REG - Hostmore PLC - Interim Results
21/09/2022 07:01
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RNS Number : 0617A Hostmore PLC 21 September 2022
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law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
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MAR.
21 September 2022
Hostmore plc
INTERIM RESULTS
Stable performance despite macro-economic headwinds
Hostmore plc ("Hostmore" or the "Company" and, together with its subsidiaries,
the "Group"), the hospitality business with brands including 'Fridays',
'63rd+1st' and 'Fridays and Go', is pleased to announce its interim results
for the 26 weeks ended 3 July 2022 ("HY22").
Key highlights
· Strong improvement in revenues (+147% over HY21 which was
significantly impacted by the pandemic), with both volume and customer spend
per head increasing.
· Increase in Group Adjusted EBITDA (+143% over HY21) due to improved
revenues, cost mitigation activities and landlord concessions.
· Cash generation enabled Adjusted free cash flow of £10.1m, before
the settlement of £6.8m of accrued listing costs.
· Undrawn banking facilities of £27.5m are presently available under
the Revolving Credit Facility ("RCF") which will support the business during a
time of uncertain consumer demand and inflated utility pricing.
· The impact of unhedged current utilities prices is expected to have
an impact on FY23 EBITDA.
Financial summary
* Restated
26 weeks ended 26 weeks ended 53 weeks ended 2 January
3 July 27 June 2022
2022 2021
Total revenue £98.5m £39.9m £159.0m
Group Adjusted EBITDA (note 1) £17.8m £7.3m £43.0m
Group Adjusted EBITDA pre IFRS 16 £7.1m (£3.3m) £21.5m
Adjusted basic earnings/(loss) per share (note 2) 3.5p (6.1p) 7.2p
Net bank debt pre IFRS 16 (note 3) (£26.2m) (£28.9m) (£12.2m)
Free cash flow (note 4) £3.3m £6.9m £31.0m
Adjusted free cash flow (note 5) £10.1m £6.9m £20.1m
* Refer to note 7 to the financial statements. In the 53 week period ended 2
January 2022 exceptional costs have increased by £965k from £8,121k, as
previously reported, to £9,086k.
Notes
1. Group Adjusted EBITDA reflects the underlying trade of the overall
business. It is calculated as statutory operating (loss)/profit plus
depreciation, net interest and bank arrangement fees, impairment,
amortisation, share based payments, loss on disposal of assets and any
exceptional costs or income. Government grant income is included in Group
Adjusted EBITDA. Please refer to page 14 for reconciliation.
2. Adjusted basic earnings per share represent the net loss after tax
before impairment and exceptional items, divided by shares issued.
3. Net bank debt pre IFRS 16 is borrowings from bank facilities,
excluding the unamortised portion of loan arrangement fees and leases, less
cash and cash equivalents.
4. Free cash flow reflects the cash generated from operations less
maintenance capital expenditures.
5. Adjusted free cash flow is free cash flow (note 4) adjusted for
listing cashflows.
Operational highlights
Stable trading against a difficult consumer backdrop
· Comparable like-for-like ("LFL") revenue was up 145% compared to HY21
and down 7% compared to pre-COVID HY19, in line with expectations.
· Trading compared to FY19 was lower in the stadium (events led) and
city centre (working from home) categories with the south-east and north-west
most affected. Monthly consumer demand fluctuated significantly as compared to
FY19.
· Group Adjusted EBITDA (pre IFRS 16) of £7.1m, an improvement on the
prior year loss of £3.3m due to increased revenues, cost mitigation activity
and the execution of landlord concession agreements.
Focus on managing inflationary pressures
· Secured £2.4m of landlord concessions, comprising the waiver of past
obligations and confirmation of incentives for the extension of leases on
profitable stores.
· Further hedging of gas and electricity post the reporting date
reflects 100% of gas being hedged until 31 December 2022, and an increase in
electricity hedging to c.89% of FY19 comparable volume until 31 March 2023,
and c.44% until 31 December 2023.
· Food and beverage cost increases limited by leveraging our supplier
relationships.
Financial position
· Cash generation enabled the settlement of material outstanding
pandemic obligations (VAT and rent arrears of £3.3m) and accrued listing
costs of £6.8m.
· Extended term of banking facilities and increased revolving credit
facility, providing further flexibility to execute growth strategy.
· Long term ambition to further build portfolio through selective
acquisitions as market conditions stabilise.
Organic growth across both established and new brands
· Creation and launch of the Fridays and Go fast-casual dining brand.
· Three new openings across our brands in Chelmsford (Fridays), Dundee
(Fridays and Go) and, subsequent to HY22, Edinburgh (63rd+1st).
Broadened senior management team
· New Chief Operating Officer to enhance operational standards and
efficiencies.
· New Chief Marketing Officer to evolve digital transformation and
adopt a data-led marketing approach to broaden customer appeal and expand
audience.
Focused on improving customer and staff proposition
· Improved guest satisfaction scores - Fridays' Guest Opinion Score at
June 2022: 70 (December 2021: 68) and 63rd+1st's Guest Opinion Score at June
2022: 65 (December 2021: 44) - arising from the addition of vegan menu options
and improved speed of service levels.
· Between June and September 2022, Fridays' Net Promoter Score improved
from 23 to 43, driven primarily by improvements to the customer experience
· Increased levels of staff retention through improving employee
rewards and a further investment in training.
Current trading and outlook
· LFL revenue for the 10 weeks since the reporting date is 14% lower
than the FY19 comparable period and reflects the impact of weaker consumer
demand and other factors including rail strikes (which are expected to
continue periodically in the second half) and heatwaves; this impact has been
partially offset by ongoing cost saving initiatives.
· Two Fridays openings planned for the final quarter of FY22 and
discussions for further store opening opportunities are ongoing.
· Net bank debt has reduced from £26.2m to £23.7m in the 8 weeks
since the period end. Net bank debt at 2 October 2022 is expected to be
approximately £32.5m and will continue to peak at each quarter end
principally due to the timing of the quarterly payments of VAT and landlord
rent obligations.
· Trading conditions are expected to remain challenging, exacerbated by
inflationary pressure on the consumer and the risk of higher utilities supply
pricing. The Group's focus remains on continuing to mitigate the impact of
these as far as possible.
· The Group welcomes Government intervention measures announced on 8
September 2022, which we expect will alleviate pressure on the consumer and
mitigate the impact of higher utilities pricing in coming months. The
beneficial impact of measures to further support businesses is awaited.
· In the absence of further Government support measures having been
confirmed and considering both the uncertain consumer demand and the enduring
inflationary environment as we enter our traditionally busiest period of the
year, LFL revenue expectations for the second half are now forecast to be 11%
lower than the FY19 comparative.
· The impact of current utilities pricing, after the mitigation of the
hedges contracted for, would result in an incremental cost of c.£5.8m in FY23
over the comparable FY22 period.
Robert B. Cook, Chief Executive Officer, commented:
"We have delivered a stable performance for the first half of FY22 despite the
undeniable and growing pressures on the consumer in the current environment.
Against this tough backdrop, we have also taken swift action to manage the
inflationary impacts that we and the rest of the sector face.
"We continue to develop our customer proposition and to apply a laser focus on
our unique portfolio of iconic and vibrant hospitality brands. Nearly 200,000
customers per week visited our restaurants through June and July, showing the
broad appeal of our attractive locations for consumers looking to have some
downtime and enjoy a memorable occasion. Pleasingly, guest feedback is
increasingly positive, with both Fridays' and 63(rd)+1(st)'s Guest Opinion
Scores improving since December; it is thanks to our incredible people that we
are able to create such a fantastic experience for customers.
"We will continue to adopt a cautious approach, reflecting ongoing uncertainty
in the UK trading environment and in particular utilities pricing, mitigating
costs wherever possible, whilst continuing to invest in our proposition, our
people and new sites.
"We, like many others in the sector, await further clarity on more Government
intervention to support the hospitality industry in light of the inflationary
pressures being felt by consumers and hospitality businesses alike,
particularly in relation to energy."
Results webcast
Robert B. Cook, Chief Executive Officer, and Alan Clark, Chief Financial
Officer, will be hosting a virtual webcast with a live Q&A for analysts
and institutional investors at 9:00am today.
Please email Hostmore@mhpc.com (mailto:Hostmore@mhpc.com) or call 020 3128
8011 to receive the details.
A live presentation will also be delivered via the Investor Meet Company
platform at 11.00am. The presentation is open to all existing and potential
shareholders. Those not registered with Investor Meet Company can sign up for
free and access the presentation via:
https://www.investormeetcompany.com/hostmore-plc/register-investor
(https://www.investormeetcompany.com/hostmore-plc/register-investor)
ENDS
Enquiries
Hostmore plc
Robert B. Cook, Chief Executive
Officer Tel:
+44 (0)330 460 5588
Alan Clark, Chief Financial
Officer
Email: enquiries@hostmoregroup.com (mailto:enquiries@hostmoregroup.com)
MHP Communications
Oliver Hughes, Simon Hockridge, Eleni Menikou
Tel: +44 (0)203 128 8100
Email: Hostmore@mhpc.com (mailto:Hostmore@mhpc.com)
About Hostmore
Hostmore plc is a UK hospitality business which runs the American-themed
casual dining brand, 'Fridays' (formerly TGI Fridays), the cocktail-led bar
and restaurant brand, '63rd+1st, and the fast casual dining brand 'Fridays and
Go'.
