Final Results
21/07/2022 07:00
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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 £82.7m (2021: £40.3m) 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 £20.3m (2021: £9.0m) and
Adjusted Headline EBITDA* of £12.4m excluding IFRS 16 (2021: £1.9m)
• EBITDA* of £19.5m (2021: £8.7m) and Adjusted EBITDA*
of £11.4m excluding IFRS 16 (2021: £1.6m)
• Headline operating profit of £9.0m (2021: loss of
£2.2m)
• Impairment charge on property, plant and equipment of
£0.6m (2021: £1.0m)
• Operating profit of £6.7m (2021: loss of £4.8m)
• Profit before tax of £3.9m (2021: loss of £7.5m)
• Strong financial position with net cash excluding
lease liabilities recognised under IFRS 16 as at 27 March 2022 of £4.3m
(2021: net debt £3.6m), an improvement of £7.9m
• 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 £5.1m
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 (http://www.fulhamshore.com/)
David Page / Nick Wong Via Hudson Sandler
Singer Capital Markets (Nominated Adviser & Broker) +44 (0) 20 7496 3000
Shaun Dobson / James Moat / Kailey Aliyar
Hudson Sandler - Financial PR fulhamshore@hudsonsandler.com (mailto: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 £82.7m, up 105% from
last year's £40.3m last year and up 20.6% from £68.6m 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
£4.3m. This was a positive swing of £7.9m during the financial year from a
net debt position of £3.6m in March 2021 and an even bigger change, of some
£13.8m, from the net debt position of £9.5m 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 £2m 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 £15.9m. This is made up of a revolving credit
facility of £17.0m, of which £1.85m is drawn and an overdraft facility of
£0.75m.
During the financial year ended 27 March 2022, the Group repaid the remaining
£9.3m 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 £4.3m (2021: net debt of £3.6m).
As at 19 July 2022, net cash (excluding lease liabilities recognised under
IFRS 16) was £5.1m. Together with undrawn facilities, the Group has financial
headroom of some £21m.
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 £m £m %
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 in the UK No. No.
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
£m £m
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 £82.7m from £40.3m 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 £20.3m (2021: £9.0m), an increase of 125.6% while Adjusted
Headline EBITDA for the year was £12.4m (2021: £1.9m), 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 £2.4m (2021:
£10.3m) 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 £0.8m (2021: £8.5m) 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 £11.4m (2021: £11.1m) following the number of
new restaurants opened during the year and the previous year. The Group
incurred one off costs in the year of £0.6m (2021: £1.0m) 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: £0.5m) 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 £6.7m (2021: loss of £4.8m).
With our new openings, we have invested £0.7m (2021: £0.2m) in pre-opening
costs. Finance costs have increased to £2.9m (2021: £2.8m). The Group's
gross bank debt decreased to £1.9m (2021: £15.9m) with net debt reduced
during the year. Overall this has resulted in a profit before taxation of
£3.9m (2021: loss £7.5m).
The Group's tax charge was £0.2m (2021: credit of £1.2m). 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 £3.7m
(2021: loss £6.3m).
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 £1.2m 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 £14.8m to
£24.5m 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 £7.8m (2021: £1.7m), 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 £19.7m (2021: £6.2m) 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 £19.7m
(2021: £6.2m).
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 £14.25m to £17.0m. 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 £17.75m including the existing £0.75m
overdraft facility.
During the year ended 27 March 2022, the Company received funds on exercise of
outstanding share options of £0.5m (2021: £0.5m).
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 £0.4m historic deferred
rents (2021: £2.8m).
Resultant net cash from our activities excluding lease liabilities recognised
under IFRS 16 as at 27 March 2022 was £4.3m (2021: net debt £3.6m). Since
the year end, as at 19 July 2022, the Group's net cash (excluding lease
liabilities recognised under IFRS 16) position improved to £5.1m.
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 £'000 £'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
27 March 28 March 27 March 28 March
Notes
2022 2021 2022 2021
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'000 £'000 £'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
£'000 £'000 £'000 £'000 £'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
Year Year Year Year
ended ended ended ended
Notes
27 March 28 March 27 March 28 March
2022 2021 2022 2021
£'000 £'000 £'000 £'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 (£'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 £1.5m from £0.5m 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 £5.1m thus having headroom of some £21m
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 £91,000 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
£'000 £'000 £'000 £'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 £88,000 (2021:£nil) 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 £330,000 (2021: £542,000).
For the year ended 28 March 2021:
The Real Franco
Greek Manca Other
segment segment unallocated Total
£'000 £'000 £'000 £'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: £1,195,000.
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
£'000 £'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 £nil (2021: £483,000) 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
£'000 £'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
£'000 £'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 £38k (2021: £147k) 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 £385,000 (2021: £184,000)
as well as gains of £198,000 (2021: £39,000) 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
£2,057,000 (2021: £600,000).
4 FINANCE
COSTS
Year Year
ended ended
27 March 28 March
2022 2021
£'000 £'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
£'000 £'000
Income tax expense on continuing operations
Based on the result for the year:
UK corporation tax at 19% (2021: 19%) 627 -
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
£'000 £'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
£'000 £'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
£'000 £'000 £'000 £'000 £'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 £1,774,000 relates to The Real Greek and is attributable to its
cash generating unit.
Goodwill of £18,931,000 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 £74,970,000 and £134,800,000 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
£'000 £'000 £'000 £'000 £'000 £'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 £348,000.
