TIDMVARE
RNS Number : 2671Q
Various Eateries PLC
25 February 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU No. 596/2014) ("MAR"). THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN
25 February 2021
VARIOUS EATERIES PLC
("Various Eateries" or "the Company"
and with its subsidiaries "the Group")
Final Results
52 week period ended 27 September 2020
Ideally Positioned to Capitalise on Post-Lockdown
Opportunities
Various Eateries PLC, the owner, developer and operator of
restaurant and hotel sites in the United Kingdom, announces its
results for the 52 weeks ended 27 September 2020.
Highlights
-- Raised GBP25m in successful AIM listing in the final week of
the period to take advantage of the state of the hospitality
market
o Increased availability of attractive sites, reduced
competition, availability of talent and changes in consumer
behaviour provide the ideal backdrop to the Company's growth
strategy
o Proven management track record in developing and rolling out
successful restaurant brands
-- Completed significant reshaping with the Group now ideally
positioned for post Covid expansion
o Acquired the freehold and completed the re-fit of a new site
in Cobham, opened post year end
o Revised and refined the menu offering across the Coppa Club
estate, further improving quality, expanding the price range and
focusing on the all-day club offer
o Italian brasserie brand, Tavolino, with its first site opened
in July, poised to take advantage of availability of prime high
street sites across the UK
o Brought two hotel sister operations into the Group in order to
enhance the clubhouse element of the Coppa Club brand and improve
profitability through sales and cost synergies
o Industry veteran, Andy Bassadone, joined the Board as
Executive Chairman and invested in the Group
o Management team further strengthened with senior appointments
including CEO Yishay Malkov and, post-period end, Property Director
Raj Manek (a non-board position)
Financials
-- Robust trading pre-Covid to the middle of February
o Positive like-for-like revenue generated from Coppa estate
-- Better than anticipated trading when the Group re-opened, from July to September
o Like-for-like revenue generated from Coppa estate was up 0.8%
despite all the restrictions that were in place
-- Particularly good performance post re-opening at sites outside of London over the same period
o Like-for-like revenue generated from Coppa estate outside of
London up 24%
o Three sites achieved their record trading weeks in the
period
Due to the timing of the reorganisation undertaken ahead of the
Company's listing, these results do not include any trading from
the newly acquired hotel entities. The results were also impacted
by a number of unusual items including the disruptive effects of
COVID-19 and the costs of the listing/restructure.
-- Total Group revenue for the year down 36% to GBP16.5m (FY19: GBP25.6m)
-- EBITDA loss before exceptional costs for the year of GBP1.7m
with total loss after exceptional costs and impairments of
GBP14.4m
-- Net assets of GBP27.2m as at 27 September 2020
Post-period
-- Coppa Club Cobham opened in December
-- Trading impacted by further Covid-19 restrictions with all the Group's sites currently closed
-- Business interruption insurance interim payment of GBP2.5m
received with negotiations regarding claims ongoing
-- Ideally positioned for a return to growth on re-opening, with
a swift implementation of the strategy to begin once restrictions
lift
Andy Bassadone, Executive Chairman of Various Eateries,
said:
"With a pandemic, a substantial restructuring and our successful
fund-raising and listing on AIM, 2020 was a remarkable year for
Various Eateries that puts us in an excellent position in 2021. The
opportunities as we move out of the Covid-19 era are enormous and
with strong liquidity, contemporary formats, a compelling growth
strategy and a management team with a proven track record of
delivery, we are confident in our ability to capitalise on
them.
While lockdowns restricted our ability to trade in the year,
sales in the periods we were able to open were above our
expectations and bode well for the future. Operationally we were
also able to make significant progress, with the opening of our
first Tavolino and the new Coppa Club in Cobham of particular note.
Both through closures and new openings, our teams have responded
brilliantly and I would like to thank them all for their hard work,
patience and understanding in what has been a challenging time for
them and their families.
It has been difficult to watch as the virus continues to
devastate our industry, but it has panned out as we expected,
validating our approach and making us even more determined to make
a contribution to the recovery. As soon as we are given the green
light by Government, we plan to expand the business, to employ more
people and to give customers high-quality experiences of
hospitality, perfectly suited to a post lockdown world. With large
sites, extensive outdoor space and all-day offer, Coppa Club is
perfectly suited to the increase in remote working and Tavolino is
poised to take advantage of the availability of prime high street
sites across the UK. There will inevitably be volatility as we
emerge from the pandemic, but we are expecting a strong bounce back
in the sector once restrictions are lifted and look forward to
driving growth as soon as circumstances permit."
A video introduction to Various Eateries and overview of the
results is available here:
http://bit.ly/VARE_FY20_results_overview
Annual General Meeting
The Company confirms that it intends to dispatch its Annual
Report and Accounts; and notice of Annual General Meeting to
shareholders, and post the documents on the Company's website, next
week. A further announcement will be made at that time.
Enquiries
Various Eateries plc
Andy Bassadone Executive Chairman Via Alma PR
Yishay Malkov Chief Executive Officer
Oli Williams Chief Financial Officer
Sole Broker and Nominated
WH Ireland Limited Adviser Tel: +44 (0)20 7220 1666
Broking
Harry Ansell, Adam
Pollock
Nominated Adviser
Katy Mitchell, Lydia
Zychowska
Alma PR Financial PR Tel: +44 (0)20 3405 0205
David Ison variouseateries@almapr.co.uk
Susie Hudson
Molly Gretton
About Various Eateries
Various Eateries owns, develops and operates restaurant 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
Andy Bassadone (Executive Chairman), Hugh Osmond (Founder), Yishay
Malkov (CEO), Oliver Williams (CFO) and Matt Fanthorpe (Chef
Director, a non-board position).