The Group was established in 2021 to provide a platform for the development
and growth of attractive hospitality brands, defined by their iconic brand
experience and vibrant heritage. Hostmore is focused on the organic growth of
its existing brands, alongside expanding through new, exciting concepts which
have roll-out potential.
Hostmore currently operates 90 sites in the UK, the majority of which are in
high footfall locations, including retail parks, shopping centres and city
centres.
https://www.hostmoregroup.com (https://www.hostmoregroup.com)
Business review
Introduction
During the period we have continued to successfully execute our strategy,
despite the increasingly difficult macro-economic backdrop. These ongoing
challenges, including the war in Ukraine, escalating inflation, and the
deepening cost of living crisis in the UK, are impacting both consumer
confidence and our operations.
Whilst these pressures have inevitably affected our financial metrics for the
half year, we are reporting a stable performance. Comparable like-for-like
revenues in HY22 were up 145% compared to HY21, and down by 7% compared to the
same pre-COVID period in 2019. This reflects our focus on delivering an
improved value and service experience to our Dine-in customers, although
trading compared to FY19 was lower in the stadium (events led) and city centre
(working from home) categories as the impact of the pandemic continued to
affect our operations. Dine-out, which tends to be a less profitable revenue
stream, has underperformed the market but remains a complementary revenue
stream for growth.
Amidst a difficult trading backdrop, we took decisive action to mitigate the
impact of the various pressures, making considered pricing adjustments across
our menus and further hedging out utilities post the reporting date. In
addition, we leveraged strong relationships with suppliers to mitigate the
impact of food and beverage inflation and have introduced better waste
management, as well as securing further concessions from landlords.
We are seeing tangible results from the improvements we have made to our brand
propositions with our focus on improving product quality, simplifying the menu
offering and brand relevance. These have all contributed to an improvement in
guest satisfaction scores. In addition, we have seen Fridays' Net Promoter
Score improve from 23 in June 2022 to 43 in September 2022.
Hostmore offers a unique collection of hospitality brands with significant
long term growth potential, even more so following the launch of our Fridays
and Go fast-casual dining brand. As part of our organic growth strategy, we
have continued to roll out new sites across the estate, opening a new Fridays
in Chelmsford and our first Fridays and Go in Dundee. Although Fridays and Go
is still at an early stage of trials, we are excited by potential
opportunities to roll this brand out more widely across the UK. We expect to
open a further two Fridays before the end of 2022, taking us ahead of our
planned schedule. Post period end, we opened a 63rd+1st in Edinburgh, our
fourth store under this brand. Discussions to secure further sites are
ongoing.
We have also recently extended the term of our banking facilities and
increased our revolving credit facility (discussed below). This gives us
greater flexibility to execute our strategy by continuing our rollout of
stores.
Strategic progress
Our 4D strategy spans four key segments. Dine-in, Drive to, Digital and
Delivery.
Dine-in LFL revenue was up 145% against HY21 and down 7% compared to pre-COVID
HY19. We are on track to deliver our medium-term target of 100 Fridays
restaurants and 25 63rd+1st restaurants, and before the end of the year,
expect to open new Fridays stores in Barnsley and Durham, and exit a further
loss-making store.
In Drive to, we are encouraged by the initial performance of our quick service
restaurant ("QSR") concept, Fridays and Go, which opened in Dundee in March.
Management is considering further QSR sites as we take learnings from this
initial store and continue to develop and improve the customer offer.
Business review continued
Our approach to Digital spans CRM, customer experience and data. During the
period, we embedded our CRM project, which is delivered through the Salesforce
tool and aims to manage interactions with customers and potential customers.
Additionally, a trial electronic point of sale (EPoS) system has been put in
place across three of our four 63rd+1st restaurants. We also continue our
omni-channel approach to data, heading towards a single customer view which
will facilitate personalised content and marketing using artificial
intelligence, as well as enabling the Group to obtain greater insight and
maximise each interaction with each customer. We continue to work with
external experts to develop a full digital transformation for Fridays, with
the ambition of fully embedding this in summer 2023.
While Dine-in remains our core focus and main driver of higher quality
revenue, in the medium term, we see Delivery as an important channel in our
offering. Post period end, a contract has been signed with Uber Eats for the
delivery of Fridays products.
Managing an inflationary environment
Inflation is a major challenge we are facing across many aspects of the
business, including food costs, wages and utilities. As an example, food and
beverage input cost inflation is currently at c. 10%. We are committed to
mitigating the impact of inflation on margins and have taken a number of
actions across the business, including:
· Securing £2.4m of concessions from our landlords in the period,
comprising both the waiver of pandemic rents and incentives for profitable
lease renewals, taking the aggregate value of rent concessions secured since
September 2020 to £10m.
· The introduction of targeted pricing adjustments.
· Limiting food and beverage cost increases by leveraging our supplier
relationships.
· Early hedging of gas and electricity costs, both volume and pricing,
as well as further hedging our gas and electricity costs post the reporting
date.
· Reducing food wastage and minimising transport costs.
· Re-engineering certain recipes post the reporting date, without
compromising on quality.
· Continuing to invest in training and development across our employee
base to increase retention.
The Group welcomes the Government intervention measures announced on 8
September 2022, which we expect will alleviate pressure on the consumer and
mitigate the impact of higher utilities supply pricing in the coming months.
Operational developments
During HY22, we significantly strengthened our executive team, adding a new
Chief Operating Officer, Julie McEwan, who joined from The Big Table Group,
where she was Brand Director of Las Iguanas, the Latin American brand. Prior
to this Julie held senior roles at Whitbread and Spirit Pub Company (which was
subsequently acquired by Greene King). Additionally, Rhiannon Scarlett joined
as Chief Marketing Officer from The Body Shop where, as Brand and Activism
Director for the UK and Republic of Ireland, she was responsible for leading
strategy and initiatives to drive customer acquisition, retention and growth.
With Rhiannon's appointment, we are enhancing our marketing to help drive
market share in a difficult consumer environment. The second half of FY22 will
see the launch of a number of new initiatives including the "Show your
Stripes" campaign, a digital-first media activation to showcase Fridays'
credentials as a renowned social hangout, and to champion inclusivity and
liberation. We are also collaborating with Sky Sports to trial live sports TV
coverage in a small number of our stores, helping to drive our local community
focus and increase
Business review continued
visits. This development ties in with our move to a more focussed "local"
store approach with associated pay-per-click and paid search spend being made
on a store-by-store basis.
The labour market is behaving in unusual ways - a lack of staff in the early
part of the post-COVID return has transitioned into a "wage war" to attract
and retain talent. The volume of staff and interest in joining our brands has
remained high and despite operating in a difficult labour market, our ability
to attract staff is good. In the 12 weeks leading up to 15 September 2022, we
had 22,111 applications for hourly paid roles and 620 applications for store
management roles. We recognise that our people are instrumental in delivering
our strategy, and we continue to invest in training and development across our
employee base.
ESG
We are deeply committed to being a responsible business. We made significant
progress in developing our ESG strategy during the period, working on a
clearer plan towards achieving our goals. Our ESG strategy is engrained in the
business at all levels and impacts the Group positively in all its functions,
including IT, HR, Finance, Procurement, Brand, Operations, Marketing, and our
Executive Team.
Our enhanced ESG disclosures at year end will include further detail on our
net zero targets, policies around waste management and responsible sourcing.
We will also provide further insight into our values and culture and our
approach to being a responsible employer and corporate citizen. This will
include detail around the work we have been conducting on our values and
expected behaviours, our People Commitment initiative, our diversity and
inclusion programme and our high potential development programme.
Whilst some elements of this work will be ongoing with further detail being
reported going forward, we anticipate being able to publish our net zero
roadmap in 2023, which will include details of our annual targets and measure
how the Group is performing year to year.
Summary and outlook
Performance during the first half of FY22 has been stable, with swift actions
taken to mitigate against a number of challenging external factors. We are
pleased with progress made in delivering our strategy, continuing to improve
our proposition whilst rolling out more sites across our brands.
We remain mindful of wider pressures on the consumer and how this may impact
leisure spend, as well as the ongoing challenges in the operating environment.
As such we will retain our strong focus on mitigation, limiting the impact on
margins, as well as the execution of our strategy.
We will continue our efforts to strengthen our brands and their relevance,
investing in a high-quality offering in food, drinks and a unique celebratory
experience, whilst prudently expanding our store estate; we have two Fridays
stores planned to open in the final quarter of 2022. The extended term of the
banking facilities and the increased revolving credit facility provide
additional balance sheet strength and flexibility for expansion in the event
of a more benign macro environment providing opportunities.
