TIDMFUL
RNS Number : 1352C
Fulham Shore PLC (The)
15 October 2020
The Fulham Shore plc
("Fulham Shore", the "Company" or "Group")
Final Results
The Directors of Fulham Shore are pleased to announce the
Company's audited results for the year ended 29 March 2020.
Highlights - Year ended 29 March 2020
-- Revenue growth of 7% to GBP68.6m (2019: GBP64.0m) driven by
improved trading in the Company's existing restaurant estate and
new openings
-- Headline EBITDA* of GBP15.2m after adoption of IFRS 16 and
GBP8.3m before adoption of IFRS 16** (2019: GBP7.8m)
-- EBITDA* of GBP14.3m after adoption of IFRS 16 and GBP7.2m
before adoption of IFRS 16** (2019: GBP7.1m)
-- Headline Operating Profit of GBP4.4m after adoption of IFRS
16 and GBP3.6m before adoption of IFRS 16** (2019: GBP3.5m)
-- Impairment charge on property, plant and equipment and change
in fair value of investments of GBP0.5m (2019: GBP0.2m)
-- Operating Profit of GBP1.8m after adoption of IFRS 16 and
GBP0.7m before adoption of IFRS 16** (2019: GBP1.8m)
-- Loss before tax of GBP0.8m after adoption of IFRS 16 and
profit before tax of GBP0.4m before adoption of IFRS 16** (2019:
profit before tax of GBP1.4m)
-- Loss after tax of GBP1.2m after adoption of IFRS 16 and GBP0m
before adoption of IFRS 16** (2019: Profit of GBP0.7m)
-- Net debt before lease liabilities recognised under IFRS 16 as
at 29 March 2020 of GBP9.5m (2019: GBP9.4m)
-- 7 new Franco Manca pizzeria and 2 new The Real Greek
restaurants were opened during the year ended 29 March 2020 in the
UK (2019: 4 Franco Manca pizzeria)
-- Since the year end:
o As directed by the UK Government, the restaurant sector was
ordered to close for dine-in customers on 20 March 2020, before the
Company's year end. The Group's restaurants then re-opened
gradually for takeaway and delivery from the end of April 2020 and
for dining in from July 2020
o 68 of 70 restaurants now fully open and trading supported by
additional safety precautions and training instigated throughout
the Group's estate prior to re-opening
o Thanks to the UK Government's "Eat Out to Help Out" scheme,
revenues for the days supported by the scheme increased markedly
compared to those of the previous year
o 1 further Franco Manca pizzeria opened in September on The Cut
by Waterloo station making 52 Franco Manca operated by the
Group
o Completion of an equity fundraise for GBP2.25m
o The Group's banking facilities were extended to GBP25.75m from
GBP15.0m
o Net debt (before lease liabilities recognised under IFRS 16)
as at 13 October 2020 was GBP3.4m
The above numbers are for continuing operations.
* Definition of Headline EBITDA and EBITDA can be found in the Financial Review.
** The Group adopted the IFRS 16 accounting standard for leases
at the beginning of the financial year but, in line with transition
rules, the comparatives have not been restated.
For further information, please contact:
The Fulham Shore PLC www.fulhamshore.com
David Page / Nick Wong Via Hudson Sandler
Allenby Capital Limited Tel: 020 3328 5656
Tony Quirke / Jos Pinnington (Sales)
Nick Naylor / Jeremy Porter / James
Reeve (Corporate Finance)
fulhamshore@hudsonsandler.com
Hudson Sandler - Financial PR Telephone: 020 7796
Alex Brennan / Lucy Wollam 4133
.
CHAIRMAN'S STATEMENT
Introduction
Coronavirus has had an unprecedented impact on communities
across the UK and, in turn, the UK restaurant sector. Your Chairman
started his restaurant career as a student dishwasher during the
'miners strikes' of 1973/74. During those times of social and
economic unrest restaurants remained open, albeit with limited
hours due to power shortages. However, even the significant
challenges presented to our industry during that period do not
compare to what we have experienced in recent months as a result of
the coronavirus pandemic, including the complete shutdown of
restaurants during the Spring.
I am pleased to report that the Company has emerged in robust
shape from this critical period and in some locations is now
serving more daily customers than ever before, despite reduced
seating capacity in our restaurants. These customers are returning
for our high quality, well sourced, ingredients, everyday day low
pricing and motivated and enthusiastic staff.
We traded profitably at Headline EBITDA level for the financial
year ended 29 March 2020. I am pleased to report, post lockdown, we
have continued to trade profitably at the Headline EBITDA
level.
Financial year ended 29 March 2020
During the year ended 29 March 2020, Fulham Shore had a
successful year up until the final few weeks of the financial year,
achieving a 7% increase in revenue to GBP68.6m (2019:
GBP64.0m).
This is the first financial year in which we are reporting our
figures after adopting the new IFRS 16 accounting standard for
leases ("IFRS 16"). The main impact of this standard is to
capitalise the Group's property rental leases as "right of use
assets" within non-current assets, along with the corresponding
lease liabilities representing the leases' cash flow obligations.
The right of use assets are then depreciated over the life of the
lease and a notional interest charge is recorded on the lease
liabilities.
Headline EBITDA* increased to GBP15.2m (2019: GBP7.8m)
incorporating the application of IFRS 16. If we had not adopted
IFRS 16, our Headline EBITDA** for the year would have been GBP8.3m
(2019: 7.8m), an increase of 6%. Net debt before lease liabilities
recognised under IFRS 16 as at 29 March 2020 was GBP9.5m (2019:
GBP9.4m).
Both The Real Greek and Franco Manca traded well throughout the
year until March. The increase in revenue and Headline EBITDA was
achieved despite the enforced restaurant closures at the end of
March that impacted both revenue and Headline EBITDA for our two
businesses.
The year's figures closed slightly below the market expectations
that were set before the impact of the coronavirus was known.
Without the closure of our restaurants in March, we would have
slightly exceeded those market expectations.
The figures for our full financial year were better than could
have been hoped for given the events of February and March when the
closure of restaurants was first announced. However they are now
truly historic in every sense of the word. This report is therefore
concentrating on the current trading environment and the long-term
growth prospects for the Company in the future.
Coronavirus effect, current trading and outlook
How the Company pivoted during the period 16 March 2020 to 2
August 2020
In line with UK government instructions, we closed all
restaurants by 23 March 2020. Trade had been diminishing over the
previous few weeks as the public's concern about coronavirus
increased.
During April 2020, in a few locations, we gradually opened for
delivery and click and collect. Within a few weeks some of our
sites were busier than the previous year. They were breaking
trading records without any dine-in customers.
Approximately half of our restaurants were operating profitably
at Headline EBITDA level on this basis by June 2020. The UK
Government then announced the reopening of dine-in to commence on 4
July 2020. We proceeded carefully throughout July 2020 and slowly
the majority of our estate opened its doors. We have two sites
still closed, being Franco Manca Aldwych and The Real Greek Strand.
These two locations rely on offices, theatregoers and tourists,
none of whom are around at present.
Due to the closure of our restaurants in accordance with UK
Government instructions, the Group was loss making both in March
2020 and in the first quarter of the financial year ending 28 March
2021 (April, May and June 2020). We returned to profit in the
second quarter at Headline EBITDA level, thanks to our customers
returning in great numbers.
Our colleagues in all parts of the business have worked
tirelessly to get the Company back on its feet, our waiting staff
and kitchen brigades striving hard to satisfy the large volume of
customers we serve wearing uncomfortable PPE and observing
different, strange, but safer working practices. The UK
Government's Job Retention Bonus scheme will make GBP1000 available
per eligible employee retained after furlough in February 2021.
This will, if we qualify, contribute towards our own job retention
actions and incentives that were put in place back in March
2020.
It is thanks to the commitment of our people that we are back
open and in certain instances able to serve more customers than
last year despite our reduced seating capacity. Head office staff
were on both full and flexi furlough, which for everyone has been a
strange and novel experience. All the above deserve both praise and
thanks for their commitment to the Group.
We are ready to flex the business should the UK Government
regulations change again. We believe that our previous experience
means we will be even better prepared for any significant future
changes.
Market overview
We believe that the restaurant market in the UK was heading for
a correction well before the Coronavirus outbreak.
There were too many restaurant businesses with owners and
managers convinced they could swim like Mark Spitz, but which were
actually being kept afloat by some badly made rubber rings and
various leaky flotation devices. They were driven to expand by
historically cheap debt, supposed high exit multiples on sale of
the businesses and run by management teams who had never
experienced either a downturn in the UK economy or an oversupply in
the restaurant sector.
Successful restaurant businesses will continue to be those
offering reasonably priced food, made with quality ingredients,
served by motivated teams. At Fulham Shore we offer all these
things. In addition, we operate from a well-positioned, carefully
chosen, fairly rented estate.
Before the onset of the coronavirus the busiest UK restaurants
were those in the West End of London and metropolitan areas such as
central Manchester. The suburbs of these large cities together with
regional towns around the UK were very much distant cousins. Since
4 July 2020 this situation has completely reversed. We believe this
will remain the case for the foreseeable future.
Some of our regional and suburban restaurants are currently
breaking trading records on a weekly basis. This is unprecedented
in my 47 years in the restaurant industry. Fulham Shore's estate is
well positioned to benefit from these structural changes.
The medium term
Predicting the UK economy, and the restaurant sector within it,
is probably more difficult now than at any time since 1945. Our
experience over the last six months has shown that the restaurants
that provide what customers want will thrive under the most
difficult of circumstances.
Ploughing the same old hackneyed furrow of formulaic me-too
offerings won't work anymore in the UK, especially in times of
societal turmoil and economic upheaval. We believe that the public
want food sourcing that is trustworthy; they want to know that the
owner of a restaurant knows the farm or vineyard that the food and
wine on the menu comes from. Combine this with menu pricing that
doesn't leave them with bill shock and servers who are seen to be
having a good time while working makes for a great atmosphere and,
consequently, high customer numbers per site.
Purchasing directly from our growers and producers cuts out one,
two or even three wholesalers, agents and middlemen. This enables
us to pass on these savings to our customers in the form of more
affordable menu prices. This results in the high numbers of
customers visiting our restaurants per week and means that our
turnover per site continues to be strong.
This is the future - high quality ingredients combined with low
prices, delivering high turnover per site. With rents likely to be
falling for the next few years and more sites becoming available,
the future looks promising for Fulham Shore. A post coronavirus era
will, I believe, see less competition. We will go prospecting in
areas of the country where we can open more of our restaurants, in
towns and cities such as Newcastle, Canterbury, Cardiff and
Glasgow.
Franco Manca
London suburbs and regional towns with a Franco Manca have been
the stars of the restaurant sector over the last few months. Our
policy of opening in London villages has borne fruit, as many
commuters are now working from home. These Franco Manca sites are
busier than they have ever been.
We have always felt that a Franco Manca pizzeria thrives better
in a local neighbourhood where it can build a loyal local following
rather than rely on passing trade. Due to our reduced seating
capacity and low prices we have demand for tables at peak times. We
have introduced our own virtual queuing system which enables us to
control the queue and also doubles as a track and trace system as
per UK Government guidelines.
Franco Manca continues to serve made to order sourdough pizza,
with dough freshly made every day at each location.
The Real Greek
The absence of tourists in London, office workers in the City
and theatregoers in the West End has impacted our The Real Greek
restaurants. These are normally bustling locations with queues and
a great vibe. The staff in these restaurants need special praise as
it must be difficult when your site is serving half your normal
number of customers with social distancing.
The complete opposite has occurred in our The Real Greek
locations around the country. Some of our regional locations are
twice as busy as they were last year. We have widened our use of
our booking system which enables us both to manage when customers
dine and which acts as a track and trace system as required by the
government.
Property
Landlords prior to COVID-19 were facing falling retail and
restaurant demand for their sites, due to the continued shift to
online shopping, the contraction of some large restaurant chains,
and the challenging economic backdrop over the past three
years.
The bottom has now truly fallen out of their world. There is no
safety net for landlords that relied on fee-based agents who played
naive prospective tenants against each other and then used this
"evidence" at the next rent review, to other operators, that this
was the new 'market rent' for the street.
Many of these landlords and their commercial agents benefited
from a constant and seemingly forever rising rent roll. Some, over
the last 40 years, were convinced that it was their financial
acumen and 'the property' which was contributing to their increased
wealth. It now turns out, and some have now realized, that it was
'the tenant' that was making them rich, not the building they
owned. The building now may turn out to be a liability rather than
an asset over the next few years.
There are some positive stories about some of our landlords.
More than 50% of our UK based landlords have worked with us and we
have come to an arrangement where we share the financial pain of
the closure period. We are still negotiating with the remainder but
astonishingly there are around 5% who cannot admit their world has
changed and are demanding money with legal menaces.
The tribulations of distressed UK businesses and their landlords
has resulted in the Group being offered more new sites than we can
possibly view. These are ex retail shops, ex ground floor offices,
ex chain restaurants, plus new build sites which were some years in
the planning, but now have no tenants. We feel the longer we wait
for even the best of these sites the lower the rents we can
achieve. We believe this situation may last at least 5 years.
Dividend policy
Although we were considering a dividend policy, the impact of
COVID-19 has meant that any plans for a dividend policy will be
delayed until the full effects of the pandemic are over. No
dividend is therefore being proposed for the year ended 29 March
2020.
Current outlook
As we write this report the UK government has once again imposed
trading restrictions in some areas of the country to combat the
spread of COVID-19. We do not believe that a 10pm curfew will have
a significant effect on our business, as the majority of our
customers eat before then. We can only react as and when these new
regulations come onto force in the areas where we have our
restaurants. If, as before, delivery and collect services are
permitted and dine-in curtailed we will pivot the business in this
direction once more.
Franco Manca and The Real Greek are popular with the public.
Fulham Shore is well capitalised and we have ample headroom in our
borrowing facilities. We are confident that this, combined with our
cash balances, will see us emerge from this period as a successful
survivor in an albeit reduced UK restaurant sector.
