1      Accounting policies

Tasty plc is a public listed company incorporated and domiciled in England and Wales. The Company's ordinary shares are listed on AIM. Its registered address is 32 Charlotte Street, London, WC1T 2NQ.

(a)  Statement of compliance

These financial statements of the Group and Company have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by European Union ("adopted IFRSs"). These financial statements have also been prepared in accordance with those parts of the Companies Act 2006 that are relevant to companies that prepare their financial statements in accordance with IFRS.

 

(b)  Basis of preparation

The financial statements cover the 52 week period ended 27 December 2020, with a comparative period of the 52 week period ended 29 December 2019. The financial statements are presented in sterling, rounded to the nearest thousand and are prepared on the historical cost basis. Accounting policies of the Company are consistent with the policies adopted by the Group.

 

(c)   Going concern

As at 27 December 2020, the Group had net assets of £0.6m (2019: £13.3m). The Group meets its day-to-day working capital requirements through the generation of operating cashflow, equity raise and bank finance.  The Group's principal sources of funding are:

·      Issues of ordinary share capital in the Company on AIM.

 

·    a £1.25m, four year term loan from its existing bankers, Barclays Bank plc (the "Facility"), in order to strengthen its balance sheet and provide additional working capital support. The Facility was drawn down in January 2021. The Facility has a capital repayment holiday of 12 months and carries interest at a rate of 4.5% per annum over the Bank of England Base Rate, following drawdown. The Group has also secured a £250,000 overdraft facility.

 

Covid-19 has led to a high level of uncertainty within the UK economy in general and has had a devastating impact on the hospitality industry in particular following the initial Government announcement requiring the closure of all restaurants from 20 March 2020 for the first lockdown. Action was immediately taken to minimise costs and cash outflows, including use of the Government's Job Retention Scheme to furlough all restaurant employees. During the first lockdown, 98% of staff had been furloughed on the Government's Job Retention Scheme. The Directors' and head-office staff salaries were also reduced while sites remained closed. Rates relief and grants have been received where relevant. Currently the majority of staff which are eligible are on flexible furlough.

The Group experienced a positive level of sales during August 2020 due to initiatives and pent-up demand.  This positive trading was short-lived as stricter measures were imposed in September 2020, including the 10 pm curfew, "work from home if you can", and followed by subsequent lockdowns and tier system.  However, with the vaccination programme on target, staycation demand, and the prediction of a "surge" in the economy, we hope that the future will be more promising once lockdown ends.  However, this will depend on when we can return to some kind of "normal". With the latest Government announcements, we will open outdoor spaces where feasible in April and a gradual opening of dine-in from May; although the timing is subject to change depending on infection levels and the progress of the vaccination programme. Trading outside of lockdown has been encouraging, and we look forward to a promising period after lockdown ends.

Discussions are also continuing with landlords and trade creditors to reduce current and future liabilities. The Group monitors cash balances and prepares regular forecasts, which are reviewed by the Board.  These forecasts include our best estimates and judgements based on currently available information and Government announcements. Judgement is particularly required as to the expected level of future trade and forecast reopening dates of our sites, which as above, we expect a gradual opening of dine-in from May 2021. 

Having reviewed the updated forecast and given the ability of the Group to manage costs, utilise government support, the bank loan and other available measures, including ongoing discussions with landlords, the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, the combined circumstances and risk that the mitigating actions available to the Directors are not sufficient represent a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern and, therefore, to continue realising their assets and discharging their liabilities in the normal course of business.

(d)  Changes in accounting policies and disclosures

 

New standards, amendments to standards or interpretations adopted by the Group

IFRS 16 'Leases' (effective January 2019)

Impact on Lessee accounting

Effective for periods starting on or after 1 January 2019, IFRS 16 has replaced IAS 17 and IFRIC4 (Determining whether an arrangement contains a lease).

 

The change in definition of a lease mainly relates to the concept of control. IFRS 16 distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:

•     The right to obtain substantially all of the economic benefits from the use of an identified asset; and

•     The right to direct the use of that asset in exchange for consideration.

 

The Group adopted IFRS 16 for its period starting 30 December 2019 using the modified retrospective approach on transition, recognising leases at the carried forward value had they been treated as such from inception, without restatement of comparative figures. On adoption of IFRS 16, the Group recognised right-of-use assets and lease liabilities in relation to the restaurant sites it leases for its business . The remaining average length of the lease is 13 years.  Up to 29 December 2019 the Group classified leases as finance or operating leases under IAS17: leases and payments made under operating leases (net of any incentives received from the lessor) were charged to profit and loss on a straight-line basis over the period of the lease.

 

When applying IFRS 16, the group applied the following practical expedients on transition date:

 

•             Reliance on the previous identification of a lease (as provided by IAS 17) for all contracts that existed on the date of initial applications;

•             Exclusion of initial direct costs from the measurement of the right-of-use asset as the date of initial application.

 

The change in accounting policy affected the following items in the balance sheet on 30 December 2019:

•             Right-of-use assets ("ROU") - increased by £55.1m

•             Lease liabilities - increased by £57.4m

 

Right-of-use assets are measured on transition at an amount equal to the minimum lease liability at the date of initial application and adjusted for an onerous lease provision of £2.8m and a lease incentive of £1.3m.  In addition, £0.6m was reclassified from prepaid operating lease to ROU.

 

The recognised right-of-use assets all relate to property leases. During the period ended 27 December 2020 the Group made a provision for impairment of the right-of-use assets against a number of sites totalling £10.0m.  The right-of-use assets as at 27 December 2020 were £39.8m.

 

Lease liabilities are measured on transition at the carried forward present value of the remaining lease payments discounted using the Group's incremental borrowing rate of 4.5% plus the Bank of England base rate of 0.1%. Lease liabilities are measured on transition at the present value of the minimum lease payments discounted using the incremental borrowing rate associated with the lease. This was identified as 4.6%.  The lease liabilities as at 27 December 2020 were £55.1m.

 

Included in profit and loss for the period is £3.6m depreciation of right-of-use assets and £2.5m financial expenses on lease liabilities.

 

The Group's leases are held across Tasty plc or Took Us Long Time Ltd ("TUALT").  In determining where the assets and liabilities should be accounted for, we have reviewed which entity derives the benefit and rights to use the asset.  In assessing this we have reviewed where the trade occurs, where staff are employed and where day to day activity is managed from.  We have concluded that the substance of the lease is that it is held by TUALT and accordingly recognised the lease liabilities within the TUALT company accounts.

