REG - Tortilla Mexcn.Grill - Unaudited Interim Results
25/09/2024 07:00
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RNS Number : 5070F Tortilla Mexican Grill PLC 25 September 2024
25 September 2024
Tortilla Mexican Grill plc
("Tortilla", the "Group" or the "Company")
Unaudited Interim Results for the 26 weeks ended 30 June 2024
Tortilla expands into France, revamps UK business and strengthens leadership
for growth
Tortilla Mexican Grill plc, the largest and most successful fast-casual
Mexican restaurant business in the UK and Europe, today announces its
unaudited interim results for the 26 weeks ended 30 June 2024 ("H1 FY24", "the
Period"). All numbers are shown on an IFRS basis unless otherwise stated.
Commenting on the results, Andy Naylor, Chief Executive Officer of Tortilla
said: "We are very proud of the positive momentum we have driven throughout
the business over the last six months. The UK business had lost momentum at
the start of the year, and we had to make some big decisions to overhaul the
trend. We have driven the UK business forward by revitalising our food
offering and investing in people, brand awareness and technology. It is
encouraging to see the benefits of these investments, with our in-store
like-for-like sales steadily improving, from -6% in March to +4% in September
month to date.
We took our first steps into Europe, announcing a strategic acquisition of
Fresh Burritos, which provides us with an important foothold in France and a
platform from which we can expand our franchise portfolio across Europe. Our
franchise network in the UK is stronger than ever with FY24 being a record
year for growth and we've just extended our SSP partnership for a further five
years which will see the estate more than double in size.
As we approach Q4 we continue to see positive signs of the hard work conducted
by the team in the first half of the year, with current trading in line with
management expectations. The Board remains confident and excited about
Tortilla's long-term and sizeable growth opportunities both in the UK and
internationally."
Operational and strategic highlights
· New management team embedded: CEO succession saw Richard Morris step down in
March, replaced by Andy Naylor, previously CFO and UK Managing Director and
CFO Maria Denny also appointed to the Board in Q1 FY24.
· New strategic approach 'Tortilla's Vital 5,' launched in Q1 with key
initiatives on track:
o Improve UK profitability: Strategic decision to revise delivery partner
strategy in H1 is driving EBITDA enhancements (+£0.5m) despite LFL decline in
delivery of -10.3%. The leverage of previous year's supplier contract
negotiations is also driving improved profit conversions year-on-year.
o Invest in brand to drive growth: With our new Food Director, James
Garland, joining in H1, we have revitalised our core menu with new recipes for
our proteins and salsas, invested in new equipment to launch an entry-offer
product, and introduced limited time offers.
Additionally, we have focused on driving brand awareness through
collaborations, and monthly influencer burrito specials, resulting in our
brand awareness rising to 23% (up 4ppts since a year ago). August also saw the
launch of the new Tortilla app, which was ranked number two in most popular UK
food apps in the launch week and has seen a rapid growing data base with
30,000 new members since launch, now totalling 164,000 active members.
We opened a new 'Grade A' company owned site in Manchester's Arndale centre in
May, and two new franchise sites in H1, one in Leeds train station (SSP), and
one in Leicester (Compass). The Tortilla portfolio in the UK and Middle East
at the end of H1 consists of 89 stores including franchise sites.
o Invest in team and tech: Seven new kiosk store conversions completed year
to date, which are driving efficiency and spend (+12% average order value), as
well as improving the overall customer experience. With a short payback period
of less than six months, the Group is planning to install more kiosks during
Q4. We have also continued to invest in our people and culture and have
strengthened our team further with the appointment of key new roles including
a Managing Director for the French business, a Food Director, a Supply Chain
Director and a Head of Learning and Development. We have also launched a new
training and development framework and held our first leadership away days to
promote a culture of internal growth and career development.
o Doubling down on franchise: Strong performance across UK franchise stores
driving sales growth of more than 10% with two further openings during the
period including Leeds Train Station (SSP) and Leicester (Compass). We expect
our franchise partners to open at least three more stores in H2 and so are on
track to achieve the expected five for the full year. We are also delighted to
announce a 5-year extension of our development agreement with SSP which will
see us more than double our number of SSP sites.
o Develop brand internationally: Successful entry into Continental Europe with
the strategic acquisition of Fresh Burritos, including the acquisition of 13
company-owned leasehold sites in high quality locations across Paris and other
major French cities, and the franchise rights to the Fresh Burritos brand and
the network of 19 franchised locations. The acquisition provides a springboard
for franchise growth across Europe with a strategically located Central
Production Kitchen (CPK) located in Lille.
