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Fulham Shore PLC - Half-year Report

RNS Number : 9045W
Fulham Shore PLC (The)
16 December 2019
 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

The Fulham Shore PLC

Unaudited interim results for the six months ended 29 September 2019

 

 

The Directors of The Fulham Shore PLC ("Fulham Shore" or the "Group") are pleased to announce unaudited interim results for the six months ended 29 September 2019.

 

Financial Highlights

·      Revenues increased 9.3% to £36.0m (2018: £33.0m)

·      Headline EBITDA* of £8.4m after adoption of IFRS 16 and £5.0m before adoption of IFRS 16** (2018: £4.6m)

·      EBITDA* of £7.8m after adoption of IFRS 16 and £4.2m before adoption of IFRS 16** (2018: £4.1m)

·      Operating profit of £2.1m after adoption of IFRS 16 and £1.5m before adoption of IFRS 16** (2018: £1.6m)

·      Profit after tax of £0.4m after adoption of IFRS 16 and £1.0m before adoption of IFRS 16** (2018: £0.9m)

·      Operating cash inflow of £9.4m after adoption of IFRS 16 and £5.6m before adoption of IFRS 16** (2018: £4.9m)

·      Net debt (excluding lease liabilities) of £8.8m (2018: £8.9m); down from £9.4m at 31 March 2019

 

* Definition of Headline EBITDA and EBITDA can be found in note 3 to the unaudited interim financial information.

** The Group adopted IFRS 16 accounting standard for leases during the year but in line with transitional rules, the comparatives have not been restated. Further details on the impact of IFRS 16 can be found in note 9 to the unaudited interim financial information.

 

Operational Highlights

 

·      Opened 6 new Franco Manca pizzeria

·      Opened 1 new The Real Greek restaurant

·      Post the period end:

1 further Franco Manca opened today located just off Bishopsgate, London

1 further The Real Greek opened by Tower Bridge, London

Launched Franco Manca loyalty scheme and mobile app with more than 55,000 users registered to date

 

 

David Page, Chairman of Fulham Shore, said:

"We are pleased to have delivered good performance during the first half of the current financial year with revenue increasing by 9.3% across the Group. The performance was driven by seven successful new restaurant openings as well as increased customer numbers in our restaurants. This demonstrates the exceptional quality and value-for-money proposition at both Franco Manca and The Real Greek.

 

Looking ahead, the Board remains confident that Fulham Shore is well positioned for continued growth and a great future. We look forward to continuing this positive momentum in the period ahead."

 

Contacts:

 

The Fulham Shore plc

www.fulhamshore.com

David Page / Nick Wong

 

Tel: 020 3026 8129

Allenby Capital Limited (Nominated Adviser and Broker)

Nick Naylor / Jeremy Porter / James Reeve

 

Tel: 020 3328 5656

 

Hudson Sandler (Financial PR)

Alex Brennan / Lucy Wollam

[email protected]

Telephone: 020 7796 4133

 

 

 

 

Notes for editors

 

Information on The Fulham Shore PLC

 

Fulham Shore was incorporated in March 2012. The Directors believed that there were attractive investment opportunities within the restaurant sector in the UK and that, given their collective experience in the restaurant sector, they could take advantage of the opportunities which existed.

 

The ordinary shares of the Company were admitted to trading on AIM in October 2014 in order to capitalise on such opportunities and to give the company's employees, customers and public the ability to share in the enterprise.

 

Today, Fulham Shore owns and operates "The Real Greek" (www.therealgreek.com) and "Franco Manca" (www.francomanca.co.uk) restaurants.

 

The Real Greek

 

Since its foundation in London in 1999, The Real Greek business has grown steadily, now offering modern Greek cuisine in 18 restaurants across London and Southern England.

 

The Real Greek food centres on the delicious, healthy diet of the Eastern Mediterranean, staying true to the Greek ethos of food, family and friends. Dishes are created using premium ingredients sourced from Greece and Cyprus whenever possible, and developed by Tonia Buxton, the face of Greek food in the UK.

 

The Real Greek's menu and atmosphere retain the spirit of eating in Greece, encouraging diners to take their time eating amongst friends and family, be it a relaxed dinner, family get-together, or a fully catered party.

 

Franco Manca

 

Franco Manca opened its first restaurant in 2008 and now has 51 restaurants, primarily in London, but with recent openings in Edinburgh, Manchester, Birmingham and Leeds. Other locations outside London are planned for the next 12 months. Franco Manca also has a franchised pizzeria on the island of Salina in Italy.

 

Franco Manca's pizza is made from slow-rising sourdough and is baked in an oven that produces high heat. The slow levitation and blast cooking process lock in the flour's natural aroma and moisture, giving a soft and easily digestible crust. Where possible, locally sourced and organic ingredients are used. Pizza prices start from £5.00.

 

Franco Manca has received the following accolades:

 

- Winner of the R200 Best Value Restaurant Operator- Over 20 Sites Award 2019 and 2017

 

- Winner of the CGA Peach Hero and Icon Awards Best Concept award 2016

 

 

 

Chairman's statement

 

Introduction

 

I am pleased to announce the unaudited interim results for the six months ended 29 September 2019 for The Fulham Shore PLC.

 

Fulham Shore has had a successful first half of the financial year. During the six months ended 29 September 2019 (the "Half Year") revenue grew to £36.0m, up 9.3% (2018: £33.0m).

 

IFRS 16

 

This is the first period in which we are reporting our figures after adopting the new IFRS 16 accounting standard for leases ("IFRS 16"). IFRS 16 came into effect for accounting periods commencing on or after 1 January 2019.

