REPORT & FINANCIAL STATEMENTS
Year ended 25 March 2018
THE FULHAM SHORE PLC
TABLE OF CONTENTS
BACKGROUND AND HIGHLIGHTS
CHAIRMAN’S STATEMENT
FINANCIAL REVIEW
BOARD OF DIRECTORS
DIRECTORS’ REPORT
STATEMENT ON DIRECTORS’ RESPONSIBILITIES
REPORT ON DIRECTORS’ REMUNERATION
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED AND COMPANY BALANCE SHEETS
CONSOLIDATED STATEMENT OF CHANGE IN EQUITY
COMPANY STATEMENT OF CHANGE IN EQUITY
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
ACCOUNTING POLICIES
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS, OFFICERS AND ADVISERS
NOTICE OF ANNUAL GENERAL MEETING
Page
2
3
6
10
12
17
18
22
26
27
29
30
31
32
41
77
78
1
THE FULHAM SHORE PLC
BACKGROUND AND HIGHLIGHTS
for the year ended 25 March 2018
Background
The Fulham Shore PLC (the “Company” or “Fulham Shore”) was incorporated in March 2012 to take advantage
of a number of potentially attractive investment opportunities within the restaurant and food service sectors
in the UK.
The Directors believe that, given their collective experience in the restaurant and food service sectors, they
can take advantage of the opportunities which exist in these sectors and create a profitable and sustainable
business.
The ordinary shares of the Company were admitted to trading on AIM in October 2014 in order to capitalise
on such opportunities.
Fulham Shore currently operates 59 restaurants: 16 The Real Greek (www.therealgreek.com) and 43 Franco
Manca (www.francomanca.co.uk).
EBITDA* of £5,544,000 (2017: £4,703,000)
Highlights – Year ended 25 March 2018
l Revenues of £54,695,000 (2017: £40,441,000)
l Headline EBITDA* of £7,430,000 (2017: £7,274,000)
l
l Headline Operating Profit of £3,716,000 (2017: £4,899,000)
l One off impairment charge on property, plant and equipment of £867,000 (2017: £Nil)
l Operating Profit of £142,000 (2017: £1,507,000)
l
l Net debt as at 25 March 2018 of £11,991,000 (26 March 2017: £5,909,000)
l Opened 9 new Franco Manca pizzeria and 4 new The Real Greek during the year ended 25 March 2018
Loss after tax of £150,000 (2017: profit of £1,209,000)
in the UK (2017: 13 Franco Manca pizzeria and 3 The Real Greek)
l Opened the first Franco Manca pizzeria franchise in Salina, Italy
l
Since the year end:
ll
ll Closing one underperforming restaurant in Brighton Marina
2 further Franco Manca pizzeria opened in Bath and Cambridge
l Management initiatives have led to an improved revenue performance in the first quarter of the new
financial year
The above numbers are for continuing operations.
* as defined on pages 6 and 40.
2
THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Introduction
In the year ended 25 March 2018, Fulham Shore achieved a 35% increase in revenue from continuing
operations to £54.7m (2017: £40.4m), an increase in Headline EBITDA from continuing operations to £7.43m
(2017: £7.27m) and a loss before taxation from continuing operations of £0.1m (2017: profit of £1.4m).
This increase in both revenue and Headline EBITDA by the Group was achieved against a backdrop of a very
difficult environment for retailers and restaurant operators in the UK. The sound foundation upon which Fulham
Shore has expanded Franco Manca and The Real Greek has stood the Group in good stead during this time.
Market overview
In last year’s Strategic Report, I wrote that an unprecedented amount of capital had been invested in the UK
restaurant sector during recent years. Restaurant supply has grown faster than demand across the country
initially caused by the fall in demand for retail shop space. Landlords and agents have consequently actively
sought to rent the vacant space to restaurant operators.
This structural imbalance of the restaurant industry then hit the brick wall of Brexit and the subsequent fragility
of consumer confidence and inflationary pressures in the UK.
Strategic vision and progress
Despite this backdrop, it has been a year of growth and strategic progress for the Group. We believe that this
demonstrates that Fulham Shore is well placed to ride out the UK economic turbulence as a dynamic operator
with strong and popular businesses and a good portfolio of sites.
During the year we opened: nine new Franco Manca pizzeria, with Oxford and Bristol particularly well received;
and four The Real Greek restaurants, also to a great customer reception.
We closed the only site of our third business, a Bukowski franchise, at the year end. Following the year end,
we sold the lease and contents for £0.3m net of expenses. We have therefore recognised the loss on this
investment of £0.4m. We will now concentrate on expanding our two successful operations.
