TIDMFUL
RNS Number : 2251T
Fulham Shore PLC (The)
21 July 2022
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 27 March 2022.
Highlights - Year ended 27 March 2022
-- Revenue increased 105% to GBP82.7m (2021: GBP40.3m) with
pandemic related trading restrictions implemented by the UK
Government which were completely lifted in mid July 2021; these had
been in place throughout most of the previous financial year
-- Increasing number of customers served by the Group gathering
momentum towards the end of the year
-- Six new Franco Manca pizzeria and four new The Real Greek
restaurants opened during the year ended 27 March 2022 in the UK
(2021: two Franco Manca pizzeria and one The Real Greek
restaurant)
-- Entered into first Franco Manca franchise agreement for
Greece, with two new Franco Manca pizzeria opened under franchise
(2021: none)
-- Total restaurants operated by the Group as at 27 March 2022
were 82 (2021:72) in the UK and 84 (2021:72) globally
-- Headline EBITDA* of GBP20.3m (2021: GBP9.0m) and Adjusted
Headline EBITDA* of GBP12.4m excluding IFRS 16 (2021: GBP1.9m)
-- EBITDA* of GBP19.5m (2021: GBP8.7m) and Adjusted EBITDA* of
GBP11.4m excluding IFRS 16 (2021: GBP1.6m)
-- Headline operating profit of GBP9.0m (2021: loss of GBP2.2m)
-- Impairment charge on property, plant and equipment of GBP0.6m (2021: GBP1.0m)
-- Operating profit of GBP6.7m (2021: loss of GBP4.8m)
-- Profit before tax of GBP3.9m (2021: loss of GBP7.5m)
-- Strong financial position with net cash excluding lease
liabilities recognised under IFRS 16 as at 27 March 2022 of GBP4.3m
(2021: net debt GBP3.6m), an improvement of GBP7.9m
-- Post year end highlights:
o Seven new Franco Manca pizzeria opened across the UK, taking
total to 66 Franco Manca in the UK and 68 globally
o Four more Franca Manca are being fitted out in Chichester,
Hove, Lincoln and Windsor
o One new The Real Greek opened and one closed due to a lack of
return to pre-pandemic footfall in the retail leisure park, taking
total to 23 The Real Greek in the UK
o Two new The Real Greek under construction in Solihull and
Gloucester Quays
o 16 further sites are in solicitors' hands, extending the
Group's strong opening pipeline
o Net cash (excluding lease liabilities recognised under IFRS
16) as at 19 July 2022 was GBP5.1m
o Group continues to trade in line with management expectations
in Q1 of FY2023
The above numbers are for continuing operations.
* Definition of Headline EBITDA, Adjusted Headline EBITDA and
EBITDA and Adjusted EBITDA can be found in the Financial
Review.
David Page, Executive Chairman at The Fulham Shore
commented:
"Fulham Shore delivered a very strong performance with revenue
more than doubling against the prior year, reflecting the quality
of our two restaurant businesses as well as the easing of
pandemic-related trading restrictions.
The Group continued to make excellent strategic progress,
investing in new restaurants across the UK and creating jobs.
During the year we opened 10 new restaurants across Franco Manca
and The Real Greek and signed an exciting franchise agreement for
Franco Manca in Greece. We have continued this momentum in the
current year to date and have an excellent pipeline of new sites as
we continue to grow our two outstanding restaurant businesses.
Whilst the first quarter of the year has been characterised by
increasing pressures on the UK consumer, our restaurants remain
crowded with customers seeking a great experience, quality food,
and importantly outstanding value. We will always aim to keep our
prices low, driving high customer numbers per site and making for
fun, atmospheric restaurants, as well as motivated employees. These
key ingredients underpin the Board's confidence in our continued
growth."
For further information, please contact:
The Fulham Shore PLC www.fulhamshore.com
David Page / Nick Wong Via Hudson Sandler
Singer Capital Markets (Nominated
Adviser & Broker)
Shaun Dobson / James Moat / Kailey
Aliyar +44 (0) 20 7496 3000
Hudson Sandler - Financial PR fulhamshore@hudsonsandler.com
Alex Brennan / Lucy Wollam Telephone: 020 7796
4133
CHAIRMAN'S STATEMENT
Introduction
Over the past two years since March 2020, COVID-19 has had an
unprecedented impact on UK society and on the hospitality sector in
particular.
We believe that we are one of the success stories emerging from
this difficult period. Led by our experienced Board and senior
management team, we were able to pivot our two businesses to
respond to our customers' preferences and operate within government
safety guidelines. We are now operating a greater number of
restaurants than two years ago.
All our employees worked tirelessly during those two years to
keep our businesses going and, whenever we were allowed to open,
our customers chose to come back to us in great numbers.
We remained cash flow positive and viable during all the
lockdown periods, and as can be seen from our consolidated cashflow
statement, we have turned from a net debt position two years ago to
a positive net cash position now.
The Group has emerged stronger than ever from the last two years
of turmoil.
Financial year ended 27 March 2022
The year ended 27 March 2022 began with some government
restrictions still in place but come mid July 2021 the Group's
restaurants were allowed to trade as normal. Trading was impacted
again in December 2021 and January 2022 by the government's working
from home advice, however we benefited from support measures
including lower VAT rates and business rates relief during the
year. The Group's revenue for the year ended 27 March 2022 was
GBP82.7m, up 105% from last year's GBP40.3m last year and up 20.6%
from GBP68.6m for the year ended 29 March 2020.
The Group remained cash flow positive during the financial year.
Net cash, excluding lease liabilities recognised under IFRS 16, as
at 27 March 2022 was GBP4.3m. This was a positive swing of GBP7.9m
during the financial year from a net debt position of GBP3.6m in
March 2021 and an even bigger change, of some GBP13.8m, from the
net debt position of GBP9.5m in March 2020.
Franco Manca traded encouragingly throughout the year and is now
serving record numbers of well over 100,000 customers each week.
More than 310,000 customers are registered to the Franco Manca
loyalty app, an increase of almost 50% compared to the prior
year.
The Real Greek performed even more strongly, helped by some
fantastic new openings which increased the business' profile
throughout the UK. These included two new restaurants in Manchester
which opened within a few weeks of each other and quickly became
amongst the Group's strongest performing Real Greek sites by
revenue.
Fulham Shore's financial year to 27 March 2022 was underpinned
by the steadily rising number of customers per week.
Current trading and outlook
As at 20 July 2022, the Group operated 89 restaurants. We aim to
have around 100 locations by the spring of 2023, including the 18
new sites we plan to open in the current financial year to March
2023.
We are now regularly taking over GBP2m per week in net group
revenues.
With help of the return of overseas tourists, the disparity
between suburban and regional towns versus city centre locations
has narrowed with some city centre locations returning to
comparatively 'normalised' patterns. For instance, our St Paul's
and Covent Garden Franco Manca sites are generating record weekly
sales thanks to UK and overseas tourists, more than making up for
any reduction in office staff customers at these locations.
In the three months since the beginning of our current financial
year, we have continued to trade well at Headline EBITDA level, in
line with management expectations.
Market overview
Analysts believe that the number of casual dining outlets across
the UK restaurant market could have contracted by as much as 17%
over the last two years.
The contraction of retail space has resulted in over 14% of the
high street retail space being vacant. CVAs and closures that have
ensued across the restaurant sector have enabled both of our
businesses to obtain sites at favourable rent levels.
We are benefiting from this by taking over not only some former
restaurants but also some former retail locations. The cost to
convert the latter sites is higher as they don't have extract
systems, toilets, utility supply capacity, etc., but they are
sometimes the most prominent locations within towns and therefore
the turnover they contribute to the Group is commensurately
higher.
Of the seven new Franco Manca openings in the last few months,
three sites were vacated by restaurant businesses, three by retail
businesses and one by a bank. Of the last five new The Real Greek
opened, all five sites were vacated by restaurant businesses. Each
opening provides jobs not only to those in hospitality but also the
UK building industry.
Medium term
The UK economy and consumer spending are predicted to enter a
period of turbulence in the coming months. Recent market analysis
has detailed a shift in consumer spending to experiences and social
outings rather than clothing or big-ticket items. We keep our
prices at, or sometimes below, a basket of our competitors' menus.
We believe our customers approve of this particularly as household
incomes become increasingly squeezed. As a result, with our low
menu price points, we have not seen any shift in customer
demand.
With the 17% reduced supply capacity of UK casual dining
restaurant site numbers, we expect a continuing demand for
successful restaurant operators. Our aim is to keep prices across
both Franco Manca and The Real Greek at a level that presents both
propositions as a viable financial alternative to eating at home,
at least once a week.
We still source our quality ingredients from local suppliers
where possible and we have motivated teams of incentivised staff
despite a tight labour market.
Property
Landlords will continue to face an uphill task over the next few
years and we believe rents will continue to decline under pressure
from empty retail and restaurant space.
There continues to be un-let premises all around the UK in
unprecedented numbers. As pointed out above by our list of recent
openings, we and others will benefit from this. The vacant high
street sites will be let at lower rents to smaller expanding chains
and independents.
This will lead to a revitalisation of town centres - Kingston
upon Thames and Peterborough are prime examples of where this is
happening - helped by enlightened local planning and positive local
council measures.
The normal balance of the supply and demand ratio for property
sites alongside tenants may, however, not happen for some
years.
Whilst some landlords are seeing demand for London West End
areas increase, driven by the return of tourists and the cheap
pound, others will have to wait a long time for even prime
positions around the country to be taken up by good restaurant
operators. We believe that this will take many years.
We have now reached agreement with all our UK based landlords
regarding waivers or rent concessions over the last two years. Rent
reviews that are coming due are almost all being agreed at nil
increases.
As a result of static or reducing rental values, we are agreeing
rates reductions on our existing and new properties.
All this should lead to maintaining or reducing the Group's
property costs in percentage terms for our existing estate over the
next few years. This will offset some of the impact of the energy
cost inflation that we are experiencing.
