REG - Tortilla Mexcn.Grill - Interim Results
03/10/2023 07:00
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RNS Number : 4347O Tortilla Mexican Grill PLC 03 October 2023
3(rd) October 2023
Tortilla Mexican Grill plc
("Tortilla", "the Group")
Interim Results
Resilient trading supports FY 2023 expectations
Tortilla Mexican Grill plc, the largest and most successful fast-casual
Mexican restaurant business in the UK, today announces its unaudited interim
results for the 26 weeks ended 2 July 2023 ("H1 FY23", "the Period"). All
numbers are shown on an IFRS basis unless otherwise stated.
Financial highlights
· Revenue growth of 22% to £32.7m (H1 FY22: £26.9m).
· Like-for-like ("LFL") revenue growth(1) of +5.0%, ahead of the
industry CGA Peach Coffer Tracker(2) benchmark average of 4.6%. LFL revenue
growth on a VAT-adjusted basis was 8.4%.
· Adjusted EBITDA (pre-IFRS 16)(3) of £1.8m (H1 FY22: £2.5m), trading
in-line with market expected financial performance(5), noting that the prior
year amount benefitted from £1.1m of Government support.
· Loss before tax of £0.6m (H1 FY22: profit before tax £0.3m).
· Strong balance sheet with net debt(4) of £1.6m at Period end (H1
FY22: £3.2m net cash), in line with expectations, and a further £7m of
liquidity available from the Group's existing debt facilities.
Operational and strategic highlights
· Good progress on UK new store openings with three opened in H1 FY22,
including our first site in Northern Ireland, plus a further two sites since.
Remain ahead of IPO aim of 45 new sites in 5 years.
· Successful integration of Chilango business and realisation of
investment case.
· Growing confidence in the UK and international franchising opportunity
with record profits following the return to normalised trading post-Covid.
· Cost pressures easing along with favourable contracts negotiated with
key suppliers.
· Successfully implemented two major technology projects - our first
kiosk-only site delivering positive early results and a nationwide roll out of
delivery order-aggregation software.
· Enhanced promotional calendar - "Tortilla Sunsets" project developed
and launched in mid-September to drive evening sales.
· Currently assessing a number of European opportunities through
franchising or strategic acquisitions.
· Strengthened Board of Directors with the appointment of Keith Down as
NED. Andy Naylor, CFO, promoted to Managing Director.
Current trading and full year outlook
Since the Period end, we have opened a further two sites: Belfast and
Bracknell in July and August respectively and both are trading well, with
Belfast doubling the opening revenue expectations. A further three sites are
expected to open in H2 FY23, taking the total to eight new sites in the year
as we continue to deliver our stated roll-out plans.
The summer was unsurprisingly quiet, as seen in the wider market, with an
increased demand for overseas holidays, ongoing industrial strike-action on
the train network and uninspiring weather. Nonetheless, the Group delivered
LFL growth for this period.
We are seeing the benefit of self-help management initiatives, particularly in
supply chain, energy and productivity. The benefit of these initiatives fell
towards the end of the Period and as such, will collectively drive a
further1.3 percentage point improvement in Adjusted EBITDA margin in H2 FY23
(compared to H1 FY23).
We continue to improve our offer through significant menu development,
providing a more consistent and higher quality product whilst offering utility
cost savings that also support our ESG strategy. We have worked hard to look
for ways to drive customer footfall through targeted events and promotions,
most notably through the launch of Tortilla Sunsets in September to enhance
our evening offer through a great value dine-in experience.
Considering the secured upside from our cost hedging, the exciting initiatives
launched to drive evening trade and the resilient trading performance of the
Group, we remain confident of being broadly in line with our targeted Adjusted
EBITDA for FY23 and we expect to see the full year benefit of these
initiatives next year.
Richard Morris, CEO of Tortilla, commented:
"Despite the challenging economic backdrop, during the first half Tortilla
demonstrated its resilience and showed consistent progress, with revenue
growth of more than 20%. We continued to expand our store estate and have
successfully embedded the Chilango acquisition. We have also enhanced our food
offer and secured significant improvement in our costs structure while making
technology upgrades which will improve and quicken customer service at peak
trading times.
We are very excited by the launch of our Tortilla Sunsets initiative earlier
this month, which has had a very positive customer response so far. We believe
there is a significant opportunity to enhance our evening sales by offering a
great-value, dine-in experience including beers and margarita cocktails for
just £2.50 as well as a number of delicious new menu additions.
With our outstanding food offer, excellent value for money and great service,
alongside our adaptable and resilient business model, we remain well placed to
continue expanding our UK network whilst taking the brand into new markets,
particularly in Europe."