 

The main impact of the standard is to capitalise the Group's property rental leases as "right-of-use assets" within non-current assets along with corresponding lease liabilities representing the leases' cash flow obligations. The right-of-use assets are then depreciated over the life of the lease and a notional interest charge is recorded on the lease liabilities.

 

The standard allows for different transition options and the Group has adopted the modified retrospective approach where the cumulative effect of initially applying IFRS 16 is recognised at the date of initial application (1 April 2019) and the right of use asset is calculated based on the corresponding lease liability. Therefore, the Group has not restated the comparatives. The impact of IFRS 16 on the Half Year is summarised below (further information can also be found in note 9 to the unaudited interim financial information):

 

 

Six months 

ended 

29 September 

2019 

(IFRS 16)

Six months 

ended 

29 September 

2019 

(IAS 17)

Six months 

ended 

23 September 

2018 

(IAS 17)

 

Unaudited 

£m 

Unaudited 

£m 

Unaudited 

£m 

Revenue

36.0 

36.0 

33,0 

Headline EBITDA*

8.4 

5.0 

4.6 

EBITDA

7.8 

4.2 

4.1 

Operating profit

2.1 

1.5 

1.6 

Profit before taxation

0.7 

1.4 

1.5 

Profit after taxation

0.4 

1.0 

0.9 

Operating cash inflow

9.4 

6.0 

4.9 

Net Assets

40.7 

39.2 

38.9 

 

             

             

             

 

Trading performance

 

Headline EBITDA* increased to £8.4m (2018: £4.6m) incorporating the application of IFRS 16. If we had not adopted IFRS 16, our Headline EBITDA** for the Half Year would have been £5.0m (2018: £4.6m). During the Half Year, we opened 7 new restaurants (2018: 2) leading to an increase in pre-opening costs to £0.5m (2018: £0.2m). Although operating profit for the Half Year was up 25.7% to £2.1m (2018: £1.6m) incorporating the application of IFRS 16, in line with the higher pre-opening costs operating profit before adoption of IFRS 16 was £1.5m (2018: £1.6m).

 

Strategic progress

 

Franco Manca traded satisfactorily during the Half Year, increasing revenue and profits. This robust performance was driven by six new restaurant openings (in Greenwich, Birmingham, Exeter, Leeds, Edinburgh and Manchester) during the Half Year as well as increased customer numbers in our existing Franco Manca pizzeria. This demonstrates the continued success of Franco Manca's clear growth strategy, popular appeal and strong value-for-money proposition.

 

 

 

As previously reported, trading at The Real Greek proved difficult during summer 2019. A number of terraces were not consistently useable during this period and this softer trading was compounded by particularly strong revenue comparatives against the glorious summer of 2018. The Real Greek opened one new restaurant in the Strand, London at the end of the Half Year, which is trading well. Since the Summer, we have seen improving trends across our Real Greek restaurants.

 

Cash flow

 

During the period, the Group generated higher cash inflow from operating activities of £9.4m (2018: £4.9m) due mainly to the adoption of IFRS 16. The cash inflow from operating activities, before the adoption of IFRS 16, increased 23.2% to £6.0m (2018: £4.9m). As a result of the recognition of £5.2m of short term lease liabilities and associated adjustments from the adoption of IFRS 16, the net current liabilities of the Group have increased to £12.6m (2018: £5.1m reported under IAS 17). The cash flow of the Group has not changed following adoption of IFRS 16 other than for categorisation on the consolidated cash flow statement.

 

The Group increased its capital expenditure, before right-of-use assets, investing £4.6m (2018: £1.7m), the majority of which was in new restaurant openings.

 

During the Half Year, the Group acquired the remaining minority interests (approximately 1% each) in Kefi Limited, which owns the subsidiary that owns and operates The Real Greek restaurants, and Franco Manca Holdings Limited, which owns the subsidiary that owns and operates the Franco Manca pizzeria, from two directors of the Company for a total sum of £0.6m in cash.

 

Overall net cash outflow for the period was £0.1m (2018 net cash inflow of: £2.9m) due primarily to our increased opening schedule. Despite this, net debt (excluding lease liabilities) remained at a manageable level as planned.  As at 29 September 2019, net debt was £8.8m (24 September 2019: £8.9m), down from £9.4m as at 31 March 2019.

 

Dividends

 

No dividend is being proposed by the Board in line with its policy that, subject to the availability of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate and prudent to do so. As previously indicated, a modest dividend will be considered by the Board at the year-end, if it is considered prudent to do so.

 

Current trading and outlook

 

Current trading remains satisfactory but the sector's outlook is not helped by poor consumer confidence.

 

Following the Half Year, we have opened two restaurants in London: a new Franco Manca on Middlesex Street, just off Bishopsgate, and a The Real Greek on the south side of Tower Bridge.

 

This brings the current group total to 69 restaurants in the UK, comprising 51 Franco Manca and 18 The Real Greek. We are close to agreeing terms on further sites due to open in calendar years 2020 and 2021 in London and around the UK.

 

Our opening plan contemplates growing the UK business by 8 to 10 new restaurants in the next financial year. Over the next couple of years, we will seek to establish one of our businesses internationally.

 

Following the Half Year, Franco Manca launched its loyalty scheme and phone app. The investment in this system has already attracted more than 55,000 users and, going forward, will provide an excellent platform for the business to build on customer engagement and to encourage more regular visits.

