Preliminary Results

RNS Number : 4637T

Tasty PLC

30 March 2016

 

Tasty plc ("Tasty" or the "Company") Preliminary results for the 52 weeks ended 27 December 2015 Highlights: ·     Revenue up 20% to £35,794,000 (2014 - £29,734,000) ·   Operating profit before pre-opening costs and non-trading items was up 28% to £3,951,000 (2014 - £3,090,000) ·     Profit before tax up 20% to £3,067,000 (2014 - £2,552,000) ·    Twelve new Wildwood and Wildwood Kitchen restaurants and one new Dim t restaurant opened in the year ·     Two new restaurants have opened since the year end ·    The Company also has two sites under construction and a number of other sites at various stages of completion and negotiation Enquiries: Tasty plc                                                               Tel: [phone] Jonny Plant, Chief Executive Cenkos Securities                                               Tel: [phone] Bobbie Hilliam Harry Pardoe

Chairman's statement

I am pleased to be reporting on the Group's profitable results of £2,467,000  (December 2014 - £2,052,000).  The results are for the 52 weeks period ended 27 December 2015 and a comparative with the 52 week period ended 28 December 2014.

Results

Revenue for the year was up 20% on last year to £35,794,000 (2014 - £29,734,000).  Operating profit before pre-opening costs and non-trading items was up 28% on last year at £3,951,000 (2014 - £3,090,000).  Pre-opening costs for the period totalled £644,000 (2014 - £360,000).

The overall statutory pre-tax profit was up by some 20% at £3,067,000 (2014 - £2,552,000).

The Board does not recommend the payment of a dividend at this stage of the Group's development.

Openings

Twelve Wildwood and Wildwood Kitchen restaurants were opened during the year: Plymouth, Hereford, Telford, Chichester and Taunton were opened in the first half of the year with Royal William Yard, Worcester, Port Solent, Brentwood, Whiteley, Kingston and Liverpool opening in the second half of the year.  The Company opened a Dim t restaurant in Whiteley in November.

Since the year end the Company has continued its expansion programme with two new sites opened, two sites under construction and a number of other sites at various stages of completion and negotiation.

Cash flows

Net cash outflow for the period before financing was £4,759,000 (2014- £1,061,000).  This is largely represented by capital expenditure on the expansion of the business through the opening of the above sites. Cash flows from operating activities were £5,076,000 (2014 - £5,308,000). 

During the year the Group updated its banking facility with Barclays, increasing the facility to £8,000,000 (2014 - available facility of £4,000,000) to be used for future capital expenditure.  As at 27 December 2015 the Company had drawn £5,750,000 of the available facility.

Cash and cash equivalents held at the end of the period were £2,221,000 (2014 - £2,044,000).

Review of the business

The Group delivered another good performance in 2015, with an improvement in operating profit margin and a 20% increase in pre-tax profits. 

The Group continued its expansion during the year, adding thirteen new sites to the estate.  The rate of development will accelerate in the medium term.  Openings in the coming 12 months will expand the UK geographical footprint of the Group.

At the end of the period the Group operated 48 restaurants.  Currently, the Group has 50 restaurants in operation - 7 DimTs and 43 Wildwoods and Wildwood Kitchens.

Pre-opening costs and accounting adjustments

Pre-opening costs have been highlighted in the income statement as these costs represent revenue expenses, such as rent, rates and training costs, which are necessarily incurred in the period before a new unit is opened, but which are specific to the opening of that unit and not part of the Group's normal ongoing trading performance.

The Group recognises a number of charges in the accounts which arise under accounting rules which have no transactional cash impact.  These charges include share based payments.

Staff

As ever, it is our dedicated staff that have contributed significantly throughout the year to the Group's much improved performance, and I would like to take this opportunity of thanking them again for their hard work and effort.

Current Trading

Since the year end trading has been broadly in line with expectations.

Keith Lassman

Chairman

30 March 2016

Chief Executive's Statement

2015 was another strong year for Tasty across all aspects of the business.  We continued to grow at a rapid rate, with 13 new openings achieved in 2015, taking the estate to 48 restaurants, an increase of 37% on the previous year. 

Improvements in Tasty's trading profits have been achieved through a combination of increased sales and cost reductions which has resulted in the adjusted EBITDA margin increasing by 1 % to 16.3%.  Adjusted EBITDA (excluding pre-opening and non-operating costs) increased by 28% to £5.8m for the year.

Since the year end we have opened two more restaurants and a further two sites are under construction.    The property pipeline is looking strong for 2016 and we expect to open 15 sites.

Brands
 

Expansion has focussed on the Wildwood (43) brands and this will continue in the future.  The 'all day' appeal of these brands has been improved by the development of a delicatessen which has driven additional morning and mid-afternoon trade.

Our sites are primarily based on the high street. However, we have a number of leisure, retail and tourist locations which all trade well, highlighting the broad appeal and scalability of the offering.  Continued expansion across all of these location types are planned in the coming year. 

