TIDMMEX
RNS Number : 4347O
Tortilla Mexican Grill PLC
03 October 2023
3(rd) October 2023
Tortilla Mexican Grill plc
("Tortilla", "the Group")
Interim Results
Resilient trading supports FY 2023 expectations
Tortilla Mexican Grill plc, the largest and most successful
fast-casual Mexican restaurant business in the UK, today announces
its unaudited interim results for the 26 weeks ended 2 July 2023
("H1 FY23", "the Period"). All numbers are shown on an IFRS basis
unless otherwise stated.
Financial highlights
-- Revenue growth of 22% to GBP32.7m (H1 FY22: GBP26.9m).
-- Like-for-like ("LFL") revenue growth(1) of +5.0%, ahead of
the industry CGA Peach Coffer Tracker(2) benchmark average of 4.6%.
LFL revenue growth on a VAT-adjusted basis was 8.4%.
-- Adjusted EBITDA (pre-IFRS 16)(3) of GBP1.8m (H1 FY22:
GBP2.5m), trading in-line with market expected financial
performance(5) , noting that the prior year amount benefitted from
GBP1.1m of Government support.
-- Loss before tax of GBP0.6m (H1 FY22: profit before tax GBP0.3m).
-- Strong balance sheet with net debt (4) of GBP1.6m at Period
end (H1 FY22: GBP3.2m net cash), in line with expectations, and a
further GBP7m of liquidity available from the Group's existing debt
facilities.
Operational and strategic highlights
-- Good progress on UK new store openings with three opened in
H1 FY22, including our first site in Northern Ireland, plus a
further two sites since. Remain ahead of IPO aim of 45 new sites in
5 years.
-- Successful integration of Chilango business and realisation of investment case.
-- Growing confidence in the UK and international franchising
opportunity with record profits following the return to normalised
trading post-Covid.
-- Cost pressures easing along with favourable contracts negotiated with key suppliers.
-- Successfully implemented two major technology projects - our
first kiosk-only site delivering positive early results and a
nationwide roll out of delivery order-aggregation software.
-- Enhanced promotional calendar - "Tortilla Sunsets" project
developed and launched in mid-September to drive evening sales.
-- Currently assessing a number of European opportunities
through franchising or strategic acquisitions.
-- Strengthened Board of Directors with the appointment of Keith
Down as NED. Andy Naylor, CFO, promoted to Managing Director.
Current trading and full year outlook
Since the Period end, we have opened a further two sites:
Belfast and Bracknell in July and August respectively and both are
trading well, with Belfast doubling the opening revenue
expectations. A further three sites are expected to open in H2
FY23, taking the total to eight new sites in the year as we
continue to deliver our stated roll-out plans.
The summer was unsurprisingly quiet, as seen in the wider
market, with an increased demand for overseas holidays, ongoing
industrial strike-action on the train network and uninspiring
weather. Nonetheless, the Group delivered LFL growth for this
period.
We are seeing the benefit of self-help management initiatives,
particularly in supply chain, energy and productivity. The benefit
of these initiatives fell towards the end of the Period and as
such, will collectively drive a further1.3 percentage point
improvement in Adjusted EBITDA margin in H2 FY23 (compared to H1
FY23).
We continue to improve our offer through significant menu
development, providing a more consistent and higher quality product
whilst offering utility cost savings that also support our ESG
strategy. We have worked hard to look for ways to drive customer
footfall through targeted events and promotions, most notably
through the launch of Tortilla Sunsets in September to enhance our
evening offer through a great value dine-in experience.
Considering the secured upside from our cost hedging, the
exciting initiatives launched to drive evening trade and the
resilient trading performance of the Group, we remain confident of
being broadly in line with our targeted Adjusted EBITDA for FY23
and we expect to see the full year benefit of these initiatives
next year.
Richard Morris, CEO of Tortilla, commented:
"Despite the challenging economic backdrop, during the first
half Tortilla demonstrated its resilience and showed consistent
progress, with revenue growth of more than 20% . We continued to
expand our store estate and have successfully embedded the Chilango
acquisition. We have also enhanced our food offer and secured
significant improvement in our costs structure while making
technology upgrades which will improve and quicken customer service
at peak trading times.
We are very excited by the launch of our Tortilla Sunsets
initiative earlier this month, which has had a very positive
customer response so far. We believe there is a significant
opportunity to enhance our evening sales by offering a great-value,
dine-in experience including beers and margarita cocktails for just
GBP2.50 as well as a number of delicious new menu additions.
With our outstanding food offer, excellent value for money and
great service, alongside our adaptable and resilient business
model, we remain well placed to continue expanding our UK network
whilst taking the brand into new markets, particularly in
Europe."
(1) defined as the percentage change in like-for-like sales
compared to H1 FY22
(2) defined as the average of the data reported for restaurants
by CGA Peach for the period.
