Audited results for the 53 weeks ended 21 April 24
09/07/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240709:nRSI5848Va&default-theme=true
RNS Number : 5848V Loungers PLC 09 July 2024
9 July 2024
Loungers plc
("Loungers" or the "Group")
Audited results for the 53 weeks ended 21 April 2024
A record year for sales, profits and site openings
Loungers, a leading operator of all day café/bar/restaurants across the UK
under the Lounge, Cosy Club and Brightside brands, is pleased to announce its
audited results for the 53 weeks ended 21 April 2024 ("FY24").
Finance Summary
53 weeks ended 52 weeks ended Year on year
21 April 2024 16 April 2023 growth
£'000 £'000 %
Revenue 353,486 283,507 +24.7%
Adjusted EBITDA ((1)) 59,592 47,349 +25.9%
Operating profit 20,315 14,751 +37.7%
Operating profit % 5.7% 5.2% 0.5ppt
Profit before tax 11,444 7,334 +56.0%
Diluted earnings per share (p) 8.5 6.5 +30.8%
Cash generated from operating activities 64,648 51,107 +26.5%
21 April 2024 16 April 2023
£'000 £'000
Non-property net debt 9,461 6,022
Net debt 160,670 140,859
((1)) Adjusted EBITDA is calculated as operating profit before depreciation,
impairment, pre-opening costs, exceptional costs, and share-based payment
charges.
Financial Highlights
· Achieved record revenue of £353.5m, up 24.7% on the prior year
and up 22.2% when excluding the benefit of the 53rd week
· A record 36 new sites opened during the year, seven sites more
than in the prior year
· Industry leading like for like ("LFL") sales growth of 7.5%, with
current trading continuing to beat the market
· Adjusted EBITDA of £59.6m representing year on year growth of
25.9%
· Operating profit up 50 basis points as a percentage of sales to
5.7%
· Strong cash generation from operating activities of £64.6m
representing 108% of Adjusted EBITDA
Operational and Strategic Highlights
· Decreasing inflationary pressures combined with increasing scale
allowed us to make good progress towards re-establishing pre-Covid margins
· Record number of new site openings each delivered consistently
high sales and profits
· Constant food, drink and design innovation continued to drive
sales growth and relevance
· Invested further in senior team and operational structure to
deliver ongoing roll-out
· Strong pipeline of new sites, with internal capability to
maintain the current rate of openings
· Growth and performance continues to demonstrate our target of 665
sites across the UK is a conservative one.
Current Trading and Outlook
We continue to feel very positive about the outlook for our brands and over
the 11 weeks since the year end, our LFL sales have been +5.0%. Our new site
openings continue to perform exceptionally well, achieving record levels of
sales, and our pipeline of new sites is as strong as ever.
We have opened seven sites since the year end (all of them Lounges) and are
confident that the good momentum we are seeing across the business, as well as
the investment that we continue to make in our operational management, puts us
in the best possible position to deliver further growth and margin expansion
in FY25.
Nick Collins, Chief Executive Officer of Loungers said:
"This has been another year of outstanding strategic, operational and
financial progress for Loungers. Our consistent and market-leading like for
like sales growth coupled with our improving margins are allowing us to
achieve record levels of profits to reinvest in our ambitious roll-out
programme.
During the year, we opened 36 new sites, created 1,200 new jobs and invested
around £39m in high streets and communities across the UK. We have
demonstrated yet again that the hospitality sector is capable of making a
really positive economic and social impact on parts of the country that are
otherwise all-too-often overlooked. To encourage further investment, I would
strongly urge the new government to address the wildly unfair tax burden that
is shouldered by our industry in the form of a business rates system that
urgently needs to be overhauled.
The variety, breadth and flexibility of our all-day offer is proving to be
more relevant than ever, and last year our wonderful teams served 7m
breakfasts and poured 6m pints to an increasingly wide demographic. As the
business grows, we are constantly evolving and improving our menus to ensure
that we continue to offer our customers the great experience and fantastic
value for money that they have come to expect from us.
The improving macroeconomic environment, with falling interest rates and
declining inflation, adds to our confidence in Loungers' trading prospects for
the coming year. In the longer term, we continue to believe that 665 sites is
a conservative target."
Analyst Presentation Webcast
An analyst presentation will be held today, Tuesday 9 July 2024, at 9:30am
(BST). Participants wishing to join the webcast should contact
loungers@powerscourt-group.com (mailto:loungers@powerscourt-group.com) to
request details.
For further information please contact:
Loungers plc Via Powerscourt
Nick Collins, Chief Executive Officer
Stephen Marshall, Chief Financial Officer
Houlihan Lokey Advisory Limited (Financial Adviser and NOMAD) Tel: +44 (0) 20 7389 3355
Sam Fuller / Tim Richardson
Panmure Liberum Limited (Joint Broker) Tel: +44 (0) 20 3100 2000
Andrew Godber / John Fishley
Peel Hunt LLP (Joint Broker) Tel: +44 (0)20 7418 8900
Dan Webster / Lalit Bose
Powerscourt (Financial Public Relations) Tel: +44 (0) 207 250 1446
Rob Greening / Russ Lynch / Elizabeth Kittle
Notes to Editors
Loungers operates through its three established complementary brands - Lounge,
Cosy Club and Brightside - in the UK hospitality sector. A Lounge is a
neighbourhood café/bar combining elements of coffee shop culture, the British
pub and dining. There are 226 Lounges nationwide. Lounges are principally
located in secondary suburban high streets and small town centres. The sites
are characterised by informal, unique interiors with an emphasis on a warm,
comfortable atmosphere, often described as a "home from home".
Cosy Clubs are more formal bars/restaurants offering reservations and table
service but share many similarities with the Lounges in terms of their broad,
all-day offering and their focus on hospitality and culture. Cosy Clubs are
typically located in city centres and large market towns. Interiors tend to
be larger and more theatrical than for a Lounge, and heritage buildings or
first-floor spaces are often employed to create a sense of occasion. There
are 35 Cosy Clubs nationwide.
Brightside is a roadside dining concept and was launched in November 2022. The
first Brightside location opened on the A38, south of Exeter, in February
2023, with the second opening in Saltash near Plymouth in June 2023 and the
third in Honiton on the A303 in August 2023.
Chairman's Statement
I am extremely pleased to report another excellent year for Loungers, both
financially and strategically.
Another record year
In the 53-week financial year ending 21st April 2024 we achieved record
revenue of £353.5m (up 24.7% on FY23) and also delivered record Adjusted
EBITDA of £59.6m (up 25.9% on FY23). This strong performance was driven by
the opening of a record number of new sites (36), as well as like for like
sales growth of 7.5%.
During the course of the year, we reached the significant milestones of
opening our 200th Lounge, Verdetto Lounge in Buckingham, and our 250th overall
site, Pionero Lounge in Rochdale.
We continued to expand our footprint across the UK. We made our Lounge debut
in the North East with the opening of Martino Lounge in Morpeth (in August),
which was followed by further Lounge openings in the region in Hexham and
Cramlington. We pushed further into the North West with openings in Penrith
and Carlisle. We also continued to expand in our established heartland in the
South West, with Barolo Lounge in Yeovil setting a terrific pace and Costero
Lounge in Paignton being an absolute standout and recently becoming the first
Lounge to deliver weekly sales of over £100k.
