Various Eat. Regulatory News (VARE)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU No. 596/2014) ("MAR"). THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

7 March 2022

VARIOUS EATERIES PLC

("Various Eateries" or "the Company"

and with its subsidiaries "the Group")

Final Results

53-week period ended 3 October 2021

A year of solid progress and well-positioned for the future

Various Eateries PLC, the owner, developer and operator of all day club, restaurant and hotel sites in the United Kingdom, announces its results for the 53 weeks ended 3 October 2021.

Highlights

· Very strong trading post-reopening facilitated by large outdoor spaces

o Better than expected Coppa Club estate like-for-like growth of +21% from full reopening on 17 May 2021 to period end (compared to 2019)

o Several Coppa Club sites delivered multiple record weekly and monthly sales performances in the period

o Encouraging reopening performance from Tavolino site in central London, building to positive monthly like-for-like trading in September 2021 (compared to 2019)

o Continued mitigation of well-publicised industry issues

· Resumption of premium site roll-out programme

o Opened two new prime location sites in the period - Coppa Club Cobham (December 2020) and Coppa Club Clifton Village (July 2021) - with both performing ahead of internal budgets

o Appointed Property Director, Raj Manek (non-board position) to accelerate site acquisition programme

· Encouraging post-period trading performance and momentum building

o Notwithstanding the impact of 'Plan B' measures introduced over the festive period

o In the 4 full weeks since the measures were lifted, sales from Coppa Club sites outside of London were up 25% (compared to 2020)

· Poised to capitalise on unprecedented site opportunity in terms of both availability and terms

o Opening of Coppa Club Putney (November 2021) with Coppa Club Haslemere and Coppa Club Bath expected to open in the first half of calendar year 2022

o Pipeline of high-quality prime sites continues to grow, with several agreed or in advanced negotiation

o Management experience coupled with healthy liquidity and a robust balance sheet puts the Group in a strong position to accelerate growth as the effects of the pandemic subside

Financials

· Total Group Revenue for the year up 36% to £22.3m (2020: £16.5m)

· Adjusted EBITDA* of £1.2m (2020: loss of £0.8m)

· Total Loss of £3.7m (2020: £14.4m)

· Cash at Bank of £19.7m as at 3 October 2021 (2020: £0.9m)

· Net Cash of £7.3m (Excluding lease liabilities) (2020: £11.5m liability)

*see Financial Review

Andy Bassadone, Executive Chairman of Various Eateries, said:

"I am incredibly proud of all our people, and all the resilience they've shown through another volatile and challenging year. It is thanks to them that we have been able to bounce back from periods of closure, delivering exceptional results in times of unrestricted trading.

What is clear is that the appeal of our brands holds strong. While open, Coppa Clubs have been in high demand, breakfast through to evening drinks, while Tavolino continues to be popular with City-dwellers. Our hotels, similarly, saw great wedding and staycation trade in the Summer. Our newest Coppa openings, Cobham and Clifton Village, have performed ahead of internal budgets and are fast becoming community favourites.

Post-period, notwithstanding the impact the introduction of 'Plan B' had on our estate over the Christmas period and through much of January this year, recent trading has been encouraging with momentum building as consumer confidence increases.

This trend underpins our positive expectations for the future, and with more new site openings on the horizon, together with solid consumer demand and a management team at the helm with a track record of success, we look forward with confidence."

A video overview of the results is available here:

https://bit.ly/VARE_FY21_results_overview

Annual General Meeting and Posting of Results

The Company confirms that it intends to dispatch its Annual Report and Accounts; and notice of Annual General Meeting to shareholders later this week. A further announcement will be made at that time. A copy of the annual report and accounts will also be available from the Company's website from today (www.variouseateries.co.uk).

Enquiries

About Various Eateries

Various Eateries owns, develops and operates restaurant and hotel sites in the United Kingdom. The Group's stated mission is "great people delivering unique experiences through continuous innovation".

The Group is led by a highly experienced senior team including Andy Bassadone (Executive Chairman), Hugh Osmond (Founder), Yishay Malkov (CEO), Oliver Williams (CFO) and Matt Fanthorpe (Chef Director, a non-board position).