The Group operates two core brands across eleven locations:
-- Coppa Club, a multi-use, all day concept that combines
restaurant, terrace, café, lounge, bar and work
spaces
-- Tavolino, a restaurant aiming to address a gap in
the market for high-quality Italian food at mid-market
prices
For more information visit www.variouseateries.co.uk
CHAIRMAN & CHIEF EXECUTIVE'S STATEMENT
In the run up to our Initial Public Offering (IPO) on the AiM
Market of the London Stock Exchange, which took place on 25
September 2020, we spoke to investors of the far-reaching
consequences we expected Covid-19 to have on the hospitality
sector, and the vast opportunities it would create for a
well-funded group with the right management team, modern formats
built for the post-Covid-19 environment, and a growth strategy fit
for purpose.
While the exact timing and extent of restrictions has been
difficult to predict, overall the pandemic and its effects on the
hospitality industry continue to pan out much as we expected. Just
70% of Britain's licensed premises were trading by the end of
October 2020(1) . Over 650,000 hospitality jobs were lost in
2020(2) , and with more than a million people in the food services
and accommodation industry furloughed as of 31 December 2020(3) ,
this figure is likely to grow dramatically in 2021. UK Hospitality
has highlighted that four in ten businesses in the sector have
stated that they would fail by mid-2021, with only one in five
having adequate capital to survive beyond February 2021 under
present levels of support(4) .
As long-standing members of this industry, these statistics make
difficult reading, however they do validate our approach and only
make us more committed to our plans to rebuild; to acquire new
sites, create jobs for as many people as possible, and to establish
a new breed of venue that customers can enjoy in comfort and in
safety.
In the period to 27 September 2020 ("FY20"), we went through a
comprehensive process of overhauling the business in preparation
for this moment. We built an incredible team - one of the most
experienced in our industry - rationalised and improved our estate
leaving us with only high-quality sites ready for growth and
developed new brands appropriate for the evolving needs of modern
consumers.
With all of the transformative work undertaken in the year,
together with our new listed status and the associated raise of
GBP25mcompleted in September, we are confident we have the
experience and resources to achieve our ambitions.
OUR STRATEGY
Our strategy is based on the Board's belief that the current
environment presents an unprecedented opportunity for us, as a
well-funded operator with strong and fresh brands and an
experienced management team, to create a major leisure group post
the Covid-19 lockdown. Initially this will be based on our two core
brands of Coppa Club and Tavolino.
Coppa Club is a multi-use, all-day concept that combines
restaurant, terrace, café, lounge, bar and remote working spaces
under one roof. Tavolino aims to address a gap in the market for
high-quality Italian food at mid-market prices.
Both Coppa and Tavolino are immediately ready to scale up given
the economic challenges facing the sector. This is particularly as
a consequence of Covid-19, which has led to a significant reduction
in competition, premium site availability the likes of which the
industry has never seen, and an increased availability of great,
hard-working people.
The impact of Covid-19, combined with the experience of our
management team, represents an unprecedented opportunity to build a
major hospitality group, post-Covid-19. Accordingly, using the
funds raised in the recent placing, we intend to invest in the
expansion of the Coppa Club and Tavolino brands by targeting
distressed sites in prime locations and also intend to identify
potential, complementary, bolt-on acquisitions of other restaurant
brands to accelerate growth across the Group.
TRADING & COVID-19 IMPACT
While the two new Coppa Club sites which were opened in the 52
weeks to 29 September 2019 ("FY19") delivered additional revenues
in FY20, due to the reshaping of the business (including the
planned closure and disposal of six sites in FY19), the severe
restrictions placed on trading in response to Covid-19, and a
period where our restaurant in Tower Bridge was closed for
refurbishment to become the first Tavolino, overall revenue for
FY20 was down 36% to GBP16.4m from GBP25.6m.
However, in periods outside of lockdown, trading was strong,
especially in our new openings. The summer trade in particular,
post July reopening from lockdown, saw some encouraging results for
the future whilst the overall liquidity of the business remains
strong.
A timeline of the various restrictions and the associated impact
on trading is set out in the Financial Review.
DEVELOPING OUR ESTATE
During the reporting period we completed the reshaping of our
estate with the disposal of the remaining four discontinued sites
following the 11 made in FY19, as well as the acquisition of the
next Coppa Club in Cobham. Prior to IPO, we also acquired the Rare
Bird hotel and events businesses at Coppa Club Sonning and
Streatley. We brought these two sister operations into the Group in
order to enhance the clubhouse element of the Coppa Club brand and
improve profitability through sales and cost synergies.
FY2020 saw the launch of the new Tavolino brand, with the first
site opening in Central London in July. Despite the significant
reduction in footfall caused by Covid-19, the launch was a success
and customer feedback was strong, boding well for the future.
MICHELIN recently said of the site: "Pasta handmade on the premises
daily and classic Italian dishes crafted using produce imported
from small Italian suppliers are the draw here. These are matched
by stunning views over the Thames towards Tower Bridge and the
Tower of London - making a table on the terrace a must in
summer".
Post-period end, we opened our seventh Coppa Club site in
Cobham, Surrey. The new site spans two floors and adopts the larger
Club & Brasserie format. It includes a restaurant, bar, lounge
and rooftop terrace complete with the brand's signature igloos. In
line with the existing estate, it provides a 'clubhouse' that
consumers can identify as their own, without annual membership fees
but providing all the associated facilities. The flexible format
means consumers can use sites for a range of activities from eating
and drinking to socialising, working or relaxing, making it fit for
changing consumer tastes in the 21st century
As at 27 September 2020, the Group has 11 sites, all in prime
locations and without restrictive lease agreements. The sites
themselves are spacious and most have significant outdoor spaces.
Coppa's 'igloo' concept has proven exceptionally popular, with all
igloos booked out solidly throughout the July to September 2020
re-opening period.
IMPROVING OUR OFFERING
During the period, we focused on making all our restaurants the
very best they can be, enhancing our market-leading product,
service and environment wherever possible. The philosophy of the
Group is built around an obsession over quality, consistency and
high standards. To that end, we continue to review our own
performance in a systematic and disciplined way using tools such as
the newly introduced customer feedback platform and will continue
to do so.
