Fuller, Smith & Turner Annual Report 2012

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FY2012 Annual Report · Fuller, Smith & Turner

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FULLER SMITH & TURNER P.L.C.
Report and Accounts 2012

CONTENTS

ANNUAL SUMMARY

Corporate Progress and
Financial Highlights

Chairman’s Statement

2-5

Group Managing Director’s Review 6-15

Corporate Social Responsibility

16-19

The Board of Directors

BUSINESS REVIEW

GOVERNANCE

20-21

22-27

28-51

FINANCIAL STATEMENTS

52-100

ADDITIONAL INFORMATION

101-105

Corporate Progress

• 30 pubs acquired and

major brewery investment

• Managed Pubs and Hotels
like for like sales up 4.2%

• Tenanted Inns profits1 up 4%

• The Fuller’s Beer Company

profits1 up 2%

• All business divisions in growth

• Net debt to EBITDA2 2.7 times

30.3

29.3

26.6

34.19

39.82

37.36

12.65

11.80

11.00

9.70

9.85

23.0

22.8

29.15

29.12

10
ADJUSTED PROFIT3
£ million

+3%

Financial Highlights

Revenue

Adjusted profit3

Profit before tax

EBITDA6

Adjusted earnings per share4

Basic earnings per share5

Total annual dividend per share5

Net debt7

ADJUSTED EARNINGS
PER SHARE4 Pence

+7%

TOTAL DIVIDEND
PER SHARE5 Pence

+7%

52 weeks ended
31 March
2012
£ million

53 weeks ended
2 April
2011
£ million

253.0

30.3

28.8

47.8

39.82p

42.13p

12.65p

138.2

241.9

29.3

31.0

46.6

37.36p

44.12p

11.80p

88.5

Change
2012/2011

+5%

+3%

-7%

+3%

+7%

-5%

+7%

Pro forma net debt/EBITDA2

2.7 times

1.9 times

1Operating profit before exceptional items. 2Pro forma net debt/EBITDA is adjusted as appropriate for the pubs acquired or disposed of in the period. 3Adjusted profit is
the profit before tax excluding exceptional items. The Directors believe that this measure provides useful information for shareholders as to the internal measures of the
performance of the Group. 4Calculated using adjusted profits after tax and the same weighted average number of shares as for the basic earnings per share and using
a 40p ordinary share. 5Calculated on a 40p ordinary share. 6Pre-exceptional earnings before interest, tax, depreciation, loss on disposal of plant and equipment and
amortisation. 7Net debt comprises cash and short term deposits, bank overdraft, bank loans, debenture stock and preference shares.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Chairman’s Statement

Whatever You Do, Take Pride

HIGHLIGHTS
I am pleased to announce a very positive performance in a
year where we have laid strong foundations for future growth
following capital investment of £75 million across the business,
which included the acquisition of 30 carefully selected pubs.

Our adjusted earnings per share rose by 7% to 39.82p (2011:
37.36p). Over the last five years our adjusted earnings per
share have grown 44%, which is testament to the success of
our long term strategy. Our revenues increased 5% to £253.0

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

million (2011: £241.9 million) and adjusted profit before tax
(excluding exceptional items) improved by 3% to £30.3 million
(2011: £29.3 million).

Managed Pubs and Hotels like for like sales increased 4.2%, with
total revenues up 6%. After duty rises and the temporary effect
of significant development projects on a number of the new
houses added in the year, profits rose by 1%. Over the last five
years revenues from our Managed Pubs and Hotels have grown
30%, showing that against a backdrop of economic recession,
we have continued to make strong long term progress.

Our Tenanted Inns have also performed consistently well over
this challenging period for the sector, and this has continued
with like for like profits up 2% and operating profits1 4% higher.
The Fuller’s Beer Company saw Own Beer volumes rise 1% on
a comparable basis, driven by excellent growth in Exports.

Excessive duty increases that total 45% over the last five
years continue to impact all parts of the business, and this is
demonstrated by a marked difference between domestic and
export sales (where UK duty does not apply). The pub industry
is a significant contributor to the local communities in which it
operates and provides employment for almost 1 million people.
However, we continue to shoulder a disproportionate tax
burden as a result of the current detrimental tax regime. The
Group paid total taxes and other government levies of £114
million for the year, which represents an astonishing 37% of
Group revenues including VAT.

Our aim has always been to invest selectively in high quality
assets where they are available and we are delighted that last
year we had the opportunity to do so. All of the pubs acquired
in the year were carefully chosen and have outstanding long
term potential. 13 have joined the Managed Pubs and Hotels
division and 17 joined the Tenanted Inns division. In addition
to the significant development of a number of the new sites,
we have continued our programme of enhancing our existing
pub estate. We have also made a substantial investment in the
brewery, adding 30,000 barrels of bottle and keg beer capacity
which will support export growth into the future.

Following capital expenditure of £75 million, net debt rose by
just under £50 million to £138.2 million (2011: £88.5 million).
After the arrangement of £60 million of additional bank facilities
in the year, our total bank facilities now stand at £150 million.
The facilities all run until May 2015 and at 31 March 2012 we
had £34 million of undrawn committed funds.

1Operating profit before exceptional items.

QUALITY, SERVICE AND PRIDE

This year we brewed 217,000 barrels
of award-winning ale at our Griffin
Brewery in Chiswick, London’s
only traditional brewery. Our beer
is sold through our own estate of
174 Managed Pubs and Hotels
and 209 Tenanted Inns across the
South of England, as well as pubs,
clubs and supermarkets in the UK
and nearly 70 foreign markets.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Chairman’s Statement continued

EBITDA increased by 3% to £47.8 million
(2011: £46.6 million) and the pro forma
ratio of net debt to EBITDA2 remains
low at 2.7 times (2011: 1.9 times),
allowing us continued flexibility to invest
in future opportunities.

2Net debt to EBITDA is adjusted as appropriate for
the pubs acquired or disposed of in the period.

DIVIDEND
The Board recommends that a final
dividend of 7.60p per 40p ‘A’ and ‘C’
ordinary share and 0.760p per 4p
‘B’ ordinary share be paid on 24 July
2012 to shareholders on the share
register as at 22 June 2012. This is
an 8% increase on last year’s final
dividend. The total dividend per share
of 12.65p per 40p ‘A’ and ‘C’ ordinary
share and 1.265p per 4p ‘B’ ordinary

share represents a 7% increase on last
year, demonstrating our confidence in
the outlook for next year and this will
be covered more than three times by
adjusted earnings per share.

PEOPLE
Since last year’s Annual General
Meeting Alastair Kerr has joined the
Board as a Non-Executive Director
and has become Chairman of the
Remuneration Committee. Alastair
has a wide range of retail experience
having previously held roles at The
Body Shop, Kwik-Fit and Mothercare,
and currently at White Stuff where he
is a Non Executive Director.

On 12 December 2011, Ian Bray
joined the Board as Managing Director
of The Fuller’s Beer Company. I am

pleased to welcome Ian, who joins
us from Bunge S.A. where he was
European Marketing Director and
brings a wealth of experience with
international brands to the Board. On
1 February 2012 Jonathon Swaine was
promoted to the position of Managing
Director of Fuller’s Inns. Jonathon
has been with the Group for six years
and was previously one of our Retail
Operations Directors.

Fuller’s provides great opportunities
for young people looking for a career
in our sector and in 2011 we launched
our first graduate development
programme. The programme provides
the opportunity to experience a wide
variety of roles, and has been well
received among the graduate applicant
community, with our second year now

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Chairman’s Statement continued

The pubs acquired in the year are:

London

The Cabbage Patch, Twickenham

The Coach & Horses, Soho

The Forester, Ealing

The Hand & Flower, Hammersmith

The Lamb & Flag, Covent Garden

The Parcel Yard, King’s Cross Station

The Pavilion End, Moorgate

The Plough, East Sheen

The Seven Stars, Holborn

The Tokenhouse, Moorgate

The Wellington, Waterloo

South East

The Bear & Ragged Staff, Michelmarsh

The Mayfly, Stockbridge

The Boater, Bath

The Crown Inn, Bishop’s Waltham

The Duke of York, Tunbridge Wells

The Fox & Hounds, Lyndhurst

The Frog & Wicket, Hook

The George & Dragon, Westerham

The Horse & Groom, Alresford

The Kingswood Arms, Kingswood

The Market Hotel, Reigate

The Old Plough, Stoke D’Abernon

The Old Thatch Tavern, Stratford-upon-Avon

The Ox Row Inn, Salisbury

The Red Lion Hotel, Wendover

The Sir John Barleycorn, Cadnam

The Three Horseshoes, Laleham

The White Swan Hotel, Stratford-upon-Avon

The William Walker, Winchester

as our flagship beer, we aim to give
our customers a wonderful summer
to remember.

Michael Turner
Chairman

31 May 2012

underway. We have also successfully
implemented a hospitality graduate
programme, which will provide an
effective development route for
graduates to progress to general
manager level in our Inns business.

We are expecting an exciting summer
and the continued support and
enthusiasm from all our staff is
crucial to taking full advantage of this
fantastic time when the spotlight will
be on London. Our success is due to
the performance of a passionate team
who aspire to the highest standards,
and who work unstintingly for the
success of the Group. I would like to
thank each and every one of them for
their hard work and effort over the

past year.

CURRENT TRADING AND PROSPECTS
We have experienced the most volatile
and weather-dependent start to a year
that we can remember. April was the
wettest on record, whilst last week
was glorious. Over the eight weeks to
26 May 2012, our total Managed Pubs
and Hotels sales grew 7.2%, while the
like for like sales decreased 2.3%.
As the summer sun chases away the
economic gloom, we now look ahead
to what promises to be a historic time
for the country.

This coming weekend we have the
Queen’s Diamond Jubilee, followed by
the European Football Championships
and then the Olympic games. With
our pub estate based in London and
the South East and London Pride

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

A selection of
the 30 new
acquistions made
during the year
whose quality
assets are wholly
consistent with
our long term
strategy.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

affluent areas where we previously had
little representation. We have acquired
19 superb freeholds for our estate in
these areas, with six Managed and 13
Tenanted pubs. All of the acquisitions are
in great locations with a strong customer
base and we expect them to respond
well to Fuller’s branding and operational
style. Within the Managed additions, the
White Swan Hotel, Stratford-upon-Avon
and the Crown, Bishop’s Waltham were

Acquisitions 2011-2012
House list excluding acquisitions 2011-2012

Group Managing Director’s Review

Simon Emeny, Group Managing Director

FULLER’S INNS
Fuller’s Inns comprises two operating
divisions. Managed Pubs and Hotels,
where we control all aspects of the
business, and Tenanted Inns, where
Fuller’s owns the property but the pub is
operated by an entrepreneur under the
Fuller’s brand. At the year-end we had
174 Managed Pubs and 209 Tenanted
Inns, following the 30 acquisitions and
the disposal of five properties which no
longer matched our criteria.

Acquisition Strategy
Our acquisitions strategy is to continue
to enhance the quality of our estate,
to increase our London presence and
to expand our reach into prosperous
areas of the South East. To achieve this,
we look at both high quality existing
businesses to which we can add value,
and those which offer significant
development potential. Our key selection
criteria for an individual site are the
local demographics, the character, the

location, the qualities of the underlying
property and the opportunity for us to
enhance the operation.

The financial year under review has been
exceptional in terms of acquisitions for
the Group, adding further high quality
sites to both our Managed and Tenanted
businesses. In addition to this initial
investment, we have invested £4.8
million in the year on the extensive
redevelopment of four of these sites;
with further development planned on
a number of the others in the new
financial year.

In London, we have added seven pubs
to our Managed division and expanded
our Tenanted presence with four
excellent pubs. The majority of the
Managed sites are existing
high turnover, drinks
led operations in great
strategic locations and
they have all traded well
from day one under our
stewardship. In March
2012 we opened the
impressive Parcel Yard
in Kings Cross Station.
This was an exciting new development
in a Grade 1 listed building and is now
the largest station pub
in Britain. In addition,
we have completely
remodelled the
Tokenhouse (formerly
traded as Bluu) in
Moorgate to capitalise
on the premium
local market of this
excellent city site.

In the South East, we
took the opportunity
to expand our
portfolio in selected

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

Group Managing Director’s Review continued

purchased as development sites. These
are remarkable historic buildings and,
following sensitive restoration schemes
that cost more than the buildings
themselves, both have already been
re-launched to the public.

Managed Pubs and Hotels
Revenues for our Managed Pubs and
Hotels business increased by 6% from
£147.2 million to £155.7 million. Like
for like sales grew by 4.2%, the 13 pubs
and hotels acquired in the year added
4% and the one week shorter reporting
period reduced the figure by 2%.
Operating profits before exceptional
items rose at a lower rate of 1% to £18.3
million (2011: £18.1 million), resulting
from a reduced operating margin.
EBITDA grew by 1% to £26.9 million
(2011: £26.6 million).

The operating margin reduction from
12.3% to 11.8% can be explained
by three main factors. First, lower
margins were achieved on drinks as
we were unable to pass on the full 7%
duty increase in March 2011 to our
consumers by raising prices further. If
the ill-conceived duty escalator remains
in place, we would expect this dilution of
margin on drinks to continue. Second,
one-off head office investments made
to enhance our food development
teams, our scheduling systems and our
digital presence also had an impact. The
final and most significant contributor
was the planned, short-term impact of
acquisitions that required closures for
refurbishment and, in the case of the
development sites, were loss-making
prior to their transformations.

Refurbishments
We have continued to improve our
existing estate and in addition to

many smaller projects, we have made
significant investments in 18 houses this
year, totalling £4.2 million. For The King’s
Head, Guildford, The Thomas a Becket,
Worthing and The Barrel and Horn,
Bromley we designed transformational
refurbishments to reposition their offer
within their respective local markets.
The Six Bells, Thame, The Pilot, Chiswick
and The Rose and Crown, Ealing,
each had targeted investments aimed
at developing under-utilised areas of
the pub, for example by transforming
function rooms or gardens. These
investments are already showing
good returns.

Four Pillars
Our business is founded on the four
pillars of outstanding cask conditioned
ales, delicious food, great wines, and
engaging service. The elements that we
can measure financially, accommodation,
food and drinks, all showed strong like
for like sales growth in this financial year
up by 7.4%, 4.5% and 4.0% respectively.

Engaging service is fundamental to
a great customer experience and to
strengthen our ability to deliver this
consistently, we launched “Connection
Week” last October. This initiative saw
one team member from every Managed
Pub and Hotel invited to an inspiring
event where we shared with them
our key messages, delivered by guest
speakers and our own staff. They were
also given the tools to subsequently
cascade these messages in every pub,
to every employee, within one week.
The response to this initiative has been
fantastic and has elevated the motivation
and engagement levels of our pub teams.
We will repeat “Connection Week” in
the coming year. We also continue to
conduct regular focus groups amongst

our employees, which have provided a
powerful means of communication.

In our estate growth in cask ale has
outperformed growth in lager this year,
indicating both a shift in consumers’
tastes, with craft beer the order of the
day, and interesting developments in
our range. New beers and our own
popular seasonals, such as Spring
Sprinter and Summer Ale, continue to
broaden our range of drinks, catering for
every occasion. Our evolving selection
of interesting foreign and niche lager
brands and exclusive wines also ensure
that our pubs satisfy the increasingly
varied tastes of their customers.

Investment in our head office food team
is already showing a return, driving
quality and consistency throughout the
estate. We focus on producing the finest
food in our pubs, using fresh, seasonal
ingredients. The 4.5% like for like
sales growth achieved in the year was
predominantly the result of increasing
the number of covers, rather than price.
We also improved margins through
holding supplier increases below
general food inflation and enhancing
kitchen efficiency.

Accommodation
We are excited about the growth
potential of our accommodation
business in the coming year. Our
acquisition and investment programme
has added 134 rooms to the estate last
year, through a combination of acquiring
sites with accommodation and adding
rooms as part of a redevelopment. At
the year-end we had 620 bedrooms
across 28 properties, an increase of
28% over the last year. The 27 rooms
added at The Drayton Court in Ealing
at the start of the year and upgrades to
rooms at the Fox & Goose Hotel, Ealing

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

MANAGED PUBS
AND HOTELS

Our desire is to run
the best pub in any
area and our strategy
for achieving this is to
deliver on our four pillars;
outstanding cask ale,
great wine, delicious food
and engaging service.

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

Group Managing Director’s Review continued

and the Chamberlain Hotel, Minories
have had the expected positive impact
on room sales. Like for like sales grew
7.4% last year, largely driven by an
increase in average room rate achieved
of 3%.

Since the end of the year we have
completed the £2.8 million refurbishment
of one of our acquisitions, The White
Swan Hotel, Stratford-upon-Avon. Part of
this magnificent Grade II listed building
dates from the 1450s and it features 41
bedrooms which have all been upgraded
to the Fuller’s standard, with high quality
finishes and bespoke artwork on the
walls from local artists.

Amongst many enhancements, this
will assist us in promoting events, allow
customers to make table bookings
online and transform the customer
journey for bedroom bookings. The
new sites are smartphone and iPad
friendly and are integrated with each
pub’s social media activity.

With around 78% of all hotel room
bookings now being made online,
one objective of our increased digital
investment is to improve the numbers
of people booking hotel rooms
directly through our new websites,
decreasing the amount paid in third-
party agency fees.

Digital
The digital arena continues to develop
rapidly and this has opened up
opportunities for us to increase our
interaction with customers and drive
sales. During the year we have invested
in our digital infrastructure and we are
delighted to be launching our new pubs
and hotels websites today (31 May).

MANAGED PUBS AND HOTELS
LIKE FOR LIKE SALES GROWTH %

2012 4.2%

2011 3.9%

2010 2.7%

2009 3.0%

2008 3.6%

GROUP CAPITAL EXPENDITURE £ million

2012 17.1 52.8 4.8 74.7

2011 12.0 12.0

2010 13.9 30.2 44.1

2009 14.0 10.2 24.2

2008 14.8 3.7 18.5

Organic capex

Pub acquisitions

Development of new sites

FULLER SMITH & TUR NER P.L.C. Report and Accounts 2012

MANAGED PUBS AND HOTELS

Accommodation, food and drink
all continue to show like for like
sales growth at 7.4%, 4.5%
and 4.0% respectively.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

TENANTED INNS

We continue to invest in our tenanted estate
through the economic cycle, and have seen
average EBITDA per pub rise by 4%.

FULLER SMITH & TUR NER P.L.C. Report and Accounts 2012
12

FULLER SMITH & TURNER P.L.C. Report and Accounts 2009

Group Managing Director’s Review continued

TENANTED INNS PROFITS £ million

2012 10.3

2011 9.9

2010 9.9

2009 10.2

2008 10.2

tenants’ businesses, we again capped all
RPI linked rent increases to 3%.

The result of this proven strategy is that
operating profits before exceptional
items increased 4% to £10.3 million
(2011: £9.9 million) and like for like
profits were up 2%.

Fuller’s prestigious Griffin Trophy for the
best pub was again awarded this year
to a Tenanted Inn, the Queen’s Head,
Farnham, reflecting the high quality
entrepreneurial calibre of our tenants.

We are continually developing our
proposition and in March 2012 we
launched a new Service Charge
agreement. This offers complete
property compliance, at a Group
purchasing price and removes a large
administrative burden, freeing up
busy tenants to focus on running their
business. Early feedback has been
very positive and a number of tenants
have already signed up. We have also
launched the first phase of an extranet
for tenants, with the ultimate aim of
providing them with a ‘one-stop shop’
for all interaction with Fuller’s, as well
as online access to our discounts,
promotions, help and advice.

Tenanted Inns
Tenanted Inns’ revenue grew by 2%
to £27.5 million (2011: £26.9 million),
driven in part by the acquisitions made
in the estate earlier in the year, which
continue to trade well. Average EBITDA
per pub increased by 4%, again as a
result of our long term strategy.

Our Tenanted Inns acquisition strategy
is to further increase the quality of the
estate by acquiring pubs with long term
potential and disposing of those sites that
no longer fit our criteria. The 17 pubs
added to the division in the year will
significantly increase our average EBITDA
per pub, whilst in the year we completed
our recent disposal programme with the
sale of four tenanted properties.

Operationally our strategy is to
continually raise standards and quality,
to develop the offer to ensure it fits
the Fuller’s brand, and to encourage
entrepreneurship in our tenants. During
the last year we have trained more
tenants than ever, as well as increasing
our range of courses; we have
introduced a Mystery Shopper service
to provide useful customer feedback
to our tenants and we also paid for all
our tenants to become members of the
BII, the leading industry organisation
for licensees.

We have continued to invest in our
estate throughout the economic cycle, a
strategy which benefits both the Group
and our tenants. This policy has seen us
invest £0.6 million last year across 26
pubs and works have been conducted
by Fuller’s and our lessees to upgrade
nearly 50% of our pub interiors in the
last two years. Wholesale drinks prices
rose as higher levels of duty were
passed on but, recognising the impact
of the current economic climate on our

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

Group Managing Director’s Review continued

THE FULLER’S BEER COMPANY
The Fuller’s Beer Company put in a
robust performance in what remains a
difficult marketplace. Revenues increased
by 5% to £109.1 million (2011: £104.1
million). Operating profits increased by
2% to £9.0 million (2011: £8.8 million)
as operating costs also increased 5%.
Operating margin has been diluted due
to both the changing sales mix and the
impact of beer duty rises.

On a comparable 52 week basis, total
beer volumes increased by 2% and
Own Beer volumes were 1% higher than
last year, driven by volumes of Own

FULLER’S BEER BARRELS 000s

2012 217.4 114.3 331.7

20113 215.5 110.8 326.3

2010 220.0 104.7 324.7

2009 215.6 103.6 319.2

2008 216.4 109.6 326.0

Own beer brewed

Foreign beer distributed

32011 barrelage figures are pro-rated to 52 weeks

TOTAL BEER BARRELS

Free On Trade 44%
�Fuller’s Managed
Pubs & Hotels 21%
�Fuller’s Tenanted
Inns 12%
�Off Trade 12%

Exports 11%

FREE ON TRADE SECTOR BARRELS

�Pub Chains 47%
�Free Houses
& Clubs 40%
�Wholesalers 13%

Beer sold in Fuller’s pubs growing 3%
and export volumes increasing by 22%
in the year. Exports continue to grow
strongly and now account for 1 in 6
barrels of Own Beer sold. For the first
time we sold more than 10 million pints
to our overseas customers. During
the year, London Pride increased
market share in our core trading
area of London, increasing 4% in a
level market4.

Our investment of £4.5 million in
new conditioning tanks at the Griffin
Brewery in Chiswick has added 30,000
barrels of conditioning capacity for
bottle and keg beer. The tanks are
now in operation and we have the
ability to increase capacity further at
a lower incremental cost in the future.
This investment allows us to meet the
current growing demand for bottle
and keg beer, whilst also being flexible
enough to produce cask ale should the
need arise.

During the last twelve months we
have continued to evolve our London
Pride marketing, starring James May
our brand ambassador. Following on
from the “When in London” series of
advertising, we are focusing on our
London provenance and renowned
brewing heritage in the build-up to
the Olympics. This latest campaign,
running throughout the summer, will be
appearing on London taxis, Riverboats
and in the capital’s train stations and
will be accompanied by related social
media activity. This will both reinforce
our appeal with Londoners and target
the expected five million visitors to
the capital, with the posters reaching
20 million potential customers.

Our seasonal ale programme continues
to provide our customers with fresh

THE FULLER’S BEER COMPANY

Fuller’s was awarded the title
of National Cask Ale
Brewer of the Year at the
Publicans’ Morning Advertiser
Supplier Awards 2012,
an award voted for by the
nation’s licensees.

and interesting choices, whilst giving
us an excellent testing ground for new
products and a breadth of range to suit
our different sales channels. A great
example of this is Black Cab, where
following success as a seasonal cask ale
in November, this rich dark stout has
been launched in bottle form for our
Export and Off Trade markets. Bengal
Lancer, a premium India Pale Ale, was
originally introduced as a seasonal ale
but has gone on to become our fastest
growing beer in the past year.

Our brewing team in Chiswick are
extremely passionate about brewing
excellence and are constantly both fine
tuning our existing range and developing
new beers. Hope and Glory is our
current seasonal ale which is being
brewed specially for the Diamond Jubilee
using Sovereign hops and Westminster
barley from H.R.H. the Prince of Wales’
farm. Following this, in June we are
looking forward to launching Wild River,
an exciting new mid-Atlantic pale ale
brewed using American hops for their
citrus aroma and flavour.

Simon Emeny
Group Managing Director

31 May 2012

4CGA, cask ale London area, March 2012

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

Corporate Social Responsibility

HERITAGE
Brewing has taken place on our Griffin
Brewery site in Chiswick, West London,
since at least the 17th century and some
of our pubs have been in the Company’s
ownership for over 150 years. Many
of our pubs pre date the Brewery, as
we have become custodians of historic
sites through selected acquisitions.
Fuller’s is acutely aware of the role that
traditional pubs and real ale plays in
British culture and we believe that our
promotion and preservation of this is
central to our appeal to our customers.

16 of our 30 acquisitions this year are
listed buildings and three are examples
of sensitive restorations of sites that had
fallen into disrepair and in one case was
even closed. The Lamb & Flag, Covent
Garden is reputedly one of the oldest pubs
in London, and this 17th century, Grade II
listed building lays claim to having Charles
Dickens as a former patron. The White
Swan Hotel, Stratford-upon-Avon dates
back to 1450, making it one of the oldest
pubs in the town and The Crown, Bishop’s
Waltham was built in the 16th century
and boasts the billeting of the defeated
Admiral of the Battle of Trafalgar as part
of its illustrious history. The investment
we made in these three properties was
considerable, but essential in order to
restore their individual characters, at the
same time as delivering an exceptional
customer experience.

Our heritage plays a large part in how
we brew and trade today. The last 30
years has seen most of the historic
breweries of London closing, however
within the last 10 years there has also
been a renaissance of craft brewers in
London. Fuller’s is proud to play an active
part in the London Brewer’s Alliance
(LBA), a group of brewers who want to

and promotions. In the last financial year
they have supported dozens of charitable
causes, ranging from local hospices to
the RNLI.

In late 2011, many of our male employees
dispensed with their razors and actively
campaigned for “Movember” – the
aim of which is to raise vital funds and
awareness for men’s health, specifically
prostate cancer and other cancers that

celebrate the resurgence of brewing in
London and promote excellence in all
aspects of brewing within our capital
city. We have hosted meetings of the
alliance in Chiswick, attended and
supported numerous LBA beer festivals
and promoted appreciation of the variety
and flavour of hops through the London
Brewer’s Alliance Hop Shoot festival.

We continue to draw on our fantastic
brewing heritage and during the year
produced the second beer in our Past
Masters series of historic brews. These
beers are brewed using, as close as we
can achieve, the methods and materials
available to the brewers of yesteryear
to encapsulate the taste of the age. Past
Masters No 2 Double Stout is based on a
recipe from 1893 using organic heritage
Plumage Archer Barley Malt.

COMMUNITY
Throughout our history, Fuller’s has always
been an integral part of the communities
in which we operate. We encourage
our pubs to become the centre of their
communities and we support their
work in sponsoring local events with
donations and assistance with marketing

FULLER SMITH & TUR NER P.L.C. Report and Accounts 2012

Corporate Social Responsibility continued

RESPONSIBLE RETAILING
The Fuller’s Beer Company prides itself
on the quality of beers that it brews,
as numerous awards over many years
testify. The premium positioning of our
brands is supported by advertising and
promotional activity where the emphasis is
on moderate consumption and taking time
to appreciate a great beer that’s worth
savouring. Our strategy continues to
promote quality rather than quantity.

Alcohol misuse and the attendant issues
of underage drinking, poor health and
other social problems are matters of
legitimate concern in the UK today.
We take these issues seriously and are
committed to playing a leading role in
responsible retailing to reduce their
impact. We have always believed that a
well-managed pub offering a relaxed and
safe environment, catering for all ages is
central to a community’s social cohesion
and plays a vital role in Britain’s social life.

We are active members of the BBPA
(“British Beer and Pub Association”) and
the BII (“British Institute of Innkeeping”),
as well as supporting Drinkaware, the
government sponsored trust which aims
to promote responsible drinking and help
reduce alcohol misuse and alcohol-related
harm. Copies of our “A Smarter Guide to
Drinking” are available in all our pubs and
clearly illustrate safe, responsible drinking
levels. The guide also suggests the pairing
of eating and drinking as a safer way to
consume alcohol.

We never promote initiatives that
encourage or lead to excessive drinking,
such as “Happy Hours”. We aim to
tailor our pubs’ offer to the needs
of the communities they serve. This
may involve encouraging families with
children to visit us or encouraging our
managers to contribute to local Pubwatch

affect men. The moustachioed Fuller’s
team raised over £36,000 (more than the
whole of France) and were 11th on the UK
leader board!