The Group operates two core brands across 13 locations:

For more information visit www.variouseateries.co.uk

CHAIRMAN'S & CHIEF EXECUTIVE'S STATEMENT

In the year to 3 October 2021, our first full financial year as a listed company, we have achieved a great deal despite the volatile trading conditions and well-publicised operational issues driven by the Covid pandemic.

We saw very strong performances when able to trade throughout the period, with pent-up demand and the ongoing appeal of our two key brands, Coppa Club and Tavolino, leading to strong performance compared to the market from the time of re-opening of hospitality in April until the end of the reporting period.

In addition, we were delighted to open two new premium sites in the period, both of which have performed very well since opening. At the same time, we further developed our menus, fortified our supply chain, integrated the hotel sites into the business and successfully mitigated staff availability challenges while navigating a competitive labour market.

The experience of our management team, our strong financial position, and our ability to take advantage of opportunities as and when they arise at a pace that makes good business sense have been crucial in navigating the period under review and we are confident these strengths will stand us in similarly good stead going forward.

As we move through the new financial year, and boosted by the latest easing of restrictions, we are more confident than ever that we have the right strategy in place and the expertise and resources necessary to execute it successfully.

OUR STRATEGY

Poised to capitalise on unprecedented opportunity

Our strategy remains focused and unchanged, and while the exact timings and patterns of restrictions have been difficult to predict, things are panning out very much as we anticipated. We believe that there is an opportunity for a well-funded operator with high quality brands, reinforced by an experienced management team, to create a significant leisure group as normality resumes.

Covid and the associated restrictions continue to put the hospitality industry under immense pressure. In January 2022, the Office for National Statistics published research saying that 40% of all hospitality businesses say they have less than three months of cash reserves, including 11% with none at all. Of those, 17% said they have low or no confidence of surviving the next three months. While over the last year we have seen government support and other factors delaying the impact, we continue to believe a significant reduction in competition and premium site availability - the likes of which the industry has never seen - is inevitable. The opportunities for Various Eateries to expand will therefore be very considerable.

Coppa Club is a multi-use, all-day concept that combines restaurant, terrace, café, lounge, bar and remote working spaces under one roof. Tavolino aims to address a gap in the market for high-quality Italian food at mid-market prices. Both Coppa and Tavolino are prepared to scale up once normality resumes and the economic challenges facing the sector subside.

TRADING & COVID IMPACT

Market outperformance during trading periods

In the period under review, we were able to welcome people into our sites for 33 weeks in total due to government restrictions designed to contain the spread of Covid. Several of these trading weeks were under various other restrictions, such as the three-tier system, the 'Rule of Six' and curfews. A full breakdown of trading across the duration of the period is detailed in the Financial Review.

Pleasingly, the Group's trading performance from the recommencement of outdoor only trading on 12 April 2021 to period end was very encouraging. Like-for-like revenue across the Coppa Club estate was up 21% from full reopening on 17 May through to 3 October 2021 against the same period in 2019 (pre-Covid), with several Coppa Club sites delivering record sales months.

Our Tavolino site, despite being in the centre of London's office district, delivered a strong reopening performance, building to positive monthly like-for-like sales versus 2019 in September 2021.

Our hotels at our Coppa Clubs in Sonning and Streatley were subject to even greater restrictions, only able to open post-lockdown in June 2021. Encouragingly for the future, though, from opening to year end, occupancy and average room rates for both hotels were above the same period in 2019.

DEVELOPING OUR ESTATE

Roll-out continues across multiple brands and site formats

At present, the Group has 13 sites, all in prime locations and without restrictive lease agreements. The sites themselves are spacious and most have significant outdoor spaces.

During the reporting period, we opened Coppa Club Cobham and Coppa Club Clifton Village, both of which have performed ahead of internal budgets, with the 'all-day' clubhouse concept being embraced by the community and guests using the venue for breakfast, for coffee, as a study/workspace and of course for lunch, supper and drinks.

Post-period end in November 2021, we also opened Coppa Club Putney. Our Putney site is a prime location on the river Thames featuring extensive outdoor terraced seating. It traded extremely well before introduction of Plan B measures and is now once again building excellent sales momentum as these measures are relaxed.

Coppa Club Haslemere and Coppa Club Bath are both expected to open in the first half of calendar year 2022. Offering the full clubhouse experience, our Haslemere site is a beautiful Grade II listed building featuring Georgian and Tudor architecture. Coppa Club Bath, the Group's second foray into the Southwest of England, is a spectacular Georgian townhouse - also Grade II listed - set across four floors in the heart of the city.