The Group continues to be offered many new sites, former retail
shops, former ground floor offices and former chain
restaurants.
Given the improved trading and popularity of our two businesses
we continue to adapt our expansion strategy for the next three
years keeping in mind the number of suitable sites available and
the cash generation of the Group. We are building a strong pipeline
of new locations to support this opening programme.
Since the start of the new financial year to March 2023 we have
opened Franco Manca in Canterbury, Kingston-Upon-Thames, Edinburgh
Stockbridge, Peterborough and three in Manchester (Didsbury, King
Street and Trafford Centre). We have opened one The Real Greek in
Newcastle and closed the small Greek on the Street unit in Boxpark
Croydon as footfall has still not recovered.
We now have 66 Franco Manca and 23 The Real Greek in the UK.
We are fitting out four new Franco Manca in Chichester, Hove,
Lincoln and Windsor and two new The Real Greek restaurants in
Solihull and Gloucester Quays.
From the firm foundation of our current estate, we have
identified many more excellent locations in the UK for both Franco
Manca and for The Real Greek.
To this end, and supported by the Group's current trading
performance, a further 16 sites are in solicitors' hands.
These sites will continue our existing opening programme for
this financial year and the next to March 2024, with a view to
operating over 120 restaurants in the UK by the spring of 2025.
With steady expansion, this should bring our total estate to
over 250 restaurants in the UK.
Franchising
Over the last few years, we have fielded many enquiries
regarding opening our restaurants outside the UK.
The Board has previous experience of successful expansion
outside the UK at PizzaExpress and Gourmet Burger Kitchen and has
this year made investment in an experienced team to capitalise on
the opportunity to establish our brands overseas.
During the financial year ended 27 March 2022, Franco Manca
entered into a franchise agreement for expansion within Greece. The
franchisee has plans for a minimum of six restaurants to be opened
over the next three years with the first two pizzeria opened during
the financial year.
The Group continues to explore a number of additional
international territories where franchised restaurants could be
opened, and is currently in discussions regarding territories in
Europe, the Middle East, and Africa.
Dividend policy
Although we were considering putting in place 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 by the Board for the
year ended 27 March 2022.
Due to our strong cash generation, the Board intends to review
the suitability of a dividend policy, as well as a small share buy
back programme, during this financial year to March 2023.
Financing
The Group financial position continues to be healthy and its
bankers, HSBC, continue to be supportive of the Group's opening
programme. We have current undrawn facilities of around GBP15.9m.
This is made up of a revolving credit facility of GBP17.0m, of
which GBP1.85m is drawn and an overdraft facility of GBP0.75m.
During the financial year ended 27 March 2022, the Group repaid
the remaining GBP9.3m UK Government backed CLBIL facility that
supported the business during the height of lockdown
uncertainty.
Net cash, excluding lease liabilities recognised under IFRS 16,
as at 27 March 2022 was GBP4.3m (2021: net debt of GBP3.6m).
As at 19 July 2022, net cash (excluding lease liabilities
recognised under IFRS 16) was GBP5.1m. Together with undrawn
facilities, the Group has financial headroom of some GBP21m.
The Group intends to continue to fund its expansion programme
primarily from operating cash flow and will utilise its existing
bank facilities as and when required.
Current outlook
As we write this report the UK Government has been in disarray
for a few weeks: the Prime Minister has resigned and there is
increasing pressure on the UK consumer.
Our restaurants are still crowded with customers seeking a great
experience and importantly value for money in the current
inflationary climate.
We always aim to keep our prices low. This drives high customer
numbers per site making for busy restaurants, a fun atmosphere for
all, and motivated employees.
We continue to source our food ethically and where we can,
locally. This combined with higher volumes in our restaurants and
therefore for our suppliers has helped to mitigate some raw
ingredients price rises. Together with menu inflation and
successful rent reviews, the Company maintained its margin
expectations for the full year.
We have invested our profits in new restaurants, creating jobs,
food quality and spreading the word about our great food and prices
at Franco Manca and The Real Greek.
Fulham Shore has the financial headroom to continue our
controlled expansion programme with our cash balances and borrowing
facilities.
We look forward with confidence to the continued growth of the
Group.
FINANCIAL REVIEW
Fulham Shore's performance in the year ended 27 March 2022 is
summarised in the table below:
Year Year
ended ended
27 March 28 March Change
2022 2021
For continuing operations GBPm GBPm %
Revenue 82.7 40.3 105.2%
Headline EBITDA* 20.3 9.0 125.6%
Adjusted Headline EBITDA* 12.4 1.9 5526%
Headline operating profit/(loss) 9.0 (2.2)
EBITDA* 19.5 8.7 124.1%
Adjusted EBITDA* 11.4 1.6 612.5%
Operating profit/(loss) 6.7 (4.8)
Profit/(loss) before taxation 3.9 (7.5)
Profit/(loss) for the year 3.7 (6.3)
Basic earnings per share 0.6p (1.1p)
Diluted earnings per share 0.6p (1.1p)
Headline basic earnings per
share 0.9p (0.7p)
Headline diluted earnings per
share 0.9p (0.7p)
Cash flow from operating activities 24.5 9.7 152.6%
Development capital expenditure 7.8 1.7 358.8%
Net debt 80.1 74.6 7.4%
(Net cash)/Net debt (excluding
lease liabilities) (4.3) 3.6
Number of restaurants operated No. No.
in the UK
Franco Manca 59 53 +11.3%
The Real Greek 23 19 +21.1%
82 72 +13.9%
* Reconciliation of profit before taxation to Adjusted Headline
EBITDA and Adjusted EBITDA for continuing operations:
Year Year
ended ended
27 March 28 March
2022 2021
GBPm GBPm
Profit/(loss) before taxation 3.9 (7.5)
Finance costs 2.9 2.8
Depreciation and amortisation 11.3 11.1
Amortisation of brand 0.8 0.8
Exceptional costs:
- Impairment of property, plant
and equipment 0.6 1.0
- Covid-19 related costs - 0.5
EBITDA 19.5 8.7
Share based payments 0.1 0.1
Pre-opening costs 0.7 0.2
Headline EBITDA 20.3 9.0
Adjustment for rent expenses (7.9) (7.1)
Adjusted Headline EBITDA 12.4 1.9
EBITDA 19.5 8.7
Adjustment for rent expenses (8.1) (7.1)
Adjusted EBITDA 11.4 1.6
This year ended 27 March 2022 comprised 52 full weeks of trading
(2021: 52 weeks).
Total Group revenue from continuing operations for the year
ended 27 March 2022 increased by 105% to GBP82.7m from GBP40.3m
last year. This increase was driven by the return to unrestricted
trading since the middle of July 2021 versus UK Government's
COVID-19 trading restrictions being in place through most of the
previous financial year.
These restrictions impacted the Group in three ways:
-- social distancing rules reduced the capacity available in
each restaurant by as much as 40% throughout the first 16 weeks of
the year ended 27 March 2022 and throughout the entire previous
financial year;
-- up until 12 April 2021, restaurants were ordered to stay
closed to dine-in customers UK wide while some of the Group's
restaurants offered takeaway, click and collect and delivery
services, then until 17 May 2021, some restaurants with outdoor
seating provided a restricted outdoor dining service;
-- Working from home advice over December 2021 and January 2022 reduced dine in footfall.
The Group's revenues also benefited from the reduced VAT rate on
food sales and certain soft drinks sales during the year ended 27
March 2022.
During the year, despite the impact of COVID-19 restrictions on
the Group in the early part of the financial year, we opened six
new Franco Manca pizzeria and four new The Real Greek restaurant
across the UK. This takes the total restaurants operated by the
Group in the UK to 82 (2021: 72) at year end.
Group Headline EBITDA and Adjusted Headline EBITDA (as defined
and reconciled above) continue to be key measures for the Group as
well as industry analysts as they are indicative of ongoing EBITDA
of the businesses. Headline EBITDA for the year was GBP20.3m (2021:
GBP9.0m), an increase of 125.6% while Adjusted Headline EBITDA for
the year was GBP12.4m (2021: GBP1.9m), an increase of 552.6% on the
prior year. As the impact of the lockdowns was felt at the
beginning of the financial year, the Group's effective cost saving
measures in both variable and fixed costs reduced the cost base of
the Group.
During the year ended 27 March 2022, the Group benefited from
GBP2.4m (2021: GBP10.3m) of other income which included various UK
Government coronavirus support and grants. Of this amount, our
staff who were furloughed or flexi furloughed benefited from
GBP0.8m (2021: GBP8.5m) from the Coronavirus Job Retention Scheme
while the remaining grants were applied against fixed costs of the
businesses. In addition, the Group benefited from business rates
holiday on restaurant properties. The Group is also very grateful
for the continued support of many of our landlords who offered rent
concessions during the affected periods.
Group depreciation and amortisation, excluding amortisation of
the Franco Manca brand, increased 1.9% to GBP11.4m (2021: GBP11.1m)
following the number of new restaurants opened during the year and
the previous year. The Group incurred one off costs in the year of
GBP0.6m (2021: GBP1.0m) from impairment charges for one restaurant
(2021: 5) which was previously impacted by COVID-19 during the year
and has not recovered at the same rate as other Group restaurants
since the return to normal trading. The Group's four restaurants,
that were subject of impairment charges in the previous financial
year, located in Debenhams department stores prior to the COVID-19
pandemic are still trading but under short term leases or tenancies
at will while negotiations with the ultimate landlords continue for
a longer-term solution. In the year ended 27 March 2022, the Group
did not incur any exceptional costs (2021: GBP0.5m) relating to the
temporary closure of the restaurants. These one off costs, have
been offset by the positive Headline EBITDA, leading to an increase
in adjusted operating profit to GBP6.7m (2021: loss of
GBP4.8m).