(1) defined as the percentage change in like-for-like sales compared to H1
FY22
(2) defined as the average of the data reported for restaurants by CGA Peach
for the period.
(3) defined as statutory operating profit before interest, tax, depreciation
and amortisation (before application of IFRS 16 and excluding exceptional
costs) and reflects the underlying trading performance of the Group. The
reconciliation to profit from operations is presented in the financial review.
(4) defined as net debt / cash before lease liabilities arising from
application of IFRS 16.
(5) based off company-compiled consensus: FY23: Adjusted EBITDA: £5.0m.
ENQUIRIES
Tortilla Mexican Grill PLC Via Hudson Sandler
Richard Morris, CEO
Andy Naylor, CFO
Liberum Capital Limited (Nominated Adviser, Sole Broker) Tel: 020 3100 2222
Andrew Godber
Edward Thomas
Nikhil Varghese
Hudson Sandler (Public Relations) Tel: 020 7796 4133
Alex Brennan tortilla@hudsonsandler.com (mailto:tortilla@hudsonsandler.com)
Wendy Baker
Charlotte Cobb
For further information visit tortillagroup.co.uk
(https://tortillagroup.co.uk/)
About Tortilla Mexican Grill plc
Tortilla is the largest and most successful fast-casual Mexican restaurant
group in the UK specialising in the sale of freshly made Californian-inspired
Mexican cuisine. The Group had 85 sites worldwide as of 3 July 2023,
comprising 67 sites in the UK operated by the Group, five sites franchised to
SSP Group in the UK, five sites franchised to Compass Group UK & Ireland
and eight franchised sites in the Middle East.
The Group was founded in 2007 by Brandon Stephens, originally from California
who, upon his arrival in London in 2003, found it difficult to satisfy his
desire for quality burritos and tacos. As a result, Brandon established
Tortilla with a mission of offering customers freshly prepared, customisable,
and authentic Californian-inspired Mexican food.
The brand is synonymous with an energetic, vibrant culture, and with providing
a great value-for-money proposition. It embraces fast-growing sector trends
(including eating out, healthy eating, provenance, ethnic cuisine, delivery)
across a variety of locations, through a differentiated product offering which
is popular with a broad customer base, and a clearly defined multi-channel
marketing strategy. It benefits from flexible site locations and formats, and
a scalable central infrastructure.
BUSINESS REVIEW
Growth
Last year was a record year of growth for the Group and we have again made
good progress on new site rollouts this year to date. In the first half of the
year, we opened new sites in Derby and Greenwich and our franchise partner SSP
opened in Manchester Piccadilly railway station. Since then, we have opened
our first site in Northern Ireland, in Belfast, and a site in Bracknell. We
anticipate a further three new sites opening this year, taking the total to
eight.
We remain ahead of our IPO aspiration to open 45 sites over five years but
felt that it was right to aim for the lower end of projections in FY23 as we
wanted to focus attention on: (1) finishing the refurbishment plans for
Chilango and ensuring the conversion was a success; and (2) assessing the full
impact of the cost-of-living crisis and the changing dynamics of the UK
commercial property rental market to get the best-possible deals.
The FY24 pipeline looks strong, with one site already legally completed, two
midway through legals and one further offer submitted. The UK commercial
property market remains favourable with rent percentage of revenue improving
further. We remain well positioned for expansion opportunities, as our
flexible model enables us to take a range of site formats, including former
retail units (since we do not need to install expensive cooking-extraction
equipment). We therefore expect to continue our UK rollout at a rate of 8-12
company-owned stores per annum from FY24 onwards.
Franchising
The Group's proposition and operating model is perfectly suited to franchising
mainly due to: (1) our site format flexibility and simplicity of kitchen setup
which allows us to access a wide range of units and (2) our central production
food model provides consistency of food quality and enables the franchisees to
quickly train employees.
We have a very healthy franchise network with quality franchise partners
performing well, including SSP and Compass Group in the UK and Eathos in the
Middle East. The travel network of franchise sites has performed incredibly
well with sales records achieved in every unit this year and a LFL sales
growth in H1 FY23 of greater than 30%. The Middle East business is also very
strong, generating LFL sales growth of c.15% and is more profitable than ever
before.
We continue to seek quality franchise locations with these existing partners
in the UK.
European opportunity
We are by far the largest fast-casual Californian-inspired Mexican business in
Europe and we remain firmly committed to exploring European opportunities for
the Group. We believe our business model and food-quality is stronger than the
competition and are keen to explore opportunities, predominantly via
franchising considering the suitability of the brand to this style of rollout.
