TIDMLGRS
RNS Number : 9822H
Loungers PLC
30 November 2022
30 November 2022
Loungers plc
Results for the 24 weeks ended 2 October 2022
Sustained market out-performance demonstrates the continued
relevance and resilience of the Lounge and Cosy Club brands
15 new sites opened in the year to date and on-track to end the
year with 225 sites
Loungers, a leading operator of all day café/bar/restaurants
across the UK under the Lounge and Cosy Club brands, is pleased to
announce its unaudited results for the 24 weeks ended 2 October
2022 ("the period").
Financial Highlights
24 weeks 24 weeks 24 weeks
ended 2 October ended 3 October ended 6 October
2022 2021 2019
GBP'000 GBP'000 GBP'000
Revenue 122,326 102,361 79,827
Adjusted EBITDA 19,307 27,086 14,475
Adjusted EBITDA margin (%) 15.8% 26.5% 18.1%
Adjusted EBITDA (IAS17) 13,482 22,018 10,222
Adjusted EBITDA (IAS17) margin
(%) 11.0% 21.5% 12.8%
Operating profit 6,056 15,968 2,029
Profit / (loss) before tax 2,831 12,809 (2,494)
Diluted earnings / (losses) per
share (p) 2.3 10.4 (2.3)
Cash generated from operating activities 14,613 35,903 12,561
2 October 3 October 6 October
2022 2021 2019
GBP'000 GBP'000 GBP'000
Non-property net debt 9,457 11,890 29,340
-- Revenue growth of 53.2% versus H1 2020 (the most recent
period unimpacted by Covid) reflects three-year like for like
("LFL") sales growth of 17.0% and the addition of 50 new sites
-- Adjusted EBITDA of GBP19.3m (H1 2022: GBP27.1m), with the
prior year result having benefitted materially from reduced rate of
VAT and business rates relief
-- Adjusted EBITDA growth of 33.4% versus H1 2020
-- IAS17 Adjusted EBITDA margin of 11.0% was down 1.8% on H1
2020, a strong performance against a backdrop of significant
inflationary pressure in cost of goods sold and site labour
Strategic Highlights
-- Significant market out-performance with consistently strong trading
-- Headline three-year LFL sales growth of +17.0% is testament
to the strength of our brands and our teams
-- Well-placed to out-perform in a recessionary environment
- Value for money principles maintained and strengthened
- Broad customer demographic reduces reliance on any particular segment
- Rent to revenue ratio further improved to 4.7%
- Strong balance sheet with further year on year reduction in non property net debt
-- Managing the inflationary environment
- Successfully balancing the requirement to drive sales volumes
and deliver market share growth whilst managing margin
pressures
- Utility costs hedged in May 2020 through to September 2024 for the majority of the estate
-- New site roll-out accelerated
- 11 new sites opened in the period, comprising eight Lounges
and three Cosy Clubs. A further four sites have been opened post
the 2 October half year end, three Lounges in Haywards Heath,
Stratford upon Avon and Selby and a Cosy Club in Milton Keynes
- Fifth build team added, expanding our new site opening
capacity to between 32 and 34 sites per year
- Pipeline strength and depth continues to be reflected in the
quality of the period's new site openings
-- Development of our new roadside brand, Brightside
- Contracts exchanged to acquire four roadside sites
- On schedule to open our first Brightside site in early 2023
Current Trading and Outlook
-- Positive momentum has continued over the first eight weeks of
Q3, with the business consistently out-performing the sector and
achieving strong like for like sales growth, with three-year LFL
sales across the 32 weeks to 27 November of +17.4%
-- Whilst there is no sign of the cost of living pressures
abating, we remain optimistic looking ahead to trading over the
Christmas period
-- With 15 sites having opened year to date we remain on track
to open a total of 30 new sites during the course of the financial
year ending 16 April 2023, including our first Brightside site.
Nick Collins, Chief Executive Officer of Loungers said:
"I am delighted with the consistent strength of our sales
performance. Our out-performance of the market has continued
unabated and reflects both our unique positioning as well as the
amazing hospitality and hard-work of our teams. We aren't immune to
the inflationary pressures impacting our sector, but we have worked
hard to strike the right balance between growing market share and
managing margin pressures. These numbers would suggest we have got
the balance about right.
"The short-term outlook is uncertain, but we take confidence
from the resilience of current trading in both brands. We are
excited about the coming months and are well-placed to take
advantage of opportunities through our continued growth. Lounge and
Cosy Club both have enormous untapped roll-out potential, and we
are very excited about the imminent launch of our new roadside
brand Brightside."
Analyst Presentation Webcast
An analyst presentation will be held today, Wednesday 30
November 2022, at 9.30am (GMT). Participants wishing to join the
webcast should contact loungers@powerscourt-group.com to request
details.