With our new openings, we have invested GBP0.7m (2021: GBP0.2m)
in pre-opening costs. Finance costs have increased to GBP2.9m
(2021: GBP2.8m). The Group's gross bank debt decreased to GBP1.9m
(2021: GBP15.9m) with net debt reduced during the year. Overall
this has resulted in a profit before taxation of GBP3.9m (2021:
loss GBP7.5m).
The Group's tax charge was GBP0.2m (2021: credit of GBP1.2m).
The tax charge for the year was particularly low primarily due to
the tax deductibility of the exercise of share options in the year
as well as the recognition of the deferred tax asset on IFRS16
leases. The Group's profit after tax was GBP3.7m (2021: loss
GBP6.3m).
Our basic and diluted earnings per share from continuing
operations was 0.6p (2021: basic and diluted loss 1.1p) whilst
Headline basic and diluted earnings per share was 0.9p (2021: basic
and diluted loss per share 0.7p).
Cost inflation
During the year, weakness of Sterling against both the Euro and
the US Dollar from uncertainty over Brexit, the post COVID-19
demand growth and supply crunch from the war in Ukraine and closed
borders in China has continued to drive 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 a 5.6% (2021: 6.2%) 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 therefore
pay at least the National Living Wage to all employees. This
positions the Group as an industry employer of choice during a
challenging time for the UK hospitality industry's labour
market.
The Group's other two material cost items are rent and utility
costs. Rental inflation of our estate at rent review has subsided
as a result of the COVID-19 impact on the commercial rental market.
New leases entered by the Group have seen improved rental deals as
well as longer rent frees and significant landlord contributions.
During the year the Group benefited from landlord contributions
totalling over GBP1.2m on new sites acquired. Utility cost
inflation continues to be volatile as the wholesale cost of energy
has been impacted by the movement of global economic adjustments
and the war in Ukraine. The majority of restaurants in the Group
benefit from fixed price contracts until October 2022.
During the last few months, the Group has seen significant
inflation in building materials for its fitting out projects due
primarily to a combination of commodity prices and supply issues.
However as more of the Group's projects are existing restaurants,
the reduced requirement for building materials mitigates part of
this inflation. Overall average fit out costs have increased by
approximately 12% compared to a year ago.
Cash flows and balance sheets
The Group's cash flow from operating activities has increased by
GBP14.8m to GBP24.5m primarily as a result of a return to normal
trading during the year following the impact of COVID-19
restrictions in the UK.
We invested GBP7.8m (2021: GBP1.7m), before right of use asset
additions, in development capital. This was primarily in new
restaurants but also included investments in outdoor dining spaces
for both businesses, and investment in IT systems including further
development of the Franco Manca loyalty app. As at 27 March 2022
there were 290,000 users (2021: 209,000) signed up to Franco Manca
loyalty scheme, an increase of 39%. This has now grown to over
310,000 users today.
In addition, we recognised GBP19.7m (2021: GBP6.2m) right-of-use
assets in relation to the 13 (2021: 3) short term leasehold
properties acquired during the year for new restaurant openings. At
the same time, equal and opposite additional lease liabilities were
recognised on the balance sheet for GBP19.7m (2021: GBP6.2m).
Following the repayment of the Company's facility under the
government backed Coronavirus Large Business Interruption Loan
Scheme, on 3 November 2021, the Company completed an amendment and
restatement of its revolving credit facility agreement for an
increase in the amount available under its debt facility with HSBC
Bank plc from GBP14.25m to GBP17.0m. Under the new arrangements,
the term of the Company's revolving credit facility was also
extended by 32 months from March 2022 to November 2024. The Company
banking facilities with HSBC now total GBP17.75m including the
existing GBP0.75m overdraft facility.
During the year ended 27 March 2022, the Company received funds
on exercise of outstanding share options of GBP0.5m (2021:
GBP0.5m).
During the years ended 27 March 2022 and 28 March 2021, the
Group has negotiated with its landlords in order to secure support
from them during the various lockdowns. Many of these landlords
have been supportive and the majority of concession deals have been
completed during this period. As at 27 March 2022, short term lease
liabilities included GBP0.4m historic deferred rents (2021:
GBP2.8m).
Resultant net cash from our activities excluding lease
liabilities recognised under IFRS 16 as at 27 March 2022 was
GBP4.3m (2021: net debt GBP3.6m). Since the year end, as at 19 July
2022, the Group's net cash (excluding lease liabilities recognised
under IFRS 16) position improved to GBP5.1m.
People
During the year, the Group's key operations were within the UK.
As detailed above, the Group continued to benefit from the UK
Government's Coronavirus Jobs Retention Scheme and the flexible
furlough of some operational staff across the Group during the
first quarter of financial year when the restaurants were either
temporarily closed or restricted from trading fully.
With the Group's opening programme, the Group continued to
create more new jobs in its new restaurants. Although staff
recruitment continues to be challenging, the impact on the Group's
openings has not been as great since most of the openings are
outside London and the Southeast where the impact has been more
pronounced. 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.
During the year ended 27 March 2022, both businesses introduced
a service charge on dine in bills on reopening at the beginning of
the financial year. This enabled staff to participate in the
service charge through a tronc scheme in each business.
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. During the year, the Group, as described
above, extended the maturity date of the RCF facility by 32 months
to November 2024.
In addition, through prudent management of costs and cashflow,
the Group has built up a cash balance which further increases
available financial headroom for the Group. 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 two years,
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 remains
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 more complex customs border
controls post Brexit and a reduced number of road haulage drivers,
the Group has increased stock levels, where possible, to allow for
longer transit times and has changed some of its ingredients to UK
grown ingredients.
Inflation
The impact of inflation on cost increases across food, drink and
utilities can be significant. To mitigate these issues, the Group
undertake alternative supplier selection, securing longer term
contracts to fix pricing or purchasing negotiations taking into
account benefits from volume growth arising from significant number
of new openings. Utility contracts have been fixed for the majority
of the Group's restaurants to October 2022.
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 combination of Brexit, new additional immigration
controls and the displacement of the workforce as a result of
COVID-19 has made recruitment harder. To mitigate these issues the
Group has invested in its human resources team and has implemented
new innovative incentive schemes designed to retain key individuals
as well as enhanced training programmes.
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 operated four restaurants within the Debenhams estate.
These restaurants are now operating on a tenancy at will or short
term lease basis while negotiations with ultimate landlords
continue. Therefore these individually may be at risk from closure
if negotiations are not successful. The Group is actively looking
for alternative locations in the vicinity of the existing
restaurant.
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.
Revenues from delivery
The Group revenues from delivery have grown during the various
lockdowns. There is a risk of temporary interruption to the third
party delivery service provider. The Group utilities two
independent delivery platforms to mitigate downtime risk.
Allergens
The Group relies on its team members following allergen policies
and procedures to ensure our customers do not suffer from
inaccurate or insufficient information concerning allergens. To
mitigate this risk, all restaurants are provided detailed allergen
information for all foods and drink served and all staff undertake
allergen training across all businesses.
Regulatory compliance
The Group is growing and the UK Government is increasing the
number of areas requiring additional regulatory compliance
including GDPR, ESOS and food labelling. 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
complex 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 trade
receivables, trade payables, accruals that arise directly from the
Group's operations and property leases. 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 27 March 2022
Year Year
ended ended
27 March 28 March
2022 2021
Notes GBP'000 GBP'000
Revenue 1 82,702 40,285
Cost of sales (51,093) (25,227)
Gross profit 31,609 15,058
Administrative expenses (25,039) (27,479)
Other income 2 2,401 10,270
Headline operating profit/(loss) 8,971 (2,151)
--------------------------------------------- ------ ---------- ----------
Share based payments 18 (80) (91)
Pre-opening costs 2 (733) (212)
Amortisation of brand 7 (821) (821)
Exceptional costs:
- Impairment of property, plant
and equipment 8 (602) (1,013)
- COVID-19 related costs 2 - (483)
Operating profit/(loss) 2 6,735 (4,771)
Finance income 2 10
Finance costs 4 (2,863) (2,754)
Profit/(loss) before taxation 3,874 (7,515)
Income tax (expense)/ income 5 (211) 1,209
Profit/(loss) and total comprehensive
income/(expense) for the year attributable
to owners of the company 3,663 (6,306)
Earnings per share
Basic 6 0.6p (1.1p)
Diluted 6 0.6p (1.1p)
CONSOLIDATED AND COMPANY BALANCE SHEETS
27 March 2022
Group Parent company
Notes 27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 7 23,233 24,127 - -
Property, plant and equipment 8 110,499 94,958 101 122
Investments 9 66 - 44,494 44,430
Trade and other receivables 11 672 935 4,164 9,456
Deferred tax assets 16 806 942 244 478
135,276 120,962 49,003 54,486
Current assets
Inventories 10 2,399 1,976 - -
Trade and other receivables 11 4,308 2,721 397 53
Cash and cash equivalents 12 6,141 12,270 63 5,797
12,848 16,967 460 5,850
Total assets 148,124 137,929 49,463 60,336
Current liabilities
Trade and other payables 13 (20,707) (14,177) (2,775) (1,994)
Borrowings 14 (6,527) (11,639) - (3,730)
Income tax payable (368) (10) - -
(27,602) (25,826) (2,775) (5,724)
Net current (liabilities)/assets (14,754) (8,859) (2,315) 126
Non-current liabilities
Borrowings 14 (79,702) (75,198) (5,821) (12,355)
Deferred tax liabilities 16 (1,455) (1,448) - -
(81,157) (76,646) (5,821) (12,355)
Total liabilities (108,759) (102,472) (8,596) (18,079)
Net assets 39,365 35,457 40,867 42,257
Equity
Share capital 17 6,348 6,191 6,348 6,191
Share premium 9,376 9,078 9,376 9,078
Merger relief reserve 30,459 30,459 30,459 30,459
Reverse acquisition reserve (9,469) (9,469) - -
Retained earnings 2,651 (802) (5,316) (3,471)
Total Equity 39,365 35,457 40,867 42,257
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 27 March 2022
Attributable to owners of the Company
Reverse Equity
Merger Acq- Share-
Share Share Relief uisition Retained holders'
Capital Premium Reserve Reserve Earnings Funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 29 March 2020 5,736 6,911 30,459 (9,469) 5,123 38,760
Loss for the year - - - - (6,306) (6,306)
Total comprehensive
income - - - - (6,306) (6,306)
Transactions with owners
Share based payments - - - - 91 91
Deferred tax on
share based payments - - - - 290 290
Issue of share
capital (net of
costs) 360 1,728 - - - 2,088
Exercise of share
options 95 439 - - 534
Total transactions
with owners 455 2,167 - - (5,925) (3,303)
At 28 March 2021 6,191 9,078 30,459 (9,469) (802) 35,457
Profit for the
year - - - - 3,663 3,663
Total comprehensive