FINANCIAL REVIEW
Fulham Shore's performance in the year ended 29 March 2020 is
summarised in the table below:
Year Year Year
ended ended ended
29 March 29 March 31 March Change
2020 2020 2019
(IFRS 16) (IAS 17) (IAS 17) (IAS 17)
For continuing operations GBPm GBPm GBPm %
Revenue 68.6 68.6 64.0 +7.2%
Headline EBITDA* 15.2 8.3 7.8 +6.4%
Headline operating profit 4.4 3.6 3.5 +2.9%
EBITDA* 14.3 7.2 7.1 +1.4%
Operating profit 1.8 0.7 1.8 -61.1%
(Loss)/profit before taxation (0.8) 0.4 1.4 -71.4%
(Loss)/profit for the year (1.2) - 0.7 -100%
Basic earnings per share (0.2p) 0.0p 0.1p
Diluted earnings per share (0.2p) 0.0p 0.1p
Headline basic earnings
per share 0.2p 0.4p 0.4p
Headline diluted earnings
per share 0.2p 0.4p 0.4p
Cash flow from operating
activities 14.8 8.2 6.1 +34.4%
Development capital expenditure* 7.2 7.2 3.5 +105.7%
Net Debt 77.7 9.5 9.4 +1.1%
Number of restaurants operated No. No. No.
in the UK
Franco Manca 51 51 44 +15.9%
The Real Greek 18 18 16 +12.5%
69 69 60 +15.0%
* Reconciliation of profit before taxation to EBITDA and
Headline EBITDA for continuing operations:
Year Year Year
ended ended ended
29 March 29 March 31 March
2020 2020 2019
(IFRS (IAS 17) (IAS 17)
16)
GBPm GBPm GBPm
(Loss)/profit before taxation (0.8) 0.4 1.4
Finance costs 2.6 0.3 0.3
Depreciation and amortisation 10.8 4.8 4.3
Amortisation of brand 0.8 0.8 0.8
Exceptional costs:
- impairment of investments 0.2 0.2 0.1
- impairment of property, plant and
equipment 0.3 0.3 0.2
- Loss on disposal of property, plant
and equipment - - 0.2
- Covid-19 0.4 0.4 -
EBITDA 14.3 7.2 7.3
Share based payments 0.2 0.2 0.1
Pre-opening costs 0.7 0.9 0.4
Headline EBITDA 15.2 8.3 7.8
This year ended 29 March 2020 comprised of 52 full weeks of
trading compared to the previous financial year ended 31 March
2019, which comprised 53 full weeks of trading.
Total Group revenue from continuing operations for the year
ended 29 March 2020 grew by 7.6% to GBP68.6m from GBP64.0m last
year. This was driven by full year revenues from restaurants opened
in the previous year, new openings during the year, and improved
trading for many existing restaurants. However the Group lost
almost two weeks of revenue at the year end as a result of the UK
Governments COVID-19 lockdown.
During the year, we opened seven new Franco Manca pizzeria
across the UK and two new The Real Greek restaurants in London.
This takes the total restaurants operated by the Group in the UK to
69 (2019: 60) at year end. During the year, our franchisee in Italy
again opened the Franco Manca pizzeria on the island of Salina to
trade through the busy summer season.
This is the first year in which we are reporting our figures
after adopting the new IFRS 16 accounting standard for leases
("IFRS 16"). IFRS 16 came into effect for accounting periods
commencing on or after 1 January 2019.
The main impact of the standard is to capitalise the Group's
property rental leases as "right-of-use assets" within non-current
assets along with corresponding lease liabilities representing the
leases' cash flow obligations. The right-of-use assets are then
depreciated over the life of the lease and a notional interest
charge is recorded on the lease liabilities.
The standard allows for different transition options and the
Group has adopted the modified retrospective approach where the
cumulative effect of initially applying IFRS 16 is recognised at
the date of initial application (1 April 2019) and the right of use
asset is calculated based on the corresponding lease liability.
Therefore, the Group has not restated the comparatives. The impact
of IFRS 16 on the financial year is summarised above (further
information can also be found in note 23):
Reconciliation between IAS 17 and IFRS 16 for the year ended 29
March 2020:
Year IFRS 16 Year
ended Removal IFRS 16 IFRS 16 IFRS 16 ended
29 March of rent Depr- Interest Other 29 March
2020 expenses eciation expense Movement 2020
(IFRS (IAS 17)
16)
For continuing operations GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 68.6 - - - - 68.6
Headline EBITDA 15.2 6.9 - - - 8.3
Headline operating
profit 4.4 6.9 (6.0) - - 3.6
EBITDA 14.3 7.1 - - - 7.2
Operating profit 1.8 7.1 (6.0) - - 0.7
(Loss)/profit before
taxation (0.8) 7.1 (6.0) (2.3) - 0.4
(Loss)/profit for
the year (1.2) 7.1 (6.0) (2.3) - -
Basic eps (0.2p) 1.2p (1.0p) (0.4p) - -p
Diluted eps (0.2p) 1.2p (1.0p) (0.4p) - -p
Headline basic eps 0.2p 1.2p (1.0p) (0.4p) - 0.4p
Headline diluted
eps 0.2p 1.2p (1.0p) (0.4p) - 0.4p
Cash flow from operating
activities 14.8 7.1 - - (0.5) 8.2
Development capital
expenditure 7.2 - - - - 7.2
Net Debt 77.7 - - - 68.2 9.5
Although IFRS 16 depreciation is on a straight line basis, IFRS
16 interest expense is higher during the first years of recognition
than later in the lease as the lease liability balance is the
greatest at the beginning. Therefore reported profitability
improves over time under IFRS 16, all things being equal.
Group Headline EBITDA (as defined and reconciled above)
continues to be a key measure for the Group as well as industry
analysts as it is indicative of ongoing EBITDA of the
businesses.
For the following narrative over the following five paragraphs
on Group performance for the year ended 29 March 2020, in order to
compare like with like, the comparisons take the numbers from the
financial year ended 29 March 2020 as if IAS 17 has applied.
Headline EBITDA for the year was GBP8.3m (2019: GBP7.8m), an
increase of 6.4% on the prior year while the Group's EBITDA
increased 1.4% to GBP7.2m (2019: GBP7.1m).
Group depreciation and amortisation, excluding amortisation of
the Franco Manca brand, increased 9.4% to GBP4.7m (2019: GBP4.3m)
following the number of new restaurants opened during the year and
the previous year. The Group incurred one off costs in the year of
GBP0.3m (2019: GBP0.2m) from impairment charges for 4 restaurants
(2019: 3) which are, this year, impacted by COVID-19 and therefore
underperforming management's expectations and GBP0.4m (2019:
GBPNil) of exceptional costs relating to the temporary closure of
the restaurants from middle of March 2020 following instructions
received from the UK Government as part of the COVID-19 lockdown.
These one off costs, even though partially offset by the improved
EBITDA, have led to a decrease in operating profit by 61.1% to
GBP0.7m (2019: GBP1.8m).
With our new openings, we have invested GBP0.9m (2019: GBP0.4m)
in pre-opening costs. Finance costs have remained static at GBP0.3m
(2019: GBP0.3m) as the Group maintained the same level of net debt.
Overall this has resulted in a profit before taxation of GBP0.4m
(2019: GBP1.4m).
The Group's tax charge has decreased to GBP0.4m (2019: GBP0.7m).
Although the Group reported a loss before tax, much of the
exceptional costs incurred in the year do not benefit from
corporation tax relief. The Group's loss after tax was GBP0.0m
(2019: profit after tax of GBP0.7m).
Our basic and diluted earnings per share from continuing
operations was 0.0p (2019: 0.1p) while Headline diluted earnings
per share also remained at 0.4p (2019: 0.4p).
Cost inflation
During the year, weakness of Sterling against both the Euro and
the US Dollar from uncertainty over Brexit and the need to increase
stock levels in case of a hard Brexit has continued to put pressure
on food cost inflation. Where possible, we have benefited from
additional volume discounts due to our opening programme and
changes in suppliers which have helped to mitigate some of the cost
pressures.
We also saw 4.9% (2019: 4.4%) increase in the Government's
National Living Wage at the beginning of the financial year for
employees over 25 years old. Both of our businesses have chosen to
treat all staff members the same irrespective of age and have
therefore paid at least the National Living Wage to all employees.
Employer's pension auto-enrolment contribution rate also increased
at the beginning of the financial year from 2% to 3% (effectively a
50% increase in this cost).
Our other two material cost items are rent and utility costs.
Rental inflation of our estate continues to increase modestly.
However this is likely to be impacted by COVID-19 effects going
forward as we enter more short term rent deals with landlords
following the year end. Utility cost inflation continues to be
volatile as the wholesale cost of energy has been impacted by the
movement of Sterling and global economic adjustments.
Cash flows and balance sheets
The Group's cash flow from operating activities has increased
significantly to GBP14.8m as a result of the adoption of IFRS 16
but by a more modest 34.4% to GBP8.2m (2019: GBP6.1m) under IAS 17
as the benefit from improved cash generation from restaurants and
better cash management flowed through. This was also after an
additional GBP0.1m (2019: GBP0.2m) in operating cash flow being
applied to increased stock holding at year end as part of risk
mitigation planning for Brexit.
We invested GBP7.4m (2019: GBP3.6m), before right of use assets
additions, in development capital. This was primarily in new
restaurants but also included investment in IT systems to introduce
advanced customer relationship management facilities to both
businesses including the launch of a new loyalty programme for
Franco Manca in October 2019. In addition we recognised GBP9.2m
(2019: GBPNil) right-of-use assets in relation to the short term
leasehold properties acquired during the year for new restaurant
openings. At the same time an equal and opposite additional lease
liabilities were recognised on the balance sheet for GBP9.2m (2019:
GBPNil).
During the year we acquired approximately 1% minority interests
in the Group's two subsidiaries: Kefi Limited ("Kefi"), which owns
the subsidiary that owns and operates The Real Greek; and Franco
Manca Holdings Limited (formerly Rocca Limited) ("FM Holdings"),
which owns the subsidiary that owns and operates Franco Manca, for
a consideration of GBP628,026 in cash. Following these transactions
Fulham Shore now owns 100% of each subsidiary.
Resultant net debt from our activities before lease liabilities
recognised under IFRS 16 as at 29 March 2020 was GBP9.5m (2019:
GBP9.4m). This is financed by our facilities with HSBC Bank PLC,
made up of a GBP14.25m revolving credit facility ("RCF") and a
GBP0.75m overdraft.
Despite the reduced trading as a result of COVID-19 at the end
of the financial year, the Group funded its nine restaurant
openings during the year largely through existing operational cash
flow.
Post balance sheet events
On 20 March 2020, the UK Government issued direct instructions
to temporarily close all restaurants to dine-in trade as part of
wider efforts in the fight against Covid-19. Following the year
end, costs were reduced to a minimum and all but essential or
committed capital expenditures were halted in order to manage cash
flow, including halting the build of a new Franco Manca in Glasgow.
To conserve further the Group's cash resources, all Directors of
the Company and certain members of the senior management team
agreed to waive 20 per cent of remuneration due to them with effect
from 1 April 2020 and until such time as the majority of the
Company's restaurants were back open and trading.
Since 4 July 2020, the date from which the UK Government
determined that restaurants could reopen to serve dine-in customers
if safe to do so, the Group has undertaken a gradual reopening of
its restaurants, serving customers through a combination of
dine-in, takeaway, click and collect and delivery services. By the
first weeks of August 2020, 67 of the 69 restaurants at the time
had reopened to trading.
On 9 April 2020, Debenhams Retail Limited (formerly Debenhams
Retail PLC) ("Debenhams"), with whom the Group has concession
agreements for four restaurants, appointed Administrators. The
Group has been in contact with Debenhams, its Administrators and
the superior landlords of the various locations to ensure the four
restaurants were able to reopen at an appropriate time after the
COVID-19 lockdown. The Group has not had full clarity on the status
of the four concessions but it is expected that three of them may
have been terminated by Debenhams. Therefore for these three
locations, the associated right-of-use asset and recognised lease
under IFRS 16 will be disposed of when a new lease is entered into
with the superior landlord.
On 20 August 2020, the Company completed a facility agreement
for an increase in the amount available under its debt facilities
with HSBC Bank plc and the waiver of certain banking covenants.
Under the new arrangements, the term of the Company's existing
GBP14.25m revolving credit facility was extended by 12 months from
March 2021 to March 2022 and the Company increased its banking
facilities with HSBC to a total of GBP25.75m including the existing
GBP0.75m overdraft facility (from GBP15m). This increase of
GBP10.75m is provided under the government backed Coronavirus Large
Business Interruption Loan Scheme, which has a term of three years,
with repayments due over the second and third years of the
term.
On 20 August 2020, the Company raised GBP2,250,000 (before
expenses) from the issue of 36,000,000 new ordinary shares in the
Company. These new funds, together with the new banking facilities,
will give the Group substantial headroom over its net debt at a
time of uncertainty of impact from COVID-19.
People
During the year, the Group's key operations were within the UK.
With our opening programme, the Group continued to create more new
jobs in its new restaurants. We continue to invest in our staff
through training, incentives and personal development as well as
investing in a stronger people and human resource team.
As the sector closed during the final weeks of March 2020, the
Group joined the UK Government's Coronavirus Jobs Retention Scheme
and furloughed nearly all operational staff across the Group when
the restaurants temporarily closed for the lockdown. Nearly all our
restaurant staff were brought back from full time furlough as we
reopened our restaurants following lock down.
Principal risks and uncertainties
The Directors consider the following to be the principal risks
faced by the Group:
COVID-19
The macro economic impact of the COVID-19 pandemic is uncertain,
and continues to evolve, with potential disruption to financial
markets including currencies, interest rates, borrowing costs and
the availability of debt financing. However, the Group's financial
risk management strategies seek to reduce our potential exposure in
relation to these risks. Following the year end, the Group, as
described above:
o raised further funds of GBP2.25m from an equity placing and subscription;
o extended the maturity date of the RCF facility by 12 months to March 2022; and
o completed a new loan facility of GBP10.75m under the UK
Government's CLBIL scheme for a three year term.
The combined effect of these actions have added an additional
GBP13m of headroom to the Group's capital structure. Overall the
headroom will provide a good buffer if another lockdown is
introduced by the UK Government. The impact of further lockdowns or
different restrictions may affect the carrying values of goodwill
and/or property, plant and equipment including right of use assets.
However the Group, through its learnings over the last six months,
and investment in personal protective equipment, additional
training and innovative systems, is prepared to respond to changing
situations quickly.
Development programme
The Group's development programme is dependent on securing the
requisite number of new properties at sensible rents. Despite the
impact on the restaurant sector from COVID-19 and a general trend
downwards on rents, the UK restaurant property market remaining
competitive at the right locations and rents. To mitigate these
issues, the Group has an experienced property team concentrating on
securing new sites for the Group.
Supply chain
The Group focuses on the freshness and quality of the produce
used in its restaurants. It is exposed to potential supply chain
disruptions due to the delay or losses of inventory in transit. The
Group seeks to mitigate this risk through effective supplier
selection and an appropriate back-up supply chain. To help mitigate
potential delays as a result of Brexit, the Group is building up
stock, where possible, to allow for longer transit times and have
changed some of its ingredients to UK grown ingredients.
Employees
The Group's performance depends largely on its management team
and its restaurant teams. The inability to recruit people with the
right experience and skills could adversely affect the Group's
results. The result of the EU Referendum has created considerable
uncertainty over the immigration status of EU nationals. To
mitigate these issues the Group has invested in its human resources
team and has implemented a number of incentive schemes designed to
retain key individuals.