Across our brands, several further premium sites have terms agreed or are in advanced negotiations, with many others under consideration. While the pipeline is extremely healthy, we will continue to be prudent in our roll-out, accelerating when appropriate.

OUR PEOPLE

Communicating with, supporting and providing a first-rate working environment for our people has - as always - been a key priority during the period. Despite the widely reported increasing competition for good people, we are proud to have recorded a high retention rate and maintained a low level of vacancies, reflecting positively on our brands as places to work and enabling us to continue delivering an uninterrupted service to visitors.

Our ethos at Various Eateries always has been to focus not just on remuneration, although of course this is important, but also on creating a positive working atmosphere where there are genuine, exciting opportunities to progress. We have promoted internally often during the last year, as well as adapting our offering to be more attractive to all ages and demographics to ensure we keep a great team of people.

The Board would like to thank our teams for their hard work and dedication in what has been another difficult year for them and their families. The way they have risen to the challenge - particularly when it comes to availability issues linked to Covid - has been exceptional and we're grateful to everyone associated with the Group for their efforts.

MARKET DEVELOPMENTS

While many well documented industry-wide challenges persist, there remains ample opportunity for well-managed hospitality businesses with compelling offerings to succeed and grow. We have demonstrated our ability to navigate supply chain and labour shortage challenges to date - continuing to provide a high-quality, uninterrupted service to customers - and will look to manage ongoing headwinds in the same way.

As Covid-related restrictions ease, we believe consumer confidence will continue to grow steadily. This is evident in the progressive improvement we have seen in trading since 'Plan B' measures were lifted. In addition, we should see the number of inbound tourists increase as international travel becomes easier, which will be beneficial to all our sites, but particularly those in London. 

At the same time, the number of people working remotely at least a few days a week is expected to continue to rise, with a recent Gartner study showing 39% of knowledge workers could look to find new work if a 'hard return' to working on-site is forced. This bodes well for Coppa Club, which provides a relaxed workspace for this demographic throughout the day.

As we move towards the end of government support initiatives, we continue to believe a correction in the market is inevitable. Competition in the hospitality sector is likely to reduce considerably in the short-to-medium-term, paving the way for fresh, forward-facing and well-funded firms such as ours to expand.

CURRENT TRADING AND OUTLOOK

Our performance in the period under review is testament to the strength of our brands, relevance of our strategy and quality of our people. While we have been subject to the same pandemic-related disruptions as the rest of the industry, we have performed very well versus the market when able to trade, which bodes very well for the Group's prospects.

Post-period, sales across our new and existing sites were encouraging prior to the introduction of 'Plan B' measures in December 2021. Since they were lifted in January 2022, we have seen a progressive improvement in trading which underpins our optimism for the current financial year. Pleasingly, in the 4 weeks since 'Plan B' measures were lifted, sales from Coppa Club sites outside of London grew 25% (compared to 2020).

Overall, it is clear that the continuing tendency for more "working from home" is favouring our large all-day out of town Coppa Club venues but still reducing customer numbers at our city centre sites. With our focus on making all our sites attractive venues to work in and spend the day in a sociable, comfortable environment, we believe we are very well positioned regardless how this trend develops in the future.

Looking ahead, the opportunity before us continues to grow, and we're excited by the prospect of ramping up our expansion plans. That said, management will continue to use its experience and industry knowledge accumulated over decades of successful rollouts to ensure it only does so at a pace is conducive to the long-term success of the Group.

The Board continues to believe that the impact of the pandemic and a saturation of outdated offerings will see competition decrease and the availability of premium sites increase. With a fine-tuned strategy designed to be future-proof, the financial firepower to execute it, and a management team with a track record of success, we are confident of another year of strong and sustainable progress.

Andy Bassadone

Executive Chairman

Yishay Malkov

Chief Executive Officer

financial review

OVERVIEW

The financial results for FY21, as with FY20, have been materially impacted by Covid-19 resulting in zero revenue in lockdown periods and disruptions to trading at all other times.

