Various Eat. Regulatory News (VARE)

24 June 2021

VARIOUS EATERIES PLC

("Various Eateries" or "the Company"

and with its subsidiaries "the Group")

Unaudited Interim Results

Very strong performance since reopening - well-positioned to execute against strategy

Various Eateries PLC, the owner, developer and operator of restaurant, clubhouse and hotel sites in the United Kingdom, announces its results for the 27 weeks ended 4 April 2021.

First Half Summary

· All sites closed for the majority of the period with trading under a variety of government restrictions limited to a maximum of seven weeks in the period

o Positive like-for-like performance of +10.1% at our Coppa Club sites outside of London during October 2020, the only complete month of trading

· Outstanding early performance of Coppa Club Cobham following opening in December 2020

· Received business interruption insurance interim payment of £2.5m in December 2020

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

Post-Period Highlights

· Very strong trading since reopening facilitated by large outdoor spaces

o Better than anticipated sales across Coppa Club estate with like-for-like revenue up 11.3% in the first five weeks (12 April to 16 May) of exclusively outdoor trading versus the same period in 2019

o Further significant uptick in sales in the five subsequent weeks (17 May to 20 June) where Coppa Club sites have been able to open indoors with like-for-life revenue up 28.3% versus the same period in 2019

o Several Coppa Club sites have seen record levels of weekly trading despite restrictions

o Solid performance at Tavolino Tower Bridge and Strada Southbank, despite continued absence of office workers and tourists

· First weddings of the year in hotels and room bookings benefitting from "staycation" trend - hotels set to benefit from new rules allowing outdoor wedding ceremonies

· Strong pipeline: large, prominent new sites for Coppa Club signed in Clifton (Bristol) and Putney, with several others in advanced stage of negotiation

· Healthy liquidity and balance sheet puts the Group in a strong position to deliver against its growth strategy with conditions normalising

Half year results resilient despite impact of lengthy closure periods

· Total Group revenue of £3.3m (H1 2020: £11.2m)

· Adjusted EBITDA* of £0.0m (H1 2020: loss of £0.3m)

· Loss after tax of £3.2m (H1 2020: loss of £3.3m)

· Gross cash at period end of £19.3m (H1 2020: £1.3m). As of 22 June 2021, cash in the bank was £20.8m.

*Adjusted EBITDA is explained in the Appendix at the end of the Financials

Andy Bassadone, Executive Chairman of Various Eateries, said:

"Our business is primed for growth: we have used lockdown to hone our existing sites, secure new ones and ensure we have the right systems and processes in place behind the scenes to enable us to scale effectively.

"After prolonged periods of closures and disruption, it is heartening to see the public returning so enthusiastically to eating and drinking out. It is still early days but the response to our re-openings has been good and trading has been ramping up as we have moved through the government's roadmap.

"As we emerge from the crisis, we do so a well-funded operator, led by an experienced management team with an exceptional track record of building hospitality groups. Our variety of clubhouses and hospitality venues is excellently suited for the post-Covid world and our strategy is unchanged - to take advantage of the unprecedented opportunities the current environment presents."

Yishay Malkov, Chief Executive of Various Eateries, said:

"We have been delighted by the enthusiastic return of our customers over the last few weeks since reopening on April 12. Thankfully, we managed to retain most of our staff through lockdown and they have coped admirably with the incredible levels of business that we have seen recently. Although the labour market is currently difficult in terms of new hirings, we are set up and prepared to train new employees from scratch and do not believe that it will impede our ambitious expansion plans."

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), Oliver Williams (CFO) and Matt Fanthorpe (Chef Director, a non-board position).

The Group operates two core brands across 11 locations:

· Coppa Club, a collection of clubhouses which combine restaurant, terrace, café, lounge, bar and work spaces, some with bedrooms and other club facilities

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

For more information visit www.variouseateries.co.uk 

Chairman and Chief Executive's Review

While Covid-related government restrictions meant we were unable to trade for most of the period under review, in the short windows we were open, sales trends were very positive. When we were closed, management and the wider operations team continued to work tirelessly behind the scenes to hone our existing estate, refine our offering, explore expansion opportunities and ensure we were prepared for reopening while continuing to support the wellbeing of our people.

On behalf of the Board, I would like to take this opportunity to thank everyone at Various Eateries for their continued commitment and patience. We are now emerging strongly from the crisis, and are delighted to have been able to welcome many of those who had been on furlough back into the workplace.

It has been another unusual period for the Group - as it has been for the entire industry - but we have responded well and recognise we are in a fortunate position relative to many others. We will continue to monitor and respond to new challenges as and when they emerge, but with very strong early sales since the phased reopening began in April, a robust balance sheet and clear path forward to expand the estate, we are optimistic about the future and the role we can play in the recovery.