 

The lease liabilities recognised in TUALT but in the name of Tasty plc totalled £44m at 27 December 2020.  Accordingly, this balance represents a contingent liability for the Company only.

 

Impact on Lessor accounting

Under IFRS 16, a lessor continues to classify leases as either finance leases or operating leases and account for those two types of leases differently.

Based on an analysis of the Group's operating leases as at 27 December 2020 on the basis of the facts and circumstances that exist at that date, the Directors of the Group have assessed that the impact of this change has not had any impact on the amounts recognised in the Group's consolidated financial statements.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group recognises these payments as an expense on a straight-line basis over the lease term. Currently the Group has no low value assets or short term leases.

 

Amounts Recognised in the Balance Sheet

 

			52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
			£'000		£'000
Right-of-use assets
Recognition of adoption of IFRS 16			55,119		-
Reassessment of leases			(814)		-
Reassessment due to disposal			(859)
Provided for the period			(3,592)		-
Impairment of right-of-use assets			(10,043)		-
At 27 December 2020			39,811		-
Lease liabilities
Recognition of adoption of IFRS 16			(57,408)		-
Reassessment in 2020			814		-
Reassessment due to disposal			1,039
Interest			(2,514)		-
Lease payment			2,946		-
At 27 December 2020			(55,123)		-
Current			(2,904)		-
Non-current			(52,219)		-
At 27 December 2020			(55,123)		-

 

Lease liabilities under IFRS 16

	Adjustments Recognised on Adoption of IFRS 16
						£'000
	Operating lease commitments disclosed at 29 December 2019
	Within one year					5,488
	Within two to five years					20,647
	Over five years					57,499
	Total operating lease liabilities disclosed at 29 December 2019					83,634
	Effect of discounting					(26,226)
	Lease liabilities under IFRS 16					57,408

 

 

Amounts Recognised in the Income Statement

 

			52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
			£'000		£'000
Depreciation charge of right-of-use assets			3,592		-
Interest expense (included in finance cost)			2,514		-
			6,106		-

 

Note the Group has elected to use the modified retrospective approach on transition, without restatement of comparative figures.

New standards, amendments to standards or interpretations not yet adopted by the Group

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2020. No standards have been early adopted by the Company.

Definition of Material - Amendments to IAS 1 and IAS 8 (effective 1 January 2020)

The IASB has made amendments to IAS 1, 'Presentation of Financial Statements', and IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors', which use a consistent definition of materiality throughout International Financial Reporting Standards and the Conceptual Framework for Financial Reporting, clarify when information is material and incorporate some of the guidance in IAS 1 about immaterial information.

In particular, the amendments clarify:

a) That the reference to obscuring information addresses situations in which the effect is similar to omitting or misstating that information, and that an entity assesses materiality in the context of the financial statements as a whole, and;

b) The meaning of 'primary users of general purpose financial statements' to whom those financial statements are directed, by defining them as 'existing and potential investors, lenders and other creditors' that must rely on general purpose financial statements for much of the financial information they need.

The amendment is not expected to have any impact on the Group.

(e)  Basis of consolidation

The consolidated financial statements incorporate the results of the Company and its subsidiary, Took Us A Long Time Limited. The accounting period of the subsidiary is co-terminous with that of the parent undertaking.

 

(f)   Revenue

The Group's revenue is derived from goods and services provided to the customers with revenue recognised at the point in time when control of the goods has transferred to the customer. Control passes to the customers at the point at which food and drinks are provided and the Group has a present right for payment.

 

(g)  Other income

Included in Other income is the rental income from operating leases.  Rental income is recognised in the period to which it relates, and rent free periods would be spread over the terms of the lease. The cost of these leases is included within the cost of sales. The Group has received Government grants in relation to the Coronavirus Job Retention Scheme ("CJRS") and "Retail and Hospitality Business Grants", provided by the Government in response to Covid-19's impact on the business. In accordance with IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance) guidelines, the Group has recognised the salary expense as normal and recognised the CJRS grant income in profit and loss as the Group becomes entitled to the grant.  "Retail and Hospitality Business Grants" are not recognised until there is reasonable assurance that the Group would qualify and meet the conditions attaching to them.

 

(h)  Retirement benefits: Defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated income statement in the period to which they relate.

 

(i)   Share based payments

The Group operates a number of equity-settled share-based payment schemes under which share options are granted to certain employees. Options granted to employees are measured at fair value at the date of grant and the fair value is charged to the statement of comprehensive income over the vesting period. Fair value is measured using the Black-Scholes or binomial model. In determining fair value, no account is taken of any vesting conditions, other than conditions linked to the price of the Group's shares (market-based conditions).

 

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided all other conditions are satisfied. The fair value determined at the grant date is then expensed on a straight line over the vesting period, based on the directors' best estimate of the number of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. The movement in the cumulative expense since the previous balance sheet date is recognised in the Income Statement, with the corresponding movement taken to equity.

 

Where the terms and conditions of options are modified before they vest or where options have been cancelled and reissued with modified terms, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period. Where options have been cancelled and no re-issue made, the remaining expense is recognised in the period the option was cancelled.  

 

The grant by the parent Company of options over its equity instruments to the employees of its subsidiary in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

 

(j)   Borrowing costs

Borrowing costs are recognised in the income statement in the period in which they are incurred.

 

(k)  Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the cost of sales line in the consolidated income statement.

 

The significant intangibles recognised by the Group and their useful economic lives are as follows:

 

	Intangible asset	Useful economic life
	Trade marks	10 years

 

(l)   Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses.

Depreciation is provided to write off the cost or valuation, less estimated residual values, of all fixed assets, evenly over their expected useful lives and it is calculated at the following rates:

 

	Leasehold improvements	over the period of the lease
	Fixtures, fittings and equipment	10% per annum straight line
	Computers	20% per annum straight line

 

Property, plant and equipment are reviewed for impairment in accordance with IAS 36 Impairment of Assets, when there are indications that the carrying value may not be recoverable. Impairment charges are recognised in the statement of comprehensive income. See note 2(d) for further details.

 

(m) Non-current assets held for sale

Non-current assets are classified as held for sale when the Board plans to sell the assets and no significant changes to this plan are expected. The assets must be available for immediate sale, an active programme to find a buyer must be underway and be expected to be concluded within 12 months with the asset being marketed at a reasonable price in relation to the fair value of the asset.