Robert B. Cook
Chief Executive Officer
20 September 2022
Financial review
Introduction
The financial statements for the period under review have been prepared
according to IFRS reporting standards and on a basis consistent with that of
the 2021 annual financial statements.
References to any pre-IFRS reporting, referred to as IAS 17 standards, are
made, where appropriate, to improve the understanding of changes between
reporting periods.
Trading results
The Group's trading results for the 26 weeks ended 3 July 2022 are summarised
below:
* Restated
26 weeks ended 26 weeks ended 53 weeks ended 2 January
3 July 27 June 2022
2022 2021
Total revenue £98.5m £39.9m £159.0m
Group Adjusted EBITDA (note 1) £17.8m £7.3m £43.0m
Group Adjusted EBITDA pre IFRS 16 £7.1m (£3.3m) £21.5m
Adjusted basic earnings/(loss) per share (note 2) 3.5p (6.1p) 7.2p
Net bank debt pre IFRS 16 (note 3) (£26.2m) (£28.9m) (£12.2m)
Free cash flow (note 4) £3.3m £6.9m £31.0m
Adjusted free cash flow (note 5) £10.1m £6.9m £20.1m
Refer to note 7 to the financial statements. In the 53 week period ended 2
January 2022 exceptional costs have increased by £965k from £8,121k, as
previously reported, to £9,086k.
Notes
1. Group Adjusted EBITDA reflects the underlying trade of the overall
business. It is calculated as statutory operating (loss)/profit plus
depreciation, net interest and bank arrangement fees, impairment,
amortisation, share based payments, loss on disposal of assets and any
exceptional costs or income. Government grant income is included in Group
Adjusted EBITDA. Please refer to page 14 for reconciliation.
2. Adjusted basic earnings per share represent the net loss after tax
before impairment and exceptional items, divided by shares issued.
3. Net bank debt pre IFRS 16 is borrowings from bank facilities,
excluding the unamortised portion of loan arrangement fees and leases, less
cash and cash equivalents.
4. Free cash flow reflects the cash generated from operations less
maintenance capital expenditures.
5. Adjusted free cash flow is free cash flow (note 4) adjusted for
listing cashflows.
Group revenue for the period was substantially greater than the comparable
prior year period, due to 2021 being negatively affected by the impact of the
COVID-19 pandemic which resulted in stores not being able to open for
normalised trading until 17 May 2021, in line with legislative restrictions.
Financial review continued
During 2022, trading conditions have been affected by changes in
macro-economic and geo-political factors which include:
· Inflationary pressures, including both increases to food and beverage
raw materials and the impact of increases to fuel prices and labour shortages
that affected the supply chain;
· A shortage of skilled staff to replace employees leaving the sector,
which initially limited operational trading hours; and
· The material impact that the cost of utilities has had indirectly on
both consumer household incomes and the Group's operational cost base.
Whilst the Group has successfully managed many of the practical operational
challenges, the impact on consumer household income has resulted in a 7%
reduction in like-for-like revenues compared to the 2019 financial period.
Notwithstanding these headwinds, it is encouraging that more than 5.2 million
main courses were served during the 26-week period to 3 July 2022, with almost
1 million delivered in June, representing the busiest month of the period.
Our high quality and competitively priced menu, and the introduction of
promotional activities in a targeted manner, are minimising spend dilution and
gross margin erosion. In addition, customer feedback has improved from
December 2021 to June 2022. This growing customer loyalty provides the basis
for customers retention whilst consumer household income continues to come
under pressure due to the combination of inflation and higher interest rates.
The basic loss per share, which includes the non-cash fixed asset impairments
referred to below, is (10.6p) (2021: (6.8p)), and the adjusted basic earnings
per share (being the loss before exceptional items after tax) is 3.5p (2021:
(6.1p)).
Profit and margins
The Group measures its business performance on the FRS 102 basis of lease
accounting which is consistent with prior years. This does not include the
impact of IFRS 16, which is recorded separately. On this basis, Adjusted
EBITDA of £7.1m (2021: (£3.3m)) is reported for the 26 weeks ended 3 July
2022. This includes the impact of the pandemic Government financial support
measures, the reduced output VAT rate of 12.5% until 31 March 2022 and the
reduced level of business rates until March 2022.
Food and beverage cost inflation, which is predicted to be c.10% for the full
financial year, has been successfully mitigated by a combination of menu
changes, limited levels of discounting, and selective price increases. This
ensured that the gross profit margin, after adjusting for the VAT rate change,
remained in line with management expectations.
The Group has continued to secure a number of landlord concessions with these
only being recognised on execution of legal documentation. This resulted in
concessions of £1.6m being accounted for in the period.
Cost mitigation measures include the benefit of hedging of gas and electricity
for the duration of the period at prices determined in September 2020 when
retail prices were substantially lower than current levels. Such hedging,
based on financial year 2019 volumes, has recently been increased as follows:
· Gas - 100% until 31 December 2022;
· Electricity - c.89% until 31 March 2023, and then c.44% until 31
December 2023.
Financial review continued
The costs of the Demerger and subsequent listing of the Company on the London
Stock Exchange have been accounted for as an exceptional item.
A non-cash impairment charge of £17.8m has been included in the results for
the 26 weeks ended 3 July 2022 in respect of certain stores that have been
more substantially affected by recent trading conditions.
This has no impact on current or future underlying trading performance and is
merely a non-cash adjustment to reflect the difference in market values to
historic purchase prices. In addition, it may reverse and be credited to
earnings when trading conditions improve.
EBITDA
The Group continues to be a strong cash generating business, as evidenced by
its EBITDA performance. The Group Adjusted EBITDA was £17.8m (2021: £7.3m).
For HY22, Group Adjusted EBITDA pre IFRS 16 totalled £7.1m, in comparison to
(£3.3m) for HY21, and £21.5m for FY21. The Board has continued to expand the
operations of the Group as outlined in the business review section, with
further cash generation used to pay down debt and strengthen the financial
standing of the Group.
Increased financing
After the reporting date, the Group, under the terms of the existing banking
facility agreement, executed an extension to these facilities with its lending
banks which now provides for:
· Deferral of the termination date by 12 months to 1 October 2024;
· A £5m reapportionment from the term loan facility to the revolving
credit facility ("RCF"), resulting in facilities of £35m and £30m
respectively, reflecting in an increase to the RCF;
· Amortisations to continue at £1.5m per quarter for the additional
year; and
· The extension of the credit support undertaking of £2.5m until 30
June 2023.
The leverage and fixed charge cover ratio covenants remain unchanged, whilst
the minimum liquidity covenant has been reduced from £15.0m to £12.5m until
30 June 2023.
Financial review continued
Cash flow and net debt
The Group' consolidated statement of cash flows and movement in debt for the
26 weeks ended 3 July 2022 is summarised below:
26 weeks ended 26 weeks ended 53 weeks ended 2 January
3 July 27 June 2022
2022 2021 £'000
£'000 £'000
Net cash from operating activities 4,882 7,706 32,904
New store openings and purchase of other fixed assets (4,956) (2,105) (4,075)
Net cash used in financing activities (20,856) (6,636) (33,950)
Net decrease in cash in period (20,930) (1,035) (5,121)
Net cash at start of period 32,080 37,201 37,201
Net cash at end of period 11,150 36,166 32,080
Gross bank debt at start of period 44,300 65,800 65,800
Loans drawn - - 5,000
Loans repaid (7,000) (700) (26,500)
Gross bank debt at end of period 37,300 65,100 44,300
Net bank debt 26,150 28,934 12,220
The reduction in net cash between 2 January 2022 and 3 July 2022 reflects:
· the final payment of VAT deferred under the Government pandemic
business incentives of £0.8m;
· settlement of pandemic period rent emanating from concessions secured
during the period of £2.5m;
· payment of accrued listing costs of £6.8m; and
· the use of surplus cash of £5.0m to pay down the balance on the RCF
to reduce borrowing costs.
As a result of the above short-term movements in cash, net bank debt (being
cash and cash equivalents less borrowings from bank facilities excluding the
unamortised portion of loan arrangement fees) has increased from £12.2m at 2
January 2022 to £26.2m at 3 July 2022.
Net bank debt (being cash and cash equivalents less borrowings from bank
facilities excluding the unamortised portion of loan arrangement fees) has
reduced from £28.9m at 27 June 2021 to £26.2m. The Group had available cash
and undrawn facilities of £36.1m at 3 July 2022, significantly more than the
minimum liquidity requirement of £15.0m under the Group's bank facility. The
liquidity headroom, as reflected by the undrawn RCF at the reporting date of
£25m, provides the Group with the ability to manage the impact of any weaker
consumer demand whilst providing a strong financial base for expansion.
New store developments during the 26 weeks ended 3 July 2022 include the
opening of the new concept Fridays and Go in Dundee on 15 March 2022, the
Fridays in Chelmsford on 13 May 2022, and subsequent to the period under
review, the development of the 63rd+1st store in Edinburgh that opened on 7
July 2022. Of the £5.0m of capex during the period, £1.6m was incurred for
the purposes of maintaining the existing estate.