One product of this ongoing process was the introduction of a
revised and refined menu across the Coppa Club estate on reopening
in July, which had been trialled briefly in March. The new menu
brought a further improvement in quality, expanded the price range
and focused on the all-day club offer. Not only was this
well-received, it drove an improvement to margin.
In line with what modern consumers expect and demand, Various
Eateries is focused on building strong, authentic menus using
premium ingredients. One of our core differentiators is that the
Chef Director and his team have a senior role within the Group.
They have developed bespoke, quality products that are scalable and
can be efficiently, consistently and profitably rolled out across
all new sites.
OUR PEOPLE
During the period industry veteran, Andy Bassadone joined the
Board as Executive Chairman and invested in the Group. The
management team was then further strengthened with senior
appointments including CEO Yishay Malkov and, post-period end,
Property Director Raj Manek (a non-Board position).
Supporting our people throughout the impacts of Covid-19 has
been incredibly important. Regular communication with our
furloughed staff through our intranet has been a key priority, as
has the introduction of several initiatives aimed at encouraging
engagement and protecting mental wellbeing such as fitness clubs
and interactive tutorials where team members volunteered to host
video calls to teach colleagues a new skill. Our people are the
lifeblood of the businesses and on behalf of the Board we would
like to thank them for their efforts and patience through what has
been a very difficult time for them and their families.
MARKET DEVELOPMENTS
Covid-19 has had a devastating impact on our industry and will
leave scars for many years to come. However, it is clear is that
the demand for enjoyable leisure and hospitality experiences has
not waned. We believe there will be a strong bounce back once
restrictions are lifted and have already seen signs of it ourselves
when we were able to trade in the summer of 2020. Similarly, with
pent up demand for holidaying likely to lead to an increase in
'staycations', and a lengthy backlog of weddings and other events,
we expect to see trade in our hotel businesses accelerate
post-Covid-19.
It has been estimated that 50% of the UK workforce favour
working remotely for 1-2 days per week post-lockdown, and consumers
now attach much greater importance to safety when making choices.
Coppa Club in particular is well-placed to take advantage of these
and other changes in consumer behaviour which have been accelerated
by Covid-19. The sites are typically spacious, with large outdoor
areas, and can be used throughout the day for everything from
working to social gatherings and of course meals from breakfast
through to dinner. This is a key reason why we believe we will be
successful in the long-term.
CURRENT TRADING AND OUTLOOK
The same trading patterns we saw between July and September
continued through the weeks we were open in October, with positive
like-for-like performance at our sites outside of London
particularly encouraging. In the period since, we have been focused
on continuing to support our people while working hard behind the
scenes to prepare the Group to capitalise on the wealth of
opportunities that will be available once restrictions are
eased.
As recently communicated, while the business has been closed,
management has been exploring a number of desirable sites for
expansion across the UK. Given the lack of concrete guidance as to
when lockdown and other restrictions will be lifted, the Company
had so far chosen to hold off signing up to any new leases, but
with the roadmap now laid out expects to be able to do so in the
near future on terms that reflect the considerable and continuing
fall in retail property values.
The operating environment is likely to remain volatile for some
time, but with a diverse mix of restaurants and hotels designed
specifically to cater to the changes in the consumer landscape, a
clear strategy and a proven management team, we are excited by what
the future holds.
Andy Bassadone
Executive Chairman
Yishay Malkov
Chief Executive Officer
(1) November edition of CGA and AlixPartners' Market Recovery
Monitor
(2) According to analysis by software provider Fourth
(3) According to HMRC coronavirus statistics
(4) Stated as part of its evidence to the Treasury Select
Committee Inquiry
FINANCIAL REVIEW
FINANCIAL PERFORMANCE
The financial results for FY20 have been materially impacted by
the following unusual factors:
-- The comprehensive restructuring and refinancing of the Group
ahead of the Initial Public Offering (IPO) in September 2020
-- The costs of the IPO
-- Impairment charges driven by market conditions
-- The impact of Covid-19 resulting in zero revenue in lockdown
periods and disruptions at other times
The Group's hotel and event operations at Sonning and Streatley
were acquired during the final week of the financial year and had
no impact on the FY20 results.
Overall Group revenue was down by 36% (2020 GBP16.5m, 2019
GBP25.6m), resulting in a Trading EBITDA loss of GBP0.8m (2019
GBP2.3m profit) and a Loss before tax of GBP14.4m (2019 GBP12.0m).
The principles of merger accounting have been followed and so the
results and comparatives are those of the underlying group. The
summarised results are:
Summary of financial performance for the 52 weeks ended 27
September 2020
52weeks 52 weeks
ended ended
27 September 29 September
2020 2019
GBP000 GBP000
Revenue 16,469 25,605
-------------- --------------
Loss before tax (14,442) (11,975)
-------------- --------------
Net finance costs 2,002 6,914
-------------- --------------
Depreciation and impairment 8,225 5,673
-------------- --------------
Loss / (profit) on disposal of assets and
leases 1,632 (117)
-------------- --------------
Authorised Guarantee Agreements provision 461 -
-------------- --------------
Initial Public Offering costs 285 -
-------------- --------------
Restructuring costs 167 322
-------------- --------------
EBITDA b efore exceptional costs (1,670) 817
-------------- --------------
Pre-opening costs* 564 752
-------------- --------------
Non-trading site costs* 302 702
-------------- --------------
Trading EBITDA (804) 2,271
-------------- --------------
Pre-Covid
Despite the existing industry-wide challenges, trade was
relatively strong up to the beginning of February 2020, with the
Coppa Club estate trading positive LFLs. However, with the arrival
of Covid-19 in the UK, sales began to decline and on 20 March, the
country went into a full lockdown and all sites were forced to
close.
During the first national lockdown
From the end of May (until the site fully reopened in July),
Coppa Club Streatley was reopened to run a takeaway service. This
proved a popular initiative, generating significant sales and
having a positive impact on the community, with the grounds of the
adjacent hotel providing local people with an expansive, safe and
picturesque environment in which to enjoy the good weather.
Post-lockdown performance
The trade of the estate post-lockdown, whilst varying from site
to site, was far stronger than we had anticipated and ahead of the
market.
