TIDMLGRS
RNS Number : 8328U
Loungers PLC
28 November 2023
28 November 2023
Loungers plc
Results for the 24 weeks ended 1 October 2023
Continued strong like for like sales performance accompanied by
acceleration in new site roll-out and margin improvement
16 new sites opened in the period; on-track to open 34 new sites
this year and to end the year with 256 sites
Loungers, a leading operator of all day café/bar/restaurants
across the UK under the Lounge, Cosy Club and Brightside brands, is
pleased to announce its unaudited results for the 24 weeks ended 1
October 2023 ("the period").
Financial Highlights
24 weeks 24 weeks
ended 1 October ended 2 October
2023 2022
GBP'000 GBP'000
Revenue 149,619 122,326
Adjusted EBITDA(1) 23,862 19,307
Adjusted EBITDA margin (%) 15.9% 15.8%
Adjusted EBITDA (IAS17) 17,284 13,482
Adjusted EBITDA (IAS17) margin
(%) 11.6% 11.0%
Operating profit 7,774 6,056
Operating profit margin (%) 5.2% 5.0%
Profit before tax 3,936 2,831
Diluted earnings per share (p) 2.6 2.3
Cash generated from operating activities 23,402 14,613
1 October 2 October
2023 2022
GBP'000 GBP'000
Non-property net debt 14,259 9,457
Net debt 156,136 134,246
(1) Adjusted EBITDA is calculated as operating profit before
depreciation, impairment, pre-opening costs, exceptional costs, and
share-based payment charges.
-- Revenue growth of 22.3% versus H1 2023 reflects like for like
("LFL") sales growth of +7.7% and the addition of a net 32 new
sites
-- Adjusted EBITDA of GBP23.9m (H1 2023: GBP19.3m), up 23.6%
-- Adjusted EBITDA (IAS17) of GBP17.3m (H1 2023: GBP13.5m) up 28.2%
-- IAS17 Adjusted EBITDA margin of 11.6% up 0.6% on H1 2023
-- Cash generated from operating activities increased to GBP23.4m (H1 2023: GBP14.6m)
Operational Highlights
-- Consistently strong trading driven by both mature estate
(with LFL sales 25% ahead of pre Covid levels) and new sites
-- Continued evolution of our offer, including further food menu
innovation and the introduction of a new blended drinks and iced
coffees range
-- Headline four-year LFL sales growth of +25.0% is testament to
the strength of our brands, the flexibility of our offering, and
the quality of our teams
-- Margins benefitting from an easing of inflationary pressures
and on track to return to pre Covid levels
-- New site roll out accelerated with 16 sites opened in the
period (H1 2023 11 sites) - 14 Lounges and two Brightsides. New
sites performing very well and the pipeline remains strong
Current Trading and Outlook
-- The business has continued to trade well over the first eight
weeks of Q3, with LFL sales growth across the 32 weeks to 26
November of 7.6%
-- A further six sites have opened post the 1 October half year
end - five Lounges and one Cosy Club
-- With the consumer remaining robust and continuing evidence of
moderating inflationary pressure we are optimistic as we look ahead
to the Christmas trading period
-- The current financial year will be a 53 week accounting year to 21 April 2024
Nick Collins, Chief Executive Officer of Loungers said:
"This has been another period of strong financial and
operational growth for Loungers. The fact that we have delivered
increases of 22.3% and 23.6% in our revenue and EBITDA respectively
should be taken as yet another reminder that it is not all doom and
gloom in the UK hospitality sector. We are living proof that
businesses which can provide outstanding hospitality, great food
and drink and excellent value are still capable of thriving, and we
see more growth potential for Loungers than ever before.
Our accelerated site roll-out programme continues at pace, and
we are on track to open 34 in FY24, which means that we will end
the year with more than 250 sites. The opening of every new Lounge
means an investment of nearly GBP1m into the local high street, and
the increased footfall creates a positive knock-on effect on all of
the businesses around us. By the end of 2023, we will have added
another 1,000 people to our team during the year, and we are
particularly pleased that one in eight of those new jobs is in
areas that the government wants to 'level up' by creating better
opportunities and standards of living."
Analyst Presentation Webcast
An analyst presentation will be held today, Tuesday 28 November
2023, at 9.00am (GMT). Participants wishing to join the webcast
should contact loungers@powerscourt-group.com to request
details.
Use of Alternative Performance Measures
The Half Year Results include both statutory and alternative
performance measures ("APMs"). Further background to the use of
APM's and reconciliations between statutory measures and APM's are
presented on page 17.
