 2 .1
Total comprehensive income for the year, net of tax 6 .1 19 . 2
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 113
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GOVERNANCE
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Group Balance Sheet
1 April 2023
Note
Group
2023
£m
Group
2022
£m
Non-current assets
Intangible assets 10 29.0 2 9.5
Property, plant and equipment 11 58 3. 3 5 9 2.7
Investment properties 12 1. 5 1.6
Retirement benefit obligations 22 1 6 .1 16. 2
Right-of-use assets 16 6 6.4 73. 8
Other financial assets 14 0 .1
–
Total non-current assets 69 6.4 713 .8
Current assets
Inventories 17 4. 2 3.6
Trade and other receivables 18 10 . 2 10 . 7
Current tax receivable 0.7 0.6
Cash and short-term deposits 21 14 .1 15 . 6
Total current assets 2 9 . 2 30.5
Assets classified as held for sale 19 7. 0 5.4
Total assets 7 3 2 . 6 74 9 . 7
Current liabilities
Trade and other payables 20 (5 4 .6) (5 7. 1)
Provisions 24 (0. 5) (0 .5)
Borrowings 21 (6 . 0) (1 20.0)
Lease liabilities 16 (4 . 8) (6.8)
Other financial liabilities 14
–
(0 .1)
Total current liabilities (6 5 .9) (18 4 .5)
Non-current liabilities
Borrowings 21 (14 0. 9) (27 .5)
Lease liabilities 16 (6 7. 0) (7 3.9)
Retirement benefit obligations 22 (1. 5) (1. 9)
Deferred tax liabilities 7 (14.7) (12 .7)
Total non-current liabilities (2 2 4 .1) (1 1 6.0)
Net assets 4 4 2. 6 4 4 9.2
Capital and reserves
Share capital 26 2 5 .4 25.4
Share premium account 26 5 3 . 2 5 3.2
Capital redemption reserve 26 3 .7 3 .7
Own shares 26 (2 1. 3) (16 .6)
Hedging reserve 26 – (0 .1)
Retained earnings 3 8 1.6 3 8 3.6
Total equity 4 4 2. 6 4 4 9.2
Approved by the Board and signed on 14 June 2023.
M J Turner, FCA
Chairman
Registered Number: 241882
114 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Company Balance Sheet
1 April 2023
Note
Company
2023
£m
Company
2022
£m
Non-current assets
Intangible assets 10 5.7 6.2
Property, plant and equipment 11 583.3 592.7
Investment properties 12 1.5 1.6
Retirement benefit obligations 22 16.1 16.2
Right-of-use assets 16 66.0 73.3
Other financial assets 14 0.1
–
Investments in subsidiaries 15 108.7 109.1
Total non-current assets 781.4 799.1
Current assets
Inventories 17 4.2 3.6
Trade and other receivables 18 10.2 10.7
Current tax receivable 0.7 0.6
Cash and short-term deposits 21 14.1 15.6
Total current assets 29.2 30.5
Assets classified as held for sale 19 7.0 5.4
Total assets 817.6 835.0
Current liabilities
Trade and other payables 20 (197.7) (193.8)
Provisions 24 (0.5) (0.5)
Borrowings 21 (6.0) (120.0)
Lease liabilities 16 (4.7) (6.5)
Other financial liabilities 14 – (0.1)
Total current liabilities (208.9) (320.9)
Non-current liabilities
Borrowings 21 (140.9) (27.5)
Lease liabilities 16 (66.6) (72.8)
Retirement benefit obligations 22 (1.5) (1.9)
Deferred tax liabilities 7 (14.7) (12.8)
Total non-current liabilities (223.7) (115.0)
Net assets 385.0 399.1
Capital and reserves
Share capital 26 25.4 25.4
Share premium account 26 53.2 53.2
Capital redemption reserve 26 3.7 3.7
Own shares 26 (21.3) (16.6)
Hedging reserve 26 – (0.1)
Merger reserve (1.6) (1.6)
Retained earnings 325.6 335.1
Total equity 385.0 399.1
Profit attributable to ordinary shareholders and included in the financial statements of the Parent Company was £0.4 million (2022: £3.3 million).
Approved by the Board and signed on 14 June 2023.
M J Turner, FCA
Chairman
Registered Number: 241882
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 115
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Group Statement of Changes in Equity
for the 53 weeks ended 1 April 2023
Group
Share
capital
(note 26)
£m
Share
premium
account
(note 26)
£m
Capital
redemption
reserve
(note 26)
£m
Own shares
(note 26)
£m
Hedging
reserve
£m
Retained
earnings
£m
Total
£m
At 27 March 2021 22.8 4.2 3 .7 (1 7. 0) (0.5) 3 66. 3 379.5
Profit for the year – – – – – 7. 1 7.1
Other comprehensive income for the year – – – – 0.4 11. 7 1 2 .1
Total comprehensive income for the year – – – – 0 .4 18 . 8 19 . 2
Issue of share capital (note 27) 2.6 4 9.0 – 0.2 – – 5 1. 8
Shares released from ESOT and treasury – – – 0. 2 – – 0 .2
Dividends (note 9) – – – – – (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 2 5 . 4 5 3 . 2 3 .7 (16 . 6) (0 .1) 38 3. 6 4 4 9. 2
Profit for the year – – – – – 7. 9 7. 9
Other comprehensive income for the year – – – – 0 .1 (1. 9) (1. 8)
Total comprehensive income for the year – – – – 0 .1 6.0 6 .1
Shares purchased to be held in ESOT or as treasury – – – (4. 8) – – (4. 8)
Shares released from ESOT and treasury – – – 0 .1 – – 0 .1
Dividends (note 9) – – – – – (7. 4) (7. 4)
Share-based payment credits – – – – – (0. 4) (0 .4)
Tax credited directly to equity – – – – – (0.2) (0.2)
At 1 April 2023 2 5 . 4 5 3 . 2 3 .7 (2 1. 3) – 3 8 1. 6 4 4 2 . 6
116 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Company Statement of Changes in Equity
for the 53 weeks ended 1 April 2023
Company
Share
capital
(note 26)
£m
Share
premium
account
(note 26)
£m
Capital
redemption
reserve
(note 26)
£m
Own shares
(note 26)
£m
Hedging
reserve
£m
Merger
reserve
£m
Retained
earnings
£m
Total
£m
At 27 March 2021 22.8 4.2 3.7 (17.0) (0.5) (1.6) 321.6 333.2
Profit for the year – – – – – 3.3 3.3
Other comprehensive income for the year – – – – 0.4 – 11.7 12.1
Total comprehensive income for the year – – – – 0.4 – 15.0 15.4
Issue of share capital (note 27) 2.6 49.0 – 0.2 – – – 51.8
Shares released from ESOT and treasury – – – 0.2 – – – 0.2
Dividends (note 9) – – – – – (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) (1.6) 335.1 399.1
Profit for the year – – – – – – 0.4 0.4
Other comprehensive income for the year – – – – 0.1 – (1.9) (1.8)
Total comprehensive income for the year – – – – 0.1 – (1.5) (1.4)
Shares purchased to be held in ESOT or as treasury – – – (4.8) – – – (4.8)
Shares released from ESOT and treasury – – – 0.1 – – – 0.1
Dividends (note 9) – – – – – – (7.4) (7.4)
Share-based payment credits – – – – – – (0.4) (0.4)
Tax credited directly to equity – – – – – – (0.2) (0.2)
At 1 April 2023 25.4 53.2 3.7 (21.3) – (1.6) 325.6 385.0
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 117
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Group Cash Flow Statement
for the 53 weeks ended 1 April 2023
Note
Group
53 weeks ended
1 April 2023
£m
Group
52 weeks ended
26 March
2022
£m
Profit before tax for continuing operations 10. 3 11. 5
Net finance costs before separately disclosed items 6 12 . 4 11 . 3
Separately disclosed items 5 2 . 4 (4. 3)
Depreciation and amortisation 4 2 6 .7 25.8
Adjusted EBITDA 5 1. 8 4 4.3
Difference between pension charge and cash paid 22 (2. 3) (2. 3)
Share-based payment (credit)/charges 4 (0 . 4) 0.8
Change in trade and other receivables 2 . 5 0.5
Change in inventories (0. 6) (1. 5)
Change in trade and other payables (3. 0) 28.8
Cash impact of operating separately disclosed items 5 (0 .5) (1. 9)
Cash generated from operations 4 7. 5 6 8 .7
Tax received – 2.5
Net cash generated from operating activities 4 7. 5 7 1. 2
Cash flow from investing activities
Purchase of property, plant and equipment and intangibles (3 0.7) (25.8)
Sale of property, plant and equipment, right-of-use assets and assets held for sale 16. 0 10.0
Net cash (outflow) from investing activities (14 .7) (1 5.8)
Cash flow from financing activities
Purchase of own shares 26 (4 . 8) –
Receipts on release of own shares to option schemes 26 0 .1 0 .1
Interest paid (8 .7) (7. 2)
Preference dividends paid 9 (0 .1) (0 .1)
Equity dividends paid 9 (7. 4) (2.4)
Net proceeds from equity placing – 51. 8
Repayment of CCFF 21 – (1 00.0)
Drawdown of bank loans 21 – 12 . 6
Surrender of leases (2 .1) (1. 9)
Principal and interest elements of lease payments 16 (9 . 8) (8 .6)
Payment of loan arrangement fees 21 (1. 5) (1. 2)
Net cash (outflow) from financing activities (3 4 . 3) (56.9)
Net movement in cash and cash equivalents (1. 5) (1. 5)
Cash and cash equivalents at the start of the year 21 15 . 6 1 7. 1
Total cash and cash equivalents at the end of the year 21 14 .1 15 . 6
118 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Company Cash Flow Statement
for the 53 weeks ended 1 April 2023
Note
Company
53 weeks ended
1 April 2023
£m
Company
52 weeks ended
26 March 2022
£m
Profit before tax for continuing operations 3.1 7.6
Net finance costs before separately disclosed items 18.8 14.9
Separately disclosed items 3.2 (4.2)
Depreciation and amortisation 26.7 25.7
Adjusted EBITDA 51.8 44.0
Difference between pension charge and cash paid 22 (2.3) (2.3)
Share-based payment (credit)/ charges (0.4) 0.8
Change in trade and other receivables (3.9) 0.5
Change in inventories (0.6) (1.5)
Change in trade and other payables 3.3 29.0
Cash impact of operating separately disclosed items (0.5) (1.9)
Cash generated from operations 47.4 68.6
Tax received – 2.5
Net cash generated from operating activities 47.4 71.1
Cash flow from investing activities
Purchase of property, plant and equipment and intangibles (30.7) (25.8)
Sale of property, plant and equipment, right-of-use assets and assets held for sale 16.0 10.0
Net cash (outflow) from investing activities (14.7) (15.8)
Cash flow from financing activities
Purchase of own shares 26 (4.8) –
Receipts on release of own shares to option schemes 26 0.1 0.1
Interest paid (8.7) (7.2)
Preference dividends paid 9 (0.1) (0.1)
Equity dividends paid 9 (7.4) (2.4)
Net proceeds of equity placing – 51.8
Repayment of CCFF 21 – (100.0)
Drawdown of bank loans 21 – 12.6
Surrender of leases (2.1) (1.9)
Principal and interest elements of lease payments 16 (9.7) (8.3)
Cost of refinancing 21 (1.5) (1.2)
Net cash outflow from financing activities (34.2) (56.6)
Net movement in cash and cash equivalents (1.5) (1.3)
Cash and cash equivalents at the start of the year 21 15.6 16.9
Total cash and cash equivalents at the end of the year 21 14.1 15.6
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 119
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Notes to the Financial Statements
1. Authorisation of Financial Statements and Accounting Policies
Authorisation of Financial Statements
The financial statements of Fuller, Smith & Turner P.L.C. and its subsidiaries (the “Group”) for the 53 weeks ended 1 April 2023 were authorised for issue by
the Board of Directors on 14 June 2023 and the Balance Sheet was signed on the Board’s behalf by M J Turner. Fuller, Smith & Turner P.L.C. is a public limited
company incorporated and domiciled in England and Wales. The Company’s ordinary ‘A’ shares are traded on the London Stock Exchange.
Significant Accounting Policies
Basis of preparation
The Group’s and Company’s financial statements have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, and in accordance with UK adopted International Financial Reporting Standards, and applied to the financial
statements of the Group and the Company for the 53 weeks ended 1 April 2023. The principal accounting policies adopted by the Group and by the Company
are set out in the accounting policies below.
The Group and Company financial statements are presented in Sterling and all values are shown in millions of pounds (£m) rounded to the nearest hundred
thousand, except where otherwise indicated.
As permitted by Section 408 of the Companies Act 2006, a separate Income Statement for the Parent Company has not been prepared.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the strategic report
on pages 1 to 65. The financial position of the Company, its cash flows, net debt and borrowing facilities and the maturity of those facilities are set out above
on pages 147 to 159.
In addition, there are further details in the financial statements on the Group’s financial risk management, objectives and policies in note 27.
At 1 April 2023, the Group Balance Sheet comprises of 92% of the estate being freehold properties and available headroom on facilities of £79.5 million and
£14.1 million of cash and resulting net debt of £132.8 million.
During the year, the Group secured a new facility of £200 million, split between a RCF 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 remained until November 2022. From December 2022
(and tested quarterly thereafter) the covenant suite consists of net debt to EBITDA (leverage) and EBITDA to net finance charges. See further details in Note 23.
The Group has modelled financial projections for the going concern period, which is the period to 29 June 2024, based upon two scenarios, the ‘base case’ and
the ‘downside case’. The base case is the Board approved FY2024 budget as well as the Q1 FY2025 plan which forms part of the Board approved three year
plan. The base case assumes that sales will continue to recover, in particular in Central London. However, the budget remains cautious about the inflationary
environment and also the impact on the consumer and therefore only assumes moderate levels of volume growth as well as continued pressure on margins.
The base case scenario indicates that it 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 sales volume reduce by 10% from the ‘base case’ and costs across food, staff and interest
continue to rise. This model also assumes train strikes are more frequent than experienced in FY2023. In this ‘downside case’, management would implement
mitigating actions such as overhead cost reduction and restructuring of capital expenditure and other property spend to essential maintenance. 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 case’ which shows that the Group could withstand a 24% reduction in volumes from those assessed in the
‘base case’ throughout the going concern period, as well as costs assumed to increase at a similar or higher rate than the downside scenario, before the
covenant levels would be exceeded on 31 March 2024. The Directors consider this scenario to be remote as other than when the business was closed
because of the pandemic, it has never seen volumes decline at anywhere close to that rate.
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 capex spend to only essential maintenance and decision not to pay dividends and bonuses. Further mitigating actions
would also include disposals of licensed and unlicensed properties.
The Directors have also determined that, over the period of the going concern assessment, there is not expected to be a significant impact because of
climate change.
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, being the period to 29 June 2024, and have therefore adopted the going concern
basis in the preparation of these financial statements.
120 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Significant accounting judgements, estimates and assumptions
The areas of estimation and assumption which are considered to be significant in the preparation of the financial statements are as follows:
The Group determines whether goodwill is impaired on an annual basis and this requires an estimation of the value in use of the cash-generating units (“CGUs”)
to which the goodwill is allocated. This involves estimation of future cash flows and choosing a suitable discount rate. Full details are supplied in note 13,
together with an analysis of those key assumptions.
The Group reviews impairment of all property, plant and equipment and right-of-use assets at CGU level where there is any indication of impairment. This
requires an estimation of the value in use and involves estimation of future cash flows and choosing a suitable discount rate. See note 13, which describes
the assumptions used, together with an analysis of the key assumptions.