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
£'000 £'000 £'000 £'000
Impairment Recoverable Impairment Recoverable
charge amount charge amount
For continuing operations
Franco Manca restaurant 1 - - 240 -
Franco Manca restaurant 2 - - 252 -
Franco Manca restaurant 3 - - 56 130
Franco Manca restaurant 4 - - 144 83
Total for Franco Manca operating segment
- - 692 213
The Real Greek restaurant 1 - - 321 -
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
£'000 £'000 £'000 £'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
£'000 £'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 £66,000 (2021: £nil) 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
£'000 £'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 of Proportion of Nature of business
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 Limited* Ordinary 100% Restaurant property
FM High Holborn Limited Ordinary 100% Restaurant property
FM London Bridge Limited Ordinary 100% Restaurant property
Franco Manca Chelmsford Limited Ordinary 100% Restaurant property
Franco Manca Holdings Limited Ordinary 100% Dormant
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 Limited Ordinary 100% Restaurant property
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
£'000 £'000 £'000 £'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 £14,690,000 (2021: £6,509,000).
TRADE AND OTHER RECEIVABLES
11
Group Parent company
27 March 28 March 27 March 28 March
2022 2021 2022 2021
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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 £17,000,000 (2021: £14,250,000), a
Coronavirus Large Business Interruption Loan facility ("CLBIL") of £Nil
(2021: £10,750,000), expiring between one and five years and a bank overdraft
facility, repayable on demand, of £750,000 (2021: £750,000) 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
£'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'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
£'000 £'000 £'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
£17,250,000 (2021: £14,250,000), a committed long term Coronavirus Large
Business Interruption Loan facility of £Nil (2021: £10,750,000) and short
term bank overdraft facilities available to manage its liquidity as at 27
March 2022 of £750,000 (2021: £750,000).
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
£'000 £'000 £'000 £'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 £42,084 (2021: £79,250).
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
£'000 £'000 £'000 £'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 £69,000) 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
£'000 £'000 £'000 £'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
£290,000 deferred tax charge to reserves (2021: £290,000 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
£'000 £'000 £'000 £'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 £1,984,000 (2021: £981,000) 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 £496,000 (2021: £186,000) 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
£'000 £'000 £'000 £'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 share shares
Amount paid per share shares £ No.
£0.01 Ordinary 0.01 11,131,070
£0.06 Ordinary 0.01 3,332,842
£0.1015 Ordinary 0.01 1,130,000
£0.1775 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 £80,000 (2021: £91,000).
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
£ £
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 exercise prices Weighted Weighted
Weighted average Weighted average
Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 £ months '000 £ months
Unapproved
£0.1015 72 0.1015 75 72 0.1015 75
£0.11 22,097 0.1100 37 22,097 0.1100 37
£0.1125 1,175 0.1125 88 - - -
£0.16 95 0.1600 109 - - -
£0.17625 585 0.1763 63 585 0.1763 63
£0.1775 81 0.1775 59 81 0.1775 59
£0.1825 921 0.1825 51 921 0.1825 51
25,026 0.1147 41 23,756 0.1146 38
CSOP
£0.1015 388 0.1015 75 388 0.1015 75
£0.1125 1,725 0.1125 88 - - -
£0.16 305 0.1600 109 - - -
£0.17625 815 0.1763 63 815 0.1763 63
£0.1775 369 0.1775 59 369 0.1775 59
£0.1825 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 exercise prices Weighted Weighted
Weighted average Weighted average
Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 £ months '000 £ months
EMI
£0.06 3,332 0.0600 7 3,332 0.0600 7
3,332 0.0600 7 3,332 0.0600 7
Unapproved
£0.06 13,805 0.0600 43 13,805 0.0600 43
£0.1015 1,492 0.1015 87 - - -
£0.11 23,373 0.1100 49 23,373 0.1100 49
£0.1125 1,595 0.1125 100 - - -
£0.17625 785 0.1763 75 785 0.1763 75
£0.1775 162 0.1775 71 162 0.1775 71
£0.1825 1,421 0.1825 63 1,421 0.1825 63
42,633 0.0975 52 39,546 0.0967 48
CSOP
£0.1015 1,518 0.1015 87 - - -
£0.1125 2,180 0.1125 100 - - -
£0.17625 915 0.1763 75 915 0.1763 75
£0.1775 538 0.1775 71 538 0.1775 71
£0.1825 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 £0.144 (2021: £0.0475) to £0.1985 (2021: £0.1650).
The share price as at 27 March 2022 was £0.155 (2021: £0.1525). The
average share price for options exercised during the year was £0.179 (2021:
£0.12)
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 exercise prices Weighted Weighted
Weighted average Weighted average
Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 £ months '000 £ 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 exercise prices Weighted Weighted
Weighted average Weighted average
Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 £ months '000 £ 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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'000 £'000 £'000 £'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 £4,291,000 (2021: net debt of (£3,580,000)).
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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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 £2,056,539 (2021: £561,000).
Other related party transactions
During the year, the Group was invoiced £nil (2021: £58,000) 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 £43,500 (2021: £71,000) 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 £Nil (2021: £Nil). During the year Meatailer Limited invoiced
the Group and Company £nil (2021: £48,000) 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 £Nil (2021: £Nil).
During the year ended 27 March 2022, the Group made an additional investment
of £66,000 (2021: £nil) 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
£'000 £'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
£'000 £'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
£'000 £'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 £Nil (2021:
£Nil).
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