Elsewhere, we opened one Cosy Club during the year, in Oxford, which has
performed very strongly. We also opened our second and third Brightsides - on
the A38 near Saltash and on the A303 near Honiton, respectively - following
comprehensive refurbishments and remodelling of the previous Route Restaurant
buildings, albeit not quite as ahead of the 2023 summer holidays as we had
hoped.
Exciting opportunities ahead
Moving into our current financial year and looking ahead, we have another very
exciting pipeline of sites to open in FY25 and beyond. As a result of the
well-documented struggles of the UK high street, property availability has
never been better, and we continue to be able to negotiate very favourable
terms. Bank closures are providing us with excellent prime pitch locations in
towns and suburbs across the country, and more often than not they are also
wonderful buildings. In FY24, our Lounge openings in Nantwich,
Ashby-de-la-Zouch, and Yeovil were all very good examples of this trend - and
looking ahead we have lined up at least seven former banks to be converted to
Lounges with our openings in Newmarket and Saffron Walden being particularly
noteworthy due to the heritage nature of the buildings.
At the beginning of the new financial year, we acquired the Pitcher and Piano
sites on Bristol harbourside and in the centre of Sheffield. The former is
currently being converted into Ritorno Lounge which will open in mid-July and
will be our largest and most ambitious Lounge to date, right in the heart of
Bristol's busiest waterside pitch. Following the success of Costero Lounge in
Paignton, which was another large site (a former Harvester), we are
particularly excited about the prospects for Ritorno and the opportunities
that exist for us to open bigger Lounges in very high footfall locations.
Mid-July will also see us finish the conversion of the Sheffield site into a
Cosy Club in a great location that we originally tried to secure,
unsuccessfully, when the development was being built.
A reshaped and strengthened team
During the year we further strengthened the executive team and put ourselves
in the best possible position to continue to deliver our ambitious growth
strategy.
Justin Carter moved from being Managing Director of Lounge to the newly
created role of Group Managing Director. Justin has been absolutely integral
to the success of Loungers, and in particular, Lounge, since joining us in
2015 and I am really pleased we now have him in a group-wide role. His support
of the brand managing directors and his extremely considered strategic
perspective will undoubtedly bring a huge amount of benefit to the individual
brands and to the wider business.
The Lounge Managing Director Role has been filled by Kate Eastwood who has
recently joined the business having previously been at Fuller's. Kate has
spent the first three months in role covering a lot of geography, getting to
know her team, and learning lots of Lounge names! Once she is fully up to
speed, I am very much looking forward to seeing her bring her considerable
experience to bear.
Lucy Knowles joined as the Cosy Club Managing Director in September last year.
Lucy has fitted in extremely well and has brought an operational intensity and
sales driving focus to the brand. FY25 will be a big year for Cosy Club and
Lucy is very busy managing a number of exciting work streams.
After an almost six year tenure, our unflappable CFO Gregor Grant announced in
November that he had decided to leave the business. Gregor has been an
invaluable member of the executive team and the PLC board, and we have been
extremely lucky and privileged to have had him with us, particularly as we
navigated the IPO in 2019 followed by the seismic shock of the pandemic in
2020/21. Gregor leaves with our warmest wishes and enormous gratitude for his
unwavering dedication and commitment. Stephen Marshall has started as our new
CFO and has hit the ground running. Stephen, who has significant CFO
experience, most notably at Nisbets and Dyson, brings a commerciality that the
business will undoubtedly benefit from as it continues to grow.
As always, we are extremely lucky to have such a dedicated and talented CEO in
Nick Collins, and we continue to enjoy challenge, support, and
entrepreneurial-style engagement with our PLC Non-Executive Directors.
Growing and maintaining three different but complementary brands
With the launch of the first Brightside in February 2023, Loungers became a
three brand business and the executive team have been busy rising to the
challenge that going from two to three brands presents.
Whilst Lounge continues to be the dominant driving force behind our growth, it
is important to me that the other two brands don't live in its shadow.
We are often asked, perhaps understandably, why we don't simply put all of our
focus into Lounge, particularly as there remain hundreds of new site
opportunities for us in the UK. My answer is always quite simple: I believe we
are an infinitely better business for having more than one brand. It means
that we have to look at a much wider spectrum of hospitality, and that we
cannot - and therefore do not - fall into the trap of becoming too set in our
ways. The brands are constantly learning from each other, and it also means
that our executive team is larger than it would otherwise be, with a greater
variety of perspectives and experiences for us to draw on.
Lounge: doubling down for future growth
The performance of Lounge has been stellar for a number of years now and it
feels like we are experiencing fewer growing pains as we get bigger. This is
despite opening a record number of Lounges last year and often having three or
four openings in a single month. We are in a great place, but instead of
taking it easy and believing we have truly arrived, we are determined to
double-down. We will not let complacency creep in and will obsessively focus
on evolving and innovating our offer and working tirelessly on finding ways to
get even better. We need to ensure that we don't lose sight of offering great
value-for-money despite a plethora of cost pressures and we will continue to
relentlessly strive to attract and retain great people.
Cosy Club: more potential to be unlocked
The next few months are a really exciting time for Cosy Club as we look to
build on the success to date and unlock the true potential of the brand. I
believe that it is time for the brand to further distance itself from Lounge
and to assume a slightly more premium position on the high street.
Lucy Knowles and her team are working hard on elevating our food offering,
overhauling our drinks menu and wine list, and driving hospitality excellence
amongst our teams. We are making the changes that our instincts are telling us
are appropriate, and Cosy Club feels like it is on a path to finding a clearer
identity. There is a lot to do but we have the strength-in-depth in the
executive team to rise to the challenge without causing any distraction to
other areas of the business, and we are really excited about what lies ahead
for Cosy Club.
Brightside: an exciting concept, but still early days
It's worth remembering that when we reported our FY23 results in July 2023 we
had only just opened our second Brightside. It is still a very new brand and
we are really looking forward to seeing how it trades over the next few months
given that it will be the first full summer in which we have all three sites
trading. Our limited like for like sales data points to encouraging sales
momentum and most importantly of all, we are really encouraged by what our
customers have to say about Brightside. However, the brand still needs to
continue to build sales before we can sensibly give a view as to its future
potential.
We have learnt a huge amount so far and we are still very much on a learning
curve - especially with regard to what works best from a marketing perspective
and what we need to do to increase brand awareness. With our fourth Brightside
due to open on the A1 in Rutland in the autumn, we will continue to learn and
assess the brand's potential - not least because it will be our first
purpose-built site.
A change of government: stance on our sector is unclear
There is now a new Prime Minister in Number 10 and a Labour government in
power. In truth, there is little in the way of detail about what Labour is
proposing when it comes to our sector. There is a vague commitment to review
business rates but in reality, we have heard all of this before and I don't
hold out much hope that this will lead to an overhaul of that system any time
soon, despite it being much needed.
What is clear is that increases in the National Living Wage will almost
certainly continue to be inflation-busting and this will put even greater
pressure on a very beleaguered UK hospitality sector.
