FULLER SMITH & TURNER P.L.C.
Report and Accounts 2013
N O W A L L F L O W E R
In the 50s we created a new ale. Rich, smooth
and wonderfully balanced. We just needed
a name. There was no Twitter back then, but
we asked around London for suggestions all
the same, and one in particular was inspired.
A flower. But not any old flower. ‘London Pride’
(or Saxifraga x urbium to be precise). A tough
little perennial that grew during the Blitz,
covering the rubble like tiny beacons of hope.
A homage to the city’s indomitable spirit, and a
fitting name for our ale. So thank you London.
B R E W E D B E S I D E T H E T H A M E S
Corporate Progress
• Managed Pubs and Hotels total
sales up 9% and profits1 up 6%
• Tenanted Inns profits1 up 18% and
average EBITDA per pub up 9%
• The Fuller’s Beer Company
total sales up 4% and total beer
volumes level
• Net debt to EBITDA2 2.6 times
31.7
30.3
29.3
26.6
22.8
43.07
39.82
37.36
34.19
13.70
12.65
11.80
11.00
29.12
9.85
09
10
12
11
ADJUSTED PROFIT3
£ million
13
+5%
Financial Highlights
Revenue
Adjusted profit3
Profit before tax
EBITDA6
Adjusted earnings per share4
Basic earnings per share5
Total annual dividend per share5
Net debt7
09
10
11
12
13
09
10
11
12
13
ADJUSTED EARNINGS
PER SHARE4 Pence
+8%
TOTAL DIVIDEND
PER SHARE5 Pence
+8%
52 weeks ended
30 March
2013
£ million
52 weeks ended
31 March
2012
£ million
271.5
31.7
35.2
51.2
43.07p
52.59p
13.70p
135.6
253.0
30.3
28.8
47.8
39.82p
42.13p
12.65p
138.2
Change
2013/2012
+7%
+5%
+22%
+7%
+8%
+25%
+8%
Pro forma net debt/EBITDA2
2.6 times
2.7 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 2013
1
Chairman’s Statement
HIGHLIGHTS
I am pleased to announce a strong performance by the
Group, driven by our pub acquisitions and developments.
We commenced the roll out of our new Beer Company
strategy towards the end of the year, which features many
exciting initiatives including a new wave craft lager and
entry into the premium cider market.
Revenues rose by 7% to £271.5 million (2012: £253.0
million) and adjusted profit before tax grew by 5% to
£31.7 million (2012: £30.3 million). Our adjusted earnings
per share rose by 8% to 43.07p (2012: 39.82p).
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Managed Pubs and Hotels total revenues increased by 9%
and like for like sales were up 2.1%. Operating profits1 grew
6% despite being subject to a record number of closed
weeks as we undertook a substantial level of refurbishment
across our estate, including some of our recent
acquisitions. During the year we purchased two prominent
freehold managed houses in the centre of Bath.
Tenanted Inns operating profit1 growth of 18% was driven
by a strong contribution from the 2012 acquisitions,
together with like for like profits, which were up 1%. We
added a further two high quality sites to our Tenanted Inns
division during the year and average EBITDA per pub rose
by 9%.
Total beer volumes in the Fuller’s Beer Company were
level with last year, as was EBITDA. However, an increased
depreciation charge in the first full year following the
significant investment in new tank capacity last year has
resulted in operating profits1 reducing by 3%.
In March we were delighted to be voted the “Company
of the Year” at the PLC Awards. This accolade recognises
Fuller’s as a company that takes a long term view and
has achieved consistent success not only in the growth
of our share price, but in laying the foundations for
continued prosperity.
The international spotlight has been focussed on London
over the last two years, with the Royal wedding, the
Queen’s Diamond Jubilee and the Olympic Games. These
have been wonderful events, through which the nation
has celebrated all things British. In particular, I would
like to congratulate the London Organising Committee
for the Olympic Games on delivering an outstanding
success with the London 2012 Games. The legacy of this
tremendous promotion of “brand London” will benefit
us for many years to come, both in our iconic London
pubs and through our award winning ales which are now
enjoyed in some 68 countries around the world.
DIVIDEND
The Board recommends that a final dividend of 8.35p
per 40p ‘A’ and ‘C’ ordinary share and 0.835p per 4p ‘B’
ordinary share be paid on 29 July 2013 to shareholders
on the share register as at 28 June 2013. This is a 10%
increase on last year’s final dividend. The total dividend
1Operating profit before exceptional items.
QUALITY, SERVICE AND PRIDE
This year we brewed 215,000
barrels of award winning ale at
the Griffin Brewery, beside the
Thames in Chiswick. From here
we supply our estate, which
comprises 177 Managed Pubs
and Hotels and 209 Tenanted
Inns, as well as pubs, clubs and
supermarkets across the UK
and overseas.
PLC COMPANY OF THE YEAR
Awarded the title of
“Company of the Year”
at the 2012 PLC awards, in
recognition of our long-term
business model and continued
share price growth.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
3
Chairman’s Statement continued
per share of 13.70p per 40p ‘A’ and ‘C’ ordinary share and
1.370p per 4p ‘B’ ordinary share represents an 8% increase
on last year and will be covered more than three times by
adjusted earnings per share.
PEOPLE
The success of the Group is founded upon the dedication
and enthusiasm of its many staff. I would like to take this
opportunity to thank every one of them for their continuing
hard work, without which our good performance this year
would not have been possible.
With effect from 1 July, I am delighted that Simon Emeny,
currently Group Managing Director, will assume the post
of Chief Executive of the Company. Simon personifies all
the values that have made this Company strong and he
combines this with enormous energy and clear conviction.
This is embodied by his vision to create and operate the
most stylish pubs and hotels whilst brewing Britain’s most
4
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Chairman’s Statement continued
coveted premium brands for discerning customers both
at home and abroad.
I look forward to working closely with Simon in the
future and watching Fuller’s grow and prosper under
his leadership.
CURRENT TRADING AND PROSPECTS
Over the nine weeks to 1 June 2013 like for like sales in our
Managed Pubs and Hotels grew 7.0%, Tenanted Inns like
for like profits were down 1% and total beer volumes were
down 5%. It is worth noting that beer sales in week 9 last
year were up 39% as pubs stocked up heavily in advance of
the Diamond Jubilee weekend.
We are well positioned to respond to the continuing
uncertainty in the economy over the coming year and
will focus our activities towards our three strategic drivers
for growth:
Distinctive Pub and Hotel Experience
• “Only at Fuller’s” – creating a distinctive experience
through a portfolio of unique products and bespoke
menus with local ingredients, delivered with engaging
service in a welcoming and stylish environment.
Targeted Acquisition and Development
• Acquiring and developing sites in transport hubs and the
heart of market towns and building our portfolio of iconic
London pubs.
• Refurbishing and repositioning pubs and hotels to achieve
their full potential.
Premium Brand Portfolio
• Innovating and investing to broaden our portfolio of high
quality products with genuine craft credentials.
• Growing our brands by communicating these attributes
to reinforce their premium positioning and extending our
distribution within existing sales channels.
Michael Turner
Chairman
7 June 2013
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
5
Group Managing Director’s Review
I am delighted to be taking over the
leadership of the Company from
Michael at this point in the continuing
evolution and long term development
of the business. I inherit a well-executed
strategy that has driven compelling
results. The fundamentals of the
business are very good, we have a
strong balance sheet, a high quality,
well invested freehold property base, a
long term focus and a passionate and
engaged team. I want to not only retain
these core strengths, but also to build
on them by refining the vision that has
delivered us to where we are today,
while developing key drivers for our
continued future growth.
FULLER’S INNS
The Fuller’s Inns business comprises
two divisions. Managed Pubs and Hotels
are operated by Fuller’s employees
and include 177 pubs and hotels. The
Tenanted Inns division has 209 pubs,
where the individual pubs are run by self-
employed entrepreneurs, who work in
partnership with us, selling our beer and
operating under the Fuller’s brand.
Acquisitions and Development
Our acquisitions are carefully targeted
towards prime locations in market
towns with our target demographics,
high footfall locations in transport hubs
and iconic pubs in our home city of
London. We seek out opportunities
where we believe there is potential for
growth and where adding the distinctive
Fuller’s character and badge of operating
excellence to the business will deliver
that potential. We make significant
investments both in our new acquisitions
and within our existing estate where we
have identified a site which will benefit
from refurbishment and repositioning.
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
In the current year, two of the pubs
acquired from Enterprise Inns in March
2012 have received a transformational
refurbishment. At The Horse and Groom
in Alresford, through careful restoration
we have repositioned the pub to be
in keeping with its surroundings and
become the premium destination in its
locality. The Ox Row, a 16th century pub
on the market square in the medieval
cathedral city of Salisbury, underwent
a similar renovation in March 2013,
retaining its original features with a
refined finish, and creating a stylish
dining room on the first floor which can
accommodate 48 covers. Both pubs have
now reopened as managed houses and
are trading well.
We also invest in refurbishment projects
that will deliver further growth in our
existing estate. The Duke of Kent in Ealing
was refurbished and repositioned as a
premium dining destination in October
2012. Careful zoning of the pub and a
major kitchen investment have helped to
increase food sales by 70% at this site.
In March 2012 we opened the doors to
The Parcel Yard, a newly constructed
pub in a classic Grade I listed building
set across two floors in the striking
new King’s Cross station concourse.
The Parcel Yard has traded ahead of
expectations and is now the largest
retailer of cask ale in our estate. In
addition, we are delighted to have
recently signed an
recently signed an
agreement with Heathrow
agreement with Heathrow
Airport for a prominent
Airport for a prominent
airside pub in the new
airside pub in the new
Terminal 2 to open in June
Terminal 2 to open in June
2014. This development
2014. This development
is a natural evolution for
is a natural evolution for
the Company to capitalise
the Company to capitalise
upon our existing
upon our existing
expertise trading in transport hubs such
as London’s Waterloo, King’s Cross and
Paddington stations. Located just eight
miles from the brewery, “London’s Pride”
will showcase the story of Fuller’s heritage
in a modern setting within one of the
world’s busiest airports. At this exciting
addition to our estate, passengers from
home and abroad will be able to sample
our array of beers and freshly prepared
food or choose a plane picnic from our
“Grab & Fly” range.
Managed Pubs and Hotels
Acquisitions and developments
completed in the previous year
contributed a full year of sales, increasing
total revenues for Managed Pubs and
Hotels by 9% to £170.1 million (2012:
£155.7 million). Like for like sales in our
Managed Pubs and Hotels grew 2.1%,
led by accommodation up 8.2% which
received a one-off benefit from the
Olympic Games. Like for like drinks sales
up 0.9% were most strongly impacted by
the wettest summer and coldest March
for a generation. Like for like food sales
proved to be more resilient with an
increase of 3.9%.
Simon Emeny, Group Managing Director
Operating profit before exceptional
items increased 6% to £19.4 million
(2012: £18.3 million). Operating margins
decreased from 11.8% to 11.4%, due
to inflation in utilities and business rates
in excess of sales growth and the impact
of closing and refurbishing a relatively
high number of pubs during the year;
a total of 73 closed weeks compares to
“
Only at Fuller’s”
Our strategy is to offer our customers a
distinctive experience that makes a visit
to a Fuller’s pub a special and memorable
occasion, setting us apart from our
competitors. We do this by offering
our unrivalled portfolio of brands, and
freshly cooked food delivered in a stylish
environment with engaging service.
THE FULLER’S VISION
We will create and operate
the most stylish pubs
and hotels whilst brewing
Britain’s most coveted
premium brands for
discerning customers both
at home and abroad.
60 in the prior year. Further progress
was achieved on payroll costs following
the implementation of labour scheduling
software in the last financial year and the
benefits of this are expected to continue
into 2014.
Our pubs offer an unparalleled range of
Fuller’s own beers and other premium
brands. Our handpicked selection of
wines boasts many of which are exclusive
to Fuller’s in the UK. We have our own
coffee brand “Brewer Street”, served
in eye catching crockery, with a coffee
menu offering all the popular variants and
indulgent snacks, such as our delicious
rich chocolate brownie.
We endeavour to source local ingredients
for all our dishes. Our beef and poultry
have been exclusively British for over four
years. We are taking this a step further
by broadening our partnership with our
Hampshire butcher, Owtons, to source
all beef for our burgers from 40 named
farms, with meat traceable back to an
individual animal. When you breakfast in
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
7
“ONLY AT FULLER’S”
Delivering pubs’ full
potential through the
distinctive experience
of premium brands,
unique dishes, inspiring
design and engaging
service, available
“Only at Fuller’s”.
8
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
MANAGED PUBS AND HOTELS
LIKE FOR LIKE SALES GROWTH %
2013 2.1%
2012 4.2%
2011 3.9%
2010 2.7%
2009 3.0%
GROUP CAPITAL EXPENDITURE £ million
2013 12.7 12.9 5.5 31.1
2012 17.1 54.4 4.8 76.3
2011 12.0 12.0
2010 13.9 30.2 44.1
2009 14.0 10.2 24.2
Organic capex
Development of new sites
Acquisitions including expensed costs
than when first launched, and 24% more
time was spent on each visit. Dwell time
has been increased by the addition of
Google Business Photos, to allow the
user to take a virtual tour inside the pub,
further promoting online bookings. These
virtual tours are also available directly
through the Google Streetview website
Group Managing Director’s Review continued
a Fuller’s hotel, your black pudding will
be Fuller’s own, made for us by an award
winning producer in Hampshire. The pigs
that go into our unique pork and HSB
sausages will be fed on the spent grain
from our Brewery in Chiswick. Classic
pub dishes are always available on our
menus, executed consistently and to a
high standard. By keeping flexibility in our
supply chain to source fresh, seasonal
and local produce, our chefs are able to
exercise creative flair through individual
menus tailored to the customers of each
of our pubs.
Taking inspiration from our own beer
collection we are excited to offer
customers a number of appetising beer
and food collaborations available only at
Fuller’s. Following on from the success
of London Porter smoked salmon, a
hot smoked version was introduced in
May 2013. In November we launched
Fuller’s Black Cab Christmas pudding
and the latest treat to grace the Fuller’s
table is the Fuller’s Vintage Ale, date and
molasses sticky toffee pudding. Over
the coming summer Wild River smoked
halibut and bread made from Fuller’s own
yeast will join this range.
People
Delivering our premium food offer is
supported by continual training and
development both in our kitchens and
through supplementary training. During
the year the first twenty-one junior chefs
passed the British Institute of Innkeeping
Awarding Body (“BIIAB”) accredited
scholarship programme to become
sous chefs or head chefs. Our team of
classically trained Executive Chefs coach
and advise individual chefs within the
Company to set rigorous skill and food
standards within our kitchens.
We place great importance on recruiting
the right people, with a passion for
providing good service and training them
to equip them with the skills they need
to excel and develop their careers within
Fuller’s. We are investing more than
ever before in attracting and developing
talent to our pubs through our graduate
hospitality scheme and management
trainee programme. Now in our third year
of training staff on the Wine and Spirits
Education Trust foundation programme,
we have seen wine sales grow by 13%
since we commenced this programme.
In December we launched a new
e-learning platform to deliver certified
training in health and safety, food
hygiene, licensing and the Disability
Discrimination Act. Since then, over
1,400 courses have been completed.
This approach provides an efficient way
to deliver information appropriate to job
roles to a wide audience.
Connecting with Customers
In May 2012 we launched new mobile-
optimised websites for all pubs. Nearly
one third of all visits to our websites are
currently made from a mobile device and
visits are increasingly driven by referrals
from social networks.
A key objective of the new websites is
to generate online bookings. 23% of
online room sales are now made through
Fuller’s websites rather than agency
websites. Online table bookings, available
on the websites of around 60 selected
pubs, also continue to grow, with online
table bookings in March 2013 exceeding
those taken in the peak trading month
of December.