The KPI's of the Group's performance are summarised in the table below:

* Audited number

Summary of financial performance for the 53 weeks ended 3 October 2021

\* The Group's hotel and event operations at Sonning and Streatley were acquired during the final weeks of the previous financial period and thus are not included in the comparative figures.

FINANCIAL PERFORMANCE

Overall Group Revenue increased by 36% (FY21: £22.3m, FY20: £16.5m), resulting in an adjusted EBITDA of £1.2m (FY20: £0.8m loss) and a loss before tax of £3.7m (FY20: £14.4m loss). Whilst the Group traded strongly when restrictions were lifted and sites were able to trade, there were 19 weeks in the year where sites were forced to fully close subsequently impacting the Group's profitability. The Group undertook various actions to minimise the impact of the forced closures however there were other factors which could not be wholly mitigated. The current year was split into periods of restricted trading or full lockdowns detailed below.

5 full weeks to 4 November 2020

Following on from the strong performance in the summer of 2020, the group started the new financial year strongly in 2020, despite being faced with increasingly challenging restrictions over the period. These included the 'rule of 6' when indoor dining was limited to groups of 6 guests, affecting large bookings and group events. The 10pm curfew and the substantial meal requirement meaning a wet lead offer was not possible when guests had finished eating also impaired evening trading. Tourism numbers were still heavily impacted, with international travel restrictions in place and in many cases businesses had yet to enforce office workers returning to the office.

5 November 2020 to 12 April 2021

Following the second national lockdown (a four-week circuit breaker in November 2020 ending on the 2 December 2020), the group was able to reopen sites in December in line with the rules of the tier system. Most of our sites were impacted with the higher tiers of the system which included rules such as only 2 households mixing for indoor dining. Given the short period, and the nature of sites hopping between tiers, it is difficult to gauge any meaningful insight into the 6-week period before the third national lockdown began on the 6 January 2021. All of our sites were in Tier 4 by the middle of December (21 December), which required hospitality businesses to be closed. With no delivery trade, this meant the group generated no income during this period. This third national lockdown continued until the 12 April 2021.

12 April 2021 to 17 May 2021

Following the end of the third national lockdown on 12th April 2021, the Group was able to start trading outside which meant all sites with outdoor space and terraces could operate. All non-essential retail was also able to re-open which helped to drive footfall. All but one of the Coppa Club estate were able to open and, driven by a combination of large outdoor spaces, pent up demand and the lower VAT rates produced some record sales weeks and significant LFL growth over the 5 weeks.

17 May 2021 to 3 October 2021

Full trading resumed from the 17th May, although this was coupled with restrictions on the number of guests allowed at any one time. The 'rule of 6' still applied to those missing different households indoors, where outdoors the limit was increased to 30 guests which drove outdoor events and large outdoor bookings. Whilst these restrictions remained in place, sales at the Coppa Clubs, both inside and outside London, continued in significant double digit LFL growth, outperforming the market.

Covid-19 mitigating actions

The Group continued to implement significant actions to mitigate the impact of Covid-19. Actions included:

• Including all site employees and a majority of head office employees on to the Coronavirus Job Retention Schemes when in full lockdowns.

• All those not furloughed including at management and executive team level agreed to temporary salary reductions.

• Taking advantage of various UK Government initiatives including Business Rates relief and various Support Grants.

• Agreements with suppliers and partners to extend credit terms, amend contracts and arrange payment plans where necessary.

• Continued dialogue with all landlords to agree a combination of rent waivers and deferrals, as well as benefitting from Covid cesser clauses to previously amended leases.

FINANCING costs

Financing costs of £1.6m (2020: £2.0m) have reduced by £0.4m in the year. Whilst the IFRS lease liability interest has risen by £0.5m, driven both by the new hotel acquisitions, as well as the new openings over the 2 years, the FY20 reorganisation resulted in a significant reduction in financing costs of £1.3m down to £0.5m.

Impairments

A detailed review of each individual site has resulted in an impairment charge of £0.6m (2020: £5.4m), all against right-of-use assets. Detail of the methodology is included in notes 14 and 15 to the financial statements.

Loss on disposal of assets & leases

There were no disposals of any significant assets or leases in the year. In FY20, the Group disposed of the remaining non-trading Strada leases and associated assets.

IPO & restructuring costs

There were no IPO or restructuring costs in the year. In FY20, these costs were incurred in the restructuring and execution of the Group's IPO, with further costs of £1.9m were charged directly to equity as they relate to the raising of equity.