Acquisition opportunities may also exist and considering the success of the
conversion of Chilango post-acquisition, we are confident that similar success
could be replicated elsewhere.
UK profitability
We have been heavily focused on improving the profitability of UK operations
and are delighted to have secured some favourable supply arrangements towards
the end of H1 FY23. These will collectively deliver a further 1.3 percentage
point improvement in profitability at the Adjusted EBITDA (pre IFRS 16) level
in the second half of FY23.
The utility market continues to be volatile, however the Group has hedged
utility prices at rates significantly lower than FY22 comparative rates until
March 2024 to provide greater certainty in this area. Internal KPIs are in
place to ensure usage is monitored, with usage mitigating actions taken where
identified. Meanwhile, inflation appears to have plateaued and is now
gradually reducing, and we expect that a more normalised cost environment will
prevail in the coming months.
Chilango update
In May 2022 the Group made the strategic acquisition of eight Chilango sites.
Five were converted to Tortilla branded stores and these have since traded far
ahead of expectations, with average weekly sales in H1 FY23 being 32% higher
than the pre-conversion average.
At one of these conversions, Croydon BoxPark, we have deployed a 'virtual
kitchen' operating under the Chilango brand on delivery platforms only. This
has resulted in 35% incremental growth, showing a very positive case for
further deployment of virtual kitchens where Chilango brand awareness is high.
We have kept the three remaining sites continuing to trade under the Chilango
brand.
Digital strategy
In H1 FY23 we recruited a new management role, Andrew Brook as Head of IT, to
drive growth and efficiencies through the use of technology. We have
successfully launched a nationwide rollout of delivery order-aggregation
software, Deliverect, to simplify the management of multi-platform delivery
channels at every store and to maximise the speed and accuracy of delivery
order fulfilment.
Post Period-end we launched a trial of our first digital concept site, by
refurbishing our London Wall site and installing kiosks. This was designed to
maximise customer throughput at peak times, and early signs are encouraging.
Our hourly sales record increased by 37%, and the peak-day average lunch
period (12-2pm) sales increased from £2,200 to £2,600. This proof-of-concept
is promising and indicates the kiosk-only approach may be a viable solution
for sites with significant volume demand that cannot currently be fully met.
Food and marketing
We have launched several key product and marketing campaigns, which we believe
will drive significant improvements.
Firstly, we have enhanced our loyalty scheme to provide a more generous offer
for the consumer who now gets a free burrito after five purchases. The scheme
has seen a 6% increase in adoption since the change, to more than 300,000
customers. Average spend among these customers is also up 12% vs the Group
average.
Secondly, in August 2023 we improved our chicken product, the Group's
best-seller. The new product, chicken pibil, is more flavoursome and
consistent than the prior product. This improvement has additionally reduced
labour costs in our sites and enabled us to remove grills from numerous sites,
resulting in lower energy usage. Other recent changes include a refreshed
Salsa Verde recipe, and the removal of one of the rice options to minimise
waste and improve the quality of having a single rice option.
Lastly, in September 2023 we launched a series of "Tortilla Sunsets"
promotions. We have adopted a low-price alcohol model to give a very generous
"Happy Hour" offering, designed to drive evening sales in student-dense areas.
We have also launched exciting new evening menu items with crockery &
cutlery provided to give customers more of a "casual dining" feel.
Environmental, Social and Governance ("ESG")
ESG remains a key consideration for the Group, and we are pleased to confirm
that we intend to install a renewable energy source at our central production
kitchen which should be operational in FY24. The central production kitchen is
our single biggest consumer of electricity and so this will bring a
significant positive environmental impact.
The new chicken pibil product has also helped us reduce our utility cost
expenditure further helping the business to lower its carbon footprint.
We continue to offer a menu containing 70% plant-based ingredients, are a
signatory to the Better Chicken Commitment and serve only higher welfare
meats. We partner with a business called Too Good To Go, to reduce food
waste, with almost 58,000 meals saved in the last twelve months.
Board and people
We have an experienced senior Management team who remain very passionate about
the brand and implementing our growth strategy. Post Period end, Keith Down
joined as a new Non-Executive Director. Keith brings with him a wealth of
experience in the sector and we are very excited to have him strengthen our
Board.
Andy Naylor, CFO, has been promoted to Managing Director. Andy has been in the
business for six years and in recent years has taken on a broader role,
including building the UK franchise partnerships and leading the development
of the technology and facilities functions.