Measurement of defined benefit pension obligations requires estimation of future changes in inflation, as well as mortality rates, the expected return on
assets and the selection of a suitable discount rate. These have been determined on advice from the Group’s qualified actuary. The estimates used and the
key assumptions are provided in note 22.
The areas of judgement which are considered to be significant in the preparation of the financial statements are as follows:
Judgement is used to determine those items that should be separately disclosed to allow a better understanding of the underlying trading performance of
the Group. The judgement includes assessment of whether an item is of a nature that is not consistent with normal trading activities or of sufficient size or
infrequency. See note 5 for further details.
The Group has exercised significant accounting estimation and judgement in the recognition of deferred tax liabilities in respect of property, plant and equipment.
Significant accounting estimates and judgements include those used to determine the amount of net book value of property, plant and equipment to which the
initial recognition exemption applies, the calculation of the tax base on sale (which is subject to certain restrictions under tax law) and the offsetting of inherent
losses against inherent gains where tax losses are expected to be utilised against future profits and gains.
Basis of consolidation
The Group financial statements consolidate the financial statements of Fuller, Smith & Turner P.L.C. and the entities it controls (its subsidiaries) drawn up for the
53 weeks ended 1 April 2023 (2022: 52 weeks ended 26 March 2022). Subsidiaries are consolidated from the date of their acquisition, being the date on which
the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to direct the relevant activities
of the subsidiary which significantly affect the return of the subsidiary, so as to obtain benefit from its activities, and is achieved through direct or indirect
ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. All intercompany balances and
transactions, including unrealised profits arising from them, are eliminated.
Business combinations and goodwill
Business combinations are accounted for under IFRS 3 Business Combinations using the purchase method. Any excess of the consideration of the business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the Balance Sheet as
goodwill and is not amortised. To the extent that the net fair value of the acquired entity’s identifiable assets, liabilities and contingent liabilities is greater than
the cost of the investment, a gain is recognised immediately in the Income Statement.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as
equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a
financial instrument and within the scope of IFRS 9 Financial Instruments is measured at fair value with the changes in fair value recognised in the statement
of profit or loss in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date
with changes in fair value recognised in profit or loss.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment, at least
annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. Any impairment of goodwill made cannot be
reversed if circumstances subsequently change.
For the purpose of impairment testing, goodwill is allocated to the related CGUs (or group of CGUs) monitored by management. Where the recoverable amount
of the CGU is less than its carrying amount, including goodwill, an impairment loss is recognised in the Income Statement.
The carrying amount of goodwill allocated to a CGU is taken into account when determining the gain or loss on disposal of the CGU, or of an operation within it.
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1. Authorisation of Financial Statements and Accounting Policies continued
Property, plant and equipment
Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a
straight-line basis to write down the cost to the estimated residual value over the expected useful life of the asset as follows:
Freehold buildings – Hotel accommodation and offices Up to 50 years
Freehold buildings – Licensed retail property and unlicensed property From 50 to 100 years
Leasehold improvements The term of the lease
Roofs From 10 to 50 years
Plant, machinery and vehicles, fixtures and fittings From three years up to 25 years
As required under IAS 16 Property, Plant and Equipment, expected useful lives and residual values are reviewed every year. Land is not depreciated. An item
of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e., at the date the recipient obtains control) or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the Income Statement when the asset is derecognised.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants
will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the
related costs for which the grants are intended to compensate. When the grant relates to an asset, it is recognised as income in equal amounts over the
expected useful life of the related asset.
Coronavirus Job Retention Scheme (“CJRS”)
In the prior year, HMRC reimbursed up to 80% of the wages of certain employees who had been asked to stop working, but who were being kept on the payroll
(“furloughed”). The scheme was designed to compensate for staff costs, so amounts received are recognised in the Income Statement over the same period as
the costs to which they relate. In the Income Statement, payroll costs are shown net of grant income.
Hive-up transaction
When a subsidiary transfers its business to its parent immediately after acquisition (hive-up transaction) the assets are transferred at market value and the
investment is reduced to reflect the net effect of a return of capital in the form of the underlying net assets with any difference taken to the merger reserve.
Investment property
The Group owns properties that are not used for the sale of goods or services but are held for capital appreciation or rental purposes. These properties are
classified as investment properties and their carrying values are based on cost less impairment. Depreciation is calculated on a straight-line basis to write
down the cost to the estimated residual value over the expected useful life of the asset, which for investment properties is between 50 and 100 years.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their
fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected
in profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible
asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of
each reporting period.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the CGU level. The assessment
of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to
finite is made on a prospective basis.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is included in the statement of profit or loss.
Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
• Its intention to complete and its ability and intention to use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during development.
122 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use and will be amortised over the period
of expected future benefit. Amortisation is recorded in operating costs. During the period of development, the asset is tested for impairment annually.
Cloud Computing Arrangement costs
Cloud computing arrangements are ones in which a customer does not have control of the underlying software and use the software on an as-needed basis.
Costs associated with cloud computing arrangements can be recognised as an intangible asset when the Group can demonstrate ultimate control over the
software, with the entity having the power to obtain sole future economic benefits from access to the software and restrict others’ access to those benefits.
Where the above criteria cannot be demonstrated, then the right to access the software over the contract term in the future is a service contract. If the Group
determines that a cloud computing arrangement is a service contract, then it recognises the related expenditure when it receives the service.
Impairment
Carrying values are reviewed for impairment if events indicate that the carrying value of the asset may not be recoverable. If such an indicator exists and where
the carrying values exceed the estimated recoverable amount, the assets or CGUs are written down to their recoverable amounts. An asset’s recoverable amount
is the greater of the fair value less costs to sell and the value in use. In assessing value in use, the estimated future cash flows are discounted to present value
using a pre-tax discount rate that reflects the current market assessments of the time value of money and risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. For
an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the smallest CGUs to which the asset belongs.
The Group bases its impairment calculation on most recent management approved budgets and forecast calculations, which are prepared separately for each
of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of two years. A long-term
growth rate is calculated and applied to project future cash flows after the second year.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment
losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Impairment losses, and any reversal of such losses, are recognised in the Income Statement.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low value assets. The Group
recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
a) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-
use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less
any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
b) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the
period in which the event or condition that triggers the payment occurs. The lease payment also includes the exercise price of a purchase option reasonably
certain to be exercised by the Group and payment of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.
Extensions to leases are recognised when it is reasonably certain the option is going to be exercised.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate
implicit in the lease is not readily determinable. The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term
or a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments).
The Group’s lease liabilities are included in Cash, Borrowings and Net Debt (see note 21).
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c) Short-term leases and leases of low value assets
The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e., those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase option). It also applies the lease of low value assets recognition exemption to leases of office
equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-
line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental
income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the Income Statement due to its operating nature.
Assets held for sale and discontinued operations
Assets are classified as held for sale when the carrying amount will be recovered principally through a sale transaction rather than continuing use. The criteria
for held for sale classification are regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its
present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision
to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date
of the classification.
Assets held for sale are valued at the lower of the carrying amount and fair value less costs to sell. No depreciation is charged whilst assets are classified as
held for sale.
In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, results for the discontinued operations are presented separately
in the Group’s Income Statement (for which the comparatives and related notes have been restated). Additional disclosures are provided in note 19. All other
notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the “Average Weighted Cost” method. Net realisable value is
the estimated selling price in the ordinary course of business less estimated costs of completion and the costs to be incurred in marketing, selling and
distribution.
Financial instruments
Initial recognition and derecognition
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial
assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks
and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Financial assets
Recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (“OCI”) and
fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics
and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which
the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price in
accordance with IFRS 15.
There are three measurement categories into which the Group classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are
measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or
loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses.
Impairment losses are presented as separate line item in the statement of profit or loss. The Group’s cash and cash equivalents, trade and other receivables
fall into this category.
• Fair value through OCI (“FVOCI”): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash
flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI and will be
recycled upon derecognition of the asset.
• Fair value through profit or loss (“FVPL”): Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.
124 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
Impairment
IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the expected credit loss (“ECL”) model.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead, the Group considers a broader range of
information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable
forecasts that affect the future cash flows of the instrument.
When assessing impairment for trade receivables, the Group has applied the simplified approach to expected credit losses as per IFRS 9 Financial Instruments.
The model focuses on an appraisal of the risk that a receivable will default rather than whether a loss has been incurred. This involves an unbiased assessment
of a range of possible outcomes and their probabilities of occurrence, and is supported by past experience of collecting payments as well as changes in
economic conditions that correlate with default on receivables. Expected credit losses are initially determined based on the Group’s historical credit loss
experience, any forward-looking factors specific to a particular trade receivable and the current economic environment.
The timing of initial recognition for impairment losses is the same period that the asset is recognised. Movements in expected credit losses are recognised
in the Income Statement within operating costs. At the point a trade receivable is written off the ledger as uncollectable, the cost is charged against the
allowance account and any subsequent recoveries of amounts previously written off are credited to the Income Statement.
In the Parent Company, amounts due from subsidiary undertakings are recognised at their original amount less allowance for impairment based on the ECL
model. In determining the model, the Company considers the net assets and the resources available to that subsidiary.
Financial liabilities
Recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables or as derivatives
designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, derivative financial instruments and
lease liabilities.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
• Financial liabilities at fair value through profit or loss which are measured subsequently at fair value with gains or losses recognised in the Income Statement
• Financial liabilities at amortised cost (loans and borrowings) which are measured using the effective interest method.
Bank loans, overdrafts and debentures
Interest bearing bank loans, overdrafts and debentures are initially recorded at the fair value of proceeds received, net of direct issue costs, and thereafter at
amortised cost. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an effective interest
rate basis in the Income Statement. Finance charges are added to the carrying amount of the instrument to the extent that they are not settled in the period
in which they arise.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable
legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Derivative financial instruments and hedge accounting
Recognition and measurement
The Group uses interest rate swaps to hedge its interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date
on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value
is positive and as financial liabilities when the fair value is negative.
For the purpose of hedge accounting, hedges are classified as:
• Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment
• Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset
or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment
• Hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting
and the risk management objective and strategy for undertaking the hedge.
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The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess
whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge
ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
• There is “an economic relationship” between the hedged item and the hedging instrument
• The effect of credit risk does not “dominate the value changes” that result from that economic relationship
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the
quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below.
The Group has interest rate swaps which are classified as cash flow hedges. The effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges is recognised in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss, within other gains/(losses). Amounts previously recognised in other comprehensive income and accumulated in equity
are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. If cash flow hedge
accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated OCI if the hedged future cash flows are still expected to
occur. Otherwise, the amount will be immediately reclassified to profit or loss as a reclassification adjustment. When a hedging instrument expires, or is sold or
terminated, or when a hedge no longer meets the criteria for hedge accounting, but the risk management objective remains the same, the hedge ratio is
adjusted so that it meets the qualifying criteria again.
Classification of shares as debt or equity
When shares are issued, any component that creates a financial liability of the Company or Group is presented as a liability in the Balance Sheet; measured
initially at fair value net of transaction costs and thereafter at amortised cost until extinguished on conversion or redemption. The corresponding dividends
relating to the liability component are charged as interest expense in the Income Statement. The initial fair value of the liability component is determined using
a market rate for an equivalent liability without a conversion feature.
The remainder of the proceeds on issue is allocated to the equity component and included in shareholders’ equity, net of transaction costs. The carrying amount
of the equity component is not remeasured in subsequent years.
The Group’s ordinary shares are classified as equity instruments. For the purposes of the disclosures given in note 25, the Group considers its capital to
comprise its ordinary share capital, share premium, capital redemption reserve, hedging reserve and accumulated retained earnings plus its preference shares
which are classified as a financial liability in the Balance Sheet. There have been no changes to what the Group considers to be capital since the prior year.
Preference shares
The Group’s preference shares are reported under non-current liabilities. The corresponding dividends on preference shares are charged as interest in the
Income Statement. Preference share dividends are at fixed rates.
Revenue
Revenue is recognised under IFRS 15 upon application of the following steps:
• Identify the contract with a customer
• Identify the performance obligations in the contract
• Determine the transaction price
• Allocate the transaction price to each performance obligation
• Recognise revenue when a performance obligation is satisfied by transferring a promised good or service to a customer.
Managed Pubs and Hotels revenue primarily consists of food, drink and accommodation sales. Food and drink revenue is recognised when control of the goods/
services has transferred, being at the point the customer purchases the food or drink. The Group also takes bookings for events and accommodation which
require a deposit to secure the booking. A contract liability for the deposit is recognised at the time of the sale. The contract liability is released and revenue is
recognised on a straight-line basis over the duration of the room occupation or event. A contract liability is recognised until the event is complete or the guest
has occupied the room.
The Group also earns revenue through selling drink to the Tenanted Inns division which is supplied to Fuller’s by Asahi under the Long-Term Supply Agreement
(“LTSA”). Revenue is recognised as though the Group is the principal as it has primary responsibility over the product and also bears the inventory risk.
Revenue is recognised under IFRS 16 where the Group receives rental income from Tenanted and unlicensed properties. This is recognised on a straight-line
basis over the lease term. Some rental income includes turnover rent which is based on the percentage of the income generated by that pub. This is recognised
when the revenue is earned. Revenue is recognised for machine income when net takings are earned.
126 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of an asset that takes a substantial period of time to get ready for use are capitalised as
part of the cost of the asset being created. This is applied to development projects where the development is expected to last in excess of six months at the
commencement of the project. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds.
Separately disclosed items
The Group presents as separately disclosed items on the face of the Income Statement 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, so as to facilitate comparison with prior periods and to better assess trends in financial performance. Separately disclosed
items are a key element used to demonstrate the underlying performance of the Group and reported as an alternative performance measure within the
management commentary for the reporting period.
Share-based payments
The Group has an employee Share Incentive Plan that awards shares to employees based on the reported profits of the Group for the year, and a Long-Term
Incentive Plan that awards shares to Directors and Senior Executives subject to specific performance criteria. The Group also issues equity-settled share-based
payments to certain employees under approved and unapproved share option schemes and a Savings Related Share Option Scheme.
The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are
granted and is recognised as an expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award.
Fair value is determined using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions. The Group has
no equity-settled transactions that are linked to the price of the shares of the Company (market conditions).
No expense is recognised for awards that do not ultimately vest. At each Balance Sheet date before vesting, the cumulative expense is calculated, representing
the extent to which the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions and of the
number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous Balance Sheet date is recognised in the Income
Statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting
period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified
award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.
Where an equity-settled award is cancelled (including when a non-vesting condition within the control of the entity or employee is not met), it is treated as if
it had vested on the date of cancellation, and any cost not yet recognised in the Income Statement for the award is expensed immediately. Any compensation
paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an
expense in the Income Statement.
Own shares
Shares to be awarded under employee incentive plans and those that have been awarded but have yet to vest unconditionally are held at cost by an employee share
ownership trust (“ESOT”) and shown as a deduction from equity in the Balance Sheet. ESOT is an independently managed trust and not controlled by the Group.
In addition to the purchase of shares by the various ESOTs for specific awards, the Group also from time to time acquires own shares to be held as treasury
shares. These shares are occasionally but not exclusively used to satisfy awards under various share option schemes. Treasury shares are held at cost and
shown as a deduction from total equity in the Balance Sheet.
Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being
taken to reserves. No gain or loss is recognised in the profit or loss on the purchase, sale, issue or cancellation of treasury shares.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The current tax payable is based on taxable profit for the year using UK tax rates enacted or substantively enacted at the Balance Sheet date and any
adjustment to tax payable in respect of previous years. Taxable profit differs from net profit as reported in the Income Statement because it excludes
items of income or expense that are taxable or deductible in other years or are never taxable or deductible.
Deferred tax
Deferred tax is recognised on temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences,
carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which they can be utilised.
