Results for the 24 weeks ended 1 October 2023
28 November 2023
Loungers plc
Results for the 24 weeks ended 1 October 2023
Continued strong like for like sales performance accompanied by acceleration in new site roll-out and margin improvement
16 new sites opened in the period; on-track to open 34 new sites this year and to end the year with 256 sites
Loungers, a leading operator of all day café/bar/restaurants across the UK under the Lounge, Cosy Club and Brightside brands, is pleased to announce its unaudited results for the 24 weeks ended 1 October 2023 ("the period").
Financial Highlights
|
|
|
24 weeks ended 1 October 2023 £'000 |
24 weeks ended 2 October 2022 £'000 |
|
Revenue |
|
149,619 |
122,326 |
|
Adjusted EBITDA(1) |
|
23,862 |
19,307 |
|
Adjusted EBITDA margin (%) |
|
15.9% |
15.8% |
|
Adjusted EBITDA (IAS17) |
|
17,284 |
13,482 |
|
Adjusted EBITDA (IAS17) margin (%) |
|
11.6% |
11.0% |
|
Operating profit |
|
7,774 |
6,056 |
|
Operating profit margin (%) |
|
5.2% |
5.0% |
|
Profit before tax |
|
3,936 |
2,831 |
|
Diluted earnings per share (p) |
|
2.6 |
2.3 |
|
Cash generated from operating activities |
|
23,402 |
14,613 |
|
|
|
|
|
|
|
|
1 October 2023 £'000 |
2 October 2022 £'000 |
|
Non-property net debt |
|
14,259 |
9,457 |
|
Net debt |
|
156,136 |
134,246 |
(1) Adjusted EBITDA is calculated as operating profit before depreciation, impairment, pre-opening costs, exceptional costs, and share-based payment charges.
· Revenue growth of 22.3% versus H1 2023 reflects like for like ("LFL") sales growth of +7.7% and the addition of a net 32 new sites
· Adjusted EBITDA of £23.9m (H1 2023: £19.3m), up 23.6%
· Adjusted EBITDA (IAS17) of £17.3m (H1 2023: £13.5m) up 28.2%
· IAS17 Adjusted EBITDA margin of 11.6% up 0.6% on H1 2023
· Cash generated from operating activities increased to £23.4m (H1 2023: £14.6m)
Operational Highlights
· Consistently strong trading driven by both mature estate (with LFL sales 25% ahead of pre Covid levels) and new sites
· Continued evolution of our offer, including further food menu innovation and the introduction of a new blended drinks and iced coffees range
· Headline four-year LFL sales growth of +25.0% is testament to the strength of our brands, the flexibility of our offering, and the quality of our teams
· Margins benefitting from an easing of inflationary pressures and on track to return to pre Covid levels
· New site roll out accelerated with 16 sites opened in the period (H1 2023 11 sites) - 14 Lounges and two Brightsides. New sites performing very well and the pipeline remains strong
Current Trading and Outlook
· The business has continued to trade well over the first eight weeks of Q3, with LFL sales growth across the 32 weeks to 26 November of 7.6%
· A further six sites have opened post the 1 October half year end - five Lounges and one Cosy Club
· With the consumer remaining robust and continuing evidence of moderating inflationary pressure we are optimistic as we look ahead to the Christmas trading period
· The current financial year will be a 53 week accounting year to 21 April 2024
Nick Collins, Chief Executive Officer of Loungers said:
"This has been another period of strong financial and operational growth for Loungers. The fact that we have delivered increases of 22.3% and 23.6% in our revenue and EBITDA respectively should be taken as yet another reminder that it is not all doom and gloom in the UK hospitality sector. We are living proof that businesses which can provide outstanding hospitality, great food and drink and excellent value are still capable of thriving, and we see more growth potential for Loungers than ever before.
Our accelerated site roll-out programme continues at pace, and we are on track to open 34 in FY24, which means that we will end the year with more than 250 sites. The opening of every new Lounge means an investment of nearly £1m into the local high street, and the increased footfall creates a positive knock-on effect on all of the businesses around us. By the end of 2023, we will have added another 1,000 people to our team during the year, and we are particularly pleased that one in eight of those new jobs is in areas that the government wants to 'level up' by creating better opportunities and standards of living."