Brexit
Brexit may have an adverse impact on the wider economic
environment in the UK and across the EU, resulting in weaker
consumer spending in the travel and food and beverage markets. The
potential further depreciation of Sterling could lead to cost
inflation pressures, particularly in the food commodity markets.
Any interruption to cross border trading with the EU could lead to
delays in deliveries of some raw ingredients. Potential
restrictions on mobility of EU nationals post-Brexit may limit the
availability of labour resource in the UK. These risks are
discussed separately above.
Competition
The Group operates in a competitive and fragmented market which
regularly sees new concepts come to the market. However, the
Directors believe that the strength of the Group's existing
restaurant brands, value offer and constant strive towards
delivering the best product and service will help the business to
mitigate competitive risk.
Landlords
The Group operates four restaurants within the Debenhams estate.
The existing restaurants may be at risk from any possible future
structural changes in Debenhams as it entered administration in
April 2020. The Directors have therefore not committed the Group to
further restaurants with Debenhams in the short term, have opened
up discussions with the ultimate landlord and to mitigate the risk,
in part, have ensured that the four restaurants have separate
street entrances.
Cyber security
The Group has been operating an online "click and collect"
service, an online loyalty programme and various customer
relationship management tools which rely on online systems that may
experience cyber security failure leading to loss of revenue or
reputation loss. The Group utilises robust supplier selection
processes and third party reviews and testing on a regular basis to
identify weaknesses and improve on existing protection and
processes.
Regulatory compliance
The Group is growing and the UK Government is increasing the
number of areas requiring additional regulatory compliance
including GDPR. This may increase the Group's expenditure to ensure
compliance and the Group may experience a failure to comply thus
leading to significant fines. The Group reviews regulatory changes
on a regular basis.
Risks are formally reviewed by the Board regularly and
appropriate processes are put in place to monitor and mitigate
them.
Financial risk management
The Board regularly reviews the financial requirements of the
Group and the risks associated therewith. The Group does not use
complicated financial instruments, and where financial instruments
are used it is for reducing interest rate risk. The Group does not
trade in financial instruments. Group operations are primarily
financed from equity funds raised, bank borrowings and retained
earnings. In addition to the financial instruments described above,
the Group also has other financial instruments such as receivables,
trade payables and accruals that arise directly from the Group's
operations. Further information is provided in note 15 to the
financial statements.
Key performance indicators
The Board receives a range of management information delivered
in a timely fashion. The principal measures of progress, both
financial and non-financial, that are reviewed on a regular basis
to monitor the development of the Company and the Group are shown
in the table at the beginning of this section.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 29 March 2020
Year Year
ended ended
29 March 31 March
2020 2019
Notes GBP'000 GBP'000
Revenue 1 68,565 63,985
Cost of sales (40,628) (38,237)
Gross profit 27,937 25,748
Administrative expenses (23,500) (22,253)
Headline operating profit 4,437 3,495
Share based payments 18 (157) (138)
Pre-opening costs 2 (683) (386)
Amortisation of brand 7 (821) (821)
Exceptional costs:
- impairment of property, plant
and equipment 8 (260) (130)
- Change in fair value of investment 9 (248) (80)
- loss on disposal of property,
plant and equipment - (187)
- cost of acquisition (3) -
- COVID-19 temporary closure costs (718) -
* COVID-19 grants received against temporary closure 285 -
costs
Operating profit 2 1,832 1,753
Finance income 10 8
Finance costs 4 (2,596) (327)
(Loss)/profit before taxation (754) 1,434
Income tax expense 5 (421) (714)
(Loss)/profit for the year (1,175) 720
Other comprehensive income - -
Total comprehensive (loss)/income (1,175) 720
(Loss)/profit for the year attributable
to:
Owners of the company (1,193) 698
Non-controlling interests 18 22
(1,175) 720
Earnings per share
Basic 6 (0.2p) 0.1p
Diluted 6 (0.2p) 0.1p
CONSOLIDATED AND COMPANY BALANCE SHEETS
29 March 2020
Group Parent company
Notes 29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 7 25,017 25,767 - -
Property, plant and equipment 8 100,606 30,806 151 173
Investments 9 - 201 44,347 43,563
Trade and other receivables 11 1,081 1,020 10,567 11,863
Deferred tax assets 16 9 301 3 287
126,713 58,095 55,068 55,886
Current assets
Inventories 10 1,906 1,764 - -
Trade and other receivables 11 2,342 3,597 150 118
Cash and cash equivalents 12 2,056 1,835 1,030 22
6,304 7,196 1,180 140
Total assets 133,017 65,291 56,248 56,026
Current liabilities
Trade and other payables 13 (12,480) (11,881) (1,309) (1,312)
Borrowings 14 (5,163) - - -
Income tax payable (135) (93) - -
(17,778) (11,974) (1,309) (1,312)
Net current liabilities (11,474) (4,778) (129) (1,172)
Non-current liabilities
Trade and other payables 13 - (1,601) - -
Borrowings 14 (74,591) (11,240) (14,737) (13,721)
Deferred tax liabilities 16 (1,888) (1,733) - -
(76,479) (14,574) (14,737) (13,721)
Total liabilities (94,257) (26,548) (16,046) (15,033)
Net assets 38,760 38,743 40,202 40,993
Equity
Share capital 17 5,736 5,714 5,736 5,714
Share premium 6,911 6,889 6,911 6,889
Merger relief reserve 30,459 30,459 30,459 30,459
Reverse acquisition reserve (9,469) (9,469) - -
Retained earnings 5,123 5,025 (2,904) (2,069)
Equity attributable to owners
of the company 38,760 38,618 40,202 40,993
Non-controlling interest - 125 - -
Total Equity 38,760 38,743 40,202 40,993
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 29 March 2020
Attributable to owners of the Company
Reverse Equity Non-
Merger Acq- Share- Control-
Share Share Relief uisition Retained holders ling Total
Capital Premium Reserve Reserve Earnings ' Interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Funds GBP'000 GBP'000
GBP'000
At 26 March
2018 5,714 6,889 30,459 (9,469) 3,936 37,529 103 37,632
Profit for
the year - - - - 698 698 22 720
Total
comprehensive
income - - - - 698 698 22 720
Transactions with
owners
Share based
payments - - - - 138 138 - 138
Deferred tax
on share based
payments - - - - 253 253 - 253
Total
transactions
with owners - - - - 391 391 - 391
At 31 March
2019 5,714 6,889 30,459 (9,469) 5,025 38,618 125 38,743
Adjustment
on adoption
of IFRS 16
(note 23) - - - - 1,872 1,872 - 1,872
At 1 April
2019 5,714 6,889 30,459 (9,469) 6,897 40,490 125 40,615
Loss for the
year - - - - (1,193) (1,193) 18 (1,175)
Total
comprehensive
income - - - - (1,193) (1,193) 18 (1,175)
Transactions with
owners
Share based
payments - - - - 157 157 - 157
Deferred tax
on share based
payments - - - - (253) (253) - (253)
Acquisition
of
non-controlling
interests - - - - (485) (485) (143) (628)
Exercise of
share options 22 22 - - - 44 - 44
Total
transactions
with owners 22 22 - - (581) (537) (143) (680)
At 29 March
2020 5,736 6,911 30,459 (9,469) 5,123 38,760 - 38,760
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 29 March 2020
Merger
Share Share Relief Retained Total
Capital Premium Reserve Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 26 March 2018 5,714 6,889 30,459 (1,582) 41,480
Loss for the year - - - (878) (878)
Total comprehensive income
for the year - - - (878) (878)
Transactions with owners
Share based payments - - - 138 138
Deferred tax on share based
payments - - - 253 253
Total transactions with owners - - - 391 391
At 31 March 2019 5,714 6,889 30,459 (2,069) 40,993
Loss for the year - - - (739) (739)
Total comprehensive income
for the year - - - (739) (739)
Transactions with owners
Share based payments - - - 157 157
Deferred tax on share based
payments - - - (253) (253)
Exercise of share options 22 22 - - 44
Total transactions with owners 22 22 - (96) (52)
At 29 March 2020 5,736 6,911 30,459 (2,904) 40,202
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
for the year ended 29 March 2020
Group Parent
Notes Year Year Year Year
ended ended ended ended
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Net cash flow from/(used in)
operating activities 19 14,842 6,132 (724) (313)
Investing activities
Acquisition of property, plant
and equipment (7,214) (3,457) (10) (4)
Acquisition of intangible
assets (145) (99) - -
Acquisition of investments (47) - - -
Acquisition of non-controlling
interests (641) - (641) -
Disposal of discontinued operations - 329 - -
Loan repaid by subsidiary
undertakings - - 2,012 1,366
Net cash flow (used in)/from
investing activities (8,047) (3,227) 1,361 1,362
Financing activities
Proceeds from issuance of
new ordinary shares (net of
expenses) 44 - 44 -
Capital received from bank
borrowings 1,000 - 1,000 -
Capital repaid on bank borrowings (700) (1,110) (700) (1,110)
Principal element of lease (4,332) - - -
payments
Interest received 10 8 466 468
Interest paid (2,596) (327) (439) (392)
Net cash flow (used in)/from
financing activities (6,574) (1,429) 371 (1,034)
Net increase in cash and cash
equivalents 221 1,476 1,008 15
Cash and cash equivalents
at the beginning of the year 12 1,835 359 22 7
Cash and cash equivalents
at the end of the year 12 2,056 1,835 1,030 22
ACCOUNTING POLICIES
GENERAL INFORMATION
The Fulham Shore PLC is a public company limited by shares
incorporated and domiciled in England and Wales with registration
number 07973930 and registered office at 1(st) Floor, 50-51 Berwick
Street, London, W1F 8SJ, United Kingdom. The Company's ordinary
shares are traded on the AIM Market.
BASIS OF PREPARATION
The above audited financial information does not constitute
statutory financial statements as defined in section 434 of the
Companies Act 2006. The above figures for the period ended 29 March
2020 have been extracted from the Group's financial statements
which have been reported on by the Group's auditors and received an
audit opinion which was unqualified and did not include any
reference to matters to which the auditors drew attention by way of
emphasis without qualifying their report or a statement under
section 498(2) or section 498(3) of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31 March
2019 have been lodged with the Registrar of Companies. These
financial statements received an audit report which was unqualified
and did not include any reference to matters to which the auditors
drew attention by way of emphasis without qualifying their report
or a statement under section 498(2) or section 498(3) of the
Companies Act 2006. The financial statements for the year ended 29
March 2020 will be dispatched to the shareholders and filed with
the Registrar of Companies. The preliminary announcement was
approved by the Board and authorised for issue on 14 October
2020.
The accounting year for the Group runs to a Sunday within seven
days of 31 March each year which will be a 52 or 53 week period.
The year ended 29 March 2020 was a 52 week period, with the
comparative year to 31 March 2019 being a 53 week period.
The Company accounts have been prepared for the same periods as
the Group.
The financial statements have been prepared under the historical
cost convention and, as permitted by EU Law, t he Financial
Statements have been prepared and approved by the Directors in
accordance with International Financial Reporting Standards as
adopted by the EU ("IFRS").
The financial statements for the year ended 29 March 2020 are
presented in Sterling because that is the primary currency of the
primary economic environment in which the Group operates. All
values are rounded to the nearest thousand pounds (GBP'000) except
when otherwise indicated.
The parent company has not presented its own income statement,
statement of total comprehensive income and related notes as
permitted by section 408 of the Companies Act 2006.
NEW STANDARDS
The following new accounting standards are effective for the
year ended 29 March 2020 and have been adopted in these financial
statements:
IFRIC Interpretation 23 Uncertainty over Income Tax Treatments
(became effective for accounting periods commencing on or after 1
January 2019)
This standard clarifies how to apply the recognition and
measurement requirements in IAS12 when there is uncertainty over
income tax treatments. The Group has adopted this accounting
standard during the year and the implementation has not had a
material impact on the Group.
IFRS 16 Leases (became effective for accounting periods
commencing on or after 1 January 2019)
The Group has adopted the standard for the first time using the
modified retrospective approach. In doing so, the Group initially
applied the standard at the date of the initial application on 1
April 2019 where the cumulative effect of initially applying IFRS
16 is recognised at this date of initial application.
On transition to IFRS 16, the Group has elected to apply the
following practical expedients permitted by the standard:
- Applying a single discount rate to a portfolio of leases with
reasonably similar characteristics;
- Excluding initial direct costs from measuring the right-of-use assets at the transition date;
- Using hindsight when determining the lease term where the
contract contains options to break or renew; and
- For leases determined to be onerous before the transition
date, relying on this assessment as an indicator of impairment as
an alternative to performing an impairment review.
Further disclosures on such contracts can be found in Note
23.
NEW STANDARDS THAT ARE NOT YET EFFECTIVE
At the date of authorisation of these financial statements, the
following Standards and Interpretations relevant to the Group
operations that have not been applied in these financial statements
were in issue but not yet effective:
IAS 1 (Amendment) Definition of Material
IAS 8 (Amendment) Definition of Material
IFRS 3 (Amendment) Definition of Business in Business Combinations
IFRS 9 (Amendment) Interest rate benchmark reform
IAS 39 (Amendment) Interest rate benchmark reform
IFRS 7 (Amendment) Interest rate benchmark reform
The Directors anticipate that the adoption of these Standards
and Interpretations as appropriate in future years will have no
material impact on the financial statements of the Group other than
the interest rate benchmark reforms which are due to take place in
2021. As the replacement to Libor has not yet been agreed, the
impact cannot be assessed until the new benchmark is available.
GOING CONCERN
The consolidated financial statements have been prepared on a
going concern basis. The Board has reviewed the risk analysis set
out in the Financial Review, the Group's net current liabilities
position as at 29 March 2020, the forecasts for the next financial
year, other longer term plans, financial resources including
undrawn but available short term and long term facilities described
in note 14, the subsequent renewal and increase in facilities post
year end and operational cash flow where cash from revenues are
received within 7 days.
COVID-19 and government action from 20 March 2020 has
significant impact on forecasts used for going concern analysis.
The Directors have reviewed the rapidly evolving situation relating
to COVID-19 and have modelled a series of downside case scenarios.
These downside cases represent increasingly severe but plausible
scenarios and include assumptions relating to the estimates of the
impact of:
- The closure of all restaurants to dine-in, takeaway and
delivery for a period of 13 weeks and then a reopening programme
over 2 months;
- The closure of all restaurants to dine-in, takeaway and
delivery for a period of 26 weeks and then a reopening programme
over 2 months;
These downside cases, whilst considered by the Directors to be
extremely prudent, as to date the Government has not fully closed
restaurants to takeaway and delivery sales, have a significant
adverse impact on sales, margin and cash flow. In response, the
Directors have taken immediate and significant actions, all within
management's control, to reduce costs and optimise the Group's cash
flow and liquidity. Amongst these are the following mitigating
actions: reducing capital and investment expenditure through
postponing or pausing projects and change activity; deferring or
cancelling discretionary spend; freezing non-essential recruitment
and reducing marketing spend; and reducing indirect costs and
central costs. Even in the most severe scenario where restaurants
are closed for 26 weeks, the Group has adequate liquidity to cover
the losses and recommence trading as we have done following the
initial lockdown. Any other scenario where the Group is only
closing restaurants to dine-in and allowed to be open for takeaway
and delivery service, the impact on cash flow is significantly
lower.