 

Non-current assets classified as held for sale are measured at the lower of their carrying amount immediately prior to being classified as held for sale and fair value less costs of disposal. Following their classification as held for sale, non-current assets are not depreciated.

 

(n)  Provisions

In the period to 29 December 2019, Provisions for onerous contracts were recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligation under the contract. Estimates had been made with respect to the time to exit and associated costs, for example lease incentives which may be required to be paid as part of the sublet process. Judgement is required by management when making such estimates. In the period to 27 December 2020, the Group has recognised a provision for dilapidations for a number of sites, where the need to carry out the work has been identified but a full survey and commission has not been undertaken and therefore management has applied their judgment in determining the provision.

 

(o)  Loans and receivables

These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. 

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

 

The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet. The Company's loans and receivables comprise only inter-Company receivables. Cash and cash equivalents include cash in hand and deposits held with banks.

 

(p)  Apprenticeship funding and levy

The payments made under the levy represent a prepayment for training services expected to be received and is recognised as an asset until the receipt of the service. When the training service is received, an appropriate expense is recognised. The grant income is deferred until apprentices receive training under the rule of the scheme and we are satisfied that we have fully complied with the scheme. We have applied an element of judgement until a full inspection is carried out.

 

(q)  Financial liabilities

Financial liabilities include trade payables, accrued lease charges, other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost.

 

Bank borrowings are initially recognised at fair value and are subsequently measured at amortised costs using the effective interest method. Interest expense includes initial transaction costs and any premium payable on redemption as well as any interest payable while the liability is outstanding.

 

(r)   Inventories

Raw materials and consumables

Inventories are stated at the lower of cost and net realisable value. Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is based on estimated selling price less costs incurred up to the point of sale.

 

Crockery and utensils (Smallwares)

Smallware inventories are held at cost which is determined by reference to the quantity in issue to each restaurant. Smallware inventory relates to small value items which have short life spans relating to kitchen and bar equipment. These items are recorded under inventory as they are utilised in providing food and beverage to customers.

(s)   Leased assets

Until transition to IFRS 16 on 30 December 2019, leases were classified as finance leases whenever the terms of the lease are such that they transfer substantially all the risks and rewards of ownership to the Group. All other leases were classified as operating leases.

 

Fixed payments made under operating leases were recognised in the income statement on a straight-line basis over the term of the lease. Contingent rent, such as turnover related rents, were recognised in the income statement as incurred. Incentives to enter into an operating lease were spread on a straight-line basis over the lease term as a reduction in rental expense.

 

Payments made to acquire operating leases were treated as pre-paid lease expenses and amortised over the term of the lease.

 

(t)   Taxation

Tax on the profit and loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

 

·    The initial recognition of goodwill

·    The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit.

 

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

 

Deferred tax is provided using the balance sheet liability method, providing for all temporary differences between the carrying amounts of assets and liabilities recorded for reporting purposes and the amounts used for tax purposes.

 

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.

 

(u)  Goodwill

Goodwill represents the difference between the fair value of consideration paid and the carrying value of the assets and liabilities acquired. Goodwill arose on acquisition of a group of leases.

Goodwill is stated as originally calculated less any accumulated provision for impairment. Goodwill is allocated to individual CGUs, where each CGU is a restaurant, and is subject to an impairment review at each reporting date. 

 

(v)  Investments

Investments in subsidiaries are included in the Company's Statement of Financial Position at cost less provision for impairment.

 

(w) Share capital

The Company's ordinary shares are classified as equity instruments.

 

(x)  Operating profit

Operating profit is stated after all expenses, but before financial income or expenses. Highlighted items are items of income or expense which because of their nature and the events giving rise to them, are not directly related to the delivery of the Group's restaurant service to its patrons and merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.

 

(y)  Earnings per share

Basic earnings per share values are calculated by dividing net profit/(loss) for the year attributable to Ordinary equity holders of the parent by the weighted average number of Ordinary shares outstanding during the year.

 

2      Critical accounting estimates and judgements

The preparation of the Group's financial statements requires management to make certain estimates, judgements and assumptions that affect the reported amount of assets and liabilities, and the disclosure of contingent liabilities at the statement of financial position date and amounts reported for revenues and expenses during the year. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liability affected in the future.  Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

(a) Share based payments (Note 26)

The Group operates equity share-based remuneration schemes for employees. Employee services received and the corresponding increase in equity are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options is estimated by using valuation models, such as Black Scholes or binomial on the date of grant based on certain assumptions. Those assumptions are described in note 27 and include, among others, the dividend growth rate, expected volatility, expected life of the options (for options with market conditions) and number of options expected to vest.

 

(b)  Accruals (Note 18)

In order to provide for all valid liabilities which exist at the balance sheet date, the Group is required to accrue for certain costs or expenses which have not been invoiced and therefore the amount of which cannot be known with certainty. Such accruals are based on management's best estimate and past experience.     Delayed billing in some significant expense categories such as utility costs can lead to sizeable levels of accruals. The total value of accruals as at the balance sheet date is set out in note 18.

 

(c)   Useful lives of Right-of-use assets, property, plant and equipment (Note 13)

Property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on management estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Right-of-use assets are depreciated over the life of the lease. The life of the lease is the minimum committed lease period. 

 

(d)  Impairment reviews (Note 13)

In carrying out an impairment review in accordance with IAS 36 it has been necessary to make estimates and judgements regarding the future performance and cash flows generated by individual trading units which cannot be known with certainty. The Group views each restaurant as a separate cash generating unit ("CGU"). Past performance is often used as a guide in estimating future performance, or comparison with similar sites. Where the circumstances surrounding a particular trading unit have changed then forecasting future performance becomes extremely judgemental and for these reasons the actual impairment required in the future may differ from the charge made in the financial statements. When assessing a CGU recoverable amount, the value in use calculation uses a discounted cash flow model which is sensitive to the discount rate and the growth rate used after taking into account potential sale value. The cashflow projections are influenced by factors which are inherently uncertain such as footfall and non-controllable costs such as rates and license costs. The future cashflows are harder to predict due to the pandemic.

 

All assets (ROU, fixed assets and goodwill) are reviewed for impairment in accordance with IAS 36 Impairment of Assets, when there are indications that the carrying value may not be recoverable. Impairment charges are recognised in the statement of comprehensive income.