Analyst Presentation Webcast
An analyst presentation will be held today, Tuesday 28 November 2023, at 9.00am (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 Nick Collins, Chief Executive Officer Gregor Grant, Chief Financial Officer
|
Via Powerscourt |
|
Houlihan Lokey UK Limited (Financial Adviser and NOMAD) Sam Fuller / Tim Richardson
|
Tel: +44 (0) 20 7484 4040 |
|
Liberum Capital Limited (Joint Broker) Andrew Godber / John Fishley
|
Tel: +44 (0) 20 3100 2000 |
|
Peel Hunt LLP (Joint Broker) Dan Webster / Andrew Clark
|
Tel: +44 (0)20 7418 8900 |
|
Powerscourt (Financial Public Relations) Rob Greening / Nick Hayns / Elizabeth Kittle
|
Tel: +44 (0) 207 250 1446 |
Notes to Editors
Loungers operates through its three established complementary brands - Lounge, Cosy Club and Brightside - 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 205 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 bars/restaurants 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 36 Cosy Clubs nationwide.
Brightside is a roadside dining concept and was launched in November 2022. The first Brightside location opened on the A38, south of Exeter, in February 2023, with the second opening in Saltash near Plymouth in June 2023 and the third in Honiton on the A303 in August 2023.
CHIEF EXECUTIVE REVIEW
Operating review
Continuing the consistently strong sales performance post Covid
Our sales performance continues to be consistently strong. We achieved like for like sales of +7.7%, whilst our four year LFL result of +25.0% reflects the resilience of our sales performance in the post Covid period. There is always noise around weather, sporting events, public holidays and the impact on sales, but from our perspective the sales story across Lounge and Cosy Club has been consistently good. Our customer base is relatively robust and represents a very broad demographic which enjoys our hospitality across the day. Historically our sales growth has been dominated by volume growth and us serving more customers. Over the last six months it is predominantly price that has been driving that growth. There are a number of different dynamics in the marketplace: - some consumers are spending less, many operators are pushing through aggressive price increases, supply has and continues to come out of the market, and everyone is working hard to impress the consumer. The last point is particularly important: Covid and the economic environment have caused everyone to up their game (and their prices). That our sales volumes have grown in the post-Covid period whilst most have seen have their volumes shrink considerably is both impressive and encouraging. I am optimistic that against this backdrop we will see a return to more significant volume growth in the short to medium term.
Pleasing margin progression
We talked in July about our goal to return to pre-Covid levels of EBITDA margin in the medium-term, and these results demonstrate our firm progress on that journey. Our impressive margin growth (IAS17 Adjusted EBITDA margin at 11.6% vs 11.0% last year) reflects not just our increasing scale and resultant ability to mitigate inflationary pressure, but also our recent focus on efficiency. Over the course of the last six months we have been working on projects looking at our efficiency in respect of oil, cellar gas, print, waste and energy. The majority are at relatively early stages, but they are demonstrating that there's significant opportunity.
Successful new openings
Our new openings continue to perform very well and above average, and the pipeline remains in good shape to deliver at our current roll-out rate of around 34 sites per year. Geographically we are seeing more opportunities in the north east as we gradually move towards Scotland, but there still remains a great deal for us to go for across England and Wales. We are enjoying strong trading in mixed use retail/leisure parks and coastal locations, alongside our "bread and butter" of suburban and small town high street locations. Our strength of performance across this variety of site types gives us real confidence in our conservative targets of 600 Lounges and 65 Cosy Clubs.
A relentless focus on innovation
The strong sales performance is achieved by an unrelenting restlessness to deliver better for our customers. The spirit of innovation and entrepreneurialism within the business has never been stronger. Given our significant growth, we often see a cyclical effect with periods that are more dominated by change and innovation followed by those that are more dominated by implementation and consolidation. We are currently in the former, and the strength and depth of our senior team is allowing us to really push on. Recent food menu launches in both Lounge and Cosy Club have been excellent, and our flexibility around being able to focus on emerging food trends - without being wedded to a specific cuisine - is a significant point of difference. We serve just as many bacon butties as vegetarian cauliflower dishes. And this restlessness is not just on the food side; we have also rolled out major improvements to our blended drinks, iced coffees, and cocktails and are embarking on a major project to improve our already strong coffee offer, which represents 10% of our sales in the Lounge estate.
Innovation and change within the business isn't limited to the customer experience. Challenging how we can adapt and improve organisationally to make life easier for our site teams whilst maintaining and enhancing the culture within the business is also critically important. Our ambition is to ensure that we benefit from the advantages that scale brings, whilst not succumbing to the red-tape risk that comes with being a 250-site business. On the commercial side, we are investing more in operational support, procurement and supply chain, risk management and maintenance, recognising that we can do more centrally, to ensure our site teams can focus solely on their customers and their own teams. Within our operational structure, we have now introduced regional maintenance managers, community managers and talent and recruitment managers. A degree of devolution and accountability at a regional level are critical to our continued success.