FINANCIAL REVIEW
Revenue
Revenue increased by 22% to £32.7m (H1 FY22: £26.9m), driven by additional
contribution from new stores as well as the continued LFL sales growth of our
existing estate. Our mature stores have continued to trade above the
restaurant industry average, with LFL sales growth in H1 FY23 of 5.0% vs an
average CGA Peach Coffer benchmark of 4.6%.
After adjusting for the benefit of the lower VAT rate prevailing in Q1 FY22,
our LFL sales growth for H1 FY23 was 8.4%.
Gross profit margin
Gross profit margin was consistent at 77.0% in both periods, which is a good
result considering that the prior year number benefitted from:
· The lower VAT rate in Q1 FY22 which lifted gross profit margin by 0.7
percentage points; and
· Q1 FY22 benefitted from materially lower food costs, particularly
proteins, which rose sharply in late March FY22 following the start of the
Ukraine war in February of that year.
This favourable trend was driven by competitive tenders on our supply
contracts, and results in our prices being secured on 76% of products until
December FY23, with 46% then secured until April FY24.
Across gross profit margin and administrative expenses, we expect to deliver a
further 1.3 percentage point improvement in our Adjusted EBITDA (pre-IFRS 16)
margin in H2 FY23 compared to H1 FY23 (in addition to the normal seasonality
weighting of EBITDA).
Administrative expenses
Administrative expenses increased by 25% to £25.0m (H1 FY22: £20.0m), in
line with revenue growth. However as a percentage of revenue, administrative
expenses were 76.3% in H1 FY23, improved versus 76.7% in H1 FY22 after
adjusting for the Q1 FY22 VAT benefit. Despite the high inflationary
environment, costs were well controlled, and savings found. The utilities
market has been highly volatile, however we hedged fixed prices at a
favourable rate to mitigate this until March FY24.
Adjusted EBITDA (pre-IFRS 16)
Adjusted EBITDA (pre-IFRS 16) is the key performance metric that the Group
utilises to assess the underlying trading performance. A reconciliation of
this measure compared to profit from operations is as follows:
H1 FY23 H1 FY22
£m £m
Adjusted EBITDA (pre-IFRS 16) 1.8 2.5
Pre-opening costs (0.3) (0.3)
Share option expense (0.2) (0.2)
Depreciation and amortisation (1.9) (1.5)
Exceptional items (0.1) (0.3)
IFRS 16 adjustment 0.9 0.7
Profit from operations 0.2 0.9
Adjusted EBITDA (pre-IFRS 16) of £1.8m was generated in H1 FY23 which was
£0.7m lower than H1 FY22. The year-on-year decrease is entirely due to a
total of £1.1m in Government support which benefitted the prior year number.
Of this support, £0.8m related to the lower VAT rate in Q1 FY22 and £0.3m
related to business rates support provided as part of the Government's COVID
support package.
Good progress has been made by the Group in FY23 to recover profitability and
this collectively contributed a net £0.4m increase in Adjusted EBITDA
(pre-IFRS 16) in the first half of the year. These cost improvements were
largely weighted towards the end of the Period and will contribute more
meaningfully in H2 FY23. We therefore expect H2 FY23 Adjusted EBITDA (pre-IFRS
16) to be 1.3 percentage points higher than H1 FY23 from these improvements
alone, on top of the normal seasonality of EBITDA generation.
Share-based payments
Share-based payment expenses of £0.2m were recognised in the Period (H1 FY22:
£0.2m) relating to the Group's Long Term Incentive Plan ("LTIP").
Finance expense
Finance expense of £0.9m is comprised of £0.8m of interest charged in
relation to Right of Use assets (a consequence of the accounting treatment of
leases under IFRS 16) and £0.1m of interest for the debt facility that the
Group has in place.
Cash flow and net cash
The Group closed the Period with a net debt position of £1.6m. Drawn debt
remains unchanged from the end of the FY22 financial year at £2.9m. A
reconciliation of the movement in net debt between the start and end of the
period is as follows:
Opening balance (£0.5m)
Adjusted EBITDA (pre-IFRS 16) £1.8m
Capital expenditure for new stores (£1.4m)
Maintenance capital expenditure (£0.8m)
Interest paid (£0.1m)
Pre-opening and exceptional costs (£0.4m)
Working capital movement (£0.2m)
Closing balance (£1.6m)
The Group's closing net debt position of £1.6m represents a low level of
leverage which is important considering the recent increases in the Bank of
England base rate. The Group's efforts to recover profitability this year and
going forward will enable the business to get back to the aim of funding
expansion capital requirements from operationally generated cash.
