TIDMFUL
RNS Number : 6090F
Fulham Shore PLC (The)
16 July 2019
The Fulham Shore plc
("Fulham Shore", the "Company" or "Group")
Final Results
The Directors of Fulham Shore are pleased to announce the
Company's audited results for the year ended 31 March 2019.
Highlights - Year ended 31 March 2019
-- Revenue growth of 17% to GBP64.0m (2018: GBP54.7m) driven
primarily by good trading in the Company's existing restaurant
estate
-- Headline EBITDA* of GBP7.8m (2018: GBP7.4m)
-- EBITDA* of GBP7.1m (2018: GBP5.5m)
-- Headline Operating Profit of GBP3.5m (2018: GBP3.7m)
-- Impairment charge on property, plant and equipment of GBP0.2m (2018: GBP0.9m)
-- Operating Profit of GBP1.8m (2018: GBP0.1m)
-- Profit before tax of GBP1.4m (2018: loss of GBP0.1m)
-- Profit after tax of GBP0.7m (2018: loss of GBP0.2m)
-- Reduced net debt as at 31 March 2019 of GBP9.4m (2018: GBP12.0m)
-- 4 new Franco Manca pizzeria were opened and 1 closed during
the year ended 31 March 2019 in the UK (2018: 9 Franco Manca
pizzeria and 4 The Real Greek)
-- Since the year end:
o 3 further Franco Manca pizzeria opened in Greenwich,
Birmingham and Exeter
o 2 further Franco Manca pizzeria being built in Leeds and
Edinburgh
The above numbers are for continuing operations.
* as defined in the Financial Review
For further information, please contact:
The Fulham Shore PLC www.fulhamshore.com
David Page / Nick Wong Tel: 020 3026 8129
Allenby Capital Limited Tel: 020 3328 5656
Nick Naylor / Jeremy Porter / James
Reeve
fulhamshore@hudsonsandler.com
Hudson Sandler - Financial PR Telephone: 020 7796 4133
Alex Brennan / Lucy Wollam
.
CHAIRMAN'S STATEMENT
Introduction
During the year ended 31 March 2019, Fulham Shore achieved a 17%
increase in revenue to GBP64.0m (2018: GBP54.7m), an increase in
Headline EBITDA to GBP7.8m (2018: GBP7.4m) and a profit before
taxation from continuing operations of GBP1.4m (2018: loss of
GBP0.1m).
These increases in revenue and Headline EBITDA, together with
the improved PBT performance by the Group, were achieved against a
backdrop of political uncertainty impacting consumer sentiment and
the well-publicised issues being faced by other UK restaurant
businesses.
Both The Real Greek and Franco Manca traded well over the year
and we are pleased to report that the number of customers visiting
our existing restaurants increased during the year.
Market overview
Much of the capital invested in the UK restaurant sector over
the past five years has not been spent wisely. However, a number of
restaurant businesses have succeeded and expanded over this period,
The Real Greek and Franco Manca amongst them.
Successful restaurant businesses continue to be those that offer
consistent, delicious and reasonably priced food made with quality
ingredients. These businesses are likely to be operating from a
well-chosen modern estate, avoiding the demise of the old prime
high street and instead favouring restored markets, destination
locations and unpretentious interiors.
As long as successful restaurant operators keep their menu
pricing right and their financial structure stable, they will
continue to succeed where some larger operators have failed. There
are many disrupters in the casual dining market that are competing
well with the incumbents.
A good restaurant can still open in a difficult, secondary or
'brave' tertiary location if the offer is good enough and time is
invested. Not only will the public find it but other restaurant
operators will follow it and the location can grow organically into
a popular destination.
This is the natural evolution of a new area of restaurant
excellence in a town, as opposed to an engineered environment
created by a planner or a developer which sometimes misses the
mark.
Rising costs, such as goods purchased following the fall in the
value of the pound, rent and labour will present issues if sales
cannot mitigate these increases. If sales are a problem because of
a lack of demand for a restaurant operator's menu, or there is a
resistance to the restaurant's pricing policy, then that operator
is in trouble.
Against the background of the capital lavished on the UK
restaurant sector over the last five years, we at Fulham Shore have
improved Headline EBITDA in every reporting period since our
admission to AIM in 2014.
We are pleased to report the demand for both of our businesses
continues to grow. We will continue to open new restaurants in
carefully chosen locations, conscious of the property pitfalls that
others have fallen into.
Strategic vision and progress
Whilst the four new pizzeria we opened during the year
contributed to our reported revenue increase, the Group's growth
was primarily driven by improved trading and increased customer
numbers within our existing restaurant estate.
With this sound platform of continued sales growth and
increasing customer numbers, the Board has taken the decision to
increase the Group's restaurant opening programme with a target of
between eight and ten new restaurants in the financial year to
March 2020. Each of these new sites will be as compact as possible,
with appropriate rent levels for its location.
Our mission to create delicious food at reasonable prices has
been supported throughout the year by continued menu innovation
delivered through the hard work and dedication of both The Real
Greek and Franco Manca operating teams, who are constantly focussed
on improving their menus whilst keeping prices affordable. During
the period we introduced highly popular new menu items including
the seasonal pizza number 7 in Franco Manca and the vegan menu in
The Real Greek.
We aim to attract and retain the best and most committed staff
in our industry and to offer them long and rewarding careers. We
have invested in our people ahead of our expansion plans and we pay
the government's National Living Wage to all our staff, including
those under the age of 25.
We do not interfere in any way with the tips our team members
may receive from customers and many of our staff are shareholders
in Fulham Shore.
Franco Manca
As we predicted, the sales erosion in our London suburban
branches that had been caused by opening new Franco Manca pizzeria
in close proximity has reduced.
During the year we opened four new Franco Manca pizzeria, in the
cities of Bath and Cambridge and in London, off the Aldwych and
opposite St Paul's Cathedral. All of these new restaurants have
started brightly. The two new openings in London had a negligible
effect on our existing restaurants nearby.
We now have 36 Central London Franco Manca locations. We have
queues at peak times in many of our Central London pizzeria and in
other major cities where we are located around the UK, reflecting
the popularity of our sourdough pizza. As a result, this year, we
will continue to search for new sites both within London and
throughout the UK.
We continue to serve made to order sourdough pizza with dough
freshly made every day at each location.
The Real Greek
The Real Greek is an established business that has been trading
for 20 years. During that time, it has evolved to be the successful
and popular business that it is today. The average The Real Greek
restaurant serves more than 2,000 customers a week.
It is very popular with families, office lunches and evening
candle-lit dinners. The vegan and vegetarian menu innovations which
we launched in Spring 2018 have proved extremely popular. The Real
Greek has continued to perform well especially with the good
weather through the summer of 2018. We plan to open further
restaurants in the new financial year.
Property
Landlords are facing falling retail and restaurant demand for
their sites, due in part to the continued move to internet
shopping, the contraction of some large restaurant chains, and the
challenging economic backdrop over the past three years.
Many of these landlords and their commercial agents continue to
suggest we are at the bottom of the cycle. However, we believe
there is a way to go. Consequently, we feel the longer we wait for
properties the better value we can achieve.
Holding out for lower rents feeds through to continued low
prices on our menus, which is excellent for our customers. We have
sometimes seen as much as a 30% fall in rent where an existing
tenant ceases trading and the landlord re-lets the property. We
believe this decline will continue. This has happened only once
before in my 46 years of restaurant and property experience -
during the 1989-93 UK recession.
I believe we are due for a longer period of rental decline this
time around. Commercial agents, who have historically been aligned
with institutional landlords' interests, should realise the boot is
now firmly on the other foot. These agents should start to truly
represent successful tenants' interests as that is where the power
and their interest now lies.
Dividend policy
In parallel with our expansion programme, and subject to
sufficient cash generation within the business, we will consider a
dividend policy over the current financial year, reflecting the
Board's continued confidence in the outlook for Fulham Shore. No
dividend is being proposed for the year ended 31 March 2019.
Current trading and outlook
The current financial year to March 2020 has started well in
both Franco Manca and The Real Greek.
Since the year end, we have opened three new Franco Manca: in
Greenwich in South East London, Birmingham and Exeter, bringing our
restaurant numbers to 47 Franco Manca and 16 The Real Greek. We are
currently building new Franco Manca in Leeds and Edinburgh, have
committed to a further Franco Manca in Manchester and are in final
stages of negotiation on two new The Real Greek sites. This takes
us well on the way to our target of eight to ten new restaurants by
the end of the financial year, which would result in a group total
of more than 68 restaurants by March 2020.
The opening of our Greenwich Franco Manca in April 2019 was one
of our busiest yet, serving more than 3,000 customers a week in its
opening weeks. Franco Manca also took GBP1m net revenue in a week
for the first time in early July 2019.
Both our businesses are building customer numbers and they both
continue to have significant growth potential. We are confident
that the Group will perform well this year and we look forward to
further financial and operational progress.
DM Page
Chairman
15 July 2019
FINANCIAL REVIEW
Fulham Shore's performance in the year ended 31 March 2019 is
summarised in the table below:
Year Year
ended ended
31 March 25 March Change
2019 2018
For continuing operations GBPm GBPm %
Revenue 64.0 54.7 +17.0%
Headline EBITDA* 7.8 7.4 +5.2%
Headline operating profit 3.5 3.7 -5.9%
Headline profit before tax 3.1 3.5 -10.6%
EBITDA 7.1 5.5 +27.3%
Operating profit 1.8 0.1 1135%
Profit/(loss) before taxation 1.4 (0.1)
Profit/(loss) for the year 0.7 (0.2)
Basic earnings per share 0.1p (0.1p)
Diluted earnings per share 0.1p (0.0p)
Headline basic earnings per share 0.4p 0.6p
Headline diluted earnings per share 0.4p 0.6p -24.5%
Cash flow from operating activities 6.1 4.5 +35.6%
Development capital expenditure 3.5 10.0 -65.6%
Net Debt 9.4 12.0 -21.6%
Number of restaurants operated in the No. No.
UK
Franco Manca 44 41 +7.3%
The Real Greek 16 16 +0.0%
60 57 +5.3%
* Reconciliation of profit before taxation to Headline EBITDA
for continuing operations:
Year Year
ended ended
31 March 25 March
2019 2018
GBPm GBPm
Profit/(loss) before taxation 1.4 (0.1)
Finance costs 0.3 0.2
Depreciation and amortisation 4.3 3.7
Amortisation of brand 0.8 0.8
Exceptional costs - impairment of investments 0.1 -
Exceptional costs - impairment of property,
plant and equipment 0.2 0.9
EBITDA 7.1 5.5
Share based payments 0.1 0.6
Pre-opening costs 0.4 1.2
Exceptional costs - loss on disposal 0.2 0.1
Headline EBITDA 7.8 7.4
This year ended 31 March 2019 comprised of 53 full weeks of
trading compared to the previous financial year ended 25 March
2018, which comprised 52 full weeks of trading.
Total Group revenue from continuing operations grew, for the
year ended 31 March 2019, by 17.0%. This was driven by full year
revenues from restaurants opened in the previous year, new openings
during the year, and improved trading for many existing
restaurants. During the year, we opened four new Franco Manca
pizzeria in the UK and closed our Franco Manca Brighton Marina
restaurant which was handed back to the landlord during the year.
This takes the total restaurants operated by the Group in the UK to
60 (2018: 57) at year end. During the year, our franchisee in Italy
again opened the Franco Manca pizzeria on the island of Salina to
trade through the busy summer season.
Summer of 2018 was much stronger than the previous summer
especially with a significant number of days benefiting from warm
weather and sunshine. Some of our pre-2017 restaurants,
particularly in the London suburbs, that experienced tougher
trading the year before, have seen improvements and have benefited
from no cannibalisation from our new restaurants in nearby
locations.
Group Headline EBITDA (as reconciled above) from continuing
operations continues to be a key measure for the Group as well as
industry analysts as it is indicative of ongoing EBITDA of the
businesses. Headline EBITDA from continuing operations for the year
was GBP7.8m (2018: GBP7.4m), an increase of 5.2% on the prior year
while the Group's EBITDA increased 27.3% to GBP7.1m (2018:
GBP5.5m). During the year, with fewer openings, the management
teams of each of our two businesses focussed on a number of
projects that contributed towards the improved trading in the
businesses.