A review of the Dimt (7) brand has identified mixed retail and leisure developments as a key area of expansion.  An additional Dimt site was opened in the year in the Whiteley Development in Fareham.

Alongside the Dimt in Whiteley, we opened a Wildwood, the first time the Group have operated these two brands in the same location.  Both sites are trading above expectations and pave the way for similar future openings if the opportunity should arise.

Expansion
 

We are now preparing for an acceleration in the rollout programme with the appointment of David Street as property director and a number of key business functions will be expanded and strengthened to facilitate this more rapid growth.

A significant investment will be made to upgrade the existing restaurant websites and greatly enhance the entire digital marketing strategy for the Group, which will increase the reach and recognition of all the Tasty brands.

To ensure that we retain our high level of food quality and consistency we will be investing in Tasty's Central Kitchen's infrastructure.

Additionally, a number of appointments are being made in our Operations, Marketing, Finance and People departments, along with a number of systems upgrades, to ensure a continued successful expansion programme.
 

Outlook

The business is at an exciting stage and is well positioned to expand.  2016 will be a year of growth and investment as we lay the foundations for the future. 

Strategic Report for the 52 weeks ended 27 December 2015

Business review and key performance indicators

Revenue for the 52 week period increased 20% on last year to £35,794,000 (2014 - £29,734,000).  Operating profit before pre-opening costs and non-operating items was £3,951,000 (2014 - £3,090,000).  Pre-opening costs for the period totalled £644,000 (2014 - £360,000). The overall statutory pre-tax profit was £3,067,000 (2014 - £2,552,000).

The Directors utilise a large number of detailed performance indicators which are used to manage the business but, as with most businesses, the focus in the Income Statement is on sales, margins and overheads compared to budget and the previous year. In the balance sheet the focus is on managing working capital.

The Directors recognise the importance of customer relations and staff are extensively trained in this regard.  Performance is monitored by reference to the results of regular "mystery diner" visits  , and staff bonuses are calculated on the basis of  the results and comments arising from these visits and other customer feedback.

A further review of the business and KPIs is included in the Chairman's Statement and in the Chief Executive's statement.

Principal uncertainties and risks

Economic conditions

There have been a number of encouraging signs regarding the UK economic outlook.  However, there still remains a high level of uncertainty.  Deterioration in consumer confidence due to future economic conditions could have a detrimental impact on the Group in terms of footfall and sales.  This risk is mitigated by the positioning of the Group's brands, which is within the affordable segment of the casual dining market.  Continued focus on customer relations and targeted and adaptable marketing initiatives help the Group retain and drive sales where footfall declines.

Input cost inflation

The Group's key variable inputs are the cost of food and labour, both of which face inflationary pressures in the medium term.  The Group monitors its food supply chain closely, regularly reviewing food costs and implementing a variety of strategies to mitigate the impact of increases.  Labour cost pressures which are outside of the control of the Group, such as the recently introduced National Living Wage and annual minimum wage increases, are suffered by the Group and its competitors.  However, labour cost are regularly monitored and on-going initiatives are used to reduce the impact of such pressures.

Strategic risks

The acquisition of suitable and well located quality sites in order to continue the Group's expansion is necessary to achieve the Group's strategic aims.  The Group has a strong and experienced property acquisition team with good relationships with external agents and advisers.

On behalf of the Board.

Jonny Plant
Joint Chief Executive Officer

30 March 2016

Consolidated statement of comprehensive income for the 52 weeks ended 27 December 2015

		Note		2015		2014
				£'000		£'000
	Revenue	3		35,794		29,734
	Cost of sales			(31,594)		(26,207)
	Gross profit			4,200		3,527
	Administrative costs			(1,026)		(901)
	Operating profit excluding non-trading items and pre-opening costs			3,951		3,090
	Pre-opening costs			(644)		(360)
	Non-trading items	5		(133)		(104)
	Operating profit	4		3,174		2,626
	Finance income			9		9
	Finance expense	6		(116)		(83)
	Profit before tax			3,067		2,552
	Income tax expense	9		(600)		(500)
	Profit and total comprehensive income for the period attributable to shareholders			2,467		2,052
	Earnings per share
	Basic	10		4.64p		3.88p
	Diluted	10		4.58p		3.83p

Consolidated statement of changes in equity for the 52 weeks ended 27 December 2015

		Share capital	Share premium	Merger reserve	Retained deficit / earnings	Total
		£'000	£'000	£'000	£'000	£'000
	Balance at 29 December 2013	5,293	13,317	992	(2,157)	17,445
	Issue of ordinary shares	12	19	-	-	31
	Total comprehensive income for the period	-	-	-	2,052	2,052
	Share based payments - credit to equity	-	-	-	104	104
	Balance at 28 December 2014	5,305	13,336	992	(1)	19,632
	Issue of ordinary shares	17	35	-	-	52
	Total comprehensive income for the period	-	-	-	2,467	2,467
	Share based payments - credit to equity	-	-	-	133	133
	Balance at 27 December 2015	5,322	13,371	992	2,599	22,284

