Tasty Regulatory News (TAST)

23 March 2022

Tasty plc

("Tasty" or the "Company")

Final results for the 52 weeks ended 26 December 2021

Tasty (AIM: TAST), the owner and operator of restaurants in the casual dining sector, announces its annual results for the 52 week period ended 26 December 2021.

Key Highlights

· Revenue £34.9m (2020: £24.2m); an increase of 44% year-on-year with 33 weeks dine-in trading, driven by strong sales post re-opening despite weaker trading for the peak December period than anticipated, due to the onset of the Omicron variant

· Adjusted EBITDA1 (post IFRS 16) of £8.0m (2020: £2.7m)

· Adjusted EBITDA1 (pre IFRS 16) of £3.9m (2020: loss £1.5m)

· Profit after tax for the period of £1.2m (2020: loss of £12.7m)

· Bank loan as at 26 December 2021 of £1.3m (27 December 2020: £nil)

· Cash at the year-end was £11.0m. After allowing for deferred HMRC payments, creditors and bank loan the Group's net cash position was approximately £6.8m

· Currently trading from 50 of 54 restaurants

[1] Adjusted for depreciation, amortisation and highlighted items including share-based payments and impairments. Adjusted EBITDA figure includes £1.9m of exceptional Government grant income

The report and accounts for the 52 week period ended 26 December 2021 will be available on the Company's website at https://dimt.co.uk/investor-relations/ shortly.

For further information, please contact:

Chairman's statement

I am pleased to be reporting on the Group's annual results for the 52 week period ended 26 December 2021 and the comparative 52 week period ended 27 December 2020. The Group currently comprises 54 restaurants: five dim t and 49 Wildwood restaurants.

We are currently trading from 50 of those restaurants out of a total estate of 54. The four restaurants that remain closed due to predicted poor trading conditions in their locality or labour shortages but are at different stages of re-opening planning. However, the Group will continue to consider selling two or three of those restaurants or re-gearing their leases to reflect current market conditions.

During the two years of the Covid-19 pandemic we have had to deal with and adapt to unexpected challenges. It has been a test of endurance, strength and resilience and our success has been testament to our dedicated teams and management, and our customers. The Board would like to thank our much valued loyal staff, suppliers, customers, landlords and other trade creditors who have assisted and supported us throughout this unprecedented period. 

The support we have received from creditors, landlords, and the Government has seen us through the difficulties we have faced. In addition, the bank facility of £1.25m drawn in January 2021 and not yet utilised, has provided additional headroom and confidence to our creditors of sufficient liquidity. At year-end, our cash balance reflects our cash preservation strategy and a deferral of payments due to creditors and HMRC. When these outstanding payments and bank debt are deducted, our net cash at year-end was approximately £6.8m.

Trading was highly encouraging when dine-in was permitted from May 2021, but impacted in December 2021 as the Omicron variant took hold and spread amongst the UK population. Subsequent Government advice meant that Christmas trade, traditionally our most profitable period, and specifically December 2021, was much weaker than we had anticipated.

In response to the experience of the last two years we have strengthened our operating model. We have increased our delivery offering and avenues of delivery. Having survived the pandemic and, now that the restrictions have been lifted, we are cautiously optimistic that we will be able to expand the estate and are rebuilding our operational and head-office structure to support this anticipated growth and property pipeline. During 2022 we expect to facilitate a measured expansion plan for a pipeline of five to six new units, however, any expansion will be at a steady pace as 2022 will not be without its challenges with labour shortages, food inflation, the ending of Government support in terms of reduced VAT and business rates and utility price volatility, impacting profitability.  

Dividend

The Board does not propose to recommend a dividend (2020: £nil).

Future Trading

Trading prior to Christmas was strong and the start of 2021 is encouraging, but this must be tempered by the challenges which the Group expects following the end of Government support including VAT and business rates, the risk of a reduction in pent-up demand, disposable income and staycations as well as a steep rise in inflation in relation to wages, utilities and input supplier costs as the UK adjusts to Brexit, the aftermath of the pandemic and the current war in Ukraine. Accordingly, the Board views the future with cautious optimism.

Keith Lassman

Chairman

22 March 2022

Strategic report for the 52 weeks ended 26 December 2021

Tasty operates two concepts in the casual dining market: Wildwood and dim t.