Also following the year end, we have agreed terms to surrender the lease for Franco Manca Brighton Marina
to the landlord as this site has not performed to our expectations. This restaurant is expected to close later in
the year. We have taken a cautious view concerning our other property values and have written down the
carrying value of three underperforming sites, resulting in an £0.9m impairment charge, of which £0.5m
relates to Brighton Marina.
Franco Manca
Between March 2015 and March 2017, we increased the number of Franco Manca pizzeria in London from
10 to 33. This was in response to enormous demand and queues at peak times in our restaurants. As
previously reported and as anticipated at the time, the result of this rapid expansion was some sales erosion
in the original branches caused by the effect of opening another Franco Manca in close proximity (sometimes
less than quarter of a mile apart).
After sharing our existing customers between these (now 35) London locations, new customers are discovering
us and the sales in the original branches have stabilised. We still have queues at peak times reflecting the
quality and value of the offer, so we will look to open new sites where there is continued demand in particular
areas.
We have always served freshly made pizza, which is as it should be. Some other pizza businesses in the UK
use frozen food products and frozen dough. We continue to make our dough every day in each of our pizzeria.
Our aim is to keep the price of our Margherita pizza (the No 2 on the menu) well below the price of the frozen
product at many high street pizza chains. The only thing we freeze at Franco Manca is our ice cream.
3
THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Franco Manca believes in competitive everyday menu pricing – not discounting. We pay at least the
Government’s national living wage to all our employees including those who are under 25 years old. Our staff
keep all their tips and we do not interfere with, or take a proportion of, those tips.
Franco Manca management have committed their time and attention to increasing service quality. When and
if a customer has a complaint, they aim to rectify the problem as soon as possible either immediately in the
pizzeria or through social media. In this way they attempt never to lose a customer; these efforts have shown
through in increasing customer numbers.
This financial year’s performance and the opening of our Franco Manca franchise in Italy have encouraged
us to investigate, and respond to, the many enquiries we have received to open Franco Manca pizzeria outside
the UK. We are now looking around the world for opportunities.
The Real Greek
The Real Greek menu continues to offer great food and great value. Customers can share hot or cold meze,
and, when finished, order more if they are still hungry. This eliminates waste, stops customers over-ordering,
and keeps them and us happy.
Our Real Greek restaurants have many outdoor eating areas and terraces, so when the sun shines they
perform disproportionately well compared to the steak houses and hamburger restaurants trading alongside
them.
The Real Greek openings in the year to March 2018 have been in Southampton, Reading, Bournemouth and
Bristol – all with large terraces to take advantage of our Greek style summers!
We are being offered many new sites for The Real Greek. This business offers the public and landlords,
especially in new retail schemes, a differentiated concept and gives the consumer a popular and healthy
alternative to the normal repetitive high street offerings available.
Emphasising the healthy aspect of the traditional Greek diet, the highlight of the year was the launch of our
vegan Real Greek menu. This was heavily influenced by Pythagoras, Socrates and Plato, all of whom
maintained that this diet was the foundation of democracy. Luckily many of our customers agreed with these
ancient sages – and they love it too!
Property
The amount of new restaurant space coming to the market is the greatest for many years. Rents are falling,
lease premiums are disappearing and the UK restaurant property market is in a period of turmoil. The capital
needed to open a new restaurant is declining due to landlord incentives. Incentives alone, however, are never
the right reason to open in a particular location and, if anything, this could continue poor expansion decisions
being made in the sector.
We still intend to open a limited number of new restaurants this year and to fund these openings largely from
our internally generated cash. Any increase in our openings target would be for stand out and highly profitable
locations which would immediately offer above average returns.
Negotiating low rents supports our ability to offer low menu prices. Franco Manca especially concentrates on
finding compact sites that may not be in the most prime locations. These off pitch locations are often at lower
rents, but there is balance as it may take time for customers to find us and for the individual site to build up
trade. We fit the premises out for what they are, hard wearing pizzeria built for very high volumes. Our two
design imperatives are Enzo Apicella’s original artwork and our industrial and spectacular pizza ovens.
Current trading and outlook
Sales in the first quarter of our current financial year, April to June 2018, have been encouraging in both
Franco Manca and The Real Greek. This is a result of some great work from both businesses’ management
teams and they are to be congratulated. Both teams have concentrated on food quality, price and service.
Both businesses have shown overall like for like revenue increases during this quarter despite tough
comparatives sales in 2017 as well as the continuous stream of poor UK economic data from the retail and
restaurant sector.
