FULLER, SMITH & TURNER P.L.C. ("the Company")
Publication of the Annual Report and Accounts for the 52 weeks ending 27 March 2021 and Notice of Annual General Meeting 2021
FULLER, SMITH & TURNER P.L.C. announces that the following documents are being posted to shareholders today:
- Annual Report and Accounts for the 52 weeks ending 27 March 2021
- Notice of Annual General Meeting 2021
- Form of Proxy
The Annual General Meeting will be held at The George IV, 185 Chiswick High Road, London, W4 2DR on Thursday, 23 September at 11 a.m., subject to the prevailing Government guidance and restrictions on physical gatherings at that time. Any changes to the arrangements for the AGM will be communicated to shareholders before the AGM through the Company's website and, where appropriate, announced to the London Stock Exchange. To the extent shareholders wish to attend in person and can do so safely and in accordance with the prevailing Government guidance at the date of the meeting, shareholders are requested to pre-register their intentions to attend by emailing FullersAGM@fullers.co.uk by no later than 5 p.m. on Monday, 20 September 2021.
Copies of the above documents are available on the Company's website at www.fullers.co.uk/corporate/investors/general-meetings and in accordance with LR 9.6.1R, have been submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
In compliance with DTR 6.3.5, the following information is extracted from the Annual Report and Accounts 2021 and should be read in conjunction with the Company's Full Year Results Announcement issued on 8 July 2021. Together, these constitute the material required by DTR 6.3.5 to be communicated to the media in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the full Annual Report and Accounts 2021 and page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the Annual Report and Accounts 2021.
For further information, please contact:
Rachel Spencer
Company Secretary
020 8996 2073
Date: 4 August 2021
Appendix
- 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") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
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 adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union), 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 adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, 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 includes 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 40 and 41.
Directors' Statement as to Disclosure of Information to Auditors
The Directors who were members of the Board at the time of approving the Directors' Report are listed on pages 40 and 41. 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
8 July 2021
2. Principal Risks and Uncertainties
The following sets out the principal risks the business faces at present that may impact future performance. This 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 28 to the financial statements.
Emerging Risks
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Description
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Risk Mitigation
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UK ECONOMY
There has been a severe impact to the UK (and global) economy from coronavirus the full impact of which has yet to be understood. In addition, the measures which the Government has put in place have cost billions of pounds, all of which will eventually be recouped through taxation.
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The risk is kept under review as we implement our strategy. It informs the level of liquidity we target to keep in the business, the way in which we invest in our diversified estate to manage fluctuations in different parts of the economy and the flexibility we look for in future leasing arrangements.
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Strategic Risks
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Description
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Risk Mitigation
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CORONAVIRUS AND FUTURE PANDEMIC
The coronavirus outbreak has had a seismic impact on our industry. This has most obviously been through the closure of all our pubs and hotels to help limit the spread of the virus, followed by the enforced social distancing and other restrictions as we have reopened. The guidelines (now laws in some cases) and Government restrictions have changed regularly and are likely to continue to change. There are changes in the behaviour of our customers and in their patterns in visiting our different sites.
The health and safety of our team members is critical and we have implemented appropriate measures for them to carry out their roles safely.
There is an increased likelihood of subsequent pandemics, either entirely new strains of a virus or evolutions of the current strain. The impact of another pandemic is likely to be similar to the experience of the current crisis.
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We have undertaken a significant rightsizing activity across our estate and central support office to reduce our ongoing cost base. We have taken advantage of the Government support for business through the job retention scheme, business rates holiday for the hospitality sector, made use of the Bank of England Covid Corporate Financing Facility and increased our liquidity levels through an equity raise. We continue to partake in discussions with Government and trade bodies to influence the future imposing and lifting of any restrictions.
We continue to monitor our cost base on a monthly and weekly basis. On a site level we review weekly profitability and review the cost of closure and subsequent reopening versus slower trading periods to make the optimal decisions.
We have introduced clear coronavirus procedures for all our sites which are reviewed regularly.
Going forward we are closely monitoring our cash flow to ensure we maintain appropriate level of liquidity, continue to keep a diversified estate and review the composition in the light of current events, negotiating more flexibility into leases going forward, keeping strong ties with Government, building on our current pandemic response plan, and maintaining and enhancing our flexibility in customer offering and operational procedures.
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CONSUMER DEMAND SHIFTS
The business's success is attributable to its ability to anticipate and react to consumer demand.
There have been accelerated changes caused by the impact of coronavirus including, but not limited to, working from home, cashless, people buying alcohol for consumption in the home, demand shift in city venues versus rural; and a continued trend towards healthy and lifestyle choices.
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Management monitor and research consumer trends and run trials of new technologies.
We gather consumer feedback through Net Promoter Score surveys, customer complaints and online and social media reviews.
We analyse retail pricing and market share data to ensure we are competitive but still premium.
In addition, through the experience of dealing with coronavirus, the business has become more flexible in dealing with changes in operational measures, product and service offerings.
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HEALTH AND SAFETY
The health and safety of our employees and customers is a key priority for us.
Operating a large number of sites increases the challenge of ensuring the highest health and safety standards are adhered to.
There is a risk of a customer suffering from failure to deliver our allergens policies and procedures.
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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. Live risk assessments and appropriate adjustments to sites to comply with Government guidelines and restrictions in response to coronavirus are in place. The allergen procedures we have implemented to manage the risks are over and above what is legally required, and are continuously reviewed, to ensure controls remain appropriate.
We continue to utilise the services of expert third party health and safety auditors to undertake annual audits on all our sites and perform detailed investigations in instances where an incident does occur.
