REG - Hostmore PLC - Interim Results
29/09/2023 07:00
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RNS Number : 0850O Hostmore PLC 29 September 2023
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29 September 2023
Hostmore plc
Turnaround implemented and beginning to benefit results
Objective of repaying borrowings on track
INTERIM RESULTS
Hostmore plc ("Hostmore" or the "Company" and, together with its subsidiaries,
the "Group") is pleased to announce its interim results for the 26 weeks ended
2 July 2023 ("H1 2023"). This half-yearly financial report has not been
audited or reviewed by auditors pursuant to the Financial Reporting
Council guidance on Review of Interim Financial Information.
Key highlights
• Transitional H1 2023 period included appointment
of new senior leadership, implementation of operating turnaround, and
introduction of revised capital allocation policy
• H1 2023 LFL revenue, adjusted for differences in
VAT, only (2)% versus H1 2022
• H2 2023 LFL revenue to 24 September +2% versus H2
2022
• Previously announced annualised cost reductions of
£5.9 million now increased to £8.2 million
• Cost reductions benefitting FY 2023 by £5.8
million, an increase from the previously announced £4.0 million, with £4.3
million of benefit in H2 2023 versus H2 2022
• Cost inflation of purchased inputs, including
food, drinks, and utilities, now stabilising with significant portion under
long-term contracts or hedged at favourable prices
• Successful operational and portfolio management of
bottom 20 loss-making stores has reduced latest 12 months' (to end H1 2023)
losses of £4.2 million in 2022 to less than £1.5 million at recent
annualised rate
• New store openings deferred until at least 2025,
saving approximately £15 million of cash expenditures
• H1 2023 ending net debt of £31.3 million,
improvement from guidance of £32.2 million
• Refinancing process commenced with existing and
potential new lenders, expected to be concluded by end of Q1 2024
• On course to repay borrowings and commence
shareholder distributions
Financial summary
26 weeks ended 26 weeks ended 52 weeks ended
2 July 3 July 1 January
2023 2022 2023
Total revenue £93.6m £98.5m £195.7m
Gross profit £71.1m £76.1m £150.6m
EBITDA (note 1) £6.6m £17.8m £31.1m
EBITDA FRS102 (note 2) (£3.8m) £7.1m £11.3m
Loss from operations (£3.8m) (£11.2m) (£91.9m)
Basic loss per share (8.5p) (10.6p) (77.8p)
Net debt (£175.3m) (£176.6m) (£176.3m)
Net bank debt FRS102 (note 3) (£31.3m) (£26.2m) (£27.7m)
Cashflows from operating activities £6.6m £16.2m £28.8m
Notes
1. EBITDA reflects the underlying trade of the business. It is
calculated as statutory operating (loss)/profit adjusted for depreciation, net
interest and bank arrangement fees, impairment, amortisation and share based
charges.
2. Includes £0.3 million of restructuring costs and a further £0.3
million of financing-related charges which are non-recurring in nature.
3. Net bank debt FRS102 is borrowings from bank facilities, excluding
the unamortised portion of loan arrangement fees and leases, less cash and
cash equivalents.
Stephen Welker, Chairman, commented:
"During the period we have undertaken a very thorough review of our cost
structure and store estate. We are pleased that the actions taken have
dramatically improved the financial outlook of the business, thereby keeping
us on the path to repaying all of our borrowings and initiating shareholder
distributions."
Julie McEwan, Chief Executive Officer, commented:
"The initiatives taken in the first half of 2023 have built a leaner and more
focused organisation. As we move through the second half of our financial
year, it is encouraging to see the effects of our strategic and operational
actions coming through in our results. Leveraging our distinctive, trusted
brand as the home of celebrations, our teams are passionate and committed
about delivering an exceptional TGI Fridays guest experience. Notwithstanding
the challenges facing the sector, the early success of our turnaround
programme enables us to look to the future with confidence. The leadership
team we have in place is focused on building a platform for future growth and
shareholder returns, with the Group well placed for the remainder of 2023 and
in the years ahead."
Results webcast
Stephen Welker (Chairman), Julie McEwan (Chief Executive Officer), and Matthew
Bibby (Interim Chief Financial Officer) will be hosting a webcast with a live
Q&A for investors and analysts at 10:00am on Monday, 2 October 2023. The
presentation relating to this webcast will be made available shortly after 7am
on Friday 29 September 2023 on the Company's website at
www.hostmoregroup.com/results-reports-presentations
(https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.hostmoregroup.com%2Fresults-reports-presentations&data=05%7C01%7CAndrew.Blurton%40hostmoregroup.com%7C94cb0caff8b34bd678f508dbc03badd6%7C86ae7907026b4c0ea860bb91e4fc901d%7C0%7C0%7C638315134767789652%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=gPRb2My7%2FFz96c5WTG2uBeSxhd%2BNFhzMzQjC%2Bl%2BevdY%3D&reserved=0)
.
The attendee links and conference call details for the webcast are detailed
below:
Webinar Registration Link:
https://us02web.zoom.us/webinar/register/WN_XaU4GgnCQySDXYxKaEPLBA
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fus02web.zoom.us%2Fwebinar%2Fregister%2FWN_XaU4GgnCQySDXYxKaEPLBA&data=05%7C01%7CAndrew.Blurton%40hostmoregroup.com%7Cbf6873824d9d4b334a0108dbc045168e%7C86ae7907026b4c0ea860bb91e4fc901d%7C0%7C0%7C638315175207687711%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=3Y%2FYCzMYTmqdWGOX46%2FUmExd2IuUf0B8wpH723c2PNY%3D&reserved=0)
Webinar ID: 848 6657 1023
Conference Call: 0203 769 6819
Conference Code: 592967
ENDS
Enquiries
Hostmore plc Matthew Bibby, Interim Chief Financial Officer
Tel: +44 (0)330 460 5588
Email: enquiries@hostmoregroup.com (mailto:enquiries@hostmoregroup.com)
Dentons Global Advisors Jonathon Brill, James
Styles
Tel: +44 (0)20 7664 5095
Email: Hostmore@dentonsglobaladvisors.com
Business review
Overview
During the first half of the year, trading conditions remained challenging
across the leisure and hospitality industry, impacting our financial
performance. We have however started to see early signs of progress from our
strategic and operational initiatives as we have moved into the second half of
the Group's financial year.
Whilst there remains much to progress, it is clear that TGI Fridays is a
highly recognised brand with a rich heritage. We are broadening our guest
appeal beyond our core families demographic, becoming a destination of choice
for guests from all walks of life seeking a celebratory experience, be that
office functions, birthday parties, promotions, pre-wedding parties, or many
other occasions.
As a Group, we are focused on delivering an improved performance from our core
TGI Fridays estate, divesting unprofitable sites where the opportunity arises,
reducing costs, prioritising debt reduction and executing on controlled,
measurable organic growth initiatives that support our objective of building a
platform for future growth and shareholder returns.
Operational review
On a like-for-like basis, adjusted for the impact of the lower VAT rate in the
equivalent period last year, our revenue performance was 2% lower than 2022,
partly offset by higher average spend per head. The warm weather in June
impacted footfall into our restaurants, given our estate's limited outdoor
space and with our core family market spending time outdoors and entertaining
at home. We are examining ways to differentiate TGI Fridays' offering with new
initiatives, such as our 'Raising the Bar' project, to ensure that we
diversify our appeal across a broader range of customers enabling us to
improve sales volumes when the weather is warmer.
The first half year of 2023 delivered a negative EBITDA FRS102 of £3.8m in
comparison to a positive £7.1m for the same period in 2022. H1 2023 was
adversely impacted in comparison by the reduced VAT rate to 12.5% for the
first quarter of 2022, grants issued by the Government in the same period and
rent concessions received from landlords. In addition, during H1 2023, we
experienced some comparative volume decline. Inflationary pressures continued
to impact the Group during the period, though we took disciplined action on
controlling costs and margin by implementing menu price increases, which to
some extent mitigated the impact of these higher input costs. Encouragingly,
the significant inflationary pressures we saw in the first half are now
starting to moderate and, with the majority of the Group's EBITDA typically
earned in the second half of the year, our focus is on maintaining the balance
between delivering an improved margin whilst at the same time continuing to
ensure value for our customers.
Reducing Group debt continues to remain a priority as we move into the second
half of the year. Net debt at the end of H1 2023 of £31.3m was better than
our guidance of £32.2m in what is the less profitable half of the Group's
financial year. The period also included the one-off cost impact from
exceptional cost saving actions which will be cash positive to the Group in H2
2023 and the future.
Strategy
At the time of our full year results in April 2023, we announced two elements
of a cost reduction programme (with a combined annualised value of £5.9m) to
drive productivity and put the Group on a more sustainable footing, alongside
a revised capital allocation policy that prioritises debt reduction and
shareholder returns over new site expansion. Having identified further
savings, I am pleased to confirm that we have now increased the annualised
value of the cost reduction programme from £5.9m to £8.2m.
