Various Eateries PLC

Consolidated Statement of Cash Flows

for the 53 weeks ended 3 October 2021

 

		53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
	Note	£ 000		£ 000
Cash flows from operating activities
Loss for the year		(3,740)		(14,442)
Adjustments to cash flows from non-cash items:
Depreciation and amortisation	14,15	3,971		2,832
Impairment	14,15	610		5,391
Loss on disposal of assets and leases		335		1,632
Share-based payments		844		-
Finance income	7	(3)		(1)
Financing costs	7	1,645		2,003
		3,662		(2,585)
Working capital adjustments:
(Increase) / decrease in inventories	17	(145)		149
Decrease in trade and other receivables	18	54		958
(Decrease) / increase in accruals, trade and other payables	20	(175)		1,656
(Decrease) / increase in provisions	23	(104)		461
Net cash flow from operating activities		3,292		639
Cash flows from investing activities
Interest received	7	3		1
Purchases of property plant and equipment	15	(5,059)		(5,086)
Purchase of intangible assets	14	-		(2)
Proceeds / (Cost) from disposal of property, plant and equipment		59		(109)
Costs on issue of shares		(46)		(432)
Net cash flows from investing activities		(5,043)		(5,628)
Cash flows from financing activities
Interest paid		(1,525)		(841)
Proceeds on issue of shares	24	23,373		79
Proceeds from borrowings	21,22	-		5,700
Principal elements of lease payments		(1,274)		(890)
Net cash flows from financing activities		20,574		4,048
Increase / (decrease) in cash		18,823		(941)
Opening cash at bank and in hand		893		1,834
Closing cash at bank and in hand		19,716		893

 

 

 

1 General information

 

Various Eateries PLC, 'the Company', and its subsidiaries (together 'the Group') are engaged in the operation of restaurants and hotels in London and the South of England

 

The Company is a public company limited by shares whose shares are publicly traded on the AiM Market of the London Stock Exchange and is incorporated and domiciled in the United Kingdom under the Companies Act 2006 and are registered in England and Wales.

 

The registered address of the Company is 20 St Thomas Street, London, SE1 9RS.

 

 

 

2 Accounting policies

Basis of preparation

The principal accounting policies adopted in the preparation of the financials statements of the Group which have been applied consistently to all periods presented, are set out below.

The directors (the 'Directors') of Various Eateries PLC are responsible for the financial statements. Judgements made by the Directors, in the application of these accounting policies that have a significant effect on the financial statements and estimates with a significant risk of material adjustments in the next period are disclosed in note 3 on page 22.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards in conformity with the requirements of the Companies Act 2006 applicable to companies reporting under IFRS and IFRIC interpretations.

The financial statements have been prepared on an historical cost basis. Monetary amounts in these financial statements are rounded to the nearest whole £1,000, except where otherwise indicated.

Basis of consolidation

 

The consolidated financial statements incorporate those of Various Eateries PLC and all of its subsidiaries (i.e. entities that the Group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All financial statements are made up to 3 October 2021.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

 

Going concern

 

In adopting the going concern basis for preparing the financial statements for the year ended 3 October 2021, the Directors have considered the business model, the Group's principal risks and uncertainties as well as taking into account the current cash position and potential facilities.

 

 

2 Accounting policies (continued)

 

Going concern (continued)

Based on the Group's cash flow forecasts and projections, the Board is satisfied that the Group will be able to operate within the level of its facilities for the foreseeable future. In making this assessment, the directors have made a specific analysis of the impact of both Covid-19 and Brexit, whilst taking into account the renewal of the Deep Discounted Bond post year end (as detailed in note 29, post balance sheet events). Even allowing for a full period of closure for twelve months from when the financial statements are authorised for issue, the Board are comfortable the Group would have the required cash to continue trading.  For this reason, the Board considers it appropriate for the Group to adopt the going concern basis in preparing its financial statements.

 

Revenue

 

Revenue represents net invoiced sales of food and beverages, hotel accommodation and room hire excluding value added tax. Revenue is recognised when the goods have been provided. 

Rental 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.

Goodwill

 

Goodwill relates to acquired sites and is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests) and any previous interest held over the net identifiable assets acquired and liabilities assumed. The company is taking the option to not restate any balances prior to the opening balance sheet for the purpose of the financial statements. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the income statement.

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The goodwill is tested annually for impairment.

 

Intangible assets (other than goodwill)

Intangible assets acquired separately from a business combination are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date if the fair value can be measured reliably.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives of 4 years on a straight line basis.

Property, plant and equipment

 

Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses. Cost comprises of purchase cost together with any incidental costs of acquisition.

 

Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are applied:

 

 

2 Accounting policies (continued)

Property, plant and equipment (continued)

 

Asset class                                                                                                         Depreciation method and rate

Right of use assets                                                                                            Life of lease

Freehold property - Land                                                                                Not depreciated

Freehold property - Buildings                                                                        Over 50 years

Leasehold improvements                                                                               Life of lease

Furniture, fittings and equipment                                                                  14.29% - 33.33% per annum

Assets under construction                                                                               Not depreciated

IT equipment                                                                                                    20% - 33.33% per annum

 

 

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Property, plant and equipment are tested for impairment if indications of impairment are present.

 

Work-in-progress relates to capital expenditure on sites that have not started trading.