Brightside progressing to plan
During the summer we opened our second and third Brightsides and the team have done a fantastic job at delivering well for their customers in what has been an intense period due to the openings coinciding with school summer holidays. This year we have achieved a gross average weekly level of sales of £22.5k across the sites and we expect this to grow as we continue to build our brand awareness. In the main we are pleased with Brightside's performance to date, and most importantly are proud of the hospitality we are providing, and the choice we have introduced to passing motorists as well as to local residents. As we continue to trade, and with the benefit of the two further planned openings in FY25, we will build a view on Brightside's returns on capital and whether there is an opportunity to roll it out as a national brand. Whilst it's an exciting time for this new brand, I believe the strength of these interim results firmly demonstrates that Brightside has in no way distracted from our focus on or the performance of the Lounge and Cosy Club brands.
Aiming to be the number one choice for careers in hospitality
On the people side we have continued to focus on how we reward and incentivise our teams across the business. We have adapted our site team bonus structures to ensure that they are fully aligned with our operational priorities. We have also enhanced the focus on development and succession planning. One of our core attributes - and one of the parts of the business of which I am most proud - is our ability to build careers in hospitality. We're good at this and have many great examples of people who have worked up through the ranks, but there is still plenty of scope for us to do more and to be better. The next couple of years will see us really double-down in terms of investing in learning and development, and ensuring that we are making the most of the career opportunities that our growth creates. We want to be the number one choice for anyone pursuing a career in the hospitality industry in the UK.
At an exec level we have welcomed Lucy Knowles into the business as Cosy Club Managing Director. Cosy Club is a fantastic brand that complements our Lounges and continues to perform well. It achieves strong sales and returns on capital in line with the Lounge business, but our instinct is that there is more that we can do to maximise sales and I am excited about the impact Lucy will have on the business.
Financial review
Financial Performance
It is pleasing to be able to report for the first time in four years current and prior year numbers that are not impacted by Covid, and all the more pleasing to be reporting such a strong year on year performance, with:
· Total revenue ahead by 22.3%;
· Adjusted EBITDA ahead by 23.6%
· Operating profit ahead by 28.4%
Total revenue growth of 22.3% reflects the positive impact of LFL sales growth of 7.7% allied to the continued strength of our new site opening programme, with 16 sites opened in the first half and a net 32 new sites opened in the past 12 months. The sales performance again demonstrates both the resilience of the Loungers business and the consistency we have seen in consumer behaviour.
Adjusted EBITDA margins are ahead by 0.1% to 15.9% on the IFRS16 basis. However the margin expansion is more marked when looked at on the IAS17 basis with rent costs included, showing an increase to 11.6% from 11.0% in H1 2023. The 60bps improvement in IAS17 Adjusted EBITDA margin reflects:
· Gross margin improvement of 60bps;
· Fixed property cost leverage benefit of 60bps; offset by
· Negative impact of higher energy costs of 50bps
· Negative impact of other costs of 10bps
The gross margin improvement has been largely driven by improvements in food and drink gross margin as the business continues to benefit from its growing scale allied to a moderation in inflationary pressures. The maintenance of strong property discipline assists in delivering improvements in fixed property cost leverage, with a rent to revenue ratio of 4.4% in the first half. As anticipated these benefits have been partially offset by higher energy costs. Whilst the business will continue to benefit from its May 2020 energy hedge through to September 2024, the new site roll out means that only approximately 70% of the estate is covered by that original hedge, with the negative margin impact coming from sites opened post May 2020.
Profit before tax of £3.9m (H1 2023 £2.8m) represents an uplift of 39.0%. The tax charge of £1.2m relates wholly to deferred tax, with the business benefitting from the introduction of the 100% main pool first year allowance. The effective tax rate of 30.4% reflects the impact of non-deductible depreciation on capital expenditure not eligible for capital allowances and the deferred tax accounting for share based payments.
Net debt
Non-property net debt (gross of arrangement fees) of £14.3m represents an increase of £4.8m relative to 2 October 2022, and reflects in large part the acceleration in the new site opening programme.
During the half year the Group entered into a new senior facilities lending agreement with its existing lenders Santander Corporate Banking and Bank of Ireland. Under the terms of the new agreement the Group reduced its term loan from £32.5m to £20.0m and increased its RCF from £10.0m to £22.5m.