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Such deferred tax assets and liabilities are not recognised where the asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. The carrying
amount of deferred tax assets is reviewed at each Balance Sheet date.
Deferred tax is not recognised in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax
balance relates to the same taxation entities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the periods when the asset is realised or the liability is settled,
based on tax rates and laws enacted or substantively enacted at the Balance Sheet date.
Current and deferred tax for the year
Current and deferred tax are recognised in the Income Statement except when they relate to items that are recognised in the Statement of Comprehensive
Income or in equity, in which case the current and deferred tax are also recognised in the Statement of Comprehensive Income or directly in equity respectively.
Pensions and other post-employment benefits
Defined contribution schemes
Payments to defined contribution retirement benefit schemes are charged to the Income Statement as they fall due.
Defined benefit schemes
The Group operated a defined benefit pension plan for eligible employees where contributions were made into a separate fund administered by Trustees. The
Scheme closed to future accrual in January 2015.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method calculated by qualified actuaries. This
attributes entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine the present value of
defined benefit obligation) and is based on actuarial advice. Past service cost is recognised as an expense at the earlier of the date when a plan amendment or
curtailment occurs and the date when an entity recognises any termination benefits, or related restructuring costs under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets.
When a settlement (eliminating all obligations for benefits already accrued) or a curtailment (reducing future obligations as a result of a material reduction in
the scheme membership or a reduction in future entitlement) occurs, the obligation and related plan assets are remeasured using current actuarial assumptions
and the resultant gain or loss is recognised in the Income Statement during the period in which the settlement or curtailment occurs.
The Group determines the net interest charge/(credit) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure
the defined benefit obligation at the beginning of the period to the net pension liability/(asset) at the beginning of the period. The net interest charge/(credit)
is recognised immediately as a separately disclosed finance cost/(income) in the Income Statement. Actuarial gains and losses are recognised in full in the
Statement of Comprehensive Income in the period in which they occur.
The defined benefit pension asset or liability in the Balance Sheet comprises the total of the present value of the defined benefit obligation (using a discount
rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on
market price information and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is restricted to the sum of the
present value of any amount the Group expects to recover by way of refunds from the plan or reductions in the future contributions.
Foreign currencies
Transactions denominated in foreign currencies are recorded at the rates of exchange ruling at the dates of the transactions. Monetary assets and liabilities are
translated at the year end exchange rates and the resulting exchange differences are taken to the Income Statement.
Dividends
Dividends recommended by the Board but unpaid at the year end are not recognised in the financial statements until they are paid (in the case of the interim
dividend) or approved by shareholders at the Annual General Meeting (in the case of the final dividend).
128 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
The Company’s investments in subsidiaries
In its separate financial statements, the Parent Company recognises its investment in its subsidiaries on the basis of cost less provision for impairment.
New standards and interpretations issued but not yet applied
The International Accounting Standards Board and International Financial Reporting Interpretations Committee have issued the following standards and
interpretations with an effective date for periods starting on or before the date on which these financial statements start:
• Amendments to IAS 1: Classification of Liabilities as Current and Non-current (effected 1 January 2023)
• Reference to the Conceptual Framework – Amendments to IFRS 3 (effected 1 January 2022)
• Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 (effected 1 January 2022)
• IFRS 17 Insurance Contracts (effected 1 January 2023)
• Onerous Contract – Costs of Fulfilling a Contract – Amendments to IAS 37 (effected 1 January 2022)
• Definition of Accounting Estimates – Amendments to IAS 8 (effected 1 January 2022)
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 (effected 1 January 2022)
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 (effected 1 January 2022)
• IFRS 9 Financial Instruments – Fees in the “10 per cent” test for derecognition of financial liabilities (effected 1 January 2022).
The adoption of the above standards have not lead to material effect in the financial statements. Other new standards and interpretations in issue but not yet
effective are not applicable to the Company and therefore are not expected to have material impact on the Group’s financial position and results.
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). More details of these segments are given in the Strategic Report on pages 1 to 65 of this report.
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.
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53 weeks ended 1 April 2023
Managed Pubs and
Hotels
£m
Tenanted
Inns
£m
Unallocated
1
£m
Total continuing
operations
£m
Revenue
Sale of goods and services 271.6 21.2 – 292.8
Accommodation income 33.7 – – 33.7
Total revenue from contracts with customers 305.3 21.2 – 326.5
Rental income 1.5 8.6 – 10.1
Revenue 306.8 29.8 – 336.6
Segment result 30.0 13.2 (18.1) 25.1
Operating separately disclosed items (14.2)
Operating profit 10.9
Profit on disposal of properties 11.8
Net finance costs (12.4)
Profit before tax 10.3
Other segment information
Additions to property, plant and equipment and intangible assets 25.2 4.7 0.1 30.0
Depreciation and amortisation 23.4 2.3 1.0 26.7
Impairment of property, right-of-use assets and assets classified as held for sale 12.5 1.8 – 14.3
52 weeks ended 26 March 2022
Managed Pubs and
Hotels
£m
Tenanted
Inns
£m
Unallocated
1
£m
Total continuing
operations
£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
1 Unallocated expenses represent primarily the salaries and costs of central management. Unallocated capital expenditure relates to additions to the head office and additions to IT
development costs.
130 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
3. Revenue
Geographical Information
All of the Group’s business is within the UK and therefore the Group only has one distinct geographical market.
53 weeks ended
1 April
2023
£m
52 weeks ended
26 March
2022
£m
Revenue disclosed in the Income Statement is analysed as follows:
Sale of goods and services 292.8 223.0
Accommodation income 33.7 21.9
Total revenue from contracts with customers 326.5 244.9
Rental income 10.1 8.9
Revenue 336.6 253.8
4. Operating Costs
53 weeks
ended
1 April 2023
£m
52 weeks
ended
26 March
2022
£m
Production costs and cost of goods used in retailing 72.2 57.9
Staff costs 119.1 96.2
Repairs and maintenance 8.5 8.5
Depreciation of property, plant and equipment and amortisation of intangible assets 19.6 18.1
Depreciation of right-of-use assets 7.1 7.7
Rental expense relating to short-term and low value leases 0.2 0.4
Variable lease payments
1
3.5 1.4
Property costs 18.0 14.4
Utilities 19.6 12.1
Separately disclosed items (note 5) 14.2 2.0
Grant income
2
– (5.4)
Other operating costs 43.7 24.0
325.7 237.3
1 Variable lease payments are dependent on turnover levels.
2 Grant income is amounts received from the Government to support businesses throughout the pandemic that were eligible depending on their rateable value.
Details of income and direct expenses relating to rental income from investment properties are shown in note 12.
a) Auditors’ Remuneration
53 weeks ended
1 April 2023
£m
52 weeks ended
26 March 2022
£m
Fees payable to Company’s auditors:
– Related to the audit of the Group and Company 0.5 0.4
0.5 0.4
Other audit related services of £5,000 (2022: £5,000) for covenant reporting and £45,000 (2022: £35,000) for interim review were also incurred in the period.
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 131
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66-104
4. Operating Costs continued
b) Employee Benefit Expenses
1
53 weeks ended
1 April 2023
£m
52 weeks ended
26 March 2022
£m
Wages and salaries
2,3
102.6 84.8
Social security costs 8.7 7.0
Pension benefits 2.2 1.9
Other staff costs
4
5.6 2.5
119.1 96.2
1 Includes Executive Directors.
2 Includes share-based credit of £0.4 million (2022: debit £0.8 million).
3 Prior year staff costs are stated net of £4.3 million claimed from the Government through the CJRS.
4 Includes temporary staff costs of £5.0 million.
c) Average Number of Employees
1
The average monthly number of persons employed by the Group (including part-time staff) was as follows:
2023
Number
2022
Number
Pub, hotel and restaurant teams 5,138 4,118
Support office
2
109 122
5,247 4,240
1 Includes Executive Directors.
2 Support office includes Finance, People Team, IT and other central functions.
d) Directors’ Emoluments
Full details are provided in the Directors’ Remuneration Report and tables on pages 86 to 100.
5. 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.
53 weeks ended
1 April 2023
£m
52 weeks ended
26 March 2022
£m
Amounts included in operating profit:
Reorganisation costs (0.5) (0.8)
Impairment of properties, right-of-use assets and assets classified as held for sale (note 13) (14.3) (3.3)
Insurance claim (0.2) –
VAT provision release 0.8 –
Adjustment related to settlement of the Beer Business – 2.1
Total separately disclosed items included in operating profit (14.2) (2.0)
Profit on disposal of properties 11.8 6.3
Separately disclosed finance credits:
Finance credit on net pension liabilities 0.5 –
Finance charge on the write down of arrangement fees (0.5) –
Total separately disclosed finance credits – –
Total separately disclosed items before tax (2.4) 4.3
Exceptional tax:
Profit on disposal of properties (1.0) (1.3)
Change in tax rate 0.5 (3.3)
Other items 1.0 1.4
Total separately disclosed tax 0.5 (3.2)
Total separately disclosed items (1.9) 1.1
132 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
The reorganisation costs comprise £0.5 million in relation to corporate restructure during the 53 weeks ended 1 April 2023 (26 March 2022: £0.8 million).
The impairment charge of £14.3 million (26 March 2022: £3.3 million) relates to the write down of 22 properties to their recoverable value (26 March 2022:
six properties).
The insurance claim of £0.2 million is the write off of property, plant and equipment and the cost of the rectification work (£2.7 million) net of insurance monies
claimed (£2.5 million).
The VAT provision release to a VAT adjustment of £0.8 million. In the prior year, £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 profit on disposal of properties of £11.8 million during the 53 weeks ended 1 April 2023 (26 March 2022: £6.3 million) relates to the disposal of nine
licensed and unlicensed properties (26 March 2022: 12 properties).
The cash impact of operating separately disclosed items before tax for the 53 weeks ended 1 April 2023 was £0.5 million cash outflow (26 March
2022: £1.9 million cash outflow).
6. Finance Costs
53 weeks ended
1 April 2023
£m
52 weeks ended
26 March 2022
£m
Finance Income
Interest income from financial assets 0.2 –
Finance costs
Interest expense arising on:
Financial liabilities at amortised cost – loans and debentures (9.6) (8.1)
Financial liabilities at amortised cost – preference shares (0.1) (0.1)
Financial liabilities at amortised cost – lease liabilities (2.9) (3.1)
Net finance costs before separately disclosed items (12.4) (11.3)
Finance credit on net pension liabilities (note 5) 0.5 –
Finance charge on the write down of arrangement fees (0.5) –
Net finance costs after separately disclosed items (12.4) (11.3)
7. Ta xation
Tax on Profit on Ordinary Activities
Group
53 weeks ended
1 April 2023
£m
52 weeks ended
26 March 2022
£m
Tax charged in the Income Statement
Current income tax:
Current tax on profit for the year – 0.2
Adjustments for current tax on prior periods – 0.6
Total current income tax expense – 0.8
Deferred income tax:
Origination and reversal of temporary differences 3.6 2.2
Change in corporation tax rate – 3.3
Adjustments for deferred tax on prior periods (1.2) (1.9)
Total deferred tax expense 2.4 3.6
Total tax charged in the Income Statement 2.4 4.4
Analysed as:
Before separately disclosed items 2.9 1.2
Separately disclosed items (0.5) 3.2
2.4 4.4
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GOVERNANCE
66-104
7. Taxation continued
Reconciliation of the Total Tax Charge
The tax expense in the Income Statement for the year is higher (2022: tax credit is higher) than the standard rate of corporation tax in the UK of 19%
(2022: 19%). The differences are reconciled below:
53 weeks ended
1 April 2023
£m
52 weeks ended
26 March 2022
£m
Profit before income tax expense 10.3 11.5
Accounting profit multiplied by the UK standard rate of corporation tax of 19% (2021: 19%) 2.0 2.2
Items not deductible/(taxable) for tax purposes 0.2 (0.3)
Current and deferred tax (over) provided in previous years (1.2) (1.3)
Net movements in respect of property 1.4 0.5
Change in corporation tax rate – 3.3
Total tax charged in the Income Statement 2.4 4.4
Deferred tax relating to items charged/(credited) to the Income Statement
Deferred tax depreciation 1.5 (0.8)
Unrealised capital gains (on PP&E) 1.7 5.2
Retirement benefit obligations 1.8 1.6
Tax losses 0.7 (2.8)
Other (3.4) (0.7)
Corporate interest restriction 0.1 1.1
Deferred tax in the Income Statement 2.4 3.6
Tax relating to items (credited)/charged to the Statement of Comprehensive Income
Deferred tax:
Valuation gains on financial liabilities – 0.1
Net actuarial (losses)/gains on pension scheme (0.6) 3.8
Total tax (credited)/charged in the Statement of Comprehensive Income (0.6) 3.9
Tax relating to items charged/(credited) directly to equity
Deferred tax:
Share-based payments 0.2 (0.1)
Total tax charged/(credited) to equity 0.2 (0.1)
134 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
Deferred Tax Provision
The deferred tax included in the Balance Sheet is as follows:
Deferred tax
Deferred tax asset/(liability)
Group
Retirement
benefit
obligations
£m
Tax losses
carried forward
£m
Employee share
schemes
£m
Financial
(liabilities)/
assets
£m
Decelerated tax
depreciation
£m
Unrealised
capital gains
(on PP&E)
£m
Pension
spreading
£m
Other
1
£m
Total
£m
Balances at 27 March 2021 0.7 7.8 0.1 0.1 4.1 (22.3) 2.3 1.9 (5.3)
(Charge)/credit to Income Statement (0.4) 2.8 0.1 – 0.8 (5.2) (1.2) (0.5) (3.6)
(Charge) to other comprehensive
income (3.8) – – (0.1) – – – – (3.9)
Credit taken directly to equity – – 0.1 – – – – – 0.1
Recategorisation – – – – – 0.4 – (0.4) –
Balances at 26 March 2022 (3.5) 10.6 0.3 – 4.9 (27.1) 1.1 1.0 (12.7)
(Charge)/credit to Income Statement (0.8) (0.7) (0.1) – (1.5) (1.7) (1.0) 3.4 (2.4)
Credit to other comprehensive
income 0.6 – – – – – – – 0.6
(Charge) taken directly to equity – – (0.2) – – – – – (0.2)
Balances at 1 April 2023 (3.7) 9.9 – – 3.4 (28.8) 0.1 4.4 (14.7)
1 Includes £4.3 million of timing difference between tax and accounting treatment of capital disposals
2023
£m
2022
£m
Deferred tax assets 17.8 18.5
Deferred tax liabilities (32.5) (31.2)
(14.7) (12.7)
Deferred tax asset/(liability)
Company
Retirement
benefit
obligations
£m
Tax losses
carried forward
£m
Employee share
schemes
£m
Financial
(liabilities)/
assets
£m
Decelerated tax
depreciation
£m
Unrealised
capital gains
(on PP&E)
£m
Pension
spreading
£m
Other
1
£m
Total
£m
Balances at 27 March 2021 0.7 7.7 0.1 0.1 4.1 (22.3) 2.3 1.9 (5.4)
(Charge)/credit to Income Statement (0.4) 2.8 0.1 – 0.8 (5.2) (1.2) (0.5) (3.6)
(Charge)/credit to other
comprehensive income (3.8) – (0.1) – – – – (3.9)
Credit taken directly to equity – – 0.1 – – – – – 0.1
Recategorisation – – – – – 0.4 – (0.4) –
Balances at 26 March 2022 (3.5) 10.5 0.3 – 4.9 (27.1) 1.1 1.0 (12.8)
(Charge)/credit to Income Statement (0.8) (0.7) (0.1) – (1.7) (0.7) (1.0) 3.4 (2.4)
Credit to other comprehensive
income 0.6 – – – – – – – 0.6
Credit taken directly to equity – – (0.2) – – – – – (0.2)
Balances at 1 April 2023 (3.7) 9.9 – – 3.4 (28.8) 0.1 4.4 (14.7)
1 Includes £4.3 million of timing difference between tax and accounting treatment of capital disposals
2023
£m
2022
£m
Deferred tax assets 17.8 18.4
Deferred tax liabilities (32.5) (31.2)
(14.7) (12.8)
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 135
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8. Earnings Per Share
Group
53 weeks
ended
1 April
2023
£m
52 weeks
ended
26 March
2022
£m
Profit attributable to equity shareholders 7.9 7.1
Separately disclosed items net of tax 1.9 (1.1)
Adjusted earnings attributable to equity shareholders 9.8 6.0
Weighted average share capital 60,875,000 61,264,000
Dilutive outstanding options and share awards 90,000 413,000
Diluted weighted average share capital 60,965,000 61,677,000
40p ‘A’ and ‘C’ ordinary share Pence Pence
Basic earnings per share 12.98 11.59
Diluted earnings per share 12.96 11.51
Adjusted earnings per share 16.10 9.79
Diluted adjusted earnings per share 16.07 9.73
4p ‘B’ ordinary share Pence Pence
Basic earnings per share 1.30 1.16
Diluted earnings per share 1.30 1.15
Adjusted earnings per share 1.61 0.98
Diluted adjusted earnings per share 1.61 0.97
For the purposes of calculating the number of shares to be used above, ‘B’ shares have been treated as one-tenth of an ‘A’ or ‘C’ share. The earnings per share
calculation is based on earnings from continuing operations and on the weighted average ordinary share capital which excludes shares held by trusts relating to
employee share options and shares held in treasury of 2,134,152 (2022: 1,744,564).
