Various Eat. Regulatory News (VARE)

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 as retained as part of UK law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this Announcement, this inside information is now considered to be in the public domain.

28 June 2023

VARIOUS EATERIES PLC

("Various Eateries" or "the Company"

and with its subsidiaries "the Group")

Half Year Results & Trading Update

For the 26-week period to 2 April 2023

Half Year Results

Various Eateries PLC, the owner, developer and operator of restaurant, clubhouse and hotel sites in the United Kingdom, announces its unaudited results for the 26-week period ending 2 April 2023.

Group revenue increased 16% on the comparable period in the prior year to £20.6m (H1 2022: £17.7m). Group LFL sales, excluding the benefit of the reduced rate of VAT for hospitality businesses in the prior year, were marginally up. Management is pleased with the revenue performance, particularly given the challenging economic environment, disruptions from train strikes, and an unseasonably wet and dull spring.

Trading highlights in the period included the improved revenue performance of our central London sites, which saw LFL sales grow by 10% on the same period last year, as the number of office workers and tourists increased.

The Group's first Noci site in Islington, which opened in March 2022, continues to outperform management expectations. The brand has quickly established itself and, although it currently forms a small part of the Group, management expects it to play an increasingly prominent role in the years to come.

However, as previously reported, the Group, alongside the rest of the hospitality industry, has been dealing with unprecedented cost pressure in the supply chain, energy costs and continuing pressure on wages and related costs. The same period last year benefited from £1.2m of VAT and Covid relief which has had a direct impact when comparing Gross Profit. The combination of these factors has led to a decrease in Gross Profit to £0.6m (H1 2022: £1.5m) and a loss after tax of £4.3m (H1 2022: loss of £2.6m).

The Group's balance sheet remains solid, with cash at bank of £3.1m as at 2 April 2023 (H1 2022: £14.5m).

New Site Openings

Following the post-period openings of Coppa Club Guildford and Noci Battersea Power Station, the Group now operates 17 venues.

Coppa Club Guildford, the brand's second townhouse offering, opened its doors in April 2023. Management is pleased with how it has been received by the local community and its strong start to trading bodes well for the future.

Opening in May 2023, the Group's second Noci site, located in the comprehensive commercial and residential redevelopment of one of London's most iconic landmarks, Battersea Power Station, has enjoyed a promising start. Although early in its existence, management is confident in its ability to replicate the success of the original.

The Group is pleased to announce it has signed terms on a third Noci site in Old Street, central London. Located in the vibrant area of Shoreditch, Noci Old Street is expected to open towards the end of the current financial year.

Coppa Club Cardiff and Coppa Club Farnham will open in the next financial year.

Noting the uncertain economic backdrop however and as previously announced, a rise in the cost of fitting out new venues, management continues to pursue its expansion strategy cautiously and at a measured pace.

Trading Update

Following a review of the trading figures for the first half of the year to end of March 2023 and for the additional two months to the end of May 2023, the Board wishes to update investors in respect of full year market expectations.

In the current economic climate, the Board has prioritised sales, customer satisfaction and maintaining the Group's value proposition ahead of trying to maintain previously industry-normal levels of margin. Consequently, although considerable uncertainty remains around the important summer trading period, excluding the impact of postponing certain new openings as a result of the board's cautious approach in the current environment, we expect full year sales to be broadly in line with market expectations.

However, several ongoing factors are continuing to have more of a negative impact on bottom line performance than the Board had previously anticipated:

· Despite sustained falls in underlying commodity prices, food costs are continuing to increase at high double-digit rates, as reported in recent official inflation data. While some of the rises have been mitigated by supply chain management and menu engineering, the Company continues to believe that it is better for its long-term strategy not to pass on the full extent of the net price increases to its customers.

· Variable costs, in particular energy costs, also remain highly elevated and, although there are signs that they are abating in some areas, they continue to substantially impact profit margins.

· The labour market continues to be extremely difficult. As well as an increase in direct labour costs, this also results in very significant additional costs, notably recruitment and training of staff.

· Continuing train strikes have a major impact on the Company's larger city centre sites, with a direct impact on revenues and increased challenges for efficient staff rostering.

