TIDMLGRS
RNS Number : 1199U
Loungers PLC
01 December 2021
1 December 2021
Loungers plc
Results for the 24 weeks ended 3 October 2021
Another strong resumption in trading post lockdown that supports
Loungers' ability to out-perform profitably in a post Covid-19
environment
Loungers (the "Group") is pleased to announce its unaudited
results for the 24 weeks ended 3 October 2021 ("the period").
Loungers operates a total of 184 sites, comprising 153 Lounge
café-bars and 31 Cosy Cub restaurant-bars. The Group's sites offer
something for everyone regardless of age, demographic or gender and
the Group operates successfully in a diverse range of different
sites and locations across England and Wales.
The 24 week period being reported on includes four weeks to 16
May where the Group's sites were restricted to external trading
only, and a further nine weeks to 18 July before the removal of the
remaining Covid restrictions. Accordingly, only 11 weeks of the
period were absent from any Covid restrictions.
Financial Highlights
24 weeks 24 weeks 24 weeks
ended 3 October ended 4 October ended 6 October
2021 2020 2019
GBP'000 GBP'000 GBP'000
Revenue 102,361 53,493 79,827
Adjusted EBITDA 27,086 13,205 14,475
Adjusted EBITDA margin (%) 26.5% 24.7% 18.1%
Adjusted EBITDA (IAS17) 22,018 8,734 10,222
Adjusted EBITDA (IAS17) margin
(%) 21.5% 16.3% 12.8%
Operating profit 15,968 3,383 2,029
Profit / (loss) before tax 12,809 117 (2,494)
Diluted earnings / (losses) per
share (p) 10.4 0.1 (2.3)
Cash generated from operating activities 35,903 20,937 12,561
3 October 4 October 4 October
2021 2020 2019
GBP'000 GBP'000 GBP'000
Non-property net debt 11,890 13,554 29,340
-- Revenue growth of 91.4% to GBP102.4m reflects the very
successful resumption of trading from 17 May
-- Adjusted EBITDA of GBP27.1m, up 105.1% (H1 2021: GBP13.2m),
driven by strong sales and margin growth
-- IAS17 Adjusted EBITDA of GBP22.0m, up 152.1% (H1 2021: GBP8.7m)
-- Underlying IAS17 EBITDA margin growth of 40bps against 2019
over the 20 weeks from 17 May, excluding the beneficial impact of
the VAT reduction and other government support measures
Operational Highlights
-- Significant market out-performance post re-opening to 3 October
- Headline LFL sales growth of +26.6% in the period from 17 May
to 3 October (compared to 2019) is testimony to the strength of our
brands and our teams
-- Uniquely well-placed post Covid
- Suburban / market town focus protects against longer-term
behavioural changes brought about by Covid
- Increased sales, efficiency and margin being delivered through
the order at table app and the reduction in the number of dishes on
the menu
-- Resumption of new site roll-out
- 12 new sites opened in the period, comprising 11 Lounges and
one Cosy Club. A further four sites have been opened post the 3
October half year end in Ringwood, Reigate, Colchester and St
Neots
- Further investment in the build and property teams to provide
the capacity to accelerate the roll-out
- Pipeline strength and depth reflected in the quality of the period's new site openings
-- Managing the inflationary environment
- Introduction of differential pricing in July 2021 allows
additional pricing flexibility whilst we retain our critical focus
on value for money
- Continued control of labour and supply costs, where we
continue to benefit from our increasing scale
- Utility costs hedged in May 2020 through to September 2024
-- Continued reduction in non-property net debt to GBP11.9m
- The Group's balance sheet strength has enabled the early
resumption of its roll-out strategy, allowing it to benefit from a
tenant friendly property market, where prime pitch properties in
strong target locations are available at attractive rents
Current Trading and Outlook
-- Since the end of the period the business has continued to
consistently out-perform the sector and achieve strong like for
like sales growth post 3 October, headline LFL sales across the 28
weeks to 28 November of +23.4%
-- Whilst mindful of the news of the Omicron variant, we are
optimistic looking ahead to trading over the Christmas period and
beyond. The Lounge business is very balanced seasonally, whilst
Christmas trading is more important for Cosy Club and we are
encouraged by the level of bookings.