 

All assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the recoverable amount is higher than the carrying amount of the CGU, no further assessment is required.  Where the carrying value of an asset or a CGU exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to dispose of the asset), the asset is written down accordingly.  In the absence of any information about the fair value of a CGU, the recoverable amount is deemed to be its value in use. Value in use is calculated using cash flows over the remaining life of the lease for the CGU discounted at 6% (2019: 10%), being the rate considered to reflect the risks associated with the CGUs. The discount rate is based on the Group's weighted average cost of capital ("WACC") which is used across all CGUs due to their similar characteristics.  This rate is considered more appropriate than the 10% applied to more limited scope impairment reviews in prior years.

 

In the prior years, we have applied a growth rate across all CGUs, in 2019 this was 3%.  This was because in the prior years, each CGU shared similar risks and had similar characteristics. The Covid-19 pandemic has resulted in an increased uncertainty and greater difference in performance across CGUs depending on whether it is located in a residential, city centre, high street or tourist location. The location also impacts when site can resume normal trading. Due to lockdowns in 2021, the forecast cashflow in 2021 is not always indicative of the future cashflows. The cashflow of each CGU has been determined based on management's judgement of future performance based on a combination of historical performance, impact of the pandemic and expected recovery in future years and therefore each CGU's cashflow has been selected on an individual criteria. Management's conservative judgement has been applied in selecting this criteria but full impact of the pandemic has yet to be materialise and therefore 0.5% growth rate (2019 - 3%) has been applied. Included within the cashflow is management's estimate of the capital expenditure in the future years.

(e)  Goodwill impairment reviews (Note 12)

The Group determines whether goodwill is impaired on an annual basis and this requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. This involves estimation of future cash flows and choosing a suitable discount rate. Full details are supplied in note 12, together with an analysis of the key assumptions.

 

(f)   Intercompany provision (Note 17)

In carrying out a review of intercompany loan in accordance with IFRS 9 it has been necessary to make estimates and judgements regarding the repayment of the loan by its subsidiary to the Company.   A sensitivity analysis has been performed on the repayment of loan value.

 

(g)  Onerous contract provision (Note 19)

In the period to 29 December 2019, the amounts provided were based on expected future rental obligations, legal costs, associated exit costs and potential lease incentives which may be required to be paid as part of the sub-let/surrender process. Significant judgements were used in calculating these provisions and changes to these assumptions or future events could have caused the value of these provisions to change.          On transition to IFRS 16 on 30 Dec 2019, the onerous lease provision was removed from the accounts as IFRS 16 does not require this. Provisions for sites are assessed as part of the impairment review with further details in note 2(d).

 

(h)  Crockery and utensils (Smallwares) inventory

The cost of replenishing smallwares is expensed directly through the income statement. Smallwares is recognised at historic cost and tested for impairment on an annual basis. Due to Covid-19 affecting menu and sales and introduction of a simplified menu, some of the smallware items were redundant. We have impaired smallware inventory value to reflect usage.

 

(i)   Lease liabilities (Note 1(d))

The calculation of lease liabilities requires the Group to determine an incremental borrowing rate ("IBR") to discount future minimum lease payments. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR rate of 4.6% therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. As at 27 December 2020, a sensitivity analysis has been conducted on the lease liabilities which shows that increasing the IBR rate by 1% will decrease the lease liability by £3.6m and decrease the right-of-use asset pre-impairment by £3.7m.

 

(j)   Dilapidations provision

The Group has recognised a provision of £0.3m for dilapidations for a number of sites, where the need to carry out the work has been identified but a full survey and commission has not been undertaken and therefore management has applied their judgment in determining the provision.  The Group has not made a provision for the costs of restoring the condition of sites at the end of the leases. This is based on management experience and judgement.

 

(k)  Lease recognition

The Group's leases are held across Tasty plc or Took Us Long Time Ltd ("TUALT").  In determining where the assets and liabilities should be accounted for, we have reviewed which entity derives the benefit and rights to use the asset.  In assessing this we have reviewed where the trade occurs, where staff are employed and where day to day activity is managed from.  We have adjudged that the substance of the lease is that it is held by TUALT and accordingly recognised the lease liabilities within the TUALT company accounts.

 

3      Revenue, other income and segmental analysis

The Group's activities, comprehensive income, assets and liabilities are wholly attributable to one operating segment (operating restaurants) and arises solely in one geographical segment (United Kingdom). All the Group's revenue is recognised at a point in time.

An analysis of the Group's total revenue is as follows:

			52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
			£'000		£'000
Sale of goods and services			24,228		44,573
			24,228		44,573

 

An analysis of the Group's other income is as follows:

			52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
			£'000		£'000
Sub-let site rental income			267		245
Coronavirus Job Retention Scheme (CJRS) and Business Grants			5,146		-
			5,413		245

 

The Group has received Government grants in relation to the Coronavirus Job Retention Scheme ("CJRS") and Covid-19 Business Grants, provided by the Government in response to Covid-19's impact on the business.

In accordance with IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance) guidelines, the Group has recognised the salary expense as normal and recognised the grant income in profit and loss as the Group becomes entitled to the grant. The CJRS grant and business grants of £5.1m have been recognised within other income. "Retail and Hospitality Business Grants" are not recognised until there is reasonable assurance that the Group would qualify and meet the conditions attaching to them.

4      Operating loss

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
	This has been arrived at after charging			£'000		£'000
	Staff costs			14,841		18,195
	Share based payments			44		40
	Operating lease rentals			-		5,496
	Amortisation of intangible assets			3		3
	Depreciation			4,934		1,507
	Amortisation of prepaid operating leases			-		50
	Onerous provision utilisation			-		(1,024)
	Onerous provision charge in the period			-		460
	Dilapidations provision			335		-
	Restructure and consultancy			408		31
	Impairment of smallware inventory due to Covid-19			400		-
	Impairment of Goodwill			326		-
	Impairment release of property, plant and equipment			(2,255)		-
	Impairment of right-of-use assets			10,043		-
	(Profit)/ loss on disposal of property, plant and equipment			(1,184)		43
	Auditor remuneration:
	Audit fee     - Parent Company			8		8
	- Group financial statements			31		26
	- Subsidiary undertaking			8		8
	Other services - Taxation compliance			-		6

 

5      Highlighted items - charged to operating expenses

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
				£'000		£'000
	Profit/ (loss)on disposal of property, plant and equipment			1,184		(43)
	Onerous provision utilisation			-		1,024
	Onerous provision charge in the period			-		(460)
	Restructure and consultancy			(408)		(31)
	Impairment of Goodwill			(326)		-
	Impairment release of property, plant and equipment			2,255		-
	Impairment of right-of-use assets			(10,043)		-
	Share based payments			(44)		(40)
	Impairment of smallware inventory due to Covid-19			(400)		-
				(7,782)		450

 

The above items have been highlighted to give more detail on items that are included in the consolidated statement of comprehensive income and which when adjusted shows a profit or loss that reflects the ongoing trade of the business.