Although still early, we are already seeing the impact of our initiatives
across the business. Our cost reduction actions are expected to benefit FY
2023 results in aggregate by £5.8m, a further increase from the £4.0m
previously announced.
We review all opportunities to improve the Group's financial results. Included
within these is the continued implementation of our digital transformation
strategy in H2 2023 and FY24. As part of our multi-channel strategy, the Group
is experiencing an improved conversion rate on the new TGI Fridays website
which was launched on 31 May 2023. The second phase of the digital
transformation process will result in the integration of the TGI Fridays
rewards app into the Group's wider digital infrastructure, making it simpler
for our consumers to redeem offers, such as our Stripes rewards scheme. We
will explore further opportunities to drive higher customer lifetime values,
in addition to cost savings and organic initiatives, such as promotional
activity and a renewed focus on upselling to drive sales.
App users are highly attractive customers, typically spending £209 per annum
(inclusive of VAT), compared to £79 per annum for a non-app user. We have
been encouraged by the number of sign-ups as we look to make further progress
with this channel.
The Group has committed not to make any new restaurant openings in FY23 and
FY24. As part of our proactive focus on managing costs and closing
unprofitable sites, we exited our loss-making TGI Fridays restaurant at
Manchester Piccadilly in May. Post period end, the Group exited its
loss-making 63rd+1st restaurant in Edinburgh. A non-cash impairment of £1.4m
of its property, plant and equipment and right of use assets has been
recorded. The effect of these two closures is that their combined negative
annual EBITDA of £0.5m will now no longer feature in our results, making a
further positive contribution to our H2 2023 results and those of future
years. The Group will continue to evaluate opportunities to exit other
loss-making restaurants. In addition, initiatives are being implemented to
improve the performance of loss-making restaurants that are retained due to
their existing lease length and we have achieved major improvements in many of
these.
Enhancing the guest experience
Our disciplined approach to capital allocation has also enabled management to
focus investment on high ROI organic growth initiatives; measures that we have
trialled previously, that have attractive cash conversation characteristics
and that are scalable.
Encouragingly, we have continued to see a sustained uplift in guest
satisfaction metrics at TGI Fridays during H1 2023, with our Net Promoter
Score up to 47 (FY 2022: 30) and our Guest Opinion Score up to 79 (FY 2022:
74). Meanwhile our TripAdvisor rating remained resilient at 4.5 (FY 2022:
4.5). Our teams are passionate in delivering the customer experience and in
particular our three key elements, speed of service, food quality and guest
interaction, which in turn secures repeat visits.
These figures demonstrate that TGI Fridays remains a trusted brand in
attractive locations, with the organic growth initiatives we now have in place
having a positive impact on our guest experience. Our ability to segment
different customer cohorts within our sites enables us to appeal to a broad
mix of guests, delivering a great experience, whatever the occasion. Our price
increases helped to offset inflationary pressures and will enable us to
increase our food and drink margins, demonstrating the pricing power within
the business. At the same time, we delivered compelling value offers for
customers, such as our kids eat free initiative that ran throughout the August
school holiday, post-period end, ensuring that a strategic approach was taken
to rewarding our guests.
Our 'Raising the Bar' initiative has been successfully implemented, yielding
positive early results. Our "2 for 1" cocktail pricing was trialled at six
restaurants in early 2023. Having since been rolled out across all our TGI
Fridays restaurants, we have seen drinks revenues increasing in total and as a
proportion of total restaurant takings. Over the period, sales of cocktails,
which have a net positive impact on Group margins, increased from an average
of 35,000 per week in H1 2022, to an average of 46,000 in H1 2023, with a peak
of 61,000 per week during this period. We see good potential for further
bar-focused revenue opportunities, driven by our interactive Cocktail
Masterclasses and Bottomless Brunches, both of which performed well and have
had a positive impact in revenue and margins.
Optimising our supply chain
Our active focus on managing the Group's cost base enabled us to mostly offset
the inflationary pressures that impacted all hospitality businesses in 2023.
We achieved meaningful success by changing some suppliers with a resultant
improvement in our cost by reference to general market prices.
As reported previously, we kept out of the hedging market for gas and
electricity during H2 2022 and benefitted from the reduction in wholesale
prices from August 2022 and into H1 2023. We commenced our utilities hedging
programme in May 2023 and have now hedged 75% of our remaining FY23 usage of
gas and electricity.
People
Our people are integral to the success of the Group and recruiting, retaining
and providing the right environment for our people to excel is of the utmost
importance. We aim to provide rewarding careers for those in the hospitality
industry. It has been pleasing to see the success of our Aspire High Potential
Development programme, which seeks to develop leading talent for the further
progression of our business.
Our Aspire programme has so far supported five delegates in our first cohort
in their promotion to more senior roles within the business. The eight
delegates in our second cohort have commenced the course this year and they
will undertake a programme of leadership development over a six month
period.
In October, we are launching a programme of leadership development across our
restaurants and Support Centre which will be supported by the introduction of
our Ignite programme. This programme is targeted at more junior aspiring
leaders in our business and will provide learning opportunities that will
further support and enhance our succession planning. We continue to align our
internal programmes with the National Apprenticeship Programme.
Our Learning Management System continues to evolve with the introduction of
career pathways in development. We are seeing greater levels of engagement
in usage of this tool given that it provides 24/7 access to engaging learning
content. It also aligns strongly with the expectations of our changing
workforce.
We recognise, as a consumer facing business, that the heightened cost of
living continues to have a tangible impact on our people. In order to mitigate
some of these pressures, we are in the process of launching 'Wagestream', an
online financial wellbeing platform which gives team members early access to
wages when needed.
Last year's people survey on performance, focused amongst other areas on the
team member /manager relationship, culture and values and an overall view of
the business performance. The result of this was that the Group subsidiary
that employs almost the entire workforce was accredited as a "Great Place to
Work" which was a major accolade for the Group as a whole. We will be
conducting regular pulse surveys to gauge the thoughts, views and opinions of
our people.
I would like to pay tribute to all of our hardworking team members for their
ongoing efforts, their commitment, professionalism and dedication to
delivering an exceptional experience for our guests.
Leadership
During the half year ended 2 July 2023, we made a number of appointments to
strengthen the Board of Directors. I was delighted to have been appointed
permanent CEO in May 2023, having been in the business since February 2022 and
Interim CEO from early January 2023. We also welcomed Stephen Welker as
Chairman at the conclusion of the AGM in June, having already been a
Non-Executive Director of the Company since August 2022. The appointments in
June 2023 of Helena Feltham and Célia Pronto as Non-Executive Directors have
further strengthened and diversified the Board and they bring valuable
expertise to the Group.
Post-period end, Alan Clark resigned as an Executive Director and as Chief
Financial Officer. Matt Bibby was appointed as Interim Chief Financial Officer
in September 2023, having previously held the role of Finance Director of
Hostmore and having been in the business since 2019.
The Board now contains a good mix of experience, skills and sector expertise,
enabling us to be well placed to deliver on our business objectives.
Current trading and outlook
The initiatives taken in the first half of 2023 have built a leaner and more
focused organisation. In particular, the actions taken have reduced costs, as
we have adopted a much tighter capital allocation policy and put in place a
diversified array of organic growth measures. The effects of these initiatives
are already coming through in our results. Our LFL revenue in H2 2023 to 24
September is already +2% versus H2 2022.
We continue to evaluate a number of measures relating to costs and
productivity. Notwithstanding the challenges facing the sector, we look to the
future with confidence, with some of the inflationary pressures in the first
half already beginning to ease. Leveraging our distinctive, trusted brand as
the home of celebrations, we remain focused on quality, relevance and
simplicity, as well as delivering an exceptional TGI Fridays guest experience.
These factors mean we are well placed for the remainder of 2023 and in the
years ahead.
Julie McEwan
Chief Executive Officer
29 September 2023
Financial review
Introduction
The results for the 26 week period ended 2 July 2023 reflect the swift and
purposeful review of the Group's short-term strategy that was referred to in
our Annual Report for the 52 week period ended 1 January 2023. These actions
have strengthened the cashflow of the Group and improved the structure of the
balance sheet. The key elements of this strategy are reflected in greater
detail within this report. The resultant improvement in our operations arising
from this strategy has positioned the Group to be cash generative in this
current year and going forwards.
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 for the 52
weeks ended 1 January 2023.
Trading results
The Group's trading results for the 26 weeks ended 2 July 2023 are summarised
below:
26 weeks ended 26 weeks ended 52 weeks ended
2 July 3 July 1 January
2023 2022 2023
Total revenue £93.6m £98.5m £195.7m
Gross profit £71.1m £76.1m £150.6m
EBITDA (note 1) £6.6m £17.8m £31.1m
EBITDA FRS102 (note 2) (£3.8m) £7.1m £11.3m
Loss from operations (£3.8m) (£11.2m) (£91.9m)
Basic loss per share (8.5p) (10.6p) (77.8p)
Net debt (£175.3m) (£176.6m) (£176.3m)
Net bank debt FRS102 (note 3) (£31.3m) (£26.2m) (£27.7m)
Cashflows from operating activities £6.6m £16.2m £28.8m
Notes
1. EBITDA reflects the underlying trade of the business. It is
calculated as statutory operating (loss)/profit adjusted for depreciation, net
interest and bank arrangement fees, impairment, amortisation and share based
charges.