(3) defined as statutory operating profit before interest, tax,
depreciation and amortisation (before application of IFRS 16 and
excluding exceptional costs) and reflects the underlying trading
performance of the Group. The reconciliation to profit from
operations is presented in the financial review.
(4) defined as net debt / cash before lease liabilities arising
from application of IFRS 16.
(5) based off company-compiled consensus: FY23: Adjusted EBITDA:
GBP5.0m.
ENQUIRIES
Tortilla Mexican Grill PLC Via Hudson Sandler
Richard Morris, CEO
Andy Naylor, CFO
Liberum Capital Limited (Nominated Adviser, Tel: 020 3100 2222
Sole Broker)
Andrew Godber
Edward Thomas
Nikhil Varghese
Hudson Sandler (Public Relations) Tel: 020 7796 4133
Alex Brennan tortilla@hudsonsandler.com
Wendy Baker
Charlotte Cobb
For further information visit tortillagroup.co.uk
About Tortilla Mexican Grill plc
Tortilla is the largest and most successful fast-casual Mexican
restaurant group in the UK specialising in the sale of freshly made
Californian-inspired Mexican cuisine. The Group had 85 sites
worldwide as of 3 July 2023, comprising 67 sites in the UK operated
by the Group, five sites franchised to SSP Group in the UK, five
sites franchised to Compass Group UK & Ireland and eight
franchised sites in the Middle East.
The Group was founded in 2007 by Brandon Stephens, originally
from California who, upon his arrival in London in 2003, found it
difficult to satisfy his desire for quality burritos and tacos. As
a result, Brandon established Tortilla with a mission of offering
customers freshly prepared, customisable, and authentic
Californian-inspired Mexican food.
The brand is synonymous with an energetic, vibrant culture, and
with providing a great value-for-money proposition. It embraces
fast-growing sector trends (including eating out, healthy eating,
provenance, ethnic cuisine, delivery) across a variety of
locations, through a differentiated product offering which is
popular with a broad customer base, and a clearly defined
multi-channel marketing strategy. It benefits from flexible site
locations and formats, and a scalable central infrastructure.
BUSINESS REVIEW
Growth
Last year was a record year of growth for the Group and we have
again made good progress on new site rollouts this year to date. In
the first half of the year, we opened new sites in Derby and
Greenwich and our franchise partner SSP opened in Manchester
Piccadilly railway station. Since then, we have opened our first
site in Northern Ireland, in Belfast, and a site in Bracknell. We
anticipate a further three new sites opening this year, taking the
total to eight.
We remain ahead of our IPO aspiration to open 45 sites over five
years but felt that it was right to aim for the lower end of
projections in FY23 as we wanted to focus attention on: (1)
finishing the refurbishment plans for Chilango and ensuring the
conversion was a success; and (2) assessing the full impact of the
cost-of-living crisis and the changing dynamics of the UK
commercial property rental market to get the best-possible
deals.
The FY24 pipeline looks strong, with one site already legally
completed, two midway through legals and one further offer
submitted. The UK commercial property market remains favourable
with rent percentage of revenue improving further. W e remain w ell
positioned for expansion opportunities, as our flexible model
enables us to take a range of site formats, including former retail
units (since we do not need to install expensive cooking-extraction
equipment). We therefore expect to continue our UK rollout at a
rate of 8-12 company-owned stores per annum from FY24 onwards.
Franchising
The Group's proposition and operating model is perfectly suited
to franchising mainly due to: (1) our site format flexibility and
simplicity of kitchen setup which allows us to access a wide range
of units and (2) our central production food model provides
consistency of food quality and enables the franchisees to quickly
train employees.
We have a very healthy franchise network with quality franchise
partners performing well, including SSP and Compass Group in the UK
and Eathos in the Middle East. The travel network of franchise
sites has performed incredibly well with sales records achieved in
every unit this year and a LFL sales growth in H1 FY23 of greater
than 30%. The Middle East business is also very strong, generating
LFL sales growth of c.15% and is more profitable than ever
before.
We continue to seek quality franchise locations with these
existing partners in the UK.
European opportunity
We are by far the largest fast-casual Californian-inspired
Mexican business in Europe and we remain firmly committed to
exploring European opportunities for the Group. We believe our
business model and food-quality is stronger than the competition
and are keen to explore opportunities, predominantly via
franchising considering the suitability of the brand to this style
of rollout. Acquisition opportunities may also exist and
considering the success of the conversion of Chilango
post-acquisition, we are confident that similar success could be
replicated elsewhere.
UK profitability
We have been heavily focused on improving the profitability of
UK operations and are delighted to have secured some favourable
supply arrangements towards the end of H1 FY23. These will
collectively deliver a further 1.3 percentage point improvement in
profitability at the Adjusted EBITDA (pre IFRS 16) level in the
second half of FY23.