Financial review continued
Principal risk & uncertainties
The Directors have continued to assess potential risks together with
appropriate mitigating actions as outlined in the Risk Management section of
the Strategic Report in the Company's 2021 Annual Report.
The following risks are considered to be particularly relevant for the
remainder of FY22 and medium term:
(a) Changes to consumer demand
Recent Bank of England guidance is now for an extended period of economic
contraction. The Group has therefore focussed on delivering a quality product
as a value proposition to retain customers. The Group intends to enhance
quality of revenue by promotional activities whilst protecting gross margins.
Additionally, the Group may use variable cost management to reduce variable
costs relative to changes in revenues.
(b) Supply interruption and inflation on food and beverage
inputs
Whilst the Group's supplies are contracted, the Board continues to evaluate
alternative suppliers for core product lines to ensure a consistent supply of
products in a timely manner. Menus are revised in light of cost movements.
(c) Staff retention and payroll inflation
Applications for employment with the Group have remained consistently strong,
with retention further enhanced by the introduction of both deferred bonuses
and share awards under the long-term incentive plan for senior store and
support centre personnel. Onboarding activities have been enhanced to reduce
staff turnover, whilst pay rates have been adjusted in key areas as a further
retention tool.
(d) Utilities inflation
The implications of events in Ukraine and how these have impacted on utilities
supply and pricing has been more enduring in the UK than previously
anticipated. The Group has pricing and volume hedges in place for both gas and
electricity, details of which are referred to above. The Board considers that
the costs of utilities will remain elevated for the 2022 and 2023 financial
years.
(e) Increases in borrowing costs
Interest rates on the Group's bank borrowings move in line with the underlying
SONIA rate. The interest cost is mitigated by the recently secured increase in
borrowings under the RCF which incurs a lower interest cost than the term loan
facility. Excess cash is also used to repay bank borrowings under the RCF.
(f) Re-emergence of COVID-19
The emergence of a variant of the virus remains a possibility which could
result in lockdowns or other measures which could restrict trading.
Nevertheless, it is considered less likely in the near term due to the
effective immunisation programme conducted previously and the ability of
further vaccination programmes. The Board keeps this very much under review.
Alan Clark
Chief Financial Officer
20 September 2022
Responsibility statement
The Directors confirm to the best of their knowledge that:
a. the condensed set of financial statements, which have been prepared in
accordance with International Accounting Standard IAS 34 (Interim Financial
Reporting), gives a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings included in
the consolidation as a whole as required by DTR 4.2.4R (preparation and
content of condensed set of financial statements);
b. the interim management results include a fair review of the information
required by DTR 4.2.7R (indication of important events during the first 26
weeks and description of principal risks and uncertainties for the remaining
26 weeks of the year); and
c. the interim management results include a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
Approved by the Board of Directors on 20 September 2022 and signed on its
behalf by:
Robert B.
Cook
Alan Clark
Chief Executive
Officer
Chief Financial Officer
Calculation of key performance indicators and alternative performance measures
The Group uses several key performance indicators ("KPIs") to track the
financial and operating performance of its business. These measures are
derived from the Group's internal systems. Some of the KPIs are alternative
performance measures ("APMs") that are not defined or recognised under IFRS.
They may not be comparable to similarly titled measures used by other
companies and should not be considered in isolation or as a substitute for
analysis of the Group's operating results as reported under IFRS. The
following information on the KPIs includes reconciliations to the nearest IFRS
measures where relevant.
LFL sales
Like-for-like sales enables the performance of the Group to be measured on a
consistent year-on-year basis and is an important metric to understand
customer patronage. The table below includes sites that were open for all of
2021 for comparability and separately includes any sites opened since 2021 or
subsequently disposed of.
26 weeks ended 3 July 26 weeks 53 weeks ended 2 January
2022 ended 27 June 2022 (audited)
(unaudited) 2021 £'000
£'000 (unaudited)
£'000
LFL 95,849 39,098 154,987
Additions since Jan 2021 2,554 383 2,579
Disposals since Jan 2021 118 284 1,065
Deferred revenue provisions (68) 155 363
Total 98,453 39,920 158,994
EBITDA and Adjusted EBITDA
EBITDA is calculated as earnings before interest and bank arrangement fees,
tax, depreciation, amortisation, impairment and share based payments. Adjusted
EBITDA is calculated as EBITDA before exceptional items (as described in note
8).
* Restated
53 weeks ended 2 January
26 weeks ended 3 July 2022 (audited)
2022 (unaudited) 26 weeks £'000
£'000 ended 27 June
2021 (unaudited)
£'000
Loss before tax (17,089) (11,171) (2,549)
Depreciation 10,895 11,063 22,339
Net interest and bank arrangement fees 5,934 6,556 13,597
Impairment 17,806 - 1,019
Share based payments 254 10 78
EBITDA 17,800 6,458 34,484
Lease exit cost/(income) - - (616)
Exceptional items - 860 9,086
Adjusted EBITDA 17,800 7,318 42,954
Calculation of key performance indicators and alternative performance measures
continued
Refer to note 7 to the financial statements. In the 53 week period ended 2
January 2022 exceptional costs have increased by £965k from £8,121k to
£9,086k, increasing loss before tax from £1,584k, as previously reported, to
£2,549k.
Free cash flow
Free cash flow is calculated as the cashflow from operating activities for the
period, adjusted for working capital movements, rental income from sub-leases,
corporation tax and maintenance capex.
* Restated
53 weeks ended 2 January 2022 (audited)
26 weeks ended 3 July 2022 (unaudited) 26 weeks £'000
£'000 ended 27 June 2021
(unaudited)
£'000
Cashflow from operating activities 16,169 5,396 29,658
Change in working capital (10,454) 2,296 1,931
Rental income from sub-leases 25 14 337
Corporation taxes (paid)/ recovered (858) - 978
Cash generated from operations 4,882 7,706 32,904
Maintenance capex (1,559) (778) (1,929)
Free cash flow 3,323 6,928 30,975
Refer to note 7 to the financial statements. In the 53 week period ended 2
January 2022 exceptional costs have increased by £965k from £8,121k to
£9,086k, reducing cashflow from operating activities of £30,623k, as
previously reported, to £29,658k.
Net debt
Net debt is calculated as the Group's long-term borrowings (excluding issue
costs) and lease liabilities less cash and cash equivalents at each period
end.
2 January 2022 (audited)
3 July 2022 (unaudited) 27 June 2021 (unaudited) £'000
£'000 £'000
Gross bank debt (37,300) (65,100) (44,300)
Lease liabilities (150,474) (152,194) (150,994)
Cash & cash equivalents 11,150 36,166 32,080
Net debt (176,624) (181,128) (163,214)
Consolidated statement of comprehensive income for the 26 week period ended 3
July 2022
* Restated
26 weeks ended 3 July 2022 (unaudited) £'000 26 weeks ended 27 June 2021 (unaudited) £'000 53 weeks ended 2 January 2022 (audited) £'000
Note
Revenue 98,453 39,920 158,994
Cost of sales (22,311) (7,710) (31,256)
Gross profit 76,142 32,210 127,738
Underlying administrative expenses 7 (70,243) (50,851) (121,773)
Exceptional items * 7, 8 - (860) (9,086)
Administrative expenses 7 (70,243) (51,711) (130,859)
Impairment of property, plant and equipment 12, 13 (17,806) - (1,019)
and right of use assets **
Other operating income 752 14,886 15,188
(Loss)/profit from operations (11,155) (4,615) 11,048
Finance income 9 4 22 6
Finance expense 9 (5,938) (6,578) (13,603)
Loss before tax (17,089) (11,171) (2,549)
Tax credit 10 3,743 3,200 1,017
Loss for the period (13,346) (7,971) (1,532)
Total comprehensive expense (13,346) (7,971) (1,532)
All operations are continuing operations.
There are no amounts recognised within other comprehensive income in the
current or prior periods.
* Refer to note 7 for further details.
** In prior periods, impairment of property, plant and equipment and right of
use assets were disclosed as part of administrative expenses.
Consolidated statement of comprehensive income for the 26 week period ended 3
July 2022 continued
* Restated
26 weeks ended 3 July 2022 (unaudited) 26 weeks ended 27 June 2021 (unaudited) 53 weeks ended 2 January 2022 (audited)
Earnings/(loss) per share (pence) Note
Basic loss per share * 11 (10.6) (6.8) (1.3)
Adjusted basic earnings/(loss) per share ** 11 3.5 (6.1) 7.2
Adjusted diluted earnings/(loss) per share ** 11 3.5 (6.1) 7.2
Adjusted earnings per share exclude impairments and exceptional items.
* Refer to note 7 for further details.
* Refer to note 11 for further details.
