Richoux Group Regulatory News (RIC)

28 September 2018

Richoux Group plc

Interim results for the period to 1 July 2018

Richoux Group plc (the "Group"), the owner and operator of Richoux, Friendly Phil's, Villagio and The Broadwick restaurants today announces its unaudited interim results for the 26 week period to 1 July 2018.

Key points:

· Revenues of £5.0 million for 26 week period were 10.3% lower than the comparable 28 week period

· EBITDA improved to a loss of £0.75 million (H1 2017: loss of £0.90 million)

· Currently eighteen restaurants trading

· Cash of £1.10 million at period end (December 2017: £4.73 million)

Enquiries

Results

Revenue for the 26 week period ended 1 July 2018 was 10.3% lower than the 28 week period ended 9 July 2017 to £5.0 million (2017: £5.65 million). Company EBITDA was (£0.75 million), representing an improvement of 16.7% over the prior period (H1 2017: (£0.90 million)), and the Adjusted operating loss* decreased to £0.67 million (2017: £0.76 million), with pre-opening costs of £0.10 million (2017: £0.39 million). The net loss for the period was £0.98 million (2017: £1.10 million).

The Directors are not recommending the payment of a dividend.

* before pre-opening costs, impairment, reorganisation costs, onerous lease provision and profit on disposal

Operations

The Group currently has eighteen operating restaurants, which operate under the Richoux, Friendly Phil's, Villagio and The Broadwick brands. Further details on each of the brands are set out below.

We successfully disposed of one underperforming unit during the period, and have rebranded a further two. Since the period end we have taken on two new sites under The Broadwick brand.

Richoux

Richoux is an all-day cafe and brasserie established in London in 1909.

The Group operates five Richoux restaurants in Knightsbridge, Mayfair, Piccadilly, Gloucester Arcade, and Port Solent.

Friendly Phil's

Friendly Phil's is a vintage American Diner.

The Group currently has five Friendly Phil's restaurants; Hempstead Valley which opened in March 2017, Port Solent which opened in April 2017, Chatham which opened in May 2017, Braintree which opened in May 2017, and Fareham which opened in June 2017.

Italian restaurants

The Group currently has four Villagio restaurants in Andover, Basildon, Hammersmith, and Chatham.

The Broadwick

The Broadwick is a restaurant and bar offering homemade popular global food with an extensive drinks selection, including a range of cocktails and gins. The restaurants are bright, vibrant, and display a range of contemporary and urban art.

We currently have four restaurants (Chislehurst, Chatham, Maidenhead, and Radlett) operating under this new format and early signs are encouraging.

Capital expenditure and cash flow

As at the end of the period under review, the Group held cash of £1.10 million (December 2017: £4.73 million) and the Company subsequently completed a subscription to raise a further £1.09 million on 29 August 2018. As at today's date, the Group holds cash of £1.8 million.

Capital expenditure of £0.5 million (H1 2017: £3.71 million) was incurred in the period, having rebranded and refurbished existing restaurants.

Outlook

As indicated in our trading update on 29 August 2018, in line with a number of other companies in the sector, the Group has seen continued pressure on trading during the period, with further impact from temporary restaurant closures due to conversion or refurbishment. In view of these continued headwinds, the Group has remained focused on cost reduction and, where necessary, refinement of both its brand and property portfolio. We do not expect to see any material improvement in trading over the balance of the current financial year.

The Group had been in negotiation regarding a potential lease sale for one of the Group's restaurant locations in Central London. However, we have concluded that the disposal of this lease on the terms available is not in the best interest of the Group at this time and we have terminated those negotiations.

Simon Morgan

Chairman

28 September 2018

Condensed consolidated statement of comprehensive income

for the 26 week period ended 1 July 2018

Condensed consolidated statement of changes in equity

for the 26 week period ended 1 July 2018

Condensed consolidated statement of financial position

at 1 July 2018

Condensed consolidated statement of cash flows

for the 26 week period ended 1 July 2018

1. The consolidated financial statements have been prepared in compliance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation. The financial statements have been prepared on the historical cost basis.