By the end of the year, the pub websites
were receiving 42% more unique visitors
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
9
Group Managing Director’s Review continued
Our tenanted service agreement was
launched in March 2012, providing a
complete property compliance package
at group purchasing prices. We targeted
to sign up 100 tenants in the first year,
but demand has exceeded this and
123 tenants are now participating in
this scheme which helps our tenants
to simplify some of their legal and
regulatory obligations.
and the Griffin Brewery in Chiswick
has become the first brewery in the UK
through which you can take a virtual tour
on Google Streetview.
Tenanted Inns
Driven by the first full year of benefit from
the 17 acquisitions in the prior year, the
Tenanted Inns business grew revenues
by 12% to £30.8 million (2012: £27.5
million). Like for like profits were up 1%
and average EBITDA per pub increased
9%, culminating in operating profit
before exceptional items 18% higher
than last year at £12.2 million (2012:
£10.3 million).
We are proud to provide what we believe
to be one of the best packages in the
marketplace, a statement which is borne
out by the average tenure of our tenants
exceeding six years – among the highest
in the industry. Leading our offer is our
premium portfolio of carefully crafted
beer brands and hand-picked selection
of wines. Tenants have access to food
at group purchasing prices and free
membership of the British Institute of
Innkeeping (“BII”). Our experienced and
BIIAB certified Business Development
Managers provide advice to tenants on
how to grow their business and we offer
a number of training courses focussed on
different aspects of running a successful
pub. We are continually striving to
improve the support we provide in all
aspects of operations and compliance.
TENANTED INNS PROFITS £ million
2013 12.2
2012 10.3
2011 9.9
2010 9.9
2009 10.2
10
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
MANAGED PUBS AND HOTELS
A one off benefit from the
Olympics drove accommodation
like for like sales growth of 8.2%.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
11
TENANTED INNS
We offer our tenants a variety of
tools and services to help them
grow their business, now including
a bespoke website, full property
compliance and free WiFi. Average
EBITDA per pub rose by 9%.
12
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
12
FULLER SMITH & TURNER P.L.C. Report and Accounts 2009
Group Managing Director’s Review continued
In April 2013 we launched an extranet
for our tenants, a one-stop shop to
help them manage their business. From
this website Fuller’s tenants can access
compliance documents, financial and
stock reports, menu and poster designs
and a variety of useful information. The
content design for the website was
tenant-led and a number of forums were
held with tenants to shape and inform
the process. The initial launch has met
the vast majority of their requirements
and we are working to develop and
enhance the site in order to meet the
remaining needs.
Three years ago we were the first pub
group to offer free WiFi to customers
in our managed houses. This proved
so popular that we have since had to
increase the bandwidth to meet demand.
During the year we were able to negotiate
free WiFi for our tenants from O2, our
group provider. As a result, all Fuller’s
pubs, managed and tenanted, now
offer free WiFi. This is an important
part of our overall package that allows
our tenants to run a great pub and a
competitive business.
THE FULLER’S BEER COMPANY
Total beer volumes were level with
last year in the context of an ongoing
challenging UK market for On Trade beer
sales. Own beer volumes reduced 1%
and foreign beer volumes increased 3%.
Revenues increased by 4% to £113.6
million (2012: £109.1 million). EBITDA
was level with last year at £11.7 million,
but operating profit before exceptional
items was 3% lower than last year at £8.7
million (2012: £9.0 million) due to the
increased depreciation charge from the
significant investment in additional tank
capacity in 2012.
This investment was made to support
high growth in the Off Trade and Export
areas, which together now account for
two in every five barrels sold. Export
volumes in particular have grown 97%
over the last five years. We focus on
growing our core markets, but we also
continue to explore new opportunities
and now export to 68 countries around
the world.
We welcome the recent abolition of
the duty escalator on beer, however,
successive duty rises above the rate of
inflation over many years have taken
a lasting toll on our industry. Beer
volumes nationally are in decline under
the burden of duty and we hope that the
Chancellor will give further beer duty
reductions to help the British Brewers,
together with the British farmers who
supply the Barley and the Hops, and
the British pub industry of which we are
all so proud. Collectively our industry
employs almost a million people, and
we contribute over £11 billion to
the exchequer.
Beer Company Strategy
The UK and worldwide drinks markets
are undergoing a period of change. The
consumer is increasingly interested in
craft products, with local provenance,
quality and authenticity. Social media
and digital technologies are tipping
the competitive landscape towards
these producers and away from the
mass market giants. Fuller’s is, and
always has been, a craft producer
and our strategy, which we began to
rollout towards the end of the year, is
to leverage this competitive advantage
to grow our existing brands, develop
new ones and expand into other
craft segments.
THE FULLER’S BEER COMPANY
As London’s longest standing
craft brewer, we continually
bring new products to market
whilst proudly brewing the
UK’s No.1 Premium ale,
London Pride.
Growing Brands
During 2013 we have been laying
foundations for future growth through
increasing brand equity and extending
our portfolio. In April 2013 we began
packaging beer into our newly designed
bottles. The first redesign of the bottle
for 19 years is elegant and distinctive
and will enable us to stand out from the
competition on shelves both at home
and abroad. We have also redesigned
every label to complement the new shape
and to give all of our beer brands a more
contemporary appeal.
Our new advertising campaign – “Made of
London” will appear in newspapers and on
websites and poster sites around London
until July and again in September. “Made
of London” engages consumers by telling
the fascinating true stories of London
Pride and the unique provenance, history
and relationship our flagship beer brand
has with London. Weaving the past and
the present together allows consumers
to discover the rich heritage of London’s
longest standing craft beer.
Developing New Brands
Our most exciting innovation is the
launch of Frontier, a new wave craft
lager. Pushing the traditional boundaries
of lager brewing, this cutting edge
beer has been hand-crafted over 42
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
13
— Premium Cider
On 4 June 2013 we purchased 100%
of the share capital of Cornish Orchards
Limited for £3.8 million. The consideration
comprised £2.4 million of cash, £0.5
million of assumed liabilities and £0.9
million contingent consideration payable
at a future date. Established in 1999,
Cornish Orchards produces premium
cider with genuine provenance, hand
crafted from freshly pressed apples. The
production facilities in Duloe, Cornwall
are well invested with potential for further
expansion on the site. The flagship
brand, Cornish Gold is a refreshing, and
truly delicious cider of uncompromising
quality, making it a perfect fit with Fuller’s
outstanding ales. The premium cider
market is a strong growth area, with
healthy margins and the full award winning
range of ciders and artisan soft drinks are
ideal for our portfolio, and will provide
the opportunity to drive incremental sales
through our existing sales channels.
These unique additions to our portfolio
allow us to offer a more extensive
repertoire of drinks to our consumers.
Simon Emeny
Group Managing Director
7 June 2013
Group Managing Director’s Review continued
days to explore new territories in taste.
From the imagination of a passionate
brewing team, drawing on over 160
years of brewing experience we have
created a unique lager with a distinctive
flavour. We combine old world malts
with new world hops and carefully
lager the beer for five weeks for a more
memorable taste, with citrus and spicy
notes. Frontier is served unpasteurised
for additional freshness and so the
consumer can enjoy the full flavour in
its original splendour. This small batch
craft lager will appeal to premium lager
drinkers who are interested in a lager
with real taste and authenticity. Initially
Frontier will be seeded into 50 pubs
around the country, allowing consumers
to seek it out, before distribution
is extended.
We proactively develop our portfolio
of beers, providing variety and interest
for consumers. We produce a large
scale seasonal ale every month,
FULLER’S BEER BARRELS 000s
2013 214.5 117.5 332.0
2012 217.4 114.3 331.7
2011* 215.5 110.8 326.3
2010 220.0 104.7 324.7
2009 215.6 103.6 319.2
Own beer brewed
Foreign beer distributed
*2011 barrelage figures are pro-rated to 52 weeks
TOTAL BEER BARRELS
Free On Trade 41%
Fuller’s Managed
Pubs & Hotels 22%
Fuller’s Tenanted
Inns 12%
Off Trade 13%
Exports 12%
reaching over 100 pubs. Seasonal cask
ale volumes are growing 35% year
on year, as our customers seek out
something new and interesting. This
spring we brewed “Brit Hop” featuring
eight different British hops, including
the award winning Admiral 2012, used
for the first time by Fuller’s. Seasonal
beers that show greatest potential are
extended into more permanent beers,
with Wild River following the success of
Bengal Lancer to become a permanent
part of the bottled range.
Expanding into Other Craft Segments
— World Beer
In response to the increasing consumer
demand for interesting beers with a
genuine history and heritage, we are
developing a portfolio of world class
beers from around the globe exclusive to
Fuller’s as UK distributors. These beers
are carefully sourced from brewers who
share Fuller’s passion for brewing and
uncompromising quality and the beers are
imported from their home brewery, not
brewed under license.
The first beer in this range was Veltins,
a Pilsner lager, brewed to the German
purity law from 1516 and served in
traditional Germanic handled glassware.
Launched to market in July 2012, Veltins
is on target to sell 2,000 barrels in its first
year, from a growing distribution base.
On 13 May 2013 we launched Chimay
Gold draught, from the Chimay Abbey in
Belgium, with over 150 years of heritage.
This is an authentic Trappist beer, served
in traditional two-thirds of a pint goblets,
to be savoured and explored. This
year is the first time this unfiltered and
unpasteurised 4.8% keg beer has been
available outside of Chimay Abbey and
we are the exclusive UK importer.
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
15
Corporate Social Responsibility
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I T ’ S N O T C A L L E D
L O N D O N - I S H P R I D E
Our brewery’s stood in London, beside the Thames,
since 1845. And we’ve been brewing London Pride
here since long before Boris bikes, oligarchs and free
evening newspapers. Sure, we could have moved out.
Saved some money. But it’s not just a brewery, it’s our
home. And some things are more important than the
bottom line. So we’re staying put. Besides, “I’ll have a
pint of London-ish Pride” just doesn’t sound right.
B R E W E D B E S I D E T H E T H A M E S
HERITAGE
Fuller’s place in the industrial and cultural
history of London is well-documented, and
it is our careful preservation of this heritage
at the brewery and in our pubs which today
sees the Company held in high regard in
each community it serves. 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.
Some of our most recent pub acquisitions
and developments, in bustling towns such
as Reigate and Bath, and developments like
The Parcel Yard in London’s King’s Cross
have further enhanced the Company’s
reputation. Tired, under-invested sites
which we have acquired, or blank canvases
such as that at King’s Cross, have been
transformed into stunning venues for the
public to socialise in a comfortable and safe
environment. The way we approach these
investments is sympathetic to the location,
but also to the wider area as in all cases we
endeavour to use the heritage of the site as
an integral aspect of the design.
As well as preserving and highlighting the
history and heritage of our properties,
we are also keen to re-establish historic
links wherever possible. We are currently
creating a wonderful new pub on the banks
of the River Cam, near Fareham, which will
be the recreation of a former tidal mill which
sat on the site.
At our brewery, we continue to delve into
our rich brewing history with recreations
of beers from our brewing books, which
stretch back for two centuries. Following
on from beers made to recipes from the
1890s and the 1930s, the next edition in our
acclaimed Past Masters series will be from
the more recent 1960s.
COMMUNITY
Fuller’s has been a fixture of the Chiswick
and wider London community for many
centuries. We are committed to continuing
the close relationship between our business
and the communities in which we operate,
including those in the vicinity of our growing
estate of pubs and hotels.
In the last couple of years we have
established a presence in towns such as
16
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Corporate Social Responsibility continued
Stratford upon Avon, Bath, Reigate and
Alresford and as with all our businesses,
we actively encourage our managers and
tenants in these new areas to support
local community programmes and events
as much as possible. For example at The
Market Stores, a Reigate pub that we have
restored to be the “heart of the town”
since purchasing it in 2012, we provided
support for a local charity called Love Works
by providing free stock and assisting with
staffing their bar at the Diamond Jubilee
celebrations.
We continue to support local and national
charities through events run at our head
office as well as at individual pubs and
hotels raising over £230,000 in direct
sponsorship. Most notably, our pub
teams and brewery staff came out in
force once again during “Movember”,
raising almost £20,000 for men’s health
charities, specifically prostrate cancer.
Fuller’s excellent support was rewarded by
the organisers with a trophy presented in
early 2013.
Fuller’s also continues to support many
causes, charities and organisations in the
local area surrounding the Company’s
Griffin Brewery, many of which are bound
by a simple ‘gentleman’s agreement’ made
many years ago. Two examples of this are
the Thames Towpath Ten race alongside
the river Thames every April and the Head
of the River Fours rowing race during the
autumn. Both events have been able to
survive and thrive as a result of Fuller’s
continued support.
Other local interest groups which receive
financial or in-kind support from the
Company include the Chiswick Pier Trust,
St Mary’s Convent & Nursing Home and
Chiswick House & Gardens, where we also
support the organisation of an annual open-
air opera event, designed to raise further
funds for one of the hidden gems of the
West London area.
During this year we have also reached a
landmark figure in our fundraising for the
maritime charity Seafarers UK, through
sales of our Seafarers Ale. Fuller’s donates
£5 per brewer’s barrel and the total raised
now stands at £100,000. Fuller’s also
continues to support the work of Cancer
Research UK at the nearby Hammersmith
Hospital through support of the annual
London Pride Walk for Cancer Research UK,
(which has raised over £1 million since the
first walk in 1996) and is proud to continue
its high profile sponsorship of the Virgin
London Marathon.
RESPONSIBLE RETAILING
The Fuller’s Beer Company continues to
pride itself on the quality of beers that it
brews. 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 are active members of the BBPA
(“British Beer and Pub Association”) and the
BII (“British Institute of Inn keeping”), as well
as supporting Drinkaware, the government
sponsored trust which aims to promote
responsible drinking and help reduce
alcohol misuse and alcohol-related harm.
We have always believed that a well-
managed pub offering a relaxed and safe
environment, catering for all ages is central
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
17
Corporate Social Responsibility continued
our managers to contribute to local
Pubwatch schemes. Our pub managers and
staff operate the “Challenge 21” proof of
age scheme. This policy is audited through
unannounced test purchases.
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.
Our graduate programmes go from strength
to strength, increasingly Fuller’s is being
viewed as a place for talented graduates
to develop into the leaders of the future.
Our General Manager development
programme continues to develop the best
assistant managers into new leaders for our
Pub estate. Our Mentor programme has
been increased in size and scope, utilising
the skills and experience of our senior
managers to support the development of
our future leaders.
The Company has continued to strengthen
its commitment to health and safety issues
both at the Brewery and in the retail estate,
to a community’s social cohesion and this
plays a vital role in Britain’s social life. In
our managed pubs we focus primarily on
food-led occasions where alcohol is drunk
as an accompaniment to the meal. When
we do promote drinks we focus on quality
drinks to savour rather than 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 to visit through
our new children’s menu or encouraging
18
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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.
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
2012 saw another period of extreme
weather starting with hose-pipe bans and
ending as the second wettest year on
record. We have to accept this is a natural
effect of climate change and continue
to do everything we can to adjust our
operations to minimise our impact on
our environment.
During the last financial year we
continued to extend our use of LED
lighting, most recently in the Brewery
where replacement floodlighting in our
cask racking area has reduced energy
consumption by 85% and annual carbon
emissions by 38 tonnes.
Less than 24% of our waste is now sent to
landfill and we have continued to extend
the use of waterless urinals in our pubs
and hotels.
Sub-metering has been installed in seven
houses and detailed analysis of the data has
enabled us to significantly improve energy
consumption and reduce annual carbon
emissions by 110 tonnes. Further savings
are expected over the coming months.
Corporate Social Responsibility continued
We are continually looking for new ways to
improve our environmental performance
and have recently begun trials on voltage
optimisation technology and sophisticated
controls to reduce gas consumption on
boilers. The initial results of both of these
initiatives look promising and a decision
on their wider deployment will be taken
later this year.
