REG - Various Eateries PLC - Final Results
01/02/2024 07:15
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RNS Number : 6149B Various Eateries PLC 01 February 2024
1 February 2024
VARIOUS EATERIES PLC
("Various Eateries" or "the Company"
and with its subsidiaries "the Group")
Final Results
52-week period ending 1 October 2023
Poised to accelerate following a year of steady progress and a successful
post-period fundraise
Various Eateries PLC, the owner, developer and operator of all day clubhouse,
restaurant and hotel sites in the United Kingdom, announces its results for
the 52 weeks ended 1 October 2023.
Financial Highlights
· Revenue growth of 12% to £45.5m (2022: £40.7m), largely driven
by new site openings
· Adjusted EBITDA* loss of £2.2m (2022: profit of £0.4m), with
the Board choosing to absorb the majority of price rises to strengthen the
Group's longer-term prospects
· Total loss before tax of £6.7m (2022: loss of £7.2m)
· Cash at bank of £1.9m (2022: £9.4m)
· Net debt of £11.6m (2022: £3.3m)
* not audited see Financial Review
Operational Highlights
· Resilient performance in the year with LFL sales holding
relatively firm despite well-publicised industry challenges
· Measured approach to expansion with the opening of two new Noci
restaurants and one Coppa Club
· Continuous mitigation of the inflationary environment through
supply chain management and menu re-engineering
· Strengthened senior management team with appointment of Sharon
Badelek as CFO, Rebecca Tooth as MD of Coppa Club (non-board position) and
Scott Williamson as People Director (non-board position)
Post-period Highlights & Outlook
· Successful fundraise of £10.1m and conversion of debt into
equity
· Encouraging signs that the inflationary environment is
normalising
· Plans to open up to ten Noci sites and up to three Coppa Club
sites in the next phase of roll-out
Andy Bassadone, Executive Chairman of Various Eateries, said:
"Performance in the year under review was solid given the host of challenges
faced by the industry. We have continued to focus on customer loyalty, brand
reputation and maintaining revenue, and I am proud of our teams for all their
hard work.
We enter the new financial year in a position of strength having raised
£10.1m and converted debt into equity in December. The convergence of site
availability, reduced competition and changing consumer behaviours has brought
forth a generational opportunity akin to the casual dining revolution of the
90s and we are well set to capitalise.
Inflationary pressures have been a major thorn in the side of all hospitality
businesses in the period but encouragingly there are signs they are beginning
to abate while interest rates appear to be cooling. We are not out of the
woods yet by any means but we are confident our approach is the right one to
ensure the long-term prosperity of the Group.
We are excited about what we are building and look forward to the challenges
and opportunities of the year ahead with confidence."
Annual General Meeting and Posting of Results
The Company confirms that it intends to distribute its Annual Report and
Accounts and notice of Annual General Meeting to shareholders shortly. A
further announcement will be made at that time. A copy of the annual report
and accounts will also be available from the Company's website at the same
time (www.variouseateries.co.uk (http://www.variouseateries.co.uk) ).
Enquiries
Various Eateries plc
Via Alma
Andy Bassadone Executive Chairman
Sharon Badelek Chief Financial Officer
WH Ireland Limited Sole Broker and NOMAD Tel: +44 (0)20 7220 1666
Broking
Harry Ansell
Nominated Adviser
Katy Mitchell
Darshan Patel
Alma Strategic Communications Financial PR Tel: +44 (0)20 3405 0205
David Ison variouseateries@almastrategic.com (mailto:variouseateries@almastrategic.com)
Rebecca Sanders-Hewett
Will Merison
About Various Eateries
Various Eateries owns, develops and operates restaurant, clubhouse and hotel
sites in the United Kingdom. The Group's stated mission is "great people
delivering unique experiences through continuous innovation".
The Group is led by a highly experienced senior team including Hugh Osmond
(Founder), Andy Bassadone (Executive Chairman) and Sharon Badelek (CFO).
The Group operates two core brands across 18 locations:
· Coppa Club, a multi-use, all day concept that combines
restaurant, terrace, café, lounge, bar and work spaces
· Noci, a modern, neighbourhood pasta-only concept which serves
very high-quality dishes at reasonable prices
For more information visit www.variouseateries.co.uk
(http://www.variouseateries.co.uk/)
Chairman's Statement
£10.1m placing to fuel expansion following a resilient year
I am pleased to be publishing these results on the back of a successful
post-period fundraise and conversion of debt into equity, positioning the
Group on a trajectory of accelerated growth. This allows us to move forward
with enhanced financial firepower and our sights firmly set on expansion.
Performance in the year under review was solid given the host of challenges
faced by the industry, with like-for-like sales standing relatively firm.
Experience tells us that in difficult periods, maintaining customer loyalty
and brand reputation is paramount, so we made the conscious decision to absorb
the majority of price rises. While this strategy put pressure on our margins
in the year, taking a longer-term view we are confident it will stand us in
good stead.
As we move into FY24, there are encouraging signs that the inflationary
landscape is beginning to normalise. Volatility remains and the rate at which
certain pressures will abate is difficult to forecast, but conditions appear
to be gradually improving. Supported by strong cash reserves and a refined
focus, we will continue to pursue our roll-out strategy in a measured and
sustainable way, exercising financial discipline while maintaining the
ambition necessary to capitalise on the current opportunity.
A multi-brand hospitality business with a generational opportunity
The Group's strategy is built around the expansion of two proven brands, each
designed to fill a specific gap in the market.
Noci, a modern neighbourhood pasta restaurant that evolved from the Group's
Tavolino concept, is the Group's newest venture. Designed to fill the void
left by the reduction of operators in the Italian mid-market sector and
deliver profitability in c. 3,000 sq ft spaces, Noci's focus on delivering
high quality food at an affordable price point provides it with a layer of
protection in the event of tightening consumer spend.