4
THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
We will continue to approach expansion with caution. Our investment strategy will be much more circumspect
than in ‘normal’ times. Careful property transactions will be even more crucial and our aim at present is to
expand largely through internally generated funds. We have opened two restaurants since the year end, Franco
Manca in Bath and Cambridge. Both are trading well. Franco Manca now has 43 pizzeria across the UK plus
one franchise on the island of Salina in Italy, which reopened for its second summer season on 2 June 2018.
We have signed a site on South St Andrews St in Edinburgh for Franco Manca in the next calendar year. We
are in final stage negotiations on two others which should see Franco Manca starting to build this summer to
open this autumn.
Despite the growth we have reported and our positive first quarter in the current financial year, the remainder
of the financial year is difficult to predict. Costs will, in all likelihood, continue to rise but maybe not as much
as they did during the past financial year.
Both our businesses continue to be leading lights in the restaurant sector. Top quality food and great value
prices lead to busy restaurants and we believe that our two businesses continue to have significant growth
potential across the UK. As a result and despite the challenging UK backdrop, we are confident that the Group
will continue to perform well and we look forward to the current financial year as we continue to grow and
develop our brands.
DM Page
Chairman
23 July 2018
5
THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Fulham Shore’s performance in the year ended 25 March 2018 is summarised in the table below:
For continuing operations
Revenue
Headline EBITDA*
Headline operating profit
Headline profit before tax
EBITDA
Operating profit
(Loss)/profit before taxation
(Loss)/profit for the year
Diluted earnings per share
Headline diluted earnings per share
Cash flow from operating activities
Development capital expenditure
Net Debt
Number of restaurants operated in the UK
Franco Manca
The Real Greek
Bukowski
Year
ended
25 March
2018
£m
54.7
7.4
3.7
3.5
5.5
0.1
(0.1)
(0.2)
(0.0p)
0.6p
Year
ended
26 March
2017
£m
40.4
7.3
4.9
4.8
4.7
1.5
1.4
1.2
0.2p
0.7p
4.5
10.0
12.0
––––––––––––
––––––––––––
No.
41
16
–
––––––––––––
57
––––––––––––
––––––––––––
10.3
12.4
5.9
––––––––––––
––––––––––––
No.
32
12
1
––––––––––––
45
––––––––––––
––––––––––––
Change
%
+35.4%
+2.1%
-24.5%
-27.3%
+17.9%
-90.6%
-100.0%
-14.3%
-56.3%
-19.4%
+103.4%
––––––––––––
––––––––––––
+28.1%
+33.3%
-100.0%
––––––––––––
+26.7%
––––––––––––
––––––––––––
* Reconciliation of profit before taxation to Headline EBITDA for continuing operations:
Year
ended
25 March
2018
£m
(0.1)
0.2
3.7
0.8
0.9
––––––––––––
5.5
0.6
1.2
0.1
––––––––––––
7.4
––––––––––––
––––––––––––
Year
ended
26 March
2017
£m
1.4
0.1
2.4
0.8
–
––––––––––––
4.7
0.6
2.0
–
––––––––––––
7.3
––––––––––––
––––––––––––
(Loss)/profit before taxation
Finance costs
Depreciation and amortisation
Amortisation of brand
Exceptional costs – impairment of property, plant and equipment
EBITDA
Share based payments
Pre-opening costs
Exceptional costs – loss on disposal
Headline EBITDA
6
THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Total Group revenue from continuing operations grew by 35.4%, driven primarily by new openings within the
UK during the year. We opened four The Real Greek and nine Franco Manca pizzeria in the UK and closed
our Bukowski franchise, taking the total restaurants operated by the Group in the UK to 57 (2017: 45) at year
end. During the year, our franchisee in Italy also opened a Franco Manca pizzeria on the island of Salina.
Summer of 2017 should have been one of the busiest periods of our financial year and the weak trading
across the dining out market that we also experienced has impacted this year’s overall revenue performance.
Some of our pre-2017 restaurants, particularly in the London suburbs, were experiencing revenue below the
equivalent period a year earlier with increased volatility and some expected cannibalisation from our new
restaurants in nearby locations. However, revenue from these restaurants have seen slight improvements and
stabilisation in the second half of the financial year and further improvements following the year end.
Group Headline EBITDA (as defined in page 40 of the financial statements and reconciled on page 6) from
continuing operations continues to be a key measure for the Group as well as industry analysts as it is
indicative of ongoing EBITDA of the businesses. Headline EBITDA from continuing operations for the year
was £7.4m (2017: £7.3m), an increase of 2.1% on the prior year while the Group’s EBITDA increased 17.9%
to £5.5m (2017: £4.7m). During the year, the Group incurred the full year impact of and the benefit from the
broader management team put in place in Franco Manca during the previous financial year to support the
brand’s opening programme.
