Interim Results
28/11/2024 07:00
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RNS Number : 9352N Loungers PLC 28 November 2024
28 November 2024
Loungers plc
Results for the 24 weeks ended 6 October 2024
Continued strong like for like sales performance and margin progression
17 new sites opened in the period; on-track to open 35 new sites this year and
to end FY25 with 292 sites
Loungers, a leading operator of all day café/bar/restaurants across the UK
under the Lounge, Cosy Club and Brightside brands, is pleased to announce its
unaudited results for the 24 weeks ended 6 October 2024 ("the period").
Financial Highlights
24 weeks ended 6 October 2024 24 weeks ended 1 October 2023
£'000 £'000 Change
Revenue 178,327 149,619 +19.2%
Adjusted EBITDA((1)) 29,832 23,862 +25.0%
Adjusted EBITDA margin (%) 16.7% 15.9% +0.8 ppts
Adjusted EBITDA (IAS17) 22,087 17,284 +27.8%
Adjusted EBITDA (IAS17) margin (%) 12.4% 11.6% +0.8 ppts
Operating profit 10,243 7,774 +31.8%
Operating profit margin (%) 5.7% 5.2% +0.5 ppts
Profit before tax 5,954 3,936 +51.3%
Diluted earnings per share (p) 4.0 2.6 +53.8%
Cash generated from operating activities 32,402 23,402 +38.5%
6 October 2024 1 October 2023
£'000 £'000
Non-property net debt 12,194 14,259
Net debt 173,655 156,136
((1)) Adjusted EBITDA is calculated as operating profit before depreciation,
impairment, pre-opening costs, exceptional costs, and share-based payment
charges.
· Revenue growth of 19.2% versus H1 2024 reflects like for like
("LFL") sales growth of +4.7% and the addition of a net 35 new sites
· Adjusted EBITDA of £29.8m (H1 2024: £23.9m), up 25.0%
· Adjusted EBITDA (IAS17) of £22.1m (H1 2024: £17.3m) up 27.8%
· IAS17 Adjusted EBITDA margin of 12.4% up 0.8% on H1 2024
· PBT of £6.0m (H1 2024 £3.9m) up 51.3%
· Cash generated from operating activities increased to £32.4m (H1
2024: £23.4m)
Operational Highlights
· Consistently strong trading across the estate as a whole
· Continued evolution of our all-day, value for money offer driving
breadth of appeal and high frequency of visit for multiple occasions
· Margin improvement driven by increasing scale, ongoing consolidation
of supply chain, and a range of efficiency initiatives; on track to return to
pre Covid margin levels
· New site roll out accelerated with 17 sites opened in the period
(H1 2024 16 sites) - 16 Lounges and one Cosy Club. New sites performing very
well and the pipeline remains strong
Current Trading and Outlook
· The business has continued to trade well over the first seven weeks of
Q3, with LFL sales growth of +3.9% (+5.1% over the first six weeks to 17
November, which excludes the last week's trading which was impacted by Storm
Bert)
· A further seven sites have opened post the 6 October half year end
- 6 Lounges and 1 Brightside
· The business will be able to absorb the unexpected increases in
Employers NIC's announced in the recent budget whilst continuing to improve
our margins, albeit prices will rise more than we had previously anticipated.
Nick Collins, Chief Executive Officer of Loungers said:
"The first half of the year has been another period of excellent progress for
Loungers, with revenue up 19.2% and adjusted EBITDA up 25.0%. We opened 17 new
sites and are on track to finish FY25 with 292 sites across all three brands.
As ever, the performance is testament to the quality and flexibility of our
all-day offering, the hard work and professionalism of our teams, and the
ongoing resilience of the UK consumer."
Analyst Presentation Webcast
An analyst presentation will be held today, Thursday 28 November 2024, at
9.00am (GMT). Participants wishing to join the webcast should contact
loungers@sodali.com (mailto:loungers@sodali.com) to request details.
Use of Alternative Performance Measures
The Half Year Results include both statutory and alternative performance
measures ("APMs"). Further background to the use of APM's and
reconciliations between statutory measures and APM's are presented on page 17.