This year, for the first time, we supported
the main annual fund raising event for
the FreeKicks Foundation – a 73 mile
walk from Barnet FC to Wembley via
every London Football League club. This
charity arranges days to remember for
ill, bereaved or disadvantaged children
at their favourite football club. As well
as making a donation to FreeKicks, we
provided much-needed refreshment at
a number of our pubs on the route for
the walkers.

Locally to our Griffin Brewery, we
support organisations such as Chiswick

House and Gardens, the Chiswick Pier
Trust, Chiswick Horticultural Society and
St Mary’s Convent & Nursing Home.
We sponsor the Christmas Lights on
Chiswick High Road, the annual open-air
opera at Chiswick House and a 10-mile
running race along the river, the Thames
Towpath Ten. We also make financial
contributions to numerous national
charities such as Children in Need and
each year we support the London Pride
Walk and Fun Run for Cancer Research
UK, which has been running annually
since 1996. We have continued our
support to Seafarer’s UK by donating £5
for every barrel of Gales Seafarers Ale
sold. Seafarers UK supports a range of
maritime charities across the country.
In addition, Fuller’s directly provides
around £100,000 worth of products for
use as prizes at numerous charity events,
raising funds for a variety of causes from
local schools to major national charities.

Fuller’s is proud to continue its
sponsorship of the London Marathon
which holds the Guinness world record
as the largest annual fund raising event in
the world.

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

Corporate Social Responsibility continued

schemes. Our pub managers and staff
operate the “Challenge 21” proof of age
scheme. This policy is audited through
unannounced test purchases. Managers
are also trained on conflict management
so that staff are prepared to handle any
difficult situations with professionalism
and diligence.

For Fuller’s, beer is a drink that should
be enjoyed in moderation and, although
beer is one of most diluted forms of
alcohol, we believe the flavours should
be savoured and revered sip by sip.

PEOPLE
The Fuller’s family ethos remains strong
and is still very evident throughout the
business. Many employees stay with
Fuller’s for much of their working life
as demonstrated every year by the
numerous recipients of our long service
awards. However we are not complacent
and have begun a number of initiatives
to make Fuller’s an even better place
to work.

We have implemented a Mentor
programme during the year, utilising
the skills and experience of our senior
managers to support the development

of our future leaders. Our graduate
programme aims to attract and cultivate
new talent.

The Company has continued to
strengthen its commitment to health and
safety issues both at the Brewery and in
the retail estate, updating our approach
through a “Safety First” project. “Safety
First” has entailed a complete revision
of manuals, processes and procedures
and the implementation of a new health
and safety portal across the estate. The
portal has made tasks easier and has
provided more effective monitoring
and compliance.

This year we launched our ride to
work cycle scheme. This has been
well received and links in with our
environmental and wellbeing agendas.

We recognise and reward excellence
throughout the business, whether
through promotion or a number of
internal awards. We value loyalty very
highly and offer a range of benefits
to encourage employees to take a
stake in the Company’s long-term
success, such as the Save As You Earn
Scheme and Share Incentive Plan.

ENVIRONMENT
The UK has not been alone in
experiencing erratic weather patterns
throughout the year and each drought or
flood serves as a reminder that the world’s
climate is changing. We take this risk very
seriously and continue to work to reduce
our energy and water consumption and
manage our waste more effectively.

During the year we have created the
new role of Environmental Analyst which
provides us with a dedicated resource
for green initiatives. This focus has
allowed us to reduce our electricity
and gas consumption by 4% and 7%
compared to the prior year on a like-
for-like basis. Although the warmer
winter has had an effect on heating
load, the impact of previous investments
we have made in energy saving are
visible throughout the Company.

We have conducted a number of LED
lighting trials and have begun to use this
lighting where appropriate.

With new technologies for improving
environmental performance coming on
to the market almost daily, it is important
to understand those that will be effective

FULLER SMITH & TUR NER P.L.C. Report and Accounts 2012

We understand that our customers want
locally sourced food and we want to
support local farmers. We selectively
source to give all our menus a distinctly
local character and have particularly
strong links with food suppliers in the
South of England through our support of
umbrella organisations such as Hampshire
Fare and the New Forest Marque. We
encourage the transportation of local
food on existing vehicles to reduce food
miles. All our bottled water comes from
New Forest Spring water with the New
Forest marque, a symbol of quality and
local provenance.

We show our commitment to sustainable
and ethical sourcing by ensuring all
our coffee is Fair Trade. We work hard
with our suppliers to reduce packaging
and are proud to say that 95% of the
materials we use to package our beer are
recyclable. We will continue working with
our suppliers with an aim to push this up
to 100%.

Corporate Social Responsibility continued

and those that will not. Accordingly, we
have nominated a number of sites to act
as reference points for our pub estate and
will equip them with sub-metering so that
we can accurately measure the impact of
equipment or behaviour change.

Over 80% of our managed houses are
separating cardboard and glass from
general waste and another 50 houses are
now separating out food waste. In order
to further reduce the amount of waste we
send to landfill, the general waste of nearly
70% of our managed pubs has been
diverted to RDF (“Refuse Derived Fuel”).
This is fuel produced by shredding and
dehydrating solid waste and can be used
in a variety of ways to produce electricity.

Following successful trials of waterless
urinals, we have adopted the technology
as standard for all development sites and
where we are refurbishing toilets. So far
we have converted 15 sites and a further
100 conversions are planned for the next
financial year.

SUPPLIERS
We recognise that our activities have a
broad impact and that our responsibilities
extend beyond our own operations to

those of our suppliers. We understand we
have a responsibility to the environment
to ensure that the products we source
are sustainable.

We constantly review our suppliers and
aim to forge long-term partnerships which
allow both them and us to plan for the
future with some degree of stability. For
example we enter into forward contracts
with our hop and barley farmers not only
to secure our own supply but also to
guarantee orders from Fuller’s giving our
farmers the confidence to invest in their
harvests for future years.

Our suppliers’ performance on human
rights, health & safety and other ethical
issues form a key part of our buying
decisions. We require all of our primary
suppliers to provide us with their CSR
policy and we aim to ensure that all
suppliers adopt similar values to Fuller’s.

Our menus reflect the seasons wherever
possible and 100% of our chips come
from British Farmers. All of our fresh
meat is sourced from within the UK and
all of our eggs are from British farms
meeting the Lion Quality standards and
carrying the Lion Quality symbol.

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

The Board of Directors as at 31 May 2012

†
Michael Turner

Simon Emeny

James Douglas

Richard Fuller

Ian Bray

Jonathon Swaine

John Dunsmore* #†

Lynn Fordham* #†

Alastair Kerr* #

Nigel Atkinson* #

Sir James Fuller Bt.

Marie Gracie

Executive Directors

Michael Turner†
Chairman
Aged 60. Joined in 1978. A Chartered
Accountant with international experience.
Initially ran the Wine Division as Wine Director.
Became 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.
Appointed Master of the Worshipful Company
of Vintners in July 2011. Chairman of the
Nominations Committee.

Simon Emeny
Group Managing Director
Aged 46. Joined in 1996 from Bass plc where
he held a variety of senior operational and
strategic planning roles. Appointed a Director in
May 1998. Non Executive Director of Dunelm
Group plc. An Economics graduate and alumni
of Harvard Business School.

James Douglas
Finance Director
Aged 46. Appointed in 2007 from LSE-listed
telecoms operator Fibernet Group plc,
where he was Finance Director. Spent eight
years with Deutsche Bank as an investment
banker. Qualified as a prize-winning Chartered
Accountant with PricewaterhouseCoopers.
Holds a first degree in Physics and a Masters
degree in Economics.

Richard Fuller
Sales and Personnel Director
Aged 52. Joined the Company in 1984. Appointed
a Divisional Director with responsibility for Sales
in 1992, and additionally for Personnel in 2005.
Appointed to the Board in December 2009. Also
responsible for Public Relations. A GMP Graduate
of Harvard Business School.

* Member of the Remuneration Committee.
# Member of the Audit Committee.
† Member of the Nominations Committee.

FULLER SMITH & TUR NER P.L.C. Report and Accounts 2012

Ian David Bray
Managing Director of The Fuller’s Beer Company
Aged 48. Appointed in 2011. Previously European
Marketing Director of Bunge S.A., a Swiss based
global foods and agricultural business. He has held
FMCG marketing and senior management roles at
both international and domestic level, working with
companies such as Wrigley, Müller and SmithKline
Beecham. A Business Studies graduate.

Jonathon Swaine
Managing Director of Fuller’s Inns
Aged 41. Appointed in February 2012. Joined the
Company in 2005 and appointed as Operations
Director for Fullers Inns in 2007. Has previously
held positions at Carlton Communications and
Molson Coors. An Arts graduate with a Masters
degree in Marketing.

Company Secretary

Marie Gracie
Aged 46. Appointed in 1998 after an offshore
appointment. Formerly Company Secretary
of Argos PLC. A Chartered Secretary and Arts
graduate. Secretary of The Chiswick House and
Gardens Trust.

Financial Statements

Contents

ANNUAL SUMMARY

BUSINESS REVIEW

Financial Review

Risks and Uncertainties

GOVERNANCE

Directors’ Report

Directors’ Statements

Corporate Governance Report

Directors’ Remuneration Report

FINANCIAL STATEMENTS

Independent Auditors’ Report

Group Income Statement and Group and Company
Statements of Comprehensive Income

Balance Sheets

Group and Company Statements of Changes in Equity

Group and Company Cash Flow Statements

Notes to the Financial Statements

ADDITIONAL INFORMATION

101 Directors and Advisers

102 Shareholders’ Information

103 Glossary

105

Five Years’ Progress

Independent Non-Executive Directors

John Dunsmore* #†
Aged 53. Appointed in January 2009. Senior
Non-Executive Director. Former Chief Executive
of C&C Group plc and former Chief Executive of
Scottish & Newcastle plc prior to its takeover by
Heineken and Carlsberg in 2008.

Lynn Fordham* #†
Aged 49. Appointed in January 2011. Chairman
of the Audit Committee. Chief Executive of SVG
Capital. Previous appointments include CFO SVG
Capital, Deputy CFO at BAA plc, Director of Audit
and Risk at Boots Group plc and Finance Director
of ED & F Man Sugar. In addition, she spent ten
years at Mobil Oil in a number of financial and
operational roles predominantly internationally.
A Graduate and Chartered Accountant.

Alastair Kerr* #
Aged 62. Appointed in August 2011. Chairman
of the Remuneration Committee. Non Executive
Director of high street clothing retailer White
Stuff Ltd. He has previously held senior roles
at Mothercare and Kwik-Fit, and was Managing
Director of Europe, Middle East and Africa for
The Body Shop and Managing Director Europe
for Virgin.

Non-Executive Directors

Nigel Atkinson* #
Aged 58. Appointed in April 2006. Formerly
Managing Director of George Gale & Co. Ltd.
Non Executive Chairman of Centurion Safety
Products Limited, Non Executive Chairman of
Premier Pubs Estates Ltd. and Non Executive
Director of Global Charities Ltd. Vice Lord-
Lieutenant of Hampshire since 2007. Master of
the Worshipful Company of Brewers 2010-2011.

Sir James Fuller Bt.
Aged 41. Appointed on 1 June 2010. Served in
The Life Guards 1991-1998. Employed by the
Company from 1998-2003, working in the tied
and managed house estate and has since been
running his own business.

FULLER SMITH & TURNER P.L.C. Report and Accoun ts 2012

Financial Review

Financial Performance
The Chairman’s Statement and Group Managing Director’s Review on pages 2 to 14 cover a comprehensive review of the headline
financial results for the year just ended.

Business Review
The key issues facing the Group are covered in the Chairman’s Statement and Group Managing Director’s Review. The key performance
indicators (KPIs) which the Group uses to monitor its overall financial position can be summarised as follows:

EBITDA
Pro forma net debt/EBITDA
Adjusted profits
Adjusted earnings per share increase

Managed Pubs and Hotels
Invested Managed Pubs and Hotels like for like sales growth
Wet like for like sales growth
Food like for like sales growth
Accommodation like for like sales growth

Tenanted Inns
Tenanted Inns like for like profits
Like for like barrels sold
Average EBITDA per pub

The Fuller’s Beer Company
Own Beer barrels sold
Foreign Beer barrels sold
Total Beer barrels sold

2012
£47.8 million
2.7 times
£30.3 million
7%

2011
£46.6 million
1.9 times
£29.3 million
9%

+4.2%
+4.0%
+4.5%
+7.4%

+2%
-4%
+4.2%

+1%
+3%
+2%

+3.9%
+3.2%
+5.1%
+11.6%

-1%
level
+2.5%

-2%
+6%
level

All like for like and barrelage figures quoted for 2012 and 2011 are on a 52 week basis, with the exception of Managed Pubs and Hotels like for like sales growthsstated
in 2011 which remain on a 53 week basis.
Full definitions of these financial KPIs can be found in the Glossary, and a commentary on them can be found in the Chairman’s Statement andGroup Managing
Director’sReview.
Pro forma net debt/EBITDA is adjusted to reflect the position as if acquisitions and disposals that took place during the year had occurred on the first day of the year.

The principal non-financial metrics monitored by senior management are:

Managed Pubs and Hotels
Mystery shopper programme; “traffic light” rating of pub stock and business audits; cellar inspections; level of customer complaints;
utility indices; and health and safety incidents.

Tenanted Inns
Cellar inspections; Own Beer stocking; Tenant training; number of tenancies at will; retention of tenants; and number of tenants on cash
with order.

The Fuller’s Beer Company
Production indices; utility indices; beer losses in production; packaging line efficiency; warehousing and logistics volumes; health and
safety incidents; and beer quality.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Financial Review
continued

Our Operating Results
We have grown revenue by 5% on the prior year despite the comparative period comprising 53 weeks. Half of the growth comes from
pub acquisitions, with the balance from duty-driven price rises. Our operating profits before exceptional items grew by 2% to £34.9 million
(2011: £34.1 million), with the largest contribution to growth coming from the Tenanted Inns division. EBITDA also increased by 3% to
£47.8 million (2011: £46.6 million). We acquired 30 pubs during the period, and disposed of four Tenanted pubs, one Managed pub
which no longer met our criteria and an additional unlicensed property.

Finance Costs
Net finance costs before exceptional items reduced to £4.6 million from £4.8 million as we received net finance income of £0.3 million
on our net pension liabilities compared to a net finance charge of £0.1 million in the prior year. This was offset by interest costs of £4.6
million on loans and debentures, compared to £4.4 million in the prior year, as average borrowings during the year increased. Net
borrowings increased from £88.5 million at the start of the year to £138.2 million at the year end due to our acquisitions investment.
Our blended cost of borrowings fell from 4.5% last year to 4.1% this year as the new borrowings, some of these at variable rates, have
been at a lower cost than existing borrowings. We expect to pay down some of the cheaper variable rate borrowings in the coming year
and hence the blended cost of borrowings is expected to rise marginally to circa 4.2% next year.

Exceptional Items
Net exceptional losses before tax of £1.5 million comprised £3.0 million of acquisition costs, a net £0.9 million onerous lease charge
and £0.2 million of non-cash losses in relation to financial instruments which are not effective for hedge accounting purposes, offset by
a profit on the disposal of properties of £0.6 million and a net reversal of property impairment charges of £2.0 million. After exceptional
items, profit before tax was therefore £28.8 million (2011: £31.0 million). We benefitted from a non-cash exceptional deferred tax credit
of £2.5 million relating to the reduction in the UK corporation tax rate from 26% to 24% which came into effect on 1 April 2012. The
total impact of these items was that basic earnings per share were greater than the adjusted figure at 42.13p (2011: 44.12p). In the prior
year the basic earnings per share were also impacted by exceptional items, with exceptional profits before tax of £1.7 million. These
comprised a profit on the disposal of properties of £2.7 million, insurance claim income of £0.4 million, offset by net property impairments
of £1.4 million.

Tax
A full analysis of the tax charge for the year is set out in note 8 to the accounts. Tax has been provided for at an effective rate of 26.1%
(2011: 28.3%) on adjusted profits. The Group’s overall effective tax rate was boosted by the deferred tax effect of the reduction in UK
corporation tax rates from 26% to 24% and was 17.7% (2011: 20.0% after the corresponding effect of the reduction in rates from 28%
to 26%).

Capital Spending, Disposals and Asset Impairment
Our capital spending of £74.7 million included the acquisition of 30 new pubs and substantial further investment which has been made
in many of these sites. The Parcel Yard, a leasehold in the new Kings Cross rail concourse and the Crown, Bishop’s Waltham were not
trading on acquisition and in these historic buildings, fantastic pubs have been created. The White Swan Hotel in Stratford-upon-Avon,
which adds 41 boutique rooms to the estate and the Tokenhouse, formerly Bluu, on Moorgate have also been completely remodelled.
£7.0 million was invested in the brewery during the year. The majority of this comprised new conditioning tanks adding 30,000 barrels
of capacity for bottled and keg beer, to accommodate the rapid growth in Export sales. Capital expenditure last year was at the lower
level of £12.0 million, which comprised mainly refurbishments and did not include any pub acquisitions. Asset disposals raised a total
of £1.9 million and we recorded an exceptional gain on disposal of £0.6 million. During the year we conducted a comprehensive
impairment review and have recorded a net reversal of impairment charges of £2.0 million in respect of our property assets.

Pensions
The accounting deficit for defined benefit pensions has risen by £12.7 million to £19.1 million (2011: £6.4 million). This was driven
principally by an increase in the calculated present value of pension obligations from £83.5 million to £98.2 million, largely due to changes
in assumptions in line with current economic conditions. The double A corporate bond yield decreased from 5.55% to 4.60% and the
assumption of long term inflation reduced from 3.5% to 3.2%. The increase in the liability was partially offset by an increase in the value
of scheme assets from £77.1 million to £79.1 million. Deficit recovery payments of £0.7 million were made during the year. These
payments will be reviewed in July 2013 at the next triennial valuation.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Financial Review
continued

Shareholders’ Return
Adjusted earnings per share were 7% higher than last year at 39.82p. The proposed final dividend of 7.60p per 40p ‘A’ ordinary share,
together with the interim dividend of 5.05p per share already paid makes a total of 12.65p and compares with a total dividend of 11.80p
last year. The total dividend per share has grown by 7% and will be covered 3.1 times by adjusted earnings per share, compared with
3.1 times in the previous year. Shareholders’ equity at the year end was £235.3 million.

During the period 1,096,154 ‘A’ ordinary 40p shares were repurchased into treasury for £7.7 million (2011: 15,997 for £0.1 million).
In addition 86,009 ‘A’ ordinary 40p shares and 338,614 ‘B’ ordinary 4p shares were purchased for £0.8 million by or on behalf of the
Trustees of the Share Incentive Plan and the LTIP Trustees to cover future issuance (2011: 180,485 ‘A’ shares and 21,933 ‘B’ shares for
£1.2 million). The average price paid was 707p per ‘A’ ordinary 40p share. The middle-market quotation of the Company’s ordinary
shares at the end of the financial year was 715p. The highest price during the year was 752p, while the lowest was 600p. The Company’s
market capitalisation at 31 March 2012 was £411.3 million.

Cash Flow
Cash generated from operating activities was £42.0 million (2011: £36.0 million). The £6.0 million increase was largely due to the prior
year being a 53 week accounting period where the Group enjoyed less favourable working capital flows as a result of an additional supplier
payment run. In line with this, creditor days have also returned to a more typical level of 46 (2011: 30). Our capital expenditure in the
period at £74.7 million (2011: £12.0 million) was much higher than last year and includes the acquisition of 30 pubs and 18 major
refurbishments. The net cash outflow from investing activities, after net income from disposals of £1.9 million (2011: £4.0 million), was
£72.8 million (2011: £8.0 million). Net debt increased by 56% from £88.5 million to £138.2 million. The ratio of net debt to EBITDA
increased from 1.9 times to 2.7 times on a proforma basis, adjusted for acquisitions and disposals during the year. This level gives us
continuing strategic and operational flexibility.

Financial Position – Bank facilities
In August 2011 and March 2012 the Group entered into two new £30.0 million facilities with Rabobank and the Co-Operative Bank
respectively. These new facilities are co-terminus with existing facilities and are on similar or better terms. As with the existing facilities,
there is no amortisation required and the Group is still free to raise additional funds without existing facilities needing to be either waived
or amended. Our total committed bank facilities stood at £150.0 million at the year end, of which £115.5 million was drawn and £34.5
million was available. The increase in facilities has been used to fund the significant level of capital expenditure invested during the year,
whilst maintaining headroom at an appropriate level. During the year we hedged a further £25.0 million of bank borrowings with an
interest rate swap, taking our total hedged bank borrowings to £85.0 million. £65.0 million is swapped at a blended interest rate of 1.8%
and £20.0 million is subject to a cap of 4.0%.

Financial Position – Other Sources of Funding
The Group’s financing is a mix of debentures, cumulative preference shares, overdraft, cash and short term deposits as disclosed in notes
22, 24 and 26. Other financial assets and liabilities such as trade receivables and payables arise through the Group’s operating activities.
Derivative instruments as detailed below are used to manage interest rate and foreign exchange risk. The Group does not trade in financial
instruments.

The Group had £34.5 million of unused committed loan facilities at the year end with no repayment obligations for more than three years.
The table below analyses available and undrawn borrowing facilities at the balance sheet date:

Uncommitted overdraft
Committed bank facility
Debenture stock
Preference shares
Total

Maturity Date
2013
2015
2023-2028
none

Total available
£ million
7.5
150.0
25.8
1.6
184.9

Amount undrawn
£ million
7.5
34.5
–
–
42.0

The Group is able to operate with negative working capital – trade and other payables were £18.4 million greater than the aggregate of
inventories and trade and other receivables at the year end (2011: £11.2 million greater).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Financial Review
continued

Financial Risks and Treasury Policies
The Group Treasury Team consists of the Finance Director and the Group Financial Controller. The objectives of the Treasury Team 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.

The Group Treasury Team monitors the overall level of financial gearing weekly, with our short and medium-term forecasts showing
underlying levels of gearing which remain within our targets.

Interest Rate Risk
It is Group policy to hedge the interest rate risk of at least 50% of our gross borrowings by either the underlying instrument being at a fixed
rate, or by taking out interest products to fix or cap the interest rate. At the Balance Sheet date 79% of the Group’s gross borrowings were
at fixed or capped rates and the fixed rates ranged between 1.2% (excluding bank margin) and 10.7%.

Committed bank facility (net of arrangement fees)
Debenture stock
Preference shares
Total borrowings

Total drawn
£ million
114.7
25.8
1.6
142.1

Amount hedged
£ million
85.0
25.8
1.6
112.4

Hedged
%
74%
100%
100%
79%

Foreign Exchange Risk
The Group has some foreign currency risk as it both imports wines denominated in Euro, US dollars and Australian dollars and exports
beer in US dollars. There is some natural hedge of US dollars and the net currency risks may be covered by entering into forward foreign
exchange contracts.

Risks and Uncertainties Facing the Group
We report in detail the risks and uncertainties facing the Group on pages 26 and 27. In summary we identify three different generic types
of risk and uncertainty. Regulatory risks encompass the risks to our business of increased regulation of the sale of alcohol, health and
safety in the workplace and pensions. Economic and market conditions include the risk to the business due to the strength or otherwise
of the economy, cost pressures including the increase in the minimum wage, the risk of assigned leases reverting to the Group and
changes in consumer trends. Operational risk includes damage to our property, brands or reputation and our reliance on information
systems to operate efficiently on a daily basis.

Going Concern Statement
The Group’s business activities, together with the factors likely to affect its future development, performance and position have been set
out in the Chairman’s Statement and Group Managing Director’s Review on pages 2 to 14 and in this Financial Review. The financial position
of the Group including the various sources of finance available and its cash flows have been described herein. In addition, note 26 of the
financial statements includes detailed disclosure on the Group’s objectives, policies and processes for managing its capital; its financial
risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit and liquidity risk.

The Group is vertically integrated, is diversified across a wide range of sales channels and is strongly cash generative. We have performed
well throughout the recent economic cycles. Our financial position is strong as we have always borrowed prudently. We continue to be
well placed going forward and have £150 million of bank facilities in place until May 2015 of which more than £30 million is not drawn.

On the basis of current financial projections and having considered the facilities available the Directors are confident that the Group and
Company have adequate resources to continue in operational existence for the foreseeable future and, accordingly, consider that it is
appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements.

James Douglas
Finance Director

31 May 2012

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Risks and Uncertainties

In the course of its normal business, the Group continually assesses and takes action to mitigate the various risks encountered that could
impact the achievement of its objectives. As detailed in the Corporate Governance Report, there are systems and processes in place to
enable the Board to monitor and control the Group’s management of risk. The Audit Committee regularly reviews the effectiveness of
this process and seeks to ensure that management’s response is adapted appropriately to the changing environment.

The following sets out what the Board considers to be the principal risks which affect the Group at present, although it is not intended
to be a comprehensive analysis of all the risks that the business may face. In addition, the key financial risks to the Group are detailed in
note 26c to the financial statements.

Regulatory Risks
Regulation of the Sale of Alcohol: Within our industry there is always the risk that the Government may change legislation in a manner
that may adversely affect us. Notably, in the past five years UK alcohol excise duties have been increased by more than 45% and the
duty escalator introduced in 2009, unless abandoned, will further raise alcohol duties annually at a rate of 2% above the rate of inflation.
There is a risk that continued inflation busting duty increases may depress sales or further reduce margins in our industry. The sale of
alcohol below the level of duty plus VAT was banned in April 2012, and the Government has announced plans to introduce a minimum
price per unit of alcohol as early as 2014. However, neither of these measures are likely to tackle below cost selling in the supermarkets.

Beer Tie:Whilst the European Union has renewed the block exemption with regard to the Beer Tie until 2022, the Beer Tie continues to
be the subject of much debate and scrutiny in the UK. Our Tenanted Code of Practice is accredited by the British Institute of Innkeeping
and we are working with industry bodies and other pubs companies towards an industry standard Code of Practice. We believe these
measures have further improved the transparency and openness of our Tied agreements. There remains a risk that other authorities will
interfere with the existing arrangements leading to the abolition of the Beer Tie. This would necessitate a change in our business model,
with higher property rents and lower prices for the supply of drinks being charged. However, we believe this threat has diminished over
the last 12 months with the production of further BBPA industry codes of practice.

Health and Safety: The health and safety of the Group’s employees and customers is a key concern to us. We report and investigate
both accidents and near misses. In order to reduce the risk of kitchen fires in our Managed Pubs and Hotels we have automatic fire
suppression systems in every kitchen. A Health and Safety Committee is in place in order to oversee the operation of the Group’s health
and safety policies and procedures, and to regularly update its training programme to ensure that all risks are identified and properly
assessed and that relevant regulation is adhered to.

Pensions:The Group operates several pension schemes including a defined benefit pension scheme and management continue to closely
monitor developments in relation to pension scheme funding. Although the defined benefit scheme is now closed to new entrants, there
remains a significant pension liability on the Balance Sheet. There is therefore a risk to the Group that a change in legislation could impact
cash flow by setting a minimum funding level that is above the Group’s current contributions or by requiring higher contributions by a
change to the basis of calculating the scheme deficit. The Group has a programme in place to reduce the deficit and made an additional
contribution of £0.7 million in the 52 weeks ended 31 March 2012. The Group has agreed with the trustees to make further annual
additional contributions of £0.7 million in order to reduce the deficit.

Economic and Market Conditions
Strength of the Economy: We are exposed to the overall strength of the UK economy and its influence on consumer spending. The
Group constantly invests in its key brands and ensures it takes advantage of the opportunities presented to encourage customers into
its pubs. The weak economic recovery is being affected by high inflation, unemployment at its highest level since the early 1990’s, and
real terms pay reductions. The UK technically re-entered recession in late 2011 and the nation continues to feel the impact of Government
spending cuts and tax rises. Combined, these factors are likely to reduce total UK consumer spending in the short term. Nonetheless,
the outlook is better than the deep recession the UK has just endured and the Group traded well through that difficult period.

The Group maintains a high quality of operation and product in order to maintain its competitive position. However, the Group’s pubs
compete for consumers with a wide variety of other branded and non-branded pubs and restaurants as well as off-licences, supermarkets
and other leisure outlets. We constantly review the position of our pubs in the market and consider that our differentiators and brands
put the Group in the best possible position for the current marketplace.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Risks and Uncertainties
continued

Assigned Leases:The Group has in the past assigned a number of property leases to third parties. The Group no longer operates these
properties and does not account for the rents due under the leases. There is a risk that, in the event of default on the rental payments
by an assignee, the landlord would seek to recover the unpaid rents from the Group. The Group monitors the credit worthiness of the
assignees, but ultimately the risk we face is a result of the third parties’ performance, itself largely influenced by the economy.