The utility market continues to be volatile, however the Group
has hedged utility prices at rates significantly lower than FY22
comparative rates until March 2024 to provide greater certainty in
this area. Internal KPIs are in place to ensure usage is monitored,
with usage mitigating actions taken where identified. Meanwhile,
inflation appears to have plateaued and is now gradually reducing,
and we expect that a more normalised cost environment will prevail
in the coming months.
Chilango update
In May 2022 the Group made the strategic acquisition of eight
Chilango sites. Five were converted to Tortilla branded stores and
these have since traded far ahead of expectations, with average
weekly sales in H1 FY23 being 32% higher than the pre-conversion
average.
At one of these conversions, Croydon BoxPark, we have deployed a
'virtual kitchen' operating under the Chilango brand on delivery
platforms only. This has resulted in 35% incremental growth,
showing a very positive case for further deployment of virtual
kitchens where Chilango brand awareness is high.
We have kept the three remaining sites continuing to trade under
the Chilango brand.
Digital strategy
In H1 FY23 we recruited a new management role, Andrew Brook as
Head of IT, to drive growth and efficiencies through the use of
technology. We have successfully launched a nationwide rollout of
delivery order-aggregation software, Deliverect, to simplify the
management of multi-platform delivery channels at every store and
to maximise the speed and accuracy of delivery order
fulfilment.
Post Period-end we launched a trial of our first digital concept
site, by refurbishing our London Wall site and installing kiosks.
This was designed to maximise customer throughput at peak times,
and early signs are encouraging. Our hourly sales record increased
by 37%, and the peak-day average lunch period (12-2pm) sales
increased from GBP2,200 to GBP2,600. This proof-of-concept is
promising and indicates the kiosk-only approach may be a viable
solution for sites with significant volume demand that cannot
currently be fully met.
Food and marketing
We have launched several key product and marketing campaigns,
which we believe will drive significant improvements.
Firstly, we have enhanced our loyalty scheme to provide a more
generous offer for the consumer who now gets a free burrito after
five purchases. The scheme has seen a 6% increase in adoption since
the change, to more than 300,000 customers. Average spend among
these customers is also up 12% vs the Group average.
Secondly, in August 2023 we improved our chicken product, the
Group's best-seller. The new product, chicken pibil, is more
flavoursome and consistent than the prior product. This improvement
has additionally reduced labour costs in our sites and enabled us
to remove grills from numerous sites, resulting in lower energy
usage. Other recent changes include a refreshed Salsa Verde recipe,
and the removal of one of the rice options to minimise waste and
improve the quality of having a single rice option.
Lastly, in September 2023 we launched a series of "Tortilla
Sunsets" promotions. We have adopted a low-price alcohol model to
give a very generous "Happy Hour" offering, designed to drive
evening sales in student-dense areas. We have also launched
exciting new evening menu items with crockery & cutlery
provided to give customers more of a "casual dining" feel.
Environmental, Social and Governance ("ESG")
ESG remains a key consideration for the Group, and we are
pleased to confirm that we intend to install a renewable energy
source at our central production kitchen which should be
operational in FY24. The central production kitchen is our single
biggest consumer of electricity and so this will bring a
significant positive environmental impact.
The new chicken pibil product has also helped us reduce our
utility cost expenditure further helping the business to lower its
carbon footprint.
We continue to offer a menu containing 70% plant-based
ingredients, are a signatory to the Better Chicken Commitment and
serve only higher welfare meats. We partner with a business called
Too Good To Go, to reduce food waste, with almost 58,000 meals
saved in the last twelve months.
Board and people
We have an experienced senior Management team who remain very
passionate about the brand and implementing our growth strategy.
Post Period end, Keith Down joined as a new Non-Executive Director.
Keith brings with him a wealth of experience in the sector and we
are very excited to have him strengthen our Board.
Andy Naylor, CFO, has been promoted to Managing Director. Andy
has been in the business for six years and in recent years has
taken on a broader role, including building the UK franchise
partnerships and leading the development of the technology and
facilities functions.
FINANCIAL REVIEW
Revenue
Revenue increased by 22% to GBP32.7m (H1 FY22: GBP26.9m), driven
by additional contribution from new stores as well as the continued
LFL sales growth of our existing estate. Our mature stores have
continued to trade above the restaurant industry average, with LFL
sales growth in H1 FY23 of 5.0% vs an average CGA Peach Coffer
benchmark of 4.6%.
After adjusting for the benefit of the lower VAT rate prevailing
in Q1 FY22, our LFL sales growth for H1 FY23 was 8.4%.
Gross profit margin
Gross profit margin was consistent at 77.0% in both periods,
which is a good result considering that the prior year number
benefitted from:
-- The lower VAT rate in Q1 FY22 which lifted gross profit margin by 0.7 percentage points; and
-- Q1 FY22 benefitted from materially lower food costs,
particularly proteins, which rose sharply in late March FY22
following the start of the Ukraine war in February of that
year.