6      Finance income and expense

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
				£'000		£'000
	Interest receivable			(4)		(8)
	Interest payable			2,548		222
				2,544		214

 

7      Employees

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
	Staff costs (including Directors) consist of			£'000		£'000
	Wages and salaries			13,668		16,637
	Social security costs			951		1,313
	Other pension costs			222		245
	Equity settled share based payment expense			44		40
				14,885		18,235

The average number of persons, including Directors, employed by the Group during the period was 810 of which 796 were restaurant staff and 14 were administration staff, (2019 - 1,028 of which 1,006 were restaurant staff and 22 were administration staff).

No staff are employed by the Company (2019 - no staff).

Of the total staff costs £13.8m was classified as cost of sales (2019 - £17.2m) and £1.0m as operating expenses (2019 - £1.0m). Redundancy costs of £0.09m (2019 - £0.0m) have been included as a cost of Restructure and Consultancy in Note 5.

8      Directors and key management personnel remuneration

Key management personnel identified as the Directors are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, and represent the Directors of the Group.

					52 weeks ended 27 December 2020					52 weeks ended 29 December 2019
					£'000				£'000
	Directors remuneration
	Emoluments				352					70
	Bonus				10					-
	Share based payments				24					17
	Pensions				5					1
	Benefits				7					-
	Social security costs				42					10
					440					98

 

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
				£'000		£'000
	Individual directors' emoluments
	J Plant			103		30
	S Kaye			89		-
	A Kaye (resigned 15 September 2020)			22		-
	K Lassman			16		8
	M Vachhani			132		32
				362		70

 

In addition to the above, a pension contribution was provided to M Vachhani of £5,000 (2019 - £1,000). Also benefits paid to J Plant and M Vachhani of £7,000 (2019 - £nil)

Company
The Company paid no director emoluments during the year (2019 - none).
 

9      Income tax expense

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
				£'000		£'000
	UK Corporation tax
	Adjustment in respect to previous years			105		-
	Total current tax			105		-
	Deferred tax
	Origination and reversal of temporary differences			-		-
	Total deferred tax			-		-
	Total income tax credit			-		-

The tax credit for the period is lower than the standard rate of (2019 - lower than) corporation tax in the UK. The differences are explained below:

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
				£'000		£'000
	Loss before tax			(12,561)		(266)
	Tax on loss at the ordinary rate of corporation
	tax in UK of 19% (2019 - 19%)			(2,387)		(51)
	Effects of
	Expenses not deductible for tax			283		23
	Income not taxable for tax purposes			(448)		56
	Remeasurement of deferred tax for changes in tax rates			(98)		-
	Deferred tax not recognised			2,462		(336)
	Adjustment in respect of previous years			105		-
	Depreciation/impairment on ineligible fixed assets			-		308
	Other movements			188		-
	Total tax charge			105		-

 

Factors effecting future tax charges

Deferred taxes at the balance sheet date have been measured using the enacted tax rates at each date. These rates are 19% at 27 December 2020, and 17% at 29 December 2019. In November 2019, the Prime Minister announced the intention to cancel the future reduction in corporation tax from 19% to 17%. This announcement did not constitute substantive enactment until 22 July 2020.

 

Post year end in March 2021 it was announced the UK corporation tax rate would increase to 25% in April 2023. This announcement does not constitute substantive enactment and therefore deferred taxes at the balance sheet date continue to be measured at the enacted tax rate of 19%.

 

10   Loss per share

				27 December 2020		29 December 2019
				Pence		Pence
	Basic and diluted loss per ordinary share			(8.98)		(0.23)
				2020		2019
				Number '000		Number '000
	Loss per share has been calculated using the numbers shown below:
	Weighted average ordinary shares (basic)			141,090		113,379
				2020		2019
				£'000		£'000
	Loss for the financial period			(12,666)		(266)

 

Due to the loss made in the year, all share options are anti dilutive. No share options would otherwise be considered dilutive (2019 - nil).

11   Dividend

No final dividend has been proposed by the Directors (2019 - £nil).

12   Intangibles

				Trademarks	Goodwill	Total
				£'000	£'000	£'000
	At 30 December 2018			26	326	352
	Additions			3	-	3
	Amortisation of trademarks			(3)	-	(3)
	At 29 December 2019			26	326	352
	Additions			3	-	3
	Amortisation of trademarks			(3)	-	(3)
	Impairments				(326)	(326)
	At 27 December 2020			26	-	26

The recoverable amount of goodwill has been determined on a value in use basis. This has been based on the performance of the units since they were acquired and management's forecasts, which assume the sites will perform at least as well as the market generally. The forecast cash flows cover a period of the committed lease length, assuming a nil growth rate and are discounted at a rate of 6% (2019 - 10%).  During the 52 weeks ended 27 December 2020, the Group recognised an impairment loss of £0.3m in relation to previously acquired goodwill recognised on acquisition of the restaurants noted in the table below. The impairment charge reflects the forecast cashflow following the pandemic. Goodwill has been allocated to CGUs as follows;

					27 December 2020			29 December 2019
				£'000			£'000
	Shaftesbury Avenue			-			196
	Cambridge			-			130
				-			326

 