Wildwood

Aimed at a broad market, our 'Pizza, Pasta, Grill' restaurant remains the Group's main focus. Our sites are primarily based on the high street. However, our estate comprises a number of leisure, retail and tourist locations that have historically traded well, highlighting the broad appeal of the offering. Located nationally, mainly outside of London, Wildwood is currently open for business from 45 of the 49 Wildwood branded restaurants.

dim t

Our pan-Asian restaurant now trades from five sites, serving a wide range of dishes, including dim sum, noodles, soup and curry. This cuisine has fared particularly well over the last two years due to a rise in its popularity and increased demand for takeaway. 

Introduction

The second half pre-Omicron was better than we anticipated. With staycation, pent-up demand, and increased disposable income, which was to be spent in the UK, the majority of our restaurants benefited from changing eating habits and working patterns. However, some of the sites, mainly those in city centres, that historically performed well and benefitted from work commuters, tourists and theatregoers have not performed as well. Fortunately, most of Tasty's estate is located in residential areas, and outside of the larger cities which has meant we have benefitted from this change in consumer habits. 

We are conscious that performance was assisted by VAT and business rate support, staycations, pent-up demand and unusually high level of disposable income. We are expecting that most of the support and peaks in consumer trends will follow a more normalised path during 2022 and we have planned for rising costs and labour shortages. However, we are cautiously optimistic about 2022 and our ability to expand. 

With an increased appetite for delivery and takeaway, we have seen strong sales growth. We plan to capitalise on this by expanding our virtual brands and different formats in new locations to optimise growth. Dim t has been rejuvenated through its successful takeaway and delivery sales growth. 

Customers

It was great to welcome customers back in for dine-in, and our focus remains that we offer better value and an improved experience. We are constantly reviewing our menu and increasing the choice of vegetarian, vegan, gluten-free and lighter options. We use our guest feedback system to improve the menu and the offering. Our customer engagement has significantly improved due to the segmentation of our database into relevant and specific groups.

People

We are pleased to report that on 26 December 2021, we employed just under 1,000 people across the business: an increase of 330 from the previous year. Like many competitors and other industries, we have been impacted by labour shortages and are currently 5% short of the full employment levels required. Targeted wage increases have been applied, which should help us retain our teams in the long-run. Since Brexit and the pandemic, we found that flexible working has helped to attract a different demographic. This change provides us with new opportunities as we grow our talent pool. Whilst 2021 was challenging in retention levels due to the pandemic and Brexit, more recent data suggests our team is more stable, and there are encouraging signs that the length of service is growing.

Even though we are operating with a shortfall in staff numbers, overall we have managed to keep the "open" sites trading. Occasionally, positive Covid cases have resulted in short-term closures but overall those instances have been kept to a minimum. We understand that at times this has stretched the existing teams and we thank and appreciate all of them for their hard work.

With the increase in National Insurance of 1.25%, National Living Wage and wage increases, there will inevitably be wage inflation, which will be impossible to completely absorb.

We believe in rewarding our loyal staff and nurturing talent and we remain committed to training and this continued last year despite the challenging environment. Ten apprentices completed their training programme, six with distinction and 18 functional skill exams were passed.

In anticipation of expansion, we are strengthening our management structure and senior teams across all areas but our initial focus is on food, marketing, people and the learning and development team.

An in-depth review into the people aspects of Tasty has been completed and a two-year strategy developed with the focus on becoming a market-leading employer with a diverse and inclusive team, creating a learning culture, using data to support decision making and growing our apprenticeship programmes. New HR and recruitment systems have been established and proposed to provide consistent and swift support to all colleagues.

Government support

The Government initiatives, including the Job Retention Scheme ("CJRS"), business rates relief, deferral of HMRC payments, Eat Out To Help Out ("EOTHO") and VAT reduction, have proved invaluable in supporting the Group over the last two years. With business rates and VAT reductions ending at the end of March 2022 and an additional National Insurance contribution of 1.25% we expect greater pressure on business performance and cash generation, but with the planned improvements to operations and the structural changes proposed, we should be able to adapt our business model to these additional costs.

Suppliers

Our suppliers have suffered from rising fuel costs, lack of drivers, workers and general shortages. This inevitably has impacted our costs, and while there have been some shortages, on the whole, these have been manageable. We are thankful to our suppliers that continue to work through the challenges and support us.

Rent negotiations

The Group has successfully achieved consensual lease concessions and rent reductions for the lockdown period for most of the estate. There remain a few sites for which negotiations are ongoing. Through the pragmatic approach and support of our landlords we have managed to avoid a formal procedure such as a company voluntary arrangement ("CVA"). We are extremely grateful for all the assistance received.