Coppa Club, the Group's all-day clubhouse proposition, has been conceived to
meet the evolving consumer behaviour trends accelerated by Covid, such as the
shift to flexible/hybrid working. From dramatic full-service riverside
locations with vast outdoor spaces, to high street hubs benefitting from city
centre footfall throughout the seasons, the concept is designed to suit all
occasions, from coffee, breakfast and weekend brunches, to lunches, dinner
celebrations and late-night drinks.
Underpinning Various Eateries' growth ambitions are a unique set of
circumstances that the Board believes form an opportunity akin to the casual
dining revolution of the 1990s.
The directors believe that before Covid, the hospitality industry had become
saturated with homogenous operators whose priorities had diverged from quality
of food and service. Already struggling to adapt to the impact of Brexit, the
lengthy restrictions on trading imposed by the government during the pandemic
dealt a killing blow to many of these businesses.
The unprecedented price increases, rising energy bills and reduction in
consumer disposable income that followed in the wake of the Russo-Ukrainian
War further destabilised the industry.
The closure of many operators throughout the Covid-19 pandemic has given rise
to the increased availability of sites in prime locations, often coming with
extensive existing fit outs that result in considerable savings on capital
investment. Coupled with favourable rates and reduced competition, this
presents a clear opportunity for well-funded operator with flexible,
forward-thinking brands and a strategy attuned to market dynamics.
Steady trading performance in a year characterised by industry-wide challenges
Trading performance for the period was in line with expectations. Revenues
were slightly higher than market expectations at £45.5m (2022: £40.7m),
largely driven by new site openings.
Group like-for-like sales ("LFL"), excluding the benefit of the reduced rate
of VAT in the prior year, held relatively firm, which is a satisfactory
performance considering the challenging macroeconomic environment, continued
train strikes and unseasonably wet weather in the spring and summer months.
The Board believes focusing on the top line as opposed to pursuing short-term
profit maximisation to be fundamentally important to long-term, sustainable
success.
Noci continues to perform well. H2 (April to September 2023) LFL sales at the
first Noci site in Islington grew 23%. Although still in the first months of
their existence, initial trading at our second and third sites in Battersea
Power Station and Shoreditch has been promising.
The Group's townhouse Coppa Clubs in Bath and Guildford, benefiting from high
footfall town centre locations, delivered positive performances. The Coppa
Clubs with large outdoor spaces, which benefitted in the prior year from
exceptionally good weather, were impacted this year by extended periods of
unusually wet conditions, including the wettest July since 2009.
Trading at the Group's Tavolino site was strong, delivering LFL sales growth
of 10%.
Managing cost pressures and growing optimism around inflation outlook
We took a proactive approach to addressing the inflationary pressures that
persisted throughout the year, for example employing innovative menu
engineering to trim unnecessary costs while upholding the quality of our food.
An increased emphasis on seasonal rotation, for example, allowed us to
continue to provide fresh, premium ingredients without the added expense
linked to year-round sourcing.
There are encouraging signs that the cost surges are beginning to subside.
Food and energy costs, which were remarkably elevated through much of FY23,
are starting to become more manageable. It will take time for conditions to
normalise and we will continue to maintain relentless focus on becoming more
operationally efficient as a Group. Aligned to this, we are currently
exploring several technological solutions which we expect to boost the overall
productivity of our colleagues while positively impacting the customer
experience.
While the rise in National Living Wage in April 2024 will have an impact on
labour costs, the market is in a much better state than it was 12 months ago,
with staffing shortages largely under control and a healthy pool of talented
and motivated people available to us. During the year, our workforce grew
significantly, and we maintained a low level of vacancies. A lot of hard work
goes on behind the scenes to make Various Eateries a great place to work,
learn and progress in the industry, and it is heartening to see it paying
dividends.
Continued growth of estate and poised to accelerate
During the financial year, the Group opened three new sites taking the total
to 18: Coppa Club Guildford, Noci Battersea Power Station and Noci
Shoreditch.
Coppa Club Guildford, which opened in April 2023, is the second iteration of
our townhouse format. A three-storey, all day venue on the busy high street,
it boasts café-work space on the ground floor and a bold mural leading the
guests' eye up the stairwell to the first-floor dining space and destination
bar on the top floor.
The Board believes there is significant potential for the expansion of Coppa
Club, with the next opening in Cardiff this spring.
Opening in May 2023, the Group's second Noci site is located in the
comprehensive commercial and residential redevelopment of one of London's most
iconic landmarks, Battersea Power Station. Noci Shoreditch, located just off
Old Street Roundabout in the heart of the capital's Tech City, followed suit
in September 2023.
The Group believes Noci to be the most compelling near-term growth opportunity
and intends to open up to ten new sites over the next couple of years. While
the immediate roll out is expected to be focused on the Greater London area,
market research leads the Board to believe there are over 100 suitable sites
in the UK.
Significantly strengthened management team
In February 2023, we announced the appointment of Sharon Badelek as Chief
Financial Officer and board member with effect from 1 April 2023. Sharon has
an established track record of driving growth in businesses in our sector,
with an impressive CV that includes senior financial positions at RedCat Pub
Company, Vue Entertainment and Novus Leisure Limited. To have attracted
someone of Sharon's calibre demonstrates the strength of our proposition and
ambition. She has already had a positive impact on our finance function and
played an important role in the recent fundraise.
As part of the refocusing of our strategy around the two brands, Rebecca
Tooth, formerly of Bills and Cote, was appointed as Managing Director of Coppa
Club, while I assumed the role of Managing Director of Noci, having led the
concept from inception. The Board believes the new management structure to be
conducive to the long-term success of both brands, with dedicated leadership
that understand the nuances of each concept and simplified reporting lines
that promote quick and effective decision-making.
Oli Williams, former CFO, and Yishay Malkov, former CEO, both left the Group
during the year. I would like to again thank them for their significant
contributions and wish them all the best for the future.
Investing in our people
During the year under review, we continued to prioritise the wellbeing and
development of our colleagues. To facilitate this, a new people director
(non-board position), Scott Williamson, joined the group in November 2023.