In an environment where getting the balance right between reflecting
significant cost pressures - specifically the cost of labour - in pricing,
whilst UK consumer confidence still feels quite variable, will prove extremely
challenging for some operators. As a big and growing business, I am confident
that we can continue to get the balance right, not least because other
inflationary pressures have eased. However, there is only so much more small
independent hospitality businesses can take and I fear that the sector will
continue to see the number of outlets in the UK reduce.
We will continue to do everything that we can, and to work with UKHospitality,
to ensure that the voice of the sector is heard by government. More
specifically, I will continue to make no apology for expressing the opinion
that if there is any help at all forthcoming for hospitality it should be
targeted towards small businesses in our sector, rather than the big
corporates. It feels like only yesterday that we were ourselves a small
business, so we are all too aware of the challenges and pressures that they
are feeling.
Our outstanding people
We employ almost 9,000 people now, which is pretty extraordinary to me when I
look back at the journey of Loungers since its inception in 2002. In a report
that is packed with a vast array of numbers, it is the number I am most proud
of. Hospitality is all about the human touch, and Loungers is a fantastic
example of how critically important people are to the success of any business.
I am so proud that we have created so many jobs and I am constantly in awe of
the way in which so many of our people need no encouragement to go that extra
mile to deliver an above-and-beyond hospitality experience. Our teams have my
full admiration, utmost respect, and immense gratitude; they are what makes
Loungers such a special business.
Alex Reilley
Chairman
9 July 2024
Chief Executive's Statement
I am pleased to report on another very successful year for Loungers. We
achieved record revenue of £353.5m, operating profit of £20.3m, opened 36
new sites (our most ever in a single financial year), and our Adjusted EBITDA
performance of £59.6m represents growth of 109% since our IPO in 2019.
This strong financial performance was underpinned by consistent LFL sales
growth and margin improvement in the mature estate, alongside growth through
the continued roll-out of new sites. The second half of the year also saw
significant organisational change in the business, providing us with a
platform to achieve further growth in the years ahead.
Sales performance and our evolving offer
Our sales performance throughout the year was once again exceptional,
achieving underlying 53 week LFL sales growth of 7.5%. LFL sales in the mature
estate are now +26.3% higher than they were four years ago. Sales growth this
year was driven by price increases, as well as modest volume growth, and we
believe we are well-positioned to return to more meaningful volume growth in
FY25. Value for money is - and always will be - at the core of our offer, and
we have closely monitored competitor pricing and remain confident we represent
excellent value for money.
Reassuringly, we haven't seen any shift in consumer behaviour, or the way our
customers are using our Lounges, Cosy Clubs and Brightsides. Sales patterns
across the week and monthly payroll cycle have remained consistent, and the
wide demographic make-up of our customers remains unchanged. Across our estate
of 264 sites, sales levels reflect a normal distribution, and there are
inevitably both over and under-performers. What's reassuring is that the
drivers of under or over-performance are virtually always within our control
and invariably relate to the tenure and strength of the team, and the
consistency of the hospitality they provide. Whilst our performance continues
to be very strong, there are, of course, always areas in which we can improve.
We continue to innovate on both the food and drink menus, with two menu
changes a year. On the food side, our customers continue to be increasingly
adventurous in terms of flavours and heat, with Asian and Middle Eastern
flavours and dishes increasing in mix. Sharing remains a really important part
of our offer in both Lounge and Cosy Club. Over the course of last year we
sold 5.7m tapas/small plates dishes, in comparison to 6.7m brunch dishes. The
versatility of our all-day offer is at the core of our success - with varied
menus offering brunch, sandwiches, burgers, mains, tapas, and puddings right
across the day. Pleasingly, there has been a good balance to LFL sales across
the dayparts, with brunch, lunch and dinner all contributing meaningfully to
our sales growth.
We are often asked who our competitors are, and the answer is that coffee
shops, bakeries, sandwich shops, pubs and restaurants (both independents and
chains) all compete with us at different times of the day. The appeal of our
sites is the result of a combination of: our unique culture, hospitality and
the personality of our teams; the changing atmosphere across the day; the
individual design of each site; value for money; and consistently great and
evolving food and drink. As the UK high street shifts around us, we are
constantly striving for improvement in all these departments.
Conversion and inflationary pressure
Last year we set out our ambition to return to pre-Covid levels of IAS17
Adjusted EBITDA conversion of 13.5% in the medium-term and I am delighted with
our progress to date. In the year to 16 April 2023 we converted at the
Adjusted EBITDA level at 12.1% and that has now improved to 12.5% for the year
to 21 April 2024.
The diminishing inflationary environment alongside the benefit of price
increases on our gross margins have been factors in this improvement, despite
the ongoing wage inflation as a result of the increase to the National Living
Wage. Our rent to revenue ratio of 4.3% continues to be a stand-out feature of
the business and as sales consistently grow in the mature estate, our fixed
costs continue to reduce as a proportion of sales. There remains opportunity
across the P&L for more efficiency, and our labour performance in some of
the new openings during the year could be improved upon. We also continue to
pursue our strategy of gradually consolidating our supply chain and anticipate
further consolidation in FY25.
Our central costs represented 7.6% of sales vs 7.3% last year, while excluding
bonuses they were flat vs last year at 6.8% of sales. The year saw further
investment in the fixed cost base of the business as we invested in the
marketing and people departments and the senior leadership team structure. As
the business continues to grow at pace, it is critical that we have the right
infrastructure to deliver the roll-out whilst maintaining operational
excellence. This year saw a notable shift in the central cost base as we
approach the next phase in our growth. In the medium term we expect our
central costs to reduce more materially as a proportion of sales as we
capitalise on the return on these investments.
People and culture
It was to some extent a year of transition from a people point of view, and we
took significant steps to create the team and platform necessary for the next
phase of our growth. We identified the need to materially increase our
investment in learning and development, and the second half of the year saw
the introduction of a number of initiatives that we expect to really kick in
during FY25. As the business grows, it is imperative that we ensure best
practice is shared across the business, learning as we go. We need to balance
the requirement for training and operational consistency across our
ever-growing estate with the need for the business to retain its unique
independent culture and personality. We continue to work hard on delivering
our Commitments to our teams across the UK and it has been pleasing to see
staff turnover reduce across the year, albeit we recognise there is always
more we can do.
There were notable investments in the Recruitment and Community teams during
the year. The introduction of Regional Recruitment and Talent Managers has
provided our Operations Managers with support to both find and retain great
people. On the community side, we introduced Regional Community Managers to
extend our local outreach, as part of our determination to make a positive
impact on the areas in which we operate.
At the end of the financial year we completed a wholesale reorganisation of
the Lounge operations team map, taking us to nine regions and 29 operating
areas. As the estate grows, it is critical the operating areas are kept to
eight or nine sites, to allow the teams to deliver new openings whilst also
ensuring that we are applying the same level of operational intensity that we
have delivered for over 20 years. The reorganisation saw five General Managers
or Head Chefs promoted into Operations Managers or Operations Chefs roles,
three Operations Managers or Operations Chefs promoted to Regional Operations
Managers, and one Regional Operations Manager promoted to Operations Director.