2. Includes £0.3 million of restructuring costs and a further £0.3
million of financing-related charges which are non-recurring in nature.
3. Net bank debt FRS102 is borrowings from bank facilities, excluding
the unamortised portion of loan arrangement fees and leases, less cash and
cash equivalents.
Strategic direction
In the Annual Report for the 52 week period ended 1 January 2023, the Board
outlined a change in the Group's capital allocation policy. In particular,
this included a pause on expansionary capital expenditure for two years and
the implementation of a clearly defined cost saving strategy. The effect of
these is that the cash generation of the business has been significantly
improved. This in turn enables an acceleration of debt reduction and resultant
enhancement of shareholders' net worth and financial returns.
The cash benefits of the reduction in capital expenditure and the cost saving
strategy are being delivered in line with the Board's expectations. In
addition, the cost savings initiatives implemented during this first half will
have a more substantial impact on cashflow and earnings in the second half of
the year and are mostly of a permanent nature which underpins the Board's
future cashflow and profit expectations.
Financial update
The 26 week period ended 2 July 2023 includes the continuing effect of
macro-economic factors which impacted the sector during the previous financial
year. These include:
· CPIH inflation of 6.3% at the reporting date, which impacts both the
Group's input costs and customer's disposable income.
· Interest rates, with the Bank of England base rate of 5.0% at the
period end of 2 July 2023 and 5.25% at the date of this report. This key rate
has continued to increase as the Bank seeks to reduce the rate of inflation.
· Utilities pricing, which remains materially above the historic
10-year trend and is likely to remain volatile until geo-political factors are
resolved.
The resultant impact is reflected by changes in how our customers are managing
their disposable income, which includes a reduced frequency of dining out and
a greater awareness of the value concept.
For TGI Fridays, the brand has a strong level of awareness in the marketplace
and we have continued to improve our guest opinion scores. During the period
ended 2 July 2023, we have implemented some price increases which are having a
beneficial impact as we progress in the second half of the year. A combination
of declining inflation, improved margins due to pricing, and any improvement
in demand is forecast by the Board to have a positive impact on the Group's
cash generation.
The cost savings initiative implemented in the first half of 2023 has
progressed in line with expectations. The previously announced savings of
£4.0m for 2023 are now expected to be £5.8m for 2023 as additional
opportunities have been identified and changes made. The impact on positive
cashflow is expected to be more evident during this second half of 2023 as the
initiatives are more fully realised and represent permanent monthly savings.
The material impact of utilities input costs has started to recede. The
decision by the Board to not enter into hedging contracts during the first
half of 2023 has been beneficial as prices have reflected a steady decline
since the beginning of the year. With the guidance of our energy brokers, the
Group has recently undertaken a programme of hedging both our gas and
electricity supplies to reflect a level of 75% of anticipated demand for the
remainder of the current financial year. A longer-term strategy is planned for
the Group's utility requirements from January 2024 onwards, in conjunction
with the execution of new supplier contracts.
Post period end, the Group exited its loss-making 63rd+1st restaurant in
Edinburgh. A non-cash impairment of £1.4m of its property, plant and
equipment and right of use assets has been recorded. The effect of this
closure is that the annual negative EBITDA of £0.3m arising from this
restaurant will now no longer feature in our results, making a further
positive contribution to our H2 2023 results and those of future years. No
other impairments were required at the half year end, reflecting the
improvement in financial performance of the business referred to above.
EBITDA for the period ended 2 July 2023
The Board measures its business performance under the FRS102 basis of lease
accounting which is consistent with prior years. The first half year of 2023
delivered a negative EBITDA FRS102 of £3.8m in comparison to a positive
£7.1m for the same period in 2022. H1 2023 was adversely impacted in
comparison to the prior year by the reduced VAT rate to 12.5% for the first
quarter of 2022, grants issued by the Government in the same period and rent
concessions received from landlords. In addition, during H1 2023, we
experienced some comparative volume decline and the additional cost of
utilities inflation in comparison to H1 2022. As referred to above,
projections for H2 2023 are positive as all of the above comparators unwind,
we implemented a major cost saving programme in April 2023 and we have
implemented price increases in Q2 and Q3 enhancing bottom line returns.
Under the IFRS16 basis of lease accounting, the Group delivered EBITDA of
£6.6m (HY 2022: £17.8m) as reflected in these financial statements. The
basic loss per share is 8.5p (HY 2022: loss 10.6p).
EBITDA
26 weeks ended 26 weeks 52 weeks ended
2 July ended 1 January
2023 (unaudited) 3 July 2023
£'000 2022 (audited)
(unaudited) £'000
£'000
Loss before tax (10,846) (17,089) (104,345)
Net interest payable and bank arrangement fees 7,080 5,934 12,478
Depreciation 8,885 10,895 20,339
Net impairment of property, plant and equipment 1,364 17,806 31,179
and right of use assets
Impairment of goodwill - - 70,858
Share based payment charge 102 254 581
EBITDA 6,585 17,800 31,090
EBITDA FRS102
26 weeks ended 26 weeks 52 weeks ended
2 July ended 1 January
2023 (unaudited) 3 July 2023
£'000 2022 (audited)
(unaudited) £'000
£'000
EBITDA 6,585 17,800 31,090
Less rent paid to lessors (10,424) (10,823) (19,931)
Add rent received from subleases 10 164 101
EBITDA FRS102 (3,829) 7,141 11,260
Cash flow and net debt
The Group's consolidated statement of cash flows and movement in debt for the
26 weeks ended 2 July 2023 is summarised below:
26 weeks ended 26 weeks ended 52 weeks ended
2 July 3 July 1 January
2023 2022 2023
£'000 £'000 £'000
Net cash from operating activities 12,980 4,882 19,978
New store openings and purchase of other fixed assets (3,151) (4,956) (10,241)
Net cash used in financing activities (9,093) (20,856) (32,726)
Net increase/(decrease) in cash in period 736 (20,930) (22,989)
Net cash at start of period 9,091 32,080 32,080
Net cash at end of period 9,827 11,150 9,091
Gross bank debt at start of period 36,800 44,300 44,300
Loans drawn 15,000 - 10,500
Loans repaid (10,700) (7,000) (18,000)
Gross bank debt at end of period 41,100 37,300 36,800
Net bank debt 31,273 26,150 27,709
The £3.6m increase in the net debt since 1 January 2023 reflects the payment
of new store opening costs for Barnsley and Durham which opened in November
and December 2022 respectively and the impact of a greater than 2% increase in
interest rate incurred during the period. It is nevertheless lower by £0.9m
than the guidance of £32.2m given at the time of announcement of our results
for the 52 weeks ended 1 January 2023, reflecting the tight control maintained
on Group cash.
New capital expenditure for the 26 weeks ended 2 July 2023 and since the
period end has been limited to the maintenance of the estate and the
development of a new TGI Fridays website. The new website went live on 31 May
2023 and improves our interaction with guests and enables restaurant
reservations to be much more straightforward.
Financing and refinancing
On 28 April 2023, the Group signed a restated bank facility agreement with its
lending banks. Under the terms of that agreement, certain covenants in the
previous facility agreement were amended to align with the Group's two year
forward forecasts. In addition, the previous requirement for the Group to
maintain a minimum cash balance of £12.5m was reduced to £1.5m, thereby
reducing interest costs on undrawn facilities. The new facility comprises a
term loan of £26.1m and a revolving credit facility of £21.5m.
In April 2023 the Board announced that it would undertake a refinancing
process in Q3 2023. This exercise has been commenced with existing and
potential new lenders and is expected to be concluded by the end of Q1 2024.
On 28 September 2023, amongst other things, additional amendments and waivers
to the covenant tests in the Group's banking facility were agreed with the
Group's banks, aligning the facility still further with the Group's forward
forecasts. The restated facility continues with the same level of amortisation
of £1.5m per quarter, with the balance repayable at maturity at the end of
the facility on 1 January 2025.
Going concern
In forming their opinion on the financial statements for the 52 week period
ended 1 January 2023, the auditors' report, which was not modified, considered
the adequacy of the Group's disclosure made in the note to those financial
statements relating to going concern and the Group's and the Company's ability
to continue as a going concern. Based on the Directors' forecasts, under a
severe but plausible downside scenario, the Group was forecast to breach the
monthly cumulative EBITDA covenant and the Net debt to EBITDA ratio covenant
within 12 months from the date of approval of those financial statements, due
to the possible impact of reduced demand following significant energy and cost
of food inflation, which would make the loans repayable on demand. In
addition, in the severe but plausible model, there was uncertainty over the
adequacy of liquidity within 12 months from the date of approval of those
financial statements. These conditions, along with the other matters explained
in the note to the financial statements relating to going concern, indicated
the existence of a material uncertainty. The financial statements did not
include the adjustments that would result if the Group and the Company were
unable to continue as a going concern. The draft financial statements of the
subsidiaries of the Company for the 52 week period ended 1 January 2023, which
have not yet been signed, have similar notes and references to an uncertainty.