Use of Alternative Performance Measures
The Half Year Results include both statutory and alternative
performance measures ("APMs"). Further background to the use of
APM's and reconciliations between statutory measures and APM's are
presented on page 17.
For further information please contact:
Loungers plc Via Powerscourt
Nick Collins, Chief Executive Officer
Gregor Grant, Chief Financial Officer
Houlihan Lokey UK Limited (Financial Adviser Tel: +44 (0) 20
and NOMAD) 7484 4040
Sam Fuller / Tim Richardson
Liberum Capital Limited (Joint Broker) Tel: +44 (0) 20
Andrew Godber / John Fishley 3100 2000
Peel Hunt LLP (Joint Broker) Tel: +44 (0)20 7418
Dan Webster / Andrew Clark 8900
Powerscourt (Financial Public Relations) Tel: +44 (0) 207
Rob Greening / Nick Hayns / Elizabeth Kittle 250 1446
Notes to Editors
Loungers operates through its two complementary brands - Lounge
and Cosy Club - in the UK hospitality sector. A Lounge is a
neighbourhood café-bar combining elements of coffee shop culture,
the British pub and dining. There are 175 Lounges nationwide.
Lounges are principally located in secondary suburban high streets
and small town centres. The sites are characterised by informal,
unique interiors with an emphasis on a warm, comfortable
atmosphere, often described as a "home from home". Cosy Clubs are
more formal restaurant-bars offering reservations and table service
but share many similarities with the Lounges in terms of their
broad, all-day offering and their focus on hospitality and culture.
Cosy Clubs are typically located in city centres and large market
towns. Interiors tend to be larger and more theatrical than for a
Lounge, and heritage buildings or first-floor spaces are often
employed to create a sense of occasion. There are 35 Cosy Clubs
nationwide.
Loungers launched its third brand, a roadside dining concept
called Brightside, in November 2022. The first Brightside location
is scheduled to open on the A38, south of Exeter, in February 2023,
with a further two to open in early FY24. In time, Loungers
believes there is scope to develop a truly national brand.
CHIEF EXECUTIVE REVIEW
Highlights
-- Consistently strong sales performance across the business;
-- Our suburban, market-town locations aligned with our
best-in-class rent to revenue ratio of 4.7% mean we are very well
placed to continue to out-perform even in a recessionary
environment;
-- The broad demographic appeal of our flexible, community-based
offer together with our unique hospitality and culture resonates
now more than ever;
-- Development of Brightside, our third brand;
-- On track to open 30 new sites in the current financial year; and
-- Continuing to see excellent property opportunities in very strong locations.
Operating review
Trading and performance
The business has traded strongly throughout the first half and
we are delighted to have grown LFL sales +17.0% on a three-year
basis. We continue to significantly out-perform the broader sector
and to date we haven't seen any indication that consumers are
changing their habits in how they use either Lounge or Cosy
Club.
The Lounges have traded very consistently across the first half.
Whilst during the summer we might not have seen the same degree of
out-performance at some of the coastal Lounges compared to 2021,
there has been no meaningful variation either geographically or
demographically. On the Cosy Club side, the post re-opening
one-year summer comps were very tough, but this was short-lived and
the sites performed well and are in a strong position as we
approach Christmas. In both brands the sales growth is relatively
consistent across all day parts and food and drink categories, with
no particular areas dominating.
Our sales performance reflects a continued unwavering focus on
our customers. We have worked hard to protect price and ensure that
we continue to represent excellent value for money across both
brands. Whilst we have taken a degree more price than in previous
years, we have taken materially less than our competitors. This
further strengthens our value for money credentials and we believe
puts us in a strong position as we look ahead to continued economic
uncertainty.
Value for money is not just about price. The natural warmth and
hospitality provided by our teams alongside the quality of our
freshly prepared food and drinks continue to set us apart. Our food
development teams in both Lounge and Cosy Club have recently rolled
out some of the best menu launches we have seen. In this
inflationary environment we have balanced well the multiple
objectives of creating better food on the plate, absorbing
inflationary pressure and representing value for money, whilst
continuing to make it more efficient for our kitchen teams to
prepare.
We continue to experience in-bound cost-pressure on various
fronts. Our scale and continued growth allow us to mitigate these
to a degree and we benefit from a favourable energy hedge over a
large part of the estate, but the margin pressure is significant
and the annual increase in National Living Wage is a key part of
this. Striking the right balance between protecting our value for
money price points versus our margin is critical. I am comfortable
that in achieving three-year like for like volume growth in our
sales, we have got this balance about right. In addition, we are
benefitting from the investment we made last year in our Operations
team, reducing the number of sites in each area, allowing us to
focus even more on our customers, conversion rates and teams.