The Group has post period end created a European sub-board committee to
oversee European operations, chaired by Group Non-Executive Director and
former YUM! European Franchise Division CFO, Francesca Tiritiello. Also
appointed to the sub-board as a Non-Executive Director was Gilles Boehringer,
former VP of Development & Franchise for KFC France. In September, we also
appointed a new Managing Director for Tortilla France, Eric Wauthier-Wurmser,
who comes with over 25 years of restaurant and franchise experience.
Financial highlights
· Revenue for H1 FY24 £31.5m (H1 FY23: £32.7m).
· Overall LFL 1 revenue down 5.5% driven mainly by the planned strategic
decision in Q1 FY24 to condense to a dual delivery partnership. This has seen
an expected delivery revenue decline of 10.3% LFL, albeit with improved
delivery profitability, up £0.5m in H1.
· Adjusted EBITDA (pre-IFRS 16) 2 of £1.8m is in line with prior year despite
the revenue drop, highlighting our improved profit conversion.
· Reduced loss before tax to £0.2m (H1 FY23: loss before tax £0.6m).
· Our adjusted net debt 3 of £3.3m at period end (H1 FY23: £1.6m adjusted net
debt) is in line with expectations and at that point £2.8m of the Group's
existing debt facilities was undrawn.
Current trading and full year outlook
· Current Trading is in line with management expectations for the full year
2024, with in-store sales continuing to improve on the back of our investment
in food, brand awareness and technology (+4% LFL in September month to date,
up from -6% in March). We also continue to see our revised delivery strategy
and cost savings initiatives improving profit conversion.
· Integration of Fresh Burritos progressing well and in-line with plans: Site
secured for a fully-fitted-out 1400 sqm Central Production Kitchen in France,
enabling Tortilla to produce consistent food at scale for the European market,
on track to open in Q4. Store conversion started with the first site,
Strasbourg, converted to Tortilla in Q3 with the next two sites scheduled for
conversion in Q4.
ENQUIRIES
Tortilla Mexican Grill PLC Via Houston
Emma Woods, Non-Executive Chair
Andy Naylor, CEO
Maria Denny, CFO
Panmure Liberum Limited (Nominated Adviser, Sole Broker) Tel: 020 3100 2222
Andrew Godber
Edward Thomas
Nikhil Varghese
Houston (Public Relations) Tel: 0204 529 0549 Tortilla@houston.co.uk (mailto:Tortilla@houston.co.uk)
Kate Hoare
Kelsey Traynor
Ben Robinson
About Tortilla Mexican Grill plc
Founded in 2007 by a San Francisco duo, Tortilla is the Europe's largest
fast-casual Mexican restaurant brand. With 81 UK locations (of which 13 are
franchise stores), 32 in France (of which 19 are franchise stores) and 8
franchise stores in the Middle East, Tortilla serves 7 million+ meals
annually, offering authentic California-style burritos, tacos and salads.
Through the acquisition of Chilango in the UK in 2022 and Fresh Burritos in
France in 2024, as well as franchise partnerships with SSP Group plc, Compass
UK & Ireland and Eathos, the brand continues to expand globally.
Tortilla breaks the mold of typical takeaways, combining quick service with
quality ingredients to serve affordable, made-to-order meals in under 90
seconds, in cosy environments fitting for lunch or dinner and a beer with
friends. The menu is fully customisable - there are thousands of flavour
combinations to try - with produce that's fresh, never frozen, 70% plant-based
and vegan-friendly, higher welfare meats and free from artificial flavours or
preservatives.
Emphasising sustainability, Tortilla only uses recycled and recyclable
packaging, 100% renewable electricity and sends zero waste to landfill.
Headquartered in London, Tortilla employs over 1,300 people.
More details at tortillagroup.co.uk
BUSINESS REVIEW
Overview
We are very proud of the positive momentum we have driven throughout the
business over the last six months. The UK business had lost momentum at the
start of the year, and we had to make some big decisions to overhaul the
trend. We have driven the UK business forward by revitalising our food
offering and investing in people, brand awareness and technology. It is
encouraging to see the benefits of these investments, with our in-store
like-for-like sales steadily improving, from -6% in March to +4% in September
month to date.