Financial stability

Over the last few years, we have focussed on cost reduction and reduced outgoings, including salary reductions, reduced services, and ensuring only necessary expenditure was incurred. As we come out of the pandemic, we are gearing towards investment in our existing sites, new sites, people and development.

The Group drew down a bank loan of £1.25m in January 2021 which is unutilised and is currently reviewing options to refinance or repay this loan.

Board Changes

As previously announced, Sam Kaye stepped down from the Board on 14 May 2021 to allow him to focus on his other commercial interests. The Board would once again like to thank Sam for the enormous support and invaluable experience that he has provided to the Group from inception. Sam remains a supportive shareholder.

Harald Samúelsson was appointed as a Non-Executive Director in May 2021. Harald has over 20 years of experience in the UK restaurant industry, including as joint managing director of Côte Restaurants, and we are delighted to have him on our Board.

Current trading and outlook for the coming year

As we are coming out of the pandemic we are optimistic about sales performance compared to 2019 though this is tempered by rising costs. In particular the end of the rates relief, reduced VAT rates and the introduction of 1.25% additional National Insurance will all impact profitability.

Having built strong foundations over lockdown we are quietly confident about our prudent expansion plans and we expect to take on another five to six units in the current year.

Financial review

Highlighted Items

The Group recognises a number of charges in the financial statements which arise under accounting rules and have no cash impact. These charges include share-based payments and impairments to fixed assets. The above items are included under 'highlighted items' in the statement of comprehensive income and further detailed in Note 5. These items, due to their nature, will fluctuate significantly year on year and are, therefore, highlighted to give more detail on the Group's trading performance.

Full year results and key performance indicators

The Directors continue to use a number of performance metrics to manage the business but, as with most businesses, the focus on the income statement at the top level is on sales, EBITDA before highlighted items and operating profit before highlighted items compared to the previous year. All key performance indicators that adjust for highlighted items do not constitute Statutory or GAAP measures.

The table below shows key performance indicators both before and after IFRS 16:

Sales were up 44% on the corresponding period to £34.9m (2020: £24.2m). Since dine-in reopened in May 2021, trading until December 2021 sales were higher than management expectations and EBITDA was £8.0m (2020: £2.7m). The adjusted EBITDA profit before IFRS 16 adjustments was £3.9m (2020: loss £1.5m).

Operating profit before highlighted items was £3.5m (pre-IFRS 16 equivalent: profit £2.6m, 2020: loss £2.2m).

The impact of the implementation of IFRS 16 "Leases" in the prior year, has resulted in depreciation on Right-of-use (ROU) assets for leases and the interest charge on lease liabilities being greater than the charge for rent that would have been reported pre-IFRS 16; net impact on reported loss is £1.5m (2020: £1.8m). The interest charge on the lease liabilities is higher in the earlier years of a lease. We have reviewed the impairment provision across the ROU assets, fixed assets and goodwill and have made a net provision of £nil (2020: £8.1m).

After taking into account all non-trade adjustments, the Group reports a profit after tax for the period of £1.2m (2020: loss of £12.7m). Net cash inflow for the period before financing was £7.3m (2020 - inflow £9.4m). This is generated from operations and proceeds from the sale of property. Net cash flows generated from operations were £7.8m and impacted by IFRS 16 (2020 - £7.5m).

As at 26 December 2021, the Group had an outstanding bank loan of £1.25m (2020 - £nil). At 26 December 2021 cash at bank was £11.0m (2020: £8.0m). Net cash after outstanding bank loan at the balance sheet date was £9.8m (2020 - net cash £8.0m). The cash balance at year-end reflects our cash preservation strategy and deferring payments due to landlords, HMRC, and other trade creditors. After reflecting these outstanding payments, our net cash at year-end was approximately £6.8m. The Group drew down the £1.25m, four-year term loan from its existing bankers, Barclays Bank plc in January 2021.

Principal risks and uncertainties

The Directors have the primary responsibility for identifying the principal risks the business faces and for developing appropriate policies to manage those risks.

On behalf of the Board.

Daniel Jonathan PlantChief Executive Officer

22 March 2022

Report of the directors for the 52 weeks ended 26 December 2021

The Directors present their report together with the audited financial statements for the 52 week period ended 26 December 2021 (comparative period 52 weeks to 27 December 2020).

Throughout the year, in performance of its duties, and in compliance with Section 172 of the Companies Act, the Board has had regard to the interests of the Group's key stakeholders and taken account of the potential impact on these stakeholders of the decisions it has made. In order to comply with Section 172, the Board is required to include a statement setting out the way in which Directors have discharged these duties during the year. Details of how the Board had regard to the following S172 Matters are as follows:

Results and dividends

The consolidated statement of comprehensive income is set out below and shows the profit for the period.