Dividend

The Directors do not recommend the payment of a dividend believing it more beneficial to use cash resources to invest in the Group in line with our strategy.

Cashflow & balance sheet

The Group undertook significant actions to mitigate the impact of the pandemic on its financial position in FY20 and in FY21, and the group was able to generate £3.4m from operations. Having received the cash during the period relating to the listing in the prior year, which was previously shown in other receivables, the Group finished the year with cash of £19.7m.

During the period, the Group invested £5.1m (2020: £5.1m) in capital expenditure in support of future growth. New Coppa Club sites were opened in Cobham, Clifton and a further site in Putney, a large proportion of which was completed in the period, as well as undertaking light refurbishments to Brighton and Maidenhead.

The group also received an interim insurance payment in the year of £2.5m relating to its Business Interruption insurance claim. The Group is collaborating with Allianz, it's insurer, to seek judicial determination over a number of issues affecting the claim for Covid-19-related losses under a Marsh Resilience policy which were left unresolved by the court following the FCA test case.

KEY PERFORMANCE INDICATORS ('KPIs')

As summarised, the Group reviews numerous indicators of performance on a monthly and annual basis. However, with the period severely impacted by the conditions faced by the group, as detailed throughout the Annual Report, the total loss and EPS figures are hard to assess on a comparable basis.

Various Eateries PLC

Consolidated Statement of Comprehensive Income

For the 53 weeks ended 3 October 2021

The above results were derived from continuing operations.

There are no items of comprehensive income other than the loss for the period and therefore, no statement of comprehensive income is presented.

Various Eateries PLC

Consolidated Statement of Financial Position

as at 3 October 2021

Various Eateries PLC

Consolidated Statement of Changes in Equity

for the 53 weeks ended 3 October 2021

Various Eateries PLC

Consolidated Statement of Cash Flows

for the 53 weeks ended 3 October 2021

1 General information

Various Eateries PLC, 'the Company', and its subsidiaries (together 'the Group') are engaged in the operation of restaurants and hotels in London and the South of England

The Company is a public company limited by shares whose shares are publicly traded on the AiM Market of the London Stock Exchange and is incorporated and domiciled in the United Kingdom under the Companies Act 2006 and are registered in England and Wales.

The registered address of the Company is 20 St Thomas Street, London, SE1 9RS.

2 Accounting policies

Basis of preparation

The principal accounting policies adopted in the preparation of the financials statements of the Group which have been applied consistently to all periods presented, are set out below.

The directors (the 'Directors') of Various Eateries PLC are responsible for the financial statements. Judgements made by the Directors, in the application of these accounting policies that have a significant effect on the financial statements and estimates with a significant risk of material adjustments in the next period are disclosed in note 3 on page 22.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards in conformity with the requirements of the Companies Act 2006 applicable to companies reporting under IFRS and IFRIC interpretations.

The financial statements have been prepared on an historical cost basis. Monetary amounts in these financial statements are rounded to the nearest whole £1,000, except where otherwise indicated.

Basis of consolidation

The consolidated financial statements incorporate those of Various Eateries PLC and all of its subsidiaries (i.e. entities that the Group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All financial statements are made up to 3 October 2021.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Going concern

In adopting the going concern basis for preparing the financial statements for the year ended 3 October 2021, the Directors have considered the business model, the Group's principal risks and uncertainties as well as taking into account the current cash position and potential facilities.

2 Accounting policies (continued)

Going concern (continued)

Based on the Group's cash flow forecasts and projections, the Board is satisfied that the Group will be able to operate within the level of its facilities for the foreseeable future. In making this assessment, the directors have made a specific analysis of the impact of both Covid-19 and Brexit, whilst taking into account the renewal of the Deep Discounted Bond post year end (as detailed in note 29, post balance sheet events). Even allowing for a full period of closure for twelve months from when the financial statements are authorised for issue, the Board are comfortable the Group would have the required cash to continue trading. For this reason, the Board considers it appropriate for the Group to adopt the going concern basis in preparing its financial statements.

Revenue

Revenue represents net invoiced sales of food and beverages, hotel accommodation and room hire excluding value added tax. Revenue is recognised when the goods have been provided. 