This year we have also introduced a
programme designed to change our
employees’ approach to energy
consumption. After six weeks of the
pilot project, all but two of the 16
pubs have made significant steps
towards achieving our targeted
reduction. If successful we will
extend the programme to the
remainder of our managed house
estate later this year.
In April 2013 we launched a
redesigned, lighter bottle for London
Pride. These bottles are 21% lighter
than the previous design and we
anticipate this will further reduce
our annual CO2 emissions by over
40 tonnes (equivalent to an average family
car driving around the world 10 times). This
is the second time we have reduced the
weight of our bottles in the past three years.
Our decision to implement a greener car
policy 4 years ago continues to deliver
improved environmental performance.
The CO2 emissions of our existing fleet are
almost 25% less than the national average
for all cars and new cars joining our fleet
also have lower emissions than the national
new car average.
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
responsibility to the environment
to ensure that the products we
to ensure that the products we
source are sustainable.
source are sustainable.
We constantly review our
We constantly review our
suppliers and aim to forge long-
suppliers and aim to forge long-
term partnerships which allow
term partnerships which allow
both them and us to plan for
both them and us to plan for
the future with some degree of
the future with some degree of
stability. For example we enter
stability. For example we enter
into forward contracts with our
into forward contracts with our
hop and barley farmers not only
hop and barley farmers not only
to secure our own supply but also
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 from our
trusted butcher’s that carry certification of
all aspects of food safety and traceability.
All of our eggs are from British farms
meeting the Lion Quality standards and
carrying the Lion Quality symbol. All
our fish for frying is sustainably sourced
and our two nominated fishmongers are
accredited with the Marine Stewardship
Council, who advise which breeds may be
at risk ensuring we continue to develop our
menus responsibly.
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
the aim of pushing this up to 100%.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
19
The Board of Directors as at 7 June 2013
†
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Executive Directors
Michael Turner†
Chairman
Aged 61. Joined in 1978. A Chartered
Accountant with international
experience. Initially ran the Wine
Division as Wine Director. Appointed
Marketing Director in 1988,
Managing Director in 1992, Chief
Executive in 2002 and Chairman in
2007. Chairman of the British Beer
and Pub Association 2008-2010.
Master of the Worshipful Company
of Vintners 2011-2012. Chairman of
the Nominations Committee.
PricewaterhouseCoopers. Holds a
first degree in Physics and a Masters
degree in Economics.
Richard Fuller
Sales and Personnel Director
Aged 53. 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.
Simon Emeny
Group Managing Director
Aged 47. 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 47. 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
Ian Bray
Managing Director of
The Fuller’s Beer Company
Aged 49. Appointed in 2011.
Previously European Marketing
Director of Bunge S.A., a Switzerland-
based global foods and agricultural
business. 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 42. Appointed to the Board
in 2012. Joined the Company in
2005 and appointed as Operations
20
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
John Dunsmore* #†
Lynn Fordham* #†
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 and an alumni
of Columbia Business School.
Independent
Non-Executive Directors
John Dunsmore* #†
Aged 54. Appointed in 2009. Senior
Non Executive Director. Deputy
Chairman of Genius Foods Ltd.,
Founder and CEO of The Hothouse
Investment Club. 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 50. Appointed in 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 10 years at Mobil Oil in a
number of financial and operational
roles predominantly internationally. A
graduate and Chartered Accountant.
Alastair Kerr* #
Aged 63. Appointed in 2011.
Chairman of the Remuneration
Committee. Non Executive Director
of high street clothing retailer White
Stuff Ltd, Non Executive Director
and Chairman of the Remuneration
Committee at Havelock Europa
PLC, Senior Independent Director
and Chairman of the Remuneration
Committee at Alliance Trust PLC and
Chairman of private holding company
Financial Statements
Contents
ANNUAL SUMMARY
BUSINESS REVIEW
22
26
Financial Review
Risks and Uncertainties
GOVERNANCE
28
33
34
41
Directors’ Report
Directors’ Statements
Corporate Governance Report
Directors’ Remuneration Report
FINANCIAL STATEMENTS
52
54
55
56
57
58
Independent Auditors’ Report
Group Income Statement and Group and Company
Statements of Comprehensive Income
Group and Company Balance Sheets
Group and Company Statements of Changes
in Equity
Group and Company Cash Flow Statements
Notes to the Financial Statements
ADDITIONAL INFORMATION
102 Directors and Advisers
103 Shareholders’ Information
104 Glossary
105
Five Years’ Progress
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
21
Ian Bray
Jonathon Swaine
Alastair Kerr* #
Sir James Fuller Bt.
Drilton 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
Sir James Fuller Bt.
Aged 42. Appointed in 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.
* Member of the Remuneration Committee.
# Member of the Audit Committee.
† Member of the Nominations Committee.
Marie Gracie
Company Secretary
Marie Gracie
Aged 47. 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 Review
Financial Performance
The Chairman’s Statement and Group Managing Director’s Review on pages 2 to 15 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
Managed Pubs and Hotels invested 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
2013
£51.2 million
2.6 times
£31.7 million
8%
2012
£47.8 million
2.7 times
£30.3 million
7%
+2.1%
+0.9%
+3.9%
+8.2%
+1%
-5%
+9.0%
-1%
+3%
level
+4.2%
+4.0%
+4.5%
+7.4%
+2%
-4%
+4.2%
+1%
+3%
+2%
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 and Group Managing Director’s
Review. 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.
Our Operating Results
We have grown revenue by 7% on the prior year. The majority of the growth comes from the full year impact of pub acquisitions made in
the previous year supplemented by duty-driven price rises. Our operating profits before exceptional items grew by 6% to £37.0 million
(2012: £34.9 million), with the largest contribution to growth coming from the Tenanted Inns division. EBITDA also increased by 7% to
£51.2 million (2012: £47.8 million). We acquired 4 pubs during the period and disposed of one Tenanted pub which no longer met our
criteria as well as a number of unlicensed properties.
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Financial Review continued
Finance Costs
Net finance costs before exceptional items increased to £5.3 million from £4.6 million as we incurred higher interest costs of £5.5 million
on loans and debentures, compared to £4.6 million in the prior year, from a full year of higher borrowing levels following the significant
levels of acquisitions made in the previous year. This increase was partially offset by an increase in the notional net finance income on
our pension scheme of £0.6 million compared to £0.3 million in the prior year.
Group net debt decreased marginally from £138.2 million at the start of the year to £135.6 million as we re-invested cash generated
from operations back into the business.
Our blended cost of borrowings remained constant at 4.1% due to the lack of significant changes in our borrowing levels and flat interest
rates on the variable rate portion of our debt. We expect this blended rate of interest to increase marginally to 4.2% in the coming year
as we continue to pay down our cheaper variable rate borrowings.
Exceptional Items
Net exceptional profits before tax of £3.5 million comprised £5.0 million profit on property disposals offset by £0.5 million of acquisition
costs expensed and property impairment charges net of reversals of £1.0 million. After exceptional items, profit before tax was therefore
£35.2 million (2012: £28.8 million). We further benefitted from an exceptional deferred tax credit of £1.8 million, primarily a credit of
£1.2 million relating to the reduction in the UK corporation tax rate from 24% to 23% which came into effect on 1 April 2013, with the
balance arising on property disposals and impairments. The total impact of these items meant that basic earnings per share was greater
than the adjusted figure at 52.59p (2012: 42.13p).
In the prior year the basic earnings per share were also impacted by exceptional items, with exceptional profits after tax of £1.3 million.
These comprised £3.0 million of acquisition costs, a net £0.9 million onerous lease charge, £0.2 million of non-cash losses in relation
to financial instruments which are not effective for hedge accounting purposes, £0.6 million profit on property disposal, net reversal of
property impairments of £2.0 million and an exceptional deferred tax credit of £2.8 million mostly relating to the reduction of the UK
Corporation tax rate from 26% to 24%.
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 24.3%
(2012: 26.1%) on adjusted profits. The Group’s overall effective tax rate of 16.8% was boosted by the deferred tax effect of the reduction
in UK corporation tax rates from 24% to 23% from 1 April 2013 (2012: 17.7% after the corresponding effect of the reduction in rates
from 26% to 24% from 1 April 2012).
Capital Spending, Disposals and Asset Impairment
Our capital spending of £29.6 million included the acquisition of four new pubs (exclusive of acquisition fees and stamp duty) – The Windmill,
Waterloo and The Grand Central, Brighton in September 2012 and later in November, The Crystal Palace and Huntsman, two grade II listed
properties in the centre of Bath. We invested substantially in the redevelopment of a number of our existing sites; most notably, the Hand
and Flower, located in the heart of Hammersmith, the Duke of Kent, Ealing, and the Turk’s Head, St Margaret’s, all benefitted from extensive
renovations to transform their offerings to our customers. At the start of the year we completed the remodelling of the Tokenhouse, on
Moorgate, as well as our investment in the White Swan, Stratford-upon-Avon, which now provides a 41 room boutique hotel. The Ox Row
and the Horse and Groom, both additions to our tenanted estate in 2012, received substantial renovations and were brought into our managed
estate. Capital expenditure last year was significantly higher at £74.7 million due to the acquisition of 30 new pubs and the substantial
investment in a number of these sites. Targeted capital expenditure for the coming year of £31.5 million includes £8.4 million of committed
pub acquisition costs and £2.9 million of committed corporate acquisitions. Uncommitted acquisitions are not included in this figure.
Asset disposals raised a total of £9.5 million and we recorded an exceptional gain on disposal of £5.0 million which was largely attributable
to the sale of various unlicensed properties. Our annual comprehensive impairment review resulted in a net impairment charge of
£1.0 million in respect of our property assets (2012: net write-back of prior impairments of £2.0 million).
Pensions
The accounting deficit for defined benefit pensions has decreased by £6.1 million to £13.0 million (2012: £19.1 million). This was driven
principally by the increase in the fair value of the plans’ assets from £79.1 million to £88.9 million largely driven by the greater than
expected returns on Equity investments and Corporate Bonds. These gains were offset partially by an increase in the calculated present
value of pension obligations from £98.2 million to £101.9 million, as the assumptions of long term inflation and salary growth increased
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
23
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Financial Review continued
from 3.2% to 3.3% and from 3.7% to 3.8% respectfully. 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.
Shareholders’ Return
Adjusted earnings per share was 8% higher than last year at 43.07p (2012: 39.82p). The proposed final dividend of 8.35p per 40p ‘A’
ordinary share, together with the interim dividend of 5.35p per share already paid makes a total of 13.70p and compares with a total
dividend of 12.65p last year. The total dividend per share has grown by 8% 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 £259.4 million.
During the period 411,393 ‘A’ ordinary 40p shares were repurchased into treasury for £2.9 million (2012: 1,096,154 for £7.7 million).
In addition 86,500 ‘A’ ordinary 40p shares, 696,752 ‘B’ ordinary 4p shares and 4,935 ‘C’ ordinary 40p shares were purchased for
£1.1 million by or on behalf of the Trustees of the Share Incentive Plan and the LTIP Trustees to cover future issuance (2012: 86,009 ‘A’
shares and 338,614 ‘B’ shares for £0.8 million). The average price paid was 717p per ‘A’ ordinary 40p share. The middle-market quotation
of the Company’s ordinary shares at the end of the financial year was 820p. The highest price during the year was 820p, while the lowest
was 700p. The Company’s market capitalisation at 30 March 2013 was £457.4 million (2012: £398.9 million).
Cash Flow
Cash generated from operating activities was £39.2 million (2012: £42.0 million). The £2.8 million reduction was largely due to negative
working capital flows, due to the timing of payments to our suppliers around the year end, which were offset by an increased EBITDA.
Our capital expenditure in the period at £29.6 million (2012: £74.7 million) was much lower than last year which included the acquisition
of 30 pubs and 18 major refurbishments. The net cash outflow from investing activities, after net income from disposals of £9.5 million
(2012: £1.9 million), was £20.1 million (2012: £72.8 million). Net debt decreased marginally from £138.2 million at the start of the
year to £135.6 million as we re-invested cash generated from operations back into the business. EBITDA increased by 7% to £51.2
million (2012: £47.8 million), bringing our pro forma net debt to EBITDA ratio to 2.6 times (2012: 2.7 times). This level of debt allows
us continued flexibility to invest in future opportunities as they arise.
Financial Position – Bank facilities
Our total committed bank facilities remained at £150.0 million at the year end of which £113.0 million was drawn (2012: £115.5 million)
and £37.0 million was available (2012: £34.5 million). We utilised cash generated during the year to fund the acquisition of four pubs
as well as our annual capital expenditure programme whilst maintaining headroom at an appropriate level. We maintained our level of
hedged bank borrowings at £85.0 million of which £65.0 million is swapped at a blended interest rate of 1.8% (excluding bank margins)
and £20.0 million is subject to a cap of 4.0%. In December 2012 we entered into a further interest rate swap agreement for £20.0 million
at 2.3%. The swap, due to commence in 2015, will allow us to continue to borrow at a fixed interest rate until 2022.
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 £37.0 million of undrawn committed loan facilities at the year end with no repayment obligations for more than two 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
37.0
–
–
44.5
The Group is able to operate with negative working capital – trade and other payables were £12.5 million greater than the aggregate of
inventories and trade and other receivables at the year end (2012: £18.4 million greater).
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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 80% of the Group’s gross borrowings were
at fixed or capped rates and the fixed rates ranged between 1.2% and 2.5% (excluding bank margin) on bank borrowings and then between
6.0% and 10.7% on preference shares and debentures.
Committed bank facility (net of arrangement fees)
Debenture stock
Preference shares
Total borrowings
Total drawn Amount fixed/hedged
£ million
85.0
25.8
1.6
112.4
£ million
112.4
25.8
1.6
139.8
Fixed/hedged
%
76%
100%
100%
80%
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 risks include 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 15 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. We believe our financial position is strong and we have always borrowed prudently. We continue to
be well placed going forward and have £150.0 million of bank facilities in place until May 2015 of which more than £30.0 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
7 June 2013
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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%. In the
recent budget the Chancellor announced the abolition of the duty escalator on beer. Whilst this was a positive step we recognise that
this remains a widely debated topic and an area that is open to future revision of government policy. In addition duty on other alcohol
continues to rise annually at 2% above inflation. There is a risk that continued inflation busting duty increases may depress sales or further
reduce margins in our industry.
In March 2013 the government also announced that it intends to introduce laws to set a minimum price per unit of alcohol by 2014 as
well as a ban on Supermarkets from offering ‘multi-buy’ discounts. Similar attempts to introduce pricing measures in Scotland have so
far been unsuccessful.
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. In April 2013 the Business Secretary announced a consultation for a mandatory
code of practice for the industry as well as the appointment of an independent adjudicator. The adjudicator will oversee practices within
the industry with a view to transferring £100 million a year of value from pub companies to tenants. Currently the industry maintains a
voluntary code of practice which is regularly reviewed and updated in consultation with numerous pub company’s and industry groups.
To ensure the transparency and openness of our Tied agreements, our own Tenanted Code of Practice, which is accredited by the British
Institute of Innkeeping, is currently being aligned to the most recent industry code.
Current proposals are for the new mandatory code of practice to apply only to companies with over 500 pubs however there remains
the risk that this threshold will be revised and may be imposed upon us. Such events would have a significant impact for a number of
our customers and affect the profitability of our business. There continues to remain the risk that eventually the authorities will further
interfere with the existing arrangements resulting in the abolition of the Beer Tie. This would necessitate changes to our business model,
with higher property rents and lower prices for the supply of drinks being charged.
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 of £13 million 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 period ended 30 March 2013. The Group has agreed with the trustees to review
this additional contribution in July 2013 and it is expected that the value of the payment will increase.
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
in real terms pay reductions. 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.
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Risks and Uncertainties continued
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.
