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TASTY PLC — Earnings Release 2018
Sep 21, 2018
7949_ir_2018-09-21_bc70a831-023e-4e60-9210-05ce9916a5c8.html
Earnings Release
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RNS Number : 4760B
Tasty PLC
21 September 2018
21 September 2018
Tasty plc
("Tasty" or the "Group")
Unaudited Interim Results for the 26 weeks ended 1 July 2018
Highlights:
· Revenue down 5.7% to £23.0m on the comparative period (H1 2017 - £24.4m)
· Impairment charge of £11.2m and onerous lease provision of £1.7m
· Net cash inflow for the period was £1.1m (H1 2017 - outflow £3.4m)
· Net debt as at 1 July 2018 of £4.1m (2 July 2017 - £5.4m)
Chairman's statement
Introduction
The Group is currently trading from 60 restaurants; 54 Wildwood and 6 dim t restaurants.
As highlighted previously the market conditions in 2018 continue to be challenging and have been exacerbated by unfavourable weather conditions and the World Cup. This is not unique to Tasty and has been evidenced by the well-documented closures across the casual dining market and throughout the retail sector.
In February 2018 we implemented major operational structural changes and are beginning to see early signs of improvements which we expect to continue in the second half of the year.
Business review
In spite of the tough trading conditions the Directors, believe the Group's brands remain attractive to consumers and are focused on optimising the performance of the estate.
Rationalise the estate
In the light of the changes to the general trading environment, we are continuously assessing our estate to identify where improvements can be made. Our estate is made up of a growing number of sites which are outperforming expectations and we will continue to invest in those restaurants. Where sites are underperforming, we are implementing turnaround strategies and in many instances, we have witnessed significant improvements. Where such measures are not successful or if we feel we can realise maximum value, we will continue to seek to dispose of those properties. We have closed 3 sites during the period under review, two of which have been sold. The Board has no plans to open any new sites at the current time and, in line with the change of strategy from accelerated to suspended expansion, we continue to seek to optimise our capital structure with a view to utilising the proceeds of property disposals to reduce gearing. We are also continuing to review our funding arrangements and as a result, we have decided to reduce our funding costs by cancelling the unutilised £5 million Revolving Credit Facility, that was previously earmarked for new restaurant openings. This will reduce financing costs by circa £35,000 per annum.
Food offering
Menu development and improvement is integral to our strategy to keep the brand relevant. We continue to innovate and review and are constantly looking at ways of making the offer more exciting including vegan and gluten free menus.
Investing in our people
We have invested in our training infrastructure and launched additional apprenticeship programmes, which will be expanded over the next 6 months. For every level of the team, we will be introducing a comprehensive career pathway to support their development, enhance job satisfaction and increase staff retention.
Investing in our Structure
We have restructured the operational team to improve efficiency and reduce costs. This has resulted in annualised cost savings of approximately £300,000 per annum and a more responsive and motivated team with a greater focus on cost control and sales growth.
Results
Sales are down 5.7% on the corresponding period to £22,977,000 (2017 - £24,375,000). Headline operating loss, before pre-opening costs, non-trade items and interest, was £119,000 (2017 - £544,000 profit) and pre-tax loss before pre-opening costs and non-trade items was £309,000 (2017 - £210,000 profit).
In the light of current trading conditions and the retail landscape, the Group has undertaken a further review of its estate during the period and has recognised an impairment charge of £11,185,000 and an onerous lease provision of £1,688,000. After taking into account all non-trade adjustments the Group has a stated loss after tax for the period of £10,694,000 (H1 2017 - loss £9,302,000).
Cash flows and financing
During the period capital expenditure of £670,000 (H1 2017 - £4,414,000) was incurred.
Overall, the net cash inflow for the period was £1,097,000 (H1 2017 - outflow £3,425,000). As at 1 July 2018, the Group had net borrowings of £4,060,000 (2 July 2017 - £5,421,000). The Group has an available banking facility of £7,000,000.