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RECRUITMENT AND RETENTION OF EMPLOYEES
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. In particular this applies to the roles held by the support office staff, who may view a career within hospitality as less attractive than other parts of the economy currently.
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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 the new pubs and hotels focused business.
Given the competition for high quality candidates across our sites, we have plans in the year ahead to significantly improve the process and systems surrounding our recruitment strategy to ensure that our offer to all employees is attractive. We provide support for staff from the EU and have increased the number of chef apprentice positions for UK candidates. By investing in our employees and offering them real career paths, we are able to differentiate ourselves from the competition and ensure that we remain the employer of choice in a challenging market.
We continue to review and improve the entire reward scheme to ensure that it is competitive in both pay and benefits for all team members.
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INFORMATION TECHNOLOGY
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.
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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 failover datacentres, and external support for hardware and software. We continue to introduce more preventive measures to reflect the increased risk.
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FINANCING
The current funding arrangements of the business are due to expire in 2022 and there is a risk that we are unable to find suitable financing. In addition, interest rates may increase, adversely impacting profit, and/or there could be a risk of breaching financial covenants.
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We have a good relationship with our current bankers and, given the predominantly freehold nature of our business, we have the ability to offer more certainty than many in our sector when raising finance. Alternative financing approaches are available, including equity, as evidenced by the recent funding.
Interest rate costs have been managed through our long-term financing arrangements and we have successfully waived covenants and agreed new measures that have minimised any risk of breach.
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COST INFLATION
Market uncertainty and increasing demand leads to cost pressures in several areas, such as food and drink production, utilities and staff costs.
The Long-Term Supply Agreement with Asahi Europe Ltd is now embedded in our business model and the impact of Brexit broadly understood.
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Our preference is to have long-term agreements in place with our suppliers linking any price rises to CPI. We have a Long-Term Supply Agreement in place with Asahi Europe Ltd for the supply of beer, cider and other beverages, which limits increases to CPI. Other suppliers are also linked to CPI with long-term agreements.
We regularly monitor prices using relevant commodity databases, review forward looking inflation and all contracts are competitively tendered.
The margin is monitored internally and our retail pricing is monitored quarterly, compared to our competitors.
The implementation of a new property maintenance system has improved controls on property costs.
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SUPPLY CHAIN
There is a risk that poor performance by our suppliers may damage customer satisfaction and could impact the profitability of the Company. Any large scale issue with out of stock items could have a big impact on trade in our Businesses. This risk includes any impact from Brexit that has yet to fully emerge due to hospitality closure either in the UK or EU.
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We have a Long-Term Supply Agreement in place with Asahi Europe Ltd for the supply of beer, cider and other beverages. This ensures that products will meet certain brand performance metrics, and the supply service is subject to key performance indicators ("KPI"s).
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 and strong relationships. The relationship with Asahi and Fuller's is now more mature, and we work with smaller suppliers to ensure that they grow healthy, sustainable businesses outside of their agreement with Fuller's. The supply chain has successfully survived the Covid crisis, which gives us confidence in its ongoing robustness.
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SUSTAINABILITY
There is risk that the failure to manage climate change risk could impact profitability through taxation, regulation and supply chain uncertainty, in addition to reputational damage.
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We have developed a sustainability programme and continue to enhance this. We consider the impact of ESG as part of customer, people, supplier and Tenanted strategies and policies going forward.
For more details, see the Corporate Social Responsibility statement on pages 34 to 38.
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WAGE COST INFLATION
Future labour cost increases may impact the profitability of the business. The principal drivers of such increases are projections for future increases in the National Living Wage, coupled with any potential for a tightening of labour supply. The risk to the business remains despite the pandemic, as unemployment, which although high during the last year of lockdowns, has already begun to fall.
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We aim to mitigate the risk of such increases through a combination of improved operational efficiency and passing the cost on through the prices we charge. Without these opportunities, the business would suffer a reduction in profitability across both pubs and hotels.
Operational efficiency measures include the rightsizing exercises, use of technology (Order & Pay app) and modelling labour per time of day to optimise staffing levels. The introduction of pay banding as part of the reward review will ensure consistency of pay and provide an effective way to manage costs.
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3. 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 £368,000 (2020: £497,000) relating to the provision of actuarial, consulting and administrative services by third parties to the Fuller, Smith & Turner Pension Plan.
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Compensation of key management personnel (including Directors)
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52 weeks
ended
27 March
2021
£m
|
52 weeks
ended
28 March
2020
£m
|
|
Short-term employee benefits
|
3.0
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4.3
|
|
Termination benefits
|
0.1
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1.1
|
|
Post-employment benefits
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0.3
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0.4
|
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Share-based payments
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-
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0.2
|
|
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3.4
|
6.0
|
Company Only
During the year the Company entered into the following related party transactions:
|
52 weeks ended 27 March 2021
|
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
|
-
|
21.0
|
-
|
4.2
|
(133.1)
|
-
|
|
52 weeks ended 28 March 2020
|
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
|
0.3
|
76.4
|
1.7
|
4.4
|
(132.2)
|
7.5
|
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 received rental income from subsidiaries of £nil during the year (2020: £0.3 million). The Company also incurred rental expenses from subsidiaries of £0.3 million (2020: £10.1 million).
In addition, the Company has recharged an amount of £nil (2020: £1.4 million) to its subsidiaries and incurred £0.1 million (2020: £0.1 million) of recharges from its subsidiaries during the year.
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 2021 for the period ended 27 March 2021 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 & 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 Limited
|
00495934
|
|
Ringwoods Limited
|
00178536
|
|
F.S.T. Trustee Limited
|
03163480
|
|
Fuller, Smith & Turner Estates Limited
|
01831674
|