Consolidated balance sheet at 27 December 2015

				2015		2014
				£'000		£'000
	Non-current assets
	Intangible assets	12		470		444
	Property, plant and equipment	13		28,496		20,391
	Pre-paid operating lease charges	14		1,936		1,731
	Other non-current assets			148		341
				31,050		22,907
	Current assets
	Inventories	16		1,812		1,051
	Trade and other receivables	17		2,529		1,801
	Pre-paid operating lease charges	14		140		152
	Cash and cash equivalents			2,221		2,044
				6,702		5,048
	Total assets			37,752		27,955
	Current liabilities
	Trade and other payables	18		(8,076)		(6,536)
	Borrowings	21		(750)		(500)
				(8,826)		(7,036)
	Non-current liabilities
	Provisions	19		(45)		(55)
	Lease incentives			(715)		(367)
	Deferred tax liability	20		(882)		(615)
	Long-term borrowings	21		(5,000)		(250)
				(6,642)		(1,287)
	Total liabilities			(15,468)		(8,323)
	Total net assets			22,284		19,632
	Equity
	Share capital	22		5,322		5,305
	Share premium	23		13,371		13,336
	Merger reserve	23		992		992
	Retained deficit / earnings	23		2,599		(1)
	Total equity			22,284		19,632

The financial statements were approved by the board of directors of the Company and authorised for issue on 30 March 2016 and signed on their behalf by Jonny Plant.

 

Consolidated cash flow statement for the 52 weeks ended 27 December 2015

		Note		2015		2014
				£'000		£'000
	Operating activities
	Cash generated from operations	30		5,076		5,308
	Corporation tax paid			-		-
	Net cash inflow from operating activities			5,076		5,308
	Investing activities
	Purchase of property, plant and equipment			(9,844)		(6,378)
	Interest received			9		9
	Net cash flows used in investing activities			(9,835)		(6,369)
	Financing activities
	Net proceeds from issues of ordinary shares			52		31
	Bank loan receipt			5,750		-
	Bank loan repayment			(750)		(250)
	Interest paid			(116)		(83)
	Net cash flows used in financing activities			4,936		(302)
	Net increase in cash and cash equivalents			177		(1,363)
	Cash and cash equivalents as at 28 December 2014			2,044		3,407
	Cash and cash equivalents as at 27 December 2015			2,221		2,044

Notes forming part of the financial statements for the 52 weeks ended 27 December 2015

1      Accounting policies

(a)  Statement of  compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards (IASB) as adopted by European Union ("adopted IFRSs").

(b)  Basis of preparation

The financial statements cover the 52 week period ended 27 December 2015, with a comparative period of the 52 week period ended 28 December 2014.  The financial statements are presented in sterling, rounded to the nearest thousand and are prepared on the historical cost basis.

(c)   Changes in accounting policy

Standards amendments and interpretations, issued by the IASB or the International Financial Reporting Interpretations Committee (IFRIC) and endorsed by the EU, which were effective for the first time in the current financial year did not have a significant impact on these financial statements.

The following standards and interpretations (including updates and amendments) are not yet effective and have not been early adopted by the Group.  The Group is assessing the impact these standards and interpretations will have on the presentation of results in future periods.

·     Annual improvements to IFRSs (2012 - 2014 Cycle) - effective from 1 January 2018

·     IFRS 15 'Revenue' - effective from 1 January 2018

·     IFRS 16 'Leases' - effective from 1 January 2019*

·     IFRS 9 'Financial Instruments' - effective from 1 January 2018

·     Clarification of Acceptable Methods of Depreciation and Amortisation:  Amendments to IAS 16 and IAS 38 - effective from 1 January 2016

·     Recognition of deferred tax assets for unrealised losses: Amendment to IAS 12 - effective from 1 January 2017*

*  not yet endorsed by EU

(d)  Basis of consolidation

The consolidated financial statements incorporate the results of the Company and its subsidiary, Took Us A Long Time Limited.  The parent Company has taken advantage of the exemption in s 408 of the Companies Act 2006 not to publish its own income statement.  The accounting period of the subsidiary is co-terminous with that of the parent undertaking.

The merger method of accounting was used to consolidate the results of the subsidiary undertaking because the transaction was a Group reconstruction.  The merger of the two companies took place on 26 June 2006 and the shares issued were recorded in the Company's balance sheet at nominal value of the shares issued plus fair value of any additional consideration.  The difference between the nominal value of the shares issued and the nominal value of the shares acquired was taken to a merger reserve in the Group accounts.

(e)  Revenue 

Revenue represents amounts received and receivable for goods and services provided (excluding value added tax) in the normal course of business.  Revenue is recognised at the point goods and services are provided.

(f)   Pre-opening costs 

Property rentals and other related overhead expenses incurred prior to a new restaurant opening are written off to the income statement in the period that they are incurred.  Similarly, the costs of training new staff during the pre-opening phase are written-off as incurred. These expenses are included within cost of sales and are specific to the opening of that unit and not part of the Group's normal ongoing trading performance.

(g)  Retirement benefits:  Defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated income statement in the period to which they relate.