-- We anticipate 25 new site openings during the financial year
ending 17 April 2022 and have the infrastructure in place to
accelerate that pace as circumstances permit
Nick Collins, Chief Executive Officer of Loungers said:
"Our value for money, all day offer appeals to a very broad
demographic, and this underpins our market-leading performance in
towns and suburbs across England and Wales. We will open 25 sites
this year as we continue to benefit from the changing dynamics of
the high street and our pipeline of new sites has never looked so
strong. Our sustained growth alongside our operational discipline
are enabling us to manage and mitigate most inflationary
pressure.
"As we move into the Christmas trading period any potential
impact of Omicron remains to be seen, but as we look ahead to 2022,
I am very optimistic with regards to our prospects and the
continuing roll-out of both Lounge and Cosy Club."
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 Instinctif Partners
Nick Collins, Chief Executive Officer
Gregor Grant, Chief Financial Officer
GCA Altium Limited (Financial Adviser and Tel: +44 (0) 20
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 / George Sellar 8900
Instinctif Partners (Financial Public Relations) Tel: +44 (0) 207
Justine Warren / Matthew Smallwood 457 2010/2005
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 153 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 31 Cosy Clubs
nationwide.
CHIEF EXECUTIVE REVIEW
Highlights
-- Market-leading sales performance of +26.6% LFL since
re-opening the entire estate on 17 May;
-- Consistently strong sales performance across the business;
-- Our suburban, market-town locations aligned with our
best-in-class rent to revenue ratio of 5.4% mean we are very well
placed to continue to generate strong returns;
-- The broad demographic appeal of our flexible, community-based
offer together with our unique hospitality and culture resonates
now more than ever;
-- Significant evolution of the Cosy Club food offer;
-- Introduction of price banding throughout the estate;
-- Roll-out resumed and we anticipate opening 25 new sites in the current financial year; and
-- We are seeing excellent property opportunities in very strong
locations and have the opportunity, infrastructure and capability
to further scale up the roll-out.
Operating review
Trading
The entire estate re-opened on 17 May once Government
Covid-related restrictions on indoor trading were lifted. Based on
our very strong performance in the summer of 2020, we expected both
Lounge and Cosy Club to open very strongly again and carried out
our re-opening planning on that basis. As anticipated, immediately
on re-opening we saw a return to growth, in contrast to 2020 when
it took two to three weeks for the sites to return to a normal
level of sales. Our sales growth and market out-performance have
been largely consistent across both brands since re-opening, both
during the summer and as we now head into the winter months.
All categories and day parts across both Lounge and Cosy Club
are in growth and there is no one stand-out contributing factor to
the sustained sales growth we are experiencing. In terms of trends,
we continue to see strong performance in the brunch day part and
shoulder periods either side of lunch and continued excellent like
for like performance in respect of cocktails, puddings and premium
drinks. We have always traded well from coastal locations and in
the summer months we benefitted in these sites from the staycation
boom in the UK.
This consistent out-performance of the market is in part
attributed to how both Lounge and Cosy Club are positioned and
located. In Lounge our concentration in market towns and suburban
high streets has meant the business has benefited from the
behavioral changes we have seen as a result of Covid. At the city
centre Cosy Clubs, where our pitches usually benefit from both
leisure and retail footfall, we have found ourselves protected
against the worst aspects of Covid. In addition, I believe the
continued emphasis on community which has become increasingly
forefront of mind throughout the pandemic suits the Lounges, which
are driven by a desire to improve communities and high streets
across the UK. The informality and flexibility of trading all-day
in both businesses also really suits consumers who might be
adapting to new working routines or looking to eat outside
traditional meal times and avoid the crowds.
I do believe our actions during the lockdowns and our broader
approach to how we wanted to emerge from Covid have had a material
impact on our sales. We were determined Covid would not interfere
with our standards of hospitality nor the atmosphere and warmth
within our sites and our customers have recognised this by coming
back again and again. Equally the innovation and evolution in the
business during the various periods of lockdown, particularly in
respect of our order at table app and menu development have been
significant contributing factors to our sales success.