Dividend
The Board did not recommend an interim dividend for FY23. In line with the
previously stated policy, the Group's capital will be focused on growth over
the coming years with the dividend policy subject to re-assessment going
forward.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 2 July 2023
Unaudited Unaudited
26 weeks ended 26 weeks ended
2 July 2023 3 July 2022
Note £ £
Revenue 32,745,623 26,898,368
Cost of sales (7,534,184) (6,184,070)
Gross profit 25,211,439 20,714,298
Other operating income 3 - 211,310
Administrative expenses (24,970,307) (20,004,021)
Profit from operations 4 241,132 921,587
Finance income 5 12,914 276
Finance expense 5 (869,153) (657,811)
Profit before tax (615,107) 264,052
Tax charge (3,402) (107,531)
Profit for the period and comprehensive income attributable to equity holders (618,509) 156,521
of the parent company
Earnings per share for profit attributable to the owners of the parent during
the period
Basic and diluted (pence) 6 (1.6) 0.4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 2 July 2023
Unaudited Unaudited Audited
At At At
2 July 2023
3 July 2022
1 January 2023
Note £ £ £
Non-current assets
Intangible assets 7 2,629,623 2,604,279 2,632,205
Right-of-use assets 8 30,836,951 29,603,290 31,035,358
Property, plant and equipment 9 14,073,657 10,933,689 13,721,101
Total non-current assets 47,540,231 43,141,258 47,388,664
Current assets
Inventories 376,641 442,693 397,083
Trade and other receivables 10 2,775,126 2,369,919 2,193,877
Cash and cash equivalents 1,327,470 6,083,998 2,375,800
Total current assets 4,479,237 8,896,610 4,966,760
Total assets 52,019,468 52,037,868 52,355,424
Current liabilities
Trade and other payables 11 9,334,177 8,982,415 9,110,069
Lease liabilities 8 5,762,578 5,329,676 5,614,340
Loans and borrowings - - -
Corporation tax liability - 1,008,221
Total current liabilities 15,096,755 15,320,312 14,724,409
Non-current liabilities
Lease liabilities 8 30,801,995 29,591,636 31,109,551
Loans and borrowings 2,939,751 2,921,208 2,930,481
Total non-current liabilities 33,741,746 32,512,844 34,040,032
Total liabilities 48,838,501 47,833,156 48,764,441
Net assets 3,180,967 4,204,712 3,590,983
Equity attributable to equity holders of the company
Called up share capital 386,640 386,640 386,640
Share premium account 4,433,250 4,433,250 4,433,250
Merger reserve 4,793,170 4,793,170 4,793,170
Share based payment reserve 661,028 271,521 452,535
Retained earnings (7,093,121) (5,679,869) (6,474,612)
Total equity 3,180,967 4,204,712 3,590,983
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 2 July 2023
Share capital Share premium Merger reserve Share-based payment reserve Retained earnings Total
£ £ £ £ £ £
Equity at 2 January 2022 386,640 4,433,250 4,793,170 90,507 (5,836,390) 3,867,177
Profit for the period - - - - 156,521 156,521
Share-based payments 181,014 - 181,014
Equity at 3 July 2022 386,640 4,433,250 4,793,170 271,521 (5,679,869) 4,204,712
Loss for the period - - - - (794,743) (794,743
Newly issued equity shares - - - - - -
Cost of issue of equity shares - - - - - -
Share-based payments - - - 181,014 - 181,014
Equity at 1 January 2023 386,640 4,433,250 4,793,170 452,535 (6,474,612) 3,590,983
Profit for the period - - - - (618,509) (618,509)
Share-based payments - - - 208,493 - 208,493
Equity at 2 July 2023 386,640 4,433,250 4,793,170 661,028 (7,093,121) 3,180,967
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 2 July 2023
Unaudited Unaudited
26 weeks ended 26 weeks ended
3 July 2022 3 July 2022
Note £ £
Operating activities
Profit after tax (618,509) 156,521
Adjustments for:
Share based payments 208,493 181,014
Net finance expense 5 105,303 79,405
Finance cost on lease liabilities 5 750,936 578,130
Corporation tax charge - 107,531
Amortisation of intangible assets 7 2,582 2,275
Loss on disposal of intangible assets 7 - 6,825
Depreciation of right to use assets 8 2,177,598 1,502,348
Depreciation of property, plant and equipment 9 1,812,912 1,420,657
Loss on disposal of property, plant and equipment 9 - 6,834
Increase in inventories 20,442 (64,788)
Decrease in trade and other receivables (581,249) 296,992
Increase in trade and other payables 224,105 358,064
Cash generated from operations 4,102,613 4,631,808
Investing activities
Interest received 5 12,914 276
Purchase of property, plant and equipment 9 (2,165,468) (2,958,549)
Acquisitions, net of cash acquired - (1,687,365)
Net cash used by investing activities (2,152,554) (4,645,638)
Financing activities
Payments made in respect of lease liabilities 8 (2,889,443) (3,484,931)
Interest paid (108,946) (70,413)
Net cash used by financing activities (2,998,389) (3,555,344)
Net (decrease)/increase in cash and cash equivalents (1,048,330) (3,569,174)
Cash and cash equivalents at the beginning of period 2,375,800 9,653,172
Cash and cash equivalents at the end of period 1,327,470 6,083,998
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1. General information
Tortilla Mexican Grill plc, the "Company" together with its subsidiaries, "the
Group", is a public limited company whose shares are publicly traded on the
Alternative Investment Market ("AIM") and is incorporated and domiciled in the
United Kingdom and registered in England and Wales.