Supply Chain Failure:Whilst we brew our own beer in Chiswick, our production process and our pubs rely on a number of third parties
to provide continuity of supply. The quality and availability of these supplies are integral to our ability to operate. Suppliers are carefully
selected and we maintain close relationships with them. Our fresh food is delivered by a number of suppliers which avoids concentration
in a sole supply arrangement. However, the weak economic climate increases the risk of a supplier failure, and therefore we continually
review contingency plans in the event of a failure in supply. Brewing is an energy intensive process and we rely upon continuity of supply
to Chiswick, although we maintain several days of gasoil on site as a backup.

Cost Increases: Utilities and agricultural produce such as hops, malt and barley, as well as food produce are significant inputs for the
Group and have been subject to considerable price increases in recent years. Further input cost increases could impact the Group’s
profitability. Management has in place arrangements with some of its key suppliers to secure supply and prices for the medium term
(thereby also enabling the business to plan effectively), but such measures can do no more than delay cost increases should they
be sustained.

Consumer Trends:In the UK, consumption of alcohol continues to be the subject of considerable social and political attention. Increasing
public concern over alcohol related social problems, including underage drinking and health consequences associated with the misuse
of alcohol, has contributed to declining sales of beer in the UK. The Group takes these issues seriously and continues to support the
industry’s campaigns on these issues and to market its products as premium beverages to be drunk in moderation in a social environment.
More generally, management frequently carries out research amongst its customer groups to ensure it reacts to changing consumer
preferences. Accommodation and food sales are an area of focus and are an increasing proportion of total sales, providing diversification
protection against shifting consumer behaviour.

Operational Risks
Griffin Brewery Site: The Group’s headquarters and sole brewing facility are based at the Griffin Brewery site in Chiswick. A disaster at
this site would seriously disrupt operations. We take various measures to mitigate the impact of such an event. For example we store
recipes and yeast off-site and have informal arrangements in place to use alternative facilities, but such measures cannot fully replicate
the Chiswick operations.

Brands and Reputation: Fuller’s has a wide portfolio of brands and has established an excellent reputation in the market. Principally,
there is a risk that the Group’s beer could become contaminated at source or outlet, which could damage the reputation of the brand
and deter customers. The Group reduces product contamination risks to an acceptable level by ensuring that the business is operated
to the highest standards by maintaining long term relationships with suppliers and by significant investment in security, quality control
and cleansing, together with insurance coverage for product contamination. In addition, the Group runs an active and continuous training
programme covering all aspects of the pub operations and provides its pubs with onsite technical support.

New Competitors: The entry of new competitors into our markets, a change in the level of marketing undertaken by them or in their
pricing policies, consolidation of competitors and/or the introduction of new competing products or brands could have a material adverse
impact on our market share, sales volumes, revenue and profits. We have an ongoing programme of brand investment to maintain and
enhance the market position of our products.

Information Technology: The Group is increasingly reliant on its information systems to operate on a daily basis and trading would be
affected by any significant or prolonged failure of these systems. To minimise this risk the IT function has a range of policies in place to
ensure that in the event of an issue normal trading would be restored quickly, incorporating a formal Disaster Recovery Plan, a system
of back-ups and external support for hardware and software.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Directors’ Report

The Directors present their annual report together with the audited financial statements for the 52 weeks ended 31 March 2012. The
narrative pages throughout the report constitute the Company’s management report as required under the FSA’s rules.

A) BUSINESS ACTIVITIES AND DEVELOPMENT
The Chairman’s Statement and Group Managing Director’s Review on pages 2 to 14 and the Financial Review on pages 22 to 25 include
information about the Group’s principal activities, the business and financial performance during the year and indications of likely future
developments and collectively provide a business review.

Dividends
The Company paid an interim dividend of 5.05 pence on the 40p ‘A’ and ‘C’ ordinary shares and 0.505 pence on the 4p ‘B’ ordinary
shares on 3 January 2012. The Directors now recommend a final dividend of 7.60 pence on the 40p ‘A’ and ‘C’ ordinary shares and
0.760 pence on the 4p ‘B’ ordinary shares. This makes a total of 12.65 pence on the 40p ‘A’ and ‘C’ ordinary shares and 1.265 pence
on the 4p ‘B’ ordinary shares for the year.

The total proposed final dividend on ordinary shares will be £4,240,000 which together with the 2012 interim dividend paid of
£2,848,000 and the £120,000 of cumulative preference dividends paid will make total dividends of £7,208,000.

Market Value of Land and Buildings
On 27 March 1999 the freehold properties, with the exception of unlicensed premises and the Brewery buildings, were partially revalued
on an open market “for existing use” basis, based on a one fifth representative sample, by a firm of professional valuers. From 1999
onwards, assets have been retained at the values at 27 March 1999, and have not been revalued further.

Since 1999 the Directors have had a series of informal and sample valuations and are confident that the market value of the Group’s
estate is significantly higher than that recorded as book value.

B) DIRECTORS
A list of current serving Directors and their biographies is given on pages 20 and 21. Nick MacAndrew retired on 29 July 2011. Alastair
Kerr was appointed to the Board on 1 August 2011, Ian Bray on 12 December 2011 and Jonathon Swaine on 1 February 2012. Ian Bray,
Alastair Kerr and Jonathon Swaine offer themselves for election. Michael Turner, Richard Fuller and John Dunsmore retire by rotation at
the Annual General Meeting and offer themselves for re-election. All of the aforementioned Directors except Alastair Kerr and John
Dunsmore are Executive Directors and have rolling service contracts of 12 months duration. Alastair Kerr does not have a service contract
but has been invited to stay on the Board until August 2012. John Dunsmore does not have a service contract but has been invited to
stay on the Board until January 2015.

Directors’ Interests
Details of Directors’ interests in the share capital of the Company up to 22 May 2012 are given overleaf. Details of Directors’ share
options and allocations under the Long Term Incentive Plan (“LTIP”) up to 22 May 2012 are given in the Directors’ Remuneration Report
on pages 46 to 50.

The Remuneration Committee put share retention guidelines in place for Executive Directors some years ago and these state that all
Executives should, within ten years of joining the Company, hold shares worth at least their annual salary. It is expected that the Company’s
share schemes should enable all Executives who do not already meet this target to do so within the ten year limit.

Related Party Transactions
Details of related party transactions involving Directors are given in note 30 to the financial statements.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Report
continued

Directors’ Shareholdings

Share class

31 March 2012 and 22 May 2012 (or leaving date)
Non Beneficial
Beneficial

2 April 2011 (or appointment date)
Non Beneficial

Beneficial

Michael Turner

Simon Emeny

James Douglas

Richard Fuller

Ian Bray1

Jonathon Swaine2

‘A’ ordinary 40p
‘B’ ordinary 4p
‘C’ ordinary 40p
2nd preference £1

‘A’ ordinary 40p
‘B’ ordinary 4p

‘A’ ordinary 40p
‘B’ ordinary 4p
‘C’ ordinary 40p
2nd preference £1

‘A’ ordinary 40p

‘A’ ordinary 40p
‘B’ ordinary 4p

John Dunsmore

‘A’ ordinary 40p

Nick MacAndrew3

‘A’ ordinary 40p

Lynn Fordham

‘A’ ordinary 40p

Alastair Kerr4

‘A’ ordinary 40p

Nigel Atkinson

‘A’ ordinary 40p

389,338
4,675,652
1,016,570
22,993

139,880
3,490,974
750,517
40,192

365,897
4,652,329
1,016,570
22,993

139,880
3,490,974
750,517
40,192

88,732
526,655

27,856
13,440

–
–

70,592
508,454

7,579
13,440

–
–

9,698
3,398,576
25,000
303

500,000
10,935,015
–
–

13,474
3,390,403
25,000
303

500,000
10,935,015
–
–

1,250

8,635
18,789

2,328

25,000

3,182

2,941

2,750

–

–
–

–

–
–
–

–

8,635
18,789

2,328

25,000

3,152

–

2,750

88,942
9,143,952
2,674,605

–

–
–

–

–
–
–

Sir James Fuller

‘A’ ordinary 40p
‘B’ ordinary 4p
‘C’ ordinary 40p

88,942
9,143,952
2,674,605

1Ian Bray was appointed on 12 December 2011. 2 Jonathon Swaine was appointed on 1 February 2012. 3Nick MacAndrew retired on 29 July 2011. 4 Alastair Kerr was
appointed on 1 August 2011.

Indemnity Provisions
The Company’s 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 Acts). All of the Executive Directors’ contracts contain a clause which
states: “the Executive shall be indemnified out of the assets of the Company against any liability incurred by him as a Director or other officer
of the Company in defending any proceedings (whether civil or criminal) in which judgement is given in his favour or in which he is acquitted
or in connection with any application under the Companies Acts in which relief from liability is granted to him by the court from liability for
negligence, default, breach of duty or breach of trust he may be guilty of in relation to the affairs of the Company.” The Company purchases
insurance cover for Trustees of the Company’s defined benefit pension scheme. James Douglas is a Trustee of the scheme.

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Directors’ Report
continued

C) CORPORATE RESPONSIBILITY
The Group’s activities during the year in the areas of: Heritage; Community; Responsible Retailing; People; the Environment; and Suppliers
are discussed in detail in the separate Corporate Social Responsibility Statement on pages 16 to 19.

Employees
The Group continues to attach a high priority to improving further its communications with all employees, thus encouraging a common
awareness of the financial and economic factors affecting the Group. Twice a year all Brewery based employees are invited to a results
presentation led by the Group Managing Director. Regular newsletters are also generated for both The Fuller’s Beer Company and Fuller’s
Inns employees and ad hoc news is regularly communicated via both traditional notice boards and e-mail distributions. The
communications policy, which is in operation throughout the business, is designed to ensure the successful cascading of information.
A structure of Consultation Committees both at Divisional and Corporate level is in place to facilitate a dialogue between the Group and
representatives of all employees including union members. Taken together, these communications have allowed the Group to engage
successfully with all our employees, wherever they are employed.

The Group’s recruitment policy is designed to ensure that all applications for employment, including those made by disabled persons,
are given full and fair consideration, in light of the applicants’ particular aptitudes and abilities. The Group also has an equal opportunity
policy which is designed to ensure that all employees are treated equally in terms of training, career development and promotion. Where
employees develop a disability during their employment by the Group, every effort will be made to continue their employment and arrange
for appropriate training, career development and promotion as far as is reasonably practicable. Development and training of our employees
at all levels has always been a priority at Fuller’s.

The Company continues to offer qualifying staff a Savings Related Share Option Scheme and a Share Incentive Plan, which serve to
encourage staff interest in the Group’s performance.

Political and Charitable Donations
The Company does not make political donations. The Company makes donations to charities in order to support the communities that
it operates in and the charitable activities of its staff and other stakeholders. Cash contributions made by the Company for charitable
purposes amounted to £95,000 (2011: £72,000). These figures exclude goods supplied by the Brewery as gifts to charitable organisations
and fund raising undertaken by the Group’s staff members, Managed pubs and Tenanted pubs, as described in the Corporate Social
Responsibility Statement on pages 16 and 17.

Supplier Payment Policy
The Group agrees its payment practice with its suppliers in advance. The Group generally pays UK trade suppliers at the month end following
the month of invoice. Overseas suppliers (mostly of wine) are paid between two and three months after the month of invoice, depending
on delivery times from the country of origin. The average amount of credit taken from suppliers as at 31 March 2012 for the Group and
Company was 46 days (2 April 2011: 30 days).

D) KEY PERFORMANCE INDICATORS (“KPIs”)
Details of the Group’s KPIs can be found in the Financial Review on page 22. In addition a definition of the key terms used is included in
the Glossary on page 103.

E) FINANCIAL MANAGEMENT AND TREASURY POLICIES
The Group Treasury and Financial Management policies are discussed in the Financial Review on page 25. The main risks associated with
the Group’s financial assets and liabilities are set out in note 26c to the financial statements.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Report
continued

F) RISKS AND UNCERTAINTIES
Details of the principal risks and uncertainties that the Group is exposed to can be found in the Risks and Uncertainties statement on
pages 26 and 27.

G) SHARE INTERESTS
The following disclosable interests of shareholders (other than Directors) have been notified to the Company:

% ‘A’ ordinary shares of 40p each
As at
22 May
2012
7.93

As at
31 March
2012
7.53

Name
Black Rock, Inc

Aberdeen Asset
Management PLC
and its subsidiaries

Ameriprise Financial, Inc

Kames Capital and
associated entities

Legal & General Group Plc
and associated entities

Dunarden Limited

7.90

4.90

7.90

5.55

4.49

3.60

3.04

3.52

3.04

% ‘B’ ordinary shares of 4p each
As at 31 March 2012
and
22 May 2012

% ‘C’ ordinary shares of 40p each
As at 31 March 2012
and
22 May 2012

Sir J H F, Messrs A F
and E F Fuller

16.26

Sir J H F, Messrs A F
and E F Fuller

J F Russell-Smith
Charitable Trust

Mr A G F Fuller

A B Earle Charitable Trust

Mrs S B Stuart

Dunarden Limited

Mr R D Inverarity

Mr G F Inverarity

Mr H D Williams

7.66

5.72

4.62

4.59

3.60

3.52

3.48

3.22

Mr T J M Turner

Mr H D Williams

Estate of Mrs J C Turner

Mrs J Fuller

Fuller Family Members Trust

Miss S M Turner

30.61

6.12

5.97

5.07

4.24

3.96

3.33

H) SHAREHOLDER MATTERS
Special Business at this Year’s Annual General Meeting
Details of the items requiring explanation at this year’s Annual General Meeting are included in the circular to shareholders dated 20 June
2012, at the back of which is the Notice of Meeting.

Purchase of Own Shares
At the Annual General Meeting of the Company held on 29 July 2011, the Company was given authority to purchase up to 4,926,220
‘A’ ordinary shares. This authority will expire at the Annual General Meeting and shareholders will be asked to give a similar authority to
purchase shares up to 15% of the ‘A’ ordinary capital at that date. The Company’s maximum issued ordinary share capital during the
year was £22,793,726, which included £13,369,642 40p ‘A’ ordinary share capital.

During the year the Company purchased a total of 1,096,154 40p ‘A’ ordinary shares at a total cost of £7,669,228. Of these, 204,048
shares, with a value of £950,948, were transferred to the Company’s Long Term Incentive Plan (“LTIP”) Trustee on 15 July 2011. These
share purchases represented 1.92% of the maximum issued ordinary share capital (3.28% of the Company’s issued ‘A’ ordinary share
capital). Taking into account all the buybacks since December 2001, 17.68% of the Company’s issued ordinary share capital (30.14%
of the Company’s issued ‘A’ ordinary share capital) has now been purchased.

In addition the Company employee share ownership trusts purchased a total of 86,009 40p ‘A’ ordinary shares at a total cost of £608,220
for the SIP and 338,614 4p ‘B’ ordinary shares at a total cost of £230,562 for the LTIP.

During the year 275,661 of the 40p ‘A’ shares held by the Company as treasury shares were reissued in connection with the Savings
Related Share Option Scheme, the Executive Share Option Scheme and the Senior Executive Share Option Scheme, generating net cash
proceeds of £954,506. A total of 1,199,082 40p ‘A’ ordinary shares at 22 May 2012 are currently held as treasury shares.

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Directors’ Report
continued

I) SHARE CAPITAL AND ARTICLES
Information on the Company’s capital structure and related restrictions is given in note 27 to the financial statements. Details of significant
shareholdings are given in Section G) above.

Computershare Trustees Limited holds 1.47% of the issued share capital of 40p ‘A’ ordinary shares on behalf of employees of the
Company who are participants in its Share Incentive Plan. 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.

Sanne Trust Company Limited holds 0.11% of the issued share capital of 40p ‘A’ ordinary shares and 0.74% of the issued share capital
of 4p ‘B’ ordinary shares in trust on behalf of participants in the Company’s LTIP within the LTIP Trust and exercises voting rights in relation
to those shares, having consulted with the participants about their voting intentions.

The current Articles of Association state that the Board may appoint Directors and that at the subsequent Annual General Meeting,
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 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 resigns, becomes
of unsound mind or bankrupt.

At every Annual General Meeting 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 shall retire. In addition, if any Director has at the start of the Annual General Meeting been
in office for more than three years since his last appointment or re-appointment he shall retire at that Annual General Meeting.

The Articles do not contain any specific provisions about amendments to the Articles which are therefore governed by the relevant
Companies Act requirements which state that the Articles may only be amended by Special Resolution.

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 entitled “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 Annual
General Meeting.

The Group has entered into a number of agreements with the major brewers operating in the UK under which it both buys and sells beers
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 ten days of such a lapse.

By order of the Board

Marie Gracie, FCIS
Company Secretary

31 May 2012

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Fuller, Smith & Turner P.L.C.
Grifﬁn Brewery
Chiswick Lane South
Chiswick, London W4 2QB

Registered number: 241882

Directors’ Statements

Statement of Directors’ Responsibilities in Respect of the Financial Statements
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance with
applicable United Kingdom law and those International Financial Reporting Standards (“IFRSs”) as adopted by the European Union.

Under Company Law the Directors must not approve the financial statements unless they are satisfied that they fairly present the financial
position, financial performance and cash flows of the Company and of the Group for the financial year. 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 Errorsand 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’s financial position and financial performance;

• state that the Group and Company have complied with 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 comply with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules
and the Disclosure and Transparency Rules 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.

Statement as to Preparation of Financial Statements
The Directors confirm, to the best of their knowledge:

• that these financial statements, prepared in accordance with IFRS as adopted by 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; and

• that the Directors’ 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.

The Directors of Fuller, Smith & Turner P.L.C. are listed on pages 20 and 21.

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 20 and 21. 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.

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On behalf of the Board

Michael Turner
Chairman

31 May 2012

James Douglas
Finance Director

31 May 2012

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Corporate Governance Report

Comment from the Chairman Michael Turner
“I am pleased to confirm that I see it as the Chairman’s responsibility to lead the Board and make sure it is working effectively. Whilst the
detail of our compliance with the UK Corporate Governance Code is set out below, there are several matters that I wanted to comment
on. The first is the issue of succession planning. This is a complex topic for a business that has very low turnover amongst its senior
management and is still very much a family concern whilst also being a listed public company. However succession plans continue to be
discussed both at Executive Committee and Board level. Throughout the rest of the business succession plans are in place at departmental
level and are reviewed regularly by the relevant directors in conjunction with their personnel advisors. Furthermore, all department plans
are compiled into a Company succession plan which provides effective review of cross departmental promotion and opportunities.

In terms of Board balance, I chair the Nominations Committee and am personally involved in all Board level recruitment so I am
able to ensure that we continue to have a good balance of skills, experience, independence and knowledge on our Board and our
Board committees.

We believe that you can only have an effective Board when all members understand what is required of them and when they all have
time to conduct their duties. All of our Directors have detailed appointment letters or contracts which set out their duties and we also
took the opportunity to clarify recently what is involved with the role of Senior Independent Director. We confirm that appointment letters
for Non-Executive Directors set out the expected time commitment required. We also have a policy that the Directors can only take on
additional roles with Board approval. In line with the new Code, the terms of appointment for all our Non-Executives specifically state
that the role of the Non-Executive Directors is to challenge and help develop strategy.

Finally I would like shareholders to understand that I am in charge of our annual Board evaluation process. We currently run this in house
but have recently looked at some of the commercial models that companies can employ to assist them in such a process. Our findings
were that the models were almost identical to the process we currently use, and thus would add little extra value.”

A) INTRODUCTION AND COMPLIANCE
The Board of Directors is committed to the highest standards of corporate governance and believes that such standards are critical to
overall business integrity and performance. This report explains how the Company applies the principles of the UK Corporate Governance
Code (“the Code”).

The Company has complied with the requirements of the Code, as applicable to a smaller quoted company, throughout the financial year
with one exception. The Company now has three independent Non-Executive Directors on its Remuneration and Audit Committees but
shareholders will note that Nigel Atkinson, who is not an independent Non-Executive Director, also sits on those Committees and in this
respect the Company may be considered not to have complied with the independence requirement for both of these Committees (Code
provisions C.3.1 and D.2.1). Having considered this matter carefully, the Board is satisfied that the deliberations of both Committees
remain independent. Shareholders should note that Nigel Atkinson, although not defined as being independent under the Code, has
never worked for the Company as a full time employee, being the former Managing Director of Gales, which the Company acquired in
2005. He is valued for his independent character and judgement and it is the Directors’ opinion that his presence at both Committees
adds considerable value. Nigel retires after the AGM in July 2012.

The information that is required by Code provision C.1.2 on the business model and the strategy for delivering the Company’s objectives
can be found in the Business Review section on pages 7 to 14. The information relating to the share capital of the Company that is
required by DTR 7.2.6R, can be found within the Directors’ Report, sections H and I on pages 31 and 32.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Corporate Governance Report
continued

B) THE BOARD
The Board’s Role
The Board of Directors is collectively responsible to the shareholders for the performance and long term success of the Group. Its role
includes the establishment, review and monitoring of strategic objectives, approval of major acquisitions, disposals and capital expenditure,
ownership of the corporate values, overseeing the Group’s systems of internal control, governance and risk management and ensuring
that the appropriate resources are in place to deliver these and fulfill the Company’s obligations to its stakeholders.

How the Board Works
The Board governs through its executive management, and formally via its other clearly mandated committees. Each standing Board
Committee has specific written terms of reference which are reviewed by the Board annually and there is a formal list of Matters Reserved
for the Board (which is also reviewed annually). This distinguishes between matters reserved for the Board and Executive Committee
decisions. The terms of reference of the Audit, Remuneration and Nomination Committees are available on the Company’s website. All
Committee Chairmen report orally on the proceedings of their Committees at the next meeting of the Board, and the minutes of the
meetings of all Board Committees (with some exceptions on remuneration matters) are provided to Board members. The Chairman
ensures that the Executive Directors provide accurate and timely information for Board meetings which is then open to debate and
challenge by all. 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 has
adopted a procedure, in accordance with the Company’s Articles, to consider and, if it sees fit, to authorise situations where a Director
has an interest that conflicts, or may possibly conflict, with the interests of the Company.

Board Meetings
The Board meets formally at least six times a year with papers circulated a week in advance and the agenda and papers for these meetings
are subject to the scrutiny of the Chairman and the Company Secretary. However the Board regularly considers matters on an ad hoc
basis between scheduled meetings. The Executive Committee meets formally at least eleven times a year and also meets informally most
weeks. There is thus a regular flow of information at Board and Executive Committee level.

At Board meetings the agendas cover strategy, analysis of the market in which the Group operates and performance. Each of the Executive
Directors and the Company Secretary update the Board at each meeting on matters for which they are responsible. The Board is
responsible for approving the annual budget and the annual and half year results. The Board also meets away from the Griffin Brewery
every year for an in depth review of corporate strategy, and other agenda items might include an update on the economy and a review
of the Group’s competitors. The Non-Executive Directors from time to time meet with members of the senior management team at the
Brewery and also spend days out in the trade with individual members of that team. This helps to keep the Non-Executive Directors up
to date with the operations of the Group and also provides the Executive Directors with valuable feedback about the Company’s people
and its operations.

At Executive Committee meetings the focus is on the detail of the Group’s performance, and the Finance Director leads a review of the
Group’s management accounts. Each Executive Director and the Company Secretary update their colleagues on the key issues facing
their part of the business and there is a good level of consultation and debate at these meetings.

The list of Matters Reserved for the Board sets out which matters need Board approval and which decisions can be made at Executive
Committee level. Most significant business decisions are made by the Board, but matters such as health and safety policy and approving
major contracts are taken at Executive Committee level. Members of the management team regularly join these Executive Committee
meetings and three times a year all of the divisional directors and financial controllers join together with the Executive Committee to
conduct a detailed review of the half year and full year accounts, and the construction of the annual budget, before these are debated at
Board level.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Corporate Governance Report
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As well as the dialogue within the boardroom, the Non-Executive Directors meet privately, under the leadership of the Senior Independent
Director, without the Executive Directors present. They also meet with the Chairman and Group Managing Director on a regular basis.
These meetings allow for the review of issues that the business faces, 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 Group Managing Director
in their roles.

Attendance at Board and Committee Meetings
The table below gives details of attendance at Board and Committee meetings during the year.

Executive
Committee
Meetings
11

11/11
11/11
10/11
11/11
4/4
2/2

Board and Committee
Meeting Attendance
for 2011/12
Total Number of Formal Meetings

Committee
Memberships

Main Board
Meetings
6

Executive Directors
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray1
Jonathon Swaine2

Non-Executive Directors
John Dunsmore
Nick MacAndrew3
Lynn Fordham
Alastair Kerr4
Nigel Atkinson
Sir James Fuller

Nom

Aud, Rem, Nom
Aud, Rem, Nom
Aud, Rem, Nom
Aud, Rem
Aud, Rem

6/6
6/6
6/6
6/6
2/2
1/1

6/6
1/1
6/6
4/4
6/6
6/6

Nominations
Committee
3

Audit
Committee
4

Remuneration
Committee
3

3/3

3/3
1/1
2/2

4/4
1/1
4/4
3/3
4/4

3/3
1/1
3/3
2/2
3/3

1Appointed to the Board on 12 December 2011. 2Appointed to the Board on 1 February 2012. 3Retired 29 July 2011. 4Appointed to the Board on 1 August 2011.

The Board believes that all of its members have sufficient time to discharge their duties effectively. All Directors are required to seek
permission before accepting any external appointments, therefore Board members are kept fully aware of their colleagues’ other
commitments.

Composition and Balance of the Board
The Board is chaired by Michael Turner who is responsible for leading it and ensuring its effectiveness and openness, and for ensuring
that communications with shareholders are valuable. The Chairman does not have any commitments which constrain his ability to fulfill
his role. His responsibilities are set out in a job description which has been approved by the Board. Michael Turner is supported by Simon
Emeny in his role as Group Managing Director. He is responsible for all operational aspects of the Group. During the financial year Ian
Bray joined the Board as Managing Director of The Fuller’s Beer Company and Jonathon Swaine was promoted to the position of Managing
Director of Fuller’s Inns.

Nick MacAndrew retired as Senior Independent Director after last year’s AGM and John Dunsmore succeeded him in this role. In August
2011 Alastair Kerr joined the Board and he took over from John Dunsmore as Chairman of the Remuneration Committee at the beginning
of March 2012. All of these recent changes to the Board are also detailed in the Directors’ Report. New Directors undertake tailored
induction programmes.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Corporate Governance Report
continued

Currently the Company has five Non-Executive Directors, one of whom (Sir James Fuller) is a family member. This representation is very
important in a Company with a high proportion of family shareholders. The other four Non-Executive Directors, three of whom are
deemed independent under the Code, are experienced business leaders and all of the Non-Executives bring a wide range of skills and
experiences to the Board. As mentioned above, Nigel Atkinson will be retiring after this year’s AGM. The Directors consider that the
Board is a well-balanced one that has the right number of members for the size of the Group and the Directors agree that no one individual
dominates discussions and that each makes a full and positive contribution. The Directors’ biographies are on pages 20 and 21. John
Dunsmore is the Senior Independent Director and an industry expert who brings knowledge, support and advice to the Chairman and
all the other Board members; he is in regular dialogue with all Board members outside of Board meetings and co-ordinates the views of
the Non-Executive Directors as and when required. All of the Independent Non-Executive Directors are determined by the Board to be
independent in character and judgement and there are no relationships or circumstances which could affect or appear to affect their
judgement; all are appointed for specified terms. The details of the Non-Executive Directors’ respective arrangements are as set out in
the Directors’ Remuneration Report on pages 43 and 51 and are available for inspection at the Company’s registered office.

Advice for the Board
There is in place a procedure under which Directors can obtain independent professional advice. The Directors also have access to the
advice and services of the Company Secretary who 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.

Professional Development
All Directors attend training courses, industry forums, and specialist briefings relevant to their role throughout the year. Occasionally
specialists such as the Company’s actuary or corporate lawyer join a Board meeting to brief the Board on a particular topic. Both the
Board and the Executive Committee visit Group pubs and hotels as part of the Board meeting programme. On these and other occasions
Board meetings may be held in the Group’s pubs, with the aim of keeping the Directors familiar with the Group’s estate. 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 Fuller’s. Simon Emeny currently holds such a Directorship at Dunelm Group plc.