For further information please contact:
Loungers plc Via Powerscourt
Nick Collins, Chief Executive Officer
Gregor Grant, Chief Financial Officer
Houlihan Lokey UK Limited (Financial Adviser Tel: +44 (0) 20
and NOMAD) 7484 4040
Sam Fuller / Tim Richardson
Liberum Capital Limited (Joint Broker) Tel: +44 (0) 20
Andrew Godber / John Fishley 3100 2000
Peel Hunt LLP (Joint Broker) Tel: +44 (0)20 7418
Dan Webster / Andrew Clark 8900
Powerscourt (Financial Public Relations) Tel: +44 (0) 207
Rob Greening / Nick Hayns / Elizabeth Kittle 250 1446
Notes to Editors
Loungers operates through its three established complementary
brands - Lounge, Cosy Club and Brightside - in the UK hospitality
sector. A Lounge is a neighbourhood café/bar combining elements of
coffee shop culture, the British pub and dining. There are 205
Lounges nationwide. Lounges are principally located in secondary
suburban high streets and small town centres. The sites are
characterised by informal, unique interiors with an emphasis on a
warm, comfortable atmosphere, often described as a "home from
home".
Cosy Clubs are more formal bars/restaurants offering
reservations and table service but share many similarities with the
Lounges in terms of their broad, all-day offering and their focus
on hospitality and culture. Cosy Clubs are typically located in
city centres and large market towns. Interiors tend to be larger
and more theatrical than for a Lounge, and heritage buildings or
first-floor spaces are often employed to create a sense of
occasion. There are 36 Cosy Clubs nationwide.
Brightside is a roadside dining concept and was launched in
November 2022. The first Brightside location opened on the A38,
south of Exeter, in February 2023, with the second opening in
Saltash near Plymouth in June 2023 and the third in Honiton on the
A303 in August 2023.
CHIEF EXECUTIVE REVIEW
Operating review
Continuing the consistently strong sales performance post
Covid
Our sales performance continues to be consistently strong. We
achieved like for like sales of +7.7%, whilst our four year LFL
result of +25.0% reflects the resilience of our sales performance
in the post Covid period. There is always noise around weather,
sporting events, public holidays and the impact on sales, but from
our perspective the sales story across Lounge and Cosy Club has
been consistently good. Our customer base is relatively robust and
represents a very broad demographic which enjoys our hospitality
across the day. Historically our sales growth has been dominated by
volume growth and us serving more customers. Over the last six
months it is predominantly price that has been driving that growth.
There are a number of different dynamics in the marketplace: - some
consumers are spending less, many operators are pushing through
aggressive price increases, supply has and continues to come out of
the market, and everyone is working hard to impress the consumer.
The last point is particularly important: Covid and the economic
environment have caused everyone to up their game (and their
prices). That our sales volumes have grown in the post-Covid period
whilst most have seen have their volumes shrink considerably is
both impressive and encouraging . I am optimistic that against this
backdrop we will see a return to more significant volume growth in
the short to medium term.
Pleasing margin progression
We talked in July about our goal to return to pre-Covid levels
of EBITDA margin in the medium-term, and these results demonstrate
our firm progress on that journey. Our impressive margin growth
(IAS17 Adjusted EBITDA margin at 11.6% vs 11.0% last year) reflects
not just our increasing scale and resultant ability to mitigate
inflationary pressure, but also our recent focus on efficiency.
Over the course of the last six months we have been working on
projects looking at our efficiency in respect of oil, cellar gas,
print, waste and energy. The majority are at relatively early
stages, but they are demonstrating that there's significant
opportunity.
Successful new openings
Our new openings continue to perform very well and above
average, and the pipeline remains in good shape to deliver at our
current roll-out rate of around 34 sites per year. Geographically
we are seeing more opportunities in the north east as we gradually
move towards Scotland, but there still remains a great deal for us
to go for across England and Wales. We are enjoying strong trading
in mixed use retail/leisure parks and coastal locations, alongside
our "bread and butter" of suburban and small town high street
locations. Our strength of performance across this variety of site
types gives us real confidence in our conservative targets of 600
Lounges and 65 Cosy Clubs.
A relentless focus on innovation
The strong sales performance is achieved by an unrelenting
restlessness to deliver better for our customers. The spirit of
innovation and entrepreneurialism within the business has never
been stronger. Given our significant growth, we often see a
cyclical effect with periods that are more dominated by change and
innovation followed by those that are more dominated by
implementation and consolidation. We are currently in the former,
and the strength and depth of our senior team is allowing us to
really push on. Recent food menu launches in both Lounge and Cosy
Club have been excellent, and our flexibility around being able to
focus on emerging food trends - without being wedded to a specific
cuisine - is a significant point of difference. We serve just as
many bacon butties as vegetarian cauliflower dishes. And this
restlessness is not just on the food side; we have also rolled out
major improvements to our blended drinks, iced coffees, and
cocktails and are embarking on a major project to improve our
already strong coffee offer, which represents 10% of our sales in
the Lounge estate.