The registered address of Tortilla Mexican Grill plc and all subsidiaries is
142-144 New Cavendish Street, London, W1W 6YF, United Kingdom.
The Group's principal activity is the operation and management of restaurants
trading under the Tortilla brand both within the United Kingdom and the Middle
East and under the Chilango brand in the United Kingdom.
2. Accounting policies
Basis of preparation
The consolidated interim financial information has been prepared in accordance
with International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRSs), as adopted by UK
international accounting standards.
The Group's Annual Report and Accounts for the period ended 31 December 2023
are expected to be prepared under IFRS.
The comparative financial information for the period ended 1 January 2023 in
this interim report does not constitute statutory accounts for that period
under 435 of the Companies Act 2006.
Statutory accounts for the period ended 1 January 2023 have been delivered to
the Registrar of Companies.
The auditors' report on the statutory accounts for 1 January 2023 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.
Significant accounting policies
The consolidated interim financial information has been prepared in accordance
with accounting policies that are consistent with the Group's Annual Report
and Accounts for the period ended 1 January 2023 which is published on the
Tortilla website, located at www.tortillagroup.co.uk. At the date of
authorisation of this financial information, certain new standards, amendments
and interpretations to existing standards applicable to the Group have been
published but are not yet effective and have not been adopted early by the
Group. The impact of these standards is not expected to be material.
In adopting the going concern basis for preparing these financial statements,
the Directors have considered the business model and strategies, as well as
taking into account the current cash position and facilities.
Based on the Group's cash flow forecasts, the Directors are satisfied that the
Group will be able to operate within the level of its current facilities for
the foreseeable future, a period of at least twelve months from the date of
this report. In making this assessment, the Directors have made a specific
analysis of the impact of both the inflationary pressures currently affecting
the industry as well as consumers, and the impact of a potential recession.
Accordingly, the Directors consider it appropriate for the Group to adopt the
going concern basis in preparing these financial statements.
3. Other operating income
Unaudited Unaudited
26 weeks ended 26 weeks ended
2 July 2023 3 July 2022
£ £
Other government grants - 211,310
( )
(1) Includes Retail Leisure Hospitality Grants, Local Restriction Support
Grants, Restart Grants and Omicron Grants
4. Profit from operations
Profit from operations is stated after charging:
Unaudited Unaudited
26 weeks ended 26 weeks ended
2 July 2023 3 July 2022
£ £
Depreciation and amortisation 3,993,091 2,923,005
Loss on disposal of fixed and intangible assets - 13,660
Variable lease payments 229,485 548,421
Inventories - amounts charged as an expense 7,534,184 6,184,070
Staff costs 10,815,498 8,810,841
Share option expense 208,493 181,014
Pre-opening costs 175,942 287,580
Exceptional items 125,544 306,866
Bank arrangement fee amortisation 9,270 9,270
Pre-opening costs
Unaudited Unaudited
26 weeks ended 26 weeks ended
2 July 2023 3 July 2022
£ £
Pre-opening costs 175,942 287,580
Number of site openings in period 4 6
The Group reports costs incurred prior to the opening of a site as a separate
expense and excludes these from the calculation of adjusted EBITDA. This
approach is in line with the standard industry practice and the methodology
used by the Group's bank for the purposes of assessing covenant compliance.
The Directors view this as a better way to analyse the underlying performance
of the Group since it excludes costs which are not trading related.
5. Finance income and expenses
Unaudited Unaudited
26 weeks ended 26 weeks ended
2 July 2023 3 July 2022
£ £
Finance income
Bank interest income 12,914 276
Finance expense
Bank loan interest expense 118,217 79,681
Finance cost on lease liabilities 750,936 578,130
869,153 657,811
6. 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.