Rental income

Rental income from subletting right-of-use assets is recognised on a straight line basis over the term of the relevant lease. It is netted off against rental costs and is recognised within cost of sales.

Goodwill

Goodwill relates to acquired sites and is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests) and any previous interest held over the net identifiable assets acquired and liabilities assumed. The company is taking the option to not restate any balances prior to the opening balance sheet for the purpose of the financial statements. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the income statement.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The goodwill is tested annually for impairment.

Intangible assets (other than goodwill)

Intangible assets acquired separately from a business combination are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date if the fair value can be measured reliably.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives of 4 years on a straight line basis.

Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses. Cost comprises of purchase cost together with any incidental costs of acquisition.

Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are applied:

2 Accounting policies (continued)

Property, plant and equipment (continued)

Asset class Depreciation method and rate

Right of use assets Life of lease

Freehold property - Land Not depreciated

Freehold property - Buildings Over 50 years

Leasehold improvements Life of lease

Furniture, fittings and equipment 14.29% - 33.33% per annum

Assets under construction Not depreciated

IT equipment 20% - 33.33% per annum

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Property, plant and equipment are tested for impairment if indications of impairment are present.

Work-in-progress relates to capital expenditure on sites that have not started trading.

Inventories

Raw materials and consumables are valued at the lower of cost and net realisable value. Cost is based on latest contracted purchase cost.

Financial instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are derecognised on the trade date when the Group is no longer a party to the contractual provisions of the instrument.

Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. All financial instruments held are classified at amortised cost.

Trade and other receivables and trade and other payables

Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.

Interest bearing borrowings

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances held at bank, call deposits, cash on hand and cash in transit.

2 Accounting policies (continued)

Impairment of intangible assets and property, plant and equipment

At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Tax payable is based on taxable profit. Taxable profit differs from net profit as reported in the statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Any liability for current tax is calculated using tax rates that have been enacted at the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount 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.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the consolidated profit and loss account, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised in the consolidated profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

2 Accounting policies (continued)

Employee benefits

Post-retirement benefits

The Group operates defined contribution plans for its employees. A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the periods during which services are rendered by employees.

Termination benefits

Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Leases

The Group leases a number of properties in various locations around the UK from which it operates.

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 twelve months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. This is 4.5% (2020: 4.5%). Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments, such as those linked to turnover, are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

· Amounts expected to be payable under any residual value guarantee;

· The exercise price of any purchase option granted in favour of the Group if it is reasonably certain to exercise that option; and

· Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of the termination option being exercised.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

· Lease payments made at or before commencement of the lease;

· Initial direct costs incurred; and

· The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).

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 depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. Right-of-use assets are tested for impairment if indications of impairment are present.

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to be made over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being depreciated over the remaining (revised) lease term.

Lease modifications change the scope of the lease or change the consideration for the lease by comparison with that detailed in the original terms and conditions of the contract. If the modifications, in substance, mean that the original lease has been terminated and a new lease created, then the revised terms are accounted for as a new lease.

2 Accounting policies (continued)

Leases (continued)

Where modifications do not need to be accounted for as a separate lease, the amount recognised for the lease liability and the right-of-use asset is revisited to reflect the updated terms and conditions of the contract.

Finance income and financing costs

Financing expenses comprise interest payable, finance charges on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, and net foreign exchange losses that are recognised in the Statement of Comprehensive Income.

Financing income includes interest receivable on funds invested.

Interest income and interest payable are recognised in the Statement of Comprehensive Income as they accrue, using the effective interest method.

Government grants

During the period, the Group has received grants from the UK Government in relation to the Coronavirus Job Retention Scheme and business rates relief. The income from these grants has been offset against the expense to which they relate.

Standards issued but not yet effective:

The following standards and interpretations relevant to the Group are in issue but are not yet effective and have not been applied in the financial statements. In some cases these standards and guidance have not been endorsed for use in the United Kingdom.

2 Accounting policies (continued)

Standards issued but not yet effective: (continued)

The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. 

3 Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements requires the Directors to make estimates and judgements that affect the reported amounts of assets, liabilities, costs and revenue. Actual results could differ from these estimates. Information about such judgements and estimates is contained in individual accounting policies. The judgements, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.