Group depreciation and amortisation, excluding amortisation of the Franco Manca brand, increased 56.4%
to £3.7m (2017: £2.4m) following the number of new restaurants opened during the year and the previous
year. The Group incurred a number of one off costs in the year including £0.9m (2017: £Nil) impairment
charge for three restaurants which are underperforming management’s expectations. All three restaurants
are still trading but Franco Manca Brighton Marina is due to close and be surrendered back to the landlord
later in the year. Together, these have led to a decrease of operating profit by 90.6% to £0.1m.
With our new openings, we have invested more than £1.2m (2017: £1.9m) in pre-opening costs. Finance costs
have increased 88.1% to £0.3m as the Group drew down on its revolving credit facilities, as planned, to support
the increased opening programme for both Franco Manca and The Real Greek. Overall this has resulted in a
loss before taxation of £0.1m (2017: £1.4m profit before tax).
The Group’s tax rate has increased to 36.4% (2017: 11.9% of profit before tax) of loss before tax due to a
number of factors. The tax charge for the year was made up of two parts: £0.3m charge relating to the current
year and £0.2m credit relating to prior years. The latter, £0.2m credit adjustment to taxation for prior years,
has arisen from our work on capital allowances on the capital expenditure over the past two years, correction
of tax rates used for forecasting to the current enacted 17%, correction of tax treatment of certain property,
plant and equipment and correction of deferred tax asset on share based payments. More detailed breakdown
of deferred tax recognised during the year can be found in note 16 to the financial statements. The £0.3m tax
charge for the year is high as a percentage of loss before tax due to a number of non tax deductible one of
costs being recognised in the year as well as a deferred tax charge as a result of the Group’s share price
being lower at the year end and therefore a reduced deferred tax asset on share based payments. Excluding
the taxation credit adjustment in relation to prior years, the Group’s loss after tax from continuing and
discontinued operations would have been £0.8m (2017: £1.0m profit after tax).
Our basic and diluted earnings per share from continuing operations decreased from 0.2p to 0.0p while
Headline diluted earnings per share reduced by 14.3% to 0.6p.
Cost inflation
During the year, the weakness of Sterling against both the Euro and the US Dollar following the Brexit vote
has continued to put pressure on food cost inflation. Where possible we have benefited from additional volume
discounts due to our opening programme which has helped to mitigate some of the cost pressures.
7
THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
We also saw 4.2% increase in the Government’s National Living Wage for over 25 year old employees at the
beginning of the financial year. All our businesses have chosen to treat all staff members the same irrespective
of age.
Our other two material cost items are rent and utility costs. Rental inflation of our estate continues to increase
modestly. Utility cost inflation continues to be volatile as the wholesale cost of energy has been impacted by
the movement of Sterling and global economic adjustments.
Cash flows and balance sheets
The Group’s cash flow from operating activities has decreased 56.3% to £4.5m (2017: £10.3m) as the benefit
from short term supplier trading credit facilities at the previous year end reversed during the year.
We invested £10.0m (2017: £12.4m) in development capital primarily in new restaurants but also including
investment in IT systems to introduce advanced customer relationship management facilities to both
businesses.
Resultant net debt from our activities at 25 March 2018 was £12.0m (2017: £5.9m). This is financed by our
facilities with HSBC Bank PLC, made up of a £14.25m revolving credit facility and a £0.75m overdraft.
Following the year end, the Group has reduced its opening programme to take account of market uncertainty.
As a result, the Group will be looking to fund future openings largely through existing operational cash flow
where possible.
People
During the year, the Group’s key operations were within the UK. With our opening programme, the Group
created more than 250 new jobs during the year (2017: 360 new jobs). We continue to invest in our staff
through training, incentives and personal development.
Post balance sheet event
Following the year end, the Group sold its lease and contents in D’Arblay Street, Soho, London, that operated
the Bukowski franchise as described in notes 23 and 24 to the financial statements. This has been treated as
discontinued operations in the financial statements with a cost to the business of £0.4m recognised during
the year.
In July 2018, the Group agreed terms to surrender the lease for the Franco Manca Brighton Marina restaurant
for a surrender fee payment of £0.1m as the restaurant has performed significantly below management
expectation. This restaurant has been subject to an impairment charge of £0.5m during the year which is
included in the £0.9m impairment charge recognised in the statement of comprehensive income.