For further information please contact:
Loungers plc Via Sodali & Co
Nick Collins, Chief Executive Officer
Stephen Marshall, Chief Financial Officer
Houlihan Lokey UK Limited (Financial Adviser and NOMAD) Tel: +44 (0) 20 7839 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
Sodali & Co (Financial Public Relations) Tel: +44 (0) 20 7100 6451
Rob Greening / Russ Lynch / Oliver Banks
Notes to Editors
Loungers operates through its three 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 240 Lounges nationwide. Lounges are principally located in
secondary suburban high streets and small town centres. The sites are
characterised by informal, unique interiors with an emphasis on a warm,
comfortable atmosphere, often described as a "home from home".
Cosy Clubs are more formal bars/restaurants offering reservations and table
service but share many similarities with the Lounges in terms of their broad,
all-day offering and their focus on hospitality and culture. Cosy Clubs are
typically located in city centres and large market towns. Interiors tend to
be larger and more theatrical than for a Lounge, and heritage buildings or
first-floor spaces are often employed to create a sense of occasion. There
are 36 Cosy Clubs nationwide.
Brightside is a roadside dining concept and was launched in November 2022. It
has four sites - three in the south-west, and one on the A1 in Rutland.
Loungers has a total of 280 sites in its portfolio across the three brands.
CHIEF EXECUTIVE REVIEW
Operating review
Consistently strong sales performance
We have had another six months of consistently strong sales, achieving LFL
sales growth of +4.7%. We have continued to outperform the sector in like for
like sales growth for 9 of the last 10 financial years and, as ever, there is
a broad consistency in terms of sales performance across all types of location
and ages of site. We remain encouraged by the resilience of the UK consumer
and the strength of the UK high street, and are proud of the role we play in
reinvigorating and supporting communities across the country. We have worked
hard to keep our prices low and believe our value for money positioning, as
well as the flexibility of our all-day offering, leaves us well-placed to
benefit in both the short and long term.
Investing in our brands to drive further growth
During the first half of the year, we invested in the operating structures in
both Lounge and Cosy Club, further reducing our already low operator to site
ratio to 1:4.5. This helps to ensure that our Operations areas are small and
our Operations Managers and Operations Chefs are close to their teams and
businesses, as well as giving them the capacity to open more sites. In
addition, we have reduced the number of sites per Region to ensure our
Regional Operations Managers can focus their attention and operate their
businesses with our customary levels of quality and intensity. As we create
new roles and prepare the operating structure for continued growth, it has
been extremely pleasing to see the high number of internal promotions into
Operations or Regional Operations roles.
· Lounge: community engagement remains at the heart of the Lounge
business. We launched the Community Fund earlier this year, which allows our
teams to choose how they can support projects that are local to their Lounge
with either cash or their time. We are also trialing some changes to our
evening offer to look at how we can drive footfall later in the day and have
invested in our hot drinks range.
· Cosy Club: towards the end of H1 we launched the new Cosy Club menu
which represented one of the most exciting and significant pieces of menu
development we have undertaken. The launch saw a major re-working of our Small
Plates and Mains sections, elevating the offer and aligning our food more
closely with the brand's personality and interior design. We have been
delighted with the initial customer reaction.
· Brightside: we have also just launched a new menu for Brightside,
with even greater focus on speed and with a more formalised take away option
which has been very well received by our customers. Last week we opened our
fourth Brightside, on the A1 in Rutland and the initial three sites are
maintaining double-digit LFL sales growth. We continue to invest in marketing
and are constantly building up our knowledge of the roadside customer.
Pleasing margin progression
Our Operating Margin has increased +0.5% to 5.7% in H1 compared against last
year. This material improvement reflects both the benefit of our increasing
scale, as well as our continued progress in gradually consolidating our food
and drink supply chain. It also reflects several efficiency initiatives in
areas such as cooking oil, waste management, energy consumption and cellar
gas, amongst others.
We have broadly maintained our labour costs as a proportion of sales vs last
year, which in this increasingly inflationary wage environment is an
achievement of which we are proud. We were, like many other businesses,
disappointed with the recent Budget and in particular the increase to
Employers' National Insurance Contributions via the reduction of the lower
threshold. The combined impact of this increase, alongside the increase in the
National Minimum / Living Wage, will cost the business an additional £9m to
implement next year (ending April 2026). As a growing business we are very
fortunate that we can absorb this cost and continue to improve our margins,
but it will inevitably lead to us having to put up our prices - albeit, as
ever, in a disciplined, managed way.