In considering the going concern basis of preparation of the interim financial
statements, the Directors took account of significant elements across the
business. These included the cost reduction exercise that commenced in H1
2023, the banking covenants being recently reset with the Group's lending
banks post-period end, the agreement with the franchisor in H1 2023 to defer
all new store opening obligations until FY25, and LFL revenue in H1 2023,
adjusted for the variance in the VAT rate on food sales between H1 2022 and H1
2023, being broadly in line with the comparative period in 2022. The results
of this review have also been underpinned by the implementation of new revenue
initiatives referred to in the Business review above.
The Directors have reviewed the Group's forecasts and underlying assumptions
in detail and monitored actual performance against forecast. They have also
assessed the forecast deliverability of the Group's updated business plan and
the strategies implemented by the Executive Team to deliver forecast results
in the plan. This has enabled the Directors to assess the expected operating
performance and cash availability for the 15 months from September 2023 to
December 2024. This assessment also considered possible adverse effects,
including severe but plausible downside sensitivities of trading and a
worsening rate of profit conversion over the forecast period. The Board
maintains a tight focus on the Group capital allocation policy and all
operating costs, such that both can be reduced further if trading is reduced
to the levels inferred in the severe but plausible downside scenario.
In light of the above, the Directors have continued to adopt the going concern
basis in the preparation of the financial statements.
Principal risks and uncertainties
The management of the business and the execution of the business strategy are
subject to a number of risks. These risks are formally reviewed by the Board
and appropriate processes and controls implemented to monitor and mitigate
them. The key business risks affecting the Group are set out below.
Brand usage risk
The Group's business is dependent on its ability to use the TGI Fridays,
63rd+1st and Fridays and Go brands, which it uses under long term Franchise
Agreements (in the case of the TGI Fridays and Fridays and Go brands) and a
Licence Agreement (in the case of the 63rd+1st brand) entered into with the
Franchisor. The Group relies on the intellectual property rights owned by the
Franchisor and relies on it to protect such rights. The Group's reputation and
the quality of the TGI Fridays, 63rd+1st and Fridays and Go brands are
critical to its business and success. The Group's business could be materially
and adversely affected if the perception of the brands is damaged.
The Board seeks to maintain a strong business relationship with the
Franchisor. The Franchisor's business model depends on the strength of its
brands. It therefore operates and adheres to, and requires its franchisees to
operate and adhere to, systems and standards which seek to safeguard its
brands. The Group adopts and maintains these systems and standards, and, in
certain areas goes beyond these contractual standards.
COVID-19 risk
Another lockdown or pandemic could have a material effect on the business if
the UK Government required restaurants to close or if the UK Government
reintroduced safety measures, such as social distancing.
The Group is focused on ensuring the safety and wellbeing of both its
customers and team members. In previous years, the Group accessed Government
support, negotiated landlord rent concessions and ensured it was able to
reopen rapidly when the environment enabled this. The Group's strategy has
been adapted to ensure the Group is in a strong position to confront similar
restrictions.
UK economic climate
The Group's business is based exclusively in the UK, save for one restaurant
in Jersey, and so is almost exclusively exposed to UK economic conditions and
consumer confidence. Leisure activities may be affected by the performance of
the UK economy, the level of consumer disposable income and customer
confidence to meet in social settings. These factors may continue to be
impacted upon by the cost of living crisis as well as other matters.
The Group operates a multi-channel business, which enables it to earn revenue
through a variety of sources. Measures have been put in place in relation to
the adverse economic climate to try and ensure that cost increases are
mitigated, whilst continuing to offer an attractive proposition to customers.
Competition risk
The Group faces competition from other market participants. The competition
may result in the Group losing custom to other participants or suffering a
reduction in margin. A loss of custom or reduction in margin impacts on the
Group's revenues and profitability.
The Group ensures that it has a compelling offering, which is attractive
relative to its competitor set. The offering is refreshed periodically and
backed up by appropriate marketing to ensure that it retains its appeal. The
Group operates a loyalty programme to ensure that repeat custom is rewarded.
Operational risk
The Group's restaurants have high footfall and high usage, in particular at
peak times. There is a risk that without the right level of ongoing investment
or if the Group ceased to be able to attract sufficient skilled team members
that the quality of the customer experience might decline, impacting the
customer experience and likelihood of return visits.
The Group is committed to promoting its values and fairness in the way that it
pays all team members s in relation to their skills, experience and
performance. The Group has learning and development programmes in place to
enhance team member capabilities and to promote the Group's values and people
retention.
Regulatory changes
The introduction of new laws or regulations which run contrary to the Group's
strategy could have a significant impact on the Group's strategic objectives.
This might result in damage to the Group's brands, and cause reputational
loss, and possible revocation of licences.
The Board regularly considers legal, risk and compliance issues affecting the
Group. Where required, the Group obtains external specialist advice to assess,
scope and plan its responses to changes in laws or regulations. In addition to
complying with applicable laws and regulations, the Board advances procedures
to ensure that the Group continues to behave in a socially responsible manner.
Business interruption risk
A major IT incident could impact the Group's ability to keep trading. Changing
preferences mean that increasingly customers book online, which increases this
risk. There has also been an increase in the level of high-profile
cyber-attacks of other companies in recent years, including on providers of IT
services. This increases the risk that business information could be accessed
by third parties.
The Executive Team manages these risks by maintaining and testing business
continuity plans and establishing remote IT disaster recovery capabilities.
Cyber-security is of great importance to the Group. The Group adopts a
multi-faceted approach to protection through internal and external sources.
The Executive Team also regularly reviews the level of monitoring and threat
protection systems that are in place and enhances these when increases might
be warranted.
Key supplier issues
The Group has a number of key distributors and suppliers that provide its food
and beverage products. Limitations and issues faced by these distributors and
suppliers, such as driver, employee, goods or fuel shortages, escalating
costs, union activity and capacity constraints, could impact the Group's
profitability or ability to offer its customers the level of experience they
would wish.
Meetings are held between the Group and its key distributors and suppliers to
discuss operational issues and mitigating actions. The Group requires certain
of its food and beverage suppliers to adhere to specific additional KPIs.
Failure by a supplier may lead to short-term disruption, although alternative
suppliers could be introduced at relatively short notice. The Group also seeks
to take mitigating actions, such as ensuring that it has adequate stock levels
and transferring stock between restaurants.
Operational risk related to allergens
There have been a number of high-profile incidents across the restaurant
sector related to allergens in food products. These incidents have arisen due
to inadequate awareness, training, communication or flagging of allergen items
included in menus.
The Group reviews all menus and menu changes for allergen-related products and
wording is included on its menus to reflect these items. The Group has robust
assured advice from its primary authority partner in place for allergen
management processes and procedures. These translate into comprehensive
operating practices in its restaurants to manage this risk and to ensure the
Group's guests are safe. Allergen awareness is part of the Group's team member
training programme.
Matthew Bibby
Interim Chief Financial Officer
29 September 2023
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 29 September 2023 and signed on its
behalf by:
Julie
McEwan
Matthew Bibby
Chief Executive
Officer
Interim Chief
Financial Officer
Calculation of key performance indicators and alternative performance measures
The Board uses several key performance indicators ("KPIs") to track the
financial and operating performance of the 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 reported under IFRS. The following
information on KPIs and APMs includes reconciliations to the nearest IFRS
measures where relevant.
Sales
Like-for-like ("LFL") sales measure the performance of the Group on a
consistent year-on-year basis. The table below includes sites that were open
for all of 2022 for comparability and separately includes sites opened since
2022 or subsequently disposed of.
26 weeks ended 26 weeks 52 weeks ended
2 July ended 1 January
2023 3 July 2023
(unaudited) 2022 (audited)
£'000 (unaudited) £'000
£'000
LFL gross of VAT benefit in 2022 90,871 95,849 189,087
Less VAT benefit in 2022 - (2,664) (2,664)
Net LFL 90,871 93,185 186,423
Additions since January 2022 2,668 2,554 6,422
Disposals since January 2022 171 118 359
Deferred revenue provisions (82) (68) (148)
Total net of VAT benefit in 2022 93,628 95,789 193,056
Add VAT benefit in 2022 - 2,664 2,664
Total 93,628 98,453 195,720
In Q1 2022 the VAT rate was lowered to 12.5% before returning to 20% in Q2
2022. The VAT benefit adjustment reflects the benefit received in H1 2022 to
provide fair comparability with 2023 LFL sales.
EBITDA
EBITDA is the Group's earnings before net interest payable and bank
arrangement fees, tax, depreciation, impairment and share based payment
charges.