The Directors do not recommend the payment of a dividend (2020 - £nil).

Post balance sheet events

Post balance sheet events are set out in Note 31.

Future developments

The outlook and future developments are set out in the Chairman's statement and the Strategic Report.

Principal activities

The Group's principal activity is the operation of restaurants.

Directors

The Directors of the Group during the period were as follows:

Daniel Jonathan Plant

Mayuri Vachhani 

Non-Executive

Keith Lassman

Samuel Kaye (resigned 14 May 2021)

Harald Samúelsson (appointed 19 May 2021)

Directors' interest in shares

Share options

B ordinary shares 

In January 2021 Daniel Jonathan Plant was awarded 15,676,640 'B' shares in Tasty plc which can be converted to ordinary shares subject to achievement of hurdle rates relating to the Company's share price.

Employees

Applications from disabled persons are given full consideration providing the disability does not seriously affect the performance of their duties. Such persons, once employed, are given appropriate training and equal opportunities.

The Group takes a positive view toward employee communication and has established systems for ensuring employees are informed of developments and that they are consulted regularly.

Environment

We continue to maintain an average of 45% recycling across both brands with a negligible amount of waste going to landfill. 

As part of our ongoing energy efficiency programme there has been a focus on energy saving. This includes a rigorous check list for branches which have been and may be required to close during the pandemic.

Our waste oil is collected and converted into Bio Diesel and Bio Gas to ensure that none is wasted.

The Group continues to work with its delivery partners in converting all our delivery packaging to biodegradable and recyclable materials.

We have stopped using plastic straws, committed to a policy recommended by the Humane League and currently looking at ways to reduce our carbon footprint.

The Group presents its greenhouse gases ("GHG") emissions and energy use data under Streamlined Energy and Carbon Reporting ("SECR") for the year ended 26 December 2021:

Energy Intensity ratio of 0.142 (2020: 0.131) has been measured using the metric of Tonnes CO2e per m2 floor area ("tCO2e").

The Group's total energy consumption for the year ended 26 December 2021 was 12,872,041 kWh (2020 - 12,216,634 kWh).

Donations

The Group made no charitable or political donations in the period (2020 - none)

Financial Instruments

Details of the use of financial instruments and the principal risks faced by the Group are contained in Note 27 to the financial statements.

Going concern

At the time of approving the financial statements, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. In reaching this conclusion the Directors have considered the financial position of the Group, together with its forecasts for the next 12 months and taking into account possible changes in trading performance. The going concern basis of accounting has, therefore, been adopted in preparing the financial statements.

Auditors

All of the current Directors have taken all reasonable steps necessary to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.

Haysmacintyre LLP were appointed as the auditors and have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting.

On behalf of the Board.

Daniel Jonathan PlantChief Executive Officer

22 March 2022

Statement of directors' responsibilities

The Directors are responsible for preparing the strategic report, the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the AIM Rules for Companies issued by the London Stock Exchange.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website (www.dimt.co.uk) in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Consolidated statement of comprehensive income

for the 52 weeks ended 26 December 2021

The notes below form part of these financial statements.

Consolidated statement of changes in equityfor the 52 weeks ended 26 December 2021

The notes below form part of these financial statements.

Company statement of changes in equityfor the 52 weeks ended 26 December 2021

The notes below form part of these financial statements.

Consolidated balance sheetAt 26 December 2021

The financial statements were approved by the Board of Directors of the Company and authorised for issue on 22 March 2022 and signed on their behalf by Daniel Jonathan Plant.

The notes below form part of these financial statements.

Company balance sheetAt 26 December 2021

The Parent Company, Tasty plc, has taken advantage of the exemption in s408 of the Companies Act 2006 not to publish its own income statement. The Parent Company made a loss of £0.14m (2020 - loss of £3.2m) for the period. The Parent Company has not recognised leases under IFRS 16 in its balance sheet as management have concluded that the substance of the leases is held by the subsidiary, Took Us A Long Time Ltd ("TUALT") and recognised within its Company accounts.

The financial statements were approved by the board of directors of the Company and authorised for issue on 22 March 2022 and signed on their behalf by Daniel Jonathan Plant.

The notes below form part of these financial statements.

Consolidated cash flow statementFor the 52 weeks ended 26 December 2021

The notes below form part of these financial statements.