Group depreciation and amortisation, excluding amortisation of
the Franco Manca brand, increased 16.4% to GBP4.3m (2018: GBP3.7m)
following the number of new restaurants opened during the year and
the previous year. The Group incurred one off costs in the year of
GBP0.2m (2018: GBP0.9m) from impairment charges for 3 restaurants
(2018: 3) which are underperforming management's expectations. All
three restaurants continue to trade. Together with the improved
EBITDA, these have led to an increase of operating profit by 1135%
to GBP1.8m (2018: GBP0.1m).
With our new openings, we have invested GBP0.4m (2018: GBP1.2m)
in pre-opening costs. Finance costs have increased 28.7% to GBP0.3m
as the Group had higher drawn down balances on its revolving credit
facilities brought forward at the beginning of the financial year.
As net debt levels reduce, the finance costs should stabilise.
Overall this has resulted in a profit before taxation of GBP1.4m
(2018: GBP0.1m loss before tax).
The Group's tax rate has increased to 46.5% (2018: 36.4% of loss
before tax) of profit before tax due to a number of factors
including the increase of GBP0.1m in the deferred tax charge on
share based payments. The Group's profit after tax from continuing
and discontinued operations was GBP0.7m (2018: GBP0.6m loss after
tax).
Our basic and diluted earnings per share from continuing
operations increased from 0.0p to 0.1p while Headline diluted
earnings per share reduced by 24.5% to 0.4p, mainly as a result of
increased depreciation from new shorter leases or concessions
during the year.
Cost inflation
During the year, weakness of Sterling against both the Euro and
the US Dollar from uncertainty over Brexit has continued to put
pressure on food cost inflation. Where possible, we have benefited
from additional volume discounts due to our opening programme and
changes in suppliers which have helped to mitigate some of the cost
pressures.
We also saw 4.4% (2018: 4.2%) increase in the Government's
National Living Wage at the beginning of the financial year for
employees over 25 years old. Both of our businesses have chosen to
treat all staff members the same irrespective of age and have
therefore paid at least the National Living Wage to all
employees.
Our other two material cost items are rent and utility costs.
Rental inflation of our estate continues to increase modestly.
Utility cost inflation continues to be volatile as the wholesale
cost of energy has been impacted by the movement of Sterling and
global economic adjustments.
Cash flows and balance sheets
The Group's cash flow from operating activities has increased
35.6% to GBP6.1m (2018: GBP4.5m) as the benefit from improved cash
generation from restaurants and better cash management flowed
through. This was also after an additional GBP0.2m (2018: GBPNil)
in operating cash flow being applied to increased stock holding at
year end as part of risk mitigation planning for Brexit.
We invested GBP3.5m (2018: GBP10.0m) in development capital
primarily in new restaurants but also including investment in IT
systems to introduce advanced customer relationship management
facilities to both businesses. The Group will continue to invest in
technology in the new financial year to bring further efficiencies
in operations and further improved customer experiences, including
the launch of a new loyalty programme for Franco Manca in the
autumn of 2019.
Resultant net debt from our activities at 31 March 2019 was
GBP9.4m (2018: GBP12.0m). This is financed by our facilities with
HSBC Bank PLC, made up of a GBP14.25m revolving credit facility and
a GBP0.75m overdraft.
At the beginning of the financial year, the Group reduced its
opening programme to take account of market uncertainty. As a
result, the Group funded its openings largely through existing
operational cash flow. The excess operational cash flow has reduced
the Group's net debt during the year. It is the Group's intention,
in the new financial year, to ensure its openings continue to be
largely funded through operational cash flow.
People
During the year, the Group's key operations were within the UK.
With our opening programme, the Group continued to create more new
jobs in its new restaurants. We continue to invest in our staff
through training, incentives and personal development as well as
investing in a stronger people and human resource team.
Post balance sheet event
On 15 July 2019, the Company entered into a conditional sale and
purchase agreement for the purchase of the approximately 1%
minority interests in its two subsidiaries: Kefi Limited ("Kefi"),
which owns the subsidiary that owns and operates The Real Greek;
and Franco Manca Holdings Limited (formerly Rocca Limited) ("FM
Holdings"), which owns the subsidiary that owns and operates Franco
Manca, for a maximum total consideration of up to GBP650,658,
payable in cash. The purchase of the minority interests is subject
to the approval of shareholders at the Company's 2019 annual
general meeting. Further details are contained in the Company's
announcement dated 16 July 2019.
Accounting standards update
The Group will be required to adopt IFRS16, a new lease
accounting standard, for the year ending 29 March 2020. The new
standard will have no material economic impact on the business and
will not change the way the business is run. It will, however, have
a significant impact on the presentation of the financial
statements including reported Headline EBITDA, reported profit
before and after taxation, balance sheet treatment of leasehold
obligations and cash flow from operating activities as well as from
financing activities. As at 1 April 2019, the initial application
date, fixed assets representing right in use relating leasehold
obligations will increase by approximately GBP71.2m while
liabilities representing the discounted value of future committed
lease payments will increase by GBP70.3m. Further details of
expected changes can be found in the Accounting Policies.
Principal risks and uncertainties
The Directors consider the following to be the principal risks
faced by the Group:
Economic conditions
The Group's performance depends to a large degree on economic
conditions and consumer confidence in the UK. Over recent months,
the UK economy has seen reducing levels of unemployment but weaker
consumer spending. However, there continue to be rapid changes to
the UK economy, with the result of the EU Referendum creating
considerable political and economic uncertainty. The Group's
existing restaurants offer an exceptional customer value experience
which the Directors believe positions the business well in dealing
with continued volatility in the UK economy.
Development programme
The Group's development programme is dependent on securing the
requisite number of new properties at sensible rents. The UK
restaurant property market remaining competitive at the right
locations and rents. To mitigate these issues, the Group has an
experienced property team concentrating on securing new sites for
the Group.
Supply chain
The Group focuses on the freshness and quality of the produce
used in its restaurants. It is exposed to potential supply chain
disruptions due to the delay or losses of inventory in transit. The
Group seeks to mitigate this risk through effective supplier
selection and an appropriate back-up supply chain. To help mitigate
potential delays as a result of Brexit, the Group is building up
stock, where possible, to allow for longer transit times.
Employees
The Group's performance depends largely on its management team
and its restaurant teams. The inability to recruit people with the
right experience and skills could adversely affect the Group's
results. The result of the EU Referendum has created considerable
uncertainty over the immigration status of EU nationals. To
mitigate these issues the Group has invested in its human resources
team and has implemented a number of incentive schemes designed to
retain key individuals.
Brexit
Brexit may have an adverse impact on the wider economic
environment in the UK and across the EU, resulting in weaker
consumer spending in the travel food and beverage markets. The
potential further depreciation of Sterling could lead to cost
inflation pressures, particularly in the food commodity markets.
Any interruption to cross border trading with the EU could lead to
delays in deliveries of some raw ingredients. Potential
restrictions on mobility of EU nationals post-Brexit may limit the
availability of labour resource in the UK. These risks are
discussed separately above.
Competition
The Group operates in a competitive and fragmented market which
regularly sees new concepts come to the market. However, the
Directors believe that the strength of the Group's existing
restaurant brands, value offer and constant strive towards
delivering the best product and service will help the business to
mitigate competitive risk.
Landlords
The Group operates four restaurants within the Debenhams estate.
The existing restaurants may be at risk from any possible future
structural changes in Debenhams, including financial restructures.
The Directors have therefore not committed the Group to further
restaurants with Debenhams in the short term and to mitigate the
risk, in part, have ensured that the four restaurants have separate
street entrances.
Cyber security
The Group has been operating an online "click and collect"
service and various customer relationship management tools which
rely on online systems that may experience cyber security failure
leading to loss of revenue or reputation loss. The Group utilises
robust supplier selection processes and third party reviews and
testing on a regular basis to identify weaknesses and improve on
existing protection and processes.
Regulatory compliance
The Group is growing quickly and the government is increasing
the number of areas requiring additional regulatory compliance
including GDPR. This may increase the Group's expenditure to ensure
compliance and the Group may experience a failure to comply thus
leading to significant fines. The Group reviews regulatory changes
on a regular basis.
Risks are formally reviewed by the Board and appropriate
processes are put in place to monitor and mitigate them.
Financial risk management
The Board regularly reviews the financial requirements of the
Group and the risks associated therewith. The Group does not use
complicated financial instruments, and where financial instruments
are used it is for reducing interest rate risk. The Group does not
trade in financial instruments. Group operations are primarily
financed from equity funds raised, bank borrowings and retained
earnings. In addition to the financial instruments described above,
the Group also has other financial instruments such as receivables,
trade payables and accruals that arise directly from the Group's
operations. Further information is provided in note 15 to the
financial statements.
Key performance indicators
The Board receives a range of management information delivered
in a timely fashion. The principal measures of progress, both
financial and non-financial, that are reviewed on a regular basis
to monitor the development of the Company and the Group are shown
in the table at the beginning of this section.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2019
Year Year
ended ended
31 March 25 March
2019 2018
Notes GBP'000 GBP'000
Revenue 1 63,985 54,695
Cost of sales (38,237) (32,039)
Gross profit 25,748 22,656
Administrative expenses (22,253) (18,940)
Headline operating profit 3,495 3,716
Share based payments 18 (138) (616)
Pre-opening costs 2 (386) (1,209)
Amortisation of brand 7 (821) (821)
Exceptional costs - impairment
of property, plant and equipment (130) (867)
Exceptional costs - impairment (80) -
of investment
Exceptional costs - loss on disposal
of property, plant and equipment (187) (61)
Operating profit 2 1,753 142
Finance income 8 2
Finance costs 4 (327) (254)
Profit/(loss) before taxation 1,434 (110)
Income tax expense - current year 5 (714) (258)
Income tax expense - prior year - 218
Profit/(loss) for the year from
continuing operations 720 (150)
Loss for the year from discontinued
operations 24 - (415)
Profit/(loss) for the year 720 (565)
Profit/(loss) for the year attributable
to:
Owners of the company 698 (576)
Non-controlling interests 22 11
720 (565)
Earnings per share
Continuing and discontinued operations
Basic 6 0.1p (0.1p)
Diluted 6 0.1p (0.1p)
Continuing operations
Basic 6 0.1p (0.0p)
Diluted 6 0.1p (0.0p)
Headline Basic 6 0.4p 0.6p
Headline Diluted 6 0.4p 0.6p
CONSOLIDATED AND COMPANY BALANCE SHEETS
31 March 2019
Group Parent company
Notes 31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 7 25,767 26,550 - -
Property, plant and equipment 8 30,806 31,768 173 203
Investments 9 201 281 43,563 43,439
Trade and other receivables 11 1,020 943 11,863 11,724
Deferred tax assets 16 301 193 287 185
58,095 59,735 55,886 55,551
Current assets
Inventories 10 1,764 1,490 - -
Trade and other receivables 11 3,597 3,325 118 135
Cash and cash equivalents 12 1,835 359 22 7
Assets classified as held
for sale 23 - 329 - -
7,196 5,503 140 142
Total assets 65,291 65,238 56,026 55,693
Current liabilities
Trade and other payables 13 (11,881) (11,521) (1,312) (888)
Income tax payable (93) (486) - -
(11,974) (12,007) (1,312) (888)
Net current liabilities (4,778) (6,504) (1,172) (746)
Non-current liabilities
Trade and other payables 13 (1,601) (1,470) - -
Borrowings 14 (11,240) (12,350) (13,721) (13,325)
Deferred tax liabilities 16 (1,733) (1,779) - -
(14,574) (15,599) (13,721) (13,325)
Total liabilities (26,548) (27,606) (15,033) (14,213)
Net assets 38,743 37,632 40,993 41,480
Equity
Share capital 17 5,714 5,714 5,714 5,714
Share premium 6,889 6,889 6,889 6,889
Merger relief reserve 30,459 30,459 30,459 30,459
Reverse acquisition reserve (9,469) (9,469) - -
Retained earnings 5,025 3,936 (2,069) (1,582)
Equity attributable to owners
of the company 38,618 37,529 40,993 41,480
Non-controlling interest 125 103 - -
Total Equity 38,743 37,632 40,993 41,480
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Attributable to owners of the Company
Reverse Equity Non-
Merger Acq- Share- Control-
Share Share Relief uisition Retained holders ling Total
Capital Premium Reserve Reserve Earnings ' Interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Funds GBP'000 GBP'000
GBP'000
At 26 March
2017 5,714 6,889 30,459 (9,469) 4,963 38,556 92 38,648
(Loss)/profit
for the year - - - - (576) (576) 11 (565)
Total comprehensive
income - - - - (576) (576) 11 (565)
Transactions with
owners
Share based
payments - - - - 616 616 - 616
Deferred tax
on share based
payments - - - - (1,067) (1,067) - (1,067)
Total transactions
with owners - - - - (451) (451) - (451)
At 25 March
2018 5,714 6,889 30,459 (9,469) 3,936 37,529 103 37,632
Profit for
the year - - - - 698 698 22 720
Total comprehensive
income - - - - 698 698 22 720
Transactions
with owners
Share based
payments - - - - 138 138 - 138
Deferred tax
on share based
payments - - - - 253 253 - 253
Total transactions
with owners - - - - 391 391 - 391
At 31 March
2019 5,714 6,889 30,459 (9,469) 5,025 38,618 125 38,743
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Merger
Share Share Relief Retained Total
Capital Premium Reserve Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 26 March 2017 5,714 6,889 30,459 359 43,421
Loss for the year - - - (1,566) (1,566)
Total comprehensive income
for the year - - - (1,566) (1,566)
Transactions with owners
Share based payments - - - 616 616
Deferred tax on share based
payments - - - (991) (991)
Total transactions with owners - - - (375) (375)
At 25 March 2018 5,714 6,889 30,459 (1,582) 41,480
Loss for the year - - - (878) (878)
Total comprehensive income
for the year - - - (878) (878)
Transactions with owners
Share based payments - - - 138 138
Deferred tax on share based
payments - - - 253 253
Total transactions with owners - - - 391 391
At 31 March 2019 5,714 6,889 30,459 (2,069) 40,993
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
for the year ended 31 March 2019
Group Parent
Notes Year Year Year Year
ended ended ended ended
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Net cash flow from/(used in)
operating activities 19 6,132 4,522 (313) (509)
Investing activities
Acquisition of property, plant
and equipment (3,457) (10,044) (4) (7)
Acquisition of intangible
assets (99) (27) - -
Acquisition of investments - (281) - -
Disposal of discontinued operations 329 - - -
Loan to subsidiary undertakings - - - (5,969)
Loan repaid by subsidiary - - 1,366 -
undertakings
Net cash flow (used in)/from
investing activities (3,227) (10,352) 1,362 (5,976)
Financing activities
Capital received from bank
borrowings - 6,350 - 6,350
Capital repaid on bank borrowings (1,110) - (1,110) -
Interest received 8 2 468 465
Interest paid (327) (254) (392) (311)
Net cash flow (used in)/from
financing activities (1,429) 6,098 (1,034) 6,504
Net increase in cash and cash
equivalents 1,476 268 15 19
Cash and cash equivalents
at the beginning of the year 12 359 91 7 (12)
Cash and cash equivalents
at the end of the year 12 1,835 359 22 7
ACCOUNTING POLICIES
GENERAL INFORMATION
The Fulham Shore PLC is a public company limited by shares
incorporated and domiciled in England and Wales with registration
number 07973930 and registered office at 1(st) Floor, 50-51 Berwick
Street, London, W1F 8SJ, United Kingdom. The Company's ordinary
shares are traded on the AIM Market.