Principal risks and uncertainties
The Directors consider the following to be the principal risks faced by the Group:
Economic conditions
The Group’s performance depends to a large degree on the economic conditions and consumer confidence
in the UK. Over recent months, the UK economy has seen reducing levels of unemployment but weaker
consumer spending. However, there continue to be rapid changes to the UK economy, with the result of the
EU Referendum creating considerable political and economic uncertainty. The Group’s existing restaurants
offer an exceptional customer value experience which the Directors believe positions the business well in
dealing with continued volatility in the UK economy.
Development programme
The Group’s development programme is dependent on securing the requisite number of new properties at
sensible rents. The UK restaurant property market remaining competitive at the right locations and rents. To
mitigate these issues, the Group has an experienced property team concentrating on securing new sites for
the Group.
8
THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Supply chain
The Group focuses on the freshness and quality of the produce used in its restaurants. It is exposed to
potential supply chain disruptions due to the delay or losses of inventory in transit. The Group seeks to mitigate
this risk through effective supplier selection and an appropriate back-up supply chain.
Employees
The Group’s performance depends largely on its management team and its restaurant teams. The inability to
recruit people with the right experience and skills could adversely affect the Group’s results. The result of the
EU Referendum has created considerable uncertainty over the immigration status of EU nationals. To mitigate
these issues the Group has invested in its human resources teams and has implemented a number of incentive
schemes designed to retain key individuals.
Competition
The Group operates in a competitive and fragmented market which regularly sees new concepts come to the
market. However, the Directors believe that the strength of the existing restaurant brands, value offer and
constant strive towards delivering the best product and service will help the business to mitigate competitive
risk.
Cyber security
The Group has introduced an online “click and collect” service which relies on online systems that may
experience cyber security failure leading to loss of revenue or reputation loss. The Group utilises robust
supplier selection processes and third party reviews and testing on a regular basis to identify weaknesses
and improve on existing protection and processes.
Regulatory compliance
The Group is growing quickly and the government is increasing the number of areas requiring additional
regulatory compliance including GDPR which may increase expenditure to ensure compliance and the Group
may experience a failure to comply thus leading to significant fines. The Group reviews regulatory changes
on a regular basis.
Risks are formally reviewed by the Board and appropriate processes put in place to monitor and mitigate
them.
Financial risk management
The Board regularly reviews the financial requirements of the Group and the risks associated therewith. The
Group does not use complicated financial instruments, and where financial instruments are used it is for
reducing interest rate risk. The Group does not trade in financial instruments. Group operations are primarily
financed from equity funds raised, bank borrowings and retained earnings. In addition to the financial
instruments described above, the Group also has other financial instruments such as receivables, trade
payables and accruals that arise directly from the Group’s operations. Further information is provided in note
15 to the financial statements.
Key performance indicators
The Board receives a range of management information delivered in a timely fashion. The principal measures
of progress, both financial and non-financial, that are reviewed on a regular basis to monitor the development
of the Company and the Group are shown in the table at the beginning of this section.
Approved on behalf of the board of directors.
NCW Wong
Finance Director
23 July 2018
9
THE FULHAM SHORE PLC
BOARD OF DIRECTORS
The Directors of The Fulham Shore PLC are:
David Page – Chairman
David trained as both a cartographer and a teacher. He was the owner and managing director of the largest
PizzaExpress franchisee organisation – the G&F Group – from 1973 to 1993. The flotation of PizzaExpress
PLC took place in 1993. David was chief executive of PizzaExpress and then chairman until it was acquired
by a private equity house in 2002. Following the sale of PizzaExpress in 2003, David founded and was
chairman of The Clapham House Group PLC from 2003 to 2010, the owner of Gourmet Burger Kitchen
(“GBK”) and Bombay Bicycle Club. David’s investment portfolio in the sector includes shareholdings in a range
of restaurants, including: Rocca di Papa, Acquolina in Bocca, MEATliquor and Chillbox.
Nabil Mankarious – Managing Director
Nabil came to the United Kingdom from Alexandria, Egypt in 1986 to study medicine. Whilst a student, he
started work in the kitchen of a PizzaExpress restaurant and rose through the ranks to become Regional
Director for PizzaExpress London in 2001. From 2006 until 2011, Nabil was head of Group Purchasing at
The Clapham House Group PLC and head of operations at GBK, its largest subsidiary company.
