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At the heart of
our community
Annual Report and Accounts 2021
At the heart of our community
Fuller’s pubs and hotels have been at the heart of their communities for over
175 years and the coronavirus pandemic has brought the special place that pubs
hold in the nation’s heart to the fore. During the past year, our pubs and the
amazing teams that work in them have fed key workers, looked after the homeless,
run community stores and helped out at vaccine centres.
But communities are not just your local neighbourhood. Our team members
are a community of their own, as are our customers, our suppliers and our
shareholders. All are of equal importance and throughout this report we want
to show you how we work with those communities.
Never has the enduring appeal of the great British pub been so strong and, across
the Fuller’s estate, we are looking forward to continuing to serve our communities
for many years to come.
OVERVIEW Chairman’s Statement
At a Glance
Chief Executive’s Review
Our Business Model
Our Strategy
Financial Review
Principal Risks and Uncertainties
Section 172 Statement
Stakeholder Engagement
Corporate Social Responsibility
Non-Financial Information Statement
Board of Directors
Directors’ Report
Directors’ Responsibilities Statement
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Independent Auditor’s Report to the
Members of Fuller, Smith & Turner P.L.C.
Group Income Statement
Group Statement of Comprehensive Income
Group Balance Sheet
Company Balance Sheet
Group Statement of Changes in Equity
Company Statement of Changes in Equity
Group Cash Flow Statement
Company Cash Flow Statement
Notes to the Financial Statements
Shareholder Information
Glossary
Five Years’ Progress
2
6
10
16
18
22
28
31
32
34
39
40
42
45
46
51
56
79
87
89
90
91
92
93
94
95
96
152
153
154
Financial and Operational Summary
• Resilient performance in an extraordinary year that started and ended with our entire
pub estate closed, and with social distancing for 16 months to date
• Closure of the entire estate for average of 71% of the year due to Covid restrictions
• High customer demand while sites were open gives us confidence in our ability
to rebound strongly as restrictions are eased
• Business remains firmly underpinned by our predominately freehold estate of iconic,
high quality pubs and hotels
• Proactive £52 million1 equity issue successfully completed in April 2021 to strengthen
the Balance Sheet and ensure the Company exits the pandemic in the best
possible position
• No full year dividend proposed in light of pandemic impact on trading performance,
but intention to return to progressive dividend policy at the appropriate time.
1 Net of expenses.
Strategic Update
• Continued investment in our predominately freehold estate during periods of enforced
closure to ensure we reopened in excellent condition, including 10 transformational
refurbishment schemes and one new opening – The White Horse, Wembley
• Strong performance in our hotels and pubs with rooms, when restrictions permitted,
benefiting from a strong boom in staycations
• Completed the integration of Cotswold Inns & Hotels, which has delivered
immediate benefits
• Transitional Services Agreement with Asahi successfully completed
• Successful roll out of digital solutions such as Order & Pay and enhanced central booking
system, improving the digital customer journey
• Streamlined teams both at house level and in our support centre ready to deliver
future growth.
Revenue and other income
EBITDA1
Group statutory (loss)/profit before tax
Basic (loss)/earnings per share2
Adjusted (loss)/profit before tax3
Net debt excluding lease liabilities4
FY 2021
£m
FY 2020
£m
73.4
(13.1)
(59.2)
(87.31)p
(48.7)
218.1
319.7
53.9
166.2
5.81p
19.4
178.9
All figures above are from continuing operations except for Group statutory (loss)/profit before tax which
includes discontinued operations.
1 Earnings before separately disclosed items, interest, tax, depreciation and amortisation.
2 Per 40p ‘A’ or ‘C’ ordinary share.
3 Adjusted (loss)/profit before tax is the (loss)/profit before tax excluding separately disclosed items.
4 Net debt comprises cash and short-term deposits, bank overdraft, bank loans, CCFF, debenture stock
and preference shares.
1
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 O V E R V I E W
Chairman’s Statement
2
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021 I’m not sure that even the most robust
of business continuity exercises could have
prepared us, the industry or the country,
for the year that we have just endured.
Being Chairman of a closed hospitality
business has been challenging throughout,
frustrating most of the time, and yet often
very rewarding due to the amazing team
of people that work at Fuller’s.
I am delighted to see the way Simon and the
Executive Team have used this extraordinary
period of enforced closure to review, plan
and implement new ways of working, which
has enabled the Company to emerge from
the pandemic an even stronger business.
The roll out of digital initiatives such as
Order & Pay improve the experience for
our customers and are developments that
add value to the business.
Meanwhile, the investment we have made
in providing stunning beer gardens and
outside trading space has increased the
number of covers in some of our most
popular pubs and will make the alfresco
experience more appealing for our
customers throughout the whole year.
We have kept all our people at our heart
during the last year – those in our pubs
and hotels, the support centre team, and
our Tenants – providing support in a wide
variety of forms. I am proud of the actions
the team have taken during the year from
the decision to top up furlough payments
to ensure everyone received 80% of their
wages and the salary sacrifice made in the
first lockdown by the Board and Executive
Team, to the suspension of commercial
rent for our Tenants.
Our People Team has provided access to
emotional and financial support for team
members who need it, and access to online
training for those team members who
wanted an additional stimulus during the
long months of lockdown. Meanwhile
Simon has provided regular video blogs to
keep the entire team informed, up to date
and, frequently, entertained while our
team members and Tenants have played
active roles in their communities providing
meals for the homeless, working in vaccine
centres and undertaking numerous
volunteering opportunities.
During the year, we announced the
departure of our Finance Director
Adam Councell, who will be returning
to the services sector later in the year.
“Fuller’s is a company
that has always prided
itself on its long-term
strategy and vision, and
that continues to stand
us in good stead and
remains unchanged.”
Equity raise net of expenses
£52m
Covid Corporate Financing Facility
accessed
£100m
3
Adam has made an important and valued
contribution to Fuller’s during one of the
most difficult chapters in its history and
we thank him and wish him well in his new
role. Post year end, we were delighted
to announce that Neil Smith, a highly
experienced Finance Director who has
spent much of his career in the pub sector,
will be joining us later in the year. Neil will
be an excellent addition to Fuller’s, the
Executive Team and the Board and we look
forward to welcoming him to the Fuller’s
family and working closely with him in
the future.
Fuller’s is a company that has always prided
itself on its long-term strategy and vision,
and that continues to stand us in good
stead and remains unchanged. Our
predominately freehold estate provides
the base for our business and, while we
may tweak the tactics in the short term
to reflect ever-changing situations, we are
excited about getting back on track to
continue to deliver our long-term strategy
and return to growth.
Trading with social distancing is like
trading with one arm behind your back and,
in light of the year we have just endured,
we have had to take actions that are
outside the norm. These include the equity
raise undertaken at the start of the new
financial year and the decision not to
propose a dividend this year. I realise the
latter is disappointing for our shareholders
and I thank them for their ongoing
understanding in these difficult times.
The Board recognises the importance
of dividends to our shareholders and hopes
to resume dividend payments once the
business is again trading profitably on
a sustained basis.
I would like to thank all my colleagues at
Fuller’s for their loyalty and perseverance
in the face of this unprecedented
pandemic, and their enthusiasm to get
back to their role of welcoming and
entertaining our customers once again.
M I C H A E L T U R N E R
C H A I R M A N
8 July 2021
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 At the heart of our community
S U PP O R TI N G O U R CU S TOM E R S
Creating beautiful, future proof
spaces so families and friends can
reunite and relax
The various restrictions imposed during the year on our
business have been difficult to negotiate for both our teams
and our customers – but out of adversity comes innovation
and adaptation. Gardens have become more important
than ever and we’ve carried out a wide range of investments
in our pub gardens and outside spaces during the year with
gazebos, purpose built structures and jumberellas making
these beautiful spaces even better – like this one at
The Mayfly in Stockbridge. Going out and staying out
has never been more enjoyable.
4
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT 5
Strategic ReportAdditional informationFinancial statementsGovernanceOverviewFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 At a Glance
O U R PU R P O S E :
O U R VA LU E S :
1. Doing things
the right way
• Deep pride and genuine enjoyment
for the business we’re in
• Integrity, quality, care and attention
to detail in everything we do
• Total dedication and passion for
everything we do
• Also about doing the right thing, not
just doing things in the right way
• Bringing a positive ‘can do’ attitude to
any challenge, always going above and
beyond for our customers.
Happy teams serving
happy customers
O U R V I S I O N :
We create exceptional
experiences full
of style and spirit –
characterful pubs and
hotels where everyone
feels they belong…
and where people
leave happier than
when they arrived
The Antelope, Belgravia
Doing the right thing has never been more
important and our teams have strived to ensure
that we keep our customers – and ourselves – safe
and secure with additional cleaning, face masks
and lashings of sanitiser.
3. Celebrating individuality
• Nurturing the individuality, spirit
and unique character of each person,
pub and bedroom, because that’s
what makes us special
• Believing that it’s the individuals
who create a great experience…
and make that experience come alive
• Embracing the freedom of thought,
creativity and diverse personalities
that make us who we are
• Where everyone can be who they are…
and make a real difference.
6
The Alice Lisle, Ringwood
The Fuller’s family is a huge collection of smaller
families – in each one of our pubs and hotels.
2. Being part of the family
• A ‘family business’, in the
broadest sense
• Bringing a family ethos and feeling
to how we work – one team pulling
together, in each pub and hotel, and
also together across Fuller’s
• A warm sense of belonging – everyone
together, including our customers
• Where every member of the family is
valued for bringing something special
• Looking out for each other, in
a warm environment built on trust
and empowerment
• Supporting and respecting each other…
and challenging when needed
• Taking the long-term view, not always
about short-term gain.
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT 4. Always asking
what’s next?
• Always asking what’s next?… for
our people, for our customers,
for our pubs and hotels
• A restless passion to continuously
improve, experiment and make
things better
• Encouraging new ideas and
creativity in our people
• Outward looking, in touch with
our market and customers
• Always changing for the better,
but never changing for change’s sake
• Embracing the best from our past,
thinking creatively about our future.
Number of employees at year end
3,764
The Swan, Cotswold Inns & Hotels
Our purchase of Cotswold Inns & Hotels included
The Swan at Bibury, one of the area’s true gems.
Managed Pubs and Tenanted Inns (%)
Revenue by division (%)
Fuller’s Managed Pubs and Hotels within
the M25
Fuller’s Tenanted Inns within the M25
Fuller’s Managed Pubs and Hotels
outside the M25
32%
13%
23%
Fuller’s Tenanted Inns outside the M25
32%
Fuller’s Tenanted Inns
Fuller’s Managed Pubs and Hotels
13%
87%
Analysis of Managed revenue – Rural/Suburban/Urban (%)
Rural
Suburban
Urban
30%
48%
22%
Our geographic reach throughout the South East
The Bear, Oxford
Well, we do encourage people to celebrate their
individuality, as can be seen here at The Bear in
Oxford – whoever the masked bear is, we promise
the welcome will be friendly.
Managed
Bel & The Dragon
Cotswold Inns & Hotels
Tenanted
7
195
7
7
175
LONDON
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report At the heart of our community
8
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT S U PP O R TI N G O U R N E I G H B O U R H O O D S
Keeping doors open to serve
and support the local community,
and to provide more than just
a place to eat and drink
When the Government closed pubs in March 2020,
The Red Lion, Ealing decided to find a way to keep the doors
open. Licensee Edin Basic, acutely aware of his role in the
community and his reputation for great Italian food, decided
to build on this with a community store, in the pub,
majoring on outstanding Italian produce. With rosemary
focaccias, freshly baked by Edin every morning, Parma ham,
antipasti and a wide range of Italian cheeses, la dolce vita
remained very much present in this quiet corner
of West London.
9
Strategic ReportAdditional informationFinancial statementsGovernanceOverviewFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 S T R A T E G I C R E P O R T
Chief Executive’s Review
10
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021 As I write this, the country is still awaiting
the start of the return to normality, and
we look back on a year that started and
ended with our entire pub estate closed.
During the year, we have traded for the
equivalent of just 29% of the financial
year – and this is reflected in our fiscal
performance with revenue1 down 77%
to £73.2 million (2020: £316.0 million).
Against this backdrop, I want to start this
review of the year by paying tribute to the
incredible team of people that work at
Fuller’s. From my Executive Team to all
our team members in our pubs, hotels and
support centre, and our Tenants, all have
dealt with the ups and downs of the past
year with positivity and optimism – filling
their time during the many periods of
furlough by working at vaccine centres,
as delivery drivers, in food banks or serving
and supporting their local communities.
At various times, we have had 98% of the
whole team furloughed and whenever we
have been ready to open up again, they
have been match fit and delivered a great
Fuller’s experience in the most challenging
of circumstances. I would like to personally
thank them all most whole-heartedly for
their dedication, commitment and loyalty.
We have now reopened the entire estate,
albeit with continued social distancing and
table service restrictions, and have used the
past year wisely – investing in our pubs and
hotels, accelerating digital projects and
rightsizing our teams. While it may have
been an unusual year in terms of revenue,
we have emerged in the best possible
position operationally as the country stands
ready to begin shaking off the spectre
of coronavirus.
We started the year with a clear strategy,
purpose and vision. While the pandemic
may have altered the short-term tactical
activity that delivers the strategy, the
overarching principles are unchanged.
This clear focus, aimed at delivering
sustainable returns for the long term,
is as relevant as ever and with our pubs
and hotels reopened and trading again,
we are optimistic about the future.
“Looking after our
teams and Tenants
has been a priority
during the pandemic
and communication
has been at the heart
of that.”
Revenue and other income
£73.4m
Capital investment
£16.5m
Prudent approach to navigating
the pandemic
During the year under review, we have
accessed the various Government relief
and coronavirus support measures
available. For much of the year, we have
had 98% of our team members on the
Coronavirus Job Retention Scheme
(“CJRS”), with the Company topping up
all salaries to 80%. We also put in place
£100 million of funding through the Covid
Corporate Financing Facility (“CCFF”)
and have benefited from the various grants
that have been on offer, the suspension
of business rates and the hospitality VAT
reduction. We are grateful for all of these
measures, but despite this our average
cash burn during the periods of total
closure has been £4-5 million per month.
With the periods of enforced closure
lasting longer than anyone could have
anticipated and a commitment to exit
the pandemic in a position of strength,
we decided at the end of the financial
year to undertake an equity raise,
successfully generating £52 million
of net proceeds in April 2021.
Looking after our teams and Tenants
has been a priority during the pandemic
and communication has been at the
heart of that. We led the industry in
cancelling commercial rent ahead of the
Government’s enforced closure and this
was very well received. For our teams
in our Managed Pubs and Hotels, and
in the support centre, the Fuse digital
communication system we implemented
back in 2017 proved to be a popular and
useful tool, providing a quick and instant
way to share information and video
messages, which have been really well
received. We also hosted a number of
webinars when we had more detailed
information to impart and these became
a regular fixture prior to each reopening.
The success of these webinars has cemented
their place in our communications toolkit
and is another positive learning that we will
take forward.
One of the areas we have paid particular
attention to is the health and wellbeing
of our teams during the pandemic.
1 From continuing operations.
11
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Chief Executive’s Review continued
Through Fuse, we have shared hints, tips and
courses on coping and regularly promoted
the wide range of support on offer from
the Licensed Trade Charity. We provided
supermarket vouchers for those most
impacted during the tough third lockdown.
The response from our team members
has been very positive. We also provided
Fuller’s vouchers to team members who
volunteered in their local communities while
furloughed for them to share with their
fellow volunteers by way of thanks.
On reopening our estate, we took
a rational approach. Decisions were taken
on a site by site basis and were based on
the data available from a range of sources
both internal and external – an approach
which allowed us to minimise losses for the
periods in which the estate was partially
reopened. Following the last lockdown,
we reopened 121 Managed Pubs and
Hotels on or soon after 12 April 2021 with
outside trading only, with the remainder
of the estate opening on 17 May 2021.
Positioning the business
for long‑term growth
At the start of the year, we completed the
integration of the support functions for
both Bel & The Dragon and Cotswold
Inns & Hotels, and the delivery of the
Transitional Services Agreement (“TSA”)
with Asahi. We also completed the sale of
the Stable Pizza and Cider Limited (“The
Stable”), a leasehold business, to Three
Joes. This streamlined the business and
allows us to focus on the areas that will
drive our growth in the future.
These actions, combined with the sale of
the Fuller’s Beer Business in April 2019,
provided an opportunity to make further
changes in our central functions – creating
a leaner, more efficient, support centre
team designed to assist a dedicated pubs
and hotels business.
This exercise was completed in the first half
of the year and we are confident we have
the right people in the right places to
continue to grow the business in the future,
both organically, and through acquisitions
and developments at the appropriate time.
We also reviewed the size and composition
of our teams at house level and, although
we made a number of redundancies, these
were kept to a minimum. As part of this
exercise, we also successfully redeployed
a number of people to other pubs and
hotels within the Fuller’s estate.
During lockdown we introduced a new
range of online learning opportunities to
help our teams develop both personally
and professionally. The courses were
delivered through Fuse and focused on
wellbeing and developing important life
skills, everything from acquiring new digital
skills to learning a new language. During
the year 1,616 courses were completed
with the most popular courses being
around managing time, managing
emotions, and wellbeing.
Finally, to underpin the right team, we
need the right systems and we have used
the downtime during the year to identify
an appropriate, first-class central finance
system. As a result, we will be rolling out
our new Microsoft Business Central
software package in October this year
– simplifying our ordering and accounts
processes and crucially improving the flow
and understanding of data to the business.
Innovative solutions for a digital future
The onset of the coronavirus pandemic
forced us to rethink our customer journey,
removing contact points and improving
our use of digital technology. While these
were implemented as a solution to an
immediate problem, the learnings we have
taken and the success of these projects,
have now made them a permanent feature
of our business.
The pre-visit journey is now key to our
customer, from searching and viewing to
booking and ordering. This encompasses
a myriad of digital touch points for the
consumer in both pubs and hotels that,
to achieve optimal efficiency and
a frictionless journey, all need to be
seamlessly interlinked. This work is on
schedule and initial enhancements in
centralised bookings and Order & Pay
are working well.
The Order & Pay solution was put in place
for the initial reopening of the estate in
July last year. The system, which allows
customers to scan a QR code to view the
menu, place orders and pay – all without
having to leave the table, wait for a team
member, or download an app – proved
both successful and popular with team
members and customers. We have
successfully rolled this out across the
estate and customers that use it have
given higher Net Promoter Scores, better
tips for the team and migrated to more
premium drinks.
“The onset of the
coronavirus pandemic
forced us to rethink
our customer journey,
removing contact points
and improving our use
of digital technology.”
12
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT The improvements to our booking platform
shorten the customer journey and
auto-confirmed bookings now account for
nearly two-thirds of all reservations made.
Meanwhile, the central sales team has been
instrumental in encouraging customers to
look outside our peak periods and, where
necessary, consider alternative Fuller’s
venues to deal with demand – broadening
our peak trading times and reducing lost
sales. During July and August last year,
our central sales team delivered over
one million covers.
At the tail end of 2019, we adapted our
accommodation marketing strategy to
focus on the domestic tourism market
– a decision that has been vindicated with
the uplift in staycations since the outbreak
of the pandemic. Access to this market
has been further boosted by search engine
optimised hotel finders, focusing on
acquiring new customers around key
domestic holiday activities such as dog
friendly hotels in the New Forest. This
drove bookings in our hotels and pubs with
rooms and 15 of our accommodation sites
had record accommodation weeks despite
the pandemic. In the Cotswold Inns &
Hotels business, which we acquired in
October 2019, we worked particularly
hard to build a good digital customer
journey for people booking and our
success is reflected in the website
conversion rate rising 28% with a 19%
rise in direct website revenue.
This digital customer journey underpins
our marketing strategy and key to this
is our single customer view database.
During the year this database has grown
by 42% to 1.6 million people, of which
over 500,000 are opted in and fully
contactable. The largest data sources were
our booking engine, Design My Night,
and Wireless Social, our wifi provider.
The Cotswold Inns & Hotels database
also saw strong growth, increasing by
103%, and we have grown the Fuller’s social
media audience too during the year with
increases across Facebook, Twitter
and Instagram of 12%, 15% and
20% respectively.
While our pubs may have been closed for
much of the year, our website was very
much open for business. We had more
customer engagement than ever on our
new pub finders – with visits up 55.7%
against the prior year, largely driven by
our Pubs Reopening finder.
Tempestuous Times
Even coronavirus couldn’t stop our ever popular
Shakespeare in the Garden from taking place.
Never has The Tempest, performed here at The
Windmill in Portishead, been more appropriate.
@weareopenbar
Instagram followers
18,300
Number of people on our database
1.6m
13
At all digital points of interaction, we
collect data – which helps us understand
what consumers are buying and how they
are behaving. This gives us the ability to
communicate easily and efficiently with
our customers and potential customers
and continues to successfully convert
to increased bookings. It is supported
by incredible in-pub activity including
Shakespeare in the Garden and the
forthcoming Comedy on Tap.
This mix of digital communications
promoting exciting in-pub activity drives
spend per head, attracts new customers,
and provides more reasons for existing
customers to visit. We will continue to
monitor which digital levers translate into
the highest profit and constantly review
and revise our online communications, while
not jeopardising the legendary personal
hospitality for which Fuller’s is famous.
Well‑invested pubs in
stunning locations
The foundation of our business is our
predominately freehold pub estate and
investment in the estate is a key tenet
of Fuller’s success. While many of our
competitors suspended their capex
programmes during the pandemic, we did
the opposite – maximising this opportunity
to complete planned investments and
bringing forward others to take advantage
during the enforced closure.
During the year, we have completed a large
number of investment schemes including
10 transformational refurbishments at sites
including The Coach & Horses in Soho,
The Elephant in Finchley, The Fox & Pelican
at Grayshott in Hampshire and The King’s
Arms Hotel in Woodstock. We have two
further ongoing schemes that began in the
last financial year – The Kingswood Arms
in Kingswood near Banstead, which opened
towards the end of June, and The Red Lion
in Wendover, which opened on 7 July 2021
as our seventh Bel & The Dragon site. We
also opened one brand new site during the
year – The White Horse at Wembley, in
the shadow of the iconic Wembley Arch
and perfectly poised to benefit from the
delayed European Championships.
We have also used the closure period
to undertake smaller schemes across
a number of Cotswold Inns & Hotels
and Bel & The Dragon sites, completing
works to further enhance these already
wonderful properties.
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Chief Executive’s Review continued
The pandemic has put a firm focus on
outside spaces and pub gardens – which
have seen an increased level of investment.
We invested heavily in “winterisation”
projects during the year and we will be
investing a further £4 million in over 90
schemes during this financial year, ready
for the autumn. Outside spaces can now
be pre-booked and our customers are
more accustomed to being in the open air.
With a huge range of innovative solutions,
including stretch tents, giant teepees,
huts, sheds and pergolas to keep customers
warm and dry, we expect to see this trend
continue. There is no doubt that the status
of the pub garden has been elevated and the
development of, and investment in, these
outstanding areas will ensure that the pub
garden is now a year-round asset, not just
for enjoying on the August Bank Holiday.
Tenanted Inns
Our high quality Tenanted Inns continue
to play an important strategic role in our
balanced estate and, at the very start of
the pandemic, we took the decision to
suspend commercial rent for our Tenants
during periods of closure. The benefits
of this decision are now being realised as
our Tenants used the savings to improve
their pubs and have emerged from the
pandemic debt free and in pole position
for reopening. When trading has been
possible, we have taken a bespoke view
by pub to ensure a fair and appropriate
rent has been charged.
Throughout the lockdown, we have kept
our Tenants informed with tips and training
materials to help them through the closure
periods and to reopen safely and profitably.
We have also provided support on mental
health and refunded unopened kegs
and casks to further help with cash flow.
In return, our Tenants have been quick to
reopen when allowed. All opened in July
2020, albeit some were a little cautious
and opened a few weeks after lockdown
ended, but the pubs traded very well
during the summer, making the most of
the Government’s Eat Out to Help Out
scheme. Like the Managed estate, trading
slowed as restrictions tightened in the
autumn, and most pubs struggled through
the staggered opening and closing of
the tier system and were already closed
when the full lockdown was reintroduced
in January. I am pleased to confirm that
all pubs are now open and trading again.
During the lockdown, we progressed with
plans to improve the training and induction
process for Tenants with the addition of
a new team member, whose sole focus
is around recruiting new Tenants and
ensuring they are fully inducted and
supported as they start their partnership
with Fuller’s. This has been well received
and has been instrumental in reducing
vacancies in our Tenanted Inns. I am
delighted to say that Iain Rippon has
proved to be an excellent leader for our
Tenanted Inns business and when our
Tenanted pubs started to reopen from
April, we did not have a single vacancy.
An evolving and engaging
ESG strategy
This year has seen a major change in our
approach to corporate social responsibility
with an evolved Environmental Social
Governance (“ESG”) programme now
integral to our business strategy. Under
the banner of Life is too good to waste,
we have three work streams covering the
environment, our communities and our
people. We are in the process of recruiting
a dedicated Head of Sustainability to drive
the ESG programme – and in particular
the environment and community elements.
Eat Out to Help Out
The Government’s Eat Out to Help Out scheme
definitely helped encourage customers to come
back to the pub last August – and it gave us lots
to shout about on social media.
#EatOutToHelpOut
14
Our new approach to addressing ESG will
see our commitment to these three areas
underpin our strategy, our decision making,
and our vision. We have always looked to
reduce our carbon footprint, and now it
will be a requirement in our investment
case. We have always played a role in
our communities – and we will bring the
community more into the business and
ensure that our support is not just financial,
but a holistic and integrated approach to
working with our charity partners.
Under the framework of Our people are too
good to waste, we will focus on three areas
– wellbeing, genuine careers and belonging
(inclusion). This forms part of the wider
people plan to create a compelling people
proposition under the banner True to You.
Looking forward to the future
The end of restrictions is now just 11 days
away and our pubs and hotels are perfectly
placed to benefit from growing consumer
confidence and the return of normal life.
Pubs are social spaces that thrive on
spontaneity – a quick pint, staying for
a bit longer to chat to someone at the bar
or just walking past a beautiful pub garden
and deciding to stop for a bite to eat
without pre-booking a table. I know that,
across our estate, our teams are excited to
see those behaviours return.
The boom in staycations and desire to get
back out with friends has led to strong
trading in parts of our estate – particularly
Cotswold Inns & Hotels and our rural pubs
with rooms – and there is an incredibly
busy season to come with numerous
weddings and a high level of advance
bookings. With our entire estate open,
like for like sales for the 12 weeks to 3 July
2021 are running at 76% of 2019 levels,
cash generation is strong and our net
debt levels are below where they were
pre-pandemic. The importance of our
perfectly balanced estate has come in to
play with different parts of the business
showing different recovery trajectories
and we are very comfortable with the
Company’s current position.
We have a clear set of priorities for the
next 12 months. We will continue to deliver
our strategic goals, invest in our estate,
and implement our new central finance
system. Other projects, such as our
employer brand and further work around
our digital customer journey, will be
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT progressed and we will, as ever,
keep a watching brief on appropriate
opportunities in the market. In the
short term, we will continue to address
challenges around recruitment and supply
chain, which are having an impact right
across the hospitality sector.
The elements that combine to make
Fuller’s such an amazing company have
been reiterated many times before and are
always worth repeating. The foundations
are our iconic, predominately freehold,
well-invested estate of stunning pubs and
hotels, which are geographically southern
based and cover city, town, village and
rural locations. At our heart are the
amazing team members and entrepreneurial
Tenants that make up the Fuller’s family,
and we are driven by a clear, consistent,
long-term strategy. Combined with our
strong Balance Sheet, a cash generative
business and the fact that the enduring
appeal of the high-quality British pub has
never been stronger, we look to the future
with confidence.
S I M O N E M E N Y
C H I E F E X E C U T I V E
8 July 2021
@EpilepsyAction
Leah Murrell, our deputy manager at The Mill
at Elstead, ran an online fundraiser for Epilepsy
Action to say thanks for all the help she had
received from the charity since being diagnosed.
@TheAngelAndCrownRichmond
The Angel & Crown in Richmond did an
amazing job of feeding the homeless during
lockdown, providing a takeaway meal and,
later, essentials including clothes and toiletries.
The pub was widely recognised for this amazing
contribution to the community.
@Pennies_orguk
We are proud to be a supporter of Pennies
and delighted to see this excellent initiative hit
a real milestone when it celebrated 100 million
micro-donations made by customers across its
retail partners.
Thanks to
you, this
year we have
achieved…
@only_a_pavement_away / @Fullers
A team from Fuller’s was delighted to
participate in a 48 hour relay for the charity
Only a Pavement Away, which finds careers in
hospitality for people who are, or are in danger
of becoming, homeless.
@beehivepub
The Beehive in Egham opened a food market
in its car park with a delivery service for those
who couldn’t make it. In a further step to
maintain links with its regulars, the pub also ran
a virtual pub quiz through its Facebook page
during lockdown.
@elephantinn / @NoahsArkHospice /
@NLondonHospice
With some remaining stock at The Elephant
in Finchley nearing the end of its shelf life
during the first lockdown, general manager
Bart Stachecki and his colleagues decided to
sell it off for charity to local residents, raising
valuable funds for two local hospices.
@ploughinnealing
Many of our pubs showed their support for key
workers with picture displays in their windows.
They also joined in when the nation clapped for
carers – like Richard Cavanagh, the general
manager at The Plough in Ealing, and his family
seen here on their balcony.
15
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Our Business Model
D E S CR I P TI O N
H OW WE CR E ATE VA LU E
Customer Offer
We are famous for delicious, fresh, seasonal
food and an extensive range of beers, wines,
spirits and soft drinks as well as over 1,000
boutique bedrooms. We have a clear vision to
deliver memorable experiences that ensure our
customers leave happier than when they arrived.
Iconic Properties
Our predominantly freehold estate is mainly
located in the South and South East of England.
It is a great balance with rural, suburban and urban
sites. It includes some truly iconic sites such
as The Still & West in Old Portsmouth and
The Churchill Arms in Notting Hill.
Tenanted Inns Estate
Our Tenanted estate is an important part of our
balanced business and is highly cash generative.
People
Our people make the real difference to our
business. Whether dealing with consumers or
colleagues, they deliver outstanding service from
bar to boardroom. Our purpose is happy teams,
happy customers – and we strive to ensure that
everyone knows the key role they play in delivering
that purpose, vision and strategy.
Digital Technology
This encompasses a myriad of digital touch points
for the consumer in both pubs and hotels that,
to achieve optimal efficiency and a frictionless
journey, all need to be seamlessly interlinked.
In addition, continued development of our digital
technologies and systems further enhance our
customer knowledge and understanding and create
efficiencies in our internal processes.
Financial Strength
Our strong Balance Sheet and prudent approach
to cash management ensure that we are well placed
to grow both organically and through acquisition.
Managed Estate
The purchases made by the customer are the
majority contribution to our revenue and profit.
Tenanted Inns
The revenue streams from this part of the
business include rent and income from the sale
of beers, wines and spirits to our Tenants.
Supplier Collaboration
We work with our suppliers for mutual benefit,
creating distinctive products that can only be
enjoyed at Fuller’s. This includes bespoke food like
our London Porter Smoked Salmon and ice-
creams from Laverstoke Park Farm. It also includes
beers and wines that are unique to our pubs – both
through the Long-Term Supply Agreement with
Asahi, and through small supplier collaborations.
16
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT O U TPU T S
TH E VA LU E WE S H A R E
Revenues
We generate revenues from the day to day
operations in our Managed Pubs and Hotels, as well
as from our Tenanted Inns estate. In addition, we
generate some rental revenue from unlicensed
properties. Another source of income is rebates
from third party suppliers, which we receive by
achieving purchasing targets through higher sales
in our Managed and Tenanted pubs.
Cash Flow
We have a highly cash generative business and
a careful approach to our financial management.
By ensuring that we always produce more than
enough revenue to cover our costs, we maintain
our liquidity which allows us to expand both
organically and through acquisitions.
Reinvestment and Refurbishment
By maintaining high standards in terms of both
structure and décor, we protect our assets. We also
regularly invest in upgrading our properties with
transformational schemes that reflect changing
markets and customer behaviour. In addition,
we invest in new properties – both single and,
if appropriate, group acquisitions in line with our
strategy (see page 18).
Customers
Our customers leave happier than they arrived,
following a memorable, premium experience
(see our purpose and vision, page 6).
Shareholders
Prior to the recent pandemic, our progressive
dividend policy had shown increasing returns for
over seven decades. The Board hopes to resume
dividend payments once the business is again
trading profitably on a sustained basis.
People
Our team members tell us that they enjoy being part
of the Fuller’s family and that they appreciate our
investment in their wellbeing. We provide best-in-
class training and development programmes and
genuine opportunities to develop through internal
career progression. Our policies ensure that we have
a respectful and inclusive working environment and
a consistent approach to supporting our people.
Communities
We strive to play a key role in the communities and
neighbourhoods in which we operate with support
for local events and groups. We support a number
of charities, including Special Olympics GB
at a corporate level and, where possible, offer
matched funding for our support centre employees
and general managers where they are undertaking
fundraising activities.
17
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report While it may have been a strange year,
we have continued to pursue our strategy
– with the addition of a fifth key element,
focused on ESG. Here we review the steps
we have made over the past year.
1
To deliver a distinctive
customer experience across
the whole Fuller’s estate
• Building genuine partnerships
while sourcing the right range of
authentic products to give Fuller’s
competitive advantage
• Optimising the customer’s journey
digitally, both at central and local level
to drive a seamless interaction and
improve conversion rates
• Broadening the appeal of our pubs and
hotels to new and existing customers
through a targeted offer and relevant
omni-channel marketing
• Surprising and delighting our customers
in our venues by managing their
experience, pre, during and post visit.
Progress:
This year has been fundamentally
impacted by estate closures and
operational restrictions due to the
coronavirus pandemic and associated
lockdowns. However, we have continued
to work with our suppliers to ensure we
have the best and most relevant products
in our portfolio and are in the best possible
position as we return to business as usual.
We have also worked to ensure our
customer journey and offer is relevant,
well-presented and communicated.
We have continued to deliver memorable
experiences – with our ever-popular
Shakespeare in the Garden programme
taking place in a Covid-secure environment
during the pandemic, which received
a fantastic reception from audiences
across our estate.
Improvements have included investments in
our outside spaces, which have become key
to trading post-pandemic, the development
of digital processes to improve the customer
journey and enhancements to the way we
book, reserve and confirm tables – all
supported by innovative social media and
digital communications.
Our Strategy
Priorities:
• Build on our single customer view
database to further improve the success
of our targeted e-mail campaigns
• Map the role of technology in the
customer journey and maximise the
use of digital tools in building sales and
improving the customer’s digital journey
• Continue to deliver innovative and
exciting customer experiences –
in a safe and secure environment
• Measurement of our success through
invested like for like sales growth and
Net Promoter Score.
Influences:
• Customers need an experience
that cannot be replicated at home
• We need to adapt our operation to
meet changes in behaviour and
expectations following on from the
coronavirus pandemic and changes
to work/home life balance
• Monitor and respond to changes in
consumer trends, particularly around
healthier lifestyles.
2
To grow by carefully
targeted acquisitions and
developments that enhance
our premium business
• To maintain the fabric of the
estate, ensuring high standards
and legal compliance for both
colleagues and customers
• Streamlined project process,
utilising skills within the team
and pool of designers, delighting
customers and enhancing our offer
• Maximise the potential from our
exceptional estate, improving
operational efficiency,
premiumisation and stand out
• Keeping appraised of potential
acquisition opportunities to add
value and by continuous assessment
of our estate.
Progress:
During the year we completed the full
integration of Cotswold Inns & Hotels,
acquired during the previous financial year.
Cotswold Inns & Hotels is an excellent
fit with our existing business, adding 201
bedrooms to our estate, and this area
performed comparatively well during the
year, with staycations being very in vogue.
18
We also opened The White Horse at
Wembley – a great new pub in the shadow
of the iconic Wembley Arch, amidst a new
development of 6,000 homes.
During the periods of enforced closure
this year we have taken the opportunity
to complete a large number of investment
schemes, including 10 transformational
refurbishments. We have also invested in
outside spaces and pub gardens in order to
maximise the use of these spaces outside
of the summer months.
Priorities:
• To complete further outdoor projects
to maximise the garden trading area
• To continue with our programme of
investment in our estate to ensure we
always have the best pub in the area
• To seek further acquisitions that
enhance our estate and increase our
customer base
• Measurement of our success through
operations revenue and profit growth.
Influences:
• Availability of high quality sites
and opportunities.
3
To build a leaner cost
base by investing and
improving processes
• Building genuine partnerships that
keep input costs in check and give
Fuller’s competitive product advantage
• Drive collaboration by creating
effective cross-functional teams
• A relentless and agile approach to
continuous improvement and efficiency,
with decisions backed by data
• Taking responsibility for our future
by putting a value on sustainability
in every decision.
Progress:
This year has been heavily impacted by
coronavirus and the associated restrictions
and procedures that have been necessary
during the periods pubs have been able
to trade. We successfully implemented
a range of new processes and procedures,
such as Order & Pay, which allows the
customer to peruse the menu, place
an order and pay the bill without leaving
their table, to ensure the safety of our
customers and team members in light
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT
of the coronavirus outbreak. These
processes are now embedded in our
operations and have stood us in good
stead as we move through the reopening
phases during the new financial year.
During the year, we have also enhanced
the way we use our central booking system
and team. This has further improved the
customer journey and increased auto-
confirmed reservations with better
scheduling of bookings, and ensuring we
offer suitable alternative venues within the
estate where sites are fully booked.
Following a full review of the supply chain,
we have moved to a new ordering system,
that sees orders placed twice weekly and
delivered two days later, driving better
planning and forecasting, whilst improving
efficiency for our suppliers.
During the year we have identified,
planned and are already well underway
with the project to transition to a more
suitable finance system for a focused
pubs and hotels business, which will
both simplify our ordering and accounts
processes and improve the flow of data
to the business.
Priorities:
• Complete implementation and roll
out of the new Microsoft Business
Central software package during
autumn 2021
• Build on our single view customer
database by identifying key interaction
points in the customer journey and
digital solutions to improve the
customer journey
• Measure our success through
gross profit margins, Net
Promoter Score, contactable
database numbers and marketing
campaign return on investment.
Influences:
• Changes in consumer behaviour due to
the impact of the coronavirus pandemic
• Increased customer use of digital
technology
• Importance of safeguarding personal data.
4
Supporting these
objectives by recruiting,
developing and investing
in the best people
• A modern, transparent and fair
reward package that attracts
and retains the right people and
incentivises high performance
• An inclusive workplace where
wellbeing is taken seriously, and
everyone has a place and a voice
• Genuine opportunities for a career
and a strong talent pipeline with
the right skills for the future
• A compelling and differentiated
employment brand coupled with
a best-in-class recruitment experience.
Progress:
During the pandemic, the health and
wellbeing of our teams has been supported
in several ways. We have shared hints,
tips and courses, provided access to
resources, regular video updates and
more targeted support in the form of
supermarket vouchers for those most
impacted. During the year 1,616 online
courses were completed on a range of
subjects as diverse as managing time
and learning a new language.
We supported our Tenants during the
pandemic in a variety of ways, including
suspending commercial rent during
periods where they were unable to trade
and by signposting sources of financial and
emotional support. As a result, our Tenants
have been in a position of strength as they
reopened their pubs.
Priorities:
• Continue to find the best people
through a strong employer brand –
work is well underway in this area
• Ensure we are fit for the future with
the right organisational structure,
capability and roles
• Ensure our people experience engages
our team members, fulfils their needs
and ambitions, and encourages the best
people to stay at Fuller’s
• Undertake an employee satisfaction
survey during the current full year
• Continue to roll out our new employer
brand – True to You – and support this
with ongoing personal development and
career progression
19
• Measure our success through staff
turnover, application numbers per role,
number of successful apprenticeships
and staff engagement.
Influences:
• Impact of potential changes to the size
and composition of our workforce in
the light of coronavirus and changing
consumer behaviour
• Impact of Brexit on the labour market
pool within the hospitality industry
• Availability of labour with appropriate skills.
5
A clear ESG strategy under
Life is too good to waste
• A road to net zero delivered through
energy and waste management
reducing our carbon footprint
• Supporting the communities in which
we operate through charity links and
community-based initiatives
• Supporting our teams through training
and development, health and wellbeing,
and a sense of belonging.
Progress:
ESG has always been important to us,
but this year we have added this as our
fifth strategic priority to recognise its
importance at the heart of the business
and will report progress on this in our
next Annual Report. We are in the process
of hiring a dedicated Head of Sustainability
who will be responsible for implementing
the programme and setting and delivering
KPIs against it. Further details on the
Life is too good to waste initiative can be
found in the Corporate Social
Responsibility Report on page 34.
Priorities:
• Establishing a road to net zero through
energy and waste management,
reducing our carbon footprint
• Increasing our support for our
charity partners
• Creating an inclusive workplace,
continuing our range of wellbeing
initiatives and career planning.
Influences:
• Impact of Government regulation and
incentives on environmental initiatives
• Media and consumer focus on
ESG related issues
• External influences such as coronavirus
or Brexit provide additional challenges
to the wellbeing of our teams.
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report At the heart of our community
S U PP O R TI N G O U R E M PLOY E E S
Feeling like a team even though
we couldn’t be together –
keeping our people connected,
motivated and engaged
With our team members spread across the South of England,
regular communication during the pandemic was essential.
Our digital learning and communications platform, Fuse, was
used for frequent informative and entertaining videos from
the Chief Executive and for online learning to keep our
teams engaged. At a house level, it was much the same.
Take The Victoria in Paddington, where Chris Cochrane and
Helen Wilson kept in touch with their team through
a combination of WhatsApp, quizzes and even a collaboration
video with all the team submitting their contributions
individually to create something unique for The Vic.
20
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT 21
Strategic ReportAdditional informationFinancial statementsGovernanceOverviewFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Financial Review
A DA M CO U N CE LL
FI N A N CE D I R EC TO R
“The focus during the long periods
of closure was to ensure that the
Group emerged strongly once the
estate reopened, with continued
investment in capital projects and
our digital offering.”
22
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT Financial Position and Performance
All figures below are for the continuing
operations of the Group.
Group revenue and other income fell by
77%, signifying the detrimental impact
that the enforced closure of our business
unsurprisingly had on the results. On
average our pubs were only open to trade
for 29% of the days within the FY21
financial year and even whilst open they
were trading under severe restrictions.
The significant decline in revenue resulted in
an adjusted loss before tax of £48.7 million
(FY20: profit of £19.4 million) and statutory
loss before tax of £57.8 million (FY20:
profit of £8.4 million). In periods where
we have been able to trade, albeit with
restrictions, trading has been encouraging
with positive cash generation and like for like
sales in Managed Pubs and Hotels at 80%
during the period between 4 July 2020
and 5 September 2020. Since then the
restrictions became more onerous, resulting
in the eventual closure of our entire estate
around the end of December, until those
pubs with outside space could reopen on
12 April 2021.
The focus during the long periods of
closure was to ensure that the Group
emerged strongly once the estate
reopened, with continued investment
in capital projects and our digital offering.
However, it also meant ensuring we
protected our financial position and kept
cash burn to a minimum. The Group
implemented a number of mitigating
actions to reduce cash outflows and
maintain liquidity, including the decision
not to pay a dividend for FY20 and FY21,
no bonuses for FY20, a voluntary salary
reduction by the Board and Executive
Team members of 25% and 20%
respectively, and carrying out an exercise
to rightsize teams across the entire pub
estate and streamline the support function.
As well as reducing costs internally, the
Group also participated in Government
initiatives to protect the viability of the
business, including the CJRS, Eat Out to
Help Out scheme and Business Rates grants.
Through the various schemes the financial
results benefited by £47.9 million. The Group
was also confirmed as an eligible issuer under
the CCFF scheme and issued commercial
paper of £100.0 million. Even with all the
measures put in place and the assistance
received from the Government, cash burn
was around £4-5 million per month.
Like for like sales when open
80%
Net debt excluding leases
£218.1m
Shortly after the end of the financial
year the Group raised £52 million, net of
expenses, through the issue of new equity.
This leaves the Group in a strong financial
position with sensible levels of debt given
our asset rich Balance Sheet. It is from this
position of strength that the business will
be able to maximise the opportunities open
to it as the economy reopens and trading
gains momentum.
On 7 June 2020, the Group sold The
Stable to Three Joes for an enterprise
value of £0.5 million, which resulted
in a loss on disposal of £0.9 million.
As The Stable was sold during the period,
the results have been reported within
discontinued operations. The amounts
shown as discontinued operations within
the financial statements are an operating
loss of £0.5 million as well as the loss on
disposal. As part of the transaction,
Fuller’s retained ownership of the five
freehold properties associated with
The Stable business.
23
Finance Costs
Total net finance costs (before separately
disclosed items) have increased by
£0.8 million to £8.4 million. The increase
is driven by the interest cost recognised on
the unwind of the lease liabilities. This has
increased by £0.6 million because of rent
concessions received during the course of
the financial year which have been treated
as lease modifications and remeasured at
an increased incremental borrowing rate
(“IBR”) from the IBR used at inception.
Interest on loans has remained in line with
prior year despite the average monthly
borrowings increasing by £74 million,
as this was offset by the lower interest
rates on the CCFF.
The net interest expense on our defined
benefit pension scheme is shown within
separately disclosed items as the charge is
driven by market conditions at an arbitrary
point in time and is not associated with our
underlying trading.
Separately Disclosed Items
The net position on separately
disclosed items of £9.1 million expense
(2020: £11.0 million expense) comprises
principally £12.9 million of impairment on
a number of properties, right-of-use assets,
lease receivable and goodwill. Additionally,
£1.9 million of reorganisation costs were
recognised in the period which include
redundancies as a result of the pandemic
as well as costs associated with the hive
up of Bel & The Dragon and Cotswold Inns
& Hotels. These costs were marginally
offset by £5.8 million profit on disposal
recognised in relation to seven properties
most of which were unlicensed properties.
Tax
A full analysis of the tax charge for the
year is set out in note 7 to the financial
statements. Tax has been provided for
at an effective rate of 18.3% on adjusted
losses (2020 restated: 37.1% on adjusted
profits) from continuing operations. The
overall effective tax rate of 16.6% is due to
the separately disclosed items being taxed
at an effective tax rate of 7.7%.
A prior year adjustment to the net deferred
tax liability has been recognised in the year,
in respect of an understatement in the
base cost of property, plant and equipment
recoverable on a sales basis. This has
resulted in an increase of £4.0 million in net
assets at 31 March 2019 and a reduction
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Financial Review continued
Total tax collected (£m)
Excise duty
VAT
PAYE and Employees’ NI
Corporation Tax
Business Rates
Employer’s NI
Other taxes and
Apprenticeship Levy
100
0
3.1
7.7
14.0
10.1
18.5
31.9
2.6
FY 2020
FY 2021
Revenue and other income
Managed Pubs and Hotels
Tenanted Inns
Unallocated
Group revenue and other income from continuing operations
Adjusted (loss)/profit by segment
Managed Pubs and Hotels
Tenanted Inns
Unallocated
Operating (loss)/profit from continuing operations
Finance costs
Adjusted (loss)/profit from continuing operations
1.0
5.5
0.4
12.2
0.2
-3.4
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
64.0
9.2
0.2
73.4
286.3
29.7
3.7
319.7
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
(26.1)
1.2
(15.4)
(40.3)
(8.4)
(48.7)
30.6
11.8
(15.4)
27.0
(7.6)
19.4
24
of £1.0 million to the profit after tax
for FY20. The net deferred tax liability
at 28 March 2020 has reduced by
£4.0 million from £17.1 million to
£13.1 million.