Scott has been in the hospitality industry since the age of 18 and brings a
wealth of experience having worked in bars, restaurants and hotels throughout
the world including, Firmdale Hotels, Carluccios, Bill's and Côte. Scott has
already had a positive impact on training programmes across Various Eateries
and will continue to build on this in 2024.
I would like to express my heartfelt appreciation for everyone at Various
Eateries for their dedication and resolve during what was another challenging
year for the industry. Without their commitment to upholding the high
standards we set as a Group, we would not have been able to grow our
reputation as we have, and I am grateful for their efforts.
Current trading and outlook
Sales in the first quarter of FY24 were in line with management expectations.
As we move into the second quarter, we are optimistic that inflationary
pressures will continue to ease and interest rates will at least not rise
further, but this remains difficult to predict.
Regardless, we will continue to focus on what is within our control - growing
the top line and taking action to ensure high levels of customer satisfaction
and improving operational efficiency.
We are building a Group for the long-term and believe this approach will
position us well for sustainable, profitable growth and value creation for
shareholders as conditions improve.
At the same time, we will continue to explore ways to make the business more
efficient while progressing our roll-out at a measured pace commensurate with
market conditions.
Financial Review
Overview
The first half of the financial results for FY22 benefitted from Covid related
reliefs and reduced VAT rates, which did not continue into the FY23 financial
year.
The KPI's of the Group's performance are summarised in the table below:
52 weeks ended 52 weeks ended Change
1 October 2023 2 October
2022
£ 000 £ 000 %
Revenue 45,495 40,667 12%
Adjusted EBITDA (before impact of IFRS 16)* (2,189) 437 (601%)
Adjusted EBITDA* 1,556 3,531 (56%)
Operating Loss (4,207) (5,209) 19%
Total loss for the year after tax (6,677) (7,215) 7%
Basic and diluted earnings per share (pence) (8.1) (8.8) 7%
Cashflow from operating activities 2,082 1,861 12%
Net debt/ (cash) excluding lease liabilities 11,609 3,317 250%
Number of sites 18 15 20%
* not audited
Summary of financial performance for the 52 weeks ended 1 October 2023
52 weeks ended 52 weeks ended
1 October 2023 2 October 2022
£ 000 £ 000
Reconciliation of loss before tax to Adjusted EBITDA
Revenue 45,495 40,667
Loss before tax (6,677) (7,215)
Impairment - 2,543
Financing costs 2,470 2,006
Depreciation and amortisation 5,571 4,702
Gain on surrender of lease (899) -
Loss on disposal of assets and leases 37 54
EBITDA 502 2,090
Pre-opening costs* 886 755
Share-based payments 69 830
Non-trading site costs* (27) (144)
Exceptional costs* 126 -
Adjusted EBITDA* 1,556 3,531
Adjustment for rent expense (3,745) (3,094)
Adjusted EBITDA (before impact of IFRS 16)* (2,189) 437
* not audited
FINANCIAL PERFORMANCE
Overall Group revenue increased by 12% (FY23: £45.5m, FY22: £40.7m). The
Group's adjusted EBITDA decreased by £1.9m, from £3.5m in FY22 to £1.6m in
FY23. During the year, the Group was faced with significant cost increases due
to external economic factors which were not fully passed onto customers. In
the Board's experience, in challenging market conditions, focusing on the
Group's revenue, as opposed to maximisation of short-term profits through cost
cutting, is fundamental to future success.
The loss before tax has decreased from £7.2m in FY22 to £6.7m in FY23. In
FY23 the Group incurred impairments to goodwill and right‑of‑use assets of
£nil (FY22: £2.5m). The Group's depreciation and amortisation charge has
increased by £0.9m (from £4.7m in FY22 to £5.6m in FY23) and pre-opening
costs have increased by £0.1m (from £0.8m in FY22 to £0.9m in FY23), as we
have continued to invest in new sites. The Group's share based payment charge
has decreased by £0.7m (from £0.8m in FY22 to £0.1m in FY23).
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 1 October 2023
52 weeks ended 52 weeks ended
1 October 2023 2 October 2022
Note £ 000 £ 000
Revenue 4 45,495 40,667
Cost of sales (43,597) (36,992)
Gross profit 1,898 3,675
Central staff costs (3,426) (2,617)
Share-based payments 26 (69) (830)
Impairment of goodwill 13 - (1,563)
Impairment of property, plant and equipment 14 - (980)
Gain on early surrender of lease 899 -
Loss of property, plant and equipment (37) (54)
Other expenses 11 (3,472) (2,840)
Operating loss (4,207) (5,209)
Financing costs 6 (2,470) (2,006)
Loss before tax (6,677) (7,215)
Tax 10 - -
Loss for the period (6,677) (7,215)
Earnings per share
Basic loss per share (pence) 12 (8.1) (8.8)
Diluted loss per share (pence) 12 (8.1) (8.8)
The above results were derived from continuing operations.
There are no items of comprehensive income other than the loss for the period
and therefore, no statement of other comprehensive income is presented.