Outlook
Market conditions remain difficult, but we are starting to see the benefits of the infrastructure changes that have been, and continue to be, implemented. Our focus will continue to be growing sales and maximising value. We have a dedicated team that is leading the Group through the challenges we are facing and we would like to thank all of them for their hard work. The Directors believe that our restaurants are appealing to customers and, once the economic climate has improved, the Group is well placed to resume growth.
K Lassman
Chairman
Tasty plc
21 September 2018
Enquiries:
Tasty plc Tel: 020 7637 1166
Jonny Plant, Chief Executive
Cenkos Securities Tel: 020 7397 8900
Mark Connelly / Cameron MacRitchie
The information contained within the announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
Consolidated statement of comprehensive income
for the 26 weeks ended 1 July 2018 (unaudited)
| 26 weeks to | 26 weeks to | 52 weeks ended | ||||||||||
| 1 July | 2 July | 31 December | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| £'000 | £'000 | £'000 | ||||||||||
| Revenue | 22,997 | 24,375 | 50,309 | |||||||||
| Cost of sales | (22,684) | (23,482) | (48,402) | |||||||||
| Gross profit | 313 | 893 | 1,907 | |||||||||
| Total operating expenses | (11,738) | (10,056) | (11,175) | |||||||||
| Operating profit before highlighted items | (119) | 544 | 1,235 | |||||||||
| Highlighted items | (11,306) | (9,707) | (10,503) | |||||||||
| Operating (loss)/profit | (11,425) | (9,163) | (9,268) | |||||||||
| Finance income | 0 | 0 | 1 | |||||||||
| Finance expense | (125) | (119) | (203) | |||||||||
| Loss before tax | (11,550) | (9,282) | (9,470) | |||||||||
| Income tax | 856 | (20) | 1,195 | |||||||||
| Loss and total comprehensive income for period and attributable to owners of the parent | (10,694) | (9,302) | (8,275) | |||||||||
| Loss per share attributable to the ordinary | ||||||||||||
| equity owners of the parent | ||||||||||||
| Basic and diluted | (17.88p) | (15.56p) | (13.84p) | |||||||||
| Highlighted items - charged to operating expenses | ||||||||||||
| 26 weeks to | 26 weeks to | 52 weeks ended | ||||||||||
| 1 July | 2 July | 31 December | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Profit on disposal of property plant and equipment | 1,942 | - | 1,237 | |||||||||
| Pre-openings costs | - | (165) | (413) | |||||||||
| Onerous lease provision | (1,688) | - | (1,635) | |||||||||
| Restructuring costs | (311) | - | - | |||||||||
| Impairment of lease premium | (890) | (172) | (96) | |||||||||
| Impairment of property, plant and equipment | (10,294) | (9,320) | (9,462) | |||||||||
| Share based payments | (65) | (50) | (134) | |||||||||
| Total highlighted items | (11,306) | (9,707) | (10,503) | |||||||||
Consolidated statement of changes in equity
for the 26 weeks ended 1 July 2018 (unaudited)
| Share | Share | Merger | Retained | Total | |
| Capital | Premium | reserve | deficit | equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 31 December 2017 | 5,980 | 21,376 | 992 | (6,290) | 22,058 |
| Issue of ordinary shares | - | - | - | - | - |
| Total comprehensive income for the period | - | - | - | (10,694) | (10,694) |
| Share based payments - credit to equity | - | - | - | 65 | 65 |
| Balance at 01 July 2018 | 5,980 | 21,376 | 992 | (16,919) | 11,429 |
| Balance at 01 January 2017 | 5,975 | 21,348 | 992 | 1,851 | 30,166 |
| Issue of ordinary shares | 5 | 28 | - | - | 33 |
| Total comprehensive income for the period | - | - | - | (9,302) | (9,302) |
| Share based payments - credit to equity | - | - | - | 50 | 50 |
| Balance at 02 July 2017 | 5,980 | 21,376 | 992 | (7,401) | 20,947 |
| Balance at 01 January 2017 | 5,975 | 21,348 | 992 | 1,851 | 30,166 |
| Issue of ordinary shares | 5 | 28 | - | - | 33 |
| Total comprehensive income for the period | - | - | - | (8,275) | (8,275) |
| Share based payments - credit to equity | - | - | - | 134 | 134 |