BASIS OF PREPARATION
The above audited financial information does not constitute
statutory financial statements as defined in section 434 of the
Companies Act 2006. The above figures for the period ended 31 March
2019 have been extracted from the Group's financial statements
which have been reported on by the Group's auditors and received an
audit opinion which was unqualified. The Group's statutory
financial statements for the year ended 25 March 2018 have been
lodged with the Registrar of Companies. These financial statements
received an audit report which was unqualified and did not include
any reference to matters to which the auditors drew attention by
way of emphasis without qualifying their report or a statement
under section 498(2) or section 498(3) of the Companies Act 2006.
The financial statements for the year ended 31 March 2019 will be
dispatched to the shareholders and filed with the Registrar of
Companies. The preliminary announcement was approved by the Board
and authorised for issue on 15 July 2019.
The financial statements for the years ended 31 March 2019 and
25 March 2018 have been prepared under the historical cost
convention and, as permitted by EU Law, the Financial Statements
have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards as adopted by the EU
("IFRS"). This financial information has been prepared on a basis
consistent with the accounting policies adopted in the financial
statement but does not contain all the information required to be
disclosed in financial statements prepared in accordance with
IFRS.
The accounting year runs to a Sunday within seven days of 31
March each year which will be a 52 or 53 week period. The year
ended 31 March 2019 was a 53 week period, with the comparative year
to 25 March 2018 being a 52 week period.
The financial statements for the year ended 31 March 2019 are
presented in Sterling because that is the primary currency of the
primary economic environment in which the Group operates. All
values are rounded to the nearest thousand pounds (GBP'000) except
when otherwise indicated.
The parent company has not presented its own income statement,
statement of total comprehensive income and related notes as
permitted by section 408 of the Companies Act 2006.
NEW STANDARDS
The following new accounting standards are effective for the
year ended 31 March 2019 and have been adopted in these financial
statements:
IFRS 9 Financial instruments
IFRS 15 Revenue from contracts with customers
Both standards were adopted on 26 March 2018.
The Group adopted IFRS 9 on 26 March 2018, the date of initial
application. The Group has applied IFRS 9 retrospectively. IFRS 9
has not had a material impact on the Group.
The Group adopted IFRS 15 using the cumulative effect method,
with the effect of adopting this standard, if any, recognised on 26
March 2018, the date of initial application. Accordingly, the
information presented for the financial year ended 25 March 2018
has not been restated. The adoption of IFRS 15 has not had a
material impact on the Group.
NEW STANDARDS THAT ARE NOT YET EFFECTIVE
At the date of authorisation of these financial statements, the
following Standards and Interpretations relevant to the Group
operations that have not been applied in these financial statements
were in issue but not yet effective:
IFRS 16 Leases
IFRIC 23 Uncertainty over income tax treatments
IAS 28 (Amendment) Investments in Associates and Joint Ventures
Annual Improvements to IFRS Standards 2015-2017 Cycle
The Directors anticipate that the adoption of these Standards
and Interpretations as appropriate in future years will have no
material impact on the financial statements of the Group other than
the new IFRS 16 Leases which will be mandatory for accounting
periods beginning on or after 1 January 2019. This new standard
will significantly change how restaurant leases will be accounted
for but will not change the way the business is run.
IFRS 16 will materially increase the Group's recognised assets
and liabilities in the Consolidated Balance Sheet introducing
right-of-use assets and lease liabilities calculated based on
discounted future committed lease payments. It will also materially
change the presentation and timing of recognition of charges in the
Consolidated Income Statement. The operating lease expense
currently reported under IAS17, typically on a straight line basis,
within Headline EBITDA and EBITDA, will be replaced by depreciation
of the right-of-use asset and notional financing costs on the lease
liability. This will result in increased "lease-related expenses"
being charged to the Consolidated Income Statement in the early
years of a lease due to the front- loaded notional financing costs,
significantly reducing reported profit or loss before taxation.
The presentation of the Consolidated Cash Flow Statement will
also be affected. Actual rent payments, which are currently part of
the net cash flow from operating activities will now be split into
a notional repayment of principal lease liability and a notional
interest payment within financing activities. This increases the
net cash flow from operating activities and increases the cash
outflow from financing activities by the same amount. Actual net
increase in cash and cash equivalents will not be affected.
In adopting IFRS 16, the Group is permitted to follow one of two
approaches: the full retrospective approach or the modified
retrospective approach. This is a choice that must be made at
transition and applied to all leases within the group at the
initial application date. The Group has chosen to adopt the
modified retrospective approach, which does not require restatement
of comparative periods. Instead the cumulative impact of applying
IFRS16 is accounted for as an adjustment to equity at the start of
the accounting period in which it is first applied. Discount rates
applicable at the time of initial application and estimates of
future rent review adjustments to future committed lease payments
are areas of significant judgement and estimation in calculating
the lease liability, particularly given the term of the Group's
leases.
The likely estimated balance sheet impact is analysed below:
GBP'000
Right-of-use asset 71,177
Lease liability in respect of leases previously classified as operating leases (70,256)
Deferred tax asset/(liability) 157
Adjustment for prepayments and accruals (921)
Adjustment to deferred income 1,993
2,150
The above estimate is based on property leases in existence as
at 1 April 2019, with a calculated weighted average discount rate
of 3.3% and an assumed rent increase of an equivalent annual rate
of 2.4% at each future rent review. The Group estimates that the
reported profit before tax for the year ending 29 March 2020 will
be reduced by between GBP1,500,000 and GBP2,000,000 as a result of
adopting the new rules.
The group generates rent receivable from sub-leases of some of
its properties. Its activities as a sub-lessor are predominantly
based on leases with terms under 12 months and therefore is not
material.
GOING CONCERN
The consolidated financial statements have been prepared on a
going concern basis. Given the risk analysis set out in the
Financial Review and after reviewing the Group's net current
liabilities position as at 31 March 2019, the budget for the next
financial year, other longer term plans and financial resources
including undrawn but available short term and long term facilities
described in note 14 and operational cash flow where cash from
revenues are received within 3 days, the Board has a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Therefore the
Board is satisfied that, at the time of approving the financial
statements, it is appropriate to adopt the going concern basis in
preparing the financial statements.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate those of The
Fulham Shore PLC and all of its subsidiary undertakings for the
period. Subsidiaries acquired are consolidated from the date that
the Group has the power to control, exposure or rights to variable
returns, and the ability to use its power over the returns and will
continue to be consolidated until the date that such control
ceases.
Although the legal form of the transaction during the period
ended 29 June 2015 was an acquisition of Kefi Limited by The Fulham
Shore PLC, the substance is the reverse of this. Accordingly the
business combination has been prepared using reverse acquisition
accounting.
The acquisition of other subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. Any
costs directly attributable to the business combination are
expensed to the Statement of Comprehensive Income. The acquiree's
identifiable assets and liabilities are recognised at their fair
values at the acquisition date.
All intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation.
INTANGIBLE ASSETS
Goodwill
Goodwill arising on the acquisition of an entity represents the
excess of the cost of an acquisition over the Group's interest in
the fair value attributed to the net assets at acquisition.
Goodwill is not subject to amortisation but is tested for
impairment at least annually. After initial recognition, goodwill
is stated at cost less any accumulated impairment losses. Any
impairment is recognised immediately in the income statement and is
not subsequently reversed. Goodwill is allocated to an associated
operating segment made up of a group of cash generating units for
the purpose of impairment testing. Each of these groups of cash
generating units represents the Group's investment in a subsidiary
which is equivalent to an operating segment of the Group. On
disposal of a subsidiary the attributable amount of goodwill is
included in the determination of the profit or loss on
disposal.
Trademarks and licences
The fair value of the intangible assets acquired through the
reverse acquisition was determined using discounted cash flow
models. The key assumptions for the valuation method are those
regarding future cash flows, tax rates and discount rates. The cash
flow projections were based on management forecasts for the
subsequent four years period. The estimated useful lives range from
4 to 20 years on a straight-line basis.
Brand
The fair value of the brand intangible assets acquired through
an acquisition of a subsidiary was determined using discounted
royalty relief models. The key assumptions for the valuation method
are those regarding future cash flows, tax rates and discount
rates. The cash flow projections were based on management forecasts
for the subsequent ten year period.
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of brand from
the beginning of the financial year that they are available for
use. The estimated useful lives are 10 years on a straight-line
basis.
Computer software
Computer software licences are capitalised on the basis of the
costs incurred to acquire and bring into use the specific software.
These costs are amortised on a straight line basis over their
estimated useful lives, being between 3 and 5 years. Costs that are
directly associated with the production of identifiable and unique
software products controlled by the Group, and that are expected to
generate economic benefits exceeding costs beyond one year, are
recognised as intangible assets. Direct costs include software
development, employee costs and directly attributable overheads.
Software integral to a related item of hardware equipment is
accounted for as property, plant and equipment. Costs associated
with maintaining computer software programmes are recognised as an
expense when they are incurred.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less
depreciation and any recognised impairment loss. The cost of
property, plant and equipment includes directly attributable
incremental costs incurred in their acquisition and
installation.