 

As a growing restaurant business, our central team also continues to grow, ensuring that we have the necessary resources to make this expansion successful. We continue to invest in our team members through providing better career pathways, training and support.

 

 

 

The Directors believe that Fulham Shore, underpinned by the strength of its popular restaurant businesses and the widespread appeal of our value and quality proposition, is well placed to continue to address the challenges faced by the UK restaurant sector. As a profitable, growing restaurant company, we look forward to the second half of our financial year with confidence.

 

 

 

David Page

Chairman

 

16 December 2019

 

* Definition of Headline EBITDA can be found in note 3 to the unaudited interim financial information.

** Headline EBITDA calculated before application of IFRS 16 can be found in note 9 to the unaudited interim financial information.

 

 

 

The Fulham Shore PLC

Unaudited Consolidated Statement of Comprehensive Income

for the six months ended 29 September 2019

 

 

 

Six months 

ended 

29 September 

2019 

(IFRS 16)

Six months 

ended 

23 September 

2018 

(IAS 17)

Year 

ended 

31 March 

2019 

(IAS 17)

 

Notes

Unaudited 

£'000 

Unaudited 

£'000 

Audited 

£'000 

 

 

 

 

 

Revenue

 

36,034 

32,978 

63,985 

Cost of sales

 

(21,035)

(19,632)

(38,237)

 

 

             

             

             

Gross profit

 

14,999 

13,346 

25,748 

Administrative expenses

 

(11,905)

(10,887)

(22,253)

 

 

             

             

             

Headline operating profit

 

3,094 

2,459 

3,495 

Share based payments

 

(82)

(93)

(138)

Pre-opening costs

 

(532)

(188)

(386)

Amortisation of brand

 

(411)

(411)

(821)

Exceptional costs

- cost of acquisition

 

 

(14)

 

 

- impairment of property, plant and equipment

 

(130)

- impairment of investment

 

(80)

- loss on disposal of property, plant and equipment

 

(137)

(187)

 

 

             

             

             

Operating profit

 

2,055 

1,630 

1,753 

Finance income

 

Finance costs

4

(1,318)

(155)

(327)

 

 

             

             

             

Profit before taxation

 

743 

1,477 

1,434 

Income tax expense

5

(357)

(537)

(714)

 

 

             

             

             

Profit for the period

 

386 

940 

720 

 

 

             

             

             

 

 

 

 

 

Profit for the period attributable to:

 

 

 

 

Owners of the company

 

369 

921  

698 

Non-controlling interests

 

17 

19  

22 

 

 

             

             

             

 

 

386 

940 

720 

 

 

             

             

             

Earnings per share

 

 

 

 

 

 

 

 

 

Basic

6

0.1p 

0.2p 

0.1p 

Diluted

6

0.1p 

0.2p 

0.1p 

 

 

 

 

 

Headline Basic

6

0.2p 

0.3p 

0.4p 

Headline Diluted

6

0.2p 

0.3p 

0.4p 

 

There were no other comprehensive income items.

 

The Fulham Shore PLC

Unaudited Consolidated Balance Sheet

as at 29 September 2019

 

 

 

 

 

 

Notes

As at 

29 September 

2019 

Unaudited 

£'000 

As at 

23 September 

2018 

Unaudited 

£'000 

As at 

25 March 

2018 

Audited 

£'000 

Non-current assets

 

 

 

 

Intangible assets

 

25,401 

26,198 

25,767 

Property, plant and equipment

 

33,142 

31,390 

30,806 

Right of use assets

9

69,795 

Investments

 

203 

281 

201 

Trade and other receivables

 

1,116 

981 

1,020 

Deferred tax assets

 

319 

362 

301 

 

 

             

             

             

 

 

129,976 

59,212 

58,095 

Current assets

 

 

 

 

Inventories

 

1,932 

1,586 

1,764 

Trade and other receivables

 

5,055 

4,054 

3,597 

Cash and cash equivalents

7

1,709 

3,249 

1,835 

 

 

             

             

             

 

 

8,696 

8,889 

7,196 

 

 

             

             

             

Total assets

 

138,672 

68,101 

65,291 

 

 

             

             

             

Current liabilities

 

 

 

 

Trade and other payables

 

(15,656)

(12,989)

(11,881)

Lease liability

9

(5,215)

- 

Income tax payables

 

(474)

(961)

(93)

 

 

             

             

             

 

 

(21,345)

(13,950)

(11,974)

 

 

             

             

             

Net current liabilities

 

(12,649)

(5,061)

(4,778)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Trade and other payables

 

(1,378)

(1,601)

Lease liability

9

(64,421)

- 

Borrowings

 

(10,540)

(12,100)

(11,240)

Deferred tax liabilities

 

(1,676)

(1,724)

(1,733)

 

 

             

             

             

 

 

(76,637)

(15,202)

(14,574)

 

 

             

             

             

Total liabilities

 

(97,982)

(29,152)

(26,548)

 

 

             

             

             

Net assets

 

40,690 

38,949 

38,743 

 

 

             

             

             

Equity

 

 

 

 

Share capital

 

5,736 

5,714 

5,714 

Share premium account

 

6,911 

6,889 

6,889 

Merger relief reserve

 

30,459 

30,459 

30,459 

Reverse acquisition reserve

 

(9,469)

(9,469)

(9,469)

Retained earnings

 

7,053 

5,234 

5,025 

 

 

             

             

             

Total equity attributable to owners of the company

 

40,690 

38,827 

38,618 

Non-controlling interest

 

122 

125 

 

 

             

             

             

Total equity

 