During the year the significant tax revenues
the Group generates for the Government
fell by 82%. During the 52 weeks ended
27 March 2021, the total tax contribution
of the Group to the UK Exchequer was
£15.9 million (2020: £87.9 million) in
taxes borne and taxes collected on behalf
of colleagues, customers and suppliers. This
significant reduction comprises a reduction
in VAT payments of £31.7 million to just
£0.2 million in the year (FY20: £31.9 million)
and a corporation tax receipt of £3.4 million
due to the losses incurred. The business rates
holiday resulted in a saving of £13.6 million.
Pension
The defined benefit pension scheme
deficit has decreased by £1.2 million to
£3.5 million (2020: £4.7 million) with both
the fair value of scheme assets and present
value of pension obligations increasing
substantially. The present value of pension
obligations increased by £18.8 million
to £147.3 million, which was driven by
a decrease in the discount rate from
2.40% to 1.95%. This was offset by an
increase of the fair value of scheme assets
by £20.0 million from £123.8 million to
£143.8 million. Standard deficit recovery
payments of £2.3 million were also made
during the financial year.
Shareholders’ Return
In light of the closure of the estate for
the majority of the financial year the
Board is not proposing the payment
of a final dividend.
During the period no ‘A’ ordinary 40p
shares were purchased into treasury
(2020: 48,700 ‘A’ ordinary 40p shares
for £0.4 million). The middle-market
quotation of the Company’s ordinary
shares at the end of the financial year was
860p. The highest price during the year
was 880p, while the lowest was 530p.
The Company’s market capitalisation
at 27 March 2021 was £474.8 million
(2020: £358.8 million).
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT Cash flow
EBITDA
Interest
Tax
Working capital
Pension contributions and share transactions
Cash available for discretionary spend
Capital expenditure
Separately disclosed items
Property disposals
Dividends
Disposal of Stable
Cash flow
Non-cash movement
Net debt movement
Sources of finance
Bank debt
Other debt
Cash
Total net debt excluding leases
Lease liabilities
Total net debt
2021
£m
(13.1)
(4.5)
3.4
(5.1)
(2.6)
(21.9)
(16.5)
(1.5)
10.8
(0.1)
(0.2)
(29.4)
13.2
(16.2)
2021
£m
207.7
27.5
(17.1)
218.1
89.9
308.0
Cash Flow and Net Debt
Overall net debt at 27 March 2021 has
increased by £39.2 million to £218.1 million
excluding leases, due to the enforced
closure of the business for a substantial
part of the financial year. Including leases,
net debt has increased by £16.2 million to
£308.0 million, reflecting a reduction in
lease liabilities of £23.0 million driven by
the sale of The Stable (£10.5 million) and
a number of rent concessions received in
the year that were treated as lease
modifications (£10.0 million).
Working capital outflow of £5.1 million
was partly due to the amounts outstanding
from the Government for the CJRS as
well as the reduction in the VAT liability
compared to the prior year.
Sources of Finance
At 27 March 2021 the Group has
£319.5 million of available facilities, of which
£292 million was scheduled to mature
within the next 12 months. Our undrawn
committed facilities at 27 March 2021 were
£84.0 million, with a further £17.1 million
of cash held on the Balance Sheet.
In June 2020, the Group increased its
available facilities by accessing the CCFF
programme and issuing £100 million
of commercial paper.
Since year end, the CCFF was repaid in
May 2021 and the Group agreed an Amend
and Extend Refinancing of its existing
debt facilities with its relationship banks,
extending the maturity of the £192 million
of debt facilities to 19 February 2023 and
amending the financial covenants to a
minimum liquidity level to 31 March 2022.
The Group also raised a further £52 million,
net of expenses, from an equity raise in
April 2021.
£20 million of our borrowings at
27 March 2021 were hedged using
swaps at a blended interest rate of 2.30%
(excluding bank margin). The interest rate
swap agreements in place will allow us to
continue to borrow a portion of our bank
debt at a fixed interest rate until 2022.
The Group’s financing is a mix of bank
debt, debentures, cumulative preference
shares, overdraft, cash and short-term
25
deposits, as disclosed in notes 24, 26 and
28. Other financial assets and liabilities
such as trade receivables and payables
arise through the Group’s operating
activities. The Group does not trade in
financial instruments.
Financial Risks and Treasury Policies
The Group operates a centralised treasury
function, which controls cash management
and borrowings and the Group’s financial
risks. The objectives of the function are
to manage the Group’s financial risk,
to secure cost effective funding for the
Group’s operations, and to minimise the
adverse effects of fluctuations in the
financial markets on the value of the
Group’s financial assets and liabilities,
on reported profitability, and on the
cash flows of the Group.
Transactions of a speculative nature are
prohibited. The Group’s treasury activities
are governed by policies approved and
monitored by the Board.
Going Concern Statement
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position
are set out in the Strategic Report on
pages 4 to 38. The financial position of
the Company, its cash flows, net debt and
borrowing facilities and the maturity of
those facilities are set out above and on
pages 136 to 141.
In addition, there are further details in
the financial statements on the Group’s
financial risk management, objectives and
policies in note 28. The Directors have
outlined the assessment approach for
going concern in the accounting policy
disclosure in note 1 of the consolidated
financial statements.
There is a material uncertainty that under
a downside scenario the Group would
breach its covenants within the going
concern period to 27 December 2022
and this may cast significant doubt about
the Group’s ability to continue as a going
concern as discussed in note 1; however,
the Board has a reasonable expectation that
the Company has adequate resources to
continue in operational existence for the
foreseeable future. For these reasons, they
continue to adopt the going concern basis in
preparing the Annual Report and Accounts.
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report In the “base case”, the minimum liquidity
requirements are not forecast to be
breached, nor are the covenants when
they revert to minimum leverage and
interest cover in June 2022. The
“downside case” shows that when the
covenants revert they will be breached
unless sufficient alternate strategies
could be implemented. Given the Group
would breach covenants under the
“downside case” and although severe
it is still plausible, this gives rise to
a material uncertainty over the going
concern assumption.
Taking account of the Group’s current
position, the material uncertainty
described above, the principal risks facing
the business and the sensitivity analysis,
as well as the potential mitigating actions
that the Company could take, and the
experience that the Company has in
adapting the business to change, the
Board has a reasonable expectation that
the Company will be able to continue in
operation and meet its liabilities as they
fall due over the period of the
viability assessment.
A D A M C O U N C E L L
F I N A N C E D I R E C T O R
8 July 2021
Viability Statement
The Corporate Governance Code requires
that the Directors have considered the
viability of the Group over an appropriate
period of time selected by them. The
Directors have chosen to assess this over
three financial years through to March
2024 as this aligns with the Group’s
strategic planning cycle and is supported
by the forecasts that are presented and
approved by the Board. It takes into
consideration the Group’s current position,
the potential impact of the principal risks
documented on pages 28 to 30 in the
Strategic Report as well as the uncertainty
regarding continuing impacts of the
coronavirus pandemic. Given the
continued uncertainty over the trading
conditions in the UK, the Directors believe
that any longer-term forecasts are difficult
to determine at present.
The Group’s base case assumes that even
though the estate was fully open from May
2021, sales in FY22 will still be impacted
by reduction in international travel, slow
return to offices and continued impact on
consumer confidence. In FY23, the sales
will continue to be impacted by the
pandemic but to a lesser degree with sales
returning to pre-pandemic level by FY24.
The Group’s longer-term forecasts
take into account the principal risks and
uncertainties as detailed on pages 28 to
30. The most significant risk continues
to be the pandemic and the continued
impact it imposes on trading, especially
on international tourism and the shift
in people working more from home.
Longer-term risks include financing as
the Group’s current funding arrangements
expire in February 2023 and the Group
will need to be able to source suitable
financing at similar levels to those
currently agreed. Other longer-term
sources of risk include cost inflation
caused by market uncertainty impacting
costs such as wages, utilities and food.
Consumer demand shifts including a move
to working from home and a continued
trend towards healthy lifestyles, as well
as the UK economy and its ability to
recover, impact the longer-term
success of the Company.
Financial Review continued
The Group has also modelled a “downside
case” which assumes there will be three
months of full lockdown in FY22, being
December 2021 through to February
2022, and a further three months with
severe restrictions akin to those
experienced in October 2020. In the
downside it will take longer to recover
from the pandemic and therefore under
this scenario, without additional mitigating
action, the covenants in June 2022
through to December 2022 would
be breached.
As announced on 31 March 2021, the
Group agreed an Amend and Extend
Refinancing of its existing debt facilities
with its relationship banks, extending the
maturity of the £192 million facilities to
19 February 2023 and amending the
financial covenants to a minimum liquidity
level to 31 March 2022.
On the same day it was also announced
that the Group proposed placing new ‘A’
shares up to appropriately 20% of existing
issued ‘A’ ordinary share capital. The
refinancing of the facilities was conditional
on the successful equity raise. On 20 April
the equity raise was approved by the
shareholders at the Extraordinary General
Meeting (“EGM”) and the net proceeds
of £52 million were received the same day.
In June 2020, the Group increased its
available facilities by accessing the CCFF
programme which issued £100 million
of commercial paper. The CCFF was
repayable in May 2021 and was repaid
using the Group’s available facilities and
the proceeds of the equity raise.
Other actions that have been
implemented to reduce the cash
expenditure each month include
furloughing the majority of the staff,
temporary pay cuts for the Main
Board and Executive Directors, taking
advantage of business rates holidays
as agreed by the Government as well
as applying for grant income and the
cancellation of the final dividend for
both 2020 and 2021 year ends.
26
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT At the heart of our community
S U PP O R TI N G O U R S U PPLI E R S
Always working with our suppliers
to develop new ideas for mutual
benefit that give the customer
something to smile about too
Laverstoke Park Farm already supplies our very popular
range of ice-creams and our buffalo mozzarella. But halloumi
– now that has always had to come from Cyprus. We love
UK-based produce though, so undeterred we set out
together to take this popular European cheese and give
it a very British twist. The result is our unique buffalomi.
This fun, delicious and innovative new addition to our menus
is made from the high quality milk of the Laverstoke Park
Farm buffalo and Hampshire cows’ milk, and is already
proving to be very popular with our customers.
27
Strategic ReportAdditional informationFinancial statementsGovernanceOverviewFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Principal Risks and Uncertainties
Risk Management
Managing risks effectively is key to
ensuring that we achieve our strategic
objectives in the long term and
continue to deliver the high standard
our customers, people and
shareholders expect.
The risk management process is
managed by the Executive Team and
is overseen by the Audit Committee
which is further supported by the
external audit process. Both the
Executive Team and the Audit
Committee report to the Main Board.
Risk Management Process
Risks are identified, considered and
observed at all levels of the business
including operational, administrative
R I S K M A N AG E M E NT
and strategic risks. These risks are then
assessed and appropriate mitigation and
management plans are implemented to
reduce the potential likelihood and
impact. The suitability of these actions
is reviewed through robust reporting and
monitoring which creates a feedback
loop enabling a continuous improvement
process to be in place regarding risk
management. This includes reviewing
ownership and accountability of risks
and controls across the Executive and
Management teams.
Risks are proactively managed
throughout the year. Regular risk
reporting is made to the Executive
Team and then reported to the
Audit Committee.
Responding to the
Coronavirus Pandemic
During the course of the last year the risk
relating to coronavirus was proactively
managed on a weekly and sometimes
daily basis by the Executive Team.
Principal Risks and Uncertainties
The following sets out the principal
risks the business faces at present
that may impact future performance.
This analysis is not intended to be
a comprehensive list of all risks actively
managed by the business. The key
financial risks are detailed in note 28
to the financial statements.
Emerging Risks
Description
Risk mitigation
U K E CO N OMY
There has been a severe impact to the UK (and
global) economy from coronavirus the full impact
of which has yet to be understood. In addition,
the measures which the Government has put
in place have cost billions of pounds, all of which
will eventually be recouped through taxation.
The risk is kept under review as we implement our strategy. It informs the level
of liquidity we target to keep in the business, the way in which we invest in our
diversified estate to manage fluctuations in different parts of the economy
and the flexibility we look for in future leasing arrangements.
Strategic Risks
Description
Risk mitigation
CO RO N AV I R U S A N D
F U T U R E PA N D E M I C
The coronavirus outbreak has had a seismic impact
on our industry. This has most obviously been
through the closure of all our pubs and hotels to help
limit the spread of the virus, followed by the enforced
social distancing and other restrictions as we have
reopened. The guidelines (now laws in some cases)
and Government restrictions have changed regularly
and are likely to continue to change. There are
changes in the behaviour of our customers and in
their patterns in visiting our different sites.
The health and safety of our team members is
critical and we have implemented appropriate
measures for them to carry out their roles safely.
There is an increased likelihood of subsequent
pandemics, either entirely new strains of a virus
or evolutions of the current strain. The impact
of another pandemic is likely to be similar to the
experience of the current crisis.
We have undertaken a significant rightsizing activity across our estate and central
support office to reduce our ongoing cost base. We have taken advantage of
the Government support for business through the job retention scheme, business
rates holiday for the hospitality sector, made use of the Bank of England Covid
Corporate Financing Facility and increased our liquidity levels through an equity
raise. We continue to partake in discussions with Government and trade bodies
to influence the future imposing and lifting of any restrictions.
We continue to monitor our cost base on a monthly and weekly basis. On a site
level we review weekly profitability and review the cost of closure and subsequent
reopening versus slower trading periods to make the optimal decisions.
We have introduced clear coronavirus procedures for all our sites which are
reviewed regularly.
Going forward we are closely monitoring our cash flow to ensure we maintain
appropriate level of liquidity, continue to keep a diversified estate and review the
composition in the light of current events, negotiating more flexibility into leases
going forward, keeping strong ties with Government, building on our current
pandemic response plan, and maintaining and enhancing our flexibility in
customer offering and operational procedures.
28
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT Description
Risk mitigation
CO N S UM E R D E M A N D S H I F T S
The business’s success is attributable to its ability
to anticipate and react to consumer demand.
There have been accelerated changes caused
by the impact of coronavirus including, but
not limited to, working from home, cashless,
people buying alcohol for consumption in the
home, demand shift in city venues versus rural;
and a continued trend towards healthy and
lifestyle choices.
H E A LTH A N D S A F E T Y
The health and safety of our employees and
customers is a key priority for us.
Operating a large number of sites increases
the challenge of ensuring the highest health
and safety standards are adhered to.
There is a risk of a customer suffering from failure
to deliver our allergens policies and procedures.
R E CR U ITM E NT A N D R E TE NTI O N
O F E M PLOY E E S
The recruitment and retention of high calibre
employees is fundamental to our ability to deliver
a distinctive experience for our customers, and
to support our growth agenda. In particular this
applies to the roles held by the support office
staff, who may view a career within hospitality
as less attractive than other parts of the
economy currently.
I N FO RM ATI O N TE CH N O LO G Y
The Group is increasingly reliant on its information
systems to operate, and trading would be affected
by any significant or prolonged failures and/or
data loss. In addition, the sophistication of cyber
attacks continues to increase.
F I N A N CI N G
The current funding arrangements of the
business are due to expire in 2022 and there is
a risk that we are unable to find suitable financing.
In addition, interest rates may increase, adversely
impacting profit, and/or there could be a risk
of breaching financial covenants.
Management monitor and research consumer trends and run trials of new technologies.
We gather consumer feedback through Net Promoter Score surveys, customer
complaints and online and social media reviews.
We analyse retail pricing and market share data to ensure we are competitive but
still premium.
In addition, through the experience of dealing with coronavirus, the business has
become more flexible in dealing with changes in operational measures, product and
service offerings.
We have a comprehensive training programme in place for our employees covering
all aspects of health and safety.
All sites complete a risk assessment and are required to undertake detailed weekly
and monthly compliance checks which are then subject to review by our in-house
health and safety team. Live risk assessments and appropriate adjustments to sites
to comply with Government guidelines and restrictions in response to coronavirus
are in place. The allergen procedures we have implemented to manage the risks are
over and above what is legally required, and are continuously reviewed, to ensure
controls remain appropriate.
We continue to utilise the services of expert third party health and safety auditors
to undertake annual audits on all our sites and perform detailed investigations in
instances where an incident does occur.
We have succession plans in place for key senior management roles and have drawn
upon these when selecting an Executive Team to deliver the Board’s strategy for
the new pubs and hotels focused business.
Given the competition for high quality candidates across our sites, we have plans
in the year ahead to significantly improve the process and systems surrounding
our recruitment strategy to ensure that our offer to all employees is attractive.
We provide support for staff from the EU and have increased the number of chef
apprentice positions for UK candidates. By investing in our employees and offering
them real career paths, we are able to differentiate ourselves from the competition
and ensure that we remain the employer of choice in a challenging market.
We continue to review and improve the entire reward scheme to ensure that it is
competitive in both pay and benefits for all team members.
Our IT function has a range of facilities and controls in place to ensure that in
the event of an issue normal operation would be restored quickly. These include
a formal IT Recovery Plan, online replication of systems and failover datacentres,
and external support for hardware and software. We continue to introduce more
preventive measures to reflect the increased risk.
We have a good relationship with our current bankers and, given the predominantly
freehold nature of our business, we have the ability to offer more certainty than
many in our sector when raising finance. Alternative financing approaches are
available, including equity, as evidenced by the recent funding.
Interest rate costs have been managed through our long-term financing
arrangements and we have successfully waived covenants and agreed new
measures that have minimised any risk of breach.
29
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Principal Risks and Uncertainties continued
Description
Risk mitigation
CO S T I N F L ATI O N
Market uncertainty and increasing demand leads
to cost pressures in several areas, such as food
and drink production, utilities and staff costs.
The Long-Term Supply Agreement with Asahi
Europe Ltd is now embedded in our business model
and the impact of Brexit broadly understood.
S U PPLY CH A I N
There is a risk that poor performance by our
suppliers may damage customer satisfaction and
could impact the profitability of the Company.
Any large scale issue with out of stock items
could have a big impact on trade in our businesses.
This risk includes any impact from Brexit that has
yet to fully emerge due to hospitality closure
either in the UK or EU.
Our preference is to have long-term agreements in place with our suppliers linking
any price rises to CPI. We have a Long-Term Supply Agreement in place with Asahi
Europe Ltd for the supply of beer, cider and other beverages, which limits increases
to CPI. Other suppliers are also linked to CPI with long-term agreements.
We regularly monitor prices using relevant commodity databases, review forward
looking inflation and all contracts are competitively tendered.
The margin is monitored internally and our retail pricing is monitored quarterly,
compared to our competitors.
The implementation of a new property maintenance system has improved controls
on property costs.
We have a Long-Term Supply Agreement in place with Asahi Europe Ltd for the
supply of beer, cider and other beverages. This ensures that products will meet
certain brand performance metrics, and the supply service is subject to key
performance indicators (“KPI”s).
All other key suppliers are subject to service and quality KPIs which are monitored
on a monthly basis.
Our preference is for long-term agreements and strong relationships. The
relationship with Asahi and Fuller’s is now more mature, and we work with smaller
suppliers to ensure that they grow healthy, sustainable businesses outside of their
agreement with Fuller’s. The supply chain has successfully survived the Covid crisis,
which gives us confidence in its ongoing robustness.
S U S TA I N A B I LIT Y
There is risk that the failure to manage climate
change risk could impact profitability through
taxation, regulation and supply chain uncertainty,
in addition to reputational damage.
We have developed a sustainability programme and continue to enhance this.
We consider the impact of ESG as part of customer, people, supplier and Tenanted
strategies and policies going forward.
For more details, see the Corporate Social Responsibility statement on pages 34
to 38.
WAG E CO S T I N F L ATI O N
Future labour cost increases may impact the
profitability of the business. The principal drivers
of such increases are projections for future
increases in the National Living Wage, coupled
with any potential for a tightening of labour supply.
The risk to the business remains despite the
pandemic, as unemployment, which although
high during the last year of lockdowns, has already
begun to fall.
We aim to mitigate the risk of such increases through a combination of improved
operational efficiency and passing the cost on through the prices we charge.
Without these opportunities, the business would suffer a reduction in profitability
across both pubs and hotels.
Operational efficiency measures include the rightsizing exercises, use of
technology (Order & Pay app) and modelling labour per time of day to optimise
staffing levels. The introduction of pay banding as part of the reward review will
ensure consistency of pay and provide an effective way to manage costs.
30
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT This statement has been prepared in
compliance with The Companies
(Miscellaneous Reporting)
Regulations 2018.
In order to comply with Section 172 of the
Companies Act, the Board is required to
take into consideration the interests of
stakeholders and include a statement
setting out the way in which Directors
have discharged this duty during the
year. More information about our key
stakeholders and how we engage with
them can be found in the Strategic Report
on pages 32 and 33.
The Board considers that, in complying
with its statutory duties, it has acted
in good faith to promote the success
of the Company for the benefit of its
shareholders as a whole and considered
the interests of all its stakeholders, and
in doing so had regard to:
a) the likely consequences of any
decision in the long term. For Fuller’s
and its Board of Directors, this has
always been an integral part of the
culture of a very long-established
business. The long term for Fuller’s
means much more than normal
business modelling entails. It is at the
heart of all decisions taken by
the Board.
b) the interest of the Company’s
employees. Details of the normal
engagement process with employees
can be found in the Stakeholder
Engagement section on page 32 and in
the CSR section on pages 37 and 38;
in addition, more information relating
to specific engagement in relation to
the coronavirus can be found on pages
3, 11-12, and 19.
c) the need to foster the Company’s
business relationship with suppliers,
customers and others. The Board
believes that delivering the strategy
successfully requires strong mutually
beneficial relationships with suppliers
and customers and indeed with
industry bodies that further the
interests of the sector as a whole.
More details of engagement can
be found in the Corporate Social
Responsibility report on page 34.
Section 172 Statement
d) the impact of the Company’s
2) Equity raise
The decision to launch the equity raise
was considered very carefully by the
Board. The long period of closure was
very expensive for the Company, and
every other company in the sector.
The Board concluded that taking
into account short-term funding
requirements (i.e. such as repaying the
£100 million commercial paper from
the CCFF by end May 2021), the
structure of a non-preemptive placing
was the most efficient route and in the
best interests of shareholders. It was
agreed that successful completion of
the placing would equip the Company
with maximum financial flexibility to
exit the pandemic strongly and be in
the best possible position to execute
its growth and recovery strategy.
The equity raise was approved through
a series of general meetings, and all
resolutions were passed with greater
than 99% of votes in favour.
operations on the community and
the environment. The Board has
developed its commitment to
corporate social responsibility and
agreed a new Environmental, Social
and Governance programme. Details
can be found on page 34.
e) the desirability of the Company
maintaining a reputation for high
standards of business conduct. Fuller’s
is well regarded as a business because
it has a consistent record of doing the
right thing – one of the most enduring
key values of the business. This forms
part of the Fuller’s culture.
f) the need to act fairly as between
members of the Company. The unique
capital structure of Fuller’s as a partly
listed company has always required the
Directors to balance the interests of
a diverse shareholder base. The focus on
the long term is well understood by the
Company’s shareholders themselves.
Principal Decisions
1) Impact of coronavirus
As detailed in the Chairman’s and Chief
Executive’s Statements on pages 2 to
15, the financial year ended 27 March
2021 has been an extraordinary year
for the business both starting and
ending with the temporary closure
of the entire business due to the
coronavirus pandemic.
The Board moved quickly to a routine
of weekly video conference calls and
received regular updates from the
Executive Directors regarding the
impact of the pandemic on the
business and its employees, and was
able to act quickly with critical decisions
required in the period. The response
to the coronavirus crisis is set out on
pages 3, 11-12, and 19. The activities
taken throughout the crisis have shown
the Board has paid due regard to all
stakeholders and ensured the business
is well positioned for long-term growth.
31
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report
Stakeholder Engagement
O U R S H A R E H O LD E R S
Our shareholders range from
founding family members to retail
shareholders and large institutional
investors. They own our business and
provide us with the capital that
enables us to progress our strategy.
How we Engage
We maintain a regular dialogue
with all our shareholders. We
actively engage with them as
part of our investor roadshows
following results presentations
and we are easily accessible to
deal with questions and feedback
throughout the year.
Further Information
During the year, we spoke to
investors about our proposed
new Remuneration Policy which
was submitted to the 2020
Annual General Meeting and
we launched an equity raise
to ensure we exited the
pandemic in the best possible
position. Both proposals were
unanimously approved and we
thank our shareholders for their
support in this process.
O U R PE O PLE
Our people are a key asset and
critical to the success of the business.
They make the experience for the
customer and deliver our business
strategy at every level.
O U R TE N A NT S
Our Tenants are an extension of the
Fuller’s team, although they have
autonomy in running their own
business. We aim to recruit Tenants
who share our values and philosophy.
How we Engage
During the pandemic, we had
to review and evolve the way
we communicate with our
employees – and we focused
on using our digital learning and
communications platform,
Fuse, to deliver updates, digital
training to keep people mentally
stimulated, and signposting for
emotional and mental wellbeing
support. (More in the Chief
Executive’s Review, page 11).
Further Information
We will be undertaking a review
of our employee engagement in
the current financial year. We
have also strengthened our focus
on Diversity and Inclusion and will
report further progress in next
year’s Annual Report. We have an
Equal Opportunities Policy, which
is designed to ensure all colleagues
are treated equally in terms of
training, career development and
promotion. All team members are
given an Inndulgence card which
gives them a colleague discount
in our Managed Pubs and Hotels.
Qualifying employees are also
invited to participate in our
Savings Related Share Option
Scheme, Share Incentive Plan
and a variety of performance
related bonus arrangements.
How we Engage
We have a team of Business
Development Managers led
by an experienced Head of
Tenanted Operations who
ensure that our Tenants are
in the best place to operate
a successful business that
delivers a good return for both
parties. During the pandemic,
we suspended commercial rent
in lockdowns to ensure they
emerged strongly.
Further Information
This year has highlighted the
entrepreneurial nature of our
Tenants. They have opened
their pubs as community stores
(see page 8) and served the
homeless. They are very visible
within their communities and we
highly value their contribution
to our business.
32
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT O U R S U PPLI E R S
An excellent supply chain is a key
tenet of our business and we look for
genuine partnerships that provide
a real point of difference.
LE G I S L AT U R E
We operate in a highly regulated
sector and, especially during the
recent pandemic, we have had
increased dialogue at both local
and national level.
O U R COM MU N ITI E S
The Great British pub has always been
at the heart of the community and we
strive to uphold that position by being
a good neighbour, supporting worthy
causes and providing employment.
How we Engage
We build a solid relationship with
our suppliers that allows for
mutually beneficial collaboration.
This results in a range that is
available Only at Fuller’s.
How we Engage
We regularly meet with both our
local MP and other legislative
stakeholders, including through
membership of both the British
Beer and Pub Association and
UK Hospitality. We regularly
contribute to consultations on
issues that impact our sector.
How we Engage
We have recently launched an
ESG programme as a key tenet
of our overall business strategy.
The initiative, Life is too good
to waste, includes our
community programme.
Further Information
We work with our suppliers to
monitor consumer trends and
changing tastes. This allows
us to evolve and adapt our offer
and menus to reflect these
macro trends.
Further Information
The work and engagement that
has been carried out during the
pandemic has strengthened our
relationships and contacts
among, particularly, national
policy makers and we will
maintain these relationships
going forwards.
Further Information
The Life is too good to waste
programme also covers
sustainability, which is more
important than ever to our
customers, our team members,
and all our stakeholders. See
page 34 for further information.
33
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Corporate Social Responsibility
This year, we have further developed our
Corporate Social Responsibility (“CSR”) strategy under the
Life is too good to waste banner.
Our environment
Our communities
Our people
This exciting project covered three
key areas:
• We believe our environment is too
good to waste
• We believe our communities are
too good to waste
• We believe our people are too
good to waste.
Although the business has been closed
for much of this year, we have nonetheless
progressed with this programme and in this
section we will describe our achievements
in these three areas.
While Fuller’s has long taken actions that
highlight the Company’s commitment to
CSR, the external environment has moved
on and we are taking a bold move to
redouble our own performance in this area
with a new ESG programme. This will be
a key plank of the overarching strategy
(see page 19) and will see the principles
of sustainability embedded in that strategy.
On an operational level, it will continue to
be delivered through the Life is too good to
waste initiative.
As part of this process, we are recruiting
a dedicated Head of Sustainability who will
be responsible for delivering our ESG plan.
They will take ownership for setting,
monitoring and reporting on the goals set
and targets met.
We will now take a look at some of those
goals and targets and report back on our
achievements over the last year.
Our environment is too good to waste
A road to net zero delivered through energy
and waste management, reducing our
carbon footprint.
We have made a number of strides in
this area over recent years, including
the following:
• We now have LED lighting throughout
our Managed Pubs and Hotels – using
up to 75% less energy and lasting around
three times longer
• We have sent zero waste to landfill
since 2018
34
• 16 of our Managed Pubs and Hotels now
have charging points for electric vehicles
(“EV”), with more in the pipeline
• We have started to recycle our cooking
oil, which has the added benefit of
reducing our refuse costs and
generating an income from the sale
of that oil – this process is set to
rise and will be delivering revenue
of over £100,000 per annum by
the end of 2021
• Each year, we save the equivalent
of over 75 Olympic swimming pools
of water by using waterless urinals
• By using Ecolab cleaning materials,
with recyclable packaging, we have
reduced our use of single use plastics
• Over 30 tonnes of cardboard per
annum has been removed from our
supply chain through the use of
re-usable plastic crates and we expect
to remove a further 150 tonnes
by 2022.
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT While the achievements above focus on
energy consumption and waste issues,
work undertaken in partnership with our
suppliers also plays a role in reducing our
environmental impact.
Previously, food was ordered for next
day delivery, leading to multiple deliveries
during the week, poor load planning for
our suppliers and, consequently, vehicles
covering a lot of miles. Today, we have
changed this process and our head chefs
and kitchen teams now order less frequently,
with deliveries arriving two days later.
The results of this process are quite
amazing. Without any compromise on
freshness, over 60,000 journeys have
been taken off the road by reducing the
frequency of food deliveries through
better planning and forecasting. Suppliers
can load plan and route more effectively
and it has the added benefit of creating
a more structured process in the kitchen.
The strengthened relationship also
mitigates supply issues and helps to
reduce our exposure to price volatility
due to both the pandemic and Brexit.
When it comes to minimising food waste,
we have also used the time during lockdown
to further improve on the way we use the
food we buy. A great example is the use of
whole carcasses with regard to our meat
suppliers – with all cuts being incorporated
into dishes on our menus, the fat being used
for dripping and the bones being sold at the
end. With our vegetables, we look to use
the leaves of celeriac, beetroot and celery
in salads – again ensuring that minimal food
waste is created in the kitchen.
While we are proud of our achievements to
date, we have a long way to go. Under the
stewardship of the Head of Sustainability,
we will plot our road map to net zero. We
have already joined the industry’s Net
Zero Carbon Forum, which is another
step on this road. We have also appointed
a specialist third party, Hospitality Energy
Saving, to complete our annual carbon
reporting and help set the strategy and
road map to net carbon zero.
We will start by identifying further
quick wins that can deliver immediate
reductions in energy saving. To facilitate
this, we will be rolling out an energy and
waste dashboard to our managed sites,
which connects to existing smart
meters, and will be used to drive change.
Modern Slavery
We are committed to acting ethically and with integrity in all our business dealings
and relationships and to implementing and enforcing effective systems and controls
to ensure modern slavery is not taking place anywhere in our own business or in any
of our supply chains.
Further details can be found on our website:
www.fullers.co.uk/corporate/csr/modern-slavery-statement
Greenhouse Gas (“GHG”) Emissions and Energy Consumption
The annual quantity of energy consumed in kWh
from (i) the combustion of gas and (ii) the
consumption of fuel for the purposes of transport,
together with the annual quantity of energy
consumed in kWh resulting from the purchase
of electricity
tCO2e1 emissions from the combustion of gas and
fuel at our facilities as well as fleet vehicle use
(Scope 1 emissions)
tCO2e emissions from purchased electricity
(Scope 2 emissions)
Total GHG emissions (Scope 1 and Scope 2)
Group’s chosen intensity measurement:
52 weeks
ended
27 March
2021
52 weeks
ended
28 March
2020
42,296,045
83,555,406
5,114
8,436
4,314
9,428
8,902
17,338
tCO2e emissions per £1m of turnover
128.8
52.7
1 tCO2e are tonnes of carbon dioxide equivalent.
The following methodologies were used to calculate the above quantities:
• The kWh consumption figures relevant to gas and electricity were calculated
using invoices received by the Group and sample unit rates
• The consumption figures relevant to transport were calculated based on
employee business mileage claims and fugitive emissions are based on
contractor records.
The Group does not have responsibility for any emission sources that are not
included in the consolidated financial statements and are outside the boundary
of operational control.
Year on year comparison is not possible due to the impacts of coronavirus as well as
the sale of the Brewery in FY20.
35
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Corporate Social Responsibility continued
That will be our first goal – to put
unnecessary energy consumption top
of mind in our team members and to
replace energy-heavy equipment. The site
dashboard will also include waste to ensure
a holistic energy in/waste out approach to
our carbon footprint.
Our environmental plan for the next year
and beyond, on which we will report back
next year, includes the following goals.
We will aim to:
• establish our starting point for each area
so we can set out our road map to net zero
• incorporate ESG in every tender as
part of our assessment criteria
• undertake a behaviour change project in
our Managed Pubs and Hotels to
reduce energy consumption and waste
• explore sourcing all of our electricity
from green sources
• ensure all food waste is separated
and recycled
• explore packaging alternatives with
our suppliers
• ensure every hotel (with parking)
has at least one EV charging point.
Our communities are too good to waste
Supporting the communities in which
we operate through charity links and
community-based initiatives.
In light of the extensive closure of our pubs
and hotels for so much of the year, our
ability to fundraise – especially through
the Pennies scheme that has proved so
generous in recent years – has been much
curtailed. But that has not stopped our
team members from being active in
their communities.
Throughout the pandemic, our team
members volunteered in food banks and
at vaccination centres, and cooked meals
for key workers. Meanwhile our Tenants
have fed the homeless and vulnerable, and
opened their pubs as community stores.
It’s that can-do spirit that has kept the
Fuller’s family busy, motivated and at the
hearts of our communities.
During the periods we were open,
our customers continued to show their
generosity and, despite the pandemic, we
still raised £35,600 through Pennies.
This amazing digital charity box continues
to deliver for our corporate charities
supporting both Shooting Star Children’s
Hospices and Special Olympics GB.
Special Olympics GB: Inclusion in Action
Special Olympics GB is part of a global
movement of people creating a new world of
inclusion and community, where every single
person is accepted and welcomed, regardless
of ability or disability.
Special Olympics GB is the largest provider
of year-round sports coaching and athletic
competition in summer and winter sports for
children and adults of all abilities with intellectual
disabilities in Great Britain. The charity provides
a competition pathway designed to nurture
and progress athletes from local competitions
through to accessing elite level competitions.
Special Olympics uses the power of sport to
change attitudes and enable opportunities for
people with intellectual disabilities to live active,
healthy, and fulfilling lives. In Great Britain there
are 105 accredited programmes across England,
Scotland and Wales, impacting the lives of 11,361
individuals with an intellectual disability, 5,194
volunteers and 2,787 coaches. The charity offers
28 sports for all ability levels including those
with profound, multiple learning disabilities and
complex health needs through its Motor Activities
Training Programme (“MATP”).
Intellectual disability is the UK’s biggest disability.
There are a total of 1.5 million individuals in the
UK with an intellectual disability – a number
that is expected to rise to 1.7 million by the end of
2021. Special Olympics athletes are among some
of the most vulnerable in society and have been
disproportionately negatively affected by the
Covid-19 pandemic. With no Special Olympics
training, competitions or activity, life has been
very different with reduced physical activity and
increased isolation.
The statistics around intellectual disabilities are
shocking – 81% of disabled people would like to
be more active, 77% of young disabled adults
(18-34) feel lonely, and eight out of 10 children
with an intellectual disability are bullied. These
startling figures, combined with the fact that
most people with an intellectual disability suffer
social exclusion, highlights the important role and
potential of Special Olympics GB.
The charity’s work continues to be made possible
through the support of our Fuller’s partnership,
which could not be more important as recent
research has identified that 36% of adults have
a connection or are aware of someone with
an intellectual disability. This equates to nearly
19 million people in Great Britain – far higher
than was previously estimated.
Finally, it should be noted that 94% of people
with an intellectual disability are not in paid
employment. However, one in two people believe
that Special Olympics GB and its sponsors need
to improve this and help find jobs for people
with an intellectual disability. This is a great
opportunity for the Special Olympics GB and
Fuller’s partnership – we can make a significant
difference in transforming the lives of those
people with an intellectual disability.
Together we are helping to make the world
a better, healthier and more joyful place
— one athlete, one volunteer, one family
member at a time. For more information visit
www.specialolympicsgb.org.uk.
36
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT We can now also take Pennies donations
as contactless payments and this will
shortly be activated on transactions made
through Order & Pay. In our Bel & The
Dragon sites, Pennies raised £2,274 for
the Heads Together mental health charity,
while at Cotswold Inns & Hotels, which
will be adopting the Pennies initiative
this year, £8,275 was raised through
customer donations for Acorns
children’s hospices.
We have also raised £33,051 for Special
Olympics through the sale of Ale & Pie
Tasting Boards and through a donation
on our children’s menus during the
periods we were open.
Our fundraising endeavours have
continued during lockdown, with
a number of team members raising money
for Special Olympics through the 2.6
Challenge last April, and through various
personal endeavours including running,
walking and selling bottled beer that was
due to expire during lockdown. The team
at Bel & The Dragon raised £2,000 for
the Injured Jockeys Fund and Hampshire
Air Ambulance with an online Cheltenham
Preview, and the marketing team at Pier
House raised over £2,000 through a 48
hour relay for Only a Pavement Away,
which finds jobs in hospitality for homeless
people and those who are in danger of
becoming homeless. This is a charity we
work with on a regular basis both to raise
money and to provide job opportunities.
We have also donated a further £50,000
to Onside – the Hammersmith & Fulham
Youth Zone project. This is our second
year of involvement and we are committed
to donating £150,000 over a four
year period.
Finally, we have continued to support
a plethora of other charities through our
Charities Aid Foundation budget. Over
£70,000 has been donated to a range of
good causes including a number of alcohol
related charities such as Drinkaware and
the Alcohol Education Trust. We have also
donated an average of around £800 each
month in matched funding through our
Give as you Earn scheme.
What we have missed this year is the
pensioners Christmas dinners and those
special events we hold, in our pubs, to raise
money for local good causes. With our pubs
and hotels reopened, we expect to see this
in abundance in the new financial year.
Heads Together
In January 2018, Bel & The Dragon started
supporting this valuable charity – and since 2019,
Pennies has helped raise even more. Throughout
Bel pubs, great importance is placed on the
individual wellbeing of the team members at each
site, so it’s a natural tie up.
@HeadsTogetherCampaign
Money raised through Pennies
£37,900
Adults in the UK with an
intellectual disability
1.5m
37
Going forwards, we will be focused on
three key areas:
• Central charity – building awareness
of Special Olympics through fundraising
initiatives driven centrally
• Local charity links – building
relationships in the community
through local charity links
• Community-based initiatives –
making the pub the hub and building
relationships at a local level.
To do this, we will:
• hold regular events driven centrally
to raise the profile of Special Olympics
• promote Pennies throughout our
estate and through all forms of card
and digital transactions
• work with Special Olympics athletes
to tell their stories
• encourage our team members to
volunteer at Special Olympics events
• hold a series of charity events at a local
level to engage our customers and
address issues at the heart of our
communities and neighbourhoods
• reinvigorate the Give as you Earn
scheme and promote matched funding
• allocate a day a year for employees
to work on a community project.
Our people are too good to waste
Creating an inclusive workplace, taking care
of our teams’ wellbeing and providing genuine
career opportunities.
We are a people business – there is no
doubt about that – and we very much
have people at our heart. Throughout
the recent pandemic and the various
lockdowns, we have focused on helping our
team members deal with unusual and often
difficult situations – whether they have
been working throughout or on furlough.
One of the best ways we did this was through
our Fuse digital learning and communications
platform. This provided an excellent way to
connect with our team members while they
were away from the workplace. One of the
most successful elements was a series of bite
sized courses focused on wellbeing and
developing important life skills – everything
from acquiring a new language to learning
new digital skills. Take up of these courses
was incredible, with team members
completing a total of 1,751 hours of free life
skills training during lockdown and furlough.
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Corporate Social Responsibility continued
Female
Male
Female
Male
2
7
7
7
22%
78%
50%
50%
Female
Male
1,630
2,134
43%
57%
We also used Fuse as a vehicle for regular
vlogs from the Chief Executive to keep
everyone informed, up to date and
entertained, and we supported this
communication flow with webinars as we
approached the various reopening dates.
Mental health continues to be a well-
discussed topic for our team members –
and the wider community – and we have
built on the initiatives we put in place last
year. During the toughest third lockdown,
over 2,000 team members tuned into
our weekly Wellbeing Podcast. This was
also hosted on Fuse. We also launched
Wagestream – a system that allows
early access to wages earned – and over
1,000 team members signed up to the
Wagestream financial wellbeing app.
During the third lockdown we also
provided supermarket vouchers to those
team members most affected by the
ongoing situation.
We are in the process of relaunching our
employer brand under the mantra True
to You, and as part of this process we are
also focusing on better understanding the
diversity of our team. We have appointed
an internal person to head up this work and
our goal is to create an inclusive workplace
where everyone can thrive, in line with
our values.
Going forwards, we will be focused on
supporting our team members’ physical,
mental, financial and social wellbeing.
To achieve this, we will:
• involve our people in creating our first
Diversity and Inclusion action plan
• identify appropriate actions to embed
an inclusive culture in all areas of our
people experience
• map our female talent and create
bespoke training interventions to
encourage their development
• introduce a wellbeing module as part
of our induction programme
• train 100+ mental health first aiders
• embed wellbeing in all our leadership
development programmes
• provide a suite of free, online
wellbeing training
• set standards for back of house
when we undertake investments
• ensure real development
opportunities through our
Designed for Life career pathway
Gender Diversity
As at 27 March 2021
Board of Directors (%)
Senior management (%)
Other employees (%)
• work with external partners and trade
bodies to raise the profile of hospitality
as a great place to have a career.
Life is too good to waste
This is the most progressive strategy we
have ever implemented in the CSR/ESG
field and we are setting stretching and
measurable targets. We look forward to
developing the initiatives outlined above
under the direction of our new Head of
Sustainability and with the support of our
Executive Team and all our team members.
The Board is committed to the delivery
of this programme and we look forward to
updating you on our progress in the future.
38
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021STRATEGIC REPORT Non-Financial Information Statement
Reporting requirement
Key policies/standards/frameworks
For additional information
E N V I RO N M E NTA L
M AT TE R S
E M PLOY E E S
CSR Strategy – Our environment
CSR Report from page 34
CSR report from page 34
Strategic Report on pages 18 and 19
CSR Strategy – Our people, Alcohol and Drugs
Policy, Attendance and Absence Policy, Bullying
and Harassment Policy, Communications Policy,
Compassionate and Bereavement Policy, Data
Protection Policy, Disciplinary Policy, Equal
Opportunity Policy, Family Friendly Policy,
Anti-Bribery Policy (covering gifts and hospitality),
Grievance Policy, IT Policy, Mobile Phone Policy,
Other Employment Policy, Parenting Policy,
Recruitment Policy, Redundancy Policy,
Residential Accommodation Policy, Right to Work
Policy, Smoking Policy, Social Media Policy, Staff
Accommodation Policy, Stop and Search Policy,
Stress Policy, Tuition Policy, Whistleblowing Policy
S O CI A L M AT TE R S
CSR Strategy – Our communities, Gender Pay
Gap reporting
CSR Report from page 34
H UM A N R I G HT S
Modern Slavery Statement
CSR Report – page 35 in particular
A NTI - CO R R U P TI O N
A N D A NTI - B R I B E RY
M AT TE R S
PR I N CI PA L R I S K S
A N D I M PAC T O N
B U S I N E S S
B U S I N E S S M O D E L
N O N - F I N A N CI A L
KE Y PE R FO RM A N CE
I N D I C ATO R S
Anti-Bribery Policy (covering gifts and hospitality),
Whistleblowing Policy
Corporate Governance Report from page 46
Audit Committee Report from page 51
These are set out on pages 28 to 30
At a glance page 6
See our vision and purpose on page 6
Strategic Report on pages 16 and 17
Strategic Report on pages 18 and 19
By order of the Board
S I M O N E M E N Y
C H I E F E X E C U T I V E
8 July 2021
39
GovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021OverviewStrategic Report Driving our strategy
is the Board – a team
of people who each
bring expertise and
experience in different
areas. They set the
strategic direction for
the Company and add
their contribution to the
Fuller’s growth story.
Board structure as at 8 July 2021
Chairman
Executive Directors
Non-Executive Directors
Independent
Non-Executive Directors
11%
34%
22%
33%
Board of Directors
M I C H A E L T U R N E R
NON-EXECUTIVE CHAIRMAN
N
S I M O N E M E N Y
CHIEF EXECUTIVE
Date appointed to the Board: January 1985
Date appointed to the Board: May 1998
Experience: A Chartered Accountant with
international experience, Michael joined Fuller’s
in 1978, initially running the Wine Division as Wine
Director. Appointed Marketing Director in 1988,
Managing Director in 1992, Chief Executive in
2002 and Chairman in 2007. Chairman of the
British Beer and Pub Association 2008-2010.
Master of the Worshipful Company of Vintners
2011-2012.
Key external appointments: None
My lockdown: With my wife, Diana, staying mainly
in London while I was in Suffolk, I’ve had to learn to
cook. Through the power of YouTube, I can now deliver
a mean rack of lamb and a lobster thermidor.
Experience: Joined in 1996 from Bass plc where
he held a variety of senior operational and strategic
planning roles. Appointed to the Board as Retail
Director in May 1998, Managing Director, Fuller’s
Inns in July 2006, Group Managing Director in
November 2010 and Chief Executive in July 2013.
Previously Senior Independent Director and Chair
of the Remuneration Committee of Dunelm
Group plc. An economics graduate and alumnus
of Harvard Business School.
Key external appointments: Non-Executive
Director of The National Gallery Company
Limited and Senior Independent Director
of WH Smith PLC.
My lockdown: My wife, Selina, and I took the
staycation opportunity to complete the Coast
to Coast cycle ride – 155 miles from Whitehaven
to Tynemouth.
A D A M C O U N C E L L*
FINANCE DIRECTOR
F R E D T U R N E R
RETAIL DIRECTOR
Date appointed to the Board: August 2019
Date appointed to the Board: June 2019
Experience: Joined the Company in 2013 as an
Operations Manager for Fuller’s Inns. Appointed
Head of Tenanted Operations in 2015 and
Tenanted Director in 2018. Qualified as
a Chartered Accountant with Grant Thornton
UK LLP. Civil engineering graduate.
Key external appointments: None
My lockdown: I turned our house into a crazy golf
course, which the children loved – but it did nearly
result in divorce!
Experience: Joined from AIM-listed Restore plc,
where he was Group Finance Director. Started
his career at Whitbread plc in the accounts
department of The Pelican Group restaurant
division before moving to the Milward Brown
Precis subsidiary of WPP plc. Joined Rentokil
Initial plc in 2003, where he held a variety of
finance posts including Commercial Director
of the Business and Industry division, Finance
Director of Catering and the combined Catering
and Hospitals division, and finally Finance Director
of the UK Business Services division. Qualified
Chartered Accountant.
Key external appointments: None
My lockdown: I’ve spent much of lockdown trying
to get involved in home schooling my children.
Turns out I’m no match for English homework.