Unaudited Unaudited
26 weeks ended 26 weeks ended
2 July 2023 3 July 2022
£ £
Profit
Profit used in calculating basic and diluted profit (618,509) 156,521
Number of shares
Weighted average number of shares for the purpose of basic and diluted 38,664,031 38,664,031
earnings per share
Basic and diluted earnings per share (p) (1.6) 0.4
Due to the nature of the options granted under the long-term incentive plan,
they are considered to be contingently issuable shares and therefore have no
dilutive effect.
7. Intangible assets
Computer Software Goodwill Total
£ £ £
Cost
At 1 January 2023 15,500 2,624,886 2,640,386
Additions - - -
Disposals - - -
At 2 July 2023 (unaudited) 15,500 2,624,886 2,640,386
Amortisation
At 1 January 2023 8,181 - 8,181
2,582 - 2,582
Amortisation charge
On disposals - - -
At 2 July 2023 (unaudited) 10,763 - 10,763
Net book value
At 2 July 2023 (unaudited) 4,737 2,624,886 2,629,623
At 1 January 2023 7,319 2,624,886 2,632,205
8. Leases
Right-of-use assets £ Lease liabilities £
At 2 January 2022 24,939,614 At 2 January 2022 (31,662,090)
Additions 4,491,185 Additions (4,491,185)
Acquisition 2,671,192 Acquisition (2,671,192)
Depreciation (1,502,348) Interest expense (578,130)
Impairment - Lease payments 3,484,931
Disposals (996,353) Disposals 996,354
At 3 July 2022 (unaudited) 29,603,290 At 3 July 2022 (unaudited) (34,921,312)
At 1 January 2023 31,035,358 At 1 January 2023 (36,723,889)
Additions 2,196,406 Additions (2,196,406)
Depreciation (2,177,598) Interest expense (750,936)
Impairment - Lease payments 2,889,443
Disposals (217,215) Disposals 217,215
At 2 July 2023 (unaudited) 30,836,951 At 2 July 2023 (unaudited) (36,564,573)
9. Property, plant and equipment
Furniture, fittings
Leasehold Plant and
Improvements machinery and equipment Total
£ £ £ £
Cost
At 1 January 2023 16,049,266 5,128,645 6,692,407 27,870,318
Additions 837,047 550,900 777,521 2,165,468
Disposals - - - -
At 2 July 2023 (unaudited) 16,886,313 5,679,545 7,469,928 30,035,786
Depreciation
At 1 January 2023 8,068,909 3,269,990 2,810,318 14,149,217
Charge for year 577,253 303,570 932,089 1,812,912
On disposals - - - -
At 2 July 2023 (unaudited) 8,646,162 3,573,560 3,742,407 15,962,129
Net book value
At 2 July 2023 (unaudited) 8,240,151 2,105,985 3,727,521 14,073,657
At 1 January 2023 7,980,357 1,858,655 3,882,089 13,721,101
10. Trade and other receivables
Unaudited Unaudited
At At
2 July 2023 3 July 2022
£ £
Trade debtors 868,124 678,955
Other debtors 1,249,845 873,759
Prepayments and accrued income 657,157 817,205
2,775,126 2,369,919
Trade debtors primarily relate to sales due from third party delivery
providers and these are settled the week immediately following the week in
which the sale was recorded. There are also amounts owed by the Group's
franchise partners, which are due within 30 days of the end of the period.
Other debtors consists of deposits held by third parties, generally landlords,
and amounts accrued but not yet invoiced to third parties. These amounts not
invoiced are franchise income and produce from the Group's central kitchen
which is sold and bought back to the Group's main food supplier, who provides
the distribution across the Group's estate.
The Group held no collateral against these receivables at the balance sheet
dates. The Directors consider that the carrying amount of receivables are
recoverable in full and that any expected credit losses are immaterial.
11. Trade and other payables
Unaudited Unaudited
At At
2 July 2023 3 July 2022
£ £
Trade payables 2,483,656 3,542,647
Other taxation and social security 1,929,037 2,024,514
Other payables 891,460 583,870
Accruals and deferred income 4,030,024 2,831,384
9,334,177 8,982,415
The carrying value of trade and other payables classified as financial
liabilities measured at amortised, which the Directors consider equal to fair
value.
12. IFRS Comparison to UK GAAP
The Group applied IFRS for the first time in the 52-week period ending 2
January 2022. The Group applied IFRS 16 using the modified retrospective
approach, with the date of initial application of 1 January 2018 and has
restated its results for comparative period as if the Group had always applied
the new standard.