Innovation and change within the business isn't limited to the
customer experience. Challenging how we can adapt and improve
organisationally to make life easier for our site teams whilst
maintaining and enhancing the culture within the business is also
critically important. Our ambition is to ensure that we benefit
from the advantages that scale brings, whilst not succumbing to the
red-tape risk that comes with being a 250-site business. On the
commercial side, we are investing more in operational support,
procurement and supply chain, risk management and maintenance,
recognising that we can do more centrally, to ensure our site teams
can focus solely on their customers and their own teams. Within our
operational structure, we have now introduced regional maintenance
managers, community managers and talent and recruitment managers. A
degree of devolution and accountability at a regional level are
critical to our continued success.
Brightside progressing to plan
During the summer we opened our second and third Brightsides and
the team have done a fantastic job at delivering well for their
customers in what has been an intense period due to the openings
coinciding with school summer holidays. This year we have achieved
a gross average weekly level of sales of GBP22.5k across the sites
and we expect this to grow as we continue to build our brand
awareness. In the main we are pleased with Brightside's performance
to date, and most importantly are proud of the hospitality we are
providing, and the choice we have introduced to passing motorists
as well as to local residents. As we continue to trade, and with
the benefit of the two further planned openings in FY25, we will
build a view on Brightside's returns on capital and whether there
is an opportunity to roll it out as a national brand. Whilst it's
an exciting time for this new brand, I believe the strength of
these interim results firmly demonstrates that Brightside has in no
way distracted from our focus on or the performance of the Lounge
and Cosy Club brands.
Aiming to be the number one choice for careers in
hospitality
On the people side we have continued to focus on how we reward
and incentivise our teams across the business. We have adapted our
site team bonus structures to ensure that they are fully aligned
with our operational priorities. We have also enhanced the focus on
development and succession planning. One of our core attributes -
and one of the parts of the business of which I am most proud - is
our ability to build careers in hospitality. We're good at this and
have many great examples of people who have worked up through the
ranks, but there is still plenty of scope for us to do more and to
be better. The next couple of years will see us really double-down
in terms of investing in learning and development, and ensuring
that we are making the most of the career opportunities that our
growth creates. We want to be the number one choice for anyone
pursuing a career in the hospitality industry in the UK.
At an exec level we have welcomed Lucy Knowles into the business
as Cosy Club Managing Director. Cosy Club is a fantastic brand that
complements our Lounges and continues to perform well. It achieves
strong sales and returns on capital in line with the Lounge
business, but our instinct is that there is more that we can do to
maximise sales and I am excited about the impact Lucy will have on
the business.
Financial review
Financial Performance
It is pleasing to be able to report for the first time in four
years current and prior year numbers that are not impacted by
Covid, and all the more pleasing to be reporting such a strong year
on year performance, with:
-- Total revenue ahead by 22.3%;
-- Adjusted EBITDA ahead by 23.6%
-- Operating profit ahead by 28.4%
Total revenue growth of 22.3% reflects the positive impact of
LFL sales growth of 7.7% allied to the continued strength of our
new site opening programme, with 16 sites opened in the first half
and a net 32 new sites opened in the past 12 months. The sales
performance again demonstrates both the resilience of the Loungers
business and the consistency we have seen in consumer
behaviour.
Adjusted EBITDA margins are ahead by 0.1% to 15.9% on the IFRS16
basis. However the margin expansion is more marked when looked at
on the IAS17 basis with rent costs included, showing an increase to
11.6% from 11.0% in H1 2023. The 60bps improvement in IAS17
Adjusted EBITDA margin reflects:
-- Gross margin improvement of 60bps;
-- Fixed property cost leverage benefit of 60bps; offset by
-- Negative impact of higher energy costs of 50bps
-- Negative impact of other costs of 10bps
The gross margin improvement has been largely driven by
improvements in food and drink gross margin as the business
continues to benefit from its growing scale allied to a moderation
in inflationary pressures. The maintenance of strong property
discipline assists in delivering improvements in fixed property
cost leverage, with a rent to revenue ratio of 4.4% in the first
half. As anticipated these benefits have been partially offset by
higher energy costs. Whilst the business will continue to benefit
from its May 2020 energy hedge through to September 2024, the new
site roll out means that only approximately 70% of the estate is
covered by that original hedge, with the negative margin impact
coming from sites opened post May 2020.