Finance costs for the period have increased to £3.9m (H1 2023: £3.3m), reflecting an increase in IFRS16 lease interest charges to £3.1m (H1 2023: £2.8m) and an increase in bank interest payable to £0.9m (H1 2023: £0.5m).
Cash flow
Net cash generated from operating activities was £23.4m (H1 2023: £14.6m), with the improvement of £8.8m coming from EBITDA growth of £4.1m and working capital improvements of £4.7m.
Capital expenditure outflows in the period increased to £21.0m (H1 2023: £15.0m), a function of the acceleration in the new site opening programme and the opening of 16 sites in the first half (H1 2023:11 sites). The capital expenditure incurred in the period (excluding IFRS16 ROUA investment) of £22.0m (H1 2023: £15.9m), included £15.1m related to new sites (H1 2023: £11.2m).
Cash outflows include £12.5m in connection with the refinancing referenced above and £0.7m in relation to the cash settlement of share awards and the purchase of the Group's own shares.
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
· The business has continued to trade well over the first eight weeks of Q3, with LFL sales growth across the 32 weeks to 26 November of 7.6%
· A further six sites have opened post the 1 October half year end - five Lounges and one Cosy Club
· With the consumer remaining robust and continuing evidence of moderating inflationary pressure we are optimistic as we look ahead to the Christmas trading period
· The current financial year will be a 53 week accounting year to 21 April 2024
Nick Collins
Chief Executive Officer
28 November 2023
Condensed Consolidated Statement of Comprehensive Income
For the 24 Week Period Ended 1 October 2023
|
|
|
24 weeks ended |
24 weeks ended |
Year ended |
|
|
Note |
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
|
£000 |
£000 |
£000 |
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
|
|
|
|
Revenue |
|
149,619 |
122,326 |
283,507 |
|
Cost of sales |
|
90,314 |
(74,411) |
(170,350) |
|
Gross profit |
|
59,305 |
47,915 |
113,157 |
|
|
|
|
|
|
|
Administrative expenses |
|
(51,531) |
(41,859) |
(98,406) |
|
Operating profit |
|
7,774 |
6,056 |
14,751 |
|
|
|
|
|
|
|
Finance income |
|
84 |
61 |
204 |
|
Finance costs |
3 |
(3,922) |
(3,286) |
(7,621) |
|
|
|
|
|
|
|
Profit before taxation |
|
3,936 |
2,831 |
7,334 |
|
Tax charge on profit |
4 |
(1,198) |
(368) |
(405) |
|
Profit for the period |
|
2,738 |
2,463 |
6,929 |
|
|
|
|
|
|
|
Other comprehensive (expense) / income: |
|
|
|
|
|
Cash flow hedge - change in value of hedging instrument |
|
- |
(38) |
(38) |
|
Other comprehensive (expense) / income for the period |
|
- |
(38) |
(38) |
|
Total comprehensive income for the period |
|
2,738 |
2,425 |
6,891 |
Earnings per share (pence)
|
Basic |
5 |
2.6 |
2.4 |
6.7 |
|
Diluted |
5 |
2.6 |
2.3 |
6.5 |
Condensed Consolidated Statement of Financial Position
As at 1 October 2023
|
|
Note |
2 October 2022 |
2 October 2022 |
16 April 2023 |
|
|
|
£000 |
£000 |
£'000 |
|
|
|
Unaudited |
Unaudited |
Audited |
|
Assets |
|
|
|
|
|
Non-current |
|
|
|
|
|
Intangible assets |
|
114,722 |
113,227 |
114,722 |
|
Property, plant and equipment |
7 |
250,467 |
203,845 |
228,414 |
|
Deferred tax assets |
|
- |
988 |
945 |
|
Finance lease receivable |
|
- |
534 |
- |
|
Total non-current assets |
|
365,189 |
318,594 |
344,081 |
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Inventories |
|
2,450 |
2,031 |
2,475 |
|
Trade and other receivables |
|
7,024 |
3,734 |
8,722 |
|
Cash and cash equivalents |
|
5,741 |
23,044 |
26,370 |
|
Total current assets |
|
15,215 |
28,809 |
37,567 |
|
|
|
|
|
|
|
Total assets |
|
380,404 |
347,403 |
381,648 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(70,411) |
(52,207) |
(69,708) |
|
Lease liabilities |
|
(11,025) |
(9,153) |
(59) |
|
Derivative financial instruments |
|
- |
- |