income - - - - 3,663 3,663
Transactions with owners
Share based payments - - - - 80 80
Deferred tax on
share based payments - - - - (290) (290)
Exercise of share
options 157 298 - - - 455
Total transactions
with owners 157 298 - - 3,453 3,908
At 27 March 2022 6,348 9,376 30,459 (9,469) 2,651 39,365
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 27 March 2022
Merger
Share Share Relief Retained Total
Capital Premium Reserve Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 29 March 2020 5,736 6,911 30,459 (2,904) 40,202
Loss for the year - - - (948) (948)
Total comprehensive income
for the year - - - (948) (948)
Transactions with owners
Share based payments - - - 91 91
Deferred tax on share based
payments - - - 290 290
Issue of share capital (net
of costs) 360 1,728 - - 2,088
Exercise of share options 95 439 - - 534
Total transactions with owners 455 2,167 - 381 3,003
At 28 March 2021 6,191 9,078 30,459 (3,471) 42,257
Loss for the year - - - (1,635) (1,635)
Total comprehensive income
for the year - - - (1,635) (1,635)
Transactions with owners
Share based payments - - - 80 80
Deferred tax on share based
payments - - - (290) (290)
Exercise of share options 157 298 - - 455
Total transactions with owners 157 298 - (210) 245
At 27 March 2022 6,348 9,376 30,459 (5,316) 40,867
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
for the year ended 27 March 2022
Group Parent company
Notes Year Year Year Year
ended ended ended ended
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Net cash flow from/(used
in) operating activities 19 24,453 9,705 (1,015) (286)
Investing activities
Acquisition of property, plant
and equipment (7,799) (1,679) (7) -
Acquisition of intangible
assets (2) (28) - -
Acquisition of investments (66) - - -
Loan repaid by/(to) subsidiary
undertakings - - 9,028 (1,850)
Net cash flow (used in)/from
investing activities (7,867) (1,707) 9,021 (1,850)
Financing activities
Proceeds from issuance of
new ordinary shares (net of
expenses) 455 2,622 455 2,622
Capital received from bank
borrowings - 11,750 - 11,750
Capital repaid on bank borrowings (14,000) (7,440) (14,000) (7,440)
Principal element of lease
payments (6,309) (1,972) - -
Interest received 2 10 242 478
Interest paid (2,863) (2,754) (437) (507)
Net cash flow (used in)/from
financing activities (22,715) 2,216 (13,740) 6,903
Net increase in cash and
cash equivalents (6,129) 10,214 (5,734) 4,767
Cash and cash equivalents
at the beginning of the year 12 12,270 2,056 5,797 1,030
Cash and cash equivalents
at the end of the year 12 6,141 12,270 63 5,797
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 27 March
2022 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. The Group's statutory
financial statements for the year ended 28 March 2021 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 27 March 2022 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 20 July 2022.
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 27 March 2022 was a 52 week period, with the
comparative year to 28 March 2021 being a 52 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, in accordance with UK-adopted International
Accounting Standards and applicable law.
The financial statements for the year ended 27 March 2022 are
presented in Sterling which is also the functional currency of the
Group. The functional currency is the 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
There following new and amended accounting standards were
effective for the year ended 27 March 2022:
Amendments to IFRS 9, IAS39, IFRS 7, IFRS 4 and IFRS 16 -
Interest rate benchmark reform phase 2 (effective for annual
periods beginning on or after 1 January 2021)
These amendments provide accounting relief when changes in the
basis for determining contractual cash flows result directly from
IBOR reform, and a series of exemptions from certain aspect of the
hedge accounting requirements. It also provides relief for lease
modification. These amendments have had no impact on the financial
statements.
Amendment to IFRS 16 - Covid-19-related rent concessions beyond
30 June 2021 (effective for accounting periods commencing on or
after 1 January 2021)
This amendment extends the time period over which the practical
expedient introduced by earlier amendments is available for use to
30 June 2022. The amendment has had no impact on retained earnings
in the financial earnings in the financial statement in the
year.
NEW STANDARDS THAT ARE NOT YET EFFECTIVE
At the date of authorisation of these financial statements, the
following amendments in Standards relevant to the Group operations
that have not been applied in these financial statements were in
issue but not yet effective:
IFRS 3 (Amendment) Reference to the conceptual framework
IAS 16 (Amendment) Property, plant and equipment: proceeds before intended use
IAS 37 (Amendment) Cost of fulfilling a contract
IAS 1 (Amendment) Classification of liabilities as current or non-current
IAS 1 (Amendment) Disclosure of accounting policies
IAS 8 (Amendment) Definition of accounting estimates
IAS 12 (Amendment) Deferred tax related to assets and
liabilities arising from a single transaction
IFRS 17 (Amendment) Insurance contracts
The Directors anticipate that the adoption of these amendments
in Standards as appropriate in future years will have no material
impact on the financial statements of the Group with the exception
of IAS 12 (Amendment). This will impact the Group with recognition
of deferred tax on IFRS 16 balances and clarity over treatment of
new leases post transition. The Group estimate the deferred tax
asset would increase to GBP1.5m from GBP0.5m as at 27 March 2022 if
the standard were effective. The Group has decided not to early
adopt the amendment.
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 27 March 2022, 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 availability of future equity funding if required
and operational cash flow where cash from revenues are received
within 7 days.
At the end of financial year ended 27 March 2022, the Group was
trading within its banking covenants and significantly within its
debt facilities.
The Group's net current liabilities position at the year end has
increased from the prior year as the Group's trading has returned
to normal trading by the year end and cash balances built up in the
previous financial year have been applied to the repayment of the
Group's CLBIL loan. Net current liabilities can be covered by day
to day operational cash flow, where revenues are normally received
in cash within 7 days of recognition, short term overdraft
facilities and utilising undrawn long term borrowing facilities.
The main long term revolving credit facility was extended during
the financial year and does not require repayment before November
2024,
COVID-19 and government action over the last two years have had
a significant impact on trading. The forecasts used for going
concern analysis has been prepared based on normal trading without
COVID-19 restrictions similar seasonally to the year ended March
2020. The Directors have reviewed the rapidly evolving situation
relating to COVID-19 and do not believe significant closures will
be repeated. As detailed in the Financial Review, various
mitigating actions were taken by the Board during the various
national lockdowns which can be redeployed if there are any future
lockdowns.
The Directors have reviewed the Group's net current liabilities
position, forecasts, sensitivity to any further impact of COVID-19,
availability of potential equity funding, other longer term plans
and the financial resources and bank facilities in place that are
available to deal with the business risks of the Company and the
Group along with the significant covenant headroom. The Group had
net funds, before lease liabilities recognised under IFRS 16, as at
19 July 2022 of GBP5.1m thus having headroom of some GBP21m
available. Additionally, the Group's opening programme can be
adjusted fluidly to take account of business risks and the wider
economic risks. The Directors feel well placed to manage the
business risks successfully within the present financial
arrangements.
The Directors have a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future, being a period of at least
twelve months from the approval of these financial statements.
Thus, they continue to adopt the going concern basis of accounting
in preparing the annual 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 was the reverse of this. Accordingly the
business combination was accounted for 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 profit or loss 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 the earlier of the useful life or 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.
IMPAIRMENT OF ASSETS (continued)
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 as described below.
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.
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.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities, are recognised on
the balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
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 events. 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 acquisition 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 profit or loss.
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.
TAXATION (continued)
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.
Covid-19 related rent concessions
The Group has applied COVID-19 related rent concessions -
amendment to IFRS16 leases. The Group applies the simplified
accounting treatment not to assess whether eligible rent
concessions that are a direct consequence of the COVID-19 pandemic
are lease modifications. The Group applies the practical expedient
consistently to contracts with similar characteristics and in
similar circumstances. For rent concession in leases to which the
Group chooses not to apply the practical expedient, or that do not
qualify for the practical expedient, the Group assesses whether
there is a lease modification.
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, returns
and deferred revenue for the Group's loyalty scheme's unsatisfied
performance obligations .
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.
EXCEPTIONAL COSTS
The Group discloses certain financial performance information
excluding exceptional costs. This presentation allows a better
understanding of the underlying trading performance to the users of
the accounts. Exceptional costs are identified by virtue of the
nature, magnitude and expected frequency of the event giving rise
to them through consideration of quantitative and qualitative
factors including where related costs or income are current
disclosed. Examples of exceptional costs that meet the above
definition and which have been presented as exceptional costs
include, but are not restricted to: impairment of property, plant
and equipment, changes in fair value of investment, costs of
acquisition, one off COVID-19 related costs.
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
UK-adopted international accounting standards 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 and for
assets previously impaired.
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.
Previously impaired assets will be reversed should the original
conditions for impairment change and there are strong indicators
supporting the estimated future cash flows from its use and
eventual disposal of the assets.
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 a 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 74.9% (2021: 68.8%) of
the Group's total assets; estimates and assumptions made may have a
material impact on their carrying value and related depreciation
charge. 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.
Lease accounting
Lease accounting under IFRS 16 is significantly complex 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
4.3% (2021: 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
The Group uses alternative performance measures which are
designed to show the normalised underlying trading performance for
the period, including an adjustment to take account of property
costs on an accruals basis, as below:
OPERATING PROFIT/(LOSS)
Operating (loss)/profit is defined as (loss)/profit before
taxation, finance income and finance costs.