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.
9. Dividends
53 weeks ended
1 April
2023
£m
52 weeks ended
26 March
2022
£m
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2022: 7.41p (2021: 0p) 4.6 –
Interim dividend for 2023: 4.68p (2022: 3.90p) 2.8 2.4
Equity dividends paid 7.4 2.4
Dividends on cumulative preference shares (note 6) 0.1 0.1
Proposed for approval at the Annual General Meeting
Final dividend for 2023: 10.0p (2022: 7.41p) 6.1 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.
136 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
10. Intangible Assets
Group and Company
Goodwill
£m
IT Development
costs
£m
Group
Total
£m
Company
Total
£m
Cost
At 27 March 2021 31.8 0.6 32.4 4.2
Additions – 2.4 2.4 2.4
At 26 March 2022 31.8 3.0 34.8 6.6
At 1 April 2023 31.8 3.0 34.8 6.6
Amortisation and impairment
At 27 March 2021 5.1 – 5.1 0.2
Provided during the year – 0.2 0.2 0.2
At 26 March 2022 5.1 0.2 5.3 0.4
Provided during the year – 0.5 0.5 0.5
At 1 April 2023 5.1 0.7 5.8 0.9
Net book value at 1 April 2023 26.7 2.3 29.0 5.7
Net book value at 26 March 2022 26.7 2.8 29.5 6.2
Net book value at 27 March 2021 26.7 0.6 27.3 4.0
IT Development costs
Costs are capitalised as IT development costs where it is deemed that the Group has control of the underlying asset. IT development costs relate to the implementation of
a new finance system and are made up of consulting time and internal employee costs. Amortisation is recognised over the useful life of the asset of five years.
Goodwill
2023 2022
Goodwill is allocated to CGUs as follows:
Managed
£m
Tenanted
£m
Total
£m £m
Gales estate 9.1 13.6 22.7 22.7
Jacomb Guinness estate 0.6 – 0.6 0.6
Bel & The Dragon 1.0 – 1.0 1.0
Cotswold Inns & Hotels 2.4 – 2.4 2.4
13.1 13.6 26.7 26.7
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11. Property, Plant and Equipment
Group
Land &
buildings –
owned & used
£m
Land &
buildings –
owned &
acting as
lessor
£m
Plant,
machinery &
vehicles
£m
Fixtures &
fittings
£m
Total
£m
Cost
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 (note 19) (1.5) – – (0.4) (1.9)
Transfer from assets held for sale (note 19) 2.4 – – 0.6 3.0
At 26 March 2022 493.6 109.6 6.3 179.5 789.0
Additions 12.0 2.3 – 15.7 30.0
Disposals (1.4) (0.3) – (6.6) (8.3)
Transfer to assets held for sale (note 19) (7.8) – – (1.4) (9.2)
At 1 April 2023 496.4 111.6 6.3 187.2 801.5
Depreciation and impairment
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 (note 19) (0.1) – – (0.3) (0.4)
Transfer from assets held for sale (note 19) – – – 0.5 0.5
At 26 March 2022 54.9 10.3 1.7 129.4 196.3
Provided during the year 4.8 1.0 – 13.3 19.1
Disposals (0.8) – – (6.3) (7.1)
Impairment loss (note 13) 13.4 – – – 13.4
Transfer to assets held for sale (note 19) (2.3) – – (1.2) (3.5)
At 1 April 2023 70.0 11.3 1.7 135.2 218.2
Net book value at 1 April 2023 426.4 100.3 4.6 52.0 583.3
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
138 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
Company
Land &
buildings
– owned &
used
£m
Land &
buildings –
owned &
acting as
lessor
£m
Plant,
machinery &
vehicles
£m
Fixtures &
fittings
£m
Total
£m
Cost
At 27 March 2021 479.2 107.8 4.8 171.2 763.0
Additions 11.3 1.8 – 9.6 22.7
Disposals (1.3) – – (1.9) (3.2)
Transfer to assets held for sale (note 19) (1.5) – – (0.4) (1.9)
Transfer from assets held for sale (note 19) 2.4 – – 0.6 3.0
At 26 March 2022 490.1 109.6 4.8 179.1 783.6
Additions 12.0 2.3 – 15.7 30.0
Disposals (1.4) (0.3) – (6.6) (8.3)
Transfer to assets held for sale (note 19) (7.8) – – (1.4) (9.2)
At 1 April 2023 492.9 111.6 4.8 186.8 796.1
Depreciation and impairment
At 27 March 2021 44.6 9.7 2.5 116.0 172.8
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 (note 19) (0.1) – – (0.3) (0.4)
Transfer from asset held for sale – – – 0.5 0.5
At 26 March 2022 50.7 10.3 2.5 127.4 190.9
Provided during the year 4.8 1.0 – 13.3 19.1
Disposals (0.8) – – (6.3) (7.1)
Impairment loss 13.4 – – – 13.4
Transfer to assets held for sale (note 19) (2.3) – – (1.2) (3.5)
At 1 April 2023 65.8 11.3 2.5 133.2 212.8
Net book value at 1 April 2023 427.1 100.3 2.3 53.6 583.3
Net book value at 26 March 2022 439.4 99.3 2.3 51.7 592.7
Net book value at 27 March 2021 434.6 98.1 2.3 55.2 590.2
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12. Investment Properties
Group and
Company
Freehold and
leasehold properties
£m
Cost at 27 March 2021 3.3
Transfer to assets held for sale (1.5)
Disposals (0.1)
Cost at 26 March 2022 1.7
Disposals (0.1)
At 1 April 2023 1.6
Depreciation and impairment at 27 March 2021 0.2
Provided during the year –
Transfer to asset held for sale (0.1)
At 26 March 2022 0.1
Provided during the year –
At 1 April 2023 0.1
Net book value at 1 April 2023 1.5
Net book value at 26 March 2022 1.6
Net book value at 27 March 2021 3.1
Fair value at 1 April 2023 6.7
Fair value at 26 March 2022 8.4
Fair value at 27 March 2021 15.0
The fair value of investment properties has been estimated by the Directors, based on the rental income earned on the properties during the year and average
yields earned on comparable properties from publicly available information, which is a Level 3 fair value valuation technique. An independent valuation of the
properties has not been performed.
Impairment
The Group considers each trading outlet to be a CGU and each CGU is reviewed annually 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 and its
value in use. During the 53 weeks ended 1 April 2023, the Group did not impair any investment properties (2022: £nil).
Management have determined that the highest and best use of the property is its current use.
Investment Property Income
The properties are let on both landlord and tenant repairing leases. Amounts recognised in the profit for the financial year relating to rental income from
investment properties are as follows:
Group and Company
2023
£m
2022
£m
Rental income 0.3 0.4
Direct operating expenses – (0.1)
All direct operating expenses relate to properties that generate rental income.
140 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
13. Impairment
During the year, impairment losses of £14.3 million (2022: £3.3 million) were recognised within separately disclosed items:
Group
2023
£m
2022
£m
Impairment losses
Property, plant and equipment 13.4 3.3
Right-of-use assets 0.5 –
Assets held for sale 0.4 –
Total net impairment charge 14.3 3.3
Company
2023
£m
2022
£m
Impairment losses
Property, plant and equipment 13.4 3.3
Right-of-use assets 0.5 –
Assets held for sale 0.4 –
Investments in subsidiaries
1
– 0.2
Total net impairment charge 14.3 3.5
1 Investment of Cotswold Inns & Hotels was impaired by £0.4 million as the majority of the trade and assets have been hived up into the Parent Company (2022: £0.2 million).
Property, Plant and Equipment and Right-of-use Assets
The Group considers each trading outlet to be a CGU and each CGU is reviewed annually 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. In the absence of any information about the fair value of a CGU, the recoverable amount is deemed to be its value in use. 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 three year period.
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. The Group has also obtained valuations for a subset of these CGUs from a third party property valuation
expert. Both FVLCS methods rely on inputs not normally observable by market participants and are therefore Level 3 measurements in the fair value hierarchy.
The key assumptions used by management in setting the Board approved financial budgets for the initial three year period were as follows:
• Trading volumes and forecast growth rates: the forecasts make assumptions on trading volumes by site based on the FY2023 results, assumptions around
the UK economic recovery and the on-going impact on consumer confidence
• Operating profits: the forecast are based on historical experience of operating margins, adjusted for the impact of inflation most notably food, utilities, and
wage inflation. The forecast assumes some of these cost pressures to abate as we move through FY2024 and into FY2025
• Local factors impacting the site in the current year or expected to impact the site in future years. Key assumptions include the future potential of recently
invested sites and the impact of increasing or reducing market supply in the local area.
Other assumptions used:
• A long-term growth rate of 2.0% (2022: 2.0%) was used for cash flows subsequent to the three year approved budget/forecast period.
• An EBITDA multiple is estimated based on a normalised trading basis and market data obtained from external sources. An average multiple of 10.5x (freehold
11.8x) is used 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 10.3% (2022: 8.6%).
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.
During the 53 weeks ended 1 April 2023, the Group recognised an impairment loss of £13.4 million (FY2022: £3.3 million) on property, plant and equipment
and £0.5 million (FY2022: £nil million) of impairment on right-of-use assets in respect of the write down of twenty two licensed properties where their asset
values exceeded the higher of FVLCS or their value in use. The impairment losses were driven principally by changes in the local competitive environment in
which the pubs are situated.
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13. Impairment continued
Sensitivity to Changes in Assumptions
The calculation of value in use is most sensitive to the assumptions in respect of achievement of budgeted cash flows, growth rate and discount rate. The
calculation of value in use is also dependent on the following assumptions: sales volume; gross margin in Managed premises; barrelage and rent projections
in Tenanted premises; and wage cost in Managed premises. The key assumptions above have their assigned values based on management knowledge and
historical information. 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 impact is set out as follows:
Impact on impairment of assets at risk – increase/(decrease)
2023
£m
2022
£m
Increase discount rate by 1.5% 24.7 11.1
Decrease discount rate by 1.5% (15.8) (4.4)
Increase growth rate by 0.5% (5.3) (1.5)
Decrease growth rate by 0.5% 6.7 3.3
The value in use calculation is also sensitive to variations in the budgeted cash flows, which represents the rate of recovery from the pandemic, the inflationary
environment and the consumer behaviour as a result of it. The CGUs represented by the “impact on impairment of assets at risk” would have their FVLCS
determined in order to conclude 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 £1.9 million for the CGUs where recoverable amount has been assessed on FVLCS.
Goodwill
Goodwill acquired through business combinations has been allocated for impairment testing on an estate and divisional CGU level. This represents the lowest
level within the Group at which goodwill is monitored for internal management purposes. An analysis of goodwill by operating segment is included within note
10. Recoverable amount is based on a calculation of value in use based upon the same cash flows as discussed under property, plant and equipment. Cash
flows beyond the budget period are extrapolated in perpetuity on the assumption that the growth rate does not exceed the average long-term growth rate for
the relevant markets. The same assumptions to calculate the value in use are used for goodwill as those for property, plant and equipment.
Sensitivity to Changes in Assumptions
Management have considered reasonable changes in key assumptions used in their calculations of value in use. An increase of 1.5% in the discount rate or
decrease in the growth of 0.5% would not result in an impairment.
Investment Property
The Group considers each trading outlet to be a CGU and each CGU is reviewed annually for indicators of impairment. During the 53 weeks ended 1April 2023,
the Group did not impair any investment properties (2022: £nil). Refer to note 12.
14. Other Financial Assets and Liabilities
Group and Company
Group
2023
£m
Group
2022
£m
Company
2023
£m
Company
2022
£m
Interest rate cap and collar 0.1 – 0.1 –
Interest rate swaps – (0.1) – (0.1)
Total financial assets/(liabilities) within non-current assets/(liabilities) 0.1 (0.1) 0.1 (0.1)
Details of the interest rate cap and collar and interest rate swaps are provided in note 25c (i).
142 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Notes to the Financial Statements
Continued
15. Investments in Subsidiaries
Company
Cost
£m
Provision
£m
Net book value
£m
At 27 March 2021 120.8 (11.5) 109.3
Impairment – (0.2) (0.2)
At 26 March 2022 120.8 (11.7) 109.1
Impairment – (0.4) (0.4)
At 1 April 2023 120.8 (12.1) 108.7
Principal subsidiary undertakings Holding Proportion held Nature of business
Griffin Catering Services Limited £1 ordinary shares 100% (indirect) Managed houses service company
George Gale and Company Limited £1 ordinary shares 100% Non-trading subsidiary
25p ‘A’ ordinary shares 100%
£10 preference shares 100%
F.S.T. Trustee Limited £1 ordinary shares 100% Non-trading subsidiary
Fuller Smith & Turner Estates Limited £1 ordinary shares 100% Non-trading subsidiary
Ringwoods Limited £1 ordinary shares 100% Non-trading subsidiary
Griffin Inns LTD. £1 ordinary shares 100% Non-trading subsidiary
Jacomb Guinness Limited £1 ordinary shares 100% Non-trading subsidiary
45 Woodfield Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
Grand Canal Trading Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
B & D Country Inns I Limited £1 ordinary shares 100% Holding company
B & D Country Inns II Limited £1 ordinary shares 100% Holding company
B & D (Cookham) Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
B & D (Farnham) Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
B & D (Kingsclere) Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
B & D (Odiham) Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
B & D (Reading) Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
B & D (Win) Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
RSH 200 Limited £1 ordinary shares 100% Holding company
Cotswold Inns and Hotels Limited £1 ordinary shares 100% (indirect) Non-trading subsidiary
The above companies are registered and operate in England and Wales. The registered office of all subsidiary companies is the same as Fuller, Smith & Turner
P.L.C. at Pier House, 86-93 Strand-on-the-Green, London, England, W4 3NN.