New site openings
During the first half we opened 11 sites comprising eight
Lounges and three Cosy Clubs and since the end of the first half we
have opened a further three Lounges and one Cosy Club. We are
opening sites well and achieving above average levels of sales in
the new sites. During the first half we added a fifth build team,
expanding our new site opening capacity to between 32 and 34 sites
per year. This relatively gentle acceleration of the roll-out has
not had any detrimental impact on the quality of our new openings
and we retain our strong focus on delivering appropriate financial
returns from all new sites.
We have opened four Cosy Clubs in the last five months compared
to only one in the preceding 12 months. Whilst the potential scale
of Cosy Club nationally is not of the same magnitude as Lounge,
these recent openings have demonstrated the appeal of the brand and
the ongoing financial opportunity it represents.
From a design perspective, as the estate grows, we are opening
better and better sites. We have never adopted a cookie-cutter
approach and the focus on each site's individual design has never
been stronger. Our in-house design and construction approach to
fitting-out sites is an important factor in achieving the local
feel of our sites and also provides us flexibility and cost
efficiency. Our levels of capex have nudged higher in this
inflationary environment, and we continue to work hard to mitigate
these pressures.
The pipeline is in very good shape. Whilst there is a slight
bias towards new opportunities in the north east, there remains
huge opportunity for infill across the UK. We continue to benefit
from a tenant-friendly market and see strong opportunities in our
target locations We are on track to open 30 new sites this
financial year and expect to open 32-34 next year.
Brightside
There is real excitement in the business following the
announcement of our third brand, Brightside, in early November. We
have been looking at the opportunity in roadside dining for the
last two years, recognizing a significant gap in the market for
good quality, sit-down dining in a sector that has been dominated
by drive-thru and quick service restaurant concepts in recent
years. It's an opportunity which really plays to our strengths in
terms of a large freshly cooked menu, speed of delivery,
operational intensity through a no-bookings model, all-day, great
value and amazing hospitality. The branding, design, menus and
culture will all reflect a degree of nostalgia alongside warmth,
happiness and a sense of journey and adventure, with Brightside
restaurants appealing to a broad range of customers including
families, locals, and UK holidaymakers.
We are shortly due to complete the acquisition of three
restaurants in the South West. Over the course of the next few
months we will close these and refurbish them, re-opening as
Brightside, with the first due to open in February 2023 and the
following two at the start of our new financial year. These
openings are included in the new site openings detailed above. We
have also exchanged contracts for a fourth new build location to
open in 2024. The investment case and returns for Brightside are
comparable to those for Lounge and Cosy Club, with the level of
capex per site falling between the two. We believe there is a
significant opportunity for Brightside and have other opportunities
already in the pipeline. Our immediate focus is on getting these
initial sites trading, finessing the offer and demonstrating the
returns available. We will then be in a position to assess scale
and roll-out, but needless to say, we are excited about the
potential of the opportunity.
People
Our teams, and the natural hospitality and amazing food and
drink that they provide, are the bedrock of our continued success.
The culture within the business goes from strength to strength and
I would like to thank all our team across the UK for their
contribution to our continued growth, and the experiences they
provide our customers day in, day out.
Recruitment remains challenging in some parts of the UK, in
particular for chefs. Despite this we created and filled in excess
of 350 jobs in the first half of the year through our new site
openings. We continue to focus on our role as an employer, pursuing
the Commitments we set out last year and listening to our teams as
to how we can be better. Through our growth, our ability to offer
colleagues development, progression and a career in hospitality
differentiates us from many of our peers.
We continue to invest for the future and build a best-in class
management team and have been delighted to welcome Guy Youll as
Chief People Officer and Kate Lister in the newly created Marketing
Director role. We have invested significantly in our recruitment
team and on the look and feel and development side of the
business.
Financial review
Financial Performance
For the first time in three years we are able to report a
financial performance that is not impacted, either positively or
negatively, by Covid. Total revenue of GBP122.3m represents an
increase of 53.2% over the 24 weeks to 6 October 2019 (pre Covid)
and clearly illustrates the growth that the Group has been able to
deliver despite the varied challenges presented in the intervening
period. Over that three year period our revenue growth has been
underpinned by:
-- Three-year LFL sales growth of +17.0%;
-- The addition of 50 new sites.
The three-year LFL sales performance has been very consistent,
having reported +17.9% for the first 12 weeks, +17.0% after 24
weeks and +17.4% after 32 weeks, and demonstrates both the
resilience of the Loungers business and the consistency we have
seen in consumer behaviour.
Year on year total revenue growth is 19.5%, albeit this
comparison is distorted by restricted trading in the first four
weeks of the prior year offset by the reduced rate VAT on food and
non-alcoholic drinks during H1 2022. Excluding these impacts total
year on year revenue growth over the 20 weeks to 2 October 2022 was
15.1%.