Board Evaluation
The Chairman conducts an annual evaluation of the Board, where all Board members are asked to rate the Board’s work across a number
of different topics, with constructive criticism encouraged, via the medium of a questionnaire. Where necessary the Chairman seeks
clarification on the responses given, he then consolidates the responses and reports back to the Board, highlighting significant
improvements and deteriorations in any particular area by comparing results with previous years’ outputs and agreeing actions to tackle
any areas requiring improvement. Unattributed comments of significance are shared with all. This year the results were almost identical
to last year’s high scores, and there were no individual scores that were below average. The results did provide some insight into areas
that could still be improved further and therefore these were the Chairman’s focus in terms of follow up. The Audit and Remuneration
Committees conduct similar assessments and their work is also commented upon in the evaluation conducted by the Chairman. The
Senior Non-Executive Director annually appraises the Chairman’s performance, having first consulted with the other Non-Executive
Directors and also the Executive team. The appraisal of the other Executive Directors and the Company Secretary is conducted annually
by the Chairman and, as part of the appraisal process, individual training and development needs are discussed. The annual appraisal of
the Non-Executive Directors is conducted by the Chairman, following consultation with the Executive team.

Board Re-election
The Articles of Association of the Company ensure that all Directors are subject to election by shareholders at the first Annual General
Meeting (“AGM”) after their appointment and to re-election at three yearly intervals.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Corporate Governance Report
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C) BOARD COMMITTEES
The Nominations Committee
The Nominations Committee consists of John Dunsmore, Lynn Fordham and Michael Turner, who is Chairman. It is responsible for
nominating candidates for appointment as Directors, for approval by the Board although the full Board will also typically informally discuss
Board appointments. The Committee met three times during the year: to consider the appointment of a new Non-Executive Director,
the new Managing Director for The Fuller’s Beer Company and the new Managing Director for Fuller’s Inns. External search consultancy
Spencer Stuart assisted with each appointment, except for the appointment of the Managing Director for Fuller’s Inns. No external agent
or advertising was required for that position since there was an internal candidate that the Board unanimously wished to promote to this
post in line with its succession plan.

The Remuneration Committee
Information about the Remuneration Committee and remuneration policy is given in the Directors’ Remuneration Report.

The Audit Committee
The Audit Committee of the Board is chaired by Lynn Fordham, Chief Executive of SVG Capital and a Chartered Accountant whose previous
appointments include Director of Audit and Risk at Boots Group plc and Finance Director of ED & F Man Sugar. Lynn thus brings recent
and relevant financial experience to the Committee. The Chairman, the Finance Director and members of the finance team usually join the
meetings as do the external Audit Partner and Audit Manager. The Chairman of the Audit Committee encourages comprehensive debate
and close scrutiny of management’s and auditors’ reports by Committee members. The Chairman of the Audit Committee meets with the
manager responsible for internal audits, the external Audit Partner and the Finance Director outside of Audit Committee meetings to give
them the opportunity to raise any concerns they may have about their work or their roles and to provide advice and support as required.

There is in place a whistle-blowing policy, which is overseen by the Audit Committee, and which allows staff to raise any concerns in
confidence, directly with the Chairman of the Audit Committee. Posters reminding staff about the existence of the policy and how it may
be used were reissued in November in order to maintain a good awareness of the whistle-blowing arrangements throughout the Company.

The Audit Committee’s terms of reference include all those matters required by the Code. The Committee has a meeting planner which
sets out the basic items to be covered at its regular meetings. At the June meeting the Committee reviews the preliminary announcement
and the report and accounts. In September the key items are a review of all aspects of the performance of the external auditors, including
the chance to assess whether they continue to show the required level of independence, agreeing the scope for the next external audit,
the audit plan and related fees. A report on internal audit is received, and one on whistle-blowing and the Committee reviews its own
effectiveness. At the November meeting the focus is on reviewing the half year report. At the January meeting the key items are risk
management, internal audit and a review of new developments in accounting and auditing. This year the Committee also invited the Retail
Audit Manager to tell them about his role and to discuss a report that he had written for the Committee. The Chairman of the Committee
also encourages debate and discussion of topical issues outside of the routine agenda items.

D) ACCOUNTABILITY
Auditors
The Committee is happy for the Board to recommend to shareholders that Ernst & Young LLP be re-elected, having reviewed their
performance and not found any issues of concern.

The Group’s auditors do from time to time provide non-audit services to the Company. This year the auditors have advised the Company
in relation to routine tax compliance and have provided services in relation to iXBRL accounts and the amount spent on these services
was £23,000. The Committee believes that this is insignificant and not at such a level that auditor objectivity and independence are
compromised. The Committee imposes an upper limit of £50,000 per annum on the amount that the finance team can spend with the
auditors for non-audit items without specific approval from the Committee. It is Group policy to seek quotations from multiple parties for
significant non-audit services and only to appoint the party (which could then be the auditors) that offers the best combination of price
and expertise.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Corporate Governance Report
continued

Internal Control and Risk Management
The Board has overall responsibility for the Group’s system of internal control and management of risks and reviewing its effectiveness.
The system is designed to provide reasonable but not absolute assurance of:

• the mitigation of risks which might cause the failure of business objectives;

• no material misstatements or losses;

• the safeguarding of assets against unauthorised use or disposition;

• the maintenance of proper accounting records and the reliability of financial information used within the business or for publication;

and

• compliance with applicable laws and regulations.

The business maintains business continuity plans, and exercises these plans on an annual basis.

Management within the Finance Department are responsible for ensuring appropriate maintenance of financial records and processes
that ensure that all financial information is relevant, reliable, in accordance with the applicable laws and regulations, and distributed both
internally and externally in a timely manner. A review of the financial statements is completed by management to ensure that the financial
position and results of the Group are appropriately reflected. All financial information published by the Group is subject to the review of
the Audit Committee.

The Board has reviewed the effectiveness of the Group’s system of internal control which has also been discussed in detail by the Audit
Committee, including taking account of material developments since the year end. The review covers all material controls including
financial and operational controls, compliance and risk management systems. Where weaknesses are identified, actions to address them
are agreed. During the year the Group commissioned and implemented a bespoke online Health and Safety management system. The
Group also engaged consultants to review and improve its business continuity management programme.

The Board has procedures in place necessary to follow the Turnbull Guidance (“Internal Control: Guidance for Directors on the Combined
Code”) for the full financial year. The Group Risk Manager co-ordinates this process by leading regular risk assessment workshops in
which new risks are identified and added to the risk register, and existing risks re-evaluated by the risk owners. Regular meetings chaired
by the Executive Directors are held in addition to the workshops in order to assess the effectiveness of the controls that are in place,
identify new risks and review existing risk mitigation plans.

Key elements of the system of internal control designed to address significant risks and uncertainties as documented on pages 26 and
27 include:

• clearly defined levels of responsibility and delegation throughout the Group, together with well-structured reporting lines up to the Board;

• the preparation of comprehensive annual budgets for each division, including commentary on key business opportunities and risks,

approved by the Executive Directors and further reviewed by the Board on a consolidated basis;

• an Executive Committee review 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;

• detailed post implementation appraisals of major capital expenditure projects;

• 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 Board and Audit Committee, which among other

things takes account of the significance of environmental, social and governance matters to the business;

• monitoring of accident statistics and the results of health and safety audits; and

• maintenance of an ISO 9001 certified quality control system.

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The Group does not have a formal internal audit function and, after a review by the Audit Committee and the Board, the Board has
confirmed that it believes that the existing arrangements for internal audit are appropriate. We may from time to time augment the internal
resource for these audits with specialist external resources. The Group carries out internal audits on financial areas according to a
programme agreed between the Audit Committee and the Finance Director and with, as appropriate, input from the other Executive
Directors and the external auditors. The audits are coordinated by an experienced senior member of the finance team and are undertaken
by other members of the finance team; in each case the person undertaking the audit is independent of the area which is the subject of
the audit. The internal audit reports, the management responses and the recommended actions are presented in summary form to the
Audit Committee on a regular basis. There are also in place procedures to ensure recommended actions are implemented. Among the
areas audited in the financial year were the procedures and controls over payroll systems and the recording of wine stock.

In addition, the Group employs a team of retail business auditors who do not have a direct report into the Audit Committee but who
monitor the controls in place in the Managed Pub estate, in particular those over stock and cash. This team reports directly to the Fuller’s
Inns Financial Controller.

E) RELATIONS WITH SHAREHOLDERS
The Company has an ongoing programme of individual meetings with institutional shareholders, allowing the Company to update
shareholders on the performance of the business and the strategy for the future, and to give shareholders an opportunity to discuss
corporate governance matters. The Company’s brokers contact key shareholders to establish if they would like to see the Chairman,
Group Managing Director and Finance Director in the days following their presentation to the City on 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 be contacted by shareholders should they have any concerns which have not been
resolved through the normal channels. The Non-Executive Directors have had no such requests during the last financial year. All Board
members receive copies of feedback reports from the City presentations and meetings with shareholders, thus keeping them in touch
with shareholder opinion.

The Board supports the use of the AGM to communicate, in particular, with private investors, and the Chairman routinely makes a detailed
presentation to shareholders updating them on the Company’s performance and progress. The Public Relations team also attends the
AGM and provides further information to shareholders about the Company through photo boards featuring pub and product information.
The Board is keen to encourage institutional investors to attend the meeting as well, in line with the duties set out in the Stewardship
Code for institutional shareholders published in July 2010, especially if they have concerns over any issues being voted upon at the AGM,
so that they can meet all the Directors and discuss them in person, and particularly if they have declined an invitation for an individual
meeting. The Chairman arranges for the Chairman of each of the Company’s Board Committees to answer relevant questions at the
meeting and for all Directors to be present.

By order of the Board

Marie Gracie, FCIS
Company Secretary

31 May 2012

Grifﬁn Brewery
Chiswick Lane South
Chiswick, London W4 2QB

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Remuneration Report

The principal purpose of this report for the 52 weeks ended 31 March 2012 is to inform shareholders of the Group’s policy on Directors’
Remuneration, as recommended by the Remuneration Committee. The report has been approved and adopted by the Board and has
been prepared in accordance with the requirements of the Companies Act 2006, Schedule 8 to the Large and Medium-Sized Companies
and Groups (Accounts and Reports) Regulations 2008, the Listing Rules and the Code. The information contained in the tables on pages
43 and 47 to 50 and in the description of non-cash emoluments in section B) and in the information about options and the LTIP outlined
in sections E) and F), is subject to audit.

An ordinary resolution will be put to shareholders at the AGM on 18 July 2012 inviting them to consider and approve this report.

Remuneration Committee
The Remuneration Committee members are currently Alastair Kerr (Chairman), John Dunsmore, Nigel Atkinson and Lynn Fordham. The
work of the Committee is set out in its terms of reference which are available on the Company’s website. In brief these state that the
Committee is responsible for determining the total remuneration package (including pensions, service agreements and termination
payments) of the Executive Directors and commenting on the remuneration of the Company’s divisional directors. Members of the
Committee have no personal financial interest in the Company, other than as shareholders and Directors. Details of the payments made
to Non-Executive Directors are set out on page 43.

The Committee is provided with independent advice from external consultants. Xafinity Consulting Limited provided the Committee and
the Company with advice on matters relating to pensions. BDO LLP provided the Committee and the Company with advice in connection
with the Company’s LTIP and share option schemes. Both of these consultants have been providing advice to the Company for some
years and were not specifically appointed by the Committee. Neither have any other connection with the Company. There has not been
a review of the existing share schemes undertaken during the year, since an independent remuneration review was conducted in 2010,
and there have been no changes made to the existing share incentive schemes during the year. The Committee believe that the existing
schemes remain appropriate to the Company’s current circumstances and prospects.

The Chairman of the Company, Michael Turner, may be invited to attend Committee meetings and advise, as appropriate, on the
remuneration and performance of the other Executive Directors and related matters. The Committee is advised internally by the Company
Secretary, Marie Gracie who also acts as Secretary to the Committee.

Remuneration Policy
It is the policy of the Remuneration Committee to provide competitive packages for the Executive Directors, which reflect the Group’s
performance against financial objectives, reward above average performance and which are designed to attract, retain and motivate high
calibre executives. The Committee seeks to structure total benefit packages which align the interests of shareholders and Executive
Directors. To this end, the Committee believes that it is appropriate to have a significant proportion of Executive Directors’ packages
made up of performance related elements and this is reflected in the use made of the Company’s bonus scheme, LTIP and share option
schemes. In addition, Executive Directors’ packages include pension benefits, as discussed in section D) below. When setting the
remuneration of Executive Directors, the Committee takes account of the Group’s performance on environmental, social and governance
matters. The Committee does not believe that the existing incentive structure raises any environmental, governance or social risks by
inadvertently motivating irresponsible behaviour.

The Committee has also considered, as suggested by the Code, whether in the event of misstatement or misconduct that there should
be claw back provisions in Directors’ contracts. The Committee concluded that the package for Executive Directors contains a sufficient
balance of short term and longer term incentives, and therefore it was not felt necessary to change the existing incentives in this respect.

The Committee’s aim remains to ensure that the Executive team are rewarded where long term growth and success are achieved.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Directors’ Remuneration Report
continued

Risk in relation to Remuneration
The Committee believes that the Company’s remuneration policy is consistent with risk management, in that existing remuneration
structures do not entice management to take inappropriate risks to achieve targets. It is felt that there is a very low risk of short term
decisions driving annual bonus payouts and the focus is very much based on a long term remuneration model, delivering value through
the Company’s various share plans.

The various elements of executive remuneration and underlying policy are as follows:

A) SERVICE CONTRACTS
The Company’s policy on the duration of Directors’ contracts is that Executive Directors should have rolling service contracts terminable
on no more than one year’s notice served by the Company or Director. The two newly appointed Executives are entitled on early termination
of their contracts to a payment equal to the salary due for the unexpired period of their notice. This is payable in monthly instalments and
for the period of their notice the Executives are expected to seek alternative income, and if they are successful, that income must be notified
to the Company and will be set off against the remaining instalments. The contracts of the other Executives state that they are entitled to
a payment equal to salary and the value of all benefits for the unexpired period of their notice, without any reduction for mitigation. The
Committee have considered whether they should attempt to negotiate a change to the contracts of the other Executives but do not believe
that this is currently appropriate.

Date of contract
1 June 1997
13 January 1999
31 July 2007
8 December 2009
12 December 2011
20 March 2012

Notice period
12 months
12 months
12 months
12 months
12 months
12 months

Date of letter of appointment
or reappointment
10 April 2006

Term expires
July 2012
15 November 2011 January 2015
May 2013
15 November 2011 January 2015
19 July 2011 August 2012

1 June 2010

Service Contract Table

Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray
Jonathon Swaine

Non-Executive Directors’ Arrangements

Nigel Atkinson
John Dunsmore
Sir James Fuller
Lynn Fordham
Alastair Kerr

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Remuneration Report
continued

B) DIRECTORS’ EMOLUMENTS AND OTHER PAYMENTS TO CURRENT AND FORMER DIRECTORS
The following table shows a breakdown of the remuneration of individual Directors who served in all or part of the year:

Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray1
Jonathon Swaine2
John Dunsmore
Nick MacAndrew3
Lynn Fordham
Alastair Kerr4
Nigel Atkinson
Sir James Fuller5
Total

Basic
salary
£000
389
323
257
162
68
29
–
–
–
–
–
–
1,228

Car

Fees &
allowance Consultancy
£000
–
–
–
–
–
–
54
20
50
30
45
40
239

£000
21
18
19
3
6
3
–
–
–
–
–
–
70

Defined
contribution
pension
2012
£000
–
33
42
–
11
4
–
–
–
–
–
–
90

Total
2012
£000
576
478
387
266
106
57
54
21
51
31
48
41
2,116

Defined
contribution
pension
2011
£000
–
27
37
–
–
–
–
–
–
–
–
–
64

Total
2011
£000
590
465
395
223
–
–
49
60
11
–
47
34
1,874

Bonus
£000
163
135
108
78
32
25
–
–
–
–
–
–
541

Benefits
in kind
£000
3
2
3
23
–
–
–
1
1
1
3
1
38

1Ian Bray was appointed on 12 December 2011. 2Jonathon Swaine was appointed on 1 February 2012. 3Nick MacAndrew retired on 29 July 2011. 4Alastair Kerr was
appointed 1 August 2011. 5Sir James Fuller received consultancy fees of £5,000 in relation tohis family shareholder liaison role.

Anthony Fuller, former Chairman and now President, receives an annual royalty of £15,000 which is paid in recognition of the fact that
Mr Fuller has given the Company ongoing exclusive permission to use his name and signature on any Company product.

The Committee sets the base salary for each Executive Director by reference to individual and corporate performance, competitive market
practice and independent salary survey information. Last year base pay was increased by approximately 3% for all Directors. This was in
line with the median of increases paid to head office staff. A car allowance is paid to Executive Directors to allow them to purchase and
maintain cars at their own expense – this is a non-pensionable amount. The Executive Directors are also reimbursed for business related
mileage. Richard Fuller had a company car until 26 January 2012 and until that time, his car and his fuel, which was paid for by the Company,
were taxable benefits. Other non-cash benefits to Executive Directors include private healthcare and product allowances. These benefits
are also extended to some other employees.

Simon Emeny is a Non-Executive Director of Dunelm Group plc. He retains fees of £30,000 per annum in respect of this position.

The Committee are kept appraised of the pay reviews awarded to employees and any changes in their terms and conditions, so that these
can be taken into account when determining Directors’ remuneration for the relevant financial year.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Directors’ Remuneration Report
continued

C) BONUSES
Executive Directors and senior management participate in the Company’s performance related bonus scheme by invitation. All payments
under the scheme are discretionary and non-pensionable. The scheme includes a proviso that where bonuses are due to be paid in a
year in which profits have declined to a specified degree, the Committee will assess the performance of the Group relative to a peer
group of companies which they have selected. They will only authorise payments where the Group has performed better than the average
of this peer group and where the Committee also believes the Group’s performance represents outperformance.

Ian Bray and Richard Fuller earn a bonus in part by achieving a profit target for The Fuller’s Beer Company and in part where the Group
achieves a growth target in pre-tax pre-exceptional earnings per share. Jonathon Swaine’s bonus is based partly on profit targets for
Fuller’s Inns and partly on a Group target. The other Executives have Group bonus targets. The target for the bonus, which is set in March
each year for the following year, includes the cost of the bonus itself. The 2011/2012 scheme for Executive Directors provided a bonus
opportunity of a maximum of 75% of base salary – this has not been increased during the year. The Committee approves the new bonus
scales every year to ensure that they include suitably stretching targets.

For the year under review, Michael Turner, Simon Emeny and James Douglas each earned a bonus of 41.7% of salary, Ian Bray earned
a (pro-rata) bonus of 15.9% of salary, and Richard Fuller earned a bonus of 47.7% of salary. Jonathon Swaine’s total bonus was made
up of a pro-rata bonus as a Divisional Director of 18.9% of his old salary and a pro-rata bonus as an Executive Director of 28.4% of his
new salary.

D) PENSIONS
Michael Turner is a pensioner of the defined benefit Company pension plan, under the Directors’ section. Richard Fuller is a member of
the defined benefit Company pension plan, under the Directors’ section, on a non-contributory basis. Simon Emeny is a member of the
defined benefit Company pension plan, under the Main section on a non-contributory basis. In addition, a salary supplement of 17.5%
of the excess of his base salary over the earnings cap was paid by the Company to his nominated pension provider.

During the last financial year James Douglas was a member of the defined contribution Company pension plan. His contract originally
stated that in addition to the contribution of 8% that he was required to make to a registered pension scheme of his choice, the Company
would make a contribution of 17.5% of his salary to the Scheme. The introduction of annual pension allowances has meant that the
Company has offered Simon Emeny and James Douglas Deeds of Variation to their contracts allowing them to use their salary supplements
not solely for investment into registered pension plans but into other investment vehicles that they wish to use as part of their overall
retirement planning. It is likely that both of them will start during the financial year 2012/2013 to take part or all of the Company
contributions mentioned above as salary supplements rather than having them paid into their pensions. James Douglas continues to be
required to contribute 8% of his net salary to his pension or another investment vehicle as above.

The Company makes a contribution of 17.5% of salary to Ian Bray and Jonathon Swaine’s nominated pension schemes. They are also
required to make contributions of 8% themselves.

In accordance with the requirements of the Listing Rules, Directors’ pension entitlements under defined benefit plans are shown overleaf.
The Companies Act 2006 requires the disclosure of similar information but in a different format and not adjusting for inflation, while the
Listing Rules requirement makes allowance for inflation.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Remuneration Report
continued

The following tables provide the information required on both bases. The additional notes are to help shareholders understand the
difference between the two. Michael Turner withdrew from the Directors’ section of the defined benefit Company pension plan on
5 April 2006. Immediately before he left the plan the Company augmented his accrued entitlement so that he would receive his promised
pension at age 60. Michael Turner is now in receipt of that pension. The Company made a lump sum payment of £620,000 into the plan
on 3 April 2006 in order to fund the augmentation for Michael Turner and former Director Tim Turner, and the value of this augmentation
is taken into account in the tables below.

Listing Rules Requirement

Michael Turner4
Simon Emeny
Richard Fuller

Increase in
accrued pension
(allowing for inflation)1

£
–
2,440
6,864

Total accrued pension
at end of period2
£
251,429
20,196
86,114

Transfer value
of increase
(net of member

contributions)3

£
–
42,159
165,787

1Increase in accrued pension (allowing for inflation) –this is the accrued pension at the year end less the accrued pension at the start of the year adjusted for inflation over
the year. 2Total accrued pension at end of yearor retirement age date if earlier–this is what the Director is entitled to receive as an annual pension based on service to
date. 3Transfer value of increase (net of member contributions) –this is the transfer value of the accrued pension at the end of the year less the transfer value of the
accrued pension at the start of the year adjusted for inflation calculated by reference to transfer value factors at the year end. The transfer values are calculated using the
basis in force at the end of the year. Therefore there is no distortion caused by changes in monetary conditions or changes to the transfer basis. 4Michael Turnerreached
retirement ageon 12 June 2011, and thereafter was drawing his pension and so accrued no further benefits.

The above table is intended to show the real increase in accrued pension and the real increase in transfer value during the year. These
figures therefore exclude the impact of inflation during the year.

Companies Act 2006 Requirement
The table below is intended to show the actual increase in accrued pension during the year and the actual increase in transfer value during
the year. These figures are not adjusted for inflation during the year.

Increase in
accrued pension1
£
–
3,036
9,523

Total accrued pension
at end of period2
£
251,429
20,196
86,114

Transfer value
at start of period3
£
5,815,093
140,146
879,017

Transfer value
at end of period4
£
5,997,292
282,346
1,502,538

Michael Turner6
Simon Emeny
Richard Fuller

Transfer value
equivalent of increase
(net of member
contributions)5

£
182,199
142,200
623,521

1Increase in accrued pension –this is the accrued pension at the year end less the accrued pension at the start of the year (as disclosed last year), without adjustment
for inflation. 2 Total accrued pension at end of year or retirement age date if earlier –this is the same figure as the Listing Rules requirement. 3 Transfer value at start of
year –this is the transfer value of the accrued pension at the start of the year (as disclosed lastyear). 4 Transfer value of end of year –this is the transfer value of the
accrued pension at the end of the year. 5Transfer value equivalent of increase (net of member contributions) –this is the difference between the two transfer values less
any member contributions in the year. Unlike the Listing Rules requirement, this shows the difference between the transfer value as published last year and the transfer
value at the year end. The transfer value this year end will reflect pensionable salary increases since last year, the addition of another year’s accrual of benefit and market
movements in equities and gilts over the year to which transfer values arereferenced. 6Michael Turnerreached retirement ageon 12 June 2011, and thereafter was
drawing his pension and so accrued no further benefits.

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Directors’ Remuneration Report
continued

E) SHARE OPTION SCHEMES AND SIP
The Company encourages Executive Directors, senior management and qualifying employees to acquire and hold Fuller’s shares, and believes
that equity-based reward programmes align the interests of Directors, and employees in general, with those of shareholders.

i) Executive and Senior Executive Share Option Schemes
The Company has an HMRC approved Executive Share Option Scheme (the “Approved Scheme”) which incorporates performance
targets and restrictions. Under this scheme, senior executives and other staff may be issued share options up to the HMRC maximum
value of £30,000 at any one time. For options to vest, growth in earnings per share adjusted principally to exclude exceptional items
(“Adjusted EPS”) must exceed growth in the Retail Price Index (“RPI”) by at least nine per cent over the three year vesting period. Adjusted
EPS will normally be consistent with the post-tax earnings per share excluding exceptional items as presented in the financial statements.
However, the Remuneration Committee are authorised to make appropriate adjustments to Adjusted EPS as applied to option and LTIP
schemes. Once the options have vested they must be exercised within the following seven years. The performance targets and restrictions
are considered to be a realistic test of management performance and were chosen because they are consistent with corporate profit
growth objectives and ensure that options only become exercisable against the background of a sustained real increase in the financial
performance of the Group.

The Company also has a Senior Executive Share Option Scheme (the “Senior Scheme”). The maximum benefit granted under the Senior
Scheme equates to 20% of salary per annum subject to the discretion of the Remuneration Committee. Currently the only participants
in the Senior Scheme are Executive Directors. For options to vest under the Senior Scheme, growth in Adjusted EPS must exceed growth
in RPI by at least nine per cent over a three year period. If this is achieved 40% of the award will vest. If Adjusted EPS exceeds RPI by
more than 21%, 100% of the award will vest. The performance targets and restrictions are considered to be a realistic test of management
performance and were chosen because they are consistent with corporate profit growth objectives and ensure that the options only
become exercisable against the background of a sustained real increase in the financial performance of the Group. Once the options
have vested they must be exercised within the following seven years.

For both the Approved Scheme and the Senior Scheme the assessment as to whether the performance conditions have been met is
relatively straightforward in that the Remuneration Committee determines this using the earnings per share information which is
published in the Group’s Annual Report and Accounts. However, the level of vesting is confirmed by BDO LLP, based on earnings per
share calculations provided by the Group.

ii) Savings Related Share Option Scheme (the “SAYE Scheme”)
The Company also operates an SAYE Scheme, which is available to all Company employees with at least one year’s service. Under the
SAYE Scheme, options are granted over the Company’s 40p ‘A’ ordinary shares at a discount of 20% on the prevailing market price at
the time of the grant. Eligible employees may agree to save up to £250 per month over a period of three or five years and then purchase
shares within six months of the end of the term. The aim of the SAYE Scheme is to encourage share ownership at all levels of the Company.
Performance conditions are not applied to the SAYE Scheme.

iii) Share Incentive Plan (“SIP”)
All Company employees with not less than five months service in November in any year are eligible to receive free 40p ‘A’ ordinary
shares in December of that year through an HMRC approved SIP. The shares are held by the Trustees of the scheme for a minimum of
three years and a maximum of five years before being available to be passed to participants. The amount of shares awarded is based on
length of service and base salary. The maximum value of the shares allowable under the SIP to any individual in any one year is £3,000.
Performance conditions are not applied to the SIP. This scheme will be ten years old this summer so a resolution will be put to shareholders
at the forthcoming AGM seeking shareholder approval to extend it for a further ten years. More details of this resolution can be found
in the circular to shareholders which includes the Notice of Meeting.