Overall, we are on track to achieve our medium-term target of returning to a
pre-Covid EBITDA margin level of 13.5%. We continue to work hard to strike the
right balance between optimising our profit conversion to reflect the size of
the business, whilst also ensuring that our focus is on top line growth in
both the new and mature estate.
Our team
We continue to concentrate a huge amount of our time and effort on the people
side of the business, particularly with regard to developing our team-members
for progression to General Manager, Head Chef and Operations roles. Given our
growth and scale, we have the unique advantage of being able to offer the
right people quick career progression as we create hundreds of leadership
positions across the UK. As such, we have invested significantly in our
Bitesize & Step-up training programmes which aim to provide the necessary
skills to run our sites and kitchens. We also launched our Future Ops
Programme, where we identify and train the Operations Managers and Chefs of
the future, as we look to grow our 63 strong Operations team.
More broadly, we have seen continued improvement in our staff retention rates.
We now employ over 9,000 people and take our responsibilities as an employer
very seriously. We are working hard on engaging with our team, improving and
protecting their work-life balance, prioritising their mental health, and
generally creating a fun environment to work in with excellent career
prospects. Hospitality is a hugely exciting and rewarding industry to work in
and whether you are a student working eight hours a week over the summer
holidays, or a career-driven General Manager, we strive to make Loungers a
wonderful home. Our team deliver amazing hospitality 364 days a year and, as
ever, I would like to say a huge thank you to them for the crucial role they
play in helping us to deliver such strong results.
Property
We continue to open fantastic sites. Since the start of the financial year we
have opened 22 Lounges, 1 Cosy Club and 1 Brightside and we have achieved
record levels of average weekly sales across these openings. Highlights
include: Ritorno Lounge in Bristol, our new waterfront Lounge in our home-town
which has smashed all our daily and weekly sales records for Lounge; Zafferano
Lounge in Saffron Walden, a beautiful bank conversion; and our very recently
opened fourth Brightside in Rutland. It continues to be the case that we are
able to find prominent, attractive and well-located sites which are delivering
strong levels of sales. The pipeline for calendar year 2025 is very fully
formed with another great cohort of locations.
We continue to have real confidence in the potential scale of the Lounge
business in particular. This confidence is continually fuelled as we open more
sites in different types of locations. We continue to enjoy great success in
suburban high streets, market towns, coastal locations, shopping centers and
mixed-use retail / leisure schemes.
Senior management & central functions
As the site roll-out continues, we are building a best-in-class senior
management team in order to be well-equipped for our next phase of growth.
With Stephen Marshall now in place as CFO, we are looking at some systems
changes in the business to make life easier for our teams and allow them to
focus even more on their customers. We have also strengthened the Property
side of the business with new senior hires and continue to try to drive down
our capital expenditure to enhance our already strong returns on capital. We
have also appointed new Heads of Learning & Development, and People
Operations & Rewards, to continue the improvement in our staff retention.
Financial review
Financial Performance
It is pleasing to report such a strong year on year performance, with:
· Total revenue ahead by 19.2%;
· Adjusted EBITDA ahead by 25.0%
· Operating profit ahead by 31.8%
· PBT ahead by 51.3%
Total revenue growth of 19.2% reflects the positive impact of LFL sales growth
of 4.7% allied to the continued strength of our new site opening programme,
with 17 sites opened in H1 and a net 35 new sites opened in the past 12
months. The sales performance again demonstrates both the flexibility and
quality of the Loungers business, as well as the consistency and resilience
that we have seen in consumer behaviour.
Adjusted EBITDA margins are ahead by 0.8% to 16.7% on the IFRS16 basis and
show the same improvement when looked at on the IAS17 basis with rent costs
included - i.e. an increase to 12.4% from 11.6% in H1 2024. The 80bps
improvement in IAS17 EBITDA margin reflects:
· Gross margin improvement of 120bps;
· Site cost benefit of 20bps; offset by
· Negative impact of central costs of 60bps
The gross margin improvement has been largely driven by improvements in food
and drink gross margin as the business continues to benefit from its growing
scale allied to a moderation in inflationary pressures. The maintenance of
strong property discipline assists in delivering improvements in fixed
property cost leverage, with a rent to revenue ratio of 4.3% in the first
half. These benefits have been partially offset by an increase in central
costs.