Poised to capitalise on unprecedented opportunity

Our strategy remains unchanged since IPO and is based on the Board's belief that the current environment presents an unprecedented opportunity for the Group, as a well-funded operator with contemporary brands, future-proof formats and an experienced management team, to create a major hospitality group beyond the pandemic. Initially this will be based on our two core brands of Coppa Club and Tavolino.

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 immediately ready to scale up given the economic challenges facing the sector. This is particularly as a consequence of Covid, which has led to a significant reduction in competition and premium site availability the likes of which, we believe, the industry has never seen. The current shortage of staff across the industry has been well-publicised in recent weeks but we are managing the situation, are set up and prepared to train new employees from scratch, and do not believe that it will impede our ambitious expansion plans.

We remain of the opinion that the impact of Covid, combined with the experience of our management team, represents an unprecedented opportunity to build a major hospitality group. Accordingly, we intend to invest in the expansion of the Coppa Club and Tavolino brands by targeting distressed sites in prime locations and to identify potential, complementary, bolt-on acquisitions of other restaurant brands to accelerate growth across the Group.

Strong site expansion progress to date and confident in execution of the site strategy

At present, the Group has 11 sites - 13 including those that are yet to open - all in prime locations.

In December 2020, we opened our seventh Coppa Club site in Cobham, Surrey. Adopting the larger club & brasserie format, the site was originally open for a matter of days before lockdown restrictions were enforced and it had to close. Despite this, the initial response from the local community was amazing, the site has now reopened fully and trading has been exceptional, comfortably exceeding internal expectations.

Post-period end, we signed a lease for Coppa Club Clifton Village, Bristol. Like Cobham, it will be spread over two floors as a relaxed space with something for everyone. From breakfast to dinner, coffee to cocktails, work to play, our first venture into the South West will be available for the local community to enjoy from early until late. The fit out of the site is almost complete with the site set to open in summer 2021.

We are also delighted to have agreed plans for a similar format of Coppa Club in Putney, South West London. The fit out is expected to begin imminently with a view to opening in autumn 2021.

In addition, we are currently putting in place legal arrangements with several new sites following agreement of heads of terms and look forward to providing the market with an update in due course.

Looking ahead, the pipeline of premium new site opportunities is very healthy with supply continuing to outstrip demand. We are constantly appraising prospective properties, including potential hotel partnerships, on a selective basis and are confident that we can continue to expand our estate in line with our strategy.

Encouraging sales during trading windows

In the period under review, we were able trade for a maximum of seven weeks in total because of government restrictions designed to contain the spread of Covid. October was the only complete month of trading, with windows through November and December varying by site depending on where they fell under the three-tier system. Throughout these trading windows, we were subjected to a variety of measures that significantly reduced the number of covers we were able to turn over, including the 'Rule of Six', curfews and the three-tier system.

Pleasingly, in October 2020, the same trading patterns we saw during July and September were evident, with positive like-for-like performance at our sites outside of London. In the short periods we were open in November and December, while trading was encouraging, we were not open long enough for any useful conclusions to be drawn.

Half year results resilient despite impact of lengthy closure periods

Half year results were severely impacted by prolonged periods of closure because of Covid restrictions. As a result, total Group revenue for the half was £3.3m (H1 2020: £11.2m).

The Group reported an adjusted EBITDA of £0.0m (H1 2020: loss of £0.3m), an operating loss of £2.4m (H1 2020: loss of £2.3m) and a loss after tax of £3.2m (H1 2020: loss of £3.3m).

The Group also received a business interruption insurance interim payment of £2.5m in December 2020, which is included in the results above, with negotiations regarding outstanding claims ongoing.

During the period, the Group extended the maturity date of a £2.4m short term loan by 12 months to January 2022, with option to extend for a further 12 months.

Gross cash at period end was £19.3m (H1 2020: £1.3m). As of 22 June 2021, cash in the bank was £20.8m.

Recruiting to accelerate growth and welcoming staff back

Raj Manek joined as property director (a non-board position) in the period with a view to accelerating the site acquisition programme. Raj has a strong track record of successfully rolling out high-quality restaurants at pace and has already made a substantial contribution to the Group.

Our staff continued to be impacted by Covid throughout the period, with most remaining on furlough. We have continued to prioritise their wellbeing, maintaining contact through the company intranet and continuing to encourage engagement through various initiatives. It has again been a difficult time for our staff and their families and the management team would like to thank them for their patience and resolve.

Post-period, since our first reopening in April, we have continued to welcome our staff back in phases subject to capacity increases in line with the easing of restrictions.