Nicholas Donaldson – Director and Company Secretary
Nick, a barrister by profession, has spent the majority of his career in the corporate finance field. Nick worked
as Head of Corporate Finance and M&A at Credit Lyonnais Securities from 1996 until 2000. Thereafter he
was Head of Investment Banking in Europe for Robert W. Baird and subsequently Head of Corporate Finance
at Arbuthnot Securities. Nick has spent the majority of his career providing strategic advice to companies in
a range of sectors, including the restaurant sector. Nick is non-executive chairman of AIM quoted DP Poland
PLC and of the fully listed Games Workshop Group PLC. He was a co-founder of The Clapham House Group
PLC, which was the subject of a recommended takeover in 2010.
Nicholas Wong – Finance Director
Nick qualified as a chartered accountant with Baker Tilly and specialised, pre and post qualification in
corporate finance. From 2005 to 2013, Nick was the Group Finance Director and Company Secretary of The
Clapham House Group PLC and worked on the acquisitions of several restaurant businesses including GBK,
the disposals of several restaurant businesses and the recommended takeover of The Clapham House Group
PLC in 2010. During this time GBK grew from 6 to over 60 restaurants in the UK and over 10 internationally.
Nick also looked after the IT and online strategy of various restaurant businesses, introducing numerous
loyalty and social media systems into the businesses.
Martin Chapman – Non-executive Director
In November 2012, Martin exercised his option to take early retirement after a 38 year career with HSBC Bank
plc. For the 10 years prior to his retirement, Martin held the position of Head of Corporate Banking for HSBC’s
largest Corporate Banking team based in the West End of London. In addition to managing and leading a
large team of senior managers, Martin had ultimate responsibility for managing the Bank’s relationship with
a substantial number of corporate customers covering almost all industry sectors and included a substantial
number of publicly quoted companies. As well as the general mid market corporate business, Martin was also
responsible for the Bank’s Corporate Real Estate business for Southern England as well the Bank’s Corporate
Hotel business for the whole of the UK. Martin has spent the majority of his career in Corporate Banking
where he has gained considerable experience in leading strategic discussion with management
teams/shareholders and stakeholders in exploring debt financing options and Capital Market solutions for
supporting growth, whether organically or by way of acquisition or merger activities. Martin is also a Non
Executive Director of Weston Group plc and Senior Advisor to MXC Capital Limited.
10
THE FULHAM SHORE PLC
BOARD OF DIRECTORS
Desmond Gunewardena – Non-executive Director
Des qualified as a chartered accountant at Ernst & Young and was responsible for financial planning at
property conglomerate Heron International during the mid-80’s. In 1991 he joined design entrepreneur Sir
Terence Conran as his business partner and CEO. During their 15 year period together Terence and Des built
Conran from a small design company into a global restaurant, retail, hotel and design company employing
2,000 staff in the major cities of the world. In 2006 Des, as its Chairman and CEO led a buyout of Conran
Restaurants (now renamed D&D London) a luxury restaurant group that owns and operates over 30 venues
in London, Leeds, Paris, New York and Tokyo. D&D also owns South Place, an 80 bedroom luxury hotel in
the City of London. Des has previously held non-executive directorships of publicly listed restaurant and
design companies. For a number of years Des has been listed as one the Evening Standard’s Top 1,000 most
influential Londoners and in 2013 was shortlisted as EY’s London Entrepreneur of the year.
11
THE FULHAM SHORE PLC
DIRECTORS’ REPORT
The Directors have pleasure in presenting their report on the affairs of the Group together with the audited
financial statements for the year ended 25 March 2018.
Principal activity
The principal activity of the Group and Company is the operation and management of restaurants.
Review of the business and future developments
Information about the progress of the business and the Group’s corporate activities is given in the Chairman’s
Statement on pages 3 to 5 and the Financial Review on pages 6 to 9.
Matters of strategic importance
The business review and future outlook, key performance indicators, principal risks and uncertainties required
by Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008 have been including in the separate Strategic Report In accordance with section 414C (11) of the
Companies Act 2006.
Results and dividends
Revenue for the year ended 25 March 2018 from continuing operations was £54,695,000 (2017: £40,441,000),
Headline Operating Profit for the same period was £3,716,000 (2017: £4,899,000) and Operating Profit for
the same period was £142,000 (2017: £1,507,000).
No final dividend is being proposed by the Board. It remains the Board’s policy that, subject to the availability
of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate
and prudent to do so.
Directors
The following Directors of the Company have held office since 27 March 2017:
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
MA Chapman
DAL Gunewardena
The Directors at the date of this report, together with their biographical details, are set out on pages 10 and 11.
At the 2018 Annual General Meeting, in accordance with the Company’s Articles of Association, Mr NAG
Mankarious will retire. Being eligible, and with the Board’s recommendation, he will offer himself for re-election.