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 with significant consideration given to the source and quality of the produce. The majority of our food is provided fresh and
sourced from within the UK. We maintain close relationships with all our suppliers and where appropriate put in place long term supply
contracts. Our 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 monitor the credit worthiness of all our suppliers as well as
continually review contingency plans in the event of a failure in supply.
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 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 on-going 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 facilities and controls
in place to ensure that in the event of an issue normal operation would be restored quickly. These include a formal Disaster Recovery
Plan, on-line replication of systems and data to a third party recovery facility and external support for hardware and software.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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Directors’ Report
The Directors present their annual report together with the audited financial statements for the 52 weeks ended 30 March 2013. The
narrative pages throughout the report constitute the Company’s management report as required under the FCA’s rules.
A) BUSINESS ACTIVITIES AND DEVELOPMENT
The Chairman’s Statement and Group Managing Director’s Review on pages 2 to 15 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 5.35 pence on the 40p ‘A’ and ‘C’ ordinary shares and 0.535 pence on the 4p ‘B’ ordinary
shares on 2 January 2013. The Directors now recommend a final dividend of 8.35 pence on the 40p ‘A’ and ‘C’ ordinary shares and
0.835 pence on the 4p ‘B’ ordinary shares. This makes a total of 13.70 pence on the 40p ‘A’ and ‘C’ ordinary shares and 1.37 pence
on the 4p ‘B’ ordinary shares for the year.
The total proposed final dividend on ordinary shares will be £4,651,000 which together with the 2013 interim dividend paid of
£2,982,000 and the £120,000 of cumulative preference dividends paid will make total dividends of £7,753,000.
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. Simon Emeny, Lynn Fordham and Sir James Fuller
retire by rotation at the Annual General Meeting and offer themselves for re-election. Simon Emeny is an Executive Director and has a
rolling service contract of 12 months duration. Lynn Fordham and Sir James Fuller are Non-Executive Directors who do not have service
contracts but have been invited to stay on the Board until January 2015 and May 2016 respectively.
Directors’ Interests
Details of Directors’ interests in the share capital of the Company up to 28 May 2013 are given overleaf. Details of Directors’ share
options and allocations under the Long Term Incentive Plan (“LTIP”) up to 28 May 2013 are given in the Directors’ Remuneration Report
on pages 41 to 51.
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. However, these
guidelines are currently under review and it is expected that they will be updated within the next few months.
Related Party Transactions
Details of related party transactions involving Directors are given in note 30 to the financial statements.
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Directors’ Report continued
Directors’ Shareholdings
Share class
30 March 2013 and 28 May 2013
(or leaving date)
31 March 2012
(or appointment date)
Beneficial
Non Beneficial
Beneficial
Non Beneficial
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray
Jonathon Swaine
‘A’ ordinary 40p
‘B’ ordinary 4p
‘C’ ordinary 40p
2nd preference £1
‘A’ ordinary 40p
‘B’ ordinary 4p
‘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
Sir James Fuller
‘A’ ordinary 40p
‘B’ ordinary 4p
‘C’ ordinary 40p
Lynn Fordham
‘A’ ordinary 40p
Alastair Kerr
‘A’ ordinary 40p
Nigel Atkinson1
‘A’ ordinary 40p
1Retired 18 July 2012
251,158
2,775,750
624,260
71
93,931
623,951
40,191
84,090
–
–
–
–
–
–
–
–
389,338
4,675,652
1,016,570
22,993
139,880
3,490,974
750,517
40,192
88,732
526,655
27,856
13,440
–
–
–
–
7,720
3,322,540
25,000
303
500,000
10,935,015
–
–
9,698
3,398,576
25,000
303
500,000
10,935,015
–
–
1,647
12,753
41,804
2,328
88,942
9,143,952
2,691,313
3,182
2,941
2,750
–
–
–
–
–
–
–
–
–
–
1,250
8,635
18,789
2,328
88,942
9,143,952
2,691,313
3,182
2,941
2,750
–
–
–
–
–
–
–
–
–
–
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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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 further improving its communications with all employees (and pensioners), thus
encouraging a common awareness of the financial and economic factors affecting the Group. Increasingly, the Company’s intranet and
e-mail systems facilitate this, and we will continue to search for ways to exploit these media to best effect. 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, a Share Incentive Plan and a variety of
performance related bonus arrangements, which serve to encourage staff interest in the Group’s performance. Staff throughout the
Group also benefit from a staff discount scheme.
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 £103,000 (2012: £95,000). 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 to 19.
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 30 March 2013 for the Group and
Company was 34 days (31 March 2012: 46 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 104.
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 26 to the financial statements.
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.
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Directors’ Report continued
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
28 May
2013
9.00
As at
30 March
2013
8.82
Name
Black Rock, Inc
Aberdeen Asset
Management PLC
and its subsidiaries
Ameriprise Financial, Inc
Kames Capital and
associated entities
Dunarden Limited
7.80
6.66
4.49
3.04
7.80
6.88
4.49
3.04
% ‘B’ ordinary shares of 4p each
As at 30 March 2013
and
28 May 2013
% ‘C’ ordinary shares of 40p each
As at 30 March 2013
and
28 May 2013
Sir J H F, Messrs A F
and E F Fuller
16.26
Sir J H F, Messrs A F
and E F Fuller
Mr T J M Turner
Mr H D Williams
Mrs J Fuller
Fuller Family Members Trust
Miss S M Turner
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
Miss S M Turner
7.66
5.72
4.62
4.59
3.60
3.52
3.48
3.22
3.22
30.61
6.12
5.97
4.24
3.96
5.02
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 27 June
2013, at the back of which is the Notice of Meeting.
Purchase of Own Shares
At the Annual General Meeting of the Company held on 18 July 2012, the Company was given authority to purchase up to 4,833,753
‘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 411,393 40p ‘A’ ordinary shares at a total cost of £2,932,000. Of these, 260,289
shares, with a value of £1,742,700, were transferred to the Company’s Long Term Incentive Plan (“LTIP”) Trustee on 20 July 2012. These
share purchases represented 0.72% of the maximum issued ordinary share capital (1.23% of the Company’s issued ‘A’ ordinary share
capital). Taking into account all the buybacks since December 2001, 18.40% of the Company’s issued ordinary share capital (31.37%
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 86,500 40p ‘A’ ordinary shares at a total cost of £615,020
for the SIP and 696,752 4p ‘B’ ordinary shares at a total cost of £521,101 and 4,935 ‘C’ ordinary shares at a total cost of £35,811 for
the LTIP.
During the year 144,172 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 £593,898. A total of 1,205,644 40p ‘A’ ordinary shares at 28 May 2013 are currently held as treasury shares.
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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.
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
7 June 2013
Fuller, Smith & Turner P.L.C.
Griffin Brewery
Chiswick Lane South
Chiswick, London W4 2QB
Registered number: 241882
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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, the Chairman’s Statement, the Group Managing Director’s Review and the Financial Review, include a fair
review of the development and performance of the business and the position of the Group and Company taken as a whole, together
with a description of the principal risks and uncertainties that they face.
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.
On behalf of the Board
Michael Turner
Chairman
7 June 2013
James Douglas
Finance Director
7 June 2013
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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 and we announced in April that Simon Emeny will become Chief Executive in
July and I will continue as Chairman but in a Non-Executive capacity. These changes are very much part of our long term succession plan.
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 advisers. 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. I am satisfied that our Board is comprised of the right individuals who have the skills required to run this type of business
and to respond to the challenges presented by the continually changing environment in which we operate.
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 last year
we took the opportunity to clarify 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. I am aware that larger PLCs
are required to seek external assistance with this process but do not believe that such a process would be likely to add extra value as
long as our own process is robust. I believe that we have that robustness and that the process encourages a healthy debate on things
that could be improved.”
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 was not an independent Non-Executive Director, also sat on those Committees until July
2012 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) for that part of the financial year. Having considered this matter carefully, the Board is
satisfied that the deliberations of both Committees remained independent during that period. Shareholders should note that Nigel
Atkinson, although not defined as being independent under the Code, never worked for the Company as a full time employee, being the
former Managing Director of Gales, which the Company acquired in 2005. He was valued for his independent character and judgement
and it is the Directors’ opinion that his presence at both Committees added considerable value. Nigel retired 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 6 to 15. 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.
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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 fulfil 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. From July 2013 the
Executive Committee will be Chaired by Simon Emeny rather than Michael Turner.
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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 faced by the business, the continuation of dialogue on strategic issues, the discussion of
Board appointments when appropriate, succession planning, and the provision of support to the Chairman and 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.
Board and Committee
Meeting Attendance
for 2012/2013
Total Number of Formal Meetings
Main Board
Meetings
6
Executive Board
Meetings
11
Audit
Committee
4
Remuneration
Committee
4
Executive Directors
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray
Jonathon Swaine1
Non-Executive Directors
John Dunsmore
Sir James Fuller
Lynn Fordham
Alastair Kerr
Nigel Atkinson2
Audit
Committee
Remuneration
Committee
Committee
Memberships
Nom
Main Board
Meetings
6/6
6/6
6/6
6/6
6/6
5/6
Executive Board
Meetings
10/11
11/11
11/11
11/11
11/11
10/11
Aud, Rem, Nom
Aud, Rem, Nom
Aud, Rem
Aud, Rem
6/6
6/6
6/6
6/6
2/2
4/4
4/4
4/4
1/1
4/4
4/4
4/4
2/2
1Missed meetings whilst attending Senior Executive Programme at Columbia Business School. 2Retired 18 July 2012
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 fulfil
his role. In the past year Michael Turner has been supported by Simon Emeny who was responsible for all operational aspects of the
Group, in his role as Group Managing Director. With effect from 1 July 2013 Simon Emeny will become Chief Executive and Michael
Turner will continue as Chairman but in a Non-Executive capacity. A new schedule of responsibilities for the Chairman and the Chief
Executive which will come into operation from 1 July 2013 has been presented to and approved by the Board. Apart from this and Nigel
Atkinson’s retirement after last year’s AGM there have been no changes to the Board.
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Corporate Governance Report continued
Currently the Company has four 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 three Non-Executive Directors, all 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. 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 or Group Managing Director 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.
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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 did not meet during the year as no appointments were made.
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 are reissued annually 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 and a report from the Company’s Retail Audit Manager. 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.
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 £22,000. 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.
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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 the 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.
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. Management 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. During the
financial year audits were performed on all purchase order and payment systems, two of which had recently been implemented. To
ensure the robustness of the audits performed, management enlisted the support of an external specialist. Among the other areas reviewed
and audited were procedures surrounding tax compliance, the Bribery Act and head office cash reconciliations.
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 encourages all Directors to be present.
By order of the Board
Marie Gracie, FCIS
Company Secretary
7 June 2013
Griffin Brewery
Chiswick Lane South
Chiswick, London W4 2QB
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Directors’ Remuneration Report
The principal purpose of this report for the 52 weeks ended 30 March 2013 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 45 to 50 and in the description of non-cash emoluments in section B) and in the information about options and the Long Term
Incentive Plan (“LTIP”) outlined in sections E) and F), is subject to audit.
An ordinary resolution will be put to shareholders at the AGM on 25 July 2013 inviting them to consider and approve this report.
Remuneration Committee
The Remuneration Committee members are currently Alastair Kerr (Chairman), John Dunsmore 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. During the year the Committee met with a number of potential remuneration
advisers and selected New Bridge Street to advise the Committee. None of these advisors have any other connection with the Company.
New Bridge Street have conducted a review of the incentive schemes on offer to the Executive team which has included a review of the
more significant share option schemes. As a result it is not intended to renew the Senior Executive Share Option Scheme when it
expires later this year, and it is proposed to recommend some changes to the LTIP scheme to shareholders at the forthcoming Annual
General Meeting.
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 and as from 1 July 2013 Simon Emeny may also be
invited to attend the Committee meetings for the same purpose. 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 again given consideration to whether, in the event of misstatement or misconduct, there should be clawback provisions
within the rules of the LTIP and bonus plan. Clawback provisions are currently being considered by the Committee. 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 2013
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Risk in relation to Remuneration
The Committee believes that the Company’s remuneration policy is consistent with its risk management policy, in that existing
remuneration structures do not encourage 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. Ian Bray and Jonathon Swaine 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 has 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.
Service Contract Table
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray
Jonathon Swaine
Non-Executive Directors’ Arrangements
Michael Turner
John Dunsmore
Sir James Fuller
Lynn Fordham
Alastair Kerr
Date of contract
1 June 1997
13 January 1999
31 July 2007
8 December 2009
12 December 2011
20 March 2012
Notice period
Contract ends 30 June 2013
12 months
12 months
12 months
12 months
12 months
Date of letter of appointment
or reappointment
4 April 2013
15 November 2011
1 June 2010
15 November 2011
19 July 2011
Term expires
Appointment starts on 1 July 2013
and expires in June 2016
January 2015
May 2016
January 2015
August 2015
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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:
Audited
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray
Jonathon Swaine
John Dunsmore
Sir James Fuller
Lynn Fordham
Alastair Kerr
Nigel Atkinson2
Total
Basic
salary
£000
399
332
264
167
204
175
–
–
–
–
–
1,541
Car
Fees &
allowance Consultancy
£000
–
–
–
–
–
–
53
41
54
51
20
219
£000
22
19
19
19
19
19
–
–
–
–
–
117
Benefits
in kind
£000
3
3
3
3
1
3
–
1
1
1
3
22
Bonus
£000
125
104
83
32
38
52
–
–
–
–
–
434
Total
2013
£000
549
458
369
221
262
249
53
42
55
52
23
2,333
Pension1
2013
£000
–
34
46
–
35
33
–
–
–
–
–
148
Defined
contribution
pension
2012
£000
–
33
42
–
11
4
–
–
–
–
–
90
Total
2012
£000
576
478
387
266
106
57
54
41
51
31
48
2,095
1This includes all payments as set out on page 44 in section D) 2Nigel Atkinson retired on 18 July 2012.
Simon’s Emeny’s basic salary will increase to £375,000 per annum on 1 July 2013 when he becomes Chief Executive. Michael Turner’s
basic salary will reduce to £250,000 per annum when he moves from Executive to Non-Executive status on 1 July 2013.
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 on-going 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. 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 2013
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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 2012/2013 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 31% of salary, Ian Bray and Richard
Fuller each earned a bonus of 19% of salary and Jonathon Swaine earned a bonus of 30% of 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 to him for investing as part of his pension planning.
James Douglas is a member of the defined contribution Company pension plan, but made no contribution during the financial year. He
is paid a contribution of 17.5% of his salary by the Company which he is required to use as part of his overall retirement planning. He is
also required to contribute 8% of his net salary to his pension or another investment vehicle.
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 net 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.
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 and so accrues no further benefit.
44
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Directors’ Remuneration Report continued
Listing Rules Requirement
Audited
Simon Emeny
Richard Fuller
Increase in
accrued pension
(allowing for inflation)1
£
2,989
3,034
Total accrued pension
at end of period2
£
23,747
91,544
Transfer value
of increase
(net of member
contributions)3
£
55,976
105,463
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 year or 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.
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.
Audited
Simon Emeny
Richard Fuller
Increase in
accrued pension1
£
3,551
5,430
Total accrued pension
at end of period2
£
23,747
91,544
Transfer value
at start of period3
£
282,346
1,502,538
Transfer value
at end of period4
£
376,238
1,784,818
Transfer value
equivalent of increase
(net of member
contributions)5
£
93,892
282,280
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.
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Directors’ Remuneration Report continued
E) 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 F). 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 has reviewed this scheme and the other incentive schemes in light of the UK Corporate Governance Code
and at present does 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 vesting occurs
if the Adjusted EPS growth fails to exceed the RPI by at least 9% over the period. 40% of the award vests if the target is hit, and there is
a sliding scale above that point. 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. The Remuneration Committee feel that in a low growth industry with underlying long-term freehold
property growth not being included in the calculation, 9% over inflation is a testing target, and one that merits a 40% vesting. The
Remuneration Committee further believes that the 40% vesting threshold at 9% in excess of inflation is triggering LTIPs at a value that is
still below the level being employed by many other companies and that it is the value of the vesting that should be considered and not
the percentage. 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.