Company cash flow statementFor the 52 weeks ended 26 December 2021

The notes below form part of these financial statements

1 Accounting policies

Tasty plc is a public listed company incorporated and domiciled in England and Wales. The Company's ordinary shares are listed on AIM. Its registered address is 32 Charlotte Street, London, WC1T 2NQ.

(a) Statement of compliance

These financial statements of the Group and Company have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the United Kingdom ("adopted IFRSs"). These financial statements have also been prepared in accordance with those parts of the Companies Act 2006 that are relevant to companies that prepare their financial statements in accordance with IFRS.

(b) Basis of preparation

The financial statements cover the 52-week period ended 26 December 2021, with a comparative period of the 52-week period ended 27 December 2020. The financial statements are presented in sterling, rounded to the nearest thousand and are prepared on the historical cost basis. The accounting policies of the Company are consistent with the policies adopted by the Group.

(c) Going concern

As at 26 December 2021, the Group had net assets of £1.9m (2020: £0.6m). The Group meets its day-to-day working capital requirements through the generation of operating cashflow, equity raise and bank finance. The Group's principal sources of funding are:

· Issues of ordinary share capital in the Company on AIM.

· a £1.25m, four-year term loan from its existing bankers, Barclays Bank plc (the "Facility"), in order to strengthen its balance sheet and provide additional working capital support. The Facility was drawn down in January 2021. The Facility has a capital repayment holiday of 12 months and carries interest at a rate of 4.5% per annum over the Bank of England Base Rate, following drawdown. The Group has also secured a £250,000 overdraft facility. The facility is currently unutilised.

The pandemic led to a high level of uncertainty and disruption in the economy and hospitality industry. During this period costs were minimised and cash outflows reduced.

Since dine-in reopened in May 2021, trading until December 2021 was highly encouraging. Following the Government's advice in December and the spread of the Omicron variant impacted Christmas sales, December was weaker than we anticipated. Trade for the start of 2022 is encouraging.

The Group monitors cash balances and prepares regular forecasts, which are reviewed by the Board. These forecasts include our best estimates and judgements based on currently available information and current environment. Judgement is particularly required as to the impact on trade of the restrictions being eased as this will also mean that many more people will be holidaying abroad.

Having reviewed the updated forecast and given the ability of the Group to manage costs, cash position and the untilised bank loan, the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis.

(d) Leases

Group's accounting policies for leases are as follows:

Lessee accounting

Effective for periods starting on or after 1 January 2019, IFRS 16 has replaced IAS 17 and IFRIC4 (Determining whether an arrangement contains a lease).

The change in definition of a lease mainly relates to the concept of control. IFRS 16 distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:

• The right to obtain substantially all of the economic benefits from the use of an identified asset; and

• The right to direct the use of that asset in exchange for consideration.

The Group adopted IFRS 16 for its period starting 30 December 2019 using the modified retrospective approach on transition, recognising leases at the carried forward value had they been treated as such from inception, without restatement of comparative figures. On adoption of IFRS 16, the Group recognised right-of-use assets and lease liabilities in relation to the restaurant sites it leases for its

business.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

• Leases of low value assets, and

• Leases with a duration of 12 months or less.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

The Group's leases are held across Tasty plc or Took Us Long Time Ltd ("TUALT"). In determining where the assets and liabilities should be accounted for, we have reviewed which entity derives the benefit and rights to use the asset. In assessing this we have reviewed where the trade occurs, where staff are employed and where day to day activity is managed from. We have concluded that the substance of the lease is that it is held by TUALT and accordingly recognised the lease liabilities within the TUALT company financial statements.

The lease liabilities recognised in TUALT but in the name of Tasty plc totalled £43m at 26 December 2021 (£44m at 27 December 2020). Accordingly, this balance represents a contingent liability for the Company only.

Lessor accounting

Under IFRS 16, a lessor continues to classify leases as either finance leases or operating leases and account for those two types of leases differently.

Based on an analysis of the Group's operating leases as at 26 December 2021 on the basis of the facts and circumstances that exist at that date, the Directors of the Group have assessed that the impact of this change has not had any impact on the amounts recognised in the Group's consolidated financial statements.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group recognises these payments as an expense on a straight-line basis over the lease term. Currently the Group has no low value assets or short term leases.

Covid-19 related rent concessions

IFRS 16 defines a lease modification as a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease. The Group has considered the Covid-19 related rent concessions and applied the lease modifications accounting.