12
THE FULHAM SHORE PLC
DIRECTORS’ REPORT
Directors’ interests in shares
Directors’ interests in the shares of the Company, including family interests, were as follows:
Director
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
MA Chapman
DAL Gunewardena
As at 25 March 2018
Ordinary
shares
of 1p each
%
As at 26 March 2017
Ordinary
shares
of 1p each
%
81,182,331
113,800,434
13,044,337
8,831,093
766,818
454,545
81,039,331
14.21%
19.92% 112,800,434
13,044,337
8,750,593
766,818
454,545
2.28%
1.55%
0.13%
0.08%
14.18%
19.74%
2.28%
1.53%
0.13%
0.08%
Details of the Directors’ interests in share options during the year are disclosed in the Report on Directors’
Remuneration on pages 18 to 21.
Directors’ liability insurance and indemnity
The Group has arranged insurance cover in respect of legal action against its Directors. To the extent permitted
by UK law, the Group also indemnifies the Directors. These provisions were in force throughout the year and
in force at the date of this report.
Substantial shareholders
The Directors’ interests in the shares of the Company have been disclosed above. On 23 July 2018, the
Company had been notified of the following interests in the ordinary share capital of the Company:
NAG Mankarious
S Wasif
DM Page
G Mascoli
P Solari
Canaccord Genuity Group Inc
D Sykes
J & K Akhtar
As at 23 July 2018
Ordinary shares
of 1p each
113,800,434
84,870,414
81,182,331
24,887,246
22,670,250
19,912,732
17,657,709
17,223,494
%
19.92%
14.85%
14.21%
4.36%
3.97%
3.49%
3.09%
3.01%
No other person has reported an interest of more than 3% in the ordinary shares.
Employment policy
The Group’s policies respect the individual regardless of gender, age, race or religion. Where reasonable and
practical under existing legislation, all persons, including disabled persons, have been treated fairly and
consistently, including matters relating to employment, training and career development.
The Group takes a positive view of employee communication and has established and maintains systems for
employee consultation, feedback and communication of developments in each business and as a Group. The
Group operates employee share schemes and a number of profit-related pay schemes as a means of further
encouraging the involvement of employees in the Group’s performance.
13
THE FULHAM SHORE PLC
DIRECTORS’ REPORT
Corporate governance
The UK Corporate Governance Code is not currently mandatory for companies traded on the AIM Market.
However, the Board of The Fulham Shore PLC recognises the importance of sound corporate governance.
The Group is complying with the QCA Guidelines so far as is practicable and appropriate for a public Group
of its size and nature. In line with updated AIM rules, the Group intends to adopt the QCA Guidelines by
August 2018.
The Company has established audit and remuneration committees of the Board with formally delegated duties
and responsibilities.
The Audit Committee
The Audit Committee comprises DAL Gunewardena, who will act as chairman of the Audit Committee, MA
Chapman, NJ Donaldson and NCW Wong. A quorum shall be two members of the Audit Committee. The
Audit Committee will meet at least twice a year and at such other times as the chairman of the Audit Committee
shall deem necessary. The Audit Committee receives and reviews reports from management and the
Company’s auditors relating to the interim and annual accounts and keeps under review the accounting and
internal controls which the Company has in place.
The Company received a letter during the year from the Financial Reporting Council’s (FRC) Corporate
Reporting Review Team which raised questions on certain aspects of our annual report for the year ended
26 March 2017. The Company responded fully to the matters raised in the FRC’s letter, enabling it to conclude
many of its questions. As a result of the FRC’s questions, the Company and the Group has made
improvements to the disclosures in this annual report in a number of areas.
Remuneration Committee
The Remuneration Committee comprises of MA Chapman, who will act as chairman of the Remuneration
Committee, DAL Gunewardena and DM Page. A quorum shall be two members of the Remuneration
Committee. The Remuneration Committee will meet at such times as the chairman of the Remuneration
Committee or the Board deem necessary. The Remuneration Committee shall determine and review the terms
and conditions of service of the executive directors and the non-executive directors. The Remuneration
Committee will also review the terms and conditions of any proposed share incentive plans, to be approved
by the Board and the Company’s shareholders.
Independence of the Auditor
The Audit Committee undertakes a formal assessment of the auditor’s independence each year which will
include:
l
l
l
l
a review of non-audit services provided to the Group and related fees;
discussion with the auditor of a written report detailing all relationships with the Group and any other
parties which could affect independence or the perception of independence;
a review of the auditor’s own procedures for ensuring the independence of the audit firm and partners
and staff involved in the audit, including the regular rotation of the audit partner; and
obtaining written confirmation from the auditor that, in their professional judgment, they are independent.