Consolidated Statement of Financial Position
As at 1 October 2023
1 October 2023 2 October 2022
Note £ 000 £ 000
Non-current assets
Intangible assets 13 11,152 11,214
Right-of-use assets 14 24,873 26,109
Other property, plant and equipment 14 25,397 21,592
61,422 58,915
Current assets
Inventories 16 1,078 808
Trade receivables 17 154 204
Other receivables 17 2,082 2,359
Cash and bank balances 18 1,902 9,390
5,216 12,761
Total assets 66,638 71,676
Current liabilities
Trade and other payables 19 (13,380) (11,420)
Borrowings 20 (13,511) (12,707)
(26,891) (29,601)
Net current liabilities (21,675) (11,366)
Total assets less current liabilities 39,747 47,549
Non-current liabilities
Borrowings 21 (28,049) (29,244)
Provisions 22 (358) (357)
Total non-current liabilities (28,407) (29,601)
Total liabilities (55,298) (53,728)
Net assets 11,340 17,948
Equity
Share capital 23 890 890
Share premium 52,284 52,284
Merger reserve 64,736 64,736
Employee benefit trust shares reserve (5,012) (5,012)
Retained earnings (101,558) (94,950)
Total funds attributable to the equity shareholders of the Company 11,340 17,948
The financial statements of Various Eateries PLC (registration number:
12698869) were approved by the Board and authorised for issue on
They were signed on its behalf by:
S Badelek
Director
Consolidated Statement of Changes in Equity
for the 52 weeks ended 1 October 2023
Called-up share capital Share premium account Merger reserve Employee benefit trust shares reserve Retained Earnings Total
Attributable to equity shareholders of the Company £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
At 3 October 2021 890 52,284 64,736 (5,012) (88,565) 24,333
Share based payments - - - - 830 830
Total transactions with owners - - - - 830 830
Loss for the period - - - - (7,215) (7,215)
Total comprehensive loss - - - - (7,215) (7,215)
At 2 October 2022 890 52,284 64,736 (5,012) (94,950) 17,948
Share based payments - - - - 69 69
Total transactions with owners - - - - 69 69
Loss for the period - - - - (6,677) (6,677)
Total comprehensive loss - - - - (6,677) (6,677)
At 1 October 2023 890 52,284 64,736 (5,012) (101,558) 11,340
Consolidated Statement of Cash Flows
for the 52 weeks ended 2 October 2022
52 weeks ended 52 weeksended
1 October 2023 2 October2022
£ 000 £ 000
Cash flows from operating activities
Loss for the year (6,677) (7,215)
Adjustments to cash flows from non-cash items:
Depreciation and amortisation 5,571 4,702
Impairment loss - 2,543
Gain on early surrender of lease (899) -
Loss on disposal of assets and leases 37 54
Share based payments 69 830
Financing costs 2,470 2,006
571 2,920
Working capital adjustments:
Increase in inventories (270) (262)
(Increase) / decrease in trade and other receivables 327 (1,059)
Increase in accruals, trade and other payables 1,454 262
Net cash flow from operating activities 2,082 1,861
Cash flows used in investing activities
Purchases of property plant and equipment (6,845) (8,852)
Net cash flows from investing activities (6,845) (8,852)
Cash flows from financing activities
Interest paid (1,627) (1,345)
Repayment of borrowings - (431)
Principal elements of lease payments (1,098) (1,559)
Net cash flows used in financing activities (2,725) (3,335)
Decrease in cash (7,488) (10,326)
Opening cash at bank and in hand 9,390 19,716
Closing cash at bank and in hand 1,902 9,390
Notes to the accounts
4 Revenue
An analysis of the Group's total revenue (including sublease rental income
shown within cost of sales) which all originates in the UK is as follows:
52 weeks ended 52 weeks ended
1 October 2023 2 October 2022
£ 000 £ 000
Sale of goods 41,437 36,523
Accommodation and room hire 4,025 4,086
Sub-let rental income 33 58
45,495 40,667
6 Finance costs
52 weeks ended 52 weeks ended
1 October 2023 2 October 2022
£ 000 £ 000
Interest on bank overdrafts and borrowings 897 661
Lease liability interest 1,573 1,344
Foreign exchange loss - 1
Total financing costs 2,470 2,006
Net finance costs 2,470 2,006
10 Tax
Tax charged in the statement of comprehensive income
52 weeks ended 52 weeks ended
1 October 2023 2 October 2022
Tax expense £ 000 £ 000
Corporation tax - -
Total current income tax - -
Tax expense in the statement of comprehensive income - -
Corporation tax is calculated at 25% (2022: 19%) of the estimated taxable loss
for the period.
The charge for the period can be reconciled to the loss in the statement of
profit or loss as follows:
52 weeks ended 52 weeks ended
1 October 2023 2 October 2022
£ 000 £ 000
Loss before tax (6,677) (7,215)
Corporation tax at standard rate 22.0% (2022: 19.0%) (1,469) (1,371)
Fixed asset differences - 527
Expenses not deductible 247 1,792
Income not taxable - (1,409)
Tax losses carried forward 1,160 -
Movement in deferred tax not recognised 62 529
Other movements - (69)
Total tax charge - -
10 Tax (continued)
No account has been taken of the potential deferred tax asset of £14,628,000
(2022: £13,375,000) calculated at 25% (2022: 25%) and representing losses
carried forward and short term timing differences, owing to the uncertainty
over the utilisation of the losses available.
11 Other expenses
52 weeks ended 52 weeks ended
1 October 2023 2 October 2022
£ 000 £ 000
Depreciation and amortisation 324 244
AGA release of provision (note 22) 1 -
Other central costs 3,147 2,596
3,472 2,840
12 Earnings per share
Basic loss per share is calculated by dividing the profit attributable to
equity shareholders by the weighted average number of shares outstanding
during the year. There were no potentially dilutive ordinary shares
outstanding as at the periods ended 1 October 2023 and 2 October 2022.
1 October 2023 2 October 2022
£ 000 £ 000
Loss for the year after tax (6,677) (7,215)
Basic and diluted weighted average number of shares 82,143,398 82,143,398
Basic loss per share (pence) (8.1) (8.8)
Diluted loss per share (pence) (8.1) (8.8)
13 Intangible assets
Group Brand Goodwill Trademarks, patents & licenses Total
£ 000 £ 000 £ 000 £ 000
Cost or valuation
At 2 October 2022 2,912 26,019 25 28,956
Additions - - - -
At 1 October 2023 2,912 26,019 25 28,956
Amortisation
At 2 October 2022 2,788 14,954 - 17,742
Charge for the period 62 - - 62
Impairment - - - -
At 1 October 2023 2,850 14,954 - 17,804
Carrying amount 1 October 2023 62 11,065 25 11,152
Brand Goodwill Trademarks, patents & licenses Total
£ 000 £ 000 £ 000 £ 000
Cost or valuation
At 3 October 2021 2,912 26,019 25 28,956
Additions - - - -
At 2 October 2022 2,912 26,019 25 28,956
Amortisation
At 3 October 2021 2,724 13,391 - 16,115
Charge for the period 64 - - 64
Impairment - 1,563 - 1,563
At 2 October 2022 2,788 14,954 - 17,742
Carrying amount 2 October 2022 124 11,065 25 11,214
Brand relates to registered brand names and is amortised over an estimated
useful economic life of four years.