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Notes to the Financial Statements
Continued
144 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
16. Leases
This note provides information for leases where the Group is a lessee. For leases where the Group is a lessor, see note 28.
a) Amounts Recognised in the Balance Sheet
Group and Company
Group
2023
£m
Group
2022
£m
Company
2023
£m
Company
2022
£m
Right-of-use assets
Properties 66.2 73.1 65.8 72.6
Equipment 0.2 0.6 0.2 0.6
Vehicles – 0.1 – 0.1
66.4 73.8 66.0 73.3
Lease liabilities
Current 4.8 6.8 4.7 6.5
Non-current 67.0 73.9 66.6 72.8
71.8 80.7 71.3 79.3
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Group
Property
£m
Equipment
£m
Vehicles
£m
Total
£m
Net carrying value at 27 March 2021 81.3 0.2 0.4 81.9
Lease amendments- rent concessions (2.6) – – (2.6)
Lease amendments
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
Disposals (1.0) – – (1.0)
Lease amendments
1
1.3 – (0.1) 1.2
Depreciation (6.7) (0.4) – (7.1)
Impairment (0.5) – – (0.5)
Net carrying value as at 1 April 2023 66.2 0.2 – 66.4
Company
Property
£m
Equipment
£m
Vehicles
£m
Total
£m
Net carrying value at 27 March 2021 80.8 0.2 0.4 81.4
Lease amendments- rent concessions (2.6) – – (2.6)
Lease amendments1 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 72.6 0.6 0.1 73.3
Disposals (1.0) – – (1.0)
Lease amendments
1
1.3 – (0.1) 1.2
Depreciation (6.6) (0.4) – (7.0)
Impairment (0.5) – – (0.5)
Net carrying value as at 1 April 2023 65.8 0.2 – 66.0
1 Lease amendments include lease terminations, modifications, reassessments and extensions to existing lease agreements.
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Set out below are the carrying amounts of lease liabilities (included under interest bearing loans and borrowings) and the movements during the period:
Group
£m
Company
£m
Net carrying value at 27 March 2021 89.9 88.3
Disposals (3.1) (3.1)
Lease amendments- rent concessions (2.6) (2.6)
Lease amendments
1
2.2 2.2
Accretion of interest 3.1 3.0
Payments (8.8) (8.5)
Net carrying value as at 26 March 2022 80.7 79.3
Disposal (3.1) (2.3)
Lease amendments
1
1.2 1.2
Accretion of interest 2.9 2.9
Payments
2
(9.9) (9.8)
Net carrying value as at 1 April 2023 71.8 71.3
1 Lease amendments include lease terminations, modifications, reassessments and extensions to existing lease agreements.
2 £1.5 million of the payments were payments in advance for FY2024.
A maturity analysis of gross lease liability payments is included within note 25.
b) Amounts Recognised in the Income Statement
Group
53 weeks
ended
01 April
2023
£m
52 weeks
ended
27 March
2022
£m
Depreciation charge on right-of-use assets
Properties 6.7 6.9
Equipment 0.4 0.7
Vehicles – 0.1
7.1 7.7
Interest expense (included in finance cost) 2.9 3.1
Expense relating to short-term leases and low value assets (included in operating costs) 0.2 0.4
Expense relating to variable lease payments not included in lease liabilities (included in operating costs) 3.5 1.4
Impairment of right-of-use assets 0.5 –
Income from sub leasing right-of-use assets (0.2) (0.2)
6.9 4.7
The Group’s total cash outflow in relation to leases in 2023 was £9.9 million (2022: £8.6 million).
Variable lease payments
Some property leases contain variable payment terms that are linked to sales generated from a pub. Variable payment terms are used for a variety of reasons,
including minimising the fixed costs base for newly established pubs. Variable lease payments that depend on sales are recognised in profit or loss in the period
in which the condition that triggers those payments occurs. Variable lease payments recognised in the Income Statement in the year ended 1 April 2023 were
£3.5 million (2022: £1.4 million).
17. Inventories
Group and Company
Group
2023
£m
Group
2022
£m
Company
2023
£m
Company
2022
£m
Stock at trading outlets 4.2 3.6 4.2 3.6
Amounts recognised in profit or loss
Inventories recognised as an expense during the year ended 1 April 2023 amounted to £73.6 million (2022: £53.2 million). These were included in operating
costs. Inventory is stated net of a provision for obsolete stock of £0.2 million (2022: £0.2 million).
Notes to the Financial Statements
Continued
146 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
18. Trade and Other Receivables
Group
2023
£m
2022
£m
Trade receivables 1.6 1.6
Other receivables 1.4 4.8
Prepayments and accrued income 7.2 4.3
10.2 10.7
Company
2023
£m
2022
£m
Trade receivables 1.6 1.6
Other receivables 1.4 4.8
Prepayments and accrued income 7.2 4.3
10.2 10.7
At 1 April 2023, the Group has included in other receivables £0.3 million (2022: £0.6 million) in relation to lease receivable for subleases.
The trade receivables balance above is shown net of the loss allowance. The Group and Company provide against trade receivables based on an expected
credit loss model, calculated from the probability of default for the remaining life of the asset.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics.
They have been grouped based on the days past due and also according to the geographical location of customers, which is the same for all.
The expected loss rates are based on the payment profile for sales over the past 24 months before the Balance Sheet date. The historical rates are adjusted to
reflect current and forward-looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding. A financial asset is written off
when there is no reasonable expectation of recovering the contractual cash flows.
The movements on the loss allowance during the year are summarised below:
Group and Company
2023
£m
2022
£m
Opening balance 0.9 1.0
(Decrease) in loss allowance recognised in profit and loss – (0.1)
Amounts released for balances written off during the year (0.1) –
Closing balance 0.8 0.9
The loss allowance for trade receivables is recorded in the accounts separately from the gross receivable. The contractual ageing of the trade receivables
balance is as follows:
Group and Company
Group
2023
£m
Group
2022
£m
Company
2023
£m
Company
2022
£m
Current 1.1 1.1 1.1 1.1
Overdue up to 30 days 0.5 0.5 0.5 0.5
Overdue between 30 and 60 days 0.1 0.1 0.1 0.1
Overdue between 60 and 90 days – – – –
Overdue more than 90 days 0.7 0.8 0.7 0.8
Trade receivables before loss allowance 2.4 2.5 2.4 2.5
Less provision (0.8) (0.9) (0.8) (0.9)
Trade receivables net of loss allowance 1.6 1.6 1.6 1.6
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19. Assets Held for Sale
Group
£m
Company
£m
Assets held for sale as at 26 March 2022 5.4 5.4
Assets disposed of during the year (3.7) (3.7)
Assets transferred from property, plant and equipment 5.7 5.7
Impairment (note 13) (0.4) (0.4)
Assets held for sale as at 1 April 2023 7.0 7.0
At 1 April 2023, seven properties have been classified as held for sale (2022: 19 properties). These properties were reclassified predominantly from property,
plant and equipment as the carrying amounts of the properties identified are to be recovered principally through sale transactions rather than through
continuing use. Sale is expected within 12 months from the reporting date. An impairment charge of £0.4 million was recognised on reclassifying the property
to held for sale (2022: £nil). Valuations performed are based on observations of transactions involving properties of a similar nature, location and condition.
Since this valuation was performed using a significant non-observable input, the fair value measurement can be categorised as a Level 3.
20. Trade and Other Payables
Due within one year:
Group
2023
£m
2022
£m
Trade payables 19.0 24.4
Other tax and social security 4.7 4.3
Other payables 7.6 7.2
Accruals 19.9 18.2
Contract liabilities 3.4 3.0
54.6 57.1
Due within one year:
Company
2023
£m
2022
£m
Trade payables 19.0 24.4
Amounts due to subsidiary undertakings 143.1 136.7
Other tax and social security 4.7 4.3
Other payables 7.6 7.2
Accruals 19.9 18.2
Contract liabilities 3.4 3.0
197.7 193.8
Company amounts due to subsidiary undertakings of £143.1 million (2022: £136.7 million) have no fixed repayment date. Interest is payable on the balance at
3% above the Bank of England base rate. Company amounts due to subsidiary undertakings are unsecured.
Contract liabilities relate to deposits received from customers to secure bookings for events and accommodation. The balance will unwind and be recognised as
revenue in the following financial year.
21. Cash, Borrowings and Net Debt
Cash and Short-Term Deposits
Group
2023
£m
Group
2022
£m
Company
2023
£m
Company
2022
£m
Cash at bank and in hand 14.1 15.6 14.1 15.6
For the purposes of the Consolidated Cash Flow Statement, cash and cash equivalents comprise cash at bank and in hand, as above. Cash at bank earns
interest at floating rates.
Notes to the Financial Statements
Continued
148 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
21. Cash, Borrowings and Net Debt continued
Borrowings
Group
2023
£m
Group
2022
£m
Company
2023
£m
Company
2022
£m
Bank loans 119.4 120.0 119.4 120.0
Debenture stock 25.9 25.9 25.9 25.9
Preference shares 1.6 1.6 1.6 1.6
Total borrowings 146.9 147.5 146.9 147.5
Analysed as:
Borrowings within current liabilities 6.0 120.0 6.0 120.0
Borrowings within non-current liabilities 140.9 27.5 140.9 27.5
146.9 147.5 146.9 147.5
All borrowings at both year ends are denominated in Sterling and, where appropriate, are stated net of issue costs. Further information on borrowings is given
in note 25.
Bank Loans
Group and Company
On 27 May 2022, the Group 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. The new facilities bear an interest rate margin dependent on leverage covenant plus SONIA. Under the new agreement, there
was a minimum liquidity requirement of £10 million until November 2022. From December 2022, there is a covenant suite which consists of net debt to EBITDA
(leverage) and EBITDA to net finance charges to be tested quarterly.
At 1 April 2023, £79.5 million (2022: £71.2 million) of the total of £200 million (2022: £191.7 million) committed bank facility was available and undrawn.
The bank loans are repayable as follows:
2023
£m
2022
£m
On demand or within one year – 120.6
Less: bank loan arrangement fees – (0.6)
Current liabilities – 120.0
In the third to fifth year inclusive 120.5 –
Less: bank loan arrangement fees (1.1) –
Non-current liabilities 119.4 –
Debenture Stock
The debenture stocks are secured on specified fixed and floating assets of the Company and are redeemable on maturity.
Debenture stocks are repayable as follows:
2023
£m
2022
£m
On demand or within one year – 10.70% 1st Mortgage Debenture Stock 2023 6.0 –
Current liabilities 6.0 –
In the first to second year inclusive – 10.70% 1st Mortgage Debenture Stock 2023 – 6.0
In greater than five years – 6.875% Debenture Stock 2028 (1st floating charge) 20.0 20.0
Less: discount on issue (0.1) (0.1)
Non-current liabilities 19.9 25.9
Preference Shares
The Company’s preference shares are classified as debt. The shares are not redeemable and are included in borrowings within non-current liabilities. See note
23 for further details of the preference shares.
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Analysis of Net Debt
Group
53 weeks ended 1 April 2023
At
26 March
2022
£m
Cash flows
£m
Non-cash
1
£m
At
1 April
2023
£m
Cash and cash equivalents:
Cash and short-term deposits 15.6 (1.5) – 14.1
15.6 (1.5) – 14.1
Financial liabilities:
Lease liabilities (80.7) 11.9 (3.0) (71.8)
(80.7) 11.9 (3.0) (71.8)
Debt:
Bank loans
2
(120.0) 1.5 (0.9) (119.4)
Debenture stock (25.9) – – (25.9)
Preference shares (1.6) – – (1.6)
Total borrowings (147.5) 1.5 (0.9) (146.9)
Net debt (212.6) 11.9 (3.9) (204.6)
52 weeks ended 26 March 2022
At
27 March
2021
£m
Cash flows
£m
Non-cash
1
£m
At
26 March
2022
£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) 10.5 (1.3) (80.7)
(89.9) 10.5 (1.3) (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) 97.6 (2.2) (212.6)
1 Non-cash movements relate to the amortisation of arrangement fees, arrangement fees accrued and movements in lease liabilities.
2 Bank loans are net of arrangement fees and cash flows include the payment of arrangement fees.
Notes to the Financial Statements
Continued
150 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
21. Cash, Borrowings and Net Debt continued
Company
53 weeks ended 1 April 2023
At
26 March
2022
£m
Cash flows
£m
Non-cash
1
£m
At
1 April
2023
£m
Cash and cash equivalents:
Cash and short-term deposits 15.6 (1.5) – 14.1
15.6 (1.5) – 14.1
Financial liabilities:
Lease liabilities (79.3) 11.4 (3.4) (71.3)
(79.3) 11.4 (3.4) (71.3)
Debt:
Bank loans
2
(120.0) 1.5 (0.9) (119.4)
Debenture stock (25.9) – – (25.9)
Preference shares (1.6) – – (1.6)
Total borrowings (147.5) 1.5 (0.9) (146.9)
Net debt (211.2) 11.4 (4.3) (204.1)
52 weeks ended 26 March 2022
At
27 March
2021
£m
Cash flows
£m
Non-cash
1
£m
At
26 March
2022
£m
Cash and cash equivalents:
Cash and short-term deposits 16.9 (1.3) – 15.6
16.9 (1.3) – 15.6
Financial liabilities:
Lease liabilities (88.3) 10.2 (1.2) (79.3)
(88.3) 10.2 (1.2) (79.3)
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 (306.6) 97.5 (2.1) (211.2)
1 Non-cash movements relate to the amortisation of arrangement fees, arrangement fees accrued and movements in lease liabilities.
2 Bank loans are net of arrangement fees and cash flows include the payment of arrangement fees.
22. Pensions
a) Retirement Benefit Plans – Group and Company
The Group operates one closed funded defined benefit pension scheme, the Fuller Smith & Turner Pension Plan (“The Scheme”). The plan is defined benefit in
nature, with assets held in separate professionally managed, trustee-administered funds. The Scheme is an HM Revenue & Customs registered pension plan
and subject to standard United Kingdom pension and tax law. On 1 January 2015 the plan was closed to future accrual.
The Group also operates a defined contribution stakeholder pension plans for its employees. The Fuller’s Stakeholder Pension Plan was set up for new
employees of the Parent Company after the closure of the Fuller, Smith & Turner Pension Plan to new entrants on 1 August 2005.
The Group offers workplace pensions to all employees who are not members of the defined contribution stakeholder pension plan. The Group offers these
pensions through the National Employment Savings Trust (“NEST”).
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The Group also pays benefits, which are unfunded, to a number of former employees. The Directors consider these benefits to be defined benefit in nature and
the full defined benefit liability is recognised on the Balance Sheet.
Group and Company
53 weeks ended
1 April 2023
£m
52 weeks ended
26 March 2022
£m
Total amounts charged in respect of pensions in the year
(Credited)/charged to Income Statement:
Defined benefit scheme – net finance credit – separately disclosed items (0.5) –
Defined contribution schemes and NEST – total operating charge 2.2 1.9
1.7 1.9
Charge/(Credit) to equity:
Defined benefit schemes – net actuarial loss/(gains) 2.5 (15.5)
Total pension charge/(credit) 4.2 (13.6)
b) Defined Contribution Stakeholder Pension Plans – Group and Company
The total cost charged to income in respect of the defined contribution stakeholder schemes is shown in the total operating charge above.
c) Defined Benefit Plans – Group and Company
The Scheme provides pensions and lump sums to members on retirement and to their dependants on death.
Trustees are appointed by both the Company and the Scheme’s membership and act in the interest of the Scheme and all relevant stakeholders, including the
members and the Company. The Trustees are also responsible for the investment of the Scheme’s assets.
The Company pays the costs as determined by regular actuarial valuations. The Trustees are required to use prudent assumptions to value the liabilities and
costs of the Scheme whereas the accounting assumptions must be best estimates.
Responsibility for making good any deficit on the Scheme lies with the Company and this introduces a number of risks for the Company. The major risks are:
• Interest and investment risk – The value of the Scheme’s assets are subject to volatility in equity prices. The Scheme has diversified its investments to
reduce the impact of volatility and variable interest return rates
• Inflation risk – The defined benefit obligation is linked to inflation so higher rates would result in a higher defined benefit obligation
• Longevity risk – An increase over the assumptions applied will increase the defined benefit obligation.