(10,247) |
|
Total current liabilities |
|
(81,436) |
(61,360) |
(80,014) |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Borrowings |
8 |
(19,709) |
(32,329) |
(32,392) |
|
Lease liabilities |
|
(130,852) |
(115,636) |
(124,590) |
|
Deferred tax liabilities |
|
(252) |
- |
- |
|
Total liabilities |
|
(232,249) |
(209,325) |
(236,996) |
|
|
|
|
|
|
|
Net assets |
|
148,155 |
138,078 |
144,652 |
|
|
|
|
|
|
|
Called up share capital |
9 |
1,139 |
1,133 |
1,133 |
|
Share premium |
|
8,066 |
8,066 |
8,066 |
|
Treasury shares |
|
(376) |
- |
- |
|
Other reserves |
|
- |
14,278 |
14,278 |
|
Accumulated profits |
|
139,326 |
114,601 |
121,175 |
|
Total equity |
|
148,155 |
138,078 |
144,652 |
Condensed Consolidated Statement of Changes in Equity
For the 24 Week Period Ended 1 October 2023
|
|
Share Capital |
Share Premium |
Hedge Reserve |
Treasury Shares |
Other Reserve |
Accumulated Profits |
Total Equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
|
At 17 April 2022 |
1,127 |
8,066 |
38 |
- |
14,278 |
110,597 |
134,106 |
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
6 |
- |
- |
- |
- |
(6) |
- |
|
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 |
|
|
|
|
|
|
|
|
|
|
Share based payment charge |
- |
- |
- |
- |
- |
2,108 |
2,108 |
|
Total transactions with owners |
- |
- |
- |
- |
- |
2,108 |
2,108 |
|
Profit for the period |
- |
- |
- |
- |
- |
4,466 |
4,466 |
|
Total comprehensive income |
- |
- |
- |
- |
- |
4,466 |
4,466 |
|
|
|
|
|
|
|
|
|
|
At 16 April 2023 |
1,133 |
8,066 |
- |
- |
14,278 |
121,175 |
144,652 |
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
6 |
- |
- |
- |
- |
(6) |
- |
|
Share based payment charge |
- |
- |
- |
- |
- |
1,141 |
1,141 |
|
Group reorganisation |
- |
- |
- |
- |
(14,278) |
14,278 |
- |
|
Purchase of own shares |
- |
- |
- |
(376) |
- |
- |
(376) |
|
Total transactions with owners |
6 |
- |
- |
(376) |
(14,278) |
15,413 |
765 |
|
Profit for the period |
- |
- |
- |
- |
- |
2,738 |
2,738 |
|
Total comprehensive income |
- |
- |
- |
- |
- |
2,738 |
2,738 |
|
|
|
|
|
|
|
|
|
|
At 1 October 2023 |
1,139 |
8,066 |
- |
(376) |
- |
139,326 |
148,155 |
Condensed Consolidated Statement of Cash Flows
For the 24 Week Period Ended 1 October 2023
|
|
|
24 Weeks ended |
24 Weeks ended |
Year ended |
|
|
Note |
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
£000 |
£000 |
£000 |
|
Net cash generated from operating activities |
10 |
23,402 |
14,613 |
51,107 |
|
Cash flows from investing activities |
|
|
|
|
|
Purchase of subsidiary undertakings (net of cash acquired) |
|
- |
- |
(2,719) |
|
Purchase of property, plant and equipment |
|
(21,022) |
(15,012) |
(36,978) |
|
Interest received |
|
84 |
43 |
204 |
|
Net cash used in investing activities |
|
(20,938) |
(14,969) |
(39,493) |
|
Cash flows from financing activities |
|
|
|
|
|
Shares issued on exercise of employee share awards |
|
(183) |
(183) |
(190) |
|
Cash settlement of share awards |
|
(333) |
- |
- |
|
Purchase of own shares |
|
(376) |
- |
- |
|
Loan arrangement fees |
|
(266) |
- |
- |
|
Bank loans repaid |
|
(12,500) |
- |
- |
|
Interest paid |
|
(852) |
(455) |
(1,334) |
|
Principal element of lease payments |
|
(5,533) |
(4,511) |
(8,824) |
|
Interest paid on lease liabilities |
|
(3,050) |
(2,758) |
(6,146) |
|
Principal element of lease receivables |
|
- |
57 |
- |
|
Net cash used in financing activities |
|
(23,093) |
(7,807) |
(16,494) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(20,629) |
(8,206) |
(4,880) |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the period |
|
26,370 |
31,250 |
31,250 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period |
|
5,741 |
23,044 |
26,370 |
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 1 October 2023 ("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 28 November 2023.