Consolidated statement of financial position at 3 July 2022
* Restated
3 July 2022 (unaudited) £'000 27 June 2021 (unaudited) 2 January 2022 (audited)
£'000 £'000
Note
Assets
Non-current assets
Property, plant and equipment 12 39,928 45,130 42,781
Right of use assets 13 104,302 116,856 116,388
Goodwill 14 145,979 145,979 145,979
Net investment in sublease 100 534 106
Deferred tax assets 10 10,596 7,142 6,192
Long term prepayment - 60 -
Total non-current assets 300,905 315,701 311,446
Current assets
Inventories 1,300 1,049 1,489
Trade and other receivables 7,477 6,980 5,579
Net investment in sublease 83 454 98
Current tax assets - 1,902 -
Cash and cash equivalents 11,150 36,166 32,080
Total current assets 20,010 46,551 39,246
Total assets 320,915 362,252 350,692
Liabilities
Non-current liabilities
Loans and borrowings 17 26,180 63,296 33,931
Lease liabilities 16 135,989 130,046 131,980
Provisions 2,352 2,850 2,430
Total non-current liabilities 164,521 196,192 168,341
Current liabilities
Trade and other payables * 15 19,188 167,600 27,742
Contract liabilities 800 - 1,024
Current tax liabilities 113 - 309
Loans and borrowings 17 10,497 1,426 9,491
Lease liabilities 16 14,485 22,148 19,014
Provisions 377 509 745
Total current liabilities 45,460 191,683 58,325
Total liabilities 209,981 387,875 226,666
Net current liabilities (25,450) (145,132) (19,079)
Net assets/(liabilities) 110,934 (25,623) 124,026
* Refer to note 7 for further details.
Consolidated statement of financial position at 3 July 2022
* Restated
3 July 2022 (unaudited) £'000 27 June 2021 (unaudited) 2 January 2022(audited)
Note
£'000 £'000
Issued capital and reserves attributable
to owners of the Company
Share capital 18 25,225 8,930 25,225
Share premium reserve 14,583 - 14,583
Merger reserve (181,180) - (181,180)
Share based payment reserve 307 10 53
Retained earnings/(accumulated losses) * 251,999 (34,563) 265,345
Total equity/(deficit) 110,934 (25,623) 124,026
* Refer to note 7 for further details.
The notes on pages 23 to 38 form part of these financial statements.
The financial statements on pages 16 to 38 were approved and authorised for
issue by the Board of Directors on 20 September 2022 and were signed on its
behalf by:
Robert B. Cook Alan Clark
Chief Executive Officer Chief Financial Officer
Consolidated statement of changes in equity for the 26 week period ended 3
July 2022
Retained earnings/
Share premium reserve Share based payment reserve (accumulated Total equity/ (deficit)
£'000 Merger reserve £'000 losses) £'000
Share capital £'000 £'000
£'000
At 2 January 2022 (restated) 25,225 14,583 (181,180) 53 265,345 124,026
Comprehensive expense
for the period
Loss for the period - - - - (13,346) (13,346)
Total comprehensive
expense for the period - - - - (13,346) (13,346)
Contributions by and distributions to owners
Share based payment charge - - - 254 - 254
Total contributions by and distributions to owners
- - - 254 (13,346) (13,092)
At 3 July 2022 (unaudited) 25,225 14,583 (181,180) 307 251,999 110,934
At 27 December 2020 (audited) - - - 4,054 (30,646) (26,592)
Comprehensive expense
for the period
Loss for the period - - - - (7,971) (7,971)
Share based payments - - - 10 - 10
Share issue 8,930 - - - - 8,930
Reclassified to retained - - - (4,054) 4,054 -
earnings on lapsing
At 27 June 2021 (unaudited) 8,930 - - 10 (34,563) (25,623)
Consolidated statement of changes in equity for the 26 week period ended 3
July 2022
Retained earnings/
Share premium reserve Share based payment reserve (accumulated Total equity/ (deficit)
£'000 Merger reserve £'000 losses) £'000
Share capital £'000 £'000
£'000
At 27 December 2020 (audited) - - - 4,054 (30,646) (26,592)
Comprehensive expense
for the period
Loss for the period - - - - (567) (567)
Total comprehensive
expense for the period - - - - (567) (567)
Correction of error * - - - - (965) (965)
Total comprehensive
expense for the period (restated)
- - - - (1,532) (1,532)
Contributions by and distributions to owners
Issue of share capital 1,518 11,624 - - - 13,142
Acquisition of subsidiaries by Hostmore 20,477 144,278 (164,755) - - -
Transfer of share capital of a subsidiary to Hostmore
138,930 - - - - 138,930
Capital reduction in a subsidiary (137,541) - - - 137,541 -
Share issue proceeds extinguish of shareholder loan
1,841 14,584 (16,425) - - -
Cancellation of share premium - (155,903) - - 155,903 -
Reclassification of share based reserve to retained earnings on lapse of share
incentive
- - - (4,079) 4,079 -
Share based payment charge - - - 78 - 78
Total contributions by and distributions to owners
25,225 14,583 (181,180) (4,001) 297,523 152,150
At 2 January 2022 (restated) 25,225 14,583 (181,180) 53 265,345 124,026
* Refer to note 7 for further details.
Consolidated statement of cash flows for the 26 week period ended 3 July 2022
* Restated
26 weeks ended 26 weeks ended 53 weeks ended 2 January 2022 (audited) £'000
3 July 2022 (unaudited) £'000 27 June 2021 (unaudited) £'000
Note
Cash flows from operating activities * 19 16,169 5,396 29,658
Movements in working capital:
(Increase)/decrease in trade and other receivables (1,897) (460) 1,002
Decrease/(increase) in inventories 191 (347) (787)
(Decrease)/increase in trade and other payables * (8,303) 3,073 1,872
(Decrease)/increase in provisions and employee benefits (445) 30 (156)
Cash generated from operations 5,715 7,692 31,589
Corporation taxes (paid)/recovered (858) - 978
Rental income from finance subleases 25 14 337
Net cash from operating activities 4,882 7,706 32,904
Cash flows from investing activities
Purchases of property, plant and equipment (4,956) (2,090) (4,075)
Initial direct costs incurred on new leases - (15) -
Net cash used in investing activities (4,956) (2,105) (4,075)
Cash flows from financing activities
Repayment of intercompany loan - (8,930) -
Repayment of bank borrowings (7,000) (700) (26,500)
Payment of loan arrangement fees - - (816)
Receipt of bank borrowings - - 5,000
Interest paid on bank borrowings (892) (978) (1,751)
Proceeds from share issue - 8,930 13,094
Payment of lease liabilities (12,964) (4,958) (22,977)
Net cash used in financing activities (20,856) (6,636) (33,950)
Net cash decrease in cash and cash equivalents (20,930) (1,035) (5,121)
Cash and cash equivalents at the beginning of period 32,080 37,201 37,201
Cash and cash equivalents at the end of the period 11,150 36,166 32,080
* Refer to note 7 for further details.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022
1. Basis of preparation
The consolidated financial statements included in these interim results have
been prepared in accordance with IAS 34 (Interim Financial Reporting). The
accounting policies and methods of computation used are consistent with those
used in the Group's latest annual audited financial statements. The
consolidated interim financial statements do not include all the information
and disclosures required in the annual financial statements and should be read
in conjunction with the Group's latest annual consolidated financial
statements for the 53 weeks ended 2 January 2022.
The information for the 53 weeks ended 2 January 2022 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory financial statements for that period has been delivered to
the Registrar of Companies and has been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
(IFRS). The auditor's report on those financial statements was unqualified,
did not draw attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
The accounting period of the Group runs to the nearest Sunday at the end of
each half year. The Directors have presented their results and consolidated
interim financial statements for the 26 week period ended 3 July 2022, with
the comparative period to 27 June 2021 also being a 26 week period.
2. Functional and presentation currency
These consolidated financial statements are presented in pounds sterling,
which is the Group's functional currency. All amounts have been rounded to the
nearest thousand pounds, unless otherwise indicated.
3. Going concern
The financial statements have been prepared on a going concern basis. Whilst
the Group is in a net current liability position, the strong positive EBITDA,
net assets and the positive operating cash flow supports the Directors' belief
that the Group is well placed to manage its business and financial risks
successfully. For this reason, they have adopted the going concern basis in
preparing the interim report and financial statements.
The Group has prepared forecasts of the expected position for the next 24
months from the date of approval of these financial statements, including
severe but plausible downside sensitivities.
The severe but plausible downside, which considers the macro-economic guidance
from the Bank of England on 4 August 2022, may result in a severely depressed
trading environment and significant worsening of the performance of the
restaurants, and the subsequent impact on the profitability and cash
generation of the Group. This scenario is based on the business plan of the
Group and applies a downturn in trading of its restaurants in the remainder of
2022 and into 2023, including proposed new openings, with a worsening profit
conversion as a result of enduring elevated utilities prices. As a result, it
models the impact this would have on the cash position and covenants
calculations of the Group.