HEADLINE OPERATING PROFIT/(LOSS)
Headline operating (loss)/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, COVID-19 related costs,
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/(LOSS) BEFORE TAXATION
Headline (loss)/profit before taxation is defined as
(loss)/profit 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, COVID-19 related costs, 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 recognised in the
profit and loss account in the period in which they are
incurred.
HEADLINE EBITDA
Headline EBITDA is defined as EBITDA before COVID-19 related
costs and grants received against COVID-19 related costs,
restructuring costs, costs of reverse acquisition, cost of
acquisition, share based payments, loss on disposal of property,
plant and equipment, impairment of property, plant and equipment
and pre-opening costs.
ADJUSTED HEADLINE EBITDA
Adjusted Headline EBITDA is defined as Headline EBITDA less rent
expense calculated on an accrual basis, which excludes the effect
of IFRS 16.
EBITDA
EBITDA is defined as Headline EBITDA less share based payments
and pre-opening costs.
ADJUSTED EBITDA
Adjusted EBITDA is defined as EBITDA less rent expense
calculated on an accrual basis, which excludes the effect of IFRS
16.
HEADLINE EPS
Headline basic EPS and Headline diluted EPS are defined in note
6.
NET CASH/NET DEBT EXCLUDING LEASE LIABILITIES
Net cash or net debt excluding lease liabilities are defined in
note 19 by removing lease liabilities recognised under IFRS16 from
total net cash or net debt .
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 27 March 2022
1 SEGMENT INFORMATION
For management purposes, the Group was organised into two
operating divisions during the year ended 27 March 2022. 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 27 March 2022:
The Real Franco
Greek Manca Other
segment segment unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue from:
External customers 29,121 53,465 116 82,702
Headline EBITDA 7,635 14,157 (1,454) 20,338
Depreciation and amortisation (3,285) (8,055) (27) (11,367)
Headline operating
profit/(loss) 4,350 6,102 (1,481) 8,971
Share based payments (27) (37) (16) (80)
Pre-opening costs (346) (387) - (733)
Amortisation of brand - (821) - (821)
Impairment of property
plant and equipment (602) - - (602)
Operating profit/(loss) 3,375 4,857 (1,497) 6,735
Finance income - 2 - 2
Finance costs (855) (1,649) (359) (2,863)
Segment profit/(loss)
before taxation 2,520 3,210 (1,856) 3,874
Income tax (211)
Profit for the year
from continuing operations 3,663
Assets 43,753 103,091 1,279 148,124
Liabilities (36,566) (67,567) (4,625) (108,759)
Net assets 7,187 35,524 (3,346) 39,365
Capital additions
to PPE 12,814 14,679 7 27,500
Capital additions
to PPE excluding right
of use assets 3,313 4,479 7 7,799
Within Franco Manca includes GBP88,000 (2021:GBPnil) of revenue
generated from the company's franchisee operating in a geographic
region outside of the UK.
1 SEGMENT INFORMATION (continued)
In addition to the revenues generated from external customers,
The Real Greek segment also generated internal revenues from
another segment, Franco Manca, to the value of GBP330,000 (2021:
GBP542,000).
For the year ended 28 March 2021:
The Real Franco
Greek Manca Other
segment segment unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue from:
External customers 9,007 30,779 499 40,285
Headline EBITDA 1,578 8,091 (670) 8,999
Depreciation and amortisation (3,190) (7,932) (28) (11,150)
Headline operating (loss)/profit (1,612) 159 (698) (2,151)
Share based payments (19) (64) (8) (91)
Pre-opening costs (31) (181) - (212)
Amortisation of brand - (821) - (821)
Impairment of property
plant and equipment (321) (692) - (1,013)
COVID-19 related costs (57) (27) (399) (483)
Operating loss (2,040) (1,626) (1,105) (4,771)
Finance income 6 4 - 10
Finance costs (694) (1,607) (453) (2,754)
Segment loss before taxation (2,728) (3,229) (1,558) (7,515)
Income tax income 1,209
Loss for the year from
continuing operations (6,306)
Assets 33,574 97,905 6,450 137,929
Liabilities (25,172) (59,306) (17,994) (102,472)
Net assets 8,402 38,599 (11,544) 35,457
Capital additions
to PPE 1,382 6,464 - 7,846
Capital additions to
PPE excluding right of
use assets 456 1,223 - 1,679
Within revenue from external customers, there was Eat Out To
Help Out income of: GBP1,195,000.
1 SEGMENT INFORMATION (continued)
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/(LOSS)
Year Year
ended ended
27 March 28 March
2022 2021
GBP'000 GBP'000
Operating profit/(loss) is stated after charging/(crediting):
Staff costs (note 3) 29,625 12,767
Coronovirus Job Retention Scheme related costs (note 3) 804 9,521
Other income:
Coronavirus Job Retention Scheme grants (note 3) (755) (8,479)
Other government grants (1,522) (1,791)
Insurance claims (124) -
Share based payments 80 91
Depreciation of property, plant and equipment
Owned assets 4,423 4,883
Leased assets 6,869 6,171
Amortisation of intangible assets:
Trademarks, licenses and franchises 75 97
Brand 821 821
Operating lease rentals of short term leases 241 188
Inventories - amounts charged as an expense 14,690 6,509
Auditor's remuneration:
for statutory audit services 151 149
for other assurance services 9 8
for transactional services - 9
Pre-opening costs 733 212
Exceptional costs:
impairment of property, plant and equipment 602 1,013
COVID-19 related costs - 483
COVID-19 related costs of GBPnil (2021: GBP483,000) include the
one off cost of temporarily closing restaurants following UK
government instructions (such as stock wastage and other costs),
one off property related costs and certain provisions made against
expected credit losses arising from the impact of the COVID-19
pandemic.
3 EMPLOYEES
Year Year
ended ended
27 March 28 March
2022 2021
No. No.
The average monthly number of persons (including Directors) employed by the Group during
the
year was:
Administration and management 35 29
Restaurants 1,610 1,069
1,645 1,098
The average monthly number of persons (including Directors) employed by the Company
during
the year was:
Administration and management 8 7
Year Year
ended ended
27 March 28 March
2022 2021
GBP'000 GBP'000
Staff costs for above persons
Salaries and fees 27,066 11,619
Defined contribution pension costs 472 218
Social security costs 2,087 930
29,625 12,767
Share based payments 80 91
29,705 12,858
Furlough related costs and grants
Furlough salaries and fees 804 8,783
Furlough defined contribution pension costs - 591
Furlough social security costs - 147
Coronavirus Job Retention Scheme grants (755) (8,479)
49 1,042
29,754 13,900
During the first quarter of the year ended 27 March 2022 some
staff were on flexi-furlough whilst during the year ended 28 March
2021, the majority of staff were on either furlough or
flexi-furlough. The Group received grants from the UK Government
under the Coronavirus Job Retention Scheme to enable such staff to
be placed on furlough rather than made redundant as a result of the
UK Government putting the UK under lockdown in the fight against
the COVID-19 pandemic. Costs of employees on furlough have been
recognised in Administrative Expenses while Coronavirus Job
Retentions Scheme grants have been recognised within Other
Income.
3 EMPLOYEES (continued)
DIRECTORS' REMUNERATION
The remuneration of Directors, who are the key management
personnel of the Group and Company, is set out in aggregate and on
a paid basis below.
Year Year
ended ended
27 March 28 March
2022 2021
GBP'000 GBP'000
Salaries, fees and other short term employee benefits 1,252 608
Defined contribution pension costs 23 22
Social security costs 231 105
1,506 735
In light of the impact of COVID-19 and the majority of staff on
furlough or flexi-furlough during the year ended 28 March 2021 and
during the year ended 27 March 2022, from 1 April 2021 up until 30
June 2021, the Directors each waived 20% of their basic salaries
totalling GBP38k (2021: GBP147k) during the same period staff were
receiving furlough or flexi-furlough.
Included above are fees paid to related parties for the
provision of directors' services which are further described in
note 22.
The highest paid director during the year received GBP385,000
(2021: GBP184,000) as well as gains of GBP198,000 (2021: GBP39,000)
from the exercise of share options during the year.
Four Directors received pension contributions during the year
(2021: Four).
During the year five directors (2021: four) exercised share
options for a total of 17,137,829 (2021: 9,440,470) ordinary shares
of the Company. The aggregate gains made on the exercise of options
during the year was GBP2,057,000 (2021: GBP600,000).
4 FINANCE COSTS
Year Year
ended ended
27 March 28 March
2022 2021
GBP'000 GBP'000
Interest expenses on bank loans
and overdrafts 362 457
Interest on lease liabilities 2,501 2,297
2,863 2,754
5 INCOME TAX EXPENSE
Year Year
ended ended
27 March 28 March
2022 2021
GBP'000 GBP'000
Income tax expense on continuing
operations
Based on the result for the year:
UK corporation tax at 19% (2021: 627 -
19%)
Adjustment in respect of prior periods (269) (127)
Total current taxation 358 (127)
Deferred taxation:
Origination and reversal of temporary
timing differences
Current year (147) (1,082)
Total deferred tax (147) (1,082)
Total tax expense/(credit) on profit/(loss)
on continuing operations 211 (1,209)
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
27 March 28 March
2022 2021
GBP'000 GBP'000
Profit/(loss) before taxation from continuing
operations 3,874 (7,515)
Taxation at UK corporation tax rate of
19% (2021: 19%) 736 (1,428)
Expenses not deductible for tax purposes 3 89
Depreciation/impairment on non-qualifying
fixed assets 353 225
Tax effect from right of use asset accounting (652) 228
Share based payments (506) (197)
Movement on unrecognised deferred tax 546 -
Adjustment to tax charge in respect of
previous periods (269) (126)
Total income tax (credit)/expense in
the income statement 211 (1,209)
Factors that may affect deferred tax charges are disclosed in
note 16 including a breakdown of the adjustment to previously
recognised deferred tax.