In March we launched our reinvigorated strategic vision 'Tortilla's Vital
Five' clearly defining the initiatives through which we will drive profitable
growth in the years ahead as we continue to expand the Tortilla brand, both in
the UK and overseas. Early milestones achieved against these plans have
included; the successful review of our delivery strategy which has driven
improved profitability on delivery sales following the switch to a dual
platform; significant investment in our food offering with a number of
improvements rolled out across our stores year to date, now driving
encouraging results with improved LFL sales; and, of course, the announcement
of the landmark strategic acquisition Fresh Burritos, which provides us with a
foothold in Europe through the acquisition of 13 company owned stores across
key French cities, the franchise rights to the Fresh Burritos brand and the
network of 19 franchised locations, and a platform from which we can expand
our franchise portfolio across Europe.
As previously guided, the full impacts of these initiatives are not expected
to start to be realised in our numbers until later in the year, however it is
encouraging to see early signs of progress in several areas as we continue to
position the Group to drive more profitable growth in the years ahead.
Strategic Progress Against The 'Tortilla Vital 5'
Improve UK Profitability
A key area of focus for the Group is the improvement of UK profitability. The
excellent work done across the Group in the prior year to improve
efficiencies, enhance purchasing power and supplier relationships have
underpinned stronger year on year profit conversion. Gross margin improved by
70bps during H1 and we are well positioned to realise the full year benefit of
these cost saving initiatives in FY24 as planned. We have continued to
strongly manage fixed costs during the period and in the longer run we expect
to see potential to leverage efficiencies and purchasing power even further as
the business grows.
We are also pleased with the early results of our strategic review of our
delivery strategy, which saw Tortilla condense to a dual delivery platform.
Whilst as anticipated, this transition was expected to have an impact on sales
volumes, it is pleasing to see the positive impact on margins which ultimately
underpinned the adjusted EBITDA (pre-IFRS) result of £1.8m for H1. This was
in line with the prior year despite the expected £1.2m revenue decline
following the delivery change.
As outlined at the time of our Annual Results for FY23, whilst we remain
focused on delivering growth through new store openings, we are focused on
targeting Grade A, higher traffic locations in major cities moving forward and
therefore expect the pace of own openings to reflect these stringent
investment criteria. During the first half of the year, we were pleased to
open Manchester Arndale in May along with two further franchise sites. We also
completed on the planned closure of one delivery kitchen in H1. Following the
period end we have also closed our Nottingham Clumber site as part of our
estate rationalisation management.
Invest in brand to drive growth
The first six months of the year have seen further investment in food and menu
development to drive continuous improvement to maintain our market leading
position, improve customer satisfaction and drive sales. We were delighted
with the success of a series of food improvements to revitalise our core menu.
These included the introduction of the asado chicken, which has gained
positive customer sentiment online. We also made recipe adjustments to beans
and slow-cooked proteins to deliver better quality, flavour and eating
experience. These improvements were successfully rolled out across our menus
in Q2 and are already wielding encouraging results. We have also invested in a
new cooking method to introduce a lower entry price product through the revamp
of our quesadillas and have been very encouraged by the early success with
plans to roll this out further in H2.
In June, we were also pleased to welcome our new Director of Food, James
Garland. James joins the business from Honest Burgers, a business highly
respected for food quality, and brings a wealth of experience with him which
will undoubtably have a transformational impact on our food quality, brand
collaborations and innovation.
We see huge opportunity to drive growth through increased investment in brand
awareness. Since the start of the new financial year, Tortilla brand
awareness increased to 23% in H1 FY24 (+4ppts over the last year) following a
sustained focus on targeted marketing initiatives. These have included
investment in a number of partnerships and collaborations including a
collaboration with Bleecker to celebrate National Burger Day, celebrations for
National Burrito Day (which saw us reach an audience of over 14 million and
drive over 27,000 people into our stores), stunts, influencer collaborations,
sports partnerships and more. In August, we were also excited to launch The
Burrito Society, the new Tortilla loyalty app. The app enables customers to
collect stamps, unlock rewards, order ahead and find their nearest Tortilla,
as well as having exclusive perks. The Tortilla app was ranked number two in
most popular UK food apps in the launch weekend and has seen rapid database
growth with +30,000 members since launch, now totalling 164,000 active
members. We look forward to driving further exclusive promotions over the
course of the year to continue to drive membership signups and purchase
frequency.