From 4 July, when lockdown was officially lifted, the Group
began a phased reopening of the estate, with 80% of its sites open
and trading by the end of July.
All the Group's London sites were negatively impacted by the
significantly reduced footfall as most of the UK transitioned to
home working and staying local. Our sites outside London, however,
were major beneficiaries of this trend.
Like-for-like sales growth
Jul '20 Aug '20 Sep '20 Jul-Sep '20
Coppa Club
- London (1
site) -35% -27% -26% -28%
-------- -------- -------- ------------
Coppa Club
- Regional
(5 sites) +6% +32% +22% +24%
-------- -------- -------- ------------
Whilst these results include VAT benefit, there were also limits
on social distancing and mixing households, the introduction of the
10pm curfew, the 'Rule of 6' in September and reduced opening hours
in the mornings. Like-for-like revenue generated from the Coppa
Club estate was up 0.8% despite all the restrictions that were in
place
Encouragingly, three Coppa Clubs achieved record sales weeks
over the course of the summer, whilst the change in menu, as well
as increasing the product quality, lead to an improvement to
margin.
Late July also saw the launch of our new Tavolino brand at Tower
Bridge. Early indications were positive despite the lack of tourism
and local office traffic, giving encouragement
for future trading.
COVID-19 MITIGATING ACTIONS AND FINANCIAL POSITION
During the pandemic, the Group has undertaken significant
actions to mitigate the impact to its financial position, which
were continued post year end into the current lockdown. Actions
included:
-- Immediately ceasing all non-essential spend
-- Transferring all site employees and a majority of head office
employees on to the Coronavirus Job Retention Scheme All those not
furloughed including at management and executive team level agreed
to temporary salary reductions
-- Ongoing discussions with all suppliers and partners to extend
-- Initiated discussions with all landlords to agree a
combination of rent waivers, deferrals and future variations/Covid
Cesser clauses to amended leases
FINANCING COSTS
The preference share dividend was GBPnil in FY20 (2019 GBP3.9m)
is a result of the debt for equity financial reorganistion during
FY19.
This reorganistation also resulted in a reduction in the
period-end debt position (from GBP21.1m in FY19 to GBP12.4m in
FY20) resulting in a reduction in interest payable of 40% to
GBP1.3m.
2020 2019
GBP000 GBP000
Dividends on preference shares - 3,941
-------- --------
Interest on bank overdrafts, borrowings
and
foreign exchange losses 1,349 2,241
-------- --------
Lease liability interest 654 741
-------- --------
Financi ng costs 2,003 6,923
-------- --------
IMPAIRMENTS
A detailed review of each individual site, has resulted in an
impairment charge of GBP5.4m, split GBP3.6m against Goodwill,
GBP0.1m against Leasehold improvements & PPE and GBP1.6m
against Right-of-use assets. Detail of the methodology is included
in notes 9 and 10.
LOSS ON DISPOSAL OF ASSETS & LEASES
In FY20, the Group disposed of the remaining non-trading Strada
leases and associated assets.
IPO & RESTRUCTUING COSTS
These costs were incurred in the prior restructuring and
execution of the Group's IPO. Further costs of GBP1.9m have been
charged directly to reserves as they relate to the raising of
equity.
DIVID
The Directors do not recommend the payment of a dividend
believing it more beneficial to use cash resources to invest in the
Group in line with our strategy.
CASHFLOW & BALANCE SHEET
As communicated above, the Group undertook significant actions
to mitigate the impact of the pandemic on its financial
position.
During the period, the Group invested GBP5.1m in capital
expenditure in support of future growth.
In September, the Group undertook a financial restructuring and
following a successful IPO on the AiM market, raised net proceeds
of GBP23.2m. With an interim insurance payment of GBP2.5m also
received post period end, the liquidity of the company remains
strong to continue to follow the expansion strategy.
KEY PERFORMANCE INDICATORS ("KPIs")
The Board reviews numerous indicators of performance on a
monthly basis. The 2 historically used are Revenue GBP16.5m (2019:
GBP25.6m) and Trading EBITDA (GBP0.8m) (2019: GBP2.3m) with both
severely impacted by the conditions faced by the Group in the
period. With the debt restructure and successful flotation on the
AiM Market during the period, the net asset position of the Group
at the period end was GBP27.2m (2019: net liabilities (GBP6.4m)).
Going forward, as the Group's strategy evolves, further KPIs will
be used to measure the progress including New site openings and
Like-for-like sales growth.
Oli Williams
CFO
Various Eateries PLC
Consolidated Statement of Comprehensive Income
for the 52 weeks ended 27 September 2020
52 weeks 52 weeks
ended 27 ended 29
September September
2020 2019
Note GBP 000 GBP 000
Revenue 4 16,469 25,605
Cost of sales (17,516) (24,418)
Gross (loss) / profit (1,047) 1,187
Central staff costs (1,901) (1,898)
Impairment of intangible fixed assets 9 (3,640) (1,236)
Impairment of property, plant and
equipment 10 (1,751) (1,004)
(Loss) / profit on disposal of assets
and leases (1,632) 117
Other expenses 7 (2,469) (2,225)
Operating loss (12,440) (5,059)
Finance income 6 1 7
Financing costs 6 (2,003) (6,923)
Loss before tax (14,442) (11,975)
Tax - -
Loss for the period (14,442) (11,975)
=========== ===========
Earnings per share
Basic loss per share (pence) 8 (116.4) (145.1)
Diluted loss per share (pence) 8 (116.4) (145.1)
=========== ===========
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 separate statement of
comprehensive income is presented.