Depreciation is provided on property, plant and equipment at
rates calculated to write each asset down to its estimated residual
value evenly over its expected useful life, as follows:-
Leasehold properties and improvements over lease term or renewal term
Plant and equipment 20% to 33% straight line
Furniture, fixtures and fittings 10% to 20% straight line
Assets in the course of construction are carried at cost, less
any recognised impairment loss. Depreciation of these assets
commences when the assets are ready for their intended use.
Residual values, useful lives and methods of depreciation are
reviewed and adjusted if appropriate on an annual basis. An item of
property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal.
The gain or loss arising on the disposal or retirement of an asset
is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the income
statement.
IMPAIRMENT OF ASSETS
Goodwill is not subject to amortisation but is tested for
impairment annually or whenever there is an indication that the
asset may be impaired. For the purpose of impairment testing,
assets which have separately identifiable cash flows, known as cash
generating units, are grouped into their operating segment. If the
recoverable amount of a group of cash generating units is less than
the carrying amount of that group's assets, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the group of cash generating units and then to the
other assets of the group pro-rata on the basis of the carrying
amount of each asset in the group. Impairment losses recognised for
goodwill are not reversed in a subsequent period. 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.
At each balance sheet date, the Group reviews the carrying
amounts of its property, plant and equipment and intangible assets
with finite useful lives 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, if any, of the
impairment loss. 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, predominantly an
individual restaurant for the purposes of property, plant and
equipment, to which the asset belongs. 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 the income statement.
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, not to 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 the
income statement.
OTHER INVESTMENTS
Other investments comprising debt and equity instruments are
recognised and derecognised on a trade date where a purchase or
sale of an investment is under a contract whose terms require
delivery of the investment within the timeframe and are initially
measured at fair value, including transaction costs and
subsequently measured at fair value through profit and loss.
Debt securities that are held for collection of contractual cash
flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost using the effective
interest method, less any impairment. Debt securities that do not
meet the criteria for amortised cost are measured at fair value
through profit and loss.
Equity securities are classified and measured at fair value
through other comprehensive income, there is no subsequent
reclassification of fair value gains and losses to profit or loss
following derecognition of the investment.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities, in respect of
financial instruments, are recognised on the balance sheet when the
Group becomes a party to the contractual provisions of the
instrument.
INVENTORIES
Inventories are valued at the lower of cost and net realisable
value. Cost is determined on a first in, first out basis. Net
realisable value is based upon estimated selling price less further
costs expected to be incurred to completion and disposal. Provision
is made for obsolete and slow-moving items.
TRADE AND OTHER RECEIVABLES
Trade receivables represent amounts owed by customers where the
right to payment is conditional only on the passage of time and are
recorded at amortised cost. The carrying value of all trade
receivables recorded at amortised cost is reduced by allowances for
lifetime estimated credit losses. Estimated future credit losses
are first recorded on the initial recognition of a receivable and
are based on the ageing of the receivable balances, historical
experience and forward looking considerations. Individual balances
are written off when management deems them not to be
collectible.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and call
deposits and other short term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
TRADE AND OTHER PAYABLES
Payables are initially recognised at fair value and subsequently
at amortised cost using the effective interest method.
SHARE CAPITAL
Share capital represents the nominal value of ordinary shares
issued.
SHARE PREMIUM
Share premium represents the amounts subscribed for share
capital in excess of nominal value less the related costs of share
issue.
MERGER RELIEF RESERVE
In accordance with Companies Act 2006 S.612 'Merger Relief', the
company issuing shares as consideration for a business combination,
accounted at fair value, is obliged, once the necessary conditions
are satisfied, to record the excess of the consideration received
over the nominal value of the shares issued to the merger relief
reserve.
REVERSE ACQUISITION RESERVE
Reverse accounting under IFRS 3 'Business Combinations' requires
the difference between the equity of the legal parent and the
issued equity instruments of the legal subsidiary pre-combination
to be recognised as a separate component of equity.
RETAINED EARNINGS
Retained earnings represents the cumulative profit and loss net
of distributions.
NON-CONTROLLING INTERESTS
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination and the
non-controlling shareholder's share of changes in equity since the
date of the combination. Total comprehensive income is attributed
to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are
translated into sterling, the presentational and functional
currency of the Group, at the rate of exchange ruling at the
balance sheet date. Transactions in foreign currencies are recorded
at the rate ruling at the date of the transaction. All differences
are taken to the income statement.
FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities and includes no
obligation to deliver cash or other financial assets. Interest
bearing loans and overdrafts are initially measured at fair value
(which is equal to cost at inception), and are subsequently
measured at amortised cost, using the effective interest rate
method. Any difference between the proceeds (net of transaction
costs) and the settlement or redemption of borrowings is recognised
over the term of the borrowing. Equity instruments issued by the
Group are recorded at the proceeds received, net of direct issue
costs.
TAXATION
Income tax expense represents the sum of the current tax payable
and deferred tax.
Current tax payable or recoverable is based on taxable profit
for the year. Taxable profit differs from profit as reported in the
income statement because some items of income or expense are
taxable or deductible in different years or may not be taxable or
deductible. The Group's liability for current tax is calculated
using tax rates and laws that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable in
the future arising from temporary differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit. It is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the tax profit or the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the year when the liability is settled or the asset
realised, based on tax rates that have been enacted or
substantively enacted by the balance sheet date. Tax assets and
liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when
they either relate to income taxes levied by the same taxation
authority on either the same taxable entity or on different taxable
entities which intend to settle the current tax assets and
liabilities on a net basis.
Tax is charged or credited to the income statement, except when
it relates to items charged or credited directly to equity, in
which case the tax is also recognised directly in equity.
LEASES
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership of the asset to the lessee. All other leases are
classified as operating leases.
Assets held under finance leases are recognised as assets of the
Group at their fair value at the inception of the lease or, if
lower, at the present value of the minimum lease payments as
determined at the inception of the lease. The corresponding
liability to the lessor is included in the balance sheet as a
finance lease obligation. Lease payments are apportioned between
finance charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in the income
statement.
Rentals payable under operating leases are charged to the income
statement on a straight line basis or other systematic basis if
representative of the time pattern of the user's benefit over the
term of the relevant lease. Benefits received and receivable as an
incentive to enter into an operating lease are also spread on a
straight line basis over the lease term.
PROVISIONS
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the
Group will be required to settle that obligation and a reliable
estimate can be made of the amount of the obligation. Provisions
are measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date and are
discounted to present value where the effect is material.
RETIREMENT BENEFITS
The amount charged to the income statement in respect of pension
costs is the contributions payable to money purchase schemes in the
year. Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or
prepayments in the balance sheet.
REVENUE RECOGNITION
Revenue represents the fair value of the consideration received
or receivable, net of Value Added Tax, for goods sold and services
provided to customers outside the Group after deducting discounts.
Revenue is recognised when the significant risks and rewards of
ownership are transferred.
INTEREST INCOME
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
SHARE BASED PAYMENTS
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value (excluding the effect of non market-based vesting conditions)
at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company's
estimate of the shares that will eventually vest and adjusted for
the effect of non market-based vesting conditions.
Fair value is measured using a Black-Scholes valuation model.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
Non-current assets (disposal groups comprising assets and
liabilities) that are expected to be recovered primarily through
sale rather than through continuing use are classified as held for
sale.
A discontinued operation is a component of an entity that either
has been disposed of, or that is classified as held for sale, and
(a) represents a separate line of business or geographical area of
operations; and (b) is a part of a single coordinated plan to
dispose of a separate line of business or geographical area of
operations; or (c) is a subsidiary acquired exclusively with a view
to sell.
Non-current assets held for sale and discontinued operations are
carried at the lower of carrying amount or fair value less cost to
sell. Any gain or loss from disposal, together with the results of
these operations until the date of disposal, is reported separately
as discontinued operations. The financial information of
discontinued operations is excluded from the respective captions in
the Consolidated financial statements and related notes for all
periods presented. Comparatives in the balance sheet are not
re-presented when a non-current asset or disposal group is
classified as held for sale. Comparatives are re-presented for
presentation of discontinued operations in the Statement of cash
flow and Statement of comprehensive income.
Adjustments in the current period to amounts previously
presented in discontinued operations that are directly related to
the disposal of a discontinued operation in a prior period are
classified separately in discontinued operations. Circumstances to
which these adjustments may relate include resolution of
uncertainties that arise from the terms of the disposal
transaction, such as the resolution of purchase price adjustments
and indemnifications, resolution of uncertainties that arise from
and are directly related to the operations of the component before
its disposal, such as environmental and product warranty
obligations retained by the Company, or the settlement of employee
benefit plan obligations provided that the settlement is directly
related to the disposal transaction.
ACCOUNTING PERIOD
The consolidated group accounts have been prepared for the year
to 31 March 2019 with the comparative year to 25 March 2018.
The Company accounts have been prepared for the same periods as
the Group.
ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of the Group's accounting policies,
described above, with respect to the carrying amounts of assets and
liabilities at the date of the financial statements, the disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during
the reporting year. These judgements, estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
including current and expected economic conditions. Although these
judgements, estimates and associated assumptions are based on
management's best knowledge of current events and circumstances,
the actual results may differ. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the year in which the estimate is revised and in
any future years affected.
The judgements, estimates and assumptions which are of most
significance to the Group are detailed below:
Assessment of the recoverable amounts in respect of assets
tested for impairment
The Group tests goodwill for impairment on an annual basis or
more frequently if there are indications that amounts may be
impaired. For property, plant and equipment and intangible assets,
other than goodwill, the Group tests for impairment when there is
an indication of impairment.
The impairment analysis for such assets is principally based
upon discounted estimated future cash flows from the use and
eventual disposal of the assets (see notes 7 and 8). Such an
analysis includes an estimation of the future anticipated results
and cash flows, annual growth rates, whether short term or long
term, future capital expenditures and the appropriate discount
rates (see notes 7 and 8 for key assumptions). Changes in the
estimates which underpin the Group's forecasts and selection of
appropriate discount rate could have an impact on the value in use
of the cash generating units and group of cash generating units
being tested.
Valuation of share based payments
The charge for share based payments is calculated in accordance
with the methodology described in note 18. The model requires
highly subjective assumptions to be made including the future
volatility of the Company's share price, expected dividend yield,
risk-free interest rates, expected time of exercise and employee
attrition rates. Changes in such estimates may have a significant
impact on the original fair value calculation at the date of grant
and the employee attrition rate will impact the judgement relating
to the number of share based incentives that would vest and
therefore the share based payments charge.
Deferred taxation
The recognition of deferred taxation assets or liabilities are
further described in note 16.
Recognition of deferred tax assets on tax losses, is based upon
whether management judge that it is probable that there will be
sufficient and suitable taxable profits in the relevant legal
entity or tax group against which to utilise the assets in the
future. Judgement is required when determining probable future
taxable profits. The Group assesses the availability of future
taxable profits using the same cash flow forecasts for the Group's
operations as are used in the Group's value in use calculations for
impairment testing purposes. Where tax losses are forecast to be
recovered beyond the five year period, the availability of taxable
profits is assessed using the cash flows and long--term growth
rates used for the value in use calculations.
Changes in the estimates which underpin the Group's forecasts
could have an impact on the amount of future taxable profits and
could have a significant impact on the period over which the
deferred tax asset would be recovered and whether the deferred tax
assets should have been recognised.
Deferred taxation assets on share based payments are calculated
based on the intrinsic value of the share based incentives at the
year end, Company's share price, availability of tax deduction on
exercise of the share based incentives and employee leave rates.
Changes in the number of share based incentives that are expected
to vest (as described above), availability of tax deduction and
other assumptions will have an impact on the value of deferred
taxation assets.
Deferred tax liabilities on capital allowances are calculated
using estimates of the proportion of property, plant and equipment
acquired during the year that qualifies for capital allowances and
the appropriate rates of allowances and estimates of tax rates
applicable in the future. Management make such estimates based on
experience with similar historic property, plant and equipment
acquired. Changes in the make-up of the building components in one
of these assets may have an impact on capital allowances claimable
and therefore the quantum of the deferred tax liabilities.