Profit before tax of GBP3.9m (H1 2023 GBP2.8m) represents an
uplift of 39.0%. The tax charge of GBP1.2m relates wholly to
deferred tax, with the business benefitting from the introduction
of the 100% main pool first year allowance. The effective tax rate
of 30.4% reflects the impact of non-deductible depreciation on
capital expenditure not eligible for capital allowances and the
deferred tax accounting for share based payments.
Net debt
Non-property net debt (gross of arrangement fees) of GBP14.3m
represents an increase of GBP4.8m relative to 2 October 2022, and
reflects in large part the acceleration in the new site opening
programme.
During the half year the Group entered into a new senior
facilities lending agreement with its existing lenders Santander
Corporate Banking and Bank of Ireland. Under the terms of the new
agreement the Group reduced its term loan from GBP32.5m to GBP20.0m
and increased its RCF from GBP10.0m to GBP22.5m.
Finance costs for the period have increased to GBP3.9m (H1 2023:
GBP3.3m), reflecting an increase in IFRS16 lease interest charges
to GBP3.1m (H1 2023: GBP2.8m) and an increase in bank interest
payable to GBP0.9m (H1 2023: GBP0.5m).
Cash flow
Net cash generated from operating activities was GBP23.4m (H1
2023: GBP14.6m), with the improvement of GBP8.8m coming from EBITDA
growth of GBP4.1m and working capital improvements of GBP4.7m.
Capital expenditure outflows in the period increased to GBP21.0m
(H1 2023: GBP15.0m), a function of the acceleration in the new site
opening programme and the opening of 16 sites in the first half (H1
2023:11 sites). The capital expenditure incurred in the period
(excluding IFRS16 ROUA investment) of GBP22.0m (H1 2023: GBP15.9m),
included GBP15.1m related to new sites (H1 2023: GBP11.2m).
Cash outflows include GBP12.5m in connection with the
refinancing referenced above and GBP0.7m in relation to the cash
settlement of share awards and the purchase of the Group's own
shares.
Dividend policy
In the short term, the Board intends to retain the Group's
earnings to bolster liquidity and balance sheet strength and for
re-investment in the roll-out of new sites. It is the Board's
ultimate intention to pursue a progressive dividend policy, subject
to the need to retain sufficient earnings for the future growth of
the Group.
Current trading and prospects
-- The business has continued to trade well over the first eight
weeks of Q3, with LFL sales growth across the 32 weeks to 26
November of 7.6%
-- A further six sites have opened post the 1 October half year
end - five Lounges and one Cosy Club
-- With the consumer remaining robust and continuing evidence of
moderating inflationary pressure we are optimistic as we look ahead
to the Christmas trading period
-- The current financial year will be a 53 week accounting year to 21 April 2024
Nick Collins
Chief Executive Officer
28 November 2023
Condensed Consolidated Statement of Comprehensive Income
For the 24 Week Period Ended 1 October 2023
24 weeks 24 weeks Year ended
ended ended
Note 1 October 2 October 16 April
2023 2022 2023
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Revenue 149,619 122,326 283,507
Cost of sales 90,314 (74,411) (170,350)
---------- ---------- -----------
Gross profit 59,305 47,915 113,157
Administrative expenses (51,531) (41,859) (98,406)
Operating profit 7,774 6,056 14,751
Finance income 84 61 204
Finance costs 3 (3,922) (3,286) (7,621)
Profit before taxation 3,936 2,831 7,334
Tax charge on profit 4 (1,198) (368) (405)
Profit for the period 2,738 2,463 6,929
========== ========== ===========
Other comprehensive (expense)
/ income:
Cash flow hedge - change in value
of hedging instrument - (38) (38)
Other comprehensive (expense)
/ income for the period - (38) (38)
Total comprehensive income for
the period 2,738 2,425 6,891
========== ========== ===========
Earnings per share (pence)
Basic 5 2.6 2.4 6.7
Diluted 5 2.6 2.3 6.5
---- ---- ----
Condensed Consolidated Statement of Financial Position
As at 1 October 2023
Note 2 October 2 October 16 April
2022 2022 2023
GBP000 GBP000 GBP'000
Unaudited Unaudited Audited
Assets
Non-current
Intangible assets 114,722 113,227 114,722
Property, plant and equipment 7 250,467 203,845 228,414
Deferred tax assets - 988 945
Finance lease receivable - 534 -
---------- ---------- ----------
Total non-current assets 365,189 318,594 344,081
Current
Inventories 2,450 2,031 2,475
Trade and other receivables 7,024 3,734 8,722
Cash and cash equivalents 5,741 23,044 26,370
---------- ---------- ----------
Total current assets 15,215 28,809 37,567