Invest in team and tech
In the first half of the year, we have continued to strengthen our senior
management team in support of our future growth plans. Alongside the
previously mentioned appointment of our new Food Director, James Garland we
were delighted to have also confirmed several key appointments to our Tortilla
France management team, the details of which are outlined below.
We place immense importance on the development of our teams and are very proud
of the career journeys we are able to offer our colleagues. In H1 we launched
our new management development program across the business. We have been
really pleased with the uptake and look forward to supporting our next
generation of Tortilla store managers as they continue to progress within the
business.
From a technology perspective, following the success of our first kiosk trial
in London Wall last year, we have continued with the roll out of self-order
kiosks. Seven additional sites have been fitted out with kiosks year to date
and early results have been very encouraging with average order value
increasing by +12% and significant improvements to operational flow at these
sites supporting an improved customer experience.
Double down on franchise
We see significant strategic merit to accelerate our growth through expanding
our franchise network, both through existing and new partnerships. We are
proud of the high calibre portfolio of existing partners in the UK, including
SSP Group ("SSP") where we are focussed on expansion across travel hub
locations and Compass Group ("Compass") where we are focused on higher
education UK campuses.
UK franchise stores continued to excel in the first half of the year with
multiple sales records achieved across the Group's partnerships resulting in
sales in the first half of the year increasing by over 10% with new franchised
sites opened in the financial year to date including Leeds Train Station (SSP)
and Leicester (Compass). We expect our franchise partners to open a further
three stores in H2, so on track to achieve the expected five for the full
year. We are also delighted to announce a 5-year extension of our development
agreement with SSP which will see us more than double our number of SSP sites.
Looking ahead, we see significant strategic merit to accelerate our growth
through expanding our franchise network, both through existing and new
partnerships and therefore we will evolve the mix of new openings to focus
more heavily on franchising whilst we take a more targeted approach on the
rollout of own stores, adding in primary locations where the brand has high
awareness.
Develop the brand internationally
On the 25 June 2024 the Group was delighted to announce the strategic
acquisition of Fresh Burritos, the second largest fast-casual Mexican
restaurant group in Europe, and largest in France, for a total consideration
of €3.95 million.
Whilst the UK will always remain at the core of Tortilla, we recognise there
is a huge opportunity to expand in other markets overseas. This acquisition
not only provides the Group with an important footprint in France through a
portfolio of 13 company-owned leasehold sites in high quality locations in
Paris and other major French cities, and the franchise rights to the Fresh
Burritos brand and the network of 19 franchised locations, but also offers a
springboard for franchise growth across Europe.
Since the completion of the acquisition on the 5 July we have been focussed on
pushing ahead with our integration plans and are pleased with the progress to
date. Alongside the acquisition we were pleased to announce plans to open a
fully-fitted-out 1400 sqm Central Production Kitchen ("CPK") in Lille France,
enabling Tortilla to produce consistent food at scale for the European market,
mirroring its operations in the UK and support any future expansion locations
in nearby countries. The Lille CPK is expected to be fully operational towards
the end of this calendar year.
As we continue to invest in our French management team we were delighted to
announce the appointment of Eric Wauthier-Wurmser as Managing Director of
Tortilla France. Eric draws on a wealth of hospitality expertise across
Europe, including his most recent role as the Vice President Operations &
Franchise, at Groupe Le Duff, leading the Brioche Doree brand and overseeing
350 restaurants. Further hires across our French team include Enrique Esquivel
who joins the team as Supply Chain Director, bringing a wealth of experience
in the purchasing and supply chain management and drawing on over 25 years in
the sector.
The Group has post period end created a European sub-board committee to
oversee European operations, chaired by Group Non-Executive Director and
former YUM! European Franchise Division CFO, Francesca Tiritiello. Also
appointed to the sub-board as a Non-Executive Director was Gilles Boehringer,
former VP of Development & Franchise for KFC France. Our newly appointed
Managing Director for France, Eric Wauthier-Wurmser, and our Group CEO Andy
Naylor have also been appointed to the European sub-board committee.