 

Inventories

 

Raw materials and consumables are valued at the lower of cost and net realisable value. Cost is based on latest contracted purchase cost.

Financial instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are derecognised on the trade date when the Group is no longer a party to the contractual provisions of the instrument.

Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. All financial instruments held are classified at amortised cost.

Trade and other receivables and trade and other payables

Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.

Interest bearing borrowings

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances held at bank, call deposits, cash on hand and cash in transit.

 

 

2 Accounting policies (continued)

Impairment of intangible assets and property, plant and equipment

 

At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

 

Taxation

 

The tax expense represents the sum of the tax currently payable and deferred tax.

 

Tax payable is based on taxable profit. Taxable profit differs from net profit as reported in the statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Any liability for current tax is calculated using tax rates that have been enacted at the balance sheet date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the consolidated profit and loss account, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

 

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

 

Current and deferred tax are recognised in the consolidated profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

 

2 Accounting policies (continued)

 

Employee benefits

Post-retirement benefits

The Group operates defined contribution plans for its employees. A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the periods during which services are rendered by employees.

Termination benefits

Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Leases

 

The Group leases a number of properties in various locations around the UK from which it operates.

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

·      Leases of low value assets; and

·      Leases with a duration of twelve months or less.

 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. This is 4.5% (2020: 4.5%). Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments, such as those linked to turnover, are expensed in the period to which they relate.

 

On initial recognition, the carrying value of the lease liability also includes:

·      Amounts expected to be payable under any residual value guarantee;

·      The exercise price of any purchase option granted in favour of the Group if it is reasonably certain to exercise that option; and

·      Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of the termination option being exercised.

 

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

·      Lease payments made at or before commencement of the lease;

·      Initial direct costs incurred; and

·      The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. Right-of-use assets are tested for impairment if indications of impairment are present.

 

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to be made over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being depreciated over the remaining (revised) lease term.

 

Lease modifications change the scope of the lease or change the consideration for the lease by comparison with that detailed in the original terms and conditions of the contract. If the modifications, in substance, mean that the original lease has been terminated and a new lease created, then the revised terms are accounted for as a new lease.

 

2 Accounting policies (continued)

Leases (continued)

 

Where modifications do not need to be accounted for as a separate lease, the amount recognised for the lease liability and the right-of-use asset is revisited to reflect the updated terms and conditions of the contract.

 

Finance income and financing costs

 

Financing expenses comprise interest payable, finance charges on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, and net foreign exchange losses that are recognised in the Statement of Comprehensive Income.

 

Financing income includes interest receivable on funds invested.

 

Interest income and interest payable are recognised in the Statement of Comprehensive Income as they accrue, using the effective interest method.

 

Government grants

 

During the period, the Group has received grants from the UK Government in relation to the Coronavirus Job Retention Scheme and business rates relief. The income from these grants has been offset against the expense to which they relate.

 

Standards issued but not yet effective:

 

The following standards and interpretations relevant to the Group are in issue but are not yet effective and have not been applied in the financial statements. In some cases these standards and guidance have not been endorsed for use in the United Kingdom.

 

 

2 Accounting policies (continued)

 

Standards issued but not yet effective: (continued)

 

 

Standard / interpretation	Content		Applicable for financial years beginning on / after
IAS 1 Classification of liabilities as current or non-current	In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current.		2 October 2023
IAS 1 Presentation of financial statements and IFRS Practice Statement 2 making materiality judgements-disclosure of accounting policies	The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term 'significant accounting policies' with 'material accounting policy information'.		2 October 2023
IAS 8 Definition of accounting estimates	The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty".		2 October 2023
IAS 12 Deferred tax related to assets and liabilities arising from a single transaction	The amendments introduce a further exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences. Following the amendments to IAS 12, an entity is required to recognise the related deferred tax asset and liability.		2 October 2023
Annual improvements to IFRS Standards 2018-2020	The annual improvements include amendments to four Standards: IFRS 1 First-time adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture.		3 October 2022
IFRS 3 Reference to the conceptual framework	In May 2020, the IASB issued amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework.		3 October 2022
IAS 16 Property, plant and equipment: proceeds before intended use	In May 2020, the IASB issued property, plant and equipment: proceeds before intended use, which prohibits entities deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management.		3 October 2022
Interest rate benchmark reform: Phase 2	The amendments address issues that might affect IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 as a result of the reform of an interest rate benchmark		4 October 2021

 

The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
 

 

3 Critical accounting judgements and key sources of estimation uncertainty

 

The preparation of the financial statements requires the Directors to make estimates and judgements that affect the reported amounts of assets, liabilities, costs and revenue. Actual results could differ from these estimates. Information about such judgements and estimates is contained in individual accounting policies. The judgements, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.

 

The resulting accounting estimates will, by definition, seldom equal the related actual results. 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 year are addressed below:

 

Key judgement - determining the rate used to discount lease payments

At the commencement date of property leases the lease liability is calculated by discounting the lease payments. The discount rate used should be the interest rate implicit in the lease. However, if that rate cannot be readily determined, which is generally the case for property leases, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. The discount rate applied to the Group's leases under the portfolio approach is 4.5%. A 0.5% increase in the discount rate to 5% will result in a decrease in net present value of the total lease liability of £648,000 in 2021 (2020: £731,000). A 0.5% decrease in discount rate to 4% results in increase in the net present value of the total lease liability of £683,000 in 2021 (2020: £771,000).