This favourable trend was driven by competitive tenders on our
supply contracts, and results in our prices being secured on 76% of
products until December FY23, with 46% then secured until April
FY24.
Across gross profit margin and administrative expenses, we
expect to deliver a further 1.3 percentage point improvement in our
Adjusted EBITDA (pre-IFRS 16) margin in H2 FY23 compared to H1 FY23
(in addition to the normal seasonality weighting of EBITDA).
Administrative expenses
Administrative expenses increased by 25% to GBP25.0m (H1 FY22:
GBP20.0m), in line with revenue growth. However as a percentage of
revenue, administrative expenses were 76.3% in H1 FY23, improved
versus 76.7% in H1 FY22 after adjusting for the Q1 FY22 VAT
benefit. Despite the high inflationary environment, costs were well
controlled, and savings found. The utilities market has been highly
volatile, however we hedged fixed prices at a favourable rate to
mitigate this until March FY24.
Adjusted EBITDA (pre-IFRS 16)
Adjusted EBITDA (pre-IFRS 16) is the key performance metric that
the Group utilises to assess the underlying trading performance. A
reconciliation of this measure compared to profit from operations
is as follows:
H1 FY23 H1 FY22
GBPm GBPm
Adjusted EBITDA (pre-IFRS
16) 1.8 2.5
Pre-opening costs (0.3) (0.3)
Share option expense (0.2) (0.2)
Depreciation and amortisation (1.9) (1.5)
Exceptional items (0.1) (0.3)
IFRS 16 adjustment 0.9 0.7
Profit from operations 0.2 0.9
Adjusted EBITDA (pre-IFRS 16) of GBP1.8m was generated in H1
FY23 which was GBP0.7m lower than H1 FY22. The year-on-year
decrease is entirely due to a total of GBP1.1m in Government
support which benefitted the prior year number. Of this support,
GBP0.8m related to the lower VAT rate in Q1 FY22 and GBP0.3m
related to business rates support provided as part of the
Government's COVID support package.
Good progress has been made by the Group in FY23 to recover
profitability and this collectively contributed a net GBP0.4m
increase in Adjusted EBITDA (pre-IFRS 16) in the first half of the
year. These cost improvements were largely weighted towards the end
of the Period and will contribute more meaningfully in H2 FY23. We
therefore expect H2 FY23 Adjusted EBITDA (pre-IFRS 16) to be 1.3
percentage points higher than H1 FY23 from these improvements
alone, on top of the normal seasonality of EBITDA generation.
Share-based payments
Share-based payment expenses of GBP0.2m were recognised in the
Period (H1 FY22: GBP0.2m) relating to the Group's Long Term
Incentive Plan ("LTIP").
Finance expense
Finance expense of GBP0.9m is comprised of GBP0.8m of interest
charged in relation to Right of Use assets (a consequence of the
accounting treatment of leases under IFRS 16) and GBP0.1m of
interest for the debt facility that the Group has in place.
Cash flow and net cash
The Group closed the Period with a net debt position of GBP1.6m.
Drawn debt remains unchanged from the end of the FY22 financial
year at GBP2.9m. A reconciliation of the movement in net debt
between the start and end of the period is as follows:
Opening balance (GBP0.5m)
Adjusted EBITDA (pre-IFRS 16) GBP1.8m
Capital expenditure for new stores (GBP1.4m)
Maintenance capital expenditure (GBP0.8m)
Interest paid (GBP0.1m)
Pre-opening and exceptional costs (GBP0.4m)
Working capital movement (GBP0.2m)
Closing balance (GBP1.6m)
The Group's closing net debt position of GBP1.6m represents a
low level of leverage which is important considering the recent
increases in the Bank of England base rate. The Group's efforts to
recover profitability this year and going forward will enable the
business to get back to the aim of funding expansion capital
requirements from operationally generated cash.