Finally, we are pleased to update that the roll out of the rebrand of the
Fresh Burritos stores under the Tortilla brand is already underway with our
first French site in Strasbourg now officially converted to Tortilla, with two
further sites scheduled for Q4.
Environmental, Social and Governance ("ESG")
ESG remains a key consideration for the Group and we are delighted to update
that the period has also seen the roll out of the largest energy project ever
undertaken by Tortilla with the installation of a state-of-the-art 60.68kWP
solar PV system at our UK CPK. This will lead to a reduction of 11 tonnes of
carbon a year.
Tortilla has also implemented an AI powered solution to manage plugged-in
devices, significantly reducing unnecessary energy consumption. Initially
rolled out as a trial across ten sites, this innovative approach achieved an
impressive 32% reduction in energy usage across the trial sites. Following the
successful trial, the Group plans to expand the implementation across all
sites over the next six months, aiming for even greater energy efficiency and
sustainability.
Finally, the Board would like to take this opportunity to thank the entire
team at Tortilla for their continued hard work, creativity and dedication. The
spirit across the business is fantastic and has been instrumental to the
Group's continued success over the last six months.
FINANCIAL REVIEW
Revenue
In H1 FY24 revenue decreased by 3.7% to £31.5m (H1 FY23 £32.7m). This was
attributable to the following factors:
· In February 2024, Tortilla made a strategic move from a multiple
to a dual delivery platform to improve the profitability of the delivery
channel. Whilst this has caused the LFL delivery sales to drop by 10.2% in H1,
the profit conversion has improved and has generated an enhancement in EBITDA
derived from delivery sales in H1 of £0.5m vs H1 FY23.
· The closure of three delivery kitchens Balham, Peckham and Wood
Green (H1 FY23 £0.8m revenue) due to the contraction of the delivery market
following the end of the Covid-19 pandemic.
· In-store LFL sales -3.6% due to a challenging trading environment
in H1 with low footfall in shopping centres, retail parks and high streets,
and the impact of the Group's revised strategy only starting to drive improved
LFL sales towards the end of H1.
Gross profit margin
Gross profit margin increased by 0.7% to 77.7% in H1 FY24 (H1 FY23 77.0%).
The improved margin was driven by competitive tenders on our supply contracts
negotiated last year, which were secured for fixed periods of time at
favourable prices compared to H1 FY23.
Administrative expenses
Administrative expenses decreased by 5% to £23.8m (H1 FY23: £25.0m). As a
percentage of revenue, administrative expenses were 75.5% in H1 FY24, improved
versus 76.3% in H1 FY23. This was driven by a reduction in the cost of
share-based payments as well as more favourable delivery commission rates
secured.
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 FY24 H1 FY23
£m £m
Adjusted EBITDA (pre-IFRS 16) 1.8 1.8
Pre-opening costs (0.1) (0.3)
Share-based payments 0.3 (0.2)
Depreciation and amortisation (2.0) (1.9)
Exceptional items (0.1) (0.1)
IFRS 16 adjustment 0.8 0.9
Profit from operations 0.7 0.2
Adjusted EBITDA (pre-IFRS 16) of £1.8m was generated in H1 FY24, in line with
that generated in H1 FY23. Given the decrease in sales, this reflects improved
underlying profitability achieved both through margin improvements and
strategically moving to a dual delivery platform.
These improvements to profit conversion are expected to continue through H2
FY24.
Finance expense
Finance expense of £1.0m 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 £0.2m of interest for the debt facility that the
Group has in place.
Cash flow and net cash
The Group closed the Period with an adjusted net debt position of £3.3m,
excluding the lease liabilities arising from application of IFRS 16. In H1
FY24, a further £4.2m was drawn down from the existing debt facility to fund
the Fresh Burritos acquisition, with the majority to be paid out in H2 FY24.