 

Key estimate - impairment of goodwill, other intangibles and property, plant and equipment

 

Determining whether goodwill, other intangibles and plant, property and equipment are impaired requires an estimation of the recoverable amount of the cash-generating units ('CGUs') to which goodwill, other intangibles and tangible fixed assets have been allocated. The value in use calculation requires estimation of future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. Details of cash generating units as well as further information about the assumptions made are disclosed in notes 14 and 15.

 

 

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:

 

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
	£ 000		£ 000
Sale of goods	20,212		16,469
Accommodation and room hire	2,111		-
Sub-let rental income	25		55
	22,348		16,524

 

 

 

5 Segmental Reporting

 

IFRS 8 'Operating Segments' requires operating segments to be based on the Group's internal reporting to its Chief Operating Decision Maker ('CODM'). The CODM is regarded as the Chief Executive Officer together with other Board Members who receive financial information at a site-by-site level. During the period ended 27 September 2020, the Group traded in one business segment (operating non-members clubs and restaurants, the "Restaurant Segment") and these sites met the aggregation criteria set out in paragraph 12 of IFRS 8. Economic indicators assessed in determining that the aggregated operating segments share similar economic characteristics include expected future financial performance, operating and competitive risks and return on investment.

 

Following the acquisition of two hotel entities in September 2020 (see note 6) these have been deemed to represent a separate operating segment ("Hotel Segment") and hence the table below shows these for the 53 weeks ended 3 October 2021 (2020: n/a) where the group now operates in two segments.

 

	Restaurant segment		Hotel segment		Other unallocated		Total
	£ 000		£ 000		£ 000		£ 000
Revenue	20,212		2,111		25		22,348
Trading sites EBITDA (before impact of IFRS 16)	2,897		(18)		(3,804)		(925)
Pre-opening costs	(295)		-		-		(295)
Impact of IFRS 16	1,182		1,200		-		2,382
Total EBITDA (IFRS 16)	3,784		1,182		(3,804)		1,162
Depreciation and amortisation	-		-		(3,971)		(3,971)
Loss on disposal property, plant and equipment	-		-		(335)		(335)
Impairment of right of use assets	-		-		(610)		(610)
Financing costs	-		-		(1,642)		(1,642)
Insurance claim proceeds	2,500		-		-		2,500
Share-based payments	-		-		(844)		(844)
Profit / (loss) before tax	6,284		1,182		(11,206)		(3,740)
Tax	-		-		-		-
Profit / (loss) for the period	6,284		1,182		(11,206)		(3,740)

 

 

6 Business Combinations

 

In the 53 weeks ended 3 October 2021, the group undertook no acquisitions.

 

In the prior period, on 15 September 2020, the Group acquired 100% of the equity instruments of Rare Bird Hotels at Sonning Limited ('RBH Sonning') and Rare Bird Hotels at Streatley Limited ('RBH Streatley'), thereby obtaining control of both companies. The companies were incorporated in 2020 for the purpose of acquiring the trade and certain assets of The Great House at Sonning Limited and Rare Bird Hotels Limited respectively, which are related parties of the Group (see note 28). The acquisitions were made to bring the full operations of each of the hotel locations, where Coppa Club sites are based, into the Group prior to the Initial Public Offering.

 

 

6 Business Combinations (continued)

	RBH Sonning		RBH Streatley
	£ 000		£ 000
Fair value of consideration transferred
Amount settled via equity issue from the Company	2,329		6,987

 

Recognised amounts of identifiable net assets
Right of use assets (note 15)	5,285		6,246
Property, plant and equipment (note 15)	169		325
Intangible assets (note 14)	125		125
Total non-current assets	5,579		6,696
Inventories	1		16
Trade and other receivables	212		420
Cash and bank balances	110		79
Trade and other payables	(626)		(615)
Lease liabilities	(5,309)		(6,274)
Identifiable net (liabilities) / assets	(33)		322
Goodwill on acquisition	2,362		6,665

The acquisitions were settled via issue of equity from the Company, 3,174,603 and 9,523,809 ordinary shares for RBH Sonning and RBH Streatley respectively (see also note 24).

 

The Group assessed the fair value of identifiable intangible assets as £250,000 relating to the Rare Bird Hotels brand name, split evenly between the acquired businesses. The goodwill of £9,027,000 arising from the acquisitions consists primarily of growth expectations, expected future profitability, and expected cost synergies. Goodwill has been allocated to the hotel segment.

 

Results for the acquired businesses were not consolidated into the Group results for the period ended 27 September 2020 due to the proximity of acquisition date to the reporting date, though assets and liabilities were consolidated into the consolidated statement of financial position as at 27 September 2020.

 

7 Finance income / financing costs

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
	£ 000		£ 000
Interest income on bank deposits	3		1
Total finance income	3		1
Financing costs on bank overdraft and borrowings	(537)		(1,348)
Lease liability interest	(1,108)		(654)
Foreign exchange loss	-		(1)
Total financing costs	(1,645)		(2,003)
Net financing costs	(1,642)		(2,002)

 

8 Auditor's remuneration

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
	£ 000		£ 000
Audit of the financial statements	138		100
Other fees to auditor
Services in relation to Initial Public Offering	-		115
	-		115

 

Audit fees for the 53 weeks ended 3 October 2021 includes £13,000 in respect of the 2020 audit. Audit fees for the 52 weeks ended 27 September 2020 includes £23,000 in respect of the 2019 audit.