Various Eateries PLC
Consolidated Statement of Financial Position
27 September 29 September
as at 27 September 2020 2020 2019
Note GBP 000 GBP 000
Non-current assets
Intangible assets 9 12,903 7,264
Right-of-use assets 10 21,049 14,206
Other property, plant and equipment 10 12,390 10,124
46,342 31,594
------------- ----------------------
Current assets
Inventories 401 551
Trade receivables 11 248 209
Other receivables 11 24,6 82 2,022
Cash and bank balances 893 1,834
2 6 ,2
24 4,616
------------- ----------------------
Total assets 72,5 66 36,210
------------- ----------------------
Current liabilities
Trade and other payables (10,992) (8,221)
Borrowings 12 (2,402) -
Net current assets / (liabilities) 12,83 0 (3,605)
------------- ----------------------
Total assets less current liabilities 5 9 ,172 27,989
------------- ----------------------
Non-current liabilities
Borrowings 13 (31,482) (34,369)
Provisions (461) -
Total non-current liabilities (31,943) (34,369)
------------- ----------------------
Total liabilities (45,337) (42,590)
------------- ----------------------
Net assets / (liabilities) 27,229 (6,380)
============= ======================
Equity
Share capital 14 890 111
Share premium 14 52,284 64,736
Merger reserve 64,736 -
Employee benefit trust shares reserve (5,012) -
Retained earnings (85,669) (71,227)
Total funds / (deficit) attributable
to the equity shareholders of the
Company 27,229 (6,380)
============= ======================
Various Eateries PLC
Consolidated statement of changes in equity
for the 52 weeks ended 27 September 2020
Employee
benefit
Called-up Share trust
share premium Merger shares Retained
capital account reserve reserve losses Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
Attributable to
equity shareholders
of the Company
At 30 September
2018 78 - - - (59,252) (59,174)
Capital restructure 33 64,736 - - - 64,769
Total transactions
with owners 33 64,736 - - - 64,769
Loss for the period - - - - (11,975) (11,975)
Total comprehensive
loss - - - - (11,975) (11,975)
---------- --------- --------- --------- --------- ---------
At 29 September
2019 111 64,736 - - (71,227) (6,380)
========== ========= ========= ========= ========= =========
At 29 September
2019 111 64,736 - - (71,227) (6,380)
Share-for-share
exchange - (64,736) 64,736 - - -
Debt for equity
swap 238 15,250 - - - 15,488
Shares issues on
IPO 342 24,658 - - - 25,000
Other shares issued 199 14,285 - (5,012) - 9,472
Share issue costs - (1,909) - - - (1,909)
Total transactions
with owners 779 (12,452) 64,736 (5,012) - 48,051
Loss for the period - - - - (14,442) (14,442)
---------
Total comprehensive
loss - - - - (14,442) (14,442)
--------- ---------
At 27 September
2020 890 52,284 64,736 (5,012) (85,669) 27,229
========== ========= ========= ========= ========= =========
Various Eateries PLC
Consolidated Statement of Cash Flows
for the 52 weeks ended 27 September 2020
52 weeks 52 weeks
ended 27 ended 29
September September
2020 2019
Note GBP 000 GBP 000
Cash flows from operating activities
Loss for the year (14,442) (11,975)
Adjustments to cash flows from non-cash
items:
Depreciation 10 2,832 3,433
Impairment 9,10 5,391 2,240
(Loss) / profit on disposal and
surrender of leases 1,632 (117)
Finance income (1) (7)
Financing costs 2,003 2,980
Preference share dividends - 3,941
(2,585) 495
Working capital adjustments:
Decrease / (increase) in inventories 149 (3)
Decrease in trade and other receivables 958 1,384
Increase in accruals, trade and
other payables 1,656 1,449
Increase in provisions 461 -
Net cash flow from operating activities 639 3,325
Cash flows from investing activities
Interest received 1 7
Purchases of property plant and
equipment (5,086) (4,363)
Purchase of intangible assets (2) (10)
(Costs) / proceeds of disposal of
property, plant and equipment (109) 434
Costs on issue of shares (432) -
Net cash flows from investing activities (5,628) (3,931)
Cash flows from financing activities
Interest paid (841) (988)
Proceeds on issue of shares 14 79 33
Proceeds from borrowings 5,700 4,000
Principal elements of lease payments (890) (2,206)
Net cash flows from financing activities 4,048 839
(Decrease) / increase in cash (941) 233
----------- -----------
Opening cash at bank and in hand 1,834 1,601
Closing cash at bank and in hand 893 1,834
=========== ===========
Various Eateries PLC
Notes to the Financial Statements (continued)
for the 52 weeks ended 27 September 2020
1 General information
Various Eateries PLC, 'the Company', and its subsidiaries
(together 'the Group') are private companies limited by shares
incorporated in the United Kingdom under the Companies Act 2006 and
are registered in England and Wales. The address of the registered
office is 20 St Thomas Street, London, SE1 9RS.
The Group is engaged in the operation of non-members clubs,
restaurants, bars and lounge areas in London and the South East of
England.
2 Accounting policies
Basis of preparation
This preliminary announcement does not constitute full statutory
financial statements.
The results for the period ended 27 September 2020 included in
this preliminary announcement are extracted from the audited
financial statements for the period ended 27 September 2020 which
were approved by the Directors on 24 February 2021. The independent
auditor's report on those financial statements was unqualified and
did not include a statement under Section 498(2) or 498(3) of the
Companies Act 2006.
The 27 September 2020 annual report and financial statements are
expected to be posted to shareholders and included within the
investor relations section of our website shortly and will be
considered at the Annual General Meeting. The financial statements
for the period ended 27 September 2020 have not yet been delivered
to the Registrar of Companies.
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 those 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.
The financial statements have been prepared in accordance with
International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
The financial statements have been prepared on an historical
cost basis. Monetary amounts in these financial statements are
rounded to the nearest whole GBP1,000, 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 27 September 2020.
All of the consolidated comparative figures relate to Various
Eateries Holdings Limited and its subsidiaries only, because
Various Eateries PLC was not incorporated until 26 June 2020. This
is because the financial statements have been prepared under the
principles of merger accounting. The share capital shown in the
comparative consolidated statement of financial position represents
the share capital of the Company, even though the Company was not
yet formed at 29 September 2019, because merger accounting assumes
that the Group entities have been combined throughout the current
and comparative periods.
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 27 September 2020, the Directors have
considered the business model and strategies, as well as taking
into account the current cash position and potential
facilities.