The Interim Financial Statements have not been audited or reviewed by the auditors. The financial information shown for the 24 weeks ended 1 October 2023 does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006.
The information shown for the year ended 16 April 2023 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 16 April 2023, 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 16 April 2023 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 16 April 2023 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 16 April 2023.
The accounting policies adopted in the preparation of the half year financial statements are consistent with those followed in the preparation of the Group's financial statements for the 52 weeks ended 16 April 2023. The Group has not early adopted any 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 current sector headwinds in terms of consumer confidence and inflationary pressures and also longer terms risks such as climate change.
As at the 1 October 2023 the Group had cash balances of £5.7m and unutilised facilities of £22.5m providing total liquidity of £28.2m.
In order to assess the Group's going concern position the Board has considered a base case and a downside case scenario of the Group's business plan. The going concern period covers the period to December 2024.
· The base case assumes below inflation selling price increases and flat volumes and reflects current assumptions in respect of future cost inflation and incorporates increases in energy costs to reflect the continued opening of new sites whose energy costs are hedged at current rates and the 30 September 2024 end date of the May 2020 energy hedge. The base case scenario indicates that the Group has significant headroom in respect of both its liquidity position and its banking covenants.
· In the downside scenario it has been assumed that sales volumes fall by 10% from the base case with an associated reduction in labour and variable cost efficiency and a resultant 50% decline in adjusted EBITDA over the year to December 2024. This significant sales decline has been mitigated by a cessation of the new site roll out programme from May 2024 onwards.
In the downside scenario the Group continues to have significant liquidity and banking covenant headroom 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 reported 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 the rollout of its Community initiatives strategy, a waste management trial and the launch of its first group-wide Environmental Policy.
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 16 April 2023.
The Group tests for impairment on an annual basis or earlier if there are indicators that an asset might be impaired. At the 1 October 2023 the Group was not aware of any specific events that would require a site to be impaired. The Group has reviewed its FY23 impairment calculations, flexing assumptions for potential increases in discount rates and is satisfied that there is no requirement to recognise additional impairment.
3. Finance costs
|
|
24 Weeks ended |
24 Weeks ended |
Year ended |
|
|
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
£000 |
£000 |
£000 |
|
|
Unaudited |
Unaudited |
Audited |
|
Bank interest payable |
872 |
528 |
1,475 |
|
Finance cost on lease liabilities |
3,050 |
2,758 |
6,146 |
|
|
3,922 |
3,286 |
7,621 |
4. Tax on profit
|
|
24 Weeks ended |
24 Weeks ended |
Year ended |
|
|
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
£000 |
£000 |
£000 |
|
|
Unaudited |
Unaudited |
Audited |
|
Taxation charged to the income statement |
|
|
|
|
Current income taxation |
- |
- |
- |
|
Adjustments for current tax of prior periods |
|
- |
- |
|
Total current income taxation |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Deferred Taxation |
|
|
|
|
Origination and reversal of temporary differences |
- |
- |
1,069 |
|
Current period |
1,198 |
368 |
- |
|
Adjustments to tax charge in respect of prior periods |
- |
- |
(911) |
|
Adjustment in respect of changes in tax rates |
- |
- |
247 |
|
Total deferred tax |
1,198 |
368 |
405 |
|
|
|
|
|
|
Total taxation charge in the consolidated income statement |
1,198 |
368 |
405 |
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 1 October 2023. The effective tax rate of 30.4% is above the standard rate of income tax due to the impact of non-deductible depreciation on fixed asset additions that are not eligible for capital allowances and the impact of share based payment charges.
5. 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 1 October 2023 the Group had potentially dilutive shares in the form of unvested shares pursuant to the above long-term incentive plans.
Own shares held in Treasury are treated as cancelled for the purpose of this calculation.
|
|
24 Weeks ended |
24 Weeks ended |
Year ended |
|
|
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
Unaudited |
Unaudited |
Audited |
|
|
£000 |
£000 |
£000 |
|
|
|
|
|
|
Profit for the period after tax |
2,738 |
2,463 |
6,929 |
|
|
|
|
|
|
Basic weighted average number of shares |
103,657,995 |
103,137,035 |
103,243,015 |
|
Adjusted for share awards |
3,338,091 |
2,148,438 |
3,375,062 |
|
Diluted weighted average number of shares |
106,996,006 |
105,285,472 |
106,618,077 |
|
|
|
|
|
|
Basic earnings per share (p) |
2.6 |
2.4 |
6.7 |
|
Diluted earnings per share (p) |
2.6 |
2.3 |
6.5 |
6. 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 £1,665,000 in respect of the Group's three share-based payment plans.