Taking the reviews and analysis, the Board has a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Therefore the
Board is satisfied that, at the time of approving the financial
statements, it is appropriate to adopt the going concern basis in
preparing the financial statements.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate those of The
Fulham Shore PLC and all of its subsidiary undertakings for the
period. Subsidiaries acquired are consolidated from the date that
the Group has the power to control, exposure or rights to variable
returns, and the ability to use its power over the returns and will
continue to be consolidated until the date that such control
ceases.
Although the legal form of the transaction during the period
ended 29 June 2015 was an acquisition of Kefi Limited by The Fulham
Shore PLC, the substance is the reverse of this. Accordingly the
business combination has been prepared using reverse acquisition
accounting.
The acquisition of other subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. Any
costs directly attributable to the business combination are
expensed to the Statement of Comprehensive Income. The acquiree's
identifiable assets and liabilities are recognised at their fair
values at the acquisition date.
All intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation.
INTANGIBLE ASSETS
Goodwill
Goodwill arising on the acquisition of an entity represents the
excess of the cost of an acquisition over the Group's interest in
the fair value attributed to the identifiable net assets at
acquisition. Goodwill is not subject to amortisation but is tested
for impairment at least annually. After initial recognition,
goodwill is stated at cost less any accumulated impairment losses.
Any impairment is recognised immediately in the income statement
and is not subsequently reversed. Goodwill is allocated to an
associated operating segment made up of a group of cash generating
units for the purpose of impairment testing. Each of these groups
of cash generating units represents the Group's investment in a
subsidiary which is equivalent to an operating segment of the
Group. On disposal of a subsidiary the attributable amount of
goodwill is included in the determination of the profit or loss on
disposal.
Trademarks and licences
The fair value of the intangible assets acquired through the
reverse acquisition was determined using discounted cash flow
models. The key assumptions for the valuation method are those
regarding future cash flows, tax rates and discount rates. The cash
flow projections were based on management forecasts for the
subsequent four years period. The estimated useful lives range from
4 to 20 years, amortised on a straight-line basis.
Brand
The fair value of the brand intangible assets acquired through
an acquisition of a subsidiary was determined using discounted
royalty relief models. The key assumptions for the valuation method
are those regarding future cash flows, tax rates and discount
rates. The cash flow projections were based on management forecasts
for the subsequent ten year period.
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of brand from
the beginning of the financial year that they are available for
use. The estimated useful lives are 10 years on a straight-line
basis.
Computer software
Computer software licences are capitalised on the basis of the
costs incurred to acquire and bring into use the specific software.
These costs are amortised on a straight line basis over their
estimated useful lives, being between 3 and 5 years. Costs that are
directly associated with the production of identifiable and unique
software products controlled by the Group, and that are expected to
generate economic benefits exceeding costs beyond one year, are
recognised as intangible assets. Direct costs include software
development, employee costs and directly attributable overheads.
Software integral to a related item of hardware equipment is
accounted for as property, plant and equipment. Costs associated
with maintaining computer software programmes are recognised as an
expense when they are incurred.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less
depreciation and any recognised impairment loss. The cost of
property, plant and equipment includes directly attributable
incremental costs incurred in their acquisition and
installation.
Depreciation is provided on property, plant and equipment at
rates calculated to write each asset down to its estimated residual
value evenly over its expected useful life, as follows:-
Leasehold properties and improvements over lease term or renewal term
Plant and equipment 20% to 33% straight line
Furniture, fixtures and fittings 10% to 20% straight line
Assets in the course of construction are carried at cost, less
any recognised impairment loss. Depreciation of these assets
commences when the assets are ready for their intended use.
Residual values, useful lives and methods of depreciation are
reviewed and adjusted if appropriate on an annual basis. An item of
property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal.
The gain or loss arising on the disposal or retirement of an asset
is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the income
statement.
Right-of-use assets arising from the Group's lease arrangements
are depreciated over their reasonably certain lease term, as
determined under the Group's leases policy.
IMPAIRMENT OF ASSETS
Goodwill is not subject to amortisation but is tested for
impairment annually or whenever there is an indication that the
asset may be impaired. For the purpose of impairment testing,
assets which have separately identifiable cash flows, known as cash
generating units, are grouped into their operating segment. If the
recoverable amount of a group of cash generating units is less than
the carrying amount of that group's assets, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the group of cash generating units and then to the
other assets of the group pro-rata on the basis of the carrying
amount of each asset in the group. Impairment losses recognised for
goodwill are not reversed in a subsequent period. Recoverable
amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
At each balance sheet date, the Group reviews the carrying
amounts of its property, plant and equipment and intangible assets
with finite useful lives to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent, if any, of the
impairment loss. Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit, predominantly an
individual restaurant for the purposes of property, plant and
equipment, to which the asset belongs. If the recoverable amount of
an asset or cash-generating unit is estimated to be less than its
carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount. An
impairment loss is recognised immediately in the income statement.
Where an impairment loss subsequently reverses, the carrying amount
of the asset or cash-generating unit is increased to the revised
estimate of its recoverable amount, not to exceed the carrying
amount that would have been determined had no impairment loss been
recognised for the asset or cash-generating unit in prior years. A
reversal of an impairment loss is recognised immediately in the
income statement.
OTHER INVESTMENTS
Other investments comprising debt and equity instruments are
recognised and derecognised on a trade date where a purchase or
sale of an investment is under a contract whose terms require
delivery of the investment within the timeframe. Other investments
are initially measured at fair value, including transaction costs
and subsequently remeasured less any impairment.
Debt securities 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 using the effective
interest method, less any impairment. Debt securities that do not
meet the criteria for amortised cost are measured at fair value
through profit and loss.
Equity securities are classified and measured at fair value
through other comprehensive income, there is no subsequent
reclassification of fair value gains and losses to profit or loss
following derecognition of the investment.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities, in respect of
financial instruments, are recognised on the balance sheet when the
Group becomes a party to the contractual provisions of the
instrument.
INVENTORIES
Inventories are valued at the lower of cost and net realisable
value. Cost is determined on a first in, first out basis. Net
realisable value is based upon estimated selling price less further
costs expected to be incurred to completion and disposal. Provision
is made for obsolete and slow-moving items.
TRADE AND OTHER RECEIVABLES
Trade receivables represent amounts owed by customers where the
right to payment is conditional only on the passage of time and are
recorded at amortised cost. Other receivables represent amounts
owed by third parties and intra group balances in the parent
company where the right to payment is conditional on the passage of
time and the occurrence of certain event. The carrying value of all
trade and other receivables recorded at amortised cost is reduced
by allowances for lifetime estimated credit losses other than
expected credit losses on group balances which are based on
expected 12 month credit losses. Estimated future credit losses are
first recorded on the initial recognition of a receivable and are
based on the ageing of the receivable balances, historical
experience and forward looking considerations. Individual balances
are written off when management deems them not to be
collectible.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and call
deposits and other short term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
TRADE AND OTHER PAYABLES
Payables are initially recognised at fair value and subsequently
at amortised cost using the effective interest method.
SHARE CAPITAL
Share capital represents the nominal value of ordinary shares
issued.
SHARE PREMIUM
Share premium represents the amounts subscribed for share
capital in excess of nominal value less the related costs of share
issue.
MERGER RELIEF RESERVE
In accordance with Companies Act 2006 S.612 'Merger Relief', the
company issuing shares as consideration for a business combination,
accounted at fair value, is obliged, once the necessary conditions
are satisfied, to record the excess of the consideration received
over the nominal value of the shares issued to the merger relief
reserve.
REVERSE ACQUISITION RESERVE
Reverse accounting under IFRS 3 'Business Combinations' requires
the difference between the equity of the legal parent and the
issued equity instruments of the legal subsidiary pre-combination
to be recognised as a separate component of equity.
RETAINED EARNINGS
Retained earnings represents the cumulative profit and loss net
of distributions.
NON-CONTROLLING INTERESTS
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination and the
non-controlling shareholder's share of changes in equity since the
date of the combination. Total comprehensive income is attributed
to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are
translated into sterling, the presentational and functional
currency of the Group, at the rate of exchange ruling at the
balance sheet date. Transactions in foreign currencies are recorded
at the rate ruling at the date of the transaction. All differences
are taken to the income statement.
FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities and includes no
obligation to deliver cash or other financial assets. Interest
bearing loans and overdrafts are initially measured at fair value
(which is equal to cost at inception), and are subsequently
measured at amortised cost, using the effective interest rate
method. Any difference between the proceeds (net of transaction
costs) and the settlement or redemption of borrowings is recognised
over the term of the borrowing. Equity instruments issued by the
Group are recorded at the proceeds received, net of direct issue
costs.
TAXATION
Income tax expense represents the sum of the current tax payable
and deferred tax.
Current tax payable or recoverable is based on taxable profit
for the year. Taxable profit differs from profit as reported in the
income statement because some items of income or expense are
taxable or deductible in different years or may not be taxable or
deductible. The Group's liability for current tax is calculated
using tax rates and laws that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable in
the future arising from temporary differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit. It is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the tax profit or the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the year when the liability is settled or the asset
realised, based on tax rates that have been enacted or
substantively enacted by the balance sheet date. Tax assets and
liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when
they either relate to income taxes levied by the same taxation
authority on either the same taxable entity or on different taxable
entities which intend to settle the current tax assets and
liabilities on a net basis.
Tax is charged or credited to the income statement, except when
it relates to items charged or credited directly to equity, in
which case the tax is also recognised directly in equity.
LEASES
When the Group leases an asset, a right of use asset is
recognised for the leased item and a lease liability is recognised
for any lease payments to be paid over the lease term at the lease
commencement date. The right of use asset is initially measured at
cost, being the present value of the lease payments paid or
payable, plus any initial direct costs incurred in entering the
lease and less any lease incentives received. Right of use assets
are depreciated on a straight-line basis from the commencement date
to the earlier of the end of the asset's useful life or the end of
the lease term. The lease term is the non-cancellable period of the
lease plus any periods for which the Group is reasonably certain to
exercise any extension options. The useful life of the asset is
determined in a manner consistent to that for owned property, plant
and equipment. If right of use assets are considered to be
impaired, the carrying value is reduced accordingly. Lease
liabilities are initially measured at the value of the lease
payments over the lease term that are not paid at the commencement
date and are discounted for the portfolio of leases using the
incremental borrowing rate of the Group as the rate implicit in
individual leases is not readily ascertainable. After initial
recognition, the lease liability is recorded at amortised cost
using the effective interest method. It is remeasured when there is
a change in future lease payments arising from a change in an index
or rate or if the Group's assessment of the lease term changes; any
changes in the lease liability as a result of these changes also
results in a corresponding change in the recorded right-of-use
asset.
The Group has elected not to recognise right-of-use assets and
lease liabilities for short-term leases of machinery that have a
lease term of 12 months or less and leases of low-value assets,
including IT equipment. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis
over the lease term.
PROVISIONS
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the
Group will be required to settle that obligation and a reliable
estimate can be made of the amount of the obligation. Provisions
are measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date and are
discounted to present value where the effect is material.
RETIREMENT BENEFITS
The amount charged to the income statement in respect of pension
costs is the contributions payable to money purchase schemes in the
year. Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or
prepayments in the balance sheet.
REVENUE RECOGNITION
The Group's revenue is derived from the sale of food and drink
in its restaurants, or as deliveries or takeaways. The performance
obligation is fulfilled when control is transferred to the customer
at the point of sale. All sales are settled at the point of sale
and the group does not, therefore, have any contract assets or
liabilities. Revenue is recognised net of VAT, discounts and
returns.
INTEREST INCOME
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
GOVERNMENT GRANTS
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in
the statement of comprehensive income over the period necessary to
match them with the costs that they are intended to compensate.
SHARE BASED PAYMENTS
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value (excluding the effect of non market-based vesting conditions)
at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company's
estimate of the shares that will eventually vest and adjusted for
the effect of non market-based vesting conditions.
Fair value is measured using a Black-Scholes valuation model.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of the Group's accounting policies,
described above, with respect to the carrying amounts of assets and
liabilities at the date of the financial statements, the disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during
the reporting year. These judgements, estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
including current and expected economic conditions. Although these
judgements, estimates and associated assumptions are based on
management's best knowledge of current events and circumstances,
the actual results may differ. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the year in which the estimate is revised and in
any future years affected.
The judgements, estimates and assumptions which are of most
significance to the Group are detailed below:
Assessment of the recoverable amounts in respect of assets
tested for impairment
The Group tests goodwill for impairment on an annual basis or
more frequently if there are indications that amounts may be
impaired. For property, plant and equipment, including right of use
assets and intangible assets, other than goodwill, the Group tests
for impairment when there is an indication of impairment.
The impairment analysis for such assets is principally based
upon discounted estimated future cash flows from the use and
eventual disposal of the assets (see notes 7 and 8). Such an
analysis includes an estimation of the future anticipated results
and cash flows, annual growth rates, whether short term or long
term, future capital expenditures and the appropriate discount
rates (see notes 7 and 8 for key assumptions). Changes in the
estimates which underpin the Group's forecasts and selection of
appropriate discount rate could have an impact on the value in use
of the cash generating units and group of cash generating units
being tested.
Valuation of share based payments
The charge for share based payments is calculated in accordance
with the methodology described in note 18. The model requires
highly subjective assumptions to be made including the future
volatility of the Company's share price, expected dividend yield,
risk-free interest rates, expected time of exercise and employee
attrition rates. Changes in such estimates may have a significant
impact on the original fair value calculation at the date of grant
and the employee attrition rate will impact the judgement relating
to the number of share based incentives that would vest and
therefore the share based payments charge.
Finite lived intangible assets
Intangible assets include amounts spent by the Group acquiring
brands and the costs of purchasing and/or developing computer
software.
Where intangible assets are acquired through business
combinations and no active market for the assets exists, the fair
value of these assets is determined by discounting estimated future
net cash flows generated by the asset. Estimates relating to the
future cash flows and discount rates used may have a material
effect on the reported amounts of finite lived intangible
assets.
The useful life over which intangible assets are amortised
depends on management's estimate of the period over which economic
benefit will be derived from the asset. Reducing the useful life
will increase the amortisation charge in the consolidated income
statement. Useful lives are periodically reviewed to ensure that
they remain appropriate. For an one year reduction in useful life
of the brand, an additional GBP91,000 of amortisation would be
charged to the income statement.