40,690

38,949

38,743 

 

 

             

             

             

 

The Fulham Shore PLC

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 29 September 2019

 

Six months ended 29 September 2019

Unaudited

 

 

Attributable to owners of the Company 

 

 

 

 

 

Share 

capital 

£'000 

 

 

Share 

premium 

£'000 

 

Merger 

Relief 

Reserve 

£'000 

Reverse 

Acq-uisition 

Reserve 

£'000 

 

 

Retained 

earnings 

£'000 

Equity 

Share-

holders '

Funds 

£'000 

Non- 

Control-ling 

Interests 

£'000 

 

 

Total 

equity 

£'000 

 

 

 

 

 

 

 

 

 

At 31 March 2019

5,714 

6,889 

30,459 

(9,469)

5,025 

38,618 

125 

38,743 

 

 

 

 

 

 

 

 

 

Profit for the period

369 

369 

17 

386 

 

             

             

             

             

             

             

             

             

Total comprehensive income for the period

 

 

 

 

 

369 

 

369 

 

17 

 

386 

 

 

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

 

  Share based payments

 

 

 

 

 

82 

 

82 

 

 

82 

- Lease incentives on adoption of IFRS 16

 

 

 

 

 

2,062 

 

2,062 

 

 

2,062 

  Acquisition of non-controlling interests

 

 

 

 

 

(485)

 

(485)

 

(142)

 

(627)

  Exercise of share options

 

22 

 

22 

 

 

 

 

44 

 

 

44 

 

             

             

             

             

             

             

             

             

Total transactions with owners

 

22 

 

22 

 

 

 

1,659 

 

1,703 

 

(142)

 

1,561 

 

             

             

             

             

             

             

             

             

At 29 September 2019

 

5,736 

 

6,911 

 

30,459 

 

(9,469)

 

7,053 

 

40,690

 

 

40,690 

 

             

             

             

             

             

             

             

             

 

 

 

 

Six months ended 23 September 2018

Unaudited

 

 

Attributable to owners of the Company 

 

 

 

 

 

 

Share 

capital 

£'000 

 

 

Share 

premium 

£'000 

 

Merger 

Relief 

Reserve 

£'000 

Reverse 

Acq-uisition 

Reserve 

£'000 

 

 

Retained 

earnings 

£'000 

Equity 

Share-

holders '

Funds 

£'000 

Non- 

Control-ling 

Interests 

£'000 

 

 

Total 

equity 

£'000 

 

 

 

 

 

 

 

 

 

 

 

At 25 March 2018

5,714 

6,889 

30,459 

(9,469)

3,936 

37,529 

103 

37,632 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

921 

921 

19 

940 

 

 

             

             

             

             

             

             

             

             

 

Total comprehensive income for the period

 

 

 

 

 

921 

 

921 

 

19 

 

940 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

 

 

  Share based payments

 

 

 

 

 

93 

 

93 

 

 

93 

 

  Deferred tax on share based payments

 

 

 

 

 

 

 

 

 

 

284 

 

 

284 

 

 

 

 

284 

 

 

             

             

             

             

             

             

             

             

 

Total transactions with owners

 

 

 

 

 

377 

 

377 

 

 

377 

 

 

             

             

             

             

             

             

             

             

 

At 23 September 2018

 

5,714 

 

6,889 

 

30,459 

 

(9,469)

 

5,234

 

38,827

 

122 

 

38,949 

 

 

             

             

             

             

             

             

             

             

 

 

 

 

 

Year ended 31 March 2019

Audited

 

 

Attributable to owners of the Company

 

 

 

 

 

 

Share 

Capital 

£'000 

 

 

Share 

Premium 

£'000 

 

Merger 

Relief 

Reserve 

£'000 

Reverse 

Acq- 

uisition 

Reserve 

£'000 

 

 

Retained 

Earnings 

£'000 

Equity 

Share-

holders '

Funds 

£'000 

Non- 

Control- 

ling 

Interests 

£'000

 

 

Total 

Equity 

£'000 

 

 

 

 

 

 

 

 

 

 

 

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 

 

 

             

             

             

             

             

             

             

             

 

 

 

The Fulham Shore PLC

Unaudited Consolidated Cash Flow Statement

for the six months ended 29 September 2019

 

 

 

 

 

 

 

Notes

Six months 

ended 

29 September 

2019 

Unaudited 

£'000 

Six months 

ended 

23 September 

2018 

Unaudited 

£'000 

Year 

ended 

31 March 

2019 

Audited 

£'000 

 

 

 

 

 

Net cash from operating activities

8

9,356 

4,888 

6,132 

 

 

 

 

 

Investing activities

 

 

 

 

Acquisition of property, plant and equipment

 

(4,615)

(1,710)

(3,457)

Acquisition of intangible assets

 

(75)

(77)

(99)

Acquisition of investments

 

(2)

Acquisition of non-controlling interest

 

(642)

Disposal of property, plant and equipment

 

(137)

Disposal of discontinued operation

 

329 

329 

 

 

             

             

             

Net cash flow used in investing activities

 

(5,334)

(1,595)

(3,227)

 

 

             

             

             

Financing activities

 

 

 

 

Proceeds from issuance of new ordinary shares (net of expenses)

 

 

44 

 

 

-  

Capital repaid on bank borrowings

 

(700)

(250)

(1,110)

Cash outflow for leases

 

(2,180)

-  

Interest received

 

Interest paid

 

(1,318)

(155)

(327)

 

 

             

             

             

Net cash used in financing activities

 

(4,148)

(403)

(1,429)

 

 

             

             

             

Net (decrease)/increase in cash and cash equivalents

 

(126)

2,890 

1,476 

 

 

 

 

 

Cash and cash equivalents at beginning of the period

 

1,835 

359 

359 

 

 

             

             

             

Cash and cash equivalents at end of period

7

1,709 

3,249 

1,835 

 

 

             

             

             

 

 

The Fulham Shore PLC

Notes to the Unaudited Interim Financial Information

for the six months ended 29 September 2019

 

1.             General information

 

The Fulham Shore PLC is a public limited company incorporated and domiciled in England and Wales. The address of the registered office is 1st Floor, 50-51 Berwick Street, London, W1F 8SJ, United Kingdom. Copies of this Interim Statement may be obtained from the above address or the investor section of the Group's website at http://www.fulhamshore.com.