As explained earlier, it is proposed to amend the LTIP rules to increase the potential maximum LTIP allocations from 100% of salary to
110% of salary, recognising that the Senior Share Option Scheme will not be renewed. This requires a rule change to be put to
shareholders at the forthcoming AGM.
Under the LTIP, the rules allow for discretionary annual awards of ‘A’ (listed), ‘B’ (unlisted) and ‘C’ (unlisted, convertible to ‘A’) ordinary
shares up to a value representing 100% of a participant’s salary in any one year. 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:
Audited
Date
17 July 2006
15 July 2009
12 July 2010
30 November 2010
20 July 2011
12 July 2012
‘A’ ordinary shares ‘B’ ordinary shares
£
0.50
0.48
0.58
0.63
0.71
0.71
£
4.98
4.80
5.78
6.30
7.09
7.05
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.
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Directors’ Remuneration Report continued
Directors’ Long Term Incentive Plan Allocations
Audited
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray
Total held at
Original
awards
Granted
vested
31 March 2012 during year
155,781
(47,533)
45,390
389,458 113,475 (118,833)
Matching
awards
vested
(8,031)
(20,080)
Lapsed
during year
(4,133)
(10,333)
Total held at
30 March 2013
141,474
353,687
Monetary
value of vest*
£000
393
98
‘A’ ordinary 40p
‘B’ ordinary 4p
‘A’ ordinary 40p
‘B’ ordinary 4p
120,690
301,727
37,787
94,468
(36,493)
(91,233)
(6,425)
(16,063)
(3,173)
(7,933)
‘A’ ordinary 40p
‘B’ ordinary 4p
97,835
244,590
30,070
75,177
(31,740)
(79,350)
–
–
(2,760)
(6,900)
‘A’ ordinary 40p
‘B’ ordinary 4p
48,155
120,389
14,297
35,744
(10,035)
(25,088)
(2,650)
(6,626)
(873)
(2,182)
‘A’ ordinary 40p
‘B’ ordinary 4p
–
–
17,276
43,191
–
–
–
–
–
–
112,386
280,966
93,405
233,517
48,894
122,237
17,276
43,191
28,897
72,245
303
76
224
56
90
22
–
–
71
18
Jonathon Swaine
‘A’ ordinary 40p
‘B’ ordinary 4p
24,749
61,875
14,893
37,234
(7,817)
(19,544)
(2,248)
(5,621)
(680)
(1,699)
* The market price of ‘A’ shares on 19 July 2012 for the LTIP 12 awards vested was £7.05. Thus we assume a “market” price for ‘B’ shares of £0.705. The market price of
‘A’ shares on 26 July 2012 for the LITP9 Matching awards vested was £7.15. Thus we assume a “market” price for ‘B’ shares of £0.715.The table above excludes vested
shares thathadbeen redeposited with the LTIP Trust in order to obtain the matching grant.
Directors’ LTIP Grants Held at 30 March 2013
Audited
Grant
Grant date
Start of performance period
End of performance period
Michael Turner
Simon Emeny
James Douglas
Richard Fuller
Ian Bray
Jonathon Swaine
‘A’ ordinary 40p
‘B’ ordinary 4p
‘A’ ordinary 40p
‘B’ ordinary 4p
‘A’ ordinary 40p
‘B’ ordinary 4p
‘A’ ordinary 40p
‘B’ ordinary 4p
‘A’ ordinary 40p
‘B’ ordinary 4p
‘A’ ordinary 40p
‘B’ ordinary 4p
LTIP 13
12 July/30 Nov 2010
April 2010
March 2013
51,966
129,916
LTIP 14
20 July 2011
April 2011
March 2014
44,118
110,296
LTIP 15
12 July 2012
April 2012
March 2015
45,390
113,475
38,041
95,102
34,224
85,562
20,761
51,903
–
–
36,558
91,396
29,111
72,778
13,836
34,590
–
–
7,612
19,031
6,392
15,980
37,787
94,468
30,070
75,177
14,297
35,744
17,276
43,191
14,893
37,234
Total at
30 March
2013
141,474
353,687
112,386
280,966
93,405
233,517
48,894
122,237
17,276
43,191
28,897
72,245
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Directors’ Remuneration Report continued
F) 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 9% 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 9% 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. This scheme expires in 2013 and it is not intended to be renewed
although a final grant is proposed in early July 2013. The Committee feels that a simpler approach to Executive remuneration can be
achieved by dispensing with the scheme and raising the level of LTIP allocations accordingly from 2014. Further details of the proposals
are given in the circular to shareholders.
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 a 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.
Details of all options granted to Executive Directors are given in the table on pages 49 and 50 and details of all options granted are in
note 28.
48
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Directors’ Remuneration Report continued
Directors’ Share Options
Audited
At 31 March
Michael Turner
2012 Exercised
14,150 (14,150)
–
11,660
–
10,040
–
5,589
–
13,011
–
1,966
–
12,916
–
11,245
–
1,997
–
1,746
–
11,029
–
–
95,349 (14,150)
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 18/7/16
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
7.05 12/7/12 12/7/15 11/7/22
date Type
A
U
U
U
U
S
U
U
S
U
U
U
Cost of options
under SAYE
schemes
£
–
–
–
–
–
6,507
–
–
9,266
–
–
–
1/9/08
1/9/10
1/9/15
1/9/13
Price at Notional
gain on
exercise
exercise
date
£
£
7.12 70,750
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30 March
Issued
Lapsed
2013
–
–
–
– 11,660
–
– 10,040
–
–
–
5,589
– 13,011
–
–
–
1,966
– 12,916
–
– 11,245
–
–
–
1,997
–
–
1,746
–
– 11,029
– 11,347 11,347
– 11,347 92,546
Simon Emeny
James Douglas
9,100
2,007
4,285
9,990
1,180
9,916
8,650
2,530
859
9,139
–
57,656
2,391
8,625
7,508
1,939
1,047
7,277
–
28,787
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,100
–
2,007
–
4,285
–
9,990
–
1,180
–
9,916
–
8,650
–
2,530
–
859
–
9,139
9,446
9,446
9,446 67,102
–
2,391
–
8,625
–
7,508
–
1,939
–
1,047
–
7,277
7,517
7,517
7,517 36,304
1/9/13
1/9/08
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
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
7.05 12/7/12 12/7/15 11/7/22
1/9/10
1/9/15
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
7.05 12/7/12 12/7/15 11/7/22
1/9/10
1/9/13
U
–
U
–
U
–
U
–
S
3,906
U
–
–
U
S 11,739
–
U
–
U
–
U
U
U
U
S
U
U
U
–
–
–
8,997
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
A: Approved Executive Share Option Scheme; S: Savings Related Share Option Scheme; U: Unapproved Senior Executive Share Option Scheme
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
49
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S
S
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N
S
U
B
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C
N
A
N
R
E
V
O
G
S
T
N
E
M
E
T
A
T
S
L
A
I
C
N
A
N
F
I
I
N
O
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A
M
R
O
F
N
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D
D
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Directors’ Remuneration Report continued
Directors’ Share Options continued
Audited
Richard Fuller
At 31 March
2012 Exercised
–
–
–
–
–
–
–
–
–
–
9,532
1,966
801
4,321
869
665
4,612
563
–
23,329
Lapsed
-
–
–
–
–
–
–
–
–
–
Expiry
Date of
5/7/04
1/9/08
1/9/09
Date from
which
grant exercisable
5/7/07
1/9/13
1/9/14
At Exercise
price
£
2.62
5/7/14
3.31
1/3/14
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
5.47 1/09/11 1/09/14 1/03/15
7.05 12/07/12 12/07/15 11/07/22
date Type
A
S
S
U
A
S
U
S
U
1/9/10
1/9/15
Cost of options
under SAYE
schemes
£
–
6,507
3,108
–
–
3,086
–
3,080
–
30 March
Granted
2013
–
9,532
–
1,966
–
801
–
4,321
–
869
–
665
–
4,612
–
563
4,765
4,765
4,765 28,094
Price at Notional
exercise
gain on
date
exercise
£
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Ian Bray
–
–
–
Jonathon Swaine 1,649
–
–
1,649
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,503
4,255
5,758
–
709
4,255
4,964
1,503
4,255
5,758
1,649
709
4,255
6,613
Total
206,770 (14,150)
– 43,797 236,417
7.05 12/07/12 12/07/15 11/07/22
7.05 12/07/12 12/07/15 11/07/22
5.47 1/09/11 01/09/14 1/03/15
7.05 12/07/12 12/07/15 11/07/22
7.05 12/07/12 12/07/15 11/07/22
U
A
S
U
A
–
–
9,020
–
–
–
–
–
–
–
–
–
–
–
–
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 (£)
Audited
Exercise Price (£)
2.12
2.62
3.67
4.98
7.51
3.31
4.05
4.80
3.88
5.78
4.64
6.30
7.09
5.47
7.05
Total
At 30 March
2013
–
9,532
20,760
12,047
9,874
5,112
25,392
31,457
801
32,593
7,131
3,652
32,057
2,212
43,797
236,417
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
2,212
–
206,770
The market price of the shares at Thursday 28 March 2013 was £8.20 and the range during the year was from £7.00 to £8.20.
50
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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 retired in July 2012), 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. 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
160
140
120
100
80
60
40
20
0
FULLER, SMITH & TURNER P.L.C.
FTSE ALL-SHARE TRAVEL & LEISURE INDEX (rebased)
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
SOURCE: THOMSON DATASTREAM
On behalf of the Board
Alastair Kerr
Chairman, Remuneration Committee
7 June 2013
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
51
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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 30 March 2013 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 31. 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 30 March 2013
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.
52
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Independent Auditors’ Report continued
to the Members of Fuller, Smith & Turner P.L.C.
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.
Eamonn McGrath (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
7 June 2013
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
53
Group Income Statement
for the 52 weeks ended 30 March 2013
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 30 March 2013
Exceptional
Before
items
exceptional items
£m
£m
–
271.5
(1.5)
(234.5)
(1.5)
37.0
5.0
–
–
0.6
–
(5.9)
3.5
31.7
1.8
(7.7)
Total
£m
271.5
(236.0)
35.5
5.0
0.6
(5.9)
35.2
(5.9)
Note
3
4, 5
5
6
7
5, 8
52 weeks ended 31 March 2012
Before
exceptional items
£m
253.0
(218.1)
34.9
–
0.3
(4.9)
30.3
(7.9)
Exceptional
items
£m
–
(1.9)
(1.9)
0.6
–
(0.2)
(1.5)
2.8
Total
£m
253.0
(220.0)
33.0
0.6
0.3
(5.1)
28.8
(5.1)
Earnings per share per 40p ‘A’ and ‘C’ ordinary share
Basic
Diluted
Adjusted
Diluted adjusted
9
9
9
9
Earnings per share per 4p ‘B’ ordinary share
Basic
Diluted
Adjusted
Diluted adjusted
9
9
9
9
5.3
29.3
2013
Pence
52.59
52.09
2013
Pence
5.26
5.21
24.0
2013
Pence
43.07
42.67
2013
Pence
4.31
4.27
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
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 30 March 2013
Group
Profit for the year
Net losses on valuation of financial assets and liabilities (note 26)
Net actuarial gains/(losses) on pension scheme (note 23)
Tax on components of other comprehensive income (note 8)
Other comprehensive income/(loss) 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
30 March
2013
£m
29.3
(0.9)
5.0
(1.2)
2.9
32.2
Company
Profit for the year
Net losses on valuation of financial assets and liabilities (note 26)
Net actuarial gains/(losses) on pension scheme (note 23)
Tax on components of other comprehensive income
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year, net of tax, attributable to equity shareholders of the Parent Company
£m
26.4
(0.9)
5.0
(1.2)
2.9
29.3
52 weeks ended
31 March
2012
£m
23.7
(2.6)
(13.9)
3.7
(12.8)
10.9
£m
21.5
(2.6)
(13.9)
3.7
(12.8)
8.7
54
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Group and Company Balance Sheets
30 March 2013
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
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 7 June 2013.
M J Turner, FCA
Chairman
Note
11
12
13
15
16
25
18
19
22
20
21
25
22
14
23
25
25
27
27
27
27
27
Group
2013
£m
30.1
414.8
4.2
0.4
–
6.1
455.6
10.1
18.3
4.3
32.7
0.6
40.9
3.8
1.0
45.7
139.9
2.4
13.0
26.7
1.8
183.8
259.4
22.8
4.8
3.1
(8.7)
(1.8)
239.2
259.4
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
Company
2013
£m
Company
2012
£m
6.2
414.8
4.2
0.4
91.8
6.0
523.4
10.1
18.3
4.3
32.7
0.6
133.2
3.8
1.0
138.0
139.9
2.4
13.0
26.7
1.8
183.8
234.9
22.8
4.8
3.1
(8.7)
(1.8)
214.7
234.9
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
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
55
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Group and Company Statements of Changes in Equity
for the 52 weeks ended 30 March 2013
Group
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
Profit for the year
Other comprehensive (loss)/income 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 30 March 2013
Company
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
At 31 March 2012
Profit for the year
Other comprehensive (loss)/income 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
At 30 March 2013
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
(3.1)
–
–
–
(8.5)
3.3
–
–
–
(8.3)
Hedging
reserve
£m
0.9
–
(2.0)
(2.0)
–
–
–
–
–
(1.1)
–
–
–
–
–
–
–
–
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
–
–
–
(4.0)
3.6
–
–
–
(8.7)
£m
(3.1)
–
–
–
(8.5)
3.3
–
–
–
(8.3)
–
–
–
(4.0)
3.6
–
–
–
(8.7)
–
(0.7)
(0.7)
–
–
–
–
–
(1.8)
£m
0.9
–
(2.0)
(2.0)
–
–
–
–
–
(1.1)
–
(0.7)
(0.7)
–
–
–
(1.8)
Retained
earnings
£m
207.7
23.7
(10.8)
12.9
–
(2.3)
(6.8)
1.9
0.6
214.0
29.3
3.6
32.9
–
(3.1)
(7.2)
1.9
0.7
239.2
£m
188.3
21.5
(10.8)
10.7
–
(2.3)
(6.8)
1.9
0.6
192.4
26.4
3.6
30.0
–
(3.1)
(7.2)
1.9
0.7
214.7
Total
£m
236.2
23.7
(12.8)
10.9
(8.5)
1.0
(6.8)
1.9
0.6
235.3
29.3
2.9
32.2
(4.0)
0.5
(7.2)
1.9
0.7
259.4
£m
216.8
21.5
(12.8)
8.7
(8.5)
1.0
(6.8)
1.9
0.6
213.7
26.4
2.9
29.3
(4.0)
0.5
(7.2)
1.9
0.7
234.9
56
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Group and Company Cash Flow Statements
for the 52 weeks ended 30 March 2013
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
Cost of refinancing and associated hedging
Net cash (outflow)/inflow 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
30 March
2013
£m
35.2
5.3
(3.5)
14.2
–
51.2
(0.5)
1.9
(0.2)
0.4
(4.0)
(1.5)
47.3
(8.1)
39.2
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
Company
52 weeks ended
30 March
2013
£m
32.6
8.4
(4.0)
14.2
–
51.2
(0.5)
1.9
(0.2)
0.4
(4.0)
(1.5)
47.3
(8.1)
39.2
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
(11.4)
(18.2)
9.5
(20.1)
(4.0)
0.6
(5.3)
(0.1)
(7.2)
–
(2.5)
(0.2)
(18.7)
0.4
3.9
4.3
(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
(11.4)
(18.2)
9.5
(20.1)
(4.0)
0.6
(5.3)
(0.1)
(7.2)
–
(2.5)
(0.2)
(18.7)
0.4
3.9
4.3
(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
Note
5
4
28
5
17
27
10
10
22
22
22
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
57
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 30 March 2013 were
authorised for issue by the Board of Directors on 7 June 2013 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 30 March 2013, 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 £26.4 million (2012:
£21.5 million). There was no dividend from subsidiary companies during the current year (2012: 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
30 March 2013.
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 ofNew Standards and Interpretations:
The following new and amended IFRS and IFRIC interpretations are effective for the Group’s period commencing 1 April 2012:
• IAS 12 Income Taxes – Recovery of Underlying Assets
• IFRS 7 Financial Instruments: Disclosure (amendments)
1 January 2012
1 July 2011
These new Standards have not had a significant impact on the accounting policies, financial position or performance of the Group.