Property, plant and equipment
Property, plant and equipment represents 75.6% (2019: 47.1%) of
the Group's total assets; estimates and assumptions made may have a
material impact on their carrying value and related depreciation
charge. The percentage has increased during the year following
adoption of IFRS 16 and recognition of right of use assets. The
depreciation charge for an asset is derived using estimates of its
expected useful life and expected residual value, which are
reviewed periodically. Increasing an asset's expected life or
residual value would result in a reduced depreciation charge in the
consolidated income statement. Management determines the useful
lives and residual values for assets, other than right of use
assets, when they are acquired, based on experience with similar
assets and taking into account other relevant factors such as any
expected changes in technology. The useful life of equipment is
assumed not to exceed the duration of restaurant property lease
unless there is a reasonable expectation of renewal or ability for
the equipment to be transferred for use in another restaurant.
Accounting treatment of other investments
Investments are recognised at fair value at the time of
acquisition. Management judgement is used to determine whether the
Group has significant influence or control over the investment
which would give rise to different accounting methodology being
applied as an associate or subsidiary.
Lease accounting
Lease accounting under IFRS 16 is significantly more complex
than under previous reporting requirements under IAS 17 and
necessitates the collation and processing of very large amounts of
data and the increased use of management judgements and estimates
to produce financial information. The most significant accounting
judgements are disclosed below:
- The Group determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or
any periods covered by a break clause to terminate the lease, if it
is reasonably certain not to be exercised.
- When the interest rate implicit in the lease is not readily
determinable, the Group estimates the incremental borrowing rate
("IBR") based on a risk-free rate adjusted for the effect of the
Group's theoretical credit risk. As the Group has external
borrowings, judgement is required to compute an appropriate
discount rate which was calculated based on UK bank borrowings and
adjusted by an indicative credit premium that reflects the credit
risk of the Group. This has resulted in a weighted average IBR of
3.3% applied to the leases.
Loyalty programme
The Group operates a loyalty programme in its Franco Manca
business. The scheme enables members to earn stamps from each
qualifying purchase from a Franco Manca restaurant. Rewards that
can be used against future purchases are earnt on collection of a
number of stamps. The Group recognises deferred revenue in an
amount that reflects the scheme's unsatisfied performance
obligations, valued at the stand-alone selling price of the future
benefit to the member. The amount of revenue recognised and
deferred is impacted by 'breakage'. On an annual basis the Group
estimate the number of rewards that will never be consumed
('breakage'). Significant estimation uncertainty exists in
projecting members' future consumption activity.
OPERATING SEGMENTS
The Group considers itself to have two key operating segments,
being the management and operation of The Real Greek restaurants
and the management and operation of Franco Manca restaurants. The
Group operates in only one geographical segment, being the United
Kingdom.
DEFINITIONS OF ALTERNATIVE PERFORMANCE MEASURES
OPERATING PROFIT
Operating profit is defined as profit before taxation, finance
income and finance costs.
HEADLINE OPERATING PROFIT
Headline operating profit is defined as operating profit before
amortisation of brand, impairment of property, plant and equipment,
impairment of goodwill and intangible assets, impairment and
changes in fair value of investments, temporary closure costs
relating to COVID-19, restructuring costs, costs of reverse
acquisition, cost of acquisition, share based payments, loss on
disposal of property, plant and equipment and pre-opening
costs.
HEADLINE PROFIT BEFORE TAXATION
Headline profit before taxation is defined as profit/loss before
taxation before amortisation of brand, impairment of property,
plant and equipment, impairment of goodwill and intangible assets,
impairment and changes in fair value of investments, temporary
closure costs relating to COVID-19, restructuring costs, costs of
reverse acquisition, costs of acquisition, share based payments,
loss on disposal of property, plant and equipment and pre-opening
costs.
PRE-OPENING COSTS
The restaurant pre-opening costs represent costs incurred up to
the date of opening a new restaurant that are written off to the
profit and loss account in the period in which they are
incurred.
HEADLINE EBITDA
Headline EBITDA is defined as EBITDA before temporary closure
costs relating to COVID-19, restructuring costs, costs of reverse
acquisition, cost of acquisition, share based payments, loss on
disposal of property, plant and equipment and pre-opening
costs.
EBITDA
EBITDA is defined as Headline EBITDA less share based payments
and pre-opening costs.
HEADLINE EPS
Headline basic EPS and Headline diluted EPS are defined in note
6.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
1 SEGMENT INFORMATION
For management purposes, the Group was organised into two
operating divisions during the year ended 29 March 2020. These
divisions, The Real Greek and Franco Manca, are the basis on which
the Group reports its primary segment information as identified by
the chief operating decision maker which is the Group's board of
directors.
For the year ended 29 March 2020:
The Real Franco
Greek Manca Other
segment segment unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue from:
External customers 20,004 48,525 36 68,565
Headline EBITDA 3,655 12,229 (690) 15,194
Depreciation and
amortisation (2,898) (7,828) (31) (10,757)
Headline operating
profit 757 4,401 (721) 4,437
Pre-opening costs (120) (563) - (683)
Impairment of investments - (248) - (248)
Operating profit 275 2,292 (735) 1,832
Finance income 4 6 - 10
Finance costs (724) (1,564) (308) (2,596)
Segment profit/(loss)
before taxation (445) 734 (1,043) (754)
Income tax expense (421)
Loss for the year
from continuing
operations (1,175)
Assets 32,712 98,972 1,333 133,017
Liabilities (25,254) (55,982) (12,021) (94,257)
Net assets 7,458 42,990 (10,688) 36,760
Capital expenditure 5,678 10,698 9 16,385
Capital expenditure
excluding right
of use assets 1,650 5,555 9 7,214
In addition to the revenues generated from external customers,
The Real Greek segment also generated internal revenues from
another segment to the value of GBP643,000 (2019:
GBP1,250,000).
1 SEGMENT INFORMATION (continued)
For the year ended 31 March 2019:
The Real Franco
Greek Manca Other
segment segment unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue from:
External customers 20,700 43,285 - 63,985
Headline EBITDA 2,746 5,814 (742) 7,818
Depreciation and
amortisation (1,048) (3,242) (33) (4,323)
Headline operating
profit 1,698 2,572 (775) 3,495
Pre-opening costs - (386) - (386)
Impairment investments - (80) - (80)
Impairment property,
plant and equipment (29) (101) - (130)
Operating profit 1,617 924 (788) 1,753
Finance income 3 5 - 8
Finance costs - - (327) (327)
Segment profit/(loss)
before taxation 1,620 929 (1,115) 1,434
Income tax expense (714)
Profit for the
year from continuing
operations 720
Assets 11,408 53,281 602 65,291
Liabilities (3,814) (10,177) (12,557) (26,548)
Net assets 7,594 43,104 (11,955) 38,743
Capital expenditure
excluding right
of use assets 407 3,046 4 3,457
Head office and PLC costs are not related to the Group's two
business segments and are therefore included in other unallocated
and are not part of a business segment. The Group's two business
segments primarily operate in one geographical area which is the
United Kingdom.
2 OPERATING PROFIT
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
Operating profit is stated after charging:
Staff costs (note 3) 25,524 23,956
Share based payments 157 138
Depreciation of property, plant and equipment
- Owned assets 4,657 4,261
- Leased assets 6,025 -
Amortisation of intangible assets:
- Trademarks, licenses and franchises 74 61
- Brand 821 821
Operating lease rentals:
Land and buildings - 6,361
Inventories - amounts charged as an expense 12,710 12,371
Auditor's remuneration:
- for statutory audit services 169 111
- for other assurance services - 13
- for tax services 42 24
- for transactional services - 11
Pre-opening costs 683 386
Exceptional costs:
- Impairment of investments 248 80
- impairment of property, plant and equipment 260 130
- loss on disposal of property, plant and equipment - 187
- COVID-19 temporary closure costs 718 -
- COVID-19 grants received against closure costs (285) -
COVID-19 temporary closure costs of GBP718,000 (2019: GBPNil)
relates to the one off cost of temporarily closing of all
restaurants following UK government instructions and includes staff
costs (which were partly covered by grants received), stock wastage
and other costs.
3 EMPLOYEES
Year Year
ended ended
29 March 31 March
2020 2019
No. No.
The average monthly number of persons (including Directors) employed by the Group during
the
year was:
Administration and management 32 26
Restaurants 1,243 1,075
1,275 1,101
The average monthly number of persons (including Directors) employed by the Company
during
the year was:
Administration and management 7 6
3 EMPLOYEES (continued)
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
Staff costs for above persons
Salaries and fees 23,379 21,959
Defined contribution pension costs 407 263
Social security costs 1,738 1,734
25,524 23,956
Share based payments 157 138
25,681 24,094
DIRECTORS' REMUNERATION
The remuneration of Directors, who are the key management
personnel of the company, is set out in aggregate and on a paid
basis below. Further details of directors' emoluments can be found
in the Report on Directors' Remuneration.
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
Salaries, fees and other short term employee benefits 942 897
Defined contribution pension costs 22 3
Social security costs 115 116
Share based payments - 31
1,079 1,047
Included above are fees paid to related parties for the
provision of directors' services which are further described in
note 22.
The Directors are the only employees of the Company. The
Directors' remuneration above represents the only staff costs for
the Company.
4 Directors received pension contributions during the year
(2019: 4).
During the year two directors (2019: Nil) exercised share
options over a total of 2,231,944 ordinary shares of the
Company.
4 FINANCE COSTS
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
Interest expenses on bank loans
and overdrafts 309 327
Interest on lease liabilities recognised 2,287 -
under IFRS 16
2,596 327
5 INCOME TAX EXPENSE
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
Income tax expense on continuing
operations
Based on the result for the year:
UK corporation tax at 19% (2019:
19%) 446 669
Adjustment in respect of prior periods (28) (54)
Total current taxation 418 615
Deferred taxation:
Origination and reversal of temporary
timing differences
Current year 3 99
Total deferred tax 3 99
Total tax expense on (loss)/profit
on continuing operations 421 714
Further information on the movement on deferred taxation is
given in note 16.
5 INCOME TAX EXPENSE (continued)
Factors affecting tax charge for year: Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
(Loss)/profit before taxation from continuing
operations (754) 1,434
Taxation at UK corporation tax rate of
19% (2018: 19%) (143) 272
Expenses not deductible for tax purposes 56 31
Depreciation/impairment on non-qualifying
fixed assets 231 290
Tax effect from right of use asset accounting 205 -
Share based payments 70 171
Rate change on deferred tax liability 30 -
Tax effect of utilisation of tax losses
not previously recognised - 4
Adjustment to previously recognised deferred - -
tax
Adjustment to tax charge in respect of
previous periods (28) (54)
Total income tax expense in the income
statement 421 714
Factors that may affect deferred tax charges are disclosed in
note 16 including a breakdown of the adjustment to previously
recognised deferred tax.
6 EARNINGS PER SHARE
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
Profit/(loss) for the purposes of basic
and diluted earnings per share: (1,193) 698
Share based payments 157 138
Deferred tax on share based payments 39 146
Pre-opening costs 683 386
Amortisation of brand 821 821
Deferred tax on amortisation of brand (137) (137)
Exceptional costs
- impairment of investment 248 80
- impairment of property, plant and equipment 260 130
- loss on disposal - 187
- cost of acquisition 3 -
- COVID-19 closure costs (net) 433 -
Headline profit for the year for the
purposes of headline basic and diluted
earnings per share: 1,314 2,449
Year Year
ended ended
29 March 31 March
2020 2019
No. '000 No. '000
Weighted average number of ordinary shares
in issue for the purposes of basic earnings
per share 572,885 571,385
Effect of dilutive potential ordinary
shares from share options 1,030 10,230
Weighted average number of ordinary shares
in issue for the purposes of diluted
earnings per share 573,915 581,615
6 EARNINGS PER SHARE (continued)
Further details of the share options that could potentially
dilute basic earnings per share in the future are provided in note
18.
Year Year
ended ended
29 March 31 March
2020 2019
Earnings per share:
Basic (0.2p) 0.1p
Diluted (0.2p) 0.1p
Headline Basic 0.2p 0.4p
Headline Diluted 0.2p 0.4p
7 INTANGIBLE ASSETS
Group Trademarks,
License and
franchises Software Brand Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
25 March 2018 58 103 8,211 20,705 29,077
Additions 5 94 - - 99
31 March 2019 63 197 8,211 20,705 29,176
Additions - 145 - - 145
29 March 2020 63 342 8,211 20,705 29,321
Accumulated amortisation
25 March 2018 31 33 2,463 - 2,527
Charge in the year 6 55 821 - 882
31 March 2019 37 88 3,284 - 3,409
Charge in the year 5 69 821 - 895
29 March 2020 42 157 4,105 - 4,304
Net book value
29 March 2020 21 185 4,106 20,705 25,017
31 March 2019 26 109 4,927 20,705 25,767
The amortisation charges for trademarks, license and franchises
and software for the year are recognised within administrative
expenses. The amortisation charges for brand for the year are
recognised within exceptional costs.
As at 29 March 2020 brand intangible assets which relates to
Franco Manca has a remaining amortisation period of 5 years (2019:
6 years).
Goodwill of GBP1,774,000 relates to The Real Greek and is
attributable to its group of cash generating units.
Goodwill of GBP18,931,000 relates to the acquisition of Franco
Manca Holdings Limited ("Franco Manca Holdings"). The goodwill is
attributable to the cash generating units held within Franco Manca
2 UK Limited.
7 INTANGIBLE ASSETS (continued)
For the purposes of impairment testing, the Directors consider
each of Franco Manca and The Real Greek, operating segments of the
Group, as the lowest level within the Group at which the goodwill
is monitored for internal management purposes. Each of these
segments is made up of a group of separate restaurants which are
cash generating units (CGUs) in their own right.
The recoverable amount for each segment and group of CGUs was
determined using a value in use calculation based upon management
forecasts for the trading results for that segment. Value in use
calculations are based on:
-- cash flow forecasts derived from the most recent financial
forecasts for the 2021 financial year for the sites open at the end
of March 2020;
-- extrapolated cash flow forecasts over twenty five years, an
appropriate timeframe for branded restaurant businesses, using
forecast growth rates based on past and current run-rates for the
initial five years that then reduce to the long term industry
growth rate of 2%;
-- less estimated annual capital expenditure required to
maintain the existing restaurants' look and feel in each segment
based on historic refurbishment programmes and investments in IT
systems;
-- a pre-tax discount rate of 6.9% (2019: 12.4%) which is the
rate believed by the Directors to reflect the risks associated with
the group of CGUs using a WACC model, and comparison to other
available restaurant businesses. During the year, the Group's
capital structure had a significant increase in debt from the
recognition of lease liabilities on adopting IFRS 16 compared to
the year ended 31 March 2019.