2. The condensed financial information for the 26 week period ended 1 July 2018 and the 28 week period ended 9 July 2017 has been prepared in accordance with IAS 34 "Interim financial reporting" and should be read in conjunction with the annual financial statements for the period ended 31 December 2017 which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The accounting policies used in preparing the condensed financial information are consistent with those of the annual financial statements for the period ended 31 December 2017. During the period various Standards and Interpretations were adopted in line with the effective dates as outlined in the annual financial statements for the period ended 31 December 2017. The condensed financial information for the 26 week period ended 1 July 2018 and the 28 week period ended 9 July 2017 has not been audited or reviewed and does not constitute full financial statements within the meaning of section 435 of the Companies Act 2006.

The financial information for the 53 week period ended 31 December 2017 does not constitute the Group's statutory accounts for that period but it is derived from those accounts. Statutory accounts for the 53 week period ended 31 December 2017 have been delivered to the Registrar of Companies. The auditors have reported on these accounts; their report was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

3. Operating segments

The Group has only one operating segment: the operation of restaurants and one geographical segment (the United Kingdom). The Group's brands meet the aggregation criteria set out in paragraph 22 of IFRS 8 "Operating Segments" and as such the Group reports the business as one reportable segment.

None of the Group's customers individually contribute over 10% of the total revenue.

4. Loss per share

The calculation of the basic and diluted loss per share is based on the following data:

5. No dividend is proposed.

6. Intangible fixed assets

Impairment testing of goodwill and intangible fixed assets

Goodwill of £263,000 (2017: £263,000) relates to the acquisition of Richoux Limited in August 2000 and is allocated to the group of cash generating units (CGUs) that comprise the business acquired with each restaurant site being treated as a single CGU.

The Group tests annually for impairment or more frequently if there are indications that the goodwill and intangible assets may be impaired. The recoverable amounts of the restaurants are calculated from value in use calculations based on cash flow projections from forecasts to December 2022 based on a sales growth rate of 2 per cent for established sites. The discount rate applied to cash flow projections is 10 per cent.

The Board has concluded that at this time no impairment provision is required (December 2017: £84,000).

7. Property, plant and equipment

Impairment testing of property, plant and equipment

The Group considers each trading restaurant to be a cash-generating unit (CGU) and each CGU is reviewed when there are indications of impairment.

The recoverable amounts of the restaurants are calculated from value in use calculations based on cash flow projections from forecasts to December 2022 based on a sales growth rate of 2 per cent for established sites. The discount rate applied to cash flow projections is 10 per cent.

The Board has concluded that at this time no impairment provision is required (December 2017: £2,675,000).

8. Reconciliation of operating loss to operating cash flows

9. Related party transactions

Transactions with directors:

Directors' emoluments

During the period Salvatore Diliberto subscribed for nil ordinary shares (2017: 5,273,375 including 2,636,687 subscribed for by his wife Irene Diliberto), The Hon. Robert Rayne subscribed for nil ordinary shares (2017: 4,103,838), Jonathan Kaye subscribed for nil ordinary shares (2017: 3,125,000) and Simon Morgan subscribed for nil ordinary shares (2017: 125,000) as part of the subscription that took place during the relevant period. The price paid per share was 16 pence in 2017.

Transactions with substantial shareholders:

During the period Phillip Kaye subscribed for nil ordinary shares (2017: 3,121,025), Samuel Kaye subscribed for nil ordinary shares (2017: 1,250,000), Adam Kaye subscribed for nil ordinary shares (2017: 1,250,000) and Michinoko Limited subscribed for nil ordinary shares (2017: 4,216,750) as part of the subscription that took place during the relevant period. The price paid per share was 16 pence.

On 22 December 2017 the Group entered into an agreement with Amberstar Limited, a Company in which Phillip Kaye is a shareholder, to temporarily suspend the rent of its former Chiswick restaurant, where it retains a liability under an authorised guarantee agreement, for up to six months from 25 December 2017.

10. Post balance sheet events

The Company had 124,979,072 ordinary shares of £0.04 each in issue as 31 December 2017. On 29 August 2018 the Company raised £1.1 million (before costs of £148,707) through the issuance of 18,168,335 new shares by way of a placing at a price of £0.06 per share.

11. Report and accounts

 Copies of the interim report and accounts will be available at www.richouxgroup.co.uk.