 

 

 

 

9 Staff numbers and costs

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
The average monthly number of employees (including directors) was:
Operational staff	599		506

 

The average monthly number of employees (being directors) of the Company was 7 (2020:7)

 

 

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
Their aggregate remuneration comprised:
Wages and salaries	11,824		10,080
Social security costs	898		777
Other pension costs (see note 25)	179		178
Share-based payments	844		-
Other employee costs	94		83
Grant income - CJRS	(3,091)		(2,846)
	10,748		8,272

 

 

 

10 Directors' remuneration

 

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
The Directors' remuneration for the period in respect of services to the Group, was as follows:	£ 000		£ 000
Remuneration	444		324
Employer pension contribution	8		7
	452		331

 

 

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
In respect of the highest paid director:	£ 000		£ 000
Remuneration	181		150
Employer pension contribution	5		4
	186		154

 

 

11 Tax

 

Tax expense

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
Tax expense	£ 000		£ 000
Corporation tax	-		-
Total current income tax	-		-
Tax expense in the statement of profit or loss	-		-
Corporation tax is calculated at 19% (2020: 19%) of the estimated taxable loss for the period.

 

 

 

11 Tax (continued)

 

The charge for the period can be reconciled to the Group's loss as follows:
	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
	£ 000		£ 000
Loss before tax	(3,740)		(14,442)
Corporation tax at standard rate 19.0% (2020: 19.0%)	(711)		(2,744)
Fixed asset differences	236		992
Expenses not deductible	311		405
Remeasurement of deferred tax for changes in tax rate	(3,049)		(676)
Movement in deferred tax not recognised	3,213		2.023
Total tax charge	-		-

 

 

No account has been taken of the potential deferred tax asset of £12,705,000 (2020: £9,885,000) calculated at 25% (2020: 19%) and representing losses carried forward and short term timing differences, owing to the uncertainty over the utilisation of the losses available.

 

 

 

12 Other expenses

 

 

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
	£ 000		£ 000
Depreciation and amortisation	389		235
AGA (release of provision) / provision (note 23)	(104)		461
IPO related costs	-		285
Restructuring costs	-		167
Other central costs	2,067		1,321
	2,352		2,469

 

 

13 Earnings per share

 

Basic loss per share is calculated by dividing the loss 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 3 October 2021 and 27 September 2020.

 

					3 October 2021		27 September 2020
					£ 000		£ 000
Loss for the year after tax					(3,740)		(14,442)
Basic and diluted weighted average number of shares					82,143,398		12,403,859
Basic loss per share (pence)					(4.6)		(116.4)
Diluted loss per share (pence)					(4.6)		(116.4)

 

 

 

 

14 Intangible assets

Group	Brand		Goodwill		Trademarks, patents & licenses		Total
	£ 000		£ 000		£ 000		£ 000
Cost or valuation
At 27 September 2020	2,912		26,019		25		28,956
Additions	-		-		-		-
At 3 October 2021	2,912		26,019		25		28,956
Amortisation
At 27 September 2020	2,662		13,391		-		16,053
Charge for the period	62		-		-		62
At 3 October 2021	2,724		13,391		-		16,115
Carrying amount 3 October 2021	188		12,628		25		12,841
	Brand		Goodwill		Trademarks, patents & licenses		Total
	£ 000		£ 000		£ 000		£ 000
Cost or valuation
At 29 September 2019	2,662		16,992		23		19,677
Additions	-		-		2		2
Acquired through business combination	250		9,027		-		9,277
At 27 September 2020	2,912		26,019		25		28,956
Amortisation
At 29 September 2019	2,662		9,751		-		12,413
Impairment	-		3,640		-		3,640
At 27 September 2020	2,662		13,391		-		16,053
Carrying amount 27 September 2020	250		12,628		25		12,903

 

Brand relates to registered brand names and is amortised over an estimated useful economic life of 4 years. The brand names that were acquired through business combinations were not amortised during the period ended 27 September 2020 due to the proximity of acquisition date to the reporting date. 

 

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 CGU's fair value less costs of disposal and its value-in-use.

 

 

 

 

14 Intangible assets (continued)

 

Group goodwill	Tavolino Riverside		Strada Southbank		Strada Dockside		Rare Bird Hotels at Sonning Limited		Rare Bird Hotels at Streatley Limited		Total
	£ 000		£ 000		£ 000		£ 000		£ 000		£ 000
Carrying amount
At 29 September 2019	4,033		3,146		62		-		-		7,241
Acquired through business combinations	-		-		-		2,418		6,609		9,027
Impairment	(1,424)		(2,154)		(62)		-		-		(3,640)
At 27 September 2020 and at 3 October 2021	2,609		992		-		2,418		6,609		12,628

 

Tavolino Riverside, Strada Southbank and Strada Dockside are included within the restaurant operating segment. Rare Bird Hotels at Sonning Limited and Rare Bird Hotels at Streatley Limited together make up the hotel operating segment.