The Group only considers substantively enacted tax laws when
assessing the amount and availability of tax losses to offset
against the future taxable profits and availability of capital
allowances.
Finite lived intangible assets
Intangible assets include amounts spent by the Group acquiring
brands and the costs of purchasing and/or developing computer
software.
Where intangible assets are acquired through business
combinations and no active market for the assets exists, the fair
value of these assets is determined by discounting estimated future
net cash flows generated by the asset. Estimates relating to the
future cash flows and discount rates used may have a material
effect on the reported amounts of finite lived intangible
assets.
The useful life over which intangible assets are amortised
depends on management's estimate of the period over which economic
benefit will be derived from the asset. Reducing the useful life
will increase the amortisation charge in the consolidated income
statement. Useful lives are periodically reviewed to ensure that
they remain appropriate.
Property, plant and equipment
Property, plant and equipment represents 47.2% (2018: 48.7%) of
the Group's total assets; estimates and assumptions made may have a
material impact on their carrying value and related depreciation
charge. The depreciation charge for an asset is derived using
estimates of its expected useful life and expected residual value,
which are reviewed periodically. Increasing an asset's expected
life or residual value would result in a reduced depreciation
charge in the consolidated income statement. Management determines
the useful lives and residual values for assets when they are
acquired, based on experience with similar assets and taking into
account other relevant factors such as any expected changes in
technology. The useful life of equipment is assumed not to exceed
the duration of restaurant property lease unless there is a
reasonable expectation of renewal or ability for the equipment to
be transferred for use in another restaurant.
Accounting treatment of other investments
Investments are recognised at fair value at the time of
acquisition. Management judgement is used to determine whether the
Group has significant influence or control over the investment
which would give rise to different accounting methodology being
applied as an associate or subsidiary.
OPERATING SEGMENTS
The Group considers itself to have two key operating segments,
being the management and operation of The Real Greek restaurants
and the management and operation of Franco Manca restaurants. The
Group operates in only one geographical segment, being the United
Kingdom.
DEFINITIONS
OPERATING PROFIT
Operating profit is defined as profit before taxation, finance
income and finance costs.
HEADLINE OPERATING PROFIT
Headline operating profit is defined as operating profit before
amortisation of brand, impairment of property, plant and equipment,
impairment of goodwill and intangible assets, impairment of
investments, onerous lease costs, restructuring costs, costs of
reverse acquisition, cost of acquisition, share based payments,
loss on disposal of property, plant and equipment and pre-opening
costs.
HEADLINE PROFIT BEFORE TAXATION
Headline profit before taxation is defined as profit/loss before
taxation before amortisation of brand, impairment of property,
plant and equipment, impairment of goodwill and intangible assets,
impairment of investments, onerous lease costs, restructuring
costs, costs of reverse acquisition, costs of acquisition, share
based payments, loss on disposal of property, plant and equipment
and pre-opening costs.
PRE-OPENING COSTS
The restaurant pre-opening costs represent costs incurred up to
the date of opening a new restaurant that are written off to the
profit and loss account in the period in which they are
incurred.
EBITDA
EBITDA is defined as operating profit before depreciation,
amortisation and impairment.
HEADLINE EBITDA
Headline EBITDA is defined as EBITDA before onerous lease costs,
restructuring costs, costs of reverse acquisition, cost of
acquisition, share based payments, loss on disposal of property,
plant and equipment and pre-opening costs.
HEADLINE EPS
Headline basic EPS and Headline diluted EPS are defined in note
6.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
1 SEGMENT INFORMATION
For management purposes, the Group was organised into two
operating divisions during the year ended 31 March 2019. These
divisions, The Real Greek and Franco Manca, are the basis on which
the Group reports its primary segment information as identified by
the chief operating decision maker which is the Group's board of
directors.
For the year ended 31 March 2019:
The Real Franco
Greek Manca Other
segment segment unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 21,950 43,285 - 65,235
Headline EBITDA 2,746 5,814 (742) 7,818
Depreciation and
amortisation (1,048) (3,242) (33) (4,323)
Headline operating
profit 1,698 2,572 (775) 3,495
Pre-opening costs - (386) - (386)
Impairment investments - (80) - (80)
Impairment property,
plant and equipment (29) (101) - (130)
Operating profit 1,617 924 (788) 1,753
Finance income 3 5 - 8
Finance costs - - (327) (327)
Segment profit/(loss)
before taxation 1,620 929 (1,115) 1,434
Income tax expense (714) (714)
Profit for the
year from continuing
operations (1,829) 720
Assets 11,408 53,281 602 65,291
Liabilities (3,814) (10,177) (12,557) (26,548)
Net assets 7,594 43,104 (11,955) 38,743
Capital expenditure 407 3,046 4 3,457
Head office costs are not related to the Group's two business
segments and are therefore included in other unallocated and are
not part of a business segment. The Group's two business segments
primarily operate in one geographical area which is the United
Kingdom.
Segmental revenue shown above is higher than Consolidated Group
revenue shown in the Consolidated Statement of Comprehensive Income
as included in The Real Greek segment is revenue of GBP1,250,000
(2018: GBPNil) that has been eliminated on consolidation. The Real
Greek revenue from external customers would have been GBP20,700,000
(2018: GBP18,139,000).
1 SEGMENT INFORMATION (continued)
For the year ended 25 March 2018:
The Real Franco
Greek Manca Other
segment segment unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 18,139 36,556 - 54,695
Headline EBITDA 2,436 5,427 (433) 7,430
Depreciation and amortisation (931) (2,751) (32) (3,714)
Headline operating
profit 1,505 2,676 (465) 3,716
Pre-opening costs (375) (834) - (1,209)
Impairment property,
plant and equipment (214) (653) - (897)
Operating profit 718 78 (654) 142
Finance income - 2 - 2
Finance costs - - (254) (254)
Segment profit/(loss)
before taxation 718 80 (908) (110)
Income tax expense (40) (40)
Profit for the year
from continuing operations (948) (150)
Assets 11,585 52,757 896 65,238
Liabilities (3,969) (10,208) (13,429) (27,606)
Net assets 7,616 42,549 (12,533) 37,632
Capital expenditure 2,874 6,741 26 9,641
Head office and PLC costs are not related to the Group's two
business segments and are therefore included in other unallocated
and are not part of a business segment. The Group's two business
segments primarily operate in one geographical area which is the
United Kingdom.
2 OPERATING PROFIT
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Operating profit is stated after charging:
Staff costs (note 3) 23,956 20,882
Depreciation of property, plant and equipment 4,261 3,684
Amortisation of intangible assets 882 851
Operating lease rentals:
Land and buildings 6,361 5,514
Inventories - amounts charged as an expense 12,371 10,489
Auditor's remuneration:
- for statutory audit services 111 83
- for other assurance services 13 20
- for tax services 24 33
- for transactional services 11 -
Share based payments 138 616
Pre-opening costs 386 1,209
Exceptional costs -impairment of investments 80 -
Exceptional costs - impairment of property, plant and equipment 130 867
Exceptional costs - loss on disposal 187 61
3 EMPLOYEES
Year Year
ended ended
31 March 25 March
2019 2018
No. No.
The average monthly number of persons (including Directors) employed by the Group during
the
year was:
Administration and management 26 29
Restaurants 1,075 1,086
1,101 1,115
The average monthly number of persons (including Directors) employed by the Company
during
the year was:
Administration and management 6 6
6 6
3 EMPLOYEES (continued)
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Staff costs for above persons
Salaries and fees 21,959 19,317
Social security costs 1,734 1,453
Share based payments 138 616
Defined contribution pension costs 263 112
24,094 21,498
DIRECTORS' REMUNERATION
The remuneration of Directors, who are the key management
personnel of the company, is set out in aggregate and on a paid
basis below. Further details of directors' emoluments can be found
in the tables of directors' remuneration in the Report on
Directors' Remuneration.
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Salaries, fees and other short term employee benefits 897 918*
Social security costs 116 72*
Share based payments 31 448
Defined contribution pension costs 3 3
1,047 1,441
* Salaries, fees and other short-term employee benefits for the
year ended 25 March 2018 included GBP278,000 bonuses and GBP38,000
social security costs paid in relation to bonuses earned from the
bonus scheme for the year ended 26 March 2017. No bonuses and
related social security costs were earnt or paid for the year ended
25 March 2018.
Included above are fees paid to related parties for the
provision of directors' services which are further described in
note 22.
The Directors are the only employees of the Company. The
Directors' remuneration above represents the only staff costs for
the Company.
3 Directors received pension contributions during the year
(2018: 3).
No Directors serving during the year exercised share options in
the year ended 31 March 2019 (2018: Nil).
4 FINANCE COSTS
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Interest expenses on bank loans
and overdrafts 327 254
327 254
5 INCOME TAX EXPENSE
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Income tax expense on continuing
operations
Based on the result for the year:
UK corporation tax at 19% (2018:
19%) 669 432
Adjustment in respect of prior periods (54) (65)
Total current taxation 615 367
Deferred taxation:
Origination and reversal of temporary
timing differences
Current year 99 (109)
Prior year - (218)
Total deferred tax 99 (327)
Total tax expense on profit on continuing
operations 714 40
The above is disclosed as
Income tax expense - current year 714 258
Income tax expense - prior year - (218)
714 40
5 INCOME TAX EXPENSE (continued)
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Income tax expense on discontinued
operations
Deferred taxation: - (13)
Total tax expense on profit on discontinued
operations - (13)
Further information on the movement on deferred taxation is
given in note 16.
Factors affecting tax charge for year: Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Profit/(loss) before taxation from continuing
operations 1,434 (110)
Taxation at UK corporation tax rate of
19% (2018: 19%) 272 (21)
Expenses not deductible for tax purposes 31 6
Depreciation/impairment on non-qualifying
fixed assets 290 214
Share based payments 171 162
Rate change on deferred tax liability - (38)
Tax effect of utilisation of tax losses 4 -
not previously recognised
Adjustment to previously recognised deferred
tax - (218)
Adjustment to tax charge in respect of
previous periods (54) (65)
Total income tax expense in the income
statement 714 40
Factors that may affect deferred tax charges are disclosed in
note 16 including a breakdown of the adjustment to previously
recognised deferred tax.
Note 23 provides additional details with regards to current and
deferred tax on discontinued operations as well as the aggregate
current and deferred tax relating to items that are charged or
credited directly to equity.
6 EARNINGS PER SHARE
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
Profit/(loss) for the purposes of basic
and diluted earnings per share: 698 (576)
Add back loss for the purposes of basic
and diluted earnings per share (discontinued
operations): - 415
Profit/(loss) for the purposes of basic
and diluted earnings per share (continuing
operations): 698 (161)
Share based payments 138 616
Deferred tax on share based payments 146 146
Pre-opening costs 386 1,209
Amortisation of brand 821 821
Deferred tax on amortisation of brand (137) (137)
Exceptional costs - impairment of investment 80 -
Exceptional costs - impairment of property,
plant and equipment 130 867
Deferred tax on impairment of property,
plant and equipment - (98)
Exceptional costs - loss on disposal 187 61
Headline profit for the year for the
purposes of headline basic and diluted
earnings per share: 2,449 3,324
Year Year
ended ended
31 March 25 March
2019 2018
No. '000 No. '000
Weighted average number of ordinary shares
in issue for the purposes of basic earnings
per share 571,385 571,385
Effect of dilutive potential ordinary
shares from share options 10,230 24,495
Weighted average number of ordinary shares
in issue for the purposes of diluted
earnings per share 581,615 595,880
6 EARNINGS PER SHARE (continued)
Further details of the share options that could potentially
dilute basic earnings per share in the future are provided in note
18.
Year Year
ended ended
31 March 25 March
2019 2018
Earnings per share:
Basic
From continuing operations 0.1p (0.0p)
From discontinued operations 0.0p (0.1p)
Total basic earnings per share 0.1p (0.1p)
Diluted
From continuing operations 0.1p (0.0p)
From discontinued operations 0.0p (0.1p)
Total basic earnings per share 0.1p (0.1p)
Headline Basic 0.4p 0.6p
Headline Diluted 0.4p 0.6p
7 INTANGIBLE ASSETS
Group Trademarks,
License and
franchises Software Brand Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
26 March 2017 58 76 8,211 20,705 29,050
Additions - 27 - - 27
25 March 2018 58 103 8,211 20,705 29,077
Additions 5 94 - - 99
31 March 2019 63 197 8,211 20,705 29,176
Accumulated amortisation
26 March 2017 23 11 1,642 - 1,676
Charge in the year 8 22 821 - 851
25 March 2018 31 33 2,463 - 2,527
Charge in the year 6 55 821 - 882
31 March 2019 37 88 3,284 - 3,409
Net book value
31 March 2019 26 109 4,927 20,705 25,767
25 March 2018 27 70 5,748 20,705 26,550
The amortisation charges for trademarks, license and franchises
and software for the year are recognised within administrative
expenses.