Goodwill is not amortised, but an impairment test is performed annually by
comparing the carrying amount of the goodwill to its recoverable amount. The
recoverable amount is represented by the greater of the individual Cash
Generating Units ("CGU's") fair value less costs of disposal and its
value-in-use.
The goodwill balance relates to Tavolino Riverside (£1,046,000), Strada
Southbank (£992,000), Rare Bird Hotels at Sonning Limited (£2,418,000), and
Rare Bird Hotels at Streatley Limited (£6,609,000). Tavolino Riverside and
Strada Southbank are included within the restaurant operating segment. Rare
Bird Hotels at Sonning Limited and Rare Bird Hotels at Streatley Limited are
included within the hotels operating segment.
Restaurant segment
The key assumptions for the value-in-use calculations are those regarding the
discount rate, trading forecasts and growth rates. The key underlying
assumption is the group's 3 year business plan which is based on past
experience, taking into account operational developments/ changes at the
group's operating sites. A pre-tax discount rate of 12.1% was used (2022:
14.9%), based on the Group's WACC and comparable businesses in the sector.
Cash flows in line with forecasts for the next 3 years were used. Cash flows
beyond the forecast period are extended out to the end of the lease terms at a
3% growth rate.
Impairment testing at 1 October 2023 resulted in no impairments.
Given the ongoing global economic uncertainty and its impact on the UK
hospitality sector there is particular sensitivity to the forecasts prepared
in connection with the impairment review as at 1 October 2023. The estimate of
recoverable amount for the restaurant segment is particularly sensitive to the
discount rate and trading forecast assumptions. If the discount rate used is
increased by 1%, the forecast future EBITDA is reduced by 10% and the terminal
growth rate reduced by 1%, a further impairment loss of £nil for the period
ended 1 October 2023 would have to be recognised against goodwill (2022:
£991,000). Management is not currently aware of any other reasonably possible
changes to key assumptions that would cause a unit's carrying amount to exceed
its recoverable amount.
Hotel segment
The key assumptions for the value-in-use calculations are those regarding the
discount rate, trading forecasts and growth rates. A pre-tax discount rate of
12.1% was used (2022: 14.9%), based on the Group's WACC and comparable
businesses in the sector. Cash flows in line with forecasts for the next 3
years were used. Cash flows beyond the forecast period are extended at a
terminal growth rate of 3% (2022: 2%).
Impairment testing at 1 October 2023 resulted in no requirement to reduce the
carrying value of goodwill at 1 October 2023, as the recoverable amounts of
the CGUs, based on value-in-use estimates, were greater than the carrying
values.
The estimate of recoverable amount for the hotel segment is sensitive to the
discount rate, trading forecast assumptions and terminal growth rate. If the
discount rate used is increased by 1%, the forecast future EBITDA is reduced
by 10% and the terminal growth rate reduced by 1%, no impairment would be
required (2022: nil). Management is not currently aware of any other
reasonably possible changes to key assumptions that would cause a unit's
carrying amount to exceed its recoverable amount.
14 Property, plant and equipment
Group
Right of use assets Freehold property Leasehold Improvements Furniture, fittings and equipment Assets Under Construction IT equipment Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Cost or valuation
At 2 October 2022 37,588 2,294 16,293 8,535 573 2,108 67,391
Additions 1,206 - 654 935 5,191 65 8,051
Lease modifications 56 - - - - - 56
Disposals (1,228) - - - (30) - (1,258)
Transfers - - 4,304 664 (5,137) 169 -
At 1 October 2023 37,622 2,294 21,251 10,134 597 2,342 74,240
Depreciation
At 2 October 2022 11,479 - 2,489 4,440 - 1,282 19,690
Charge for the period 2,499 138 1,054 1,502 - 316 5,509
Eliminated on disposal (1,229) - - - - - (1,229)
At 1 October 2023 12,749 138 3,543 5,942 - 1,598 23,970
Carrying amount 24,873 2,156 17,708 4,192 597 744
At 1 October 2023 50,270
14 Property, plant and equipment (continued)
Right of use assets Freehold property Leasehold Improvements Furniture, fittings and equipment Assets Under Construction IT equipment Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Cost or valuation
At 3 October 2021 29,215 2,294 9,814 6,003 1,336 1,583 50,245
Additions 6,531 - 5,481 2,291 585 495 15,383
Lease modifications 2,127 - - - - - 2,127
Disposals (285) - - (3) (74) (2) (364)
Transfers - - 998 244 (1,274) 32 -
At 2 October 2022 37,588 2,294 16,293 8,535 573 2,108 67,391
Depreciation
At 3 October 2021 8,491 - 1,756 3,091 - 1,015 14,353
Charge for the period 2,286 - 733 1,351 - 268 4,638
Eliminated on disposal (278) - - (2) - (1) (281)
Impairment loss 980 - - - - - 980
At 2 October 2022 11,479 - 2,489 4,440 - 1,282 19,690
Carrying amount 26,109 2,294 13,804 4,095 573 826
2 October 2022 47,701
The Group's leasehold premises and improvements are stated at cost, being the
fair value at the date of acquisition, plus any additions at cost less any
subsequent accumulated depreciation. Work in progress relates to capital
expenditure on sites that have not started trading.
Depreciation is charged to cost of sales in the Statement of Comprehensive
Income for property, plant and equipment in use at the trading leasehold
premises. Depreciation on property, plant and equipment used by central
functions is charged to other expenses in the Statement of Comprehensive
Income.
Rental income from subletting right-of-use assets is recognised on a
straight-line basis over the term of the relevant lease. It is netted off
against rental costs and is recognised within cost of sales (2023: £41,000,
2022: £42,000).