26 weeks ended 26 weeks 52 weeks ended
2 July ended 1 January
2023 (unaudited) 3 July 2023
£'000 2022 (audited)
(unaudited) £'000
£'000
Loss before tax (10,846) (17,089) (104,345)
Net interest payable and bank arrangement fees 7,080 5,934 12,478
Depreciation 8,885 10,895 20,339
Net impairment of property, plant and equipment 1,364 17,806 31,179
and right of use assets
Impairment of goodwill - - 70,858
Share based payment charge 102 254 581
EBITDA 6,585 17,800 31,090
Calculation of key performance indicators and alternative performance measures
EBITDA FRS102
EBITDA FRS102 is the Group's EBITDA under IFRS adjusted for rent paid to
lessors and rent received from subleases.
26 weeks ended 26 weeks 52 weeks ended
2 July ended 1 January
2023 (unaudited) 3 July 2023
£'000 2022 (audited)
(unaudited) £'000
£'000
EBITDA 6,585 17,800 31,090
Less rent paid to lessors (10,424) (10,823) (19,931)
Add rent received from subleases 10 164 101
EBITDA FRS102 (3,829) 7,141 11,260
Net debt
Net debt calculated in accordance with IFRS16, is the Group's long-term
borrowings (excluding issue costs) and lease liabilities less cash and cash
equivalents at each period end.
2 July 3 July 1 January
2023 (unaudited) 2022 (unaudited) 2023
£'000 £'000 (audited)
£'000
Gross bank loans and borrowings (41,100) (37,300) (36,800)
Lease liabilities (143,984) (150,474) (148,555)
Cash & cash equivalents 9,827 11,150 9,091
Net debt (175,257) (176,624) (176,264)
Net debt FRS102
Net debt calculated in accordance with FRS102, is the Group's long-term
borrowings (excluding issue costs), less cash and cash equivalents at each
period end.
2 July 3 July 1 January
2023 (unaudited) 2022 (unaudited) 2023
£'000 £'000 (audited)
£'000
Gross bank loans and borrowings (41,100) (37,300) (36,800)
Cash & cash equivalents 9,827 11,150 9,091
Net debt (31,273) (26,150) (27,709)
Consolidated statement of comprehensive income for the 26 week period ended 2
July 2023
26 weeks ended 26 weeks ended 52 weeks ended
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) £'000 2023 (audited) £'000
Note
Revenue 93,628 98,453 195,720
Cost of sales (22,534) (22,311) (45,103)
Gross profit 71,094 76,142 150,617
Underlying administrative expenses (73,578) (70,243) (141,152)
Exceptional items 7 - - (70,858)
Administrative expenses (73,578) (70,243) (212,010)
Impairment reversal of property, plant and equipment - - 5,712
and right of use assets
Impairment of property, plant and equipment 12.1 (1,364) (17,806) (36,891)
and right of use assets
Other operating income 82 752 705
Loss from operations (3,766) (11,155) (91,867)
Finance income 8 88 4 78
Finance expense 8 (7,168) (5,938) (12,556)
Loss before tax (10,846) (17,089) (104,345)
Tax (charge)/credit 9 282 3,743 6,801
Loss for the period (10,564) (13,346) (97,544)
Total comprehensive expense (10,564) (13,346) (97,544)
All operations are continuing operations.
There are no amounts recognised within other comprehensive income in the
current or prior periods.
26 weeks ended 26 weeks ended 52 weeks ended
2 July 3 July 1 January 2023 (audited)
2023 (unaudited) 2022 (unaudited)
(Loss)/earnings per share in pence Note
Basic loss per share 10 (8.5) (10.6) (77.8)
Diluted loss per share 10 (8.5) (10.6) (77.8)
Consolidated statement of financial position at 2 July 2023
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) 2023
£'000 (audited)
Note £'000
Assets
Non-current assets
Property, plant and equipment 11 34,774 39,928 36,140
Right of use assets 12 90,383 104,302 94,568
Goodwill 14 75,121 145,979 75,121
Net investment in subleases 89 100 95
Deferred tax assets 9 13,083 10,596 12,801
Total non-current assets 213,450 300,905 218,725
Current assets
Inventories 1,219 1,300 1,464
Trade and other receivables 3,666 7,477 6,285
Current tax assets - - 740
Net investment in subleases 11 83 12
Cash and cash equivalents 9,827 11,150 9,091
Total current assets 14,723 20,010 17,592
Total assets 228,173 320,915 236,317
Liabilities
Non-current liabilities
Loans and borrowings 15 18,224 26,180 23,146
Lease liabilities 13 131,824 135,989 133,261
Provisions 16 5,187 2,352 5,143
Total non-current liabilities 155,235 164,521 161,550
Current liabilities
Trade and other payables 21,207 19,188 18,136
Contract liabilities 974 800 1,004
Current tax liabilities 8 113 -
Loans and borrowings 15 22,181 10,497 13,295
Lease liabilities 13 12,160 14,485 15,294
Provisions 16 307 377 475
Total current liabilities 56,837 45,460 48,204
Total liabilities 212,072 209,981 209,754
Net current liabilities (42,114) (25,450) (30,612)
Net assets 16,101 110,934 26,563
Consolidated statement of financial position at 2 July 2023
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) 2023
£'000 (audited)
Note £'000
Issued capital and reserves attributable
to owners of the Company
Share capital 17 25,225 25,225 25,225
Share premium reserve 14,583 14,583 14,583
Merger reserve (181,180) (181,180) (181,180)
Share based payment reserve 736 307 634
Retained earnings 156,737 251,999 167,301
Total equity 16,101 110,934 26,563
The notes on pages 21 to 36 form part of these financial statements.
The financial statements on pages 17 to 36 were approved and authorised for
issue by the Board of Directors on 29 September 2023 and were signed on its
behalf by:
Julie McEwan Matthew Bibby
Chief Executive Officer Interim Chief Financial Officer
Consolidated statement of changes in equity for the 26 week period ended 2
July 2023
Share premium reserve Share based payment reserve
Share £'000 Merger reserve £'000 Retained earnings Total
capital £'000 £'000 equity
£'000 £'000
At 2 January 2023 25,225 14,583 (181,180) 634 167,301 26,563
Comprehensive expense
for the period
Loss for the period - - - - (10,564) (10,564)
Total comprehensive
expense for the period - - - - (10,564) (10,564)
Contributions by and distributions to owners
Share based payment charge - - - 102 - 102
Total contributions by and distributions to owners
- - - 102 (10,564) (10,462)
At 2 July 2023 (unaudited) 25,225 14,583 (181,180) 736 156,737 16,101
At 3 January 2022 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 3 January 2022 25,225 14,583 (181,180) 53 265,345 124,026
Comprehensive expense
for the period
Loss for the period - - - - (97,544) (97,544)
Total comprehensive
expense for the period - - - - (97,544) (97,544)
Contributions by and distributions to owners
Share purchases by Employee Benefit Trust - - - - (500) (500)
Share based payment charge - - - 581 - 581
Total contributions by and distributions to owners
- - - 581 (500) 81
At 1 January 2023 (audited) 25,225 14,583 (181,180) 634 167,301 26,563
Consolidated statement of cash flows for the 26 week period ended 2 July 2023
26 weeks ended 26 weeks ended 52 weeks ended
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) £'000 2023
(audited) £'000
Note
Cash flows from operating activities 18 6,585 16,169 28,800
Movements in working capital:
Decrease/(increase) in trade and other receivables 2,619 (1,897) (2,415)
Decrease in inventories 245 191 25
Increase/(decrease) in trade and other payables 2,924 (8,303) (8,071)
(Decrease)/increase in provisions and employee benefits (152) (445) 2,391
Cash generated from operations 12,221 5,715 20,730
Corporation taxes recovered/(paid) 748 (858) (857)
Rental income from subleases 11 25 105
Net cash from operating activities 12,980 4,882 19,978
Cash flows from investing activities
Purchases of property, plant and equipment (3,235) (4,956) (10,311)
Interest received 84 - 70
Net cash used in investing activities (3,151) (4,956) (10,241)
Cash flows from financing activities
Repayment of bank borrowings (10,700) (7,000) (18,000)
Payment of loan arrangement fees (810) - -
Receipt of bank borrowings 15,000 - 10,500
Interest paid on bank borrowings (1,344) (892) (2,291)
Share purchases by Employee Benefit Trust - - (500)
Payment of lease liabilities (11,239) (12,964) (22,435)
Net cash used in financing activities (9,093) (20,856) (32,726)
Net cash increase/(decrease) in cash and cash equivalents 736 (20,930) (22,989)
Cash and cash equivalents at the beginning of period 9,091 32,080 32,080
Cash and cash equivalents at the end of the period 9,827 11,150 9,091
Notes to the consolidated financial statements for the 26 weeks ended 2 July
2023
1. Basis of preparation
The Group's consolidated financial statements have been prepared in accordance
with UK-adopted International Accounting Standards and with the requirements
of the Companies Act 2006 as applicable to companies reporting under those
standards.