As at 31 March 2019 brand intangible assets which relates to
Franco Manca has a remaining amortisation period of 6 years (2018:
7 years).
Goodwill of GBP1,774,000 relates to the The Real Greek and is
attributable to its group of cash generating units.
Goodwill of GBP18,931,000 relates to the acquisition of Franco
Manca Holdings Limited ("Franco Manca Holdings"). The goodwill is
attributable to the cash generating units held within Franco Manca
2 UK Limited.
7 INTANGIBLE ASSETS (continued)
For the purposes of impairment testing, the Directors consider
each of Franco Manca and The Real Greek, operating segments of the
Group, as the lowest level within the Group at which the goodwill
is monitored for internal management purposes. Each of these
segments is made up of a group of separate restaurants which are
cash generating units (CGUs) in their own right.
The recoverable amount for each segment and group of CGUs was
determined using a value in use calculation based upon management
forecasts for the trading results for that segment. Value in use
calculations are based on:
-- cash flow forecasts derived from the most recent approved
financial budgets for the 2020 financial year for the sites open at
the end of March 2019;
-- extrapolated cash flow over twenty five years, an appropriate
timeframe for branded restaurant businesses, using forecast growth
rates based on past and current run-rates for the initial five
years that then reduce to the industry growth rate of 2%;
-- less estimated annual capital expenditure required to
maintain the existing restaurants' look and feel in each segment
based on historic refurbishment programmes and investments in IT
systems;
-- applied pre-tax discount rate to cash flow projections of
12.4% (2018: 12.4%) which is the rate believed by the Directors to
reflect the risks associated with the group of CGUs using a WACC
model with comparison to other available restaurant businesses.
During the year, the Group's capital structure had a reduced
portion of debt than the year ended 25 March 2018.
Other than as disclosed below, management believes that no
reasonably possible change in any of the above key assumptions
would cause the carrying value of any segment to materially exceed
its recoverable amount. The estimated recoverable amount of The
Real Greek and Franco Manca segments exceed their carrying values
by GBP30,388,000 and GBP21,118,000 respectively. The changes in the
following table to assumptions used in the impairment review would,
in isolation, lead to an impairment loss being recognised for the
year ended 31 March 2019:
The Real Greek Franco Manca
% %
Reduction in long term growth rate (4.7%) (3.2%)
Increase in pre-tax discount rate 32.2% 8.8%
8 PROPERTY, PLANT AND EQUIPMENT
Group Furniture,
fixtures Assets
Leasehold Plant and and under
improvements equipment fittings construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
26 March 2017 25,161 4,223 1,591 1,310 32,285
Additions 6,908 1,694 660 379 9,641
Reclassification 1,168 51 189 (1,408) -
Reclassification as held for sale (552) (75) (17) - (644)
Disposals - (6) - (61) (67)
25 March 2018 32,685 5,887 2,423 220 41,215
Additions 2,020 605 166 666 3,457
Reclassification 24 8 65 (97) -
Disposals (438) (139) (40) (5) (622)
31 March 2019 34,291 6,361 2,614 784 44,050
Accumulated depreciation
and impairment
26 March 2017 3,356 1,196 427 - 4,979
Charge in the year 2,339 1,052 334 - 3,725
Reclassification as held for sale (264) (41) (10) - (315)
Impairment 949 83 30 - 1,062
Disposals - (4) - - (4)
25 March 2018 6,380 2,286 781 - 9,447
Charge in the year 2,656 1,198 407 - 4,261
Impairment 130 - - - 130
Disposals (438) (120) (36) - (594)
31 March 2019 8,728 3,364 1,152 - 13,244
Net book value
31 March 2019 25,563 2,997 1,462 784 30,806
25 March 2018 26,305 3,601 1,642 220 31,768
.
8 PROPERTY, PLANT AND EQUIPMENT (continued)
Impairment review of property, plant and equipment is reviewed
when there is indication of impairment. For the purposes of
impairment testing of property, plant and equipment, the Directors
consider each restaurant unit as a separate cash generating units
(CGUs). The recoverable amount for each CGU was determined using a
value in use calculation based upon management forecasts for the
trading results for those restaurants. Value in use calculations
are based on:
-- cash flow forecasts derived from the most recent approved
financial budgets for the 2020 financial year for the sites open at
the end of March 2019;
-- extrapolated cash flow over the remaining unexpired length of
the lease years using forecast growth rates based on run rate
expectations for the initial five years that then reduce to the
industry growth rate of 2%;
-- less estimated annual capital expenditure required to
maintain the existing restaurants' look and feel in each segment
based on historic refurbishment programmes;
-- applied pre-tax discount rate to cash flow projections of
12.4% (2018: 12.4%) which is the rate believed by the Directors to
reflect the risks associated with the CGU using a WACC model with
comparison to other available restaurant businesses.
The Group has also conducted a sensitivity analysis on the
impairment test of the CGU carrying value including reducing sales
level by reducing long term growth rate by 1 % and there is no
reasonably expected change that would give rise to an impairment
charge other than in relation to The Real Greek restaurant 1 where
an additional impairment charge of GBP43,000 may be necessary. This
has not been recognised as plans to improve trading in this
restaurant is being implemented.
The following impairment charges have been recognised in the
Statement of Comprehensive Income as exceptional costs - impairment
of property, plant and equipment.
31 March 31 March 25 March 25 March
2019 2019 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
Impairment Recoverable Impairment Recoverable
charge amount charge amount
For continuing operations
Franco Manca Brighton - - 505 -
Marina
Franco Manca restaurant
1 - - 148 437
Franco Manca restaurant
2 75 487 - -
Franco Manca restaurant
3 26 838 - -
Total for Franco Manca
operating segment 101 1,325 653 437
The Real Greek restaurant
1 - - 214 299
The Real Greek restaurant
2 29 87 - -
Total for The Real Greek
operating segment 29 87 214 299
Total for the Group 130 1,412 867 736
For discontinued operations
Bukowski Soho - - 195 -
8 PROPERTY, PLANT AND EQUIPMENT (continued)
During the year ended 31 March 2019, the Group impaired the
short term leasehold improvements in relation to two properties
trading as Franco Manca, which are trading financially below
management expectations, and one property trading as The Real
Greek, which has just over two years left on the lease and the
lease has not yet been extended or renewed. During the year ended
25 March 2018, the Group impaired the short term leasehold
improvements in relation to the property at D'Arblay Street, Soho,
London which was sold during the year ended 31 March 2019 (see Note
23 as the recoverable amount was reclassified to Asset held for
sale) and a further two properties trading as Franco Manca and one
property trading as The Real Greek which are trading financially
below management expectation. The trading of Franco Manca
restaurant 1 has improved in the year ended 31 March 2019.
Parent Company Furniture,
fixtures
Leasehold Plant and and
improvements equipment fittings Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
26 March 2017 205 48 25 278
Additions - 7 - 7
25 March 2018 205 55 25 285
Additions - 4 - 4
31 March 2019 205 59 25 289
Accumulated
depreciation
26 March 2017 16 30 5 51
Charge in the year 21 8 2 31
25 March 2018 37 38 7 82
Charge in the year 22 9 3 34
31 March 2019 59 47 10 116
Net book value
31 March 2019 146 12 15 173
25 March 2018 168 17 18 203
All depreciation charges have been recognised in administrative
expenses in the income statement.
All non-current assets are located in the United Kingdom.
9 INVESTMENTS
31 March 25 March
2019 2018
GBP'000 GBP'000
Group
Unlisted shares at cost 201 201
Loans at cost 80 80
Impairment of loans (80) -
Carrying amount 201 281
Investments are recognised and derecognised on a trade date
where a purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, including transaction costs and subsequently
measured.
During the year ended 25 March 2018 the Group made an investment
in Made of Dough Limited subscribing for 25% of the equity.
Although the investment is for more than 20% of the investee and
includes one board representation, the structure of the investee
board, the shareholder agreement and the start up nature of the
business operations has led the Group to conclude that the Group
does not have significant influence over its operations and
therefore not an associate.
Other investments classified as finance assets are stated at
amortised cost using the effective interest method, less any
impairment. During the year ended 31 March 2019, the Group
recognised impairment of the loan investment based on estimated
future credit loss.
31 March 25 March
2019 2018
GBP'000 GBP'000
Parent Company
Cost and net book value
Opening position 43,439 43,011
Investment in subsidiaries 124 428
Closing position 43,563 43,439
9 INVESTMENTS (continued)
As at 31 March 2019, the Company had the following subsidiary
undertakings which are all registered at 1st Floor, 50-51 Berwick
Street, London W1F 8SJ:
Name of subsidiary Class Proportion Nature of business
of of shares
Holding held,
ownership
interest and
voting power
Incorporated in England and
Wales
FM98 LTD Limited* Ordinary 99% Operation of restaurants
10DAS Limited Ordinary 100% Operation of restaurants
Café Pitfield Ordinary 100% Dormant
Limited
Kefi Limited Ordinary 99% Dormant
The Real Greek Food Ordinary 99% Operation of restaurants
Company Limited*
The Real Greek Wine Ordinary 99% Dormant
Company Limited*
Souvlaki & Bar Limited* Ordinary 99% Dormant
CHG Brands Limited* Ordinary 99% Dormant
The Real Greek International
Limited* Ordinary 99% Dormant
Franco Manca Holdings
Limited Ordinary 99% Dormant
Franco Manca 2 UK Ordinary 99% Operation of restaurants
Limited*
FM6 Limited* Ordinary 99% Restaurant property
FM111 Limited* Ordinary 99% Restaurant property
FM Catherine The Great Ordinary 99% Restaurant property
Limited*
Franco Manca International
Limited* Ordinary 99% Dormant
* Held by subsidiary undertaking
10 INVENTORIES
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Raw materials and consumables 656 449 - -
Consumables 1,108 1,041 - -
1,764 1,490 - -
Inventories are charged to cost of sales in the consolidated
comprehensive statement of income.
TRADE AND OTHER RECEIVABLES
11
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Included within non-current assets:
Amounts receivable from subsidiaries - - 11,863 11,724
Other receivables 1,020 943 - -
1,020 943 11,863 11,724
Included within current assets:
Trade receivables 1,470 1,095 - 3
Other receivables 176 319 - -
Other taxation and social security costs
- - - -
Prepayments and accrued income 1,951 1,911 118 132
3,597 3,325 118 135
4,617 4,268 11,981 11,859
Other receivables due after more than one year relate to rent
deposits.
Receivables are denominated in sterling.
The Group and Company hold no collateral against these
receivables at the balance sheet date. The Directors consider that
the carrying amount of receivables are recoverable in full and
approximates to their fair value.
12 CASH AND CASH EQUIVALENTS
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 1,835 359 22 7
Cash and cash equivalents as presented in the balance sheet 1,835 359 22 7
Bank overdraft - - - -
1,835 359 22 7
Bank balances comprise cash held by the company on a short term
basis with maturity of three months or less. The carrying amount of
these assets approximates to their fair value.
TRADE AND OTHER PAYABLES
13
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Included in current liabilities:
Trade payables 4,202 5,622 67 113
Other taxation and social security payable 1,600 1,350 88 117
Other payables 843 208 1 29
Accruals 4,844 4,206 1,156 629
Deferred income 392 135 - -
11,881 11,521 1,312 888
Included in non-current liabilities:
Deferred income 1,601 1,470 - -
1,601 1,470 - -
Trade payables were all denominated in sterling and comprise
amounts outstanding for trade purchases and ongoing costs and are
non-interest bearing.
The Directors consider that the carrying amount of trade
payables approximate to their fair value.
Deferred income relates to lease incentives received by the
Group on restaurant leases acquired.