The Company and Trustees are aware of these risks and manage them through appropriate investment and funding strategies. The Trustees manage
governance and operational risks through a number of internal control policies.
The Scheme is subject to regular actuarial valuations, which are usually carried out every three years. In April 2023, the 2022 triennial valuation was concluded,
and the Company has agreed to continue to pay contributions into the Plan in line with the existing recovery plan. Under this plan, deficit reduction contributions
started at £2.2 million per annum in July 2022. These are payable in equal monthly instalments and increase each January in line with CPI. As of January 2023,
the deficit reduction contributions have increased to £2.4 million. Fixed security over certain Company’s freehold properties (with a net book value of £29.8 million at
1 April 2023) has been provided to the Plan as additional security, the value of which will be reviewed at each triennial valuation. The next triennial valuation is due on
30 July 2025.
The figures in the following disclosures were measured using the projected unit credit method.
The Scheme has not invested in any of the Group’s own financial instruments or in properties or other assets in use by the Group.
Key assumptions
The key assumptions used in the valuation of the Scheme are set out below:
Mortality assumptions
2023
Years
2022
Years
Current pensioners (at 65) – males 22.0 22.2
Current pensioners (at 65) – females 24.2 24.5
Future pensioners (at 65) – males 23.3 23.6
Future pensioners (at 65) – females 25.7 25.9
The Scheme is now closed to future accrual. The average age of the members who were active at closure is 58 for males and 55 for females. The average age
of all non-pensioners is 57.
Notes to the Financial Statements
Continued
152 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
22. Pensions continued
Key financial assumptions used in the valuation of the Scheme 2023 2022
Rate of increase in pensions in payment 3.20% 3.75%
Discount rate 4.75% 3.00%
Inflation assumption – RPI 3.20% 3.80%
Inflation assumption – CPI (pre 2030/post 2030) 2.3%/3.2% 2.9%/3.8%
The present value of the Scheme liabilities is sensitive to the assumptions used, as follows:
Impact on Scheme liabilities – increase/(decrease)
1
2023
£m
2022
£m
Increase discount rate by 0.1% (1.2) (2.1)
Increase inflation assumption by 0.1%
2
0.1 1.3
Increase life expectancies by 1 year 3.9 6.2
1 The sensitivity analyses are based on a change in an assumption whilst holding all of the other assumptions constant. In practice, this is unlikely to occur and changes in some of the
assumptions may be correlated. When calculating the sensitivity to change, the same actuarial method has been applied as when calculating the pension liability within the Balance
Sheet. Due to the Scheme closing to future accrual on 1 January 2015, there are no longer any active members in the Scheme. As the members who were active at closure did not
maintain a salary link on their past service benefits, the future salary increase assumptions no longer have an impact on the Scheme’s liabilities.
2 For members who were active at closure, their pensions now increase in deferment in line with CPI inflation.
Assets in the Scheme
At
1 April 2023
£m
At
26 March 2022
£m
Corporate bonds 56.4 25.0
Index linked debt instruments 28.7 26.0
Overseas equities 6.6 31.5
Alternatives
1
19.0 56.5
Cash 0.3 1.6
Annuities 2.4 3.3
Total market value of assets 113.4 143.9
1 Alternatives is composed of holdings in diversified growth investment funds.
2023
£m
2022
£m
Fair value of Scheme assets 113.4 143.9
Present value of Scheme liabilities (98.8) (129.6)
Surplus in the Scheme 14.6 14.3
Included within the total present value of Group and Company Scheme liabilities of £98.8 million (2021: £129.6 million) are liabilities of £1.5 million
(2022: £1.9 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.
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Defined benefit obligation Fair value of Scheme assets Net defined benefit surplus
2023
£m
2022
£m
2023
£m
2022
£m
2023
£m
2022
£m
Balance at beginning of the year (129.6) (147.3) 143.9 143.8 14.3 (3.5)
Included in profit and loss
Net interest credit (3.9) (2.8) 4.4 2.8 0.5 –
(3.9) (2.8) 4.4 2.8 0.5 –
Included in other comprehensive Income
Actuarial (losses)/gain relating to:
Actual return less expected return on Scheme’s assets – – (32.0) 0.6 (32.0) 0.6
Experience gains arising on Scheme liabilities 29.5 14.9 – – 29.5 14.9
29.5 14.9 (32.0) 0.6 (2.5) 15.5
Other
Employer contributions – – 2.3 2.3 2.3 2.3
Benefits paid 5.2 5.6 (5.2) (5.6) – –
5.2 5.6 (2.9) (3.3) 2.3 2.3
Balance at end of the year (98.8) (129.6) 113.4 143.9 14.6 14.3
The weighted average duration of the Scheme’s liabilities at the end of the period is 17 years (2022: 17 years).
The total contributions to the Scheme in the next financial year are expected to be £2.4 million for the Group and Company. Following the conclusion of the
2022 triennial valuation in April 2023, it was agreed that the Company would continue to pay contributions in line with the deficit recovery plan. Under this
plan, deficit reduction contributions started at £2.2 million per annum in July 2022. These are payable in equal monthly instalments and increase each January
in line with CPI. As of January 2023, the deficit reduction contributions have increased to £2.4 million. The recovery deficit plan will be reviewed at the next
triennial valuation, which is due on 30 July 2025. No further payments are made as the Scheme is now closed to future accrual.
23. Preference Share Capital
Group and Company
Authorised, issued and fully paid share capital
Number authorised and in issue:
First 6%
cumulative
preference share
of
£1 each
Number
000s
Second 8%
cumulative
preference share
of
£1 each
Number
000s
Total
Number
000s
At 1 April 2023 and 26 March 2022 400 1,200 1,600
Monetary amount: £m £m £m
At 1 April 2023 and 26 March 2022 0.4 1.2 1.6
The first 6% cumulative preference shares of £1 each are entitled to first payment of a fixed cumulative dividend and on winding up to a return of paid capital
plus arrears of dividends. The second 8% cumulative preference shares of £1 each are entitled to second payment of a fixed cumulative dividend and on
winding up a return of capital paid up (plus a premium calculated by reference to an average quoted price on the London Stock Exchange for the previous six
months) plus arrears of dividends.
Preference shareholders may only vote in limited circumstances: principally on winding up, alteration of class rights or on unpaid preference dividends.
Preference shares cannot be redeemed by the holders, other than on winding up.
Notes to the Financial Statements
Continued
154 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
24. Provisions
Legal claim
Group and Company
2023
£m
2022
£m
Balance at the beginning of the year 0.5 4.0
Utilised – (1.4)
Released – (2.1)
Balance at the end of the year 0.5 0.5
Analysed as:
2023
£m
2022
£m
Due within one year 0.5 0.5
Due in more than one year – –
0.5 0.5
25. Financial Instruments
Details of the Group’s treasury function are included in the Financial Review’s discussion of financial risks and treasury policies on page 33.
The accounting treatment of the Group’s financial instruments is detailed in note 1.
a) Capital Management – Group and Company
As described in note 1, the Group considers its capital to comprise the following:
Group
2023
£m
2022
£m
Ordinary share capital 25.4 25.4
Share premium 53.2 53.2
Capital redemption reserve 3.7 3.7
Hedging reserve – (0.1)
Retained earnings 381.6 383.6
Preference shares 1.6 1.6
465.5 467.4
Company
2023
£m
2022
£m
Ordinary share capital 25.4 25.4
Share premium 53.2 53.2
Capital redemption reserve 3.7 3.7
Hedging reserve – (0.1)
Merger reserve (1.6) (1.6)
Retained earnings 325.6 335.1
Preference shares 1.6 1.6
407.9 417.3
In managing its capital, the primary objective is to ensure that the Group is able to continue to operate as a going concern and to maximise return
to shareholders through a combination of capital growth, distributions and the payment of preference dividends to its preference shareholders. The Group
seeks to maintain a ratio of debt and equity that balances risks and returns at an acceptable level and maintains sufficient funds to meet working capital
targets, investment requirements and comply with lending covenants. As a minimum, the Board reviews the Group’s dividend policy twice yearly and reviews
the treasury position at every Board meeting.
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b) Categories of Financial Assets and Liabilities
The Group’s financial assets and liabilities as recognised at the Balance Sheet date may also be categorised as follows:
Group
2023
£m
2022
£m
Non-current assets
Derivative financial instruments used for hedging 0.1 –
Total current assets 0.1 –
Current assets
Trade and other receivables in scope of IFRS 9 1.6 1.6
Total current assets 1.6 1.6
Total financial assets 1.7 1.6
Current liabilities
Financial liabilities at amortised cost:
Trade and other payables in scope of IFRS 9 22.9 27.9
Lease liabilities 4.8 6.8
Loans 6.0 120.0
Total carried at amortised cost 33.7 154.7
Derivative financial instruments used for hedging – 0.1
Total current liabilities 33.7 154.8
Non-current liabilities
Derivative financial instruments used for hedging – –
Financial liabilities at amortised cost:
Lease liabilities 67.0 73.9
Loans and debenture stock 139.3 25.9
Preference shares 1.6 1.6
Total carried at amortised cost 207.9 101.4
Total non-current liabilities 207.9 101.4
Total financial liabilities 241.6 256.2
Notes to the Financial Statements
Continued
156 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
25. Financial Instruments continued
Company
2023
£m
2022
£m
Non-current assets
Derivative financial instruments used for hedging 0.1 –
Total non-current assets 0.1 –
Current assets
Trade and other receivables in scope of IFRS 9 1.6 1.6
Total current assets 1.6 1.6
Total financial assets 1.7 1.6
Current liabilities
Financial liabilities at amortised cost:
Trade and other payables in scope of IFRS 9 166.0 164.6
Lease liabilities 4.7 6.5
Loans 6.0 120.0
Total carried at amortised cost 176.7 291.1
Derivative financial instruments used for hedging – 0.1
Total current liabilities 176.7 291.2
Non-current liabilities
Derivative financial instruments used for hedging – –
Financial liabilities at amortised cost:
Lease liabilities 66.6 72.8
Loans and debenture stock 139.3 25.9
Preference shares 1.6 1.6
Total carried at amortised cost 207.5 100.3
Total non-current liabilities 207.5 100.3
Total financial liabilities 384.2 391.4
There is no set-off of financial assets and liabilities as shown above.
c) Financial Risks – Group and Company
The main risks associated with the Group’s financial assets and liabilities are set out below, as are the Group’s policies for their management.
Derivative instruments are used to change the economic characteristics of financial instruments in accordance with Group policy.
i. Interest rate risk
The Group manages its cost of borrowings using a mixture of fixed rates, variable rates and interest rate swaps. Fixed rates do not expose the Group to cash
flow interest rate risk, but do not enjoy a reduction in borrowing costs in markets where rates are falling. Floating rate borrowings, although not exposed to
changes in fair value, expose the Group to cash flow risk following rises in interest rates and cost.
The debentures totalling £25.9 million (2022: £25.9 million), net of interest paid in advance, are at fixed rates. The bank loans totalling £200 million
(2022: £120 million), net of arrangement fees, are at floating rates. At the year end, after taking account of the interest rate collar, 50% interest rate swaps
2022: 17%) of the Group’s bank loans and 60% (2022: 32%) of gross borrowings were at fixed rates or hedged.
Interest rate collar
The Group has entered into interest rate collar agreement, where the Group sold a floor and bought a cap, in order to hedge the risk in interest cash flows on
its borrowings going higher than the cap. At the Balance Sheet date, £60 million of the Group’s and Company’s borrowings were hedged by interest rate collar
at floor and cap rate of 3.10% and 5.00% respectively. At 26 March 2022, £20 million of the Group’s and Company’s borrowings were hedged by interest rate
swaps at a blended fixed rate of 2.34%. The swap active at 26 March 2022 expired in August 2022.
The interest rate collar is expected to impact the Income Statement in line with the liquidity risk table shown in section (iii) below. The interest rate collar cash
flow hedge in effect at 1 April 2023 was assessed as being highly effective. Net unrealised gain of £0.1 million (2022: £0.5 million) has been recorded in other
comprehensive income.
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Sensitivity – Group and Company
The Group borrows in Sterling at market rates. Three month Sterling SONIA rate during the 53 weeks ended 1 April 2023 ranged between 0.69% and 4.17%.
The Directors consider 1.00% to be a reasonable possible increase in rates and 0.50% to be a reasonable possible decrease in rates, with reference to market
yield curves and the current economic conditions.
The annualised effect of these changes to interest rates on the floating rate debt at the Balance Sheet date, all other variables being constant, are as follows:
Group Company
1
Impact on post-tax profit and net equity – increase/(decrease)
2023
£m
2022
£m
2023
£m
2022
£m
Decrease interest rate by 0.5% 0.8 0.5 1.3 1.0
Increase interest rate by 1.0% (1.5) (1.0) (3.6) (2.1)
1 The Company has substantial interest bearing payables due to subsidiary companies (note 20).
ii. Credit risk
The risk of financial loss due to a counter party’s failure to honour its obligations arises principally in relation to transactions where the Group provides goods
and services on deferred payment terms, deposits surplus cash and enters into derivative contracts.
Group policies are aimed at minimising losses and deferred terms are only granted to customers who demonstrate an appropriate payment history and satisfy
credit worthiness procedures. Individual customers are subject to credit limits to control debt exposure and goods may also be sold on a cash with order basis.
Cash deposits with financial institutions for short periods and derivative transactions are only permitted with financial institutions approved by the Board.
There are no significant concentrations of credit risk within the Group. The maximum credit risk exposure relating to financial assets is represented by their
carrying value as at the Balance Sheet date.
Trade and other receivables
The Group records impairment losses on its trade receivables separately from gross receivables. Further detail is included in note 18.
iii. Liquidity risk
The Group minimises liquidity risk by managing cash generation, applying trade receivables collection targets, monitoring daily cash receipts and payments and
setting rolling cash forecasts. Investments have cash payback periods applied as part of a tightly controlled investment appraisal process. The Group’s rating
with credit agencies is excellent.
The Group has a mixture of long and short-term borrowings and overdraft facilities: 1% (2022: 15%) of the Group’s borrowings are repayable after more than
five years, 95% (2022: 4%) within the first to fifth years and 4% (2022: 81%) within one year.
The tables on the following page summarise the maturity profile of the Group’s financial liabilities at 1 April 2023 based on undiscounted contractual cash
flows, including interest payable. Floating rate interest is estimated using the prevailing interest rate at the Balance Sheet date.
Group at 1 April 2023
On
demand
£m
Less than
3 months
£m
3 to 12
months
£m
1 to 5
years
£m
6 to 10
years
£m
More than
10 years
£m
Total
£m
Interest bearing loans and borrowings
1
– 2.7 14.1 144.1 – 20.1 181.0
Preference shares
2
– – 0.1 0.5 – 3.4 4.0
Trade and other payables 19.0 3.4 0.5 – – – 22.9
Lease liabilities – 2.0 6.1 29.3 29.5 32.3 99.2
1 Bank loans are included after taking account of the following cash flows in relation to the interest rate collar held in respect of these borrowings:
Group at 26 March 2022
On
demand
£m
Less than
3 months
£m
3 to 12
months
£m
1 to 5
years
£m
6 to 10
years
£m
More than
10 years
£m
Total
£m
Interest bearing loans and borrowings
1
– 1.9 125.4 12.0 – 21.5 160.9
Preference shares
2
– – 0.1 0.5 – 3.4 4.0
Trade and other payables 24.4 3.0 0.5 – – – 27.9
Lease liabilities – 2.3 6.8 27.3 26.0 39.4 101.8
1 Bank loans are included after taking account of the following cash flows in relation to the interest rate swap and cap held in respect of these borrowings:
Interest rate swaps – 0.1 0.1 – – 0.2
2 The preference shares have no contractual repayment date. For the purposes of the table above, interest payments have been shown for 20 years from the Balance Sheet date but no further.