Profit before tax of £6.0m (H1 2024 £3.9m) represents an uplift of 51.3%.
The tax charge of £1.7m provides an effective tax rate of 28.1%, reflecting
the impact of non-deductible depreciation on capital expenditure not eligible
for capital allowances.
Net debt
Non-property net debt (gross of arrangement fees) of £12.2m represents a
decrease of £2.1m relative to 1 October 2023, which is pleasing considering
the continued pace of the new site opening programme.
Finance costs for the period have increased to £4.5m (H1 2024: £3.9m),
reflecting an increase in IFRS16 lease interest charges to £3.5m (H1 2024:
£3.1m) and an increase in bank interest payable to £1.0m (H1 2024: £0.9m).
Cash flow
Net cash generated from operating activities was £32.4m (H1 2024: £23.4m),
with the improvement of £9.0m coming from adjusted EBITDA growth of £6.0m,
working capital improvements of £2.0m and £1.2m in tax recovered, which is
partially offset by a £0.2m increase in pre-opening costs.
Capital expenditure outflows in the period remained consistent at £21.0m (H1
2024: £21.0m), reflecting the continued roll out of the new site opening
programme and the opening of 17 sites in the first half (H1 2024:16 sites).
The capital expenditure incurred in the period (excluding IFRS16 ROUA
investment) of £21.9m (H1 2024: £22.0m), included £17.7m related to new
sites (H1 2024: £18.1m).
Cash outflows include £1.4m in relation to the cash settlement of share
awards, and £1.0m in relation to interest payments on the RCF and term loan
facilities.
Dividend policy
In the short term, the Board intends to retain the Group's earnings to bolster
liquidity and balance sheet strength and for re-investment in the roll-out of
new sites. It is the Board's ultimate intention to pursue a progressive
dividend policy, subject to the need to retain sufficient earnings for the
future growth of the Group.
Current trading and prospects
· The business has continued to trade well over the first seven weeks
of Q3, with LFL sales growth of +3.9% (+5.1% over the first six weeks to 17
November, which excludes the last week's trading which was impacted by Storm
Bert)
· A further seven sites have opened post the half year end
Nick Collins
Chief Executive Officer
28 November 2024
Condensed Consolidated Statement of Comprehensive Income
For the 24 Week Period Ended 6 October 2024
24 weeks ended 24 weeks ended 53 weeks ended
Note 6 October 2024 1 October 2023 21 April 2024
£000 £000 £000
Unaudited Unaudited Audited
Revenue 178,327 149,619 353,486
Cost of sales (105,415) (90,314) (209,338)
Gross profit 72,912 59,305 144,148
Administrative expenses (62,669) (51,531) (123,833)
Operating profit 10,243 7,774 20,315
Finance income 183 84 154
Finance costs 3 (4,472) (3,922) (9,025)
Profit before taxation 5,954 3,936 11,444
Tax charge on profit 4 (1,672) (1,198) (2,320)
Profit for the period 4,282 2,738 9,124
Total comprehensive income for the period 4,282 2,738 9,124
Earnings per share (pence)
Basic 5 4.0 2.6 8.6
Diluted 5 4.0 2.6 8.5
Condensed Consolidated Statement of Financial Position
As at 6 October 2024
Note 6 October 2024 1 October 2023 21 April 2024
£000 £000 £'000
Unaudited Unaudited Audited
Assets
Non-current
Intangible assets 114,722 114,722 114,722
Property, plant and equipment 7 296,067 250,467 271,359
Total non-current assets 410,789 365,189 386,081
Current
Inventories 3,024 2,450 2,910
Trade and other receivables 9,628 7,024 10,487
Cash and cash equivalents 7,806 5,741 10,349
Total current assets 20,458 15,215 23,746
Total assets 431,247 380,404 409,827
Liabilities
Current liabilities
Trade and other payables (84,786) (70,411) (79,788)
Lease liabilities (12,690) (11,025) (11,876)
Total current liabilities (97,476) (81,436) (91,664)
Non-current liabilities
Borrowings 8 (19,851) (19,709) (19,810)
Lease liabilities (148,771) (130,852) (139,333)