(e) Changes in accounting policies and disclosures

New standards, amendments to standards or interpretations adopted by the Group

Amendments to accounting standards applied in the year ended 26 December 2021 were as follows:

• Definition of Material - amendments to IAS 1 and IAS 8; and

• Revised Conceptual Framework for Financial Reporting; and

The application of these did not have a material impact on the group's accounting treatment and has therefore not resulted in any material changes.

New standards, amendments to standards or interpretations not yet adopted by the Group

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial years beginning on or after 1 January 2021. No standards have been early adopted by the Group.

• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate Benchmark Reform Phase 2

• Amendment to IFRS 16 - Covid-19-Related Rent Concessions beyond 30 June 2021

• Annual Improvements to IFRS Standards 2018-2020 Cycle

• Amendment to IAS 37 - Onerous Contracts: Cost of Fulfilling a Contract

• Amendment to IAS 1 - Classification of Liabilities as Current or Non-current

• Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies

• Amendments to IAS 8 - Definition of Accounting Estimates

We are currently assessing the impact of these new accounting standards and amendments. The amendments will not have any significant impact on the Group.

(f) Basis of consolidation

The consolidated financial statements incorporate the results of the Company and its subsidiary, Took Us A Long Time Limited. The accounting period of the subsidiary is co-terminous with that of the parent undertaking.

(g) Revenue

The Group's revenue is derived from goods and services provided to the customers from dine-in and delivery and takeaway. With revenue recognised at the point in time when control of the goods has transferred to the customer. Control passes to the customers at the point at which food and drinks are provided and the Group has a present right for payment.

(h) Other income

Included in Other income is the rental income from operating leases.  Rental income is recognised in the period to which it relates, and rent free periods would be spread over the terms of the lease. The cost of these leases is included within the cost of sales. The Group has received Government grants in relation to the Coronavirus Job Retention Scheme ("CJRS") and "Retail and Hospitality Business Grants", provided by the Government in response to Covid-19's impact on the business. In accordance with the IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance) guidelines, the Group has recognised the salary expense as normal and recognised the CJRS grant income in profit and loss as the Group becomes entitled to the grant. "Retail and Hospitality Business Grants" are recognised when there is reasonable assurance that the Group has met the conditions attaching to these grants.

(i) 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.

(j) Share based payments

Certain employees (including Directors and senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (e.g. options, shares etc).

The cost of this is measured by reference to the fair value at the date on which they are granted. The fair value is determined by using an appropriate pricing model (e.g. binomial or Monte Carlo model).

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

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 that all other performance and/or service conditions are satisfied. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(k) Borrowing costs

Borrowing costs are recognised in the income statement in the period in which they are incurred.

(l) 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:

(m) 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:

Property, plant and equipment are reviewed for impairment in accordance with IAS 36 Impairment of Assets, when there are indications that the carrying value may not be recoverable. Impairment charges are recognised in the statement of comprehensive income. See note 2(d) for further details.

(n) Non-current assets held for sale

Non-current assets are classified as held for sale when the Board plans to sell the assets and no significant changes to this plan are expected. The assets must be available for immediate sale, an active programme to find a buyer must be underway and be expected to be concluded within 12 months with the asset being marketed at a reasonable price in relation to the fair value of the asset.

Non-current assets classified as held for sale are measured at the lower of their carrying amount immediately prior to being classified as held for sale and fair value less costs of disposal. Following their classification as held for sale, non-current assets are not depreciated.

(o) Provisions

In the period to 26 December 2021, the Group has recognised a provision for dilapidations for a number of sites, where the need to carry out the work has been identified but a full survey and commission has not been undertaken and therefore management has applied their judgment in determining the provision.

(p) Loans and receivables

These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. 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 using the effective interest rate method, less provision for impairment. 

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

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.

(q) Apprenticeship funding and levy

The payments made under the levy represent a prepayment for training services expected to be received and is recognised as an asset until the receipt of the service. When the training service is received, an appropriate expense is recognised. The apprenticeship grant income is deferred until apprentices receive training under the rule of the scheme and we are satisfied that we have fully complied with the scheme. We have applied an element of judgement until a full inspection is carried out.

(r) Financial liabilities

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

Bank borrowings are initially recognised at fair value and are subsequently measured at amortised costs using the effective interest method. Interest expense includes initial transaction costs and any premium payable on redemption as well as any interest payable while the liability is outstanding.

(s) Inventories

Raw materials and consumables

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.

Crockery and utensils (Smallwares)

Smallware inventories are held at cost which is determined by reference to the quantity in issue to each restaurant. Smallware inventory relates to small value items which have short life spans relating to kitchen and bar equipment. These items are recorded under inventory as they are utilised in providing food and beverage to customers.