It is the removal of the VAT reduction on food and non-alcoholic
drinks (the reduction to the 5% rate ended on 30 September 2021 and
the reduction to 12.5% ended on 31 March 2022), and to a lesser
extent the ending of the business rates support on 31 March 2022,
that lie behind the year on year EBITDA margin reduction, with
IFRS16 Adjusted EBITDA margin down from 26.5% to 15.8%. On a
three-year basis, and avoiding these distortions, underlying IAS17
Adjusted EBITDA margin is down by 1.8%, a strong performance
against a backdrop of significant inflationary pressure on both the
site labour and cost of goods sold lines. Across the first half the
business has sought to manage margins in the context of retaining
its long held value for money credentials and looking to grow
volume and market share. The strong three-year LFL sales
performance is a reflection of this approach and the business
continues to work very hard to mitigate the impacts of inflation on
labour costs and cost of goods sold.
Net debt
Non-property net debt (gross of arrangement fees) of GBP9.5m
represents an improvement of GBP2.4m relative to 3 October 2021, a
12 month period during which the Group has seen capital expenditure
related cash outflows of GBP31.4m and paid off the remaining
GBP5.6m of deferred Covid 19 liabilities to HMRC and landlords. The
increase in net debt of GBP8.2m relative to the 17 April 2022 year
end is a function of the timing of working capital outflows; in the
week prior to the half year end payments totaling GBP9.9m were made
to suppliers and landlords.
Finance costs for the period have increased to GBP3.3m (2022:
GBP3.2m), reflecting an increase in IFRS16 lease interest charges
to GBP2.8m (2022: GBP2.6m).
Cash flow
Net cash generated from operating activities was GBP14.6m (2022:
GBP35.9m), with the significant reduction reflecting the one-off
benefits in the prior year from the rebuilding of our working
capital position post reopening after the third Covid related
lockdown.
Capital expenditure outflows in the period increased to GBP15.0m
(2022: GBP6.5m). The increase reflecting a combination of the prior
year cash flow benefitting from the rebuilding of capital
expenditure creditors post resumption of the new site roll out
programme in 2021, and a higher level of incurred capital
expenditure (excluding IFRS16 ROUA investment) in the first half of
GBP15.9m (2022: GBP10.0m). The capital expenditure incurred in the
period (excluding IFRS16 ROUA investment) of GBP15.9m (2022
GBP10.0m), included GBP11.2m related to new sites (2022 GBP8.4m)
and a further GBP0.9m in respect of the acquisition of the Cosy
Club Canterbury freehold. The Brightside launch noted above
involves the acquisition of two freehold sites. Whilst the strength
of the Loungers' balance sheet allows us to make these freehold
acquisitions it is our intention to complete sale and leaseback
transactions in respect of the Brightside and Canterbury freeholds
at the appropriate time.
Dividend policy
In the short term, the Board intends to retain the Group's
earnings to bolster liquidity and balance sheet strength and for
re-investment in the roll-out of new sites. It is the Board's
ultimate intention to pursue a progressive dividend policy, subject
to the need to retain sufficient earnings for the future growth of
the Group.
Current trading and prospects
Positive momentum has continued over the first eight weeks of
Q3, with the business consistently out-performing the sector and
achieving strong like for like sales growth, with three-year LFL
sales across the 32 weeks to 27 November of +17.4%. Whilst there is
no sign of the cost of living pressures abating we remain
optimistic looking ahead to trading over the Christmas period. With
15 sites having opened year to date we remain on track to open 30
new sites during the course of the financial year ending 16 April
2023, including our first Brightside site.