Deferred tax liabilities (4,102) (252) (2,634)
Total liabilities (270,200) (232,249) (253,441)
Net assets 161,047 148,155 156,386
Called up share capital 9 1,041 1,139 1,039
Share premium 8,066 8,066 8,066
Treasury shares (376) (376) (376)
Accumulated profits 152,316 139,326 147,657
Total equity 161,047 148,155 156,386
Condensed Consolidated Statement of Changes in Equity
For the 24 Week Period Ended 6 October 2024
Share Capital Share Premium Treasury Shares Other Reserve Accumulated Profits Total Equity
£000 £000 £000 £000 £000 £000
At 16 April 2023 1,133 8,066 - 14,278 121,175 144,652
Ordinary shares issued 6 - - - (6) -
Share based payment charge - - - - 1,141 1,141
Group reorganisation - - - (14,278) 14,278 -
Purchase of own shares - - (376) - - (376)
Total transactions with owners 6 - (376) (14,278) 15,413 765
Profit for the period - - - - 2,738 2,738
Total comprehensive income - - - - 2,738 2,738
At 1 October 2023 1,139 8,066 (376) - 139,326 148,155
Share based payment charge - - - - 1,945 1,945
Redemption of preference shares (100) - - - - (100)
Total transactions with owners (100) - - - 1,945 1,845
Profit for the period - - - - 6,386 6,386
Total comprehensive income - - - - 6,386 6,386
At 21 April 2024 1,039 8,066 (376) - 147,657 156,386
Ordinary shares issued 2 - - - (2) -
Share based payment charge - - - - 379 379
Total transactions with owners 2 - - - 377 379
Profit for the period - - - - 4,282 4,282
Total comprehensive income - - - - 4,282 4,282
At 6 October 2024 1,041 8,066 (376) - 152,316 161,047
Condensed Consolidated Statement of Cash Flows
For the 24 Week Period Ended 6 October 2024
24 weeks ended 24 weeks ended 53 weeks ended
Note 6 October 2024 1 October 2023 21 April 2024
Unaudited Unaudited Audited
£000 £000 £000
Net cash generated from operating activities 10 32,402 23,402 64,648
Cash flows from investing activities
Purchase of property, plant and equipment (21,048) (21,022) (47,716)
Disposal of property, plant and equipment 8 - -
Interest received 183 84 154
Net cash used in investing activities (20,857) (20,938) (47,562)
Cash flows from financing activities
Shares issued on exercise of employee share awards (235) (183) (193)
Cash settlement of share awards (1,422) (333) (333)
Purchase of own shares - (376) (376)
Loan arrangement fees - (266) (266)
Bank loans repaid - (12,500) (12,500)
Interest paid (981) (852) (1,882)
Principal element of lease payments (7,934) (5,533) (10,607)
Interest paid on lease liabilities (3,516) (3,050) (6,950)
Net cash used in financing activities (14,088) (23,093) (33,107)
Net decrease in cash and cash equivalents (2,543) (20,629) (16,021)
Cash and cash equivalents at beginning of the period 10,349 26,370 26,370
Cash and cash equivalents at end of the period 7,806 5,741 10,349
Notes to the Condensed Consolidated Interim Financial Statements
1. General information
The Directors of Loungers plc (the "Company") and its subsidiaries (the
"Group") present their interim report and the unaudited condensed financial
statements for the 24 weeks ended 6 October 2024 ("Interim Financial
Statements").
The Company is a public limited company, incorporated and domiciled in England
and Wales, under the company registration number 11910770. The registered
office of the company is 26 Baldwin Street, Bristol BS1 1SE.
The Interim Financial Statements were approved by the Board of Directors on 28
November 2024.
The Interim Financial Statements have not been audited or reviewed by the
auditors. The financial information shown for the 24 weeks ended 6 October
2024 does not constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006.
The information shown for the 53 weeks ended 21 April 2024 does not constitute
statutory accounts within the meaning of section 434 of the Companies Act 2006
and has been extracted from the Group's Annual Report and Financial Statements
for that period.