Evolution
The most significant development during the period was in
respect of the Cosy Club food menu and its broader brand
positioning. Since the start of the financial year we have been
evolving and trialling a major re-work of the Cosy Club menu,
introducing a new structure and layout, with the inclusion of small
plates, and a material reduction in the number of dishes available
at each mealtime. The new menu is more elevated, introducing a
number of less mainstream, more aspirational dishes, with a
slightly higher price point. Alongside this we have introduced new
furniture across the Cosy Clubs and changed our steps of service to
place more emphasis on providing great hospitality. It has been one
of the most significant development projects we have ever
undertaken. Following a successful trial over the summer months the
new menu has now been rolled out across the entire Cosy Club estate
and whilst it is too early to assess its impact, we are pleased
with the initial reaction from our customers.
On the Lounge side we have continued to improve the App in terms
of customer journey, performance and offering, alongside a new menu
launch in October with a more typical 10% change in the number of
dishes. This summer we also accelerated the roll-out of our kitchen
management system across the Lounge estate, with all Lounges now
benefitting from electronic tickets and the fantastic insight that
gives us into our operational delivery. The final elements of the
kitchen reset project, largely relating to new equipment and
revised ergonomics, are currently being scheduled to take place in
2022.
This summer also saw us launch banded pricing across both Lounge
and Cosy Club estates. We now have three different tiers of pricing
in each brand, with each site allocated a tier based on our
understanding of the level of affluence and earnings in that
location. As our geography has expanded across the UK, it has
become more apparent that we can take advantage of price elasticity
in some areas, consistent with how some of our peers approach
pricing. Our initial approach has seen all locations benefit from
price increases, but we have been relatively conservative, wanting
to ensure that we understand any customer reaction.
Roll-out and pipeline
Over the period we have opened 11 Lounges and one Cosy Club, and
since the period end we have opened a further four Lounges. Our
four build-teams are fully operational once again and we are back
opening sites at a rate of 25 per annum, delivering on the strategy
we set out at the IPO in 2019. The sites we have opened this year
have further increased average unit sales and EBITDA reflecting
both the strength of our pipeline and our operational performance.
Highlights have included Lounges in Pontypridd and Blackpool and
Cosy Club in Chelmsford.
From a pipeline perspective it has never looked so good. Our
property team continued to look at opportunities throughout the
lockdowns and as a result we reopened in May with a strong pipeline
in place, now stretching into FY24. We are seeing a continuation
and exaggeration of trends we were seeing pre-Covid with
strong-pitch opportunities in high priority target towns becoming
available, principally as a result of retail CVA's and
administrations. These opportunities are allowing us to open sites
generating higher levels of sales. Our rent to revenue ratio
continues to hold firm at sub 6% and we are seeing improving
landlord packages in terms of rent free periods and capital
contributions helping to protect our returns on capital.
In the period we restructured the property and build teams with
a view to future-proofing this side of the business and ensuring we
are well positioned to both continue opening sites at a rate of 25
per year or accelerate beyond that rate should we feel it
appropriate. We have brought both build and property under the
leadership of Tom Trenchard, Property Director and created a new
position of Head of Construction. With the new structure now in
place we are well positioned to achieve efficiencies in our capex
spend whilst ensuring our site design is as fresh and innovative as
ever.
People
Trading over the summer months, in particular, wasn't easy. Our
teams had to deal with staff shortages in some locations,
unpredictably high demand at times and occasional interruptions to
the supply chain. Our teams at all levels across the business
performed astonishingly well in what were at times incredibly
challenging circumstances and I would like to thank them enormously
for all their efforts and contribution. As a provider of
hospitality, we are only ever as good as our team, and we have one
of the best teams in the UK today.
Recruitment and retention within the sector remains tough at the
moment. Covid has caused a minority of people working in the
hospitality sector to think twice about their careers as they
consider their life choices and work/life balance. We have managed
this well to date, however, as a large employer it is critical that
we address this, in terms of both understanding where we can be
better, alongside promoting what we are very good at. Despite
recruitment being tough, we have opened 16 sites in the financial
year to date, recruiting 16 teams and we continue to trade well.