At period end, a total of £7.2m was drawn from our £10m credit facility with
Santander, agreed to September FY26 A reconciliation of the movement in
adjusted net debt between the start and end of the period is as follows:
Opening balance (£1.3m)
Adjusted EBITDA (pre-IFRS 16) £1.8m
Capital expenditure for new stores (£0.5m)
Investment in product, technology and CPK (£0.4m)
Maintenance capex (£1.2m)
Cash outflow due to Fresh Burritos acquisition (£0.8m)
Net interest paid (£0.1m)
Pre-opening and exceptional costs (£0.2m)
Working capital movement (£0.6m)
Closing balance (£3.3m)
Dividend
The Board did not recommend an interim dividend for FY24. 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 30 June 2024
Unaudited Unaudited
26 weeks ended 26 weeks ended
30 June 2024 2 July 2023
Note £ £
Revenue 31,546,043 32,745,623
Cost of sales (7,028,772) (7,534,184)
Gross profit 24,517,271 25,211,439
Administrative expenses (23,819,554) (24,970,307)
Profit from operations 3 697,717 241,132
Finance income 4 23,863 12,914
Finance expense 4 (956,625) (869,153)
Loss before tax (235,045) (615,107)
Tax charge - (3,402)
Loss for the period and comprehensive income attributable to equity holders of (235,045) (618,509)
the parent company
Earnings per share for profit attributable to the owners of the parent during
the period
Basic and diluted (pence) 5 (0.6) (1.6)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2024
Unaudited Unaudited Audited
At At At
30 June 2024
2 July 2023
31 December 2023
Note £ £ £
Non-current assets
Intangible assets 6 2,624,886 2,629,623 2,627,039
Right-of-use assets 7 29,861,287 30,836,951 29,520,494
Property, plant and equipment 8 14,175,125 14,073,657 14,119,801
Total non-current assets 46,661,298 47,540,231 46,267,334
Current assets
Inventories 321,329 376,641 358,861
Trade and other receivables 9 2,909,017 2,775,126 3,135,075
Cash and cash equivalents 3,844,326 1,327,470 1,644,674
Total current assets 7,074,672 4,479,237 5,138,610
Total assets 53,735,970 52,019,468 51,405,944
Current liabilities
Trade and other payables 10 8,098,460 9,334,177 9,749,505
Lease liabilities 7 6,077,235 5,762,578 5,670,902
Total current liabilities 14,175,695 15,096,755 15,420,407
Non-current liabilities
Lease liabilities 7 29,429,493 30,801,995 29,532,937
Loans and borrowings 7,158,291 2,939,751 2,949,021
Deferred taxation 617,696 - 617,696
Total non-current liabilities 37,205,480 33,741,746 33,099,654
Total liabilities 51,381,175 48,838,501 48,520,061
Net assets 2,354,795 3,180,967 2,885,883
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 543,935 661,028 839,978
Retained earnings (7,802,200) (7,093,121) (7,567,155)
Total equity 2,354,795 3,180,967 2,885,883
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2024
Share capital Share premium Merger reserve Share-based payment reserve Retained earnings Total
£ £ £ £ £ £
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
Loss for the period - - - - (474,034) (474,034)
Share-based payments - - - 178,950 - 178,950
Equity at 31 December 2023 386,640 4,433,250 4,793,170 839,978 (7,567,155) 2,885,883
Profit for the period - - - - (235,045) (235,045)
Share-based payments - - - (296,043) - (296,043)
Equity at 30 June 2024 386,640 4,433,250 4,793,170 543,935 (7,802,200) 2,354,795
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 June 2024
Unaudited Unaudited
26 weeks ended 26 weeks ended
30 June 2024 2 July 2023
Note £ £
Operating activities
Profit after tax (235,045) (618,509)
Adjustments for:
Share based payments (296,043) 208,493
Net finance expense 4 144,594 105,303
Finance cost on lease liabilities 4 788,168 750,936
Amortisation of intangible assets 6 2,153 2,582
Depreciation of right to use assets 7 2,231,155 2,177,598
Depreciation of property, plant and equipment 8 1,995,873 1,812,912
Decrease in inventories 37,532 20,442
Decrease/(increase) in trade and other receivables 226,058 (581,249)
(Decrease)/increase in trade and other payables (1,651,045) 224,105
Cash generated from operations 3,243,400 4,102,613
Investing activities
Interest received 4 23,862 12,914
Purchase of property, plant and equipment 8 (2,051,196) (2,165,468)
Net cash used by investing activities (2,027,334) (2,152,554)
Financing activities
Payments made in respect of lease liabilities 7 (3,057,614) (2,889,443)
Interest paid (158,800) (108,946)
Drawdown of loan 4,200,000 -
Net cash generated from/(used by) financing activities 983,586 (2,998,389)
Net increase/(decrease) in cash and cash equivalents 2,199,652 (1,048,330)
Cash and cash equivalents at the beginning of period 1,644,674 2,375,800
Cash and cash equivalents at the end of period 3,844,326 1,327,470
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 29 December 2024
are expected to be prepared under IFRS.