The UK corporation tax rate is currently 19% but will increase
to 25% from 1 April 2023. The rate increase has been substantively
enacted and therefore the deferred taxation balances have been
recognised at the rate they are expected to reverse at.
6 EARNINGS PER SHARE
Year Year
ended ended
27 March 28 March
2022 2021
GBP'000 GBP'000
Profit/(loss) for the purposes of basic
and diluted earnings per share: 3,663 (6,306)
Share based payments 80 91
Deferred tax on share based payments (81) (214)
Pre-opening costs 733 212
Amortisation of brand 821 821
Deferred tax on amortisation of brand (137) (137)
Loss on disposal 64 3
Exceptional costs
- impairment of property, plant and equipment 602 1,013
- COVID-19 related costs (net) - 483
Headline profit/(loss)for the year for
the purposes of headline basic and diluted
earnings per share: 5,745 (4,034)
Year Year
ended ended
27 March 28 March
2022 2021
No. '000 No. '000
Weighted average number of ordinary shares
in issue for the purposes of basic earnings
per share 626,794 596,214
Effect of dilutive potential ordinary
shares from share options 12,386 23,225
Weighted average number of ordinary shares
in issue for the purposes of diluted
earnings per share 639,180 619,439
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
27 March 28 March
2022 2021
Earnings per share:
Basic and diluted 0.6p (1.1p)
Diluted 0.6p (1.1p)
Headline basic and diluted 0.9p (0.7p)
Headline diluted 0.9p (0.7p)
During a period where the Group or Company makes a loss,
accounting standards require that 'dilutive' shares for the Group
be excluded in the earnings per share calculation, because they
will reduce the reported loss per share; consequently, diluted
earnings per share are the same as basic earnings per share for the
year ended 28 March 2021.
7 INTANGIBLE ASSETS
Group Trademarks,
License and
franchises Software Brand Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
29 March 2020 63 342 8,211 20,705 29,321
Additions 5 23 - - 28
28 March 2021 68 365 8,211 20,705 29,349
Additions 2 - - - 2
27 March 2022 70 365 8,211 20,705 29,351
Accumulated amortisation
29 March 2020 42 157 4,105 - 4,304
Charge in the year 8 89 821 - 918
28 March 2021 50 246 4,926 - 5,222
Charge in the year 5 70 821 - 896
27 March 2022 55 316 5,747 - 6,118
Net book value
27 March 2022 15 49 2,464 20,705 23,233
28 March 2021 18 119 3,285 20,705 24,127
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
presented after Headline Operating Profit/(loss).
As at 27 March 2022 brand intangible asset which relates to
Franco Manca has a remaining amortisation period of 3 years (2021:
4 years).
Goodwill of GBP1,774,000 relates to The Real Greek and is
attributable to its cash generating unit.
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 unit 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 2023 and financial year for the sites open at the
end of March 2022;
-- extrapolated cash flow forecasts over the following twenty
four years, an appropriate timeframe for branded restaurant
businesses, using forecast growth rates based on 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 9.0% (2021: 10.25%) 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.
The estimated recoverable amount of The Real Greek and Franco
Manca segments exceed their carrying values by GBP74,970,000 and
GBP134,800,000 respectively. There are no reasonably plausible
scenarios in which a change in the assumptions would lead to an
impairment loss being recognised for the year ended 27 March
2022.
Similarly, following the impact of COVID-19 on trading during
the year, it would be unlikely for all restaurants in each CGU to
close temporarily to trading for the significant amount of time
that would 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
29 March 2020 39,721 73,559 7,755 3,367 387 124,789
Additions 1,043 5,329 355 162 119 7,008
Remeasurements - 838 - - - 838
Reclassification 46 - - 26 (72) -
Disposals (3) (2,111) (3) - - (2,117)
28 March 2021 40,807 77,615 8,107 3,555 434 130,518
Additions 4,008 18,712 1,433 867 1,491 26,511
Remeasurements - 989 - - - 989
Reclassification 222 - 15 22 (259) -
Disposals (7) - - (63) - (70)
27 March 2022 45,030 97,316 9,555 4,381 1,666 157,948
Accumulated depreciation
and impairment
29 March 2020 11,880 6,025 4,661 1,617 - 24,183
Charge in the year 3,145 6,171 1,242 496 - 11,054
Impairment 1,013 - - - - 1,013
Disposals (1) (687) (2) - - (690)
28 March 2021 16,037 11,509 5,901 2,113 - 35,560
Charge in the year 2,805 6,869 1,119 499 - 11,292
Impairment 162 440 - - - 602
Disposals - - - (5) - (5)
27 March 2022 19,004 18,818 7,020 2,607 - 47,449
Net book value
27 March 2022 26,026 78,498 2,535 1,774 1,666 110,499
28 March 2021 24,770 66,106 2,206 1,442 434 94,958
Right of use assets comprises assets relating to property
leases.
8 PROPERTY, PLANT AND EQUIPMENT (continued)
An impairment review of property, plant and equipment is carried
out 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 unit
(CGU). 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 board
approved financial forecasts for the 2023 financial year for the
site being tested at the end of March 2022;
-- extrapolated cash flow forecasts over the remaining unexpired
length of the lease years using forecast growth rates based on 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 9.0%
(2021: 10.25%) 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 the 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 and one CGU that had
previously had an impairment charge, where the overall impairment
charge would increase by GBP348,000.
The following impairment charges have been recognised in the
Statement of Comprehensive Income as exceptional costs - impairment
of property, plant and equipment.
27 March 27 March 28 March 28 March
2022 2022 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
Impairment Recoverable Impairment Recoverable
charge amount charge amount
For continuing operations
Franco Manca restaurant - - 240 -
1
Franco Manca restaurant - - 252 -
2
Franco Manca restaurant
3 - - 56 130
Franco Manca restaurant
4 - - 144 83
Total for Franco Manca
operating segment - - 692 213
The Real Greek restaurant - - 321 -
1
The Real Greek restaurant
2 602 528 - -
Total for The Real
Greek operating segment 602 528 321 -
Total for the Group 602 528 1,013 213
8 PROPERTY, PLANT AND EQUIPMENT (continued)
The recoverable amounts shown above include the right of use
assets recognised under IFRS 16 relating to the relevant CGU.
During the year ended 27 March 2022, the Group impaired the
property plant and equipment in relation to nil (2021: one)
property trading as Franco Manca and one (2021: nil) property
trading as The Real Greek, which are trading financially below
management expectations. In the prior year ended 28 March 2021,
three restaurants trading as Franco Manca and one as The Real Greek
were impaired following the closure of Debenhams where these sites
were located as concessions. These sites continue to trade under
short term leases or tenancies at will.
Parent Company Furniture,
fixtures
Leasehold Plant and and
improvements equipment fittings Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
29 March 2020 and 28 March 2021 206 66 26 298
Additions - 7 - 7
27 March 2022 206 73 26 305
Accumulated
depreciation
29 March 2020 80 54 13 147
Charge in the year 21 5 3 29
28 March 2021 101 59 16 176
Charge in the year 21 4 3 28
27 March 2022 122 63 19 204
Net book value
27 March 2022 84 10 7 101
28 March 2021 105 7 10 122
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
27 March 28 March
2022 2021
GBP'000 GBP'000
Group
Unlisted shares 66 -
Change in fair value - -
Loans at cost - -
Impairment of investments and loans - -
Carrying amount 66 -
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 27 March 2022, the Group made an
additional investment of GBP66,000 (2021: GBPnil) to Made of Dough
Limited as part of a rights issue. The Group as at 27 March 2022
holds 24% (2021: 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.
27 March 28 March
2022 2021
GBP'000 GBP'000
Parent Company
Cost and net book value
Opening position 44,430 44,347
Investment in subsidiaries 64 83
Closing position 44,494 44,430
9 INVESTMENTS (continued)
As at 27 March 2022, 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
Holding shares held,
ownership
interest
and
voting power
Incorporated in England and Wales
10DAS Limited Ordinary 100% Dormant
Café Pitfield Limited Ordinary 100% Dormant
CHG Brands Limited* Ordinary 100% Dormant
FM6 Limited* Ordinary 100% Restaurant property
FM98 LTD Limited* Ordinary 100% Operation of restaurants
FM111 Limited* Ordinary 100% Restaurant property
FM Catherine The Great Ordinary 100% Restaurant property
Limited*
FM High Holborn Limited Ordinary 100% Restaurant property
FM London Bridge Limited Ordinary 100% Restaurant property
Franco Manca Chelmsford Ordinary 100% Restaurant property
Limited
Franco Manca Holdings Ordinary 100% Dormant
Limited
Franco Manca International
Limited* Ordinary 100% Restaurant franchising
Franco Manca Peterborough
Limited Ordinary 100% Restaurant property
Franco Manca 1 UK Limited Ordinary 100% Restaurant property
Franco Manca 2 UK Limited* Ordinary 100% Operation of restaurants
Kefi Limited Ordinary 100% Dormant
Souvlaki & Bar Limited* Ordinary 100% Restaurant property
The Real Greek Bracknell Ordinary 100% Restaurant property
Limited
The Real Greek Food
Company Limited* Ordinary 100% Operation of restaurants
The Real Greek International
Limited* Ordinary 100% Dormant
The Real Greek (Norwich)
Limited* Ordinary 100% Dormant
The Real Greek Wine
Company Limited* Ordinary 100% Restaurant property
* Held by subsidiary undertaking
10 INVENTORIES
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Raw materials 827 532 - -
Consumables 1,572 1,444 - -
2,399 1,976 - -
Inventories are charged to cost of sales in the consolidated
comprehensive statement of income. Amounts recognised as an expense
during the period ended 27 March 2022 GBP14,690,000 (2021:
GBP6,509,000).