There are undoubtedly things that we can do better, but through our
strong culture and as a result of the progression opportunities we
can offer to our team, we are emerging from this in a strong
position.
We continue to reward our loyal team members through our share
plans and are very proud of the shared ownership within the
business. Over 1,000 of our 5,000 employees are currently
shareholders in the Group.
Financial review
Financial Performance
Whilst the impact of Covid (both the negatives of trading
restrictions and the positives of government support measures) once
again runs through the reported financial results, it cannot mask a
very strong performance, with revenue up 91% to GBP102.4m and
Adjusted EBITDA up 105% to GBP27.1m.
By way of context the period under review incorporates:
-- A four week period where our sites were able to trade
externally only. Over the course of these four weeks, we increased
the number of sites trading external areas only from 44 sites to 88
sites, ahead of the whole estate reopening for internal and
external trade on 17 May;
-- A further nine week period to 18 July during which social
distancing rules remained in place, including the "Rule of 6" and
order at table requirements;
-- The beneficial impact on EBITDA margins of government
initiatives including the temporary reduction in the VAT rate
charged on food and non-alcoholic drinks, the business rates
holiday; and the Restart Grants.
In the period post reopening for internal trade on 17 May
headline LFL sales were +26.6%. Excluding the positive impact of
the VAT reduction the underlying LFL result was +13.6%. This sales
performance was remarkably consistent across the period under
review, with headline LFL sales of +23.7% over the nine weeks to 18
July increasing to +28.8% over the 11 weeks to 3 October post the
ending of Covid restrictions.
This strong sales performance helped to drive IFRS16 Adjusted
EBITDA margin growth of 1.8% to 26.5%, whilst the IAS17 Adjusted
EBITDA margin, which was relatively more impacted by the greater
lockdown period in the prior year, grew by 5.2% to 21.5%. As in the
prior year the Adjusted EBITDA margin continues to reflect the
benefit of government support measures, with the VAT reduction, for
example, adding 7.5% to the reported Adjusted EBITDA margin in the
period under review. Most importantly however, if we exclude the
period of external trading and look at just the 20 weeks from 17
May to 3 October and remove the positive impacts of government
support and the costs of re-opening post lockdown three, the
business has delivered IAS17 Adjusted EBITDA margin growth of 0.4%.
This margin growth reflects the continuing positive benefits of
cost of goods margin growth and improving operational leverage
offsetting labour cost pressure that was particularly notable
during the early weeks post reopening.
Impact of UK Government Initiatives
The Group continued to benefit from a number of UK Government
initiatives introduced to mitigate the impact of Covid-19,
notably:
-- The Coronavirus Job Retention Scheme ("CJRS") - During the
period under the review the Group received a total of GBP4.1m of
funding under the CJRS. A total of GBP2.1m was recognised in the
statement of comprehensive income in the period, offsetting site
payroll costs on the costs of sales line and head office payroll
costs on the administrative expenses line. Cash receipts included
GBP2.0m that was recognised in the FY21 results.
-- Business Rates Relief - The Group's sites have benefitted
from the 100% business rates holiday that ran from 1 April 2021 to
30 June 2021 and have continued to benefit from the 66% reduction
(capped at GBP2.0m) that runs to 31 March 2022. During the period
Group has benefitted by GBP2.3m.
-- Support Grant Funding - In the period under review the Group
has recognised GBP2.5m of grant funding received under the Restart
Grant scheme. This income has been recognised under other
income.
Net debt
Non property net debt (gross of arrangement fees) reduced to
GBP11.9m at period end, an improvement of GBP22.7m from the FY21
year end. Reported net debt continues to benefit from deferred
liabilities to landlords and HMRC totaling GBP5.6m. Adjusting to
reflect these deferred liabilities as if they had been paid, net
debt at 3 October 2021 would have been GBP17.5m. This represents a
reduction of GBP30.0m relative to the FY21 year end. The timing of
the half year results does not flatter the reporting of net debt,
coming as it does immediately after the September rent quarter and
month end payment runs. In the week prior to the half year end
payments totaling GBP9.0m were made to suppliers, landlords and
HMRC.