 

Restaurant 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 12.0% was used (2020: 12.8%), based on the Group's WACC and comparable businesses in the sector. Cash flows in line with 3 year forecasts were used, which incorporate a reasonably foreseeable, as at 3 October 2021, future impact of the Covid-19 pandemic and assumptions concerning the rate at which site level cash flows will recover. Cash flows beyond the forecast period are extended out to the end of the lease terms at a 2% growth rate. The key assumption for the fair value calculations is the multiple applied to site EBITDA. A multiple of 5 times site EBITDA was used (2020: 5 times) based on expected market value if the sites were to be sold as individual trading businesses.

 

Impairment testing resulted in no impairment of goodwill due to the recoverable amount, being value-in-use, at 3 October 2021 being higher than the goodwill recognized in the restaurant segment.

 

Given the global pandemic and its ongoing impact on the UK hospitality sector there is particular sensitivity to the forecasts prepared in connection with the impairment review as at 3 October 2021. 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 2%, the forecast 3 year total EBITDA is reduced by 10%, and the terminal growth rate reduced by 1%, an impairment loss of £220,000 for the period ended 3 October 2021 would have to be recognised against goodwill (2020: £856,000). 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 12.0% was used (2020: 12.8%), based on the Group's WACC and comparable businesses in the sector. Cash flows in line with 3 year forecasts were used, which incorporate a reasonably foreseeable, as at 3 October 2021, future impact of the Covid-19 pandemic and assumptions concerning the rate at which site level cash flows will recover. Cash flows beyond the forecast period are extended at a terminal growth rate of 2%. The key assumption for the fair value calculations is the multiple applied to site EBITDA. A multiple of 9 times site EBITDA was used (2020: 9 times) based on expected market value if the entities were to be sold as individual trading businesses.

 

 

14 Intangible assets (continued)

Hotel segment (continued)

Impairment testing resulted in no requirement to reduce the carrying value of goodwill in 2021 as the recoverable amounts of the CGUs, based on value-in-use estimates, were £12,464,000 for Rare Bird Hotels at Sonning Limited (2020: £14,469,000) and £17,648,000 for Rare Bird Hotels at Streatley Limited (2020: £24,184,000). The headroom of recoverable amount over goodwill is £10,327,000 and           £11,809,000 respectively (2020: £12,328,000 and £18,345,000).

 

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 2%, the forecast 3 year total EBITDA is reduced by 10%, and the terminal growth rate reduced by 1%, the headroom reduces to £6,653,000 for Rare Bird Hotels at Sonning Limited (2020: £8,505,000) and £6,607,000 for Rare Bird Hotels at Streatley Limited (2020: £11,940,000). 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.

 

15 Property, plant and equipment
   Group

 

	Right-of-use assets		Freehold property		Leasehold improvem-ents		Furniture, fittings and equipmen-t		Assets under constru-ction		IT equipme-nt		Total
	£ 000		£ 000		£ 000		£ 000		£ 000		£ 000		£ 000
Cost or valuation
At 27 September 2020	26,907		1,795		7,860		5,942		1,171		1,432		45,107
Additions	2,308		17		2,088		1,404		1,336		215		7,368
Disposals	-		-		(701)		(1,404)		(60)		(65)		(2,230)
Transfers	-		482		567		61		(1,111)		1		-
At 3 October 2021	29,215		2,294		9,814		6,003		1,336		1,583		50,245
Depreciation
At 27 September 2020	5,858		-		1,436		3,551		-		823		11,668
Charge for the period	2,023		-		374		1,267		-		244		3,909
Eliminated on disposal	-		-		(54)		(1,727)		-		(52)		(1,833)
Impairment loss	610		-		-		-		-		-		610
At 3 October 2021	8,491		-		1,756		3,091		-		1,015		14,353
Carrying amount 3 October 2021	20,724		2,294		8,058		2,912		1,336		568		35,892

 

 

15 Property, plant and equipment (continued)

 

	Right-of-use assets		Freehold property		Leasehold improvem-ents		Furniture, fittings and equipmen-t		Assets under constru-ction		IT equipme-nt		Total
	£ 000		£ 000		£ 000		£ 000		£ 000		£ 000		£ 000
Cost or valuation
At 29 September 2019	19,038		-		8,499		4,972		105		1,311		33,925
Adjustment relating to prior periods	-		-		801		1,391		-		74		2,266
Additions	707		1,795		72		548		2,605		66		5,793
Acquired through business combination	11,532		-		-		403		-		90		12,025
Disposals	(4,370)		-		(2,383)		(1,909)		(102)		(138)		(8,902)
Transfers	-		-		871		537		(1,437)		29		-
At 27 September 2020	26,907		1,795		7,860		5,942		1,171		1,432		45,107
Depreciation
At 29 September 2019	4,832		-		1,609		2,550		-		604		9,595
Adjustment relating to prior periods	-		-		771		1,420		-		75		2,272
Charge for the period	1,272		-		431		902		-		227		2,832
Eliminated on disposal	(1,862)		-		(1,510)		(1,321)		-		(83)		(4,776)
Impairment loss	1,616		-		135		-		-		-		1,751
At 27 September 2020	5,858		-		1,436		3,551		-		823		11,668
Carrying amount 27 September 2020	21,049		1,795		6,424		2,391		1,171		609		33,439

 

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.

 

At the period end an exercise was undertaken to review and determine the assets still in use by the group. An adjustment relating to prior periods was made to the cost and accumulated depreciation brought forward to re-instate the depreciated items that had been removed from the note previously. There was no material impact on the income statement.