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 for the 52
weeks ended 1 January 2023. 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 52 weeks ended 1 January
2023.
The information for the 52 weeks ended 1 January 2023 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory financial statements of the Company for that period, prepared
in accordance with International Financial Reporting Standards as adopted by
the European Union (IFRS), has been delivered to the Registrar of Companies.
The auditor's report on those financial statements was unqualified, did not
contain a statement under section 498(2) or (3) of the Companies Act 2006, but
did draw attention to a matter by way of emphasis.
The accounting period of the Group runs to the nearest Sunday at the end of
each half year. The Directors have presented the Group's results and
consolidated interim financial statements for the 26 week period ended 2 July
2023, with the comparative period being the 26 week period ended 3 July 2022.
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
In forming their opinion on the financial statements for the 52 week period
ended 1 January 2023, the auditors' report, which was not modified, considered
the adequacy of the Group's disclosure made in the note to those financial
statements relating to going concern and the Group's and the Company's ability
to continue as a going concern. Based on the Directors' forecasts, under a
severe but plausible downside scenario, the Group was forecast to breach the
monthly cumulative EBITDA covenant and the Net debt to EBITDA ratio covenant
within 12 months from the date of approval of those financial statements, due
to the possible impact of reduced demand following significant energy and cost
of food inflation, which would make the loans repayable on demand. In
addition, in the severe but plausible model, there was uncertainty over the
adequacy of liquidity within 12 months from the date of approval of those
financial statements. The Directors continued to adopt the going concern basis
in preparing those financial statements, and the financial statements did not
include 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. The draft financial statements of the subsidiaries of the Company for
the 52 week period ended 1 January 2023, which have not yet been signed, have
similar notes and references to an uncertainty.
The financial statements for the 26 weeks ended 2 July 2023 have been prepared
on a going concern basis. The impact on consumer confidence of the
inflationary pressures, together with increases in interest rates, increasing
energy costs and supply cost inflation, adversely affected the nature of the
market in which the Group operates. The Board responded proactively to these
changes. The Group's capital allocation policy was re-set to focus on
delivering improved performance from the core TGI Fridays estate, with
substantial improvements to marketing, operating effectiveness and site
management. The Board also negotiated an amendment to the development
agreement with the brand's US Franchisor, resulting in no new site openings
being required during the two years ending 31 December 2024. These actions
have resulted in a material improvement in net cash retention by the Group.
They have also been complemented by a major cost reduction programme and
related working capital enhancement. These improvements commenced in Q1 2023.
All of the above strategies have been reflected in the Group's forecasts for
FY 2023 and 2024.
The banking facilities available to the Group were amended and restated on 28
April 2023 and further amended on 28 September 2023. These amendments
included, amongst other things, the revision and waiver of certain covenants
in line with the Group's Business Plan. These are referred to in more detail
in note 15 to the financial statements. Under the restated facility agreement,
the Group provides increased reporting to the banks. The Group will also not
open any new restaurants during the term of the facility which ensures that
capital expenditure is reduced. Having already successfully implemented a
range of revenue initiatives and a substantial reduction in central costs, the
Board is confident that these actions are resulting in an improvement in cash
generation.
The Group has prepared forecasts of the expected position for the next 15
months from the date of approval of these financial statements, which includes
a severe but plausible downside scenario. The severe but plausible downside
scenario assesses the position in a depressed trading environment and
worsening of performance by the Group's restaurants, with reduced recovery in
H2 2023 and FY 2024. These scenarios are based on the business plan of the
Group but apply a downturn in trading of its restaurants for the remainder of
2023 and throughout 2024. They also model the impact that this would have on
the amended covenants of the Group.
In the Group's forecasts, the Group has sufficient liquidity from its restated
facilities to finance its operations for the next fifteen months to the end of
the facility in January 2025, including compliance by the Group with its
amended banking covenants and debt amortisation as it comes due under the
facility.
The Directors are confident that the business will continue to trade for a
period of at least 15 months following the signing of these financial
statements and therefore that it is appropriate to prepare these financial
statements on a going concern basis. The Directors have continued to adopt the
going concern basis in preparing these financial statements and the financial
statements do not include 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.
4. Accounting policies
These consolidated financial statements have been prepared on a basis
consistent with the accounting policies set out in the Group's financial
statements for the 52 week period ended 1 January 2023.
5. Critical accounting judgements, estimates and assumptions
Judgements, estimates and assumptions are evaluated at each reporting date and
are based on historical experience as adjusted for current market conditions
and other factors. Judgements, estimates and assumptions have been made in
respect of the following:
5.1 Judgements
Goodwill
The Group does not allocate goodwill to individual CGUs. This is because 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. This includes
TGI Fridays, 63rd+1st and Fridays and Go.
Lease term
Several leases of restaurant properties contain extension options or break
clauses. The non-cancellable period and enforceable period are both considered
to be the lease term in the contract in place at the period end, including
leases which have been extended.
Leases for restaurant properties are generally long-term. Due to the nature of
the business, decisions to extend or terminate leases are based on evolving
market dynamics that may create an economic incentive to do so. Therefore, at
the period end there is no reasonable certainty of whether an option to extend
or terminate will be exercised except where hindsight has been used.
Deferred tax asset
The Group has recognised deferred tax assets of £13,083k (HY 2022: £10,596k)
based on all deductible temporary differences on the basis that there will be
future taxable profits. The Group has projected its taxable profits for the
next 48 months and extrapolated these into the future for the purposes of this
assessment, consistent with the projections used for impairment assessment.
This has confirmed that the deferred tax assets recognised will be utilised
within the next 12 years.
5.2 Estimates and assumptions
Goodwill
The Group tests all cash generating units ("CGUs") for impairment at each
reporting date on a value-in-use basis. Where a CGU is considered impaired,
its carrying value is reduced to its recoverable amount. The value-in-use
calculations are based on future projected cashflows of the operating
business, over the life of the leases, with management assuming profitable
stores' leases will be extended and therefore projected into perpetuity,
discounted back using a pre-tax discount rate of 15.8%.
If the combined carrying amount of the CGUs and goodwill is higher than the
recoverable amount of the group of all CGUs, the residual impairment losses
are allocated to goodwill.
Impairment
The Group performs an impairment assessment at the end of each reporting
period. For this purpose, each restaurant in the Group is considered a
separate CGU. An impairment charge is recognised where the recoverable amount
is less than the carrying value of the RoU assets of the CGU. The recoverable
amount is based on value-in-use calculations, using discounted forecasted
cashflows and each restaurant's ability to cover its costs, including an
allocation of central overheads, marketing and maintenance standards of
assets. An impairment charge is not recognised where the assets have been
trading for less than 12 months at the reporting date.
The recoverable amount is based on value-in-use calculations with cash flow
projections over the lease term of each restaurant. This uses the Group's
updated 2023 budget and the business plan growth rate for the next two years,
applying a long-term growth rate of 2% per annum. The discount rate applied in
the value-in-use calculations is by reference to the Group's weighted average
cost of capital and similar benchmarks in the industry. A pre-tax discount
rate of 14.2% (HY 2022: 12.3%) has been applied in the value-in-use
calculations.
6. Segment information
The Group's reportable segments are all under the TGI Fridays brand. 63rd+1st
and Fridays and Go are aggregated with TGI Fridays in internal reporting and
are therefore not a separate reportable segment under IFRS 8 (Operating
Segments). 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 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. Exceptional items
Exceptional items are those items that, by virtue of their unusual nature or
size, warrant separate, additional disclosure in the financial statements to
fairly assess the underlying performance of the Group.