Nick Collins
Chief Executive Officer
30 November 2022
Condensed Consolidated Statement of Comprehensive Income
For the 24 Week Period Ended 2 October 2022
24 weeks 24 weeks Year ended
ended ended
Note 2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Revenue 122,326 102,361 237,291
Cost of sales (74,411) (56,330) (134,369)
---------- ---------- -----------
Gross profit 47,915 46,031 102,922
Administrative expenses (41,859) (32,553) (76,975)
Other income 3 - 2,490 2,490
---------- ---------- -----------
Operating profit 6,056 15,968 28,437
Finance income 61 23 44
Finance costs 4 (3,286) (3,182) (6,876)
Profit before taxation 2,831 12,809 21,605
Tax charge on profit 5 (368) (1,949) (3,727)
Profit for the period 2,463 10,860 17,878
========== ========== ===========
Other comprehensive (expense)
/ income:
Cash flow hedge - change in value
of hedging instrument (38) 126 269
Other comprehensive (expense)
/ income for the period (38) 126 269
Total comprehensive income for
the period 2,425 10,986 18,147
========== ========== ===========
Earnings per share (pence)
Basic 6 2.4 10.6 17.4
Diluted 6 2.3 10.4 17.0
---- ----- -----
Condensed Consolidated Statement of Financial Position
As at 2 October 2022
Note 2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP'000
Unaudited Unaudited Audited
Assets
Non-current
Intangible assets 113,227 113,227 113,227
Property, plant and equipment 8 203,845 169,005 188,363
Deferred tax assets 988 3,190 1,355
Finance lease receivable 534 623 579
---------- ---------- ----------
Total non-current assets 318,594 286,045 303,524
Current
Inventories 2,031 1,558 1,919
Trade and other receivables 3,734 2,846 5,466
Derivative financial instruments - - 38
Cash and cash equivalents 23,044 20,610 31,250
---------- ---------- ----------
Total current assets 28,809 25,014 38,673
Total assets 347,403 311,059 342,197
========== ========== ==========
Liabilities
Current liabilities
Trade and other payables (52,207) (44,602) (56,214)
Lease liabilities (9,153) (7,437) (8,475)
Derivative financial instruments - (106) -
---------- ---------- ----------
Total current liabilities (61,360) (52,145) (64,689)
Non-current liabilities
Borrowings 9 (32,329) (32,211) (32,275)
Lease liabilities (115,636) (101,450) (111,127)
Total liabilities (209,325) (185,806) (208,091)
========== ========== ==========
Net assets 138,078 125,253 134,106
========== ========== ==========
Called up share capital 10 1,133 1,127 1,127
Share premium 8,066 8,066 8,066
Hedge reserve - (105) 38
Other reserves 14,278 14,278 14,278
Accumulated profits 114,601 101,887 110,597
---------- ---------- ----------
Total equity 138,078 125,253 134,106
========== ========== ==========
Condensed Consolidated Statement of Changes in Equity
For the 24 Week Period Ended 2 October 2022
Share Share Hedge Other Accumulated Total
Capital Premium Reserve Reserve Profits Equity
/ (Losses)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 18 April 2021 1,124 8,066 (231) 14,278 89,680 112,917
Ordinary shares issued 3 - - - (3) -
Share based payment charge - - - - 1,350 1,350
--------- --------- --------- --------- ------------ --------
Total transactions with
owners 3 - - - 1,347 1,350
Profit for the period - - - - 10,860 10,860
Other comprehensive expense - - 126 - - 126
--------- --------- --------- --------- ------------ --------
Total comprehensive income - - 126 - 10,680 10,986
At 3 October 2021 1,127 8,066 (105) 14,278 101,887 125,253
========= ========= ========= ========= ============ ========
Share based payment charge - - - - 1,692 1,692
--------- --------- --------- --------- ------------ --------
Total transactions with
owners - - - - 1,692 1,692
Profit for the period - - - - 7,018 7,018
Other comprehensive income - - 143 - - 143
--------- --------- --------- --------- ------------ --------
Total comprehensive income - - 143 - 7,018 7,161
At 17 April 2022 1,127 8,066 38 14,278 110,597 134,106
========= ========= ========= ========= ============ ========
Ordinary shares issued 6 - - - (6) 0
Share based payment charge - - - - 1,547 1,547
--------- --------- --------- --------- ------------ --------
Total transactions with
owners 6 - - - 1,541 1,547
Profit for the period - - - - 2,463 2,463
Other comprehensive expense - - (38) - - (38)
--------- --------- --------- --------- ------------ --------
Total comprehensive income - - (38) - 2,463 2,425
At 2 October 2022 1,133 8,066 - 14,278 114,601 138,078
========= ========= ========= ========= ============ ========
Condensed Consolidated Statement of Cash Flows
For the 24 Week Period Ended 2 October 2022
24 Weeks 24 Weeks Year ended
ended ended
Note 2 October 3 October 17 April
2022 2021 2022
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Net cash generated from operating
activities 11 14,613 35,903 69,626
========== ========== ===========
Cash flows from investing activities
Purchase of property, plant and
equipment (15,012) (6,494) (22,837)
Net cash used in investing activities (15,012) (6,494) (22,837)
========== ========== ===========
Cash flows from financing activities
Shares issued on exercise of employee
share awards (183) (135) 135)
Bank loans repaid - (7,000) (7,000)
Interest paid (455) (595) (1,101)
Interest received 43 3 3
Principal element of lease payments (4,511) (3,551) (6,903)
Interest paid on lease liabilities (2,758) (2,433) (5,315)
Principal element of lease receivables 57 - -
Net cash used in financing activities (7,807) (13,711) (20,451)
========== ========== ===========
Net (decrease) / increase in cash
and cash equivalents (8,206) 15,698 26,338
Cash and cash equivalents at beginning
of the period 31,250 4,912 4,912
Cash and cash equivalents at end
of the period 23,044 20,610 31,250
========== ========== ===========
Notes to the Condensed Consolidated Interim Financial
Statements
1. General information
The Directors of Loungers plc (the "Company") and its
subsidiaries (the "Group") present their interim report and the
unaudited condensed financial statements for the 24 weeks ended 2
October 2022 ("Interim Financial Statements").