72% of our Operations team were previously General Managers or Head Chefs
within the business and this very high proportion of people being promoted
from within is critical to our continued success - and is a statistic of which
we are very proud. Other people-related investments this year included the
recent introduction of our Future Operations Manager Programme and Assistant
Manager and Sous Chef step-up programmes. All of these initiatives and
investments are part of our clear ambition to be the number one choice for
hospitality careers in the UK.
As ever, I would like to say a huge thank you to our teams across the Lounges,
Cosy Clubs, Brightsides and in HQ. Their willingness to go the extra mile for
their customers, communities and team has allowed us to deliver another
fantastic performance.
The ongoing roll-out and the opportunity in front of us
During the year we opened a record 36 sites comprising 33 Lounges, one Cosy
Club and two Brightsides. We also closed one site, our Cosy Club in Harrogate.
Our acquisitions, design, development and build teams have again delivered a
record number of sites at a fantastically high standard. Average Lounge net
capex stood at £905k (vs £835k last year) and whilst we continue to benefit
from having the construction capability in-house, there remains a cost
opportunity from a capex perspective, and we want to build on this in FY25.
The property market more broadly remains very tenant-friendly. To date, higher
interest rates have not resulted in any reduction in capital contributions
from landlords, and, as ever, our primary focus is on achieving a sub 6% rent
to revenue percentage. In terms of the types of property we are taking on, we
have seen an increase in the number of former banks that we are converting,
but former retail units continue to form the bulk of our new openings.
Lounge
The Lounge new openings strategy continues to see us in-fill across England
and Wales in areas where we already have a strong presence, as well as
continuing to nudge into new territories further north and east from our
heartland in the South West. This was evidenced by a cluster of openings in
the North East and across into Cumbria, as well as openings in Kent and Essex.
The openings reflect the diversity of location type where Lounges trade, with
a good mix of suburban high streets, small towns, coastal locations, and
mixed-use retail-leisure schemes. We smashed our individual site sales records
in the year, with Costero Lounge in Paignton achieving record Lounge weekly
sales at £99k, Brasco Lounge on the Mersey achieving record Lounge daily
sales, and Barolo Lounge in Yeovil achieving the highest ever opening week of
sales for a Lounge. These record-breaking locations are a great illustration
of the diversity of our reach. The strength of our new site openings continues
to give us real confidence in the roll-out, as well as the viability of our
conservative target of at least 600 Lounges across the UK.
Cosy Club
In October 2023, we opened a beautiful Cosy Club on Cornmarket in Oxford,
which has traded exceptionally well since opening and as previously noted, we
continue to look for new Cosy Club opportunities and anticipate opening one to
two sites per year in future. It was disappointing to close the Cosy Club in
Harrogate in February - this was only our eighth site closure in 22 years, of
which two were sites that had reached the end of their leases. The sales at
Harrogate never reached a level at which we felt confident the site could
generate a meaningful profit. Harrogate is a competitive environment, and with
the benefit of hindsight we got the pitch of the site wrong.
Brightside
Our three Brightside units traded for the majority of the financial year and
during this time we continued to learn a great deal about this new brand. We
have been delighted with the customer experience, and once the legacy effect
of the previous business operated at the three sites washed through, the
feedback has been consistently strong. As is typical for a new brand, sales
have been relatively low, averaging around £20k per week. Unlike a Lounge or
Cosy Club, Brightsides don't benefit from any footfall, and instead we need to
convince passing motorists to stop. Over the course of the year, we have
learnt more about the mix of local vs tourist traffic, and our marketing
strategy has evolved accordingly. This summer will present a fascinating test
for the brand, and the extent to which we can drive LFL growth vs last summer.
A fourth Brightside unit will open on the A1 in Rutland later this year.
Beyond that we have no further pipeline sites at the moment, and instead want
to really get to grips with the initial four sites in order to understand the
sales growth profile before considering further potential scale. We remain
excited about the Brightside concept, and customer reaction certainly suggests
that the demand is there.
Our impact on society and the environment
Community is at the heart of our business and continues to be a major focus as
we think about our role and responsibilities towards society more broadly.
Last year we created around 1,200 new jobs on high streets across England and
Wales. We continue to encourage our teams to think about the local community
and how their Lounge can be used to promote kindness, charity and social
interaction. The introduction of our Regional Community Managers has provided
our sites with even more resource to share best practice across the business.
Towards the end of the year we launched our Community Fund, which means that
each Lounge has the opportunity to put £1,000 towards local causes important
to either our teams or customers.
We continue to pursue our goals as set out in our 'Good Stuff Strategy' which
we shared in November, setting out our ambition under the five key pillars of
community, customers, people, planet and suppliers. We are working hard on our
target to have 40% of senior leadership positions held by women over the next
five years and getting 100% of our suppliers to connect with us on SEDEX to
ensure they follow sustainable and ethical practices. In recent months we have
also introduced new segregated waste systems to further increase the volume of
waste that is recycled or composted and continue to work with nutritionists to
enhance the nutritional value of all our dishes.
Management team and the future
The year saw considerable evolution in the leadership team as we look to the
next phase of our growth and maintaining our industry-leading performance.
Justin Carter was promoted from Managing Director of the Lounge brand to the
new role of Group Managing Director. Justin is now responsible for all three
of our brands, allowing each of them to benefit from his invaluable industry
experience and operational expertise. Kate Eastwood joined us to replace him
as Lounge Managing Director and Lucy Knowles joined us as Cosy Club Managing
Director. We are also saying farewell to Gregor Grant as CFO and welcome
Stephen Marshall in his place. Behind the executive team we have strong senior
management, and the succession pipeline across the Group has really
strengthened during the year as we have continued to progress people through
the business.
I am in no doubt that we have one of the most talented, hard-working and
creative leadership teams in the industry. The business has consistently
planned ahead of time how best to prepare itself for the next phase of growth.
This year has been no exception, and we have particularly stress-tested our
leadership style, the way we think about accountability, and how best to
achieve our medium to long-term priorities. We don't just think about what we
need to look like as a 300 site business, but also as a 650 site business. We
are more excited than ever about what we can achieve over the next few years.
Current trading and outlook
We continue to feel very positive about the outlook for our brands and over
the 11 weeks since the year end our LFL sales have been +5.0%. Our new site
openings continue to perform exceptionally well, achieving record levels of
sales, and our pipeline of new sites is as strong as ever.
We have opened seven sites since the year end (all of them Lounges) and are
confident that the good momentum we are seeing across the business, as well as
the investment that we continue to make in our operational management, puts us
in the best possible position to deliver further growth and margin expansion
in FY25.
Nick Collins
Chief Executive Officer
9 July 2024
Financial Review
Overview
I am pleased to be able to report on a year of significant progress, not least
in respect of our journey to restore margins to pre Covid levels. We have
delivered record sales on the back of market-leading LFL revenue growth in our
mature estate, strong sales performance in our newer sites and a record 36 new
site openings. In addition, we have taken a significant step towards our
medium-term goal of returning to our pre-Covid Adjusted EBITDA margin through
a combination of disciplined cost management and an easing of inflationary
pressures. Our strong cash conversion continues to allow us to fund our growth
through internally generated profits. We remain very confident in our ability
to deliver strong top line performance through our compelling all-day offer in
our existing and new sites, and to improve profitability against easing
inflation and lower interest rates for the UK consumer. As a result, we see
significant potential to continue our strong growth trajectory over the coming
years.