7. Fixed assets
|
|
Freehold Land and Buildings |
Leasehold Building Improvements |
Motor Vehicles |
Fixtures and Fittings |
Right of Use Asset |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Cost |
|
|
|
|
|
|
|
At 17 April 2022 |
369 |
67,489 |
210 |
70,606 |
149,381 |
288,055 |
|
|
|
|
|
|
|
|
|
Additions |
832 |
6,455 |
- |
8,640 |
9,698 |
25,625 |
|
|
|
|
|
|
|
|
|
At 2 October 2022 |
369 |
74,776 |
210 |
79,246 |
159,079 |
313,680 |
|
|
|
|
|
|
|
|
|
Additions |
- |
10,621 |
- |
12,633 |
14,821 |
38,075 |
|
Acquisition of subsidiaries |
1,500 |
- |
- |
- |
- |
1,500 |
|
Disposals |
(250) |
(451) |
(9) |
(175) |
- |
(885) |
|
|
|
|
|
|
|
|
|
At 16 April 2023 |
2,451 |
84,114 |
201 |
91,704 |
173,900 |
352,370 |
|
|
|
|
|
|
|
|
|
Additions |
2,865 |
7,717 |
- |
11,429 |
12,571 |
34,582 |
|
|
|
|
|
|
|
|
|
At 1 October 2023 |
5,316 |
91,831 |
201 |
103,133 |
186,471 |
386,952 |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
Provided for the period |
14 |
2,692 |
25 |
4,818 |
5,533 |
13,082 |
|
Impairment |
- |
381 |
- |
85 |
2,937 |
3,403 |
|
Impairment reversal |
- |
(157) |
- |
- |
(1,639) |
(1,796) |
|
Disposals |
- |
(405) |
(3) |
(160) |
- |
(568) |
|
|
|
|
|
|
|
|
|
At 16 April 2023 |
14 |
22,527 |
111 |
39,114 |
62,190 |
123,956 |
|
|
|
|
|
|
|
|
|
Provided for the period |
42 |
2,606 |
16 |
4,856 |
5,009 |
12,529 |
|
|
|
|
|
|
|
|
|
At 1 October 2023 |
56 |
25,133 |
127 |
43,970 |
67,199 |
136,485 |
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
At 1 October 2023 |
5,260 |
66,698 |
74 |
59,163 |
119,272 |
250,467 |
|
|
|
|
|
|
|
|
|
At 16 April 2023 |
2,437 |
61,587 |
90 |
52,590 |
111,710 |
228,414 |
|
|
|
|
|
|
|
|
|
At 2 October 2022 |
369 |
54,760 |
121 |
44,875 |
103,720 |
203,845 |
|
|
|
|
|
|
|
|
|
At 17 April 2022 |
369 |
49,552 |
144 |
39,948 |
98,350 |
188,363 |
8. Borrowings
|
|
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
£000 |
£000 |
£000 |
|
|
Unaudited |
Unaudited |
Audited |
|
Non-current |
|
|
|
|
Bank loan |
20,000 |
32,500 |
32,500 |
|
Loan arrangement fees |
(291) |
(171) |
(108) |
|
|
19,709 |
32,329 |
32,392 |
The Group's bank borrowings are secured by way of fixed and floating charges over the Group's assets.
In June 2023 the Group completed a refinancing of it debt arrangements leaving it with a term loan of £20,000,0000 and a revolving credit facility of £22,500,000. The term loan is non-amortising and bears interest at between 1.75% and 2.5% over SONIA subject to the Group's leverage. At inception of the new facility the Group was paying a margin of 1.75%. The term loan and RCF are subject to financial covenants relating to leverage and interest cover, which are unchanged from the original facility.
The Group has been compliant with all of its covenant obligations during the 24 weeks to 1 October 2023.
At 1 October 2023 the term loan was fully drawn and £nil was drawn down under the revolving credit facility.