The Company is a public limited company, incorporated and
domiciled in England and Wales, under the company registration
number 11910770. The registered office of the company is 26 Baldwin
Street, Bristol BS1 1SE.
The Interim Financial Statements were approved by the Board of
Directors on 29 November 2022.
The Interim Financial Statements have not been audited or
reviewed by the auditors. The financial information shown for the
24 weeks ended 2 October 2022 does not constitute statutory
financial statements within the meaning of section 434 of the
Companies Act 2006.
The information shown for the year ended 17 April 2022 does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 and has been extracted from the Group's
Annual Report and Financial Statements for that year.
The Interim Financial Statements should be read in conjunction
with the Group's Annual Report and Financial Statements for the
year ended 17 April 2022, which were prepared in accordance with UK
adopted International Accounting Standards and those parts of the
Companies Act 2006 applicable to companies reporting under those
standards. The Group's Annual Report and Financial Statements for
the year ended 17 April 2022 have been filed with the Registrar of
Companies. The Independent Auditors' Report on the Group's Annual
Report and Financial Statements for the year ended 17 April 2022
was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
2. Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority. They do not include all of the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last financial statements.
The Interim Financial Statements are presented in Pounds
Sterling, rounded to the nearest thousand Pounds, except where
otherwise indicated; and under the historical cost convention as
modified through the recognition of financial liabilities at fair
value through the profit and loss.
The Directors consider that the principal risks and
uncertainties faced by the Group are as set out in the Group's
Annual Report and Financial Statements for the year ended 17 April
2022.
In addition to the accounting policies applied in the
preparation of the Group's consolidated financial statements for
the year ended 17 April 2022, the Group has adopted the following
amendments to accounting standards, effective for annual financial
periods beginning on or after 1 January 2022:
-- Amendments to IFRS 3: Reference to the Conceptual Framework
-- Amendments to IAS 16: Property, Plant and Equipment: Proceeds Before Intended Use
-- Amendments to IAS 37: Onerous Contracts - Costs of Fulfilling a Contract
The adoption of these amendments has not had a material impact
on the Group's interim financial statements.
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Going concern
In concluding that it is appropriate to prepare the Group's
interim financial statements on the going concern basis attention
has been paid both to the potential impact of further Covid-19
outbreaks on the Group and also to the current sector headwinds in
terms of consumer confidence and inflationary pressures.
As at the 2 October 2022 the Group had cash balances of GBP23.0m
and unutilised facilities of GBP10m (excluding the GBP15m RCF which
has subsequently been allowed to expire in October 2022) providing
total liquidity of GBP33.0m.
In order to assess the Group's going concern position the Board
has considered three downside scenarios of the Group's business
plan.
-- The first scenario assumes a re-emergence of Covid-19 in
similar fashion to the Omicron outbreak of 2021. A sales decline of
20% relative to the FY23 budget for 12 weeks across December 2022,
January and February 2023 has been modelled. This is significantly
worse than the impact felt from the 2021 Omicron variant.
-- The second scenario looks to model a weakening in consumer
confidence, accelerating in October 2022 with sales between 5% and
10% below budget, allied to continuing cost of goods sold and
labour inflation reducing gross margins by 1%.
-- The third scenario combines both the above scenarios,
resulting, for example, in sales being 30% below budget across
December 2022 to February 2023.
In the most severe downside scenario the Group is forecast to
remain within its borrowing facilities and to be in compliance with
its covenant obligations, and accordingly the Directors have
concluded that it is appropriate to prepare the Interim Financial
Statements on the going concern basis.
ESG and TCFD requirements
The Group will be reporting under the TCFD framework in its full
year report and accounts to 16 April 2023. The Group continues to
evolve its ESG strategy, with initiatives undertaken in the first
half of the financial year including a detailed review of energy
efficiency and the rollout of a paperless trial in sites.
At the half year, the Group is not aware of any climate related
risks that would have a material financial impact upon the Group's
ability to operate, but the Board continues to monitor this as part
of their ongoing risk assessments.
Accounting estimates and judgements
In preparing these financial statements, management has made
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those applied to the Group's
consolidated financial statements for the year ended 17 April
2022.
The Group tests for impairment on an annual basis or earlier if
there are indicators that an asset might be impaired. At the 2
October 2022 the Group was not aware of any specific events that
would require a site to be impaired. The Group has reviewed its
FY22 impairment calculations, flexing assumptions for potential
increases in discount rates and is satisfied that there is no
requirement to recognise additional impairment.