(h)  Share based payments

The Company operates a number of equity-settled share-based payment schemes under which share options are granted to certain employees. The costs of equity-settled transactions are measured at fair value at the date of grant. Fair value is measured using the Black-Scholes or binomial model. In determining fair value, no account is taken of any vesting conditions, other than conditions linked to the price of the Company's shares (market-based conditions).

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided all other conditions are satisfied. The fair value determined at the grant date is then expensed on a straight line over the vesting period, based on the directors' best estimate of the number of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. The movement in the cumulative expense since the previous balance sheet date is recognised in the Income Statement, with the corresponding movement taken into equity.

Where the terms and conditions of options are modified before they vest or where options have been cancelled and reissued with modified terms, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period.  Where vesting conditions are satisfied and options are exercised before the end of the vesting period the fair value of the award not yet expensed is taken to the Income Statement.

The grant by the Company of options over its equity instruments to the employees of its subsidiary in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

(i)   Investments

Investments in subsidiaries are valued at cost less impairment.

(j)   Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the cost of sales line in the consolidated income statement.

The significant intangibles recognised by the Group and their useful economic lives are as follows:-

	Intangible asset	Useful economic life
	Trade marks	10 years

(k)  Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses.

Depreciation is provided to write off the cost or valuation, less estimated residual values, of all fixed assets, evenly over their expected useful lives and it is calculated at the following rates:-

	Leasehold improvements	over the period of the lease
	Fixtures, fittings and equipment	10% per annum straight line

Restaurants under construction are included in Property, plant and equipment.  No depreciation is provided on restaurants under construction until the asset is available for use.

All property, plant and equipment is reviewed for impairment in accordance with IAS36 Impairment of Assets, when there are indications that the carrying value may not be recoverable.

(l)   Impairment of non-financial assets (excluding inventories and deferred tax assets)

Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.  Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income.

(m) Onerous contracts

Provisions for onerous contracts are recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligation under the contract.

(n)  Loans and receivables

Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset.  They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost, less provision for impairment.

Impairment provisions are recognised when there is objective evidence that the Group will be unable to collect all of the amounts due under the terms of the receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.  For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the income statement.  On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet.  The Company's loans and receivables comprise only inter-Company receivables.  Cash and cash equivalents include cash in hand and deposits held with banks.

(o)  Financial liabilities

Financial liabilities include trade payables, accrued lease charges and other short term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost. 

(p)  Inventories

Inventories are stated at the lower of cost and net realisable value.  Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.  Net realisable value is based on estimated selling price less costs incurred up to the point of sale.

(q)  Leased assets

Leases are classified as finance leases whenever the terms of the lease are such that they transfer substantially all the risks and rewards of ownership to the Group.  All other leases are classified as operating leases.  The Group currently has no finance leases.  Assets leased under operating leases are not recorded on the balance sheet.

The total rentals payable under the operating leases are charged to the consolidated income statement on a straight-line basis over the lease term.  Where the Group sub-let sites to tenants, the rental income and expense are offset within administrative expenses.

Lease incentives received, primarily rent-free periods, are capitalised and then systematically released to the income statement over the period of the lease term.  Payments made to acquire operating leases are treated as pre-paid lease expenses and are amortised over the term of the lease.

(r)   Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

Deferred tax is provided using the balance sheet liability method, providing for all temporary differences between the carrying amounts of assets and liabilities recorded for reporting purposes and the amounts used for tax purposes.  Deferred tax is calculated on an undiscounted basis, at the tax rates that are expected to apply when the liability is settled or the asset is realised.  Deferred tax is charged or credited to the Statement of Comprehensive income, except when it relates to items charged or credited directly to equity, in which case deferred tax is also dealt with in equity.

The carrying value of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

(s)   Business combinations

The financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, the identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.

(t)   Goodwill

Goodwill represents the difference between the fair value of consideration paid and the fair value of the net identifiable assets acquired in a business combination.

Goodwill is stated as originally calculated less any accumulated provision for impairment. Goodwill is allocated to individual cash generating units and is subject to an impairment review at each reporting date.

(u)  Contingent liabilities

Where the Company enters into financial guarantee contracts and guarantees the indebtedness of other companies within the Group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time that it becomes probable that the Company will be required to make a payment under the guarantee.

(v)  Share capital

The Company's ordinary shares are classified as equity instruments.

(w) Dividend policy

Dividends declared after the balance sheet date are not recognised as a liability at that balance sheet date, and are recognised in the financial statements when they have received approval by shareholders.

(x)  Operating profit

Operating profit is stated after all expenses, but before financial income or expenses. Non-trading items are items of income or expense which because of their nature and the events giving rise to them, are not directly related to the delivery of the Company's restaurant service to its patrons and merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.