Total assets 380,404 347,403 381,648
========== ========== ==========
Liabilities
Current liabilities
Trade and other payables (70,411) (52,207) (69,708)
Lease liabilities (11,025) (9,153) (59)
Derivative financial instruments - - (10,247)
---------- ---------- ----------
Total current liabilities (81,436) (61,360) (80,014)
Non-current liabilities
Borrowings 8 (19,709) (32,329) (32,392)
Lease liabilities (130,852) (115,636) (124,590)
Deferred tax liabilities (252) - -
Total liabilities (232,249) (209,325) (236,996)
========== ========== ==========
Net assets 148,155 138,078 144,652
========== ========== ==========
Called up share capital 9 1,139 1,133 1,133
Share premium 8,066 8,066 8,066
Treasury shares (376) - -
Other reserves - 14,278 14,278
Accumulated profits 139,326 114,601 121,175
---------- ---------- ----------
Total equity 148,155 138,078 144,652
========== ========== ==========
Condensed Consolidated Statement of Changes in Equity
For the 24 Week Period Ended 1 October 2023
Share Share Hedge Treasury Other Accumulated Total
Capital Premium Reserve Shares Reserve Profits Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 17 April 2022 1,127 8,066 38 - 14,278 110,597 134,106
Ordinary shares issued 6 - - - - (6) -
Share based payment charge - - - - - 1,547 1,547
--------- --------- --------- --------- --------- ------------ --------
Total transactions with
owners 6 - - - - 1,541 1,547
Profit for the period - - - - - 2,463 2,463
Other comprehensive expense - - (38) - - - (38)
--------- --------- --------- --------- --------- ------------ --------
Total comprehensive
income - - (38) - - 2,463 2,425
At 2 October 2022 1,133 8,066 - - 14,278 114,601 138,078
========= ========= ========= ========= ========= ============ ========
Share based payment charge - - - - - 2,108 2,108
--------- --------- --------- --------- --------- ------------ --------
Total transactions with
owners - - - - - 2,108 2,108
Profit for the period - - - - - 4,466 4,466
Total comprehensive
income - - - - - 4,466 4,466
At 16 April 2023 1,133 8,066 - - 14,278 121,175 144,652
========= ========= ========= ========= ========= ============ ========
Ordinary shares issued 6 - - - - (6) -
Share based payment charge - - - - - 1,141 1,141
Group reorganisation - - - - (14,278) 14,278 -
Purchase of own shares - - - (376) - - (376)
Total transactions with
owners 6 - - (376) (14,278) 15,413 765
Profit for the period - - - - - 2,738 2,738
Total comprehensive
income - - - - - 2,738 2,738
At 1 October 2023 1,139 8,066 - (376) - 139,326 148,155
========= ========= ========= ========= ========= ============ ========
Condensed Consolidated Statement of Cash Flows
For the 24 Week Period Ended 1 October 2023
24 Weeks 24 Weeks Year ended
ended ended
Note 1 October 2 October 16 April
2023 2022 2023
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Net cash generated from operating
activities 10 23,402 14,613 51,107
========== ========== ===========
Cash flows from investing activities
Purchase of subsidiary undertakings
(net of cash acquired) - - (2,719)
Purchase of property, plant and
equipment (21,022) (15,012) (36,978)
Interest received 84 43 204
Net cash used in investing activities (20,938) (14,969) (39,493)
========== ========== ===========
Cash flows from financing activities
Shares issued on exercise of employee
share awards (183) (183) (190)
Cash settlement of share awards (333) - -
Purchase of own shares (376) - -
Loan arrangement fees (266) - -
Bank loans repaid (12,500) - -
Interest paid (852) (455) (1,334)
Principal element of lease payments (5,533) (4,511) (8,824)
Interest paid on lease liabilities (3,050) (2,758) (6,146)
Principal element of lease receivables - 57 -
Net cash used in financing activities (23,093) (7,807) (16,494)
========== ========== ===========
Net decrease in cash and cash
equivalents (20,629) (8,206) (4,880)
Cash and cash equivalents at beginning
of the period 26,370 31,250 31,250
Cash and cash equivalents at end
of the period 5,741 23,044 26,370
========== ========== ===========
Notes to the Condensed Consolidated Interim Financial
Statements
1. General information
The Directors of Loungers plc (the "Company") and its
subsidiaries (the "Group") present their interim report and the
unaudited condensed financial statements for the 24 weeks ended 1
October 2023 ("Interim Financial Statements").
The Company is a public limited company, incorporated and
domiciled in England and Wales, under the company registration
number 11910770. The registered office of the company is 26 Baldwin
Street, Bristol BS1 1SE.