Notes to the Financial Statements
Continued
158 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
25. Financial Instruments continued
The Company figures are as for the Group, except as follows:
Company at 1 April 2023
On
demand
£m
Less than
3 months
£m
3 to 12
months
£m
1 to 5
years
£m
6 to 10
years
£m
More than
10 years
£m
Total
£m
Amounts due to subsidiary undertakings
3
143.1 – – – – – 143.1
Trade and other payables 19.0 3.4 0.5 – – – 22.9
Lease liabilities – 1.9 6.0 28.9 29.5 32.3 98.6
Company at 26 March 2022
Amounts due to subsidiary undertakings
3
136.6 – – – – – 136.6
Trade and other payables 24.4 3.0 0.5 – – – 27.9
Lease liabilities – 2.2 6.6 26.2 25.9 39.2 100.1
3 Amounts due to subsidiary undertakings have no fixed repayment date. Interest is payable on the balance at 3% above the Bank of England base rate.
Security – Group and Company
The 10.7% debentures 2023 are secured on property, plant and equipment with a net book value of £10.7 million (2022: £10.5 million). The 6.875% debentures
2028 are secured by a floating charge over the assets of the Company.
Covenants – Group and Company
The Group and Company are subject to a number of covenants in relation to their borrowing facilities which, if contravened, would result in its loans becoming
immediately repayable.
The Group has secured a new facility of £200 million, split between a RCF of £110 million and a term loan of £90 million, for a tenure of four years to May 2026.
Under the new agreement, there is a covenant suite which consist of net debt to adjusted EBITDA (leverage) and adjusted EBITDA to net finance charges. See
further details in note 21.
d) Fair Value
Book value Fair value
Fair
value
LevelGroup
2023
£m
2022
£m
2023
£m
2022
£m
Financial assets
Interest rate collar 0.1 – 0.1 – 3
Financial liabilities
Lease liabilities (71.8) (80.7) (71.8) (80.7) 3
Fixed rate borrowings (25.9) (25.9) (29.2) (32.0) 3
Floating rate borrowings (119.3) (120.0) (119.3) (120.0) 3
Preference shares (1.6) (1.6) (1.6) (1.6) 3
Interest rate swaps – (0.1) – (0.1) 2
The Company figures are as for the Group above except for:
Book value Fair value
Fair
value
LevelCompany
2023
£m
2022
£m
2023
£m
2022
£m
Financial liabilities
Lease liabilities (71.3) (79.3) (71.3) (88.3) 3
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Level 1 fair values are valuation techniques where inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at
measure data.
Level 2 fair values are valuation techniques where all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly, but are not derived directly from quoted prices in active markets. The Group bases its valuations on information provided by financial institutions,
who use a variety of estimation techniques based on market conditions, such as interest rate expectations, existing at each Balance Sheet date.
Level 3 fair values are valuation techniques for which all inputs that have a significant effect on the recorded fair value are not observable. Derivative fair
values are obtained from quoted market prices in active markets. The fair values of borrowings have been calculated by discounting the expected future cash
flows at prevailing interest rates. Interest rates for borrowings range from 1.5% to 10.7%. The fair values of preference shares have been calculated using the
market interest rates.
Management assessed that the fair values of cash and short-term deposits, trade receivables and other receivables, and trade and other payables approximate
their carrying amounts largely due to the short-term maturities of these instruments.
There were no transfers between levels in the fair value hierarchy as at 1 April 2023 and 26 March 2022.
26. Share Capital and Reserves
a) Share Capital
Authorised, issued and fully paid
Number in issue
‘A’ ordinary
shares of
40p each Number
000s
‘C’ ordinary shares
of
40p each
Number
000s
‘B’ ordinary
shares of
4p each Number
000s
Total
Number
000s
At 26 March 2022 41,082 13,466 89,052 143,600
At 1 April 2023 41,082 13,466 89,052 143,600
Proportion of total equity shares at 01 April 2023 28.6% 9.4% 62.0%
Monetary amount £m £m £m £m
At 26 March 2022 16.4 5.4 3.6 25.4
At 1 April 2023 16.4 5.4 3.6 25.4
Share capital represents the nominal value proceeds received on the issue of the Company’s equity share capital, comprising 40p and 4p ordinary shares. The
Company’s preference shares are classified as non-current liabilities in accordance with IFRS (see note 23).
The ordinary shareholders are entitled to be paid a dividend out of any surplus profits and to participate in surplus assets on winding up in proportion to the
nominal value of each class of share (‘B’ shares have one-tenth of the nominal value of ‘A’ and ‘C’ shares).
All equity shares in the Company carry one vote per share, save that shares held in treasury have their voting rights suspended. The ‘A’ and ‘C’ shares have a
40p nominal value and the ‘B’ shares have a 4p nominal value so that a ‘B’ share dividend will be paid at 10% of the rate applying to ‘A’ and ‘C’ shares. The ‘A’
shares are listed on the London Stock Exchange. The ‘C’ shares carry a right for the holder to convert them to ‘A’ shares by written notice in the 30 day period
following the half year and preliminary announcements. The ‘B’ shares are not listed and have no conversion rights. In most circumstances the value of a ‘B’
share is deemed to be 10% of the value of the listed ‘A’ shares. The Trustee holding shares for participants of the LTIP currently waives dividends for shares
held during the initial three year period. Dividends are not paid on shares held in treasury.
The Articles include provisions relating to the Company’s ‘B’ and ‘C’ shares which provide that shareholders who wish to transfer their shares may only do so if
the transfer is to another ‘B’ or ‘C’ shareholder, or if the transfer is to certain of that shareholder’s family members or their executors or administrators or, where
shares are held by trustees, to new trustees, or to the trustees of any employee share scheme, or if the Company is unable to identify another shareholder of
that class willing to purchase the shares within the specified period, to any person.
Notes to the Financial Statements
Continued
160 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
26. Share Capital and Reserves continued
b) Own Shares
Own shares relate to shares held by independently managed employee share ownership trusts (“ESOTs”) together with the Company’s holding of treasury
shares. Shares are purchased by the ESOTs in order to satisfy potential awards under the Long Term Incentive Plan (“LTIP”) and Share Incentive Scheme (“SIP”).
Treasury shares are used, inter alia, to satisfy options under the Company’s share options schemes. The LTIP ESOT has waived its rights to dividends on the
shares it holds. Treasury shares have voting and dividend rights suspended. All own shares held, as below, are excluded from earnings and net assets per
share calculations.
Treasury shares LTIP ESOT SIP ESOT Total Total
Number
‘A’ ordinary 40p
shares
000s
‘B’ ordinary 4p
shares
000s
‘B’ ordinary 4p
shares
000s
‘C’ ordinary 40p
shares
000s
‘A’ ordinary 40p
shares
000s
‘A’ ordinary 40p
shares
000s
‘B’ ordinary 4p
shares
000s
‘C’ ordinary 40p
shares
000s
Own shares
000s
At 27 March 2021 1,274 4,558 326 6 5 1,279 4,884 6 6,169
Shares released (11) (230) – – – (11) (230) – (241)
At 26 March 2022 1,263 4,328 326 6 5 1,268 4,654 6 5,928
Share Purchased 1,000 – – – – 1,000 – – 1,000
Shares released (11) – – – – (11) – – (11)
At 1 April 2023 2,252 4,328 326 6 5 2,257 4,654 6 6,917
Monetary amount £m £m £m £m £m £m £m £m £m
At 27 March 2021 11.9 4.6 0.3 0.1 0.1 12.0 4.9 0.1 17.0
Shares released (0.1) (0.3) – – – (0.1) (0.3) – (0.4)
At 26 March 2022 11.8 4.3 0.3 0.1 0.1 11.9 4.6 0.1 16.6
Share Purchased 4.8 – – – – 4.8 – – 4.8
Shares released (0.1) – – – – (0.1) – – (0.1)
At 1 April 2023 16.5 4.3 0.3 0.1 0.1 16.6 4.6 0.1 21.3
Market value at
1 April 2023 10.5 2.0 0.2 – – 10.5 2.2 – 12.7
c) Other Capital Reserves
Share premium account
The balance in the share premium account represents the proceeds received above the nominal value on the issue of the Company’s equity share capital.
Capital redemption reserve
The capital redemption reserve balance arises from the buy-back of the Company’s own equity share capital.
Hedging reserve
The hedging reserve contains the effective portion of the cash flow hedge relationships incurred at the Balance Sheet date, net of tax.
Merger reserve
The merger reserve balance arises from the hive up of Bel & The Dragon.
27. Share Options and Share Schemes
The key points of each of the Group’s share schemes for grants up to 1 April 2023 are summarised below. All schemes are equity-settled. All disclosure relates
to both Group and Company. For the purposes of option and LTIP schemes, “Adjusted EPS” will normally be consistent with the pre-tax earnings per share
excluding separately disclosed items as presented in the financial statements. However, the Remuneration Committee is authorised to make appropriate
adjustments to Adjusted EPS as applied to these schemes.
Savings Related Share Option Scheme (“SAYE”)
This scheme grants options over shares at a discount of 20% on the average market price over the three days immediately prior to the date of offer. Employees
must save a regular amount each month. Savings are made over three or five years, at the participant’s choice. The right to buy shares at the discounted price
lasts for six months after the end of the savings contract. There are no performance conditions, other than continued employment.
Executive Share Option Scheme
This is an approved Executive Share Option Scheme. For grants up to the year ended 28 March 2020 options vest if growth in Adjusted EPS exceeds the growth
in RPI by 9% or more, over the three year performance period of the option. For grants made during the year ended 27 March 2021 options vest if a set EBITDA
target is achieved. For grants made during the year ended 26 March 2022 onwards, the options vest if a set pre-tax Adjusted EPS target is achieved. The
options must then be exercised within seven years after the end of the performance period.
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LTIP
This plan grants conditional share awards. Up until the LTIP granted during the year ended 28 March 2020 vesting is conditional on growth in Adjusted EPS
exceeding growth in RPI by 9% or more over the three year initial performance period of the award, with vesting levels on a sliding scale from 40% up to 100%,
if growth in Adjusted EPS exceeds growth in RPI by 24% or more.
From the LTIP granted during the year ended 27 March 2021 vesting is conditional upon pre-tax Adjusted EPS targets, with vesting levels on a sliding scale from
25% up to 100% dependent on the level of EPS achieved. An independent firm of advisors verifies the vesting level each year. The initial vesting period is three
years and, for Executive Directors, is followed by a two year holding period. After this time the shares may be passed to the plan participants, as long as
vesting conditions are met.
A one-off Recovery LTIP was granted during the year ended 26 March 2022. Vesting is conditional upon Group EBITDA (excluding IFRS 16) targets, with vesting
levels on a sliding scale from 25% up to 100% dependent on the level of EBITDA achieved. The initial vesting period is three years and is followed by a two year
holding period. After this time the shares may be passed to the plan participants, as long as vesting conditions are met.
SIP
This plan awards free shares. An equal number of shares are awarded to each eligible employee. The maximum value of shares allowable under the scheme is
£3,000 per year, per person with at least five months’ service as at 15 May each year. The basis of the award was changed with effect from the 2018 award so
that all eligible employees receive the same number of shares. There is no requirement for performance targets (although there may be tax consequences if
sold within five years of the award).
Share-based payment expense recognised in the year
The expense recognised for share-based payments in respect of employee services received during the 53 weeks ended 1 April 2023 is £0.4 million credit
(2022: £0.8 million expense). The whole of that expense arises from equity-settled share-based payment transactions.
Market value
The market value of the shares at 1 April 2023 was £4.65 (2022: £6.20).
Movements in the year
The following tables illustrate the number and weighted average exercise prices (“WAEP”) of, and movements in, each category of share instrument during the year.
Volatility
The expected volatility is based on the historical volatility over the expected life of the rights.
a) SAYE
2023
Number
000s
2023
WAEP
2022
Number
000s
2022
WAEP
Outstanding at the beginning of the year 474 £4.70 460 £4.79
Granted 131 £4.29 130 £5.43
Lapsed (130) £4.78 (105) £5.43
Exercised (5) £4.35 (11) £7.66
Outstanding at the end of the year 470 £4.49 474 £4.70
Exercisable at the end of the year – n/a 4 £7.70
Weighted average share price for options exercised in the year £4.79 £7.35
Weighted average contractual life remaining for share options outstanding at the
year end 2.0 years 2.7 years
Weighted average share price for options granted in the year £5.14 £6.40
Weighted average fair value of options granted during the year £1.98 £0.77
Range of exercise prices for options outstanding at the year end
– from £4.19 £4.35
– to £8.12 £8.12
Notes to the Financial Statements
Continued
162 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
27. Share Options and Share Schemes continued
Outstanding share options granted to employees under the SAYE scheme are as follows:
Exercisable at
Exercise price 40p
shares
£
Number of ‘A’
ordinary shares
under option
2023
000s
Number of ‘A’
ordinary shares under
option
2022
000s
September 2021 7.70 – 4
September 2022 8.12 – 2
September 2023 7.70 – 2
November 2023 4.35 149 187
December 2024 5.43 51 76
November 2025 4.35 112 149
December 2025 4.19 99 –
December 2026 5.43 27 54
December 2027 4.19 32 –
470 474
b) Share Option Schemes
Executive Share Option Scheme
2023
Number
000s
2023
WAEP
2022
Number
000s
2022
WAEP
Outstanding at the beginning of the year 184 £7.23 212 £7.46
Granted 41 £6.92 – –
Lapsed (35) £10.24 (28) £9.00
Exercised (5) £5.78 – –
Outstanding at the end of the year 185 £7.46 184 £7.23
Exercisable at the end of the year 12 £9.03 25 £9.17
Weighted average share price for options exercised in the year £6.02 n/a
Weighted average contractual life remaining for share options outstanding at the year end 7.61 years 8.84 years
Weighted average share price for options granted in the year £6.30 n/a
Weighted average fair value of options granted during the year £1.65 n/a
Range of exercise prices for options outstanding at the year end
– from £6.00 £6.92
– to £10.90 £10.90
Outstanding options which are capable of being exercised between three and ten years from date of issue and their exercise prices are shown in the table below:
Executive Approved Scheme
Exercisable in/between
Exercise price 40p
shares
£
Number of
‘A’ ordinary shares
under option
2023
000s
Number of
‘A’ ordinary shares
under option
2022
000s
2015 and 2022 7.05 – 5
2016 and 2023 9.10 7 9
2017 and 2024 9.65 5 5
2018 and 2025 10.90 – 5
2021 and 2028 9.46 – 1
2022 and 2029 9.61 – –
2024 and 2031 6.92 137 159
2025 and 2032 6.00 36 –
185 184
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GOVERNANCE
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c) LTIP
Shares
2023
‘A’ shares Number
000s
2023
‘B’ shares Number
000s
2022
‘A’ shares Number
000s
2022
‘B’ shares Number
000s
Outstanding at the beginning of the year 782 1,954 404 1,009
Granted 248 620 533 1,332
Lapsed (104) (261) (155) (388)
Outstanding at the end of the year 926 2,313 782 1,953
Weighted average share price for shares vested in the year n/a n/a n/a n/a
For shares outstanding at the year end, the weighted average contractual life
remaining is 1.52 years 1.52 years 2.12 years 2.12 years
Weighted average share price for shares granted in the year £6.30 £0.63 £7.40 £0.74
Weighted average fair value of shares granted during the year £5.60 £0.56 £7.16 £0.72
All LTIPs have a vesting price of £nil. LTIP shares do not receive dividends until vested.
d) SIP
2023
Number
000s
2022
Number
000s
Outstanding at the beginning of the year 73 112
Released
1
(32) (39)
Outstanding at the end of the year 41 73
Weighted average share price for shares released in the year £5.18 £7.17
For shares outstanding at the year end, the weighted average contractual life remaining is 0.77 years 1.32 years
Weighted average share price for shares granted during the year n/a n/a
Weighted average fair value of shares granted during the year n/a n/a
1 Shares have been issued from treasury shares.
Outstanding SIP shares represent shares allocated and held by the SIP Trustees on behalf of employees, which remain in the trust for between three and five
years. All SIPs have a vesting price of £nil. SIP shares receive dividends once allocated.
e) Fair Value of Grants
i. Equity-settled options and LTIPs
The fair value of equity-settled share options granted is estimated as at the date of grant, taking into account the terms and conditions upon which the awards
were granted. The following table lists the inputs to the model used for the 53 weeks ended 1 April 2023 and 52 weeks ended 26 March 2022, except for
exercise price and the weighted average share price for grants in the year, which are disclosed in sections a) to d) above.