The Interim Financial Statements should be read in conjunction with the
Group's Annual Report and Financial Statements for the 53 weeks ended 21 April
2024, which were prepared in accordance with UK adopted International
Accounting Standards and those parts of the Companies Act 2006 applicable to
companies reporting under those standards. The Group's Annual Report and
Financial Statements for the 53 weeks ended 21 April 2024 have been filed with
the Registrar of Companies. The Independent Auditors' Report on the Group's
Annual Report and Financial Statements for the 53 weeks ended 21 April 2024
was unqualified, did not draw attention to any matters by way of emphasis, and
did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
2. Basis of preparation
The Interim Financial Statements have been prepared in accordance with IAS34,
'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority. They do not
include all of the information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to explain
events and transactions that are significant to an understanding of the
changes in the Group's financial position and performance since the last
financial statements.
The Interim Financial Statements are presented in Pounds Sterling, rounded to
the nearest thousand Pounds, except where otherwise indicated; and under the
historical cost convention as modified through the recognition of financial
liabilities at fair value through the profit and loss.
The Directors consider that the principal risks and uncertainties faced by the
Group are as set out in the Group's Annual Report and Financial Statements for
the 53 weeks ended 21 April 2024.
The accounting policies adopted in the preparation of the half year financial
statements are consistent with those followed in the preparation of the
Group's financial statements the 53 weeks ended 21 April 2024. The Group has
not early adopted any standard, interpretation or amendment that has been
issued but is not yet effective.
Going concern
In concluding that it is appropriate to prepare the Group's interim financial
statements on the going concern basis, attention has been paid both to the
current sector headwinds in terms of consumer confidence and inflationary
pressures and also longer terms risks such as climate change. The impact of
the most recent Budget has also been considered - including the effect of cost
changes resulting from the increases to National Living Wage and employer's NI
contributions from April 2025.
As at the 6 October 2024 the Group had cash balances of £7.8m and unutilised
facilities of £22.5m providing total liquidity of £30.3m.
In order to assess the Group's going concern position the Board has considered
a base case and a downside case scenario of the Group's business plan. The
going concern period covers the period to December 2025.
· The base case assumes selling price increases in line with
inflation 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 46% decline in adjusted EBITDA over
the period to December 2025. Despite the significant sales decline, the
Group continues to have sufficient liquidity to fund the new site roll out
plan over the review period.
In the downside scenario the Group continues to have significant liquidity and
banking covenant headroom and accordingly the Directors have concluded that it
is appropriate to prepare the Interim Financial Statements on the going
concern basis.
Principal risks and uncertainties
In the course of normal business, the Group continually assess and takes
action to mitigate various risks encountered that could impact the achievement
of its objectives. The risks applicable to the business and mitigating
actions which may affect the Group's performance in the next six months are
consistent with those detailed on page 24 of the FY24 Annual Report and
Financial Statements, which are available on the Loungers website,
www.loungers.co.uk.
ESG and TCFD requirements
The Group reported under the TCFD framework in its full year report and
accounts to 21 April 2024. The Group continues to evolve its ESG strategy.
At the half year, the Group is not aware of any climate related risks that
would have a material financial impact upon the Group's ability to operate,
but the Board continues to monitor this as part of their ongoing risk
assessments.
Accounting estimates and judgements
In preparing these financial statements, management has made judgements,
estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those applied to the Group's consolidated financial statements for the
53 weeks ended 21 April 2024.
The Group tests for impairment on an annual basis or earlier if there are
indicators that an asset might be impaired. At the 6 October 2024 the Group
was not aware of any specific events that would require a site to be impaired.
The Group has reviewed its FY24 impairment calculations, flexing assumptions
for potential increases in discount rates and is satisfied that there is no
requirement to recognise additional impairment.
3. Finance costs
24 weeks ended 24 weeks ended 53 weeks ended
6 October 2024 1 October 2023 21 April 2024
£000 £000 £000
Unaudited Unaudited Audited
Bank interest payable 956 872 2,075
Finance cost on lease liabilities 3,516 3,050 6,950
4,472 3,922 9,025
4. Tax on profit
24 weeks ended 24 weeks ended 53 weeks ended
6 October 2024 1 October 2023 21 April 2024
£000 £000 £000
Unaudited Unaudited Audited
Taxation charged to the income statement
Current income taxation 204 - -
Adjustments for current tax of prior periods - - (1,259)
Total current income taxation 204 - (1,259)
Deferred Taxation
Origination and reversal of temporary differences - - 3,941
Current period 1,468 1,198 -
Adjustments to tax charge in respect of prior periods - - (687)
Adjustment in respect of changes in tax rates - - 325
Total deferred tax 1,468 1,198 3,579
Total taxation charge in the consolidated income statement 1,672 1,198 2,320
The income tax expense was recognised based on management's best estimate of
the effective income tax rate expected for the full financial year, applied to
the profit before tax for the 24 weeks ended 6 October 2024. The effective tax
rate of 28.1% is above the standard rate of income tax due to the impact of
non-deductible depreciation on fixed asset additions that are not eligible for
capital allowances.
5. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
equity shareholders by the weighted average number of shares outstanding
during the period. The calculation includes vested share awards awarded as
nil cost options that have not yet been exercised, but excludes unvested
shares held pursuant to the following long-term incentive plans:
· Loungers plc Employee Share Plan
· Loungers plc Senior Management Restricted Share Plan
· Loungers plc Value Creation Plan
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. During the period ended 6 October 2024 the Group
had potentially dilutive shares in the form of unvested shares pursuant to the
above long-term incentive plans.
Own shares held in Treasury are treated as cancelled for the purpose of this
calculation.
24 weeks ended 24 weeks ended 53 weeks ended
6 October 2024 1 October 2023 21 April 2024
Unaudited Unaudited Audited
£000 £000 £000
Profit for the period after tax 4,282 2,738 9,124
Basic weighted average number of shares 106,311,384 103,657,995 105,620,347
Adjusted for share awards 1,592,591 3,338,091 2,180,395
Diluted weighted average number of shares 107,903,975 106,996,006 107,800,742
Basic earnings per share (p) 4.0 2.6 8.6
Diluted earnings per share (p) 4.0 2.6 8.5
6. Share based payments
The Group had the following share-based payment arrangement in operation
during the period:
- Loungers plc Employee Share Plan
- Loungers plc Senior Management Restricted Share Plan
- Loungers plc Value Creation Plan
The Group recognised a total charge of £2,258,000 in respect of the Group's
three share-based payment plans.
7. Fixed assets
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 16 April 2023 2,451 84,114 201 91,704 173,900 352,370
Additions 2,865 7,717 - 11,429 12,571 34,582
At 1 October 2023 5,316 91,831 201 103,133 186,471 386,952
Additions - 12,288 - 12,873 14,475 39,636
Disposals - - - - (243) (243)
At 21 April 2024 5,316 104,119 201 116,006 200,703 426,345
Additions 900 9,334 9 11,617 18,186 40,046
Disposals - (351) (17) (506) - (874)
At 6 October 2024 6,216 113,102 193 127,117 218,889 465,517
Depreciation
At 16 April 2023 14 22,527 111 39,114 62,190 123,956
Provided for the period 40 2,608 16 4,856 5,009 12,529
At 1 October 2023 54 25,135 127 43,970 67,199 136,485
Provided for the period - 3,477 19 6,295 6,382 16,173
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
Provided for the period 132 3,086 15 5,839 6,260 15,332
Disposals - (351) (11) (506) - (868)
At 6 October 2024 186 31,318 150 55,931 81,865 169,450
Net book value
At 6 October 2024 6,030 81,784 43 71,186 137,024 296,067
At 21 April 2024 5,262 75,536 55 65,408 125,098 271,359
At 1 October 2023 5,260 66,698 74 59,163 119,272 250,467
At 16 April 2023 2,437 61,587 90 52,590 111,710 228,414
8. Borrowings
6 October 2024 1 October 2023 21 April 2024
£000 £000 £000
Unaudited Unaudited Audited
Non-current
Bank loan 20,000 20,000 20,000
Loan arrangement fees (149) (291) (190)
19,851 19,709 19,810
The Group's bank borrowings are secured by way of fixed and floating charges
over the Group's assets.
In June 2023, the Group completed a refinancing of its debt arrangements
leaving it with a term loan of £20,000,0000 and a revolving credit facility
of £22,500,000. The term loan is non-amortising and bears interest at
between 1.75% and 2.5% over SONIA subject to the Group's leverage. At
inception of the facility and at 6 October 2024 the Group was paying a margin
of 1.75%. The term loan and RCF are subject to financial covenants relating to
leverage and interest cover, which are unchanged from the original facility.
The Group has been compliant with all its covenant obligations during the 24
weeks to 6 October 2024.
At 6 October 2024 the term loan was fully drawn and £nil was drawn down under
the revolving credit facility.