BORROWINGS
14
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Short term borrowings:
Bank overdraft - - - -
Long term borrowings:
Bank loans 11,240 12,350 11,240 12,350
Amounts owed to subsidiary undertakings - - 2,481 975
11,240 12,350 13,721 13,325
11,240 12,350 13,721 13,325
As at 31 March 2019, the Group's committed Sterling borrowing
facilities comprises a revolving credit facility of GBP14,250,000
(2018: GBP14,250,000) expiring between two and five years and a
bank overdraft facility from HSBC Bank PLC which is secured by a
mortgage debenture in favour of HSBC Bank PLC representing fixed or
floating charges over all assets of the Group. The interest rate
applicable on this bank loan is 2.50% above LIBOR.
The bank overdraft is repayable on demand with interest being
charged at 2.5% over base rate and is secured by a debenture giving
fixed and floating charges over all assets of the Group.
Amounts owed to subsidiary undertakings are amounts borrowed
from The Real Greek Food Company Limited, a subsidiary of the
Company and are repayable on 31 March 2021. The interest rate
applicable on the amounts owed to subsidiary undertakings is
3.5%.
15 CAPITAL AND FINANCIAL MANAGEMENT
The Group is exposed to financial risks which could affect the
Group's future financial performance.
This note describes the objectives, policies and processes of
the Group for managing those risks and the methods used to measure
them.
The Group finances its operations through equity, borrowings and
cash generated from operations. For borrowings, the Group's policy
is to borrow centrally using a mixture of long-term and short-term
borrowing facilities to meet anticipated funding requirements.
These borrowings, together with cash generated from operations, are
loaned internally or contributed as equity to certain
subsidiaries.
Financial Assets and Liabilities
The Group and Company had the following financial assets and
liabilities:
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Non-current financial assets
Other investments 201 281 - -
Amounts owed by subsidiary undertakings - - 11,863 11,724
Other receivables 1,020 943 - -
Current financial assets
Cash at bank and in hand 1,835 359 22 7
Trade and other receivables* 1,646 1,414 - 3
4,702 2,997 11,885 11,734
Current financial liabilities
At amortised cost - borrowings - - - -
At amortised cost - payables** 9,889 10,036 1,224 771
Non-current financial liabilities
At amortised cost - borrowings 11,240 12,350 11,240 12,350
At amortised cost - payables - - 2,481 975
21,129 22,386 14,945 14,096
* excludes other taxation and social security receivable and
prepayments included in trade and other receivables in note 11.
** excludes other taxation and social security and deferred
income included in trade and other payables in note 13.
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
The maturity analysis table below analyses the Group's financial
assets and liabilities into relevant maturity groupings based on
the remaining period at the balance sheet to the contractual
maturity date. The amounts disclosed in the table are contractual
undiscounted cash flows.
For the year ended 31 March 2019
Between More
Less than 1 and than
1 year 5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
Other investments - - 201 201
Cash at bank and in hand 1,835 - - 1,835
Trade and other receivables 1,646 57 963 2,666
Bank loans and overdrafts - (11,240) - (11,240)
Trade and other payables (9,889) - - (9,889)
(6,408) (11,183) 1,164 (16,427)
For the year ended 25 March 2018
Between More
Less than 1 and than
1 year 5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
Other investments - 80 201 281
Cash at bank and in hand 359 - - 359
Trade and other receivables 1,414 43 900 2,357
Bank loans - (12,350) - (12,350)
Trade and other payables (10,036) - - (10,036)
(8,263) (12,227) 1,101 (19,389)
The financial instruments recognised on the balance sheets and
shown above are all loans and receivables and financial liabilities
at amortised cost.
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
The maturity analysis table below analyses the Company's
financial assets and liabilities into relevant maturity groupings
based on the remaining period at the balance sheet to the
contractual maturity date. The amounts disclosed in the table are
contractual undiscounted cash flows.
For the year ended 31 March 2019
Between
Less than 1 and
1 year 5 years Total
GBP'000 GBP'000 GBP'000
Trade and other receivables - 11,863 11,863
Bank loans and overdrafts - (11,240) (11,240)
Trade and other payables (1,224) (2,481) (3,705)
(1,224) (1,858) (3,082)
For the year ended 25 March 2018
Between
Less than 1 and
1 year 5 years Total
GBP'000 GBP'000 GBP'000
Trade and other receivables 3 11,724 11,727
Bank loans and overdrafts - (12,350) (12,350)
Trade and other payables (771) (975) (1,746)
(768) (1,601) (2,369)
The financial instruments recognised on the balance sheets and
shown above are all loans and receivables and financial liabilities
at amortised cost.
Liquidity Risks
The Group and Company had a committed long term revolving credit
facility of GBP14,250,000 (2018: GBP14,250,000) and short term bank
overdraft facilities available to manage its liquidity as at 31
March 2019 of GBP750,000 (2018: GBP750,000).
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
Market Risks
The Group's market risk exposure arises mainly from its floating
interest rate interest bearing borrowings. Only the following
financial assets and liabilities were interest bearing:
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Floating rate
Other investments - 80 - -
Cash at bank and in hand 1,835 359 22 7
Bank overdraft - - - -
Bank loans (11,240) (12,350) (11,240) (12,350)
(9,405) (11,911) (11,218) (12,343)
Trade and other receivables and trade and other payables are all
non-interest bearing.
Weighted average interest rates paid for bank loans during the
year ended 31 March 2019 were 1.9% and year ended 25 March 2018
were 1.9% and the weighted average interest rates paid for bank
overdrafts during the year ended 31 March 2019 were 2.5% and year
ended 25 March 2018 were 2.5%.
The Group has derived a sensitivity analysis based on a 0.5%
variance in LIBOR element of floating interest rates. The
annualised impact of an increase in LIBOR by 0.5% applied to the
balance of floating rate bank loans at the year end would be
GBP56,200 (2018: GBP61,750).
Foreign Exchange Risks
During the years ended 31 March 2019 and 25 March 2018, the
Group did not receive or pay significant amounts denominated in
foreign currencies. As purchasing from foreign franchised
territories that is not denominated or agreed in Sterling increase
to a significant level, the Group will implement a foreign exchange
management policy.
15 CAPITAL AND FINANCIAL MANAGEMENT (continued)
Credit Risks
The Group's exposure to credit risk arises mainly from as
follows:
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Other investments - 80 - -
Cash at bank and in hand 1,835 359 22 7
Trade receivables and other receivables 1,646 1,414 11,863 11,727
3,481 1,853 11,885 11,734
The Group estimated that a future credit loss was likely in
relation to the other investments held by the Group. Therefore the
Group has recognised impairment of GBP80,000 during the year ended
31 March 2019. The carrying amounts of the other financial assets
above are considered to be recoverable in full and approximate to
their fair value. They are neither past due nor impaired:
The majority of the Group's cash balances have been held in
current accounts at HSBC Bank PLC during the years ended 31 March
2019 and 25 March 2018 and did not earn any significant
interest.
The majority of the Group's trade receivables are due for
maturity within 7 days and largely comprise amounts receivable from
credit and debit card clearing houses. As the Group has no material
credit facilities granted to customers no credit losses have been
estimated.
The Company's trade and other receivables are made up of loans
to its subsidiary undertaking, Franco Manca 2 UK Limited. The
Company has undertaken to determine whether there has been a
significant increase in credit risk. Where these procedures
identify a significant increase in credit risk, the loss allowance
is measured based on the risk of a default occurring over the
expected life of the instrument. No increase in credit risk has
been identified.
Fair Values of Financial Assets and Financial Liabilities
The fair value amounts of the Group's and Company's financial
assets and liabilities as at 31 March 2019 and 25 March 2018 did
not materially vary from the carrying value amounts.
16 DEFERRED TAXATION
Analysis of movements in net deferred tax balance during the
period:
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Opening position (1,586) (859) 185 1,238
Adjustment in relation to prior year
cumulative deferred tax on share based
payments error - (484) - (498)
Tax on share based payments 253 (583) 253 (493)
Transfer from/(to) reserves 253 (1,067) 253 (991)
Adjustment in relation to brought
forward deferred tax errors - 218 - -
Movement in accelerated capital
Allowances - continuing (90) 17 - -
- discontinued 13 - -
Tax on share based payments (146) (45) (151) (62)
Tax on intangible assets 137 137 - -
Transfer from/(to) profit and loss (99) 340 (151) (62)
Net deferred tax (liability)/asset (1,432) (1,586) 287 185
During the year ended 31 March 2019, the Group transferred
GBP253,000 deferred tax charge from reserves (2018: GBP1,067,000 to
reserves) in relation to deferred tax on share based payments which
included GBPNil (2018: GBP484,000) error relating to the year ended
26 March 2017 and before.
16 DEFERRED TAXATION (continued)
The Group's deferred taxation liability disclosed above relates
to the following:
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Deferred tax assets
Share options 301 193 287 185
Deferred taxation assets 301 193 287 185
Deferred tax liabilities
Accelerated capital allowances 912 829 - -
Intangible assets 821 950 - -
Deferred taxation liabilities 1,733 1,779 - -
The Company has losses of GBP283,000 (2018: GBP283,000) which,
subject to agreement with HM Revenue & Customs, are available
to offset against the Company's future profits. A deferred taxation
asset in respect of these losses of GBP51,000 (2018: GBP51,000) has
not been recognised in the financial statements. Although the
directors are confident that the Company will achieve future
profitability in line with current expectations, the timing of such
profits is uncertain and therefore the directors have not
recognised the entire deferred tax asset. The Directors have
recognised deferred tax assets in relation to the share based
payment charge recognised in the year as such deferred tax asset
may be used against future group tax relief.
17 SHARE CAPITAL
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Allotted, issued called up and fully paid:
571,385,237 (2018: 571,385,237) ordinary shares of 1p
each 5,714 5,714 5,714 5,714
The Company has one class of ordinary share which carries no
rights to fixed income.
18 SHARE BASED PAYMENTS
The Group currently uses a number of equity settled share plans
to incentivise to its Directors and employees.
The Group operates four share plans:
-- The Fulham Shore Enterprise Management Incentive ("EMI") Share Option Plan;
-- The Fulham Shore Unapproved Share Option Plan ("Unapproved Plan");
-- The Fulham Shore Company Share Option Plan ("CSOP"); and
-- The Fulham Shore Share Incentive Plan ("SIP")
The Group's Share Plans provide for a grant price equal to the
market price of the Company shares on the date of grant. The
vesting period on all Share Plans except the SIP is 3 years with an
expiration date 7 to 10 years from the date of grant. Furthermore,
share options are forfeited if the employee leaves the Group before
the options vest unless forfeiture is waived at the discretion of
the Remuneration Committee. For the SIP, the vesting period ranges
from 1 day to 3 years with an expiration date 10 years from the
date of grant. For the initial grant under the SIP, the shares are
not forfeited if the employee leaves the Group before vesting. On
all schemes, there are no other material vesting conditions.
The charge recorded in the financial statements of the Group in
respect of share-based payments is GBP138,000 (2018:
GBP616,000).