13   Property, plant and equipment and right-of-use assets

		Leasehold improvements	Furniture fixtures and computer equipment	Total fixed assets	Right-of-use assets	Total
		£'000	£'000	£'000	£'000	£'000
	Cost
	At 30 December 2018	39,977	10,463	50,440	-	50,440
	Additions	120	247	367	-	367
	Disposals	(351)	(101)	(452)	-	(452)
	Reclassified as held for sale	(1,085)	(502)	(1,587)	-	(1,587)
	At 29 December 2019	38,661	10,107	48,768	-	48,768
	Recognition on adoption of IFRS 16	-	-	-	55,119	55,119
	At 30 December 2019	38,661	10,107	48,768	55,119	103,887
	Additions	2	118	120	-	120
	Reassessment of leases	-	-	-	(1,673)	(1,673)
	Disposals	(1,487)	(333)	(1,820)	-	(1,820)
	At 27 December 2020	37,176	9,892	47,068	53,446	100,514
	Depreciation
	At 30 December 2018	26,550	7,336	33,886	-	33,886
	Provided for the period	892	615	1,507	-	1,507
	Disposals	(351)	(57)	(408)	-	(408)
	Reclassified as held for sale	(417)	(370)	(787)	-	(787)
	At 29 December 2019	26,674	7,524	34,198	-	34,198
	Provided for the period	757	585	1,342	3,592	4,934
	Impairment	(2,133)	(122)	(2,255)	10,043	7,788
	Disposals	(1,464)	(325)	(1,789)	-	(1,789)
	At 27 December 2020	23,834	7,662	31,496	13,635	45,131
	Net book value
	At 27 December 2020	13,342	2,230	15,572	39,811	55,383
	At 29 December 2019	11,987	2,583	14,570	-	14,570

 

During the 52 weeks ended 27 December 2020, the Group recognised an impairment charge of £7.8m (2019: £nil) due to impairment of ROU assets (£10.0m) and release on fixed assets (£2.2m). The impairment is due to IFRS 16 and the pandemic while the release of the impairment on fixed assets is primarily due to the reassessment of impairment by site and asset following the transition to IFRS 16.     A 1% decrease in the discount rate would reduce the net impairment charge by £1.3m, an increase of 1% would increase the impairment charge by £1.2m and a 1% growth rate would reduce the impairment charge by £0.6m.

 

The total carrying value of the assets that have been impaired in the period is £21.8m (2019 - £nil). These have been impaired to their value in use of £10.9m. The impairment losses were driven principally by the significant impact Covid-19 has had and will continue to have on the hospitality sector.

 

The key judgements and estimates in the inputs in calculating the impairments are outlined in note 2(d).

 

Assets held for sale accounted for a carrying value of £nil (2019 - £0.8m). 

 

Company
The Company holds no property, plant and equipment.

14   Prepaid operating leases

				27 December 2020		29 December 2019
				£'000		£'000
	Held within current assets			-		50
	Held within non-current assets			-		573
				-		623

Prepaid operating leases represent lease premiums paid on the acquisition of sites, amortised evenly over the lease term. On transition to IFRS 16, £0.06m of prepaid operating leases has been reclassed as Right-of-use assets.

 

15   Investments

						£'000
	Company
	At 30 December 2018					3,130
	Share based payment in respect of subsidiary					40
	At 29 December 2019					3,170
	Share based payment in respect of subsidiary					44
	At 27 December 2020					3,214

The Company's investments are wholly related to a 100% ordinary shareholding in Took Us a Long Time Limited (2019 - 53% holding), a company registered in England and Wales with registered offices at 32 Charlotte Street, London. Took Us a Long Time Limited is primarily engaged with the operation of restaurants.

At the start of the year certain of the Directors and employees had interests in 'A', 'B' and 'C' shares in Took Us a Long Time Limited, the subsidiary company. The benefit of holding these shares is considered by the Board to be similar to the benefit of holding an EMI option.   In March 2020 to simplify the Group and the tax structure, the above shares were bought back by Took Us a Long Time Limited and cancelled at a nominal cost of £28.37. The cancellation of this resulted in the holding moving from 53% to 100%.

Under IFRS any "non-Controlling Interest" must be recognised based on the ownership percentage, unless there is a separate agreement meaning the share of profits is allocated on another basis. In the period to 29 December 2019, the nature of the shares held by other parties meant that the shareholders would only receive profits when certain thresholds are met, and would never be liable for any of the losses. As the Group was loss making in the period to 29 December 2019, no share of the losses was allocated and therefore a "non-Controlling Interest" was not  shown.

16   Inventories

				27 December 2020		29 December 2019
				£'000			£'000
	Raw materials and consumables			591			871
	Smallware inventories			1,231			1,779
				1,822			2,650

In the Directors' opinion there is no material difference between the replacement cost of inventories and the amounts stated above. Raw material and consumable inventory purchased and recognised as an expense in the period was £6.1m (2019 - £11.4m). In the period to 27 December 2020, £0.4m of smallware inventories was written off due to Covid-19 affecting menu and sales. Due to restricted trade the Group is offering a simplified menu and hence some of the smallware items were redundant.

17   Trade and other receivables

				27 December 2020		29 December 2019
				£'000		£'000
	Trade receivables			245		267
	Prepayments and other receivables			1,247		3,078
	Total trade and other receivables			1,492		3,345
	Less non-current portion (Deposits)			(129)		(197)
				1,363		3,148
	Company
	Amounts due from subsidiary			3,978		7,300
	Total trade and other receivables			3,978		7,300
	Classified as non-current			3,978		7,300

There has been an increase in the credit risk of this loan since it was advanced due to the deterioration in the market and the resulting impact on the performance of the trading company. The Company has previously made loans to the trading subsidiary of £28.4m (2019 - £28.5m).

The Directors of the Company consider this loan to be classed as Stage 2 under the General Approach set out in IFRS 9. The Company has made provisions of £24.4m (2019 - £21.2m) which represents the lifetime expected credit losses. In assessing the lifetime expected credit losses consideration has been given to a number of factors including internal forecasts of EBITDA, cashflow and the consolidated net asset value of the Group at the balance sheet date.

18   Trade and other payables

				27 December 2020		29 December 2019
				£'000			£'000
	Trade payables			3,865			3,651
	Taxations and social security			3,154			1,804
	Accruals and deferred income			2,451			1,771
	Other payables			1,227			736
	Total trade and other payables			10,697			7,962
	Less non-current portion (Deposits)			(80)			(128)
				10,617			7,834

Included within trade payables are £0.20m (2019 - £0.15m) due to related parties (note 29).

 

19   Provisions

				27 December 2020		29 December 2019
				£'000			£'000
	IFRS 16 adjustment			(2,783)			-
	Revised brought forward balance			-			-
	At the beginning of the period			-			3,347
	Onerous provision utilisation in the period			-			(1,024)
	Onerous provision charge in the period						460
	Dilapidation's provision			335			-
	At the end of the period			335			2,783

 

In the period to 29 December 2019, onerous provision movement was £0.6m (A provision charge of £0.4m and a release of £1m). This provision has been made against sites where projected future trading income is insufficient to cover the unavoidable costs under the lease. The provision is based on the expected cash out flows of these sites and the associated costs of exiting these leases and the time expected to sell.