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.
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
excluding value added tax. Revenue is recognised when the goods
have been provided.
Goodwill
Goodwill 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 irrespective of whether there is an indication of
impairment.
Intangible fixed 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 four 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 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:
Asset class Depreciation method and rate
Right-of-use assets Life of lease
Freehold property Not depreciated
Leasehold improvements Life of lease
Furniture, fittings and equipment 14.29% - 33.33% per annum
Work in progress 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.
Impairments of tangible and intangible fixed assets
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.
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 12 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% (2019: 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;
-- Any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of 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. 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.
The transition model applied in the 2019 financial statements
was the full retrospective approach, recalculated as at the opening
position of the 2017 financial period as opposed to the inception
dates of the individual leases.
Government grants
During the period ended 27 September 2020, 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.
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 - fair value of separable intangible assets in
business combinations
The Group's policies require that a fair value be attributed to
the assets and liabilities of an acquired business, including
internally developed assets that may not be recognised by the
acquired business at the date of acquisition. The Directors use
their judgement to identify the separate intangible assets and then
determine a fair value for each based upon the nature of the asset,
future potential and other relevant factors.
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% results in a decrease in net
present value of the total lease liability of GBP731,000 at 27
September 2020 (2019: GBP500,000). A 0.5% decrease in discount rate
to 4% results in an increase in the net present value of the total
lease liability of GBP771,000 at 27 September 2020 (2019:
GBP530,000, see note 13).
Key estimate - impairment of goodwill, other intangibles and
property, plant and equipment
Determining whether goodwill, other intangibles and tangible
fixed assets 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 9 and 10.
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 52 weeks
ended 27 ended 29
September September
2020 2019
GBP 000 GBP 000
Sale of goods and services 16,469 25,605
Sub-let rental income 55 81
16,524 25,686
===================== =====================
5 Business Combinations
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 16). 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 IPO.
RBH Sonning RBH Streatley
GBP 000 GBP 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 10) 5,285 6,246
Other property, plant and equipment (note
10) 169 325
Intangible assets (note 9) 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 14).
The Group assessed the fair value of identifiable intangible
assets as GBP250,000 relating to the Rare Bird Hotels brand name,
split evenly between the acquired businesses. The goodwill of
GBP9,027,000 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 have not been consolidated
into the Group results for the period ended 27 September 2020 as
the results are not material to the Group's results for the period
due to the proximity of acquisition date to the reporting date.
Assets and liabilities have been consolidated into the consolidated
statement of financial position as at 27 September 2020.
6 Finance income / financing costs
52 weeks 52 weeks
ended 27 ended 29
September September
2020 2019
GBP 000 GBP 000
Interest income on bank deposits 1 7
Total finance income 1 7
----------- -----------
Dividends on preference shares - 3,941
Interest on bank overdrafts and borrowings 1,348 2,239
Lease liability interest 654 741
Foreign exchange loss 1 2
Total financing costs 2,003 6,923
----------- -----------
7 Other expenses
52 weeks 52 weeks
ended 27 ended 29
September September
2020 2019
GBP 000 GBP 000
Other central costs 1,321 1,646
AGA provision 461 -
IPO-related costs 285 -
Depreciation of property, plant and equipment
(note 10) 235 257
Restructuring costs 167 322
2,469 2,225
=========== ===========
8 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 period ended 27
September 2020 and 29 September 2019.
27 September 29 September
2020 2019
Loss for the year after tax (GBP 000) (14,442) (11,975)
Basic and diluted weighted average number
of shares 12,403,859 8,251,030
Basic loss per share
(pence) (116.4) (145.1)
Diluted loss per share (pence) (116.4) (145.1)
============= =============
9 Intangible assets
Group Trademarks,
patents
Brand Goodwill & licences Total
GBP 000 GBP 000 GBP 000 GBP 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
======== ========= ============ ========
Trademarks,
patents
Brand Goodwill & licences Total
GBP 000 GBP 000 GBP 000 GBP 000
Cost or valuation
At 30 September 2018 2,662 16,992 13 19,667
Additions - - 10 10
At 29 September 2019 2,662 16,992 23 19,677
-------- --------- ------------ --------
Amortisation
At 30 September 2018 2,662 8,515 - 11,177
Impairment - 1,236 - 1,236
At 29 September 2019 2,662 9,751 - 12,413
-------- --------- ------------ --------
Carrying amount 29 September
2019 - 7,241 23 7,264
======== ========= ============ ========
Brand relates to registered brand names and is amortised over an
estimated useful economic life of four years. The brand names
acquired through business combination have not been amortised
during the period ended 27 September 2020 due to the proximity of
acquisition date to the reporting date, as the impact is
immaterial.
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.
The brought forward goodwill balance relates to: Tavolino
Riverside (GBP4,032,000), Strada Southbank (GBP3,147,000), and
Strada Dockside (GBP62,000). These three CGUs are included in the
restaurant operating segment.
The goodwill acquired through business combination relates to
the acquisition of Rare Bird Hotels at Sonning Limited and Rare
Bird Hotels at Streatley Limited in September 2020. These two CGUs
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 12.8% was used (2019: 10%), based on the
Group's WACC and comparable businesses in the sector. Cash flows in
line with five year forecasts were used, which incorporate a
reasonably foreseen, as at 27 September 2020, 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 (2019: 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 goodwill to its
recoverable amount, being value-in-use, at 27 September 2020, with
the full charge recognised against the restaurant segment. The
split of the charge between the CGUs and resulting carrying values,
respectively, are: Tavolino Riverside (GBP1,424,000) and
GBP2,609,000; Strada Southbank (GBP2,154,000) and GBP992,000; and
Strada Dockside (GBP62,000) and GBPnil.
Given the global pandemic and its impact on the UK hospitality
sector there is particular sensitivity to the forecasts prepared in
connection with the impairment review as at 27 September 2020. 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%, a
further impairment loss of GBP654,000 for the period ended 27
September 2020 would have to be recognised against goodwill (2019:
GBP425,000). If the forecast 5 year total EBITDA is reduced by 10%,
a further impairment loss of GBP856,000 for the period ended 27
September 2020 would have to be recognised against goodwill.