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
UK GAAP IFRS UK GAAP IFRS
26 weeks ended IFRS 16 26 weeks ended 26 weeks ended IFRS 16 26 weeks ended
2 July 2023 Transition 2 July 2023 3 July 2022 Transition 3 July 2022
£ £ £ £ £ £
Revenue 32,745,623 - 32,745,623 26,898,368 - 26,898,368
Cost of sales (7,534,184) - (7,534,184) (6,184,070) - (6,184,070)
Gross profit 25,211,439 - 25,211,439 20,714,298 - 20,714,298
Other operating income - - - 211,310 - 211,310
Administrative expenses (25,869,027) 788,851 (24,970,307) (20,712,692) 708,671 (20,004,021)
Profit/(loss) from operations (657,588) 788,851 241,132 212,916 708,671 921,587
Adjusted EBITDA 1,773,722 2,979,750 4,753,472 2,508,013 2,134,969 4,642,982
Pre-opening costs (266,104) 90,162 (175,942) (354,288) 66,708 (287,580)
Share based payments (208,493) - (208,493) (181,014) - (181,014)
Depreciation and amortisation (1,821,899) (2,171,192) (3,993,091) (1,443,659) (1,493,006) (2,936,665)
Exceptional items (125,544) - (125,544) (306,866) - (306,866)
Non-trading costs (9,270) - (9,270) (9,270) - (9,270)
(657,588) 898,720 241,132 212,916 708,671 921,587
Finance income 12,914 - 12,914 276 - 276
Finance expense (118,217) (750,936) (869,153) (79,681) (578,130) (657,811)
Profit/(loss) before tax (762,891) 147,784 (615,107) 133,511 130,541 264,052
Tax charge (3,402) - (3,402) (107,531) - (107,531)
Profit/(loss) for the period and comprehensive income attributable to equity (766,293) 147,784 (618,509) 25,980 130,541 156,521
holders of the parent company
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
UK GAAP IFRS UK GAAP IFRS
26 weeks ended IFRS 16 26 weeks ended 26 weeks ended IFRS 16 26 weeks ended
2 July 2023 Transition 2 July 2023 3 July 2022 Transition 3 July 2022
£ £ £ £ £ £
Non-current assets
Intangible assets 2,629,623 - 2,629,623 2,604,279 - 2,604,279
Right-of-use assets - 30,836,951 30,836,951 - 29,603,290 29,603,290
Property, plant and equipment 13,379,173 694,484 14,073,657 10,109,347 824,342 10,933,689
Total non-current assets 16,008,796 31,531,435 47,540,231 12,713,626 30,427,632 43,141,258
Current assets
Inventories 376,641 - 376,641 442,693 - 442,693
Trade and other receivables 4,013,124 (1,237,998) 2,775,126 3,632,953 (1,263,034) 2,369,919
Cash and cash equivalents 1,327,470 - 1,327,470 6,083,998 - 6,083,998
Total current assets 5,717,235 (1,237,998) 4,479,237 10,159,644 (1,263,034) 8,896,610
Total assets 21,726,031 30,293,437 52,019,468 22,873,270 29,164,598 52,037,868
Current liabilities
Trade and other payables 11,186,622 (1,852,445) 9,334,177 10,763,355 (1,780,940) 8,982,415
Lease liabilities - 5,762,578 5,762,578 - 5,329,676 5,329,676
Loans and borrowings - - - - - -
Corporation tax liability - - - 1,008,221 - 1,008,221
Total current liabilities 11,186,622 3,910,133 15,096,755 11,771,576 3,548,736 15,320,312
Non-current liabilities
Lease liabilities - 30,801,995 30,801,995 - 29,591,636 29,591,636
Loans and borrowings 2,939,751 - 2,939,751 2,921,208 - 2,921,208
Total non-current liabilities 2,939,751 30,801,995 33,741,746 2,921,208 29,591,636 32,512,844
Total liabilities 14,126,373 34,712,128 48,838,501 14,692,784 33,140,372 47,833,156
Net assets / (liabilities) 7,599,658 (4,418,691) 3,180,967 8,180,486 (3,975,774) 4,204,712
Equity attributable to equity holders of the company
Called up share capital 386,640 - 386,640 386,640 - 386,640
Share premium account 4,433,250 - 4,433,250 4,433,250 - 4,433,250
Share merger reserve 4,793,170 - 4,793,170 4,793,170 - 4,793,170
Share based payment reserve 661,028 - 661,028 271,521 - 271,521
Retained earnings (2,674,430) (4,418,691) (7,093,121) (1,704,095) (3,975,774) (5,679,869)
Total equity 7,599,658 (4,418,691) 3,180,967 8,180,486 (3,975,774) 4,204,712
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