 

2.             Basis of preparation

 

The unaudited interim financial information for the six months ended 29 September 2019 has been prepared under the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ("IFRS") based on the accounting policies consistent with those used in the financial statements for the period ended 31 March 2019 with the exception of IFRS16 which has been adopted by the group on 1 April 2019, and those to be applied for the period ending 29 March 2020 but does not include all of the information required for a complete set of IFRS financial statements.

 

The unaudited interim financial information was approved and authorised for issue by the Board on 16 December 2019.

 

The unaudited interim financial information for the six months ended 29 September 2019 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and should be read in conjunction with the statutory accounts for the period ended 31 March 2019. The information for the year ended 31 March 2019 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The audit report on these statutory accounts was unqualified, did not contain an emphasis of matter paragraph, and did not contain a statement either under section 498(2)-(3) of the Companies Act 2006.

 

The interim financial statements are presented in Pounds Sterling because that is the currency of the primary economic environment in which the company operates. All values are rounded to the nearest one thousand Pounds (£'000) except when otherwise indicated.

 

Changes in accounting policies and disclosures:

 

IFRIC Interpretation 23 Uncertainty over Income Tax Treatments (became effective for accounting periods commencing on or after 1 January 2019)

This standard clarifies how to apply the recognition and measurement requirements in IAS12 when there is uncertainty over income tax treatments. The Group has adopted this accounting standard during the year and the implementation has not had a material impact on the Group.

 

IFRS 16 Leases (became effective for accounting periods commencing on or after 1 January 2019)  

The Group has adopted the standard for the first time using the modified retrospective approach. In doing so, the Group initially applied the standard at the date of the initial application on 1 April 2019 where the cumulative effect of initially applying IFRS 16 is recognised at this date of initial application.

 

Under IFRS 16, on commencement of a contract that gives the Group the right to use an asset for a period of time in exchange for consideration, the Group recognises a right-of-use asset and a lease liability except for low value leases (for assets that are of value less than £5,000 that do not highly depend on other assets) and those with a term of less than 12 months. Such contracts were previously treated as operating leases under IAS17 Leases. Further disclosures on such contracts can be found in Note 9.

 

A right-of-use asset is recognised at commencement of the lease and is initially measured at the amount of the lease liability, plus any incremental costs of obtaining the lease, any lease payments made at or before the leased asset is available for use by the Group less any lease incentives received, plus any estimate of costs to be incurred in respect of dismantling or restoring the underlying asset to its original condition.

 

 

 

The right-of-use asset is subsequently measured at cost less accumulated depreciation and any accumulated impairment losses. Right-of-use assets are depreciated straight line over the shorter of the period of the lease term or the remaining useful life of the underlying asset. Termination, extension and purchase options are considered in determining the appropriate remaining lease term. The right-of-use asset is depreciated from the date it is 'available for use' even if the entity does not use it until a later date.

 

Impairment losses are determined and accounted for in accordance with IAS 36 'Impairment of Assets' An estimate of costs to be incurred in restoring the right-of-use asset to the condition required under the terms and conditions of the lease is recognised as part of the cost of the right-of-use asset when the Group incurs the obligation for these costs. The provision is measured at the best estimate of the expenditure required to settle the obligation.

 

Initial measurement of lease liabilities

The lease liability is initially measured at the present value of the lease payments during the lease term discounted using the incremental borrowing rate. The lease term is the non-cancellable period of the lease plus extension periods that the Group is reasonably certain to exercise and termination periods that the Group is reasonably certain not to exercise. Lease payments include fixed payments less any lease incentives receivable, variable lease payments that are dependent on an index (such as retail price index) or a rate and any residual value guarantees. Variable lease payments are initially measured using the index or rate when the right-of-use asset is available for use. Turnover rents on property leases are not included in the above calculation and are therefore written off to the Statement of Comprehensive Income.

 

Subsequent measurement of lease liabilities

The lease liability is subsequently increased for a constant periodic rate of interest on the remaining balance of the lease liability and reduced for lease payments.

 

Interest on the lease liability is recognised in profit or loss, and variable lease payments not included in the measurement of the lease liability are also recognised in profit or loss in the period in which the event or condition that triggers those payments occurs.

 

Significant judgements and key sources of estimation uncertainty

Determining the discount rate

When the interest rate implicit in the lease is not readily determinable, the Group estimates the incremental borrowing rate based on a risk-free rate adjusted for the effect of the Group's theoretical credit risk. As the Group has external borrowings, judgement is required to compute an appropriate discount rate which was calculated based on UK bank borrowings and adjusted by an indicative credit premium that reflects the credit risk of the Group. This has resulted in a weighted average incremental borrowing rate of 3.3% applied to the leases.