The Fulham Shore EMI, Unapproved Plan and CSOP
Outstanding share options under The Fulham Shore EMI, The Fulham
Shore Unapproved Share Option Plan and The Fulham Shore CSOP to
acquire ordinary shares of 1 pence each as at 31 March 2019 are as
follows:
Year Year
ended ended
31 March 25 March
2019 2018
'000 '000
At the beginning of the year 62,633 60,608
Granted during the year 3,800 2,950
Lapsed during the year (2,625) (925)
At the end of the year 63,808 62,633
18 SHARE BASED PAYMENTS (continued)
Weighted average exercise price
Year Year
ended ended
31 March 25 March
2019 2018
GBP GBP
At the beginning of the year 0.10 0.09
Granted during the year 0.10 0.18
Lapsed during the year (0.16) (0.18)
At the end of the year 0.09 0.10
Outstanding and exercisable share options to acquire ordinary
shares of 1 pence each as at 31 March 2019 under various Group
share plans are as follows:
For the year ended 31 March 2019
Options outstanding Options exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
EMI
GBP0.02 2,232 0.0200 11 2,232 0.0200 11
GBP0.05 2,779 0.0500 23 2,779 0.0500 23
GBP0.06 9,440 0.0600 31 9,440 0.0600 31
14,451 0.0519 26 5,011 0.0519 26
Unapproved
GBP0.05 554 0.0500 23 554 0.0500 23
GBP0.06 13,805 0.0600 31 13,805 0.0600 31
GBP0.1015 1,792 0.1015 111
GBP0.11 24,023 0.1100 37 24,023 0.1100 37
GBP0.17625 1,185 0.1763 99
GBP0.1775 162 0.1775 95 - - -
GBP0.1825 1,692 0.1825 87 - - -
43,213 0.0988 42 38,382 0.0596 35
CSOP
GBP0.1015 1,808 0.1015 111
GBP0.17625 1,065 0.1763 99
GBP0.1775 638 0.1775 95 - - -
GBP0.1825 2,633 0.1825 87 - - -
6,144 0.1802 97 - - -
18 SHARE BASED PAYMENTS (continued)
For the year ended 25 March 2018
Options outstanding Options exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
EMI
GBP0.02 2,232 0.0200 23 2,232 0.0200 23
GBP0.05 2,779 0.0500 35 2,779 0.0500 35
GBP0.06 9,440 0.0600 43 9,440 0.0600 43
14,451 0.0519 38 5,011 0.0519 38
Unapproved
GBP0.05 554 0.0500 35 554 0.0500 35
GBP0.06 13,805 0.0600 43 13,805 0.0600 43
GBP0.11 24,673 0.1100 49 - - -
GBP0.17625 1,285 0.1763 111
GBP0.1775 162 0.1775 107 - - -
GBP0.1825 2,064 0.1825 99 - - -
42,543 0.0988 50 14,359 0.0596 35
CSOP
GBP0.17625 1,465 0.1763 111
GBP0.1775 738 0.1775 107 - - -
GBP0.1825 3,436 0.1825 99 - - -
5,639 0.1802 103 - - -
During the year ended 31 March 2019, the market price of
ordinary shares in the Company ranged from GBP0.0910 (2018:
GBP0.0900) to GBP0.1288 (2018: GBP0.2238). The share price as at 31
March 2019 was GBP0.1125 (2018: GBP0.0935).
The fair value of the options is estimated at the date of grant
using a Black-Scholes valuation model.
Expected life of options used in the model is based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
18 SHARE BASED PAYMENTS (continued)
Expected volatility was determined by calculating the historical
90 days volatility of the Group's share price over the previous 180
days. The inputs to the Black Scholes model were as follows:
Year Year
ended ended
31 March 25 March
2019 2018
Weighted average expected life 3 years 3 years
Weighted average exercise price 10.15 pence 17.625 pence
Risk free rate 0.50% 0.50%
Expected volatility 69.8% 34.1%
Expected dividends - -
The Fulham Shore SIP
The Fulham Shore SIP was introduced during the year ended 27
March 2015. Outstanding ordinary shares of 1 pence each granted
under The Fulham Shore SIP as at 31 March 2019 are as follows:
Year Year
ended ended
31 March 25 March
2019 2018
'000 '000
At the beginning and end of the year 591 591
For the year ended 31 March 2019
SIP shares outstanding SIP shares exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
Nil 591 - 73 591 - 73
591 - 73 591 - 73
18 SHARE BASED PAYMENTS (continued)
For the year ended 25 March 2018
SIP shares outstanding SIP shares exercisable
Range of Weighted Weighted
exercise Weighted average Weighted average
prices Number average remaining Number average remaining
of exercise contractual of exercise contractual
shares price life shares price life
'000 GBP months '000 GBP months
Nil 591 - 85 591 - 85
591 - 85 591 - 85
The fair value of the SIP shares is estimated at the date of
grant using a Black-Scholes valuation model.
19 NOTE TO CASH FLOWS STATEMENTS
Reconciliation of net cash flows from operating activities
Group Parent
Year Year Year Year
ended ended ended ended
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) from continuing
operations 720 (150) (878) (1,566)
Loss from discontinued operations - (415) - -
Profit/(loss) for the year 720 (565) (878) (1,566)
Income tax expense 714 27 150 61
Profit/(loss) before tax 1,434 (538) (728) (1,505)
Finance income (8) (2) (468) (465)
Finance costs 327 254 392 312
Operating profit/(loss)
for the year 1,753 (286) (804) (1,658)
Adjustments
Depreciation and amortisation 5,144 4,575 34 31
Impairment 210 1,062 - 1,004
Loss on disposal of fixed
assets 27 63 - -
Share based payments expense 138 616 14 188
Cost of acquisition - - - -
Operating cash flows before
movements in working capital 7,272 6,030 (756) (435)
Increase in inventories (274) (438) - -
(Increase)/decrease in trade
and other receivables (349) (719) 18 49
Increase/(decrease) in trade
and other payables 491 63 425 (123)
Cash generated from/(used
in) operations 7,140 4,936 (313) (509)
Income taxes paid (1,008) (414) - -
Net cash flow from operating
activities 6,132 4,522 (313) (509)
19 NOTE TO CASH FLOWS STATEMENTS (continued)
Changes in liabilities from financing activities
Cash Borrowings Borrowings
and due due
Cash within after
Equivalents 1 year 1 year Total
GBP'000 GBP'000 GBP'000 GBP'000
Net debt as at 26 March
2017 271 (180) (6,000) (5,909)
Cash flows 88 180 (6,350) (6,082)
Net debt as at 25 March
2018 359 - (12,350) (11,991)
Cash flows 1,476 - 1,110 2,586
Net debt as at 31 March
2019 1,835 - (11,240) (9,405)
COMMITMENTS UNDER OPERATING LEASES
20
The Group had aggregate minimum lease payments under
non-cancellable operating leases which fall due as follows:
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Land and buildings
within one year 6,697 6,043 136 136
in two to five years 24,246 22,652 123 261
after five years 47,271 48,711 - -
78,214 77,406 259 397
Others
within one year 60 21 - -
60 21 - -
78,274 77,427 259 397
Included above are certain annual lease commitments relating to
a subsidiary company that have been guaranteed by the parent
company.
Operating lease payments for land and buildings represent rent
payable by the Group for a restaurant property. Leases either
negotiated as a new lease or acquired through lease assignment have
an average term of 20 years and rentals are fixed for an average of
5 years.
CAPITAL COMMITMENTS
21
The Group capital expenditure contracted for but not provided in
the financial statements as follows:
Group Parent company
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Committed new restaurant builds 1,040 - - -
22 RELATED PARTY DISCLOSURES
Remuneration of key management personnel
The remuneration of the directors, who are the key management
personnel of the Group is provided in the Report on Directors'
Remuneration, and in note 3. Details of share options granted to
Directors are also shown in the Report on Directors'
Remuneration.
Other related party transactions
During the year, the Group provided restaurant management or
operation services to the following companies in which DM Page and
NAG Mankarious are directors and shareholders:
Amounts invoiced (including VAT) Group Parent company
Year Year Year Year
ended ended ended ended
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Wild Food Ideas Limited 1 4 - -
1 4 - -
Amounts outstanding Group Parent company
at year end
31 March 25 March 31 March 25 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Wild Food Ideas Limited - - - -
- - - -
22 RELATED PARTY DISCLOSURES (continued)
During the year, the Group was invoiced GBP84,000 (2018:
GBP83,000) for the services of NJ Donaldson by London Bridge
Capital Partners LLP, a company in which NJ Donaldson is a
director, and the balance outstanding at 31 March 2019 was
GBP17,000 (2018: GBP33,000).
During the year, the Group was invoiced GBP6,000 (2018:
GBP146,000) for franchise fees and products by Bukowski Limited, a
company in which NAG Mankarious is a director and DM Page and NAG
Mankarious are shareholders. The balance outstanding at 31 March
2019 was GBPNil (2018: GBP19,000). The Group also acquired
equipment of GBPNil (2018: GBP18,000) from Bukowski Limited and the
balance owed by the Group outstanding at 31 March 2019 was GBPNil
(2018: GBP18,000)
During the year, the Group was invoiced GBP857,000 (2018:
GBP936,000) for restaurant management services by Room 307 Limited,
a company in which NAG Mankarious and NCW Wong are directors and DM
Page, NAG Mankarious and NCW Wong are shareholders. The balance
outstanding at 31 March 2019 was GBP249,000 (2018: GBP266,000).
During the year, the Group was invoiced GBP132,000 (2018:
GBP171,000) for information technology services by Restaurants IT
Limited, a company in which NCW Wong is a director and DM Page, NAG
Mankarious and NCW Wong are shareholders. The balance outstanding
at 31 March 2019 was GBP49,000 (2018: GBP61,000).
During the year, the Group credited GBP2,000 (2018: invoiced
GBP86,000) in rent relating to a property leased to Fixed
Restaurants Limited, a company in which DM Page, NAG Mankarious, NJ
Donaldson and NCW Wong are directors and indirect shareholders and
MA Chapman is an indirect shareholder. The balance outstanding as
at 31 March 2019 owed to Fixed Restaurants Limited was GBP37,000
(2018: GBPNil).
During the year, the Group and Company invoiced GBP12,000 (2018:
GBP3,000) for desk space provided to and GBP76,000 (2018: GBPNil)
in rent relating to a property leased to Meatailer Limited, a
company in which DM Page and NAG Mankarious are directors and
shareholders and NJ Donaldson and NCW Wong are shareholders. The
balance outstanding as at 31 March 2019 was GBP21,000 (2018:
GBPNil).
Transactions between the Company and its subsidiaries
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation. During the
year, the Company provided restaurant management services to the
following subsidiaries:
Amounts invoiced (including VAT)
Parent company
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
10DAS Limited 9 57
The Real Greek Food Company Limited 615 603
Franco Manca 2 UK Limited 791 806
1,415 1,466
22 RELATED PARTY DISCLOSURES (continued)
During the year the Company also loaned amounts to the following
subsidiaries:
Amounts loaned/(repaid)
Parent company
Year Year
ended ended
31 March 25 March
2019 2018
GBP'000 GBP'000
10DAS Limited (245) 331
The Real Greek Food Company Limited (1,489) 1,215
Franco Manca 2 UK Limited 368 4,423
(1,366) 5,969
Amounts outstanding at year
end Parent company
31 March 25 March
2019 2018
GBP'000 GBP'000
10DAS Limited (16) 1,233
The Real Greek Food Company
Limited (2,464) (975)
Franco Manca 2 UK Limited 11,863 11,494
9,383 11,752
The Company was a legal guarantor and a party to an agreement in
which 10DAS Limited during the year, a subsidiary company, entered
into a lease of a restaurant space. The total potential aggregate
minimum lease payments under this guarantee at the end of the year
were GBPNil (2018: GBP1,462,000). This commitment is included in
the Group disclosure in note 20. Following the year end, the
guarantee was released.
23 DISCONTINUED OPERATION AND NON-CURRENT ASSETS CLASSED AS HELD FOR SALE
During the period, the Group disposed of the property and
business of the Bukowski franchise at D'Arblay Street, Soho,
London. An impairment loss was recognised in the year ended 25
March 2018 on reclassification of the property, plant and equipment
as held for sale.
Year
ended
25 March
2018
GBP'000
Revenue 617
Expenses (850)
Operating loss (233)
Net finance costs -
Loss before taxation (233)
Income taxation expense 13
(220)
Impairment (195)
Loss from discontinued operations attributable to the owners of the company (415)
Cash flows from discontinued operations included in the consolidated cash flow statement are
as follows:
Net cash used in operating activities (301)
Net cash used in investing activities 18
(283)
Property, plant and equipment held for sale 329
The impairment charge above related to the impairment of the
property, plant and equipment for the D'Arblay Street restaurant
business. The Group expected the fair value less costs to be
approximately GBP329,000. There were no liabilities expected to be
held for sale. The cash received from the sale during the year was
GBP329,000.
24 SUBSEQUENT EVENTS
On 15 July 2019, the Company entered into a conditional sale and
purchase agreement for the purchase of the approximately 1%
minority interests in its two subsidiaries: Kefi Limited ("Kefi"),
which owns the subsidiary that owns and operates The Real Greek;
and Franco Manca Holdings Limited (formerly Rocca Limited) ("FM
Holdings"), which owns the subsidiary that owns and operates Franco
Manca, for a total maximum consideration of up to GBP650,658,
payable in cash. The purchase of the minority interests is subject
to the approval of shareholders at the Company's 2019 annual
general meeting.
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END
FR EAAXSFAENEAF
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