In both the base and the severe but plausible downside case, the Group has
sufficient liquidity via its existing facilities to finance its operations for
the next twelve months to the end of September 2023, including the requisite
compliance of the Group with the banking covenants and the debt amortisation
as they come due. Both models, beyond the period of assessment for going
concern purposes, anticipate the successful concluding of the refinancing of
the debt in advance of the repayment date of 1 October 2024.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
3. Going concern continued
Accordingly, as the Directors continue to adopt the going concern basis in
preparing these accounts, they do not include any adjustments to the carrying
amounts or classification of assets and liabilities that would result if the
Group was unable to continue as a going concern.
Both scenarios, being the Group business plan and the severe but plausible
downside, show that there will be no breach of the Group's covenant tests and
that the Group has headroom above the minimum covenant levels.
After the reporting date, the Group completed an extension of its current
financing arrangements and existing covenants to 1 October 2024, which extends
beyond the period in the scenarios described above. Refer to note 17 for
further details.
The Directors are confident that the business will continue to trade for a
period of at least 12 months following the signing of these financial
statements. They are therefore confident that it is appropriate to prepare
these financial statements on a going concern basis.
4. Accounting policies
These consolidated financial statements have been prepared on a basis
consistent with the accounting policies set out in the Group's annual report
for the 53 week period ended 2 January 2022.
5. Accounting estimates and judgements
Estimates and judgements are evaluated at each reporting date and are based on
historical experience as adjusted for current market conditions and other
factors. Estimates and assumptions have been made in respect of the following:
5.1 Judgement
Goodwill
The Group does not allocate goodwill to individual cash generating units
("CGUs") as it is deemed to represent the ongoing value of the existing
business and brand and it cannot be allocated to individual restaurants on a
non-arbitrary basis. Therefore, the goodwill is allocated to all CGUs as a
group as it is considered that they all benefit equally from the brand value.
Lease term
Several leases of restaurant properties contain extension options or break
clauses. Profitable stores' leases have been considered to be extended,
discounted back using pre-tax discount rate of 12.4%. The non-cancellable
period and enforceable period are both considered to be the initial lease term
in the contract at the period end for which leases have already been extended.
Leases for restaurant properties are generally long-term and due to the nature
of the business, decisions to extend or terminate are based on evolving market
dynamics that may create an economic incentive to do so. Therefore, at the
period end date, except for those where decisions have already been made,
there is no reasonable certainty of whether an option to extend or terminate
will be exercised.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
5. Accounting estimates and judgements continued
5.2 Estimates and assumptions
Property, plant and equipment and RoU assets impairment
The Group performs an impairment assessment at the end of each reporting
period. Each restaurant within the Group is considered a separate cash
generating unit ("CGU"). An impairment charge is recognised where the
recoverable amount is less than the carrying value of the property, plant and
equipment or RoU of the CGU. The recoverable amount is based on value-in-use
calculations, using forecasted cashflows and each restaurant's ability to
cover its costs, including an allocation of central overheads, marketing and
maintenance of standards of assets.
When trading data and forecasts indicate that an impairment no longer exists,
any previously recognised impairments are reversed up to the recoverable
amount, without exceeding the previous carrying value less depreciation. This
impairment reversal is recognised in the statement of comprehensive income.
The recoverable amount is based on value-in-use calculations with cash flow
projections over the lease term of each restaurant, using the Group's forecast
performance for 2022 and the business plan for the next 2 years, with a
long-term growth rate of 2% applied. The discount rate applied in the
value-in-use calculations has been calculated with reference to the Group's
weighted average cost of capital and similar benchmarks in the industry. The
pre-tax discount rate of 12.3% (2021: 11.7%) has been applied in the
value-in-use calculations.
6. Segment information
The Group's reportable segments constituting revenue, profit, assets and
liabilities are all under the Fridays brand. '63rd + 1st' was launched within
the 53 week period ended 2 January 2022 as a trading brand. It is aggregated
with Fridays within internal reporting and is therefore not a separate
reportable segment under IFRS 8 (Operating Segments). For these purposes, the
Group's Chief Executive Officer and all other Board members are considered to
be the Chief Operating Decision Maker, who receive information at a
consolidated Group and site-by-site level. These sites share similar economic
characteristics and are corporately under the TGI Fridays licensed branding
and meet the aggregation criteria under IFRS 8 paragraph 12.
7. Prior period administrative expenses restatement
The Company has restated prior period exceptional costs associated with the
listing of the Company's ordinary shares on the London Stock Exchange, by
increasing this amount by £965k, with such amount being included within
administrative expenses. The restatement was due to a late invoice not being
accrued for at the prior period end. The under accrual has been corrected by
restating each of the affected financial statement line items for the prior
period as follows:
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
7. Prior period administrative expenses restatement continued
Previously reported
53 weeks ended
2 January * Restated
2022 Inclusion of under accrual 53 weeks ended
Consolidated statement of comprehensive £'000 £'000 2 January
income (extract) 2022
£'000
Administrative expenses 130,913 965 131,878
Profit from operations 12,013 (965) 11,048
Finance income 6 - 6
Finance expense (13,603) - (13,603)
Loss before tax (1,584) (965) (2,549)
Tax credit 1,017 - 1,017
Loss for the period (567) (965) (1,532)
Previously reported
53 weeks ended
2 January * Restated
2022 Inclusion of under accrual 53 weeks ended
Consolidated statement of comprehensive £'000 £'000 2 January
income (extract) 2022
£'000
Basic loss per share (pence) (0.5) (0.8) (1.3)
Previously reported
2 January
2022 Inclusion of under accrual * Restated
Consolidated statement of £'000 £'000 2 January
financial position (extract) 2022
£'000
Trade and other payables 26,777 965 27,742
Total current liabilities 57,360 965 58,325
Total liabilities 225,701 965 226,666
Net current liabilities (18,114) (965) (19,079)
Net assets 124,991 (965) 124,026
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
7. Prior period administrative expenses restatement continued
Previously reported
53 weeks ended
2 January * Restated
2022 Inclusion of under accrual 53 weeks ended
Consolidated statement of £'000 £'000 2 January
cash flows (extract) 2022
£'000
Cash flows from operating activities 30,623 (965) 29,658
Movement in working capital
Increase in trade and other payables 907 965 1,872
8. Exceptional items
Included within the (loss)/profit from operations are items which are
considered to be exceptional in nature. These are as follows:
* Restated
26 weeks 53 weeks
26 weeks ended ended 27 June ended 2 January
3 July 2022 (unaudited) 2021 2022
£'000 (unaudited) (audited)
£'000 £'000
Costs associated with Hostmore's listing - 860 9,086
Exceptional items are those items that, by virtue of their unusual nature or
size, warrant separate, additional disclosure in the financial statements to
fully assess the performance of the Group. These related to costs associated
with the listing of the Company's ordinary shares on the London Stock
Exchange. These costs principally comprised fees related to accounting and
legal advice associated with the London Stock Exchange listing.
Further to note 7, the 53 week period ended 2 January 2022 exceptional costs
have increased by £965k from £8,121k, as previously reported, to £9,086k.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
9. Finance income and expense
26 weeks 53 weeks
26 weeks ended ended 27 June ended 2 January
3 July 2022 (unaudited) £'000 2021 (unaudited) 2022 (audited)
£'000 £'000
Finance income
Interest receivable on net investment in sublease 4 22 -
Other interest receivable - - 6
Total finance income 4 22 6
Finance expense
Bank interest payable 829 1,000 2,576
Amortisation of loan arrangement fees 254 162 804
Interest on lease liabilities 4,827 4,989 10,165
Interest on withholding tax - 392 -
Other interest payable 28 35 -
Unwinding of discount on provisions - - 58
Total finance expense 5,938 6,578 13,603
10. Tax credit
10.1 Income tax credit recognised in profit or loss
26 weeks 53 weeks
26 weeks ended ended 27 June ended 2 January
3 July 2022 (unaudited) £'000 2021 (unaudited) 2022 (audited)
£'000 £'000
Current tax
Current tax charge on profits for the period (661) - (1,217)
Adjustments in respect of prior periods - 544 528
Total current tax (661) 544 (689)
Deferred tax credit
Origination and reversal of timing differences 4,404 2,401 (142)
Adjustments in respect of prior periods - 255 328
Change in future tax rate - - 1,520
Total deferred tax credit 4,404 2,656 1,706
Tax credit for the period 3,743 3,200 1,017
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
10. Tax credit continued
10.2 Deferred tax balances
The following is the analysis of deferred tax assets/(liabilities) in the
consolidated statement of financial position:
Recognised
Opening balance in profit Closing balance
£'000 and loss £'000
£'000
Deferred tax assets in relation to:
Accelerated capital allowances on property, plant and equipment 1,970 591 2,561
Short term timing differences 71 - 71
Deferred tax arising from GAAP differences 4,151 3,813 7,964
3 July 2022 6,192 4,404 10,596
Recognised
Opening balance in profit and loss Closing balance
£'000 £'000 £'000
Deferred tax assets in relation to:
Accelerated capital allowances on property, plant and equipment 1,318 346 1,664
Short term timing differences 44 (10) 34
Trading losses utilised 410 2,066 2,476
Deferred tax arising from GAAP differences 2,714 254 2,968
27 June 2021 4,486 2,656 7,142
Recognised
Opening balance in profit and loss Closing balance
£'000 £'000 £'000
Deferred tax assets in relation to:
Accelerated capital allowances on property, plant and equipment 1,318 652 1,970
Short term timing differences 44 27 71
Trading losses utilised 410 (410) -
Deferred tax arising from GAAP differences 2,714 1,437 4,151
2 January 2022 4,486 1,706 6,192
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
11. (Loss)/earnings per share
* Restated
26 weeks ended 26 weeks 53 weeks
3 July ended 27 June ended 2 January
2022 (unaudited) 2021 2022
(unaudited) (audited)
Basic loss per share
Weighted average outstanding shares ('000) 126,127 116,920 118,463
Loss after tax for the period (£'000) (13,346) (7,971) (1,532)
Basic EPS (pence) (10.6) (6.8) (1.3)
Adjusted earnings/(loss) per share
Loss after tax for the period (£'000) (13,346) (7,971) (1,532)
Exceptional items (£'000) (note 8) - 860 9,086
Impairment of property, plant and equipment and right of use assets 17,806 - 1,019
Adjusted (loss)/profit for the period (£'000) 4,460 (7,111) 8,573
Adjusted EPS (pence) 3.5 (6.1) 7.2
Adjusted diluted earnings/(loss) per share
Weighted average outstanding shares ('000) 126,127 116,920 118,463
Dilutive shares ('000) - - -
126,127 116,920 118,463
Adjusted diluted EPS (pence) 3.5 (6.1) 7.2
The calculation of diluted earnings per share does not assume conversion,
exercise or other issue of potential ordinary shares that would have an
anti-dilutive effect on earnings per share, as the Group is in a loss-making
position.