The Group has determined that each site in the restaurant operating segment,
and each of the companies in the hotel operating segment are separate CGUs for
impairment testing purposes. Each CGU is tested for impairment at the balance
sheet date if there exists at that date any indicators of impairment. Losses
incurred by the Group pre Covid-19 as well as the ongoing Covid-19 pandemic
are considered indicators of potential impairment, accordingly all CGUs have
been tested for impairment by comparing the carrying amount of the assets to
recoverable amount. The recoverable amount is represented by the greater of
the individual CGU's fair value less costs of disposal and its value-in-use.
Restaurant segment
The key assumptions for the value-in-use calculations are those regarding the
discount rate, trading forecasts and growth rates. A discount rate of 12.1%
was used (2022: 14.9%), based on the Group's WACC and comparable businesses in
the sector. Cash flows in line with forecasts over the next 3 years were used.
Cash flows beyond the forecast period are extended out to the end of the lease
terms at a 3% growth rate.
Impairment testing resulted in no impairments in the year. The CGU's with the
least headroom are Restaurant 1 with £23,000, Restaurant 2 with £432,000 and
Restaurant 3 with £461,000.
The estimate of recoverable amount for the restaurant segment is particularly
sensitive to the trading forecast assumptions. If the discount rate used is
increased by 1%, the forecast EBITDA is reduced by 10%, and the terminal
growth rate reduced by 1%, an impairment loss of £650,000 for the period
ended 1 October 2023 would have to be recognized against hyphenate right of
use assets. Management is not currently aware of any other reasonably possible
changes to key assumptions that would cause a unit's carrying amount to exceed
its recoverable amount.
Hotel segment
As a result of the headroom identified during the goodwill impairment testing
of the hotel operating segment (see note 13), no impairment charge is required
in respect of the hotel segment.
17 Trade and other receivables
Group
1 October 2023 2 October 2022 1 October 2023 2 October 2022 as restated
£ 000 £ 000 £ 000 £ 000
Trade receivables 154 204 - -
Prepayments 946 907 - -
Other receivables 1,136 1,452 - -
2,236 2,563 - -
All of the trade receivables were non-interest bearing, receivable under
normal commercial terms, and the directors do not consider there to be any
material expected credit loss. The directors consider that the carrying value
of trade and other receivables approximates to their fair value. The
receivable from subsidiaries (£42,632,000) at 2 October 2022 has been
restated as a fixed asset, which better reflects management's expectation of
the timing of the recovery of the amount.
18 Cash and bank balances
Group Company
1 October 2023 2 October 2022 1 October 2023 2 October 2022
£ 000 £ 000 £ 000 £ 000
Cash and bank balances 1,902 9,390 - -
19 Trade and other payables
Group Company
1 October 2023 2 October 2022 1 October 2023 2 October 2022
£ 000 £ 000 £ 000 £ 000
Trade payables 3,107 2,232 - -
Payables to subsidiaries - - 2,795 1,863
Accrued expenses 4,205 3,805 - -
Social security and other taxes 1,400 1,363 - -
Other payables 1,377 1,194 - -
Lease liabilities due in less than one year 3,291 2,826 - -
13,380 11,420 2,795 1,863
20 Current borrowings
Group Company
1 October 2023 2 October 2022 1 October 2023 2 October 2022
£ 000 £ 000 £ 000 £ 000
Borrowings from related parties 13,511 12,707 - -
Borrowings from related parties classed as payable within 12 months includes
two deep discounted bond instruments issued by VEL Property Holdings Limited
and by Various Eateries Trading Limited.
The deep discounted bond instrument issued by VEL Property Holdings Limited
was rolled in January 2023 with a new redemption date of 14 July 2023. In July
2023 the deep discounted bond was rolled with a new redemption date of 14
January 2024. The nominal value at year end is £2,902,000 (2022:
£2,791,000). The discount is recognised between subscription and redemption
date, resulting in £51,000 of accrued financing costs as at the reporting
date.
20 Current borrowings (continued)
The deep discounted bond instrument issued by Various Eateries Trading Limited
was rolled for 12 months in February 2023 with a redemption date of April
2024. The nominal value at year end is £10,001,000 (2022: £10,001,000). The
discount is recognised between subscription and redemption date resulting in
£368,000 of accrued financing costs at the reporting date. The balance of
£608,000 (2022: £608,000) under the August 2019 loan agreement matures in
April 2024, and bears cash settled interest at 3.75% above SONIA (2022: cash
settled interest at 3.75% above SONIA).
21 Non-current borrowings
Group Company
1 October 2023 2 October 2022 1 October 2023 2 October 2022
£ 000 £ 000 £ 000 £ 000
Lease liabilities due after more than one year 28,049 29,244 - -
The loans and borrowings classified as financial instruments are disclosed in
note 25.
The Group's exposure to market and liquidity risk in respect of loans and
borrowings is disclosed in the financial instruments note.
22 Provisions for liabilities
Group 52 weeks ended
1 October 2023
Authorised Guarantee Agreements ('AGAs') £ 000
At start and end of previous financial period 357
At start of financial period 357
Charge in the year 1
At end of financial period 358
The provision relates to the annual rental cost of three (2022: three)
previously operated sites that have been disposed of via assignment of lease
and include Authorised Guarantee Agreements ('AGAs') as part of the assignment
arrangement (see also note 30).
23 Share capital and share premium
Authorised, allotted, called-up and fully paid shares
1 October 2023 2 October 2022
No. 000 £ 000 No. 000 £ 000
Ordinary shares of £0.01 each 89,008 890 89,008 890
There were no movements in ordinary share capital in the period ended 1
October 2023
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the
proceeds on the winding up of the Company in proportion to the number of and
amounts paid on the shares held. The fully paid ordinary shares have a par
value of £0.01 and the company does not have a limited amount of authorised
capital.
Employee benefit trust shares reserve
The Group presents these shares as an adjustment to own equity at the period
end date through the employee benefit trust shares reserve, until the point
that the shares are awarded, and cease to be conditional awards of shares. The
award of shares is conditional upon certain vesting criteria, as outlined in
note 26.