40
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Key to Committee membership:
A Audit Committee
N Nomination Committee
R Remuneration Committee
Committee Chair
J U L I E T T E S T A C E Y
SENIOR INDEPENDENT
NON-EXECUTIVE DIRECTOR
A N R
S I R J A M E S F U L L E R , B T
NON-EXECUTIVE DIRECTOR
R I C H A R D F U L L E R
NON-EXECUTIVE DIRECTOR
Date appointed to the Board: June 2010
Date appointed to the Board: December 2009
Date appointed to the Board: March 2018
Experience: Former Chief Executive of Mabey
Holdings Limited. Former Chief Operating Officer
(UK and Europe) and previously Finance Director
(Commercial UK) of Savills plc. Qualified as
a Chartered Accountant with Ernst & Young.
Key external appointments: None
My lockdown: I resurrected my love of interior design
and dealt with some long overdue projects – I made
two sets of curtains, four Roman blinds, a number
of scatter cushions and reupholstered eight
dining chairs.
Experience: Served in The Life Guards from
1991 to 1998. Employed by the Company from
1998 to 2003, working in the Tied and Managed
Pub estate and has since been running his
own business.
Key external appointments: None
My lockdown: I renovated the half acre Victorian
walled garden during lockdown, including the creation
of a huge vegetable patch to serve the local area.
Experience: Joined the Company in 1984.
Appointed a Divisional Director in 1992 and to
the Board in December 2009 with responsibility
initially for sales then, additionally, personnel,
corporate affairs and government relations.
Became Non-Executive Director in February
2020. A GMP graduate of Harvard
Business School.
Key external appointments: Chairman of Kempton
Park Racecourse and Master of the Worshipful
Company of Brewers.
My lockdown: I’m in the middle of laying a 100 yard
hedge – it’s a very intricate process of cutting and
staking a combination of Hawthorn and Hazel to
make a thicker, tidier hedge.
H E L E N J O N E S
A N R
INDEPENDENT NON-EXECUTIVE DIRECTOR
R O B I N R O W L A N D O B E
A N R
INDEPENDENT NON-EXECUTIVE DIRECTOR
R A C H E L S P E N C E R
COMPANY SECRETARY
Date appointed to the Board: March 2019
Date appointed to the Board: March 2020
Date appointed: January 2021
Experience: Formerly Group Executive Director at
Caffè Nero and Managing Director of Zizzi, the Italian
casual dining chain, and Non-Executive Director of
international fast-dining restaurant group Vapiano SE.
Experience: Previously Chairman and Chief
Executive of YO! Sushi, Non-Executive Director
of Marstons PLC and Tortilla. Awarded an OBE
in 2015 for outstanding services to hospitality.
Key external appointments: Senior Independent
Director and Chair of the Environmental, Social
and Governance Committee of Halfords Group plc.
Other appointments include Non-Executive
Director and Chair of the Remuneration
Committee of Virgin Wines UK Plc and
Non-Executive Director of Premier Foods Plc.
Key external appointments: Currently European
Operating Partner of TriSpan Private Equity with
Chairman and Non-Executive Director roles with
three portfolio companies: Rosa Thai, Thunderbird
and Rosa Mexicano (USA). Independent
Non-Executive Director roles with Eathos (Gulf)
and Caffè Nero.
Experience: An experienced company secretary
having held positions at a number of other listed
companies including Invensys PLC, Aldermore
Group PLC (both the listed entity and the
regulated bank) and, most recently, Clarkson PLC.
Fellow of the Institute of Chartered Secretaries
and Administrators.
My lockdown: I’ve spent lockdown trying to house
train my new puppy. She is a black Springador called
Winnie and has made a real impact on our lives
– and on our carpet!
My lockdown: I took my fitness regime on the road
and reconnected with nature during lockdown with
a daily walk or cycle ride around the beautiful
Buckinghamshire countryside. Less Twitter and
more Twitcher!
My lockdown: I have taken up bee keeping for the first
time ever and have over 5,000 bees in my new hive.
I’m already getting honey – but I still can’t identify
which one is the queen.
*
As announced on 26 February 2021, Adam Councell informed the Board of his intention to step down from his current position as Finance Director. Adam will
remain with the Company in order to ensure an orderly handover, and his leaving date will be confirmed in due course. Neil Smith will join the Board as Finance
Director at a date to be confirmed, but no later than 1 December 2021.
41
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview
The Directors present their report to
shareholders together with the audited
financial statements for the 52 weeks
ended 27 March 2021. The Directors’
Report and the Strategic Report
(pages 4 to 44) together constitute
the management report for the purpose
of Rule 4.1.8R of the Disclosure
Guidance and Transparency Rules.
Other information relevant to the report,
including information relevant pursuant to
the Companies Act 2006 and UK Listing
Rule 9.8.4R, is incorporated.
As permitted by legislation, some of the
matters required to be included in the
Directors’ Report have instead been
included in the Strategic Report as the
Board considers them to be of strategic
importance. Specifically, these are:
Information
Reported in
Page(s)
Future business
developments
Our Strategy
18
Employment of
disabled persons
Stakeholder
Engagement
32
Employee
engagement
(including
participation
in share plans)
Engagement
with suppliers,
customers and
others
Emissions
reporting
32,34
Stakeholder
Engagement and
CSR
Stakeholder
Engagement
32-33
CSR
35
Annual General Meeting
The 2021 Annual General Meeting
(“AGM”) will be held at 11am on Thursday
23 September 2021 at The George IV,
185 Chiswick High Road, London, W4
2DR. The Notice of Meeting which sets
out the resolutions to be proposed has
been posted to shareholders and is
available on the Company’s website
at www.fullers.co.uk.
Articles of Association
The Company’s Articles of Association
were adopted in 2014. In accordance with
the Companies Act 2006, the Articles
of Association may only be amended by
a special resolution of shareholders in
a general meeting.
Directors’ Report
Directors
The names and biographical details of the
Directors who served on the Board and
Board Committees during the financial
year and up the date of this report are
given on pages 40 and 41.
Appointment and Retirement
of Directors
The Articles of Association (“the Articles”)
state that the Board may appoint Directors
and that at the subsequent AGM,
shareholders may elect any such Director.
Alternatively, the Company may directly
appoint a Director. The Articles also
contain the power for the Company to
remove any Director by special resolution
and appoint someone in his or her place by
ordinary resolution. There are various other
circumstances under the Articles which
would mean that the office of a Director
would be vacated, including if he or she
resigns, or becomes of unsound mind
or bankrupt.
At every AGM one-third of the Directors
who are subject to retirement by rotation
or, if their number is not three or any
multiple of three, then the number nearest
to but not exceeding one-third shall
retire from office but, if there is only one
Director who is subject to retirement by
rotation, he or she shall retire. In addition,
if any Director has at the start of the AGM
been in office for more than three years
since his or her last appointment or
re-appointment he or she shall retire
at that AGM.
Powers of the Directors
Subject to the Company’s Memorandum
and Articles of Association and UK
legislation, the business of the Company
is managed by the Board which may
exercise all the powers of the Company.
The Articles of the Company have
a section entitled “Powers and Duties
of the Board” which sets out powers such
as the rights to establish local boards, to
appoint agents, to delegate and to appoint
persons with the designation “Director”
without implying that the person is
a Director of the Company. There are
further sections of the Articles entitled
“Allotment of Shares” setting out the
Board’s power to issue shares and
purchase the Company’s own shares,
and “Borrowing Powers” setting out the
provisions concerning the Company’s
power to borrow and give security.
42
The Directors have been authorised
to allot and issue ordinary shares.
These powers are exercised under
authority of resolutions of the Company
passed at its AGM.
Directors’ Indemnities and Insurance
The Articles of Association provide the
Directors with indemnities in relation
to their duties as Directors, including
qualifying third party indemnity
provisions (within the meaning of the
Companies Acts).
The Company purchases Directors and
Officers liability insurance which gives
appropriate cover for any legal action
brought against its Directors. This insurance
also covers the Trustees of the Company’s
defined benefit pension scheme.
Directors’ Interests
Details of all Directors’ interests as at the
end of the financial year are set out in the
Directors’ Remuneration Report on pages
56 to 78.
Dividends
In view of the coronavirus pandemic the
Company paid no interim dividends and
the Directors decided not to recommend
a final dividend on the ordinary shares for
the financial year ended 27 March 2021.
Total dividends of £120,000 relate to the
cumulative preference dividends which
have been paid.
External Auditors
The auditors, Ernst & Young LLP, were
appointed by the Directors during the
year following a formal tender process as
detailed further in the Audit Committee
Report on pages 51 to 55. Ernst & Young
LLP have indicated their willingness to
continue in office, and a resolution that
they be appointed will be proposed
at the AGM.
Information Required under the
Listing Rules
For the purpose of LR9.8.4CR, the
information required to be disclosed by
LR9.8.4R can be found in the Annual
Report in the following locations and is
hereby incorporated by reference into
this Directors’ Report:
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE exercises voting rights in relation to
those shares, having consulted with the
participants about their voting intentions.
Subsequent to the year end, on
31 March 2021 the Company completed
a non-pre-emptive placing of 6,455,447
new ‘A’ ordinary shares at 830p per
share (the “Placing”) and satisfied
subscriptions from Directors over 13,853
new ‘A’ ordinary shares, generating net
cash proceeds of £53,580,210.10
less costs. In conjunction with the
Placing, the Company also transferred
230,094 ‘B’ ordinary shares (including
132,528 ‘B’ ordinary shares to satisfy
applications from the Directors),
generating net cash proceeds of
£109,998.24 less costs. General
Meetings convened on 20 April 2021
approved the issuance of this additional
share capital and the ‘A’ ordinary shares
were subsequently admitted to the
main market.
Substantial Shareholdings
The Company had been notified under the Disclosure Guidance and Transparency Rules
or is aware of the following holdings of voting rights of its listed issued share capital:
‘A’ ordinary shares of 40p each
BlackRock, Inc
Lansdowne Partners (UK) LLP
Columbia Threadneedle
% of total voting rights
As at
27 March
2021
13.47
–
5.37
As at
7 July
2021
13.43
8.40
5.06
The Company is also aware of the following interests in 3% or more of the voting rights in
the two classes of its unlisted share capital:
‘B’ ordinary shares of 4p each
Mr A W M Mitchell & Burges Salmon Trustees Ltd
Mr R H F Fuller & Mr R I Turner & Mr P A Sheils
Mr R H F Fuller & Mr P J Turner & Mr P A Sheils
Mr A G F Fuller
Mr R H F Fuller & Mr P A Sheils & Mr P J Turner
Dunarden Limited
Mr R D Inverarity
Mr G F Inverarity
Mr M J Turner
Miss S M Turner
Mr R H F Fuller
Mr T J M Turner
As at
27 March
2021
14.85
7.66
–
5.72
4.62
3.60
3.52
3.48
3.32
3.33
3.08
3.00
As at
7 July
2021
14.85
–
7.66
5.74
4.62
3.60
3.48
3.37
3.37
3.33
3.08
3.00
• Information about long-term incentives
is disclosed in the Directors’
Remuneration Report on page 60
• Any waiver of emoluments by a Director
of the Company or any subsidiary
undertaking is disclosed in the
Directors’ Remuneration Report
on page 56.
Political Donations
The Group does not make political donations.
Purchase of Own Shares
At the AGM held on 10 September
2020, the Company was given an annual
authority to purchase up to 4,851,096
‘A’ ordinary shares to be held as treasury
shares to be used in connection with,
among other purposes, the Long-Term
Incentive Plan (“LTIP”) and/or other
share option schemes. Shareholders will
be asked to give a similar authority to
purchase shares up to 15% of the ‘A’
ordinary capital at the 2021 AGM.
The Company’s maximum issued
ordinary share capital during the year was
£22,793,726 comprising 33,619,834 ‘A’
ordinary shares, 89,052,625 ‘B’ ordinary
shares and 14,459,218 ‘C’ ordinary shares.
During the year the Company did not
purchase any shares.
6,915 ‘A’ ordinary shares held in treasury
were allocated to participants of the Savings
Related Share Option Scheme, the Senior
Executive Share Option Scheme and the
Executive Share Option Scheme on
exercise of options, generating net cash
proceeds of £14,011. As at 27 March 2021,
a total of 1,273,146 ‘A’ ordinary shares and
a total of 4,558,009 ‘B’ ordinary shares are
held as treasury shares.
Share Capital
Information on the Company’s financial
instruments, capital structure and related
restrictions is given in notes 28 and 29
to the financial statements. Details of
significant shareholdings are set out below.
Computershare Trustees Limited holds
a total of 186,337 ‘A’ ordinary shares on
behalf of employees of the Company who
are participants in its SIP. This represents
0.48% of the issued ‘A’ ordinary share
capital (excluding shares held in treasury).
In respect of the shares that have been
allocated, Computershare Trustees Limited
43
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview ‘C’ ordinary shares of 40p each
Mr A W M Mitchell & Burges Salmon Trustees Ltd
Mr T J M Turner
Miss S M Turner
Mr P A R Carter & Sir J H F Fuller
Mr W G F Fuller
Mr A G F Fuller & Mr P A R Carter
Mrs D M St. C Turner
Mr C D W Williams
Mrs E A Crisp
Post Balance Sheet Events
Post Balance Sheet events are disclosed
in note 33 to the financial statements.
Significant Agreements
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.
The service agreements of the current
Executive Directors and the incoming
new Finance Director include provisions
regarding a change of control. Further
details are included in the Directors’
Remuneration Policy set out on
pages 56 to 78.
Directors’ Report continued
As at
27 March
2021
31.02
6.20
5.25
4.30
–
4.12
3.09
3.02
3.02
As at
7 July
2021
31.02
6.20
5.25
4.30
4.24
4.12
3.09
3.02
3.02
By order of the Board
R A C H E L S P E N C E R
C O M P A N Y S E C R E T A R Y
8 July 2021
Fuller, Smith & Turner P.L.C.
Pier House
86-93 Strand-on-the-Green
London W4 3NN
Registered in England under number:
241882
44
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Directors’ Responsibilities Statement
• that the Annual Report and the
Strategic Report includes a fair review
of the development and performance
of the business and the position of the
Group and Company taken as a whole,
together with a description of the
principal risks and uncertainties that
they face; and
• that they consider the Annual Report
and the financial statements, taken
as a whole, provides the information
necessary to assess the Company’s
performance, business model and
strategy and is fair, balanced and
understandable.
The Directors of Fuller, Smith & Turner
P.L.C. are listed on pages 40 and 41.
Directors’ Statement as to Disclosure
of Information to Auditors
The Directors who were members of
the Board at the time of approving the
Directors’ Report are listed on pages 40
and 41. Having made enquiries of fellow
Directors and of the Company’s auditors,
each of these Directors confirms that:
• to the best of each Director’s
knowledge and belief, there is no
information relevant to the preparation
of this report of which the Company’s
auditors are unaware; and
• each Director has taken all the steps
a Director might reasonably be
expected to have taken to be aware
of any relevant audit information and to
establish that the Company’s auditors
are aware of that information.
On behalf of the Board
M I C H A E L T U R N E R
C H A I R M A N
8 July 2021
Statement of Directors’
Responsibilities in Respect
of the Financial Statements
The Directors are responsible for preparing
the Strategic Report, the Annual Report,
the Remuneration Report and the Group
and Company financial statements
in accordance with applicable United
Kingdom law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law, the
Directors have elected to prepare the
financial statements in accordance with
international accounting standards in
conformity with the requirements of the
Companies Act 2006. Under company
law, the Directors must not approve the
financial statements unless they are
satisfied that they give a true and fair
view of the state of affairs and profit or
loss of the Group and Company for the
financial period.
Under the Financial Conduct Authority’s
Disclosure Guidance and Transparency
Rules, Group financial statements are
required to be prepared in accordance with
international financial reporting standards
(“IFRSs”) adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the
European Union.
In preparing the Group and Company
financial statements, the Directors are
required to:
• select suitable accounting policies in
accordance with IAS 8 Accounting
policies, changes in accounting
estimates and errors and then apply
them consistently;
• present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
• provide additional disclosures
when compliance with the specific
requirements in IFRSs is insufficient
to enable users to understand the
impact of particular transactions,
other events and conditions on the
group and company financial position
and financial performance;
• make an assessment of the Company’s
ability to continue as a going concern;
• state that the Group and Company
have complied with international
accounting standards in conformity with
the requirements of the Companies Act
2006 and IFRSs adopted pursuant to
Regulation (EC) No 1606/2002 as it
applies in the European Union), subject
to any material departures disclosed and
explained in the financial statements; and
• make judgements and estimates that are
reasonable and prudent.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s
transactions and disclose with reasonable
accuracy at any time the financial position
of the Group and Company and enable
them to ensure that the financial
statements and the Remuneration Report
comply with the Companies Act 2006
and applicable regulations, including the
requirements of the Listing Rules and the
Disclosure and Transparency Rules
(“DTR”) and in the case of the Group
financial statements, with Article 4 of the
IAS Regulation. They are also responsible
for safeguarding the assets of the Group
and hence for taking reasonable steps for
the prevention and detection of fraud
and other irregularities.
The Directors are responsible for
preparing the Annual Report in
accordance with applicable law and
regulations. The Directors are responsible
for the maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
Statement as to Preparation
of Financial Statements
The Directors confirm, to the best
of their knowledge:
• that these financial statements,
prepared in accordance with
international accounting standards in
conformity with the requirements of
the Companies Act 2006 and IFRSs
adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the
European Union, give a true and fair
view of the assets, liabilities, financial
position and profit of the Group and
Company taken as a whole;
45
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Corporate Governance Report
M I CH A E L T U R N E R
CH A I R M A N
“The Board recognises
that good corporate
governance is critical to
delivering our strategy
for the long-term
benefit of all
our stakeholders.”
Through the Nominations Committee,
which I chair, we have conducted the
search for a new Finance Director to
replace Adam Councell, who has decided
to return to the service sector. We are
delighted to have announced the
appointment of Neil Smith, who will join
us later in the year. On behalf of the Board,
I would also like to express our appreciation
for the contribution Adam has made
during his tenure, which covered the most
remarkable period in the Company’s 176
year history. He has risen well to the
challenges, and we wish him every success
in his future endeavours.
We had intended to conduct an externally-
facilitated Board evaluation this year but,
in the strange times of working remotely,
it was unanimously agreed that this should
be deferred until the Directors could
meet in person. Consequently, our Senior
Independent Director (Juliette Stacey)
ran an internal process this year which
concluded, despite the challenges
presented by coronavirus, that the Board
had performed very effectively. Our
intention is that the external evaluation
will take place during the current financial
year, and myself and Juliette are currently
conducting a selection process with
potential firms to support this exercise.
I was disappointed that our AGM in 2020
had to be held as a closed meeting, but
shareholders will hopefully understand that
this was entirely necessary to ensure the
safety of all concerned. We very much
look forward to welcoming shareholders
to our AGM on 23 September 2021 which,
subject to any Government guidance
in place at that time, will be held at
The George IV in our Chiswick heartland.
M I C H A E L T U R N E R
C H A I R M A N
8 July 2021
Dear Shareholder,
I am pleased to present our Corporate
Governance Report for 2021. The
Board recognises that good corporate
governance is critical to delivering our
strategy for the long-term benefit of
all our stakeholders, while remaining
cognisant that arrangements need to be
appropriate for the business. With a strong
heritage and as primarily a family owned
company, there are some provisions in the
2018 UK Corporate Governance Code
(the “Code”), which we believe are not
appropriate for Fuller’s. In the spirit of the
Code and for transparency we have
summarised these in the table on the
facing page.
As described in my Chairman’s Review,
this year has been unprecedented and
consequently the workings of the Board
have had to adapt. Given the exceptional
circumstances we faced, it was critical
as a Board that we met more frequently.
In April 2020, we moved quickly to
a weekly routine of video conference
calls to discuss operational, financial and
liquidity matters so that we could assess
the impact to the business, and provide
oversight to the Executive Team.
In the Spring of 2021, the Board spent
considerable time evaluating the decision
to launch an equity raise. Ensuring the
right balance of debt and equity capital in
a business is an important part of ensuring
long-term success, and after very careful
and detailed discussions, the Board
concluded that equity was the correct
route and in the best interests
of shareholders.
Meetings have continued to be held
remotely for most of the year and I would
like to thank my fellow Board members
for embracing this new way of working
and for their significant contribution
during the year. Special recognition also
goes to the Executive Team for its
response to the Covid crisis.
Our Board Committees have also been
very active during the year and helped us
navigate through these extraordinary and
challenging times. Further detail of their
work is reported on pages 47 to 78.
46
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Statement of Compliance with the
UK Corporate Governance Code 2018
The Board is committed to maintaining
effective corporate governance and
integrity, enabling us to deliver our
strategy for the long-term benefit of all
our stakeholders. With this in mind, the
Company has applied the main principles
of the Code throughout the year.
However, given the structure of the Group
– we are a public listed company but still
very much a family-controlled concern
– there are some provisions of the
Code where we do not comply but
where we do consider our governance
framework remains appropriate. These
are summarised in the table below.
Code Provision Detail of non-compliance
Further information
PR I N CI PLE 1: B OA R D LE A D E R S H I P A N D COM PA N Y PU R P O S E
5
For engagement with the workforce, the Company
does not have a director appointed from the workforce;
a formal workforce advisory panel; or a designated
non-executive director.
PR I N CI PLE 2: D I V I S I O N O F R E S P O N S I B I LITI E S
11
At least half of the Board, excluding the Chairman,
are not independent Non-Executive Directors.
Fuller’s has adopted a people first approach in its response to the pandemic
by engaging effectively through strong communications with its staff. The
Board receives regular updates from the CEO and Director of People to
ensure employee matters are understood. Normally there is also regular
engagement with employees through visits to our pubs and hotels, although
this has understandably been curtailed with the estate closed. Over the next
year, the Board will consider whether the designation of a Non-Executive
Director to provide a formal link to the Board is required.
The Board considers that membership is well balanced with the right mix
of skills and experience. The presence of Non-Executive Directors who are
long-standing family shareholders is important in this professionally run
family business.
PR I N CI PLE 3: COM P O S ITI O N , S U CCE S S I O N A N D E VA LUATI O N
18
Directors are not subject to annual re-election.
In accordance with the Company’s Articles of Association, all Directors are
subject to election by shareholders at the first AGM after their appointment
and to re-election at three yearly intervals. As part of the annual Board
effectiveness review, the performance of the Directors is evaluated and
forms the recommendation in the Notice of AGM as to why the Company
believes an individual director should be re-elected. In view of the
Company’s size, its ownership structure and its history, the Board is not
minded to move to annual re-election of Directors but will keep this
requirement under review.
19
The Chairman has been in post for more than
nine years.
The Board considers that the Chairman’s knowledge and understanding
of this long-established family business and its requirements is
extremely valuable.
PR I N CI PLE 5 : R E MU N E R ATI O N
33
The pension contribution rates for the current Executive
Directors are not aligned with those available to
the workforce.
The pension rate for the current Executive Directors represents an existing
contractual commitment and their overall pay is towards the lower end of
market practice. The Board wishes to honour these contractual entitlements
and does not consider it appropriate to make a reduction. Under the
Remuneration Policy approved by shareholders in 2020, the pension
opportunity for new Directors (which includes Neil Smith, the incoming new
Finance Director) is in line with the policy for the majority of the workforce.
Further information on the Code can be
found on the Financial Reporting Council’s
website at www.frc.org.uk.
The Board
Role and Workings of the Board
Led by the Chairman, the Board is
collectively responsible to the shareholders
for the performance and long-term
success of the Group, as well to other
stakeholders for the wider impact we have.
Its role includes the establishment, review
and monitoring of the Company’s strategy,
approval of major acquisitions, disposals
and capital expenditure, setting the
Company’s purpose and values, overseeing
the Group’s systems of internal controls,
governance and risk management, and
ensuring that the appropriate resources
are in place to deliver these.
A formal schedule of matters reserved
for the Board is in place. The Board has
delegated some of its responsibilities to
mandated Committees, each of which
operates under written terms of reference
approved by the Board and which are
available on the Company’s website. All
Committee Chairs report orally on the
proceedings of their Committees at the
next meeting of the Board, and the
47
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Corporate Governance Report continued
minutes of the meetings of all Board
Committees (with some exceptions on
remuneration matters) are provided to
Board members.
The Board delegates all operational
matters and execution of the strategy to
the Executive Team (which includes the
Executive Directors, the Marketing
Director, the People and Talent Director,
and the Property Director). The Chairman
ensures that the Executive Committee
provides accurate and timely information
for Board meetings which is then open to
debate and challenge by all.
Board meetings enjoy open dialogue and
constructive challenge on all issues is
encouraged. With a good information
flow between and prior to Board meetings,
decisions are made in a timely manner
after appropriate questions are dealt with.
The Board has adopted a procedure, in
accordance with the Company’s Articles,
to consider and, if it sees fit, to authorise
situations were a Director to have an
interest that conflicts, or may possibly
conflict, with the interests of
the Company.
Board Meetings and Activities
Normally the Board meets formally at
least six times, but additional meetings
had to be held this year to review the
impact of the coronavirus. At the start
of the pandemic, the Board met weekly
and meetings moved to an online format.
Meetings have continued to be held online
throughout the year but going forward
with restrictions lifting it is intended that
meetings will be held at the Group’s new
registered office, Pier House, and also
within the retail estate.
The process for agreeing the agenda is
managed by the Company Secretary in
consultation with the Chairman. Papers
are distributed a week in advance via
a secure online portal. If required, the
Board considers matters on an ad hoc
basis between scheduled meetings.
At Board meetings, the agendas cover
projects, analysis of the market in which
the Group operates and performance.
Each of the Executive Directors and the
Company Secretary also provide updates
to the Board on matters for which they are
responsible. The Board is responsible for
approving the annual budget and the
annual and half year results. Of course,
much of the discussion this year has
focused on the impact of the coronavirus
pandemic and to address the challenges
posed by the enforced closure of the
business. Considerable time was spent
evaluating the decision to launch an
equity raise and to deal with the
Company’s refinancing.
At the start of 2021, a programme
of presentations from members of the
Executive Team and senior management
was resumed. The programme gives the
Board exposure to talent in the business
while also providing an opportunity to
engage in the key areas being worked
on and the agreed strategic projects.
Presentations have included information
about the customer journey and digital
transformation, our people strategy and
our ESG strategy. These sessions also
enable the Board to provide feedback
and guidance to the individual presenting.
In addition to scheduled meetings,
the Board also meets every year for an
in-depth review of the Group’s strategy
which includes, among other things,
discussions about market trends,
consumer market, competitor landscape
and capital structure. This session is
normally held offsite within one of our
venues in the Estate but in light of the
pandemic this was not possible. Members
of the Executive Team joined the Board
to provide their views on the strategy and
while the pandemic may have altered some
short-term tactical activity that delivers
this strategy, the Board agreed that the
overarching principles were unchanged.
The Non-Executive Directors from time
to time meet with members of the senior
management team and also spend days
out in the trade with individual members
of that team. This helps to keep Non-
Executive Directors up to date with the
operations of the Group and also provides
the Executive Directors and senior
management with valuable feedback about
the Company’s people and its operations.
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 the Chief
Executive on a regular basis. These
48
meetings allow for the review of issues
faced by the business, the continuation
of dialogue on strategic issues, the
discussion of Board appointments when
appropriate, succession planning, and
the provision of support to the Chairman
and the Chief Executive in their roles.
Board Committees
The Audit Committee
The Audit Committee monitors the
integrity of the financial reporting for the
Company, manages the relationship with
the external auditors, and oversees the
effectiveness of the risk management and
internal control systems. Its members are
all independent Non-Executive Directors.
The Audit Committee’s report for the year
is set out on pages 51 to 55.
The Remuneration Committee
The Remuneration Committee sets the
Remuneration Policy for the Chairman
and the Executive Directors, and it also
reviews the remuneration framework for
other senior management. Its members
are all independent Non-Executive
Directors. The Remuneration
Committee’s report for the year is set
out on pages 56 to 78.
The Nominations Committee
The Nominations Committee is chaired
by Michael Turner and the other members
are all independent Non-Executive
Directors. Juliette Stacey and Helen
Jones have served during all of the year
and, following approval by the Board,
Robin Rowland joined the Committee
on 25 January 2021.
The Committee is responsible for leading
the process for appointment of Directors,
for approval by the Board, although
the full Board will also typically
informally discuss Board and senior
management appointments.
After a competitive process the
Nominations Committee approved
the appointment of Spencer Stuart to
support the search for a Finance Director.
Potential candidates were identified
and the CEO and People and Talent
Director met with them for initial
interview. Short-listed candidates were
then invited to meet the Chairman and
other members of the Nominations
Committee, as well as the Executive Team.
Having considered feedback from these
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE meetings and his breadth of financial
and sector experience, the Nominations
Committee recommended the
appointment of Neil Smith to the Board.
Whilst the Board is alert to the
need to ensure diversity in all its forms
is promoted, the Board believes
appointments should be made on merit
and does not want to adopt targets that
may affect its ability to make the right
decision for the business and all its
stakeholders. As and when Board
vacancies arise and, should the support
of an executive search firm be required,
the Board and the Nominations
Committee will ensure that it only uses
firms that have signed up to their
industry’s Voluntary Code of Conduct.
Further information on gender diversity
across the business can be found in the
Corporate Social Responsibility report
on page 38.
Attendance at Board and
Committee Meetings
The table above shows the attendance
of Directors at Board and Committee
meetings held during the year
under review.
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 Chairman is responsible for leading
the Board and ensuring its effectiveness
and openness, and that shareholders are
kept well informed. The Chairman does
not have any commitments which
constrain his ability to fulfil his role. Simon
Emeny, the Chief Executive, is responsible
for all operational aspects of the Group.
During the period, Adam Councell
announced he would be leaving the
Company later this year following an
orderly handover. Neil Smith will join as
the new Finance Director no later than
1 December 2021.
On appointment, new Directors
undertake a tailored induction programme.
Attendance 2020/21
Director
Michael Turner
Simon Emeny
Adam Councell
Fred Turner
Sir James Fuller
Richard Fuller
Helen Jones
Robin Rowland
Juliette Stacey
Board1
28/28
28/28
27/28
27/28
28/28
28/28
28/28
28/28
28/28
Audit
Committee
Nominations
Committee2
Remuneration
Committee
–
–
–
–
–
–
11/11
11/11
11/11
1/1
–
–
–
–
–
1/1
–
1/1
–
–
–
–
–
–
8/8
8/8
8/8
1
Includes scheduled and ad hoc meetings, including weekly meetings held in response to the
Covid-19 pandemic.
2 Robin Rowland was appointed as a member of the Nominations Committee on 25 January 2021.
The Company has six Non-Executive
Directors of which three – Michael Turner,
Sir James Fuller and Richard Fuller –
are family members. The other three
Non-Executive Directors, all of whom
are deemed independent under the Code,
are experienced business leaders, and
collectively all of the Non-Executives
bring a wide range of skills and experience
to the Board. Although the Board
(excluding the Chairman) does not
comprise at least half independent
Non-Executive Directors, the Board
considers it is well balanced as it has the
right number of members for the size of
the Group with representation of the
founding families on the Board being
considered very important in a company
with a high proportion of family shareholders.
The Directors agree that no one individual
dominates discussions and that each makes
a full and positive contribution.
The Directors’ biographies are on pages
40 and 41. Juliette Stacey is the Senior
Independent Director. The Senior
Independent Director offers support and
advice to the Chairman and all the other
Board members; 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 56 to 78
49
and are available for inspection at the
Company’s registered office.
Succession Planning
The Board continues to see succession
planning as a key issue for a business that
has very low turnover amongst its senior
management and is still very much
a family-controlled concern whilst also
being a public listed company.
Succession planning and the development
of talent is an ongoing activity regularly
discussed by the Board and the Executive
Team and there is a clear plan in place for the
succession of key roles. Talented and “critical
to retain” individuals are identified and each
individual has their own development plan,
owned by the individual and supported and
overseen by their leader and the People &
Talent team. Development plans are
grounded in data from assessments and
feedback, and external partners and experts
are engaged to support development
where required.
Advice for the Board
There is a procedure in place under
which Directors can obtain independent
professional advice. The Directors also
have access to the advice and services
of the Company Secretary whose
appointment and removal is a matter for
the whole Board. The Company Secretary
is responsible to the Board for ensuring
that Board procedures are complied
with. The Directors are satisfied that any
concerns they raise at Board meetings
are recorded in the minutes. The Company
maintains appropriate insurance cover in
respect of legal action against its Directors
and Officers.
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Corporate Governance Report continued
Professional Development
Directors are encouraged to attend
training courses, industry forums and
specialist briefings relevant to their role
throughout the year. Occasionally,
specialists such as the Company’s legal
advisors join a Board meeting to brief the
Board on a particular topic. 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.
Board Evaluation
The Company was due to undertake an
externally-facilitated evaluation this year
but, in light of the impact of Covid-19, it
was decided that an internal process would
be conducted by the Senior Independent
Director. An externally-facilitated
evaluation will take place next year and
a process to select a firm to help with
this exercise is currently underway.
This year, the Directors completed
a questionnaire covering the performance
of the Board as a whole and the Board
committees, the effectiveness of the
Executive Directors and Non-Executive
Directors, key learnings from the year
in question and considerations for future
areas of focus. The Senior Independent
Director also met with each Director
individually to discuss their feedback and
performance over the year and, following
review with the Chairman, the findings
were presented to the Board.
Overall, feedback was positive and
demonstrated that the Board and
each of its committees had performed
effectively in dealing with both day-to-day
and ongoing strategic issues during a very
challenging period. The Board recognised
the contribution and efforts of the
Executive Team through the coronavirus
pandemic. Areas highlighted for
enhancement included:
• Continuing with more frequent informal
contact between Board meetings
established in response to the
coronavirus pandemic
• Reestablishing regular formal and
informal Board visits to the wider business
as restrictions ease and increasing the
contact between Board members
and employees
• Supporting succession planning below
Board level and developing a strong
diverse talent pipeline.
Committees to answer relevant questions
at the meeting and encourages all Directors
to be present.
In light of the ongoing risks of Covid, we
held the 2020 AGM as a closed meeting
to ensure the safety of all concerned.
Shareholders were invited to submit
questions on any matters related to the
AGM prior to the meeting and answers
were posted on the Company’s website
afterwards. The Board plans to hold the
2021 AGM as normal this year on the
basis that all restrictions will have been
lifted by the time of the meeting, and
preparations are being made for a physical
meeting to be held on 23 September 2021
at The George IV, subject of course to any
Government guidance in place at the time.
Details of the engagement process with
shareholders regarding the new Directors’
Remuneration Policy can be found in the
Directors’ Remuneration Report on
page 66.
By order of the Board
R A C H E L S P E N C E R
C O M P A N Y S E C R E T A R Y
8 July 2021
Fuller, Smith & Turner P.L.C.
Pier House
86-93 Strand-on-the-Green
London W4 3NN
Board Re-election
The Articles of Association of the
Company ensure that all Directors are
subject to election by shareholders at the
first AGM after their appointment and
to re-election at three yearly intervals.
Relations with Shareholders
The Company has an ongoing programme
of individual meetings with institutional
shareholders, allowing it to update
shareholders on the performance of the
business and the strategy for the future,
and to give them an opportunity to discuss
corporate governance matters. The
Company’s brokers also contact key
shareholders to establish if they would like
to see the Chief Executive and Finance
Director in the days following the
presentation of the preliminary and half
year results. The Chairman, Richard Fuller
and Sir James Fuller are the key contacts
with the Company’s family shareholders
and Sir James Fuller has a specific role
to keep in touch with those shareholders.
The Senior Independent Director and
the other Non-Executive Directors
are all willing to attend meetings with
shareholders or to be contacted by
shareholders should they have any
concerns which have not been resolved
through the normal channels. The
Non-Executive Directors have had no
such requests during the last financial year.
All Board members receive feedback from
the results presentations and meetings
with shareholders, enabling them to keep
in touch with shareholder opinion.
The Board supports the use of the AGM
to communicate, in particular, with private
investors, and the Chairman and Chief
Executive make a detailed presentation
to shareholders updating them on the
Company’s performance and progress.
The Board is keen to encourage institutional
investors to attend the meeting, in line with
the duties set out in the Stewardship Code
for institutional shareholders. Should they
have concerns over any issues being voted
upon at the AGM, they can then meet all
the Directors and discuss them in person,
particularly if they have declined an
invitation for an individual meeting.
The Chairman arranges for the Chair
of each of the Company’s Board
50
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE J U LI E T TE S TACE Y
CH A I R O F T H E AU D I T
COM M I T T EE
“The fundamentals
of our risk management
and internal control
framework have been
subject to close scrutiny
during the ongoing
closure of the estate.”
that the FRC had no specific
questions to raise but, in response
to points they highlighted, we have
reviewed our disclosures and for those
areas which are still relevant this year
we have made a number of changes to
enhance reporting so that it is clearer
and more concise.
Looking ahead to the next year, we will
monitor closely the roll out of the new
finance system which the Company
has identified as more suitable for
the business following the sale
of the Brewery, reviewing both the
robustness of financial reporting
from the system and simplification
of internal controls management.
IT security will also be an area of focus
given the increased risk from cyber
attacks, and we intend to conduct
a deep dive into the controls in this
area to help mitigate these threats.
I will be attending the AGM on
23 September 2021 and I look
forward to answering any questions
about the work of the Audit
Committee then.
J U L I E T T E S T A C E Y
C H A I R O F T H E A U D I T
C O M M I T T E E
8 July 2021
Audit Committee Report
Statement of the Audit
Committee Chair
Dear Shareholder,
I am pleased to present the Audit
Committee Report for the year ended
27 March 2021.
As reported last year, we identified
coronavirus as an emerging risk and
whilst our core duties have remained
unchanged, it has been necessary to
flex our programme of activities and
consequently meet more frequently than
normal. In particular, the fundamentals of
our risk management and internal control
framework have been subject to close
scrutiny during the ongoing closure of the
estate and given the uncertainty of the
impact of the pandemic on our business.
During the year, we were pleased to
welcome a new Head of Finance
Transformation and Risk, Ian Namey.
Ian has helped us implement changes to
strengthen our approach to the annual risk
assessment, and supported a comprehensive
review of our risks, as well as implementing
a framework which we can use to assess
and enhance the control environment.
A key area of work for the Audit
Committee this year has been the
audit tender process which resulted in
the appointment of Ernst & Young LLP.
I led this process on behalf of the Audit
Committee, but would like to thank my
fellow Committee members and the wider
finance team for their support. Given
the engagement of a new audit firm, it
seemed an appropriate time to summarise
arrangements around independence
and objectivity, and this has now been
formalised into a written policy. The formal
appointment of Ernst & Young LLP will be
proposed at the AGM, but we have been
delighted with their support during the
year end and look forward to developing
this relationship.
During the year, we received a letter from
the Financial Reporting Council noting
that the Company’s 2020 Annual Report
and Accounts had been included in their
thematic review of corporate reporting
on cash flow statements and liquidity
disclosures. We were pleased to note
51
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Audit Committee Report continued
The Audit Committee keeps abreast of
regulatory and governance developments
as part of ongoing reporting from the
auditors. Specific areas of interest
are scheduled separately and in 2021
a member of the auditors’ Regulatory &
Public Policy team gave a presentation to
the Committee on audit reform proposals
being considered by the Government.
The effectiveness of the Audit Committee
formed part of the Board evaluation
process described in the Corporate
Governance Report on page 50.
Financial Reporting and
Significant Judgement
The Audit Committee monitors the
integrity of the financial information
published in the interim and annual
financial statements and considers the
extent to which suitable accounting
policies have been adopted, presented
and disclosed.
During its review of the Group’s financial
statements for the period to 27 March
2021, the Audit Committee has reviewed
the key judgements applied in the
preparation of the consolidated financial
statements, including those communicated
by the auditors during their reporting.
These are described in the accounting
policies detailed in note 1 to the financial
statements. The Board was made
fully aware of any significant financial
reporting issues and judgements made
in connection with the preparation of
the financial statements.
Committee Membership
The Committee comprises three
independent Non-Executive Directors
and has a good balance of skills, with
competence and experience in the sector
in which Fuller’s operates. The Chair of the
Committee is a Chartered Accountant
and has a broad range of experience in
senior finance roles, and she is therefore
considered to meet the requirement
under the Code that at least one member
should have recent and relevant financial
experience. The Committee is advised
internally by the Company Secretary,
Rachel Spencer (Séverine Béquin until
8 January 2021), who also acts as
secretary to the Committee.
Meeting Attendance
Attendance of Committee members at
scheduled meetings throughout the year
is set out on page 49. The Committee
normally meets fours time a year but,
given the unprecedented year, we have
held eleven meetings. As well as the
additional rigour needed around risk
management with the entire closure of
the business, the formalities of the FY20
audit process required added attention.
All meetings are attended by the external
auditors and the Company Secretary,
and regular attendees include the
Chairman, Chief Executive and the
Finance Director. Members of the
finance and risk management team
also attend relevant meetings at the
Committee Chair’s request, and reports
are received on occasion from other
members of the management team
as required by the agenda.
The Audit Committee meets at least once
a year with the external auditors, without
management present, to discuss any
matters they may wish to raise. The Audit
Committee Chair also meets separately
with the Finance Director and auditors
outside of the formal meeting programme
which helps to identify key areas of focus
and emerging issues that may need to be
added to the Audit Committee’s agenda.
Responsibilities
The Audit Committee’s responsibilities
are outlined in its terms of reference.
These were reviewed following the year
end, including an assessment of how the
Audit Committee had discharged its
responsibilities during the year. The revised
terms of reference can be found on the
Company’s website.
The principal responsibilities of the
Audit Committee are to review the
integrity of the financial reporting for
the Group (including managing the
relationship with the auditors) and to
oversee the effectiveness of the risk
management and internal control systems.
Key Activities
The Audit Committee has a detailed
meeting planner which sets out the key
items to be covered at its scheduled
meetings which includes reviewing the
financial statements and announcements,
monitoring changes in accounting practices
and policies, and reviewing decisions with
a significant element of judgement.
At each scheduled meeting an update on
risk management is presented, together
with reports on compliance with anti-
bribery procedures and data protection.
In light of Covid-19 and the entire closure
of the business, there has been even
greater rigour around potential risks arising
from the ongoing uncertainty. In 2021, the
Audit Committee received an update
regarding the increasing risk of allergens
and was pleased to note the continued
adherence to procedures already in place
to mitigate this risk, together with the new
areas of enhancement being considered
to ensure controls remain appropriate.
52
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE The key issues and judgements considered by the Audit Committee are detailed in the accompanying table:
Key accounting judgement
How the issue was addressed
Going Concern
Impairment Testing of Intangible
Assets, Right-of-Use Assets and
Property, Plant and Equipment
Deferred tax
Separately Disclosed Items
Pension Accounting
The Audit Committee considered the appropriateness of the going concern assessment and
associated judgements around material uncertainties. The Audit Committee reviewed the
scenarios and mitigations available to the Group as disclosed in note 1 and is satisfied
the disclosures are appropriate.
The Audit Committee considered the proposed impairment of property assets, right-of-use
assets and goodwill for both the Half Year Report and the Annual Report. The Audit Committee
was satisfied with the approach presented by management and the judgements made for those
properties at risk of impairment.
Deferred tax accounting on property, plant and equipment is a complex area and a number
of judgements are required to determine the value. Deferred tax can be recognised on pubs
based on disposal, in-use or a dual basis and a number of different inputs need to be considered
to calculate this such as fair value uplifts, rolled over gains and indexation. A prior year
adjustment to deferred tax liability has been recognised in respect of an understatement in
the base cost recoverable on a sales basis. The Audit Committee is satisfied that after the
adjustment was made to the opening balance, the judgements that management applied in the
current year are appropriate. The Audit Committee has also considered whether sufficient
disclosures have been made in the Annual Report for the prior year restatement and is satisfied
they have been.
The Audit Committee considered the nature of items classified as “separately disclosed items”
in the financial statements. The Audit Committee was satisfied that the items management
proposed to be shown as separately disclosed items were not linked to the underlying trading
of the Group. Separately disclosed items include:
• costs relating to the corporate reorganisation of the Group, specifically the hive up
of the trade and assets of Bel & The Dragon and Cotswold Inns & Hotels, the ending
of the transitional services arrangement with Asahi and restructuring due to the
coronavirus pandemic
• profit or loss on property disposals
• impairment on properties, right-of-use assets and goodwill
• net interest expense on the Group’s defined benefit pension plan.
In addition, the Audit Committee reviewed these disclosures within the 2021 Annual Report
and Accounts to ensure they clearly identified and reconciled to the relevant GAAP measure.
The pension liability is sensitive to the actuarial assumptions applied in measuring future cash
outflows. The use of assumptions such as discount rate and inflation, which have an impact
on the valuation of the defined benefit pension scheme, was assessed by the Audit Committee.
The Audit Committee was satisfied with the proposed accounting treatment and disclosures
of the Group’s defined benefit plan in the financial statements.
Going Concern and
Viability Statement
The Audit Committee assessed the
going concern and viability reviews
undertaken by management as detailed
in the Financial Review on pages 25 and
26. This involved looking at potential
revenues, costs and cash flow modelling
on both a prudent base case and stress
case scenario where there was much
greater uncertainty. The Committee was
satisfied with the approach presented by
management including the judgements
made in the estimation of future cash flows
and the Group’s financing, and considering
the high proportion of freehold property
that underpins the estate.
Fair, Balanced and Understandable
The Audit Committee reviewed whether
the 2021 Annual Report, taken as a whole,
was fair, balanced and understandable and
also whether it provided the information
necessary for shareholders to assess the
Company’s position and performance,
business model and strategy. In making
its assessment the Audit Committee took
the following into account:
• A timetable for the production of the
2021 Annual Report was agreed by the
Finance Team and the auditors, with
overall co-ordination of the report being
overseen by the Finance Director
• Each section of the report was prepared
by a member of management with
appropriate knowledge and experience,
including representatives from finance,
communications, company secretariat
and risk
• Management’s views on each of the key
judgements which were then discussed
by the Audit Committee
• Reports and feedback from the
auditors which were presented to the
Audit Committee
• Board members received drafts of the
report for review which provided an
opportunity to provide comments and
ensure messaging was cohesive.
53
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Audit Committee Report continued
Following its review, the Audit Committee
confirmed to the Board that the 2021
Annual Report was fair, balanced and
understandable, and the Board’s
statement is set out on page 45.
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 was 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 disposal
• the maintenance of proper accounting
records and the reliability of financial
information used within the business
or for publication
• compliance with applicable laws
and regulations.
The Directors’ statement on the
Company’s system of internal controls
is set out below.
Early in the year the Committee discussed
the Company’s risk management process
and took the opportunity to do a full
refresh of the risk register. This included
a bottom up review of risks across all
departments, revising or reconfirming
ownership and updating mitigating actions
and controls. This gave the Committee
increased confidence in the risk processes
within the Group. Any significant
changes to risks were discussed in each
subsequent Committee meeting.
In addition, during the year a selection
of key risks were presented to either the
Audit Committee or the Board. This has
included risks around business continuity
with the closure and reopening of the
business due to Covid, assessment of risks
around our people and the approach to
simplifying and solidifying our supply chain.
Looking forward, the delegation
of authorities is being updated for full
implementation with the new finance
system, and the commencement
of a focused review on cyber security
is being initiated.
including commentary on key business
opportunities and risks, approved by the
Executive Team and further reviewed
by the Board on a consolidated basis
• the reviews by the Executive Team
of actual monthly results against
budget, together with commentary
on significant variances and updates
of both profit and cash flow
expectations for the year
• in addition, due to the exceptional
circumstances of this year, weekly
reviews of performance of both
profit and cash flow during periods
of reopening
• a detailed investment approval process
requiring Board authorisation for all
major projects
• 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
take 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.