The comparative financial information for the period ended 31 December 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 31 December 2023 have been delivered
to the Registrar of Companies.
The auditors' report on the statutory accounts for 31 December 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 31 December 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. Profit from operations
Profit from operations is stated after charging:
Unaudited Unaudited
26 weeks ended 26 weeks ended
30 June 2024 2 July 2023
£ £
Depreciation and amortisation 4,200,147 3,993,091
Variable lease payments 218,752 229,485
Inventories - amounts charged as an expense 7,028,772 7,534,184
Staff costs 10,733,161 10,815,498
Share option (release)/expense (261,879) 208,493
Pre-opening costs 74,422 175,942
Exceptional items 71,301 125,544
Bank arrangement fee amortisation 9,270 9,270
Pre-opening costs
Unaudited Unaudited
26 weeks ended 26 weeks ended
30 June 2024 2 July 2023
£ £
Pre-opening costs 74,422 175,942
Number of site openings in period 1 4
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.
4. Finance income and expenses
Unaudited Unaudited
26 weeks ended 26 weeks ended
30 June 2024 2 July 2023
£ £
Finance income
Bank interest income 23,863 12,914
Finance expense
Bank loan interest expense 168,457 118,217
Finance cost on lease liabilities 788,168 750,936
956,625 869,153
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.
Unaudited Unaudited
26 weeks ended 26 weeks ended
30 June 2024 2 July 2023
£ £
Profit
Profit used in calculating basic and diluted profit (235,045) (618,509)
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) (0.6) (1.6)
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.
6. Intangible assets
Computer Software Goodwill Total
£ £ £
Cost
At 31 December 2023 15,500 2,624,886 2,640,386
Additions - - -
Disposals - - -
At 30 June 2024 (unaudited) 15,500 2,624,886 2,640,386
Amortisation
At 31 December 2023 13,347 - 13,347
2,153 - 2,153
Amortisation charge
On disposals - - -
At 30 June 2024 (unaudited) 15,500 - 15,500
Net book value
At 30 June 2024 (unaudited) - 2,624,886 2,624,886
At 31 December 2023 7,319 2,624,886 2,627,039
7. Leases
Right-of-use assets £ Lease liabilities £
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)
At 31 December 2023 29,520,494 At 31 December 2023 (35,203,839)
Additions 2,571,948 Additions (2,572,335)
Depreciation (2,231,155) Interest expense (788,168)
Impairment - Lease payments 3,057,614
Disposals - Disposals -
At 30 June 2024 (unaudited) 29,861,287 At 30 June 2024 (unaudited) (35,506,728)
8. Property, plant and equipment
Furniture, fittings
Leasehold Plant and
Improvements machinery and equipment Total
£ £ £ £
Cost
At 31 December 2023 17,992,372 5,229,185 7,505,962 30,727,519
Additions 641,240 719,804 690,152 2,051,196
Disposals - - - -
At 30 June 2024 (unaudited) 18,633,612 5,948,989 8,196,114 32,778,715
Depreciation
At 31 December 2023 9,562,954 3,060,866 3,983,898 16,607,718
Charge for year 618,052 372,211 1,005,609 1,995,872
On disposals - - - -
At 30 June 2024 (unaudited) 10,181,006 3,433,077 4,989,507 18,603,590
Net book value
At 30 June 2024 (unaudited) 8,452,606 2,515,912 3,206,607 14,175,125
At 31 December 2023 8,429,418 2,168,319 3,522,064 14,119,801
9. Trade and other receivables
Unaudited Unaudited
At At
30 June 2024 2 July 2023
£ £
Trade debtors 498,221 868,124
Other debtors 1,183,043 1,249,845
Prepayments and accrued income 1,227,753 657,157
2,909,017 2,775,126
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.
Prepayments and accrued income at H1 FY24 includes £0.9m relating to the
Fresh Burritos acquisition.