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 12.8% was used (2019: 10%), based on the
Group's WACC and comparable businesses in the sector. Cash flows in
line with five year forecasts were used, which incorporate a
reasonably foreseen, as at 27 September 2020, 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 based on
expected market value if the entities were to be sold as individual
trading businesses.
Impairment testing resulted in no requirement to reduce the
carrying value of goodwill in 2020 as the recoverable amounts of
the CGUs, based on value-in-use estimates, were GBP14,469,000 for
Rare Bird Hotels at Sonning Limited and GBP24,184,000 for Rare Bird
Hotels at Streatley Limited. The headroom of recoverable amount
over goodwill is GBP12,328,000 and GBP18,345,000 respectively.
Given the global pandemic and its impact on the UK hospitality
sector there is particular sensitivity to the forecasts prepared in
connection with the impairment review as at 27 September 2020. 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 five year total EBITDA is reduced by 10%, and the terminal
growth rate reduced by 1%, the headroom reduces to GBP8,505,000 for
Rare Bird Hotels at Sonning Limited and GBP11,940,000 for Rare Bird
Hotels at Streatley Limited. 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.
10 Property, plant and equipment
Group
Furniture,
fittings Work
Right-of-use Freehold Leasehold and in IT
assets property improvem-ents equipmen-t progress equipme-nt Total
GBP GBP GBP
000 GBP 000 GBP 000 GBP 000 000 GBP 000 000
Cost or
valuation
At 29
September
2019 19,038 - 8,499 4,972 105 1,311 33,925
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 7,059 4,551 1,171 1,358 42,841
------------- ---------- -------------- ----------- ----------- ----------- --------
Depreciation
At 29
September
2019 4,832 - 1,609 2,550 - 604 9,595
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 - 665 2,131 - 748 9,402
------------- ---------- -------------- ----------- ----------- ----------- --------
Carrying
amount 27
September
2020 21,049 1,795 6,394 2,420 1,171 610 33,439
============= ========== ============== =========== =========== =========== ========
Furniture,
Right-of-use Leasehold fittings Work IT equipme
assets improvem-ents and equipmen-t in progress -nt Total
GBP GBP GBP
000 GBP 000 GBP 000 000 GBP 000 000
Cost or valuation
At 30 September
2018 20,205 7,733 5,022 285 1,115 34,360
Additions 1,722 1,178 795 2,166 224 6,085
Disposals (2,889) (2,230) (1,254) (26) (121) (6,520)
Transfers - 1,818 409 (2,320) 93 -
At 29 September
2019 19,038 8,499 4,972 105 1,311 33,925
------------- --------------- ---------------- ------------- ----------- ----------
Depreciation
At 30 September
2018 5,882 2,340 2,666 15 460 11,363
Charge for
the period 1,755 557 897 - 224 3,433
Eliminated
on disposal (2,889) (2,208) (1,013) (15) (80) (6,205)
Impairment
loss 84 920 - - - 1,004
At 29 September
2019 4,832 1,609 2,550 - 604 9,595
------------- --------------- ---------------- ------------- ----------- ----------
Carrying
amount 29
September
2019 14,206 6,890 2,422 105 707 24,330
============= =============== ================ ============= =========== ==========
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.
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 off against rental costs and is recognised within cost of
sales (2019: GBP81,000, 2020: GBP55,000).
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 the 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
pre-tax discount rate of 12.8% was used (2019: 10%), based on the
Group's WACC and comparable businesses in the sector. Cash flows in
line with five 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 five times
site EBITDA was used (2019: five 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 three CGUs in 2020,
with the full charge recognised against the restaurant segment. The
split of the charge between the CGUs and the asset classes are: 31
below Marylebone GBP378,000 against right-of-use assets and
leasehold improvements; Coppa Club Brighton GBP439,000 against
right-of-use assets; and Coppa Club Maidenhead GBP935,000 against
right-of-use assets.
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%, a
further impairment loss of GBP450,000 for the period ended 27
September 2020 would have to be recognised against right-of-use
assets. If the forecast five year total EBITDA is reduced by 10%, a
further impairment loss of GBP376,000 for the period ended 27
September 2020 would have to be recognised 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 9), no
impairment charge is required in respect of the hotel segment.
11 Trade and other receivables
Group
27 September 29 September
2020 2019
GBP 000 GBP 000
Trade receivables 248 209
Prepayments 317 1,065
Other receivables 24,3 65 957
24,93
0 2,231
================= =================
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.
Receivables from subsidiaries includes a balance created by the
upwards novation of GBP15,488,000 of the related party borrowings
balance as part of the capital restructure in the period.
Other receivables includes GBP23,523,000 in respect of net IPO
share issue proceeds.
12 Loans and borrowings
Group
27 September 29 September
2020 2019
GBP 000 GBP 000
Borrowings from related parties 2,402 -
=================== ======================
Borrowings from related parties classed as payable within 12
months represents a deep discounted bond instrument issued by VEL
Property Holdings Limited on 15 January 2020. The subscription
amount was GBP2,300,000, the nominal value GBP2,438,000, and the
final redemption date is 14 January 2021. The discount is
recognised on a straight-line basis between subscription and
redemption date, resulting in GBP102,000 of accrued financing costs
as at the reporting date.
13 Non-current loans and borrowings
Group
27 September 29 September
2020 2019
GBP 000 GBP 000
Borrowings from related parties 10,000 21,082
Lease liabilities due after more than 1 year 21,482 13,287
31,482 34,369
==================== ====================
The borrowings from related parties balance as at 27 September
2020 is made up of a deep discounted bond instrument and the
existing August 2019 loan agreement. The deep discounted bond was
issued in September 2020 as part of a capital restructure (see note
14), with a subscription price of GBP8,962,000, a nominal value of
GBP9,515,000, and a term of 19 months. The balance of GBP1,038,000
(2019: GBP21,082,000) under the August 2019 loan agreement matures
in August 2022, bears cash settled interest at 3.75% above LIBOR
(2019: cash settled interest at 3.75% above LIBOR on GBP11,000,000
of the principal and payment in kind interest at 6% above LIBOR on
GBP10,000,000 of the principal), and contains an EBITDA multiple
covenant that should have been first tested in September 2020 under
the original agreement and has been waived until April 2022.