TRADE AND OTHER RECEIVABLES
11
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Included within non-current assets:
Amounts receivable from subsidiaries - - 4,164 9,456
Other receivables 672 935 - -
672 935 4,164 9,456
Included within current assets:
Trade receivables 2,603 1,009 247 -
Other receivables 293 491 - -
Prepayments and accrued income 1,412 1,221 150 53
4,308 2,721 397 53
4,980 3,656 4,561 9,509
Other receivables due after more than one year relate to rent
deposits.
Amounts receivable from subsidiaries in the Company included
within non-current assets 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
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 6,141 12,270 63 5,797
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.
TRADE AND OTHER PAYABLES
13
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Included in current liabilities:
Trade payables 8,577 5,670 109 60
Other taxation and social security payable 891 765 82 96
Other payables 1,622 971 38 95
Accruals 9,617 6,771 2,546 1,743
20,707 14,177 2,775 1,994
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.
BORROWINGS
14
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Short term borrowings:
Bank loans - 3,730 - 3,730
Lease liabilities 6,527 7,909 - -
6,527 11,639 - 3,730
Long term borrowings:
Bank loans 1,850 12,120 1,850 12,120
Lease liabilities 77,852 63,078 - -
Amounts owed to subsidiary undertakings - - 3,971 235
79,702 75,198 5,821 12,355
86,229 86,837 5,821 16,085
As at 27 March 2022, the Group's committed Sterling borrowing
facilities comprise a revolving credit facility of GBP 17,000,000
(2021: GBP14,250,000), a Coronavirus Large Business Interruption
Loan facility ("CLBIL") of GBPNil (2021: GBP10,750,000), expiring
between one and five years and a bank overdraft facility, repayable
on demand, of GBP750,000 (2021: GBP750,000) from HSBC Bank PLC
("HSBC") which are secured by a mortgage debenture in favour of
HSBC representing fixed or floating charges over all assets of the
Group. The Group benefited from covenant waivers from HSBC during
the year ended 27 March 2022.
The interest rate applicable on the revolving credit facility is
up to 2 .60 % above SONIA. The interest rate applicable on the bank
overdraft is 2.1% over base rate. The overdraft facility was
undrawn as at 27 March 2022.
Amounts owed to subsidiary undertakings are amounts borrowed
from The Real Greek Food Company Limited, a subsidiary of the
Company and are repayable on 27 March 2022. The interest rate
applicable on the amounts owed to subsidiary undertakings is
3.5%.
14 BORROWINGS (continued)
The maturity profile of the Group's lease liabilities as at 27
March 2022 was as follows:
27 March 28 March
2022 2021
GBP'000 GBP'000
Within one year 9,153 10,039
In more than one year but less than two years 8,906 7,051
In more than two years but less than three years 8,903 6,861
In more than three years but less than four years 8,694 6,807
In more than four years but less than five years 8,166 6,552
In more than five years 63,024 51,439
106,846 88,749
Effect of unearned interest (22,467) (17,762)
Lease liabilities 84,379 70,987
There are no committed lease liabilities not yet commenced at 27
March 2022.
Interest expense on borrowings for the year is disclosed in Note
4 finance costs whilst capital payments for the year is disclosed
in Note 19.
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.
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
Financial assets and liabilities
The Group and Company had the following financial assets and
liabilities:
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Non-current financial assets
Amounts owed by subsidiary undertakings - - 4,164 9,456
Other receivables 672 935 - -
Current financial assets
Cash at bank and in hand 6,141 12,270 63 5,797
Trade and other receivables* 2,896 1,500 247 -
9,709 14,705 4,474 15,253
Current financial liabilities
At amortised cost - borrowings 6,527 11,639 - 3,730
At amortised cost - payables** 19,816 13,412 2,693 1,898
Non-current financial liabilities
At amortised cost - borrowings 79,702 75,198 1,850 12,120
At amortised cost - payables - - 3,971 235
106,045 100,249 8,514 17,983
* 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 27 March 2022
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 6,141 - - 6,141
Trade and other receivables 2,896 153 519 3,568
Bank loans and overdrafts - (1,850) - (1,850)
Lease liabilities (532) (4,187) (102,127) (106,846)
Trade and other payables (19,816) - - (19,816)
(11,311) (5,884) (101,608) (118,803)
For the year ended 28 March 2021
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 12,270 - - 12,270
Trade and other receivables 1,500 117 818 2,435
Bank loans and overdrafts (3,730) (12,120) - (15,850)
Lease liabilities (2,930) (3,271) (82,548) (88,749)
Trade and other payables (13,412) - - (13,412)
(6,302) (15,274) (81,730) (103,306)
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 27 March 2022
Between
Less than 1 and
1 year 5 years Total
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 63 - 63
Trade and other receivables 247 4,164 4,411
Bank loans and overdrafts - (1,850) (1,850)
Trade and other payables (2,693) (3,971) (6,664)
(2,383) (1,657) (4,040)
For the year ended 28 March 2021
Between
Less than 1 and
1 year 5 years Total
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 5,797 - 5,797
Trade and other receivables - 9,456 9,456
Bank loans and overdrafts (3,730) (12,120) (15,850)
Trade and other payables (1,898) (235) (2,133)
169 (2,899) (2,730)
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 GBP17,250,000 (2021: GBP14,250,000), a committed long
term Coronavirus Large Business Interruption Loan facility of
GBPNil (2021: GBP10,750,000) and short term bank overdraft
facilities available to manage its liquidity as at 27 March 2022 of
GBP750,000 (2021: 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
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Floating rate
Cash at bank and in hand 6,141 12,270 63 5,797
Bank loans (1,850) (15,850) (1,850) (15,850)
4,291 (3,580) (1,787) (10,053)
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 27 March 2022 were 2.0% and year ended 28 March 2021
were 2.2% and the weighted average interest rates paid for bank
overdrafts during the year ended 27 March 2022 and 2021 were
2.5%.
The Group has performed a sensitivity analysis based on a 0.5%
variance in SONIA element of floating interest rates. The
annualised impact of an increase in SONIA by 0.5% applied to the
balance of floating rate bank loans at the year end would result in
increased finance costs of GBP42,084 (2021: GBP79,250).
Foreign Exchange Risks
During the years ended 27 March 2022 and 28 March 2021, 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
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 6,141 12,270 63 5,797
Trade receivables and other receivables 3,568 2,435 4,164 9,456
9,709 14,705 4,227 15,253
The Group has made a number of deposits and estimates that there
are no further credit loss likely in relation to these deposits
made. In the year ended 28 March 2021 the Group recognised an
impairment of GBP69,000) in relation to other investment held by
the Group. 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 27 March 2022 and 28 March 2021 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 and online food delivery
companies. As the Group has no material credit facilities granted
to customers no credit losses have been estimated.
The Group's other receivables predominantly comprises of
deposits held by landlords and suppliers and the Group estimates
that there is no material expected credit loss on these.
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. The Company estimates that there
is no increase in credit risk identified given the nature of the
balances held.
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 27 March 2022 and 28 March 2021 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
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
As at 28 March 2021 (506) (1,879) 478 3
Tax on share based payments (290) 290 (290) 290
Transfer from/(to) reserves (290) 290 (290) 290
Movement in accelerated capital
allowances (294) 285 - -
Tax on share based payments 81 214 56 185
Tax on losses (429) 429 - -
Tax on intangible assets 136 137 - -
Tax on leases 653 18
Transfer from profit and loss 147 1,083 56 185
Net deferred tax (liability)/asset (649) (506) 244 478
During the year ended 27 March 2022, the Group and Company
transferred GBP290,000 deferred tax charge to reserves (2021:
GBP290,000 from reserves) in relation to deferred tax on share
based payments.
The Group's deferred taxation liability disclosed above relates
to the following:
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Deferred tax assets
Share options 304 513 244 478
Leases 502 - - =
Tax losses - 429 - -
Deferred taxation assets 806 942 244 478
Deferred tax liabilities
Accelerated capital allowances (1,044) (750) - -
Intangible assets (411) (547) - -
Leases - (151) - -
Deferred taxation liabilities (1,455) (1,448) - -
16 DEFERRED TAXATION (continued)
The Company has losses of GBP1,984,000 (2021: GBP981 ,000)
which, subject to agreement with HM Revenue & Customs, are
available to offset against the respective Company's future
profits. A deferred taxation asset in respect of these losses of
GBP496,000 (2021: GBP186,000) 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
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Allotted, issued called up and fully paid:
634,820,577 (2021: 619,057,651) ordinary shares of 1p each 6,348 6,191 6,348 6,191
The Company has one class of ordinary share which carries no
rights to fixed income.
During the year ended 27 March 2022, the Company issued the
following ordinary shares following the exercise of certain share
options in the Company:
Nominal Number
Type value per of ordinary
of ordinary shares
Amount paid per share shares share No.
GBP
GBP0.01 Ordinary 0.01 11,131,070
GBP0.06 Ordinary 0.01 3,332,842
GBP0.1015 Ordinary 0.01 1,130,000
GBP0.1775 Ordinary 0.01 169,014
15,762,926
18 SHARE BASED PAYMENTS
The Group currently uses a number of equity settled share plans
to incentivise to its Directors and employees.
The Group operated four share plans during the year:
-- 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 GBP80,000 (2021: GBP91,000).
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 27 March 2022 are as
follows:
Year Year
ended ended
27 March 28 March
2022 2021
No. No.