(t) Taxation

Tax on the profit and loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

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, except for differences arising on:

· The initial recognition of goodwill

· The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit.

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.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.

(u) Goodwill

Goodwill represents the difference between the fair value of consideration paid and the carrying value of the assets and liabilities acquired. Goodwill arose on acquisition of a group of leases.

Goodwill is stated as originally calculated less any accumulated provision for impairment. Goodwill is allocated to individual CGUs, where each CGU is a restaurant, and is subject to an impairment review at each reporting date.

(v) Investments

Investments in subsidiaries are included in the Company's Statement of Financial Position at cost less provision for impairment.

(w) Share capital

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

(x) Operating profit

Operating profit is stated after all expenses, but before financial income or expenses. Highlighted 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 Group'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.

(y) Earnings per share

Basic earnings per share values are calculated by dividing net profit/(loss) for the year attributable to Ordinary equity holders of the parent by the weighted average number of Ordinary shares outstanding during the year.

2 Critical accounting estimates and judgements

The preparation of the Group's financial statements requires management to make certain estimates, judgements and assumptions that affect the reported amount of assets and liabilities, and the disclosure of contingent liabilities at the statement of financial position date and amounts reported for revenues and expenses during the year. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liability affected in the future. 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 (Note 26)

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 binomial or the Monte Carlo model on the date of grant based on certain assumptions. Those assumptions are described in note 26 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 (Note 18)

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 estimate 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 Right-of-use assets, property, plant and equipment (Note 13)

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. Right-of-use assets are depreciated over the life of the lease. The life of the lease is the minimum committed lease period.

(d) Impairment reviews (Note 13)

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. The Group views each restaurant as a separate cash generating unit ("CGU"). 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. When assessing a CGU recoverable amount, the value in use calculation uses a discounted cash flow model which is sensitive to the discount rate and the growth rate used after taking into account potential sale value. The cashflow projections are influenced by factors which are inherently uncertain such as footfall and non-controllable costs such as rates and license costs. The future cashflows are harder to predict due to the pandemic.

All assets (ROU, fixed assets and goodwill) are reviewed for impairment in accordance with IAS 36 Impairment of Assets, when there are indications that the carrying value may not be recoverable. Impairment charges are recognised in the statement of comprehensive income.

All assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the recoverable amount is higher than the carrying amount of the CGU, no further assessment is required. Where the carrying value of an asset or a CGU exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to dispose of the asset), the asset is written down accordingly. In the absence of any information about the fair value of a CGU, the recoverable amount is deemed to be its value in use. Value in use is calculated using cash flows over the remaining life of the lease for the CGU discounted at 6% (2020: 6%), being the rate considered to reflect the risks associated with the CGUs. The discount rate is based on the Group's weighted average cost of capital ("WACC") which is used across all CGUs due to their similar characteristics.

The Covid-19 pandemic has resulted in an increased uncertainty and greater difference in performance across CGUs depending on whether it is located in a residential, city centre, high street or tourist location. The location also impacts when site can resume normal trading. Due to lockdowns in 2021, the cashflow in 2021 is not always indicative of the future cashflows. The cashflow of each CGU has been determined based on management's judgement of future performance based on a combination of historical performance, impact of the pandemic and expected recovery in future years and therefore each CGU's cashflow has been selected on an individual criterion. Management's conservative judgement has been applied in selecting this criterion due to the uncertainty arising from amongst other conditions, cost of living increases and utility cost pressures and therefore a 0.5% growth rate (2020 - 0.5%) has been applied. Included within the cashflow is management's estimate of the capital expenditure required to maintain performance of the sites in the future years.

(e) Goodwill impairment reviews (Note 12)

The Group determines whether goodwill is impaired on an annual basis and this requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. This involves estimation of future cash flows and choosing a suitable discount rate. Full details are supplied in note 12, together with an analysis of the key assumptions.

(f) Intercompany provision (Note 17)

In carrying out a review of intercompany loan in accordance with IFRS 9 it has been necessary to make estimates and judgements regarding the repayment of the loan by its subsidiary to the Company. A sensitivity analysis has been performed on the repayment of loan value.

(g) Crockery and utensils (Smallwares) inventory

The cost of replenishing smallwares is expensed directly through the income statement. Smallwares is recognised at historic cost and tested for impairment on an annual basis.