The Group does not have a formal internal
audit function. The Group employs a team
of retail business auditors who monitor,
in particular, the controls over stock and
cash in the Managed Pub estate, Bel &
The Dragon sites, Cotswold Inns & Hotels
and, until their sale, The Stable sites.
Relevant management attend meetings of
the Audit Committee to discuss the issues
being addressed. Clearly, with the business
closed, these reviews were curtailed but
a programme of activities has now been
resumed. After consideration, the Audit
Committee has confirmed that the
existing arrangements for internal audit
remain appropriate. Management may
from time to time augment the internal
audit resource with specialist external
resources. External expertise is also used
if assurance is required on any areas of
risk or controls where the Committee
considers the business may be exposed.
This year this included an external review
of the CJRS claim and looking forward
external expertise will be used to support
our cyber security review.
The Group maintains business continuity
plans and tests these plans on an annual
basis, usually towards the end of the
financial year. Due to the coronavirus
pandemic and the closure of the estate
for much of the year, it was not possible
to carry out the annual exercise for the
financial year ended 27 March 2021.
The Board and Audit Committee consider
the rapid and thorough response to the
pandemic by the Executive Team, and
the broader management team, as solid
evidence of the effectiveness of existing
disaster recovery and business
continuity plans.
Management within the Finance
Department are responsible for the
appropriate maintenance of financial
records and processes that ensure all
financial information is relevant, reliable,
in accordance with the applicable laws and
regulations, and distributed both internally
and externally in a timely manner.
The scoping, tendering and implementation
of a new central finance system, which will
go live during the new financial year, has
been an area of focus for the Finance
Department during this financial year.
Throughout the period, the Executive
Directors provided relevant and timely
financial commentary to the Board to
supplement the financial reporting, ensuring
the Board and the Audit Committee were
informed of the financial position and
results of the Group.
The Board and Audit Committee have
considered the effectiveness of the Group’s
system of internal control, taking account
of material changes in the operations of the
Group following the coronavirus pandemic,
the implementation of the Coronavirus Job
Retention Scheme and the Group’s various
reopening plans that have been required
at various points during the year and again
after the year end.
Key elements of the system of internal
control designed to address significant
risks and uncertainties, as documented
on pages 28 to 30, include:
• clearly defined levels of responsibility
and delegation throughout the Group,
together with well-structured reporting
lines up to the Board the preparation
of annual budgets for each division,
54
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE The Policy is in line with the
recommendations set out in the FRC’s
Guidance on Audit Committees and the
requirements of the FRC’s Revised Ethical
Standard 2019 (the “Standard”). In respect
of non-audit services, only a very short
list of non-audit services is now permitted
under the Standard, which are detailed
in the Policy. Previously, authority was
delegated to the finance team to authorise
spend with the auditors for non-audit items
up to £50,000, but under the Policy all
spend now has to be approved by the Audit
Committee which ensures full visibility.
In 2021, the fees paid to EY for audit
services were £405,000 including
£95,000 for non-recurring audit services.
There were no non-audit services fees paid
during the year.
J U L I E T T E S T A C E Y
C H A I R O F T H E A U D I T
C O M M I T T E E
8 July 2021
Whistleblowing
The Audit Committee is responsible for
reviewing the adequacy and security of the
Company’s arrangements for employees
and contractors to raise concerns about
any possible improprieties relating to
financial reporting or other matters.
Since the year end, the Audit Committee
has reviewed and updated the Company’s
Whistleblowing Policy. To complement
the internal processes already in place,
a mechanism for concerns to be raised
anonymously, rather than just in
confidence, has been implemented
through the appointment of an
independent whistleblowing service
operated by Safecall. Employees are
being notified of the new arrangements
through the Company’s online training
and communications platform.
Any whistleblowing reports are reported
to the Audit Committee and, at least
annually, to the Board. Following the
reopening of the business, a standing
report to the Audit Committee on
employee relation matters has been
resumed to provide insight to any
trends within the business.
External Audit
As reported last year, the Audit Committee
decided to review the external audit
appointment and conducted a competitive
audit tender process. A number of firms
were invited to tender, and shortlisted
firms presented their proposals to
the Audit Committee Chair and the
Finance Director. Before the final
recommendation to the Board, all
other members of the Committee, the
Chairman and the CEO met the potential
engagement partner of the preferred firm.
Following careful consideration, the Audit
Committee recommended the appointment
of Ernst & Young LLP (“EY”) to conduct
the audit of the Group’s financial statements
for the financial year to 27 March 2021.
Their sector experience was recognised as
particularly valuable. Grant Thornton UK
LLP subsequently resigned.
The auditors are invited to attend all
meetings of the Audit Committee and
report on the plan and approach for the
full year audit and half year review.
The Audit Committee Chair meets the
auditors on a regular basis during the year
and the Audit Committee meets with the
external auditors, without management
present, at least annually in order to allow
both Audit Committee members and the
auditors to raise any issues directly and to
discuss the auditors’ remit.
The Audit Committee reviewed the
effectiveness of EY’s performance of the
external audit process taking into account:
• the quality and scope of the audit plan,
and evaluation of delivery and
performance against the plan
• qualifications, efficiency and
performance of the audit team
• the communication between the
Company and EY
• EY’s understanding of the Group’s
business and industry sector
• the results of the FRC’s Audit Quality
Inspection Report on EY.
After considering these matters, the
Audit Committee was satisfied with
the effectiveness of the year end audit
process and recommended to the Board
that EY should be proposed for formal
appointment at the Company’s AGM
on 23 September 2021.
During the year, the Company complied
with the provisions of the Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of
Competitive Tender Process and Audit
Committee Responsibilities) Order 2014.
Auditor Independence
and Non-Audit Services
Auditor independence and objectivity
are safeguarded by a number of control
measures and, in light of the appointment
of EY, the Audit Committee decided it
was an appropriate time to summarise
arrangements into a formal written policy
(the “Policy”). The Policy was approved in
January 2021 and sets out processes for
assessing independence and objectivity,
including disclosure requirements of the
auditors, restrictions on the employment
of the auditors’ former employees and
the circumstances in which the auditors
may be permitted to undertake
non-audit services.
55
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report
H E LE N J O N E S
CH A I R O F T H E
R E MU N ER AT I O N COM M I T T EE
“After careful
consideration
the Remuneration
Committee is planning
to grant a one-off
Recovery LTIP Award
in 2021 to incentivise
management to re-build
the business and profit
levels following the
Covid-19 pandemic.”
Statement of the Remuneration
Committee Chair
Dear Shareholder,
On behalf of the Board, I am pleased to
present the Remuneration Report for
the 52 weeks ended 27 March 2021,
which includes our revised Directors’
Remuneration Policy (“Policy”) which
will be put to shareholders for approval
at the AGM on 23 September 2021.
The last year has been an extremely
difficult one for the hospitality sector.
The outbreak of Covid-19 has had
a significant impact on the business with
pubs closed for a considerable portion
of the last financial year and the early part
of this financial year. From the start of the
first lockdown until 12 April 2021 our pubs,
on average, will have been open on only
27% of the 388 days. During lockdown
cash burn was c.£4-5 million per month.
All of our sites are now open but we are
operating at a much-reduced capacity
in line with government guidance.
In light of the impact of the pandemic
on the business and to support the
management of costs, the Executive
Directors and other Board members
volunteered to reduce their salaries by
25% between 1 April 2020 and 30 June
2020 and as I reported last year no annual
bonus was paid for FY2020, despite part
of the performance targets being met.
The Remuneration Committee
(“the Committee”) and the Executive
Directors agreed that, given the closure
of the business and our reliance on
government support, no annual bonus
plan would operate for FY21. Stretching
adjusted EPS growth targets set for 2018
LTIP awards were not met and therefore
this award will lapse.
Fuller’s is primarily a family owned business
and this ethos is integral to our decision
making. Throughout the closure of
the business, the physical and mental
well-being of our people and their families
has been of paramount importance
to the Board and all our decisions have
been made with them at the centre of
our thinking. We were the first company
to suspend rent for our Tenants during
periods of closure which was very well
received. For our teams in our Managed
Pubs and Hotels, and in the Support
Centre, our People Team has provided
access to emotional and financial support
for team members. This has been cascaded
through our digital communication system
and has included regular video messages
from the Chief Executive, as well as
access to support on offer from the
Licensed Trade Charity. We also provided
supermarket vouchers for those of our
teams most impacted during the tough
third lockdown and provided Fuller’s
vouchers to team members who
volunteered in their local communities
while furloughed by way of thanks.
A number of webinars have also been
hosted to impart more detailed information
and these became a regular fixture just
prior to each reopening. The success of
these webinars has cemented their place
in our communications toolkit and is
a positive learning that we will take forward.
Recovery LTIP Award
In light of the challenges the business
faces, the Board is concerned about the
motivation and retention of the Executive
Directors and is therefore intending to
grant a one-off Recovery LTIP Award
in 2021 to incentivise management to
rebuild the business and profit levels.
This award will be in addition to the
normal LTIP award.
56
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE The Recovery LTIP Award will vest based
upon the achievement of stretching
EBITDA targets for FY24 which are
aligned with delivering a full recovery
of the business. The Committee has
selected Group EBITDA (excluding IFRS
16) as the sole measure of performance for
the Recovery LTIP as it strongly incentivises
operational recovery throughout our
business and provides strong line of sight
for management. Following the end of the
performance period, vested shares will be
subject to a holding period for two years.
For Executive Directors, the award
will have a value of 250% of base salary.
Other senior executives will also participate
in the plan receiving lower levels of award.
It is intended that the Recovery LTIP
Award will be granted under the existing
LTIP rules and will be subject to the
same terms around discretion to override
formulaic outcomes, malus and clawback
and leavers. We will be seeking shareholder
approval for a revised Directors’ Remuneration
Policy and for an amendment to our LTIP
Rules to enable us to grant this Recovery
LTIP Award following the AGM.
Other reward elements
Base salaries for Executive Directors
will be increased by 2% in line with the
increase for the wider workforce. For
FY22 the maximum annual bonus will
continue to be 100% of base salary with
the annual bonus based 70% on Group
EBITDA performance and 30% based
on individual strategic performance.
For FY22 the maximum LTIP award
will continue to be 125% of base salary
for the CEO and Retail Director based
on the achievement of EPS performance
for FY24.
Finance Director’s
Remuneration arrangements
As announced on 11 June 2021, Neil
Smith will be joining us as our new Finance
Director at a date to be confirmed, but
no later than 1 December 2021. His salary
has been set at £352,500 per annum.
We appreciate this salary is above the
salary for the former Finance Director,
however, it is positioned some way below
the salary he received in his previous role
of £430,000. Neil will receive a pension
of 5% of base salary in line with the
pension received by the majority of
our wider workforce and in line with
our Directors’ Remuneration Policy.
His maximum annual bonus opportunity
will be 100% of base salary and he will
be eligible to receive an annual LTIP
award of 100% of base salary. He will
also be eligible to participate in the
Recovery LTIP on a pro-rata basis.
Adam Councell will step down from the
Board and his role of Finance Director
later in the year. He will not receive any
payment in lieu of notice. Adam will not
be entitled to participate in incentive
arrangements in respect of FY22 and
all his outstanding LTIP and ESOS awards
will lapse.
The Committee strongly believes
that the Recovery LTIP Award is critical
to support the business in recovery from
the significant impact of the pandemic
and we hope that you will support our
revised Directors’ Remuneration Policy,
the amendment to the LTIP Rules and our
Annual Remuneration Report at the 2021
AGM on 23 September 2021.
H E L E N J O N E S
C H A I R O F T H E
R E M U N E R A T I O N C O M M I T T E E
8 July 2021
57
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Report on Directors’ Remuneration Policy
The following table sets out our Remuneration Policy for Directors (the “Policy”). This policy will be put forward to shareholders for
their binding approval at the Annual General Meeting to be held on 23 September 2021 and will apply to payments made from this date.
In developing this Policy, the Committee has considered the key principles set out in Provision 40 of the UK Corporate Governance
Code. The Committee believes that our Policy is clear and transparent and aligned with our culture. In normal years we operate a simple
incentive framework of an annual bonus and a LTIP only. Award levels are capped with payout linked to performance against a limited
number of measures which are well linked to our strategy. Stretching but fair targets are set. This ensures that potential reward outcomes
are clear and aligned with performance achieved, with the Committee having the discretion to adjust pay-outs where this is not considered
to be the case.
Pay levels are set taking into account external market levels as well as internal practice to ensure pay remains competitive while being
equitable within the Company. Malus and clawback and discretion provisions, LTIP holding periods and shareholding guidelines, including
post-employment, are in place to mitigate reputational and other risks.
Further details regarding the operation of the Policy for the current financial year can be found on pages 64 to 68. Details of how the
previous Policy was applied for the financial year ended 27 March 2021 can be found on pages 68 to 78.
Executive Directors (“Executives”)
Purpose and how the
element supports the short
and long-term strategic
objectives of the Company
Element
Base Salary To recruit, retain and
reward high calibre
Executive Directors to
deliver the Company’s
strategy. The salary will
reflect each role, the
importance of that
role to the business
and the experience the
individual brings to it.
Operation
Maximum opportunity
Performance measures
The Committee sets base salary taking
into account:
• the individual’s skills, experience and
their performance
• salary levels at other companies of a similar
size and complexity
• pay and conditions elsewhere in the Group.
Any salary increases are normally effective
from 1 June.
Not applicable.
Whilst there is no
maximum salary,
increases will normally
be in line with the
typical increases
awarded to other
employees in the Group.
However, increases
may be above this level
in certain circumstances
such as:
• where an Executive
Director has been
appointed to the Board
at a lower than typical
market salary to allow
for growth in the role,
larger increases may be
awarded to move salary
positioning closer to
typical market level as
the Executive Director
gains experience
• where an Executive
Director has been
promoted or has
had a change in
responsibilities
• where there has been
a significant change
in market practice or
the size and complexity
of the organisation.
58
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Element
Benefits
Purpose and how the
element supports the short
and long-term strategic
objectives of the Company
To recruit and retain
Executive Directors by
providing competitive
benefits which also
protect Executives and
provide preventative
care for them.
Annual
Bonus
To incentivise
Executive Directors
to deliver performance
in line with the Group
strategy and to align
their interests with
those of shareholders.
Operation
Maximum opportunity
Performance measures
Not applicable.
The cost of the provision
of allowances and benefits
varies from year to year
depending on the cost to
the Company and there
is no prescribed maximum
limit. However, the
Committee monitors
annually the overall cost
of the benefits provided,
to ensure that it remains
appropriate.
The Company offers Executives a range
of benefits which include:
• car allowance
• life assurance
• private medical insurance
• subscriptions to professional bodies
or other relevant organisations
• regular medical check ups
• permanent health insurance.
Executive Directors may participate in the
Share Incentive Plan or Savings Related Share
Option Plan or any other all-employee plans
on the same basis as other eligible employees
up to HMRC-approved limits.
The Committee may introduce other benefits
if it is considered appropriate to do so.
Executive Directors shall be reimbursed for
all reasonable expenses and the Company
may settle any tax incurred.
Where an Executive Director is required to
relocate to perform their role, the appropriate
one-off or ongoing benefits may be provided
(e.g. housing, schooling, etc.).
Any bonus earned of up to 75% of salary
will normally be paid in cash following
the year-end.
Maximum annual bonus
opportunity of 100%
of base salary.
Normally 50% of the
bonus shall pay out
for on-target levels of
performance. The annual
bonus normally starts
to accrue for meeting
threshold levels of
performance.
The Committee retains
discretion to vary the
level of payout for
threshold and target
performance if it
considers it to be
appropriate.
Any bonus earned in excess of 75% will
normally be deferred into shares under the
Bonus and Deferred Bonus plan for three
years subject to continued employment.
The Committee may decide to pay the entire
bonus in cash where the amount to be deferred
into shares would, in the opinion of the
Committee, be so small it is administratively
burdensome to apply deferral.
Bonuses are not pensionable.
Bonuses are based on annual
performance targets.
The Committee may, in its discretion adjust
annual bonus payments if it considers that
the outcome does not reflect the underlying
financial or non-financial performance
of the participant or the Group over the
relevant period or that such payout level is not
appropriate in the context of circumstances
that were unexpected or unforeseen when the
targets were set. When making this judgment
the Committee may take into account such
factors as the Committee considers relevant.
Malus and clawback provisions apply, detailed
on page 63.
59
The Committee
shall determine
performance measures
for the bonus each year.
These may include
financial measures (for
example profitability)
and other metrics linked
to the delivery of the
business strategy.
No less than 70%
of the annual bonus
will be based on
financial measures.
The Committee has the
discretion in exceptional
circumstances to adjust
the performance
targets and/or set
different measures
if events occur outside
of management’s
control or where the
target no longer
satisfies its original
purpose to ensure
that pay is aligned
with performance.
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Element
Share Plans
Long-Term
Incentive
Plan
(“LTIP”)
Purpose and how the
element supports the short
and long-term strategic
objectives of the Company
To reward the efforts
of Executive Directors
in line with the
Company’s objective
of creating shareholder
value and support
alignment with
shareholder interests.
The LTIP also acts
as a retention tool.
Operation
Maximum opportunity
Performance measures
The maximum annual
award in respect of
a financial year is 125%
of base salary.
Normally 25% of awards
vest for threshold levels
of performance.
Awards granted in
2021/22 will vest
subject to pre-tax
adjusted EPS
performance which will
normally be measured
over a period of three
years.
The Committee
may use different
performance measures
for future awards it is
deemed appropriate.
Awards can be in the form of conditional
shares or in such other form that the
Committee determines has the same
economic effect. Awards can be over ‘A’
(listed), and ‘B’ and ‘C’ (unlisted) ordinary
shares and the Committee may alter the
distribution between the different classes
of shares, provided that there is no increase
in the aggregate market value of the award.
Awards normally vest based on
performance assessed over a period
not shorter than three years.
Awards granted from 2020/21 onwards
will normally be subject to a holding period
of two years following the end of the
performance period.
The Committee may, in its discretion,
adjust LTIP vesting levels if it considers that
the outcome does not reflect the underlying
financial or non-financial performance
of the participant or the Group over the
relevant period or that such vesting level
is not appropriate in the context of
circumstances that were unexpected
or unforeseen when the targets were
set or in the context of the experience
of shareholders or other stakeholders.
When making this judgment, the Committee
may take into account such factors as
the Committee considers relevant.
Malus and clawback provisions apply,
as detailed on page 63.
60
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Purpose and how the
element supports the short
and long-term strategic
objectives of the Company
The Recovery LTIP
Award will be granted
on a one-off basis in
FY22, designed to
support the recovery
of the business
following the
COVID-19 pandemic
by incentivising
management to
rebuild the business
and profit levels.
Element
Recovery
Long-term
Incentive
Plan Award
(“Recovery
LTIP
Award”)
Note – it is
intended that
the Recovery
LTIP will be
granted under
the terms of
the LTIP Plan
subject to
shareholder
approval of
a revised
approach
to individual
award limits
at the 2021
AGM
Executive
Share
Option
Scheme
(“ESOS”)
To align the interest
of Executive
Directors with those
of shareholders.
Operation
Maximum opportunity
Performance measures
It is intended that
the Recovery LTIP
Awards will be based
on EBITDA (excluding
IFRS 16) performance.
The Recovery LTIP
Award will be granted
on a one-off basis
with awards intended
to be granted in FY22.
The maximum award
is 250% of base salary.
25% of the award will vest
for threshold levels of
performance, 50% of the
award will vest for target
levels of performance,
75% of the award will vest
for very strong levels of
performance and 100%
of the award will vest for
exceptional performance.
Executives may be
granted and hold
options up to the
maximum value
set by HMRC
(currently £30,000)
at any one time.
An ESOS option
will vest in full if the
threshold performance
level is achieved.
The vesting of ESOS
options is subject
to the achievement
of performance
conditions which will
normally be measured
over a period of not
less than three years.
The Committee
intends to use
adjusted EPS as the
performance condition.
The Committee
may, however, use
different performance
measures if it is
deemed appropriate.
Awards can be in the form of conditional
shares or in such other form that the
Committee determines has the same
economic effect. Awards can be over ‘A’
(listed), and ‘B’ and ‘C’ (unlisted) ordinary
shares and the Committee may alter the
distribution between the different classes
of shares, provided that there is no increase
in the aggregate market value of the award.
It is intended that awards will vest based on
performance over the three financial years
2021/22 to 2023/24.
Awards will be subject to a holding period
of two years following the end of the
performance period, other than in
exceptional circumstances.
The Committee may, in its discretion,
adjust the Recovery LTIP vesting levels if it
considers that the outcome does not reflect
the underlying financial or non-financial
performance of the participant or the Group
over the relevant period or that such vesting
level is not appropriate in the context of
circumstances that were unexpected or
unforeseen when the targets were set or in
the context of the experience of shareholders
or other stakeholders. When making this
judgment, the Committee may take into
account such factors as the Committee
considers relevant.
Malus and clawback provisions apply,
as detailed on page 63.
A tax-advantaged market value share
option plan.
Executive Directors may be granted market
value options up to a maximum total value
set by HMRC.
Options vest based on performance over
a three-year period.
Once vested, options must be exercised
before the tenth anniversary of grant.
61
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Element
Pension
Purpose and how the
element supports the short
and long-term strategic
objectives of the Company
To provide Executive
Directors with
long-term pension
provisions on
a competitive basis.
Operation
Maximum opportunity
Performance measures
The Company operates a variety of pension
benefits. Executive Directors are either
deferred members of the defined benefit
pension plan – now closed to future accruals
– or the Company’s defined contribution
pension plan or receive a salary supplement
or a mixture of these.
Not applicable.
The maximum annual
pension contribution or
cash allowance is 17.5%
of base salary. Executive
Directors will normally be
expected to make a net
contribution of 8% of
base salary themselves.
The Chief Executive is
a member of the main
section of the defined
benefit pension plan
which is closed to
future accrual.
For any new Executive
Director to the Board
from 1 April 2020, the
pension opportunity
will be in line with the
policy for the majority
of the workforce.
Share
ownership
guidelines
Align the interests
of Executive Directors
and shareholders and
encourage long-term
shareholding and
commitment to the
Company both in and
post-employment.
Executive Directors are expected to build and
maintain a holding of shares in the Company
equal to at least 200% of base salary.
Executive Directors are expected to retain
50% of any post-tax shares that vest under
any share incentive arrangements until this
shareholding is reached.
Not applicable.
Not applicable.
The Committee also has a policy to promote
interests in shares following cessation of
employment to enable the interest of former
Executive Directors to remain aligned with the
interests of shareholders for an extended period
after leaving employment.
Following ceasing to be an Executive Director,
Executive Directors will normally be expected
to maintain a minimum shareholding of 200%
of base salary (or actual shareholding if lower)
for the first 12 months following departure from
the Board and 100% of base salary (or actual
shareholding if lower) for the subsequent
12 months. The Committee retains discretion
to waive this guideline if it is not considered
appropriate in the specific circumstances.
62
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Purpose and how the
element supports the short
and long-term strategic
objectives of the Company
Element
Non-Executive Directors
Basic and
Additional
Fees
To attract and retain
high calibre Non-
Executive Directors
by offering market
competitive fee levels
that recognise the time
that the Non-Executive
Directors commit to
their various roles.
Operation
Maximum opportunity
Performance measures
Not applicable.
There is no maximum
fee level other than as
provided by Article 112
of the Company’s articles
of association.
The fees are paid in cash.
The fees paid to the Chairman are
determined by the Remuneration Committee.
The fees paid to the other Non-Executive
Directors are determined by the Chairman
and the Executive Committee.
Fees are set taking into account the time
commitment required to fulfil the role and
typical practice at other similar companies.
The policy in relation to Non-Executive
Directors’ fees is to pay a basic fee for
membership of the Board, and additional
fees for the Senior Independent Director
and for chairmanship of a Committee to take
into account the additional responsibilities
and time commitment of these roles.
Additional fees may be paid to
reflect additional Board or Committee
responsibilities as appropriate (such as
liaising with family shareholders).
Benefits
To provide suitable
arrangements to
allow Non-Executive
Directors to discharge
their duties effectively.
Reasonable costs in relation to travel and
accommodation are reimbursed to the
Chairman and Non-Executive Directors.
The Company may meet any tax liabilities
that may arise on such expenses.
There is no maximum
benefit opportunity.
Not applicable.
The Chairman and Non-Executive Directors
do not participate in incentive schemes.
None of the Non-Executive Directors are
members of any Group pension scheme with
the exception of Michael Turner and Richard
Fuller who are both pensioners of the
director’s section of the defined benefit
pension plan. Both also receive life
assurance cover.
The Chairman also receives private
medical insurance.
Additional non-significant benefits may
be introduced if considered appropriate.
Information Supporting the Policy
Malus and clawback
Cash annual bonus payments may be clawed back for a period of three years from the date of payment. Malus and clawback provisions
apply under the Bonus and Deferred Bonus Plan (“BDBP”) and LTIP (including Recovery LTIP Awards) from award to the third
anniversary of the grant date in the case of BDBP awards and sixth anniversary of the award date for LTIP awards. The circumstances in
which malus/clawback may apply are a material misstatement of financial results, an error in assessing performance or in the information/
assumptions used, a material failure of risk management, serious reputational damage, serious misconduct by the participant, or any other
similar circumstances.
63
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Share plan operation
The Committee will operate the annual bonus, BDBP, LTIP and ESOS in accordance with the Rules of the plans. Awards under any of the
Company’s share plans may:
• have any performance conditions applicable to them amended or substituted by the Committee in circumstances where the Committee
determines an amended or substituted performance condition would be more appropriate and not materially less difficult to satisfy
• incorporate the right to receive an amount equal to the value of dividends which would have been paid on the shares under an award that
vests up to the time of vesting (this provision does not apply to the ESOS). This amount may be calculated assuming that the dividends
have been reinvested in the Company’s shares on a cumulative basis
• be settled in cash at the Committee’s discretion (this provision does not apply to the ESOS). For Executive Directors, this provision
will only be used in exceptional circumstances such as where for regulatory reasons it is not possible to settle awards in shares
• be adjusted in the event of any variation of the Company’s share capital or any demerger, delisting, special dividend or other event
that may affect the Company’s share price.
Summary of Decision-making Process and Changes to Policy
During 2020 the Committee undertook a full review of the Policy to ensure that our approach remains appropriate to support our
strategy of achieving long-term sustainable shareholder value creation. The Committee continues to believe that in normal years the
overall framework of an annual bonus and LTIP is appropriate for the Company.
The Covid-19 pandemic has, however, had a significant impact on the business and in light of this the Committee considered that it
would be appropriate to grant a Recovery LTIP Award during FY22 to incentivise management to re-build the business and profit levels.
The Remuneration Policy has therefore been revised to allow for the grant of such an award. Minor other changes have been made to
the wording of the policy to increase flexibility, to aid operation, to increase transparency and to reflect typical market practice.
In determining the new Remuneration Policy, the Committee followed a robust process which included discussions on the content
of the Policy at Remuneration Committee meetings during the year. The Committee considered input from Management and our
independent advisors, as well as considering best practice and guidance from major shareholders. The Committee also consulted
with major shareholders when considering the structure of the Recovery LTIP Award.
Approved Payments
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising any
discretions available to it in connection with such payments) notwithstanding that they are not in line with the Policy set out above
where the terms of the payment were agreed (i) before the policy set out above came into effect, provided that the terms of the payment
were consistent with any applicable shareholder-approved directors’ remuneration policy in force at the time they were agreed or where
otherwise approved by shareholders; or (ii) at a time when the relevant individual was not a Director of the Company (or other persons
to whom the Policy set out above applies) and, in the opinion of the Committee, the payment was not in consideration for the individual
becoming a Director of the Company or such other person. For these purposes “payments” includes the Committee satisfying awards
of variable remuneration and, in relation to an award over shares, the terms of the payment are “agreed” no later than the time the award
is granted. This Policy applies equally to any individual who is required to be treated as a director under the applicable regulations.
Selection of Performance Measures
Annual bonus
The annual bonus performance measures are intended to incentivise Executive Directors to achieve the financial objectives
of the Group and deliver the business strategy. The particular bonus metrics are selected by the Committee each year to ensure
that Executive Directors are appropriately focused on the key objectives for the next twelve months.
LTIP and ESOS
Our long-term strategic objective is to provide long-term sustainable returns for all of our shareholders. It is intended that awards made
in 2021/22 will be based on pre-tax adjusted EPS performance to provide a clear incentive for executives to deliver on this objective.
Performance targets for the annual bonus, LTIP and ESOS are set taking into account internal budget forecasts, external expectations
and the need to ensure that targets remain motivational.
Recovery LTIP Award
It is intended that the Recovery LTIP award is conditional upon the achievement of EBITDA targets. The Committee has selected Group
EBITDA (excluding IFRS 16) as the sole measure of performance for the Recovery LTIP Award as it strongly incentivises operational
recovery throughout our business and provides strong line of sight for management.
64
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Remuneration arrangements throughout the Group
Remuneration arrangements are determined throughout the Group based on the same principle; that the Remuneration policies and practices
should be aligned to Company purpose and values and support the delivery of the strategy and promote long-term sustainable success.
Remuneration outcomes in different performance scenarios
The charts below set out an illustration of the Policy for FY22. The charts provide an illustration of the proportion of total remuneration
made up of each component of the Remuneration Policy and the value of each component.
Four performance scenarios have been illustrated for each Executive Director:
Below threshold performance
In-line with expectations
Maximum performance
• Fixed remuneration (base salary, benefits and pension)
• No annual bonus pay-out
• No vesting under the LTIP and under the Recovery LTIP Award.
• Fixed remuneration (base salary, benefits and pension)
• 50% annual bonus pay-out
• 50% vesting under the LTIP and under the Recovery LTIP Award.
• Fixed remuneration (base salary, benefits and pension)
• 100% annual bonus pay-out
• 100% vesting under the LTIP and under the Recovery LTIP Award.
Maximum performance plus 50%
share price growth
• Fixed remuneration (base salary, benefits and pension)
• 100% annual bonus pay-out
• 100% vesting under the LTIP and under the Recovery LTIP Award plus 50% share price growth.
The charts have been prepared on the following basis:
• Base salary – the base salary in place at 1 June 2021
• Benefits – based on the disclosed benefits value in the single figure for FY21
• Pensions – based on a contribution of 17.5% of base salary
• Bonus – the normal maximum annual bonus is 100% of base salary
• LTIP – based on the maximum award of 125% of base salary (note the ESOS has not been included on the basis that awards are not
granted at regular intervals)
• Recovery LTIP Award – based on the maximum one-off award of 250% of base salary.
No payment of dividend equivalents has been assumed. Potential benefits under all-employee share plans have not been included.
No share price growth has been assumed other than where stated.
Simon Emeny – CEO
£000
Adam Councell – Finance Director
£000
Fred Turner – Retail Director
£000
2,600
2,100
1,600
1,100
600
100
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
4,000
71%
3,044
63%
1,832
52%
14%
34%
621
100%
Minimum
In line with
expectation
17%
20%
13%
16%
Maximum Maximum
plus share
price growth
(50%)
Fixed1
Bonus
LTIP
1 “Fixed” includes salary, benefits and pension.
2,480
71%
1,890
62%
1,141
52%
14%
34%
393
100%
Minimum
In line with
expectation
17%
21%
13%
16%
Maximum Maximum
plus share
price growth
(50%)
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1,613
71%
1,230
62%
746
51%
14%
35%
261
100%
Minimum
In line with
expectation
17%
21%
13%
16%
Maximum Maximum
plus share
price growth
(50%)
65
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Remuneration Policy for Newly Appointed Directors
When determining the remuneration package for a newly appointed Executive Director, the Committee would seek to apply the
following principles:
• The package should be market competitive to facilitate the recruitment of individuals of sufficient calibre to lead the business.
At the same time, the Committee would intend to pay no more than it believes is necessary to secure the required talent
• New Executive Directors will normally receive a base salary, benefits and pension contributions in line with the policy described
on pages 58 to 62 and would also be eligible to join the bonus and equity incentive plans up to the limits set out in the Policy
• In addition, the Committee has discretion to include any other remuneration component or award which it feels is appropriate taking
into account the specific circumstances of the recruitment, subject to the limit on variable remuneration set out below. The key
terms and rationale for any such component would be disclosed as appropriate in the Remuneration Report for the relevant year
• Where an individual forfeits outstanding variable pay opportunities or contractual rights at a previous employer as a result of their
appointment, the Committee may offer compensatory payments or awards, in such form as the Committee considers appropriate,
taking into account all relevant factors including the form of awards, expected value and vesting timeframe of forfeited opportunities.
When determining any such “buyout”, the guiding principle would be that awards would generally be on a “like for like” basis unless
this is considered by the Committee not to be practical or appropriate
• The maximum level of variable remuneration which may normally be awarded (excluding any “buyout” awards referred to above) in respect
of recruitment is 225% of salary, which is in line with the current maximum limit under the annual bonus and LTIP. In addition, any new
Executive Director may also be granted a Recovery LTIP Award. Any Recovery LTIP Award would normally be pro-rated to reflect the
time in role during the performance period unless the Remuneration Committee determines otherwise.
• Where an Executive Director is required to relocate from their home location to take up their role, the Committee may provide
assistance with relocation (either via one off or on-going payments or benefits)
• In the event that an internal candidate is promoted to the Board, legacy terms and conditions would normally be honoured, including
any accrued pension entitlements and any outstanding incentive awards.
To facilitate any buyout awards outlined above, in the event of recruitment the Committee may grant awards to a new Executive Director
relying on the exemption in the Listing Rules which allows for the grant of awards, to facilitate, in unusual circumstances, the recruitment
of an Executive Director, without seeking prior shareholder approval or under any other appropriate Company incentive plan.
The remuneration package for a newly appointed Non-Executive Director would normally be in line with the structure set out in the policy
table for Non-Executive Directors on page 63.
Service Contracts/Payments on Loss of Office
When determining leaving arrangements for an Executive Director, the Committee takes into account any contractual agreements
including the provisions of any incentive arrangements, typical market practice and the performance and conduct of the individual.
Executive Directors have rolling service contracts terminable on no more than one year’s notice served by the Company or Director.
Our Policy is that in the event of early termination a payment equal to the salary due for the unexpired period of their notice would
be made, payable in monthly instalments, subject to mitigation. The Committee retains discretion to pay any unexpected notice in
the form of a lump sum payment if this is considered appropriate.
Simon Emeny’s contract has been in place for a number of years. In the event of early termination, he would be entitled to a payment
equal to his base salary and the value of all benefits for the unexpired period of his notice, without any reduction for mitigation.
The Committee may make any other payments in connection with a Director’s cessation of office or employment where the payments
are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of
settlement of any claim arising in connection with the cessation of a Director’s office or employment. Any such payments may include
but are not limited to paying any fees for outplacement assistance and/or the Director’s legal and/or professional advice fees in connection
with their cessation of office or employment.
Annual Bonus
The Committee may determine that an Executive Director may remain eligible to receive a pro-rata bonus for the financial year in respect of the
period they remained in employment. The Committee will determine the level of bonus taking into account time in employment, the circumstances
of cessation of employment and performance.
66
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Share Plan Leaver Rules
The treatment of leavers under the Company’s long-term incentive plans is determined by the rules of the relevant plans.
Good leavers*
BDBP
If a participant dies, their BDBP award will vest. If a participant becomes
a good leaver for any other reason, BDBP awards would normally continue and
vest in full on the normal vesting date. The Committee may exercise discretion
to allow awards to vest at the time of cessation of employment or to pro-rate
the vesting level to reflect the proportion of the vesting period served.
LTIP (including the Recovery LTIP Award)
If a participant becomes a good leaver, LTIP awards will not lapse, but will
normally be pro-rated to reflect the proportion of the performance period
served and remain subject to performance conditions. LTIP awards will
normally vest on the normal vesting date. The Committee may determine that
LTIP award should vest as soon as practical following cessation of employment.
Leavers in other circumstances
Awards lapse.
Awards lapse.
If a participant ceases employment during the holding
period (other than in the event of gross misconduct)
then awards will normally continue and be released at
the normal release date. The Committee may exercise
discretion to allow awards to be released at the time
of cessation of employment.
ESOS
If a participant dies, ESOS awards will not lapse, but may be exercised for a
period of 12 months following death. If a participant becomes a good leaver for
any other reason, ESOS awards will not lapse, but may be exercised until six
months after the third anniversary of grant (or six months after cessation if
later). ESOS awards will continue to be subject to performance conditions.
Awards lapse.
All-employee share plans
Leaver provisions are determined in accordance with HMRC-approved provisions.
* Death, ill-health, injury, disability, redundancy, retirement, the sale of their employing entity out of the Group, or for any other reason at the Committee’s discretion.
Terms and Conditions for the Chairman and Non-Executive Directors
The Chairman and Non-Executive Directors serve the Company on the basis of renewable letters of appointment which can be
terminated by written notice by either party. No compensation is awarded on termination. Letters of appointment are available for
inspection at the Annual General Meeting and at the Company’s registered office.
Service Contracts and Fee Letters
The following sets out the date of Directors service contracts and fee letters:
Executive Directors
Simon Emeny
Adam Councell
Fred Turner
Neil Smith
Date of contract
13 January 1999
15 March 2019
23 May 2019
16 June 2021*
* Effective date of employment at a date to be confirmed, but no later than 1 December 2021.
Non-Executive Directors
Date of appointment
Michael Turner
Sir James Fuller
Juliette Stacey
Helen Jones
Richard Fuller
Robin Rowland
1 July 2013*
1 June 2010
21 March 2018
12 March 2019
1 February 2020*
23 March 2020
Notice period
12 months
12 months
12 months
12 months
Term expires
June 2022
May 2022
July 2024
March 2023
February 2022
March 2024
* Michael Turner was first appointed to the Board as an Executive Director in January 1985 and became Non-Executive Chairman on 1 July 2013. Richard Fuller
was first appointed to the Board as an Executive Director in December 2009 and was appointed as a Non-Executive Director on 1 February 2020.
** All directors are subject to retirement by rotation as detailed in the Directors’ Report on page 42.
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Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Change of Control
In the event of a takeover or winding up of the Company, share awards may vest early, subject (where relevant) to the extent to which
performance conditions have been satisfied. Awards (other than awards under the BDBP) will normally be pro-rated for time since award
unless the Committee determines otherwise. In the case of a demerger, special dividend or similar circumstances, awards may, at the
Committee’s discretion, vest early on the same basis as for a takeover.
Consideration of Employment Conditions Elsewhere in the Company
The Committee is advised of the proposed annual pay review for staff in advance of them considering the proposed pay reviews for
Directors, so that this can be taken into account when determining Directors’ remuneration for the relevant financial year. Salary increases
will ordinarily be (in percentage terms) in line with those of the wider workforce, and significant variances would only be expected where
there had been a significant change in an individual’s responsibilities or a market review had been conducted which suggested that an
individual’s salary was no longer competitive, or where the Committee wanted to take account of an individual’s performance or experience.
The Committee would also be advised if there were any other key changes to the terms and conditions on which staff are employed.
Consideration of Employee Views
The Committee does not formally consult directly with employees on executive pay or in drawing up the Remuneration Policy but does
receive periodic updates from the People & Talent Director. Share ownership amongst the Company’s employees is encouraged through
the SAYE Scheme and SIP. These tax-advantaged schemes allow employees to participate as shareholders and align their interests with
those of the shareholders.
Consideration of Shareholder Views
In developing this Remuneration Policy and in considering the structure of the Recovery LTIP Award, the Committee consulted in detail
with our largest shareholders and was pleased with the level of support received for the changes. Our intention is that shareholder views
will be are sought when there is any significant change to Directors’ remuneration. Should shareholders have any concerns about the
Remuneration Policy, the Committee Chairman would endeavour to meet with them, as appropriate, to understand and respond to
any issues they may have.
Annual Remuneration Implementation Report
The information on pages 68 to 78 has been audited.
The Remuneration Committee
The Remuneration Committee consists entirely of Independent Non-Executive Directors and the members during the period were
Helen Jones (Chair), Juliette Stacey and Robin Rowland. The Chairman of the Company, Michael Turner, and the Chief Executive,
Simon Emeny, are invited to attend the Committee meetings and to advise, where appropriate, on the remuneration and performance
of the Executive Directors and related matters. The Committee is advised internally by the Company Secretary, Rachel Spencer
(Séverine Béquin until 8 January 2021), who also acts as Secretary to the Committee.
The Committee’s terms of reference are available on the Company’s website – state that the Committee is responsible for determining
the total remuneration package (including pensions, service agreements and termination payments) of the Executive Directors. The
Committee also reviews the remuneration of the members of the Executive Committee in consultation with the Chief Executive.
Members of the Committee have no personal financial interest in the Company, other than as shareholders and Directors.
The Committee’s Advisors
Deloitte LLP was appointed by the Committee in June 2019 and during the year under review continued to provide the Committee
and the Company with advice in connection with remuneration matters as well as the Company’s LTIP and share option schemes.
Deloitte is a founding member of the Remuneration Consultants’ Group (“RCG”), which is responsible for the development and
maintenance of the voluntary Code of Conduct that clearly sets out the role of executive remuneration consultants and the professional
standards by which they advise their clients. Fees are charged on a time and expenses basis and totalled £42,850 (plus VAT) during
2020/21. During the year Deloitte also provided other unrelated tax advice to the Company. The Committee is satisfied that advice
received from Deloitte during the year was objective and independent and that all individuals who provided remuneration advice to the
Committee have no connections with Fuller’s or its Directors that may impair their independence. The Committee reviewed the potential
for conflicts of interest and judged that there were appropriate safeguards against such conflicts.
XPS Pension Group provides the Company with advice on matters relating to pensions. XPS Pension Group is authorised and regulated
by the Financial Conduct Authority and its actuaries are also separately required to abide by Actuarial Profession Standards which include
the requirement for them to provide objective and independent advice.
68
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Statement of Implementation of Remuneration Policy for 2021/22
The last year has been a difficult one for the hospitality sector. The outbreak of Covid-19 has had a significant impact on the business with
pubs closed for a significant portion of the last financial year and the early part of this financial year. Many of our sites are now open but we
are operating at a much-reduced capacity in-line with government guidance. In light of this, the Committee intends to grant an additional
Recovery LTIP Award in FY22 to incentivise management to rebuild the business and profit levels. Further details on the structure of the
Award are provided below.
Base salaries
The CEO and retail Director’s base salaries have been increased by 2% in line with the increase received across the wider workforce.
On 26 February we announced that Adam Councell would be stepping down as Finance Director and his salary will therefore not be
increased. Salaries from 1 June 2021 are therefore as follows:
Chief Executive
– £510,000
Finance Director – £315,000
– £204,000
Retail Director
There has been no change to the fees payable to the Non-Executive Directors which were last reviewed in January 2018.
As announced on 11 June, Neil Smith will be joining us as our new Finance Director. His salary has been set at £352,500 per annum.
We appreciate this salary is above the salary for the former Finance Director, however, it is positioned some way below the salary he received
in his previous role of £430,000.
Annual bonus
As noted above, given the closure of the business and our reliance on government support we did not operate an annual bonus for FY21.
For FY22 we intend to operate an annual bonus in-line with our normal policy. The maximum annual bonus will be 100% of base salary
for all directors. The annual bonus will be based 70% on Group EBITDA performance and 30% based on individual strategic performance
linked to the successful recovery of the business.
Targets are considered to be commercially sensitive and have therefore not been disclosed. Our intention is to disclose targets in the
FY22 Annual Remuneration report provided that these are no longer considered to be commercially sensitive at that time.
LTIP
The Committee intends to continue to grant LTIP awards for 2021/22 to ensure that management are aligned with shareholders and
incentivised to deliver long-term performance. Awards will be granted at the policy level of 125% of base salary to the CEO and the
Retail Director. The new Finance Director will receive an award of 100% of base salary following his joining. It is intended that his award
for FY22 will be pro-rated to reflect his time in employment during the performance period. The Committee is aware of shareholder
guidance regarding reviewing award levels where there has been a fall in share price. We are not planning to reduce grant sizes given the
significant need to continue to motivate and retain management. However, the Committee retains discretion to adjust vesting outcomes
if it considers that there have been any “windfall” gains.
The LTIP will be based on pre-tax adjusted EPS performance as the Committee considers that this provides a clear objective for
management and supports our strategy. The portion of the LTIP award that vests for threshold performance will be 25% of maximum.
For 2021/22 LTIP awards, EPS targets have been set as absolute pence targets for 2023/24 in light of the impact of coronavirus on the
base year and to provide a clear focus for management on the required level of performance.
We want to measure the performance of our Executive Directors against a criterion that aligns the Executive Directors’ interest with the
long-term interests of our shareholders. We believe that an earnings per share measure is more appropriate than a simple profit measure
as the latter could be improved by, for example, the issuance of shares to raise cash or to finance an acquisition having a consequent
diluting effect on existing shareholders’ interests. Additionally, given the aim of encouraging long-term performance, we believe that the
earnings per share figure should not reflect short-term non-trading impacts on profit, whether positive or negative, for example, profits or
losses on the sale of freehold properties, or profits or losses on the disposal of a component business such as the Beer Business, and such
items should be adjusted for. Lastly, given that changes in tax rates are unrelated to Executive Directors’ performance, we believe that any
earnings per share measure for the LTIP should be based on pre-tax earnings.
69
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Pre-tax adjusted EPS targets for the 2021/22 awards are proposed as follows:
Pre-tax adjusted EPS pence in 2023/24 1,2
Target
(25% vesting)
Maximum
(100% vesting)
44.89
54.68
1 Vesting increases on a straight line basis between Target and Maximum.
2 The targets set are the same as those for the 2020 LTIP award (as adjusted for the equity raise in March 2021). Given the extended lockdown periods throughout
2020 and 2021, the Committee consider that these targets remain appropriately stretching and aligned with the creation of shareholder value.
Recovery LTIP Award
In light of the challenges the business faces, the Board is concerned about the motivation and retention of the Executive Directors and is
therefore, intending to grant a one-off Recovery LTIP Award in FY22 to incentivise management to re-build the business and profit levels.
This award will be in addition to the normal LTIP award outlined above.
The Recovery LTIP Award will vest based upon the achievement of stretching EBITDA targets for FY24 which are aligned with delivering
a full recovery of the business as outlined below. The Committee has selected Group EBITDA as the sole measure of performance
for the Recovery LTIP as it strongly incentivises operational recovery throughout our business and provides strong line of sight for
management. Awards will be subject to a holding period for two years following the end of the performance period.
For Executive Directors, the award will have a value of 250% of base salary. It is intended that the award to the new Finance Director
for FY22 will be pro-rated to reflect his time in employment during the performance period. Other senior executives will also participate
in the plan receiving lower levels of award.
The vesting of Awards will be subject to achieving the following targets:
Group EBITDA target
Commentary
Threshold (25% vesting)
Target (50% payout)
£55.0m
£62.6m
Very strong (75% payout)
Maximum (100% vesting)
£67.6m
£73.0m
This represents re-building to our pre-pandemic performance
This represents our stretch budgeted performance for FY21 pre-pandemic
and is considered by the Committee to represent a strong recovery
32% increase above threshold performance
This level of performance would exceed our EBITDA performance level from
when we owned the beer business and is considered to represent significant
value for shareholders
Pension and benefits
There are no changes to the pension and benefits provision for Executive Directors. Executive Directors receive a pension allowance
of 17.5% of base salary. The Committee is aware of shareholder guidance that pensions for Executive Directors should be aligned with the
wider workforce. However, given the current rate for the Executive Directors represents an existing contractual commitment and that
their overall pay is towards the lower end of market practice, the Committee does not consider that it is appropriate to make a reduction
at this stage. The Committee will keep this approach under review.
For any new Executive Directors appointed to the Board from 1 April 2020 the pension opportunity will be in-line with the maximum
employer contribution available for the majority of the workforce.