The resulting accounting estimates will, by definition, seldom equal the related actual results. 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 year are addressed below:

Key judgement - determining the rate used to discount lease payments

At the commencement date of property leases the lease liability is calculated by discounting the lease payments. The discount rate used should be the interest rate implicit in the lease. However, if that rate cannot be readily determined, which is generally the case for property leases, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. The discount rate applied to the Group's leases under the portfolio approach is 4.5%. A 0.5% increase in the discount rate to 5% will result in a decrease in net present value of the total lease liability of £648,000 in 2021 (2020: £731,000). A 0.5% decrease in discount rate to 4% results in increase in the net present value of the total lease liability of £683,000 in 2021 (2020: £771,000).

Key estimate - impairment of goodwill, other intangibles and property, plant and equipment

Determining whether goodwill, other intangibles and plant, property and equipment are impaired requires an estimation of the recoverable amount of the cash-generating units ('CGUs') to which goodwill, other intangibles and tangible fixed assets have been allocated. The value in use calculation requires estimation of future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. Details of cash generating units as well as further information about the assumptions made are disclosed in notes 14 and 15.

4 Revenue

An analysis of the Group's total revenue (including sublease rental income shown within cost of sales) which all originates in the UK is as follows:

5 Segmental Reporting

IFRS 8 'Operating Segments' requires operating segments to be based on the Group's internal reporting to its Chief Operating Decision Maker ('CODM'). The CODM is regarded as the Chief Executive Officer together with other Board Members who receive financial information at a site-by-site level. During the period ended 27 September 2020, the Group traded in one business segment (operating non-members clubs and restaurants, the "Restaurant Segment") and these sites met the aggregation criteria set out in paragraph 12 of IFRS 8. Economic indicators assessed in determining that the aggregated operating segments share similar economic characteristics include expected future financial performance, operating and competitive risks and return on investment.

Following the acquisition of two hotel entities in September 2020 (see note 6) these have been deemed to represent a separate operating segment ("Hotel Segment") and hence the table below shows these for the 53 weeks ended 3 October 2021 (2020: n/a) where the group now operates in two segments.

6 Business Combinations

In the 53 weeks ended 3 October 2021, the group undertook no acquisitions.

In the prior period, on 15 September 2020, the Group acquired 100% of the equity instruments of Rare Bird Hotels at Sonning Limited ('RBH Sonning') and Rare Bird Hotels at Streatley Limited ('RBH Streatley'), thereby obtaining control of both companies. The companies were incorporated in 2020 for the purpose of acquiring the trade and certain assets of The Great House at Sonning Limited and Rare Bird Hotels Limited respectively, which are related parties of the Group (see note 28). The acquisitions were made to bring the full operations of each of the hotel locations, where Coppa Club sites are based, into the Group prior to the Initial Public Offering.

6 Business Combinations (continued)

The acquisitions were settled via issue of equity from the Company, 3,174,603 and 9,523,809 ordinary shares for RBH Sonning and RBH Streatley respectively (see also note 24).

The Group assessed the fair value of identifiable intangible assets as £250,000 relating to the Rare Bird Hotels brand name, split evenly between the acquired businesses. The goodwill of £9,027,000 arising from the acquisitions consists primarily of growth expectations, expected future profitability, and expected cost synergies. Goodwill has been allocated to the hotel segment.

Results for the acquired businesses were not consolidated into the Group results for the period ended 27 September 2020 due to the proximity of acquisition date to the reporting date, though assets and liabilities were consolidated into the consolidated statement of financial position as at 27 September 2020.

7 Finance income / financing costs

8 Auditor's remuneration

Audit fees for the 53 weeks ended 3 October 2021 includes £13,000 in respect of the 2020 audit. Audit fees for the 52 weeks ended 27 September 2020 includes £23,000 in respect of the 2019 audit.

9 Staff numbers and costs

The average monthly number of employees (being directors) of the Company was 7 (2020:7)

10 Directors' remuneration

11 Tax

Tax expense

11 Tax (continued)

No account has been taken of the potential deferred tax asset of £12,705,000 (2020: £9,885,000) calculated at 25% (2020: 19%) and representing losses carried forward and short term timing differences, owing to the uncertainty over the utilisation of the losses available.

12 Other expenses

13 Earnings per share

Basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares outstanding during the year. There were no potentially dilutive ordinary shares outstanding as at the periods ended 3 October 2021 and 27 September 2020.