Comparative (loss)/earnings per share is calculated using the current capital
structure, excluding shares issued immediately prior to the listing date.
In the 53 week period ended 2 January 2022, adjusted earnings per share and
adjusted diluted earnings per share have been increased from 6.4 pence, as
previously reported, to 7.2 pence. This is due to the inclusion of impairment
of property, plant and equipment and right of use assets in the calculation of
both adjusted earnings per share and adjusted diluted earnings per share. The
exceptional items within this calculation have also been restated in line with
details included in Note 7, however this has no impact on the adjusted
earnings per share and adjusted diluted earnings per share figures.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
12. Property, plant and equipment
Plant and machinery £'000 Fixtures and fittings
£'000 Total £'000
Net book value at 2 January 2022 (audited) 6,819 35,962 42,781
Additions 2,230 2,399 4,629
Disposals (1) (17) (18)
Depreciation charge for the period (1,591) (2,768) (4,359)
Impairment charge for the period - (3,105) (3,105)
Net book value at 3 July 2022 (unaudited) 7,457 32,471 39,928
Cost at 27 June 2021 (unaudited) 49,489 88,620 138,109
Accumulated depreciation and impairment (41,837) (51,142) (92,979)
Net book value at 27 June 2021 (audited) 7,652 37,478 45,130
Cost at 2 January 2022 (audited) 50,665 90,058 140,723
Accumulated depreciation and impairment (43,846) (54,096) (97,942)
Net book value at 2 January 2022 (audited) 6,819 35,962 42,781
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
13. Right of use assets
Property and vehicle leases
£'000
Net book value at 2 January 2022 (audited) 116,388
Additions 9,151
Depreciation charge for the period (6,536)
Impairment charge for the period (14,701)
Net book value at 3 July 2022 (unaudited) 104,302
Cost at 27 June 2021 (unaudited) 132,903
Accumulated depreciation and impairment (16,047)
Net book value at 27 June 2021 (unaudited) 116,856
Cost at 2 January 2022 (audited) 168,657
Accumulated depreciation and impairment (52,269)
Net book value at 2 January 2022 (audited) 116,388
Impairment losses recognised in the period
The Group performs an impairment assessment at the end of each reporting
period. Each restaurant within the Group is considered a separate cash
generating unit ("CGU"). An impairment charge is recognised where the
recoverable amount is less than the carrying value of the right of use assets
of the CGU. The recoverable amount is based on value-in-use calculations,
using forecasted cashflows and each restaurant's ability to cover its costs,
including an allocation of central overheads, marketing and maintenance of
standards of assets.
The recoverable amount is based on value-in-use calculations with cash flow
projections over the lease term of each restaurant, using the Group's forecast
performance for 2022 and the business plan for the next 2 years, with a
long-term growth rate of 2% applied. The discount rate applied in the
value-in-use calculations has been calculated with reference to the Group's
weighted average cost of capital and similar benchmarks in the industry. The
pre-tax discount rate of 12.3% (2021: 11.7%) has been applied in the
value-in-use calculations.
The Group has recognised an impairment charge on property, plant and equipment
and RoU assets of £17,806k for the period ended 3 July 2022 (2021: £1,019k).
The charge relates to a number of specific CGUs, including their year to date
trading performance, and represents the potential impact of short to medium
term macro-economic trading conditions as projected by the Bank of England on
4 August 2022.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
13. Right of use assets continued
Sensitivities to impairment charges
The key assumptions in the impairment calculation are the predicted cashflows
of the CGU and the discount rate applied. The following table shows the effect
on impairment of property, plant and equipment and right of use assets for a
2% absolute change in the discount rate or 10% variation in EBITDA, with all
other variables held constant:
3 July 27 June 2 January
2022 (unaudited) £'000 2021 (unaudited) 2022 (audited)
£'000 £'000
Discount rate - 2% increase 1,894 - 1,382
Discount rate - 2% decrease (1,933) - (285)
EBITDA - 10% increase (2,741) - (457)
EBITDA - 10% decrease 3,320 - 1,829
14. Goodwill
3 July 27 June 2 January
2022 (unaudited) £'000 2021 (unaudited) 2022 (audited)
£'000 £'000
Cost 155,284 155,284 155,284
Accumulated impairment (9,305) (9,305) (9,305)
145,979 145,979 145,979
The Group continues to assess goodwill for impairment at each reporting date
in line with its accounting policy. No impairment charge has been necessary
for the 26 weeks ended 3 July 2022 as the value-in-use supports the carrying
value of all assets, goodwill, property, plant and equipment and RoU assets.
The value-in-use calculations are based on future projected cashflows of the
operating business, over the life of the leases, assuming profitable stores'
leases will be extended, discounted back using pre-tax discount rate of 12.4%.
Sensitivity analysis conducted shows that +/- 2% increase in the discount rate
and a +/- 10% movement in the EBITDA results in £nil impairment to the
goodwill.
The Directors consider that the Fridays brand is the sole cash generating unit
of goodwill as it cannot be allocated to individual restaurants on a
non-arbitrary basis.
15. Trade and other payables
As part of the Capital Reorganisation referred to in the Group's audited
financial statements for the 53 weeks ended 2 January 2022, payables to
related parties of £133m were capitalised. Full details were set out in the
Prospectus.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
16. Leases
The Group has entered into a number of leases on properties from which it
operates its restaurants. It has also entered into lease arrangements for
motor vehicles for use by certain employees. These have all been recognised as
right-of-use assets in the consolidated statement of financial position.
3 July 27 June 2 January 2022 (audited)
2022 2021 (unaudited) £'000
(unaudited) £'000 £'000
Contractual undiscounted cash flows due
Not later than one year 19,763 32,563 21,108
Between one year and five years 80,357 82,343 77,591
Later than five years 112,215 110,192 111,285
212,335 225,098 209,984
3 July 27 June 2 January 2022 (audited)
2022 (unaudited) £'000 2021 (unaudited) £'000
£'000
Discounted lease liabilities
Non-current 135,989 130,046 131,980
Current 14,485 22,148 19,014
150,474 152,194 150,994
17. Loans and borrowings
3 July 27 June 2 January 2022 (audited) £'000
2022 (unaudited) £'000 2021 (unaudited) £'000
Secured bank loans and borrowings
Non-current 26,180 63,296 33,931
Current 10,497 1,426 9,491
36,677 64,722 43,422
The Group completed an extension of the bank loan facilities on 5 July 2022.
The amended facility agreement now consists of a £35m term loan and a £30m
revolving credit facility (previously it consisted of a £40m term loan and a
£25m revolving credit facility). No arrangement fees were incurred in respect
of this refinancing exercise. At the period end, £37.3m of the then term loan
available had been drawn and £nil had been drawn on the revolving credit
facility. The Group's loans are denominated in pounds sterling. There is no
foreign exchange risk on the Group's loan arrangements.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
17. Loans and borrowings continued
The carrying value of loans and borrowings classified as financial liabilities
are measured at amortised cost approximate to their fair value.