 

 

3.             Segment information

 

For management purposes, the Group was organised into two operating divisions during the 6 months ended 29 September 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 six months ended 29 September 2019 (Unaudited)

 

 

The Real 

Greek 

segment 

£'000 

Franco 

Manca 

segment 

£'000 

 

Other 

unallocated 

£'000 

 

 

Total 

£'000 

 

 

 

 

 

External revenue

10,951 

25,083 

36,034 

 

 

 

 

 

Headline EBITDA*

2,245 

6,791 

(606)

8,430 

Depreciation and amortisation

(1,429)

(3,891)

(16)

(5,336)

 

             

             

             

             

Headline operating profit/(loss)

816 

2,900 

(622)

3,094 

 

 

 

 

 

Share based payments

(33)

(47)

(2)

(82)

Pre-opening costs

(49)

(483)

(532)

Amortisation of brand

(411)

(411)

Exceptional costs

(1)

(3)

(10)

(14)

 

             

             

             

             

Operating profit/(loss)

733 

1,956 

(634)

2,055 

 

 

 

 

 

Finance income

Finance costs

(371)

(786)

(161)

(1,318)

 

             

             

             

             

Segment profit/(loss) before taxation

363 

1,175 

(795)

743 

Income tax expense

(357)

(357)

 

             

             

             

             

Profit/(loss) for the period

363 

1,175 

(1,152)

386 

 

             

             

             

             

 

 

 

 

 

Assets

34,792 

103,193 

687 

138,672 

Liabilities

(26,722)

(59,154)

(12,106)

(97,982)

 

             

             

             

             

Net assets

8,070 

44,039 

(11,419)

40,690 

 

             

             

             

             

 

 

 

 

 

Capital expenditure (including Right-of-use assets)

 

4,489 

 

8,627 

 

 

13,121 

 

             

             

             

             

 

 

 

 

For the six months ended 23 September 2018 (Unaudited)

 

 

The Real 

Greek 

segment 

£'000 

Franco 

Manca 

segment 

£'000 

 

Other 

unallocated 

£'000 

 

 

Total 

£'000 

 

 

 

 

 

External revenue

11,896 

21,082 

32,978 

 

 

 

 

 

Headline EBITDA*

2,014 

2,952 

(401)

4,565 

Depreciation and amortisation

(515)

(1,575)

(16)

(2,106)

 

             

             

             

             

Headline operating profit/(loss)

1,499 

1,377 

(417)

2,459 

 

 

 

 

 

Share based payments

(39)

(47)

(7)

(93)

Pre-opening costs

(188)

(188)

Amortisation of brand

(411)

(411)

Exceptional costs

(137)

(137)

 

             

             

             

             

Operating profit/(loss)

1,460 

594 

(424)

1,630 

 

 

 

 

 

Finance income

Finance costs

(1)

(154)

(155)

 

             

             

             

             

Segment profit/(loss) before taxation

1,461 

594 

(578)

1,477 

Income tax expense

(537)

(537)

 

             

             

             

             

Profit/(loss) for the period from continuing operations

 

1,461 

 

594 

 

(1,115)

 

940 

 

             

             

             

             

 

 

 

 

 

Assets

13,061 

54,285 

755 

68,101 

Liabilities

(4,881)

(11,147)

(13,124)

(29,152)

 

             

             

             

             

Net assets

8,180 

43,138 

(12,369)

38,949 

 

             

             

             

             

 

 

 

 

 

Capital expenditure

296 

1,415 

1,711 

 

             

             

             

             

           

 

 

 

 

 

For the year ended 31 March 2019 (Audited)

 

 

The Real 

Greek 

segment 

£'000 

Franco 

Manca 

segment 

£'000 

 

Other 

unallocated 

£'000 

 

 

Total  

£'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/(loss)

1,698 

2,572 

(775)

3,495 

 

 

 

 

 

Share based payments

(52)

(73)

(13)

(138)

Pre-opening costs

(386)

(386)

Amortisation of brand

(821)

(821)

Impairment investments

(80)

(80)

Impairment of property, plant and equipment

 

(29)

 

(101)

 

 

(130)

Loss on disposal of property, plant and equipment

 

 

(187)

 

 

(187)

 

             

             

             

             

Operating profit/(loss)

1,617 

924 

(788)

1,753 

Finance income

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

 

1,620 

 

929 

 

(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 

3,457 

 

             

             

             

             

 

 

Head office and PLC costs, previously treated as an operating segment, 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.

 

 

 

*Headline EBITDA is a key measure for the Group as well as industry analysts as it is indicative of ongoing EBITDA generation of the businesses. Headline EBITDA is defined as EBITDA before amortisation of brand, impairment of property, plant and equipment, impairment of goodwill and intangible assets, 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.

 

 

Six months 

ended 

29 September 

2019 

Six months 

ended 

23 September 

2018 

Year 

ended 

31 March 

2019 

 

Unaudited 

£'000 

Unaudited 

£'000 

Audited 

£'000 

 

 

 

 

Profit before taxation

743 

1,477 

1,434 

Finance costs

1.318 

155 

327 

Finance income

(6)

(2)

(8)

 

             

             

             

Operating profit

2,055 

1,630 

1,753 

 

 

 

 

Depreciation and amortisation

5,336 

2,106 

4,323 

Amortisation of brand

411 

411 

821 

 

             

             

             

EBITDA

7,802 

4,147 

6,897 

 

 

 

 

Share based payments

82 

93 

138 

Pre-opening costs

532 

188 

386 

Exceptional costs:

- impairment of property, plant and equipment

 

 

 

130 

- impairment of investments

80 

- loss on disposal of property, plant and equipment

137 

187 

- cost of acquisition

14 

 

 

 

             

             

             

Headline EBITDA

8,430 

4,565 

7,818 

 

             

             

             

 

Headline EBITDA before adoption of IFRS16 is disclosed in Note 9.