10. Trade and other payables
Unaudited Unaudited
At At
30 June 2024 2 July 2023
£ £
Trade payables 2,057,430 2,483,656
Other taxation and social security 1,850,723 1,929,037
Other payables 930,490 891,460
Accruals and deferred income 3,259,817 4,030,024
8,098,460 9,334,177
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
30 June 2024 Transition 30 June 2024 2 July 2023 Transition 2 July 2023
£ £ £ £ £ £
Revenue 31,546,043 - 31,546,043 32,745,623 - 32,745,623
Cost of sales (7,087,782) 59,010 (7,028,772) (7,534,184) - (7,534,184)
Gross profit 24,458,261 59,010 24,517,271 25,211,439 - 25,211,439
Other operating income - - - - - -
Administrative expenses (24,547,964) 728,410 (23,819,554) (25,869,027) 898,720 (24,970,307)
Profit/(loss) from operations (89,703) 787,420 697,717 (657,588) 898,720 241,132
Adjusted EBITDA 1,769,489 3,021,489 4,790,978 1,773,722 2,979,750 4,753,472
Pre-opening costs (88,293) 13,871 (74,422) (266,104) 90,162 (175,942)
Share based payments 261,879 - 261,879 (208,493) - (208,493)
Depreciation and amortisation (1,952,207) (2,247,940) (4,200,147) (1,821,899) (2,171,192) (3,993,091)
Exceptional items (71,301) - (71,301) (125,544) - (125,544)
Non-trading costs (9,270) - (9,270) (9,270) - (9,270)
(89,703) 787,420 697,717 (657,588) 898,720 241,132
Finance income 23,863 - 23,863 12,914 - 12,914
Finance expense (168,457) (788,168) (956,625) (118,217) (750,936) (869,153)
Profit/(loss) before tax (234,297) (748) (235,045) (762,891) 147,784 (615,107)
Tax charge - - - (3,402) - (3,402)
Profit/(loss) for the period and comprehensive income attributable to equity (234,297) (748) (235,045) (766,293) 147,784 (618,509)
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
30 June 2024 Transition 30 June 2024 2 July 2023 Transition 2 July 2023
£ £ £ £ £ £
Non-current assets
Intangible assets 2,624,886 - 2,624,886 2,629,623 - 2,629,623
Right-of-use assets - 29,861,287 29,861,287 - 30,836,951 30,836,951
Property, plant and equipment 13,675,152 499,973 14,175,125 13,379,173 694,484 14,073,657
Total non-current assets 16,300,038 30,361,260 46,661,298 16,008,796 31,531,435 47,540,231
Current assets
Inventories 321,329 - 321,329 376,641 - 376,641
Trade and other receivables 3,983,553 (1,074,536) 2,909,017 4,013,124 (1,237,998) 2,775,126
Cash and cash equivalents 3,844,326 - 3,844,326 1,327,470 - 1,327,470
Total current assets 8,149,208 (1,074,536) 7,074,672 5,717,235 (1,237,998) 4,479,237
Total assets 24,449,246 29,286,724 53,735,970 21,726,031 30,293,437 52,019,468
Current liabilities
Trade and other payables 9,769,054 (1,670,594) 8,098,460 11,186,622 (1,852,445) 9,334,177
Lease liabilities - 6,077,235 6,077,235 - 5,762,578 5,762,578
Total current liabilities 9,769,054 4,406,641 14,175,695 11,186,622 3,910,133 15,096,755
Non-current liabilities
Lease liabilities - 29,429,493 29,429,493 - 30,801,995 30,801,995
Loans and borrowings 7,158,291 - 7,158,291 2,939,751 - 2,939,751
Deferred taxation 617,696 - 617,696 - - -
Total non-current liabilities 7,775,987 29,429,493 37,205,480 2,939,751 30,801,995 33,741,746
Total liabilities 17,545,041 33,836,134 51,381,175 14,126,373 34,712,128 48,838,501
Net assets / (liabilities) 6,904,205 (4,549,410) 2,354,795 7,599,658 (4,418,691) 3,180,967
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 543,935 - 543,935 661,028 - 661,028
Retained earnings (3,252,790) (4,549,410) (7,802,200) (2,674,430) (4,418,691) (7,093,121)
Total equity 6,904,205 (4,549,410) 2,354,795 7,599,658 (4,418,691) 3,180,967
1 defined as the percentage change in like-for-like sales compared to H1
FY23. Change in methodology compared with previously reported LFL sales which
included any new sites after twelve months of trading, whilst the new
methodology excludes all FY23 openings.
2 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.
3 defined as net debt / cash excluding lease liabilities arising from
application of IFRS 16.
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