Dividend
The Board did not recommend an interim dividend for FY23. In
line with the previously stated policy, the Group's capital will be
focused on growth over the coming years with the dividend policy
subject to re-assessment going forward.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 2 July 2023
Unaudited Unaudited
26 weeks 26 weeks
ended ended
2 July 3 July
2023 2022
Note GBP GBP
Revenue 32,745,623 26,898,368
Cost of sales (7,534,184) (6,184,070)
============= =============
Gross profit 25,211,439 20,714,298
Other operating income 3 - 211,310
Administrative expenses (24,970,307) (20,004,021)
============= =============
Profit from operations 4 241,132 921,587
Finance income 5 12,914 276
Finance expense 5 (869,153) (657,811)
------------- -------------
Profit before tax (615,107) 264,052
Tax charge (3,402) (107,531)
============= =============
Profit for the period and comprehensive
income attributable to equity holders
of the parent company (618,509) 156,521
============= =============
Earnings per share for profit attributable
to the owners of the parent during
the period
Basic and diluted (pence) 6 (1.6) 0.4
============= =============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 2 July 2023
Unaudited Unaudited Audited
At At At
2 July 3 July 1 January
2023 2022 2023
Note GBP GBP GBP
Non-current assets
Intangible assets 7 2,629,623 2,604,279 2,632,205
Right-of-use assets 8 30,836,951 29,603,290 31,035,358
Property, plant and equipment 9 14,073,657 10,933,689 13,721,101
Total non-current assets 47,540,231 43,141,258 47,388,664
Current assets
Inventories 376,641 442,693 397,083
Trade and other receivables 10 2,775,126 2,369,919 2,193,877
Cash and cash equivalents 1,327,470 6,083,998 2,375,800
Total current assets 4,479,237 8,896,610 4,966,760
Total assets 52,019,468 52,037,868 52,355,424
============ ============ ============
Current liabilities
Trade and other payables 11 9,334,177 8,982,415 9,110,069
Lease liabilities 8 5,762,578 5,329,676 5,614,340
Loans and borrowings - - -
Corporation tax liability - 1,008,221
Total current liabilities 15,096,755 15,320,312 14,724,409
Non-current liabilities
Lease liabilities 8 30,801,995 29,591,636 31,109,551
Loans and borrowings 2,939,751 2,921,208 2,930,481
Total non-current liabilities 33,741,746 32,512,844 34,040,032
Total liabilities 48,838,501 47,833,156 48,764,441
============ ============ ============
Net assets 3,180,967 4,204,712 3,590,983
============ ============ ============
Equity attributable to equity
holders of the company
Called up share capital 386,640 386,640 386,640
Share premium account 4,433,250 4,433,250 4,433,250
Merger reserve 4,793,170 4,793,170 4,793,170
Share based payment reserve 661,028 271,521 452,535
Retained earnings (7,093,121) (5,679,869) (6,474,612)
Total equity 3,180,967 4,204,712 3,590,983
============ ============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 2 July 2023
Share Share Merger Share-based Retained Total
capital premium reserve payment earnings
reserve
GBP GBP GBP GBP GBP GBP
Equity at 2 January
2022 386,640 4,433,250 4,793,170 90,507 (5,836,390) 3,867,177
Profit for the
period - - - - 156,521 156,521
Share-based payments 181,014 - 181,014
Equity at 3 July
2022 386,640 4,433,250 4,793,170 271,521 (5,679,869) 4,204,712
========= ========== ========== ============ ============ ==========
Loss for the period - - - - (794,743) (794,743
Newly issued equity
shares - - - - - -
Cost of issue of
equity shares - - - - - -
Share-based payments - - - 181,014 - 181,014
Equity at 1 January
2023 386,640 4,433,250 4,793,170 452,535 (6,474,612) 3,590,983
========= ========== ========== ============ ============ ==========
Profit for the
period - - - - (618,509) (618,509)
Share-based payments - - - 208,493 - 208,493
Equity at 2 July
2023 386,640 4,433,250 4,793,170 661,028 (7,093,121) 3,180,967
========= ========== ========== ============ ============ ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 2 July 2023
Unaudited Unaudited
26 weeks 26 weeks
ended ended
3 July 2022 3 July 2022
Note GBP GBP
Operating activities
Profit after tax (618,509) 156,521
Adjustments for:
Share based payments 208,493 181,014
Net finance expense 5 105,303 79,405
Finance cost on lease liabilities 5 750,936 578,130
Corporation tax charge - 107,531
Amortisation of intangible assets 7 2,582 2,275
Loss on disposal of intangible
assets 7 - 6,825
Depreciation of right to use
assets 8 2,177,598 1,502,348
Depreciation of property, plant
and equipment 9 1,812,912 1,420,657
Loss on disposal of property,
plant and equipment 9 - 6,834
Increase in inventories 20,442 (64,788)
Decrease in trade and other receivables (581,249) 296,992
Increase in trade and other payables 224,105 358,064
Cash generated from operations 4,102,613 4,631,808
============ ============
Investing activities
Interest received 5 12,914 276
Purchase of property, plant and
equipment 9 (2,165,468) (2,958,549)
Acquisitions, net of cash acquired - (1,687,365)
Net cash used by investing activities (2,152,554) (4,645,638)
============ ============
Financing activities
Payments made in respect of lease
liabilities 8 (2,889,443) (3,484,931)
Interest paid (108,946) (70,413)
Net cash used by financing activities (2,998,389) (3,555,344)
============ ============
Net (decrease)/increase in cash
and cash equivalents (1,048,330) (3,569,174)
============ ============
Cash and cash equivalents at
the beginning of period 2,375,800 9,653,172
Cash and cash equivalents at
the end of period 1,327,470 6,083,998
============ ============
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1. General information
Tortilla Mexican Grill plc, the "Company" together with its
subsidiaries, "the Group", is a public limited company whose shares
are publicly traded on the Alternative Investment Market ("AIM")
and is incorporated and domiciled in the United Kingdom and
registered in England and Wales.