3 July 27 June 2 January
Nominal interest 2022 (unaudited) £'000 2021 2022
rate Year of maturity (unaudited) (audited)
Loan Facility Repayment schedule £'000 £'000
Secured bank loan Margin plus compound reference rate based on 2024 £1.5m per quarter from June 22, with balance on maturity 37,300 65,100 44,299
SONIA
Unamortised loan arrangement fees
(623) (378) (877)
36,677 64,722 43,422
The facility agreement includes the following covenants:
· a minimum liquidity covenant which is tested on a monthly basis until
August 2022, requiring a cash balance of no less than £15.0m until 31 August
2022, at which time it was reduced to £12.5m until 30 June 2023;
· leverage and fixed cost cover ratio covenants that are tested on a
quarterly basis from September 2022. The leverage ratio covenant requires that
the Group's total net debt to Adjusted EBITDA must not exceed 3.0 times
between 30 September 2022 and 31 December 2022, and 2.5 times from 1 January
2023; and
· the fixed cost cover ratio covenant requires EBITDA, adjusted for
rental payments, to be not less than 1.5 times the aggregation of such rental
payments and bank interest charges.
The Group complied with all covenants within its bank facilities during the 26
week period ended 3 July 2022 and until the date of publication of these
financial statements. As a part of the facility extension a credit support
undertaking of £2.5m was also extended until 30 June 2023.
Interest on the Group's loan facilities is payable at the aggregate of a
margin of 4% plus a compound reference rate based on SONIA. A margin rachet
applies from the date on which the adjusted leverage covenant and the fixed
cost cover ratio covenant begin to be tested, with the impact on margin shown
below. Any increase or decrease on the margin as a result of the margin rachet
will apply from the beginning of the next interest quarter.
Whilst the Group has complied with all of its covenants during the 26 week
period ended 3 July 2022, the margin rachet has not applied. Based on the
Board's forecasts, it is not expected to be applied during the 12 months from
the date of approval of these financial statements.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
17. Loans and borrowings continued
Margin %
per annum
Adjusted Leverage
Greater than or equal to 2.0x 4.00
Less than 2.0x but greater than or equal to 1.5x 3.75
Less than 1.5x but greater than or equal to 1.0x 3.50
Less than 1.0x 3.25
The borrower and guarantor Group companies under the facilities agreement have
provided English law fixed and floating charges over all of their assets in
support of their obligations under the facilities agreement. Hostmore Group
Limited has also provided third party security in respect of the shares that
it holds in its wholly owned subsidiary Wednesdays (Bidco) Limited.
The term loan is repayable in quarterly instalments of £1.5m from 30 June
2022. The remaining balance is due for repayment at the end of the facility on
1 October 2024. At 3 July 2022, and in accordance with the terms of the
facility agreement, there was £219k of interest owed to the lender.
Undrawn facilities
The Group had committed borrowing floating rate facilities available to be
drawn at 3 July 2022 as follows:
3 July 27 June 2021 (unaudited) £'000 2 January
2022 2022
(unaudited) (audited)
£'000 £'000
Expiring between 1 and 2 years 25,000 - 20,000
Undrawn loan facilities incur a charge at 40% of the interest rate margin on
the drawn facilities.
Movement of Loans
3 July 27 June 2021 (unaudited) £'000 2 January
2022 2022
(unaudited) (audited)
£'000 £'000
At the beginning of period 43,422 65,260 65,260
Loans drawn down - - 5,000
Loans repaid (7,000) (700) (26,500)
Amortisation of loan arrangement fees 255 162 804
Loan arrangement fees incurred in period - - (1,142)
Balance at end of period 36,677 64,722 43,422
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
18. Share capital
Issued and fully paid
Issue of ordinary shares during the half-year
Number
'000 £'000
Ordinary shares of 20p each at 2 January 2022 and 3 July 2022 126,127 25,225
The Company has one class of ordinary shares, comprising the entire issued
share capital of the Company.
Share issuances during the period
There were no shares issued during the 26 week period ended 3 July 2022.
Rights attaching to ordinary shares
The Company's shares form a single class for all purposes, including with
respect to voting, dividends and other distributions declared, made or paid on
the Company's share capital. Shareholders are entitled to one vote per share
at shareholder meetings of the Company.
Dividends on ordinary shares
No dividends were declared by the Company during the 26 week period ended 3
July 2022.
Market purchases of ordinary shares
At the Company's annual general meeting held on 27 May 2022, the Company's
shareholders passed a special resolution in accordance with the Act to
authorise the Company to purchase in the market up to a maximum number of
12,612,727 shares in the Company, representing 10% of its issued share capital
at 27 May 2022, within normal guidelines. No market purchases were made under
this authority during the period from the Company's annual general meeting
held on 27 May 2022 to 3 July 2022. The authority will expire (unless
previously revoked, varied or renewed) at the close of business on 30 June
2023 or, if earlier, at the conclusion of the Company's annual general meeting
to be held in 2023.
Under the existing authority, purchases can be made at a minimum price of the
nominal value of the share and a maximum price of the higher of (a) 5% above
the average of the closing price for a share for the five business days
immediately preceding the date the share is contracted to be purchased, and
(b) an amount equal to the higher of the price of the last independent trade
of a share and the highest current independent bid for a share as derived from
the London Stock Exchange Trading System.
Authorities to issue share capital
At the Company's annual general meeting held on 27 May 2022, the Directors
were authorised to allot and issue ordinary shares in the Company within
ordinary guidelines. No issuances were made under this authority during the
period from the Company's annual general meeting on 27 May 2022 to 3 July
2022. This authority will expire (unless previously revoked, varied or
renewed) at the close of business on 30 June 2023 or, if earlier, at the
conclusion of the Company's annual general meeting to be held in 2023.
Notes to the consolidated financial statements for the 26 weeks ended 3 July
2022 continued
19. Cash flows from operating activities
* Restated
26 weeks ended 26 weeks ended 53 weeks ended
3 July 27 June 2021 (unaudited) £'000 2 January
2022 (unaudited) 2022 (audited)
£'000 £'000
Loss for the period (13,346) (7,971) (1,532)
Adjustments for cash items and amounts disclosed separately:
Depreciation of property, plant and equipment and right of use assets 10,895 11,063 22,339
Impairment of property, plant and equipment and right of use assets 17,806 - 1,019
Lease exit income - - (616)
Finance income (4) (22) (6)
Finance expense 5,938 6,593 13,603
COVID-19 rent concessions (1,631) (1,077) (4,210)
Income tax credit (3,743) (3,200) (1,017)
Share based payment charge 254 10 78
Cash flows from operating activities 16,169 5,396 29,658
Further to note 7, the 53 week period ended 2 January 2022 exceptional costs
have increased by £965k from £8,121k to £9,086k, increasing the loss after
tax from £567k, as previously reported, to £1,532k.
20. Related parties
Identity of related parties with which the Group has transacted
The Group was previously wholly owned by Electra. During the 53 week period
ended 2 January 2022, a distribution in specie of all of the issued share
capital of the Company was declared. This resulted in each Electra shareholder
receiving three shares in the Company pro-rata for each Electra share then
held. Further details relating to the Demerger were set out in the Prospectus.
Independent review report to Hostmore plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Hostmore plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Interim Results of
Hostmore plc for the 26 week period ended 3 July 2022 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
• the Consolidated Statement of Financial Position at 3 July 2022;
• the Consolidated Statement of Comprehensive Income for the 26 week
period then ended;
• the Consolidated Statement of Cash Flows for the 26 week period then
ended;
• the Consolidated Statement of Changes in Equity for the 26 week
period then ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Results of Hostmore
plc have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 ("ISRE"), 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with this ISRE. However, future events or
conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Interim Results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Watford
21 September 2022
Definitions
The following definitions shall apply throughout this document unless the
context requires otherwise:
"Adjusted EBITDA" EBITDA before exceptional items
"Company" Hostmore plc, a company registered in England and Wales with company number
13334853 whose registered office is at Highdown House, Yeoman Way, Worthing,
West Sussex BN99 3HH
"Demerger" the demerger of the Company from Electra
"EBITDA" earnings before interest and bank arrangement fees, tax, depreciation,
amortisation, impairment and share based payments
"Electra" Electra Private Equity PLC (now renamed Unbound Group PLC), a company
registered in England and Wales with company number 00303062 whose registered
office is at 17 Old Park Lane, London W1K 1QT
"Exceptional items" items that, by virtue of their unusual nature or size, warrant separate,
additional disclosure in the financial statements in order to assess the
performance of the Group
"Free cash flow" the profit/(loss) for a period adjusted for depreciation, non-cash items,
changes in working capital, tax paid and maintenance capex, and excludes cash
used in financing activities
"Group" the Company together with its direct and indirect subsidiaries and subsidiary
undertakings
"GAAP" Generally accepted accounting principles in the UK
"IFRS" International Financial Reporting Standards as adopted by the UK
"Like-for-like (LFL) Sales" the revenue performance of the Group measured on a consistent year-on- year
basis
"Net Debt" the Group's long-term borrowings (excluding issue costs) and lease obligations
less cash and cash equivalents at each period end
"Prospectus" the document issued by the Company dated 15 October 2021 relating to Admission
"RoU asset" Right of use asset
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