Exceptional current trading and confident outlook

The Group began the phased re-opening of its restaurants from 12 April, initially for outdoor trading only in line with government restrictions, and then for indoor and outdoor dining from 17 May. Trading has been extremely strong throughout both phases, with Coppa Club like-for-like sales up 11.3% and 28.3% on the corresponding periods in 2019 respectively despite ongoing restrictions. Several Coppa Club sites have set weekly trading records - some on more than one occasion - and Tavolino Tower Bridge and Strada Southbank have delivered a solid performance despite the continued absence of office workers and tourists.

While there will naturally be high levels of pent-up demand post-lockdown and VAT has had an underlying benefit, the outperformance of management expectations across our estate in the weeks we have been open is encouraging and gives the Board confidence in the Group's prospects in the second half and beyond.

Our business is primed for growth and our strategy unchanged - to take advantage of the unprecedented opportunities the current environment presents. We look forward to the lifting of restrictions on 19 July and to reporting on further progress in due course.

Andy Bassadone (Chairman) and Yishay Malkov (Chief Executive Officer)

24 June 2021

Various Eateries PLC

Consolidated Statement of Comprehensive Income

for the 27 weeks ended 4 April 2021

Various Eateries PLC

Consolidated Statement of Financial Position

As at 4 April 2021

Various Eateries PLC

Consolidated Statement of Changes in Equity

for the 27 weeks ended 4 April 2021

Various Eateries PLC

Consolidated Statement of Cash Flows

for the 27 weeks ended 4 April 2021

Various Eateries PLC

Notes to the Financial Statements

for the 52 weeks ended 27 September 2020

1 General information

Various Eateries PLC is a public limited company incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The address of the registered office is 20 St Thomas Street, London, SE1 9RS.

The Group is engaged in the operation of non-members clubs, restaurants, hotels, bars and lounge areas in London and the South East of England.

2 Basis of preparation

The unaudited interim financial information for the 27 weeks ended 4 April 2021 has been prepared under the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ("IFRS") based on the accounting policies consistent with those used in the financial statements for the period ended 27 September 2020, 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 23 June 2021. The unaudited interim financial information for the 26 weeks ended 29 March 2020 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 27 September 2020. The information for the 52 weeks ended 27 September 2020 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 Financing costs

4 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.

5 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.

6 Property, plant and equipment

7 Trade and other receivables

All of the trade receivables were non-interest bearing, receivable under normal commercial terms, and the Directors do not consider there to be any material expected credit loss. The Directors consider that the carrying value of trade and other receivables approximates to their fair value.

Other receivables at 27 September 2020 included £23,523,000 in respect of net IPO share issue proceeds.

8 Trade and other payables

9 Loans and borrowings

Borrowings from related parties classed as payable within 12 months represents a deep discounted bond instrument issued by VEL Property Holdings Limited on 14 January 2021. The subscription amount was £2,438,000, the nominal value £2,584,000, and the final redemption date is 14 January 2022. The discount is recognised on a straight-line basis between subscription and redemption date, resulting in £32,000 of accrued financing costs as at the reporting date.

The non-current borrowings from related parties is made up of a deep discounted bond instrument and the existing August 2019 loan agreement. The deep discounted bond was issued in September 2020 as part of a capital restructure, with a subscription price of £8,962,000, a nominal value of £9,515,000, and a term of 19 months. The balance of £1,038,000 under the August 2019 loan agreement matures in August 2022, bears cash settled interest at 3.75% above LIBOR, and contains an EBITDA multiple covenant that should have been first tested in September 2020 under the original agreement and has been waived until April 2022.

10 Share-based payments

As at 4 April 2021, the Group maintained one share-based payment scheme for employee remuneration, the Joint Share Ownership Plan ('JSOP'), which will be equity settled. The grants under the JSOP were made on 18 September 2020.

In accordance with IFRS 2 "Share-based Payment", the value of the awards is measured at fair value at the date of the grant. The fair value is expensed on a straight-line basis over the vesting period, based on management's estimate of the number of shares that will eventually vest. A charge of £427,000 has been recognised in profit and loss for the 27 weeks ended 4 April 2021 in respect of this JSOP.

The JSOP is part of the remuneration package of the Group's senior management. Participants in this scheme have to be employed until the end of the agreed vesting period. Upon vesting, the holder is entitled to purchase ordinary shares at the market price determined at grant date.

The historical volatility has been calculated based on the share returns of four comparators for a period preceding the valuation date equal to the expected term of the options, i.e. a period of 1.95 years. The total estimated fair value of the options granted on 18 September 2020 to be recognised as an expense over the vesting period is £1,531,000.

Appendix: Loss before Tax to Adjusted EBITDA reconciliation (unaudited)