9. Share capital
|
|
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
£000 |
£000 |
£000 |
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
|
|
|
Allotted, called up and fully paid ordinary shares |
1,039 |
1,033 |
1,033 |
|
Redeemable preference shares |
100 |
100 |
100 |
|
|
1,139 |
1,133 |
1,133 |
|
|
|
|
|
|
Ordinary shares at £0.01 each |
103,900,642 |
103,303,312 |
103,332,033 |
|
Redeemable preference shares |
2 |
2 |
2 |
The table below summarises the movements in share capital for Loungers plc during the period ended 1 October 2023:
|
|
Ordinary |
Redeemable |
£'000 |
|
|
Shares |
Preference |
|
|
|
|
Shares |
|
|
|
£0.01 NV |
£49,999 NV |
|
|
|
|
|
|
|
At 16 April 2023 |
103,332,033 |
2 |
1,133 |
|
Shares issued |
568,609 |
- |
6 |
|
At 1 October 2023 |
103,900,642 |
2 |
1,139 |
On 4 May 2023 the Group issued 359,000 ordinary shares of 1 pence each to 718 employees pursuant to the Group's share plans. At the same time the Group applied to increase its block listing by 477,962 shares in respect of its share plans. In the period to 1 October 2023 209,609 shares have been issued under the block listing scheme.
10. Note to the cash flow statement
|
|
|
24 Weeks ended |
24 Weeks ended |
Year ended |
|
|
|
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
|
£000 |
£000 |
£000 |
|
Cash flows from operating activities |
|
|
|
|
|
Profit before tax |
|
3,936 |
2,831 |
7,334 |
|
Adjustments for: |
|
|
|
|
|
Depreciation of property, plant and equipment |
|
7,520 |
5,815 |
13,364 |
|
Depreciation of right of use assets |
|
5,009 |
4,328 |
9,861 |
|
Impairment of property, plant and equipment |
|
- |
- |
309 |
|
Impairment of right of use assets |
|
- |
- |
1,298 |
|
Share based payment transactions |
|
1,665 |
1,730 |
4,024 |
|
Loss on disposal of fixed assets |
|
- |
- |
317 |
|
Finance income |
|
(84) |
(60) |
(204) |
|
Finance costs |
|
3,922 |
3,286 |
7,621 |
|
Changes in inventories |
|
25 |
(112) |
(557) |
|
Changes in trade and other receivables |
|
1,552 |
1,591 |
(3,134) |
|
Changes in trade and other payables |
|
(143) |
(4,796) |
10,950 |
|
Cash generated from operations |
|
23,402 |
14,613 |
51,183 |
|
Tax paid |
|
- |
- |
(76) |
|
Net cash generated from operating activities |
|
23,402 |
14,613 |
51,107 |
|
|
|
|
|
|
11. Group reorganisation
As of 1 October 2023 the Group was engaged in a restructuring exercise, to remove three intermediate holding companies (Lion / Jenga Topco Ltd, Lion / Jenga Midco Ltd and Lion / Jenga Bidco Ltd) from the Group structure, thereby simplifying it. As a consequence of the capital reductions undertaken, the Condensed Consolidated Statement of Changes in Equity at 1 October 2023 shows a reduction in other reserves and a corresponding increase in accumulated profits.
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 ended |
24 weeks ended |
Year ended |
|
|
|
1 October 2023 |
2 October 2022 |
16 April 2023 |
|
|
|
£000 |
£000 |
£000 |
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
|
|
|
|
Operating profit |
|
7,774 |
6,056 |
14,751 |
|
Net impairment charge |
|
- |
- |
1,607 |
|
Loss on disposal of fixed assets |
|
- |
- |
317 |
|
Transaction costs |
|
- |
- |
102 |
|
Share based payment charge |
|
1,665 |
1,730 |
4,024 |
|
Site pre-opening costs |
|
1,894 |
1,378 |
3,323 |
|
Adjusted operating profit |
|
11,333 |
9,164 |
24,124 |
|
Depreciation (pre IFRS 16 right of use asset charge) |
|
7,520 |
5,815 |
13,364 |
|
IFRS 16 Right of use asset depreciation |
|
5,009 |
4,328 |
9,861 |
|
Adjusted EBITDA (IFRS 16) |
|
23,862 |
19,307 |
47,349 |
|
|
|
|
|
|
|
Adjusted EBITDA % (IFRS 16) |
|
15.9% |
15.8% |
16.7% |
|
|
|
|
|
|
|
IAS 17 Rent charge |
|
(6,816) |
(5,959) |
(13,459) |
|
IAS 17 Rent charge included in IAS 17 pre-opening costs |
|
238 |
134 |
331 |
|
Adjusted EBITDA (IAS 17) |
|
17,284 |
13,482 |
34,221 |
|
|
|
|
|
|
|
Adjusted EBITDA % (IAS 17) |
|
11.6% |
11.0% |
12.1% |
|
|
|
|
|
|
|
|
|
|
|
|
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.
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