Finance costs for the period have reduced to GBP3.2m (2021:
GBP3.3m) reflecting the repayment of the GBP7m RCF draw in the
period. Finance costs include GBP2.6m (2021: GBP2.6m) of IFRS16
lease interest charges.
Cash flow
Net cash generated from operating activities grew by 71.5% to
GBP35.9m (2021: GBP20.9m). The performance in the period was
boosted by a positive swing of GBP9.9m (2021 GBP7.4m) in the
working capital position post reopening.
The resumption of the new site roll-out programme saw a
significant uplift in capital expenditure, with outflows in the
period rising to GBP6.5m (2021 GBP1.4m). Capital expenditure
incurred in the period (excluding IFRS16 ROUA investment) was
GBP10.0m (2021 GBP1.4m), of which GBP8.4m related to new sites.
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 Lounge and Cosy Club 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
The business has continued to consistently out-perform the
sector and achieve strong like for like sales growth post the 3
October half year end, with headline LFL sales across the 28 weeks
to 28 November of +23.4%. Whilst mindful of the news of the Omicron
variant, we remain optimistic looking ahead to trading over the
Christmas period and beyond. We anticipate 25 new site openings
during the course of the financial year ending 17 April 2022 and
have the infrastructure in place to accelerate that pace as
circumstances permit.
Nick Collins
Chief Executive Officer
30 November 2021
Condensed Consolidated Statement of Comprehensive Income
For the 24 Week Period Ended 3 October 2021
24 weeks 24 weeks Year ended
ended ended
Note 3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Revenue 102,361 53,493 78,346
Cost of sales (56,330) (28,848) (46,178)
---------- ---------- -----------
Gross profit 46,031 24,645 32,168
Gross profit before exceptional
items 46,031 24,645 32,609
Exceptional items included in cost
of sales 3 - - (441)
---------------------------------------------- ----- ---------- ---------- -----------
Administrative expenses (32,553) (21,862) (43,950)
Other income 4 2,490 600 4,054
---------- ---------- -----------
Operating profit / (loss) 15,968 3,383 (7,728)
Operating profit / (loss) before
exceptional items 15,968 4,005 (6,401)
Exceptional items included in cost
of sales - - (441)
Exceptional items included in administrative
expenses 3 - (622) (886)
---------------------------------------------- ----- ---------- ---------- -----------
Finance income 23 22 46
Finance costs 5 (3,182) (3,288) (7,040)
Profit / (loss) before taxation 12,809 117 (14,722)
Tax (charge) / credit on profit
/ (loss) 6 (1,949) 39 3,580
Profit / (loss) for the period 10,860 156 (11,142)
========== ========== ===========
Other comprehensive expense:
Cash flow hedge - change in value
of hedging instrument 126 (27) 101
Other comprehensive expense for
the period 126 (27) 101
Total comprehensive income / (expense)
for the period 10,986 129 (11,041)
========== ========== ===========
Earnings per share (pence)
Basic 7 10.6 0.2 (10.9)
Diluted 7 10.4 0.1 (10.9)
----- ---- -------
Condensed Consolidated Statement of Financial Position
As at 3 October 2021
Note 3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP'000
Unaudited Unaudited Audited
Assets
Non-current
Intangible assets 113,227 113,227 113,227
Property, plant and equipment 9 169,005 162,436 165,443
Deferred tax assets 3,190 608 3,816
Finance lease receivable 623 709 668
---------- ---------- -----------
Total non-current assets 286,045 276,980 283,154
Current
Inventories 1,558 1,259 774
Trade and other receivables 2,846 2,211 2,619
Cash and cash equivalents 20,610 25,946 4,912
---------- ---------- -----------
Total current assets 25,014 29,416 8,305
Total assets 311,059 306,396 291,459
========== ========== ===========
Liabilities
Current liabilities
Trade and other payables (44,602) (39,381) (28,576)
Lease liabilities (7,437) (6,585) (6,921)
Derivative financial instruments (106) (359) (231)
---------- ---------- -----------
Total current liabilities (52,145) (46,325) (35,728)
Non-current liabilities
Borrowings 10 (32,211) (39,094) (39,157)
Lease liabilities (101,450) (97,869) (103,657)
Total liabilities (185,806) (183,288) (178,542)
========== ========== ===========
Net assets 125,253 123,108 112,917