The new Finance Director will receive a pension of 5% of base salary in-line with the pension received by the majority of our wider
workforce and in-line with our Directors’ Remuneration Policy.
70
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Implementation of Remuneration Policy for 2020/21
Single Total Figure of Remuneration Table
The following table shows a breakdown of the remuneration of individual Directors who served in all or part of the year:
Salary/Fees1
Taxable benefits2
Annual bonus3
LTIP/Options4
Pensions
Total
Total fixed
Total variable
2021
£000
2020
£000
2021
£000
2020
£000
2021
£000
2020
£000
2021
£000
2020
£000
2021
£000
2020
£000
2021
£000
2020
£000
2021
£000
2020
£000
2021
£000
2020
£000
469
489
295
189
188
167
235
250
47
50
42
162
70
58
52
71
61
3
25
23
23
26
–
1
–
–
–
25
13
19
26
–
20
–
–
–
–
–
–
–
–
–
–
–
–
1
–
1
–
–
1
–
–
–
8
6
8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
88
85
590
600
581
599
55
35
–
–
–
–
–
–
33
379
235
374
234
30
254
217
245
216
–
–
261
276
261
276
47
50
47
50
27
43
210
43
209
–
–
–
70
58
52
71
61
3
70
58
52
71
61
3
9
5
9
–
–
–
–
–
–
1
1
1
–
–
1
–
–
–
Simon
Emeny
Adam
Councell5
Fred
Turner6
Michael
Turner
Sir James
Fuller
Richard
Fuller7
Juliette
Stacey
Helen
Jones
Robin
Rowland8
1 Salary/fees for 2021 include the Board members’ voluntary temporary 25% reduction in salary and fees from 1 April 2020 until 30 June 2020.
2 Taxable benefits include car allowances and private medical insurance.
3 Bonus refers to the annual bonus scheme based on performance in the period under review and the value of free shares awarded under the SIP of £nil (2020: £993).
4 LTIP/Options includes the value transferred to Directors from the LTIP, ESOS and SAYE Schemes. The benefit is calculated as the share price at the vest date
less the exercise price multiplied by the number of vested awards for LTIP and ESOS. For SAYE, the benefit is calculated as the share price at the grant date
less the exercise price, multiplied by the number of options being purchased. LTIP and ESOS awards are considered to have vested if substantially all of the
performance criteria have been met in the financial year, in which case the number of vested awards is estimated based on performance against performance
measures. The table below sets out how the award is linked to performance of the Group.
5 From his appointment on 27 August 2019.
6 From his appointment on 1 June 2019.
7 Richard Fuller was an Executive Director until 1 February 2020, when he became a Non-Executive Director for which he received fees of £7,500 in the period
to 28 March 2020, included in the figure above.
8 From his appointment to the Board on 23 March 2020.
Base Salary
During the 2020/21 financial year the Executive Directors and Non-Executive Directors volunteered to temporarily reduce their salary
and fees from 1 April 2020 to 30 June 2020 by 25% to support the business in managing costs. With the estate gradually reopening,
salaries and fees reverted to normal with effect from 1 July 2020.
Annual Bonus
As noted above, given the closure of the business and our reliance on government support the Committee and the Executive Directors
agreed that it was not appropriate to operate an annual bonus for FY21.
LTIP
LTIP awards granted in 2018 were based on Group adjusted earnings per share (“EPS”) performance for the financial year 2020/21.
The EPS targets were not met and therefore these awards will lapse. The following sets out details of performance against targets set:
LTIP
Performance
measure
EPS vs RPI
Target set
Minimum
(40% vesting)
Maximum
(100% vesting)
Value of award
Actual
performance
Value of award
EPS exceeds
RPI by +9%
EPS exceeds
RPI by +24%
Percentage vest of
original grant:
Minimum – 40%
Maximum – 100%
Nil growth
Nil% of maximum award
The Committee did not exercise any discretion in relation to the LTIP outcomes. No portion of the LTIP awards relates to share price growth.
71
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Total Pension Entitlements
Michael Turner and Richard Fuller are pensioners of the defined benefit Company pension plan, which is closed to future accrual, under
the Directors’ section.
Simon Emeny became a deferred member of the defined benefit Company pension plan, under the main section when the plan closed
to future accruals on 1 January 2015. Prior to closure, he received a salary supplement of 17.5% of the excess of his base salary over the
earnings cap for use as part of his retirement planning. Following closure of the pension plan, Simon Emeny is paid a salary supplement
of 17.5% of his salary by the Company which he is required to use as part of his overall retirement planning.
During the year, Adam Councell and Fred Turner were paid a salary supplement of 17.5% of their salaries by the Company which they
are required to use as part of their overall retirement planning. They are also required to contribute 8% of their salary to their pension
or another investment vehicle.
The Committee considers that the Policy operated as intended during the year.
Percentage Change in Remuneration of Directors and Employees
The table below shows the percentage change in the remuneration of the Board of Directors compared to that of the average of all of the
Company’s employees taken as a whole between the financial years ended 28 March 2020 and 27 March 2021:
Average of all employees
Simon Emeny
Adam Councell
Fred Turner
Michael Turner
Sir James Fuller
Richard Fuller3
Juliette Stacey3
Helen Jones3
Robin Rowland
Change in
annual salary1
Change in annual
taxable benefits
Change in
annual bonus2
1.0%
-4.0%
–
–
-6.2%
-6.2%
-73.9%
-0.7%
-4.5%
–
-1.6%4
-0.1%
–
–
1.5%
nil%
-93.8%
nil%
nil%
–
-1.2%
nil%
nil%
nil%
n/a
n/a
n/a
n/a
n/a
n/a
1 Figures excluded where prior year comparator is less than a full year as this distorts the percentage change.
2 “Change in annual bonus” reflects the increase or decrease in the percentage of annual salary paid out as bonus and excludes the value of free shares awarded
under the SIP. The employee comparator group excludes pub staff who are employed by another Group company. It also excludes The Stable employees who
transferred on the disposal of The Stable Pizza & Cider Limited on 7 June 2020.
3 A number of Directors had role changes during FY2020 (Richard Fuller, Juliette Stacey and Helen Jones), all of which have impacted the year on
year comparison.
4 The change in taxable benefits for the average of all employees has gone down year on year due to the comparatively smaller group of staff who receive
a company car due to their role, compared to FY20 which included brewery staff. Benefits offered to Fuller’s employees have not changed year on year.
External Directorship Fees
The Board may give approval for Executives to have one Non-Executive role and to retain any related fees paid. Simon Emeny was
appointed a Non-Executive Director of The National Gallery Company Limited on 6 February 2018 for which he does not receive any
remuneration. He is the Senior Independent Director of WH Smith PLC and during the year he received and retained remuneration
of £59,000.
72
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Scheme Interests Awarded During the Financial Year1,2
In respect of the 52 week period ended 27 March 2021 the following LTIPs, share options and SIP awards were granted:
Director
Type of award
Number of 'A'
shares
Number of 'B'
shares
Exercise price
per 'A' share
Exercise price
per 'B' share
Face value at
grant/award
Date of grant/
award
Performance
period ends
S Emeny
Total
A Councell3
Total
F Turner
Total
LTIP⁴
SAYE
LTIP⁴
SAYE
LTIP⁴
SAYE
83,333
208,333
6,896
–
90,229
208,333
52,500
131,250
4,137
–
56,637
131,250
33,333
83,333
6,896
–
40,229
83,333
–
4.35
–
4.35
–
4.35
– 625,000
05/10/2020
1/04/2023
–
–
–
–
–
37,497
30/09/2020
n/a
662,497
393,751
05/10/2020
1/04/2023
22,495
30/09/2020
n/a
416,246
249,998
05/10/2020
1/04/2023
37,497
30/09/2020
n/a
287,496
% of award/
grant vesting
at minimum
threshold
40%
n/a
40%
n/a
40%
n/a
1 Face values have been calculated using the actual grant prices also shown in the table except for SAYE. For the SAYE Scheme this is based on an average price
for the three days before grant (shown above) although options are granted at a 20% discount.
2 Under the tax-advantaged ESOS only options worth £30,000 may be held at any time.
3 Adam Councell has indicated his intention to resign as a Director, at which time all awards will lapse.
4 The LTIP awards granted in October 2020 are subject to a pre-tax adjusted EPS performance condition, with the targets set on an absolute basis and measured
over a period of three years. 25% of the awards vest for pre-tax adjusted EPS of 50.16p in FY23, with 100% vesting for pre-tax adjusted EPS of 61.09p
(straight-line vesting in-between). Further details of the actual targets are set out in the 2020 Annual Report. The Remuneration Committee is considering the
impact of the equity raise on these awards to determine whether it is appropriate to adjust the current EPS targets. If relevant, further details will be disclosed in
the 2022 Remuneration Report.
Share Scheme Interests Outstanding at the Year End
Shares
The Company has Share Ownership Guidelines for Directors which state that Executives should hold shares worth at least 200% of their
salary. Accordingly, until their guideline is met, Executives are expected to retain:
• all shares they hold in the SIP
• all shares they acquire as a result of exercising SAYE options
• all shares that they acquire as a result of exercising options under the tax-advantaged ESOS net of the cost of those options
• at least 50% of any shares that they acquire as a result of exercising options under the non-tax-advantaged SESOS net of the cost
of those options and the costs of settling related tax and National Insurance (“NI”) thereon
• at least 50% of any post-tax and NI vested shares under the LTIP and the BDBP.
Based on the share price on 27 March 2021 of £8.60, Simon Emeny held shares with a value of 391% of salary, Fred Turner held shares
with a value of 622% of salary and Adam Councell held shares with a value of 16% of salary. All of the Executive Directors’ shareholdings
therefore already meet the guideline with the exception of Adam Councell who only joined the Company in August 2019.
73
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Directors’ Shareholdings
Directors’ share interests
Simon Emeny
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
‘C’ ordinary 40p shares
Adam Councell
‘A’ ordinary 40p shares
Fred Turner
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
‘C’ ordinary 40p shares
2nd preference £1 shares
Michael Turner
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
‘C’ ordinary 40p shares
2nd preference £1 shares
Sir James Fuller
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
‘C’ ordinary 40p shares
Richard Fuller
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
‘C’ ordinary 40p shares
2nd preference £1 shares
Juliette Stacey
‘A’ ordinary 40p shares
Helen Jones
‘A’ ordinary 40p shares
Robin Rowland
‘A’ ordinary 40p shares
Beneficial
interest at
7 July
2021
Non-beneficial
interest at
7 July
2021
Beneficial
interest at
27 March
2021
Non-beneficial
interest at
27 March
2021
Beneficial
interest at
28 March
2020
Non-beneficial
interest at
28 March
2020
130,472
1,055,684
2,000
5,800
1,471
492,473
100,819
4,324
271,378
3,036,586
624,260
71
88,942
10,486,379
–
–
–
–
–
–
–
–
–
–
–
–
–
–
124,448
1,055,684
2,000
5,800
1,471
452,667
100,819
4,324
271,378
2,988,394
624,260
71
88,942
10,438,187
–
–
–
–
–
–
–
–
–
–
–
–
–
–
113,509
1,055,684
2,000
2,250
1,471
447,633
99,065
4,324
271,378
2,988,394
624,260
71
88,942
10,415,881
500
–
–
–
–
–
–
–
–
–
–
–
–
–
2,702,003
621,050
2,702,003
621,050
2,702,003
612,050
13,267
872,937
11,460
500,000
10,591
500,000
3,065,726
10,935,015
3,065,726
10,935,015
3,065,726
10,935,015
20,000
303
–
20,000
7,499
303
2,454
2,970
7,165
–
–
–
1,250
1,766
3,551
–
–
–
–
–
20,000
303
1,250
–
–
–
–
–
–
–
74
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Directors’ Share Options
As at
28 March
Director
Scheme3
20 Exercised
Lapsed Granted
As at
27 March
21
Exercise
price
Date
of grant
Exercisable
from
Expiry
date
Price at
exercise
date
Gain on
exercise
Simon
Emeny
ESOS
3,296
–
–
– 3,296
£9.10 01/07/2013 01/07/2016 30/06/2023
SAYE
3,410
– (3,410)
(467)
–
–
–
–
£7.74 01/09/2016 01/09/2021 01/03/2022
£7.70 01/09/2018 01/09/2023 01/03/2024
–
–
–
–
–
SAYE
SAYE
Total
Adam
Councell1 ESOS
SAYE
467
–
7,173
3,121
–
3,121
Total
Fred
Turner
Total
Richard
Fuller2
Total
ESOS 2,590
SAYE
3,975
– (3,975)
ESOS
SAYE
520
–
7,085
–
–
ESOS
869
(869)
–
ESOS 2,588
SAYE
SAYE
2,713
779
6,949
– (2,588)
– (2,713)
–
(779)
– 6,896 6,896
£4.35 30/09/2020 01/12/2025 01/06/2026
10,192
–
–
–
–
–
3,121
£9.61
15/01/2020 15/01/2023 14/01/2030
4,137
4,137
£4.35 30/09/2020 01/12/2023 01/06/2024
7,258
– 2,590 £9.65 30/06/2014 30/06/2017 29/06/2024
–
–
–
£7.74 01/09/2016 01/09/2021 01/03/2022
520
£9.61
15/01/2020 15/01/2023 14/01/2030
– 6,896 6,896
£4.35 30/09/2020 01/12/2025 01/06/2026
10,006
–
–
–
–
–
–
–
–
–
£5.78 12/07/2010 12/07/2013 12/07/2020
7.36 6,395.84
£9.65 30/06/2014 30/06/2017 29/06/2024
£7.74 01/09/2016 01/09/2021 01/03/2022
£7.70 01/09/2018 01/09/2023 01/03/2024
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Adam Councell has indicated his intention to resign as a Director, at which time all outstanding awards will lapse.
2 Richard Fuller’s outstanding options lapsed on 31 July 2020 following his resignation as Executive Director on 1 February 2020.
3 The Executive Share Option Scheme (“ESOS”) and Savings Related Share Option Scheme (“SAYE”) are both tax-advantaged share option schemes.
Vested but unexercised options
75
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
Directors’ Long-Term Incentive Plan Allocations
Director
Simon Emeny
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
Adam Councell2
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
Fred Turner
‘A’ ordinary 40p shares
‘B’ ordinary 4p shares
Total held at
28 March 20201
Awarded during
the year
Vested during
the year
Lapsed during
the year
Total held at
27 March 20212
Monetary
value of vest
131,307
328,271
83,333
208,333
28,844
72,112
52,500
131,250
20,568
51,424
33,333
83,333
–
–
–
–
–
–
(40,860)
(102,152)
173,780
434,452
–
–
81,344
203,362
(1,381)
(3,454)
52,520
131,303
n/a
n/a
n/a
n/a
n/a
n/a
1 Or date of appointment if subsequent.
2 Or date of resignation. Adam Councell has indicated his intention to resign as a Director, at which time all outstanding LTIP awards will lapse.
The performance conditions for the LTIP are set out in the table on page 71 of this report.
Payments to Past Directors
There were no payments made to past Directors in the period.
Payments on Loss of Office in Prior Year
No payments were made in respect of loss of office in respect of the financial year ended 27 March 2021.
Performance Graph and Table
The graph below shows a comparison of the Total Shareholder Return (“TSR”) for the Company’s listed ‘A’ ordinary shares for the last ten
financial years against the TSR for the companies in the FTSE All Share. The Company is a constituent of this Index and therefore it is an
appropriate choice for this report.
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
Fuller, Smith & Turner P.L.C. 12,723
FTSE All Share 12,158
Mar 11
Aug 11
Jan 12
Jun 12 Nov 12 Apr 13 Sep 13
Feb 14
Jul 14 Dec 14
May 15 Oct 15 Mar 16
Aug 16
Jan 17 Jun 17 Nov 17
Apr 18 Sep 18 Feb 19 Jul 19 Dec 19 May 20 Oct 20
Fuller, Smith & Turner P.L.C.
FTSE All Share
Source: Thomson Data stream
76
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE The table below shows the total remuneration figure for the Chief Executive over the last ten financial years and the annual bonus and
LTIP pay-out for each year as a percentage of the maximum available:
2012
2013
20141
2015
2016
2017
2018
2019
20202
2021
Single figure total
remuneration (£000)
Annual bonus3
LTIP
944
56%
92%
911
41%
56%
977
77%
64%
1,244
76%
96%
1,418
85%
100%
1,097
41%
100%
1,089
48%
56%
687
48%
nil
600
nil
nil
590
nil
nil
1 Simon Emeny was appointed as Group Chief Executive in July 2013. This single total figure comprises the remuneration received by Simon Emeny in the
financial year, hence includes remuneration for the three months prior to this promotion.
2 One-third of the annual bonus was due to pay out reflecting the Company’s strong like for like sales performance vs. the Peach Tracker. However, in light of the
broader business circumstances following the outbreak of coronavirus, the Committee and the Executive Directors agreed that it was not appropriate to pay this
portion of the annual bonus.
3 Annual bonus as a percentage of the maximum available.
Relative Importance of Spend on Pay
The graph below shows the total remuneration for the Group’s employees compared to other key financial indicators:
120
100
80
60
40
20
0
£m
Remuneration
Taxes
payable to
HMRC1
Capital
expenditure &
business
combinations2
Dividends
and share
buy-backs3
2021 2020
1 Taxes payable to HMRC is based upon tax incurred in the year and includes corporation tax, VAT, PAYE, NI, duty, stamp duty, non-domestic rates, property
licences, environmental levies and machine game duty. Duty on the sale of beer only relates to one month for 2020 until the sale of the Fuller’s Beer Business
on 27 April 2019.
2 Capital expenditure (including business combinations) represents cash paid in the year.
3 Dividends for 2020 represent the one-off ‘D’ share dividend paid in October 2019 as part of the return of capital to shareholders and the interim dividend for
2020 paid in the year. No dividends were paid during 2021 due to the coronavirus pandemic.
CEO Pay Ratio
The following table sets out CEO pay ratio figures, in respect of the financial year ended 27 March 2021.
Year
2020/21
2019/20
Method
Option B
Option B
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
35.7:1
33.0:1
33.2:1
32.6:1
23.8:1
31.6:1
The movement in pay ratio between 2019/20 and 2020/21 is driven by a combination of pay on furlough for the 25th percentile and
median being lower than normal pay, but CEO pay having also reduced due to the Board’s voluntary pay reduction from 1 April to
30 June 2020.
The relevant individuals have been identified using Option B, as defined under the relevant regulations, as it is considered to be the most
appropriate methodology for Fuller’s based on the availability of data at the time the Annual Report was published. The respective single
figure values for each individual for 2020/21 have then been calculated. No estimates were required, and no elements of pay were omitted
in calculating the relevant single figures. The figures do not include amounts paid to individuals in respect of their tronc share. The figures
for 2020/21 have been distorted by the impact of the coronavirus pandemic, with the figures for the respective percentiles only
representing hours worked for a small number of open weeks during the year, plus furlough pay received.
77
Strategic ReportFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021GovernanceOverview Directors’ Remuneration Report continued
The single figure values for individuals immediately above and below the identified employee at each quartile within the Gender Pay Gap
analysis were also reviewed.
The chosen individuals were reviewed to determine if they were representative of the 25th percentile, median and 75th percentile
employees. If the chosen individual had left the business or had changed roles during the financial year an alternative employee would be
used for the calculations. The alternative employee used in each instance was the closest employee to the relevant percentile, who was
considered representative of that percentile. For the 52 weeks ended 27 March 2021 no adjustment was needed for the 75th percentile,
but alternative employees were selected for the 25th percentile and median.
Year
Supporting information
2020/21
Salary
Total pay
25th percentile
pay
Median
pay
75th percentile
pay
£16,235
£16,540
£17,788
£17,788
£24,230
£24,762
Statement of Voting at Annual General Meeting
At the Annual General Meeting held on 10 September 2020, votes cast by proxy in respect of the approval of the Directors’
Remuneration Report were as follows:
Resolution text
Number of
votes cast for
Percentage of
votes cast for
Number of votes
cast against
Percentage of
votes cast against
Total
votes cast
Number of votes
withheld
Approval of Remuneration Report 2020
96,950,017
99.07%
905,613
0.93% 97,855,630
36,661
At the Annual General Meeting held on 10 September 2020, votes cast by proxy in respect of the approval of the Directors’ Remuneration
Policy were as follows:
Resolution text
Number of
votes cast for
Percentage of
votes cast for
Number of votes
cast against
Percentage of
votes cast against
Total
votes cast
Number of votes
withheld
Approval of Remuneration Policy 2020
94,559,027
97.04%
2,881,462
2.96% 97,440,489
451,801
The Directors’ Remuneration Report, encompassing pages 68 to 78, was approved by the Board and signed on its behalf.
H E L E N J O N E S
C H A I R O F T H E R E M U N E R A T I O N C O M M I T T E E
8 July 2021
78
FULLER’S ANNUAL REPORT AND ACCOUNTS 2021GOVERNANCE Independent Auditor’s Report to the Members of Fuller, Smith & Turner P.L.C.
Opinion
In our opinion:
– Fuller, Smith & Turner P.L.C.’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Company’s affairs as at 27 March 2021 and of the Group’s loss for the 52 week period (the ‘period’)
then ended;
– the Group financial statements have been properly prepared in accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No.1606/2002
as it applies in the European Union;
– the Company financial statements have been properly prepared in accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006 as applied in accordance with section 408 of the Companies Act 2006; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Fuller, Smith & Turner P.L.C. (the ‘Company’) and its subsidiaries (the ‘Group’) for the 52 week period
ended 27 March 2021 which comprise:
Group
Company
Group balance sheet as at 27 March 2021
Balance sheet as at 27 March 2021
Group income statement for the 52 week period then ended
Statement of changes in equity for the 52 week period then ended
Group statement of comprehensive income for the 52 week period
then ended
Statement of cash flows for the 52 week period then ended
Group statement of changes in equity for the 52 week period
then ended
Related notes 1 to 34 to the financial statements, including
a summary of significant accounting policies
Group cash flows for the 52 week period then ended
Related notes 1 to 34 to the financial statements, including
a summary of significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and, as regards to the Group financial statements, International Financial Reporting Standards
adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union and as regards the Company financial statements,
as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are
independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
79
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Independent Auditor’s Report to the Members of Fuller, Smith & Turner P.L.C.
Continued
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which indicates that the ongoing Coronavirus pandemic continues to result in uncertainty
over the Group’s ability to operate its pubs and therefore whether the Group will be able to comply with its banking covenants from 30 June 2022
onwards under a severe but plausible downside scenario. As stated in note 1, these events or conditions, along with the other matters as set out in
note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group and Company’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
We draw attention to the viability statement in the Annual Report on page 26, which indicates that an assumption to the statement of viability
is that the Group will complete a refinance of its debt facilities by February 2023. The Directors consider that the material uncertainties referred
to in respect of going concern may cast significant doubt over the future viability of the Group and company should these events not complete.
Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going
concern basis of accounting included:
– Obtaining an understanding of management’s basis for use of the going concern basis of accounting. To challenge the completeness of this
assessment, we independently identified factors that may indicate events or conditions that may cast significant doubt on the Group and
Company’s ability to continue as a going concern. Events or conditions were identified, and we designed our audit procedures to evaluate the
effect of these risks on the Group’s and Company’s ability to continue as a going concern;
– Confirming our understanding of the directors’ going concern assessment process;
– Assessing the adequacy of the going concern assessment period to 27 December 2022 and considering the existence of any significant events
or conditions beyond this period;
– The audit engagement partner increased her time directing and supervising the audit procedures on going concern and utilised corporate
finance specialists, with relevant hospitality sector expertise, to assist in assessing the integrity of the model and the assumptions employed;
– Agreeing the Group’s available financing and related terms, including the changes in the period, and the post year-end amend and extend,
to the original debt agreements and covenant waivers; and auditing the £52 million (net of expenses) equity raise completed in April 2021
back to supporting evidence, including share issue documentation and cash receipt;
– Obtaining the cash flow forecast models to 27 December 2022 used by the Board in its assessment, testing their arithmetical accuracy,
ascertaining whether they have been approved by the Board and considering the Group’s historical forecasting accuracy;
– Testing the assessment, including forecast liquidity and covenant compliance under base and downside scenarios, for clerical accuracy;
– Challenging the assumptions particularly over the timing and extent to which trading would recover to pre-Coronavirus levels, were realistic,
achievable and consistent with the external and/or internal environment as well as other matters identified in the audit;
– Assessing, whether assumptions made were reasonable and in the case of the downside scenario, appropriately severe, in light of the Group’s
relevant principal risks and uncertainties; This included comparing management’s forecasts to independent analyst commentary on the recovery
of the pub sector;
– Considering the likelihood of management’s ability to execute mitigating actions based on our understanding of the Group and the sector,
including whether those mitigating actions were controllable by management. This assessment was supported by our analysis of management’s
historical ability to take controllable actions such as suspension of dividends, deferral of non-essential capital expenditure and inventory orders,
as well as the likelihood of non-controllable actions such as obtaining further covenant waivers or raising additional funds through debt, equity
or sale of pubs in the portfolio being plausible;
– Applying professional scepticism in performing our own independent reverse stress testing of the Group’s cash flow forecast models and their
impact on forecast liquidity and banking covenants to identify under what circumstances the Group’s liquidity would be compromised, and
whether the scenario has no more than a remote possibility of occurring;
– Considering the impact of a significant event beyond the going concern assessment period that was identified by the directors and the audit team,
being the need to complete a refinancing of the Group’s debt facilities prior to its expiry on 19 February 2023. We challenged whether there was
a realistic prospect that the Group would be able to complete this refinancing. Our audit procedures included assessing the conclusions of the
Group’s external debt advisor, and the involvement of an EY debt advisory specialist to help us form an independent view; and
– Assessing the appropriateness of the going concern disclosures in describing the risks associated with the Group’s and Company’s ability to
continue as a going concern for the period to 27 December 2022.
80
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Our key observations
– The Group is experiencing a high level of disruption from the impact of the pandemic given the sector in which it operates. Therefore, there
is uncertainty about the impacts of COVID-19 on management’s forecasts in the going concern assessment period, with the key assumptions
relating to further potential lockdowns and/or extensions to social distancing rules.
– On 31 March 2021, the Group agreed an Amend and Extend Refinancing of its existing debt facilities extending the maturity of the £192 million
facilities to 19 February 2023 and amending the financial covenants to a minimum liquidity level of £10 million (tested monthly) until 31 March
2022 and then from quarter ending 25 June 2022 reverting to a covenant suite of net debt to EBITDA and EBITDA to net finance charges.
Based on management’s downside case, the Group would breach its banking covenants from June 2022, therefore requiring further covenant
waivers to be negotiated.
We confirm that we are satisfied with management’s conclusion that the Group and Company are a going concern, but that there is a material
uncertainty over this assumption, and that management has accurately described this material uncertainty within the financial statements. We also
determined going concern to be a key audit matter.
In relation to the Group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and Company’s ability
to continue as a going concern.
Overview of our audit approach
Audit scope
– We performed an audit of the complete financial information of the Group, which accounted
for 100% of loss before taxation, 100% of revenue and 100% of total assets.
Key audit matters
Materiality
– Going concern
– Impairment of tangible and intangible assets
– Deferred taxation on the pub estate
– Management override in the recognition of revenue
– Overall Group materiality of £0.9 million (2020: the predecessor auditor set their materiality
threshold at £1.045 million). We used professional judgement to determine materiality given
the impact of COVID-19 on the Group’s relevant materiality measures.
An overview of the scope of the Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements.
The Group’s operations are based solely in the United Kingdom with a single head office and finance function and therefore all audit procedures
are completed by one audit team at this location. The audit team includes tax specialists.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant
accounts in the financial statements we performed full scope audit procedures over 100% of the Group’s results for the 52 week period ended
27 March 2021 and 100% of the Group’s total assets at that date. We obtained an understanding of the entity-level controls of the Group which
assisted us in identifying and assessing risks of material misstatement due to fraud or error, as well as assisting us in determining the most appropriate
audit strategy.
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OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Independent Auditor’s Report to the Members of Fuller, Smith & Turner P.L.C.
Continued
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the material uncertainty related to going
concern section, we have determined the matters described below to be the key audit matters to be communicated in our report:
Key observations communicated to the Audit Committee
Based on our audit procedures we have concluded
the impairment charge of £11.2 million (being
£9.0 million PP&E impairment, £1.6 million ROUA
impairment and £0.6 million goodwill impairment)
is appropriately determined. We highlighted that
a reasonably possible change in certain key
assumptions including sales forecasts and risk
adjustment factors could lead to material additional
impairment charges. We concluded appropriate
disclosures had been included by management for
the above assumptions.
Risk
Our response to the risk
Impairment of tangible and intangible assets
Refer to the Audit Committee Report (page 53);
Accounting policies (page 100); and Note 13 of the
Consolidated Financial Statements (page 120)
At 27 March 2021 the carrying value of tangible
assets is £672.1 million which is made up of
property, plant and equipment (PP&E) and
right-of-use asset (ROUA). Intangible assets
have a carrying value of £27.4 million of which
£26.7 million relates to goodwill recorded on
business combinations in previous years.
The continued uncertainties over the current
economic environment caused by the
Coronavirus pandemic, including the closure
or restricted trading of all pubs in the UK, has
been identified as an indicator of impairment.
Impairment for tangible assets (property plant
and equipment and the right-of-use assets)
are tested on the basis of each individual cash
generating unit (CGU) – an individual pub site.
For intangible assets (goodwill) the testing is
performed at the relevant group of CGUs that
benefit from the goodwill.
There is a risk that, given the uncertainties
over future trading caused by the Coronavirus,
pubs may not achieve the anticipated business
performance to support their carrying value.
This could lead to an impairment charge that
has not been recognised by management.
Significant judgement is required in forecasting
future cash flows of each pub, the long-term
growth rate and the rate at which cash flows
are discounted. For a portion of the pub estate
where the value-in-use model indicates a small
impairment charge, an overlay based on the
market value approach is performed which
involves significant judgement in determining
the fair value of these pubs.
We gained an understanding through a walkthrough of the
process and controls management has in place over the
impairment process.
We validated that the methodology of the impairment
exercise is consistent with the requirements of IAS 36
Impairment of Assets, including appropriate identification
of cash generating units and the allocation of central
service costs in the value in use calculations.
We confirmed the mathematical accuracy of the models.
Below we summarise the procedures performed in relation
to the key judgements for the tangible (PP&E and ROUA)
and intangible assets (goodwill) impairment review:
– We analysed management’s forecasts underlying the
impairment review against past and current performance
and external future economic forecasts incorporating
a COVID-19 impact on the hospitality sector in the UK.
– We compared the expectation of performance of the
pub sites reopening to the recent government
announcements and other external market indicators
of economic recovery such as forecast GDP growth,
searching for contrary evidence.
– We critically challenged and assessed the reasonableness
of management’s recovery assumptions and post-
COVID-19 assumptions with the assistance of our
EY sector specialists.
– We also performed sensitivity analysis based on
reasonable possible changes to key assumptions
determined by management being revenue, discount
rate and long-term growth rate. We assessed that the
reasonably possible change in assumptions applied by
management were appropriate by reference to the
ranges independently established by our work.
– We engaged our EY internal specialists to independently
calculate the discount rate and compare it to the
discount rate applied in the models by management.
– Where management’s pub impairment assessment was
based on the fair value approach, we engaged our
property valuation specialists to review the methodology
applied and audit the key assumptions that form part of
the valuation in light of recent transactions in the market.
We assessed the disclosures in notes to the financial
statements against the requirements of IAS 36 Impairment
of Assets, in particular the requirement to disclose further
sensitivities for CGUs where a reasonably possible change
in a key assumption would cause an impairment. We also
assessed the related separately disclosed item accounting
treatment by reference to the company’s accounting
policy, industry practice and the FRC guidance.
82
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Risk
Our response to the risk
Key observations communicated to the Audit Committee
We identified an error in the current year deferred
tax workings relating to the underlying methodology
applied by management. This has also resulted in the
prior year adjustment of £4.0 million in the Group
and £3.6 million for the Company that has been
reflected in the accounts. Following correction
of the methodology we conclude management’s
judgement arising on the deferred tax calculation to
be appropriate. We also consider that the disclosures
in note 7 and note 34 to the Group and Company
financial statements, including the description of
the prior year adjustment, are appropriate.
We did not identify any instances of management
override of controls, including through topside
journals. Based on our work, which included using
data analysis tools to test 100% of the Group’s
revenue transactions and the extent to which they
converted to trade receivables or cash, we consider
that revenue is fairly stated.
Deferred taxation on the pub estate
Refer to the Audit Committee Report (page 53);
Accounting policies (page 105); and Note 7 and
Note 34 of the financial statements (page 111 and
151 respectively)
At 27 March 2021, the Group had deferred
tax assets of £17.0 million (Restated
2020: £10.0 million) and deferred tax liabilities
of £22.3 million (Restated 2020: £23.1 million)
and the Company had deferred tax assets of
£16.9 million (Restated 2020: £9.5 million) and
deferred tax liabilities of £22.3 million (Restated
2020: £20.3 million).
A significant level of management judgement
and complex calculations are required in
accounting for the deferred tax. These are
focused on:
– Measuring deferred tax on pubs on a disposal,
in-use or a dual basis.
– The deferred tax treatment of fair value
uplifts and rolled over gains and their
interaction with indexation allowances.
– Tracking which components of deferred tax
in each pub should not be recognised under
the initial recognition exemption of IAS 12.
– The recognition or non-recognition of
deferred tax assets on realised capital losses.
We performed a walkthrough of the Group’s process for
determining the deferred tax arising on the pub estate.
In conjunction with our tax specialists, we tested the
deferred tax calculations on the Group’s freehold and
leasehold pub portfolio. This focused on verifying the inputs
into the deferred tax calculation, testing the mathematical
accuracy and recalculating the deferred tax for a sample
of pubs across the estate. This included a review of capital
losses, rollover relief, indexation allowances and initial
recognition exemptions, as well as management’s
calculation of the impact of a historical error in the
calculation, which has been adjusted as a prior
year adjustment.
Additionally, we verified the deferred tax calculations are
consistent with UK Tax laws and the Group’s practice in
filing tax returns.
We challenged management on the assumptions used in
calculating the deferred tax balances, including whether the
deferred tax application was consistent with the Group’s
intended manner of recovery for each pub in the deferred
tax calculations and was consistent with the assumptions
concerning depreciation and residual value in the fixed
asset register.
We considered whether the related deferred tax
disclosures, included in note 7 to the Group financial
statements, were in line with IAS 12 requirements.
Management override in the recognition
of revenue
Refer to the Accounting policies (page 104) and
Note 3 of the financial statements (page 108)
We performed a walkthrough of each of the Group’s
significant revenue processes, including the recording
of manual journal adjustments, and assessed the design
effectiveness of the key controls that are in place.
The Group recorded revenue of £73.2 million
in the period (2020: £316.0 million), including
£64.0 million in the Managed houses segment
(2020: £286.3 million) and £9.2 million in the
Tenanted Inns segment (2020: £29.7 million).
We applied correlation data analysis over the Group’s entire
revenue journal population to identify how much of the
Group’s revenue is converted to cash postings and to isolate
non-standard revenue transactions for further analysis,
focusing our testing on higher risk transactions identified.
We searched for any topside journals to revenue, but none
were identified.
We performed cut-off testing procedures including review
of post period end cash receipts and journals, and an
analytical review of significant variances to the prior year,
to assess for completeness.
The vast majority of the Group’s revenue
transactions are non-complex, with no
judgement applied over the amount recorded.
We consider the significant risk relating to
revenue to be around management override
of controls and topside journals to revenue in
the Managed and Tenanted estate.
For Managed houses, revenue is typically
comprised of a large number of low value
transactions. Although there is little
management judgement involved, there is
a risk that manual topside adjustments could
be posted which could result in revenue being
overstated or not recorded. For Tenanted Inns
there is also a risk that manual topside
adjustments could be posted to revenue.
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OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Independent Auditor’s Report to the Members of Fuller, Smith & Turner P.L.C.
Continued
The key audit matters set out above are consistent with those reported by Fuller, Smith & Turner plc’s previous external auditor with the
exception of:
– Addition of the key audit matter around the deferred tax on the pub estate given the complexity around the calculation and the prior year
adjustment identified which increased our audit effort in this area.
– Removal of the key audit matters in relation to the adoption and accounting for IFRS 16 as the risk in the current year has reduced as lease
changes are lower in frequency and value.
– Similarly, the previous auditor included a key audit matter in relation to separately disclosed items, for which we do not consider there to a key
audit matter given the quantum of the balance excluding impairments as we have identified that as a KAM above.
– Lastly, the previous auditor included a key audit matter in relation to the disposal of the brewery business. As this is a non-recurring transaction,
there is no such key audit matter for the current period.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions
of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group and Company to be £0.9 million (2020: £1.05 million determined by the Group’s predecessor auditor),
based on our professional judgement on relevant metrics used by investors and other users of the financial statements. Materiality in 2020 was
based on our judgement of normalised earnings of the Group. To form the basis of this assessment we have considered the average adjusted profit
before tax for continuing operations for financial years 2019 – 2020 and restricted the percentage applied to that basis to 3% (from the usual 5%
applied for listed entities) to factor in the decline in trade in 2021 driven by the Coronavirus pandemic.
During the course of our audit, we reassessed initial materiality to reflect the impact of COVID-19 on Fuller, Smith & Turner P.L.C. We concluded
that no change is required to our final materiality.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance
materiality was 50% of our planning materiality, namely £0.45 million (2020: 65% of planning materiality determined by the Group’s predecessor
auditor). We have set performance materiality at this percentage as this year is a first year audit.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £45,000, which is set at 5%
of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information,
we are required to report that fact.
We have nothing to report in this regard.
84
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial period for which the financial statements are prepared
is consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
– adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not
visited by us; or
– the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and Company’s compliance with the provisions of the UK Corporate Governance Code specified for
our review.
Aside from the impact of the matters disclosed in the material uncertainty related to going concern section, based on the work undertaken as part
of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the
financial statements or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 25;
– Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate
set out on page 96;
– Directors’ statement on fair, balanced and understandable set out on page 45;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 45;
– The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 54;
and
– The section describing the work of the Audit Committee set out on page 52.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 45, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
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OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Independent Auditor’s Report to the Members of Fuller, Smith & Turner P.L.C.
Continued
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company
and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant
are Companies Act 2006, Health & Safety and food hygiene laws, Minimum Wage regulations, Money Laundering regulations and the UK
Corporate Governance Code 2018.
– We understood how the Company is complying with those frameworks by making inquiries of management, those charged with governance, those
responsible for legal and compliance procedures and the company secretary. We corroborated our inquires through inspection of board minutes
and correspondence with regulatory authorities and through attendance at Audit Committee meetings.
– We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by making inquiries
of management, those charged with governance and various other individuals within the financial reporting function. We corroborated these
inquiries by inspecting board minutes, internal audit reports and findings, reports to the Group’s internal whistleblowing hotline and by
understanding both the Group’s bonus scheme structure and the expectations of investors and analysts, to understand areas in which individuals
may be incentivised to commit fraud.
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures
involved making inquiries as described above, inspecting minutes of all significant board and committee meetings, reading correspondence with
regulatory authorities, testing manual journal entries with higher risk characteristics and testing unusual or non-standard transactions.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
Following the recommendation from the Audit Committee, we were appointed by the company on 27 January 2021 to audit the financial
statements for the 52 week period ended 27 March 2021 and subsequent financial periods.
– The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Company and we remain independent
of the Group and the Company in conducting the audit.
– The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
R A C H E L S AVA G E
S E N I O R S T A T U T O R Y A U D I T O R
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
8 July 2021
86
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Group Income Statement
for the 52 weeks ended 27 March 2021
Continuing operations
Revenue
Operating costs before separately disclosed items
Other income
Adjusted operating (loss)/profit
Operating separately disclosed items
Operating (loss)/profit
Finance costs
Financing separately disclosed items
Profit on disposal of properties
(Loss)/profit before income tax
Adjusted (loss)/profit before income tax
Total separately disclosed items
(Loss)/profit before income tax
Tax
Analysed as:
Underlying trading
Separately disclosed items
(Loss)/profit from continuing operations
Net (loss)/profit from discontinued operations after tax
(Loss)/profit for the year
1 Refer to Note 34 for details of restatement.
52 weeks
ended
27 March
2021
£m
73.2
(113.7)
0.2
(40.3)
(14.8)
(55.1)
(8.4)
(0.1)
5.8
(57.8)
(48.7)
(9.1)
(57.8)
9.6
8.9
0.7
(48.2)
(1.4)
(49.6)
Note
3
4
3
5
6
5, 6
5
5
7
7
5, 7
21
Restated1
52 weeks
ended
28 March
2020
£m
316.0
(292.7)
3.7
27.0
(20.1)
6.9
(7.6)
(0.5)
9.6
8.4
19.4
(11.0)
8.4
(5.2)
(7.2)
2.0
3.2
157.7
160.9
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OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Group Income Statement
for the 52 weeks ended 27 March 2021
Continued
Group
(Loss)/earnings per share per 40p ‘A’ and ‘C’ ordinary share
Basic
Diluted
(Loss)/earnings per share per 4p ‘B’ ordinary share
Basic
Diluted
Continuing operations
(Loss)/earnings per share per 40p ‘A’ and ‘C’ ordinary share
Basic
Diluted
(Loss)/earnings per share per 4p ‘B’ ordinary share
Basic
Diluted
1 Refer to Note 34 for details of restatement.
52 weeks
ended
27 March
2021
Pence
(89.84)
(89.84)
Restated1
52 weeks
ended
28 March
2020
Pence
291.89
291.21
(8.98)
(8.98)
29.19
29.12
(87.31)
(87.31)
(8.73)
(8.73)
5.81
5.79
0.58
0.58
Note
8, 21
8, 21
8, 21
8, 21
8
8
8
8
88
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Group Statement of Comprehensive Income
for the 52 weeks ended 27 March 2021
(Loss)/profit for the year
Items that may be reclassified to profit or loss in subsequent years (net of tax)
Net gains on valuation of financial assets and liabilities
Tax related to items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss in subsequent years (net of tax)
Net actuarial (losses)/gains on pension schemes
Tax related to items that will not be reclassified to profit or loss
Other comprehensive (losses)/gains for the year, net of tax
Total comprehensive (expenses)/income for the year net of tax
1 Refer to Note 34 for details of restatement.
52 weeks
ended
27 March
2021
£m
Restated1
52 weeks
ended
28 March
2020
£m
(49.6)
160.9
0.5
(0.1)
(1.0)
0.2
(0.4)
0.2
(0.1)
5.9
(1.1)
4.9
(50.0)
165.8
Note
28
7
25
7
89
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Note
10
11
12
15
17
19
20
24
22
23
27
24
17
24
17
14
25
7
29
29
29
29
29
Group
2021
£m
27.3
590.2
3.1
–
81.9
702.5
2.1
11.5
4.0
17.1
34.7
9.6
746.8
(28.7)
(4.0)
(207.7)
(6.7)
(247.1)
(27.5)
(83.2)
(0.7)
(3.5)
(5.3)
(120.2)
379.5
22.8
4.2
3.7
(17.0)
(0.5)
366.3
379.5
Restated1
Group
2020
£m
27.5
617.7
4.8
0.1
107.0
757.1
4.0
12.6
6.0
20.3
42.9
2.6
802.6
(37.7)
(4.1)
(171.7)
(8.9)
(222.4)
(27.5)
(104.0)
(1.1)
(4.7)
(13.1)
(150.4)
429.8
22.8
4.2
3.7
(17.1)
(0.9)
417.1
429.8
Group Balance Sheet
27 March 2021
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Other non-current assets
Right-of-use assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and short-term deposits
Total current assets
Assets classified as held for sale
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Other financial liabilities
Retirement benefit obligations
Deferred tax liabilities
Total non-current liabilities
Net assets
Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Own shares
Hedging reserve
Retained earnings
Total equity
1 Refer to Note 34 for details of restatement.
Approved by the Board and signed on 8 July 2021.
M J T U R N E R , F C A
C H A I R M A N
Registered Number: 241882
90
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Company Balance Sheet
27 March 2021
Company
2021
£m
Note
Restated1
Company
2020
£m
10
11
12
15
17
16
19
20
24
22
23
27
24
17
24
17
14
25
7
29
29
29
29
29
4.0
590.2
3.1
–
81.4
109.3
788.0
2.1
11.4
3.9
16.9
34.3
9.6
831.0
(161.6)
(4.0)
(207.7)
(6.5)
(379.8)
(27.5)
(81.8)
(0.7)
(3.5)
(5.4)
(118.9)
333.2
22.8
4.2
3.7
(17.0)
(0.5)
(1.6)
321.6
332.2
2.6
593.8
4.8
0.1
96.6
122.4
820.3
3.5
19.4
5.9
19.2
48.0
2.6
870.9
(165.2)
(4.1)
(171.7)
(7.9)
(348.9)
(27.5)
(91.7)
(1.1)
(4.7)
(10.8)
(135.8)
386.2
22.8
4.2
3.7
(17.1)
(0.9)
373.5
386.2
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Other non-current assets
Right-of-use assets
Investments in subsidiaries
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and short-term deposits
Total current assets
Assets classified as held for sale
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Other financial liabilities
Retirement benefit obligations
Deferred tax liabilities
Total non-current liabilities
Net assets
Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Own shares
Hedging reserve
Merger reserve
Retained earnings
Total equity
1 Refer to Note 34 for details of restatement.
Loss attributable to ordinary shareholders and included in the financial statements of the Parent Company was £50.7 million
(2020: £142.0 million profit).
Approved by the Board and signed on 8 July 2021.