3. Other income
24 Weeks 24 Weeks Year ended
ended ended
2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Government support grant funding - 2,490 2,490
- 2,490 2,490
============================================== ========== ===========
4. Finance costs
24 Weeks 24 Weeks Year ended
ended ended
2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Bank interest payable 528 601 1,190
Other interest payable - - 4
Finance cost on lease liabilities 2,758 2,581 5,682
3,286 3,182 6,876
========== ========== ===========
5. Tax on profit
24 Weeks 24 Weeks Year ended
ended ended
2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Taxation charged to the income
statement
Current income taxation - 1,323 1,266
Adjustments for current tax - - -
of prior periods
---------- ---------- -----------
Total current income taxation - 1,323 1,266
========== ========== ===========
Deferred Taxation
Origination and reversal of
temporary differences
Current period 368 987 2,408
Adjustments to tax charge in
respect of prior periods - - 109
Adjustment in respect of changes
in tax rates - (361) (56)
---------- ---------- -----------
Total deferred tax 368 626 2,461
========== ========== ===========
Total taxation charge in the
consolidated income statement 368 1,949 3,727
========== ========== ===========
The income tax expense was recognised based on management's best
estimate of the effective income tax rate expected for the full
financial year, applied to the profit before tax for the 24 weeks
ended 2 October 2022. The effective tax rate of 13.0% is below the
standard rate of income tax due to the impact of the capital
allowance "super-deduction" effective from the 1(st) April
2021.
The 2021 Budget announced an increase in the corporation tax
rate from 19% to 25% with effect from 1 April 2023. This was
substantively enacted on 24 May 2021. Accordingly, the deferred tax
assets and liabilities at the balance sheet date are calculated at
the substantively enacted rate of 25%, to the extent they are not
expected to reverse before 1 April 2023. This amount was presented
as an adjusting item in the Group's report and accounts for the 52
weeks ended 17 April 2022.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity shareholders by the weighted average number
of shares outstanding during the period, excluding unvested shares
held pursuant to the following long-term incentive plans:
-- Loungers plc Employee Share Plan
-- Loungers plc Senior Management Restricted Share Plan
-- Loungers plc Value Creation Plan
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. During the
period ended 2 October 2022 the Group had potentially dilutive
shares in the form of unvested shares pursuant to the above
long-term incentive plans.
24 Weeks 24 Weeks Year ended
ended ended
2 October 3 October 17 April
2022 2021 2022
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Profit for the period after
tax 2,463 10,860 17,878
Basic weighted average number
of shares 103,137,035 102,716,490 102,728,430
Adjusted for share awards 2,148,438 2,111,986 2,464,588
Diluted weighted average number
of shares 105,285,472 104,828,476 105,193,018
Basic earnings per share (p) 2.4 10.6 17.4
Diluted earnings per share (p) 2.3 10.4 17.0
============ ============ ============
7. Share based payments
The Group had the following share-based payment arrangement in
operation during the period:
- Loungers plc Employee Share Plan
- Loungers plc Senior Management Restricted Share Plan
- Loungers plc Value Creation Plan
The Group recognised a total charge of GBP1,730,000 in respect
of the Group's three share-based payment plans.
8. Fixed assets
Land and Motor Vehicles Fixtures Right of Total
Buildings and Fittings Use Asset
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 18 April 2021 56,668 81 55,790 132,977 245,516
Additions 4,900 - 5,112 2,074 12,086
Disposals - (19) - - (19)
At 3 October 2021 61,568 62 60,902 135,051 257,583
Additions 6,290 148 9,704 14,330 30,472
At 17 April 2022 67,858 210 70,606 149,381 288,055
----------- --------------- -------------- ----------- --------
Additions 7,287 - 8,640 9,698 25,625
At 2 October 2022 75,145 210 79,246 159,079 313,680
----------- --------------- -------------- ----------- --------
Depreciation
At 18 April 2021 13,919 53 23,521 42,580 80,073
Provided for the period 1,740 10 3,120 3,654 8,524
Disposals - (19) - - (19)
At 3 October 2021 15,659 44 26,641 46,234 88,578
Provided for the period 2,278 22 4,017 4,797 11,114
At 17 April 2022 17,937 66 30,658 51,031 99,692
----------- --------------- -------------- ----------- --------
Provided for the period 2,079 23 3,713 4,328 10,143
At 2 October 2022 20,016 89 34,371 55,359 109,835
----------- --------------- -------------- ----------- --------
Net book value
At 2 October 2022 55,129 121 44,875 103,720 203,845
At 17 April 2022 49,921 144 39,948 98,350 188,363
At 3 October 2021 45,909 18 34,261 88,817 169,005
At 18 April 2021 42,749 28 32,269 90,397 165,443
=========== =============== ============== =========== ========
9. Borrowings
2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Non-current
Bank loan 32,500 32,500 32,500
Loan arrangement fees (171) (289) (225)
---------- ---------- ---------
32,329 32,211 32,275
========== ========== =========
The Group's bank borrowings are secured by way of fixed and
floating charges over the Group's assets.