 

 

 

4.             Finance costs

 

 

Six months 

ended 

29 September 

2019 

Unaudited 

£'000 

Six months 

ended 

23 September 

2018 

Unaudited 

£'000 

Year 

ended 

31 March 

2019 

Audited 

£'000 

 

 

 

 

Interest expenses on bank loans and overdrafts

162 

155 

327 

Interest on lease liabilities recognised under IFRS16

1,156 

 

             

             

              

 

1,318 

155 

327 

 

             

             

             

 

5.             Income Tax Expense

 

 

Six months 

ended 

29 September 

2019 

Unaudited 

£'000 

Six months 

ended 

23 September 

2018 

Unaudited 

£'000 

Year 

ended 

31 March 

2019 

Audited 

£'000 

 

 

 

 

Income tax expense on continuing operations

 

 

 

Based on the result for the period:

 

 

 

UK Corporation tax at 19% (2018: 19%)

431 

478 

669 

Adjustment in respect of prior periods

(54)

 

             

             

              

Total current tax

431 

478 

615 

 

 

 

 

Deferred taxation:

 

 

 

Origination and reversal of temporary differences

 

 

 

Current year

(74)

59 

99 

 

             

             

              

Total deferred tax

(74)

59 

99 

 

             

             

             

Total taxation expense on profit from continuing operations

 

357 

 

537 

 

714 

 

             

             

             

 

 

 

 

The above is disclosed as:

 

 

 

Income tax expense - current year

357 

537 

714 

 

             

             

             

 

357 

537 

714 

 

             

             

             

 

During the period ended 29 September 2019, the Group recognised deferred taxation on share based payments crediting equity of £Nil (2018: credit of £284,000)

 

 

 

6.             Earnings per share

 

 

Six months 

ended 

29 September 

2019 

Unaudited 

£'000 

Six months 

ended 

23 September 

2018 

Unaudited 

£'000 

Year 

ended 

31 March 

2019 

Audited 

£'000 

 

 

 

 

Profit for the purposes of basic and diluted earnings per share (continuing operations):

 

369 

 

921 

 

698 

 

 

 

 

Share based payments

82 

93 

138 

Deferred tax on share based payments

(18)

(115)

146 

Pre-opening costs

532 

188 

386 

Amortisation of brand

411 

411 

821 

Deferred tax on amortisation of brand

(68)

(68)

(137)

Exceptional costs

- impairment of investments

 

 

 

80 

- impairment of property, plant and equipment

130 

- cost of acquisition

14 

Exceptional costs - loss on disposal of property, plant and equipment

 

 

137 

 

187 

 

             

             

             

Headline profit for the period for the purposes of Headline basic and diluted earnings per share

 

1,322 

 

1,567 

 

2,449 

 

             

             

             

 

 

Six months 

ended 

29 September 

2019 

Unaudited 

No. '000 

Six months 

ended 

23 September 

2018 

Unaudited 

No. '000 

Year 

ended 

31 March 

2019 

Audited 

No. '000 

 

 

 

 

Weighted average number of ordinary shares in issue for the purposes of basic earnings per share

 

572,150 

 

571,385 

 

571,385 

Effect of dilutive potential ordinary shares:

- Share options

 

13,529 

 

7,909 

 

10,230 

 

             

             

             

Weighted average number of shares for the purpose of diluted earnings per share

 

585,679 

 

579,294 

 

581,615 

 

             

             

             

 

 

Six months 

ended 

29 September 

2019 

Unaudited 

Six months 

ended 

23 September 

2018 

Unaudited 

Year 

ended 

31 March 

2019 

Audited 

Earnings per share:

 

 

 

 

 

 

 

Basic earnings per share

0.1p 

0.2p 

0.1p 

Diluted earnings per share

0.1p 

0.2p 

0.1p 

 

             

             

             

 

 

 

 

Headline basic

0.2p 

0.3p 

0.4p 

Headline diluted

0.2p 

0.3p 

0.4p 

 

             

             

             

 

 

 

7.             Cash and cash equivalents

 

 

As at 

29 September 

2019 

Unaudited 

£'000 

As at 

23 September 

2018 

Unaudited 

£'000 

As at 

31 March 

2019 

Audited 

£'000 

 

 

 

 

Cash at bank and in hand

1,709 

3,249 

1,835 

 

             

             

             

Cash and cash equivalents as presented

in the balance sheet

 

1,709 

 

3,249 

 

1,835 

Bank overdraft

- 

- 

- 

 

             

             

             

 

1,709 

3,249 

1,835 

 

             

             

             

 

Bank balances comprise cash held by the Group on a short term basis with maturity of three months or less. The carrying amount of these assets approximates their fair value.