2      Critical accounting estimates and judgements

The Group makes certain estimates and judgements that affect the application of policies and reported amounts.  Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.  The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

(a)  Share based payments

The Group operates equity share-based remuneration schemes for employees.  Employee services received and the corresponding increase in equity are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions.  The fair value of share options is estimated by using valuation models, such as Black Scholes or binomial on the date of grant based on certain assumptions.  Those assumptions are described in note 27 and include, among others, the dividend growth rate, expected volatility, expected life of the options (for options with market conditions) and number of options expected to vest. 

(b)  Accruals

In order to provide for all valid liabilities which exist at the balance sheet date, the Group is required to accrue for certain costs or expenses which have not been invoiced and therefore the amount of which cannot be known with certainty. Such accruals are based on management's best judgement and past experience. Delayed billing in some significant expense categories such as utility costs can lead to sizeable levels of accruals. The total value of accruals as at the balance sheet date is set out in note 18.

(c)   Useful lives of property, plant and equipment

Property, plant and equipment are amortised or depreciated over their useful lives.  Useful lives are based on management estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness.

(d)  Impairment reviews

In carrying out an impairment review in accordance with IAS 36 it has been necessary to make estimates and judgements regarding the future performance and cash flows generated by individual trading units which cannot be known with certainty. Past performance is often used as a guide in estimating future performance, or comparison with similar sites. Where the circumstances surrounding a particular trading unit have changed then forecasting future performance becomes extremely judgemental and for these reasons the actual impairment required in the future may differ from the charge made in the financial statements.

(e)  Deferred tax

The deferred tax liability provided in the accounts is based on temporary difference between the tax written down values of assets and liabilities and their carrying values in the accounts and as such it is dependent on assumptions made in the Company's corporation tax computations. The assumptions on the proportion of certain elements of capital expenditure which will be eligible for tax relief are subjective and the final calculations agreed with HMRC could differ from the provision made in the financial statements.

3      Revenue and segmental analysis

The revenue for the Group is wholly attributable to one operating segment (operating restaurants) and arises solely in one geographical segment (United Kingdom). 
 

4      Operating profit

				2015		2014
	This has been arrived at after charging			£'000		£'000
	Staff costs			13,730		10,691
	Share based payments			133		104
	Operating lease rentals			3,765		3,101
	Amortisation of intangible assets			2		2
	Depreciation			1,710		1,310
	Amortisation of prepaid operating leases			170		164
	Loss on disposal			-		61
	Auditor remuneration:
	Audit fee          - Parent Company			8		8
	- Group financial statements			10		10
	- Subsidiary undertaking			22		20
	Other services - Taxation compliance			6		6
	- Other taxation advisory			6		6

5      Non-trading items - charged to administrative expenses

				2015		2014
				£'000		£'000
	Reversal of Impairment of property, plant and equipment			-		-
	Share based payments			(133)		(104)
				(133)		(104)

During the year a review of impairments and site performance was undertaken resulting in no net adjustment to non-current asset value. 

Share based payments are valued at the date of grant and amortised over the vesting period, the current year charge is £133,000 (2014 - £104,000). 
 

6      Finance expense

				2015		2014
				£'000		£'000
	Loan interest payable			116		83
				116		83

7      Employees

				2015		2014
	Staff costs (including directors) consist of			£'000		£'000
	Wages and salaries			12,699		9,779
	Social security costs			979		849
	Other pension costs			52		63
	Equity settled share based payment expense			133		104
				13,863		10,795

The average number of persons, including directors, employed by the Group during the period was 846, of which 836 were restaurant staff and 10 were administration staff, (2014 - 642 of which 634 were restaurant staff and 8 were administration staff). 

No staff are employed by the Company.

Of the total staff costs £13,028,000 was classified as cost of sales (2014 - £10,099,000) and £835,000 as administrative expenses (2014 - £788,000). 
 

8      Directors and key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, and represent the Directors of the Company. 

				2015		2014
				£'000		£'000
	Directors remuneration
	Emoluments			320		360
	Share based payments			71		69
	Benefits in Kind			13		13
				404		442

				2015		2014
				£'000		£'000
	Individual Directors' emoluments
	J Plant			140		140
	S Kaye			110		130
	A Kaye			40		60
	K Lassman			30		30
				320		360

In addition to the above, benefits in kind for the period were provided to J Plant of £5,000, S Kaye of £4,000 and A Kaye of £4,000. 

Share based payments for the period that are attributable to the directors are £31,000 to J Plant, £20,000 to S Kaye and £20,000 to A Kaye.

Company
The Company paid no director emoluments during the year.