25 Financial instruments
Group
Financial assets at amortised cost
1 October 2023 2 October 2022
£ 000 £ 000
Cash at bank and in hand 1,902 9,390
Trade and other receivables 1,290 1,656
3,192 11,046
Reconciliation of liabilities arising from financing activities
Lease Liabilities Other Borrowings Total
£ 000 £ 000 £ 000
At start of financial period 32,070 12,707 44,777
New Borrowings/(disposals) (425) - (425)
DDB renewal - - -
Interest charge 1,573 804 2,377
Repayments during the period (1,878) - (1,878)
At end of financial period 31,340 13,511 44,851
Valuation methods and assumptions
Trade receivables are all due for settlement in less than one year. The
Directors consider that the carrying amount of trade and other receivables is
approximately equal to their fair value due to their short term nature.
Financial liabilities at amortised cost
1 October 2023 2 October 2022
£ 000 £ 000
Trade and other payables 40,029 39,190
Borrowings from related parties 13,511 12,707
53,540 51,897
Valuation methods and assumptions
The Directors consider that the carrying amount of trade and other payables is
approximately equal to their fair value due to their short-term nature. The
fair value of financial liabilities is estimated by discounting the remaining
contractual maturities at the current market interest rate that is available
for similar financial liabilities.
Fair value hierarchy
The tables above detail the Group's assets and liabilities disclosed at fair
value. Using a three-level hierarchy, based on the lowest level of input that
is significant to the entire fair value measurement, all assets and
liabilities shown above are considered to be level 3: 'Unobservable inputs for
the asset or liability'. There were no transfers between levels during the
financial period.
Financial risk management and impairment of financial assets
The Group's activities expose it to a variety of financial instrument risks.
The risk management policies employed by the Group to manage these risks are
discussed below. The primary objectives of the financial instrument risk
management function are to establish risk limits, and then ensure that
exposure to risks stay within these limits.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to
continue as a going concern, so that it can provide returns for shareholders
and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of
financial position, plus net debt. Net debt is calculated as total borrowings
less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Company may adjust
the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
The Company is subject to certain financing arrangements covenants and meeting
these is given priority in all capital risk management decisions. There have
been no events of default on the financing arrangements during the financial
period.
Credit risk management
The Group's credit risk is attributable to trade and other receivables and
cash with the carrying amount best representing the maximum exposure to credit
risk. The Group places its cash with banks with high quality credit standings.
Trade and other receivables relate to day-to-day activities which are entered
into with creditworthy counterparties.
Market risk management
The Group's activities expose it economic factors, the Directors closely
monitor market conditions and consider any impact on the Group's existing
strategy.
Interest rate risk management
The Group is exposed to interest rate risk as the Group's borrowings have an
interest rate of 3.75% above SONIA.
Liquidity risk management
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
Management review cashflow forecasts on a regular basis to determine whether
the Group has sufficient cash reserves to meet future working capital
requirements and to take advantage of business opportunities.
Remaining contractual maturities
The following tables detail the company's remaining contractual maturity for
its financial instrument liabilities. The tables have been drawn up based on
the undiscounted cash flows of financial liabilities based on the earliest
date on which the financial liabilities are required to be paid. The tables
include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their
carrying amount in the statement of financial position.
25 Financial instruments (continued)
Weighted average interest rate 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities
2023 % £ 000 £ 000 £ 000 £ 000 £ 000
Non-derivatives
Trade payables - 3,107 - - - 3,107
Other payables - 5,582 - - - 5,582
Borrowings - Deep Discount Bond - 12,903 - - - 12,903
Borrowings - loan 3.75% + SONIA 608 - - - 608
Lease liability 4.5% 3,291 3,718 3,733 20,598 31,340
25,491 3,718 3,733 20,598 53,540
1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities
Weighted average Interest rate
2022 % £ 000 £ 000 £ 000 £ 000 £ 000
Non-derivatives
Trade payables - 2,232 - - - 2,232
Other payables - 4,999 - - - 4,999
Borrowings - Deep Discount Bond - 12,792 - - - 12,792
Borrowings - loan 3.75% + SONIA 608 - - - 608
Lease liability 4.5% 3,157 3,669 11,178 26,451 44,455
23,788 3,669 11,178 26,451 65,086
The cash flows in the maturity analysis above are not expected to occur
significantly earlier than contractually disclosed above.
26 Share based payments
As at 1 October 2023, the Group maintained three separate share based payment
scheme for employee remuneration (2022: three):
· Various Eateries Joint Share Ownership Scheme ("JSOP Scheme 1")
· Various Eateries Joint Share Ownership Scheme ("JSOP Scheme 2")
· Various Eateries Company Share Option Plan ("CSOP")
JSOP Scheme 1
In accordance with IFRS 2 "Share-based Payment", the value of the awards is
measured at fair value at the date of the grant. The fair value is expensed on
a straight-line basis over the vesting period, based on management's estimate
of the number of shares that will eventually vest. A charge of £nil (2022:
£713,000) has been recognised in the consolidated income statement by the
Group in the period ended 1 October 2023.
The JSOP is part of the remuneration package of the Group's senior management.
Participants in this scheme have to be employed until the end of the agreed
vesting period. Upon vesting, the holder is entitled to purchase ordinary
shares at the market price determined at grant date.
JSOP (Scheme 1)
Number of shares
Granted Exercisable Total
At 2 October 2022 - 5,809,523 5,809,523
Lapsed 11 November 2022 - (1,095,238) (1,095,238)
Lapsed 8 September 2023 - (2,190,476) (2,190,476)
At 2 October 2022 - 2,523,809 2,523,809
At 3 October 2021 5,809,523 - 5,809,523
Granted - - -
Vesting (5,809,523) 5,809,523 -
At 2 October 2022 - 5,809,523 5,809,523
26 Share based payments (continued)
The fair value of these options granted was determined using a Black-Scholes
model. The following principal assumptions were used in the valuation:
JSOP
Grant date 18 September 2020
Vesting period ends 31 August 2022
Share price at date of grant £0.73
Volatility 66.98%
Option life 1.95 years
Dividend yield 0.00%
Risk-free investment rate (0.13) %
Fair value per option at grant date £0.26
Exercise price at date of grant £0.73
Exercisable from / to 31 August 2022/31 August 2030
Remaining contractual life nil
The historical volatility has been calculated based on the share returns of
four comparators for a period preceding the valuation date equal to the
initial expected term of the options, i.e. a period of 1.95 years. The total
estimated fair value of the options granted on 18 September 2020 that was
recognised as an expense expenses over the vesting period is £1,531,000.