M J T U R N E R , F C A
C H A I R M A N
Registered Number: 241882
91
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Group Statement of Changes in Equity
for the 52 weeks ended 27 March 2021
Capital
redemption
reserve
(note 29)
£m
Deferred
shares
£m
Group
At 30 March 2019 (restated)1
Profit for the year (restated)1
Other comprehensive income for the year
Total comprehensive income for the year
Share
capital
(note 29)
£m
22.8
–
–
–
Share
premium
account
(note 29)
£m
4.8
–
–
–
Issue of share capital (note 29)
0.6
(0.6)
Reclassification of deferred shares
(note 29)
Cancellation of deferred shares (note 29)
Shares purchased to be held in ESOT or
as treasury
Shares released from ESOT and treasury
Dividends (note 9)
Share-based payment charges
Transfer to retained earnings
Tax debited directly to equity (note 7)
Total transactions with owners
At 28 March 2020 (restated)1
Loss for the year
Other comprehensive income/(expense)
for the year
Total comprehensive income/(loss) for the
year
Shares purchased to be held in ESOT or
as treasury
Shares released from ESOT and treasury
Dividends (note 9)
Share-based payment credits
Total transactions with owners
At 27 March 2021
1 Refer to Note 34 for details of restatement.
(0.6)
–
–
–
–
–
–
–
–
22.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.6)
4.2
–
–
–
–
–
–
–
–
22.8
4.2
Own shares
(note 29)
£m
(19.8)
Hedging
reserve
£m
(0.8)
–
–
–
–
–
–
(0.5)
3.2
–
–
–
–
2.7
(17.1)
–
–
–
–
0.1
–
–
0.1
–
0.1
0.1
–
–
–
–
–
–
–
(0.2)
–
(0.2)
(0.9)
–
0.4
0.4
–
–
–
–
–
Retained
earnings
(restated)
£m
332.4
160.9
4.8
165.7
–
–
–
–
(1.1)
Total
£m
342.5
160.9
4.9
165.8
–
–
–
(0.5)
2.1
(80.5)
(80.5)
0.5
0.2
(0.1)
(81.0)
417.1
(49.6)
0.5
–
(0.1)
(78.5)
429.8
(49.6)
(0.8)
(0.4)
(50.4)
(50.0)
–
(0.1)
–
(0.3)
(0.4)
–
–
–
(0.3)
(0.3)
3.1
–
–
–
–
–
0.6
–
–
–
–
–
–
0.6
3.7
–
–
–
–
–
–
–
–
3.7
(17.0)
(0.5)
366.3
379.5
–
–
–
–
–
0.6
(0.6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
92
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Company Statement of Changes in Equity
for the 52 weeks ended 27 March 2021
Share
capital
(note 29)
£m
Share
premium
account
(note 29)
£m
Capital
redemption
reserve
(note 29)
£m
Deferred
shares
£m
Own shares
(note 29)
£m
Hedging
reserve
£m
Merger
reserve
£m
22.8
4.8
–
–
–
0.6
(0.6)
–
–
–
–
–
–
–
–
22.8
–
–
–
–
–
–
–
–
–
–
–
–
(0.6)
–
–
–
–
–
–
–
–
(0.6)
4.2
–
–
–
–
–
–
–
–
–
22.8
4.2
–
–
–
–
–
0.6
(0.6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.1
(19.8)
(0.8)
–
–
–
–
–
0.6
–
–
–
–
–
–
–
–
–
–
–
–
(0.5)
3.2
–
–
–
–
0.6
3.7
2.7
(17.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
–
–
–
0.1
–
0.1
0.1
–
–
–
–
–
–
(0.2)
–
–
(0.2)
(0.9)
–
0.4
0.4
–
–
–
–
–
–
3.7
(17.0)
(0.5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1.6)
–
(1.6)
(1.6)
Retained
earnings
(restated)
£m
307.7
142.0
4.8
146.8
–
–
–
–
(1.1)
Total
£m
317.8
142.0
4.9
146.9
–
–
–
(0.5)
2.1
(80.5)
(80.5)
0.2
0.5
(0.1)
(81.0)
373.5
(50.7)
(0.8)
(51.5)
–
(0.1)
–
–
(0.3)
(0.4)
–
0.5
(0.1)
(78.5)
386.2
(50.7)
(0.4)
(51.1)
–
–
–
(1.6)
(0.3)
(1.9)
321.6
333.2
Company
At 30 March 2019 (restated)1
Profit for the year (restated)1
Other comprehensive income for the year
Total comprehensive income for the year
Issue of share capital (note 29)
Reclassification of deferred shares (note 29)
Cancellation of deferred shares (note 29)
Shares purchased to be held in ESOT or
as treasury
Shares released from ESOT and treasury
Dividends (note 9)
Transfer to retained earnings
Share-based payment charges
Tax debited directly to equity (note 7)
Total transactions with owners
At 28 March 2020 (restated)
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Shares purchased to be held in ESOT or
as treasury
Shares released from ESOT and treasury
Dividends (note 9)
Hive up of Bel & The Dragon
Share-based payment charges
Total transactions with owners
At 27 March 2021
1 Refer to Note 34 for details of restatement.
93
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Group Cash Flow Statement
for the 52 weeks ended 27 March 2021
(Loss)/profit before tax for continuing operations
Net finance costs before separately disclosed items
Separately disclosed items
Depreciation and amortisation
Difference between pension charge and cash paid
Contribution to pension fund
Share-based payment (credit)/charges
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Cash impact of operating separately disclosed items
Cash (absorbed by)/generated from operations
Tax received/(paid)
Cash (absorbed by)/generated from operating activities – continuing operations
Cash (absorbed by)/generated from operating activities – discontinued operations
Net cash (absorbed by)/generated from operating activities
Cash flow from investing activities
Business combinations
Purchase of property, plant and equipment and intangibles
Sale of property, plant and equipment, right-of-use assets and assets held for sale
Cash absorbed by investing activities – continuing operations
Cash generated from investing activities – discontinued operations
Net cash (outflow)/inflow from investing activities
Cash flow from financing activities
Purchase of own shares
Receipts on release of own shares to option schemes
Interest paid
Preference dividends paid
Equity dividends paid
Drawdown of bank loans
Repayment of bank loans
Repayment of obligations under leases
Cash generated/(absorbed by) financing activities – continuing operations
Cash absorbed by investing activities – discontinued operations
Net cash inflow/(outflow) from financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at the start of the year
Total cash and cash equivalents at the end of the year
94
Group
52 weeks
ended
27 March
2021
£m
(57.8)
8.4
9.1
27.2
(13.1)
(2.3)
–
(0.3)
(0.4)
1.7
(6.4)
(1.5)
(22.3)
3.4
(18.9)
(0.4)
(19.3)
–
(16.5)
10.8
(5.7)
0.3
(5.4)
–
–
(4.5)
(0.1)
–
99.4
(64.0)
(9.2)
21.6
(0.1)
21.5
(3.2)
20.3
17.1
Group
52 weeks
ended
28 March
2020
£m
8.4
7.6
11.0
26.9
53.9
(2.3)
(24.0)
0.5
(1.1)
1.1
(1.5)
(5.0)
21.6
(10.1)
11.5
1.5
13.0
(32.8)
(46.7)
11.4
(68.1)
224.5
156.4
(0.5)
2.3
(4.7)
(0.1)
(80.5)
–
(65.4)
(10.3)
(159.2)
(0.9)
(160.1)
9.3
11.0
20.3
Note
6
5
4
5
21
21
29
9
24
24
17
21
24
24
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Company Cash Flow Statement
for the 52 weeks ended 27 March 2021
Loss before tax for continuing operations
Net finance costs before separately disclosed items
Separately disclosed items
Depreciation and amortisation
Difference between pension charge and cash paid
Contribution to pension fund
Share-based payment (credit)/charges
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Cash impact of operating separately disclosed items
Cash (absorbed by)/generated from operations
Tax received/(paid)
Cash (absorbed by)/generated from operating activities – continuing operations
Cash absorbed by operating activities – discontinued operations
Net cash (absorbed by)/generated from operating activities
Cash flow from investing activities
Business combinations
Purchase of property, plant and equipment
Sale of property, plant and equipment, right-of-use assets and assets held for sale
Cash absorbed by investing activities – continuing operations
Cash generated from investing activities – discontinued operations
Net cash (outflow)/inflow from investing activities
Cash flow from financing activities
Purchase of own shares
Receipts on release of own shares to option schemes
Interest paid
Preference dividends paid
Equity dividends paid
Drawdown of bank loans
Repayment of bank loans
Repayment of obligations under leases
Cash generated/(absorbed by) investing activities – continuing operations
Cash generated from financing activities – discontinued operations
Net cash inflow/(outflow) from financing activities
Net movement in cash and cash equivalents
Cash acquired on acquisition
Cash and cash equivalents at the start of the year
Total cash and cash equivalents at the end of the year
95
Company
52 weeks
ended
27 March
2021
£m
(60.3)
Note
12.1
8.5
26.8
(12.9)
(2.3)
–
(0.3)
7.1
1.7
(14.7)
(1.5)
(22.9)
3.6
(19.3)
–
(19.3)
0.2
(16.5)
10.8
(5.5)
0.6
(4.9)
–
–
(4.5)
(0.1)
–
99.4
(64.0)
(8.9)
21.9
–
21.9
(2.3)
–
19.2
16.9
5
29
9
24
24
17
24
24
Company
52 weeks
ended
28 March
2020
£m
(17.8)
10.3
35.8
25.6
53.9
(2.3)
(24.0)
0.5
(10.9)
1.1
0.8
(4.8)
14.3
(10.1)
4.2
–
4.2
(34.1)
(46.2)
11.4
(68.9)
225.4
156.5
(0.5)
2.3
(4.7)
(0.1)
(80.5)
–
(57.1)
(10.1)
(150.7)
–
(150.7)
10.0
–
9.2
19.2
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021
Notes to the Financial Statements
1. Authorisation of Financial Statements and Accounting Policies
Authorisation of Financial Statements
The financial statements of Fuller, Smith & Turner P.L.C. and its subsidiaries (the “Group”) for the 52 weeks ended 27 March 2021 were authorised
for issue by the Board of Directors on 8 July 2021 and the Balance Sheet was signed on the Board’s behalf by M J Turner. Fuller, Smith & Turner
P.L.C. is a public limited company incorporated and domiciled in England and Wales. The Company’s ordinary ‘A’ shares are traded on the London
Stock Exchange.
Significant Accounting Policies
Basis of preparation
The Group’s and Company’s financial statements have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, and in accordance with International Financial Reporting Standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies to the European Union, and applied to the financial statements of the Group and the Company for the 52 weeks
ended 27 March 2021. The principal accounting policies adopted by the Group and by the Company are set out in the accounting policies below.
The Group and Company financial statements are presented in Sterling and all values are shown in millions of pounds (£m) rounded to the nearest
hundred thousand, except where otherwise indicated.
As permitted by Section 408 of the Companies Act 2006 a separate Income Statement for the Parent Company has not been prepared.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic
Report on pages 4 to 38 and include the section entitled “Principal risks and uncertainties” on pages 28 to 30. In the Financial Review section on pages
22 to 26 it describes the financial position of the Group, its cash flows and liquidity position. In addition, note 28 to the financial statements includes the
Group’s objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging
activities, borrowing facilities, and its exposure to credit risk and liquidity risk.
The Directors have prepared the 2021 financial statements on a going concern basis after assessing the continued impact of the coronavirus pandemic
including further lockdowns and restrictions as well as the Group’s financing arrangement and other principal risks and uncertainties.
At 27 March 2021, the Group had a strong Balance Sheet with 91% of the estate being freehold properties and available headroom on facilities
of £84.0 million and £17.1 million of cash and resulting net debt of £218.1 million excluding leases.
The Group had existing facilities of £292 million; £192 million was due to expire in August 2021 with the rest being the £100 million CCFF, which expired
in May 2021. Post year end, the Group agreed an Amend and Extend Refinancing of its existing debt facilities with its relationship banks, extending the
maturity of the £192 million facilities to 19 February 2023 and amending the financial covenants to a minimum liquidity level of £10 million to be tested
monthly until 31 March 2022. In June 2022 the Company will revert to a covenant suite of net debt to EBITDA (leverage) and EBITDA to net
finance charges.
After year end, the Group proposed placing new ‘A’ shares up to appropriately 20% of existing issued ‘A’ ordinary share capital. The refinancing of the
facilities was conditional on the successful equity raise. On 20 April 2021 the equity raise was approved by the shareholders at the Extraordinary General
Meeting (“EGM”) and the net proceeds of £52 million were received the same day. The proceeds of the equity raise, along with the Group’s existing
facilities, were used to repay the CCFF on 12 May 2021.
As well as extending the bank facilities and raising funds through an equity raise, the Group has implemented a number of mitigating actions to reduce
cash outflows and maintain liquidity, as follows:
– A final dividend was not declared for FY20, nor has one been declared for FY21
– Participated in government initiatives to protect the viability of the business, including the CJRS, Eat Out to Help Out scheme and Business
Rates Relief and grants, and was confirmed as an eligible issuer under the CCFF
– Rightsized staff across the entire pub estate and streamlined the support function to reduce the cost base
– Board and Executive Team members took a temporary voluntary salary reduction.
The Group has modelled two financial scenarios covering the period to 27 December 2022 (the “going concern assessment period”) that reflect the
potential continued impact of the coronavirus pandemic:
The Group’s “base case” assumes that even though the estate was fully open from May 2021, sales in FY22 will still be impacted by reduction in
international travel, slow return to offices and continued impact on consumer confidence. This will be marginally offset by increase in weddings, staycations
and small increase in suburban areas as people stay at home to work. Under this scenario there would be significant headroom and all covenants would be
compiled with for the duration of the going concern period.
96
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 A “downside case” assumes there will be three months of full lockdown in FY22, being December 2021 through to February 2022, and a further three
months with severe restrictions akin to those experienced in October 2020. In FY23, there will be one further month of severe restrictions in place and
then from May 2022 trading will resume in line with the base case.
Under the “downside case” without additional mitigating action, the covenants on reinstatement in June 2022 through to December 2022 would be
breached. The Directors consider the significant reduction in sales modelled under this scenario, which largely reflects a repeat of FY21 in the second half
of the year, to be unlikely given the continued successful roll out of the vaccine. However, with the continued threat of variants and the unknown impact
that these could have, this downside scenario whilst severe is plausible.
Although the model shows there would be adequate liquidity headroom even under this scenario, the Directors would need to seek waivers for debt and
interest coverage covenants that will be reinstated from June 2022 under the terms of the loan extensions. The Directors are confident that in this case
it would be possible to agree waivers for these covenants with its lending banks (as has been the case in prior lockdown scenarios). In addition, the Group
could also implement further mitigating actions before this point in time comprising deferring capital expenditure, further disposals of parts of the Group’s
valuable freehold property estate and cost reductions such as redundancies. It is possible that the extent of these mitigating actions would negate the need
to get waivers in place.
After due consideration of the matters set out above, the Directors are satisfied that there is a reasonable expectation that the Group and Company
have adequate resources to continue in operational existence for at least the going concern assessment period to 27 December 2022. However, as the
downside scenario shows that the covenants would be breached when reinstated from June 2022 through to December 2022, within the going concern
period, and not all the mitigating actions required to prevent this are within management’s control, there is a material uncertainty that may cast doubt on
the Group’s and Company’s ability to continue as a going concern. The financial statements do not reflect any adjustments that would be required to be
made, if they were prepared on a basis other than the going concern basis.
Significant accounting judgements, estimates and assumptions
The areas of estimation and assumption which are considered to be significant in the preparation of the financial statements are as follows:
The Group determines whether goodwill is impaired on an annual basis and this requires an estimation of the value in use of the cash-generating units
(“CGUs”) to which the goodwill is allocated. This involves estimation of future cash flows and choosing a suitable discount rate. Full details are
supplied in note 13, together with an analysis of those key assumptions.
The Group reviews for impairment of all property, plant and equipment and right-of-use assets at CGU level where there is any indication
of impairment. This requires an estimation of the value in use and involves estimation of future cash flows and choosing a suitable discount rate.
See note 13, which describes the assumptions used together with an analysis of the key assumptions.
Measurement of defined benefit pension obligations requires estimation of future changes in inflation, as well as mortality rates, the expected return
on assets and the selection of a suitable discount rate. These have been determined on advice from the Group’s qualified actuary. The estimates used
and the key assumptions are provided in note 25.
The calculation of lease liabilities requires the Group to determine an incremental borrowing rate ("IBR") to discount future minimum lease
payments. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds
necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the
Group “would have to pay”, which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms
and conditions of the lease. A sensitivity analysis has been conducted on the lease liabilities which shows that increasing the discount rate by 1% will
decrease the lease liability by £5.9 million and decrease the right-of-use asset by £6.0 million. See note 17 for further details on leases.
Estimation is required to determine the expenditure that will result from a present legal obligation arising from a past event. In the current year, the
Group have estimated the expected expenditure for a legal claim. The Directors believe the recognised provision in relation to this specific matter
reflects the best estimate of the most likely current outcome at the reporting date, based on a probability weighting with a material range of
potential outcomes. The claim has still not been resolved at the date of signing and any further details have not been disclosed for serious
prejudicial reasons.
The areas of judgement which are considered to be significant in the preparation of the financial statements are as follows:
In concluding that there was a material uncertainty over going concern the Directors had to consider a number of possible scenarios due to the
uncertainty of how the pandemic will continue to impact the business. They also needed to use their judgement to assess the most likely scenario
and the impact this would have on the covenants and the facilities to assess what the material uncertainty was. Refer to going concern on page 96
for details of the scenarios judged most likely.
Judgement is used to determine those items, that should be separately disclosed to allow a better understanding of the underlying trading
performance of the Group. The judgement includes assessment of whether an item is of a nature that is not consistent with normal trading
activities or of sufficient size or infrequency. See note 5 for further details.
97
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
1. Authorisation of Financial Statements and Accounting Policies continued
Judgement was required in assessing whether a rent concession given by the Group to its lessees constituted a lease modification or was covered by
the original contract. The contract needed to be assessed in light of the circumstances that gave rise to the concession. It was determined that given
the Tenants could not legally use the premises the concession was permitted within the contract. It was therefore not treated as a modification and
spread over the lease term but instead recognised in the financial year.
The Group has exercised significant accounting estimation and judgement in the recognition of deferred tax liabilities in respect of property, plant
and equipment. Significant accounting estimates and judgements include those used to determine the amount of net book value of property, plant
and equipment to which the initial recognition exemption applies, the calculation of the tax base on sale (which is subject to certain restrictions under
tax law) and the offsetting of inherent losses against inherent gains where tax losses are expected to be utilised against future profits and gains.
Basis of consolidation
The Group financial statements consolidate the financial statements of Fuller, Smith & Turner P.L.C. and the entities it controls (its subsidiaries)
drawn up for the 52 weeks ended 27 March 2021 (2020: 52 weeks ended 28 March 2020). Subsidiaries are consolidated from the date of
their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
Control comprises the power to direct the relevant activities of the subsidiary which significantly affect the return of the subsidiary, so as to obtain
benefit from its activities, and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting
rights; or by way of contractual agreement. All intercompany balances and transactions, including unrealised profits arising from them, are eliminated.
Adoption of new standards and interpretations
The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 29 March
2020. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
– Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
– Amendments to IAS 1 and IAS 8 Definition of Material
– Amendments to IFRS 3 – Definition of a Business
– Conceptual Framework for Financial Reporting
– Covid-19 Related Rent Concessions – Amendment to IFRS 16 – The amendment applies to annual reporting periods beginning on or after
1 June 2020. Earlier application is permitted. The Group has elected to not take the practical expedient and instead has treated rent concessions
received as lease modifications.
The Directors do not believe the adoption of new standards has had any significant impact on the amounts reported in the financial statements.
Business combinations and goodwill
Business combinations are accounted for under IFRS 3 Business Combinations using the purchase method. Any excess of the consideration
of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised
in the Balance Sheet as goodwill and is not amortised. To the extent that the net fair value of the acquired entity’s identifiable assets, liabilities and
contingent liabilities is greater than the cost of the investment, a gain is recognised immediately in the Income Statement.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset
or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments is measured at fair value with the changes in fair value
recognised in the statement of profit or loss in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9
is measured at fair value at each reporting date with changes in fair value recognised in profit or loss.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment,
at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. Any impairment of goodwill
made cannot be reversed if circumstances subsequently change.
For the purpose of impairment testing, goodwill is allocated to the related CGUs (or group of CGUs) monitored by management. Where the
recoverable amount of the CGU is less than its carrying amount, including goodwill, an impairment loss is recognised in the Income Statement.
The carrying amount of goodwill allocated to a CGU is taken into account when determining the gain or loss on disposal of the CGU, or of an
operation within it.
Property, plant and equipment
Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and any impairment in value. Depreciation is
calculated on a straight-line basis to write down the cost to the estimated residual value over the expected useful life of the asset as follows:
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FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Freehold buildings – Hotel accommodation and offices
Freehold buildings – Licensed retail property and unlicensed property
Leasehold improvements
Roofs
Up to 50 years
50 to 100 years
The term of the lease
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. An item
of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e., at the date the recipient obtains control) or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the Income Statement when the asset is derecognised.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attached to them and that
the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises
as expenses the related costs for which the grants are intended to compensate. When the grant relates to an asset, it is recognised as income in equal
amounts over the expected useful life of the related asset.
Coronavirus Job Retention Scheme (“CJRS”)
Under this scheme, HMRC will reimburse up to 80% of the wages of certain employees who have been asked to stop working, but who are being
kept on the payroll (“furloughed”). The scheme is designed to compensate for staff costs, so amounts received are recognised in the Income
Statement over the same period as the costs to which they relate. In the Income Statement payroll costs are shown net of grant income.
Eat Out to Help Out
From 3 to 31 August 2020, HMRC offered a 50% discount of food and non-alcoholic drinks, capped to £10 per person, when dining out between
Monday and Wednesday. Revenue includes amounts reimbursed from HMRC in respect of the scheme.
Business rates
Businesses in the retail, hospitality and leisure sectors in England do not have to pay business rates for the 2020 to 2021 tax year. No business rate
charge has therefore been recognised in the Income Statement for the period ended 27 March 2021. Income relating to the business rate grants has
been recognised in operating expenses in the Income Statement.
Covid Corporate Financing Facility (“CCFF”)
Commercial Paper issued to the Bank of England at a favourable yield is deemed to constitute a government grant. The debt has been recognised
within current borrowings on the Balance Sheet at fair value, with the grant element, reflecting the favourable yield, recognised as deferred income
within trade and other payables. On amortisation, the grant element has been recognised within finance costs, consistent with where the cost is
recognised, as the Group’s policy is to present the income as a deduction from the related expense.
Hive-up transaction
When a subsidiary transfers its business to its parent immediately after acquisition (hive-up transaction) the assets are transferred at market value
and the investment is reduced to reflect the net effect of a return of capital in the form of the underlying net assets with any difference taken to the
merger reserve.
Investment property
The Group owns properties that are not used for the sale of goods or services but are held for capital appreciation or rental purposes.
These properties are classified as investment properties and their carrying values are based on cost less impairment. Depreciation is calculated on
a straight-line basis to write down the cost to the estimated residual value over the expected useful life of the asset, which for investment properties
is between 50 to 100 years.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination
is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either
finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed
at least at the end of each reporting period.
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Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the CGU level.
The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change
in useful life from indefinite to finite is made on a prospective basis.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the statement of profit or loss.
Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group
can demonstrate:
– The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
– Its intention to complete and its ability and intention to use or sell the asset
– How the asset will generate future economic benefits
– The availability of resources to complete the asset
– The ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and
accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use and will be
amortised over the period of expected future benefit. Amortisation is recorded in operating costs. During the period of development, the asset
is tested for impairment annually.
Impairment
Carrying values are reviewed for impairment if events indicate that the carrying value of the asset may not be recoverable. If such an indicator
exists and where the carrying values exceed the estimated recoverable amount, the assets or CGUs are written down to their recoverable amounts.
An asset’s recoverable amount is the greater of the fair value less costs to sell, and the value in use. In assessing value in use, the estimated future
cash flows are discounted to present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and
risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions
can be identified, an appropriate valuation model is used. For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the smallest CGUs to which the asset belongs.
The Group bases its impairment calculation on most recent management approved budgets and forecast calculations, which are prepared separately
for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of two
years. A long-term growth rate is calculated and applied to project future cash flows after the second year.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Impairment losses, and any reversal of such losses, are recognised in the Income Statement.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets.
The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
a) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-
use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before
the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
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FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 b) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value guarantees. Variable lease payments that do not depend on an index or a rate are recognised
as expenses in the period in which the event or condition that triggers the payment occurs. The lease payment also includes the exercise price of
a purchase option reasonably certain to be exercised by the Group and payment of penalties for terminating a lease, if the lease term reflects the
Group exercising the option to terminate. Extensions to leases are recognised when it is reasonably certain the option is going to be exercised.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate
implicit in the lease is not readily determinable. The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term
or a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments).
The Group’s lease liabilities are included in Cash, Borrowings and Net Debt (see note 24).
c) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e., those leases that have a lease term
of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition
exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating
leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the Income Statement
due to its operating nature.
Assets held for sale and discontinued operations
Assets are classified as held for sale when the carrying amount will be recovered principally through a sale transaction rather than continuing use.
The criteria for held for sale classification are regarded as met only when the sale is highly probable and the asset or disposal group is available for
immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale
will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to
be completed within one year from the date of the classification.
Assets held for sale are valued at the lower of the carrying amount and fair value less costs to sell. No depreciation is charged whilst assets are
classified as held for sale.
In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, results for the discontinued operations are presented
separately in the Group’s Income Statement (for which the comparatives and related notes have been restated). Additional disclosures are provided
in note 21. All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the “first in first out” method. Net realisable value is
the estimated selling price in the ordinary course of business less estimated costs of completion and the costs to be incurred in marketing, selling
and distribution.
Financial instruments
Initial recognition and derecognition
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Financial assets
Recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive
income (“OCI”), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not
contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset
at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain
a significant financing component are measured at the transaction price in accordance with IFRS 15.
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There are three measurement categories into which the Group classifies its debt instruments:
– Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and
interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss. The Group’s cash and cash
equivalents, trade and other receivables fall into this category.
– Fair value through OCI (“FVOCI”): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken
through OCI and will be recycled upon derecognition of the asset.
– Fair value through profit or loss (“FVPL”): Assets that do not meet the criteria for amortised cost or Fair value through OCI are measured at
FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other
gains/(losses) in the period in which it arises.
Impairment
IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the expected credit loss (“ECL”)
model. Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader
range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and
supportable forecasts that affect the future cash flows of the instrument.
When assessing impairment for trade receivables, the Group has applied the simplified approach to expected credit losses as per IFRS 9 Financial
Instruments. The model focuses on an appraisal of the risk that a receivable will default rather than whether a loss has been incurred. This involves an
unbiased assessment of a range of possible outcomes and their probabilities of occurrence, and is supported by past experience of collecting payments
as well as changes in economic conditions that correlate with default on receivables. Expected credit losses are initially determined based on the
Group’s historical credit loss experience, any forward-looking factors specific to a particular trade receivable and the current economic environment.
The timing of initial recognition for impairment losses is the same period that the asset is recognised. Movements in expected credit losses are
recognised in the Income Statement within operating costs. At the point a trade receivable is written off the ledger as uncollectable, the cost
is charged against the allowance account and any subsequent recoveries of amounts previously written off are credited to the Income Statement.
In the Parent Company, amounts due from subsidiary undertakings are recognised at their original amount less allowance for impairment based
on the ECL model. In determining the model the Company considers the net assets and the resources available to that subsidiary.
Financial liabilities
Recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables,
or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, derivative financial instruments
and lease liabilities.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
– Financial liabilities at fair value through profit or loss which are measured subsequently at fair value with gains or losses recognised in the
Income Statement
– Financial liabilities at amortised cost (loans and borrowings) which are measured using the effective interest method.
Bank loans, overdrafts and debentures
Interest bearing bank loans, overdrafts and debentures are initially recorded at the fair value of proceeds received, net of direct issue costs,
and thereafter at amortised cost. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted
for on an effective interest rate basis in the Income Statement. Finance charges are added to the carrying amount of the instrument to the extent
that they are not settled in the period in which they arise.
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FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is
a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle
the liabilities simultaneously.
Derivative financial instruments and hedge accounting
Recognition and measurement
The Group uses interest rate swaps to hedge its interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date
on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value
is positive and as financial liabilities when the fair value is negative.
For the purpose of hedge accounting, hedges are classified as:
– Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment
– Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised
asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment
– Hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge
accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will
assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and
how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
– There is “an economic relationship” between the hedged item and the hedging instrument
– The effect of credit risk does not “dominate the value changes” that result from that economic relationship
– The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below.
The Group has interest rate swaps which are classified as cash flow hedges. The effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges is recognised in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss, within other gains/(losses). When a hedging instrument expires, or is sold or terminated, or when
a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging that were reported
in equity are immediately reclassified to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedging accounting
is discontinued and the related gain or loss is held in the equity reserve until the forecast transaction occurs.
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 29, the Group considers its
capital to comprise its ordinary share capital, share premium, capital redemption reserve, hedging reserve and accumulated retained earnings plus
its preference shares which are classified as a financial liability in the Balance Sheet. There have been no changes to what the Group considers to
be capital since the prior year.
Preference shares
The Group’s preference shares are reported under non-current liabilities. The corresponding dividends on preference shares are charged as interest
in the Income Statement. Preference share dividends are at fixed rates.
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Revenue
Revenue is recognised under IFRS 15 upon application of the following steps:
– Identify the contract with a customer
– Identify the performance obligations in the contract
– Determine the transaction price
– Allocate the transaction price to each performance obligation
– Recognise revenue when a performance obligation is satisfied by transferring a promised good or service to a customer.
Managed Pubs and Hotels revenue primarily consists of food, drink and accommodation sales. Food and drink revenue is recognised when control
of the goods/services has transferred, being at the point the customer purchases the food or drink. The Group also takes bookings for events and
accommodation which require a deposit to secure the booking. A contract liability for the deposit is recognised at the time of the sale. The contract
liability is released and revenue is recognised on a straight-line basis over the duration of the room occupation or event. A contract liability is
recognised until the event is complete or the guest has occupied the room.
The Group also earns revenue through selling drink to the Tenanted Inns division which is supplied to Fuller’s by Asahi under the Long-Term Service
Agreement (“LTSA”). Revenue is recognised as though the Group is the principal as it has primary responsibility over the product and also bears the
inventory risk.
Following the sale of the Fuller’s Beer Business to Asahi Europe Ltd, the Group entered into a TSA to provide certain services to facilitate the
successful separation of the two companies. The revenue is recognised over the period the services are provided.
Revenue is recognised under IFRS 16 where the Group receives rental income from Tenanted and unlicensed properties. This is recognised on a straight-
line basis over the lease term. Some rental income includes turnover rent which is based on the percentage of the income generated by that pub.
This is recognised when the revenue is earned. Revenue is recognised for machine income when net takings are earned.
Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of an asset that takes a substantial period of time to get ready for use are
capitalised as part of the cost of the asset being created. This is applied to development projects where the development is expected to last in excess
of six months at the commencement of the project. All other borrowing costs are expensed in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Separately disclosed items
The Group presents as separately disclosed items on the face of the Income Statement those material items of income and expense which, because
of the nature or expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the
elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial performance.
Separately disclosed items are a key element used to demonstrate the underlying performance of the Group and reported as an alternative
performance measure within the management commentary for the reporting period.
Share-based payments
The Group has an employee Share Incentive Plan that awards shares to employees based on the reported profits of the Group for the year, and
a Long-Term Incentive Plan that awards shares to Directors and Senior Executives subject to specific performance criteria. The Group also issues equity-
settled share-based payments to certain employees under approved and unapproved share option schemes and a Savings Related Share Option Scheme.
The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they
are granted and is recognised as an expense over the vesting period, which ends on the date on which the relevant employees become fully entitled
to the award. Fair value is determined using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting
conditions. The Group has no equity-settled transactions that are linked to the price of the shares of the Company (market conditions).
No expense is recognised for awards that do not ultimately vest. At each Balance Sheet date before vesting, the cumulative expense is calculated,
representing the extent to which the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market
conditions and of the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous Balance Sheet
date is recognised in the Income Statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on
the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the
new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair
value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.
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FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Where an equity-settled award is cancelled (including when a non-vesting condition within the control of the entity or employee is not met),
it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the Income Statement for the award is expensed
immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any
excess over fair value being treated as an expense in the Income Statement.
Own shares
Shares to be awarded under employee incentive plans and those that have been awarded but have yet to vest unconditionally are held at cost by
an employee share ownership trust (“ESOT”) and shown as a deduction from equity in the Balance Sheet. ESOT is an independently managed trust
and not controlled by the Group.
In addition to the purchase of shares by the various ESOTs for specific awards, the Group also from time to time acquires own shares to be held
as treasury shares. These shares are occasionally but not exclusively used to satisfy awards under various share option schemes. Treasury shares are
held at cost and shown as a deduction from total equity in the Balance Sheet.
Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original
cost being taken to reserves. No gain or loss is recognised in the profit or loss on the purchase, sale, issue or cancellation of treasury shares.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The current tax payable is based on taxable profit for the year using UK tax rates enacted or substantively enacted at the Balance Sheet date and
any adjustment to tax payable in respect of previous years. Taxable profit differs from net profit as reported in the Income Statement because it
excludes items of income or expense that are taxable or deductible in other years or are never taxable or deductible.
Deferred tax
Deferred tax is recognised on temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences,
carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which they can be utilised.
Such deferred tax assets and liabilities are not recognised where the asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss. The carrying amount of deferred tax assets is reviewed at each Balance Sheet date.
Deferred tax is not recognised in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred
tax balance relates to the same taxation entities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the periods when the asset is realised or the liability
is settled, based on tax rates and laws enacted or substantively enacted at the Balance Sheet date.
Current and deferred tax for the year
Current and deferred tax are recognised in the Income Statement except when they relate to items that are recognised in the Statement of
Comprehensive Income or in equity, in which case the current and deferred tax are also recognised in the Statement of Comprehensive Income
or directly in equity respectively.
Pensions and other post-employment benefits
Defined contribution schemes
Payments to defined contribution retirement benefit schemes are charged to the Income Statement as they fall due.
Defined benefit schemes
The Group operated a defined benefit pension plan for eligible employees where contributions were made into a separate fund administered by
Trustees. The Scheme closed to future accrual in January 2015.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method calculated by qualified actuaries.
This attributes entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine
the present value of defined benefit obligation) and is based on actuarial advice. Past service costs are recognised in the Income Statement on
a straight-line basis over the vesting period or immediately if the benefits have vested.
105
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
1. Authorisation of Financial Statements and Accounting Policies continued
When a settlement (eliminating all obligations for benefits already accrued) or a curtailment (reducing future obligations as a result of a material reduction
in the scheme membership or a reduction in future entitlement) occurs, the obligation and related plan assets are remeasured using current actuarial
assumptions and the resultant gain or loss is recognised in the Income Statement during the period in which the settlement or curtailment occurs.
The Group determines the net interest charge/(credit) on the net defined benefit liability/(asset) for the period by applying the discount rate used
to measure the defined benefit obligation at the beginning of the period to the net pension liability/(asset) at the beginning of the period. The net
interest charge/(credit) is recognised immediately as a separately disclosed finance cost/(income) in the Income Statement. Actuarial gains and
losses are recognised in full in the Statement of Comprehensive Income in the period in which they occur.
The defined benefit pension asset or liability in the Balance Sheet comprises the total of the present value of the defined benefit obligation
(using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly.
Fair value is based on market price information and in the case of quoted securities is the published bid price. The value of a net pension benefit asset
is restricted to the sum of the present value of any amount the Group expects to recover by way of refunds from the plan or reductions in the
future contributions.
Foreign currencies
Transactions denominated in foreign currencies are recorded at the rates of exchange ruling at the dates of the transactions. Monetary assets and
liabilities are translated at the year end exchange rates and the resulting exchange differences are taken to the Income Statement.
Dividends
Dividends recommended by the Board but unpaid at the year end are not recognised in the financial statements until they are paid (in the case
of the interim dividend) or approved by shareholders at the Annual General Meeting (in the case of the final dividend).
The Company’s investments in subsidiaries
In its separate financial statements, the Parent Company recognises its investment in its subsidiaries on the basis of cost less provision for impairment.
New standards and interpretations issued but not yet applied
The 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:
– Amendments to IAS 1: Classification of liabilities as current and non-current (effective 1 January 2023)
– Reference to the Conceptual Framework –Amendments to IFRS 3 (effective 1 January 2022)
– Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 (effective 1 January 2022)
– IFRS 9 Financial Instruments – Fees in the “10 per cent” test for derecognition of financial liabilities (effective 1 January 2022)
Other new standards and interpretations in issue but not yet effective are not applicable to the Company and therefore are not expected to have
material impact on the Group’s financial position and results.
2. Segmental Analysis
Operating Segments
For management purposes, the Group’s operating segments are:
– Managed Pubs and Hotels, which comprises managed pubs, managed hotels, Bel & The Dragon and Cotswold Inns & Hotels.
– Tenanted Inns, which comprises pubs operated by third parties under tenancy or lease agreements.
The most important measure used to evaluate the performance of the business is adjusted profit, which is the profit before tax, adjusted for separately
disclosed items. The operating segments are organised and managed separately according to the nature of the products and services provided, with
each segment representing a strategic operating unit. The Managed Pubs and Hotels operating segments have been aggregated to one reportable
segment on the basis they have similar economic characteristics. Economic indicators assessed in determining that the aggregated operating
segments share similar characteristics include expected future financial performance, operating and competitive risks, and return on capital. As such
the operating segments meet the aggregation criteria in paragraph 12 IFRS 8 Operating Segments (amended). More details of these segments are
given in the Strategic Report on pages 4 to 38 of this report.
As segment assets and liabilities are not regularly provided to the Chief Operating Decision Maker (“CODM”), the Group has elected, as provided
under IFRS 8 Operating Segments (amended), not to disclose a measure of segment assets and liabilities.
106
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 52 weeks ended 27 March 2021
Revenue
Sale of goods and services
Accommodation income
Total revenue from contracts with customers
Rental income
Revenue
Other income
Segment result
Operating separately disclosed items
Operating loss
Profit on disposal of properties
Net finance costs
Loss before income tax
Other segment information
Additions to property, plant & equipment
Depreciation
Impairment of property, right-of-use assets, assets held for sale and goodwill
52 weeks ended 28 March 2020
Revenue
Sale of goods and services
Accommodation income
Total revenue from contracts with customers
Rental income
Revenue
Other income
Segment result
Operating separately disclosed items
Operating profit
Profit on disposal of properties
Net finance costs
Profit before income tax
Other segment information
Additions to property, plant & equipment
Business combinations
Depreciation
Impairment of property, right-of-use assets and goodwill
Managed
Pubs and
Hotels
£m
Tenanted
Inns
£m
Unallocated1
£m
Total
continuing
operations
£m
56.6
5.9
62.5
1.5
64.0
–
(26.1)
6.9
–
6.9
2.3
9.2
–
1.2
–
–
–
–
–
0.2
(15.4)
12.6
24.7
11.3
Managed
Pubs and
Hotels
£m
261.5
23.3
284.8
1.5
286.3
–
30.6
0.7
1.8
1.6
0.5
0.7
–
Tenanted
Inns
£m
Unallocated1
£m
Total
continuing
operations
£m
21.7
–
21.7
8.0
29.7
–
11.8
–
–
–
–
–
3.7
(15.4)
63.5
5.9
69.4
3.8
73.2
0.2
(40.3)
(14.8)
(55.1)
5.8
(8.5)
(57.8)
13.8
27.2
12.9
283.2
23.3
306.5
9.5
316.0
3.7
27.0
(20.1)
6.9
9.6
(8.1)
8.4
50.8
32.8
26.9
15.1
23.6
32.8
24.8
14.4
3.6
–
2.0
0.7
23.6
–
0.1
–
1 Unallocated expenses represent primarily the salaries and costs of central management. Unallocated revenue represents Transitional Services Agreement (“TSA”) income
while unallocated capital expenditure relates to the purchase of a new head office.
107
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
3. Revenue
Geographical Information
All of the Group’s business is within the UK and therefore the Group only has one distinct geographical market.
Revenue disclosed in the Income Statement is analysed as follows:
Sale of goods and services1
Accommodation income
Total revenue from contracts with customers
Rental income
Revenue
Transitional Services Agreement revenue2
Other income
Revenue and other income
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
63.5
5.9
69.4
3.8
73.2
0.2
0.2
73.4
283.2
23.3
306.5
9.5
316.0
3.7
3.7
319.7
1 Revenue includes £2.0 million received from the Government under the Eat Out to Help Out Scheme.
2 Following the sale of the Fuller’s Beer Business to Asahi Europe Ltd, the Group entered into a TSA to provide certain services to facilitate the successful separation of the
two companies. This included finance, IT and payroll services. The TSA was completed during the financial year on 27 April 2020.
4. Operating Costs
Production costs and cost of goods used in retailing
Staff costs
Repairs and maintenance
Depreciation of property, plant and equipment
Depreciation of right-of-use asset
Rental expense relating to short-term and low-value leases
Variable lease payments1
Property costs
Utilities
Separately disclosed items (note 5)
IT, retail and communication costs
Professional fees
Pub operational costs
Training
Grant income2
Other operating costs
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
19.1
40.8
8.6
18.6
8.6
0.2
0.9
3.5
4.8
14.8
3.7
2.5
3.8
0.2
(4.7)
3.1
128.5
80.2
111.0
13.6
16.9
10.0
1.1
1.8
16.2
8.0
20.1
4.4
3.0
15.8
2.0
–
8.7
312.8
1 Variable lease payments are dependent on turnover levels.
2 Grant income is amounts received from the Government to support businesses throughout the pandemic that were eligible depending on their rateable value.
Details of income and direct expenses relating to rental income from investment properties are shown in note 12.
108
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 a) Auditors’ Remuneration
Fees payable to Company’s auditors:
– Statutory audit fees of Group financial statements
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
0.4
0.4
0.3
0.3
Other audit related services of £1,650 for covenant reporting and non-audit services of £1,500 for iXBRL tagging were also incurred in the
prior period.
b) Employee Benefit Expenses1
Wages and salaries2,3
Social security costs
Pension benefits
Other staff costs
Includes Executive Directors.
1
2 Includes share-based credit of £0.3 million (2020: expense £0.5 million).
3 Staff costs are stated net of £41.2 million claimed from the Government through the CJRS.
c) Average Number of Employees1
The average monthly number of persons employed by the Group (including part-time staff) was as follows:
Continuing operations
Pub, hotel and restaurant teams
Support office2
Includes Executive Directors.
1
2 Support office includes Finance, People, IT and other support staff.
d) Directors’ Emoluments
Full details are provided in the Directors’ Remuneration Report and tables on pages 56 to 78.
£m
31.6
5.8
1.7
1.7
40.8
£m
95.7
7.0
2.0
6.3
111.0
Number
Number
4,046
173
4,219
4,957
209
5,166
109
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
5. Separately Disclosed Items
The Group presents separately disclosed items on the face of the Income Statement for those material items of income and expense which, because
of the nature or expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the
elements of financial performance in the year.
Amounts included in operating (loss)/profit:
Acquisition costs
Reorganisation costs
Impairment of intangible assets, properties and right-of-use assets
IT maintenance, support and rectification costs
Total separately disclosed items included in operating (loss)/profit
Profit on disposal of properties
Separately disclosed finance costs:
Finance charge on net pension liabilities
Finance credit on the cancellation of interest rate swaps
Total separately disclosed finance costs
Total separately disclosed items before tax
Exceptional tax:
Profit on disposal of properties
Other items
Total separately disclosed tax
Total separately disclosed items
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
–
(1.9)
(12.9)
–
(14.8)
5.8
(0.1)
–
(0.1)
(9.1)
(0.2)
0.9
0.7
(8.4)
(1.4)
(2.1)
(15.1)
(1.5)
(20.1)
9.6
(0.6)
0.1
(0.5)
(11.0)
(1.9)
3.9
2.0
(9.0)
The reorganisation costs of £1.9 million during the 52 weeks ended 27 March 2021 (28 March 2020: £2.1 million) were largely incurred as a result of
a corporate reorganisation of the Group, specifically the hive up of the trade and assets of Bel & The Dragon and Cotswold Inns & Hotels, and redundancy
costs as a result of restructuring due to the coronavirus pandemic.
The total impairment charge of £12.9 million during the 52 weeks ended 27 March 2021 relates to the write down of 37 licensed properties to their
recoverable value (£9.0 million relating to property, plant and equipment and £1.6 million to right-of-assets) as well as the write down in value of
previously acquired goodwill recognised on acquisition of Jacomb Guinness Limited of £0.6 million, assets held for sale impairment of £0.2 million
and lease receivable impairment of £1.5 million (28 March 2020: £15.1 million).
The profit on disposal of properties of £5.8 million during the 52 weeks ended 27 March 2021 (28 March 2020: £9.6 million) relates to the disposal of seven
licensed and unlicensed properties (2020: three properties).
The cash impact of operating separately disclosed items before tax for the 52 weeks ended 27 March 2021 was £1.5 million cash outflow (28 March
2020: £5.0 million cash outflow).
110
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 6. Finance Costs
Finance Income
Interest income from financial assets
Finance Costs
Interest expense arising on:
Financial liabilities at amortised cost – loans and debentures1
Financial liabilities at amortised cost – preference shares
Financial liabilities at amortised cost – lease liabilities
Total interest expense for financial liabilities
Total finance costs before separately disclosed items
Finance charge on net pension liabilities (note 5)
Finance credit on cancellation of interest rate swaps (note 5)
Total finance costs after separately disclosed items
1 Interest expense on loans and debentures is shown net of £0.6 million of grant income recognised in relation to the CCFF.
7. Taxation
Tax on Profit on Ordinary Activities
Group
Tax (credited)/charged in the Income Statement
Current income tax:
Current tax on (loss)/profits for the year
Adjustments for current tax on prior periods
Total current income tax (credit)/expense
Deferred income tax:
Origination and reversal of temporary differences
Change in corporation tax rate
Adjustments for current tax on prior periods
Total deferred tax (benefit)/expense
Total tax (credited)/charged in the Income Statement
Analysed as:
Before separately disclosed items
Separately disclosed items
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
–
0.2
(5.3)
(0.1)
(3.0)
(8.4)
(8.4)
(0.1)
–
(8.5)
(5.3)
(0.1)
(2.4)
(7.8)
(7.6)
(0.6)
0.1
(8.1)
52 weeks
ended
27 March
2021
£m
Restated
52 weeks
ended
28 March
2020
£m
(1.0)
(0.5)
(1.5)
(8.1)
–
–
(8.1)
(9.6)
(8.9)
(0.7)
(9.6)
0.8
0.3
1.1
2.2
1.6
0.3
4.1
5.2
7.2
(2.0)
5.2
111
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
7. Taxation continued
Reconciliation of the Total Tax (Credit)/Charge
The tax credit in the Income Statement for the year is lower (2020: tax expense is higher) than the standard rate of corporation tax in the UK of 19%
(2020: 19%). The differences are reconciled below:
(Loss)/profit from continuing operations before income tax (credit)/expense
Accounting (loss)/profit multiplied by the UK standard rate of corporation tax of 19% (2020: 19%)
Items not deductible for tax purposes
Current and deferred tax (over)/under provided in previous years
Total tax (credited)/charged in the Income Statement
Deferred tax relating to items (credited)/charged to the Income Statement
Deferred tax depreciation
Unrealised capital (losses)/gains (on PP&E)
Retirement benefit obligations
Tax losses
Other
Corporate interest restriction
Deferred tax in the Income Statement
Tax relating to items (credited)/charged to the Statement of Comprehensive Income
Deferred tax:
Valuation gains on financial liabilities
Net actuarial (gains)/losses on pension scheme
Total tax (credited)/charged in the Statement of Comprehensive Income
Tax relating to items charged directly to equity
Deferred tax:
Share-based payments
Total tax charged to equity
52 weeks
ended
27 March
2021
£m
(57.8)
(11.0)
1.9
(0.5)
(9.6)
(0.6)
(0.4)
1.6
(7.4)
(0.1)
(1.2)
(8.1)
0.1
(0.2)
(0.1)
–
–
Restated
52 weeks
ended
28 March
2020
£m
8.4
1.6
1.6
2.0
5.2
–
3.2
0.6
–
0.3
–
4.1
0.1
1.1
1.2
0.1
0.1
112
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Deferred Tax Provision
The deferred tax included in the Balance Sheet is as follows:
Deferred tax
Group
Balances at 30 March 2019
(Charge)/credit to Income Statement
(Charge) to other comprehensive income
(Charge) taken directly to equity
Acquisitions
Balances at 28 March 2020
(Charge)/credit to Income Statement
Credit/(charge) to other comprehensive
income
Charge taken directly to equity
Disposals
Balances at 27 March 2021
Retirement
benefit
obligations
£m
6.1
(4.1)
(1.1)
–
–
0.9
(0.4)
0.2
–
–
0.7
Tax losses
carried
forward
£m
0.6
–
–
–
–
0.6
7.4
–
–
(0.2)
7.8
1
Includes £1.2 million of corporate interest restriction.
Deferred tax assets
Deferred tax liabilities
Company
Balances at 31 March 2019
(Charge)/credit to Income Statement
(Charge) to other comprehensive income
(Charge) taken directly to equity
Acquisitions
Balances at 28 March 2020
(Charge)/credit to Income Statement
(Charge) to other comprehensive income
(Charge) taken directly to equity
Acquisitions
Balances at 27 March 2021
Retirement
benefit
obligations
£m
6.1
(4.1)
(1.1)
–
–
0.9
(0.4)
0.2
–
–
0.7
Tax losses
carried
forward
£m
0.3
–
–
–
–
0.3
7.4
–
–
–
7.7
1
Includes £1.2 million of corporate interest restriction.