14 Intangible assets

Brand relates to registered brand names and is amortised over an estimated useful economic life of 4 years. The brand names that were acquired through business combinations were not amortised during the period ended 27 September 2020 due to the proximity of acquisition date to the reporting date.

Goodwill is not amortised, but an impairment test is performed annually by comparing the carrying amount of the goodwill to its recoverable amount. The recoverable amount is represented by the greater of the individual CGU's fair value less costs of disposal and its value-in-use.

14 Intangible assets (continued)

Tavolino Riverside, Strada Southbank and Strada Dockside are included within the restaurant operating segment. Rare Bird Hotels at Sonning Limited and Rare Bird Hotels at Streatley Limited together make up the hotel operating segment.

Restaurant segment

The key assumptions for the value-in-use calculations are those regarding the discount rate, trading forecasts and growth rates. A pre-tax discount rate of 12.0% was used (2020: 12.8%), based on the Group's WACC and comparable businesses in the sector. Cash flows in line with 3 year forecasts were used, which incorporate a reasonably foreseeable, as at 3 October 2021, future impact of the Covid-19 pandemic and assumptions concerning the rate at which site level cash flows will recover. Cash flows beyond the forecast period are extended out to the end of the lease terms at a 2% growth rate. The key assumption for the fair value calculations is the multiple applied to site EBITDA. A multiple of 5 times site EBITDA was used (2020: 5 times) based on expected market value if the sites were to be sold as individual trading businesses.

Impairment testing resulted in no impairment of goodwill due to the recoverable amount, being value-in-use, at 3 October 2021 being higher than the goodwill recognized in the restaurant segment.

Given the global pandemic and its ongoing impact on the UK hospitality sector there is particular sensitivity to the forecasts prepared in connection with the impairment review as at 3 October 2021. The estimate of recoverable amount for the restaurant segment is particularly sensitive to the discount rate and trading forecast assumptions. If the discount rate used is increased by 2%, the forecast 3 year total EBITDA is reduced by 10%, and the terminal growth rate reduced by 1%, an impairment loss of £220,000 for the period ended 3 October 2021 would have to be recognised against goodwill (2020: £856,000). Management is not currently aware of any other reasonably possible changes to key assumptions that would cause a unit's carrying amount to exceed its recoverable amount.

Hotel segment

The key assumptions for the value-in-use calculations are those regarding the discount rate, trading forecasts and growth rates. A pre-tax discount rate of 12.0% was used (2020: 12.8%), based on the Group's WACC and comparable businesses in the sector. Cash flows in line with 3 year forecasts were used, which incorporate a reasonably foreseeable, as at 3 October 2021, future impact of the Covid-19 pandemic and assumptions concerning the rate at which site level cash flows will recover. Cash flows beyond the forecast period are extended at a terminal growth rate of 2%. The key assumption for the fair value calculations is the multiple applied to site EBITDA. A multiple of 9 times site EBITDA was used (2020: 9 times) based on expected market value if the entities were to be sold as individual trading businesses.

14 Intangible assets (continued)

Hotel segment (continued)

Impairment testing resulted in no requirement to reduce the carrying value of goodwill in 2021 as the recoverable amounts of the CGUs, based on value-in-use estimates, were £12,464,000 for Rare Bird Hotels at Sonning Limited (2020: £14,469,000) and £17,648,000 for Rare Bird Hotels at Streatley Limited (2020: £24,184,000). The headroom of recoverable amount over goodwill is £10,327,000 and £11,809,000 respectively (2020: £12,328,000 and £18,345,000).

The estimate of recoverable amount for the hotel segment is sensitive to the discount rate, trading forecast assumptions and terminal growth rate. If the discount rate used is increased by 2%, the forecast 3 year total EBITDA is reduced by 10%, and the terminal growth rate reduced by 1%, the headroom reduces to £6,653,000 for Rare Bird Hotels at Sonning Limited (2020: £8,505,000) and £6,607,000 for Rare Bird Hotels at Streatley Limited (2020: £11,940,000). Management is not currently aware of any other reasonably possible changes to key assumptions that would cause a unit's carrying amount to exceed its recoverable amount.

15 Property, plant and equipment Group

15 Property, plant and equipment (continued)