9      Income tax expense

				2015		2014
				£'000		£'000
	UK Corporation tax
	Current tax on profits for the period			(333)		-
	Total current tax			(333)		-
	Deferred tax
	Total deferred tax			(267)		(500)
	Total income tax charge			(600)		(500)

The tax charge for the period is lower than the standard rate of corporation tax in the UK.  The differences are explained below:

				2015		2014
				£'000		£'000
	Profit before tax			3,067		2,552
	Tax on profit at the ordinary rate of corporation
	tax in UK of 20.25% (2014 - 21.5%)			621		549
	Effects of
	Expenses not deductible for tax			8		8
	Depreciation on ineligible fixed assets			80		63
	Utilisation of tax losses			(109)		(120)
	Total tax charge			600		500

10   Earnings per share

				2015		2014
				pence		Pence
	Basic earnings per ordinary share			4.64		3.88
	Diluted earnings per ordinary share			4.58		3.83
				2015		2014
				Number '000		Number '000
	Earnings per share have been calculated using the numbers shown below:
	Weighted average ordinary shares (basic)			53,189		52,954
	Dilutive shares to be issued in respect of option granted			697		662
	Weighted average ordinary shares (diluted)			53,886		53,616
				2015		2014
				£'000		£'000
	Profit for the financial period			2,467		2,052

1,263,785 share options have been used when calculating the diluted EPS (2014 - 1,091,888).  2,900,000 share options have been excluded when calculating the diluted EPS as they were anti-dilutive and did not meet performance conditions (2014 - 2,021,785).

11   Dividend

No final dividend has been proposed by the Directors (2014 - nil).

12   Intangibles

				Trademarks	Goodwill	Total
				£'000	£'000	£'000
	At 29 December 2013			5	441	446
	Amortisation of trademarks			(2)	-	(2)
	At 28 December 2014			3	441	444
	Additions			28	-	28
	Amortisation of trademarks			(2)	-	(2)
	At 27 December 2015			29	441	470

The recoverable amount of goodwill has been determined on a value in use basis.  This has been based on the performance of the units since they were acquired and management's forecasts, which assume the sites will perform at least as well as the market generally.  The forecast cash flows are discounted at a rate of 10%.

13   Property, plant and equipment

			Leasehold improvements	Furniture fixtures and computer equipment	Assets in the course of construction	Total
			£'000	£'000	£'000	£'000
	Cost
	At 29 December 2013		15,128	5,429	298	20,855
	Additions		4,736	1,462	180	6,378
	Disposals		(120)	(11)	-	(131)
	Transfers		197	85	(282)	-
	At 28 December 2014		19,941	6,965	196	27,102
	Additions		7,442	2,134	239	9,815
	Disposals		-	-	-	-
	Transfers		115	49	(164)	-
	At 27 December 2015		27,498	9,148	271	36,917
	Depreciation		3,468	2,003	-	5,471
	At 29 December 2013		748	562	-	1,310
	Provided for the period		(62)	(8)		(70)
	Disposals			-	-	-
	At 28 December 2014		4,154	2,557	-	6,711
	Provided for the period		958	752	-	1,710
	Disposals				-	-
	At 27 December 2015		5,112	3,309	-	8,421
	Net book value
	At 27 December 2015		22,386	5,839	271	28,496
	At 28 December 2014		15,787	4,408	196	20,391

Company
The Company holds no property, plant and equipment.
 

14   Prepaid operating leases

				2015		2014
				£'000		£'000
	Held within current assets			140		152
	Held within non-current assets			1,936		1,731
				2,076		1,883

Prepaid operating leases represent lease premiums paid on the acquisition of sites, amortised evenly over the lease term.

15   Investments

						£'000
	Company
	At 29 December 2013					2,548
	Share based payment in respect of subsidiary					104
	At 28 December 2014					2,652
	Share based payment in respect of subsidiary					133
	At 27 December 2015					2,785

The Company's investments are wholly related to a 100% ordinary shareholding in Took Us a Long Time Limited, a company registered in England and Wales.  Took Us a Long Time Limited is primarily engaged with the operation of restaurants.

16   Inventories

				2015		2014
				£'000		£'000
	Raw materials and consumables			774		531
	Crockery and utensils			1,038		520
				1,812		1,051

In the Directors' opinion there is no material difference between the replacement cost of stocks and the amounts stated above.  Inventory purchased and recognised as an expense in the period is £8,410,000 (2014 - £7,145,000).

17   Trade and other receivables

				2015		2014
				£'000		£'000
	Group
	Trade receivables			179		353
	Prepayments and other receivables			2,498		1,789
	Total trade and other receivables			2,677		2,142
	Less non-current portion			(148)		(341)
				2,529		1,801
	Company
	Amounts due from subsidiary			16,420		16,403
	Total trade and other receivables			16,420		16,403
	Classified as non-current			16,420		16,403

During the year the Company issued shares and passed the net proceeds of £52,000 (2014 - £31,000) to its subsidiary.