Other than as disclosed below and any further impact on trade
from COVID-19, management believes that no reasonably possible
change in any of the above key assumptions would cause the carrying
value of any segment to materially exceed its recoverable amount.
The estimated recoverable amount of The Real Greek and Franco Manca
segments exceed their carrying values by GBP46,149,000 and
GBP96,845,000 respectively. If assumptions used in the impairment
review are to change as below, each change would, in isolation,
lead to an impairment loss being recognised for the year ended 29
March 2020:
The Real Greek Franco Manca
% %
Percentage point change:
Reduction in long term growth rate 5.3% 4.7%
Increase in pre-tax discount rate 12.3% 8.7%
Similarly, given the impact of COVID-19 on trading, if, in the
unlikely event, all restaurants in each CGU had to close
temporarily to trading, the closure period will need to be, in
isolation, over 3 years to lead to an impairment loss being
recognised.
8 PROPERTY, PLANT AND EQUIPMENT
Group Furniture,
Right fixtures Assets
Leasehold of use Plant and and under
improvements assets equipment fittings construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
25 March 2018 32,685 - 5,887 2,423 220 41,215
Additions 2,020 - 605 166 666 3,457
Reclassification 24 - 8 65 (97) -
Disposals (438) - (139) (40) (5) (622)
31 March 2019 34,291 - 6,361 2,614 784 44,050
Recognition on adoption of IFRS
16 - 64,388 - - - 64,388
1 April 2019 34,291 64,388 6,361 2,614 784 108,438
Additions 4,879 9,171 1,366 656 313 16,385
Reclassification 551 - 36 97 (684) -
Disposals - - (8) - (26) (34)
29 March 2020 39,721 73,559 7,755 3,367 387 124,789
Accumulated depreciation
and impairment
25 March 2018 6,380 - 2,286 781 - 9,447
Charge in the year 2,656 - 1,198 407 - 4,261
Impairment 130 - - - - 130
Disposals (438) - (120) (36) - (594)
31 March 2019 8,728 - 3,364 1,152 - 13,244
Charge in the year 2,892 6,025 1,300 465 - 10,682
Impairment 260 - - - - 260
Disposals - - (3) - - (3)
29 March 2020 11,880 6,025 4,661 1,617 - 24,183
Net book value
29 March 2020 27,841 67,534 3,094 1,750 387 100,606
31 March 2019 25,563 - 2,997 1,462 784 30,806
The net book value of right of use assets include GBP67,534,000
(2019: GBPNil) in relation to assets held under finance leases.
8 PROPERTY, PLANT AND EQUIPMENT (continued)
Impairment review of property, plant and equipment is reviewed
when there is indication of impairment. For the purposes of
impairment testing of property, plant and equipment, the Directors
consider each restaurant unit as a separate cash generating units
(CGUs). The recoverable amount for each CGU was determined using a
value in use calculation based upon management forecasts for the
trading results for those restaurants. Value in use calculations
are based on:
-- cash flow forecasts derived from the most recent financial
forecasts for the 2021 financial year for the sites open at the end
of March 2020;
-- extrapolated cash flow forecasts over the remaining unexpired
length of the lease years using forecast growth rates based on run
rate expectations for the initial five years that then reduce to
the long term industry growth rate of 2%;
-- incorporate any expected trading or cash flow impact from COVID-19;
-- less estimated annual capital expenditure required to
maintain the existing restaurants' look and feel in each segment
based on historic refurbishment programmes;
-- a pre-tax discount rate to cash flow projections of 6.9%
(2019: 12.4%) which is the rate believed by the Directors to
reflect the risks associated with the CGU using a WACC model with
comparison to other available restaurant businesses.
The Group has also conducted a sensitivity analysis on the
impairment test of the CGU carrying value including reducing sales
level by reducing long term growth rate by 1 % and there is no
reasonably expected change that would give rise to an impairment
charge other than the CGUs listed below, where the overall
impairment charge would increase by GBP387,000.
The following impairment charges have been recognised in the
Statement of Comprehensive Income as exceptional costs - impairment
of property, plant and equipment.
29 March 29 March 31 March 31 March
2020 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000
Impairment Recoverable Impairment Recoverable
charge amount charge amount
For continuing operations
Franco Manca restaurant
1 71 1,869 - -
Franco Manca restaurant
2 - - 75 487
Franco Manca restaurant
3 - - 26 838
Total for Franco Manca
operating segment 71 1,869 101 1,325
The Real Greek restaurant
1 20 1,278 - -
The Real Greek restaurant
2 10 110 29 87
The Real Greek restaurant
3 159 1,383
Total for The Real Greek
operating segment 189 2,771 29 87
Total for the Group 260 4,640 130 1,412
The recoverable amounts shown above include the right of use
assets recognised under IFRS 16 relating to the relevant CGU.
8 PROPERTY, PLANT AND EQUIPMENT (continued)
During the year ended 31 March 2019, the Group impaired the
short term leasehold improvements in relation to two properties
trading as Franco Manca, which are trading financially below
management expectations, and one property trading as The Real
Greek, which has just over two years left on the lease and the
lease has not yet been extended or renewed.
Parent Company Furniture,
fixtures
Leasehold Plant and and
improvements equipment fittings Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
25 March 2018 205 55 25 285
Additions - 4 - 4
31 March 2019 205 59 25 289
Additions 1 8 1 10
Disposals - (1) - (1)
29 March 2020 206 66 26 298
Accumulated
depreciation
25 March 2018 37 38 7 82
Charge in the year 22 9 3 34
31 March 2019 59 47 10 116
Charge in the year 21 7 3 31
29 March 2020 80 54 13 147
Net book value
29 March 2020 126 12 13 151
31 March 2019 146 12 15 173
All depreciation charges have been recognised in administrative
expenses in the income statement.
All non-current assets are located in the United Kingdom.
9 INVESTMENTS
29 March 31 March
2020 2019
GBP'000 GBP'000
Group
Unlisted shares 245 201
Change in fair value (245)
Loans at cost 83 80
Impairment of investments and loans (83) (80)
Carrying amount - 201
Investments are recognised and derecognised on a trade date
where a purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, including transaction costs and subsequently
measured.
During the year ended 31 March 2019 the Group made an investment
in Made of Dough Limited subscribing for 25% of the equity.
Following a further funding round during the year ended 29 March
2020, the Group holds 24% of the equity of Made of Dough Limited.
Although the investment is for more than 20% of the investee and
includes one board representation, the structure of the investee
board, the shareholder agreement and the start up nature of the
business operations has led the Group to conclude that the Group
does not have significant influence over its operations and
therefore it is not an associate.
Other investments classified as financial assets are stated at
amortised cost using the effective interest method, less any
impairment. During the year ended 29 March 2020, the Group
recognised a movement in fair value of the unlisted shares in Made
of Dough Limited given the uncertainty in valuation given the
ongoing impact of COVID-19 on the sector. Also during the year, the
Group recognised an impairment of the loan investment based on
estimated future credit loss.
29 March 31 March
2020 2019
GBP'000 GBP'000
Parent Company
Cost and net book value
Opening position 43,563 43,439
Investment in subsidiaries 784 124
Closing position 44,347 43,563
9 INVESTMENTS (continued)
As at 29 March 2020, the Company had the following subsidiary
undertakings which are all registered at 1st Floor, 50-51 Berwick
Street, London W1F 8SJ:
Name of subsidiary Class Proportion Nature of business
of of shares
Holding held,
ownership
interest and
voting power
Incorporated in England and
Wales
FM98 LTD Limited* Ordinary 100% Operation of restaurants
10DAS Limited Ordinary 100% Operation of restaurants
Café Pitfield Ordinary 100% Dormant
Limited
Kefi Limited Ordinary 100% Dormant
The Real Greek Food
Company Limited* Ordinary 100% Operation of restaurants
The Real Greek Wine
Company Limited* Ordinary 100% Restaurant property
Souvlaki & Bar Limited* Ordinary 100% Dormant
CHG Brands Limited* Ordinary 100% Dormant
The Real Greek International
Limited* Ordinary 100% Dormant
Franco Manca Holdings
Limited Ordinary 100% Dormant
Franco Manca 2 UK Ordinary 100% Operation of restaurants
Limited*
FM6 Limited* Ordinary 100% Restaurant property
FM111 Limited* Ordinary 100% Restaurant property
FM Catherine The Great
Limited* Ordinary 100% Restaurant property
Franco Manca International
Limited* Ordinary 100% Dormant
* Held by subsidiary undertaking
10 INVENTORIES
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Raw materials 528 656 - -
Consumables 1,378 1,108 - -
1,906 1,764 - -
Inventories are charged to cost of sales in the consolidated
comprehensive statement of income.
11 TRADE AND OTHER RECEIVABLES
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Included within non-current assets:
Amounts receivable from subsidiaries - - 10,567 11,863
Other receivables 1,081 1,020 - -
1,081 1,020 10,567 11,863
Included within current assets:
Trade receivables 606 1,470 - -
Other receivables 235 176 61 -
Prepayments and accrued income 1,501 1,951 89 118
2,342 3,597 150 118
3,423 4,617 10,717 11,981
Other receivables due after more than one year relate to rent
deposits.
Amounts receivable from subsidiaries in the Company due after
more than one year are unsecured and earn interest at 3.5% above
LIBOR.
Receivables are denominated in sterling.
The Group and Company hold no collateral against these
receivables at the balance sheet date. The Directors consider that
the carrying amount of receivables are recoverable in full and
approximates to their fair value. As the risk of a credit loss is
low there is no material ECL adjustment required.
12 CASH AND CASH EQUIVALENTS
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 2,056 1,835 1,030 22
Cash and cash equivalents as presented in the balance sheet 2,056 1,835 1,030 22
2,056 1,835 1,030 22
Bank balances comprise cash held by the company on a short term
basis with maturity of three months or less. The carrying amount of
these assets approximates to their fair value.
13 TRADE AND OTHER PAYABLES
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Included in current liabilities:
Trade payables 5,386 4,202 83 67
Other taxation and social security payable 1,661 1,600 86 88
Other payables 808 843 - 1
Accruals 4,625 4,844 1,140 1,156
Deferred income - 392 - -
12,480 11,881 1,309 1,312
Included in non-current liabilities:
Deferred income - 1,601 - -
- 1,601 - -
Trade payables are all denominated in sterling and comprise
amounts outstanding for trade purchases and ongoing costs and are
non-interest bearing.
The Directors consider that the carrying amount of trade
payables approximate to their fair value.
Deferred income relates to lease incentives received by the
Group on restaurant leases acquired. Following the adoption of IFRS
16 this is no longer recognised.
14 BORROWINGS
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Short term borrowings:
Lease liabilities 5,163 - - -
Long term borrowings:
Bank loans 11,540 11,240 11,540 11,240
Lease liabilities 63,051 - - -
Amounts owed to subsidiary undertakings - - 3,197 2,481
74,591 11,240 14,737 13,721
79,754 11,240 14,737 13,721
As at 29 March 2020, the Group's committed Sterling borrowing
facilities comprises a revolving credit facility of GBP14 ,250,000
(2019: GBP14,250,000) expiring between two and five years and a
bank overdraft facility of GBP750,000 (2019: GBP750,000) from HSBC
Bank PLC, repayable on demand, which are secured by a mortgage
debenture in favour of HSBC Bank PLC representing fixed or floating
charges over all assets of the Group.
The interest rate applicable on the revolving credit facility is
2 .50 % above LIBOR. The interest rate applicable on the bank
overdraft is 2.5% over base rate. The overdraft facility was
undrawn as at 29 March 2020.
Amounts owed to subsidiary undertakings are amounts borrowed
from The Real Greek Food Company Limited, a subsidiary of the
Company and are repayable on 31 March 2021. The interest rate
applicable on the amounts owed to subsidiary undertakings is
3.5%.
The maturity profile of the Group's lease liabilities as at 29
March 2020 was as follows:
29 March
2020
GBP'000
Within one year 5,163
In more than one year but less than two years 5,354
In more than two years but less than three years 5,270
In more than three years but less than four years 5,085
In more than four years but less than five years 4,778
In more than five years 44,899
70,549
Effect of discounting 2,335
Lease liabilities 68,214
14 BORROWINGS (continued)
There are no committed lease liabilities not yet commenced at 29
March 2020.
Interest expense on borrowings for the year is disclosed in Note
4 finance costs.
15 CAPITAL AND FINANCIAL MANAGEMENT
The Group is exposed to financial risks which could affect the
Group's future financial performance.
This note describes the objectives, policies and processes of
the Group for managing those risks and the methods used to measure
them.
The Group finances its operations through equity, borrowings and
cash generated from operations. For borrowings other than lease
liabilities, the Group's policy is to borrow centrally using a
mixture of long-term and short-term borrowing facilities to meet
anticipated funding requirements. These borrowings, together with
cash generated from operations, are loaned internally or
contributed as equity to certain subsidiaries.
Financial assets and liabilities
The Group and Company had the following financial assets and
liabilities:
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Non-current financial assets
Other investments - 201 - -
Amounts owed by subsidiary undertakings - - 10,567 11,863
Other receivables 1,081 1,020 - -
Current financial assets
Cash at bank and in hand 2,056 1,835 1,030 22
Trade and other receivables* 841 1,646 - -
3,978 4,702 11,597 11,885
Current financial liabilities
At amortised cost - borrowings 5,163 - - -
At amortised cost - payables** 10,819 9,889 1,223 1,224
Non-current financial liabilities
At amortised cost - borrowings 74,591 11,240 11,540 11,240
At amortised cost - payables - - 3,197 2,481
90,573 21,129 15,960 14,945
* excludes other taxation and social security receivable and
prepayments included in trade and other receivables in note 11.
** excludes other taxation and social security and deferred
income included in trade and other payables in note 13.
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
The maturity analysis table below analyses the Group's financial
assets and liabilities into relevant maturity groupings based on
the remaining period at the balance sheet to the contractual
maturity date. The amounts disclosed in the table are contractual
undiscounted cash flows.
For the year ended 29 March 2020
Between More
Less than 1 and than
1 year 5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 2,056 - - 2,056
Trade and other receivables 841 93 988 1,922
Bank loans and overdrafts - (11,540) - (11,540)
Lease liabilities (30) (4,056) (64,128) (68,214)
Trade and other payables (10,819) - - (10,819)
(7,952) (15,503) (63,140) (86,595)
For the year ended 31 March 2019
Between More
Less than 1 and than
1 year 5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
Other investments - - 201 201
Cash at bank and in hand 1,835 - - 1,835
Trade and other receivables 1,646 57 963 2,666
Bank loans and overdrafts - (11,240) - (11,240)
Trade and other payables (9,889) - - (9,889)
(6,408) (11,183) 1,164 (16,427)
The financial instruments recognised on the balance sheets and
shown above are all loans and receivables and financial liabilities
at amortised cost.