The Interim Financial Statements were approved by the Board of
Directors on 28 November 2023.
The Interim Financial Statements have not been audited or
reviewed by the auditors. The financial information shown for the
24 weeks ended 1 October 2023 does not constitute statutory
financial statements within the meaning of section 434 of the
Companies Act 2006.
The information shown for the year ended 16 April 2023 does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 and has been extracted from the Group's
Annual Report and Financial Statements for that year.
The Interim Financial Statements should be read in conjunction
with the Group's Annual Report and Financial Statements for the
year ended 16 April 2023, which were prepared in accordance with UK
adopted International Accounting Standards and those parts of the
Companies Act 2006 applicable to companies reporting under those
standards. The Group's Annual Report and Financial Statements for
the year ended 16 April 2023 have been filed with the Registrar of
Companies. The Independent Auditors' Report on the Group's Annual
Report and Financial Statements for the year ended 16 April 2023
was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
2. Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority. They do not include all of the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last financial statements.
The Interim Financial Statements are presented in Pounds
Sterling, rounded to the nearest thousand Pounds, except where
otherwise indicated; and under the historical cost convention as
modified through the recognition of financial liabilities at fair
value through the profit and loss.
The Directors consider that the principal risks and
uncertainties faced by the Group are as set out in the Group's
Annual Report and Financial Statements for the year ended 16 April
2023.
The accounting policies adopted in the preparation of the half
year financial statements are consistent with those followed in the
preparation of the Group's financial statements for the 52 weeks
ended 16 April 2023. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective.
Going concern
In concluding that it is appropriate to prepare the Group's
interim financial statements on the going concern basis attention
has been paid both to the current sector headwinds in terms of
consumer confidence and inflationary pressures and also longer
terms risks such as climate change.
As at the 1 October 2023 the Group had cash balances of GBP5.7m
and unutilised facilities of GBP22.5m providing total liquidity of
GBP28.2m.
In order to assess the Group's going concern position the Board
has considered a base case and a downside case scenario of the
Group's business plan. The going concern period covers the period
to December 2024.
-- The base case assumes below inflation selling price increases
and flat volumes and reflects current assumptions in respect of
future cost inflation and incorporates increases in energy costs to
reflect the continued opening of new sites whose energy costs are
hedged at current rates and the 30 September 2024 end date of the
May 2020 energy hedge. The base case scenario indicates that the
Group has significant headroom in respect of both its liquidity
position and its banking covenants.
-- In the downside scenario it has been assumed that sales
volumes fall by 10% from the base case with an associated reduction
in labour and variable cost efficiency and a resultant 50% decline
in adjusted EBITDA over the year to December 2024. This significant
sales decline has been mitigated by a cessation of the new site
roll out programme from May 2024 onwards.
In the downside scenario the Group continues to have significant
liquidity and banking covenant headroom and accordingly the
Directors have concluded that it is appropriate to prepare the
Interim Financial Statements on the going concern basis.
ESG and TCFD requirements
The Group reported under the TCFD framework in its full year
report and accounts to 16 April 2023. The Group continues to evolve
its ESG strategy, with initiatives undertaken in the first half of
the financial year including the rollout of its Community
initiatives strategy, a waste management trial and the launch of
its first group-wide Environmental Policy.
At the half year, the Group is not aware of any climate related
risks that would have a material financial impact upon the Group's
ability to operate, but the Board continues to monitor this as part
of their ongoing risk assessments.
Accounting estimates and judgements
In preparing these financial statements, management has made
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those applied to the Group's
consolidated financial statements for the year ended 16 April
2023.
The Group tests for impairment on an annual basis or earlier if
there are indicators that an asset might be impaired. At the 1
October 2023 the Group was not aware of any specific events that
would require a site to be impaired. The Group has reviewed its
FY23 impairment calculations, flexing assumptions for potential
increases in discount rates and is satisfied that there is no
requirement to recognise additional impairment.
3. Finance costs
24 Weeks 24 Weeks Year ended
ended ended
1 October 2 October 16 April
2023 2022 2023
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Bank interest payable 872 528 1,475
Finance cost on lease liabilities 3,050 2,758 6,146
3,922 3,286 7,621
========== ========== ===========
4. Tax on profit
24 Weeks 24 Weeks Year ended
ended ended
1 October 2 October 16 April
2023 2022 2023
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Taxation charged to the income
statement
Current income taxation - - -
Adjustments for current tax - -
of prior periods
---------- ---------- -----------
Total current income taxation - - -
========== ========== ===========
Deferred Taxation
Origination and reversal of
temporary differences - - 1,069
Current period 1,198 368 -
Adjustments to tax charge in
respect of prior periods - - (911)
Adjustment in respect of changes
in tax rates - - 247
---------- ---------- -----------
Total deferred tax 1,198 368 405
========== ========== ===========
Total taxation charge in the
consolidated income statement 1,198 368 405
========== ========== ===========
The income tax expense was recognised based on management's best
estimate of the effective income tax rate expected for the full
financial year, applied to the profit before tax for the 24 weeks
ended 1 October 2023. The effective tax rate of 30.4% is above the
standard rate of income tax due to the impact of non-deductible
depreciation on fixed asset additions that are not eligible for
capital allowances and the impact of share based payment
charges.
5. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity shareholders by the weighted average number
of shares outstanding during the period, excluding unvested shares
held pursuant to the following long-term incentive plans:
-- Loungers plc Employee Share Plan
-- Loungers plc Senior Management Restricted Share Plan
-- Loungers plc Value Creation Plan
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. During the
period ended 1 October 2023 the Group had potentially dilutive
shares in the form of unvested shares pursuant to the above
long-term incentive plans.
Own shares held in Treasury are treated as cancelled for the
purpose of this calculation.
24 Weeks 24 Weeks Year ended
ended ended
1 October 2 October 16 April
2023 2022 2023
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Profit for the period after
tax 2,738 2,463 6,929
Basic weighted average number
of shares 103,657,995 103,137,035 103,243,015
Adjusted for share awards 3,338,091 2,148,438 3,375,062
Diluted weighted average number
of shares 106,996,006 105,285,472 106,618,077
Basic earnings per share (p) 2.6 2.4 6.7
Diluted earnings per share (p) 2.6 2.3 6.5
============ ============ ============
6. Share based payments
The Group had the following share-based payment arrangement in
operation during the period:
- Loungers plc Employee Share Plan
- Loungers plc Senior Management Restricted Share Plan
- Loungers plc Value Creation Plan
The Group recognised a total charge of GBP1,665,000 in respect
of the Group's three share-based payment plans.
7. Fixed assets
Freehold Leasehold Motor Fixtures Right Total
Land and Building Vehicles and Fittings of Use
Buildings Improvements Asset
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 17 April 2022 369 67,489 210 70,606 149,381 288,055
Additions 832 6,455 - 8,640 9,698 25,625
At 2 October 2022 369 74,776 210 79,246 159,079 313,680
Additions - 10,621 - 12,633 14,821 38,075
Acquisition of subsidiaries 1,500 - - - - 1,500
Disposals (250) (451) (9) (175) - (885)
At 16 April 2023 2,451 84,114 201 91,704 173,900 352,370
----------- -------------- ---------- -------------- -------- --------
Additions 2,865 7,717 - 11,429 12,571 34,582
At 1 October 2023 5,316 91,831 201 103,133 186,471 386,952
----------- -------------- ---------- -------------- -------- --------
Depreciation
At 17 April 2022 - 17,937 66 30,658 51,031 99,692
Provided for the period - 2,079 23 3,713 4,328 10,143
At 2 October 2022 - 20,016 89 34,371 55,359 109,835
Provided for the period 14 2,692 25 4,818 5,533 13,082
Impairment - 381 - 85 2,937 3,403
Impairment reversal - (157) - - (1,639) (1,796)
Disposals - (405) (3) (160) - (568)
At 16 April 2023 14 22,527 111 39,114 62,190 123,956
----------- -------------- ---------- -------------- -------- --------
Provided for the period 42 2,606 16 4,856 5,009 12,529
At 1 October 2023 56 25,133 127 43,970 67,199 136,485
----------- -------------- ---------- -------------- -------- --------
Net book value
At 1 October 2023 5,260 66,698 74 59,163 119,272 250,467
At 16 April 2023 2,437 61,587 90 52,590 111,710 228,414
At 2 October 2022 369 54,760 121 44,875 103,720 203,845
At 17 April 2022 369 49,552 144 39,948 98,350 188,363
=========== ============== ========== ============== ======== ========
8. Borrowings
1 October 2 October 16 April
2023 2022 2023
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Non-current
Bank loan 20,000 32,500 32,500
Loan arrangement fees (291) (171) (108)
---------- ---------- ---------
19,709 32,329 32,392
========== ========== =========
The Group's bank borrowings are secured by way of fixed and
floating charges over the Group's assets.
In June 2023 the Group completed a refinancing of it debt
arrangements leaving it with a term loan of GBP20,000,0000 and a
revolving credit facility of GBP22,500,000. The term loan is
non-amortising and bears interest at between 1.75% and 2.5% over
SONIA subject to the Group's leverage. At inception of the new
facility the Group was paying a margin of 1.75%. The term loan and
RCF are subject to financial covenants relating to leverage and
interest cover, which are unchanged from the original facility.