Details of all options granted to Executive Directors are given in the table on pages 47 and 48 and details of all options granted are in
note 28.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Remuneration Report
continued

Directors’ Share Options

Michael Turner

Simon Emeny

At 2 April
2011
or date of

Granted

31 March
Lapsed
appointment Exercised
2012
– 14,150
–
–
– 11,660
–
–
– 10,040
–
–
–
–
–
5,589
– 13,011
– (2,297)
–
–
–
1,966
– 12,916
–
–
– 11,245
–
–
–
–
–
1,997
–
–
–
1,746
–
– 11,029 11,029
– (2,297) 11,029 95,349

14,150
11,660
10,040
5,589
15,308
1,966
12,916
11,245
1,997
1,746
–
86,617

At Exercise
price
£

Expiry

Date of

Date from
which
grant exercisable
2.12 25/6/03 25/6/06 24/6/13
3.67 19/7/05 19/7/08 18/7/15
4.98 18/7/06 18/7/09 17/7/16
7.51 18/7/07 18/7/10 17/7/17
4.05 15/7/08 15/7/11 15/7/18
3.31
1/3/14
4.80 16/7/09 16/7/12 16/7/19
5.78 12/7/10 12/7/13 12/7/20
1/3/16
4.64
6.30 30/11/10 30/11/13 30/11/20
7.09 20/7/11 20/7/14 19/7/21

date Type
A
U
U
U
U
S
U
U
S
U
U

Cost of options
under SAYE
schemes
£
–
–
–
–
–
6,507
–
–
9,266
–
–

1/9/08

1/9/10

1/9/13

1/9/15

Price at Notional
gain on
exercise
exercise
date
£
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
9,100
–
–
6,022 (6,022)
–
–
2,007
–
–
4,285
– (1,763)
11,753
–
–
1,180
–
–
9,916
–
–
8,650
–
–
2,530
859
–
–
–

–
9,100
–
–
–
2,007
–
4,285
–
9,990
–
1,180
–
9,916
–
8,650
–
2,530
–
859
9,139
9,139
(1,763) 9,139 57,656

3.67 19/7/05 19/7/08 18/7/15
4.98 18/7/06 18/7/09 17/7/16
4.98 18/7/06 18/7/09 17/7/16
7.51 18/7/07 18/7/10 17/7/17
4.05 15/7/08 15/7/11 15/7/18
3.31
1/3/14
4.80 16/7/09 16/7/12 16/7/19
5.78 12/7/10 12/7/13 12/7/20
4.64
1/3/16
6.30 30/11/10 30/11/13 30/11/20
7.09 20/7/11 20/7/14 19/7/21

1/9/08

1/9/10

1/9/15

1/9/13

–
U
–
A
–
U
–
U
–
U
3,906
S
–
U
–
U
S 11,739
–
U
–
U

–

–
–
–
–
–
–

–
7.20 13,369
–
–
–
–
–
–
–
–
–

–
–

James Douglas

56,302 (6,022)

7,407 (7,407)
–
2,814
–
8,625
–
7,508
–
1,939
–
1,047
–
–
29,340 (7,407)

–
(423)
–
–
–
–
–

–
–
–
2,391
–
8,625
–
7,508
–
1,939
–
1,047
7,277
7,277
(423) 7,277 28,787

4.05 15/7/08 15/7/11 15/7/18
4.05 15/7/08 15/7/11 15/7/18
4.80 16/7/09 16/7/12 16/7/19
5.78 12/7/10 12/7/13 12/7/20
4.64
1/3/14
6.30 30/11/10 30/11/13 30/11/20
7.09 20/7/11 20/7/14 19/7/21

1/9/10

1/9/13

A
U
U
U
S
U
U

–
–
–
–
8,997
–
–

7.20 23,332
–
–
–
–
–
–

–
–
–
–
–
–

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Directors’ Remuneration Report
continued

Directors’ Share Options continued

Richard Fuller

At 2 April
2011
or date of

appointment Exercised
–
(820)
–
–
–
–
–
–
(820)

9,532
820
1,966
801
4,321
869
665
–
18,974

Lapsed
–
–
–
–
–
–
–
–
–

Expiry

Date of

5/7/04
1/9/06
1/9/08
1/9/09

Date from
which
grant exercisable
5/7/07
1/9/11
1/9/13
1/9/14

At Exercise
price
£
4/7/14
2.62
1/3/12
3.92
1/3/14
3.31
3.88
1/3/15
5.78 12/7/10 12/7/13 12/7/20
5.78 12/7/10 12/7/13 12/7/20
4.64
1/3/16
7.09 20/7/11 20/7/14 19/7/21

date Type
A
S
S
S
U
A
S
U

1/9/10

1/9/15

Cost of options
under SAYE
schemes
£
–
3,214
6,507
3,108
–
–
3,086
–

31 March
Granted
2012
–
9,532
–
–
–
1,966
–
801
–
4,321
–
869
–
665
4,612
4,612
4,612 22,766

Price at Notional
gain on
exercise
exercise
date
£
£
–
–
2,198
6.60
–
–
–
–
–
–
–
–
–
–
–
–

Ian Bray1

–

Jonathon Swaine2 1,649
1,649

–

–
–

–

–
–

–

–
–

–

1,649
1,649

Total

192,882 (14,249)

(4,483) 32,057 206,207

5.47

1/9/11

1/9/14

1/3/15

9,020

–

1Ian Bray was appointed on 12 December 2011. 2Jonathon Swaine was appointed on 1 February 2012.
A: Approved Executive Share Option Scheme
S: Savings Related Share Option Scheme
U: Unapproved Senior Executive Share Option Scheme

Directors’ Options Analysed by Exercise Price (£)

Exercise Price (£)
2.12
2.62
3.67
3.92
4.98
7.51
3.31
4.05
4.80
3.88
5.78
4.64
6.30
7.09
5.47
Total

At 31 March
2012
14,150
9,532
20,760
–
12,047
9,874
5,112
25,392
31,457
801
32,593
7,131
3,652
32,057
1,649
206,207

At 2 April
2011*
14,150
9,532
20,760
820
18,069
9,874
5,112
37,282
31,457
801
32,593
7,131
3,652
–
–
191,233

*The number of options at 2 April 2011 excludes 1,649 in respect of Jonathon Swaine, who was not a Director at the start of the year.
The market price of the shares at Friday, 30 March 2012 was £7.15 and the range during the year was from £6.00 to £7.52.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Remuneration Report
continued

F) Long Term Incentive Plan (“LTIP”)
The aim of the LTIP is to align the efforts of Directors and senior managers with the Company’s objective of creating shareholder value
and increasing earnings per share in the longer term. The performance conditions for the LTIP were chosen accordingly and all subsisting
LTIP awards have a performance condition wholly based on growth in Adjusted EPS as defined in section E) above. The EPS based measure
ensures that awards only become exercisable against a background of a sustained real increase in the financial performance of the Group.
The Remuneration Committee have reviewed this scheme and the other incentive schemes in light of the new UK Corporate Governance
Code and at present do not feel it is appropriate to introduce any non financial metrics into any of the schemes.

To assess the awards, the average growth in Adjusted EPS is compared with the growth in inflation over the performance period. The
performance period covers three financial years starting from the start of the financial year in which the grant is made. No vest occurs
if the Adjusted EPS growth fails to exceed the RPI by at least 9% over the period (for LTIP grants made up to July 2008 this was 6%). 40%
of the award vests if the target is hit, and there is a sliding scale above that point (sliding scale from 25% for grants made up to 2008).
Some institutional shareholders believe that this is too high a percentage for the first point of vest, but the Remuneration Committee
believe that it is fair given that the hurdle rate has been raised, that grants can never exceed more than 100% of salary under the scheme
(which is modest compared to many other schemes) and that in some years, there may be no vest at all. For a 100% award of shares to
be made, growth in Adjusted EPS would need to exceed the growth in RPI by 24% or more over the period (21% for grants made up to
2008). The Remuneration Committee determines whether the Adjusted EPS performance condition has been met using the earnings
per share information which is published in the Group’s Annual Report and Accounts. BDO LLP confirm the level of vesting of awards
based on earnings per share calculations provided by the Group.

Under the LTIP, the rules allow for discretionary annual awards of ‘A’ (listed), ‘B’ (unlisted) and, following a recent rule change, ‘C’
(convertible to ‘A’) ordinary shares up to a value representing 100% of a participant’s salary in any one year (80% for grants made up
to 2008). For awards made up to and including 2006, where shares vested, participants were invited to re-deposit half of their shares
for a further three year period. The Company then made a matched share award up to the number of shares deposited. Both the deposited
shares and the matched shares award are released to the participants in full after the second three year period, providing the participant
is still employed by the Company. The practice of offering matching awards was discontinued after the award made in July 2006. Details
of the awards made during the year to Directors are given in the following tables.

In all cases the LTIP grants were calculated by reference to the middle market quotation as at the following dates:

Date
18 July 2005
17 July 2006
14 July 2008
15 July 2009
12 July 2010
30 November 2010
20 July 2011

‘A’ ordinary shares ‘B’ ordinary shares
£
0.37
0.50
0.41
0.48
0.58
0.63
0.71

£
3.67
4.98
4.05
4.80
5.78
6.30
7.09

In all cases shares will vest, subject to performance criteria being attained, within 72 days of the publication of results for the last
financial year in the performance period.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Directors’ Remuneration Report
continued

Directors’ Long Term Incentive Plan Allocations

Michael Turner

‘A’ ordinary 40p
‘B’ ordinary 4p

Total held at
2 April 2011
Granted
or date of
during year
of appointment
44,118
157,731
394,336 110,296

Original
awards
vested
(31,229)
(78,073)

Matching
awards
vested
(9,328)
(23,323)

Lapsed
during year
(5,511)
(13,778)

Total held at
31 March 2012
155,781
389,458

Monetary
value of vest*
£000
282
71

Simon Emeny

James Douglas

Richard Fuller

Ian Bray

‘A’ ordinary 40p
‘B’ ordinary 4p

119,619
299,050

36,558
91,396

(23,976)
(59,940)

(7,280)
(18,201)

(4,231)
(10,578)

‘A’ ordinary 40p
‘B’ ordinary 4p

93,257
233,145

29,111
72,778

(20,853)
(52,133)

–
–

(3,680)
(9,200)

‘A’ ordinary 40p
‘B’ ordinary 4p

48,164
120,416

13,836
34,590

(8,990)
(22,477)

(3,268)
(8,173)

(1,587)
(3,967)

‘A’ ordinary 40p
‘B’ ordinary 4p

–
–

Jonathon Swaine

‘A’ ordinary 40p
‘B’ ordinary 4p

24,749
61,875

–
–

120,690
301,727

97,835
244,590

48,155
120,389

–
–

24,749
61,875

218
54

145
36

85
21

–
–

*The market price of ‘A’ shares on 22 July 2011 for theLTIP 11 awards vested was £6.95. Thusweassume a“market” price for ‘B’ shares of £0.695. The market price of
‘A’ shares on 25 July 2011 for the LITP8 Matching awards vested was £7.00. Thuswe assumea“market” price for ‘B’ shares of £0.700.

The table above excludes vested shares that have been redeposited with the LTIP Trust in order to obtain the matching grant.

Directors’ LTIP Grants Held at 31 March 2012

Grant
Grant date
Start of performance period
End of performance period
Matching period end
Michael Turner

LTIP 9
18 July 2006
April 2006
March 2009
17 July 2012
8,031
20,080

LTIP 12
16 July 2009
April 2009
March 2012
n/a
51,666
129,166

LTIP 13
12 July/30 Nov 2010
April 2010
March 2013
n/a
51,966
129,916

‘A’ ordinary 40p
‘B’ ordinary 4p

LTIP 14
20 July 2011
April 2011
March 2014
n/a
44,118
110,296

36,558
91,396

29,111
72,778

13,836
34,590

–
–

Total at
31 March
2012
155,781
389,458

120,690
301,727

97,835
244,590

48,155
120,389

–
–

38,041
95,102

34,224
85,562

20,761
51,903

–
–

7,612
19,031

6,392
15,980

24,749
61,875

Simon Emeny

James Douglas

Richard Fuller

Ian Bray

Jonathon Swaine

‘A’ ordinary 40p
‘B’ ordinary 4p

6,425
16,063

‘A’ ordinary 40p
‘B’ ordinary 4p

–
–

2,650
6,626

–
–

2,248
5,621

39,666
99,166

34,500
86,250

10,908
27,270

–
–

8,497
21,243

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors’ Remuneration Report
continued

G) REMUNERATION POLICY FOR NON-EXECUTIVE DIRECTORS
The remuneration of the Non-Executive Directors is determined by the Executive Committee. The policy is to ensure in all cases that the
fees paid are not out of line with the market and go some way towards rewarding the Non-Executives for the time they commit to their
various roles. Accordingly all Non-Executive Directors receive a basic fee. The Senior Independent Director receives a fee for that role
and there are additional fees for chairing and being a member of the Audit and Remuneration Committees. Sir James Fuller receives a
consultancy fee for his work in liaising with family shareholders. It is the Company’s policy that Non-Executive Directors should not
participate in bonus schemes, share options or long term incentive plans. None of the Non-Executive Directors are members of any
Group pension scheme, with the exception of Nigel Atkinson, who is a deferred member of the Gales section of the defined benefit
Company pension plan, accrued when he was Managing Director of Gales.

Non-Executive Directors receive a product allowance and are reimbursed for travel and other business related expenses. Nigel Atkinson
also benefits from private healthcare.

None of the Non-Executive Directors have service contracts and their appointments are reviewed at between one and three yearly
intervals. They are renewable as shown on page 42.

H) PERFORMANCE GRAPH
The graph below shows a comparison of the Total Shareholder Return (“TSR”) for the Company’s listed ‘A’ ordinary shares for the last
five financial years against the TSR for the companies in the FTSE Travel & Leisure Index. The Company is a constituent of this Index and
therefore it is an appropriate choice for this report.

Total Shareholder Return

120

100

FULLER, SMITH & TURNER P.L.C.

FTSE ALL-SHARE TRAVEL & LEISURE INDEX (rebased)

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

SOURCE: THOMSON DATASTREAM

On behalf of the Board

Alastair Kerr
Chairman, Remuneration Committee

31 May 2012

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Independent Auditors’ Report
to the Members of Fuller, Smith & Turner P.L.C.

We have audited the financial statements of Fuller, Smith & Turner P.L.C. for the 52 weeks ended 31 March 2012 which comprise the Group
Income Statement, the Group and Company Statements of Comprehensive Income, the Group and Company Balance Sheets, the Group
and Company Statements of Changes in Equity, the Group and Company Cash Flow Statements and the related notes 1 to 30. The financial
reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union and, as regards the Parent Company financial statements, as applied in accordance with the provisions of
the Companies Act 2006.

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.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR
As explained more fully in the Directors’ Responsibilities Statement set out on page 33, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion
on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance
that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the Group’s and the Parent Company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report and Accounts
to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.

OPINION ON THE FINANCIAL STATEMENTS
In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2012

and of the Group’s profit for the 52 weeks then ended;

• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

• the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union

and as applied in accordance with the provisions of the Companies Act 2006; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the

Group financial statements, Article 4 of the IAS Regulation.

OPINION 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;

• the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the

financial statements; and

• the information given in the Corporate Governance Report set out on pages 34 to 40 with respect to internal control and risk management

systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Independent Auditors’ Report
to the Members of Fuller, Smith & Turner P.L.C. continued

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received

from branches not visited by us; or

• the Parent 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; or

• a Corporate Governance Statement has not been prepared by the Company.

Under the Listing Rules we are required to review:

• the Directors’ statement, set out on page 25, in relation to going concern;

• the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate

Governance Code specified for our review; and

• certain elements of the report to shareholders by the Board on Directors’ remuneration.

Les Clifford (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London

31 May 2012

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FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Group Income Statement
for the 52 weeks ended 31 March 2012

Revenue
Operating costs
Operating profit
Profit on disposal of properties
Finance revenue
Finance costs
Profit before tax
Taxation
Profit for the year attributable to equity
shareholders of the Parent Company

52 weeks ended 31 March 2012
Exceptional
Before
items
exceptional items
£m
£m
–
253.0
(1.9)
(218.1)
(1.9)
34.9
0.6
–
–
0.3
(0.2)
(4.9)
(1.5)
30.3
2.8
(7.9)

Total
£m
253.0
(220.0)
33.0
0.6
0.3
(5.1)
28.8
(5.1)

Note

4, 5

5, 7

5, 8

53 weeks ended 2 April 2011
Before
exceptional items
£m
241.9
(207.8)
34.1
–
0.1
(4.9)
29.3
(8.3)

Exceptional
items
£m
–
(1.0)
(1.0)
2.7
–
–
1.7
2.1

Total
£m
241.9
(208.8)
33.1
2.7
0.1
(4.9)
31.0
(6.2)

Earnings per share per 40p ‘A’ and ‘C’ ordinary share
Basic
Diluted
Adjusted
Diluted adjusted

Earnings per share per 4p ‘B’ ordinary share
Basic
Diluted
Adjusted
Diluted adjusted

1.3

23.7

2012
Pence
42.13
41.62

2012
Pence
4.21
4.16

22.4

2012
Pence

39.82
39.34

2012
Pence

3.98
3.93

3.8

24.8

2011
Pence
44.12
43.30

2011
Pence
4.41
4.33

21.0

2011
Pence

37.36
36.67

2011
Pence

3.74
3.67

The results and earnings per share measures above are all in respect of continuingoperations of the Group.

Group and Company Statements of Comprehensive Income
for the 52 weeks ended 31 March 2012

Group
Profit for the year
Net (losses)/gains on valuation of financial assets and liabilities (note 26)
Net actuarial (losses)/gains on pension scheme (note 23)
Tax on components of other comprehensive income (note 8)
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income for the year, net of tax, attributable to equity shareholders of the Parent Company

52 weeks ended
31 March
2012
£m
23.7
(2.6)
(13.9)
3.7
(12.8)
10.9

Company
Profit for the year
Net (losses)/gains on valuation of financial assets and liabilities
Net actuarial (losses)/gains on pension scheme (note 23)
Tax on components of other comprehensive income
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income for the year, net of tax, attributable to equity shareholders of the Parent Company

£m
21.5
(2.6)
(13.9)
3.7
(12.8)
8.7

53 weeks ended
2 April
2011
£m
24.8
1.8
6.0
(2.4)
5.4
30.2

£m
22.7
1.5
6.0
(2.3)
5.2
27.9

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Balance Sheets
31 March 2012

Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Derivative financial assets
Other non-current assets
Investments in subsidiaries
Deferred tax assets
Total non-current assets

Current assets
Inventories
Trade and other receivables
Cash and short term deposits
Total current assets
Assets classified as held for sale

Current liabilities
Trade and other payables
Current tax payable
Provisions
Total current liabilities

Non-current liabilities
Borrowings
Derivative financial liabilities
Retirement benefit obligations
Deferred tax liabilities
Provisions
Total non-current liabilities
Net assets

Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Own shares
Hedging reserve
Retained earnings
Total shareholders’ equity

Approved by the Board and signed on 31 May 2012.

M J Turner, FCA
Chairman

Note

Group
2012
£m

30.6
400.5
4.9
–
0.3
–
7.8
444.1

10.5
18.3
3.9
32.7
5.3

47.2
3.9
0.5
51.6

142.1
1.4
19.1
30.1
2.5
195.2
235.3

22.8
4.8
3.1
(8.3)
(1.1)
214.0
235.3

Group
2011
£m

23.9
342.8
10.0
1.5
0.4
–
4.1
382.7

8.8
18.8
3.7
31.3
0.2

38.8
4.5
0.3
43.6

92.2
–
6.4
33.7
2.1
134.4
236.2

22.8
4.8
3.1
(3.1)
0.9
207.7
236.2

Company
2012
£m

Company
2011
£m

6.7
400.5
4.9
–
0.3
91.8
7.5
511.7

10.5
18.3
3.9
32.7
–

132.3
3.9
0.5
136.7

142.1
1.4
19.1
28.9
2.5
194.0
213.7

22.8
4.8
3.1
(8.3)
(1.1)
192.4
213.7

–
342.8
4.7
1.5
0.4
91.8
3.7
444.9

8.8
18.8
3.7
31.3
0.2

121.9
4.5
0.3
126.7

92.2
–
6.4
32.2
2.1
132.9
216.8

22.8
4.8
3.1
(3.1)
0.9
188.3
216.8

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Group and Company Statements of Changes in Equity
for the 52 weeks ended 31 March 2012

Group
At 27 March 2010
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Shares purchased to be held in ESOT or as treasury
Shares released from ESOT and treasury
Dividends (note 10)
Share-based payment charges
Tax credited directly to equity (note 8)
At 2 April 2011

Profit for the year
Other comprehensive loss for the year
Total comprehensive (loss)/income for the year
Shares purchased to be held in ESOT or as treasury
Shares released from ESOT and treasury
Dividends (note 10)
Share-based payment charges
Tax credited directly to equity (note 8)
At 31 March 2012

Company
At 27 March 2010
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Shares purchased to be held in ESOT or as treasury
Shares released from ESOT and treasury
Dividends (note 10)
Share-based payment charges
Tax credited directly to equity
At 2 April 2011

Share
capital
(note 27)
£m
22.8
–
–
–
–
–
–
–
–
22.8

Share
premium
account
£m
4.8
–
–
–
–
–
–
–
–
4.8

Capital
redemption
reserve
£m
3.1
–
–
–
–
–
–
–
–
3.1

Own
shares
(note 27)
£m
(4.0)
–
–
–
(1.3)
2.2
–
–
–
(3.1)

Hedging
reserve
£m
(0.4)
–
1.3
1.3
–
–
–
–
–
0.9

–
–
–
–
–
–
–
–
22.8

£m
22.8
–
–
–
–
–
–
–
–
22.8

–
–
–
–
–
–
–
–
22.8

–
–
–
–
–
–
–
–
4.8

£m
4.8
–
–
–
–
–
–
–
–
4.8

–
–
–
–
–
–
–
–
4.8

–
–
–
–
–
–
–
–
3.1

£m
3.1
–
–
–
–
–
–
–
–
3.1

–
–
–
–
–
–
–
–
3.1

–
–
–
(8.5)
3.3
–
–
–
(8.3)

£m
(4.0)
–
–
–
(1.3)
2.2
–
–
–
(3.1)

–
–
–
(8.5)
3.3
–
–
–
(8.3)

–
(2.0)
(2.0)
–
–
–
–
–
(1.1)

£m
(0.2)
–
1.1
1.1
–
–
–
–
–
0.9

–
(2.0)
(2.0)
–
–
–
–
–
(1.1)

Retained
earnings
£m
180.9
24.8
4.1
28.9
–
(1.7)
(3.3)
1.8
1.1
207.7

23.7
(10.8)
12.9
–
(2.3)
(6.8)
1.9
0.6
214.0

£m
163.6
22.7
4.1
26.8
–
(1.7)
(3.3)
1.8
1.1
188.3

21.5
(10.8)
10.7
–
(2.3)
(6.8)
1.9
0.6
192.4

Total
£m
207.2
24.8
5.4
30.2
(1.3)
0.5
(3.3)
1.8
1.1
236.2

23.7
(12.8)
10.9
(8.5)
1.0
(6.8)
1.9
0.6
235.3

£m
190.1
22.7
5.2
27.9
(1.3)
0.5
(3.3)
1.8
1.1
216.8

21.5
(12.8)
8.7
(8.5)
1.0
(6.8)
1.9
0.6
213.7

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Group and Company Cash Flow Statements
for the 52 weeks ended 31 March 2012

Profit before tax
Net finance costs before exceptional items
Exceptional items
Depreciation and amortisation
Loss on disposal of property, plant and equipment

Difference between pension charge and cash paid
Share-based payment charges
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Cash impact of operating exceptional items
Cash generated from operations
Tax paid
Cash generated from operating activities

Cash flow from investing activities
Business combinations
Purchase of property, plant and equipment
Sale of property, plant and equipment
Net cash outflow from investing activities

Cash flow from financing activities
Purchase of own shares
Receipts on release of own shares to option schemes
Interest paid
Preference dividends paid
Equity dividends paid
Drawdown of bank loans
Repayment of bank loans
Repayment of debenture stock
Cost of refinancing and associated hedging
Net cash inflow/(outflow) from financing activities

Net movement in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year

There were no significant non-cash transactions during either year.

Group
52 weeks ended
31 March
2012
£m
28.8
4.6
1.5
12.8
0.1
47.8
(0.9)
1.9
0.7
(1.7)
4.9
(2.0)
50.7
(8.7)
42.0

Group
53 weeks ended
2 April
2011
£m
31.0
4.8
(1.7)
12.4
0.1
46.6
(0.4)
1.8
(2.5)
(1.2)
(0.1)
0.4
44.6
(8.6)
36.0

Company
52 weeks ended
31 March
2012
£m
26.1
7.3
1.5
12.8
0.1
47.8
(0.9)
1.9
0.7
(1.7)
4.9
(2.0)
50.7
(8.7)
42.0

Company
53 weeks ended
2 April
2011
£m
28.2
7.7
(1.7)
12.4
0.1
46.7
(0.4)
1.8
(2.5)
(1.2)
(0.2)
0.4
44.6
(8.6)
36.0

(52.8)
(21.9)
1.9
(72.8)

(8.5)
1.0
(4.4)
(0.1)
(6.8)
50.0
–
–
(0.2)
31.0

0.2
3.7
3.9

–
(12.0)
4.0
(8.0)

(1.3)
0.5
(4.1)
(0.1)
(3.3)
65.5
(80.2)
(1.2)
(1.2)
(25.4)

2.6
1.1
3.7

(52.8)
(21.9)
1.9
(72.8)

(8.5)
1.0
(4.4)
(0.1)
(6.8)
50.0
–
–
(0.2)
31.0

0.2
3.7
3.9

–
(12.0)
4.0
(8.0)

(1.3)
0.5
(4.1)
(0.1)
(3.3)
65.5
(80.2)
(1.2)
(1.2)
(25.4)

2.6
1.1
3.7

Note

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements

1. Authorisation of Financial Statements and Accounting Policies

AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRSs

The financial statements of Fuller, Smith & Turner P.L.C. and its subsidiaries (the “Group”) for the 52 weeks ended 31 March 2012 were
authorised for issue by the Board of Directors on 31 May 2012 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.

The Group’s and Company’s financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRSs”) as adopted for use in the European Union and applied to the financial statements of the Group and the Company for the 52 weeks
ended 31 March 2012, in accordance with the provisions of the Companies Act 2006.

The principal accounting policies adopted by the Group and by the Company are set out in the accounting policies below.

Profit attributable to members of the Parent Company
As permitted by Section 408 of the Companies Act 2006 a separate Income Statement for the Parent Company has not been prepared.
The profit attributable to ordinary shareholders and included in the financial statements of the Parent Company was £21.5 million (2011:
£22.7 million). There was no dividend from subsidiary companies during the current year (2011: £nil).

SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation
The accounting policies which follow set out those policies which apply in preparing the financial statements for the 52 weeks ended
31 March 2012.

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 when otherwise indicated.

Adoption of New Standards and Interpretations:
The following new and amended IFRS and IFRIC interpretations are effective for the Group’s period commencing 3 April 2011:

• IAS 24 Related Party Disclosures (Amendment) – 1 January 2011

• IFRIC 14 Prepayments of a Minimum Funding Requirement (amendment) – 1 January 2011

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments – 1 July 2010

• Improvements to IFRSs (issued May 2010) – 1 July 2010/1 January 2011

These new standards have not had a significant impact on the accounting policies, financial position or performance of the Group.

Notably, during the year the Group has expensed transaction costs on pub acquisitions which qualify as business combinations, in
accordance with IFRS 3 Business Combinations (revised). These have been recorded as exceptional items. There were no business
combinations in the comparative period presented.

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 52 weeks ended 31 March 2012 (2011: 53 weeks ended 2 April 2011).

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 govern the financial and operating policies of the
investee 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. The financial statements of subsidiaries are prepared for the
same reporting year as the Parent Company, using consistent accounting policies. All intercompany balances and transactions, including
unrealised profits arising from them, are eliminated.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and impairment losses. Intangible assets acquired separately from a
business are carried initially at cost. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset
is separable or arises from contractual or other legal rights and its fair value can be measured reliably. Payments made to acquire operating
leases from third parties are classified as intangible assets and amortised over the expected life of the lease and recognised in the
Income Statement.

Goodwill
Business combinations on or after 28 March 2004 are accounted for under IFRS 3 using the purchase method. No goodwill has arisen from
acquisitions made prior to 28 March 2004. Any excess of the cost 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.

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 cash-generating units (or group of cash generating units) monitored
by management. Where the recoverable amount of the cash-generating unit 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 cash-generating unit is taken into account when determining the gain or loss on disposal of
the unit, or of an operation within it.

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 down 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, unlicensed property and brewery – 50 to 100 years.

Leasehold improvements – The term of the lease.

Roofs – From 10 to 50 years.

Plant, machinery and vehicles, containers, 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.

Investment Property
The Group owns properties that are not used for the production 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. Depreciation is calculated
on a straight-line basis down to the estimated residual value over the expected useful life of the asset, which for investment properties is
50 to 100 years.

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 cash-generating units 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. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the smallest cash-generating unit to which the asset belongs. Impairment losses, and any reversal
of such losses, are recognised in the Income Statement.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

Leases
Group as a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases and rentals
payable are charged in the Income Statement on a straight-line basis over the lease term. Premiums paid or payable on acquiring a new
lease which are considered to be in consideration for a reduction in rent are spread on a straight-line basis over the term of the lease. Such
premiums are classified in the Balance Sheet as current or non-current prepayments. Contingent rents are dependent on turnover levels
and are expensed as incurred.

Group as a lessor
Assets leased under operating leases are included in property, plant and equipment and depreciated over their estimated useful lives. Rental
income, including the effect of lease incentives, is recognised on a straight line basis over the lease term.

Incentives received or receivable to enter into an operating lease are spread on a straight-line basis over the lease term.

Assets Held for Sale
Assets are classified as held for sale when the carrying amount will be recovered principally through a sale transaction rather than continuing
use. To be classified as such management need to have initiated a sales plan as at the Balance Sheet date and must expect the sale to qualify
for recognition as a completed sale within one year. 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.

Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the First In First Out method. The cost of own
beer consists of materials with the addition of relevant overhead expenses. 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
Financial Assets
Trade and other receivables
Trade receivables and loans to customers do not carry any interest and are recognised at their original invoiced amounts, less an allowance
for any amounts that are not considered to be collectible. Increases to the allowance account are recognised in the Income Statement
within operating costs. At the point a trade receivable is written off the ledger as uncollectible, the cost is charged against the allowance
account and any subsequent recoveries of amounts previously written off are credited to the Income Statement.

Cash and short-term deposits
Cash and short-term deposits comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where the rights
to receive cash flows from the asset have expired.

Financial Liabilities
Trade and other payables
Trade and other payables do not bear interest and are carried at original cost.

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.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, such
that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in profit or loss.

Derivative financial instruments and hedging
In order to hedge its exposure to certain foreign exchange transaction risks, the Group enters into forward foreign exchange contracts. In
order to hedge its exposure to interest rate risks, the Group enters into interest rate derivative contracts. The Group uses these contracts
in order to hedge known borrowings. The Group does not use any derivative financial instruments for speculative purposes.

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 assets when the fair value is positive and as liabilities when the fair value
is negative. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar
maturity profiles. The fair value of interest rate swap and cap contracts are determined by reference to market values for similar
instruments.This represents a Level 2 fair value under the hierarchy in IFRS 7.

For those derivatives designated as hedges and for which hedge accounting is desired, the hedging relationship is documented at its
inception. This documentation identifies the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and
how effectiveness will be measured throughout its duration. Such hedges are expected at inception to be highly effective. For the purpose
of hedge accounting, hedges are classified as cash flow hedges when hedging 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.

Interest rate swaps are classified as cash flow hedges. If they are effective hedges, then any changes in fair value are deferred in equity until
the hedged transaction occurs, when any changes in fair value will be recycled through the Income Statement together with any changes
in the fair value of the hedged item. If the hedges are not effective hedges, then any changes in fair value are recognised in the Income
Statement immediately.

If a forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to profit or loss. If the hedging
instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts
previously recognised in equity remain in equity until the forecast transaction occurs and are transferred to the Income Statement.

Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken to the Income
Statement.

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 26, 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.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

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 shares carry interest at fixed rates.

Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and revenue can be reliably
measured. It is measured at the fair value of consideration received or receivable, net of discounts and VAT.

Sales of goods are recognised when the goods are delivered and title has passed. Rental income is recognised on a straight-line basis over
the term of the lease. Revenue for bedroom accommodation is recognised at the point the services are rendered. Amusement machine
revenue is recognised in the accounting period to which the income relates.

Operating Profit
Operating profit is revenue less operating costs. Revenue is as detailed above and as shown in note 3. Operating costs are all costs excluding
finance costs, costs associated with the disposal of properties and the tax charge.

Finance Revenue
Finance revenue is recognised as interest accrues using the effective interest method.

Borrowing Costs
Borrowing costs are generally recognised as an expense when incurred. Interest expenses 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 assets 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.

Taxation
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.

Tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise tax is recognised in the
Statement of Comprehensive Income or the Income Statement, as applicable.

Deferred tax is provided on all 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 except where
the 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.

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 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 except where the deferred tax asset 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 assets and liabilities are measured on an undiscounted basis 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.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

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, except where hedge accounting is applied.

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 scheme
The Group operates a defined benefit pension plan for eligible employees where contributions are made into a separate fund administered
by trustees.

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 costs are recognised in the
Income Statement on a straight-line basis over the vesting period or immediately if the benefits have vested.

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 recognised in the Income Statement during the period in which
the settlement or curtailment occurs.

The interest element of the defined benefit cost represents the change in present value of scheme obligations resulting from the passage
of time, and is determined by applying the discount rate to the opening present value of the benefit obligation, taking into account material
changes in the obligation during the year.

The expected return on plan assets is based on an assessment made at the beginning of the year of long-term market returns on scheme
assets, adjusted for the effect on the fair value of plan assets of contributions received and benefits paid during the year. The difference
between the expected return on plan assets and the interest cost is recognised in the Income Statement as other finance income or expense.
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 any past service cost not yet recognised and 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 any unrecognised past service costs
and the present value of any amount the Group expects to recover by way of refunds from the plan or reductions in the future contributions.

Exceptional Items
The Group presents as exceptional items on the face of the Income Statement, those material items of income and expense which, because
of the nature and 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.

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 which 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.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

Share-Based Payments continued
The cost of equity-settled transactions with employees is measured by reference to the fair value 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.

The Group has taken advantage of the transitional provisions of IFRS 1 in respect of equity-settled awards so as to apply IFRS 2 only to those
equity-settled awards granted after 7 November 2002 that had not vested before 1 January 2005.

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 and shown as a deduction from equity in the Balance Sheet.

In addition to the purchase of shares by the various employee share ownership trusts 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 revenue reserves. No gain or loss is recognised in the performance statements on the purchase, sale, issue or
cancellation of treasury shares.

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).

Financial Guarantee Contracts
Where the Company enters into contracts to guarantee the indebtedness of other companies within the Group, the Company considers
these to be insurance arrangements, and accounts for them as such. In this respect the Company treats the guarantee contract as a
contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.

The Company’s Investments in Subsidiaries
The Company recognises its investments in subsidiaries at cost. Distributions received are recognised in the Income Statement. The cost of
the investment held is subject to annual impairment review.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

New Standards and Interpretations Issued But Not Yet Applied
At the reporting date, the IASB and IFRIC had issued the following standards and interpretations with an effective date for periods starting
on or after the date on which these financial statements start. The Directors have not early adopted these standards and do not anticipate
that the adoption of any of these standards and interpretations, wherever relevant to Fuller’s, will have a significant impact on the Group’s
results or assets and liabilities in the period of initial application and are not expected to require significant additional disclosure:

International Accounting Standards
• IAS 1 Financial Statement Presentation – Presentation of Items of Other Comprehensive Income

• IAS 12 Income Taxes – Recovery of Underlying Assets

• IAS 27 Separate Financial Statements (as revised in 2011)

• IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

• IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments)

• IFRS 7 Financial Instruments; Disclosure (Amendments)

• IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities (Amendments)

• IFRS 9 Financial Instruments — Classification and Measurement

• IFRS 10 Consolidated Financial Statements

• IFRS 11 Joint Arrangements

• IFRS 12 Disclosure of Interests in Other Entities

• IFRS 13 Fair Value Measurement

Effective date
1 July 2012

1 January 2012

1 January 2013

1 January 2014

1 July 2011

1 January 2013

1 January 2015

1 January 2013

The following change in standard has not been early adopted but it is believed by the Directors this will have an impact on the Group’s results,
assets and liabilities:

• IAS 19 Employee Benefits (Amendment)

1 January 2013

IAS 19 (Amendment) requires the Group to replace interest cost on defined benefit obligations and expected return on plan assets with a
net interest amount that is calculated by applying the discount rate to the net defined benefit liability/asset. The impact of this change to
the Group’s reported profit in the period of adoption will be dependent on the Group’s pension asset profile at the date of adoption.

Significant Accounting Estimates and Judgements
The judgements, estimates and assumptions which are considered to be significant 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 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 11, together with an analysis of the key assumptions.

The Group reviews for impairment all property, plant and equipment at cash-generating unit 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 12,
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 salaries and 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 23.

Judgement is required when determining the provision for taxes as the tax treatment of some transactions cannot be finally determined until
a formal resolution has been reached with the tax authorities. Tax benefits are not recognised unless it is probable that the benefit will be
obtained. Tax provisions are made if it is possible that a liability will arise. The Group reviews each significant tax liability or benefit to assess
the appropriate accounting treatment. See notes 8 and 25.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

1. Authorisation of Financial Statements and Accounting Policies continued

Significant Accounting Estimates and Judgements continued
The assessment of fair values for the assets and liabilities recognised in the financial statements on the acquisition of a business requires
significant judgement. Management assesses fair values, particularly for property plant and equipment, with reference to current market
prices. See note 17 for the business combinations made in the year.

2. Segmental Analysis

Operating Segments
For management purposes, the Group’s operating segments are:

• Managed Pubs and Hotels, which comprises managed pubs and managed hotels;

• Tenanted Inns, which comprises pubs operated by third parties under tenancy or lease agreements; and

• The Fuller’s Beer Company, which comprises the brewing and distribution of beer, wines and spirits.

The Group’s business is vertically integrated. The most important measure used to evaluate the performance of the business is adjusted
profit, which is the profit before tax, adjusted for exceptional 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. More details
of these segments are given in the Group Managing Director’s Review on pages 6 to 14 of this report. Segment performance is evaluated
based on operating profit before exceptional items and is measured consistently with the operating profit before exceptional items in the
consolidated financial statements.

Transfer prices between operating segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment
revenue, segment expense and segment result include transfers between operating segments. Those transfers are eliminated on
consolidation. Group financing, including finance costs and revenue, and taxation are managed on a Group basis.

As segment assets and liabilities are not regularly provided to the Chief Operating Decision Maker, the Group has elected, as provided
under IFRS 8 Operating Segments (amended) not to disclose a measure of segment assets and liabilities.

52 weeks ended 31 March 2012
Revenue
Segment revenue
Inter-segment sales
Revenue from third parties

Segment result
Operating exceptional items
Operating profit
Profit on disposal of properties
Net finance costs
Profit before tax

Other segment information
Capital expenditure:

Property, plant and equipment
Business combinations
Depreciation and amortisation
Impairment of property
Reversal of impairment on property

Managed Pubs
and Hotels
£m

Tenanted Inns
£m

The Fuller’s
Beer Company
£m

Unallocated1
£m

155.7
–
155.7

18.3

13.4
21.5
8.5
0.2
(2.3)

27.5
–
27.5

10.3

1.5
31.3
1.6
0.1
–

109.1
(39.3)
69.8

–
–
–

9.0

(2.7)

7.0
–
2.7
–
–

–
–
–
–
–

Total
£m

292.3
(39.3)
253.0

34.9
(1.9)
33.0
0.6
(4.8)
28.8

21.9
52.8
12.8
0.3
(2.3)

1Unallocated expenses represent primarily the salary andcostsof central management.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

2. Segmental Analysis continued

53 weeks ended 2 April 2011
Revenue
Segment revenue
Inter-segment sales
Revenue from third parties

Segment result
Operating exceptional items
Operating profit
Profit on disposal of properties
Net finance costs
Profit before tax

Other segment information
Capital expenditure:

Property, plant and equipment

Depreciation and amortisation
Impairment of property

Managed Pubs
and Hotels
£m

Tenanted Inns
£m

The Fuller’s
Beer Company
£m

Unallocated1
£m

147.2
–
147.2

18.1

26.9
–
26.9

9.9

104.1
(36.3)
67.8

–
–
–

8.8

(2.7)

7.6
8.4
0.9

1.4
1.6
0.5

3.0
2.4
–

–
–
–

Total
£m

278.2
(36.3)
241.9

34.1
(1.0)
33.1
2.7
(4.8)
31.0

12.0
12.4
1.4

1 Unallocated expenses represent primarily the salary and costs of central management.

Geographical Information

The majority of the Group’s business is within the UK and the Group identifies two distinct geographic markets:

52 weeks ended 31 March 2012
Revenue
Sales to external customers

53 weeks ended 2 April 2011
Revenue
Sales to external customers

UK
£m

Rest of
the World
£m

Total
£m

247.3

5.7

253.0

UK
£m

Rest of
the World
£m

Total
£m

237.1

4.8

241.9

Sales to external customers disclosed in geographical information are based on the geographical location of its customers. All of the
Group’s assets, liabilities and capital expenditure relate to the UK only (2012 and 2011).

3. Revenue

Revenue disclosed in the Income Statement is analysed as follows:
Sale of goods and services
Rental income

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

245.0
8.0
253.0

234.2
7.7
241.9

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

4. Operating Costs

Production costs and cost of goods used in retailing
Change in stocks of ﬁnished goods and beer in progress
Staff costs
Repairs to properties
Depreciation of property, plant and equipment
Amortisation of intangibles
Operating lease rentals – minimum lease payments1

– contingent rents2

Exceptional items (note 5)
Other

52 weeks ended
31 March
2012
£m
86.4
1.7
62.5
6.8
12.5
0.3
6.4
1.1
1.9
40.4
220.0

53 weeks ended
2 April
2011
£m
80.6
1.2
60.3
6.7
12.4
–
5.7
1.1
1.0
39.8
208.8

1Included within minimum lease payments are sublease payments of £0.7million (2011:£0.6million). 2Contingent rents are dependent on turnover levels.

Details of income and direct expenses relating to rental income from investment properties are shown in note 13.

a) Auditors’ Remuneration
Fee payable to Company’s auditors:
Statutory audit fees of Group financial statements

Total non-audit fees, relating to iXBRL conversion, tax and covenants review, were £23,000 (2011: £15,000).

b) Staff Costs*
Wages and salaries**
Social security costs
Pension beneﬁts

*IncludesDirectors. **Includes share-based payment expense.

c) Average Number of Employees*

The average monthly number of persons employed by the Group (including part-time staff) was as follows:
Fuller’s Inns
The Fuller’s Beer Company
Central Services

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

0.1
0.1

£m
56.8
4.0
1.7
62.5

0.1
0.1

£m
54.4
4.0
1.9
60.3

Number

3,095
283
14
3,392

3,061
288
14
3,363

* Includes Directors.

d) Directors’ Emoluments

Full details are provided in the Directors’ Remuneration Report and tables on pages 41, 43 and 51. Three Directors had benefits accruing
under defined benefit pension schemes at the end of the year (2011: three). Two Directors had benefits accruing under the Company’s
defined contribution scheme at the end of the year (2011: one). One Director had benefits accruing under a non Company defined
contribution pension (2011: nil).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

5. Exceptional Items

Amounts included in operating profit:
Acquisition costs
Onerous lease charges
Reversal of impairment on property
Impairment of properties
Insurance claim
Total exceptional items included in operating profit
Profit on disposal of properties
Exceptional finance costs:
Movement in fair value of financial instruments
Total exceptional finance costs
Total exceptional items before tax

Exceptional tax:
Change in corporation tax rate (see note 8)
Profit on disposal of properties
Other items
Total exceptional tax
Total exceptional items

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

(3.0)
(0.9)
2.3
(0.3)
–
(1.9)
0.6

(0.2)
(0.2)
(1.5)

2.5
(0.1)
0.4
2.8
1.3

–
–
–
(1.4)
0.4
(1.0)
2.7

–
–
1.7

2.6
(0.8)
0.3
2.1
3.8

Acquisition costs of £3.0 million during the 52 weeks ended 31 March 2012 comprise £2.6 million of transaction costs on pub acquisitions
which qualify as business combinations (note 17) and £0.4 million abortive acquisition costs incurred during a proposed acquisition bid.

The onerous lease charge of £0.9 million during the 52 weeks ended 31 March 2012 relates to provisions made in respect of leasehold
properties which are currently trading at a loss and which the Directors do not expect to become profitable in the future.

During the 52 weeks ended 31 March 2012 the impairment of £0.3 million (2011: £1.3 million) and the reversal of prior impairments of
£2.3 million (2011: £nil) relate to the write down/back of licensed properties to their recoverable value. During the 53 weeks ended 2 April
2011 there was also a £0.1 million write down of investment properties to their recoverable value. See notes 12 and 13.

During the 53 weeks ended 2 April 2011 insurance claim income of £0.4 million was recognised in relation to the gain made on the disposal
of a property destroyed by fire.

The profit on disposal of properties of £0.6 million during the 52 weeks ended 31 March 2012 (2011: £2.7 million) relates to the disposal
of six licensed and unlicensed properties (2011: ten).

The movement in fair value of financial instruments of £0.2 million for the 52 weeks ended 31 March 2012 relates to interest rate swaps
and caps which, although considered effective in managing the interest rate risk of the Group’s borrowings, do not meet the definition of an
effective hedge for hedge accounting purposes.

The cash impact of operating exceptional items before tax for the 52 weeks ended 31 March 2012 was £2.0 million cash outflow (2011:
£0.4 million cash inflow).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

6. Finance Revenue

Interest receivable from:
Cash and cash equivalents
Finance income on net pension liabilities

7. Finance Costs

Interest expense arising on:
Financial liabilities at amortised cost – loans and debentures
Financial liabilities at amortised cost – preference shares
Total interest expense for financial liabilities
Finance charge on net pension liabilities
Unwinding of discounts on provisions
Total finance costs before exceptional items
Movement in fair value of financial instruments (note 5)

8. Taxation

a) Tax on Profit on Ordinary Activities

Group
Tax charged in the Income Statement
Current income tax:
Corporation tax
Amounts over provided in previous years
Total current income tax
Deferred tax:
Origination and reversal of temporary differences
Change in corporation tax rate (note 5)
Total deferred tax
Total tax charged in the Income Statement

Tax relating to items charged/credited to the Statement of Comprehensive Income
Deferred tax:
Change in corporation tax rate
Net (losses)/gains on valuation of financial assets and liabilities
Net actuarial (losses)/gains on pension scheme
Tax (credit)/charge included in the Statement of Comprehensive Income

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

–
0.3
0.3

0.1
–
0.1

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

4.6
0.1
4.7
–
0.2
4.9
0.2
5.1

4.4
0.1
4.5
0.1
0.3
4.9
–
4.9

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

8.2
–
8.2

(0.6)
(2.5)
(3.1)
5.1

0.2
(0.6)
(3.3)
(3.7)

9.5
(0.1)
9.4

(0.6)
(2.6)
(3.2)
6.2

0.3
0.5
1.6
2.4

Notes to the Financial Statements
continued

8. Taxation continued

a) Tax on Profit on Ordinary Activities continued

Tax relating to items charged directly to equity
Deferred tax:
Reduction in deferred tax liability due to indexation
Share-based payments
Current tax:
Share-based payments
Tax credit included in the Statement of Changes in Equity

Deferred tax in the Income Statement
Decelerated tax depreciation
Rolled over gains
Retirement benefit obligations
Tax losses carried forward
Employee share schemes
Others

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

(0.5)
0.1

(0.2)
(0.6)

(1.9)
(0.9)
0.2
–
–
(0.5)
(3.1)

(0.8)
(0.2)

(0.1)
(1.1)

(2.8)
(0.6)
–
0.2
(0.1)
0.1
(3.2)

During the period the Finance Act 2011 and in connection with Finance Act 2012, a resolution under PCTA 1968, have both been
“substantively enacted”. The main impact is that the rate of UK corporation tax reduced from 26% to 24% from 1 April 2012. To the
extent that this rate change will affect the amount of future cash tax payments to be made by the Group, this reduces the size of both
the Group’s balance sheet deferred tax liability and deferred tax asset. The impact in the 52 weeks ended 31 March 2012 is an exceptional
credit to the income statement of £2.5 million, and a charge to the Statement of Comprehensive Income of £0.2 million.

Further reductions have been proposed, to reduce the rate to 23% and 22% on 1 April 2013 and 2014 respectively, however these
changes have not yet been substantively enacted and the financial effects will only be recorded in future periods as legislation is
introduced. The effect of these proposals on the net deferred tax liability at 31 March 2012 would be to reduce the liability by £1.9 million.

b) Reconciliation of the Total Tax Charge

The tax expense in the Income Statement for the year is lower than the standard rate of corporation tax in the UK of 26% (2011: 28%).
The differences are reconciled below:

Group
Profit from continuing operations before taxation
Accounting profit multiplied by the UK standard rate of corporation tax of 26% (2011: 28%)
Items not deductible for tax purposes
Current and deferred tax overprovided in previous years
Change in Corporation Tax rate
Total tax charged in the Income Statement

52 weeks ended
31 March
2012
£m
28.8
7.5
0.1
–
(2.5)
5.1

53 weeks ended
2 April
2011
£m
31.0
8.7
0.2
(0.1)
(2.6)
6.2

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

9. Earnings Per Share

Proﬁt attributable to equity shareholders
Exceptional items net of tax
Adjusted earnings attributable to equity shareholders

Weighted average share capital
Dilutive outstanding options and share awards
Diluted weighted average share capital

40p ‘A’ and ‘C’ ordinary share
Basic earnings per share
Diluted earnings per share
Adjusted earnings per share
Diluted adjusted earnings per share

4p ‘B’ ordinary share
Basic earnings per share
Diluted earnings per share
Adjusted earnings per share
Diluted adjusted earnings per share

52 weeks ended
31 March
2012
£m
23.7
(1.3)
22.4

53 weeks ended
2 April
2011
£m
24.8
(3.8)
21.0

Number
56,250,000
695,000
56,945,000

Number
56,208,000
1,062,000
57,270,000

Pence
42.13
41.62
39.82
39.34

Pence
4.21
4.16
3.98
3.93

Pence
44.12
43.30
37.36
36.67

Pence
4.41
4.33
3.74
3.67

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 734,626 (2011: 775,935).

Diluted earnings per share 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 ordinary shares into ordinary shares.

Adjusted earnings per share are calculated on profit before tax excluding exceptional items and on the same weighted average ordinary
share capital as for the basic and diluted earnings per share. An adjusted earnings per share measure has been included as the Directors
consider that this measure better reflects the underlying earnings of the Group.

10. Dividends

Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2011: 7.05p (2010: 1.15p)*
Interim dividend for 2012: 5.05p (2011: 4.75p)
Equity dividends paid

Dividends on cumulative preference shares (note 7)

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

4.0
2.8
6.8

0.1

0.6
2.7
3.3

0.1

*The final dividend paid for 2010 took into account the level of interim dividends already paid during the year, which included a second interim dividend.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

10. Dividends continued

Proposed for approval at the AGM:
Final dividend for 2012: 7.60p (2011: 7.05p)

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

4.2

4.0

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.

11. Intangible Assets

Cost
At 27 March 2010 and at 2 April 2011
Acquisitions (note 17)
At 31 March 2012

Amortisation and impairment
At 27 March 2010 and at 2 April 2011
Provided during the year
At 31 March 2012

Net book value at 31 March 2012
Net book value at 27 March 2010 and 2 April 2011

Lease assignment premiums

Group and
Company
Lease
assignment
premiums
£m

–
7.0
7.0

–
0.3
0.3

6.7
–

Group
Goodwill
£m

24.5
–
24.5

0.6
–
0.6

23.9
23.9

Group
Total
£m

24.5
7.0
31.5

0.6
0.3
0.9

30.6
23.9

Company
Total
£m

–
7.0
7.0

–
0.3
0.3

6.7
–

Amounts paid to acquire leasehold property (“lease assignment premiums”) are amortised on a straight-line basis over the remaining
useful life of the lease. The amortisation is charged in the Income Statement in the line item “Operating costs” (see note 4).

There are 4 pubs on which we carry lease assignment premiums at 31 March 2012 (2011: nil).

Goodwill

Goodwill is allocated to cash generating units as follows:
Gales estate
Jacomb Guinness estate

2012
£m
22.7
1.2
23.9

2011
£m
22.7
1.2
23.9

Of the £22.7 million of goodwill relating to the Gales estate, £9.1 million relates to Managed Pubs and Hotels division and £13.6 million
relates to the Tenanted Inns division. All of the Jacomb Guinness goodwill relates to the Managed Pubs and Hotel division.

Key assumptions used in value in use calculations:
Long term growth rate – Managed
Long term growth rate – Tenanted
Pre-tax discount rate

2.5%
1.5%
6.5%

3.0%
3.0%
7.9%

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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S
U
B

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C
N
A
N
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E
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O
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S
T
N
E
M
E
T
A
T
S

L
A

C
N
A
N

I
F

N
O
T
A
M
R
O
F
N

L
A
N
O
T
D
D
A

Notes to the Financial Statements
continued

11. Intangible Assets continued

Goodwill continued

Goodwill acquired through business combinations has been allocated for impairment testing on an estate and divisional cash-generating
unit level. This represents the lowest level within the Group at which goodwill is monitored for internal management purposes. Recoverable
amount is based on a calculation of value in use based upon the budget for the forthcoming financial year approved by senior
management. Cashflows 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 pre-tax discount rate applied to cash flow projections is based on the
Directors’ assessment of the Group’s weighted average cost of capital and current market conditions.

The calculation of value in use is most sensitive to the assumptions in respect of growth rate and discount rate. The calculation of value
in use is also dependent upon the following assumptions: sales volume; gross margin in managed premises; barrelage and rent projections
in tenanted premises; and wage cost in managed premises. Gross margins are based on historical performance levels. It has been assumed
that any increase in excise duty will be reflected in an increase in sales price and hence will have no effect on cash margins.

All of the key assumptions above have their assigned values based on management knowledge and historical information.

Sensitivity to Changes in Assumptions

There is no impairment to either the Jacomb Guinness or the Gales cash-generating units at 31 March 2012 and the value in use
calculations are not sensitive to the assumptions used.

12. Property, Plant and Equipment

Group
Cost
At 27 March 2010
Additions
Disposals
Transfer to assets held for sale/investment properties
At 2 April 2011
Additions
Acquisitions (note 17)
Disposals
At 31 March 2012
Depreciation and impairment
At 27 March 2010
Provided during the year
Impairment loss net of reversals
Disposals
Transfer to assets held for sale/investment properties
At 2 April 2011
Provided during the year
Impairment reversals net of loss
Disposals
At 31 March 2012

Net book value at 31 March 2012
Net book value at 2 April 2011
Net book value at 27 March 2010

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Land & Plant, machinery
& vehicles
£m

buildings
£m

Containers,
fixtures & fittings
£m

326.1
2.2
(2.4)
(1.2)
324.7
7.6
44.7
(2.1)
374.9

20.8
2.0
1.3
(1.0)
(0.3)
22.8
2.0
(2.0)
(1.3)
21.5

353.4
301.9
305.3

28.4
1.5
(1.3)
–
28.6
4.5
0.1
(0.5)
32.7

17.5
1.6
–
(1.2)
–
17.9
1.7
–
(0.5)
19.1

13.6
10.7
10.9

89.2
7.5
(2.0)
(0.1)
94.6
11.6
0.7
(2.7)
104.2

57.2
8.8
–
(1.6)
–
64.4
8.8
–
(2.5)
70.7

33.5
30.2
32.0

Total
£m

443.7
11.2
(5.7)
(1.3)
447.9
23.7
45.5
(5.3)
511.8

95.5
12.4
1.3
(3.8)
(0.3)
105.1
12.5
(2.0)
(4.3)
111.3

400.5
342.8
348.2

Notes to the Financial Statements
continued

12. Property, Plant and Equipment continued

Company
Cost
At 27 March 2010
Additions
Disposals
Transfer to assets held for sale/investment properties
At 2 April 2011
Additions
Acquisitions (note 17)
Disposals
At 31 March 2012
Depreciation and impairment
At 27 March 2010
Provided during the year
Impairment loss net of reversals
Disposals
Transfer to assets held for sale/investment properties
At 2 April 2011
Provided during the year
Impairment reversals net of loss
Disposals
At 31 March 2012

Net book value at 31 March 2012
Net book value at 2 April 2011
Net book value at 27 March 2010

Group and Company

Interest Capitalised

Land & Plant, machinery
& vehicles
£m

buildings
£m

Containers,
fixtures & fittings
£m

326.0
2.2
(2.4)
(1.2)
324.6
7.6
44.7
(2.1)
374.8

20.7
2.0
1.3
(1.0)
(0.3)
22.7
2.0
(2.0)
(1.3)
21.4

353.4
301.9
305.3

28.3
1.5
(1.3)
–
28.5
4.5
0.1
(0.5)
32.6

17.5
1.6
–
(1.2)
–
17.9
1.7
–
(0.5)
19.1

13.5
10.6
10.8

87.7
7.5
(2.0)
(0.1)
93.1
11.6
0.7
(2.7)
102.7

55.6
8.8
–
(1.6)
–
62.8
8.8
–
(2.5)
69.1

33.6
30.3
32.1

Total
£m

442.0
11.2
(5.7)
(1.3)
446.2
23.7
45.5
(5.3)
510.1

93.8
12.4
1.3
(3.8)
(0.3)
103.4
12.5
(2.0)
(4.3)
109.6

400.5
342.8
348.2

The amount of interest capitalised to date is £100,000 (2011: £100,000).

Assets under construction

Included in the cost of property, plant and equipment at 31 March 2012 was an amount of £2.2 million (2011: £1.8 million) relating to
two property developments in the course of construction.

Impairment

The Group considers each trading outlet to be a cash-generating unit (“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. In the absence of any information about the fair value of a CGU,
the recoverable amount is deemed to be its value in use.