========== ========== ===========
Called up share capital 11 1,127 1,124 1,124
Share premium 8,066 8,066 8,066
Hedge reserve (105) (359) (231)
Other reserves 14,278 14,278 14,278
Accumulated profits 101,887 99,999 89,680
---------- ---------- -----------
Total equity 125,253 123,108 112,917
========== ========== ===========
Condensed Consolidated Statement of Changes in Equity
For the 24 Week Period Ended 3 October 2021
Share Share Hedge Other Accumulated Total
Capital Premium Reserve Reserve Profits Equity
/ (Losses)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 20 April 2020 1,025 - (332) 14,278 99,011 113,982
Ordinary shares issued 99 8,066 - - (6) 8,159
Share based payment charge - - - - 838 838
--------- --------- --------- --------- ------------ ---------
Total transactions with owners 99 8,066 - - 832 8,997
Profit for the period - - - - 156 156
Other comprehensive expense - - (27) - - (27)
--------- --------- --------- --------- ------------ ---------
Total comprehensive income - - (27) - 156 129
At 4 October 2020 1,124 8,066 (359) 14,278 99,999 123,108
========= ========= ========= ========= ============ =========
Share based payment charge - - - - 979 979
--------- --------- --------- --------- ------------ ---------
Total transactions with owners - - - - 979 979
Loss for the period - - - - (11,298) (11,298)
Other comprehensive income - - 128 - - 128
--------- --------- --------- --------- ------------ ---------
Total comprehensive income - - 128 - (11,298) (11,170)
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 - 10,860 10,986
At 3 October 2021 1,127 8,066 (105) 14,278 101,887 125,253
========= ========= ========= ========= ============ =========
Condensed Consolidated Statement of Cash Flows
For the 24 Week Period Ended 3 October 2021
24 Weeks 24 Weeks Year ended
ended ended
Note 3 October 4 October 18 April
2021 2020 2021
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Net cash generated from operating
activities 12 35,903 20,937 12,031
========== ========== ===========
Cash flows from investing activities
Purchase of property, plant and
equipment (6,494) (1,367) (7,808)
Net cash used in investing activities (6,494) (1,367) (7,808)
========== ========== ===========
Cash flows from financing activities
Issue of ordinary shares - 8,158 8,158
Shares issued on exercise of employee
share awards (135) (79) (79)
Bank loans repaid (7,000) - -
Interest paid (595) (603) (1,260)
Interest received 3 - -
Principal element of lease payments (3,551) (2,926) (5,303)
Interest paid on lease liabilities (2,433) (2,319) (4,910)
Principal element of lease receivables - 62 -
Net cash (used in) / from financing
activities (13,711) 2,293 (3,394)
========== ========== ===========
Net increase in cash and cash equivalents 15,698 21,863 829
Cash and cash equivalents at beginning
of the period 4,912 4,083 4,083
Cash and cash equivalents at end
of the period 20,610 25,946 4,912
========== ========== ===========
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 3
October 2021 ("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 30 November 2021.
The Interim Financial Statements have not been audited or
reviewed by the auditors. The financial information shown for the
24 weeks ended 3 October 2021 does not constitute statutory
financial statements within the meaning of section 434 of the
Companies Act 2006.
The information shown for the year ended 18 April 2021 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 18 April 2021, which were prepared in accordance with
International Financial Reporting Standards ('IFRS') and those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The Group's Annual Report and Financial Statements for
the year ended 18 April 2021 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 18 April 2021
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 18 April
2021.
The accounting policies adopted in the preparation of the
Interim Financial Statements are consistent with those applied in
the preparation of the Group's consolidated financial statements
for the year ended 18 April 2021. 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 these interim
results on the going concern basis the Directors have considered
the Group's cash flows, liquidity and business activities.