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
The maturity analysis table below analyses the Company's
financial assets and liabilities into relevant maturity groupings
based on the remaining period at the balance sheet to the
contractual maturity date. The amounts disclosed in the table are
contractual undiscounted cash flows.
For the year ended 29 March 2020
Between
Less than 1 and
1 year 5 years Total
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 1,030 - 1,030
Trade and other receivables - 10,567 10,567
Bank loans and overdrafts - (11,540) (11,540)
Trade and other payables (1,223) (3,197) (4,420)
(193) (4,170) (4,363)
For the year ended 31 March 2019
Between
Less than 1 and
1 year 5 years Total
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 22 - 22
Trade and other receivables - 11,863 11,863
Bank loans and overdrafts - (11,240) (11,240)
Trade and other payables (1,224) (2,481) (3,705)
(1,202) (1,858) (3,060)
The financial instruments recognised on the balance sheets and
shown above are all loans and receivables and financial liabilities
at amortised cost.
Liquidity Risks
The Group and Company had a committed long term revolving credit
facility of GBP14,250,000 (2019: GBP14,250,000) and short term bank
overdraft facilities available to manage its liquidity as at 29
March 2020 of GBP750,000 (2019: GBP750,000).
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
Market Risks
The Group's market risk exposure arises mainly from its floating
interest rate interest bearing borrowings. Only the following
financial assets and liabilities were interest bearing:
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Floating rate
Cash at bank and in hand 2,056 1,835 1,030 22
Bank loans (11,540) (11,240) (11,540) (11,240)
(9,484) (9,405) (10,510) (11,218)
Trade and other receivables and trade and other payables are all
non-interest bearing.
Weighted average interest rates paid for bank loans during the
year ended 29 March 2020 were 1.9% and year ended 31 March 2019
were 1.9% and the weighted average interest rates paid for bank
overdrafts during the year ended 29 March 2020 were 2.5% and year
ended 31 March 2019 were 2.5%.
The Group has performed a sensitivity analysis based on a 0.5%
variance in LIBOR element of floating interest rates. The
annualised impact of an increase in LIBOR by 0.5% applied to the
balance of floating rate bank loans at the year end would result in
increased finance costs of GBP57,700 (2019: GBP56,200).
Foreign Exchange Risks
During the years ended 29 March 2020 and 31 March 2019, the
Group did not receive or pay significant amounts denominated in
foreign currencies. As purchasing from foreign franchised
territories that is not denominated or agreed in Sterling increase
to a significant level, the Group will implement a foreign exchange
management policy.
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
Credit Risks
The Group's exposure to credit risk arises mainly from as
follows:
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 2,056 1,835 1,030 22
Trade receivables and other receivables 841 1,646 10,567 11,863
2,897 3,481 11,597 11,885
The Group estimated that a future credit loss was likely in
relation to the other investments held by the Group. Therefore the
Group has recognised an impairment of GBP3,000 during the year
ended 29 March 2020 (2019: GBP80,000). The carrying amounts of the
other financial assets above are considered to be recoverable in
full and approximate to their fair value. They are neither past due
nor impaired and the expected credit loss is not considered to be
material.
The majority of the Group's cash balances have been held in
current accounts savings accounts at HSBC Bank PLC during the years
ended 29 March 2020 and 31 March 2019 and did not earn any
significant interest. The Group estimates that there is no material
expected credit loss.
The majority of the Group's trade receivables are due for
settlement within 7 days and largely comprise amounts receivable
from credit and debit card clearing houses. As the Group has no
material credit facilities granted to customers no credit losses
have been estimated.
The Company's trade and other receivables are made up of loans
to its subsidiary undertaking, Franco Manca 2 UK Limited. The
Company has undertaken procedures to determine whether there has
been a significant increase in credit risk. Where these procedures
identify a significant increase in credit risk, the loss allowance
is measured based on the risk of a default occurring over the
expected life of the instrument. No increase in credit risk has
been identified and given the nature of the balances held, there is
no additional credit risk expected from the impact of COVID-19.
COVID-19 risks
The macro economic impact of the COVID-19 pandemic is uncertain,
and continues to evolve, with potential disruption to financial
markets including to currencies, interest rates, borrowing costs
and the availability of debt financing. However, the Group's
financial risk management strategies seek to reduce our potential
exposure in relation to these risks. Following the year end, the
Group, as described in Note 24:
o raised further funds from an equity placing and
subscription;
o extended the maturity date of the RCF facility by 12 months to
March 2022; and
o completed a new loan facility under the UK Government's CLBIL
scheme for a three year term.
The combined effect of these actions have added an additional
GBP13m of headroom to the Group's capital structure.
Fair Values of Financial Assets and Financial Liabilities
The fair value amounts of the Group's and Company's financial
assets and liabilities as at 29 March 2020 and 31 March 2019 did
not materially vary from the carrying value amounts.
16 DEFERRED TAXATION
Analysis of movements in net deferred tax balance during the
period:
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Opening position (1,432) (1,586) 287 185
Effect of adoption of IFRS 16 (191) - - -
As at 1 April 2019 (1,623) (1,586) 287 185
Tax on share based payments (253) 253 (253) 253
Transfer from/(to) reserves (253) 253 (253) 253
Movement in accelerated capital
Allowances (100) (90) - -
Tax on share based payments (39) (146) (31) (151)
Tax on intangible assets 137 137 - -
Transfer from/(to) profit and loss (2) (99) (31) (151)
Net deferred tax (liability)/asset (1,878) (1,432) 3 287
During the year ended 29 March 2020, the Group transferred
GBP253,000 deferred tax charge to reserves (2019: GBP253,000 from
reserves) in relation to deferred tax on share based payments.
16 DEFERRED TAXATION (continued)
The Group's deferred taxation liability disclosed above relates
to the following:
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Deferred tax assets
Share options 9 301 3 287
Deferred taxation assets 9 301 3 287
Deferred tax liabilities
Accelerated capital allowances 1,203 912 - -
Intangible assets 684 821 - -
Deferred taxation liabilities 1,887 1,733 - -
The Company has losses of GBP285,000 (2019: GBP283 ,000) which,
subject to agreement with HM Revenue & Customs, are available
to offset against the Company's future profits. A deferred taxation
asset in respect of these losses of GBP54,000 (2019: GBP51,000) has
not been recognised in the financial statements. Although the
directors are confident that the Company will achieve future
profitability in line with current expectations, the timing of such
profits is uncertain and therefore the directors have not
recognised the entire deferred tax asset. The Directors have
recognised deferred tax assets in relation to the share based
payment charge recognised in the year as such deferred tax asset
may be used against future group tax relief.
17 SHARE CAPITAL
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Allotted, issued called up and fully paid:
573,617,181 (2019: 571,385,237) ordinary shares of 1p each 5,736 5,714 5,736 5,714
The Company has one class of ordinary share which carries no
rights to fixed income.
During the year the Company issued 2,231,944 ordinary shares of
1p each for proceeds of 2p each following the exercise of share
options.
18 SHARE BASED PAYMENTS
The Group currently uses a number of equity settled share plans
to incentivise to its Directors and employees.
The Group operates four share plans:
-- The Fulham Shore Enterprise Management Incentive ("EMI") Share Option Plan;
-- The Fulham Shore Unapproved Share Option Plan ("Unapproved Plan");
-- The Fulham Shore Company Share Option Plan ("CSOP"); and
-- The Fulham Shore Share Incentive Plan ("SIP")
The Group's Share Plans provide for a grant price equal to the
market price of the Company shares on the date of grant. The
vesting period on all Share Plans except the SIP is 3 years with an
expiration date 7 to 10 years from the date of grant. Furthermore,
share options are forfeited if the employee leaves the Group before
the options vest unless forfeiture is waived at the discretion of
the Remuneration Committee. For the SIP, the vesting period ranges
from 1 day to 3 years with an expiration date 10 years from the
date of grant. For the initial grant under the SIP, the shares are
not forfeited if the employee leaves the Group before vesting. On
all schemes, there are no other material vesting conditions.
The charge recorded in the financial statements of the Group in
respect of share-based payments is GBP157,000 (2019:
GBP138,000).
The Fulham Shore EMI, Unapproved Plan and CSOP
Outstanding share options under The Fulham Shore EMI, The Fulham
Shore Unapproved Share Option Plan and The Fulham Shore CSOP to
acquire ordinary shares of 1 pence each as at 29 March 2020 are as
follows:
Year Year
ended ended
29 March 31 March
2020 2019
'000 '000
At the beginning of the year 63,808 62,633
Granted during the year 4,225 3,800
Exercised during the year (2,232) -
Lapsed during the year (950) (2,625)
At the end of the year 64,851 63,808
18 SHARE BASED PAYMENTS (continued)
Weighted average exercise price
Year Year
ended ended
29 March 31 March
2020 2019
GBP GBP
At the beginning of the year 0.09 0.10
Granted during the year 0.11 0.10
Exercised during the year (0.02) -
Lapsed during the year (0.15) (0.16)
At the end of the year 0.10 0.09
Outstanding and exercisable share options to acquire ordinary
shares of 1 pence each as at 29 March 2020 under various Group
share plans are as follows:
For the year ended 29 March 2020
Options outstanding Options exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
EMI
GBP0.05 2,779 0.0500 11 2,779 0.0500 11
GBP0.06 9,440 0.0600 19 9,440 0.0600 19
14,451 0.0519 14 5,011 0.0519 14
Unapproved
GBP0.05 554 0.0500 11 554 0.0500 11
GBP0.06 13,805 0.0600 19 13,805 0.0600 19
GBP0.1015 1,692 0.1015 99 - - -
GBP0.11 23,873 0.1100 25 23,873 0.1100 25
GBP0.1125 1,695 0.1125 112 - - -
GBP0.17625 1,085 0.1763 87 - - -
GBP0.1775 162 0.1775 83 162 0.1775 83
GBP0.1825 1,557 0.1825 75 1,557 0.1825 75
44,423 0.0979 33 39,951 0.0950 25
CSOP
GBP0.1015 1,733 0.1015 99 - - -
GBP0.1125 2,530 0.1125 112 - - -
GBP0.17625 915 0.1763 87 - - -
GBP0.1775 638 0.1775 83 638 0.1775 83
GBP0.1825 2,393 0.1825 75 2,393 0.1825 75
8,309 0.1427 93 3,031 0.1814 77
18 SHARE BASED PAYMENTS (continued)
For the year ended 31 March 2019
Options outstanding Options exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
EMI
GBP0.02 2,232 0.0200 11 2,232 0.0200 11
GBP0.05 2,779 0.0500 23 2,779 0.0500 23
GBP0.06 9,440 0.0600 31 9,440 0.0600 31
14,451 0.0519 26 5,011 0.0519 26
Unapproved
GBP0.05 554 0.0500 23 554 0.0500 23
GBP0.06 13,805 0.0600 31 13,805 0.0600 31
GBP0.1015 1,792 0.1015 111 - - -
GBP0.11 24,023 0.1100 37 24,023 0.1100 37
GBP0.17625 1,185 0.1763 99 - - -
GBP0.1775 162 0.1775 95 - - -
GBP0.1825 1,692 0.1825 87 - - -
43,213 0.0988 42 38,382 0.0596 35
CSOP
GBP0.1015 1,808 0.1015 111 - - -
GBP0.17625 1,065 0.1763 99 - - -
GBP0.1775 638 0.1775 95 - - -
GBP0.1825 2,633 0.1825 87 - - -
6,144 0.1802 97 - - -
During the year ended 29 March 2020, the market price of
ordinary shares in the Company ranged from GBP0.0450 (2019: GBP
0.0910) to GBP0.1288 (2019: GBP0.1288). The share price as at 29
March 2020 was GBP0.055 (2019: GBP 0.1125) .
The fair value of the options is estimated at the date of grant
using a Black-Scholes valuation model.
Expected life of options used in the model is based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
18 SHARE BASED PAYMENTS (continued)
Expected volatility was determined by calculating the historical
90 days volatility of the Group's share price over the previous 180
days. The inputs to the Black Scholes model were as follows:
Year Year
ended ended
29 March 31 March
2020 2019
Weighted average expected life 3 years 3 years
Weighted average exercise price 11.25 pence 10.15 pence
Risk free rate 0.75% 0.50%
Expected volatility 52.5% 69.8%
Expected dividends - -
The Fulham Shore SIP
The Fulham Shore SIP was introduced during the year ended 27
March 2015. Outstanding ordinary shares of 1 pence each granted
under The Fulham Shore SIP as at 29 March 2020 are as follows:
Year Year
ended ended
29 March 31 March
2020 2019
'000 '000
At the beginning and end of the year 591 591
For the year ended 29 March 2020
SIP shares outstanding SIP shares exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
Nil 591 - 61 591 - 61
591 - 61 591 - 61
18 SHARE BASED PAYMENTS (continued)
For the year ended 31 March 2019
SIP shares outstanding SIP shares exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
Nil 591 - 73 591 - 73
591 - 73 591 - 73
The fair value of the SIP shares is estimated at the date of
grant using a Black-Scholes valuation model.
19 NOTE TO CASH FLOW STATEMENTS
Reconciliation of net cash flows from operating activities
Group Parent
Year Year Year Year
ended ended ended ended
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/profit for the year (1,175) 720 (739) (878)
Income tax expense 421 714 31 150
(Loss)/profit before tax (754) 1,434 (708) (728)
Finance income (10) (8) (466) (468)
Finance costs 2,596 327 439 392
Operating profit/(loss)
for the year 1,832 1,753 (735) (804)
Adjustments
Depreciation and amortisation 11,577 5,144 31 34
Impairment 263 210 - -
Change in fair value 245 - - -
Loss on disposal of fixed
assets 23 27 1 -
Share based payments expense 157 138 4 14
Cost of acquisition 14 - 10 -
Operating cash flows before
movements in working capital 14,111 7,272 (689) (756)
Increase in inventories (142) (274) - -
(Increase)/decrease in trade
and other receivables (59) (349) (32) 18
Increase/(decrease) in trade
and other payables 1,307 491 (3) 425
Cash generated from/(used
in) operations 15,217 7,140 (724) (313)
Income taxes paid (375) (1,008) - -
Net cash flow from operating
activities 14,842 6,132 (724) (313)
19 NOTE TO CASH FLOW STATEMENTS (continued)
Changes in liabilities from financing activities
Lease Lease Bank
Cash liabilities liabilities loans
and due due due
Cash within after after
Equivalents 1 year 1 year 1 year Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net debt as at 25
March 2018 359 - - (12,350) (11,991)
Cash flows 1,476 - - 1,110 2,586
Net debt as at 31
March 2019 1,835 - - (11,240) (9,405)
IFRS 16 transitional
adjustment - (4,668) (58,715) - (63,383)
Net debt as at 1 April
2019 1,835 (4,668) (58,715) (11,240) (72,788)
Cash flows 221 4,332 - (300) 4,253
Addition to lease
liabilities - (4,827) (4,336) - (9,163)
Net debt as at 29
March 2020 2,056 (5,163) (63,051) (11,540) (77,698)
Net debt before lease liabilities recognised under IFRS 16 as at
29 March 2020 was GBP9,484,000 (2019: GBP9,405,000).
20 COMMITMENTS UNDER OPERATING LEASES
The Group had aggregate minimum lease payments under
non-cancellable operating leases which fall due as follows:
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Land and buildings
within one year 6 6,697 - 136
in two to five years - 24,246 - 123
after five years - 47,271 - -
6 78,214 - 259
Others
within one year - 60 - -
- 60 - -
6 78,274 - 259
Included above are certain annual lease commitments relating to
a subsidiary company that have been guaranteed by the parent
company.