In the period to 27 December 2020, the Group has recognised a provision of £0.3m for dilapidations for a number of sites, where the need to carry out the work has been identified but a full survey and commission has not been undertaken and therefore management has applied their judgment in determining the provision.

20   Deferred tax

				27 December 2020		29 December 2019
				£'000			£'000
	At the beginning of the period			-			-
	Profit and loss credit/(charge)			-			-
				-			-
	Accelerated capital allowances			-			-
	Tax losses carried forward			-			-
	At the end of the period			-			-

 

Due to the uncertainty of future profits, a deferred tax asset of £2.5m (2019 - £0.3m) is not recognised in these financial statements.

21   Borrowings

				27 December 2020		29 December 2019
				£'000			£'000
	Current
	Secured bank borrowings			-			800
				-			800
	Non-current
	Secured bank borrowings			-			852
				-			852
				-			1,652
	Maturity of secured bank borrowings
	Due within one year			-			1,055
	Due In more than one year but less than two years			-			669
	Due In more than two years but less than five years			-			-
				-			1,724
	Future interest payments			-			(72)
				-			1,652

The outstanding loan of £1.7m was paid in full in January 2020.

22   Share capital

 

			Number	Number	£'000
			Ordinary	Deferred
Called up and fully paid:
Ordinary shares at 0.1 pence			59,795,496	-	60
Deferred shares at 9.9 pence (as a result of sub-division			-	59,795,496	5,920
Ordinary shares issued at 0.1 pence			81,294,262	-	81
At 27 December 2020 and as at 29 December 2019			141,089,758	59,795,496	6,061

 

Share Capital Reorganisation, placing and open offer

On 1 May 2019 the Group sub-divided each existing ordinary share into one ordinary share of 0.1 pence each and one deferred share of 9.9 pence each. Following this, the Group issued 81,294,262 Ordinary Shares through a placing and open offer at 4 pence, each at nominal value of 0.1 pence.

23   Reserves

Share capital comprises of the nominal value of the issued shares.

Share premium reserve is the amount subscribed in excess of the nominal value of shares net of issue costs.

Cumulative gains and losses recognised in the income statement are shown in the Retained deficit reserves, together with other items taken direct to equity.

The merger reserve arose in 2006 on the creation of the Group.

24   Leases

Operating leases where the Group is the lessor

The total future value of minimum operating lease receipts are shown below. The receipts are from sub-tenants on contractual sub-leases.

				27 December 2020		29 December 2019
				£'000		£'000
	Within one year: receipts			253		278
	Within two to five years: receipts			1,158		1,158
	Over five years: receipts			2,135		2,428
				3,546		3,864

 

25   Pensions

The Group made contributions of £5,000 (2019 - £1,000) to the personal pension plan of the Directors. During the year the Group made contributions to employee pensions of £0.2m (2019 - £0.2m). As at 27 December 2020, contributions of £99,000 due in respect of the current reporting period had not been paid over to the schemes (2019 - £12,000).

 

26   Share based payments

				Weighted average exercise price		Number
				(pence)		'000
	At 30 December 2018			105.4		2,883
	Lapsed			70.1		(190)
	Cancelled			131.2		(293)
	Granted			4.1		4,525
	At 29 December 2019			39.5		6,925
	Lapsed			4.4		(745)
	Cancelled			105.0		(2,400)
	At 27 December 2020			4.1		3,780

 

The exercise price of options outstanding at the end of the period ranged between 3p and 4p (2019 - 3p and 120p) and their weighted average remaining contractual life was 9 years (2019 - 8.4 years).

Of the total number of options outstanding at the end of period none (2019 - 2.4m weighted average exercise price of 105p) had vested and were exercisable at the end of the period.

The market price of the Company's ordinary shares as at 27 December 2020 was 3.3p and the range during the financial year was from 1.3p to 4.5p (as at 29 December 2019 was 2.7p and the range during the financial year was from 2.7p to 10.7p).

No option was exercised in 2020 (2019 £nil) and or granted in 2020 (2019 - 4.5m).

On 29 July 2019 options of 3.5m were granted at a grant price of 4.4p reflecting the opening share price.   The options vest in three years and expire in 10 years and no other conditions are attached.   A charge of £61,000 will be recognised over the three years based on a volatility of 63.5% and risk rate of 0.5% using the Binomial method.  The volatility is weighted on a four year basis and the risk free rate is based on risk free rate on the mid point between the vesting date and expiry.

On 17 October 2019 options of 1m were granted at a grant price of 3.3p reflecting the opening share price. The options vest in three years and expire in 10 years and no other conditions are attached.  A charge of £12,000 will be recognised over the three years based on a volatility of 61.6% and risk rate of 0.5% using the Binomial method.  The volatility is weighted on a four year basis and the risk free rate is based on risk free rate on the mid point between the vesting date and expiry.

The 3.8m shares outstanding as at 27 December 2020 comprise of the options issued in July and October 2019. There are no other outstanding options.

27   Financial instruments

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

The Group is exposed through its operations to the following financial risks:

·    Credit risk

·    Interest rate risk

·    Liquidity risk

 

The Group does not have any material exposure to currency risk or other market price risk.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:-

·    loans and borrowings

·    trade receivables

·    cash and cash equivalents

·    trade and other payables

 

The Group's financial instruments apart from cash and cash equivalents are measured on an amortised cost basis. Due to the short-term nature of trade receivables and trade/ other payables, the carrying value approximates their fair value.

	Financial assets			27 December 2020		29 December 2019
				£'000		£'000
	Cash and cash equivalents			8,028		4,570
	Trade and other receivables			374		464
	Total financial assets			8,402		5,034
	Financial liabilities (amortised cost)
	Trade and other payables			5,329		4,387
	Loans and borrowings			-		1,652
	Finance leases			55,123		-
	Total financial liabilities			60,452		6,039

 

 

	Company - Financial assets (amortised cost)			27 December 2020		29 December 2019
				£'000			£'000
	Intercompany loan			3,978			7,300

 

 

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies.  

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

The Group's assets and liabilities are wholly attributable to one operating segment (operating restaurants) and arises solely in one geographical segment (United Kingdom).
 

Credit risk is the risk of the financial loss to the Group if a customer or a counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from rebates from suppliers, sub-letting income and trade receivables.

 

Trade and other receivables are disclosed in note 17 and represent the maximum credit exposure for the Group.