The registered address of Tortilla Mexican Grill plc and all
subsidiaries is 142-144 New Cavendish Street, London, W1W 6YF,
United Kingdom.
The Group's principal activity is the operation and management
of restaurants trading under the Tortilla brand both within the
United Kingdom and the Middle East and under the Chilango brand in
the United Kingdom.
2. Accounting policies
Basis of preparation
The consolidated interim financial information has been prepared
in accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations
(collectively IFRSs), as adopted by UK international accounting
standards.
The Group's Annual Report and Accounts for the period ended 31
December 2023 are expected to be prepared under IFRS.
The comparative financial information for the period ended 1
January 2023 in this interim report does not constitute statutory
accounts for that period under 435 of the Companies Act 2006.
Statutory accounts for the period ended 1 January 2023 have been
delivered to the Registrar of Companies.
The auditors' report on the statutory accounts for 1 January
2023 was unqualified, did not draw attention to any matters by way
of emphasis, and did not contain a statement under 498(2) or 498(3)
of the Companies Act 2006.
Significant accounting policies
The consolidated interim financial information has been prepared
in accordance with accounting policies that are consistent with the
Group's Annual Report and Accounts for the period ended 1 January
2023 which is published on the Tortilla website, located at
www.tortillagroup.co.uk. At the date of authorisation of this
financial information, certain new standards, amendments and
interpretations to existing standards applicable to the Group have
been published but are not yet effective and have not been adopted
early by the Group. The impact of these standards is not expected
to be material.
In adopting the going concern basis for preparing these
financial statements, the Directors have considered the business
model and strategies, as well as taking into account the current
cash position and facilities.
Based on the Group's cash flow forecasts, the Directors are
satisfied that the Group will be able to operate within the level
of its current facilities for the foreseeable future, a period of
at least twelve months from the date of this report. In making this
assessment, the Directors have made a specific analysis of the
impact of both the inflationary pressures currently affecting the
industry as well as consumers, and the impact of a potential
recession.
Accordingly, the Directors consider it appropriate for the Group
to adopt the going concern basis in preparing these financial
statements.
3. Other operating income
Unaudited Unaudited
------------- ------------
26 weeks 26 weeks
ended ended
2 July 2023 3 July 2022
GBP GBP
Other government grants - 211,310
============ ============
(1) I ncludes Retail Leisure Hospitality Grants, Local
Restriction Support Grants, Restart Grants and Omicron Grants
4. Profit from operations
Profit from operations is stated after charging:
Unaudited Unaudited
------------ ------------
26 weeks 26 weeks
ended ended
2 July 2023 3 July 2022
GBP GBP
Depreciation and amortisation 3,993,091 2,923,005
Loss on disposal of fixed and
intangible assets - 13,660
Variable lease payments 229,485 548,421
Inventories - amounts charged
as an expense 7,534,184 6,184,070
Staff costs 10,815,498 8,810,841
Share option expense 208,493 181,014
Pre-opening costs 175,942 287,580
Exceptional items 125,544 306,866
Bank arrangement fee amortisation 9,270 9,270
Pre-opening costs
Unaudited Unaudited
------------ ------------
26 weeks 26 weeks
ended ended
2 July 2023 3 July 2022
GBP GBP
Pre-opening costs 175,942 287,580
Number of site openings in period 4 6
============ ============
The Group reports costs incurred prior to the opening of a site
as a separate expense and excludes these from the calculation of
adjusted EBITDA. This approach is in line with the standard
industry practice and the methodology used by the Group's bank for
the purposes of assessing covenant compliance. The Directors view
this as a better way to analyse the underlying performance of the
Group since it excludes costs which are not trading related.
5. Finance income and expenses
Unaudited Unaudited
------------ ------------
26 weeks 26 weeks
ended ended
2 July 2023 3 July 2022
GBP GBP
Finance income
Bank interest income 12,914 276
============ ============
Finance expense
Bank loan interest expense 118,217 79,681
Finance cost on lease liabilities 750,936 578,130
869,153 657,811
============ ============
6. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity shareholders by the weighted average number
of shares outstanding during the period.
Unaudited Unaudited
------------ ------------
26 weeks 26 weeks
ended ended
2 July 2023 3 July 2022
GBP GBP
Profit
Profit used in calculating basic
and diluted profit (618,509) 156,521
Number of shares
Weighted average number of shares
for the purpose of basic and diluted
earnings per share 38,664,031 38,664,031
Basic and diluted earnings per
share (p) (1.6) 0.4
============ ============
Due to the nature of the options granted under the long-term
incentive plan, they are considered to be contingently issuable
shares and therefore have no dilutive effect.