IFRS 16
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
£000 £000
Revenue 353,486 283,507
Operating profit 20,315 14,751
Operating margin (%) 5.7% 5.2%
Profit before tax 11,444 7,334
Fully diluted earnings per share (p) 8.5 6.5
Net cash generated from operating activities 64,648 51,107
Net debt 160,670 140,859
Year on year revenue was up by 24.7% to a record £353.5m on a 53-week basis
(FY23: £283.5m). Excluding the benefit of the 53(rd) week, total sales were
up 22.2%. This sales performance reflects both continuing strong LFL sales
growth across our mature estate (+7.5% across 53 weeks) and the ongoing
success of our new site opening programme. Headline operating margin increased
from 5.2% to 5.7% as the benefits of improved gross margin performance
exceeded receding cost inflation.
Net cash generated from operating activities on a 53-week basis of £64.6m
represented 108% (2023: 108%) of IFRS 16 Adjusted EBITDA and continues to
reflect the working capital benefits accruing from the strong LFL sales
performance and the new site opening programme. Post investing and financing
outflows, which included capital expenditure cash outflows of £47.7m and the
reduction of the term loan from £32.5m to £20m, cash balances decreased by
£16.0m to £10.3m. We continue to be pleased with the returns on capital
from the estate. Total year end IFRS 16 net debt increased by £19.8m to
£160.7m, the increase driven by taking on new leases with a capital value of
£27.0m at inception.
We use a range of financial and non-financial measures to assess our
performance. A number of the financial measures, for example LFL sales and
Adjusted EBITDA are not defined under IFRS and accordingly they are termed
Alternative Performance Measures ("APMs"). The Group believes that these
APMs provide stakeholders with additional useful information on the underlying
trends, performance and position of the Group and are consistent with how
business performance is measured internally. Adjusted EBITDA, which is
defined as operating profit before depreciation, impairment, pre-opening costs
and share based payments) is also the measure used by the Group's banks for
the purposes of assessing covenant compliance.
The table below summarises the key APM's under both IFRS 16 and IAS 17 for the
past two financial years (with FY24 on a 52 week basis to aid comparison):
Year ended 14 April 2024 Year ended 16 April 2023 Year on year
£000 £000 Growth
52 Weeks 52 Weeks %
52 Weeks
Sites at year end 257 222 +15.8%
New sites opened 36 29 +24.1%
Revenue 346,570 283,507 +22.2%
Adjusted EBITDA - IFRS 16 58,559 47,349 +23.7%
Adjusted EBITDA margin (%) - IFRS 16 16.9% 16.7% +0.2ppt
Adjusted EBITDA - IAS 17 43,490 34,221 +27.1%
Adjusted EBITDA margin (%) - IAS 17 12.5% 12.1% +0.4ppt
Net debt - IAS 17 8,494 6,022 +41.0%
Over the five years since IPO the Group has grown revenue by 127% on a 52 week
basis, a function of growing the estate by 76% and a consistently strong LFL
sales performance, across all cohorts.
The adjusted 52-week EBITDA (IAS 17) of £43.5m delivers a margin of 12.5%, up
40 basis points on FY23. The Group has succeeded in expanding its gross margin
whilst retaining the core value for money principles that are at the heart of
the offer, and this has offset the impact of the significant National Living
Wage increases. This leaves the business well placed on its medium-term
journey to return to the pre-Covid margin level of 13.5%.
Non-property net debt increased to £8.5m, a year on year increase of
£2.5m. This largely reflects the increase in the pace of the new site roll
out programme, which increased to 36 sites in the year under review.
Impairment costs
The statutory operating profit of £20.3m is after incurring net impairment
charges of £2.5m. These costs include:
· £3.9m relating to the impairment of right of use assets
· £0.8m relating to the impairment of property, plant and
equipment
· The release of prior year impairment provisions totalling £2.2m
The impairment methodology included the calculation of a value in use for all
sites. This valuation was based upon three year site cash flow forecasts
covering FY25 through to FY27 which incorporated assumptions regarding future
trading, and a full allocation of central costs and maintenance capex spend.
The release of excess impairment provisions created in prior years relate to
the improved trading performance in a number of sites relative to the
assumptions about future trading made at the time of the impairment.
The main driver of this year's charge was the impairment of the Cosy Club in
Harrogate, which was closed on 1 April 2024. This site was opened on 31 August
2022 but due to site specific factors struggled to trade at acceptable levels,
accordingly the Board took the decision to close. As at 21 April 2024, an
impairment of £2.5m was charged in relation to the Harrogate property. At
the point of closure, there were 18 years remaining on the lease, which has
been fully provided for in the above charge. There is an intention to
sub-lease the site and if achieved, this will result in a partial reversal of
the above impairment.
Long Term Employee Incentives
Employee engagement and retention remains a key area of focus, and share
awards continue to play a significant role in these efforts. During the year
the Group granted further share awards under the employee share plan (588,500
shares) and the senior management restricted share plan (629,192 shares).
These awards were made to a total of 1,267 employees who work across the
business, predominantly at site level, and in hourly paid and salaried
positions. In addition, awards covering 992 employees and in respect of
810,647 shares vested in the year.
The Group recognised a share based payment charge in the year of £3.9m (2023:
£4.0m), the charge covering the employee share plan, the senior management
restricted share plan and the value creation plan.
Finance Costs and Net Debt
Finance costs of £9.0m (2023 £7.6m) include IFRS 16 lease liability finance
costs of £7.0m (2023: £6.1m) and bank interest payable of £2.0m (2023:
£1.5m). The Group received interest of £0.2m (2023: £0.2m) on its
positive cash balances.
Net debt at the year end including property leases of £160.7m (2023:
£140.9m) reflects the impact of adding new lease liabilities of £27.0m in
the year.
During the year the Group refinanced its borrowing facilities with its
existing lenders, paying down £12.5m of the term loan to leave a term loan
debt of £20.0m and extending the RCF to £22.5m to leave total facilities
unchanged at £42.5m. The Board continues to consider the options for hedging
the interest rate risk on the outstanding term loan.
Taxation
The Group has reported a tax charge of £2.3m for the financial year to 21
April 2024 (2023: charge of £0.4m) and at year end carried a corporation tax
receivable of £1.2m (2023: £0.1m receivable). The corporation tax charge
represents 20.3% of profit before tax (2023: 5.5%), with the prior year
benefiting from the 130% capital allowance super deduction, without which the
corporation tax rate would have been 20.9%.
Cash Flow and Capital Expenditure
Net cash generated from operating activities of £64.6m (2023: £51.1m)
reflects a working capital cash inflow of £9.0m (2023: cash inflow of
£7.3m).
Cash outflows in the year in respect of capital expenditure totalled £47.7m
(2023: £37.0m) and compare to the cost of fixed asset additions (excluding
right of use assets) recognised in the year of £47.2m (2023: £39.2m).