 

 

15 Property, plant and equipment (continued)

 

The assets acquired through business combination comprise the fair value of the property, plant and equipment of Rare Bird Hotels at Sonning Limited and Rare Bird Hotels at Streatley Limited, acquired by the Group in September 2020.

 

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 against rental costs and is recognised within cost of sales (2020: £55,000, 2021: £41,000).

 

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 12.0% was used (2020: 12.0%), based on the Group's WACC and comparable businesses in the sector. Cash flows in line with 3 year forecasts were used, which incorporate an impact of the Covid-19 pandemic and assumptions concerning the rate at which site level cash flows will recover. Cash flows beyond the forecast period are extended out to the end of the lease terms at a 2% growth rate. The key assumption for the fair value calculations is the multiple applied to site EBITDA. A multiple of 5 times site EBITDA was used (2020: 5 times) based on expected market value if the sites were to be sold as individual trading businesses.

 

Impairment testing resulted in the reduction of carrying amount to recoverable amount, being value-in-use, for one CGU - in 2021, with the full charge recognised against the restaurant segment. The charge was £610,000 against right-of-use asset at Strada Dockside.

 

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 2%, the forecast 3 year total EBITDA is reduced by 10%, and the terminal growth rate reduced by 1%, a further impairment loss of £63,000 for the period ended 3 October 2021 would have to be recognized against 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 14), no impairment charge is required in respect of the hotel segment.

 

 

 

 

16 Investments

 

Group subsidiaries
Name of subsidiary	Principal activity	Country of incorporation and registered office	Proportion of ownership interest and voting rights held by the Group
			2021	2020
Various Eateries Holdings Limited*	Holding company	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%
Rare Bird Hotels at Sonning Limited*	Hotels and similar accommodation	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%
Rare Bird Hotels at Streatley Limited*	Hotels and similar accommodation	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%
VEL Property Holdings Limited	Buying and selling of own real estate	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%
SCP Sugar Limited	Holding company	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%
Various Eateries Trading Limited	Licensed restaurants	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%
Noci Islington Limited	Dormant	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	-
Coppa Club (Haslemere) Limited	Dormant	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	-
Coppa Club Limited	Dormant	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%
Coppa Limited	Dormant	United Kingdom 20 St Thomas Street, London, SE1 9RS	100%	100%

 

 

*indicates direct investment of the Company; other companies are held by direct subsidiaries

 

 

 

17 Inventories

	Group
	3 October 2021		27 September 2020
	£ 000		£ 000
Food and drink	234		178
Consumables	312		223
	546		401
Inventories recognised as an expense in the period totalled £5,078,000 (2020: £4,509,000).

 

 

18 Trade and other receivables

	Group
	3 October 2021		27 September 2020
	£ 000		£ 000
Trade receivables	137		248
Prepayments	579		317
Other receivables	788		24,365
	1,504		24,930

 

 

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.

 

 

Other receivables includes £nil (2020: £23,523,000 in respect of net IPO share issue proceeds).

 

 

19 Cash and bank balances

	Group
	3 October 2021		27 September 2020
	£ 000		£ 000
Cash and bank balances	19,716		893

 

20 Trade and other payables

 

	Group
	3 October 2021		27 September 2020
	£ 000		£ 000
Trade payables	1,544		2,621
Accrued expenses	5,028		3,813
Social security and other taxes	923		988
Other payables	906		1,186
Lease liabilities due in less than one year	2,842		2,384
	11,243		10,992

 

21 Current borrowings

 

	Group
	3 October 2021		27 September 2020
	£ 000		£ 000
Borrowings from related parties	12,438		2,402

 

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 issued in January 2021, the subscription amount was £2,438,000, the nominal value £2,584,000, and the final redemption date is 14 January 2022. The discount is recognised between subscription and redemption date, resulting in £105,000 of accrued financing costs as at the reporting date.

The deep discounted bond instrument issued by Various Eateries Trading Limited was in September 2020 as part of a capital restructure (see note 24), with a subscription price of £8,962,000, a nominal value of £9,515,000, and a term of 19 months. The discount is recognised between subscription and redemption date resulting in £349,000 of accrued financing costs at the reporting date. The balance of £1,038,000 (2020: £1,038,000) under the August 2019 loan agreement matures in April 2022, bears cash settled interest at 3.75% above LIBOR (2020: cash settled interest at 3.75% above LIBOR), and contains an EBITDA multiple covenant first tested in September 2020 that has been waived until April 2022.

 

 

 

22 Non-current borrowings

	Group
	3 October 2021		27 September 2020
	£ 000		£ 000
Borrowings from related parties	-		10,000
Lease liabilities due after more than one year	22,128		21,482
	22,128		31,482

 

 

The loans and borrowings classified as financial instruments are disclosed in note 26.

 

The Group's exposure to market and liquidity risk in respect of loans and borrowings is disclosed in the financial instruments note.

 

 

23 Provisions for liabilities

 

Group			53 weeks ended 3 October 2021
Authorised Guarantee Agreements ('AGAs')			£ 000
At start of financial period			461
Release of provision in the year			(104)
At end of financial period			357

 

The provision relates to the annual rental cost of three (2020: four) 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).