During the 52 weeks ended 31 March 2012, the Group recognised an impairment loss of £0.3 million (2011: £1.3 million) in respect of
the write down of licensed properties purchased in recent years where their asset values exceeded either fair value less costs to sell or their
value in use. The impairment losses were driven principally by changes in the local competitive environment in which the pubs are situated.
Following an improvement in trading performance and an increase in the amounts of estimated future cash flows of certain previously
impaired sites, reversals of £2.3 million were recognised during the 52 weeks ended 31 March 2012 (2011: £nil).

The key assumptions used in the value in use calculations are those detailed in note 11 except that the pre-tax discount rate used for
leasehold properties was 9.5% (2011: 10.5%).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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A
N

I
F

N
O
T
A
M
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O
F
N

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O
T
D
D
A

Notes to the Financial Statements
continued

12. Property, Plant and Equipment continued

Sensitivity to Changes in Assumptions

The value in use calculations are sensitive to the assumptions used. The Directors consider a movement of 1% in the discount rate and
0.5% in the growth rate to be reasonable with reference to market yield curves and the current economic conditions. The impact is set
out as follows:

52 weeks ended
31 March
2012
£m
0.7
(0.3)
(0.2)
0.3

53 weeks ended
2 April
2011
£m
0.5
(0.2)
(0.1)
0.1

Group
Freehold
& leasehold
properties
£m

Company
Freehold
& leasehold
properties
£m

10.0
1.1
11.1
0.1
0.3
(0.2)
(5.3)
6.0

0.7
0.1
0.3
1.1
1.1
4.9
10.0
9.3

8.4
14.2
14.7

4.7
1.1
5.8
0.1
0.3
(0.2)
–
6.0

0.7
0.1
0.3
1.1
1.1
4.9
4.7
4.0

8.4
8.9
9.4

Impact on impairment of assets at risk – increase/(decrease)
Increase discount rate by 1%
Decrease discount rate by 1%
Increase growth rate by 0.5%
Decrease growth rate by 0.5%

13. Investment Properties

Cost
At 27 March 2010
Transfer from property, plant & equipment
At 2 April 2011
Additions
Acquisitions (note 17)
Disposals
Transfer to assets held for sale
At 31 March 2012
Depreciation and impairment
At 27 March 2010
Impairment loss
Transfer from property, plant & equipment
At 2 April 2011
At 31 March 2012
Net book value at 31 March 2012
Net book value at 2 April 2011
Net book value at 27 March 2010

Fair value at 31 March 2012
Fair value at 2 April 2011
Fair value at 27 March 2010

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

13. Investment Properties continued

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. An independent valuation of the
properties has not been performed.

Impairment

The Group considers each property to be a cash-generating unit (“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 52 weeks ended 31 March 2012, the Group did not impair any investment properties (2011: £0.1 million).

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:

Rental income
Direct operating expenses

All direct operating expenses relate to properties that generate rental income.

Group
2012
£m
0.4
(0.2)

Group
2011
£m
0.4
(0.1)

Company
2012
£m
0.4
(0.1)

Company
2011
£m
0.4
(0.1)

14. Derivative Financial Instruments

Group and Company
Interest rate swaps
Interest rate cap
Total financial assets within non-current assets

Interest rate swaps
Total financial liabilities within current liabilities

Details of the interest rate swaps and cap are provided in note 26.

15. Other Non-Current Assets

Group and Company
Loans to customers due after one year
Other

2012
£m
–
–
–

(1.4)
(1.4)

2012
£m
0.2
0.1
0.3

2011
£m
1.2
0.3
1.5

–
–

2011
£m
0.3
0.1
0.4

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S
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N
S
U
B

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C
N
A
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R
E
V
O
G

S
T
N
E
M
E
T
A
T
S

L
A

C
N
A
N

I
F

N
O
T
A
M
R
O
F
N

L
A
N
O
T
D
D
A

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

16. Investments in Subsidiaries

Company
At 27 March 2010, 2 April 2011 and 31 March 2012

Principal subsidiary undertakings
Griffin Catering Services Limited
George Gale & Co. Limited

Holding
£1 ordinary shares
£1 ordinary shares
25p ‘A’ ordinary shares
£10 preference shares

Proportion held
100% (indirect)
100%
100%
100%

The above companies are registered and operate in England and Wales.

Cost
£m
92.0

Provision
£m
(0.2)

Net book value
£m
91.8

Nature of business
Managed houses service company
Property holding company

17. Business Combinations

During the 52 weeks ended 31 March 2012 the Company has acquired 30 new pubs. 28 of these property acquisitions have been treated
as business combinations as they were operating as a business at the point the Company acquired them. Five individual pubs were
purchased from Marston’s PLC on 1 November 2011 for a consideration of £16.0 million, 16 individual pubs were purchased from
Enterprise Inns plc on 9 March 2012 for a consideration of £25.3 million and the remaining seven pubs were bought individually throughout
the year.

The acquisitions were made as part of the Group’s continuing strategy to expand the managed and tenanted portfolio via selective quality
acquisitions.

Number of pubs purchased

Provisional fair value:
Property, plant and equipment and working capital acquired
Lease assignment premiums
Goodwill
Consideration

Satisfied by:
Cash

Managed
9

Tenanted
19

£m

14.5
7.0
–
21.5

31.3
–
–
31.3

Total
28

£m

45.8
7.0
–
52.8

21.5

31.3

52.8

Costs associated with the acquisitions of £2.6 million have been charged to operating exceptional items in the Consolidated Income
Statement for the 52 weeks ended 31 March 2012 (see note 5), of which £1.6 million was paid in the year. These comprise primarily
stamp duty and other property fees.

Fair values have been determined provisionally and will be finalised at the end of the 12 months measurement period.

The acquisitions have contributed the following values of operating profit to the Group in the 52 weeks ended 31 March 2012 from the
date of acquisition:

Operating profit

Managed
£m
0.3

Tenanted
£m
0.3

Total
£m
0.6

It is not practical to identify the related cash flows, revenue and profit on an annualised basis as the months for which the pubs have
been owned are not representative of the annualised figures. The pre-acquisition trading results are not indicative of the trading expected
going forwards following the significant redevelopment by the Group, therefore proforma trading results have not been included.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

18. Inventories

Group and Company
Raw materials, beer in progress
Beer, wines and spirits
Stock at retail outlets

The difference between purchase price or production cost and their replacement cost is not material.

19. Trade and Other Receivables

Group and Company
Trade receivables
Other receivables
Prepayments and accrued income

2012
£m
1.4
7.0
2.1
10.5

2012
£m
13.4
1.4
3.5
18.3

2011
£m
1.5
5.7
1.6
8.8

2011
£m
13.8
1.5
3.5
18.8

The trade receivables balance above is shown net of the provision for bad debts. As a general rule the Group provides fully against all
trade receivables which are over six months overdue. In addition to this there are individual specific provisions against balances which
are considered by management to be at risk of default.

The movements on this bad debt provision during the year are summarised below:

Group and Company
Trade receivables provision at 2 April 2011
Increase in provision recognised in profit and loss
Amounts written off during the year
Trade receivables provision at 31 March 2012

2012
£m
1.3
0.1
(0.1)
1.3

2011
£m
1.3
0.2
(0.2)
1.3

The provision 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
Current
Overdue up to 30 days
Overdue between 30 and 60 days
Overdue more than 60 days
Trade receivables before provision
Less provision
Trade receivables net of provision

2012
£m
14.2
0.2
–
0.3
14.7
(1.3)
13.4

2011
£m
14.6
0.1
–
0.4
15.1
(1.3)
13.8

Included in the Group’s trade receivables balance are trade receivables with a carrying value of £0.3 million (2011: £0.1 million) which
are overdue at the Balance Sheet date for which the Group has not provided as the Group considers these amounts to be recoverable.

In addition, there are loans to customers included in other receivables of £0.3 million (2011: £0.3 million) due within one year and
£0.4 million (2011: £0.4 million) due in more than one year, against which there is a provision of £0.3 million (2011: £0.3 million).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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A
N

I
F

N
O
T
A
M
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N

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O
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D
D
A

Notes to the Financial Statements
continued

20. Assets Classified as Held for Sale

Investment property
Property, plant and equipment

Group
2012
£m
5.3
–
5.3

The movements in assets classified as held for sale during the year are summarised below:

Assets held for sale at the start of the year
Assets disposed during the year
Transfer from investment property
Assets held for sale at the end of the year

Group
2012
£m
0.2
(0.2)
5.3
5.3

Group
2011
£m
–
0.2
0.2

Group
2011
£m
0.6
(0.6)
0.2
0.2

Company
2012
£m
–
–
–

Company
2012
£m
0.2
(0.2)
–
–

Company
2011
£m
–
0.2
0.2

Company
2011
£m
0.6
(0.6)
0.2
0.2

At 31 March 2012 one property (2011: one) was transfered to assets held for sale, as it is in the advanced stages of the sales process
and is expected to complete in July 2012. All of the properties shown above are expected to or have resulted in a profit on sale.

21. Trade and Other Payables

Due within one year:
Trade payables
Amounts due to subsidiary undertakings
Other tax and social security
Other payables
Accruals

Group
2012
£m

18.0
–
9.3
7.2
12.7
47.2

Group
2011
£m

11.4
–
10.3
6.7
10.4
38.8

Company
2012
£m

Company
2011
£m

18.0
85.1
9.3
7.2
12.7
132.3

11.4
83.1
10.3
6.7
10.4
121.9

Company amounts due to subsidiary undertakings of £85.1 million (2011: £83.1 million) have no fixed repayment date. Interest is
payable on the balance at 3% above the Bank of England base rate. All other significant trade and other receivables and trade and other
payables are due within one year and are at nil rate of interest.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

22. Cash, Borrowings and Net Debt

Cash and Short Term Deposits
Group and Company
Cash at bank and in hand

2012
£m
3.9

2011
£m
3.7

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.

Borrowings
Group and Company
Bank loans
Debenture stock
Preference shares
Total borrowings

Analysed as:
Borrowings within non-current liabilities

2012
£m
114.7
25.8
1.6
142.1

142.1
142.1

2011
£m
64.8
25.8
1.6
92.2

92.2
92.2

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 26.

Bank Loans
Group and Company

During the 52 weeks ended 31 March 2012 the Company increased its loan facilities by £50 million in total. Two new facilities of
£30 million each, which expire in May 2015 and have no amortisation requirements, were entered into on 5 August 2011 and 30 March
2012 respectively and the existing facility was reduced by £10 million. At 31 March 2012, £34.5 million (2011: £34.5 million) of this
committed loan facility was available and undrawn.

The bank loans at 31 March 2012 are unsecured, and are repayable as shown in the table below. Interest is payable at LIBOR plus a
margin, which varies dependant on the ratio of net debt to EBITDA. The variable rate interest payments under the loans have been partially
swapped for fixed interest payments and a proportion of the remaining variable interest payments have also been capped. Details of the
swap and cap arrangements are given in note 26.

The bank loans are repayable as follows:

In the third to fifth years inclusive
Less: bank loan arrangement fees
Non-current liabilities

2012
£m
115.5
(0.8)
114.7

2011
£m
65.5
(0.7)
64.8

W
E

V
E
R

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S
E
N
S
U
B

E
C
N
A
N
R
E
V
O
G

S
T
N
E
M
E
T
A
T
S

L
A

C
N
A
N

I
F

N
O
T
A
M
R
O
F
N

L
A
N
O
T
D
D
A

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

22. Cash, Borrowings and Net Debt continued

Debenture Stock
Group and Company
The debenture stocks are secured on specified fixed and floating assets of the Company and are redeemable on maturity.

Debenture stock repayable after five years:
10.70% 1st Mortgage Debenture Stock 2023
6.875% Debenture Stock 2028 (1st floating charge)
Less: 2028 debenture issue costs
Non-current liabilities

Preference shares

2012
£m

6.0
19.9
(0.1)
25.8

2011
£m

6.0
19.9
(0.1)
25.8

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 24 for further details of the preference shares.

Analysis of Net Debt

Group
Cash and cash equivalents
Cash and short term deposits

Debt
Bank loans
Debenture stock
Preference shares

Net debt

At 2 April
2011
£m

3.7
3.7

(64.8)
(25.8)
(1.6)
(92.2)
(88.5)

Cash flows
£m

Non-cash1
£m

At 31 March
2012
£m

0.2
0.2

(49.8)
–
–
(49.8)
(49.6)

–
–

(0.1)
–
–
(0.1)
(0.1)

1Non-cash movements relate to the amortisation of arrangement fees, offset by arrangement fees accrued.

Group
Cash and cash equivalents
Cash and short term deposits

Debt
Bank loans
Debenture stock
Preference shares

Net debt

At 27 March
2010
£m

Cash flows
£m

Non-cash1
£m

1.1
1.1

(80.2)
(27.0)
(1.6)
(108.8)
(107.7)

2.6
2.6

15.5
1.2
–
16.7
19.3

–
–

(0.1)
–
–
(0.1)
(0.1)

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

3.9
3.9

(114.7)
(25.8)
(1.6)
(142.1)
(138.2)

At 2 April
2011
£m

3.7
3.7

(64.8)
(25.8)
(1.6)
(92.2)
(88.5)

Notes to the Financial Statements
continued

23. Pensions

a) Retirement Benefit Plans – Group and Company

The Group operates one funded defined benefit pension scheme, the Fuller, Smith & Turner Pension Plan. The plan is Defined Benefit
in nature, with assets held in separate professionally managed, trustee-administered funds. The pension cost relating to the position of
the plan is assessed with the advice of an independent actuary. The plan is closed to new entrants.

The Group also operates three 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 Griffin Stakeholder Pension Plan operates for those employees of a Group subsidiary. The Gales 2001 scheme was
set up following the closure of the Gales defined benefit scheme in 2001.

The Group also pays benefits to a number of former employees which are unfunded. The Directors consider these benefits to be defined
benefit in nature and the full defined benefit liability is recognised on the Balance Sheet.

Total amounts charged in respect of pensions in the period
Charged to income statement:
Defined benefit scheme – operating profit before exceptional items
Defined benefit scheme – net finance (income)/charge
Defined contribution schemes – total operating charge

Credit/charge to equity:
Defined benefit scheme –net actuarial losses/(gains)
Total pension charge/(credit)

52 weeks ended
31 March
2012
£m

53 weeks ended
2 April
2011
£m

1.4
(0.3)
0.3
1.4

13.9
15.3

1.6
0.1
0.3
2.0

(6.0)
(4.0)

The total contributions to the defined benefit plans in the next financial year are expected to be £2.2 million for the Group and
the Company.

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 above.

c) Defined Benefit Plan – Group and Company

The defined benefit plan was actuarially assessed as at 31 March 2012, using the projected unit credit method.

The pension plan has not invested in any of the Group’s own financial instruments nor in properties or other assets used by the Group.

Key Assumptions

The mortality assumptions used in the 2012 valuation of the plan are set out below:

Current pensioners (at 65) – males
Current pensioners (at 65) – females
Future pensioners (at 65) – males
Future pensioners (at 65) – females

2012
Years
21.0
23.5
22.0
24.4

2011
Years
21.0
23.5
22.0
24.4

The assumptions for future pensioners are based on the average current age of the active population, which is 53 years for male members
of the scheme (2011: 52) and 47 years for female members (2011: 46).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

23. Pensions continued

Key financial assumptions used in the valuation of the scheme
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption – RPI
Inflation assumption – CPI

The present value of the scheme liabilities is sensitive to the assumptions used, as follows:

Impact on scheme liabilities – increase/(decrease)
Increase rate of salaries by 0.5%
Increase rate of pensions in payment by 0.5%
Increase discount rate by 1.0%
Increase inflation assumption by 0.5%

Assets in the scheme and the expected rate of return
Bonds – Government
Bonds – Corporate
Equities
Absolute return fund*
Property
Cash
Annuities
Total market value of assets

Long term
rate of return
expected at
31 March 2012
%
2.74%
4.60%
7.00%
7.00%
7.00%
2.00%
4.60%
6.44%

Value at
31 March 2012
£m
–
16.3
34.9
25.6
0.7
0.5
1.1
79.1

At
31 March 2012
3.70%
3.20%
4.60%
3.20%
2.70%

At
2 April 2011
4.00%
3.50%
5.55%
3.50%
3.00%

2012
£m
1.8
3.9
(14.8)
1.4

Value at
2 April 2011
£m
2.9
17.6
51.9
–
1.3
2.4
1.0
77.1

2011
£m
1.3
3.5
(12.0)
1.2

Long term
rate of return
expected at
2 April 2011
%
4.18%
5.55%
7.00%
n/a
7.00%
2.00%
5.55%
6.39%

*The absolute return fund assets were previously shown split between the assets classes held in the fund at each period end date. During the 52 weeks ended 31 March
2012 managementhasreviewed this and consider that it is more appropriate to show these assets separately, as the asset split is fluid and the fund’s aim is to target an
equity return over the long term. The asset splitfor the 53 weeks ended 2 April 2011 under the revised basis would have been:government bonds £nil, corporate bonds
£15.0 million, equities £45.7million, absolute return fund £14.7 million, property £0.6 million, cash £0.1 million and annuities £1.0 million.

The amount included in the Balance Sheet arising
from the Group’s obligations in respect
of its defined benefit retirement plan
Fair value of plan assets
Present value of scheme liabilities
Deficit in the scheme

2012
£m
79.1
(98.2)
(19.1)

2011
£m
77.1
(83.5)
(6.4)

2010
£m
71.1
(83.8)
(12.7)

2009
£m
52.1
(60.5)
(8.4)

2008
£m
61.2
(66.6)
(5.4)

Included within the total present value of Group and Company scheme liabilities of £98.2 million (2011: £83.5 million) are liabilities of
£3.5 million (2011: £3.3 million) which are entirely unfunded.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

23. Pensions continued

Group and Company

Analysis of the amount charged to operating profit
Current service cost of defined benefit scheme
Total operating charge

Analysis of the amount charged to other finance expense
Expected return on pension scheme assets
Interest on pension scheme liabilities
Net (income)/charge

Movements in the fair value of scheme assets during the year
Fair value at beginning of the year
Expected return on scheme assets
Actuarial (losses)/gains
Employer contributions
Employer special contributions
Employee contributions
Benefits paid
Fair value at the end of the year

Movements in the present value of defined benefit obligations during the year
Present value of obligation at beginning of the year
Service cost
Interest cost
Employee contributions
Benefits paid
Actuarial (losses)/gains
Present value of obligation at the end of the year

The analysis of the actuarial (losses)/gains in the Statement of Comprehensive Income
Actual return less expected return on pension scheme assets
Experience losses arising on the scheme liabilities
Changes in assumptions underlying the present value of the scheme liabilities
Actuarial (losses)/gains

2012
£m

1.4
1.4

(4.9)
4.6
(0.3)

77.1
4.9
(2.5)
1.6
0.7
0.5
(3.2)
79.1

(83.5)
(1.4)
(4.6)
(0.5)
3.2
(11.4)
(98.2)

(2.5)
(0.8)
(10.6)
(13.9)

2011
£m

1.6
1.6

(4.6)
4.7
0.1

71.1
4.6
1.7
1.5
0.5
0.5
(2.8)
77.1

(83.8)
(1.6)
(4.7)
(0.5)
2.8
4.3
(83.5)

1.7
(1.3)
5.6
6.0

History of Experience Gains and Losses

A five year history is presented below:

Group and Company
Difference between actual and expected returns
on assets (£ million)
% of scheme assets
Experience (losses)/gains on liabilities (£ million)
% of scheme liabilities
Total actuarial (losses)/gains (£ million)
% of scheme liabilities

2012

2011

2010

2009

2008

(2.5)
(3.2%)
(0.8)
(0.9%)
(13.9)
(14.2%)

1.7
2.2%
(1.3)
(1.5%)
6.0
7.2%

15.5
21.8%
0.2
0.2%
(4.5)
(5.4%)

(13.7)
(26.2%)
0.3
0.6%
(3.5)
(5.7%)

(4.0)
(6.5%)
0.5
0.8%
4.3
6.5%

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

23. Pensions continued

History of Experience Gains and Losses continued

The cumulative amount of actuarial losses recognised since 28 March 2004 in the Group Statement of Comprehensive Income is £12.8
million (2011: gains of £1.1 million). The cumulative amount of actuarial losses recognised since 28 March 2004 in the Company
Statement of Comprehensive Income is £15.1 million (2011: losses of £1.2 million).

The expected return on assets is the product of the weighted average rate of return on assets and the fair value of scheme assets at the
start of the year, adjusted for expected contributions less benefits paid.

24. Preference Share Capital

Group and Company

Authorised, issued and fully paid share capital
Number authorised and in issue:

At 27 March 2010, 2 April 2011 and 31 March 2012

Monetary amount:
At 27 March 2010, 2 April 2011 and 31 March 2012

First 6%
cumulative
preference share
of £1 each

Second 8%
cumulative
preference share
of £1 each

Number
000s

Total

Number
000s

400

£m
0.4

1,200

1,600

£m
1.2

£m
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 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.

25. Provisions

a) Onerous lease provision

Group and Company

Onerous lease provision
At 2 April 2011
Arising during the year
Released during the year
Utilised
Unwinding of discount
At 31 March 2012

Analysed as:
Due within one year
Due in more than one year

2012
£m

2.4
1.6
(0.7)
(0.5)
0.2
3.0

0.5
2.5
3.0

2011
£m

2.5
0.2
(0.2)
(0.4)
0.3
2.4

0.3
2.1
2.4

The onerous lease provision is recognised in respect of leasehold properties where the lease contracts are deemed to be onerous.
Provision is made for the discounted value of the lower of the unavoidable lease costs or the losses expected to be incurred by
the Group.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

25. Provisions continued

b) Deferred Tax Provision

The deferred tax included in the Balance Sheet is as follows:

Group
Deferred tax
Retirement benefit obligations
Tax losses carried forward
Employee share schemes
Financial liabilities/(assets)
Accelerated tax depreciation
Rolled over capital gains
Others

Company
Deferred tax
Retirement benefit obligations
Tax losses carried forward
Employee share schemes
Financial liabilities/(assets)
Accelerated tax depreciation
Rolled over capital gains
Others

26. Financial Instruments

Asset
2012
£m

4.6
0.7
1.2
0.3
–
–
1.0
7.8

Asset
2012
£m

4.6
0.4
1.2
0.3
–
–
1.0
7.5

Liability
2012
£m

–
–
–
(0.1)
(19.4)
(10.6)
–
(30.1)

Liability
2012
£m

–
–
–
(0.1)
(18.2)
(10.6)
–
(28.9)

Net
2012
£m

4.6
0.7
1.2
0.2
(19.4)
(10.6)
1.0
(22.3)

Net
2012
£m

4.6
0.4
1.2
0.2
(18.2)
(10.6)
1.0
(21.4)

Asset
2011
£m

1.7
0.7
1.3
–
–
–
0.4
4.1

Asset
2011
£m

1.7
0.3
1.3
–
–
–
0.4
3.7

Liability
2011
£m

–
–
–
(0.4)
(21.3)
(12.0)
–
(33.7)

Liability
2011
£m

–
–
–
(0.4)
(19.8)
(12.0)
–
(32.2)

Net
2011
£m

1.7
0.7
1.3
(0.4)
(21.3)
(12.0)
0.4
(29.6)

Net
2011
£m

1.7
0.3
1.3
(0.4)
(19.8)
(12.0)
0.4
(28.5)

Details of the Group’s treasury function are included in the Financial Review’s discussion of financial risks and treasury policies on page 25.

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:

Capital
Ordinary share capital
Share premium
Capital redemption reserve
Hedging reserve
Retained earnings
Preference shares

Group
2012
£m
22.8
4.8
3.1
(1.1)
214.0
1.6
245.2

Group
2011
£m
22.8
4.8
3.1
0.9
207.7
1.6
240.9

Company
2012
£m
22.8
4.8
3.1
(1.1)
192.4
1.6
223.6

Company
2011
£m
22.8
4.8
3.1
0.9
188.3
1.6
221.5

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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D
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Notes to the Financial Statements
continued

26. Financial Instruments continued

a) Capital Management – Group and Company continued

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. The Group bought back
£8.5 million shares in the 52 weeks ended 31 March 2012 (2011: £1.3 million), of which £0.8 million related to purchases made by or
on behalf of employee share ownership trusts (2011: £1.2 million). As a minimum, the Board reviews the Group’s dividend policy twice
yearly and reviews the treasury position every Board meeting.

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:

Non-current assets
Derivative financial assets hedge accounted
Derivative financial assets at fair value through profit or loss
Loans and other receivables in scope of IAS 39
Total non-current assets

Current assets
Loans and other receivables:
Trade and other receivables in scope of IAS 39
Cash and short term deposits
Total current assets
Total financial assets

Current liabilities
Carried at amortised cost:
Trade and other payables in scope of IAS 39
Total current liabilities

Non-current liabilities
Derivative financial liabilities hedge accounted
Carried at amortised cost:
Other payables in scope of IAS 37
Loans and borrowings
Preference shares
Total carried at amortised cost
Total non-current liabilities
Total financial liabilities

Group
2012
£m

–
–
0.2
0.2

13.6
3.9
17.5
17.7

31.2
31.2

1.4

2.5
140.5
1.6
144.6
146.0
177.2

Group
2011
£m

1.2
0.3
0.3
1.8

14.0
3.7
17.7
19.5

22.1
22.1

Company
2012
£m

Company
2011
£m

–
–
0.2
0.2

13.6
3.9
17.5
17.7

1.2
0.3
0.3
1.8

14.0
3.7
17.7
19.5

116.3
116.3

105.2
105.2

–

1.4

–

2.1
90.6
1.6
94.3
94.3
116.4

2.5
140.5
1.6
144.6
146.0
262.3

2.1
90.6
1.6
94.3
94.3
199.5

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

26. Financial Instruments continued

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 caps. The current Group policy is
that a minimum of 50% of total outstanding borrowings should be at a fixed or capped rate of interest. This is achieved by both taking out
interest rate swaps and caps with third parties and by loan instruments that require us to pay a fixed rate. 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. Interest rate caps
limit the maximum rate payable but require payment of a lump sum premium. The fair value risk inherent in fixed rate borrowings means
that the Group is exposed to unplanned costs if debt is paid off earlier than anticipated. 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 £25.8 million (2011: £25.8 million) are at fixed rates. The bank loans totalling £114.7 million (2011: £64.8
million), net of arrangement fees, are at floating rates. At the year end, after taking account of interest rate swaps and caps, 74% (2011:
95%) of the Group’s bank loans and 79% (2011: 95%) of gross borrowings were at fixed or capped rates.

Interest Rate Swap – Group and Company

The Group has entered into interest rate swap agreements, where the Group pays a fixed rate and receives 1 month or 3 month LIBOR,
in order to hedge the risk of variation in interest cash flows on its borrowings. At the Balance Sheet date £65.0 million of the Group’s
borrowings (2011: £40.0 million) were hedged by an interest rate swap at a blended fixed rate of 1.75% (2011: 2.13%). Of the swaps
held at 31 March 2012, £40.0 million expire in 2015 and £25.0 million expire in 2017.

Interest Rate Cap – Group and Company

The Group has entered into interest rate cap agreements in order to hedge the risk of variation in interest cash flows on its borrowings.
At the Balance Sheet date £20.0 million (2011: £20.0 million) of the Group’s borrowings were hedged by an interest rate cap at a fixed
rate of 4.00% (2011: 4.00%). The cap held at 31 March 2012 expires in 2015.

The interest rate swaps and cap are expected to impact the Income Statement in line with the liquidity risk table shown in section (iv)
below. The interest rate swap cashflow hedges were assessed as being highly effective at 31 March 2012 and a net unrealised loss of
£2.6 million (2011: net unrealised gain of £1.8 million) has been recorded in Other Comprehensive Income. The interest rate cap cashflow
hedge entered into on 20 May 2010 is not designated as a cashflow hedge for hedge accounting purposes and a net unrealised loss of
£0.2 million (2011: £nil) has been recorded in the Income Statement as an “exceptional item”.

Sensitivity – Group and Company

The Group borrows in Sterling at market rates. 3 month Sterling LIBOR rate during the 52 weeks ended 31 March 2012 ranged between
0.65% and 0.82%. The Directors consider 1% to be a reasonable possible increase in rates and 0.5% 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:

Impact on post-tax profit and net equity – increase/(decrease)
Decrease interest rate by 0.5%
Increase interest rate by 1.0%

* The Company has substantial interest bearing payables due to subsidiary companies (note21).