These additions included £38.5m in respect of new site openings of which
£35.7m related to 36 sites opened in the year (2023: £29.6m in respect of
new site openings of which £26.9m related to the 29 sites opened in the
year).
Key Performance Indicators ("KPI's")
The KPI's, both financial and non-financial, that the Board reviews on a
regular basis in order to measure the progress of the Group are as follows:
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
New site openings 36 29
Capital expenditure (excluding IFRS16 RoU assets) £47.2m £39.2m
LFL Sales growth ( ) +7.5% +7.4%((1))
Total sales growth 22.2%((2)) 19.5%
Adjusted EBITDA margin (IFRS16) 16.9% 16.7%
((1) ) One year LFL calculated over 48 weeks from16 May 2022
((2) ) Sales growth over the 52 weeks ended 14 April 2024 versus
the 52 weeks ended 16 April 2023
Going Concern
In concluding that it is appropriate to prepare the financial statements for
the 53 weeks to 21 April 2024 on the going concern basis attention has been
paid both to the current sector headwinds in terms of consumer confidence and
inflationary pressures and also longer term risks such as climate change.
The Group has traded successfully over the past financial year and ended the
year with net debt (including property leases) of £160.7m and total liquidity
of £32.8m.
In order to assess the Group's going concern position the Board has considered
a base case and downside case scenario. The base case assumes no further
selling price increases beyond those put through in March 2024 and flat
volumes and reflects current assumptions in respect of future cost inflation.
The base case scenario indicates that the Group has significant headroom in
respect of both its liquidity position and its banking covenants.
In the downside scenario it has been assumed that sales volumes fall by 10%
from the base case with an associated reduction in labour and variable cost
efficiency and a resultant 31% decline in adjusted EBITDA. Under this
scenario the Group is able to maintain its new site opening programme and
continues to have significant liquidity and banking covenant headroom and
accordingly the Directors have concluded that it is appropriate to prepare the
financial statements for the 53 weeks ending 21 April 2024 on the going
concern basis.
Stephen Marshall
Chief Financial Officer
9 July 2024
Consolidated Statement of Comprehensive Income
For the 53 Weeks Ended 21 April 2024
53 weeks ended 52 weeks ended
Note 21 April 2024 16 April 2023
£000 £000
Revenue 353,486 283,507
Cost of sales (209,338) (170,350)
Gross profit 144,148 113,157
Administrative expenses (123,833) (98,406)
Operating profit 4 20,315 14,751
Finance income 154 204
Finance costs 5 (9,025) (7,621)
Profit before taxation 11,444 7,334
Tax charge on profit 6 (2,320) (405)
Profit for the year 9,124 6,929
Other comprehensive expense:
Items that may be reclassified to profit or loss
Cash flow hedge - change in value of hedging instrument - (38)
Other comprehensive expense - (38)
Total comprehensive income for the year 9,124 6,891
Earnings per share 53 weeks ended 52 weeks ended
Note 16 April 2024 16 April 2023
Pence Pence
Basic earnings per share 7 8.6 6.7
Diluted earnings per share 7 8.5 6.5
Consolidated Statement of Financial Position
As at 21 April 2024
Note At 21 April 2024 At 16 April 2023
£000 £000
Assets
Non-current
Goodwill 8 114,722 114,722
Property, plant and equipment 9 271,359 228,414
Deferred tax assets - 945
Total non-current assets 386,081 344,081
Current
Inventories 2,910 2,475
Trade and other receivables 10,487 8,722
Cash and cash equivalents 10,349 26,370
Total current assets 23,746 37,567
Total assets 409,827 381,648
Liabilities
Current liabilities
Trade and other payables (79,788) (69,708)
Corporation tax payable - (59)
Lease liabilities (11,876) (10,247)
Total current liabilities (91,664) (80,014)
Non-current liabilities
Borrowings 10 (19,810) (32,392)
Lease liabilities (139,333) (124,590)
Deferred tax liabilities (2,634) -
Total liabilities (253,441) (236,996)
Net assets 156,386 144,652
Called up share capital 1,039 1,133
Share premium 8,066 8,066
Treasury shares (376) -
Other reserve - 14,278
Retained earnings 147,657 121,175
Total equity 156,386 144,652
Consolidated Statement of Changes in Equity
For the 53 Weeks Ended 21 April 2024
Called up share capital Share premium Treasury shares Hedge reserve Other reserve Retained earnings Total equity
£000 £000 £000 £000 £000 £000 £000
At 17 April 2022 1,127 8,066 - 38 14,278 110,597 134,106
Ordinary shares issued 6 - - - - (6) -
Share based payment charge - - - - - 3,655 3,655
Total transactions with owners 6 - - - - 3,649 3,655
Profit for the year - - - - - 6,929 6,929
Other comprehensive income - - - (38) - - (38)
Total comprehensive income for the 52 week year - - - (38) - 6,929 6,891
At 16 April 2023 1,133 8,066 - - 14,278 121,175 144,652
Ordinary shares issued 6 - - - - (6) -
Share based payment charge - - - - - 3,086 3,086
Group reorganisation - - - - (14,278) 14,278 -
Redemption of preference shares (100) - - - - - (100)
Purchase of own shares - - (376) - - - (376)
Total transactions with owners (94) - (376) - (14,278) 17,358 2,610
Profit for the year - - - - - 9,124 9,124
Total comprehensive income for the 53 week year - - - - - 9,124 9,124
At 21 April 2024 1,039 8,066 (376) - - 147,657 156,386
Consolidated Statement of Cash Flows
For the 53 Weeks Ended 21 April 2024
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
£000 £000
Cash flows from operating activities
Profit before tax 11,444 7,334
Adjustments for:
Depreciation of property, plant and equipment 17,311 13,364
Depreciation of right of use assets 11,391 9,861
Net impairment of property, plant and equipment 304 309
Net impairment of right of use assets 2,215 1,298
Share based payment transactions 3,907 4,024
Loss on disposal of tangible assets (15) 317
Finance income (154) (204)
Finance costs 9,025 7,621
Changes in inventories (434) (557)
Changes in trade and other receivables (836) (3,134)
Changes in trade and other payables 10,319 10,950
Cash generated from operations 64,477 51,183
Tax refunded / (paid) 171 (76)
Net cash generated from operating activities 64,648 51,107
Cash flows from investing activities
Purchase of subsidiary undertakings (net of cash acquired) - (2,719)
Purchase of property, plant and equipment (47,716) (36,978)
Interest received 154 204
Net cash used in investing activities (47,562) (39,493)
Cash flows from financing activities
Shares issued on exercise of employee share awards (193) (190)
Cash settlement of share awards (333) -
Purchase of own shares (376) -
Loan arrangement fees (266) -
Bank loans repaid (12,500) -
Interest paid (1,882) (1,334)
Principal element of lease payments (10,607) (8,824)
Interest paid on lease liabilities (6,950) (6,146)
Net cash used in financing activities (33,107) (16,494)
Net decrease in cash and cash equivalents (16,021) (4,880)
Cash and cash equivalents at beginning of the year 26,370 31,250
Cash and cash equivalents at end of the year 10,349 26,370
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
1. General information
Loungers plc ("the company") and its subsidiaries ("the Group") operate café
bars and café restaurants through three complementary brands, Lounge, Cosy
Club and Brightside.