Due to the above factors, the Company anticipates that net EBITDA margins as a percentage of sales will be significantly lower than previously expected. Although, there remains considerable uncertainty in forecasting in current circumstances, based on current levels of cost inflation, we estimate that the total impact of increased food, labour and variable costs on site EBITDA margins for the full year to September 2023 as a percentage of sales will amount to approximately 5-7%.

Further central cost pressures may amount to a further 1-3% of sales in terms of reduction in total Group EBITDA margin. Obviously, the Board is continuously reviewing costs and implementing measures to mitigate this shortfall.

On a more optimistic note, excluding the effects of train strikes, sales across the Group continue to hold up well, the performance of recent new openings has been encouraging, and the availability of sites in prime locations at significantly lower rents continue to increase.

Andy Bassadone, Chairman of Various Eateries, said:

"A squeeze on margins of this scale is unprecedented in my thirty-five years' experience in the hospitality industry. Even though we were anticipating a significant downturn, the actual rise in input costs has been much higher and far more sustained than the industry anticipated.

In addition to the discipline we are exercising in relation to new openings referred to above, we continue to focus rigorously on the cost structure and operational efficiency and will adapt the way we operate in this environment.

With established and desirable brands, a clear growth strategy, and a management team that has a proven track record of growing businesses in good and bad times, the Group is well positioned. We will approach the second half in a similarly measured way to the first and remain confident in our ability to accelerate growth when conditions normalise."

Yishay Malkov, CEO of Various Eateries, said:

"I am proud of the way our teams continue to rise to the challenges of the current landscape while maintaining an unwavering focus on delivering exceptional experiences to everyone that comes through our doors. It is thanks to them that our brands have built such strong reputations and remain in such high demand.

Looking ahead, while it's difficult to say with any certainty when the pressures we, and others in our industry are under will subside, we will continue to monitor and respond to further changes in the landscape as necessary."

Enquiries 

About Various Eateries 

Various Eateries owns, develops and operates restaurant, clubhouse 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), Sharon Badelek (CFO) and Matt Fanthorpe (Chef Director, a non-board position). 

The Group operates three core brands across 17 locations: 

· Coppa Club, a multi-use, all day concept that combines restaurant, terrace, café, lounge, bar and workspaces 

· Tavolino, a restaurant aiming to address a gap in the market for high-quality Italian food at mid-market prices 

· Noci, a modern, neighbourhood pasta-only concept which serves very high-quality dishes at reasonable prices 

For more information visit www.variouseateries.co.uk

Various Eateries PLC

Consolidated Statement of Comprehensive Income

for the 26 weeks ended 2 April 2023

Various Eateries PLC

Consolidated Statement of Financial Position

As at 2 April 2023

Various Eateries PLC

Consolidated Statement of Changes in Equity

for the 26 weeks ended 2 April 2023

Various Eateries PLC

Consolidated Statement of Cash Flows

for the 26 weeks ended 2 April 2023

Various Eateries PLC

Notes to the Financial Statements

for the 26 weeks ended 2 April 2023

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 AIM, a market of the London Stock Exchange and is incorporated 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 Basis of preparation

The unaudited interim financial information for the 26 weeks ended 2 April 2023 has been prepared under the recognition and measurement principles of International Financial Reporting Standards ("IFRS") based on the accounting policies consistent with those used in the financial statements for the period ended 2 October 2022, but does not contain all the information necessary for full compliance with IFRS.

The unaudited interim financial information was approved and authorised for issue by the Board on 27 June 2023. The unaudited interim financial information for the 26 weeks ended 3 April 2022 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and should be read in conjunction with the statutory accounts for the period ended 2 October 2022. The information for the 52 weeks ended 2 October 2022 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The audit report on these statutory accounts was unqualified, did not contain an emphasis of matter paragraph, and did not contain a statement under sections 498(2)-(3) of the Companies Act 2006.

The interim financial statements are presented in Pounds Sterling because that is the currency of the primary economic environment in which the company operates. All values are rounded to the nearest one thousand Pounds (£'000) except when otherwise indicated.

Changes in accounting policies and disclosures:

There were no changes in accounting policies and disclosures during the period.

3 Segmental reporting

3 Segmental reporting (continued)

4 Financing costs

5 Earnings per share

Basic loss per share is calculated by dividing the profit 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 reporting date.

6 Intangible assets

Brand relates to registered brand names and is amortised over an estimated useful economic life of four years.

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.

7 Property, plant and equipment