Deferred tax assets
Deferred tax liabilities
Deferred tax asset/(liability)
Employee
share
schemes
£m
Financial
(liabilities)/
assets
£m
Accelerated
tax
depreciation
(restated)
£m
Unrealised
capital gains
(on PP&E)
(restated)
£m
Pension
spreading
£m
Other1
(restated)
£m
Total
(restated)
£m
0.3
(0.1)
–
(0.1)
–
0.1
–
–
–
–
0.1
0.3
–
(0.1)
–
–
0.2
–
(0.1)
–
–
0.1
4.0
–
–
–
–
4.0
0.6
–
–
(0.5)
4.1
(16.6)
(3.2)
–
–
(3.3)
(23.1)
0.4
–
–
0.4
(22.3)
–
3.5
–
–
–
3.5
(1.2)
–
–
–
2.3
0.9
(0.2)
–
–
–
0.7
1.3
–
–
(0.1)
1.9
(4.4)
(4.1)
(1.2)
(0.1)
(3.3)
(13.1)
8.1
0.1
–
(0.4)
(5.3)
2021
£m
17.0
(22.3)
(5.3)
(restated)
2020
£m
10.0
(23.1)
(13.1)
Deferred tax asset/(liability)
Employee
share
schemes
£m
Financial
(liabilities)/
assets
£m
Accelerated
tax
depreciation
(restated)
£m
Unrealised
capital gains
(on PP&E)
(restated)
£m
Pension
spreading
£m
Other1
(restated)
£m
Total
(restated)
£m
0.3
(0.1)
–
(0.1)
–
0.1
–
–
–
–
0.1
0.3
–
(0.1)
–
–
0.2
–
(0.1)
–
–
0.1
3.9
–
–
–
–
3.9
0.6
–
–
(0.4)
4.1
(14.5)
(3.0)
–
–
(2.8)
(20.3)
0.4
–
–
(2.4)
(22.3)
–
3.5
–
–
–
3.5
(1.2)
–
–
–
2.3
0.5
0.1
–
–
–
0.6
1.3
–
–
–
1.9
2021
£m
16.9
(22.3)
(5.4)
(3.1)
(3.6)
(1.2)
(0.1)
(2.8)
(10.8)
8.1
0.1
–
(2.8)
(5.4)
2020
£m
9.5
(20.3)
(10.8)
113
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
8. (Loss)/Earnings Per Share
Group
(Loss)/profit attributable to equity shareholders
Separately disclosed items net of tax1
Adjusted (loss)/earnings attributable to equity shareholders
1 This includes separately disclosed items as per Note 5 and Note 21
Weighted average share capital
Dilutive outstanding options and share awards
Diluted weighted average share capital
40p ‘A’ and ‘C’ ordinary share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Adjusted (loss)/earnings per share
Diluted adjusted (loss)/earnings per share
4p ‘B’ ordinary share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Adjusted (loss)/earnings per share
Diluted adjusted (loss)/earnings per share
Continuing operations
(Loss)/profit attributable to equity shareholders
Separately disclosed items net of tax
Adjusted (loss)/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 (loss)/earnings per share
Diluted (loss)/earnings per share
Adjusted (loss)/earnings per share
Diluted adjusted (loss)/earnings per share
4p ‘B’ ordinary share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Adjusted (loss)/earnings per share
Diluted adjusted (loss)/earnings per share
114
52 weeks
ended
27 March
2021
£m
(49.6)
9.3
(40.3)
Restated
52 weeks
ended
28 March
2020
£m
160.9
(149.6)
11.3
Number
Number
55,207,000 55,124,000
139,000
128,000
55,346,000 55,252,000
Pence
(89.84)
(89.84)
(73.00)
(73.00)
Pence
(8.98)
(8.98)
(7.30)
(7.30)
52 weeks
ended
27 March
2021
£m
(48.2)
8.4
(39.8)
Pence
291.89
291.21
20.50
20.45
Pence
29.19
29.12
2.05
2.05
Restated
52 weeks
ended
28 March
2020
£m
3.2
9.0
12.2
Number
Number
55,207,000 55,124,000
139,000
128,000
55,346,000 55,252,000
Pence
(87.31)
(87.31)
(72.09)
(72.09)
Pence
(8.73)
(8.73)
(7.21)
(7.21)
Pence
5.81
5.79
22.13
22.08
Pence
0.58
0.58
2.21
2.21
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 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 1,777,248 (2020: 1,860,777).
Diluted earnings per share amounts are calculated using the same earnings figure as for basic earnings per share, divided by the weighted average
number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion
of all the dilutive potential ordinary shares into ordinary shares.
Adjusted earnings per share are calculated on profit before tax excluding separately disclosed items and on the same weighted average ordinary
share capital as for the basic and diluted earnings per share. Adjusted earnings per share measures have been included as the Directors consider
that these measures better reflect the underlying earnings of the Group.
9. Dividends
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2020: 0p (2019: 4.35p)
Second interim dividend for 2020: 0p (2019: 8.00p)
First interim dividend for 2021: 0p (2020: 7.80p)
‘D’ share single dividend for 2021: 0p (2020: 125p)
Equity dividends paid
Dividends on cumulative preference shares (note 6)
52 weeks ended
27 March
2021
£m
52 weeks ended
28 March
2020
£m
–
–
–
–
–
0.1
2.4
4.4
4.3
69.4
80.5
0.1
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.
As indicated in the circular published on 28 March 2019 relating to the disposal of the Fuller’s Beer Business, the Board made an additional cash
return of £1.25 per ‘A’ and ‘C’ ordinary share and 12.5p per ‘B’ ordinary share through a ‘D’ share scheme. Each ordinary shareholder as at the record
date was issued with ten ‘D’ shares for every existing ‘A’ and ‘C’ ordinary share and one ‘D’ share for every one ‘B’ ordinary share held at the time.
Numis (acting as principal, and not as agent, nominee or Trustee for the Company) made an offer to purchase the ‘D’ shares for an amount of 12.5p
per ‘D’ share (free of all expenses and commissions). The Company accepted the offer on behalf of shareholders and paid a single dividend to Numis
as holder of all the ‘D’ shares of £69.4 million representing the sum of 12.5p per ‘D’ share plus the stamp duty payable by Numis in connection with
the purchase of all the ‘D’ shares in issue.
Following the approval of all the resolutions presented to the Company’s Extraordinary General Meeting on 1 October 2019, 552,030,154 ‘D’
shares of 0.1p each were allotted and issued to shareholders on 2 October 2019 on the basis of ten ‘D’ shares for every existing ‘A’ and ‘C’ ordinary
share of 40p each and one ‘D’ share for every existing ‘B’ ordinary share of 4p each held at the record date. Following the purchase by Numis of all
of the ‘D’ shares, and payment by the Company of a single dividend to Numis of £69.4 million as holder of all of the ‘D’ shares on 7 October 2019,
the ‘D’ shares were reclassified as deferred shares of 0.1p and were immediately repurchased and cancelled by the Company on 8 October 2019.
No final dividend for 2021 has been proposed for approval at the Annual General Meeting as a result of the business being closed for the majority
of the 52 week period ended 27 March 2021 due to the continued impact of the coronavirus pandemic.
115
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
10. Intangible Assets
Cost
At 30 March 2019
Acquisitions (note 18)
Transfer to right-of-use assets (note 17)
At 28 March 2020
Additions
Hive up of Bel & The Dragon
At 27 March 2021
Amortisation and impairment
At 30 March 2019
Impairment during the year
Transfer to right-of-use assets (note 17)
At 28 March 2020
Provided during the year
Impairment
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
Net book value at 30 March 2019
Group and Company
Lease
assignment
premiums
£m
Development
costs
£m
Goodwill
£m
29.2
2.6
–
31.8
–
–
31.8
0.6
3.7
–
4.3
0.8
5.1
26.7
27.5
28.6
13.1
–
(13.1)
–
–
–
–
4.8
–
(4.8)
–
–
–
–
–
8.3
–
–
–
–
0.6
–
0.6
–
–
–
–
–
–
0.6
–
–
Group
Total
£m
42.3
2.6
(13.1)
31.8
0.6
–
32.4
5.4
3.7
(4.8)
4.3
0.8
5.1
27.3
27.5
36.9
Company
Total
£m
13.1
2.6
(13.1)
2.6
0.6
1.0
4.2
4.8
–
(4.8)
–
0.2
0.2
4.0
2.6
8.3
The Company balance comprises £3.4 million of goodwill and £0.6 million of development costs. Impairment of £0.8 million relates to impairment
of £0.6 million of goodwill on Jacomb Guiness Limited to its recoverable value and an adjustment to goodwill on acquisition of Cotswold Inns &
Hotels of £0.2 million.
Development costs
Development costs relate to the implementation of a new finance system and are made up of licence costs, consulting time and internal employee
costs. Amortisation of the asset will begin when development is complete and the asset is available for use.
Goodwill
Goodwill is allocated to CGUs as follows:
Gales estate
Jacomb Guinness estate
Bel & The Dragon
Cotswold Inns & Hotels
Managed
£m
9.1
0.6
1.0
2.4
13.1
2021
Tenanted
£m
13.6
–
–
–
13.6
2020
£m
22.7
1.2
1.0
2.6
27.5
Total
£m
22.7
0.6
1.0
2.4
26.7
116
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021
11. Property, Plant and Equipment
Group
Cost
At 30 March 2019
Additions
Acquisitions (note 18)
Disposals
Transfer to investment property (note 12)
Transfer to assets held for sale (note 22)
At 28 March 2020
Additions
Disposals
Disposals of discontinued operations
Transfer to assets held for sale (note 22)
At 27 March 2021
Depreciation and impairment
At 30 March 2019
Provided during the year
Disposals
Impairment loss
Transfer to assets held for sale (note 22)
At 28 March 2020
Provided during the year
Disposals
Disposals of discontinued operations
Impairment loss
Transfer to assets held for sale (note 22)
Reclassification of impairment to right-of-use assets (note 17)
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
Net book value at 30 March 2019
Land &
buildings
£m
Plant,
machinery &
vehicles
£m
Fixtures &
fittings
£m
Total
£m
534.0
36.0
42.2
(2.2)
(0.2)
(2.2)
6.2
0.3
–
–
–
–
156.6
696.8
15.4
2.1
(5.0)
–
(0.2)
51.7
44.3
(7.2)
(0.2)
(2.4)
607.6
6.5
168.9
783.0
0.6
(1.7)
(6.8)
(9.2)
590.5
39.7
3.8
(0.7)
8.5
(0.1)
51.2
4.6
(0.2)
(4.7)
9.0
(1.0)
(0.4)
58.5
532.0
556.4
494.3
–
–
(0.1)
(0.1)
6.3
1.3
0.5
–
–
–
1.8
–
–
–
–
(0.1)
–
1.7
4.6
4.7
4.9
13.2
(0.6)
(7.6)
(2.3)
13.8
(2.3)
(14.5)
(11.6)
171.6
768.4
103.1
144.1
13.6
(4.4)
0.1
(0.1)
112.3
14.0
(0.6)
(5.8)
–
(1.9)
–
17.9
(5.1)
8.6
(0.2)
165.3
18.6
(0.8)
(10.5)
9.0
(3.0)
(0.4)
118.0
178.2
53.6
56.6
53.5
590.2
617.7
552.7
117
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Land &
buildings
£m
Plant,
machinery &
vehicles
£m
Fixtures &
fittings
£m
Total
£m
505.5
4.9
147.9
658.3
74.4
3.7
(2.1)
(0.2)
(2.2)
–
–
–
–
–
579.1
4.9
–
–
(0.1)
4.8
16.5
–
(4.9)
–
(0.2)
159.3
14.8
(0.6)
(2.3)
90.9
3.7
(7.0)
(0.2)
(2.4)
743.3
33.7
(2.4)
(11.6)
171.2
763.0
2.6
96.3
131.5
–
–
–
–
12.6
(4.3)
0.1
(0.1)
15.8
(5.0)
7.4
(0.2)
2.6
104.6
149.5
–
–
–
(0.1)
–
2.5
2.3
2.3
2.3
13.8
(0.5)
–
(1.9)
–
18.4
(0.7)
9.0
(3.0)
(0.4)
116.0
172.8
55.2
54.7
51.6
590.2
593.8
526.8
Notes to the Financial Statements
Continued
11. Property, Plant and Equipment continued
Company
Cost
At 30 March 2019
Additions
Acquisitions
Disposals
Transfer to investment property (note 12)
Transfer to assets held for sale (note 22)
At 28 March 2020
Additions1
Disposals
Transfer to assets held for sale (note 22)
At 27 March 2021
Depreciation and impairment
At 30 March 2019
Provided during the year
Disposals
Impairment loss net of reversals
Transfer to assets held for sale (note 22)
At 28 March 2020
Provided during the year
Disposals
Impairment loss
Transfer to assets held for sale (note 22)
Reclassification of impairment to right-of-use assets (note 17)
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
Net book value at 30 March 2019
1 On 6 June 2020, the net assets of Bel & The Dragon of £19.9 million were hived up to the Company at fair value.
118
18.9
(1.8)
(9.2)
587.0
32.6
3.2
(0.7)
7.3
(0.1)
42.3
4.6
(0.2)
9.0
(1.0)
(0.4)
54.3
532.7
536.8
472.9
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021
12. Investment Properties
Cost at 31 March 2019
Transfer from property, plant and equipment
Cost at 28 March 2020
Transfer to asset held for sale
At 27 March 2021
Depreciation and impairment at 30 March 2019 and 28 March 2020
Provided during the year
Transfer to asset held for sale
At 27 March 2021
Net book value at 27 March 2021
Net book value at 28 March 2020
Net book value at 30 March 2019
Fair value at 27 March 2021
Fair value at 28 March 2020
Fair value at 30 March 2019
Group and
Company
Freehold and
leasehold
properties
£m
5.5
0.2
5.7
(2.4)
3.3
0.9
–
(0.7)
0.2
3.1
4.8
4.6
15.0
20.1
15.4
The fair value of investment properties has been estimated by the Directors, based on the rental income earned on the properties during the year
and average yields earned on comparable properties from publicly available information, which is a Level 3 fair value valuation technique.
An independent valuation of the properties has not been performed.
Impairment
The Group considers each trading outlet to be a CGU and each CGU is reviewed annually for indicators of impairment. In assessing whether an asset has
been impaired, the carrying amount of the CGU is compared to its recoverable amount. The recoverable amount is the higher of its fair value less costs
to sell and its value in use. During the 52 weeks ended 27 March 2021, the Group did not impair any investment properties (2020: £nil).
Management have determined that the highest and best use of the property is its current use.
Investment Property Income
The properties are let on both landlord and Tenant repairing leases. Amounts recognised in the profit for the financial year relating to rental income
from investment properties are as follows:
Group and Company
Rental income
Direct operating expenses
All direct operating expenses relate to properties that generate rental income.
2021
£m
0.7
(0.1)
2020
£m
0.5
(0.3)
119
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
13. Impairment
During the year, impairment losses of £12.9 million (2020: £18.9 million) were recognised within separately disclosed items:
Group
Impairment losses
Intangible assets
Property, plant and equipment
Right-of-use assets
Assets held for sale
Lease receivable
Total net impairment charge
Company
Impairment losses
Property, plant and equipment
Right-of-use assets
Assets held for sale
Lease receivable
Investments in subsidiaries1
Total net impairment charge
2021
£m
0.6
9.0
1.6
0.2
1.5
12.9
2021
£m
9.0
0.7
0.2
1.5
6.9
18.3
2020
£m
3.7
8.6
6.6
–
–
18.9
2020
£m
7.4
4.1
–
–
4.0
15.5
1
Investments in subsidiaries in FY21 was impaired on hive up of Bel & The Dragon and was recognised through the merger reserve.
Lease receivables have been assessed for impairment under IFRS 9. All other assets above were assessed for impairment under IAS 36.
Property, Plant and Equipment and Right-of-use Assets
The Group considers each trading outlet to be a CGU and each CGU is reviewed annually for indicators of impairment. In assessing whether an
asset has been impaired, the carrying amount of the CGU is compared to its recoverable amount. The recoverable amount is the higher of its fair
value less costs to sell (“FVLCS”) and its value in use. In the absence of any information about the fair value of a CGU, the recoverable amount
is deemed to be its value in use. For the purposes of estimating the value in use of CGUs, management have used a discounted cash flow approach.
The calculations use cash flow projections based on the following plans covering a five year period.
The 2021/22 forecast shows that trading will continue to be adversely impacted by the coronavirus pandemic, international sales are forecast to be down
by 75% and corporate sales down by 45% as people only slowly start to return to work. It also assumes that consumer confidence will take a while to return,
impacting sales with a reduction of 5% in H1 and 2.5% in H2.
The 2022/23 forecast shows some growth but this will remain affected by the lasting impact of the pandemic. International sales will be down by 15% and
corporate sales down by 20% as the expectation is that people will work from home more regularly. It is then assumed that normal trading will resume in
2023/24, so taking two years to fully recover from the pandemic.
Other key assumptions used by management in the value in use calculations were as follows:
– The discount rate is based on the Group’s weighted average cost of capital, which is used across all CGUs due to their similar characteristics.
The pre-tax discount rate is 6.9%
– A long-term growth rate of 2% was used for cash flows subsequent to the 2022/23 budget.
The calculation of value in use is most sensitive to the assumptions in respect of achievement of budgeted cash flows, growth rate and discount rate.
The calculation of value in use is also dependent on the following assumptions: sales volume; gross margin in managed premises; barrelage and rent
projections in Tenanted premises; and wage cost in managed premises. Gross margins are based on historical performance levels. The key assumptions
above have their assigned values based on management knowledge and historical information. Government support by way of VAT reduction and
continued business rates holiday have been factored into the model.
Where the value in use is higher than the carrying amount of the CGU, no further assessment is required. For CGUs where the value in use is lower than
the carrying value (and at risk of impairment), a valuation of the property is performed to determine FVLCS. The property valuations are performed by
the Group’s in-house property expert using a multiple of forecast EBITDA . In a number of cases, the value of the property derived purely from an income
120
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 approach understates the underlying property value. In these cases the expert has applied a spot value to the property rather than a value derived
from a multiple applied to the income. The Group has also obtained valuations for a subset of these CGUs from a third party property valuation expert.
The fair value valuation technique is Level 3 as it used an unobservable fair value input.
Impairments are recognised where the property valuation is also lower than the CGU’s carrying value for those determined to be at risk of
impairment. This is measured as the difference between the carrying value and the higher of FVLCS and its value in use. Where the property
valuation exceeds the carrying value, no impairment is required.
During the 52 weeks ended 27 March 2021, the Group recognised an impairment loss of £9.0 million (2020: £8.6 million) on property, plant and
equipment and £1.6 million (2020: £6.6 million) of impairment on right-of-use assets in respect of the write down of a number of licensed properties
where their asset values exceeded the higher of fair value less costs to sell or their value in use. The impairment losses were driven principally by changes
in the local competitive environment in which the pubs are situated as well as the significant impact coronavirus will continue to have on these pubs.
Sensitivity to Changes in Assumptions
The value in use calculations are sensitive to the assumptions used. The Directors consider a movement of 1.5% in the discount rate and 0.5% in the
growth rate to be reasonable with reference to current market yield curves and the current economic conditions. The impact is set out as follows:
Impact on impairment of assets at risk – increase/(decrease)
Increase discount rate by 1.5%
Decrease discount rate by 1.5%
Increase growth rate by 0.5%
Decrease growth rate by 0.5%
2021
£m
22.3
(13.6)
(5.9)
7.0
2020
£m
13.6
(24.5)
(6.3)
5.0
The increase in discount rate and decrease in growth rate would lead to the CGUs represented by the value above being subject to further review
by the Group. The value in use calculation is also sensitive to variations in the budgeted cash flows, which represents the rate of recovery from
coronavirus. Applying the ‘downside case’ cashflow forecast, as discussed in the going concern disclosure within Note 1, to the value in use
calculation results in an increase to impairment by £2.9 million. The CGUs represented by the “impact on impairment of assets at risk” would have
their FVLCS determined in order to conclude on whether an impairment is required. A general decrease in property values across the portfolio
would have a similar effect to that set out above i.e. any reduction in property values would lead to assets being at risk of impairment. In the current
year, a decrease of 5% in the FVLCS would have led to an additional impairment of £1.2 million for the CGUs where recoverable amount has been
assessed on FVLCS.
Goodwill
Goodwill acquired through business combinations has been allocated for impairment testing on an estate and divisional CGU level. This represents
the lowest level within the Group at which goodwill is monitored for internal management purposes. An analysis of goodwill by operating segment
is included within note 10. Recoverable amount is based on a calculation of value in use based upon the same cashflows as discussed under property,
plant and equipment. Cash flows beyond the budget period are extrapolated in perpetuity on the assumption that the growth rate does not exceed
the average long-term growth rate for the relevant markets. The same assumptions to calculate the value in use are used for goodwill as those for
property, plant and equipment.
During the 52 weeks ended 27 March 2021, the Group recognised an impairment loss of £0.6 million in relation to Jacomb Guinness Limited as the
recoverable amount being the value in use for those pubs of £0.6 million could not support the carrying value.
Sensitivity to Changes in Assumptions
Management have considered reasonable changes in key assumptions used in their calculations of value in use. An increase of 1% in discount rate
would increase the impairment by £0.6 million. A decrease in growth rate by 0.5% would increase the impairment by £0.6 million.
Investment Property
The Group considers each trading outlet to be a CGU and each CGU is reviewed annually for indicators of impairment. During the 52 weeks ended
27 March 2021, the Group did not impair any investment properties (2020: £nil). Refer to note 12.
14. Other Financial Liabilities
Group and Company
Interest rate swaps
Total financial liabilities within non-current liabilities
Details of the interest rate swaps are provided in note 28c (i).
121
Group
2021
£m
(0.7)
(0.7)
Group
2020
£m
(1.1)
(1.1)
Company
2021
£m
Company
2020
£m
(0.7)
(0.7)
(1.1)
(1.1)
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021
Notes to the Financial Statements
Continued
15. Other Non-Current Assets
Group and Company
Loans to customers due after one year
16. Investments in Subsidiaries
Company
At 30 March 2019
Additions
Return of capital
Disposals
Impairment
At 28 March 2020
Return of capital
Disposals
At 27 March 2021
2021
£m
–
2020
£m
0.1
Cost
£m
122.5
30.4
(13.3)
(13.0)
–
126.6
(5.8)
–
120.8
Provision
£m
(0.2)
–
–
–
(4.0)
(4.2)
(6.9)
(0.4)
(11.5)
Net book
value
£m
122.3
30.4
(13.3)
(13.0)
(4.0)
122.4
(12.7)
(0.4)
109.3
Principal subsidiary undertakings
Holding
Proportion held
Nature of business
Griffin Catering Services Limited
£1 ordinary shares
100% (indirect)
Managed houses service company
George Gale & Company Limited
£1 ordinary shares
FST Trustees Limited
25p ‘A’ ordinary shares
£10 preference shares
£1 ordinary shares
Fuller Smith & Turner Estates Limited
£1 ordinary shares
Ringwoods Limited
Griffin Inns Limited
Jacomb Guinness Limited
45 Woodfield Limited
Grand Canal Trading Limited
B&D Country Inns I Limited
B&D Country Inns II Limited
B&D (Cookham) Limited
B&D (Farnham) Limited
B&D (Kingsclere) Limited
B&D (Odiham) Limited
B&D (Reading) Limited
B&D (Win) Limited
RSH 200 Limited
Cotswold Inns & Hotels Limited
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
£1 ordinary shares
100%
100%
100%
100%
100%
100%
100%
100%
Non-trading subsidiary
Non-trading subsidiary
Non-trading subsidiary
Non-trading subsidiary
Non-trading subsidiary
Non-trading subsidiary
100% (indirect)
Non-trading subsidiary
100% (indirect)
Non-trading subsidiary
100%
100%
Holding company
Holding company
100% (indirect)
Non-trading subsidiary
100% (indirect)
Non-trading subsidiary
100% (indirect)
Non-trading subsidiary
100% (indirect)
Non-trading subsidiary
100% (indirect)
Non-trading subsidiary
100% (indirect)
Non-trading subsidiary
100%
Holding company
100% (indirect)
Hotel and restaurant ownership
The above companies are registered and operate in England and Wales. The registered office of all subsidiary companies is the same as Fuller, Smith
& Turner P.L.C. at Pier House, 86-93 Strand-on-the-Green, London, England, W4 3NN.
122
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 17. Leases
This note provides information for leases where the Group is a lessee. For leases where the Group is a lessor, see note 31.
a) Amounts Recognised in the Balance Sheet
Group and Company
Right-of-use assets
Properties
Equipment
Vehicles
Lease liabilities
Current
Non-current
Group
2021
£m
81.3
0.2
0.4
81.9
6.7
83.2
89.9
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Group
Net carrying value as at 28 March 2020
Additions
Lease amendments – rent concessions
Lease amendments – other1
Disposal
Depreciation
Impairment – transferred from property, plant and equipment
Impairment
Net carrying value as at 27 March 2021
Company
Net carrying value as at 28 March 2020
Additions
Lease amendments – rent concessions
Lease amendments – other1
Disposals
Depreciation
Impairment – transferred from property, plant and equipment
Impairment
Net carrying value as at 27 March 2021
Property
£m
105.1
2.6
(10.0)
1.3
(8.1)
(7.6)
(0.4)
(1.6)
81.3
Property
£m
94.7
2.6
(9.0)
1.3
(0.4)
(7.3)
(0.4)
(0.7)
80.8
1 Lease amendments include lease terminations, modifications, reassessments and extensions to existing lease agreements.
Group
2020
£m
Company
2021
£m
Company
2020
£m
105.1
0.8
1.1
107.0
8.9
104.0
112.9
Vehicles
£m
1.1
–
–
(0.4)
–
(0.3)
–
–
0.4
Vehicles
£m
1.1
–
–
(0.4)
–
(0.3)
–
–
0.4
80.8
0.2
0.4
81.4
6.5
81.8
88.3
Equipment
£m
0.8
–
–
0.1
–
(0.7)
–
–
0.2
Equipment
£m
0.8
–
–
0.1
–
(0.7)
–
–
0.2
94.7
0.8
1.1
96.6
7.9
91.7
99.6
Total
£m
107.0
2.6
(10.0)
1.0
(8.1)
(8.6)
(0.4)
(1.6)
81.9
Total
£m
96.6
2.6
(9.0)
1.0
(0.4)
(8.3)
(0.4)
(0.7)
81.4
123
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
17. Leases continued
Set out below are the carrying amounts of lease liabilities (included under interest bearing loans and borrowings) and the movements during the period:
Net carrying value as at 28 March 2020
Additions
Disposal
Lease amendments – rent concessions
Lease amendments – other
Accretion of interest
Payments
Net carrying value as at 27 March 2021
A maturity analysis of gross lease liability payments is included within note 28.
b) Amounts Recognised in the Income Statement
Group
Depreciation charge of right-of-use assets
Properties
Equipment
Vehicles
Interest expense (included in finance cost)
Expense relating to short-term leases and low-value assets (included in operating costs)
Expense relating to variable lease payments not included in lease liabilities (included in operating costs)
Impairment of right-of-use assets
Income from sub-leasing right-of-use assets
Group
2021
£m
112.9
2.6
(10.5)
(10.0)
1.0
3.1
(9.2)
89.9
Company
2021
£m
99.6
2.6
–
(9.0)
1.0
3.0
(8.9)
88.3
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
7.6
0.7
0.3
8.6
3.0
0.2
0.9
1.6
–
5.7
9.8
0.6
0.2
10.6
2.7
0.8
2.0
6.6
(0.5)
11.6
The Group’s total cash outflows for leases in 2021 were £9.3 million (2020: £11.2 million).
Variable lease payments
Some property leases contain variable payment terms that are linked to sales generated from a pub. Variable payment terms are used for a variety
of reasons, including minimising the fixed costs base for newly established pubs. Variable lease payments that depend on sales are recognised in
profit or loss in the period in which the condition that triggers those payments occurs. Variable lease payments recognised in the Income Statement
in the year ended 27 March 2021 were £0.9 million (2020: £2.0 million).
124
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 18. Business Combinations
During the 52 weeks ended 27 March 2021, there were no business combinations.
During the 52 weeks ended 28 March 2020, the Company acquired 100% of the shares of Cotswold Inns & Hotels for total consideration
of £30.4 million, a business incorporated in the UK and consisting of seven premium hotels and two bars. The acquisition was completed on
31 October 2019. A further pub was bought for £3.7 million and treated as a business combination as it was operating as a business at the point
the Company acquired it.
Number of pubs/hotels/restaurants purchased
Fair value
Net assets acquired
Goodwill
Total consideration paid
Net outflow of cash
Cash consideration paid
Cash and cash equivalents acquired
Net cash outflow from investing activities
Repayment of third party loans on acquisition
Net cash outflow from financing activities1
Net cash outflow in respect of purchase of businesses
1
Included within repayment of bank loans in the Group cash flow statement.
19. Inventories
Group and Company
Stock at pubs and hotels
2021
2020
Pubs and
Restaurant
Cotswold Inns
& Hotel
–
£m
–
–
–
–
–
–
–
–
–
9
£m
28.0
2.4
30.4
30.4
(1.3)
29.1
8.4
8.4
37.5
Pubs
1
£m
3.7
–
3.7
3.7
–
3.7
–
–
3.7
Group
2021
£m
2.1
Group
2020
£m
4.0
Company
2021
£m
2.1
Company
2020
£m
3.5
Amounts recognised in profit or loss
Inventories recognised as an expense during the year ended 27 March 2021 amounted to £15.8 million (2020: £66.4 million). These were included
in operating costs. Inventory is stated net of a provision for obsolete stock of £0.3 million (2020: £0.4 million).
20. Trade and Other Receivables
Group
Trade receivables
Other receivables
Prepayments and accrued income
Company
Trade receivables
Amounts due from subsidiary undertakings
Other receivables
Prepayments and accrued income
125
2021
£m
2.1
6.6
2.8
11.5
2021
£m
2.1
–
6.5
2.8
11.4
2020
£m
2.4
7.2
3.0
12.6
2020
£m
2.4
7.5
6.7
2.8
19.4
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
20. Trade and Other Receivables continued
As at 28 March 2020, the Company amounts owed from subsidiary undertakings of £7.5 million had no fixed repayment date. Interest was payable
on the balance at the higher of either the Bank of England base rate plus 3% or 8%. During the year the subsidiaries that owed the Company
amounts were hived up into the Company and as part of the restructuring the intercompany balances were settled.
As at 27 March 2021, the Group has accrued £4.0 million (2020: £0.9 million), shown in other receivables, in relation to the CJRS. Also included in other
receivables is £0.8 million (2020: £2.7 million) of lease receivable for subleases. £1.5 million of lease receivable was impaired during the year based on the
expected credit loss model and recorded in separately disclosed items given its one-off nature.
The trade receivables balance above is shown net of the loss allowance. The Group and Company provide against trade receivables based on an
expected credit loss model, calculated from the probability of default for the remaining life of the asset.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk
characteristics. They have been grouped based on the days past due and also according to the geographical location of customers which is the
same for all.
The expected loss rates are based on the payment profile for sales over the past 24 months before the Balance Sheet date. The historical rates
are adjusted to reflect current and forward-looking macroeconomic factors affecting the customers' ability to settle the amount outstanding,
the most significant factor being the coronavirus pandemic. A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows.
The movements on the loss allowance during the year are summarised below:
Group and Company
Opening balance
Increase in loss allowance recognised in profit and loss
Amounts written off during the year
Closing balance
2021
£m
0.9
0.3
(0.2)
1.0
2020
£m
0.4
0.5
–
0.9
The loss allowance for trade receivables is recorded in the accounts separately from the gross receivable. The contractual ageing of the trade
receivables balance is as follows:
Group and Company
Current
Overdue up to 30 days
Overdue between 30 and 60 days
Overdue between 60 and 90 days
Overdue more than 90 days
Trade receivables before loss allowance
Loss allowance
Trade receivables net of loss allowance
Group
2021
£m
1.3
0.4
0.1
0.1
1.2
3.1
(1.0)
2.1
Group
2020
£m
Company
2021
£m
Company
2020
£m
0.9
1.2
0.1
0.3
0.8
3.3
(0.9)
2.4
1.3
0.4
0.1
0.1
1.2
3.1
(1.0)
2.1
0.9
1.2
0.1
0.3
0.8
3.3
(0.9)
2.4
21. Discontinued Operations
On 7 June 2020, the Group sold its subsidiary, Stable Pizza & Cider Limited ("The Stable") to Sourdough South Limited ("Three Joes"), for an
enterprise value of £0.5 million on a debt-free basis including any cash left in the business. Accordingly this business has been reported as discontinued
operations in the Annual Report for the 52 weeks ended 27 March 2021.
On 27 April 2019, the Group sold its entire Beer Business to Asahi Europe Ltd (“AEL”), a wholly owned subsidiary of Asahi Group Holdings Ltd
(“Asahi”), for an enterprise value of £250.0 million on a debt-free basis including any cash left in the business.
The business sold comprised the entirety of Fuller’s beer, cider and soft drinks brewing and production, wine wholesaling, as well as the distribution
thereof, and also includes the Griffin Brewery, Cornish Orchards, Dark Star Brewing and Nectar Imports (referred to as the “Fuller’s Beer Business”).
Accordingly those divisions have been reported as discontinued operations in the Annual Report for the 52 weeks ended 28 March 2020.
126
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 a) Financial Performance and Cash Flow
The financial performance and cash flow information presented for the 52 weeks ended 27 March 2021 reflects the operations for the period ended
7 June 2020. The financial performance and cash flow presented for the 52 weeks ended 28 March 2020 reflects the full year of The Stable and
the period ended 27 April 2019 for the Fuller's Beer Business.
Revenue
Segment revenue
Inter-segment sales
Revenue from third parties
Segment result
Operating separately disclosed items
Operating loss
Net finance costs
Loss from operating activities – discontinued operations
(Loss)/gain on sale of discontinued operation1
Income tax on (loss)/gain on sale of discontinued operation
(Loss)/profit before tax – discontinued operations
Taxation
Analysed as:
Underlying trading
Separately disclosed items
(Loss)/profit from discontinued operations
Net cash (outflow)/inflow from operating activities
Net cash inflow from investing activities
Net cash outflow from financing activities
Net (decrease)/increase in cash generated by discontinued operations
Other segment information
Additions to property, plant and equipment
Depreciation and amortisation
Impairment
(Loss)/earnings per share – discontinued operations
40p ‘A’ and ‘C’ ordinary share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Adjusted (loss)/earnings per share
Diluted adjusted (loss)/earning per share
4p ‘B’ ordinary share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Adjusted (loss)/earnings per share
Diluted adjusted (loss)/earning per share
1 This is treated as a separately disclosed item.
127
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
–
–
–
(0.5)
–
(0.5)
–
(0.5)
(0.9)
–
(1.4)
–
–
–
(1.4)
(0.4)
0.3
(0.1)
(0.2)
–
0.3
–
26.4
(4.1)
22.3
(0.5)
(3.8)
(4.3)
(0.3)
(4.6)
162.4
–
157.8
(0.1)
(0.1)
–
157.7
1.5
224.5
(0.9)
225.1
0.9
1.6
3.8
(2.54)
(2.54)
(0.91)
(0.91)
(0.25)
(0.25)
(0.09)
(0.09)
286.08
285.42
(1.63)
(1.63)
28.61
28.54
(0.16)
(0.16)
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
21. Discontinued Operations continued
b) Details of the Sale of the Subsidiary
Consideration received
Cash
Carrying amount of net assets sold
Loss on sale before income tax
Transaction costs
Loss net of transaction costs
Income tax expense on loss
Loss on sale after income tax
22. Assets held for sale
Assets held for sale at the start of the year
Assets disposed of during the year
Assets transferred from Investment Properties
Assets transferred from Property, Plant and Equipment
Impairment of assets
Assets held for sale at the end of the year
52 weeks
ended
27 March
2021
£m
0.4
1.2
(0.8)
(0.1)
(0.9)
–
(0.9)
Group
2021
Company
2021
2.6
(3.1)
1.7
8.6
(0.2)
9.6
2.6
(3.1)
1.7
8.6
(0.2)
9.6
At 27 March 2021, 17 properties have been classified as held for sale (2020: 2 properties). The properties are predominately unlicensed properties.
Sale is expected within 12 months from the reporting date. An impairment of £0.2 million was recognised on reclassifying the property to held for
sale to recognise the assets at the lower of carrying amount and fair value less cost to sell. Valuations performed are based on observations of
transactions involving properties of a similar nature, location and condition. Since this valuation was performed using a significant non-observable
input, the fair value measurement can be categorised as a Level 3.
23. Trade and Other Payables
Due within one year:
Group
Trade payables
Other tax and social security
Other payables
Accruals
Contract liabilities
Due within one year:
Company
Trade payables
Amounts due to subsidiary undertakings
Other tax and social security
Other payables
Accruals
Contract liabilities
128
2021
£m
12.7
1.6
5.7
7.3
1.4
28.7
2021
£m
12.6
133.1
1.5
5.7
7.3
1.4
2020
£m
12.6
5.1
6.7
10.9
2.4
37.7
2020
£m
11.5
132.2
4.2
5.5
9.4
2.4
161.6
165.2
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Company amounts due to subsidiary undertakings of £133.1 million (2020: £132.2 million) have no fixed repayment date. Interest is payable on the
balance at 3% above the Bank of England base rate. Company amounts due to subsidiary undertakings are unsecured.
Contract liabilities relate to deposits received from customers to secure bookings for events and accommodation. The balance will unwind and be
recognised as revenue in the following financial year.
At 27 March 2021, £0.1 million has been recognised as deferred income within accruals in relation to the CCFF, representing the favourable
conditions granted by the Government. This is being unwound over the term of the loan.
24. Cash, Borrowings and Net Debt
Cash and Short-Term Deposits
Cash at bank and in hand
Group
2021
£m
17.1
Group
2020
£m
20.3
Company
2021
£m
16.9
Company
2020
£m
19.2
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
Bank loans
CCFF
Debenture stock
Preference shares
Total borrowings
Analysed as:
Borrowings within current liabilities
Borrowings within non-current liabilities
Group
2021
£m
107.9
99.8
25.9
1.6
235.2
207.7
27.5
235.2
Group
2020
£m
171.7
–
25.9
1.6
199.2
171.7
27.5
199.2
Company
2021
£m
Company
2020
£m
107.9
99.8
25.9
1.6
235.2
207.7
27.5
235.2
171.7
–
25.9
1.6
199.2
171.7
27.5
199.2
All borrowings at both year ends are denominated in Sterling and where appropriate are stated net of issue costs. Further information on borrowings
is given in note 28.
Bank Loans
Group and Company
The Group had facilities of £291.7 million at year end including the CCFF. Post year end, the CCFF expired on 12 May 2021 and was repaid on that
date. The remaining £191.7 million of the Company’s total existing main bank facilities were due to expire in August 2021 but on 20 April 2021 the
bank facilities were amended and extended to February 2023.
At 27 March 2021, £83.7 million (2020: £53.0 million) of the total of £291.7 million (2020: £225.0 million) committed bank facility was available
and undrawn.
As a result of coronavirus and the temporary closure of the entire estate for a significant portion of the period, the two main quarterly covenants,
being net debt to EBITDA (leverage) and net debt to finance charges, were waived for the whole period and revised to a more appropriate test based
on liquidity for each of the quarters during the financial year. The liquidity covenants are in place until March 2022 and then will revert to the
leverage and interest coverage covenants from June 2022.
The bank loans at 27 March 2021 are unsecured, and are repayable as shown in the table on the following page. Interest is payable at LIBOR plus
a margin, which varies dependent on the ratio of net debt to EBITDA, but since the covenants were waived in March 2020 and replaced with
a liquidity test the interest rate margin has been fixed until March 2022.
129
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
24. Cash, Borrowings and Net Debt continued
The bank loans and CCFF are repayable as follows:
On demand or within one year
Less: bank loan arrangement fees
Less: CCFF amortisation fees and fair value adjustments
Current liabilities
Debenture Stock
The debentured stocks are secured on specified fixed and floating assets of the Company and are redeemable on maturity.
Debenture stock is repayable as follows:
Group and Company
In the third to fifth year inclusive – 10.70% 1st Mortgage Debenture Stock 2023
In greater than five years – 6.875% Debenture Stock 2028 (1st floating charge)
Less: discount on issue
Non-current liabilities
2021
£m
208.0
(0.1)
(0.2)
207.7
2020
£m
172.0
(0.3)
–
171.7
2021
£m
6.0
20.0
(0.1)
25.9
2020
£m
6.0
20.0
(0.1)
25.9
Preference Shares
The Company’s preference shares are classified as debt. The shares are not redeemable and are included in borrowings within non-current liabilities.
See note 26 for further details of the preference shares.
Analysis of Net Debt
Group
52 weeks ended 27 March 2021
Cash and cash equivalents:
Cash and short-term deposits
Financial liabilities:
Lease liabilities
Debt:
Bank loans2
CCFF
Debenture stock
Preference shares
Total borrowings
Net debt
At
28 March
2020
£m
20.3
20.3
(112.9)
(112.9)
(171.7)
–
(25.9)
(1.6)
(199.2)
(291.8)
Cash flows
£m
Non-cash1
£m
(3.2)
(3.2)
9.2
9.2
64.0
(99.4)
–
–
(35.4)
(29.4)
–
–
13.8
13.8
(0.2)
(0.4)
–
–
(0.6)
13.2
At
27 March
2021
£m
17.1
17.1
(89.9)
(89.9)
(107.9)
(99.8)
(25.9)
(1.6)
(235.2)
(308.0)
130
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 52 weeks ended 28 March 2020
Cash and cash equivalents:
Cash and short-term deposits
Financial liabilities:
Lease liabilities
Debt:
Bank loans2
Other loans
Debenture stock
Preference shares
Total borrowings
Net debt
At
30 March
2019
£m
Transition to
IFRS 16
Cash flows
£m
Non-cash1
£m
11.0
11.0
–
–
–
–
(100.4)
(100.4)
(228.5)
(0.2)
(25.9)
(1.6)
(256.2)
(245.2)
–
–
–
–
–
(100.4)
9.3
9.3
11.2
11.2
57.0
–
–
–
57.0
77.5
–
–
(23.7)
(23.7)
(0.2)
0.2
–
–
–
(23.7)
At
28 March
2020
£m
20.3
20.3
(112.9)
(112.9)
(171.7)
–
(25.9)
(1.6)
(199.2)
(291.8)
1 Non-cash movements relate to the amortisation of arrangement fees, arrangement fees accrued, movements in lease liabilities and corporate acquisitions.
2 Bank loans net of arrangement fees.
Company
52 weeks ended 27 March 2021
Cash and cash equivalents:
Cash and short-term deposits
Financial liabilities:
Lease liabilities
Debt:
Bank loans2
CCFF
Debenture stock
Preference shares
Total borrowings
Net debt
At
28 March
2020
£m
Cash flows
£m
Non-cash1
£m
At
27 March
2021
£m
19.2
19.2
(2.3)
(2.3)
–
–
16.9
16.9
(99.6)
(99.6)
(171.7)
–
(25.9)
(1.6)
(199.2)
(279.6)
8.9
8.9
64.0
(99.4)
–
–
(35.4)
(28.8)
2.4
2.4
(0.2)
(0.4)
–
–
(0.6)
1.8
(88.3)
(88.3)
(107.9)
(99.8)
(25.9)
(1.6)
(235.2)
(306.6)
131
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
24. Cash, Borrowings and Net Debt continued
52 weeks ended 28 March 2020
Cash and cash equivalents:
Cash and short-term deposits
Financial liabilities:
Lease liabilities
Debt:
Bank loans2
Debenture stock
Preference shares
Total borrowings
Net debt
At
30 March
2019
£m
Transition to
IFRS 16
£m
Cash flows
£m
Non-cash1
£m
At
28 March
2020
£m
9.2
9.2
–
–
10.0
10.0
–
–
19.2
19.2
–
–
(88.6)
(88.6)
10.1
10.1
(21.1)
(21.1)
(99.6)
(99.6)
(228.5)
(25.9)
(1.6)
(256.0)
(246.8)
–
–
–
–
(88.6)
57.0
(0.2)
–
–
57.0
77.1
–
–
(0.2)
(21.3)
(171.7)
(25.9)
(1.6)
(199.2)
(279.6)
1 Non-cash movements relate to the amortisation of arrangement fees, arrangement fees accrued and movements in lease liabilities.
2 Bank loans net of arrangement fees.
25. Pensions
a) Retirement Benefit Plans – Group and Company
The Group operates one closed funded defined benefit pension scheme, the Fuller Smith & Turner Pension Plan. The plan is defined benefit in
nature, with assets held in separate professionally managed, Trustee-administered funds. The Scheme is HM Revenue & Customs registered pension
plan and subject to standard United Kingdom pension and tax law. On 1 January 2015 the plan was closed to future accrual.
The Group also operates three defined contribution stakeholder pension plans for its employees. The Fuller’s Stakeholder Pension Plan was set
up for new employees of the Parent Company after the closure of the Fuller, Smith & Turner Pension Plan to new entrants on 1 August 2005.
The Griffin Stakeholder Pension Plan operates for those employees of a Group subsidiary. The Gales 2001 scheme was set up following the closure
of the Gales defined benefit scheme in 2001.
The Group offers workplace pensions to all employees who are not members of the three defined contribution stakeholder pension plans. The Group
offers these pensions through the National Employment Savings Trust (“NEST”).
The Group also pays benefits, which are unfunded, to a number of former employees. The Directors consider these benefits to be defined benefit
in nature and the full defined benefit liability is recognised on the Balance Sheet.
Group and Company
Total amounts charged in respect of pensions in the year
Charged to Income Statement:
Defined benefit scheme – net finance charge – separately disclosed items
Defined contribution schemes and NEST – total operating charge
Charge/(credit) to equity:
Defined benefit schemes – net actuarial losses/(gains)
Total pension charge/(credit)
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
0.1
1.7
1.8
1.0
2.8
0.6
2.1
2.7
(5.9)
(3.2)
b) Defined Contribution Stakeholder Pension Plans – Group and Company
The total cost charged to income in respect of the defined contribution stakeholder schemes is shown in the total operating charge above.
c) Defined Benefit Plans – Group and Company
The Scheme provides pensions and lump sums to members on retirement and to their dependants on death.
132
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Trustees are appointed by both the Company and the Scheme’s membership and act in the interest of the Scheme and all relevant stakeholders,
including the members and the Company. The Trustees are also responsible for the investment of the Scheme’s assets.
The Company pays the costs as determined by regular actuarial valuations. The Trustees are required to use prudent assumptions to value the
liabilities and costs of the Scheme whereas the accounting assumptions must be best estimates.
Responsibility for making good any deficit on the Scheme lies with the Company and this introduces a number of risks for the Company.
The major risks are:
– interest and investment risk – The value of the Scheme’s assets are subject to volatility in equity prices. The Scheme has diversified its
investments to reduce the impact of volatility and variable interest return rates
– inflation risk – The defined benefit obligation is linked to inflation so higher rates would result in a higher defined benefit obligation
– longevity risk – An increase over the assumptions applied will increase the defined benefit obligation.
The Company and Trustees are aware of these risks and manage them through appropriate investment and funding strategies. The Trustees manage
governance and operational risks through a number of internal control policies.
The Scheme is subject to regular actuarial valuations, which are usually carried out every three years. In June 2021, the 2019 triennial valuation was
concluded and the Company have agreed to continue to pay in line with the existing recovery plan. Under this plan, deficit reduction contributions
started at £2.1 million in July 2019 and increase per annum in line with CPI. Subsequent to the year end, fixed security over certain of the Company’s
freehold properties (with a net book value of £27.3 million), has been provided to the Scheme as additional security, the value of which will be reviewed
at each triennial valuation. The next triennial valuation is due on 30 July 2022.