Included within the loss from operations in the 52 weeks ended 1 January 2023
were items which are considered to be exceptional in nature. These are as
follows:
26 weeks ended 26 weeks 52 weeks
2 July ended ended
2023 (unaudited) 3 July 1 January
£'000 2022 2023
(unaudited) (audited)
£'000 £'000
Impairment of goodwill (note 14) - - 70,858
8. Finance income and expense
26 weeks ended 26 weeks 52 weeks
2 July ended ended
2023 (unaudited) £'000 3 July 1 January
2022 (unaudited) 2023
£'000 (audited)
£'000
Finance income
Interest receivable on net investment in subleases - 4 -
Other interest receivable 88 - 78
Total finance income 88 4 78
Finance expense
Bank interest payable 1,846 829 2,569
Amortisation of loan arrangement fees 474 254 209
Interest on lease liabilities 4,819 4,827 9,726
Other interest payable - 28 -
Unwinding of discount on provisions 29 - 52
Total finance expense 7,168 5,938 12,556
9. Tax (charge)/credit
9.1 Tax (charge)/credit recognised in consolidated statement of comprehensive
income
26 weeks ended 26 weeks 52 weeks
2 July ended ended
2023 (unaudited) £'000 3 July 1 January
2022 (unaudited) 2023
£'000 (audited)
£'000
Corporation tax (charge)/credit
Current tax charge on profits for the period - (661) -
Adjustments in respect of prior periods - - 192
Total corporation tax (charge)/credit - (661) 192
Deferred tax (charge)/credit
Origination and reversal of timing differences 282 4,404 4,842
Adjustments in respect of prior periods - - 27
Change in future tax rate - - 1,740
Total deferred tax credit 282 4,404 6,609
Tax credit for the period 282 3,743 6,801
9.2 Deferred tax assets
Deferred tax assets in the consolidated statement of financial position arose
as follows:
Recognised
in consolidated statement of comprehensive income
£'000
2 January 2023 2 July
£'000 2023
£'000
Deferred tax assets in relation to:
Property, plant and equipment differences 3,111 (492) 2,619
Other temporary differences 76 - 76
Losses carried forward 228 474 702
Deferred tax arising from leases 9,386 300 9,686
Total deferred tax assets 12,801 282 13,083
Recognised
in consolidated statement of comprehensive income
£'000
3 January 3 July
2022 2022
£'000 £'000
Deferred tax assets in relation to:
Property, plant and equipment differences 1,970 591 2,561
Other temporary differences 71 - 71
Deferred tax arising from leases 4,151 3,813 7,964
Total deferred tax assets 6,192 4,404 10,596
Recognised
in consolidated statement of comprehensive income
£'000
3 January 2022 1 January 2023
£'000 £'000
Deferred tax assets in relation to:
Property, plant and equipment differences 1,970 1,141 3,111
Other temporary differences 71 5 76
Losses carried forward - 228 228
Deferred tax arising from leases 4,151 5,235 9,386
Total deferred tax assets 6,192 6,609 12,801
10. (Loss)/earnings per share
26 weeks ended 26 weeks 52 weeks
2 July ended ended
2023 (unaudited) 3 July 1 January
2022 2023
(unaudited) (audited)
Basic loss per share
Weighted average outstanding number of shares ('000) 124,734 126,127 125,427
Loss after tax for the period (£'000) (10,564) (13,346) (97,544)
Basic loss per share (pence) (8.5) (10.6) (77.8)
Diluted loss per share
Weighted average outstanding number of shares ('000) 124,734 126,127 125,427
Dilutive shares ('000) - - -
124,734 126,127 125,427
Loss after tax for the period (£'000) (10,564) (13,346) (97,544)
Diluted loss per share (pence) (8.5) (10.6) (77.8)
11. Property, plant and equipment
Leasehold
property improvements £'000 Plant and machinery Fixtures and
£'000 Fittings Total
£'000 £'000
Cost
At 2 January 2023 (audited) 9,874 54,590 95,669 160,133
Additions - 1,946 1,135 3,081
Disposals - (225) (649) (874)
At 2 July 2023 (unaudited) 9,874 56,311 96,155 162,340
Accumulated depreciation and impairment
At 2 January 2023 (audited) 9,874 46,550 67,569 123,993
Depreciation charge for the period - 1,517 2,292 3,809
Impairment charge for the period - - 632 632
Disposals - (225) (643) (868)
At 2 July 2023 (unaudited) 9,874 47,842 69,850 127,566
Net book value
At 2 July 2023 (unaudited) - 8,469 26,305 34,774
At 3 July 2022 (unaudited) - 7,457 32,471 39,928
At 1 January 2023 (audited) - 8,040 28,100 36,140
12. Right of use assets
Motor
Property £'000 vehicles Total
£'000 £'000
Cost
At 2 January 2023 (audited) 171,614 262 171,876
Additions and modifications 2,993 - 2,993
Disposals (1,370) - (1,370)
At 2 July 2023 (unaudited) 173,237 262 173,499
Accumulated depreciation and impairment
At 2 January 2023 (audited) 77,058 250 77,308
Depreciation charge for the period 5,065 11 5,076
Impairment charge for the period 732 - 732
At 2 July 2023 (unaudited) 82,855 261 83,116
Net book value
At 2 July 2023 (unaudited) 90,382 1 90,383
At 3 July 2022 (unaudited) 104,274 28 104,302
At 1 January 2023 (audited) 94,556 12 94,568
12.1 Impairment losses recognised in property, plant and equipment and right
of use assets in the period
The Group performs an impairment assessment at the end of each reporting
period. For the purposes of impairment of property, plant and equipment and
right of use assets, each restaurant in the Group is considered a separate
cash generating unit ("CGU"). An impairment charge is recognised when the
recoverable amount is less than the carrying value of the property, plant and
equipment and right of use assets. Where there is an indication that an
impairment loss recognised in prior periods no longer exists, the impairment
loss is reversed and credited to the consolidated statement of comprehensive
income.
The recoverable amount is based on value-in-use calculations, using discounted
forecasted cashflows of each restaurant and its ability to cover its costs,
including an allocation of central overheads, marketing and maintenance
standards of assets. The recoverable amount is assessed over the lease term of
each restaurant, using the Group's updated budget for 2023, applying a
long-term growth rate of 2%. The discount rate applied in the value-in-use
calculations is by reference to the Group's weighted average cost of capital
and similar benchmarks in the industry. A pre-tax discount rate of 14.2% (HY
2022: 12.3%) has been applied in the value-in-use calculations.
The Directors have assessed the carrying value of property, plant and
equipment and right of use assets at the period end by reference to the
Group's updated business plan and the interest rates now prevailing. Post
period end, the Group exited its loss-making 63rd+1st restaurant in Edinburgh.
A non-cash impairment of £1,364k of its PPE and RoU assets has been recorded
in the results to 2 July 2023. No other impairments were required during the
half year ended 2 July 2023 (HY 2022: £17,806k).
Sensitivities to impairment charges
The key assumptions in the calculation of impairment of property, plant and
equipment and right of use assets are the predicted cashflows of the CGUs and
the discount rate applied. The Group has conducted a sensitivity analysis
taking into consideration the impact of key impairment test assumptions
arising from a range of reasonably possible trading and economic scenarios.
The reasonably possible effect on impairment of property, plant and equipment
and right of use assets for a 2% absolute change in the discount rate or a 10%
variation in EBITDA, with all other variables held constant is as follows:
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) 2023
£'000 (audited)
£'000
Discount rate - 2% increase 2,994 1,894 3,113
Discount rate - 2% decrease (3,145) (1,933) (2,541)
EBITDA - 10% increase (4,230) (2,741) (3,926)
EBITDA - 10% decrease 4,842 3,320 4,738
13. 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 team members. These have all been recognised as
right of use assets in the consolidated statement of financial position.
Lease liabilities are due as follows:
2 July 3 July 1 January
2023 2022 (unaudited) 2023 (audited)
(unaudited) £'000 £'000 £'000
Contractual undiscounted cash flows due
Not later than one year 20,757 19,763 20,925
Between one year and five years 81,670 80,357 80,764
Later than five years 99,868 112,215 104,673
Total contractual undiscounted cash flows 202,295 212,335 206,362
Contractual discounted cash flows of lease liabilities
Non-current 131,824 135,989 133,261
Current 12,160 14,485 15,294
Total lease liabilities 143,984 150,474 148,555
The contractual cash flows of lease liabilities have been discounted by
applying an appropriate incremental borrowing cost for each lease, depending
on the remaining lease term ranging from 2% for leases with shorter terms to
7.5% for leases with longer terms.
14. Goodwill
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) 2023 (audited)
£'000 £'000
Cost
Opening and closing balance 155,284 155,284 155,284
Accumulated impairment
Opening balance 80,163 9,305 9,305
Impairment charge for the period - - 70,858
Closing balance 80,163 9,305 80,163
Net book value 75,121 145,979 75,121
The Directors consider that the TGI Fridays brand is the sole cash generating
unit of goodwill as it cannot be allocated to individual restaurants on a
non-arbitrary basis. The Group continues to assess goodwill for impairment at
each reporting date. No impairment charge has been necessary for the 26 weeks
ended 2 July 2023 as the value-in-use calculations support the net book value
of all assets, goodwill, property, plant and equipment and right of use
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 a pre-tax discount rate
of 15.8%.
Sensitivities to impairment charges
The key assumptions in the impairment calculation of goodwill are the
predicted cashflows of the CGUs and the discount rate applied. The Group has
conducted a sensitivity analysis taking into consideration the impact of key
impairment test assumptions arising from a range of reasonably possible
trading and economic scenarios. The reasonably possible effect on impairment
of goodwill for a 2% absolute change in the discount rate or a 10% variation
in EBITDA, with all other variables held constant is as follows:
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) 2023
£'000 (audited)
£'000
Discount rate - 2% increase 4,507 1,894 3,113
Discount rate - 2% decrease - (1,933) (2,541)
EBITDA - 10% increase - (2,741) (3,926)
EBITDA - 10% decrease 2,135 3,320 4,738
15. Loans and borrowings
2 July 3 July 1 January
2023 (unaudited) £'000 2022 (unaudited) £'000 2023 (audited) £'000
Secured bank loans and borrowings
Non-current 18,224 26,180 23,146
Current 22,181 10,497 13,295
Total secured bank loans and borrowings 40,405 36,677 36,441
Movement of Loans
2 July 3 July 1 January
2023 2022 (unaudited) £'000 2023
(unaudited) (audited)
£'000 £'000
Opening balance 36,441 43,422 43,422
Loans drawn down 15,000 - 10,500
Loans repaid (10,700) (7,000) (18,000)
Amortisation of loan arrangement fees 474 255 209
Loan arrangement fees waived - - 325
Loan arrangement fees incurred in period (810) - (15)
Closing balance 40,405 36,677 36,441
The Group completed an extension and restatement of the bank loan facilities
on 28 April 2023. The restated facility agreement consists of a £24.6m term
loan and a £21.5m revolving credit facility, with a term date of 1 January
2025. Arrangement fees of £0.8m were incurred in respect of this refinancing
exercise. At the period end, £16.5m had been drawn on the revolving credit
facility.