The following table sets out the ageing of trade receivables:

			27 December 2020		29 December 2019
Ageing of receivables			£'000		£'000
<30 days			58		106
31-60 days			(7)		67
61-120 days			83		48
>120 days			111		46
			245		267

 

The Group's principal financial assets are cash and trade receivables. There is minimal credit risk associated with the Group's cash balances. Cash balances are all held with recognised financial institutions. Trade receivables arise in respect of rebates from a major supplier and therefore they are largely offset by trade payables. As such the net amounts receivable form an insignificant part of the Group's business model and therefore the credit risk associated with them is also insignificant to the Group as a whole.

The Company's principal financial assets are intercompany receivables. These balances arise due to the funds flow from the listed Company to the trading subsidiary and are repayable on demand. The credit risk arising from these assets are linked to the underlying trading performance of the trading subsidiary. See note 17 for further details on intercompany debt.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.  The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, the Group seeks to maintain cash balances to meet its expected cash requirements as determined by regular cash flow forecasts prepared by management.

 The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

		Up to 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years
		£'000	£'000	£'000	£'000	£'000
	Trade & other payables	5,249	-	24	-	56
	Loan and other borrowings	-	-	-	-	-
	Finance leases	689	2,215	2,952	8,955	40,312
	As at 27 December 2020	5,938	2,215	2,976	8,955	40,368

 

		Up to 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 3 years	Over 5 years
		£'000	£'000	£'000	£'000	£'000
	Trade & other payables	4,307	-	24	-	56
	Loan and other borrowings	417	638	669	-	-
	As at 29 December 2019	4,724	638	693	-	56

 

Non-current other payables are sub-let site rent deposits.

 

Interest rate risk

The Group seeks to minimise interest costs by regularly reviewing cash balances.

Interest rate risk arises from the Group's use of interest bearing loans linked to LIBOR.  The Group is exposed to cash flow interest rate risk from long term borrowings at variable rate. The Board considers the exposure to the interest rate risk to be acceptable.  

Surplus funds are invested in interest bearing, instant access bank accounts.

Loans and borrowings

During the year the Group had a loan facility with Barclays Bank Plc. On 8 January 2020 the Group repaid the outstanding bank loan of £1.7m.

Capital disclosures

The Group's capital is made up of ordinary share capital, deferred share capital, share premium, merger reserve and retained deficit totalling £0.6m (2019 - £13.2m).

The Group's objective when maintaining capital is to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.

The Group manages its capital structure and makes adjustments to it in the light of strategic plans. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

28   Related party transactions

The Directors are considered to be the key management personnel. Details of directors' remuneration are shown in Note 8.

The Group pays fees, rent and associated insurance to a number of companies considered related parties by virtue of the interests held by the Directors in such companies. The Group also reimburses expenses incurred by such companies on behalf of the Group.

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
				£'000		£'000
	Rent, insurance and legal services
	-      Kropifko Properties Ltd			(78)		(52)
	-      KLP Partnership			(72)		(83)
	-      ECH Properties Ltd			(52)		(79)
	-      Proper Proper T Ltd			(80)		(52)
	-      Super Hero Properties			(68)		(135)
	-      Benja Properties Ltd			(76)		(154)
	-      Howard Kennedy LLP			(10)		(18)
	Expenses reimbursed			-		-
	Balance due to related parties			198		152

The rent paid to related parties are considered to be a reasonable reflection of the market rate for the properties.

29   Reconciliation of loss before tax to net cash inflow from operating activities

				52 weeks ended 27 December 2020		52 weeks ended 29 December 2019
				£'000		£'000
	Group
	Loss before tax			(12,561)		(266)
	Finance income			(4)		(8)
	Finance expense			34		222
	Finance expense (IFRS 16)			2,514		-
	Share based payment charge			44		40
	Share issue costs			(68)		-
	Depreciation			4,934		1,557
	Amortisation of intangible assets			3		3
	Impairment of goodwill			326		-
	Impairment of property, plant and equipment			(2,255)		-
	Impairment of Right-of-use assets			10,043		-
	Profit from sale of property plant and equipment			(1,184)		43
	Amortisation of intangible assets			3		3
	Onerous provision utilisation			-		(1,024)
	Onerous provision charge in the period			-		460
	Dilapidations provision			335		-
	Other non cash			(2)		-
	Decrease / (increase) in inventories			827		(102)
	Decrease / (increase) in trade and other receivables			1,852		477
	(Decrease)/ Increase in trade and other payables			2,734		824
				7,575		2,226

 

30   Reconciliation of financing activity

 

		Lease liabilities	Lease liabilities	Bank Loan	Bank Loan	Total
		Due within 1 year	Due after 1 year	Due within 1 year	Due after 1 year
		£'000	£'000	£'000	£'000	£'000
	Net debt as at 29 December 2019	-	-	800	852	1,652
	IFRS 16 transitional adjustment	1,647	55,761	-	-	57,408
	Net debt as at 30 December 2019	1,647	55,761	800	852	59,060
	Cashflow	(1,735)	-	(800)	(852)	(3,387)
	Addition / (decrease) to lease liability	2,992	(3,542)	-	-	(550)
	Net debt as at 27 December 2020	2,904	52,219	-	-	(55,123)

 

31   Assets held for sale

The following major classes of assets have been classified as held for sale on the consolidated balance sheet.

				27 December 2020		29 December 2019
				£'000			£'000
	Leasehold improvements			-			668
	Furniture, fixtures and computer equipment			-			132
	Total assets held for sale			-			800

 

The assets held for sale at 29 December 2019 related to More London dim t and sold for a gross consideration of £2m.

 

32   Post Balance Sheet Events

The Group has secured a £1.25m, four year term loan from its existing bankers, Barclays Bank plc (the "Facility"), in order to strengthen its balance sheet and provide additional working capital support. The Facility was drawn down in January 2021. The Facility has a capital repayment holiday of 12 months and carries interest at a rate of 4.5% per annum over the Bank of England Base Rate, following drawdown.

In January 2021 Daniel Jonathan Plant was awarded 15,676,640 'B' shares at a nominal value of £157 and premium of £2,843 in Tasty plc which can be converted to 'A' shares subject to achievement of hurdle rates.

From 5 January 2021 we have been operating under the third national lockdown. In line with the latest Government announcements, we will open outdoor spaces where feasible in April 2021 and a gradual opening of dine-in from May 2021; although the timing is subject to change depending on infection levels and the progress of the vaccination programme.