18   Trade and other payables

				2015		2014
				£'000		£'000
	Trade payables			3,309		3,422
	Taxation and social security			1,475		957
	Accruals			2,810		1,803
	Other payables			482		354
				8,076		6,536

19   Provisions

				2015		2014
				£'000		£'000
	At 28 December 2014			55		65
	Utilisation in period			(10)		(10)
	At 27 December 2015			45		55

20   Deferred tax

				2015		2014
				£'000		£'000
	At 28 December 2014			(615)		(115)
	Profit and loss charge			(267)		(500)
				(882)		(615)
	Accelerated capital allowances			(882)		(766)
	Tax losses carried forward			-		151
	At 27 December 2015			(882)		(615)

21   Borrowings

				2015		2014
				£'000		£'000
	Current
	Secured bank borrowings			750		500
				750		500
	Non-current
	Secured bank borrowings			5,000		250
				5,000		250
				5,750		750
	Maturity of secured bank borrowings
	Due within one year			881		518
	Due In more than one year but less than two years			530		259
	Due In more than two years but less than five years			4,741		-
				6,152		777
	Future interest payments			(402)		(27)
				5,750		750

Bank borrowings comprise of a term loan of £5,000,000 and an additional committed facility of £3,000,000 of which £750,000 was drawn down at the balance sheet date.  There were no instances of default, including covenant terms, in either the current or prior period.  The bank loan is secured by a charge on Group assets and a cross guarantee from the parent and subsidiary company.  The Company's maximum exposure to this loan is shown above.

22   Share capital

				Number		£'000
	Authorised, issued, called up and fully paid:
	At 29 December 2013			52,927,101		5,293
	Exercise of share options			121,335		12
	At 28 December 2014			53,048,436		5,305
	Exercise of share options			166,888		17
	At 27 December 2015			53,215,324		5,322

23   Reserves

Share capital comprises of the nominal value of the issued shares.

Share premium reserve is the amount subscribed in excess of the nominal value of shares net of issue costs. 

Cumulative gains and losses recognised in the income statement are shown in the Retained deficit reserves, together with other items taken direct to equity.

The merger reserve is the difference between the nominal value of shares issued and the nominal value of shares acquired on merger. 

24   Capital commitments

At the balance sheet date the Group and the Company had no capital commitments which were contracted but not provided for (2014 - £nil). Capital commitments relate to committed expenditure in respect of restaurants under construction.

25   Operating lease commitments

The total future value of minimum lease payments under non-cancellable operating leases are shown below.  The receipts are from sub-tenants on contractual sub-leases, the net position represents the cash liability of the Group.

				2015		2014
				£'000		£'000
	Within one year: payments			4,465		3,016
	Within one year: receipts			(230)		(230)
				4,235		2,786
	Within two to five years: payments			17,679		12,663
	Within two to five years: receipts			(920)		(920)
				16,759		11,743
	Over five years: payments			57,161		40,759
	Over five years: receipts			(3,647)		(4,086)
				53,514		36,673
				74,508		51,202

26   Pensions

The Group, last year, made contributions of £nil to the personal pension plan of the Directors. The total amount paid during the period was also £nil.  During the year the Group made contributions to employee pensions of £52,000 (2014 - £63,000).

27   Share based payments

				Weighted average exercise price		Number
				(pence)		'000
	At 29 December 2013			44.2		1,594
	Exercised			26.9		(522)
	Granted			101.4		2,042
	At 28 December 2014			80.6		3,114
	Exercised			31.3		(167)
	Cancelled			112.0		(20)
	Granted			114.0		1,237
	At 27 December 2015			92.4		4,164

The exercise price of options outstanding at the end of the period ranged between 31.5p and 139p (2014 - 18p and 112p) and their weighted average remaining contractual life was 8 years (2014 - 8 years).

Of the total number of options outstanding at the end of period 2,505,000 (2014 - 1,071,888) had vested and were exercisable at the end of the period.

The market price of the Company's ordinary shares as at 27 December 2015 was 191p and the range during the financial year was from 115p to 200p.

On 30 April 2015 the Company's subsidiary issued 500,000 'A' ordinary shares of £0.0001 each that carry rights enabling the holder of those 'A' ordinary shares to exchange such shares for ordinary shares in the Company subject to the share price of the Company remaining at or above £1.50 for fifteen consecutive days and satisfying length of service conditions of 1 to 4 years.   'A' ordinary shares convey similar rights to the holder as EMI options with an exercise price of £1.00 and a contractual life of 10 years.  These shares have been valued as a share based payment with conditional performance options ("ESOP A").    

On 30 April 2015 the Company's subsidiary issued 600,000 'B' ordinary shares of £0.0001 each that carry rights enabling the holder of those 'B' ordinary shares to exchange such shares for ordinary shares in the Company subject to the share price of the Company remaining at or above £2.00 for fifteen consecutive days.   'B' ordinary shares convey similar rights to the holder as EMI options with an exercise price of £1.20 and a contractual life of 10 years.  These shares have been valued as a share based payment with conditional performance options ("ESOP B").

On 9 April 2015 the Company issued a further 137,000 options in the Company Share Option Plan ("CSOP").  These options have an exercise price of 139p, a vesting period of 3 years and a contractual life of 10 years. 

In the current period 166,888 (2014 - 121,335) options were exercised. The weighted average share price at the date of exercise was 31.3p (2014 - 26.9p).

The following information is relevant in the determination of the fair value of options granted during the period under the equity settled shared based remuneration schemes operated by the group.