LTIP scheme SAYE Executive Share Option Scheme
Fair value inputs 2023 2022 2023 2022 2023 2022
Dividend yield (%) 1.9% 1.1% 2.2% 1.3% 1.9% n/a
Expected share price volatility (%) n/a n/a 41.2%–45.6% 2.3–2.7% 45.1% n/a
Risk-free interest rate (%) 1.8% 0.5% 3.3% (0.1%) 1.8% n/a
Expected life of option/award (years) 3 years 3 years 3 to 5 years 3 to 5 years 4 years n/a
Model used Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes n/a
ii. SIP free shares awarded
The fair value of free shares awarded under the SIP is the share price at the date of allocation. The total value of SIPs awarded is a fixed rate based on the
Group’s performance in the preceding financial year. The number of shares awarded is therefore dependent on the share price at the date of the award.
Notes to the Financial Statements
Continued
164 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
28. Guarantees and Commitments
Operating leases where the Group is the lessor
The Group earns rental income from two sources. Licensed property included within property, plant and equipment is rented under agreements where lessees
must also purchase goods from the Group. Additionally, there are a smaller number of agreements in respect of investment properties where there is no
requirement for the lessee to purchase goods.
Investment properties are let to third parties on leases that have remaining terms of between one and fifteen years.
At 1 April 2023, future minimum rentals receivable are as follows:
Investment properties Property, plant and equipment
Group
2023
£m
2022
£m
2023
£m
2022
£m
Within one year 0.3 0.3 5.7 5.7
One to two years 0.2 0.2 1.5 2.0
Two to three years 0.2 0.2 1.3 1.5
Three to four years 0.1 0.2 0.4 0.6
Four to five years 0.1 0.1 0.1 0.1
After five years 0.5 0.6 0.5 0.6
1.4 1.6 9.5 10.5
Company
Within one year 0.3 0.3 5.7 5.7
One to two years 0.2 0.2 1.5 2.0
Two to three years 0.2 0.2 1.3 1.5
Three to four years 0.1 0.2 0.4 0.6
Four to five years 0.1 0.1 0.1 0.1
After five years 0.5 0.6 0.5 0.6
1.4 1.6 9.5 10.5
The Group and Company’s commercial leases on property are principally for licensed outlets. The terms of the leases are normally for either three, four or five
years. The agreements allow for annual inflationary increases and full rental reviews occur on renewal of the lease.
At 1 April 2023, future minimum rentals receivable under non-cancellable subleases included in the figures above were £1.2 million (2022: £2.0 million).
b) Other Commitments
Group and Company
2023
£m
2022
£m
Capital commitments – authorised, contracted but not provided for 1.0 2.2
29. Related Party Transactions
Group and Company
During the current and prior years, the Company provided various administrative services to the Fuller, Smith & Turner Pension Plan free of charge. In addition,
the Company settled costs totalling £304,000 (2022: £394,000) relating to the provision of actuarial, consulting and administrative services by third parties to
the Fuller, Smith & Turner Pension Plan.
Compensation of key management personnel (including Directors)
53 weeks ended
1 April
2023
£m
52 weeks ended
26 March
2022
£m
Short-term employee benefits 4.1 3.1
Termination benefits 0.1 –
Post-employment benefits 0.3 0.3
4.5 3.4
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GOVERNANCE
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Company Only
During the year, the Company entered into the following related party transactions:
53 weeks ended 01 April 2023
Sales to related
parties
£m
Purchases from
related parties
£m
Interest due from
related parties
£m
Interest due to
related parties
£m
Amounts due to
related parties
£m
Amounts due from
related parties
£m
Subsidiaries – 64.9 6.4 – (143.1) –
52 weeks ended 26 March 2022
Sales to related
parties
£m
Purchases from
related parties
£m
Interest due from
related parties
£m
Interest due to
related parties
£m
Amounts due to
related parties
£m
Amounts due from
related parties
£m
Subsidiaries – 61.1 – 3.7 (136.7) –
Interest is payable on the majority of the amounts due to subsidiaries at 3% above the Bank of England base rate. All amounts outstanding are unsecured and
repayable on demand.
The Company also incurred rental expenses from subsidiaries of £0.1 million (2022: £0.3 million).
Subsidiaries of parent companies established within the European Economic Area are exempt from an audit if a guarantee is provided by the parent for the
subsidiary liabilities and the shareholders are in unanimous agreement. The Group will be exempting the following companies from an audit in 2023 for the
period ended 1 April 2023 under Section 479A of the Companies Act 2006, all of which are fully consolidated in these financial statements:
Company Company Number
Griffin Catering Services Limited 01577632
Jacomb Guinness Limited 02934979
George Gale and Company Limited 00026330
45 Woodfield Limited 04279254
Grand Canal Trading Limited 04271734
B & D Country Inns I Limited 07292333
B & D Country Inns II Limited 08029280
B & D (Cookham) Limited 07320065
B & D (Odiham) Limited 08377459
B & D (Reading) Limited 07309587
B & D (Win) Limited 07320245
B & D (Farnham) Limited 08392963
B & D (Kingsclere) Limited 08975762
RSH 200 Limited 12035987
Cotswold Inns and Hotels Limited 03309179
The Group will be exempting the following companies from the preparation and delivering of accounts to Companies House under Section 394A of the
Companies Act 2006, all of which are fully consolidated in these financial statements:
Company Company Number
Griffin Inns Ltd. 00495934
Ringwoods Limited 00178536
F.S.T. Trustee Limited 03163480
Fuller Smith & Turner Estates Limited 01831674
Additional Information
Chairman
Michael Turner, FCA,
Non-Executive Chairman
Executive Directors
Simon Emeny, Chief Executive
Neil Smith, Finance Director, ACA
Fred Turner, Retail Director, ACA
Non-Executive Directors
Juliette Stacey, ACA*
Sir James Fuller, Bt
Richard Fuller
Helen Jones*
Robin Rowland, OBE*
* Independent
President
Anthony Fuller, CBE
Chairman from 1982-2007, Anthony Fuller retired
from the Board in 2010 after a long career with
Fuller’s and continues as President.
Secretary and Registered Office
Rachel Spencer
Pier House
86-93 Strand-on-the-Green
London W4 3NN
Tel: 020 8996 2105
Email: company.secretariat@fullers.co.uk
Registered Number
241882
Auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
Stockbrokers
Numis Securities Limited
10 Paternoster Square
London EC4M 7LT
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel: 0870 889 4096
Email via website:
www.investorcentre.co.uk/contactus
Registrars
Any enquiries relating to shareholdings on the
share register (for example, change of address,
bank mandates, communication preferences)
should be sent to the Company’s Registrars,
Computershare. You can also manage your
shareholding online at www.computershare.com/
investor/uk.
Shareholders may at any time choose to receive
notification of the availability of corporate
communications on Fuller’s website by email or
choose to receive them in printed form. To
receive notifications of the availability of a
corporate communication by email, or revoke or
amend an instruction to receive such notifications
by email go to www.computershare.com/
investor/uk or contact Computershare, quoting
your shareholder reference number.
Shareholder Privileges
Individual shareholders with at least 1,000 ‘A’ or ‘C’
ordinary shares or 10,000 ‘B’ ordinary shares are
eligible to receive a Shareholder Inndulgence Card.
For any individual issued with a Card prior to 1 April
2022, continued eligibility will be based on the
eligibility criteria at the time of issue, being at
least500 ‘A’ or ‘C’ ordinary shares or 5,000 ‘B’
ordinary shares.
Card holders are entitled to a 15% discount on
food and drinks in any of our Managed Pubs and
Hotels, including Bel & The Dragon and Cotswold
Inns & Hotels. It also offers a 15% discount on
the Best Flexible Rate or Standard Flexible B&B
Rate for Beautiful Bedrooms by Fuller’s and Bel
&The Dragon accommodation. There is currently
no accommodation discount available with the
Card at any of the Cotswold Inns & Hotel sites.
Further information is available from the
Company Secretariat.
Redesignation of ‘C’ Shares
‘C’ ordinary shares can be redesignated as ‘A’
ordinary shares within 30 days of the full year
andhalf year announcements by sending in
yourcertificates and a written instruction to
redesignate prior to or during the period to the
Company’s Registrars.
ShareGift
The Orr Mackintosh Foundation operates a
charity share donation scheme for shareholders
with small parcels of shares whose value makes
it uneconomic to sell them. If you have a small
number of shares and would like to donate them
to charity, details of the scheme can be found on
the ShareGift website www.sharegift.org, or by
contacting the Company Secretariat.
Financial Calendar and Key Dates
20 July 2023
Annual General Meeting (11am)
16 November 2023
FY2024 Half year results announcement
June 2024
FY2024 Full year results announcement
Shareholder Information
Directors, Advisors and Corporate Information
166 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Adjusted earnings per share (“EPS”) – this is earnings per share, adjusted for separately disclosed items. The Directors believe that this
measure provides useful information for shareholders as to the performance of the Group.
Adjusted profits – this is profit before tax and before separately disclosed items.
CCFF – this is an HM Treasury and Bank of England lending facility.
CJRS – this is a claim for 80% of employees’ wages plus any employer National Insurance and pension contributions for staff on furlough through
the Government’s Coronavirus Job Retention Scheme.
CRM – Customer Relationship Management.
Drinks, food and accommodation like for like sales growth – this is measured on the same basis as “Managed Pubs and Hotels invested
like for like sales growth”.
EBITDA – this is the earnings before interest, tax, depreciation, profit on disposal of plant and equipment, and amortisation, adjusted for
separately disclosed items.
ESOS – Executive Share Option Scheme.
LTIP – Long-Term Incentive Plan.
LTSA- Long term supply agreement
Managed Pubs and Hotels invested like for like sales growth – this is the sales growth calculated to exclude those pubs which have not
been trading throughout the two years for the corresponding period in both years. The principal exclusions from this measure are: pubs purchased
or sold in the last 12 months; sites which are closed; and pubs which are transferred to tenancy.
Market capitalisation – only the Company’s 40p ‘A’ ordinary shares are listed. The Company calculates its market capitalisation as the total of
all classes of ordinary shares; i.e. listed 40p ‘A’ ordinary shares, unlisted 4p ‘B’ ordinary shares and unlisted 40p ‘C’ ordinary shares plus all
potentially awardable share options and LTIP awards less any shares held in treasury. For the purposes of the calculation of market capitalisation,
a 4p ‘B’ ordinary share is treated as having 10% of the market value of a quoted 40p ‘A’ ordinary share and a 40p ‘C’ ordinary share is treated as
having an equivalent value to a 40p ‘A’ ordinary share.
Net debt – this comprises cash, bank loans, CCFF, debenture stock, preference shares and lease liabilities.
NPS – Net Promoter Score, a metric used to measure customer satisfaction.
Operating profit – this is profit before finance costs and tax and profit on disposal of properties.
PPA – Power purchase agreement is a contract that secures the long term supply of renewable energy.
SAYE – Savings Related Share Option Scheme.
SIP – Share Incentive Plan.
TCFD – Task Force on Climate-related Financial Disclosures, a framework developed by the Financial Stability Board for companies to report on
how climate change will affect their business.
Total annual dividend – the total annual dividend for a financial year comprises interim dividends paid during the financial year and the final
dividend proposed for approval by shareholders at the Annual General Meeting after the completion of the financial year.
Unnecessary plastic – eliminating all plastic which is used instantaneously but is unnecessary for food safety purposes and its removal will not
lead to unintended environmental consequences by its removal, such as increased waste or carbon emissions.
Working capital – calculated as current assets (trade receivables and inventory) less current liabilities (trade and other payables).
Glossary
Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C. 167
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GOVERNANCE
66-104
Five Years’ Progress
Group Income Statement
1
2023
£m
2022
£m
2021
£m
Restated
2020
£m
Restated
2019
£m
Revenue and other income 336.6 253.8 73.4 319.7 324.7
Operating profit before separately disclosed items 25.1 18.5 (40.3) 27.0 40.0
Finance costs before separately disclosed items (12.4) (11.3) (8.4) (7.6) (6.9)
Adjusted profit/(loss) before income tax 12.7 7.2 (48.7) 19.4 33.1
Exceptional items and discontinued operations (2.4) 4.3 (10.5) 146.8 (8.4)
Profit/(loss) before income tax 10.3 11.5 (59.2) 166.2 24.7
Taxation (2.4) (4.4) 9.6 (5.3) (5.2)
Profit/(loss) after income tax 7.9 7.1 (49.6) 160.9 19.5
Non-controlling interest – – – – (0.2)
Profit/(loss) attributable to equity shareholders of the Parent Company 7.9 7.1 (49.6) 160.9 19.3
EBITDA 51.8 44.3 (13.1) 53.9 59.5
1 Continuing operations only.
Assets employed
Non-current assets 696.4 713.8 702.5 757.1 595.3
Inventories 4.2 3.6 2.1 4.0 5.0
Other current assets 10.9 11.3 15.5 18.6 8.4
Assets classified as held for sale 7.0 5.4 9.6 2.6 87.0
Cash and cash equivalents 14.1 15.6 17.1 20.3 11.0
732.6 749.7 746.8 802.6 706.7
Current borrowings (6.0) (120.0) (207.7) (171.7) (50.0)
Other current liabilities (59.9) (64.5) (39.4) (50.7) (62.9)
666.7 565.2 499.7 580.2 593.8
Non-current borrowings (140.9) (27.5) (27.5) (27.5) (206.2)
Other non-current liabilities (83.2) (88.5) (92.7) (122.9) (49.1)
Net assets 442.6 449.2 379.5 429.8 338.5
2023 2022 2021 2020 2019
Per 40p ‘A’ ordinary share
Adjusted earnings 16.10p 9.79p (73.00)p 20.50p 62.78p
Basic earnings 12.98p 11.59p (89.84)p 291.89p 35.12p
Dividends (interim and proposed final)
2
14.68p 11.31p – 132.80p 20.15p
Net assets £7.27 £7.27 £6.87 £7.80 £6.16
Net debt (£ million)
3
(204.6) (212.6) (308.0) (291.8) (245.2)
Gross capital expenditure (£ million) 30.7 25.8 16.5 84.5 58.6
Average number of employees 5,247 4,240 4,219 5,166 5,399
2 2020 includes ‘D’ share dividend.
3 Net debt from FY20 onwards includes amounts relating to leases under IFRS 16.
168 Annual Report and Accounts 2023 Fuller, Smith & Turner P.L.C.
Design and production
www.luminous.co.uk
Fuller, Smith & Turner P.L.C.
Registered Office
Pier House
86-93 Strand-on-the-Green
London W4 3NN
Registered number: 241882
Telephone: +44 (0)20 8996 2000
Email: fullers@fullers.co.uk
www.fullers.co.uk