Particular attention has been paid to the impact of Covid-19 on the
business, both experienced to date and potentially foreseeable in
the future. This has included:
-- Measures put in place during lockdowns to preserve and to
increase liquidity and the Group's ability to comply with revised
covenants, including the extension of the GBP15m RCF facility to
October 2022
-- The impact of Government measures to support industry, and in
particular the hospitality industry. While the impact of these will
diminish during H2, following the end of the Coronavirus Jobs
Retention Scheme and the increase in VAT for food and soft drinks
to 12.5%, they have played a significant role in enabling Loungers
to retain significant liquidity throughout the pandemic
-- Initial trading during the period post the resumption of full trading on 17 May 2021
-- The repayment of rent and HMRC liabilities deferred during FY21 and FY22
As reported in the Group Annual Report and Financial Statements
for the year ended 18 April 2021 the Group had cash balances of
GBP4.9m and undrawn facilities of GBP18m, providing total liquidity
of GBP22.9m at that date. As a result of the strong trading
performance post re-opening for full trading on 17 May 2021 as at
3(rd) October 2021 the Group had cash balances of GBP20.6m and
undrawn facilities of GBP25m, providing total liquidity of
GBP45.6m.
In reaching their conclusion the Directors have assessed both a
base case scenario and a more severe downside set of LFL sales
assumptions. The Group's base forecasts assume a level of flat LFL
sales for the remainder of FY22, which is more prudent than the
positive LFL sales growth experienced in the period post
re-opening. The more severe downside scenario assumes a significant
increase in infection rates over the winter leading to:
-- Significant LFL sales decline over Christmas, followed by lockdown in January and February
-- Flat like for like sales in the last two months of FY22,
followed by a return to modest LFL sales growth in FY23
-- Mitigation through the scaling back of new site openings
In the revised 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.
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 18 April
2021.
3. Exceptional items
24 Weeks 24 Weeks Year ended
ended ended
3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Included in cost of sales
Covid-19 related - - 441
Included in administrative expenses
Covid-19 related - 622 886
- 622 1,327
================================================= ========== ===========
The Covid-19 related costs included in administrative expenses
include the costs of the removal and storage of furniture and soft
furnishings and the professional fees incurred in respect of the
amendments made to the Group's banking facilities.
4. Other income
24 Weeks 24 Weeks Year ended
ended ended
3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Government support grant funding 2,490 600 4,054
2,490 600 4,054
========== ========== ===========
5. Finance costs
24 Weeks 24 Weeks Year ended
ended ended
3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Bank interest payable 601 704 1,398
Finance cost on lease liabilities 2,581 2,584 5,642
3,182 3,288 7,040
========== ========== ===========
6. Tax on profit / (loss)
24 Weeks 24 Weeks Year ended
ended ended
3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Taxation charged to the income
statement
Current income taxation 1,323 335 -
Adjustments for current tax - - -
of prior periods
---------- ---------- -----------
Total current income taxation 1,323 335 -
========== ========== ===========
Deferred Taxation
Origination and reversal of
temporary differences
Current period 987 (374) (2,600)
Prior period - (980)
Effect of changes in tax rates (361) - -
---------- ---------- -----------
Total deferred tax 626 (374) (3,580)
========== ========== ===========
Total taxation charge / (credit)
in the consolidated income statement 1,949 (39) (3,580)
========== ========== ===========
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 3 October 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.
7. 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 3 October 2021 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
3 October 4 October 18 April
2021 2020 2021
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Profit / (loss) for the period
after tax 10,860 156 (11,142)
Basic weighted average number
of shares 102,716,490 102,169,298 102,291,621
Adjusted for share awards 2,111,986 2,061,637 2,076,783
Diluted weighted average number
of shares 104,828,476 104,230,935 104,368,404
Basic earnings / (losses) per
share (p) 10.6 0.2 (10.9)
Diluted earnings / (losses)
per share (p) 10.4 0.1 (10.9)
============ ============ ============
8. 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 GBP1,554,000 in respect
of the Group's three share-based payment plans.