		CSOP		ESOP A		ESOP B
	Option pricing model used	Binomial		Binomial		Binomial
	Weighted average share price at grant date (pence)	138.5		136.5		136.5
	Exercise price	139		100		120
	Vesting period	3 years		3-4 years		6 years
	Contractual life	10 years		10 years		10 years
	Expected volatility	21%		21%		21%
	Expected dividend growth rate	0%		0%		0%
	Staff turnover	12%		7%		7%

The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share prices over the last three periods.

28   Financial instruments

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.  This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them.  Further quantitative information in respect of these risks is presented throughout these financial statements. 

The Group is exposed through its operations to the following financial risks: 

·     Credit risk

·     Interest rate risk

·     Liquidity risk

 
The Group does not have any material exposure to currency risk or other market price risk. 

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. 

 

Principal financial instruments 

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:- 

·     loans and borrowings

·     trade receivables

·     cash and cash equivalents

·     trade and other payables 

General objectives, policies and processes 

The Board has overall responsibility for the determination of the Group's risk management objectives and policies. 

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility.  Further details regarding these policies are set out below: 

Credit risk 

Credit risk is the risk of the financial loss to the Group if a customer or a counterparty to a financial instrument fails to meet its contractual obligations.  The Group is mainly exposed to credit risk from rebates from suppliers and the risk is considered minimal

Trade and other receivables, which are neither past due nor impaired, are disclosed in note 17 and represent the maximum credit exposure for the Group.

The Group's principal financial assets are cash and trade receivables.  There is minimal credit risk associated with the Group's cash balances.  Cash balances are all held with recognised financial institutions.  Trade receivables arise in respect of rebates from a major supplier and therefore they are largely offset by trade payables.  As such the net amounts receivable form an insignificant part of the Group's business model and therefore the credit risk associated with them is also insignificant to the Group as a whole.

Liquidity risk 

Liquidity risk arises from the Group's management of working capital.  It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. 

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. 

The Group seeks to manage its financial risk to ensure that sufficient liquidity is available to meet foreseeable needs both in the short and long term (note 21).  The Board consider detailed cash flow forecasts together with future obligations from capital projects in progress and the resulting impact on its cash balances. 

Interest rate risk 

The Group seeks to minimise interest costs by regularly reviewing cash balances. 

Interest rate risk arises from the Group's use of interest bearing financial instruments.  This is the risk that the future cash flows of the financial instrument will fluctuate because of changes in the interest rates. 

The Group is exposed to cash flow interest rate risk from long term borrowings at variable rate.  The Group does not seek to fix interest rates on these borrowings because the Board considers the exposure to the interest rate risk to be acceptable.  

Surplus funds are invested in interest bearing, instant access bank accounts.  The Group also holds short term deposit accounts in relation to tenant deposits received on sublet sites.

Loans and borrowings 

The Group has a loan facility with Barclays Bank Plc.  Under the terms of the facility the Group may borrow up to a maximum of £3.0m on flexible loan terms and £5.0m on a 5 year fixed term.  Interest on this facility is charged at 1.7% above LIBOR plus a variable charge for mandatory associated costs of the lender for all amounts drawn down, with a 0.68% charge on any amounts of the facility that is not drawn down.   

At 27 December 2015 if the Bank of England base rate had been 1% higher / lower with all other variables held constant this would not have resulted in any significant variance in the profit or loss or net assets of the Group. 

The bank loans are secured by a legal charge over the issued share capital of the Group companies, a legal charge over all the Group's trading sites, and a cross guarantee between Group companies. 

Capital disclosures 

The Group considers its capital to comprise the ordinary share capital, share premium and retained earnings. 

The Group's objective when maintaining capital is to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders. 

The Group manages its capital structure and makes adjustments to it in the light of strategic plans.  In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

29   Related party transactions

The Directors are considered to be the key management personnel.  Details of directors remuneration is shown in note 8. 

The Group pays rent and associated insurance to a number of companies considered related parties by virtue of the interests held by the directors in such companies.  The Group also reimburses expenses incurred by such companies on behalf of the Group. The Group receives income from related parties for fees in relation to consultancy services offered.

				2015		2014
				£'000		£'000
	Rent and insurance
	-      Kropifko Properties Limited			(371)		(371)
	-      KLP Partnership			(336)		(184)
	-      ECH Properties Limited			(69)		(69)
	Expenses reimbursed			(6)		(4)
	Income			-		5
	Balance due to related parties			4		176
	Balance due from related parties			-		1

The rent paid to related parties are considered to be a reasonable reflection of the market rate for the properties.

30   Reconciliation of profit before tax to net cash inflow from operating activities

										2015		2014
										£'000		£'000
		Group
		Profit before tax								3,067		2,552
		Finance income								(9)		(9)
		Finance expense								116		83
		Share based payment charge								133		104
		Depreciation and impairment								1,710		1,310
		Amortisation of intangible assets								2		2
		Loss on disposal								-		61
		Onerous lease provision movement								(10)		(10)
		(Increase) / decrease in inventories								(761)		(240)
		(Increase) / decrease in trade and other receivables								(535)		(411)
		Increase / (decrease) in trade and other payables								1,363		1,866
		Net cash generated from operations								5,076		5,308

 

END

 

 

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