The Company is a public company limited by shares whose shares are publicly
traded on the Alternative Investment Market ("AIM") of the London Stock
Exchange and is incorporated and domiciled in the United Kingdom and
registered in England and Wales.
The registered address of the Company is 26 Baldwin Street, Bristol, United
Kingdom, BS1 1SE.
2. Basis of preparation
The consolidated financial statements of the Loungers plc Group 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 financial statements have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and liabilities
(including derivatives) at fair value through profit and loss. The financial
statements are presented in thousands of pounds sterling ('£000') except
where otherwise indicated.
The accounting policies adopted in the preparation of the Financial Statements
are consistent with those applied in the preparation of the financial
statements of the Group for the year ended 16 April 2023.
The auditors' reports on the accounts for the 53 weeks ended 21 April 2024 and
the 52 weeks 16 April 2023 for Loungers plc were unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006.
The financial statements for Loungers plc for the 53 weeks to 21 April 2024
will be delivered to the Registrar of Companies shortly. The financial
information contained within this preliminary announcement for the periods
ended 21 April 2024 and 16 April 2023 does not comprise the statutory
financial statements of Loungers plc.
In concluding that it is appropriate to prepare the FY24 financial statements
on the going concern basis the Directors have considered the Group's cash
flows, liquidity and business activities in accordance with the Guidance on
Risk Management, Internal Control and Related Financial and Business Reporting
2014 published by the UK Financial Reporting Council.
As at 21 April 2024 the Group had cash balances of £10.3m (2023: £26.4m) and
undrawn facilities of £22.5m (2023: £10m), providing total liquidity of
£32.8m (2023: £36.4m).
The Group has modelled financial projections for the going concern period to
the 5 October 2025 based upon two scenarios, a base case and a downside
case. The base case incorporates the Board approved budget for FY25 as well
as the first six periods of the FY26 business plan. The base case assumes no
further selling price increases beyond those put through in March 2024 andt
flat volumes and reflects current assumptions in respect of future cost
inflation. The base case scenario indicates that the Group has significant
headroom in respect of both its liquidity position and its banking covenants.
In the downside scenario it has been assumed that sales volumes fall by 10%
from the base case with an associated reduction in labour and variable cost
efficiency and a resultant 31% decline in adjusted EBITDA. Under this
scenario the Group is able to maintain its new site opening programme and
continues to have significant liquidity and banking covenant headroom.
3. New standards, amendments and interpretations adopted
Amendments to accounting standards applied from 17 April 2023 included
amendments to:
· IFRS 17 Insurance Contracts
· Definition of Accounting Estimates - amendments to IAS 8
· International Tax Reform - Pillar Two Model Rules - amendments to
IAS 12
The application of the above did not have a material impact on the group's
accounting treatment and has therefore not resulted in any material changes.
4. Operating profit
The operating profit is stated after charging / (crediting):
53 weeks ended 52 weeks ended
Note 21 April 2024 16 April 2023
£000 £000
Depreciation of tangible fixed assets 9 17,311 13,364
Depreciation of right of use assets 9 11,391 9,861
Net impairment on property, plant and equipment 9 304 309
Net impairment on Right of Use assets 9 2,215 1,298
Loss on disposal of tangible fixed assets 9 - 317
Loss on disposal of right of use asset 9 52 -
(Gain) on write back of lease liability (67) -
Inventories - amounts charged as an expense 81,587 68,023
Fees payable to the company's auditors and its associates for the audit of 110 85
parent company and consolidated financial statements
Fees payable to company's auditors and its associates for other services:
- for statutory audit services (subsidiary companies) 110 85
Staff costs (excluding share based payments) 150,989 123,008
Pre-opening costs 4,164 3,323
5. Finance Costs
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
£000 £000
Bank interest payable 2,075 1,476
Finance cost on lease liabilities 6,950 6,145
9,025 7,621
6. Tax charge on profit
The income tax charge is applicable on the Group's operations in the UK.
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
£000 £000
Taxation charged to the income statement
Current income taxation - -
Adjustment for current tax of prior periods (1,259) -
Total current income taxation (1,259) -
Deferred Taxation
Origination and reversal of temporary timing differences 3,941 1,069
Adjustments to tax charge in respect of prior years (687) (911)
Adjustment in respect of change of rate of corporation tax 325 247
Total deferred tax 3,579 405
Total taxation charge in the consolidated income statement 2,320 405
The above is disclosed as:
Income tax charge - current year 4,266 1,316
Income tax (credit) / charge - prior year (1,946) (911)
2,320 405
Factors affecting the tax charge for the year
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
£000 £000
Profit before tax 11,444 7,334
At UK standard rate of corporation taxation of 25% (2023: 19%). 2,861 1,393
Expenses not deductible for tax purposes 1,080 801
Fixed asset permanent differences - (1,125)
Adjustments to tax charge in respect of prior years (1,946) (911)
Adjustment in respect of change of rate of corporation tax 325 247
Total tax charge for the year 2,320 405
7. Earnings per share
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
£000 £000
Profit for the year after tax 9,124 6,929
Basic weighted average number of shares 105,620,347 103,243,015
Adjusted for share awards 2,180,395 3,375,062
Diluted weighted average number of shares 107,800,742 106,618,077
Basic earnings per share (p) 8.6 6.7
Diluted earnings per share (p) 8.5 6.5
8. Goodwill
21 April 2024 16 April 2023
£000 £000
Cost
At beginning of year 114,722 113,227
Additions - 1,495
At end of year 114,722 114,722
Goodwill of £113,227,000 arose on the acquisition of a majority stake in the
Group by the former controlling party, Lion Capital LLP, on 19 December 2016.
Goodwill of £1,495,000 arose on the acquisition of Route Restaurants Limited
and Nightlife Leisure (South West) Limited on 1 December 2022.