'000 '000
At the beginning of the year 53,295 64,851
Granted during the year 400 -
Exercised during the year (21,113) (9,441)
Lapsed during the year (2,375) (2,115)
At the end of the year 30,207 53,295
18 SHARE BASED PAYMENTS (continued)
Weighted average exercise price
Year Year
ended ended
27 March 28 March
2022 2021
GBP GBP
At the beginning of the year 0.10 0.10
Granted during the year 0.16 -
Exercised during the year (0.07) (0.06)
Lapsed during the year (0.15) (0.14)
At the end of the year 0.12 0.10
Outstanding and exercisable share options to acquire ordinary
shares of 1 pence each as at 27 March 2022 under various Group
share plans are as follows:
For the year ended 27 March 2022
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
Unapproved
GBP0.1015 72 0.1015 75 72 0.1015 75
GBP0.11 22,097 0.1100 37 22,097 0.1100 37
GBP0.1125 1,175 0.1125 88 - - -
GBP0.16 95 0.1600 109 - - -
GBP0.17625 585 0.1763 63 585 0.1763 63
GBP0.1775 81 0.1775 59 81 0.1775 59
GBP0.1825 921 0.1825 51 921 0.1825 51
25,026 0.1147 41 23,756 0.1146 38
CSOP
GBP0.1015 388 0.1015 75 388 0.1015 75
GBP0.1125 1,725 0.1125 88 - - -
GBP0.16 305 0.1600 109 - - -
GBP0.17625 815 0.1763 63 815 0.1763 63
GBP0.1775 369 0.1775 59 369 0.1775 59
GBP0.1825 1,579 0.1825 51 1,579 0.1825 51
5,181 0.1505 71 3,151 0.1703 58
18 SHARE BASED PAYMENTS (continued)
For the year ended 28 March 2021
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
GBP0.06 3,332 0.0600 7 3,332 0.0600 7
3,332 0.0600 7 3,332 0.0600 7
Unapproved
GBP0.06 13,805 0.0600 43 13,805 0.0600 43
GBP0.1015 1,492 0.1015 87 - - -
GBP0.11 23,373 0.1100 49 23,373 0.1100 49
GBP0.1125 1,595 0.1125 100 - - -
GBP0.17625 785 0.1763 75 785 0.1763 75
GBP0.1775 162 0.1775 71 162 0.1775 71
GBP0.1825 1,421 0.1825 63 1,421 0.1825 63
42,633 0.0975 52 39,546 0.0967 48
CSOP
GBP0.1015 1,518 0.1015 87 - - -
GBP0.1125 2,180 0.1125 100 - - -
GBP0.17625 915 0.1763 75 915 0.1763 75
GBP0.1775 538 0.1775 71 538 0.1775 71
GBP0.1825 2,179 0.1825 63 2,179 0.1825 63
7,330 0.1438 81 3,632 0.1802 67
During the year ended 27 March 2022, the market price of
ordinary shares in the Company ranged from GBP0.144 (2021: GBP
0.0475) to GBP0.1985 (2021: GBP0.1650). The share price as at 27
March 2022 was GBP0.155 (2021: GBP 0.1525) . The average share
price for options exercised during the year was GBP0.179 (2021:
GBP0.12)
The fair value of the options is estimated at the date of grant
using a Black-Scholes valuation model.
Following the exercise of the outstanding options within the EMI
plan during the year ended 27 March 2022, this scheme will no
longer operate moving forwards.
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 for the grants were as
follows:
Year Year
ended ended
27 March 28 March
2022 2021
Weighted average expected life 3 years -
Weighted average exercise price 16 pence -
Risk free rate 0.01% -
Expected volatility 0.78% -
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 27 March 2022 are as follows:
Year Year
ended ended
27 March 28 March
2022 2021
'000 '000
At the beginning of the year 579 591
Exercised during the year (15) (12)
At the beginning and end of the year 564 579
For the year ended 27 March 2022
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 564 - 37 564 - 37
564 - 37 564 - 37
18 SHARE BASED PAYMENTS (continued)
For the year ended 28 March 2021
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 579 - 49 579 - 49
579 - 49 579 - 49
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 company
Year Year Year Year
ended ended ended ended
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) for the year 3,663 (6,306) (1,635) (948)
Income tax expense/ (credit) 211 (1,209) (57) (185)
Profit/(loss) before tax 3,874 (7,515) (1,692) (1,133)
Finance income (2) (10) (242) (479)
Finance costs 2,863 2,754 437 507
Operating profit/(loss)
for the year 6,735 (4,771) (1,497) (1,105)
Adjustments
Depreciation and amortisation 12,188 11,972 28 29
Impairment 602 1,013 - -
Loss on disposal of fixed
assets 65 3 - -
Share based payments expense 80 91 16 8
Operating cash flows before
movements in working capital 19,670 8,308 (1,453) (1,068)
Increase in inventories (423) (70) - -
(Increase)/decrease in trade
and other receivables (1,324) (233) (343) 97
Increase/ in trade and other
payables 6,530 1,700 781 685
Cash generated from/(used
in) operations 24,453 9,705 (1,015) (286)
Income taxes paid - - - -
Net cash flow from/(used
in) operating activities 24,453 9,705 (1,015) (286)
19 NOTE TO CASH FLOW STATEMENTS (continued)
Changes in net debt from financing activities
Group Bank Bank Lease Lease
Cash loans loans Total liabilities liabilities
and due due before due due
Cash within after lease within after
Equivalents 1 year 1 year liabilities 1 year 1 year Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash/(debt)
as at
29 March 2020 2,056 - (11,540) (9,484) (5,163) (63,051) (77,698)
Cash flows 10,214 - (4,310) 5,904 1,972 - 7,876
Reallocation - (3,730) 3,730 - (4,915) 4,915 -
Additions to
lease
liabilities - - - - (141) (5,188) (5,329)
Remeasurements
to lease
liabilities - - - - (131) (707) (838)
Reduction of
lease
liabilities - - - - 469 953 1,422
Net cash/(debt)
as at
28 March 2021 12,270 (3,730) (12,120) (3,580) (7,909) (63,078) (74,567)
Cash flows (6,129) - 14,000 7,871 6,309 - 14,180
Reallocation - 3,730 (3,730) - (3,242) 3,242 -
Additions to
lease
liabilities - - - - (1,662) (17,050) (18,712)
Remeasurements
to lease
liabilities - - - - (23) (966) (989)
Net cash/(debt)
as at
27 March 2022 6,141 - (1,850) 4,291 (6,527) (77,852) (80,088)
Net cash/ (net debt) before lease liabilities recognised under
IFRS 16 as at 27 March 2022 was net cash of GBP4,291,000 (2021: net
debt of (GBP3,580,000)).
19 NOTE TO CASH FLOW STATEMENTS (continued)
Parent Company Bank Bank
Cash loans loans
and due due
Cash within after
Equivalents 1 year 1 year Total
GBP'000 GBP'000 GBP'000 GBP'000
Net cash/(debt)
as at 29 March
2020 1,030 - (14,737) (13,707)
Cash flows 4,767 - (1,348) 3,419
Reallocation - (3,730) 3,730 -
Net cash/(debt)
as at 28 March
2021 5,797 (3,730) (12,355) (10,288)
Cash flows (5,734) - 10,264 4,530
Reallocation - 3,730 (3,730) -
Net cash/(debt)
as at 27 March
2022 63 - (5,821) (5,758)
LEASE COMMITMENTS
20
The Group had aggregate minimum lease payments under
non-cancellable leases which fall due as follows:
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Land and buildings
within one year - 100 - -
- 100 - -
The commitment included above relates to annual lease
commitments under short term leases that have not been included in
borrowings and will be charged to the profit and loss. Within the
terms of the leases for land and buildings are commitments for
variable pay that are dependent on turnover. These have not been
disclosed in the above table due to the variable nature of these
payments.
CAPITAL COMMITMENTS
21
The Group capital expenditure contracted for but not provided in
the financial statements as follows:
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Committed new restaurant builds 4,343 902 - -
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.
Transactions with Directors other than compensation
During the year ended 27 March 2022, DM Page, NAG Mankarious, N
Wong and N Donaldson, directors of the Company, exercised options
over 17,137,829 ordinary shares (2021: DM Page, NAG Mankarious, N
Wong and N Donaldson exercised options over 9,440,470 ordinary
shares). The aggregate gains made on the exercise of the options
during the year was GBP2,056,539 (2021: GBP561,000).
Other related party transactions
During the year, the Group was invoiced GBPnil (2021: GBP58,000)
for the services of NJ Donaldson by London Bridge Capital Partners
LLP, a business in which NJ Donaldson is a partner. This
arrangement ended on 31 December 2020 and from 1 January 2021, NJ
Donaldson was remunerated directly by the Group
22 RELATED PARTY DISCLOSURES (continued)
During the year the Group invoiced GBP43,500 (2021: GBP71,000)
in rent relating to a property leased to Meatailer Limited, a
company in which DM Page and NAG Mankarious are directors and
shareholders and NJ Donaldson and NCW Wong are shareholders. The
balance outstanding as at 27 March 2022 owed by Meatailer Limited
was GBPNil (2021: GBPNil). During the year Meatailer Limited
invoiced the Group and Company GBPnil (2021: GBP48,000) for a
volume rebate received by the Group that was attributable to
Meatailer Limited on a joint purchasing deal earned from a third
party supplier. The balance outstanding as at 27 March 2022 owed to
Meatailer was GBPNil (2021: GBPNil).
During the year ended 27 March 2022, the Group made an
additional investment of GBP66,000 (2021: GBPnil) to Made of Dough
Limited as part of a rights issue. The Group as at 27 March 2022
holds 24% (2021: 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.
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
27 March 28 March
2022 2021
GBP'000 GBP'000
The Real Greek Food Company Limited 688 623
Franco Manca 2 UK Limited 920 1,302
1,608 1,925
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
27 March 28 March
2022 2021
GBP'000 GBP'000
10DAS Limited - 2
The Real Greek Food Company Limited (3,736) 2,959
Franco Manca 2 UK Limited (5,292) (1,111)
(9,028) 1,850
Amounts outstanding at year
end Parent company
27 March 28 March
2022 2021
GBP'000 GBP'000
10DAS Limited (14) (14)
The Real Greek Food Company
Limited (3,957) (221)
Franco Manca 2 UK Limited 4,164 9,456
193 9,221
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 (2021: GBPNil).
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END
FR EADXEAEKAEAA
(END) Dow Jones Newswires
July 21, 2022 02:00 ET (06:00 GMT)
Grafico Azioni The Fulham Shore (LSE:FUL)
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