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