 

8.             Reconciliation of net cash flows from operating activities

 

 

 

Six months 

ended 

29 September 

2019 

Unaudited 

£'000 

Six months 

ended 

23 September 

2018 

Unaudited 

£'000 

Year 

ended 

31 March 

2019 

Audited 

£'000 

 

 

 

 

Profit for the period

386 

940 

720 

 

 

 

 

Adjustments:

 

 

 

Income tax expense

357 

537 

714 

Finance income

(6)

(2)

(8)

Finance costs

1,318 

155 

327 

 

             

             

             

Operating profit for the period

2,055 

1,630 

1,753 

Depreciation and amortisation

5,746 

2,517 

5,144 

Cost of acquisition

14 

Impairment of property, plant and equipment

130 

Impairment of investments

80 

Loss on disposal of property, plant and equipment

138 

27 

Share based payments expense

82 

93 

138 

 

             

             

             

Operating cash flows before movement in working capital

 

7,897 

 

4,378 

 

7,272 

Increase in inventories

(168)

(96)

(274)

Increase in trade and other receivables

(2,806)

(767)

(349)

Increase in trade and other payables

4,483 

1,376 

491 

 

             

             

             

Cash generated from operations

9,406 

4,891 

7,140 

Income taxes paid

(50)

(3)

(1,008)

 

             

             

             

Net cash from operating activities

9,356 

4,888 

6,132 

 

             

             

             

 

 

 

9.             Right of use assets

 

 

Right of use 

assets 

£'000 

Cost

 

Recognition on adoption of IFRS16

64,388 

Additions

8,433 

 

             

29 September 2019

72,821 

 

             

 

 

Accumulated depreciation

Charge in the year

3,026 

 

            

29 September 2019

3,026 

 

             

Net book value

 

31 March 2019

69,795 

 

             

31 March 2019 and 23 September 2018

 

             

 

Adoption of IFRS 16 accounting standard for leases

 

During the period ended 29 September 2019, the Group has adopted and applied IFRS 16 using the modified retrospective approach, and therefore comparative information has not been restated and continues to be reported under IAS 17 'Leases'. The Group has applied this approach subject to the transition provisions set out below:

 

•      A single discount rate has been applied to portfolios of leases with similar characteristics;

•      The right-of-use assets have not been assessed for impairment at 1 April 2019 but have been reduced by the amount of any onerous lease provisions at that date, if any;

•      Initial direct costs have been excluded from the measurement of the right-of-use assets at the date of initial application;

•      Hindsight has been applied in determining the lease term for contracts that contain lease extension or termination options;

•      Right-of-use assets and lease liabilities for short term leases that have a lease term of less than 12 months have not been recognised; and

•      Right-of-use assets and lease liabilities for a lease term ending within twelve months of the date of initial application have been recognised.

 

As at the date of initial application, for all contracts, the Group assessed whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group identified 70 open contracts at the date of initial application that are, or contain, a lease. On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 'Leases'. These liabilities were measured at the present value of the remaining lease payments, discounted using applicable discount rates as of 31 March 2019. Corresponding right of use assets were recognised based on these calculated lease liabilities.

 

In determining the lease liability, management considered any lease extension option or break clauses that management is reasonably certain to exercise or not to exercise. In doing so, the Group considered all relevant factors that create an economic incentive to do so. At the date of initial application, management was of the view that break clauses for 4 leases would not be exercised.

 

 

 

 

The impact on the Consolidated Balance Sheet on adoption of IFRS16 is summarised below:

 

 

 

As at 

31 March 

2019 

Audited 

£'000 

 

IFRS16 

Adjustments 

On adoption 

Unaudited 

£'000 

Post IFRS16 

As at 

31 March 

2019 

Unaudited 

£'000 

 

 

 

 

Right-of-use assets

64,388 

64,388 

Current trade and other receivables

3,597 

(1,252)

2,345 

Current trade and other payables

(11,881)

708 

(11,173)

Non-current trade and other payables

(1,601)

1,601 

Current lease liability

(4,668)

(4,668)

Non-current lease liability

(58,715)

(58,715)

 

             

             

             

 

(9,885) 

2,062 

(7,823)

 

             

             

             

 

The impact on the Group's retained earnings reserves on adoption of IFRS 16 is summarised below:

 

 

 

 

Unaudited 

£'000 

 

 

 

 

Lease incentives previously recognised

 

 

1,890 

Rent review liabilities previously recognised

 

 

172 

 

 

 

             

Adjustment to reserves on adoption of IFRS 16

 

 

2,062 

 

 

 

             

 

Reconciliation of the Group's operating lease liabilities on transition:

 

 

 

 

Unaudited 

£'000 

 

 

 

 

Operating lease commitments at 31 March 2019

 

 

78,274 

Add lease liabilities in respect of lease breaks unlikely to be taken

 

 

688 

Additional leases identified

 

 

1,587 

Less effect of discounting payments included in the operating lease commitment

 

 

 

(17,166)

 

 

 

             

Lease liability opening balance reported at 1 April 2019

 

 

63,383 

 

 

 

             

 

 

 

 

The impact on the Consolidated Statement of Comprehensive Income on adoption of IFRS16 is summarised below for the six months ended 29 September 2019:

 

 

 

Headline 

EBITDA 

Unaudited 

£'000 

 

 

EBITDA 

Unaudited 

£'000 

 

Operating 

Profit 

Unaudited 

£'000 

Profit 

before 

Taxation 

Unaudited 

£'000 

 

 

 

 

 

Under IAS 17 policy

5,022 

4,245 

1,524 

1,368 

Removal of rent expenses

3,408 

3,557 

3,557 

3,557 

IFRS 16 Depreciation

(3,026)

(3,026)

IFRS 16 Interest expense

(1,156)

 

             

             

             

             

Under IFRS 16 policy

8,430 

7,802 

2,055 

743 

 

             

             

             

             

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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Quick facts: Fulham Shore PLC

Price: 5.5

Market: AIM
Market Cap: £31.55 m
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