| Balance at 31 December 2017 | 5,980 | 21,376 | 992 | (6,290) | 22,058 |
Consolidated balance sheet
At 1 July 2018 (unaudited)
| 26 weeks to | 26 weeks to | 52 weeks ended | ||||
| 1 July | 2 July | 31 December | ||||
| 2018 | 2017 | 2017 | ||||
| £'000 | £'000 | £'000 | ||||
| Non-current assets | ||||||
| Intangible assets | 469 | 444 | 470 | |||
| Property, plant and equipment | 17,289 | 27,844 | 28,331 | |||
| Pre-paid operating lease charges | 467 | 1,833 | 1,428 | |||
| Other non-current assets | 278 | 278 | 278 | |||
| Deferred Tax | 604 | - | - | |||
| Total non-current assets | 19,107 | 30,399 | 30,507 | |||
| Current assets | ||||||
| Inventories | 2,543 | 2,442 | 2,655 | |||
| Trade and other receivables | 5,006 | 4,195 | 6,257 | |||
| Pre-paid operating lease charges | 143 | 114 | 143 | |||
| Cash and cash equivalents | 2,940 | 1,579 | 1,843 | |||
| Total current assets | 10,632 | 8,330 | 10,898 | |||
| Total assets | 29,739 | 38,729 | 41,405 | |||
| Current liabilities | ||||||
| Trade and other payables | (6,767) | (8,191) | (9,202) | |||
| Corporation Tax Liabilities | - | (407) | - | |||
| Borrowings | (2,332) | (583) | ||||
| Total liabilities | (9,099) | (8,598) | (9,785) | |||
| Non-current liabilities | ||||||
| Provisions | (3,348) | (30) | (1,660) | |||
| Lease incentives | (1,195) | (1,168) | (1,233) | |||
| Deferred tax liability | - | (986) | (252) | |||
| Long-term borrowings | (4,668) | (7,000) | (6,417) | |||
| Total non-current liabilities | (9,211) | (9,184) | (9,562) | |||
| Total liabilities | (18,310) | (17,782) | (19,347) | |||
| Total net assets | 11,429 | 20,947 | 22,058 | |||
| Equity | ||||||
| Share capital | 5,980 | 5,980 | 5,980 | |||
| Share premium | 21,376 | 21,376 | 21,376 | |||
| Merger reserve | 992 | 992 | 992 | |||
| Retained deficit | (16,919) | (7,401) | (6,290) | |||
| Total equity | 11,429 | 20,947 | 22,058 |
Consolidated cash flow statement
for the 26 weeks ended 1 July 2018 (unaudited)
| 26 weeks to | 26 weeks to | 52 weeks ended | ||||||||||
| 1 July | 2 July | 31 December | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| £'000 | £'000 | £'000 | ||||||||||
| Operating activities | ||||||||||||
| Cash generated from operations | (2,259) | 1,075 | 2,785 | |||||||||
| Corporation tax paid | - | - | - | |||||||||
| Net cash inflow from operating activities | (2,259) | 1,075 | 2,785 | |||||||||
| Investing activities | ||||||||||||
| Proceeds from sale of property, plant and equipment | 4,150 | - | 975 | |||||||||
| Purchase of property, plant and equipment | (670) | (4,414) | (6,752) | |||||||||
| Interest received | - | - | 1 | |||||||||
| Net cash flows used in investing activities | 3,481 | (4,414) | (5,776) | |||||||||
| Financing activities | ||||||||||||
| Net proceeds from issues of ordinary shares | - | 33 | 33 | |||||||||
| Bank loan receipt | - | - | - | |||||||||
| Bank loan repayment | - | - | - | |||||||||
| Interest paid | (125) | (119) | (203) | |||||||||
| Net cash flows used in financing activities | (125) | (86) | (170) | |||||||||
| Net increase in cash and cash equivalents | 1,097 | (3,425) | (3,161) | |||||||||
| Cash and cash equivalents as beginning of the period | 1,843 | 5,004 | 5,004 | |||||||||
| Cash and cash equivalents as at 1st July 2018 | 2,940 | 1,579 | 1,843 | |||||||||
Notes to the condensed financial statements
for the 26 weeks ended 1 July 2018 (unaudited)
1 General information
Tasty plc ("Tasty") is a public limited company incorporated in the United Kingdom under the Companies Act (registration number 5826464). The Company is domiciled in the United Kingdom and its registered address is 32 Charlotte Street, London, W1T 2NQ. The Company's ordinary shares are traded on the Alternative Investment Market of the London Stock Exchange ("AIM"). Copies of this Interim Report or the Annual Report and Financial Statements may be obtained from the above address or on the investor relations section of the Company's website at www.dimt.co.uk.