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 30 March 2013 (2012: 52 weeks ended 31 March 2012).
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.
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.
58
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
1. Authorisation of Financial Statements and Accounting Policies continued
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 2013
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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.
60
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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.
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.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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Notes to the Financial Statements continued
1. Authorisation of Financial Statements and Accounting Policies continued
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 profits before tax 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.
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.
62
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
1. Authorisation of Financial Statements and Accounting Policies continued
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.
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).
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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Notes to the Financial Statements continued
1. Authorisation of Financial Statements and Accounting Policies continued
Share-Based Payments continued
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.
New Standards and Interpretations Issued But Not Yet Applied
The IASB and IFRIC have 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 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:
64
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
1. Authorisation of Financial Statements and Accounting Policies continued
International Accounting Standards
• IAS 1 Financial Statement Presentation – Presentation of Items of Other Comprehensive Income
• IAS 27 Separate Financial Statements (as revised in 2011)
• IAS 28 Investment in Associates and Joint Ventures (as revised in 2011)
• IAS 32 Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32
• IFRS 1 Government Loans –Amendments to IFRS 1
• IFRS 7 Disclosures –Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7
• IFRS 9 Financial Instruments: Classification and Measurement
• IFRS 10 Consolidation Financial Statements
• IFRS 10, IFRS 12 and IAS 27 Investments Entities – Amendments to IFRS 10, IFRS 12 and IAS 27
• IFRS 11 Joint Arrangements
• IFRS 12 Disclosure of Involvement with Other Entities
• IFRS 13 Fair Value Measurement
• Improvements to IFRS 2009-2011 cycle
* Latest date of adoption.
Effective date
1 July 2012
1 January 2013
1 January 2013
1 January 2014
1 January 2013
1 January 2013
1 January 2015
1 January 2014
1 January 2014
*
1 January 2014
1 January 2014
1 January 2013
1 January 2013
The following change in standard has not been early adopted but it is believed by the Directors that it 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 future impact of this change
to the Group's reported profit in the period is set out in note 23.
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.
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.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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Notes to the Financial Statements continued
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 15 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 30 March 2013
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
170.1
–
170.1
19.4
30.8
–
30.8
12.2
113.6
(43.0)
70.6
–
–
–
8.7
(3.3)
14.1
7.5
9.6
0.7
(0.8)
2.2
3.9
1.6
1.1
–
1.9
–
3.0
–
–
–
–
–
–
–
Total
£m
314.5
(43.0)
271.5
37.0
(1.5)
35.5
5.0
(5.3)
35.2
18.2
11.4
14.2
1.8
(0.8)
1Unallocated expenses represent primarily the salary andcostsof central management.
66
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
2. Segmental Analysis continued
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 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 30 March 2013
Revenue
Sales to external customers
52 weeks ended 31 March 2012
Revenue
Sales to external customers
UK
£m
Rest of
the World
£m
Total
£m
265.0
6.5
271.5
UK
£m
Rest of
the World
£m
Total
£m
247.3
5.7
253.0
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.
3. Revenue
Revenue disclosed in the Income Statement is analysed as follows:
Sale of goods and services
Rental income
52 weeks ended
30 March
2013
£m
52 weeks ended
31 March
2012
£m
262.1
9.4
271.5
245.0
8.0
253.0
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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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
30 March
2013
£m
95.7
(0.4)
67.3
7.1
13.7
0.5
7.2
1.5
1.5
41.9
236.0
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
1Included within minimum lease payments are sublease payments of £0.7 million (2012:£0.7million). 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
52 weeks ended
30 March
2013
£m
52 weeks ended
31 March
2012
£m
0.1
0.1
0.1
0.1
Fees for tax compliance work of £16,000 (2012: £16,000) and other non-audit service fees relating to iXBRL conversion and covenants
review of £6,000 (2012: £6,000) were charged in the year.
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
£m
60.6
4.8
1.9
67.3
£m
56.8
4.0
1.7
62.5
Number
Number
3,166
297
14
3,477
3,095
283
14
3,392
* Includes Directors.
d) Directors’ Emoluments
Full details are provided in the Directors’ Remuneration Report and tables on pages 41, 43 and 51. Two Directors had benefits accruing
under defined benefit pension schemes at the end of the year (2012: three). Two Directors had benefits accruing under the Company’s
defined contribution scheme at the end of the year (2012: two). One Director had benefits accruing under a non Company defined
contribution pension (2012: one).
68
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
5. Exceptional Items
Amounts included in operating profit:
Acquisition costs
Impairment of property
Reversal of impairment on property
Onerous lease charges (note 25)
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
30 March
2013
£m
52 weeks ended
31 March
2012
£m
(0.5)
(1.8)
0.8
–
(1.5)
5.0
–
–
3.5
1.2
(0.1)
0.7
1.8
5.3
(3.0)
(0.3)
2.3
(0.9)
(1.9)
0.6
(0.2)
(0.2)
(1.5)
2.5
(0.1)
0.4
2.8
1.3
Acquisition costs of £0.5 million during the 52 weeks ended 30 March 2013 (2012: £3.0 million) relate to transaction costs on pub
acquisitions. Of these amounts £0.5 million during the 52 weeks ended 30 March 2013 (2012: £2.6 million) relates to the purchase of pubs
which qualify as business combinations. The additional costs of £0.4 million during the 52 weeks ended 31 March 2012 were abortive
transaction costs incurred during a proposed acquisition bid.
The property impairment charge of £1.8 million during 52 weeks ended 30 March 2013 (2012: £0.3 million) represents a write down of
licensed properties to their recoverable value. The reversal of impairment credit of £0.8 million during the 52 weeks ended 30 March 2013
(2012: £2.3 million) relates to the write back of previously impaired licensed properties to their recoverable value.
The net onerous lease charge of £0.9 million during the 52 weeks ended 31 March 2012 related 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.
The profit on disposal of properties of £5.0 million during the 52 weeks ended 30 March 2013 (2012: £0.6 million) relates to the disposal
of five licensed and unlicensed properties (2012: six).
The movement in fair value of financial instruments of £0.2 million for the 52 weeks ended 31 March 2012 related 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 30 March 2013 was £1.5 million cash outflow (2012:
£2.0 million cash outflow).
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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Notes to the Financial Statements continued
6. Finance Revenue
Interest receivable from:
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
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 on valuation of financial assets and liabilities
Net actuarial gains/(losses) on pension scheme
Tax charge/(credit) included in the Statement of Comprehensive Income
70
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
52 weeks ended
30 March
2013
£m
52 weeks ended
31 March
2012
£m
0.6
0.6
0.3
0.3
52 weeks ended
30 March
2013
£m
52 weeks ended
31 March
2012
£m
5.5
0.1
5.6
0.3
5.9
–
5.9
4.6
0.1
4.7
0.2
4.9
0.2
5.1
52 weeks ended
30 March
2013
£m
52 weeks ended
31 March
2012
£m
8.6
(0.2)
8.4
(1.3)
(1.2)
(2.5)
5.9
0.3
(0.2)
1.1
1.2
8.2
–
8.2
(0.6)
(2.5)
(3.1)
5.1
0.2
(0.6)
(3.3)
(3.7)
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
30 March
2013
£m
52 weeks ended
31 March
2012
£m
(0.5)
0.1
(0.3)
(0.7)
(3.3)
0.4
0.2
0.1
0.2
(0.1)
(2.5)
(0.5)
0.1
(0.2)
(0.6)
(1.9)
(0.9)
0.2
–
–
(0.5)
(3.1)
During the period the Finance Act 2012 has received Royal Assent. The main impact is that the rate of UK corporation tax reduced from
24% to 23% from 1 April 2013. To the extent that this rate change will affect the amount of future cash tax payments to be made by the
Group, this has reduced the size of both the Group's Balance Sheet deferred tax liability and deferred tax asset. The impact in the 52 weeks
to 30 March 2013 is an exceptional credit to the Income Statement of £1.2 million, and a charge to the Statement of Comprehensive
Income of £0.3 million. The impact of previous rate changes in the 52 weeks ended 31 March 2012 was 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 21% and 20% on 1 April 2014 and 2015 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 combined effect of these proposals on the net deferred tax liability at 30 March 2013 would be to reduce the liability by £2.7 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 24% (2012: 26%).
The differences are reconciled below:
Group
Profit from continuing operations before taxation
Accounting profit multiplied by the UK standard rate of corporation tax of 24% (2012: 26%)
Items not deductible for tax purposes
Current and deferred tax overprovided in previous years
Change in Corporation Tax rate
Indexation on disposal of properties
Total tax charged in the Income Statement
52 weeks ended
30 March
2013
£m
35.2
8.4
0.1
(0.2)
(1.2)
(1.2)
5.9
52 weeks ended
31 March
2012
£m
28.8
7.5
0.1
–
(2.5)
–
5.1
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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S
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N
S
U
B
I
E
C
N
A
N
R
E
V
O
G
S
T
N
E
M
E
T
A
T
S
L
A
I
C
N
A
N
I
F
I
N
O
T
A
M
R
O
F
N
I
I
L
A
N
O
T
D
D
A
I
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
30 March
2013
£m
29.3
(5.3)
24.0
52 weeks ended
31 March
2012
£m
23.7
(1.3)
22.4
Number
55,717,000
534,000
56,251,000
Number
56,250,000
695,000
56,945,000
Pence
Pence
52.59
52.09
43.07
42.67
5.26
5.21
4.31
4.27
42.13
41.62
39.82
39.34
4.21
4.16
3.98
3.93
For the purposes of calculating the number of shares to be used above, ‘B’ shares have been treated as one tenth of an ‘A’ or ‘C’ share.
The earnings per share calculation is based on earnings from continuing operations and on the weighted average ordinary share capital
which excludes shares held by trusts relating to employee share options and shares held in treasury of 1,267,808 (2012: 734,626).
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 2012: 7.60p (2011: 7.05p)
Interim dividend for 2013: 5.35p (2012: 5.05p)
Equity dividends paid
Dividends on cumulative preference shares (note 7)
Proposed for approval at the AGM:
Final dividend for 2013: 8.35p (2012: 7.60p)
72
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
52 weeks ended
30 March
2013
£m
52 weeks ended
31 March
2012
£m
4.2
3.0
7.2
0.1
4.7
4.0
2.8
6.8
0.1
4.2
Notes to the Financial Statements continued
10. Dividends continued
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 2 April 2011
Acquisitions
At 31 March 2012
At 30 March 2013
Amortisation and impairment
At 2 April 2011
Provided during the year
At 31 March 2012
Provided during the year
At 30 March 2013
Net book value at 30 March 2013
Net book value at 31 March 2012
Net book value at 2 April 2011
Lease assignment premiums
Group and
Company Lease
assignment
premiums
£m
Group
Goodwill
£m
24.5
–
24.5
24.5
0.6
–
0.6
–
0.6
23.9
23.9
23.9
–
7.0
7.0
7.0
–
0.3
0.3
0.5
0.8
6.2
6.7
–
Group
Total
£m
24.5
7.0
31.5
31.5
0.6
0.3
0.9
0.5
1.4
30.1
30.6
23.9
Company
Total
£m
–
7.0
7.0
7.0
–
0.3
0.3
0.5
0.8
6.2
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 three pubs on which we carry lease assignment premiums at 30 March 2013 (2012: three).
Goodwill
Goodwill is allocated to cash generating units as follows:
Gales estate
Jacomb Guinness estate
2013
£m
22.7
1.2
23.9
2012
£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 – Freehold
Pre-tax discounted rate – Leasehold
2.5%
1.5%
7.2%
9.7%
2.5%
1.5%
6.5%
9.5%
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
73
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U
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C
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E
V
O
G
S
T
N
E
M
E
T
A
T
S
L
A
I
C
N
A
N
I
F
I
N
O
T
A
M
R
O
F
N
I
I
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A
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O
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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
Management have considered reasonable changes in key assumptions used in their calculations of value in use. They have concluded
that such changes will not result in an impairment to either the Jacomb Guinness or the Gales cash-generating units at 30 March 2013.
12. Property, Plant and Equipment
Group
Cost
At 2 April 2011
Additions
Acquisitions
Disposals
At 31 March 2012
Additions
Acquisitions (note 17)
Disposals
Transfer to/from investment properties
At 30 March 2013
Depreciation and impairment
At 2 April 2011
Provided during the year
Impairment reversals net of loss
Disposals
At 31 March 2012
Provided during the year
Impairment loss net of reversals
Disposals
At 30 March 2013
Net book value at 30 March 2013
Net book value at 31 March 2012
Net book value at 2 April 2011
74
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Land & Plant, machinery
& vehicles
£m
buildings
£m
Containers,
fixtures & fittings
£m
324.7
7.6
44.7
(2.1)
374.9
4.9
10.8
(0.2)
0.4
390.8
22.8
2.0
(2.0)
(1.3)
21.5
2.2
1.0
–
24.7
366.1
353.4
301.9
28.6
4.5
0.1
(0.5)
32.7
1.0
–
(0.2)
–
33.5
17.9
1.7
–
(0.5)
19.1
2.0
–
(0.2)
20.9
12.6
13.6
10.7
94.6
11.6
0.7
(2.7)
104.2
11.7
0.6
(3.1)
–
113.4
64.4
8.8
–
(2.5)
70.7
9.5
–
(2.9)
77.3
36.1
33.5
30.2
Total
£m
447.9
23.7
45.5
(5.3)
511.8
17.6
11.4
(3.5)
0.4
537.7
105.1
12.5
(2.0)
(4.3)
111.3
13.7
1.0
(3.1)
122.9
414.8
400.5
342.8
Notes to the Financial Statements continued
12. Property, Plant and Equipment continued
Company
Cost
At 2 April 2011
Additions
Acquisitions
Disposals
At 31 March 2012
Additions
Acquisitions (note 17)
Disposals
Transfer to/from investment property
At 30 March 2013
Depreciation and impairment
At 2 April 2011
Provided during the year
Impairment reversals net of loss
Disposals
At 31 March 2012
Provided during the year
Impairment loss net of reversals
Disposals
At 30 March 2013
Net book value at 30 March 2013
Net book value at 31 March 2012
Net book value at 2 April 2011
Group and Company
Interest Capitalised
Land & Plant, machinery
& vehicles
£m
buildings
£m
Containers,
fixtures & fittings
£m
324.6
7.6
44.7
(2.1)
374.8
4.9
10.8
(0.2)
0.4
390.7
22.7
2.0
(2.0)
(1.3)
21.4
2.2
1.0
–
24.6
366.1
353.4
301.9
28.5
4.5
0.1
(0.5)
32.6
1.0
–
(0.2)
–
33.4
17.9
1.7
–
(0.5)
19.1
2.0
–
(0.2)
20.9
12.5
13.5
10.6
93.1
11.6
0.7
(2.7)
102.7
11.7
0.6
(3.1)
–
111.9
62.8
8.8
–
(2.5)
69.1
9.5
–
(2.9)
75.7
36.2
33.6
30.3
Total
£m
446.2
23.7
45.5
(5.3)
510.1
17.6
11.4
(3.5)
0.4
536.0
103.4
12.5
(2.0)
(4.3)
109.6
13.7
1.0
(3.1)
121.2
414.8
400.5
342.8
The amount of interest capitalised to date is £100,000 (2012: £100,000).