Group
2012
£m
0.2
(0.4)

Group
2011
£m
0.1
(0.2)

Company*
2012
£m
0.5
(1.0)

Company*
2011
£m
0.4
(0.8)

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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D
D
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Notes to the Financial Statements
continued

26. Financial Instruments continued

(ii) Foreign Currency Risk

The Group buys and sells goods and services denominated in non-sterling currencies principally the US dollar, Euro and Australian dollar.
As a result, movements in exchange rates can affect the value of the Group’s revenues and purchases.

The Group policy on covering foreign currency exposure is included in the Financial Review’s discussion of financial risks and treasury
policies on page 25. As a minimum it buys or sells forward the net known value of all committed purchase or sales orders. In addition,
the Group will usually buy or sell a proportion of the estimated sale or buy orders for the remaining part of the year to minimise its
transactional currency exposures in non-sterling currencies. Forward currency contracts must be in the same currency as the hedged
items. The Group does not trade in forward currency hedges.

At 31 March 2012 the Group and Company had forward contracts open to buy €1.5 million (2011: sell US$0.3 million and buy
€2.2 million). These have a Sterling equivalent of £1.3 million (2011: £0.2 million and £1.9 million) and a net gain of £nil (2011: gain
of £0.1 million) when comparing the contractual rates with the year-end exchange rates.

At 31 March 2012 the only significant foreign currency assets or liabilities were the following:

Group and Company
Euro assets/(liabilities)
US dollar assets/(liabilities)
Australian dollar assets

(iii) Credit Risk

Cash deposits
2012
£m
0.2
0.1
–

Cash deposits Trade receivables
2012
£m
–
0.3
–

2011
£m
0.6
0.1
0.1

Trade receivables
2011
£m
–
0.3
–

Trade payables
2012
£m
(0.4)
(0.1)
–

Trade payables
2011
£m
(0.3)
(0.1)
–

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. Credit insurance
is taken out where appropriate for wholesale customers and goods may also be sold on a cash with order basis.

Cash deposits with financial institutions and derivative transactions are only permitted for short periods 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 19.

(iv) Liquidity Risk

The Group minimises liquidity risk by managing cash generation, applying debtor 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 has a mixture of long and short term borrowings and overdraft facilities. 19% (2011: 30%) of the Group’s borrowings are repayable
after more than five years, and 81% (2011: 70%) between three and five years. On 5 August 2011 and 30 March 2012 the Group entered
into two new three year bank facilities of £30 million each, as described in note 22.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

26. Financial Instruments continued

The tables below summarise the maturity profile of the Group’s financial liabilities at 31 March 2012 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 31 March 2012
Interest bearing loans and borrowings1
Preference shares2
Trade and other payables

On
demand
£m
–
–
5.1

Less than
3 months
£m
1.4
–
24.2

3 to 12
months
£m
4.1
0.1
0.4

1 to 5
years
£m
131.8
0.5
1.6

More than 5
years
£m
45.0
3.4
3.4

Total
£m
182.3
4.0
34.7

1Bank 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 and cap

Group at 2 April 2011
Interest bearing loans and borrowings1
Preference shares2
Trade and other payables

–

£m
–
–
3.5

0.3

£m
1.0
–
18.4

0.9

£m
3.0
0.1
0.2

3.1

£m
80.2
0.5
1.3

–

4.3

£m
47.0
3.4
2.3

£m
131.2
4.0
25.7

1Bank 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 and cap

–

0.2

0.5

2.1

–

2.8

2The preference shares have no contractualrepayment date. For the purposes of the table above interest payments have been shown for 20 years from the BalanceSheet
date but no further.

The Company figures are as for the Group, except as follows:

Company at 31 March 2012
Amounts due to subsidiary undertakings3

Company at 2 April 2011
Amounts due to subsidiary undertakings3

On
demand
£m
85.1

£m
83.1

Less than
3 months
£m
–

£m
–

3 to 12
months
£m
–

£m
–

1 to 5
years
£m
–

£m
–

More than 5
years
£m
–

£m
–

Total
£m
85.1

£m
83.1

3Amounts 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 £12.7 million (2011: £12.9 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. These covenants inter alia specify maximum net debt to earnings before interest, tax,
depreciation and amortisation, and minimum earnings before interest, tax, depreciation and amortisation to interest.

W
E

V
E
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S
S
E
N
S
U
B

E
C
N
A
N
R
E
V
O
G

S
T
N
E
M
E
T
A
T
S

L
A

C
N
A
N

I
F

N
O
T
A
M
R
O
F
N

L
A
N
O
T
D
D
A

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

26. Financial Instruments continued

d) Fair Value

Fair Values of Financial Assets and Liabilities

Set out below is a comparison by category of carrying amounts and fair values of all the financial instruments that are carried in the
financial statements:

Group
Financial assets
Cash
Trade and other receivables due within one year in scope of IAS 39
Loans and other receivables due in more than one year in scope of IAS 39
Interest rate swap
Interest rate cap

Financial liabilities
Trade and other payables in scope of IAS 39
Fixed rate borrowings
Floating rate borrowings
Preference shares
Interest rate swap

The Company figures are as for the Group, except as follows:

Company
Financial liabilities
Trade and other payables in scope of IAS 39

Book value
2012
£m

Book value
2011
£m

Fair value
2012
£m

Fair value
2011
£m

3.9
13.9
0.2
–
–

(33.7)
(25.8)
(114.7)
(1.6)
(1.4)

3.7
14.0
0.3
1.2
0.3

(24.2)
(25.8)
(64.8)
(1.6)
–

3.9
13.9
0.2
–
–

(33.7)
(31.4)
(114.7)
(1.8)
(1.4)

3.7
14.0
0.3
1.2
0.3

(24.2)
(28.4)
(64.8)
(1.8)
–

Book value
2012
£m

Book value
2011
£m

Fair value
2012
£m

Fair value
2011
£m

(118.8)

(107.3)

(118.8)

(107.3)

The fair values of borrowings have been calculated by discounting the expected future cash flows at prevailing interest rates. The fair
values of preference shares have been calculated using the market interest rates. Derivative fair values are obtained from quoted market
prices in active markets and are classed as Level 2 fair values for both years. The Group distinguishes Level 2 fair values as being: valuation
techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly, but
where these are not derived directly from quoted prices in active markets.

27. Share Capital and Reserves

a) Share Capital

Issued and fully paid: Number in issue
At 27 March 2010, 2 April 2011 and 31 March 2012

‘A’ ordinary
shares of
40p each

Number
000s
33,424

‘C’ ordinary
shares of
40p each

Number
000s
14,657

‘B’ ordinary
shares of
4p each

Number
000s
89,052

Total

Number
000s
137,133

Proportion of total equity shares at 31 March 2012

24.4%

10.7%

64.9%

100%

Issued and fully paid: Monetary amount
At 27 March 2010, 2 April 2011 and 31 March 2012

£m
13.3

£m
5.9

£m
3.6

£m
22.8

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 24).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

27. Share Capital and Reserves continued

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 provisons 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.

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.

Number
At 27 March 2010
Shares purchased
Shares transferred
Shares released
At 2 April 2011
Shares purchased
Shares transferred
Shares released
At 31 March 2012

Monetary amount
At 27 March 2010
Shares purchased
Shares transferred
Shares released
At 2 April 2011
Shares purchased
Shares transferred
Shares released
At 31 March 2012

Market value at 31 March 2012

Treasury shares
‘A’ ordinary
40p shares
000s
710
104
(88)
(143)
583
1,096
(204)
(276)
1,199

LTIP ESOT
‘A’ ordinary
40p shares
000s
119
–
88
(172)
35
–
204
(239)
–

LTIP ESOT
‘B’ ordinary
4p shares
000s
543
219
–
(431)
331
338
–
(98)
571

SIP ESOT
‘A’ ordinary
40p shares
000s
1
92
–
(91)
2
86
–
(86)
2

Total
‘A’ ordinary
40p shares
000s
830
196
–
(406)
620
1,182
–
(601)
1,201

Total
‘B’ ordinary
4p shares
000s
543
219
–
(431)
331
338
–
(98)
571

£m
3.3
0.6
(0.5)
(0.7)
2.7
7.7
(1.0)
(1.4)
8.0

8.6

£m
0.5
–
0.5
(0.8)
0.2
–
1.0
(1.2)
–

–

£m
0.2
0.1
–
(0.1)
0.2
0.2
–
(0.1)
0.3

0.4

£m
–
0.6
–
(0.6)
–
0.6
–
(0.6)
–

–

£m
3.8
1.2
–
(2.1)
2.9
8.3
–
(3.2)
8.0

8.6

£m
0.2
0.1
–
(0.1)
0.2
0.2
–
(0.1)
0.3

0.4

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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S
E
N
S
U
B

E
C
N
A
N
R
E
V
O
G

S
T
N
E
M
E
T
A
T
S

L
A

C
N
A
N

I
F

N
O
T
A
M
R
O
F
N

L
A
N
O
T
D
D
A

Notes to the Financial Statements
continued

27. Share Capital and Reserves continued

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 buyback 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.

28. Share Options and Share Schemes

The key points of each of the Group’s share schemes for grants up to 31 March 2012 are summarised below. All schemes are equity-
settled. All disclosure relates to both Group and Company. For the purpose of option and LTIP schemes, “Adjusted EPS” will normally
be consistent with the post-tax earnings per share excluding exceptional items as presented in the financial statements. However, the
Remuneration Committee are 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 grant. 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.

Senior Executive Share Option Scheme

This is an unapproved Executive Share Option Scheme. If growth in Adjusted EPS exceeds growth in the Retail Price Index (“RPI”) by 9%
over the performance period of the option, then 40% of the award will vest. Vesting levels are then on a sliding scale, with 100% vesting
occurring if growth in Normalised EPS exceeds growth in RPI by more than 21%. The performance period for grants under this scheme
is three years. Options must be exercised within seven years of the end of the performance period.

Executive Share Option Scheme

This is an approved Executive Share Option Scheme. The 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. The options must then be exercised within seven years after the end of the
performance period.

LTIP

This plan awards free shares. Vesting is conditional on growth in Adjusted EPS exceeding growth in RPI by 9% (grants before 2009: 6%)
or more over the 3 year initial performance period of the award. Vesting levels are on a sliding scale from 40% up to 100% (grants before
2009: 25% to 100%), if growth in Adjusted EPS exceeds growth in RPI by 24% (grants before 2009: 21%) or more. An independent
firm of advisors verify the vesting level each year. The initial vesting period is three years. After this time the shares may be passed to
the plan participants, as long as vesting conditions are met. For grants up to and including that made in 2006, participants can choose
to redeposit their shares for a further three year period. If participants choose to redeposit, then the Company will match the redeposited
shares at a ratio of 1:1 at the end of the matching period, providing none of the redeposited shares have been sold and the participant
remains employed by the Company.

SIP

This plan awards free shares. The number of shares awarded up to a maximum value of £3,000 per person per year, is based on length
of service and salary. The life of each plan is five years, after which shares are released to participants. There are no performance conditions
as in almost all circumstances participants can retain the shares awarded (although there may be tax consequences).

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

28. Share Options and Share Schemes continued

Share-Based Payment Expense Recognised in the Year

The expense recognised for share-based payments in respect of employee services received during the 52 weeks ended 31 March 2012
is £1.9 million (2011: £1.8 million). The whole of that expense arises from equity settled share-based payment transactions.

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. The significance of options granted before 7 November 2002 is that they have been excluded from the IFRS
2 share-based payment charge on the basis of their date of grant. There are no outstanding option/share awards granted before
7 November 2002, except for those detailed in the Executive Approved Scheme, at b) below.

Market Value

The market value of the shares at 31 March 2012 was £7.15 (2011: £5.96).

a) SAYE

Outstanding at beginning of the year
Granted
Lapsed
Exercised
Outstanding at end of the year

Exercisable at end of the year

Weighted average share price for options exercised in the year
Weighted average contractual life remaining for share options
outstanding at the year end
Weighted average share price for options granted in the year
Weighted average fair value of options granted during the year
Range of exercise prices for options outstanding at the year end – from

– to

2011
WAEP
£3.75
£4.64
£4.82
£3.00
£3.93

n/a

2012
Number
000s
616
135
(30)
(178)
543

–

£6.56

2.46 years
£6.55
£1.12
£3.31
£6.04

2012
WAEP
£3.93
£5.47
£4.11
£3.49
£4.45

n/a

2011
Number
000s
596
151
(68)
(63)
616

–

£5.60

2.49 years
£5.39
£0.92
£3.31
£6.04

Outstanding share options granted to employees under the Saving Related Share Option Scheme are as follows:

Exercisable at
September 2011
September 2011
September 2012
September 2012
September 2013
September 2013
September 2014
September 2014
September 2015
September 2016

Exercise price
40p shares
£
3.92
3.31
6.04
3.88
3.31
4.64
3.88
5.47
4.64
5.47

Number of ‘A’
ordinary shares
under option
2012
000s
–
–
24
87
100
65
63
100
71
33
543

Number of ‘A’
ordinary shares
under option
2011
000s
53
126
24
93
110
73
64
–
73
–
616

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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S
E
N
S
U
B

E
C
N
A
N
R
E
V
O
G

S
T
N
E
M
E
T
A
T
S

L
A

C
N
A
N

I
F

N
O
T
A
M
R
O
F
N

L
A
N
O
T
D
D
A

Notes to the Financial Statements
continued

28. Share Options and Share Schemes continued

b) Share Option Schemes

Senior Executive Share Option Scheme
Outstanding at beginning of the year
Granted
Lapsed
Exercised
Outstanding at end of the year

Exercisable at end of the year
Weighted average share price for options exercised in the year
Weighted average contractual life remaining for share options
outstanding at the year end
Weighted average share price for options granted in the year
Weighted average fair value of options granted during the year
Range of exercise prices for options outstanding at the year end – from

– to

Executive Share Option Scheme
Outstanding at beginning of the year
Granted
Lapsed
Exercised
Outstanding at end of the year

Exercisable at end of the year
Number of options in the opening balance that were granted
before 7 November 2002
Number of options in the closing balance that were granted
before 7 November 2002
Weighted average share price for options exercised in the year
Weighted average contractual life remaining for share options
outstanding at the year end
Weighted average share price for options granted in the year
Weighted average fair value of options granted during the year
Range of exercise prices for options outstanding at the year end – from

– to

2011
WAEP
£4.89
£5.82
£5.46
£4.87
£5.00

£5.11

2011
WAEP
£4.47
£5.78
£5.98
£3.63
£4.84

£5.09

2012
Number
000s
150
32
(8)
(7)
167

68
£6.15

6.91 years
£7.02
£0.99
£3.67
£7.51

2012
Number
000s
248
39
(12)
(90)
185

–
£6.94

6.44 years
£7.02
£0.74
£2.12
£7.51

2012
WAEP
£5.00
£7.09
£5.58
£4.98
£5.38

£4.60

2012
WAEP
£4.84
£7.09
£6.32
£4.14
£5.56

£5.00

2011
Number
000s
156
42
(39)
(9)
150

53
£5.55

7.22 years
£5.80
£0.84
£3.67
£7.51

2011
Number
000s
294
35
(10)
(71)
248

113

1
£5.88

6.57 years
£5.75
£0.63
£2.08
£7.51

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

28. Share Options and Share Schemes continued

Outstanding options which are capable of being exercised between three and ten years from date of issue (five and ten years in the case
of the 2008 to 2013 scheme noted below) and their exercise prices are shown in the table below:

Exercisable between
2005 and 2012
2008 and 2013
2007 and 2014
2008 and 2015
2009 and 2016
2010 and 2017
2011 and 2018
2012 and 2019
2013 and 2020
2013 and 2020
2014 and 2021

c) LTIP

Shares
Outstanding at beginning of the year
Granted including matching awards
Lapsed
Vested
‘A’ shares issued in lieu of ‘B’ shares
Outstanding at end of the year

Exercise price
40p shares
£
–
–
–
3.67
4.98
7.51
4.05
4.80
5.78
6.30
7.09

Senior Executive Scheme
Number of ‘A’
ordinary shares
under option
2011
000s
–
–
–
21
19
13
30
31
32
4
–
150

Number of ‘A’
ordinary shares
under option
2012
000s
–
–
–
21
12
10
25
31
32
4
32
167

Exercise price
40p shares
£
2.08
2.12
2.62
3.67
4.98
7.51
4.05
4.80
5.78
–
7.09

Executive Approved Scheme
Number of ‘A’
ordinary shares
under option
2011
000s
1
14
13
16
27
42
75
25
35
–

Number of ‘A’
ordinary shares
under option
2012
000s
–
14
13
–
10
36
19
20
35
–
38
185

2012
‘A’ shares
Number
000s
741
211
(35)
(239)
40
718

2012
‘B’ shares
Number
000s
1,852
529
(88)
(98)
(400)
1,795

2011
‘A’ shares
Number
000s
819
273
(179)
(172)
–
741

248

2011
‘B’ shares
Number
000s
2,049
682
(448)
(431)
–
1,852

In addition to the above, there are shares held by the LTIP Trust in respect of vested shares redeposited for matching, as follows:

Redeposited shares at end of the year

184

Weighted average share price for shares vested in the year
For shares outstanding at the year end,
the weighted average contractual life remaining is
Weighted average share price for shares granted in the year
Weighted average fair value of shares granted in the year

£6.63

£0.66

£5.65

£0.56

1.22 years
£7.02
£6.47

1.22 years
£0.70
£0.65

1.32 years
£5.68
£5.35

1.32 years
£0.57
£0.54

All LTIPs have a vesting price of £nil. LTIP shares do not receive dividends until vested.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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S
E
N
S
U
B

E
C
N
A
N
R
E
V
O
G

S
T
N
E
M
E
T
A
T
S

L
A

C
N
A
N

I
F

N
O
T
A
M
R
O
F
N

L
A
N
O
T
D
D
A

Notes to the Financial Statements
continued

28. Share Options and Share Schemes continued

d) SIP

Shares
Outstanding at beginning of the year
Granted
Lapsed
Released
Outstanding at end of the year

Weighted average share price for shares released in the year
For shares outstanding at the year end, the weighted average contractual life remaining is
Weighted average share price of shares granted in the year
Weighted average fair value of shares granted in the year

2012
Number
000s
345
86
–
(76)
355

2011
Number
000s
360
92
(1)
(106)
345

£6.88
2.43 years
£7.10
£7.10

£6.03
3.06 years
£6.00
£6.00

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 and LTIPs granted is estimated as at the date of grant, taking into account the terms and
conditions upon which the awards were granted. The following tables list the inputs to the model used for the 52 weeks ended 31 March
2012 and 53 weeks ended 2 April 2011, except exercise price and for the weighted average share price for grants in the year, which
are disclosed in sections a) to d) above.

Fair value inputs
Dividend yield (%)
Expected share price volatility (%)
Risk-free interest rate (%)
Expected life of option/award (years)
Model used

2012
1.8%
n/a

Executive and
Senior Executive Option Schemes
2011
2.0%
17%
1.6 to 2.3% 1.8 to 2.5%
4 to 6 years
4 to 6 years
Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes

Save As You Earn Scheme
2011
2012
2.0%
1.8%
17%
17%
0.9 to 1.5% 1.2 to 1.9%
3 to 5 years
3 to 5 years

LTIP Scheme
2011
2.0%
n/a
1.2% 1.2 to 1.4%
3 years

2012
1.8%
17%

3 years

The expected life of the options/shares is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily
be the actual outcome. No other features of options grant were incorporated into the measurement of fair value.

(ii) SIPs Granted

The fair value of SIPs is the share price at the date of allocation. The 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.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Notes to the Financial Statements
continued

29. Guarantees and Commitments

a) Operating Lease Commitments

Operating Leases Where the Group is the Lessee

Future minimum rentals payable under non-cancellable operating leases are due as follows:

Group and Company
Within one year
Between one year and ﬁve years
After ﬁve years

2012
£m
7.7
25.3
41.2
74.2

2011
£m
6.0
22.0
38.5
66.5

Commercial operating leases are typically for 20 to 25 years, although certain leases have lease periods extending up to 40 years.

Operating Leases Where the Group is the Lessor

The Group earns rental income from two sources. Licenced 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 13 years.

At 31 March 2012 future minimum rentals receivable by the Group are as follows:

Group and Company
Within one year
Between one year and ﬁve years
After ﬁve years

Investment properties

Property, plant
and equipment

2012
£m
0.2
0.5
0.3
1.0

2011
£m
0.2
0.6
0.4
1.2

2012
£m
7.5
16.6
12.0
36.1

2011
£m
6.3
12.9
6.4
25.6

The Group’s commercial leases on property are principally for licensed outlets. The terms of the leases are normally for either three, five
or ten years. The agreements allow for annual inflationary increases and full rental reviews occur on renewal of the lease, or every five
years for a ten year lease.

At 31 March 2012 future minimum rentals receivable under non-cancellable sub-leases included in the figures above were £4.7 million
(2011: £5.3 million).

b) Other Commitments

Group and Company
Capital commitments – authorised, contracted but not provided for

2012
£m
1.6

2011
£m
1.3

The Company has accepted various duty deferment bonds in connection with HM Revenue and Customs. The total outstanding
commitment at 31 March 2012 was £720,000 (2011: £370,000) for the Group and Company.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

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Notes to the Financial Statements
continued

30. 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 £178,000 (2011: £191,000) 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)
Short-term employee benefits
Termination benefits
Post-employment benefits
Share-based payments

Company Only

During the year the Company entered into the following related party transactions:

52 weeks ended
31 March
2012
£m
3.7
–
0.4
1.2
5.3

53 weeks ended
2 April
2011
£m
3.6
0.3
0.4
1.2
5.5

52 weeks ended 31 March 2012
Subsidiaries

53 weeks ended 2 April 2011
Subsidiaries

Sales
to related
parties
£m
–

Purchases
from related
parties
£m
32.2

Purchases
from related
parties
£m
33.1

Net interest
due to
related parties
£m
2.7

Amounts
owed to
related parties
£m
(85.1)

Net interest
due to
related parties
£m
3.5

Amounts
owed to
related parties
£m
(83.1)

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.

100

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Directors and Advisers
as at 31 May 2012

Directors
Michael Turner, FCA, Chairman
Simon Emeny, Group Managing Director
James Douglas, ACA
Richard Fuller
Ian Bray1
Jonathon Swaine2
John Dunsmore*
Lynn Fordham, CA*
Alastair Kerr* 3
Nigel Atkinson*
Sir James Fuller*

*Non-Executive.
1Appointed 12 December 2011.
2Appointed 1 February 2012.
3Appointed1 August 2011.

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
Marie Gracie, FCIS
Grifﬁn Brewery
Chiswick Lane South
Chiswick
London W4 2QB

Tel: 020 8996 2105

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

Please note you can now advise
Computershare of changes to your address
or set up a dividend mandate online at
www.computershare.com/investor/uk

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FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

101

Shareholders’ Information

2012 Diary
Friday, 22 June
Record Date

Sunday, 1 July
Preference dividends paid

11 a.m. Wednesday, 18 July
Annual General Meeting
Hock Cellar, Griffin Brewery

Tuesday, 24 July
Final dividend paid

Friday, 23 November
Half year results announcement

2013 Diary
January
Preference dividends paid
Interim dividend paid

June
Preliminary results announcement

Shareholder Privileges
Shareholders owning more than 250 ‘A’ or ‘C’ shares or 2,500 ‘B’ shares can buy beer, wine and spirits from the Brewery Store in
Chiswick at preferential prices. These shareholders are also entitled to certain discounts in Fuller’s Hotels. For details contact Company
Secretariat on 020 8996 2105.

Redesignation of ‘C’ Shares
‘C’ ordinary shares can be redesignated as ‘A’ ordinary shares within 30 days of the preliminary and half year announcements by sending
in your certificates and a written instruction to redesignate prior or during the period to the Company’s Registrars:

Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZZ

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 on 020 8996 2105.

102

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Glossary

• Accommodation sales as a percentage of Managed Pubs and Hotels revenue – this is the proportion of revenue from Managed Pubs

and Hotels that arises from the letting of bedrooms.

• Adjusted earnings per share – this is earnings per share, adjusted for exceptional items. The Directors believe that this measure provides

useful information for shareholders as to the internal measures of the performance of the Group.

• Adjusted profits – this is profit before tax, adjusted for exceptional items.

• Beer volumes – this is the volume of beer sold, in number of barrels; a brewing term representing 288 pints.

• EBITDA – this is the earnings before interest, tax, depreciation, loss on disposal of plant and equipment and amortisation, adjusted for

exceptional items.

• Food sales as a percentage of Managed Pubs and Hotels revenue – this is the proportion of revenue from Managed Pubs and Hotels
that arises from sales of food, with the revenue figure adjusted so as to exclude sites where the food operations are franchised out.

• Foreign Beer – this is sales made by the Company of beer produced by other brewers, the majority of which is lager.

• Invested Managed Pubs and Hotels 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 twelve months; sites which are closed; and pubs which are transferred to tenancy.

• LTIP – Long Term Incentive Plan.

• Market capitalisation – only the Company’s 40p ‘A’ ordinary shares are listed. The Company calculates its market capitalisation as the
sum 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, loan notes, debenture stock and preference shares.

• Own Beer – this is sales of own brand beer brewed by the Company in Chiswick.

• SIP – Share Incentive Plan.

• Tenanted like for like profit growth – this is the profits growth of Tenanted Inns calculated to exclude from both years those
pubs which have not been trading throughout the two years. The principal exclusions from this measure are: pubs purchased or sold;
pubs which have closed; and pubs transferred to or from our Managed business. Bad debt expense is included but head office costs
are excluded.

• 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.

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FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

103

Shareholders’ Notes

104

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

Five Years’ Progress

Income Statement
Revenue1
Operating proﬁt before exceptional items
Net finance costs
Adjusted profit
Exceptional items
Profit before tax
Taxation
Profit attributable to equity shareholders
of the Parent Company

EBITDA

Assets employed
Non-current assets
Inventories
Trade and other receivables
Assets classified as held for sale
Cash and short term deposits

Current borrowings
Other current liabilities

Non-current borrowings
Other non-current liabilities
Net assets

Per 40p ‘A’ ordinary share
Adjusted earnings
Basic earnings
Dividends (interim and proposed final)
Net assets
Net debt (£ million)
Net debt/EBITDA
Gross capital expenditure (£ million)
Average number of employees

2012
£m

253.0
34.9
(4.6)
30.3
(1.5)
28.8
(5.1)

23.7

47.8

444.1
10.5
18.3
5.3
3.9
482.1
–
(51.6)
430.5
(142.1)
(53.1)
235.3

2011
£m

241.9
34.1
(4.8)
29.3
1.7
31.0
(6.2)

24.8

46.6

382.7
8.8
18.8
0.2
3.7
414.2
–
(43.6)
370.6
(92.2)
(42.2)
236.2

2010
£m

227.7
32.0
(5.4)
26.6
0.2
26.8
(7.6)

19.2

43.6

387.9
7.6
15.6
0.6
1.1
412.8
(81.4)
(44.5)
286.9
(27.4)
(52.3)
207.2

2009
£m

210.0
29.0
(6.2)
22.8
(8.4)
14.4
(5.5)

8.9

40.2

356.9
6.1
16.0
–
0.9
379.9
(8.8)
(37.9)
333.2
(86.3)
(49.9)
197.0

20081
£m

203.1
29.4
(6.4)
23.0
0.8
23.8
(4.7)

19.1

40.5

350.6
5.8
15.7
1.8
3.9
377.8
(8.1)
(34.3)
335.4
(91.3)
(46.4)
197.7

2012

2011

2010

2009

2008

39.82p
42.13p
12.65p
£4.22
(138.2)
2.7
74.7
3,392

37.36p
44.12p
11.80p
£4.19
(88.5)
1.9
12.0
3,363

34.19p
34.37p
11.00p
£3.68
(107.7)
2.5
44.1
3,263

29.12p
16.00p
9.85p
£3.54
(94.2)
2.3
24.2
2,923

29.15p
34.33p
9.70p
£3.55
(95.5)
2.4
18.5
3,067

1 Revenue for the 52 weeks ended 29 March 2008 has been restated to include all excise Duty in revenue and costs as a result of the change in accounting policy for the
52 weeks ended 28 March 2009.

FULLER SMITH & TURNER P.L.C. Report and Accounts 2012

105

F U L L E R S M I T H & T U R N E R P. L . C.

G r i f f i n B r e w e r y , C h i s w i c k L a n e S o u t h , C h i s w i c k , L o n d o n W 4 2 Q B
T e l e p h o n e : + 4 4 ( 0 ) 2 0 8 9 9 6 2 0 0 0
F a x : + 4 4 ( 0 ) 2 0 8 9 9 5 0 2 3 0
E - m a i l : F u l l e r s @ f u l l e r s . c o . u k
W e b a d d r e s s : w w w . f u l l e r s . c o . u k
R e g i s t e r e d n u m b e r : 2 4 1 8 8 2