The provision related to one site was released in the year following a new lease resulting in the potential cost being removed.

 

 

24 Share capital and share premium

Authorised, allotted, called-up and fully paid shares
	3 October 2021				27 September 2020
	No. 000		£ 000		No. 000		£ 000
Ordinary shares of £0.01 each	89,008		890		89,008		890

 

 

 

24 Share capital and share premium (continued)

Movements in ordinary share capital
	Date		Shares		Nominal value		£ 000
At incorporation	26 June 2020		1		£1.00		-
Share subdivision	27 August 2020		99		£0.01		-
Share-for-share exchange	27 August 2020		11,111,011		£0.01		111
Share conversion	18 September 2020		23,809,522		£0.01		238
Issue of shares on IPO	25 September 2020		34,246,576		£0.01		342
Issue of other shares	18 September 2020		19,841,268		£0.01		198
Balance	3 October 2021		89,008,477				890

There were no movements in ordinary share capital in the period ended 3 October 2021

 

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.

 

Share-for-share exchange

The Company was incorporated on 26 June 2020 with one ordinary share of £1.00. On 27 August 2020 the shareholders of Various Eateries Holdings Limited ('VEHL') exchanged their ordinary shares in VEHL for ordinary shares in the Company.

 

Share conversion

On 18 September 2020, the Group carried out a pre-AIM float capital restructure in the form of a debt for equity swap whereby deep discounted bond instruments issued by Various Eateries Trading Limited in 2020 and a proportion of the balance under the August 2019 loan agreement were repaid via equity issued by the Company. The reduction of debt was achieved by way of issue of a new deep discounted bond instrument by Various Eateries Trading Limited (see note 22) and successive novation of £15,488,000 of the balance upwards through the Group. The intercompany balance created by this novation makes up a proportion of the receivables from subsidiaries disclosed in note 18.

 

Issue of shares

The shares issued on 18 September 2020 includes 12,698,412 shares issued as consideration for the purchase of the entire issued ordinary share capital of Rare Bird Hotels at Sonning Limited and Rare Bird Hotels at Streatley Limited (see note 6), and 5,809,523 shares issued under a share-based payment scheme (see note 27).

 

 

 

25 Retirement benefit schemes

 

Group personal pension scheme

The Group operates group personal pension schemes for all qualifying employees. The assets of the schemes are

held separately from those of the Group.

The total cost charged to income of £179,000 (2020: £178,000) represents contributions payable to these schemes by the Group at rates specified in the rules of the schemes. As at 3 October 2021, contributions of £26,000 (2020: £23,000) due in respect of the current reporting period had not been paid over to the schemes.

 

26 Financial instruments

 

Group
Financial assets - loans and receivables
			3 October 2021		27 September 2020
			£ 000		£ 000
Cash at bank and in hand			19,716		893
Trade and other receivables			925		24,613
			20,641		25,506

 

 

Group
Reconciliation of liabilities arising from financing activities
			Lease liabilities		Other borrowings		Total
			£ 000		£ 000		£ 000
At start of financial period			23,866		12,402		36,268
New borrowings			2,307		36		2,343
Interest charge			1,108		-		1,108
Repayments during the period			(2,311)		-		(2,311)
At end of financial period			24,970		12,438		37,408

 

 

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
			3 October 2021		27 September 2020
			£ 000		£ 000
Trade and other payables			32,447		31,486
Borrowings from related parties			12,438		12,402
			44,885		43,888

 

 

 

26 Financial instruments (continued)

 

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 company'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 Company'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 LIBOR.

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.

 

 

 

26 Financial instruments (continued)

 

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.

 

	Weighted average interest rate		1 year or less		Between 1 and 2 years		Between 2 and 5 years		Over 5 years		Remaining contractual maturities
2020	%		£ 000		£ 000		£ 000		£ 000		£ 000
Non-derivatives
Non-interest bearing
Trade payables	-		2,621		-		-		-		2,621
Other payables	-		4,999		-		-		-		4,999
Borrowings - Deep Discounted Bond	-		2,438		9,515		-		-		11,953
Interest-bearing
Borrowings - loan	3.75% + LIBOR		-		1,038		-		-		1,038
Lease liability	4.5%		2,526		2,666		8,015		19,487		32,694
			12,584		13,219		8,015		19,487		53,305

 

	Weighted average interest rate		1 year or less		Between 1 and 2 years		Between 2 and 5 years		Over 5 years		Remaining contractual maturities
2021	%		£ 000		£ 000		£ 000		£ 000		£ 000
Non-derivatives
Non-interest bearing
Trade payables	-		1,544		-		-		-		1,544
Other payables	-		5,934		-		-		-		5,934
Borrowings - Deep Discounted Bond	-		12,099		-		-		-		12,099
Interest-bearing
Borrowings - loan	3.75% + LIBOR		1,038		-		-		-		1,038
Lease liability	4.5%		2,970		2,999		8,627		18,387		32,983
			23,585		2,999		8,627		18,387		53,598

 

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

 

27 Share based payments

 

As at 3 October 2021, the Group maintained three separate share based payment scheme for employee remuneration (2020: one):

·      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 - Options granted on 18 September 2020.

 

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 £818,000 (2020: £nil) has been recognised in the income statement by the Group in the period ended 3 October 2021.