The figures in the following disclosures were measured using the projected unit credit method.
The Scheme has not invested in any of the Group’s own financial instruments or in properties or other assets in use by the Group.
Key assumptions
The key assumptions used in the 2021 valuation of the Scheme are set out below:
Mortality assumptions
Current pensioners (at 65) – males
Current pensioners (at 65) – females
Future pensioners (at 65) – males
Future pensioners (at 65) – females
2021
Years
22.2
24.4
23.5
25.9
2020
Years
22.1
24.3
23.4
25.8
The Scheme is now closed to future accrual. The average age of the members who were active at closure is 56 for males and 52 for females.
The average age of all non-pensioners is 56.
Key financial assumptions used in the valuation of the Scheme
Rate of increase in pensions in payment
Discount rate
Inflation assumption – RPI
Inflation assumption – CPI (pre 2030/post 2030)
The present value of the Scheme liabilities is sensitive to the assumptions used, as follows:
Impact on Scheme liabilities – increase/(decrease)1
Increase discount rate by 0.1%
Increase inflation assumption by 0.1%2
Increase life expectancies by 1 year
2021
3.35%
1.95%
3.40%
2.5%/3.4%
2020
2.85%
2.40%
2.85%
1.95%
2021
£m
(2.6)
2.1
7.3
2020
£m
(2.1)
1.8
5.7
1 The sensitivity analyses are based on a change in an assumption whilst holding all of the other assumption constant. In practice this is unlikely to occur and changes in some
of the assumptions may be correlated. When calculating the sensitivity to change, the same actuarial method has been applied as when calculating the pension liability within
the Balance Sheet. Due to the Scheme closing to future accrual on 1 January 2015, there are no longer any active members in the Scheme. As the members who were
active at closure did not maintain a salary link on their past service benefits, the future salary increase assumptions no longer have an impact on the Scheme's liabilities.
2 For members who were active at closure, their pensions now increase in deferment in line with CPI inflation.
133
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
25. Pensions continued
Assets in the Scheme
Corporate bonds
Index linked debt instruments
Gilts
UK equities
Overseas equities
Alternatives1
Cash
Annuities
Total market value of assets
1 Alternatives is composed of holdings in diversified growth investment funds.
Fair value of Scheme assets
Present value of Scheme liabilities
Deficit in the Scheme
27 March
2021
£m
28 March
2020
£m
25.5
28.3
–
–
30.6
53.7
1.9
3.8
143.8
2021
£m
143.8
(147.3)
(3.5)
26.9
–
24.0
17.0
20.9
30.5
0.9
3.6
123.8
2020
£m
123.8
(128.5)
(4.7)
Included within the total present value of Group and Company Scheme liabilities of £147.3 million (2020: £128.5 million) are liabilities of £2.1 million
(2020: £2.4 million) which are entirely unfunded.
Defined benefit obligation
Fair value of Scheme assets
Net defined benefit deficit
Balance at beginning of the year
Included in profit and loss
Current service cost
Net interest cost
Included in Other Comprehensive Income
Actuarial gains/(losses) relating to:
Actual return less expected return on Scheme’s assets
Experience gains/(losses) arising on Scheme liabilities
Other
Employer special contributions
Employer contributions
Benefits paid
2021
£m
2020
£m
(128.5)
(148.3)
2021
£m
123.8
–
(3.0)
(3.0)
–
(20.5)
(20.5)
–
–
4.7
4.7
–
(3.7)
(3.7)
–
19.1
19.1
–
–
4.4
4.4
–
2.9
2.9
19.5
–
19.5
–
2.3
(4.7)
(2.4)
Balance at end of the year
(147.3)
(128.5)
143.8
The weighted average duration of the Scheme’s liabilities at the end of the period is 17 years (2020: 17 years).
2020
£m
111.9
–
3.1
3.1
(13.2)
–
(13.2)
24.0
2.4
(4.4)
22.0
123.8
2021
£m
(4.7)
–
(0.1)
(0.1)
19.5
(20.5)
(1.0)
–
2.3
–
2.3
(3.5)
2020
£m
(36.4)
–
(0.6)
(0.6)
(13.2)
19.1
5.9
24.0
2.4
–
26.4
(4.7)
The total contributions to the scheme in the next financial year are expected to be £2.3 million for the Group and Company. Following the
conclusion of the 2019 triennial valuation on 15 June 2021, it was agreed that the Company would continue to pay contributions in line with the
deficit recovery plan which started at £2.1 million in July 2019 and increase each year with CPI. The recovery deficit plan will be reviewed at the next
triennial valuation which is due on 30 July 2022. No further payments are made as the Scheme is now closed to future accrual.
In the prior year, following the sale of the Fuller’s Beer Business to Asahi Europe Ltd, which completed on 27 April 2019, the Group made a special
contribution of £24.0 million of net cash proceeds from the sale to the Scheme.
134
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 26. Preference Share Capital
Group and Company
Authorised, issued and fully paid share capital
Number authorised and in issue:
At 30 March 2019, 28 March 2020 and 27 March 2021
Monetary amount:
At 30 March 2019, 28 March 2020 and 27 March 2021
First 6%
cumulative
preference
share of
£1 each
Number
000s
Second 8%
cumulative
preference
share of
£1 each
Number
000s
400
1,200
Total
Number
000s
1,600
£m
0.4
£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 London Stock Exchange for
the previous six months) plus arrears of dividends.
Preference shareholders may only vote in limited circumstances: principally on winding up, alteration of class rights or on unpaid preference dividends.
Preference shares cannot be redeemed by the holders, other than on winding up.
27. Provisions
Group and Company
Balance at beginning of the year
Utilised
Transferred to right-of-use assets
Balance at end of the year
Analysed as:
Due within one year
Due in more than one year
Further information has not been disclosed about the legal claim as it is an ongoing dispute.
Legal claim
Onerous lease
2021
£m
4.1
(0.1)
–
4.0
2021
£m
4.0
–
4.0
2020
£m
4.2
(0.1)
–
4.1
2020
£m
4.1
–
4.1
2021
£m
–
–
–
–
2021
£m
–
–
–
2020
£m
2.6
–
(2.6)
–
2020
£m
–
–
–
135
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
28. Financial Instruments
Details of the Group’s treasury function are included in the Financial Review’s discussion of financial risks and treasury policies on page 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:
Group
Ordinary share capital
Share premium
Capital redemption reserve
Hedging reserve
Retained earnings
Preference shares
Company
Ordinary share capital
Share premium
Capital redemption reserve
Hedging reserve
Merger reserve
Retained earnings
Preference shares
2021
£m
22.8
4.2
3.7
(0.5)
366.3
1.6
398.1
2021
£m
22.8
4.2
3.7
(0.5)
(1.6)
320.7
1.6
350.9
2020
£m
22.8
4.2
3.7
(0.9)
417.1
1.6
448.5
2020
£m
22.8
4.2
3.7
(0.9)
–
373.5
1.6
404.9
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 did not buy back any shares in the 52 weeks ended
27 March 2021 (2020: £0.5 million). As a minimum, the Board reviews the Group’s dividend policy twice yearly and reviews the treasury position
at every Board meeting.
136
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 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
Non-current assets
Financial assets at amortised cost:
Loans and other receivables in scope of IFRS 9
Total non-current assets
Current assets
Trade and other receivables in scope of IFRS 9
Total current assets
Total financial assets
Current liabilities
Financial liabilities at amortised cost:
Trade and other payables in scope of IFRS 9
Lease liabilities
Loans
Total carried at amortised cost
Total current liabilities
Non-current liabilities
Derivative financial instruments used for hedging
Financial liabilities at amortised cost:
Lease liabilities
Loans and debenture stock
Preference shares
Total carried at amortised cost
Total non-current liabilities
Total financial liabilities
2021
£m
2020
£m
–
–
2.1
2.1
2.1
25.4
6.7
207.7
239.8
239.8
0.1
0.1
2.4
2.4
2.5
30.0
8.9
171.7
210.6
210.6
0.7
1.1
83.2
25.9
1.6
110.7
111.4
351.2
104.0
25.9
1.6
131.5
132.6
343.2
137
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
28. Financial Instruments continued
Company
Non-current assets
Financial assets at amortised cost:
Loans and other receivables in scope of IFRS 9
Total non-current assets
Current assets
Trade and other receivables in scope of IFRS 9
Total current assets
Total financial assets
Current liabilities
Financial liabilities at amortised cost:
Trade and other payables in scope of IFRS 9
Lease liabilities
Loans
Total carried at amortised cost
Total current liabilities
Non-current liabilities
Derivative financial instruments used for hedging
Financial liabilities at amortised cost:
Lease liabilities
Loans and debenture stock
Preference shares
Total carried at amortised cost
Total non-current liabilities
Total financial liabilities
2021
£m
2020
£m
–
–
2.1
2.1
2.1
158.4
6.5
207.7
372.6
372.6
0.1
0.1
9.9
9.9
10.0
159.6
7.9
171.7
339.2
339.2
0.7
1.1
81.8
25.9
1.6
109.3
110.0
482.6
91.7
25.9
1.6
119.2
120.3
459.5
There is no set-off of financial assets and liabilities as shown above.
c) Financial Risks – Group and Company
The main risks associated with the Group’s financial assets and liabilities are set out below, as are the Group’s policies for their management.
Derivative instruments are used to change the economic characteristics of financial instruments in accordance with Group policy.
i. Interest rate risk
The Group manages its cost of borrowings using a mixture of fixed rates, variable rates and interest rate swaps. Fixed rates do not expose the Group
to cash flow interest rate risk, but do not enjoy a reduction in borrowing costs in markets where rates are falling. Floating rate borrowings, although
not exposed to changes in fair value, expose the Group to cash flow risk following rises in interest rates and cost.
The debentures totalling £25.9 million (2020: £25.9 million) and the CCFF totalling £99.8 million (2020: £nil), net of interest paid in advance,
are at fixed rates. The bank loans totalling £107.9 million (2020: £171.7 million), net of arrangement fees, are at floating rates. At the year end, after
taking account of interest rate swaps, 19% (2020: 23%) of the Group’s bank loans and 63% (2020: 34%) of gross borrowings were at fixed rates.
138
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Interest rate swaps
The Group has entered into interest rate swap agreements, where the Group pays a fixed rate and receives one month or three month LIBOR, in
order to hedge the risk of variation in interest cash flows on its borrowings. At the Balance Sheet date £20.0 million of the Group and Company’s
borrowings (2020: £40.0 million) were hedged by interest rate swaps at a blended fixed rate of 2.30% (2020: 2.42%). The swap active at 27 March
2021 expires in 2022.
The interest rate swap is expected to impact the Income Statement in line with the liquidity risk table shown in section (iii) below. The interest rate
swap cash flow hedge in effect at 27 March 2021 was assessed as being highly effective. Net unrealised gain of £0.3 million (2020: £0.2 million)
has been recorded in Other Comprehensive Income. An interest rate swap for £20.0 million expired in August 2020 and resulted in £0.2 million
net realised gain.
Sensitivity – Group and Company
The Group borrows in Sterling at market rates. Three month Sterling LIBOR rate during the 52 weeks ended 27 March 2021 ranged between
0.09% and 0.58%. The Directors consider 1.00% to be a reasonable possible increase in rates and 0.50% to be a reasonable possible decrease
in rates, with reference to market yield curves and the current economic conditions.
The annualised effect of these changes to interest rates on the floating rate debt at the Balance Sheet date, all other variables being constant,
are as follows:
Impact on post-tax profit and net equity – increase/(decrease)
Decrease interest rate by 0.5%
Increase interest rate by 1.0%
1 The Company has substantial interest bearing payables due to subsidiary companies (note 23).
Group
Company1
2021
£m
0.4
(0.7)
2020
£m
0.5
(1.1)
2021
£m
0.9
(1.8)
2020
£m
1.1
(2.1)
ii. Credit risk
The risk of financial loss due to a counter party’s failure to honour its obligations arises principally in relation to transactions where the Group
provides goods and services on deferred payment terms, deposits surplus cash and enters into derivative contracts.
Group policies are aimed at minimising losses and deferred terms are only granted to customers who demonstrate an appropriate payment history
and satisfy credit worthiness procedures. Individual customers are subject to credit limits to control debt exposure and goods may also be sold on
a cash with order basis.
Cash deposits with financial institutions for short periods and derivative transactions are only permitted with financial institutions approved by
the Board. There are no significant concentrations of credit risk within the Group. The maximum credit risk exposure relating to financial assets
is represented by their carrying value as at the Balance Sheet date.
Trade and other receivables
The Group records impairment losses on its trade receivables separately from gross receivables. Further detail is included in note 20.
iii. Liquidity risk
The Group minimises liquidity risk by managing cash generation, applying trade receivables collection targets, monitoring daily cash receipts and
payments and setting rolling cash forecasts. Investments have cash payback periods applied as part of a tightly controlled investment appraisal
process. The Group’s rating with credit agencies is excellent.
The Group has a mixture of long and short-term borrowings and overdraft facilities: 9% (2020: 11%) of the Group’s borrowings are repayable after
more than five years, 3% (2020: 76%) within the first to fifth years and 88% (2020: 13%) within one year.
The tables on the following page summarise the maturity profile of the Group’s financial liabilities at 27 March 2021 based on undiscounted
contractual cash flows, including interest payable. Floating rate interest is estimated using the prevailing interest rate at the Balance Sheet date.
139
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
28. Financial Instruments continued
Group at 27 March 2021
Interest bearing loans and borrowings1
Preference shares2
Trade and other payables
Lease liabilities
On
demand
£m
Less than
3 months
£m
–
–
12.7
–
0.9
–
8.7
7.2
3 to 12
months
£m
210.0
0.1
4.0
10.2
1 to 5
years
£m
12.8
0.5
–
10.4
More than 5
years
£m
22.9
3.4
–
80.9
Total
£m
246.6
4.0
25.4
108.7
1 Bank loans are included after taking account of the following cash flows in relation to the interest rate swap held in respect of these borrowings:
Interest rate swaps
–
0.1
0.3
0.2
–
0.6
Group at 28 March 2020
Interest bearing loans and borrowings1
Preference shares2
Trade and other payables
Lease liabilities
On
demand3
£m
160.1
–
12.6
–
Less than
3 months
£m
1.2
–
13.3
3.0
3 to 12
months
£m
29.9
0.1
4.1
9.1
1 to 5
years
£m
–
0.5
–
41.7
More than 5
years
£m
24.3
3.4
–
94.7
Total
£m
215.5
4.0
30.0
148.5
1 Bank loans are included after taking account of the following cash flows in relation to the interest rate swap and cap held in respect of these borrowings:
Interest rate swaps
–
0.2
0.3
0.4
–
0.9
2 The preference shares have no contractual repayment date. For the purposes of the table above interest payments have been shown for 20 years from the Balance Sheet
date but no further.
3 The £160.1 million has been restated from the 1 to 5 years bucket to the on demand bucket. This is because at the end of FY20 there was a technical breach of the covenants
and therefore the balance should have been disclosed within the on demand bucket.
The Company figures are as for the Group, except as follows:
Company at 27 March 2021
Amounts due to subsidiary undertakings3
Trade and other payables
Lease liabilities
Company at 28 March 2020
Amounts due to subsidiary undertakings3
Trade and other payables
Lease liabilities
On
demand
£m
133.1
12.6
–
132.2
11.5
–
Less than
3 months
£m
–
8.7
7.1
–
11.8
2.7
3 to 12
months
£m
–
4.0
9.9
1 to 5
years
£m
–
–
More than
5 years
£m
–
–
10.2
79.5
–
4.1
8.1
–
–
–
–
36.3
85.0
Total
£m
133.1
25.3
106.7
132.2
27.4
132.1
3 Amounts due to subsidiary undertakings have no fixed repayment date. Interest is payable on the balance at 3% above the Bank of England base rate.
Security – Group and Company
The 10.7% debentures 2023 are secured on property, plant and equipment with a net book value of £11.6 million (2020: £11.0 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.
140
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 When it came apparent that as a result of coronavirus the Company’s pubs and hotels would need to temporarily close, Fuller’s began discussions
with its lenders and formally agreed appropriate amendments to its banking agreements with its lenders. The revised covenants focus on liquidity
headroom metrics, which are more appropriate under the current coronavirus conditions. The agreement was initially through to September 2020
and was later extended to March 2021. As part of the amend and extend of the facilities, as agreed on 20 April 2021, the covenants were waived
through to and including March 2022 and replaced with the liquidity test.
d) Fair Value
Group
Financial assets
Book value
2021
£m
2020
£m
Fair value
2021
£m
2020
£m
Fair
value
Level
Loans and other receivables due in more than one year in scope of IFRS 9
–
0.1
–
0.1
Financial liabilities
Lease liabilities
Fixed rate borrowings
Floating rate borrowings
Preference shares
Interest rate swaps
(89.9)
(125.7)
(107.9)
(1.6)
(0.7)
(112.9)
(25.9)
(171.7)
(1.6)
(1.1)
(89.9)
(132.7)
(107.9)
(1.6)
(0.7)
(112.9)
(33.4)
(171.7)
(2.0)
(1.1)
3
3
3
3
3
2
The Company figures are as for the Group above except for:
Company
Financial liabilities
Lease liabilities
Book value
2021
£m
2020
£m
Fair value
2021
£m
2020
£m
Fair
value
Level
(88.3)
(99.6)
(88.3)
(99.6)
3
Level 1 fair values are valuation techniques where inputs are quoted prices in active markets for identical assets or liabilities that the entity can access
at measure data.
Level 2 fair values are valuation techniques where all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly, but are not derived directly from quoted prices in active markets. The Group bases its valuations on information provided by financial
institutions, who use a variety of estimation techniques based on market conditions, such as interest rate expectations, existing at each Balance
Sheet date.
Level 3 fair values are valuation techniques for which all inputs that have a significant effect on the recorded fair value are not observable.
Derivative fair values are obtained from quoted market prices in active markets. The fair values of borrowings have been calculated by discounting
the expected future cash flows at prevailing interest rates. Interest rates for borrowings range from 1.3% to 10.7%. The fair values of preference
shares have been calculated using the market interest rates.
Management assessed that the fair values of cash and short-term deposits, trade receivables and other receivables, and trade and other payables
approximate their carrying amounts largely due to the short-term maturities of these instruments.
There were no transfers between levels in the fair value hierarchy as at 27 March 2021 and 28 March 2020.
141
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
29. Share Capital and Reserves
a) Share Capital
Authorised, issued and fully paid
Number in issue
At 30 March 2019
Issue of Share Capital
Reclassification to Deferred shares
Cancellation of Deferred shares
Share conversions
At 28 March 2020
Share conversions
At 27 March 2021
Proportion of total equity shares at 27 March 2021
Monetary amount
At 28 March 2020
Share conversions
At 27 March 2021
‘A’ ordinary
shares of
40p each
Number
000s
‘C’ ordinary
shares of
40p each
Number
000s
‘B’ ordinary
shares of
4p each
Number
000s
‘D’ ordinary
shares of
0.1p each
Number
000s
33,578
14,503
89,052
–
Deferred
shares of
0.1p each
Number
000s
–
–
Total
Number
000s
137,133
552,318
–
–
–
42
–
–
–
(42)
–
–
–
–
33,620
14,461
89,052
–
33,620
24.5%
–
14,461
10.6%
–
89,052
64.9%
£m
13.4
–
13.4
£m
5.8
–
5.8
£m
3.6
–
3.6
552,318
(552,318)
552,318
–
–
–
–
–
–
–
£m
–
–
–
(552,318)
(552,318)
–
–
–
–
–
£m
–
–
–
–
137,133
137,133
100%
£m
22.8
–
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 26).
The ordinary shareholders are entitled to be paid a dividend out of any surplus profits and to participate in surplus assets on winding up in proportion
to the nominal value of each class of share (‘B’ shares have one-tenth of the nominal value of ‘A’ and ‘C’ shares).
All equity shares in the Company carry one vote per share, save that shares held in treasury have their voting rights suspended. The ‘A’ and ‘C’ shares
have a 40p nominal value and the ‘B’ shares have a 4p nominal value so that a ‘B’ share dividend will be paid at 10% of the rate applying to ‘A’ and ‘C’
shares. The ‘A’ shares are listed on the London Stock Exchange. The ‘C’ shares carry a right for the holder to convert them to ‘A’ shares by written
notice in the 30 day period following the half year and preliminary announcements. The ‘B’ shares are not listed and have no conversion rights.
In most circumstances the value of a ‘B’ share is deemed to be 10% of the value of the listed ‘A’ shares. The Trustee holding shares for participants
of the LTIP currently waives dividends for shares held during the initial three year period. Dividends are not paid on shares held in treasury.
The Articles include provisions relating to the Company’s ‘B’ and ‘C’ shares which provide that shareholders who wish to transfer their shares may
only do so if the transfer is to another ‘B’ or ‘C’ shareholder, or if the transfer is to certain of that shareholder’s family members or their executors
or administrators or, where shares are held by Trustees, to new Trustees, or to the Trustees of any employee share scheme, or if the Company is
unable to identify another shareholder of that class willing to purchase the shares within the specified period, to any person.
The ‘D’ share with nominal value of 0.1p were issued to the ordinary shareholders in the following proportions: ten ‘D’ shares for each ‘A’ ordinary
share and ‘C’ ordinary share in issue and one ‘D’ share for each ‘B’ ordinary share in issue. The ‘D’ shares were reclassified as a deferred shares and
subsequently cancelled upon payment of a single ‘D’ share dividend (note 9).
142
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 b) Own Shares
Own shares relate to shares held by independently managed ESOTs together with the Company’s holding of treasury shares. Shares are purchased
by the ESOTs in order to satisfy potential awards under the LTIP and 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 30 March 2019
Shares purchased
Shares transferred
Shares released
At 28 March 2020
Shares released
At 27 March 2021
Monetary amount
At 30 March 2019
Shares purchased
Shares transferred
Shares released
At 28 March 2020
Shares released
At 27 March 2021
Treasury shares
LTIP ESOT
SIP ESOT
Total
Total
‘A’ ordinary
40p shares
000s
‘B’ ordinary
4p shares
000s
‘B’ ordinary
4p shares
000s
‘C’ ordinary
40p shares
000s
‘A’ ordinary
40p shares
000s
‘A’ ordinary
40p shares
000s
‘B’ ordinary
4p shares
000s
‘C’ ordinary
40p shares
000s
Own shares
000s
1,567
4,558
235
49
(41)
(294)
–
–
–
1,281
4,558
(7)
–
1,274
4,558
£m
14.9
0.4
(0.5)
(2.8)
12.0
(0.1)
11.9
£m
4.6
–
–
–
4.6
–
4.6
91
–
–
326
–
326
£m
0.2
0.1
–
–
0.3
–
0.3
6
–
–
–
6
–
6
£m
0.1
–
–
–
0.1
–
0.1
91
–
–
1,574
4,793
7
–
41
49
–
(43)
(337)
5
–
5
£m
–
–
0.5
(0.4)
0.1
–
0.1
1,286
4,884
(7)
–
1,279
4,884
£m
14.9
0.4
–
(3.2)
12.1
(0.1)
12.0
£m
4.8
0.1
–
–
4.9
–
4.9
6
–
–
–
6
–
6
£m
0.1
–
–
–
0.1
–
0.1
6,373
140
–
(337)
6,176
(7)
6,169
£m
19.8
0.5
–
(3.2)
17.1
(0.1)
17.0
Market value at 27 March 2021
11.0
3.9
0.3
0.1
–
11.0
4.2
0.1
15.3
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. In the prior year, share premium was capitalised by £0.6 million in order to issue ‘D’ shares with the nominal value of 0.1p each to ordinary
shareholders. The ‘D’ shares were reclassified as a deferred share and subsequently cancelled upon payment of a single ‘D’ share dividend (note 9).
Capital redemption reserve
The capital redemption reserve balance arises from the buy-back of the Company’s own equity share capital.
Hedging reserve
The hedging reserve contains the effective portion of the cash flow hedge relationships incurred at the Balance Sheet date, net of tax.
Merger reserve
The merger reserve arises on the hive up of a subsidiary at market value with any difference between the reduction in investment and the underlying
assets being recognised in this reserve.
143
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
30. Share Options and Share Schemes
The key points of each of the Group's share schemes for grants up to 27 March 2021 are summarised below. All schemes are equity-settled.
All disclosure relates to both Group and Company. For the purposes of option and LTIP schemes, “Adjusted EPS” will normally be consistent
with the post-tax earnings per share excluding separately disclosed items as presented in the financial statements. However, the Remuneration
Committee is authorised to make appropriate adjustments to Adjusted EPS as applied to these schemes.
Savings Related Share Option Scheme (“SAYE”)
This scheme grants options over shares at a discount of 20% on the average market price over the three days immediately prior to the date of offer.
Employees must save a regular amount each month. Savings are made over three or five years, at the participant's choice. The right to buy shares at the
discounted price lasts for six months after the end of the savings contract. There are no performance conditions, other than continued employment.
Senior Executive Share Option Scheme
This is an unapproved Executive Share Option Scheme. No new grants have been made under this scheme since 2013 and all remaining options were
exercised during the year ended 28 March 2020.
Executive Share Option Scheme
This is an approved Executive Share Option Scheme. For the grants up to the year ended 28 March 2020 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. From the grant made during the year ended
27 March 2021 onwards, the options vest if the set pre-tax Adjusted EPS target is achieved. The options must then be exercised within seven years
after the end of the performance period.
LTIP
This plan awards free shares. Up until the LTIP granted during the year ended 27 March 2021 vesting is conditional on growth in Adjusted EPS
exceeding growth in RPI by 9% or more over the three year initial performance period of the award, with vesting levels on a sliding scale from 40%
up to 100%, if growth in Adjusted EPS exceeds growth in RPI by 24% or more.
From the LTIP granted during the year ended 27 March 2021 vesting is conditional upon pre-tax Adjusted EPS targets, with vesting levels on
a sliding scale from 25% up to 100% dependent on the level of EPS achieved. An independent firm of advisors verifies the vesting level each year.
The initial vesting period is three years. After this time the shares may be passed to the plan participants, as long as vesting conditions are met.
SIP
This plan awards free shares. An equal number of shares are awarded to each eligible employee. The maximum value of the shares allowable under the
scheme is £3,000 per year, per person with at least five months’ service as at 15 May each year. The basis of the award was changed with effect from
the 2018 award so that all eligible employees receive the same number of shares. There is no requirement for performance targets (although there
may be tax consequences if sold within five years of the award).
Share-based payment expense recognised in the year
The expense recognised for share-based payments in respect of employee services received during the 52 weeks ended 27 March 2021
is £0.3 million credit (2020: £0.5 million charge). The whole of that expense arises from equity-settled share-based payment transactions.
Market value
The market value of the shares at 27 March 2021 was £8.60 (2020: £6.50).
Movements in the year
The following tables illustrate the number and weighted average exercise prices (“WAEP”) of, and movements in, each category of share instrument
during the year.
Volatility
The expected volatility is based on the historical volatility over the expected life of the rights.
144
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 a) SAYE
Outstanding at the beginning of the year
Granted
Forfeited
Expired
Exercised
Outstanding at the end of the year
Exercisable at the 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
Outstanding share options granted to employees under the SAYE scheme are as follows:
Exercisable at
September 2020
September 2020
September 2021
September 2021
September 2022
September 2023
November 2023
November 2025
b) Share Option Schemes
Outstanding at the beginning of the year
Exercised
Outstanding at the end of the year
Weighted average share price for options exercised in the year
2021
Number
000s
167
410
(78)
(38)
(1)
460
9
£8.99
3.1 years
£5.59
£1.38
£4.35
£8.70
2021
WAEP
£7.98
£4.35
£7.54
£8.06
£8.12
£4.79
£8.51
2020
Number
000s
485
–
2020
WAEP
£7.89
n/a
(129)
£7.90
n/a
£7.80
£7.98
–
(189)
167
–
£10.13
2.2 years
n/a
n/a
£7.70
£8.70
Number of
‘A’ ordinary
shares under
option
2021
000s
Number of
‘A’ ordinary
shares under
option
2020
000s
Exercise
price 40p
shares
£
8.70
8.12
7.74
7.70
8.12
7.70
4.35
4.35
6
3
17
24
3
4
228
175
460
26
40
35
50
6
10
–
–
167
Senior Executive Share Option Scheme
2021
Number
000s
–
–
–
n/a
2021
WAEP
n/a
n/a
n/a
2020
Number
000s
75
(75)
–
£9.67
2020
WAEP
£7.00
£7.00
n/a
145
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
30. Share Options and Share Schemes continued
Outstanding at the beginning of the year
Granted
Lapsed
Surrendered*
Exercised
Outstanding at the end of the year
Exercisable at the 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
2021
Number
000s
159
163
(44)
(65)
(1)
212
26
£7.36
8.63 years
£6.92
£0.94
£6.92
£10.90
Executive Share Option Scheme
2021
WAEP
£9.69
£6.92
2020
Number
000s
188
34
2020
WAEP
£9.50
£9.61
£10.24
(42)
£10.24
£9.71
£5.78
£7.46
£9.03
–
(21)
159
47
–
£8.84
£9.69
£9.43
£10.05
6.93 years
£9.70
£0.84
£5.78
£10.90
* During the year ended 27 March 2021, 65,073 options were surrendered and replacement options granted, shown within the number granted above. This was treated as
a modification of the original grants and as such the fair value recognised for the replacement options was reduced by the calculated fair value of the surrendered options
as at the date of surrender, the average of which was £0.35. The fair value calculation for the surrendered options was performed consistently with the inputs disclosed at
section e)(i) below except as follows. The expected remaining life ranged from 2 to 6 years, the volatility ranged from 17.7% to 20.9% and the risk-free interest rate used
ranged from -0.1% to 0.05%.
Outstanding options which are capable of being exercised between three and ten years from date of issue and their exercise prices are shown in the
table below:
Exercisable in/between
2013 and 2020
2014 and 2021
2015 and 2022
2016 and 2023
2017 and 2024
2018 and 2025
2020 and 2027
2021 and 2028
2022 and 2029
2023 and 2030
Executive Approved Scheme
Number of
‘A’ ordinary
shares under
option
2021
000s
Number of
‘A’ ordinary
shares under
option
2020
000s
–
2
5
9
5
5
–
19
4
163
212
1
2
5
10
17
13
38
42
31
–
159
Exercise
price 40p
shares
£
5.78
7.09
7.05
9.10
9.65
10.90
10.34
9.46
9.61
6.92
146
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 c) LTIP
Shares
Outstanding at the beginning of the year
Granted
Adjustment for ‘D’ shares impact
Lapsed
Outstanding at the end of the year
2021
‘A’ shares
Number
000s
288
220
–
(104)
404
2021
‘B’ shares
Number
000s
721
549
–
(261)
1,009
2020
‘A’ shares
Number
000s
2020
‘B’ shares
Number
000s
360
115
18
(205)
288
901
288
45
(513)
721
Weighted average share price for shares vested in the year
n/a
n/a
n/a
n/a
For shares outstanding at the year end, the weighted average contractual life remaining is
1.91 years
1.91 years
1.60 years
1.60 years
Weighted average share price for shares granted in the year
Weighted average fair value of shares granted during the year
£5.90
£5.75
£0.59
£0.58
£9.70
£8.95
£0.97
£0.90
All LTIPs have a vesting price of £nil. LTIP shares do not receive dividends until vested.
d) SIP
Outstanding at the beginning of the year
Granted
Lapsed
Released
Outstanding at the 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 for shares granted during the year
Weighted average fair value of shares granted during the year
2021
Number
000s
150
–
–
(38)
112
2020
Number
000s
254
43
(1)
(146)
150
£7.22
£9.61
1.88 years
2.61 years
–
–
£10.34
£10.34
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.
147
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
30. Share Options and Share Schemes continued
e) Fair Value of Grants
i. Equity-settled options and LTIPs
The fair value of equity-settled share options granted is estimated as at the date of grant, taking into account the terms and conditions upon
which the awards were granted. The following table lists the inputs to the model used for the 52 weeks ended 27 March 2021 and 52 weeks ended
28 March 2020, 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)
LTIP scheme
2021
nil%
n/a
(0.1%)
3 years
2020
1.8%
n/a
0.4%
3 years
SAYE
2021
nil%
17.2%–19.1%
(0.1%)
3 to 5 years
Executive Share Option Scheme
2021
nil%
18.7%
(0.1%)
4 years
2020
1.8%
15.8%
0.4%
4 years
2020
n/a
n/a
n/a
n/a
Model used
Black Scholes
Black Scholes Black Scholes
n/a Black Scholes
Black Scholes
ii. SIP free shares awarded
The fair value of free shares awarded under the SIP is the share price at the date of allocation. The total value of SIPs awarded is a fixed rate based on the
Group’s performance in the preceding financial year. The number of shares awarded is therefore dependent on the share price at the date of the award.
31. Guarantees and Commitments
a) Operating Lease Commitments
Operating leases where the Group is the lessor
The Group earns rental income from two sources. Licensed property included within property, plant and equipment is rented under agreements
where lessees must also purchase goods from the Group. Additionally there are a smaller number of agreements in respect of investment properties
where there is no requirement for the lessee to purchase goods.
Investment properties are let to third parties on leases that have remaining terms of between one and fifteen years.
At 27 March 2021 future minimum rentals receivable are as follows:
Group
Within one year
Between one year and five years
After five years
Company
Within one year
Between one year and five years
After five years
Investment properties
Property, plant and equipment
2021
£m
0.5
0.7
0.3
1.5
0.5
0.7
0.3
1.5
2020
£m
0.8
1.0
0.5
2.3
0.8
1.0
0.5
2.3
2021
£m
7.8
11.2
0.8
19.8
7.8
11.2
0.8
19.8
2020
£m
3.1
4.8
3.3
11.2
2.6
4.7
4.8
12.1
The Group and Company’s commercial leases on property are principally for licensed outlets. The terms of the leases are normally for either three,
four or five years. The agreements allow for annual inflationary increases and full rental reviews occur on renewal of the lease.
At 27 March 2021 future minimum rentals receivable under non-cancellable sub-leases included in the figures above were £1.6 million (2020: £5.4 million).
148
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 b) Other Commitments
Group and Company
Capital commitments – authorised, contracted but not provided for
2021
£m
2.4
2020
£m
1.3
32. Related Party Transactions
Group and Company
During the current and prior years the Company provided various administrative services to the Fuller, Smith & Turner Pension Plan free of charge.
In addition, the Company settled costs totalling £368,000 (2020: £497,000) relating to the provision of actuarial, consulting and administrative
services by third parties to the Fuller, Smith & Turner Pension Plan.
Compensation of key management personnel (including Directors)
Short-term employee benefits
Termination benefits
Post-employment benefits
Share-based payments
Company Only
During the year the Company entered into the following related party transactions:
52 weeks
ended
27 March
2021
£m
52 weeks
ended
28 March
2020
£m
3.0
0.1
0.3
–
3.4
4.3
1.1
0.4
0.2
6.0
52 weeks ended 27 March 2021
Subsidiaries
52 weeks ended 28 March 2020
Subsidiaries
Sales to
related
parties
£m
Purchases
from related
parties
£m
Interest due
from related
parties
£m
Interest due
to related
parties
£m
Amounts due
to related
parties
£m
Amounts due
from related
parties
£m
–
21.0
–
4.2
(133.1)
–
Sales to
related
parties
£m
0.3
Purchases
from related
parties
£m
Interest due
from related
parties
£m
Interest due
to related
parties
£m
Amounts due
to related
parties
£m
Amounts due
from related
parties
£m
76.4
1.7
4.4
(132.2)
7.5
Interest is payable on the majority of the amounts due to subsidiaries at 3% above the Bank of England base rate. All amounts outstanding are
unsecured and repayable on demand.
The Company received rental income from subsidiaries of £nil during the year (2020: £0.3 million). The Company also incurred rental expenses
from subsidiaries of £0.3 million (2020: £10.1 million).
In addition, the Company has recharged an amount of £nil (2020: £1.4 million) to its subsidiaries and incurred £0.1 million (2020: £0.1 million)
of recharges from its subsidiaries during the year.
149
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes to the Financial Statements
Continued
32. Related Party Transactions continued
Subsidiaries of parent companies established within the European Economic Area are exempt from an audit if a guarantee is provided by the parent for the
subsidiary liabilities and the shareholders are in unanimous agreement. The Group will be exempting the following companies from an audit in 2021 for the
period ended 27 March 2021 under Section 479A of the Companies Act 2006, all of which are fully consolidated in these financial statements:
Company
Griffin Catering Services Limited
Jacomb Guinness Limited
George Gale & Company Limited
45 Woodfield Limited
Grand Canal Trading Limited
B&D Country Inns I Limited
B&D Country Inns II Limited
B&D (Cookham) Limited
B&D (Odiham) Limited
B&D (Reading) Limited
B&D (Win) Limited
B&D (Farnham) Limited
B&D (Kingsclere) Limited
RSH 200 Limited
Cotswold Inns and Hotels Limited
Company Number
01577632
02934979
00026330
04279254
04271734
07292333
08029280
07320065
08377459
07309587
07320245
08392963
08975762
12035987
03309179
The Group will be exempting the following companies from the preparation and delivering of accounts to Companies House under Section 394A
of the Companies Act 2006, all of which are fully consolidated in these financial statements:
Company
Griffin Inns Limited
Ringwoods Limited
F.S.T. Trustee Limited
Fuller, Smith & Turner Estates Limited
Company Number
00495934
00178536
03163480
01831674
33. Post Balance Sheet Events
On 31 March 2021, the Group agreed an Amend and Extend Refinancing of its existing debt facilities with its relationship banks, extending the
maturity of the £192 million facilities to 19 February 2023 and amending the financial covenants to a minimum liquidity level of £10 million to
31 March 2022.
On the same day it was also announced that the Group proposed placing new ‘A’ shares up to approximately 20% of existing issued ‘A’ ordinary
share capital. The refinancing of the facilities was conditional on the successful equity raise. On 20 April 2021 the equity raise was approved by
the shareholders at the EGM and the net proceeds of £52 million were received the same day.
On 13 May 2021, using the Group’s available facilities and the proceeds of the equity raise, the Group repaid the CCFF in full.
150
FINANCIAL STATEMENTSFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 34. Prior year adjustment
The Group identified an error within its assessment of deferred tax which dates back prior to the earliest prior period presented within these
financial statements. In line with IAS 8, the Group has restated balances as at 31 March 2019, and restated its financial results for the period ended
28 March 2020.
The issue identified as at 31 March 2019 related to how deferred tax was being calculated on property, plant and equipment (‘PP&E’) and the
assumptions used for the intended manner of recovery of each pub. Management had understated the base cost of PP&E recoverable on a sales
basis and not recognised a deferred tax liability on a use basis. Additionally, an adjustment was recognised to goodwill for the acquisition of
Bel & The Dragon as a result of incorrect application of the initial recognition exemption.
The financial impact of the errors identified are as follows:
Group
Deferred tax asset/(liability)
Retained earnings
Corporation tax
Goodwill
Income Statement for 52 weeks ended 28 March 2020:
Profit before tax
Tax
Profit after tax
Company
Deferred tax asset/(liability)
Retained earnings
Corporation tax
As at 28 March 2020
As at 31 March 2019
Reported
£m
Adjustment
£m
Restated
£m
Reported
£m
Adjustment
£m
Restated
£m
(17.1)
(414.1)
6.2
28.3
4.0
(3.0)
(0.2)
(0.8)
(13.1)
(9.2)
4.8
(4.4)
(417.1)
(328.4)
(4.0)
(332.4)
6.0
27.5
(2.8)
29.4
–
(0.8)
(2.8)
28.6
Reported
£m
Adjustment
£m
Restated
£m
166.2
(4.3)
161.9
–
(1.0)
(1.0)
166.2
(5.3)
160.9
As at 28 March 2020
As at 31 March 2019
Reported
£m
Adjustment
£m
Restated
£m
Reported
£m
Adjustment
£m
Restated
£m
(14.4)
(370.1)
6.1
3.6
(3.4)
(0.2)
(10.8)
(7.5)
4.4
(3.1)
(373.5)
(303.3)
(4.4)
(307.7)
5.9
–
–
–
151
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Directors
Chairman
Michael Turner, FCA,
Non-Executive Chairman
Executive Directors
Simon Emeny, Chief Executive
Adam Councell, ACMA
Fred Turner, ACA
Non-Executive Directors
Sir James Fuller, Bt
Richard Fuller
Helen Jones*
Robin Rowland*
Juliette Stacey, ACA*
*
Independent
Shareholder Information
as at 7 July 2021
President
Anthony Fuller, CBE
Chairman from 1982 to 2007, Anthony Fuller
retired from the Board in 2010 after a long
career with Fuller’s and continues as President.
Secretary and Registered Office
Rachel Spencer
Pier House
86-93 Strand-on-the-Green
London W4 3NN
Tel: 020 8996 2000
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 that you can advise
Computershare of changes to your
address or set up a dividend mandate online
at www.computershare.com/investor/uk
Shareholder Privileges
Individual shareholders with at least 500
‘A’ or ‘C’ ordinary shares or 5,000 ‘B’ ordinary
shares are eligible to receive a shareholder
Inndulgence card entitling them to a 15%
discount on food and drinks in any of our
managed pubs and hotels including Bel & The
Dragon and Cotswolds Inns & Hotels. It also
offers a 15% discount on the Best Flexible Rate
or Standard Flexible B&B Rate for Beautiful
Bedrooms by Fuller’s and Bel & The Dragon
accommodation. There is currently no
accommodation discount available with the
Shareholder Inndulgence Card at any of the
Cotswold Inns & Hotel sites.
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.
Financial Calendar and Key Dates
23 September 2021
Annual General Meeting (11 a.m.)
18 November 2021
FY22 Half year results announcement
June 2022
FY22 Full year results announcement
Information is available from the Company
Secretariat on 020 8996 2105
or at company.secretariat@fullers.co.uk.
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 to or during
the period to the Company’s Registrars:
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZZ
152
ADDITIONAL INFORMATIONFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Glossary
Adjusted earnings per share (“EPS”) – this is earnings per share, adjusted for separately disclosed items. The Directors believe that this measure
provides useful information for shareholders as to the performance of the Group.
Adjusted profits – this is profit before tax and before separately disclosed items.
CCFF – this is an HM Treasury and Bank of England lending facility.
CJRS – this is a claim for 80% of employees’ wages plus any employer National Insurance and pension contributions for staff on furlough through
the Government’s Coronavirus Job Retention Scheme.
Drinks, food and accommodation like for like sales growth – this is measured on the same basis as “Managed Pubs and Hotels invested like for like
sales growth”.
EBITDA – this is the earnings before interest, tax, depreciation, profit on disposal of plant and equipment, and amortisation, adjusted for separately
disclosed items.
LTIP – Long-Term Incentive Plan.
Managed Pubs and Hotels invested like for like sales growth – this is the sales growth calculated to exclude those pubs which have not been trading
throughout the two years for the corresponding period in both years. The principal exclusions from this measure are: pubs purchased or sold in the
last 12 months; sites which are closed; and pubs which are transferred to tenancy. The calculation excludes The Stable sites.
Market capitalisation – only the Company’s 40p ‘A’ ordinary shares are listed. The Company calculates its market capitalisation as the total of all
classes of ordinary shares; i.e. listed 40p ‘A’ ordinary shares, unlisted 4p ‘B’ ordinary shares and unlisted 40p ‘C’ ordinary shares plus all potentially
awardable share options and LTIP awards less any shares held in treasury. For the purposes of the calculation of market capitalisation, a 4p ‘B’
ordinary share is treated as having 10% of the market value of a quoted 40p ‘A’ ordinary share and a 40p ‘C’ ordinary share is treated as having
an equivalent value to a 40p ‘A’ ordinary share.
Net debt – this comprises cash, bank loans, other loans, debenture stock and preference shares.
Operating profit – this is profit before finance costs and tax and profit on disposal of properties.
SIP – Share Incentive Plan.
The disposal of the Fuller’s Beer Business – the sale of the entire issued share capital of The Fuller’s Beer Company (which was incorporated to
acquire certain of the assets and liabilities of the Fuller’s Beer Business).
The Fuller’s Beer Business or the “Beer Business” – the entirety of Fuller’s beer, cider and soft drinks brewing and production business, wine
wholesaling business, as well as the distribution thereof, and also includes the Griffin Brewery, Cornish Orchards, The Dark Star Brewing Company
and Nectar Imports Limited.
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.
TSA – Transitional Services Agreement with Asahi subsequent to sale of the Fuller’s Beer Business.
Working capital – calculated as current assets (trade receivables and inventory) less current liabilities (trade and other payables).
153
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 2018
£m
2017
£m
403.6
392.0
49.2
(6.0)
43.2
0.4
43.6
(8.8)
34.8
1.0
35.8
70.9
49.5
(6.6)
42.9
(3.0)
39.9
(7.4)
32.5
0.2
32.7
70.5
612.1
14.0
21.6
5.9
15.3
668.9
(20.0)
(73.7)
575.2
702.5
757.1
595.3
623.2
4.0
18.6
2.6
20.3
802.6
(171.7)
(50.7)
580.2
5.0
8.4
87.0
11.0
706.7
(50.0)
(62.9)
593.8
13.5
22.9
2.1
11.7
673.4
(30.0)
(71.8)
571.6
2.1
15.5
9.6
17.1
746.8
(207.7)
(39.4)
499.7
(27.5)
(92.7)
379.5
(27.5)
(206.2)
(183.6)
(201.4)
(122.9)
429.8
(49.1)
(53.1)
338.5
334.9
(64.1)
309.7
2021
2020
2019
2018
2017
61.39p
59.21p
(73.00)p
20.50p
62.78p
62.90p
(89.84)p
291.89p
–
132.80p
35.12p
20.15p
64.89p
19.55p
18.80p
£6.87
£7.80
£6.16
£6.07
£5.61
(308.0)
(291.8)
(245.2)
(201.9)
(206.1)
16.5
4,219
84.5
5,166
58.6
5,399
40.6
4,913
55.8
4,722
Five Years’ Progress
Group Income Statement
Revenue and other income
Operating profit before separately disclosed items
Finance costs before separately disclosed items
Adjusted profit before income tax
Exceptional items and discontinued operations
Profit before income tax
Taxation
Profit after income tax
Non-controlling interest
Loss/profit attributable to equity shareholders of the Parent Company
EBITDA1
2021
£m
73.4
(40.3)
(8.4)
(48.7)
(10.5)
(59.2)
9.6
(49.6)
–
(49.6)
(13.1)
Restated
2020
£m
319.7
27.0
(7.6)
19.4
146.8
166.2
(5.3)
160.9
–
160.9
53.9
Restated
2019
£m
324.7
40.0
(6.9)
33.1
(8.4)
24.7
(5.2)
19.5
(0.2)
19.3
59.5
1 Continuing operations only.
Assets employed
Non-current assets
Inventories
Other current assets
Assets classified as held for sale
Cash and cash equivalents
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)2
Net assets
Net debt (£ million)3
Gross capital expenditure (£ million)
Average number of employees
2 2020 includes ‘D’ share dividend.
3 Net debt from FY20 onwards includes amounts relating to leases under IFRS 16.
154
ADDITIONAL INFORMATIONFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes
155
OverviewStrategic ReportGovernanceFinancial StatementsAdditional InformationFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Notes
Continued
156
ADDITIONAL INFORMATIONFULLER’S ANNUAL REPORT AND ACCOUNTS 2021 Consultancy, design and production
www.luminous.co.uk
Design and production
www.luminous.co.uk
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Fuller, Smith & Turner P.L.C.
Registered Office
Pier House
86-93 Strand-on-the-Green London
W4 3NN