The Group has been compliant with all of its covenant
obligations during the 24 weeks to 1 October 2023.
At 1 October 2023 the term loan was fully drawn and GBPnil was
drawn down under the revolving credit facility.
9. Share capital
1 October 2 October 16 April
2023 2022 2023
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Allotted, called up and fully
paid ordinary shares 1,039 1,033 1,033
Redeemable preference shares 100 100 100
1,139 1,133 1,133
============ ============ ============
Ordinary shares at GBP0.01 each 103,900,642 103,303,312 103,332,033
Redeemable preference shares 2 2 2
The table below summarises the movements in share capital for
Loungers plc during the period ended 1 October 2023:
Ordinary Redeemable GBP'000
Shares Preference
Shares
GBP0.01 GBP49,999
NV NV
------------ ----------- --------
At 16 April 2023 103,332,033 2 1,133
Shares issued 568,609 - 6
At 1 October 2023 103,900,642 2 1,139
============ =========== ========
On 4 May 2023 the Group issued 359,000 ordinary shares of 1
pence each to 718 employees pursuant to the Group's share plans. At
the same time the Group applied to increase its block listing by
477,962 shares in respect of its share plans. In the period to 1
October 2023 209,609 shares have been issued under the block
listing scheme.
10. Note to the cash flow statement
24 Weeks 24 Weeks Year ended
ended ended
1 October 2 October 16 April
2023 2022 2023
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit before tax 3,936 2,831 7,334
Adjustments for:
Depreciation of property, plant
and equipment 7,520 5,815 13,364
Depreciation of right of use assets 5,009 4,328 9,861
Impairment of property, plant and
equipment - - 309
Impairment of right of use assets - - 1,298
Share based payment transactions 1,665 1,730 4,024
Loss on disposal of fixed assets - - 317
Finance income (84) (60) (204)
Finance costs 3,922 3,286 7,621
Changes in inventories 25 (112) (557)
Changes in trade and other receivables 1,552 1,591 (3,134)
Changes in trade and other payables (143) (4,796) 10,950
Cash generated from operations 23,402 14,613 51,183
Tax paid - - (76)
Net cash generated from operating
activities 23,402 14,613 51,107
========== ========== ===========
11. Group reorganisation
As of 1 October 2023 the Group was engaged in a restructuring
exercise, to remove three intermediate holding companies (Lion /
Jenga Topco Ltd, Lion / Jenga Midco Ltd and Lion / Jenga Bidco Ltd)
from the Group structure, thereby simplifying it. As a consequence
of the capital reductions undertaken, the Condensed Consolidated
Statement of Changes in Equity at 1 October 2023 shows a reduction
in other reserves and a corresponding increase in accumulated
profits.
Reconciliation of Statutory Results to Alternative Performance
Measures
The Interim Results include both statutory and alternative
performance measures ("APMs"). APM's are included for the following
reasons:
-- They reflect the way in which management report and monitor
the financial performance of the Group internally;
-- They improve the comparability of information between
reporting periods by adjusting for one-off factors;
-- The IAS17 presentation reflects the way in which the
financial performance of the Group has been presented historically
and the basis on which the Group's financial covenants are
tested.
24 weeks 24 weeks Year ended
ended ended
1 October 2 October 16 April
2023 2022 2023
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Operating profit 7,774 6,056 14,751
Net impairment charge - - 1,607
Loss on disposal of fixed assets - - 317
Transaction costs - - 102
Share based payment charge 1,665 1,730 4,024
Site pre-opening costs 1,894 1,378 3,323
---------- ---------- -----------
Adjusted operating profit 11,333 9,164 24,124
Depreciation (pre IFRS 16 right
of use asset charge) 7,520 5,815 13,364
IFRS 16 Right of use asset depreciation 5,009 4,328 9,861
Adjusted EBITDA (IFRS 16) 23,862 19,307 47,349
Adjusted EBITDA % (IFRS 16) 15.9% 15.8% 16.7%
IAS 17 Rent charge (6,816) (5,959) (13,459)
IAS 17 Rent charge included in
IAS 17 pre-opening costs 238 134 331
Adjusted EBITDA (IAS 17) 17,284 13,482 34,221
========== ========== ===========
Adjusted EBITDA % (IAS 17) 11.6% 11.0% 12.1%
The Group references Like for Like sales growth as a key APM.
Like for Like sales growth excludes the sales from sites that have
been open for less than 18 months.
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END
IR DZMZMZNFGFZZ
(END) Dow Jones Newswires
November 28, 2023 02:00 ET (07:00 GMT)
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