2 Basis of accounting
The condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as endorsed by the European Union. The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Company's latest annual audited financial statements.
The financial information for the 26 weeks ended 1 July 2018 has not been subject to an audit nor a review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the Auditing Practices Board.
The financial information for the period ended 31 December 2017 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for 2017 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2017 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.
The condensed financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£'000).
Except when otherwise indicated, the consolidated accounts incorporate the financial statements of Tasty plc and its subsidiary, Took Us A Long Time Limited, made up to the relevant period end.
3 Income tax
The income tax charge has been calculated by reference to the estimated effective corporation tax and deferred tax rates of 19% (2017 - 20%).
4 Loss per share
| 26 weeks to | 26 weeks to | 52 weeks | ||||||||
| 1 July | 2 July | 31 December | ||||||||
| 2018 | 2017 | 2017 | ||||||||
| Pence | Pence | Pence | ||||||||
| Loss per ordinary share | (17.88) | (15.56) | (13.84) | |||||||
The basic and diluted loss per share figures are calculated by dividing the net loss for the period attributable to shareholders by the weighted average number of ordinary shares in issue during the period. The diluted earnings per share figure allows for the dilutive effect of the conversion into ordinary shares of the weighted average number of options outstanding during the period. Options are only taken into account when their effect is to reduce basic earnings per share.
Loss per share have been calculated using the numbers shown below:
| 26 weeks to | 26 weeks to | 52 weeks | ||||||||
| 1 July | 2 July | 31 December | ||||||||
| 2018 | 2017 | 2017 | ||||||||
| number '000 | number '000 | number '000 |
||||||||
| Weighted average ordinary shares (basic) | 59,795 | 59,763 | 59,787 | |||||||
| 26 weeks to | 26 weeks to | 52 weeks | ||||||||
| 1 July | 2 July | 31 December | ||||||||
| 2018 | 2017 | 2017 | ||||||||
| £'000 | £'000 | £'000 | ||||||||
| Loss for the financial period | (10,694) | (9,302) | (8,275) | |||||||
5 Reconciliation of profit before tax to net cash inflow from operating activities
| 26 weeks to | 26 weeks to | 52 weeks ended | |||
| 1 July | 2 July | 31 December | |||
| 2018 | 2017 | 2017 | |||
| £'000 | £'000 | £'000 | |||
| Loss before tax | (11,550) | (9,282) | (9,470) | ||
| Finance income | - | - | (1) | ||
| Finance expense | 125 | 119 | 203 | ||
| Share based payment charge | 65 | 50 | 134 | ||
| Depreciation and impairment | 12,115 | 10,837 | 11,847 | ||
| Profit from sale of property plant and equipment | (1,942) | - | (1,237) | ||
| Amortisation of intangible assets | 1 | 1 | 3 | ||
| Onerous lease provision movement | 1,688 | (5) | 1,625 | ||
| (Increase) / decrease in inventories | 112 | 23 | (190) | ||
| (Increase) / decrease in trade and other receivables | (199) | 196 | (392) | ||
| Increase / (decrease) in trade and other payables | (2,673) | (864) | 263 | ||
| Net cash inflow from operating activities | (2,259) | 1,075 | 2,785 |
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
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