Assets under construction
Included in the cost of property, plant and equipment at 30 March 2013 was an amount of £0.4 million (2012: £2.2 million) relating to
three (2012: 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 30 March 2013, the Group recognised an impairment loss of £1.8 million (2012: £0.3 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 £0.8 million were recognised during the 52 weeks ended 30 March 2013 (2012: £2.3 million).
The key assumptions used in the value in use calculations are those detailed in note 11.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
75
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M
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A
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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:
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 2 April 2011
Additions
Acquisitions
Disposals
Transfer to assets held for sale
At 31 March 2012
Additions
Disposals
Transfer to/from property, plant and equipment
Transfer to assets held for sale
At 30 March 2013
Depreciation and impairment
At 2 April 2011
At 31 March 2012
Provided during the year
Disposals
At 30 March 2013
Net book value at 30 March 2013
Net book value at 31 March 2012
Net book value at 2 April 2011
Fair value at 30 March 2013
Fair value at 31 March 2012
Fair value at 2 April 2011
76
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
52 weeks ended
30 March
2013
£m
1.6
(0.8)
(0.4)
0.5
52 weeks ended
31 March
2012
£m
0.7
(0.3)
(0.2)
0.3
Group
Freehold
& leasehold
properties
£m
Company
Freehold
& leasehold
properties
£m
11.1
0.1
0.3
(0.2)
(5.3)
6.0
1.0
(1.0)
(0.4)
(0.6)
5.0
1.1
1.1
–
(0.3)
0.8
4.2
4.9
10.0
8.2
8.4
14.2
5.8
0.1
0.3
(0.2)
–
6.0
1.0
(1.0)
(0.4)
(0.6)
5.0
1.1
1.1
–
(0.3)
0.8
4.2
4.9
4.7
8.2
8.4
8.9
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 30 March 2013, the Group did not impair any investment properties (2012: nil).
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.
14. Derivative Financial Instruments
Group and Company
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
Group
2013
£m
0.4
(0.1)
Group
2012
£m
0.4
(0.2)
Company
2013
£m
0.4
(0.1)
Company
2012
£m
0.4
(0.1)
2013
£m
(2.4)
(2.4)
2013
£m
0.3
0.1
0.4
2012
£m
(1.4)
(1.4)
2012
£m
0.2
0.1
0.3
W
E
I
V
E
R
S
S
E
N
S
U
B
I
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C
N
A
N
R
E
V
O
G
S
T
N
E
M
E
T
A
T
S
L
A
I
C
N
A
N
I
F
I
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O
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A
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O
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N
I
I
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A
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O
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D
D
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
77
Notes to the Financial Statements continued
16. Investments in Subsidiaries
Company
At 2 April 2011, 31 March 2012 and 30 March 2013
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 30 March 2013 the Company has acquired four new pubs for a combined consideration of £11.4 million, all
of which have been treated as business combinations as they were operating as a business at the point the Company acquired them.
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
Fair value:
Property, plant and equipment acquired
Goodwill
Consideration
Satisfied by:
Cash
Number
4
£m
11.4
–
11.4
11.4
Costs associated with the acquisitions of £0.5 million have been charged to operating exceptional items in the Consolidated Income
Statement for the 52 weeks ended 30 March 2013 (see note 5). These comprise primarily stamp duty and other property fees.
The acquisitions have contributed the following operating profit to the Group in the 52 weeks ended 30 March 2013 from the date
of acquisition:
Operating profit
£m
0.3
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 Company, therefore proforma trading results have not been included.
During the prior period the Company acquired 28 pubs throughout the year; five from Marston’s PLC on 1 November 2011 for
£16.0 million, 16 from Enterprise Inns plc on 9 March 2012 for £25.3 million and the remaining seven pubs were bought individually
through the year for a total of £11.5 million. From the date of acquisition the sites acquired contributed £0.6 million operating profit in
the 52 weeks ended 31 March 2012.
78
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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
2013
£m
1.3
6.3
2.5
10.1
2013
£m
13.7
1.1
3.5
18.3
2012
£m
1.4
7.0
2.1
10.5
2012
£m
13.4
1.4
3.5
18.3
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 31 March 2012
Increase in provision recognised in profit and loss
Amounts written off during the year
Trade receivables provision at 30 March 2013
2013
£m
1.3
0.2
(0.1)
1.4
2012
£m
1.3
0.1
(0.1)
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
2013
£m
14.5
0.1
–
0.5
15.1
(1.4)
13.7
2012
£m
14.2
0.2
–
0.3
14.7
(1.3)
13.4
Included in the Group’s trade receivables balance are trade receivables with a carrying value of £0.2 million (2012: £0.3 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 (2012: £0.3 million) due within one year and
£0.5 million (2012: £0.4 million) due in more than one year, against which there is a provision of £0.3 million (2012: £0.3 million).
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
79
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U
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C
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E
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S
T
N
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M
E
T
A
T
S
L
A
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C
N
A
N
I
F
I
N
O
T
A
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O
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Notes to the Financial Statements continued
20. Assets Classified as Held for Sale
Investment property
Group
2013
£m
0.6
0.6
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
2013
£m
5.3
(5.3)
0.6
0.6
Group
2012
£m
5.3
5.3
Group
2012
£m
0.2
(0.2)
5.3
5.3
Company
2013
£m
0.6
0.6
Company
2013
£m
–
–
0.6
0.6
Company
2012
£m
–
–
Company
2012
£m
0.2
(0.2)
–
–
At 30 March 2013 three properties (2012: one) were transfered to assets held for sale, as they were in the advanced stages of the sales
process and are expected to complete in 2013. 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
2013
£m
15.7
–
8.3
6.7
10.2
40.9
Group
2012
£m
18.0
–
9.3
7.2
12.7
47.2
Company
2013
£m
Company
2012
£m
15.7
92.3
8.3
6.7
10.2
133.2
18.0
85.1
9.3
7.2
12.7
132.3
Company amounts due to subsidiary undertakings of £92.3 million (2012: £85.1 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.
80
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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
2013
£m
4.3
2012
£m
3.9
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
2013
£m
112.5
25.8
1.6
139.9
139.9
139.9
2012
£m
114.7
25.8
1.6
142.1
142.1
142.1
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 30 March 2013, £37.0 million (2012: £34.5 million) of this
committed loan facility was available and undrawn.
The bank loans at 30 March 2013 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
2013
£m
113.0
(0.5)
112.5
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
2013
£m
6.0
19.9
(0.1)
25.8
2012
£m
115.5
(0.8)
114.7
2012
£m
6.0
19.9
(0.1)
25.8
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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M
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A
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A
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A
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Notes to the Financial Statements continued
22. Cash, Borrowings and Net Debt continued
Preference shares
The Company’s preference shares are classified as debt. The shares are not redeemable and are included in borrowings within non-
current liabilities. See note 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 31 March
2012
£m
Cash flows
£m
Non-cash1
£m
At 30 March
2013
£m
3.9
3.9
(114.7)
(25.8)
(1.6)
(142.1)
(138.2)
0.4
0.4
2.7
–
–
2.7
3.1
–
–
(0.5)
–
–
(0.5)
(0.5)
4.3
4.3
(112.5)
(25.8)
(1.6)
(139.9)
(135.6)
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
23. Pensions
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)
3.9
3.9
(114.7)
(25.8)
(1.6)
(142.1)
(138.2)
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.
82
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
23. Pensions continued
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
Defined contribution schemes – total operating charge
Credit/charge to equity:
Defined benefit scheme –net actuarial (gains)/losses
Total pension (credit)/charge
52 weeks ended
30 March
2013
£m
52 weeks ended
31 March
2012
£m
1.6
(0.6)
0.3
1.3
(5.0)
(3.7)
1.4
(0.3)
0.3
1.4
13.9
15.3
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.
An amendment to IAS19 – Employee Benefits is effective for the 52 weeks ending 29 March 2014. Were the amendment to be applied
for the 52 weeks ended 30 March 2013, the effect would be a reduction in the expected return on pension scheme assets of £1.5 million
resulting in an overall finance charge on net pension liabilities of £0.9 million for the period and a corresponding effect on Other
Comprehensive Income.
For the 52 weeks ending 29 March 2014 the effect will be a reduction in the expected return on pension scheme assets of £1.5 million
resulting in an overall finance charge on net pension liabilities of £0.6 million for the period.
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 30 March 2013, 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 2013 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
2013
Years
21.0
23.5
22.0
24.4
2012
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 54 years for male members
of the scheme (2012: 53) and 48 years for female members (2012: 47).
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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S
T
N
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M
E
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S
L
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A
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At
30 March 2013
3.80%
3.30%
4.60%
3.30%
2.60%
At
31 March 2012
3.70%
3.20%
4.60%
3.20%
2.70%
2013
£m
2.0
4.2
(15.2)
1.3
2012
£m
1.8
3.9
(14.8)
1.4
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
Corporate Bonds
Equities
Absolute return fund
Property
Cash
Annuities
Total market value of assets
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
Long term
rate of return
expected at
30 March 2013
%
4.10%
7.00%
7.00%
7.00%
2.00%
4.60%
6.34%
Value at
31 March 2012
£m
16.3
34.9
25.6
0.7
0.5
1.1
79.1
Long term
rate of return
expected at
31 March 2012
%
4.60%
7.00%
7.00%
7.00%
2.00%
4.60%
6.44%
Value at
30 March 2013
£m
18.1
40.7
27.7
0.6
0.6
1.2
88.9
2013
£m
88.9
(101.9)
(13.0)
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)
Included within the total present value of Group and Company scheme liabilities of £101.9 million (2012: £98.2 million) are liabilities of
£3.1 million (2012: £3.5 million) which are entirely unfunded.
84
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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
Movements in the fair value of scheme assets during the year
Fair value at beginning of the year
Expected return on scheme assets
Actuarial gains/(losses)
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
Present value of obligation at the end of the year
The analysis of the actuarial gains/(losses) in the Statement of Comprehensive Income
Actual return less expected return on pension scheme assets
Experience gains/(losses) arising on the scheme liabilities
Changes in assumptions underlying the present value of the scheme liabilities
Actuarial gains/(losses)
2013
£m
1.6
1.6
(5.1)
4.5
(0.6)
79.1
5.1
5.4
1.4
0.7
0.4
(3.2)
88.9
(98.2)
(1.6)
(4.5)
(0.4)
3.2
(0.4)
(101.9)
5.4
0.6
(1.0)
5.0
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)
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 gains/(losses) on liabilities (£ million)
% of scheme liabilities
Total actuarial gains/(losses) (£ million)
% of scheme liabilities
2013
5.4
6.1%
0.6
0.6%
5.0
4.9%
2012
2011
2010
2009
(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%)
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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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
£7.8 million (2012: losses of £12.8 million). The cumulative amount of actuarial losses recognised since 28 March 2004 in the Company
Statement of Comprehensive Income is £10.1 million (2012: losses of £15.1 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 2 April 2011, 31 March 2012 and 30 March 2013
Monetary amount:
At 2 April 2011, 31 March 2012 and 30 March 2013
First 6%
cumulative
preference share
of £1 each
Second 8%
cumulative
preference share
of £1 each
Number
000s
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 31 March 2012
Arising during the year
Released during the year
Utilised
Unwinding of discount
At 30 March 2013
Analysed as:
Due within one year
Due in more than one year
2013
£m
3.0
0.4
(0.4)
(0.5)
0.3
2.8
1.0
1.8
2.8
2012
£m
2.4
1.6
(0.7)
(0.5)
0.2
3.0
0.5
2.5
3.0
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.
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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
2013
£m
3.0
0.6
0.9
0.5
–
–
1.1
6.1
Asset
2013
£m
3.0
0.5
0.9
0.5
–
–
1.1
6.0
Liability
2013
£m
–
–
–
(0.1)
(16.1)
(10.5)
–
(26.7)
Liability
2013
£m
–
–
–
(0.1)
(16.1)
(10.5)
–
(26.7)
Net
2013
£m
3.0
0.6
0.9
0.4
(16.1)
(10.5)
1.1
(20.6)
Net
2013
£m
3.0
0.5
0.9
0.4
(16.1)
(10.5)
1.1
(20.7)
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)
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
2013
£m
22.8
4.8
3.1
(1.8)
239.2
1.6
269.7
Group
2012
£m
22.8
4.8
3.1
(1.1)
214.0
1.6
245.2
Company
2013
£m
22.8
4.8
3.1
(1.8)
214.7
1.6
245.2
Company
2012
£m
22.8
4.8
3.1
(1.1)
192.4
1.6
223.6
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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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
£4.0 million shares in the 52 weeks ended 30 March 2013 (2012: £8.5 million), of which £1.1 million related to purchases made by or
on behalf of employee share ownership trusts (2012: £0.8 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:
Group
2013
£m
0.3
0.3
13.9
4.3
18.2
18.5
26.9
26.9
Group
2012
£m
0.2
0.2
13.6
3.9
17.5
17.7
31.2
31.2
Company
2013
£m
Company
2012
£m
0.3
0.3
13.9
4.3
18.2
18.5
0.2
0.2
13.6
3.9
17.5
17.7
119.2
119.2
116.3
116.3
2.4
1.4
2.4
1.4
1.8
138.3
1.6
141.7
144.1
171.0
2.5
140.5
1.6
144.6
146.0
177.2
1.8
138.3
1.6
141.7
144.1
263.3
2.5
140.5
1.6
144.6
146.0
262.3
Non-current assets
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 39
Loans and borrowings
Preference shares
Total carried at amortised cost
Total non-current liabilities
Total financial liabilities
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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 (2012: £25.8 million) are at fixed rates. The bank loans totalling £112.5 million (2012: £114.7
million), net of arrangement fees, are at floating rates. At the year end, after taking account of interest rate swaps and caps, 76% (2012:
74%) of the Group’s bank loans and 80% (2012: 79%) 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 (2012: £65.0 million) were hedged by interest rate swaps at a blended fixed rate of 1.75% (2012: 1.75%). Of the swaps
held at 30 March 2013, £40.0 million expire in 2015 and £25.0 million expire in 2017. In December 2012 the Group also entered into
an interest rate swap agreement to hedge the risk of interest rate variation on £20 million of the Group’s borrowings at a rate of 2.25%.
This agreement commences in 2015 and expires in 2022.
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 (2012: £20.0 million) of the Group’s borrowings were hedged by an interest rate cap at a fixed
rate of 4.00% (2012: 4.00%). The cap held at 30 March 2013 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 30 March 2013 and a net unrealised loss of
£0.9 million (2012: £2.6 million) has been recorded in Other Comprehensive Income. The interest rate cap cashflow hedge is not
designated as a cashflow hedge for hedge accounting purposes and no net unrealised gain/loss (2012: net unrealised loss of £0.2 million)
was 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 30 March 2013 ranged between
0.49% and 1.06%. 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
2013
£m
0.2
(0.4)
Group
2012
£m
0.2
(0.4)
Company*
2013
£m
0.5
(1.0)
Company*
2012
£m
0.5
(1.0)
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
89
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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 30 March 2013 the Group and Company had open forward contracts to buy €2.6 million (2012: buy €1.5 million). These have a
Sterling equivalent of £2.1 million (2012: £1.3 million) and a net gain of nil (2012: net gain of nil) when comparing the contractual rates
with the year-end exchange rates.
At 30 March 2013 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
2013
£m
0.1
0.2
–
Cash deposits Trade receivables
2013
£m
–
0.4
–
2012
£m
0.2
0.1
–
Trade receivables
2012
£m
–
0.3
–
Trade payables
2013
£m
(0.2)
(0.2)
–
Trade payables
2012
£m
(0.4)
(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 for short periods and derivative transactions are only permitted with financial institutions approved
by the Board. There are no significant concentrations of credit risk within the Group. The maximum credit risk exposure relating to financial
assets is represented by their carrying value as at the Balance Sheet date.