On 28 September 2023, amongst other things, additional amendments and waivers
to the covenant tests in the Group's banking facility were agreed with the
Group's banks, aligning the facility still further with the Group's forward
forecasts.
The Group's loans are denominated in pounds sterling. There is no foreign
exchange risk on the Group's loan arrangements. The carrying value of loans
and borrowings classified as financial liabilities are measured at amortised
cost, which approximates to their fair value. The balances at the period end
are summarised below:
2 July 3 July 2 January
2023 (unaudited) £'000 2022 2022
Nominal interest Date of maturity Repayment (unaudited) (audited)
Loan Facility rate schedule £'000 £'000
Secured bank loan Margin plus compound reference rate based on 1 January 2025 £1.5m per 41,100 37,300 36,800
SONIA quarter from
June 2022, with balance on maturity
Unamortised loan arrangement fees
(695) (623) (359)
40,405 36,677 36,441
15. Loans and borrowings (continued)
During the 26 week period ended 2 July 2023 the Group complied with all
covenants within its bank facilities as amended on 28 September 2023. This has
continued to the date of approval of these financial statements.
The restated facility agreement, as amended on 28 September 2023, includes the
following covenants:
· a minimum liquidity covenant tested on a weekly basis, requiring an
aggregate of cash and undrawn commitments under the Revolving Credit Faciity
of not less than £1.5m tested by reference to quarterly forward forecasts;
· an adjusted leverage covenant of Group net debt at the end of each
quarter to adjusted EBITDA in such period not exceeding prescribed ratios set
out in the restatement agreement;
· a cumulative monthly EBITDA covenant tested monthly between 31
October 2023 and 31 March 2024 and then quarterly from 30 June 2024 to 31
December 2024. The covenant requires the Group's cumulative EBITDA for each
period to be not less than prescribed amounts set out in the restatement
agreement; and
· a capital expenditure covenant that is tested annually on 31
December, requiring the Group to have not incurred capital expenditure greater
than prescribed values set out in the restatement agreement.
Interest on the Group's loan facility is payable at the aggregate of a
compound reference rate based on SONIA plus a rachet referred to in the table
below, with any increase or decrease on the margin as a result of the margin
rachet applying from the beginning of the next interest quarter.
Margin %
Interest rate margin payable in addition to SONIA per annum
Adjusted leverage
Bank borrowings less than 1.0x adjusted leverage 3.25
Bank borrowings greater than or equal to 1.0x but less than 1.5x adjusted 3.50
leverage
Bank borrowings greater than or equal to 1.5x but less than 2.0x adjusted 3.75
leverage
Bank borrowings greater than or equal to 2.0x adjusted leverage 4.00
In addition, under the restatement agreement, a further interest charge
accrues at a rate of 5% per annum on the amount of bank debt in excess of 2.5x
adjusted leverage. This additional interest will become payable on the earlier
of repayment of the loan, including under a refinancing, or at maturity of the
loan on 1 January 2025.
The borrower and guarantor Group companies under the facilities agreement and
Hostmore Group Limited have provided English law fixed and floating charges
over all of their assets in support of the obligors' obligations under the
facilities agreement. Hostmore plc has granted a debenture to Hostmore Group
Limited and the obligor companies under the facility.
Under the restated agreement, the term loan is repayable in quarterly
instalments of £1.5m from 30 June 2023. The remaining balance is due for
repayment at the end of the facility on 1 January 2025. At 2 July 2023, and in
accordance with the terms of the facility agreement, there was £1.0m of
interest owed to the lenders which has been accrued in these financial
statements.
15. Loans and borrowings (continued)
Undrawn facilities
The Group had committed undrawn borrowing facilities at floating rates at 2
July 2023 as follows:
2 July 3 July 1 January
2023 2022 (unaudited) £'000 2023
(unaudited) (audited)
£'000 £'000
Expiring between 1 and 2 years 5,000 25,000 22,500
Undrawn loan facilities incur a charge at 40% of the interest rate margin on
the drawn facilities.
16. Provisions
2 July 3 July 1 January
2023 2022 (unaudited) £'000 2023
(unaudited) (audited)
£'000 £'000
Opening balance 5,618 3,175 3,175
Increase in provision 26 - 2,935
Charged to consolidated statement of comprehensive income - - -
Credited to consolidated statement of comprehensive income (181) (473) (544)
Unwind of discount 31 27 52
Closing balance 5,494 2,729 5,618
Expected to be utilised within one year or less 307 377 475
Expected to be utilised after more than one year 5,187 2,352 5,143
Closing balance 5,494 2,729 5,618
The dilapidation provision arises from an obligation to return leased sites to
their original condition at the end of their lease term. The requirement for
provisions is based on value-in-use calculations, using discounted forecasted
cashflows of each restaurant and their ability to cover their costs, including
an allocation of central overheads, marketing and maintenance standards of
assets. The recoverable amount is assessed over the lease term of each
restaurant.
17. Share capital
Issued and fully paid
Number £'000
Ordinary shares of 20p each at 3 July 2022, 126,127,279 25,225
1 January 2023 and 2 July 2023
Share issues during the period
There were no shares issued during the 26 week period ended 2 July 2023.
17. Share capital (continued)
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 or paid by the Company during the 26 week period
ended 2 July 2023.
Market purchases of ordinary shares
At the Company's annual general meeting held on 7 June 2023, the Company's
shareholders passed a special resolution in accordance with the Companies Act
2006 to authorise the Company to purchase in the market up to a maximum number
of 12,612,725 shares in the Company, representing 10% of its issued share
capital at 7 June 2023, within normal market guidelines. No market purchases
were made under this authority during the period from the Company's annual
general meeting on 7 June 2023 to the date of approval by the Board of these
financial statements. The authority granted at the Company's annual general
meeting held on 7 June 2023 will expire (unless previously revoked, varied or
renewed) at the close of business on 30 June 2024 or, if earlier, at the
conclusion of the Company's annual general meeting to be held in 2024. The
Company intends to seek a renewal of this authority at its annual general
meeting to be held in 2024.
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 7 June 2023, the Directors
were authorised to allot and issue ordinary shares in the Company within
normal market guidelines. No issuances were made under this authority during
the period from the Company's annual general meeting on 7 June 2023 to the
date of approval by the Board of these financial statements. This authority
will expire (unless previously revoked, varied or renewed) at the close of
business on 30 June 2024 or, if earlier, at the conclusion of the Company's
annual general meeting to be held in 2024.
18. Cash flows from operating activities
26 weeks ended 26 weeks ended 52 weeks ended
2 July 3 July 1 January
2023 (unaudited) 2022 (unaudited) £'000 2023 (audited)
£'000 £'000
Loss for the period (10,564) (13,346) (97,544)
Adjustments for non-cash items and amounts disclosed separately:
Depreciation of property, plant and equipment 8,885 10,895 20,339
and right of use assets
Impairment reversal of property, plant and equipment - - (5,712)
and right of use assets
Impairment of property, plant and equipment 1,364 17,806 36,891
and right of use assets
Impairment of goodwill - - 70,858
Finance income (88) (4) (78)
Finance expense 7,168 5,938 12,556
Covid-19 rent concessions - (1,631) (2,290)
Income tax charge/(credit) (282) (3,743) (6,801)
Share based payment charge 102 254 581
Cash flows from operating activities 6,585 16,169 28,800
19. Related parties
Transactions with key management personnel
During the 26 week period ended 2 July 2023, a relative of Julie McEwan, the
Group's Chief Executive Officer, received £13k of Board approved sponsorship
in return for advertising the TGI Fridays brand at sports events.
Definitions
The following definitions shall apply throughout this document unless the
context requires otherwise:
"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
"EBITDA" earnings before interest and bank arrangement fees, tax, depreciation,
impairment and share based payments
"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
"Group" the Company together with its direct and indirect subsidiaries and subsidiary
undertakings
"IFRS" International Financial Reporting Standards as adopted by the UK
"Like-for-like (LFL) Sales" the revenue performance of the Group measured by reference to its business in
operation during any comparable period
"Net Debt" the Group's long-term borrowings (excluding issue costs) and lease obligations
less cash and cash equivalents at each period end
"RoU asset" right of use asset
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