7. Intangible assets
Computer Goodwill Total
Software
GBP GBP GBP
Cost
At 1 January 2023 15,500 2,624,886 2,640,386
Additions - - -
Disposals - - -
At 2 July 2023 (unaudited) 15,500 2,624,886 2,640,386
=================================== ========== ==========
Amortisation
At 1 January 2023 8,181 - 8,181
Amortisation charge 2,582 - 2,582
On disposals - - -
At 2 July 2023 (unaudited) 10,763 - 10,763
=================================== ========== ==========
Net book value
At 2 July 2023 (unaudited) 4,737 2,624,886 2,629,623
=================================== ========== ==========
At 1 January 2023 7,319 2,624,886 2,632,205
=================================== ========== ==========
8. Leases
Right-of-use assets GBP Lease liabilities GBP
At 2 January 2022 24,939,614 At 2 January 2022 (31,662,090)
Additions 4,491,185 Additions (4,491,185)
Acquisition 2,671,192 Acquisition (2,671,192)
Depreciation (1,502,348) Interest expense (578,130)
Impairment - Lease payments 3,484,931
Disposals (996,353) Disposals 996,354
At 3 July 2022 (unaudited) 29,603,290 At 3 July 2022 (unaudited) (34,921,312)
============ =============
At 1 January 2023 31,035,358 At 1 January 2023 (36,723,889)
Additions 2,196,406 Additions (2,196,406)
Depreciation (2,177,598) Interest expense (750,936)
Impairment - Lease payments 2,889,443
Disposals (217,215) Disposals 217,215
At 2 July 2023 (unaudited) 30,836,951 At 2 July 2023 (unaudited) (36,564,573)
============ =============
9. Property, plant and equipment
Furniture,
Leasehold Plant and fittings
Improvements machinery and equipment Total
GBP GBP GBP GBP
Cost
At 1 January 2023 16,049,266 5,128,645 6,692,407 27,870,318
Additions 837,047 550,900 777,521 2,165,468
Disposals - - - -
At 2 July 2023 (unaudited) 16,886,313 5,679,545 7,469,928 30,035,786
------------- ------------ -------------- -----------
Depreciation
At 1 January 2023 8,068,909 3,269,990 2,810,318 14,149,217
Charge for year 577,253 303,570 932,089 1,812,912
On disposals - - - -
At 2 July 2023 (unaudited) 8,646,162 3,573,560 3,742,407 15,962,129
------------- ------------ -------------- -----------
Net book value
At 2 July 2023
(unaudited) 8,240,151 2,105,985 3,727,521 14,073,657
============= ============ ============== ===========
At 1 January 2023 7,980,357 1,858,655 3,882,089 13,721,101
============= ============ ============== ===========
10. Trade and other receivables
Unaudited Unaudited
------------ ------------
At At
2 July 2023 3 July 2022
GBP GBP
Trade debtors 868,124 678,955
Other debtors 1,249,845 873,759
Prepayments and accrued income 657,157 817,205
2,775,126 2,369,919
============ ============
Trade debtors primarily relate to sales due from third party
delivery providers and these are settled the week immediately
following the week in which the sale was recorded. There are also
amounts owed by the Group's franchise partners, which are due
within 30 days of the end of the period.
Other debtors consists of deposits held by third parties,
generally landlords, and amounts accrued but not yet invoiced to
third parties. These amounts not invoiced are franchise income and
produce from the Group's central kitchen which is sold and bought
back to the Group's main food supplier, who provides the
distribution across the Group's estate.
The Group held no collateral against these receivables at the
balance sheet dates. The Directors consider that the carrying
amount of receivables are recoverable in full and that any expected
credit losses are immaterial.
11. Trade and other payables
Unaudited Unaudited
------------ ------------
At At
2 July 2023 3 July 2022
GBP GBP
Trade payables 2,483,656 3,542,647
Other taxation and social security 1,929,037 2,024,514
Other payables 891,460 583,870
Accruals and deferred income 4,030,024 2,831,384
9,334,177 8,982,415
============ ============
The carrying value of trade and other payables classified as
financial liabilities measured at amortised, which the Directors
consider equal to fair value.
12. IFRS Comparison to UK GAAP
The Group applied IFRS for the first time in the 52-week period
ending 2 January 2022. The Group applied IFRS 16 using the modified
retrospective approach, with the date of initial application of 1
January 2018 and has restated its results for comparative period as
if the Group had always applied the new standard.
