Results for the 52 weeks to 27 March 2021

STRICTLY EMBARGOED

UNTIL 7AM THURSDAY 8 JULY 2021

FULLER, SMITH & TURNER P.L.C.

("Fuller's", the "Company", or the "Group")

Financial results for the 52 weeks to 27 March 2021

Financial and Operational Summary

·    Resilient performance in an extraordinary year that started and ended with our entire pub estate closed, and with social distancing restrictions for 16 months to date

·    Closure of the estate for an 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 million 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.

All figures above are from continuing operations except for Group statutory (loss)/profit before tax which includes discontinued operations

1    Adjusted (loss)/profit before tax is the (loss)/profit before tax excluding separately disclosed items.

2   Net debt comprises cash and short-term deposits, bank overdraft, bank loans, CCFF, debenture stock and preference shares.

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.

Current Trading and Outlook

·    Estate now fully reopened, albeit with restrictions

·    Balanced business in terms of operational style, geography and demographics with varying recovery trajectories across the estate

·    Current net debt levels below where they were pre-pandemic, helped by strong cash generation since reopening

·    Managed like for like sales for 12 weeks to 3 July 2021 at 76% of 2019 levels, reflecting continued impact of social distancing restrictions on trading, particularly in our London pubs

·    Over 90 projects planned during the year to further improve our pub gardens and outside spaces

·    Transformational refurbishments completed at The Kingswood Arms, Banstead, and in Wendover with the opening of our seventh Bel & The Dragon site

·    100% occupancy in our Tenanted estate, with full commercial rent reintroduced on 26 June 2021

·    New central finance system on schedule to go live in the second half of the year

·    Looking forward to trading fully with no restrictions from 19 July

·    Company in excellent shape to continue to deliver long-term strategy and growth.

Chief Executive Simon Emeny said: "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 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."

-Ends-

For further information, please contact:

Fuller, Smith & Turner P.L.C.

Simon Emeny, Chief Executive                                                           020 8996 2000

Adam Councell, Finance Director                                                     020 8996 2000

Georgina Wald, Corporate Comms Manager                                 020 8996 2198

Instinctif Partners

Justine Warren                                                                                      020 7457 2010

Notes to Editors:

Fuller, Smith & Turner PLC is the premium pubs and hotels business that is famous for beautiful and inviting pubs with delicious fresh food, a vibrant and interesting range of drinks, and engaging service from passionate people. Fuller's has 209 managed businesses, with 1,027 boutique bedrooms, and 175 Tenanted Inns. The estate is predominately located in the South of England (44% of sites are within the M25) and stretches from our City of London heartland to the Jurassic Coast via the New Forest. Our Managed Pubs and Hotels include 15 iconic Ale & Pie pubs, seven stunning hotels in the Cotswolds, and Bel & The Dragon - seven exquisite country inns located in the Home Counties. In summary, Fuller's is the home of great pubs, outstanding hospitality and passionate people, where everyone is welcome and leaves that little bit happier than they arrived.

Photography is available from the Fuller's Press Office on 020 8996 2198 or by email at [email protected].

This statement will be available on the Company's website, www.fullers.co.uk. An accompanying presentation will also be available from 12 noon on 8 July 2021.

FULLER, SMITH & TURNER P.L.C.

FINANCIAL RESULTS FOR THE 52 WEEKS ENDED 27 MARCH 2021

CHAIRMAN'S STATEMENT

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 Exec 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. 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.

Michael Turner

Chairman

7 July 2021

CHIEF EXECUTIVE'S REVIEW

With the country still awaiting the start of the return to normality, we look back on a year that both 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 revenue[1] 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.

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. 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 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.

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. 

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.

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.

FINANCIAL POSITION

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 while 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 £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 4 July 2020 to 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.

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.

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).

In June 2020, the Group increased its available facilities by accessing the CCFF programme and issuing £100 million of commercial paper.

At 27 March 2021, the Group had £319.5 million of available facilities, of which £292 million was 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. 

Since the 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 £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.

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 a lease modification 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 position on separately disclosed items of £9.1 million expense (2020: £11.0 million expense) comprises principally of £12.9 million impairment of 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 which were predominately unlicensed properties.

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 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.

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.

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 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.

Simon Emeny

Chief Executive

7 July 2021

[1] From continuing operations.
 

Fuller, Smith & Turner P.L.C.

Financial Highlights

For the 52 weeks ended 27 March 2021

All figures are for continuing operations except where stated.

1    Pre-separately disclosed earnings before interest, tax, depreciation, profit on disposal of plant and equipment and amortisation.

2    Calculated on a 40p ordinary share.

3    Adjusted (loss)/profit 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.