9. Share capital
6 October 2024 1 October 2023 21 April 2024
£000 £000 £000
Unaudited Unaudited Audited
Allotted, called up and fully paid ordinary shares 1,041 1,039 1,039
Redeemable preference shares - 100 -
1,041 1,139 1,039
Ordinary shares at £0.01 each 104,098,443 103,900,642 103,945,057
Redeemable preference shares - 2 -
The table below summarises the movements in share capital for Loungers plc
during the period ended 6 October 2024:
Ordinary Redeemable £'000
Shares Preference
Shares
£0.01 NV £49,999 NV
At 21 April 2024 103,945,057 - 1,039
Shares issued 153,386 - 2
At 6 October 2024 104,098,443 - 1,041
In May 2024, a total of 464,000 ordinary shares of 1 pence each to 929
employees were settled pursuant to the Group's share plans. Of the total,
382,500 awards were settled in cash. There has been no block listing
increase to 6 October 2024, and in the same period, 71,886 shares have been
issued under the block listing scheme.
10. Note to the cash flow statement
24 weeks ended 24 weeks ended 53 weeks ended
6 October 2024 1 October 2023 21 April 2024
£000 £000 £000
Cash flows from operating activities
Profit before tax 5,954 3,936 11,444
Adjustments for:
Depreciation of property, plant and equipment 9,072 7,520 17,311
Depreciation of right of use assets 6,260 5,009 11,391
Impairment charge of property, plant and equipment - - 304
Impairment of right of use assets - - 2,215
Share based payment transactions 2,258 1,665 3,907
Gain on disposal of fixed assets (3) - (15)
Finance income (183) (84) (154)
Finance costs 4,472 3,922 9,025
Changes in inventories (114) 25 (434)
Changes in trade and other receivables (317) 1,552 (836)
Changes in trade and other payables 3,827 (143) 10,319
Cash generated from operations 31,226 23,402 64,477
Tax refunded 1,176 - 171
Net cash generated from operating activities 32,402 23,402 64,648
11. Statement of Directors' Responsibilities
The Directors confirm, to the best of their knowledge, that this condensed set
of financial statements gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the issuer or the undertakings
included in the consolidation as a whole and has been prepared in accordance
with IAS 34, Interim Financial Reporting, as adopted by the United Kingdom.
The interim management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months and their impact on the financial statements and a
description of the principal risks and uncertainties for the remaining six
months of the financial year;
· disclosure of material related party transactions in the first six
months and any material changes to related party transactions.
By order of the Board
Nick Collins
Stephen Marshall
CEO
CFO
28 November 2024
Reconciliation of Statutory Results to Alternative Performance Measures
The Interim Results include both statutory and alternative performance
measures ("APMs"). APM's are included for the following reasons:
· They reflect the way in which management report and monitor the
financial performance of the Group internally;
· They improve the comparability of information between reporting
periods by adjusting for one-off factors;
· The IAS17 presentation reflects the way in which the financial
performance of the Group has been presented historically and the basis on
which the Group's financial covenants are tested.
24 weeks ended 24 weeks ended 53 weeks ended
6 October 2024 1 October 2023 21 April 2024
£000 £000 £000
Unaudited Unaudited Audited
Operating profit 10,243 7,774 20,315
Net impairment charge - - 2,519
Gain on disposal of fixed assets (3) - (15)
Share based payment charge 2,258 1,665 3,907
Site pre-opening costs 2,002 1,894 4,164
Adjusted operating profit 14,500 11,333 30,890
Depreciation (pre IFRS 16 right of use asset charge) 9,072 7,520 17,311
IFRS 16 Right of use asset depreciation 6,260 5,009 11,391
Adjusted EBITDA (IFRS 16) 29,832 23,862 59,592
Adjusted EBITDA % (IFRS 16) 16.7% 15.9% 12.5%
IAS 17 Rent charge (7,979) (6,816) (15,886)
IAS 17 Rent charge included in IAS 17 pre-opening costs 234 238 530
Adjusted EBITDA (IAS 17) 22,087 17,284 44,236
Adjusted EBITDA % (IAS 17) 12.4% 11.6% 12.5%
The Group references Like for Like sales growth as a key APM. Like for Like
sales growth excludes the sales from sites that have been open for less than
18 months.
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