JSOP Scheme 2
A charge of £nil (2022: £35,000) has been recognised in the consolidated
income statement by the Group in the period ended 1 October 2023.
The JSOP is part of the remuneration package of the Group's senior management.
Participants in this scheme have to be employed until the end of the agreed
vesting period. Upon vesting, the holder is entitled to purchase ordinary
shares at the market price determined at grant date.
JSOP (Scheme 2)
Number of shares Exercise price per share (£)
At 1 October 2023 - -
At 3 October 2021 360,000 1.09
Lapsed 29 June 2022 (360,000) 1.09
At 2 October 2022 - -
Grant date 11 May 2021
Vesting period ends Various
Share price at date of grant £1.03
Volatility 64.17%
Option life 3.89
Dividend yield 0.00%
Risk-free investment rate 0.24%
Exercise price at date of grant £1.09
Exercisable from / to 31 March 2025 / 31 March 2026
Remaining contractual life 1.50 years
26 Share based payments (continued)
The historical volatility has been calculated based on the share returns of
four comparators for a period preceding the valuation date equal to the
initial expected term of the options, i.e. a period of 3.89 years. The total
estimated fair value of the options granted on 11 May 2021 to be recognised in
expenses over the vesting period was £193,000. All options under the scheme
as at 1 October 2023 have lapsed.
CSOP
A charge of £69,000 (2022: £82,000) has been recognised in the consolidated
income statement by the Group in the period ended 1 October 2023.
CSOP
Number of shares Exercise price per share (£)
At 2 October 2022 1,240,441 various
Granted 15 November 2022 250,000 0.35
Granted 4 April 2023 642,857 0.28
Granted 17 July 2023 393,442 0.31
Lapsed 11(th) November 2022 (104,167) 1.09
Lapsed 3 October 2022 (136,887) 1.09
Lapsed 30(th) April 2023 (250,000) 1.09
Lapsed 31 July 2023 (91,258) 1.09
At 1 October 2023 1,944,428 various
At 3 October 2021 92,402 1.09
Granted 17 January 2022 990,441 0.69
Lapsed 11 May 2022 (92,402) 1.09
Granted 25 August 2022 250,000 0.42
At 2 October 2022 1,240,441 various
The fair value of the options is estimated at the date of grant using a
Black-Scholes valuation method. The total estimated fair value of the options
granted during the year to be recognised over the vesting period is £167,000.
CSOP CSOP CSOP CSOP CSOP CSOP
Grant date 11 May 2021 17 January 2022 25 August 2022 15 November 2022 4 April 2023 17 July 2023
Vesting period ends 11 May 2024 17 January 2025 25 August 2025 15 November 2025 4 April 2026 17 July 2026
Share price at date of grant £1.08 £0.69 £0.42 £0.35 £0.28 £0.31
Volatility 65.66% 65.66% 65.66% 65.66% 65.66% 65.66%
Option life at grant 3 years 3 years 3 years 3 years 3 years 3 years
Dividend yield 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Risk-free investment rate 0.87 % 0.87 % 0.87 % 0.87 % 0.87 % 0.87 %
Fair value per option at grant date £0.49 £0.30 £0.19 £0.15 £0.12 £0.13
Exercise price at date of grant £1.08 £0.69 £0.42 £0.35 £0.28 £0.31
Exercisable from / to 11 May 2024/11 May 2031 17 January 2025/17 January 2032 25 August 2025/25 August 2032 15 November 2025/15 November 2032 4 April 2026/4 April 2033 17 July 2026/17 July 2033
Remaining contractual life 0.6 years 1.3 years 1.9 years 2.1 years 2.5 years 2.8 years
29 Post balance sheet events
Various Eateries Trading Limited funding
In December 2023, the business issued 86,036,788 shares at £0.25 each raising
a total of £21,509,197. Of the total amount raised, £11,409,197 is used to
convert the deep discounted bond debt in Various Eateries Trading Limited to
Equity (see note 20). The remaining £10,100,000 is paid in cash. The net cash
inflow after transaction fees is £9,707,000.
Deep discount bond
In January 2024 the deep discounted bond was rolled with a new redemption date
of 14 July 2024 and a nominal value of £3,139,189.
Share options
Following the equity raise, the existing share options were revised. All JSOP
options of 2,523,809 and 654,167 of the CSOP scheme were surrendered.
New options totalling 13,483,180 under the CSOP scheme were issued and will
vest over a three-year period to January 2027. One third were issued at 27.5
pence, a 10% premium to the equity raise price of 25 pence. The second third
were at a 10% premium to the first issue at 30.25 pence and the last third at
33.275 pence.
30 Contingent liabilities
Authorised Guarantee Agreements
There are 10 (2022: 9) previously operated sites that have been disposed of
via assignment of lease and include Authorised Guarantee Agreements ('AGAs')
as part of the assignment arrangement. There is a risk that the sites would be
returned if the assigned leaseholders were to default on their contractual
obligations with their respective landlords, the risk of which was heightened
as a result of the coronavirus (Covid-19) outbreak. The total annual rental
cost for these sites is £758,000, of which £358,000 (2022: £357,000) has
been provided for (see note 23). The average remaining lease length is 6
years.
CJRS claim
The Group made material claims under the CJRS schemes in order to support the
business through the pandemic. Given multiple changes to the rules governing
the schemes, as well as the degree of complexity in the various rules, the
Group undertook an external review of past claims to confirm their validity.
The directors are of the opinion that claims made to date are valid and
materially correct and so do not consider the likelihood of material outflow
as a result of this review to be probable.
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