Following adoption of IFRS 16, leases for land and buildings are
disclosed under borrowings.
21 CAPITAL COMMITMENTS
The Group capital expenditure contracted for but not provided in
the financial statements as follows:
Group Parent company
29 March 31 March 29 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Committed new restaurant builds 503 1,040 - -
22 RELATED PARTY DISCLOSURES
Remuneration of key management personnel
The remuneration of the directors, who are the key management
personnel of the Group, is provided in the Report on Directors'
Remuneration, and in note 3. Details of share options granted to
Directors are also shown in the Report on Directors'
Remuneration.
Transactions with Directors other than compensation
During the year ended 29 March 2020, the Group acquired
approximately 1% minority interests in its two subsidiaries: Kefi
Limited ("Kefi"), which owns the subsidiary that owns and operates
The Real Greek; and Franco Manca Holdings Limited (formerly Rocca
Limited) ("FM Holdings"), which owns the subsidiary that owns and
operates Franco Manca, for a total consideration of GBP628,026 in
cash from DM Page and NAG Mankarious, both directors of the
Company.
During the year ended 29 March 2020, DM Page and NAG Mankarious,
both directors of the Company, each exercised options over
1,115,972 ordinary shares (2019: Nil). The aggregate gains made on
the exercise of the options during the year was GBP223,000 (2019:
GBPNil).
Other related party transactions
During the year, the Group was invoiced GBP101,000 (2019:
GBP84,000) for the services of NJ Donaldson by London Bridge
Capital Partners LLP, a company in which NJ Donaldson is a
director, and the balance outstanding at 29 March 2020 was
GBP18,000 (2019: GBP17,000).
During the year, the Group was invoiced GBPNil (2019: GBP6,000)
for franchise fees and products by Bukowski Limited, a company in
which NAG Mankarious is a director and DM Page and NAG Mankarious
are shareholders. The balance outstanding at 29 March 2020 was
GBPNil (2019: GBPNil).
During the year, Room 307 Limited and Restaurants IT Limited,
previously identified as a related party, no longer is a related
party with effect from 31 March 2019.
During the year, the Group invoiced GBPNil (2019: credited
GBP2,000) in rent relating to a property leased to Fixed
Restaurants Limited, a company in which DM Page, NAG Mankarious, NJ
Donaldson and NCW Wong are directors and indirect shareholders and
MA Chapman is an indirect shareholder. The balance outstanding as
at 29 March 2020 owed to Fixed Restaurants Limited was GBPNil
(2019: GBP37,000).
22 RELATED PARTY DISCLOSURES (continued)
During the year, the Group and Company invoiced GBPNil (2019:
GBP12,000) for desk space provided to Meatailer Limited, a company
in which DM Page and NAG Mankarious are directors and shareholders
and NJ Donaldson and NCW Wong are shareholders. Further, during the
year the Group invoiced and GBP71,000 (2019: GBP76,000) in rent
relating to a property leased to Meatailer Limited. The balance
outstanding as at 29 March 2020 owed by Meatailer was GBP1,000
(2019: GBP21,000). During the year Meatailer Limited invoiced the
Group and Company GBP30,000 (2019: GBPNil) for a volume rebate on a
joint purchasing deal earned from a third party supplier and the
Group GBP2,000 (2019: GBPNil) for a staff Christmas Party. The
balance outstanding as at 29 March 2020 owed to Meatailer was
GBP2,000 (2019: GBPNil).
Transactions between the Company and its subsidiaries
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation. During the
year, the Company provided restaurant management services to the
following subsidiaries:
Amounts invoiced (including VAT)
Parent company
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
10DAS Limited - 9
The Real Greek Food Company Limited 636 615
Franco Manca 2 UK Limited 845 791
1,481 1,415
22 RELATED PARTY DISCLOSURES (continued)
During the year the Company also loaned amounts to the following
subsidiaries:
Amounts loaned/(repaid)
Parent company
Year Year
ended ended
29 March 31 March
2020 2019
GBP'000 GBP'000
10DAS Limited (1) (245)
The Real Greek Food Company Limited (716) (1,489)
Franco Manca 2 UK Limited (1,296) 368
(2,013) (1,366)
Amounts outstanding at year
end Parent company
29 March 31 March
2020 2019
GBP'000 GBP'000
10DAS Limited (16) (16)
The Real Greek Food Company
Limited (3,180) (2,464)
Franco Manca 2 UK Limited 10,567 11,863
7,371 9,383
The Company was a legal guarantor and a party to an agreement in
which 10DAS Limited during the year, a subsidiary company, entered
into a lease of a restaurant space. The total potential aggregate
minimum lease payments that has been called under this guarantee at
the end of the year were GBPNil (2019: GBPNil).
23 ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES
During the year ended 29 March 2020, the Group has adopted and
applied IFRS 16 using the modified retrospective approach, and
therefore comparative information has not been restated and
continues to be reported under IAS 17 'Leases'.
Under IFRS 16, on commencement of a contract that gives the
Group the right to use an asset for a period of time in exchange
for consideration, the Group recognises a right-of-use asset and a
lease liability except for low value leases (for assets that are of
value less than GBP5,000 that do not highly depend on other assets)
and those with a term of less than 12 months. Such contracts were
previously treated as operating leases under IAS17 Leases.
A right-of-use asset is recognised at commencement of the lease
and is initially measured at the amount of the lease liability,
plus any incremental costs of obtaining the lease, any lease
payments made at or before the leased asset is available for use by
the Group less any lease incentives received, plus any estimate of
costs to be incurred in respect of dismantling or restoring the
underlying asset to its original condition.
The right-of-use asset is subsequently measured at cost less
accumulated depreciation and any accumulated impairment losses.
Right-of-use assets are depreciated straight line over the shorter
of the period of the lease term or the remaining useful life of the
underlying asset. Termination, extension and purchase options are
considered in determining the appropriate remaining lease term. The
right-of-use asset is depreciated from the date it is 'available
for use' even if the entity does not use it until a later date.
Thus right of use assets are measured at cost comprising the
following:
o The amount of the initial measurement of the lease
liability;
o Any lease payments made at or before the commencement date
less any lease incentives received;
o Any initial direct costs; and
o Restoration costs.
Impairment losses are determined and accounted for in accordance
with IAS 36 'Impairment of Assets' An estimate of costs to be
incurred in restoring the right-of-use asset to the condition
required under the terms and conditions of the lease is recognised
as part of the cost of the right-of-use asset when the Group incurs
the obligation for these costs. The provision is measured at the
best estimate of the expenditure required to settle the
obligation.
23 ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES (continued)
The Group has applied this approach subject to the transition
provisions set out below:
o A single discount rate has been applied to portfolios of
leases with similar characteristics;
o The right-of-use assets have not been assessed for impairment
at 1 April 2019 but have been reduced by the amount of any onerous
lease provisions at that date, if any;
o Initial direct costs have been excluded from the measurement
of the right-of-use assets at the date of initial application;
o Hindsight has been applied in determining the lease term for
contracts that contain lease extension or termination options;
and
o Right-of-use assets and lease liabilities for short term
leases that have a lease term of less than 12 months have not been
recognised.
As at the date of initial application, for all contracts, the
Group assessed whether the contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration. The Group identified 70 open contracts
at the date of initial application that are, or contain, a lease.
On adoption of IFRS 16, the Group recognised lease liabilities in
relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 'Leases'. These
liabilities were measured at the present value of the remaining
lease payments, discounted using applicable discount rate as of 31
March 2019 estimated using the Group's Incremental Borrowing Cost
as a single rate for the whole portfolio, given the similarity
between all leases.. Corresponding right of use assets were
recognised based on these calculated lease liabilities.
Variable lease payments are initially measured using the index
or rate when the right-of-use asset is available for use. Turnover
rents on property leases are not included in the above calculation
and are therefore recognised to the Statement of Comprehensive
Income as they are incurred.
In determining the lease liability, management considered any
lease extension option or break clauses that management is
reasonably certain to exercise or not to exercise. In doing so, the
Group considered all relevant factors that create an economic
incentive to do so. At the date of initial application, management
was of the view that break clauses for 4 leases would not be
exercised.
The lease liability is subsequently increased for a constant
periodic rate of interest on the remaining balance of the lease
liability and reduced for lease payments.
Interest on the lease liability is recognised in profit or loss,
and variable lease payments not included in the measurement of the
lease liability are also recognised in profit or loss in the period
in which the event or condition that triggers those payments
occurs.
23 ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES (continued)
The impact on the Consolidated Balance Sheet on adoption of IFRS
16 is summarised below:
Post IFRS
As at IFRS 16 16
31 March Adjustments As at
2019 On adoption 1 April
GBP'000 GBP'000 2019
GBP'000
Right-of-use assets - 64,388 64,388
Current trade and other
receivables 3,597 (1,252) 2,345
Current trade and other
payables (11,881) 709 (11,172)
Non-current trade and other
payables (1,601) 1,601 -
Current lease liability - (4,668) (4,668)
Non-current lease liability - (58,715) (58,715)
Non-current deferred tax
liability - (191) (191)
(9,885) 1,872 (8,013)
The impact on the Group's retained earnings reserves on adoption
of IFRS 16 is summarised below:
Post IFRS
16
As at
1 April
2019
GBP'000
Lease incentives previously recognised 1,891
Rent review liabilities previously recognised 172
Deferred tax recognition (191)
Adjustment to reserves on adoption of
IFRS 16 1,872
Reconciliation of the Group's operating lease liabilities on
transition:
GBP'000
Operating lease commitments at 31 March
2019 78,274
Add lease liabilities in respect of
lease breaks unlikely to be taken 688
Additional leases identified 1,587
Less effect of discounting payments
included in the operating lease commitment (17,166)
Lease liability opening balance reported
at 1 April 2019 63,383
23 ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES (continued)
The impact on the Consolidated Statement of Comprehensive Income
on adoption of IFRS 16 is summarised below for the year ended 29
March 2020:
Year IFRS 16 IFRS 16 Year Year
ended Remove IFRS 16 Interest ended ended
29 March rent Deprec- and tax 29 March 31 March
2020 expense iation Expense 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(IFRS (IAS 17) (IAS 17)
16)
Revenue 68,565 - - - 68,565 63,985
Cost of sales (40,628) - - - (40,628) (38,237)
Gross profit 27,937 - - - 27,937 25,748
Administrative expenses
(before depreciation
and amortisation) (12,743) (6,909) - - (19,652) (17,930)
Headline EBITDA 15,194 (6,909) - - 8,285 7,818
Depreciation and
amortisation (10,757) - 6,025 - (4,732) (4,323)
Headline operating
profit 4,437 (6,909) 6,025 - 3,553 3,495
Share based payments (157) - - - (157) (138)
Pre-opening costs (683) (215) - - (898) (386)
Amortisation of
brand (821) - - - (821) (821)
Exceptional costs: (944) - - - (944) (397)
Operating profit 1,832 (7,124) 6,025 - 733 1,753
Finance income 10 - - - 10 8
Finance costs (2,596) - - 2,287 (309) (327)
(Loss)/profit before
taxation (754) (7,124) 6,025 2,287 434 1,434
Income tax expense (421) - - (21) (442) (714)
(Loss)/profit for
the year (1,175) (7,124) 6,025 2,266 (8) 720
Earnings per share
Basic (0.2p) 0.0p 0.1p
Diluted (0.2p) 0.0p 0.1p
Headline Basic 0.2p 0.4p 0.4p
Headline Diluted 0.2p 0.4p 0.4p
-----------
There are no committed lease liabilities not yet commenced at 29
March 2020.
24 SUBSEQUENT EVENTS
Impact of Covid-19
On 20 March 2020, the UK Government issued direct instructions
to temporarily close all restaurants to dine-in trade as part of
wider efforts in the fight against Covid-19. Following the year
end, costs were reduced to a minimum and all but essential or
committed capital expenditures were halted in order to manage cash
flow. To conserve further the Group's cash resources, all Directors
of the Company and certain members of the senior management team
agreed to waive 20 per cent of remuneration due to them with effect
from 1 April 2020 and until such time as the majority of the
Company's restaurants were back open and trading.
Since 4 July 2020, the date from which the UK Government
determined that restaurants could reopen to serve dine-in customers
if safe to do so, the Group has undertaken a gradual reopening of
its restaurants, serving customers through a combination of
dine-in, takeaway, click and collect and delivery services.
Debenhams Concessions
On 9 April 2020, Debenhams Retail Limited (formerly Debenhams
Retail PLC) ("Debenhams"), with whom the Group has concession
agreements for four restaurants, appointed Administrators. The
Group has been in contact with Debenhams, its Administrators and
the superior landlords of the various locations to ensure the four
restaurants were able to reopen at an appropriate time after the
COVID-19 lockdown. The Group has not had full clarify on the status
of the four concessions but it is expected that three of them may
have been terminated by Debenhams. Therefore for these three
locations, the associated right-of-use asset and recognised lease
under IFRS 16 will be disposed when a new lease is entered into
with the superior landlord.
New banking facilities
Following the year end, on 20 August 2020 the Company completed
a facility agreement for an increase in the amount available under
its debt facilities with HSBC Bank plc and the waiver of certain
banking covenants. Under the new arrangements, the term of the
Company's existing GBP14.25 million revolving credit facility was
extended by 12 months from March 2021 to March 2022 and the Company
increased its banking facilities with HSBC to a total of GBP25.75
million including the existing GBP0.75 million overdraft facility
(from GBP15 million). This increase of GBP10.75 million is provided
under the government backed Coronavirus Large Business Interruption
Loan Scheme, which has a term of three years, with repayments due
over the second and third years of the term.
Equity fundraise
On 20 August 2020, the Company raised GBP2,250,000 (before
expenses) from the issue of 36,000,000 new ordinary shares in the
Company.
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