9. Property, plant and equipment
Freehold Land and Buildings Leasehold Building Improvements Motor Vehicles Fixtures and Fittings Right of use asset Total
£000 £000 £000 £000 £000 £000
Cost
At 18 April 2022 369 67,489 210 70,606 149,381 288,055
Additions 832 17,076 - 21,273 24,519 63,700
Acquisition of subsidiaries 1,500 - - - - 1,500
Disposals (250) (451) (9) (175) - (885)
At 16 April 2023 2,451 84,114 201 91,704 173,900 352,370
Accumulated depreciation
At 18 April 2022 - 17,937 66 30,658 51,031 99,692
Provided for the year 14 4,771 48 8,531 9,861 23,225
Impairment - 381 - 85 2,937 3,403
Impairment reversal - (157) - - (1,639) (1,796)
Disposals - (405) (3) (160) - (568)
At 16 April 2023 14 22,527 111 39,114 62,190 123,956
Net book value
At 16 April 2023 2,437 61,587 90 52,590 111,710 228,414
Cost
At 17 April 2023 2,451 84,114 201 91,704 173,900 352,370
Additions 2,865 20,005 - 24,302 27,046 74,218
Disposals - - - - (243) (243)
At 21 April 2024 5,316 104,119 201 116,006 200,703 426,345
Accumulated depreciation
At 17 April 2023 14 22,527 111 39,114 62,190 123,956
Provided for the year 40 6,085 35 11,151 11,391 28,702
Impairment - 422 - 333 3,940 4,695
Impairment reversal - (451) - - (1,725) (2,176)
Disposals - - - - (191) (191)
At 21 April 2024 54 28,583 146 50,598 75,605 154,986
Net book value
At 21 April 2024 5,262 75,536 55 65,408 125,098 271,359
Impairment of property, plant and equipment and right of use assets
The Group has determined that each site is a separate CGU for impairment
testing purposes. Each CGU is tested for impairment at the balance sheet
date if there exists at that date any indicators of impairment. All sites
were reviewed in FY20 following the first national lockdown and an impairment
of £9,829,000 was booked in the FY20 financial statements. Following
reopening a number of those sites have generated sufficient cashflows to
justify an assessment that impairment is no longer necessary and consequently
a reversal of £2,176,000 has been released to the income statement (2023:
£1,796,000). Conversely, the assessment carried out at the end of FY24
indicated that a further eleven sites showed potential impairment and a
£4,695,000 charge has been recognised in respect of these sites (2023:
£3,403,000).
The value in use of each CGU is calculated based upon the Group's latest
three-year forecast. The site cash flows include an allocation of central
costs and ongoing capital expenditure to maintain the sites. The cash flows
exclude any growth capital. Cash flows beyond the three-year period are
extrapolated using the Group's estimate of the long-term growth rate,
currently 2.0% (2023: 2.0%).
The key assumptions in the value in use calculations are the LFL sales
projections for each site, changes in the operating cost base, the long-term
growth rate and the pre-tax discount rate. The post-tax discount rate is
derived from the Group's WACC and is currently 9.0% (2023: 9.0%).
The cash flows used within the impairment model are based upon Board approved
forecasts. Management has performed sensitivity analysis on the key
assumptions in the impairment model using reasonably possible changes in the
key assumptions. A reduction in site cash flows of 10% in each year would
result in an incremental impairment charge of £1,978,000 (2023:
£1,000,000). A 100 basis point increase in the discount rate would result
in an impairment charge of £455,000 (2023: £400,000) and a 50 basis point
reduction in the terminal growth rate would result in an impairment charge of
£174,000 (2023: £100,000).
10. Borrowings
21 April 2024 16 April 2023
£000 £000
Long term borrowings:
Secured bank loans 20,000 32,500
Loan arrangement fees (190) (108)
19,810 32,392
Secured bank loans
The Group's bank borrowings are secured by way of fixed and floating charges
over the Group's assets.
The facilities entered into at the time of the IPO provided for a term loan of
£32,500,000 and a revolving credit facility ("RCF") of £10,000,000. The term
loan was a five-year non-amortising facility with a margin of 2% above SONIA.
In June 2023 the Group completed a refinancing of its debt arrangements,
reducing the term loan to £20,000,000 and increasing the RCF by £12,500,000.
The term loan and RCF are subject to financial covenants relating to leverage
and interest cover. There were no breaches of these tests in the years to 16
April 2023 or 21 April 2024.
At 21 April 2024 the term loan was fully drawn while nothing was drawn on the
revolving facility (2023: term loan fully drawn and £nil drawn down under the
RCF).
11. Analysis of changes in net debt
18 April 2022 Cash flows Non-cash movement 16 April 2023
£000 £000 £000 £000
Cash in hand 31,250 (4,880) - 26,370
Bank Loans - due after one year (32,275) - (117) (32,392)
Lease liabilities (119,602) 14,970 (30,205) (134,837)
Net debt (120,627) 10,090 (30,322) (140,859)
Derivatives
Interest-rate swaps liability 38 - (38) -
Total derivatives 38 - (38) -
Net debt after derivatives (120,589) 10,090 (30,360) (140,859)
17 April 2023 Cash flows Non-cash movement 21 April 2024
£000 £000 £000 £000
Cash in hand 26,370 (16,021) - 10,349
Bank Loans - due after one year (32,392) 12,766 (184) (19,810)
Lease liabilities (134,837) 17,557 (33,929) (151,209)
Net debt (140,859) 14,302 (34,113) (160,670)
Non-cash movements in bank loans due after one year relate to the amortisation
of bank loan issue costs.
12. Reconciliation of statutory results to alternative performance measures
53 weeks ended 52 weeks ended
21 April 2024 16 April 2023
£000 £000
Operating profit 20,315 14,751
Net impairment charge 2,519 1,607
Loss on disposal of fixed assets (15) 317
Transaction costs - 102
Share based payment charge 3,907 4,024
Site pre-opening costs 4,164 3,323
Adjusted operating profit 30,890 24,124
Depreciation (pre IFRS 16 right of use asset charge) 17,311 13,364
IFRS 16 right of use asset depreciation 11,391 9,861
Adjusted EBITDA (IFRS 16) 59,592 47,349
Adjusted EBITDA % (IFRS 16) 16.9% 16.7%
IAS 17 Rent charge (15,886) (13,459)
IAS 17 Rent charge included in IAS 17 pre-opening costs 530 331
Adjusted EBITDA (IAS 17) 44,236 34,221
Adjusted EBITDA Margin % (IAS17) 12.5% 12.1%
Profit before tax (IFRS 16) 11,444 7,334
IAS 17 Rent charge (15,886) (13,459)
IAS 17 Leasehold depreciation (re landlord contributions) (1,241) (945)
IFRS 16 Right of use asset impairment 2,215 1,298
IFRS 16 Right of use asset depreciation 11,391 9,861
IFRS 16 Lease interest charge 6,950 6,145
IFRS 16 Lease interest income (15) -
Profit before tax (IAS 17) 14,858 10,234
Profit before tax (IFRS16) 11,444 7,334
Net impairment charge 2,519 1,607
(Profit) / loss on disposal of fixed assets (15) 317
Transaction costs - 102
Adjusted profit before tax (IFRS16) 13,948 9,360
Adjusted profit before tax 13,948 9,360
Tax charge (2,320) (405)
Tax effect of adjusting items (323) (324)
Adjusted profit after tax (IFRS16) 11,305 8,631
Basic weighted average number of shares 105,620,347 103,243,015
Adjusted for share awards 2,180,395 3,375,062
Diluted weighted average number of shares 107,800,742 106,618,077
Basic adjusted earnings per share (p) 10.7 8.4
Diluted adjusted earnings per share (p) 10.5 8.1
13. Reconciliation of statutory results to alternative performance measures (continued)
Net debt (IFRS 16) 160,670 140,859
Property lease liability (151,209) (134,837)
Net debt (IAS 17) 9,461 6,022
The Group references Like for Like (LFL) sales growth as a key APM. LFL sales
growth excludes the sales from sites that have been open for less than 18
months. During the 53 weeks ended 21 April 2024, the comparator periods are
the 52 weeks ended 16 April 2023 for the one-year like for like.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR QKFBDCBKDKOK