(h) Lease liabilities (Note 1(d))

The calculation of lease liabilities requires the Group to determine an incremental borrowing rate ("IBR") to discount future minimum lease payments. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR rate of 4.6% therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. As at 26 December 2021, a sensitivity analysis has been conducted on the lease liabilities which shows that increasing the IBR rate by 1% will decrease the lease liability by £3.3m and decrease the right-of-use asset pre-impairment by £3.3m.

(i) Provision

A dilapidation provision is made for a number of sites, where the need to carry out the work has been identified but a full survey and commission has not been undertaken and therefore management has applied their judgment in determining the provision. The Group has not made a provision for the costs of restoring the condition of sites at the end of the leases. This is based on management experience and judgement.

The apprenticeship grant income is deferred until apprentices receive training under the rule of the scheme and we are satisfied that we have fully complied with the scheme. We have applied an element of judgement until a full inspection is carried out.

(j) Lease recognition

The Group's leases are held across Tasty plc or Took Us Long Time Ltd ("TUALT"). In determining where the assets and liabilities should be accounted for, we have reviewed which entity derives the benefit and rights to use the asset. In assessing this we have reviewed where the trade occurs, where staff are employed and where day to day activity is managed from. We have adjudged that the substance of the lease is that it is held by TUALT and accordingly recognised the lease liabilities within the TUALT company accounts.

3 Revenue, other income and segmental analysis

The Group's activities, comprehensive income, assets and liabilities are wholly attributable to one operating segment (operating restaurants) and arises solely in one geographical segment (United Kingdom). All the Group's revenue is recognised at a point in time. 

An analysis of the Group's total revenue is as follows:

An analysis of the Group's other income is as follows:

The Group has received Government grants in relation to the Coronavirus Job Retention Scheme ("CJRS") and Covid-19 Business Grants, provided by the Government in response to Covid-19's impact on the business.

In accordance with IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance) guidelines, the Group has recognised the salary expense as normal and recognised the grant income in profit and loss as the Group becomes entitled to the grant. The CJRS grant and business grants of £3.9m have been recognised within other income. "Retail and Hospitality Business Grants" are recognised when there is reasonable assurance that the Group has met the conditions attaching to these grants.

4 Operating loss

5 Highlighted items - charged to operating expenses

The above items have been highlighted to give more detail on items that are included in the consolidated statement of comprehensive income and which when adjusted shows a profit or loss that reflects the ongoing trade of the business.

This net impairment movement is £nil, however for some sites there was an impairment charge of £6.2m and for other sites a release of £6.2m.

6 Finance income and expense

7 Employees

The average number of persons, including Directors, employed by the Group during the period was 821 of which 805 were restaurant staff and 16 were head-office (2020 - 810 of which 796 were restaurant staff and 14 were head-office staff). The second-half of 2021 the average number of staff was 934.

No staff are employed by the Company (2020 - no staff).

Of the total staff costs £14.3m was classified as cost of sales (2020 - £13.8m) and £1.1m as operating expenses (2020 - £1.0m). Redundancy costs of £0.0m (2020 - £0.09m) have been included as a cost of Restructure and Consultancy in Note 5.

8 Directors and key management personnel remuneration

Key management personnel identified as the Directors are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, and represent the Directors of the Group. The remuneration of the Directors for the period ended 26 December 2021 is as follows:

CompanyThe Company paid no director emoluments during the year (2020 - none). 

9 Income tax expense

The tax charge for the period is lower than the standard rate of (2020 - lower than) corporation tax in the UK. The differences are explained below:

Factors affecting future tax charges

Deferred taxes at the balance sheet date have been measured using the enacted tax rates at each date. These rates are 19% at 26 December 2021 (19% at 27 December 2020).

In March 2021 it was announced the UK corporation tax rate would increase to 25% in April 2023. This announcement does not constitute substantive enactment, however, the disclosed but unrecognised deferred tax disclosed in Note 20 is calculated at the future tax rate of 25%.

10 Earnings per share

The weighted average number of ordinary shares outstanding is increased by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. Due to the profit made in the year; all share options are considered dilutive.

11 Dividend

No final dividend has been proposed by the Directors (2020 - £nil). 

12 Intangibles

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 cover a period of the committed lease length, assuming a growth rate of 0.5% (2020 - 0.5%) and are discounted at a rate of 6% (2020 - 6%). During the 52 weeks ended 26 December 2021, the Group recognised an impairment loss of £nil (2020 - £0.3m) in relation to previously acquired goodwill recognised on acquisition of the restaurants noted in the table below. The impairment charge reflects the forecast cashflow following the pandemic. Goodwill had been allocated to CGUs as follows;