9. Fixed assets
Leasehold Motor Vehicles Fixtures Right of Total
Building and Fittings Use Asset
Improvements
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 20 April 2020 54,498 81 53,147 121,480 229,206
Additions 264 - 1,129 2,775 4,168
Disposals - - - - -
At 4 October 2020 54,762 81 54,276 124,255 233,374
Additions 2,066 - 1,661 8,960 12,687
Disposals (160) - (147) (238) (545)
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
-------------- --------------- -------------- ----------- --------
Depreciation
At 20 April 2020 10,525 22 16,961 35,251 62,759
Provided for the period 1,659 14 3,123 3,383 8,179
Disposals - - - - -
At 4 October 2020 12,184 36 20,084 38,634 70,938
Provided for the period 1,894 17 3,581 4,184 9,676
Disposals (159) - (144) (238) (541)
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
-------------- --------------- -------------- ----------- --------
Net book value
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
At 4 October 2020 42,578 45 34,192 85,621 162,436
At 19 April 2020 43,973 59 36,186 86,229 166,447
============== =============== ============== =========== ========
10. Borrowings
3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Non-current
Bank loan 32,500 39,500 39,500
Loan arrangement fees (289) (406) (343)
---------- ---------- ---------
32,211 39,094 39,157
========== ========== =========
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 LIBOR. A
three-year interest rate swap through to July 2022 has been entered
into that fixes LIBOR on this facility at 0.7%.
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. In addition, the
covenant tests scheduled for 11 July 2021, 3 October 2021 and 26
December 2021 were amended.
At 3 October 2021 the term loan was fully drawn and GBPnil was
drawn down under the revolving credit facility.
11 Share capital
3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Allotted, called up and fully
paid ordinary shares 1,027 1,024 1,024
Redeemable preference shares 100 100 100
------------ ------------ ------------
1,127 1,124 1,124
============ ============ ============
Ordinary shares at GBP0.01 each 102,738,664 102,400,000 102,400,000
Redeemable preference shares 2 2 2
============ ============ ============
The table below summarises the movements in share capital for
Loungers plc during the period ended 3 October 2021:
Ordinary Redeemable GBP'000
Shares Preference
Shares
GBP0.01 NV GBP49,999
NV
------------ ----------- --------
At 18 April 2021 102,400,000 2 1,124
Shares issued 338,664 - 3
At 3 October 2021 102,738,664 2 1,127
============ =========== ========
On 30 April 2021 the Group issued 338,664 ordinary shares of 1
pence each to 673 employees pursuant to the Group's share
plans.
12. Note to the cash flow statement
24 Weeks 24 Weeks Year ended
ended ended
3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit / (loss) before tax 12,809 117 (14,722)
Adjustments for:
Depreciation of property, plant
and equipment 4,870 4,796 10,288
Depreciation of right of use assets 3,654 3,383 7,567
Share based payment transactions 1,554 854 2,034
Profit on disposal of fixed assets - - 4
Finance income (23) (22) (46)
Finance costs 3,182 3,288 7,040
Changes in inventories (785) (444) 41
Changes in trade and other receivables (225) 3,515 3,108
Changes in trade and other payables 10,867 4,319 (4,414)
Cash generated from operations 35,903 19,806 10,900
Tax reclaimed - 1,131 1,131
Net cash generated from operating
activities 35,903 20,937 12,031
========== ========== ===========
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 3 October 4 October 18 April
2021 2020 2021
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Operating profit / (loss) 15,968 3,383 (7,728)
Exceptional items 3 - 622 1,327
Share based payment charge 1,554 854 2,034
Site pre-opening costs 1,040 167 421
---------- ---------- -----------
Adjusted operating profit 18,562 5,026 (3,946)
Depreciation (pre IFRS 16 right
of use asset charge) 4,870 4,796 10,288
IFRS 16 Right of use asset depreciation 3,654 3,383 7,567
(Profit) / loss on disposal of
fixed assets - - 4
---------- ---------- -----------
Adjusted EBITDA (IFRS 16) 27,086 13,205 13,913
IAS 17 Rent charge (5,295) (4,650) (10,889)
IAS 17 Rent charge included in
IAS 17 pre-opening costs 227 179 506
Adjusted EBITDA (IAS 17) 22,018 8,734 3,530
========== ========== ===========
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END
IR ZZMFMMGKGMZZ
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December 01, 2021 02:00 ET (07:00 GMT)
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