 

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		Exercise price per share (£)
Outstanding at 27 September 2020	5,809,523		0.73
Granted	-		-
Outstanding at 3 October 2021	5,809,523		0.73
Exercisable at 3 October 2021	-		-
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			0.92 years

 

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 1.92 years. The total estimated fair value of the options granted on 18 September 2020 to be recognised over the vesting period is £1,531,000.

 

 

27 Share based payments (continued)

 

JSOP Scheme 2 - Options granted on 11 May 2021.

 

A charge of £20,000 (2020: £nil) has been recognised in the income statement by the Group in the period ended 3 October 2021.

 

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 (£)
Outstanding at 27 September 2020	-		-
Granted	360,000		1.09
Outstanding at 3 October 2021	360,000		1.09
Exercisable at 3 October 2021	-		-
			JSOP
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			3.89 years

 

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 is £192,685.

 

CSOP - Options granted on 11 May 2021.

 

A charge of £6,000 (2020: £nil) has been recognised in the income statement by the Group in the period ended 3 October 2021.

 

 

 

27 Share based payments (continued)

 

	CSOP
	Number of shares		Exercise price per share (£)
Outstanding at 27 September 2020	-		-
Granted	92,402		1.09
Outstanding at 3 October 2021	92,402		1.09

 

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 on 11 May 2021 to be recognised over the vesting period is £44,999.

 

 

28 Related party transactions

 

Transactions with related parties include management charges for services provided by Osmond Capital Limited, which has common shareholders with controlling influence with the Company, of £200,000 (2020: £390,000). In addition, H E M Osmond is the principal lender of the £10,000,000 borrowings (2020: £10,000,000) and a shareholder with controlling influence of Xercise2 Ltd which is a significant shareholder of the Company.

As at 3 October 2021, there was £20,275 (2020: £397,000) of accrued cash interest payable on borrowings from related parties, of which £nil was due to Xercise2 Ltd (2020: £341,000).

Remuneration of key management personnel

The remuneration of the Directors of the Company and its subsidiaries and other key management, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 "Related Party Disclosures".

	53 weeks ended 3 October 2021		52 weeks ended 27 September 2020
	£ 000		£ 000
Salaries and other short term employee benefits	716		600
Employers national insurance contributions	88		75
Post-employment benefits	15		12
	819		687

 

 

 

 

28 Related party transactions (continued)

 

During the period, the Group entered into the following trading transactions with related parties:
	53 weeks ended 3 October 2021				52 weeks ended 27 September 2020
	Purchase of goods / services		Sale of goods / services		Purchase of goods / services		Sale of goods / services
	£ 000		£ 000		£ 000		£ 000
SCP Newbury Manor Limited	15		-		-		-
Osmond Capital Limited	200		-		-		-
The Great House at Sonning Limited	657		-		364		351
Rare Bird Hotels Limited	-		-		491		281
CCO Cygnet Limited	748		-		-		-
Mudlark Hotels Limited	-		-		-		29
	1,620		-		855		661
The following amounts were outstanding at the reporting date:

 

	3 October 2021				27 September 2020
	Amounts owed to related parties		Amounts owed by related parties		Amounts owed to related parties		Amounts owed by related parties
	£ 000		£ 000		£ 000		£ 000
The Great House at Sonning Limited	1		53		-		-
Rare Bird Hotels Limited	-		119		-		-
CCO Cygnet Limited	-		-		-		-
Mudlark Hotels Limited	-		-		2		38
	1		172		2		38

 

SCP Newbury Manor Limited, Osmond Capital Limited, The Great House at Sonning Limited, Rare Bird Hotels Limited, CCO Cygnet Limited and Mudlark Hotels Limited are related parties of the Group because they have common shareholders with controlling influence with the Group. The trade and certain assets of The Great House at Sonning Limited and Rare Bird Hotels Limited were acquired by newly incorporated operating companies in August 2020, Rare Bird Hotels at Sonning Limited and Rare Bird Hotels at Streatley Limited respectively. The entire issued share capital of these companies was subsequently acquired by the Company in September 2020.

 

Sales and purchases of goods and services between the related parties were made at market prices discounted to reflect the relationships between the parties.

 

The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties.

 

29 Post balance sheet events                    

 

Coppa Club Putney

In November 2021, the Group opened its newest site at Putney.

 

VEL Property Holdings funding

Within current liabilities at the year end, there was a deep discounted bond instrument with a nominal value of £2,584,000 and a final redemption date of 14 January 2022. In January 2022, this was replaced by a new deep discounted bond instrument with a nominal value of £2,791,022 and a final redemption date of 14 January 2023.

 

Various Eateries Trading Limited funding

Within current liabilities (note 21), is a deep discounted bond due to be redeemed in April 2022. On 24 February 2022, a deep discounted bond instrument, with a nominal value of £9,515,000 and a final redemption date of April 2023, was issued to replace the existing deep discounted bond.

 

Grant of share options

On 17 January 2022, the company issued options over 990,440 shares to various directors.

 

 

30 Contingent liabilities

 

Authorised Guarantee Agreements

There are 9 (2020: 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 has been heightened as a result of the coronavirus (Covid-19) outbreak. The total annual rental cost for these sites is £663,000, of which £357,000 (2020: £461,000) has been provided for (see note 23).

 

CJRS claim

The Group made material claims under the CJRS schemes during the period (and prior period) 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.