14 Share capital and share premium
Movements in ordinary share capital
Nominal
Date Shares value GBP 000
At incorporation 26 June 2020 1 GBP1.00 -
27 August
Share subdivision 2020 99 GBP0.01 -
27 August
Share-for-share exchange 2020 11,111,011 GBP0.01 111
18 September
Share conversion 2020 23,809,522 GBP0.01 238
Issue of shares on 25 September
IPO 2020 34,246,576 GBP0.01 342
18 September
Issue of other shares 2020 19,841,268 GBP0.01 198
27 September
Balance 2020 89,008,477 890
=================== ======================
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 GBP0.01 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 GBP1.00. 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 13) and successive novation of GBP15,488,000 of the balance
upwards through the Group.
Issues 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 5), and
5,809,523 shares issued under a share-based payment scheme (see
note 15).
The shares issued on 25 September 2020 raised gross proceeds of
GBP25,000,000. Net proceeds were received post year end and are
included in other receivables as at 27 September 2020 (see note
11).
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 15.
15 Share-based payments
As at 27 September 2020, the Group and Company maintained one
share-based payment scheme for employee remuneration, the Joint
Share Ownership Plan ('JSOP'), which will be equity settled. The
grants under the JSOP were made 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. No charge has been recognised in profit and
loss by the Group in the period ended 27 September 2020 as the
proximity of the grant date to the balance sheet date results in a
charge that is not material.
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
Exercise
Number of price per
shares share (GBP)
Outstanding at 29 September 2019 - -
Granted 5,809,523 0.73
Outstanding at 27 September 2020 5,809,523 0.73
====================== ======================
Exercisable at 27 September 2020 - -
====================== ======================
The fair values of options granted were determined using a Black-Scholes
model. The following principal assumptions were used in the valuation:
JSOP
Grant date 18 September 2020
31 August
Vesting period ends 2022
Share price at date of grant GBP0.73
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 GBP0.26
Exercise price at date of grant GBP0.73
31 August 2022 / 31
Exercisable from / to August 2030
Remaining contractual life 1.92 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 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 to be recognised as an expense over the
vesting period is GBP1,531,000.
16 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
GBP390,000 (2019: GBP236,000). In addition, H E M Osmond is the
principal lender of the GBP10,000,000 borrowings (2019:
GBP21,082,000 via Xercise2 Limited) and a shareholder with
controlling influence of Xercise2 Ltd which is a significant
shareholder of the Company.
The capital restructure that took place in September 2020 (see
note 14) involved the exchange of debt held by equity shareholders
of the Group (in the form of a loan facility and a deep discounted
bond instrument) for newly issued ordinary share capital in the
Company.
As at 27 September 2020, there was GBP397,000 of accrued cash
interest payable on borrowings from related parties, of which
GBP341,000 was due to Xercise2 Ltd (2019: GBP365,000 total,
GBP345,000 due to Xercise2 Ltd).
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".
52 weeks 52 weeks
ended 27 ended 29
September September
2020 2019
GBP 000 GBP 000
Salaries, employment taxes and other short
term employee benefits 600 537
Post-employment benefits 12 16
612 553
===================== =====================
Trading transactions
During the period, the Company entered into the following trading
transactions with related parties:
Purchase Sale of
of goods goods /
/ services services
GBP 000 GBP 000
The Great House at Sonning Limited 364 351
Rare Bird Hotels Limited 491 281
Mudlark Hotels Limited - 29
855 661
====================== =====================
The following amounts were outstanding at the statement
of financial position date:
Amounts Amounts
owed to owed by
related related
parties parties
GBP 000 GBP 000
Mudlark Hotels Limited 2 38
====================== =====================
The Great House at Sonning Limited, Rare Bird Hotels Limited,
and Mudlark Hotels Limited are related parties of the Company
because they have common shareholders with controlling influence in
the Company. 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 (see
note 5).
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.
17 Post balance sheet events
Coronavirus
The coronavirus (Covid-19) outbreak continued to hamper the
trade of the Group post year end as a result of the tier system
introduced that was swiftly followed by a second national
month-long lockdown enforced in November 2020. After returning to
trade in December 2020, all sites across the estate were forced to
close under the tier system by Christmas and, as at the date of
signing, have not yet been able to reopen due to a third national
lockdown that started in early January 2021.
Coppa Club Cobham
In December 2020, the Group was able to open its newest site at
Cobham. Both sales and future bookings were exceptional, far above
the business case despite the restrictions in place under the tier
system at the time of opening.
Insurance claim
Post the reporting date, the Group received an interim payment
from its insurer of GBP2,500,000 with regards to its Covid-19
related business interruption claim. The claim is still being
finalised, with the final quantum not yet known as at the date of
signing. In accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, no amount has been recognised as
at 27 September 2020.
VEL Property Holdings Limited funding
Within current liabilities at the year end, there was a deep
discounted bond instrument with a nominal value of GBP2,438,000 and
a final redemption date of 14 January 2021. In January 2021, this
was replaced by a new deep discounted bond instrument with a
nominal value of GBP2,584,000 and a final redemption date of 14
January 2022.
18 Contingent liabilities
Authorised Guarantee Agreements
There are nine (2019: nine) 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 GBP733,000, of
which GBP461,000 has been provided for.
CJRS claim
The Group recognised claims of GBP2.8 m under the CJRS schemes
during the period 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 is undertaking a 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. Accordingly the Directors cannot reliably estimate what
the amount of any outflow might be.
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END
FR FFFVIFLISFIL
(END) Dow Jones Newswires
February 25, 2021 02:00 ET (07:00 GMT)
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