The facilities entered into at the time of the IPO in April 2019
provide for a term loan of GBP32,500,000 and a revolving credit
facility of GBP10,000,000. The term loan is a five-year
non-amortising facility with a margin of 2% above SONIA.
On 22 April 2020, in response to the Covid-19 lockdown, the
Group agreed an incremental GBP15,000,000 revolving credit facility
for the 18-month period to October 2021. On 16 April 2021 this
incremental facility was extended to October 2022 and was allowed
to expire at the end of the extension.
The Group has been compliant with all of its covenant
obligations during the 24 weeks to 2 October 2022.
At 2 October 2022 the term loan was fully drawn and GBPnil was
drawn down under the revolving credit facility.
10. Share capital
2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Allotted, called up and fully
paid ordinary shares 1,033 1,027 1,027
Redeemable preference shares 100 100 100
------------ ------------ ------------
1,133 1,127 1,127
============ ============ ============
Ordinary shares at GBP0.01 each 103,303,312 102,738,664 102,738,664
Redeemable preference shares 2 2 2
============ ============ ============
The table below summarises the movements in share capital for
Loungers plc during the period ended 2 October 2022:
Ordinary Redeemable GBP'000
Shares Preference
Shares
GBP0.01 GBP49,999
NV NV
------------ ----------- --------
At 17 April 2022 102,738,664 2 1,127
Shares issued 564,648 - 6
At 2 October 2022 103,303,312 2 1,133
============ =========== ========
On 30 April 2022 the Group issued 385,167 ordinary shares of 1
pence each to 711 employees pursuant to the Group's share plans. On
the 29 July 2022 the Group released a block listing of 364,635
shares in respect of its share plans, of which 179,481 had been
issued as of 2 October 2022.
11. Note to the cash flow statement
24 Weeks 24 Weeks Year ended
ended ended
2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit before tax 2,831 12,809 21,605
Adjustments for:
Depreciation of property, plant
and equipment 5,815 4,870 11,187
Depreciation of right of use assets 4,328 3,654 8,451
Share based payment transactions 1,730 1,554 3,220
Profit on disposal of fixed assets - -
Finance income (60) (23) (44)
Finance costs 3,286 3,182 6,876
Changes in inventories (112) (785) (1,145)
Changes in trade and other receivables 1,591 (225) (2,699)
Changes in trade and other payables (4,796) 10,867 23,593
Cash generated from operations 14,613 35,903 71,044
Tax paid - - (1,418)
Net cash generated from operating
activities 14,613 35,903 69,626
========== ========== ===========
12. Post Balance Sheet events
On 7(th) November, the Group announced that it was launching a
new brand, Brightside, in the UK. It has acquired three sites for a
total cash consideration of GBP3m, one leasehold and two freehold,
through the purchase of Route Restaurants Ltd and Nightlife Leisure
Ltd, which is expected to complete on 1(st) December 2022.
Reconciliation of Statutory Results to Alternative Performance
Measures
The Interim Results include both statutory and alternative
performance measures ("APMs"). APM's are included for the following
reasons:
-- They reflect the way in which management report and monitor
the financial performance of the Group internally;
-- They improve the comparability of information between
reporting periods by adjusting for one-off factors;
-- The IAS17 presentation reflects the way in which the
financial performance of the Group has been presented historically
and the basis on which the Group's financial covenants are
tested.
24 weeks 24 weeks Year ended
ended ended
Note 2 October 3 October 17 April
2022 2021 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Operating profit 6,056 15,968 28,437
Share based payment charge 1,730 1,554 3,220
Site pre-opening costs 1,378 1,040 2,344
---------- ---------- -----------
Adjusted operating profit 9,164 18,562 34,001
Depreciation (pre IFRS 16 right
of use asset charge) 5,815 4,870 11,187
IFRS 16 Right of use asset depreciation 4,328 3,654 8,451
Adjusted EBITDA (IFRS 16) 19,307 27,086 53,639
IAS 17 Rent charge (5,959) (5,295) (11,745)
IAS 17 Rent charge included in
IAS 17 pre-opening costs 134 227 425
Adjusted EBITDA (IAS 17) 13,482 22,018 42,319
========== ========== ===========
The Group references Like for Like sales growth as a key APM.
Like for Like sales growth excludes the sales from sites that have
been open for less than 18 months. The periods in which the Group
did not trade are excluded from the calculation.
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END
IR DZMZMVLRGZZM
(END) Dow Jones Newswires
November 30, 2022 02:00 ET (07:00 GMT)
Loungers (LSE:LGRS)
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