Trade and other receivables
The Group records impairment losses on its trade receivables separately from gross receivables. Further detail is included in note 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. 20% (2012: 19%) of the Group’s borrowings are repayable
after more than five years, and 80% (2012: 81%) within the third to fifth year inclusive.
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
26. Financial Instruments continued
The tables below summarise the maturity profile of the Group’s financial liabilities at 30 March 2013 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 30 March 2013
Interest bearing loans and borrowings1
Preference shares2
Trade and other payables
On
demand
£m
–
–
7.9
Less than
3 months
£m
1.3
–
18.2
3 to 12
months
£m
4.0
0.1
0.4
1 to 5
years
£m
128.0
0.5
1.3
More than 5
years
£m
43.0
3.4
2.4
Total
£m
176.3
4.0
30.2
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 31 March 2012
Interest bearing loans and borrowings1
Preference shares2
Trade and other payables
–
£m
–
–
5.1
0.3
£m
1.4
–
24.2
0.9
£m
4.1
0.1
0.4
1.9
–
3.1
£m
131.8
0.5
1.6
£m
45.0
3.4
3.4
£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
–
0.3
0.9
3.1
–
4.3
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 30 March 2013
Amounts due to subsidiary undertakings3
Company at 31 March 2012
Amounts due to subsidiary undertakings3
On
demand
£m
92.3
£m
85.1
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
92.3
£m
85.1
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 £12.6 million (2012: £12.7 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.
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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
Financial liabilities
Trade and other payables in scope of IAS 39
Fixed rate borrowings
Floating rate borrowings
Preference shares
Interest rate swaps
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
2013
£m
Book value
2012
£m
Fair value
2013
£m
4.3
13.9
0.3
(28.7)
(25.8)
(112.5)
(1.6)
(2.4)
3.9
13.9
0.2
(33.7)
(25.8)
(114.7)
(1.6)
(1.4)
4.3
13.9
0.3
(28.7)
(29.3)
(112.5)
(1.8)
(2.4)
Fair value
2012
£m
3.9
13.9
0.2
(33.7)
(31.4)
(114.7)
(1.8)
(1.4)
Book value
2013
£m
Book value
2012
£m
Fair value
2013
£m
Fair value
2012
£m
(121.0)
(118.8)
(121.0)
(118.8)
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 2 April 2011, 31 March 2012 and 30 March 2013
‘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 30 March 2013
24.4%
10.7%
64.9%
100%
Issued and fully paid: Monetary amount
At 2 April 2011, 31 March 2012 and 30 March 2013
£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).
92
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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 2 April 2011
Shares purchased
Shares transferred
Shares released
At 31 March 2012
Shares purchased
Shares transferred
Shares released
At 30 March 2013
Monetary amount
At 2 April 2011
Shares purchased
Shares transferred
Shares released
At 31 March 2012
Shares purchased
Shares transferred
Shares released
At 30 March 2013
Market value at 30 March 2013
Treasury shares
‘A’ ordinary
40p shares
000s
583
1,096
(204)
(276)
1,199
411
(260)
(144)
1,206
LTIP ESOT
‘A’ ordinary
40p shares
000s
35
–
204
(239)
–
–
260
(260)
–
LTIP ESOT
‘B’ ordinary
4p shares
000s
331
338
–
(98)
571
697
–
(575)
693
LTIP ESOT
‘C’ ordinary
40p shares
000s
–
–
–
–
–
5
–
–
5
SIP ESOT
‘A’ ordinary
40p shares
000s
2
86
–
(86)
2
87
–
(87)
2
Total
‘A’ ordinary
40p shares
000s
620
1,182
–
(601)
1,201
498
–
(491)
1,208
Total
‘B’ ordinary
4p shares
000s
331
338
–
(98)
571
697
–
(575)
693
Total
‘C’ ordinary
40p shares
000s
–
–
–
–
–
5
–
–
5
£m
2.7
7.7
(1.0)
(1.4)
8.0
2.9
(1.7)
(1.0)
8.2
9.9
£m
0.2
–
1.0
(1.2)
–
–
1.7
(1.7)
–
–
£m
0.2
0.2
–
(0.1)
0.3
0.5
–
(0.3)
0.5
0.6
£m
–
–
–
–
–
–
–
–
–
–
£m
–
0.6
–
(0.6)
–
0.6
–
(0.6)
–
–
£m
2.9
8.3
–
(3.2)
8.0
3.5
–
(3.3)
8.2
9.9
£m
0.2
0.2
–
(0.1)
0.3
0.5
–
(0.3)
0.5
0.6
£m
–
–
–
–
–
–
–
–
–
–
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
93
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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 30 March 2013 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 Adjusted 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% or more over the three
year initial performance period of the award. Vesting levels are on a sliding scale from 40% up to 100%, if growth in Adjusted EPS exceeds
growth in RPI by 24% 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 could choose to redeposit their shares for a further three year period. If participants chose to redeposit,
then the Company matched the redeposited shares at a ratio of 1:1 at the end of the matching period. The last grant of matching shares
vested during the 52 weeks ended 30 March 2013.
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).
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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 30 March 2013
is £1.9 million (2012: £1.9 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 30 March 2013 was £8.20 (2012: £7.15).
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
2012
WAEP
£3.93
£5.47
£4.11
£3.49
£4.45
n/a
2013
Number
000s
543
102
(35)
(112)
498
–
£7.18
2.14 years
£7.23
£1.74
£3.31
£5.63
2013
WAEP
£4.45
£5.63
£5.03
£4.35
£4.69
n/a
2012
Number
000s
616
135
(30)
(178)
543
–
£6.56
2.46 years
£6.55
£1.12
£3.31
£6.04
Outstanding share options granted to employees under the Saving Related Share Option Scheme are as follows:
Exercisable at
September 2012
September 2012
September 2013
September 2013
September 2014
September 2014
September 2015
September 2015
September 2016
September 2016
Exercise price
40p shares
£
6.04
3.88
3.31
4.64
3.88
5.47
4.64
5.63
5.47
5.63
Number of ‘A’
ordinary shares
under option
2013
000s
–
–
96
64
57
90
65
71
31
24
498
Number of ‘A’
ordinary shares
under option
2012
000s
24
87
100
65
63
100
71
–
33
–
543
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95
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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
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
2013
Number
000s
167
35
–
–
202
100
n/a
6.50 years
£7.06
£1.25
£3.67
£7.51
2013
Number
000s
185
42
(10)
(32)
185
72
–
£7.38
7.80 years
£7.06
£1.12
£2.62
£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
2013
WAEP
£5.38
£7.05
–
–
£5.67
£4.66
2013
WAEP
£5.56
£7.05
£7.37
£3.04
£5.58
£5.47
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
91
1
£6.94
6.44 years
£7.02
£0.74
£2.12
£7.51
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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
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
2015 and 2022
c) LTIP
Shares
Outstanding at beginning of the year
Granted
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
7.05
Senior Executive Scheme
Number of ‘A’
ordinary shares
under option
2012
000s
–
–
21
12
10
25
31
32
4
32
–
167
Number of ‘A’
ordinary shares
under option
2013
000s
–
–
21
12
10
25
31
32
4
32
35
202
Exercise price
40p shares
£
2.12
2.62
3.67
4.98
7.51
4.05
4.80
5.78
–
7.09
7.05
Executive Approved Scheme
Number of ‘A’
ordinary shares
under option
2012
000s
14
13
–
10
36
19
20
35
–
38
–
185
Number of ‘A’
ordinary shares
under option
2013
000s
–
10
–
6
29
14
14
35
–
35
42
185
2013
‘A’ shares
Number
000s
718
249
(19)
(260)
6
694
2013
‘B’ shares
Number
000s
1,795
622
(48)
(575)
(61)
1,733
2012
‘A’ shares
Number
000s
741
211
(35)
(239)
40
718
2012
‘B’ shares
Number
000s
1,852
529
(88)
(98)
(400)
1,795
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
–
–
34
86
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
£7.06
£0.71
£6.63
£0.66
1.32 years
£7.05
£6.62
1.32 years
£0.71
£0.66
1.22 years
£7.02
£6.47
1.22 years
£0.70
£0.65
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 2013
97
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N
S
U
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C
N
A
N
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E
V
O
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S
T
N
E
M
E
T
A
T
S
L
A
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C
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A
N
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F
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O
T
A
M
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F
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A
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D
D
A
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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
2013
Number
000s
355
88
(1)
(73)
369
2012
Number
000s
345
86
–
(76)
355
£7.40
2.83 years
£7.54
£7.54
£6.88
2.43 years
£7.10
£7.10
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 30 March
2013 and 52 weeks ended 31 March 2012, except for exercise price and 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
Executive and
Senior Executive Option Schemes
2012
1.8%
17%
0.5 to 0.7% 1.6 to 2.3%
4 to 6 years
4 to 5 years
Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes
Save As You Earn Scheme
2012
2013
1.8%
1.8%
17%
25%
0.2 to 0.6% 0.9 to 1.5%
3 to 5 years
3 to 5 years
LTIP Scheme
2012
1.8%
n/a
1.2%
3 years
2013
1.8%
n/a
0.3%
3 years
2013
1.8%
25%
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.
98
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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
2013
£m
8.2
25.3
39.5
73.0
2012
£m
7.7
25.3
41.2
74.2
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 11 years.
At 30 March 2013 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
2013
£m
0.4
0.5
0.2
1.1
2012
£m
0.2
0.5
0.3
1.0
2013
£m
7.8
17.9
11.7
37.4
2012
£m
7.5
16.6
12.0
36.1
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 with the maximum being 30 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 30 March 2013 future minimum rentals receivable under non-cancellable sub-leases included in the figures above were £5.6 million
(2012: £4.7 million).
b) Other Commitments
Group and Company
Capital commitments – authorised, contracted but not provided for
2013
£m
2.0
2012
£m
1.6
The Company has accepted various duty deferment bonds in connection with HM Revenue and Customs. The total outstanding
commitment at 30 March 2013 was £720,000 (2012: £720,000) for the Group and Company.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
99
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A
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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 £145,000 (2012: £178,000) 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
Post-employment benefits
Share-based payments
Company Only
During the year the Company entered into the following related party transactions:
52 weeks ended
30 March
2013
£m
4.0
0.4
1.2
5.6
52 weeks ended
31 March
2012
£m
3.7
0.4
1.2
5.3
52 weeks ended 30 March 2013
Subsidiaries
52 weeks ended 31 March 2012
Subsidiaries
Sales
to related
parties
£m
–
Sales
to related
parties
£m
–
Purchases
from related
parties
£m
40.0
Purchases
from related
parties
£m
32.2
Net interest
due to
related parties
£m
3.1
Amounts
owed to
related parties
£m
(92.3)
Net interest
due to
related parties
£m
2.7
Amounts
owed to
related parties
£m
(85.1)
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.
During the year there has been a change in the legislation relating to audit requirements for UK companies. The new legislation provides
an exemption for the subsidiaries of parent companies established within the European Economic Area if a guarantee is provided by the
parent for the subsidiary liabilities and the shareholders of the subsidiary are in unanimous agreement. The Group will be exempting the
following companies from an audit for the period ending 30 March 2013 under section 479A of the Companies Act 2006, all of which
are fully consolidated in these financial statements:
Griffin Catering Services Ltd
Jacomb Guinness Ltd
George Gale & Co Ltd
45 Woodfield Ltd
01577632
02934979
00026330
04279254
The Group will be exempting the following companies from the preparation and delivering of accounts to Companies House under section
394A of the Companies Act 2006, all of which are fully consolidated in these financial statements:
Griffin Inns Ltd
Ringwoods Ltd
FST Trustee Ltd
Fuller, Smith & Turner Estate Ltd
00495934
00178536
03163480
01831674
100
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Notes to the Financial Statements continued
31. Post Balance Sheet Events
Purchase of freehold
On 2 May 2013 the Group gave notice to exercise an option to purchase the freehold of a licensed property at an estimated cost of
£6.9 million in October 2013.
Acquisition of Cornish Orchards Limited
On 4 June 2013 the Group purchased 100% of the share capital and obtained control of Cornish Orchards Limited. The company acquired
produces alcoholic and non-alcoholic beverages. The Group paid £2.4 million as consideration in cash, which is fair value, and recognised
liabilities for £0.9 million for a contingent consideration payable in cash at a future date, subject to the achievement of annualised
production targets, and £0.5 million of assumed liabilities. The maximum payment of deferred consideration is £1.2 million. Acquisition
related costs amounted to £0.1 million.
Due to the timing of the transaction it has not been possible to complete the accounting for the acquisition and determine the fair value
of assets and liabilities acquired (including receivables), the value of Goodwill arising on the acquisition and the revenue and profits
expected to be realised from the acquired company. Based on accounting records the acquired company has net assets with a carrying
value of £1.1 million and has no contingent liabilities.
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FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
101
Directors and Advisers
as at 7 June 2013
Directors
Michael Turner, FCA, Chairman
Simon Emeny, Group Managing Director
James Douglas, ACA
Richard Fuller
Ian Bray
Jonathon Swaine
John Dunsmore*
Sir James Fuller*
Lynn Fordham, CA*
Alastair Kerr*
*Non-Executive.
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
102
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Shareholders’ Information
2013 Diary
Friday, 28 June
Record Date
Monday, 1 July
Preference dividends paid
11 a.m. Thursday, 25 July
Annual General Meeting
Hock Cellar, Griffin Brewery
Monday, 29 July
Final dividend paid
Friday, 22 November
Half year results announcement
2014 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.
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
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Glossary
• 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.
• Foreign Beer – this is sales made by the Company of beer produced by other brewers, the majority of which is lager.
• Managed Pubs and Hotels invested like for like sales growth – this is the sales growth calculated to exclude those pubs which have
not been trading throughout the two years for the corresponding period in both years. The principal exclusions from this measure are:
pubs purchased or sold in the last twelve months; sites which are closed; and pubs which are transferred to tenancy.
• Wet, food and accommodation like for like sales growth – this is measured on the same basis as “Managed Pubs and Hotels invested
like for like sales growth”.
• Like for like barrels sold – this is measured on the same basis as “Tenanted like for like profit growth”.
• 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, 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.
104
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
Five Years’ Progress
Income Statement
Revenue
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
2013
£m
271.5
37.0
(5.3)
31.7
3.5
35.2
(5.9)
29.3
51.2
455.6
10.1
18.3
0.6
4.3
488.9
–
(45.7)
443.2
(139.9)
(43.9)
259.4
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
2013
2012
2011
2010
2009
43.07
52.59
13.70p
£4.66
(135.6)
2.6
31.1
3,477
39.82p
42.13p
12.65p
£4.22
(138.2)
2.7
76.3
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
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
105
Five Years’ Progress
Income Statement
Revenue
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
2013
£m
271.5
37.0
(5.3)
31.7
3.5
35.2
(5.9)
29.3
51.2
455.6
10.1
18.3
0.6
4.3
488.9
–
(45.7)
443.2
(139.9)
(43.9)
259.4
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
2013
2012
2011
2010
2009
43.07
52.59
13.70p
£4.66
(135.6)
2.6
31.1
3,477
39.82p
42.13p
12.65p
£4.22
(138.2)
2.7
76.3
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
FULLER SMITH & TURNER P.L.C.
Griffin Brewery, Chiswick Lane South, Chiswick, London W4 2QB
Telephone: +44 (0)20 8996 2000 Fax: +44 (0)20 8995 0230
E-mail: Fullers@fullers.co.uk Web address: www.fullers.co.uk
Registered number: 241882
FULLER SMITH & TURNER P.L.C. Report and Accounts 2013
105
B R E W E D B E S I D E T H E T H A M E S