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
------------- ------------ ------------- ------------- ------------ -------------
UK GAAP IFRS UK GAAP IFRS
26 weeks IFRS 26 weeks 26 weeks IFRS 26 weeks
ended 16 ended ended 16 ended
2 July 2 July 3 July 3 July
2023 Transition 2023 2022 Transition 2022
GBP GBP GBP GBP GBP GBP
Revenue 32,745,623 - 32,745,623 26,898,368 - 26,898,368
Cost of sales (7,534,184) - (7,534,184) (6,184,070) - (6,184,070)
Gross profit 25,211,439 - 25,211,439 20,714,298 - 20,714,298
Other operating
income - - - 211,310 - 211,310
Administrative
expenses (25,869,027) 788,851 (24,970,307) (20,712,692) 708,671 (20,004,021)
Profit/(loss)
from operations (657,588) 788,851 241,132 212,916 708,671 921,587
Adjusted EBITDA 1,773,722 2,979,750 4,753,472 2,508,013 2,134,969 4,642,982
Pre-opening
costs (266,104) 90,162 (175,942) (354,288) 66,708 (287,580)
Share based
payments (208,493) - (208,493) (181,014) - (181,014)
Depreciation
and amortisation (1,821,899) (2,171,192) (3,993,091) (1,443,659) (1,493,006) (2,936,665)
Exceptional
items (125,544) - (125,544) (306,866) - (306,866)
Non-trading
costs (9,270) - (9,270) (9,270) - (9,270)
(657,588) 898,720 241,132 212,916 708,671 921,587
------------- ------------ ------------- ------------- ------------ -------------
Finance income 12,914 - 12,914 276 - 276
Finance expense (118,217) (750,936) (869,153) (79,681) (578,130) (657,811)
Profit/(loss)
before tax (762,891) 147,784 (615,107) 133,511 130,541 264,052
Tax charge (3,402) - (3,402) (107,531) - (107,531)
Profit/(loss)
for the period
and comprehensive
income attributable
to equity holders
of the parent
company (766,293) 147,784 (618,509) 25,980 130,541 156,521
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
------------- ------------ ------------ ------------ ------------ ------------
UK GAAP IFRS UK GAAP IFRS
26 weeks IFRS 26 weeks 26 weeks IFRS 26 weeks
ended 16 ended ended 16 ended
2 July 2 July 3 July 3 July
2023 Transition 2023 2022 Transition 2022
GBP GBP GBP GBP GBP GBP
Non-current
assets
Intangible assets 2,629,623 - 2,629,623 2,604,279 - 2,604,279
Right-of-use
assets - 30,836,951 30,836,951 - 29,603,290 29,603,290
Property, plant
and equipment 13,379,173 694,484 14,073,657 10,109,347 824,342 10,933,689
Total non-current
assets 16,008,796 31,531,435 47,540,231 12,713,626 30,427,632 43,141,258
Current assets
Inventories 376,641 - 376,641 442,693 - 442,693
Trade and other
receivables 4,013,124 (1,237,998) 2,775,126 3,632,953 (1,263,034) 2,369,919
Cash and cash
equivalents 1,327,470 - 1,327,470 6,083,998 - 6,083,998
Total current
assets 5,717,235 (1,237,998) 4,479,237 10,159,644 (1,263,034) 8,896,610
Total assets 21,726,031 30,293,437 52,019,468 22,873,270 29,164,598 52,037,868
============= ============ ============ ============ ============ ============
Current liabilities
Trade and other
payables 11,186,622 (1,852,445) 9,334,177 10,763,355 (1,780,940) 8,982,415
Lease liabilities - 5,762,578 5,762,578 - 5,329,676 5,329,676
Loans and borrowings - - - - - -
Corporation tax
liability - - - 1,008,221 - 1,008,221
Total current
liabilities 11,186,622 3,910,133 15,096,755 11,771,576 3,548,736 15,320,312
Non-current
liabilities
Lease liabilities - 30,801,995 30,801,995 - 29,591,636 29,591,636
Loans and borrowings 2,939,751 - 2,939,751 2,921,208 - 2,921,208
Total non-current
liabilities 2,939,751 30,801,995 33,741,746 2,921,208 29,591,636 32,512,844
Total liabilities 14,126,373 34,712,128 48,838,501 14,692,784 33,140,372 47,833,156
============= ============ ============ ============ ============ ============
Net assets /
(liabilities) 7,599,658 (4,418,691) 3,180,967 8,180,486 (3,975,774) 4,204,712
============= ============ ============ ============ ============ ============
Equity attributable to
equity holders of the company
Called up share
capital 386,640 - 386,640 386,640 - 386,640
Share premium
account 4,433,250 - 4,433,250 4,433,250 - 4,433,250
Share merger
reserve 4,793,170 - 4,793,170 4,793,170 - 4,793,170
Share based payment
reserve 661,028 - 661,028 271,521 - 271,521
Retained earnings (2,674,430) (4,418,691) (7,093,121) (1,704,095) (3,975,774) (5,679,869)
------------- ------------ ------------ ------------ ------------ ------------
Total equity 7,599,658 (4,418,691) 3,180,967 8,180,486 (3,975,774) 4,204,712
============= ============ ============ ============ ============ ============
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IR QLLFBXBLLFBZ
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October 03, 2023 02:00 ET (06:00 GMT)
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