(Sharecast News) - Fulham Shore said in a trading update on Monday that, after the removal of all Covid-19 restrictions in February, customers were returning to its restaurants in increasing numbers.
The AIM-traded operator of the Franco Manca and Real Greek chains said that during the second half of its financial year, both businesses delivered strong underlying performances despite periods of disruption caused by the Omicron variant of the coronavirus.
It said it also made "excellent progress" against its UK expansion plans, opening 10 new restaurants.
In line with its international strategy, two franchised Franco Manca restaurants were also opened during the period, in Athens, Greece.
Input costs rose throughout the year ended 27 March, due to increased transportation costs, raw materials and the impact of Covid-19 disruption.
However, the company said they were mitigated through small price increases, generating better results than the board previously anticipated at the half-year.
"This strong trading momentum and expansion drove a significant increase in revenue, comparable with the levels seen pre Covid-19," the directors said in their statement.
"As a result, the board expects to report that revenue, EBITDA and adjusted headline EBITDA for the financial year will be ahead of last year's figures and comfortably ahead of market expectations."
Those market expectations were for revenue of £73.4m, EBITDA of £16.5m and adjusted headline EBITDA of £9.5m.
The company said its net cash position pre-IFRS 16 as at 25 March totalled £4.0m, swinging from net debt of £3.6m a year earlier, with undrawn bank facilities of £15.9m.
"Planned openings have been and will continue to be financed primarily by internally generated cash flow," the board said.
"It should be noted the group improved its cash balance through this financial year despite opening 10 restaurants."
Looking at its dividends, the board said it was still considering creating a policy on shareholder distributions during the new financial year.
It said the decision would depend on geopolitical events, its trading patterns, and UK economic conditions.
"The group continues to secure desirable sites at favourable rents, supported by high vacancy rates and lower rents than at the peak levels seen in 2019," the board said of the company's outlook.
A total of 19 proposed new Franco Manca sites were in legal negotiations and planned to open in the summer and autumn, while the Real Greek was also in legal negotiations for five new sites.
"The outlook for costs, be they utilities, raw ingredients or labour presents challenges for all operators within the sector.
"In addition, the reduced VAT rate and hospitality business rates relief both ended on 1 April.
"Thanks to its brands' affordable, value-for-money proposition, the group is well placed to offset these increased costs through increased menu pricing, which, when they occur, will be implemented to cover costs rather than increase margin."
Fulham Shore said that as customer numbers continued to grow and trading was "robust", it planned to open around 18 new restaurants in the new financial year, and would review its opening programme at the half-year.
"The board is very encouraged by the strong performance achieved by the Group during the 2022 financial year and underpinned by its two relevant businesses, their value-for-money propositions and the clear growth opportunities, remains confident of its exciting potential."
Fulham Shore said it would announce full-year figures for 2022 around the end of July.
At 0834 BST, shares in the Fulham Shore were up 7.74% at 16.7p.