An analysis of the fees payable to the external audit firm in respect of both audit and non-audit services during
the year is set out in note 2 to the financial statements.
14
THE FULHAM SHORE PLC
DIRECTORS’ REPORT
Political and charitable contributions
During the year ended 25 March 2018 the Group made no political contributions (2017: £Nil). The Group
made charitable donations during the year ended 25 March 2018 by contributing following:
Action Against Hunger
Aeolian Island Preservation Fund
The British Red Cross Society (Italian Earthquake Appeal)
Other local charities and good causes
Year
ended
25 March
2018
£’000
1
–
–
5
––––––––––––
6
––––––––––––
––––––––––––
Year
ended
26 March
2017
£’000
12
19
6
2
––––––––––––
39
––––––––––––
––––––––––––
Annual general meeting
On pages 78 to 79 is a notice convening the annual general meeting of the Company for 23 August 2018 and
the notice sets out the resolutions to be proposed at that meeting. The Board believes that the proposed
resolutions to be put to the annual general meeting to be held on 23 August 2018 are in the best interests of
shareholders and, accordingly, recommends that shareholders vote in favour of the resolutions.
Statement as to disclosure of information to auditors
The Directors who were in office on the date of approval of these financial statements have confirmed that
as far as they are aware, there is no relevant audit information of which the auditors are unaware. The
Directors have confirmed that they have taken all the steps that they ought to have taken as Directors in order
to make themselves aware of any relevant audit information and to establish that it has been communicated
to the auditor.
Going concern
The Company’s and Group’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report on pages 3 to 9. In addition, note 15 to the
financial statements includes the company’s objectives, policies and processes for managing its capital, its
financial risk management objectives and its exposures to credit risk and liquidity risk.
The Group’s net current liabilities position at the year end is due to the level of build activities at year end for
sites opening around and just after the year end as well as the availability of supplier credit terms on day to
day purchasing. Net current liabilities can be covered by day to day operational cash flow, where revenues
are normally received within 3 days of recognition, short term overdraft facilities and utilising undrawn long
term borrowing facilities. The long term borrowing facilities do not require repayment before March 2021.
The Directors have reviewed the Group’s net current liabilities position, the budget and forecasts, other longer
term plans and the financial resources and bank facilities in place that is available to deal with the business
risks of the Company and the Group. Additionally, the Group’s opening programme can be adjusted fluidly to
take account of business risks and the wider economic risks. The Directors feel well placed to manage the
business risks successfully within the present financial arrangements.
The Directors have a reasonable expectation that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the annual financial statements.
15
THE FULHAM SHORE PLC
DIRECTORS’ REPORT
Subsequent Events
In April 2018, the Group disposed of the property previously traded by the Group as Bukowski Grill and
terminated the franchise arrangement as discussed in note 23.
In July 2018, the Group agreed terms to terminate the outstanding lease for the Franco Manca Brighton Marina
restaurant (note 24).
Auditors
RSM UK Audit LLP has indicated its willingness to continue in office.
Approved on behalf of the Board of directors.
DM Page
Chairman
23 July 2018
16
THE FULHAM SHORE PLC
STATEMENT ON DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report, the Directors’ 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. The directors are
required under the AIM Rules of the London Stock Exchange to prepare Group financial statements in
accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union
(“EU”) and have elected under company law to prepare the Company financial statements in accordance with
IFRS as adopted by the EU.
The financial statements are required by law and IFRS as adopted by the EU to present fairly the financial
position of the Group and the Company and the financial performance of the Group. The Companies Act
2006 provides in relation to such financial statements that references in the relevant part of that Act to financial
statements giving a true and fair view are references to their achieving a fair presentation.
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.
In preparing each of the Group and Company financial statements, the Directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c.
d.
state whether they have been prepared in accordance with IFRS as adopted by the EU; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the group and company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Group and the Company and enable them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on The Fulham Shore PLC website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
On behalf of the Board.
DM Page
Chairman
23 July 2018
17
THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
Introduction
The Board of The Fulham Shore PLC has resolved that the Company, whilst trading on the AIM market, should
apply good governance to Directors’ remuneration.
Remuneration Committee
The Remuneration Committee is authorised by the Board to determine the Company’s remuneration policy
on executive Directors’ service contracts and remuneration including share based incentive awards. The
Remuneration Committee is chaired by MA Chapman, the non-executive director. DM Page and DAL
Gunewardena also served on the committee during the year.
Remuneration policy
The Company’s executive remuneration packages are designed to attract, motivate and retain personnel of
the high calibre needed to create value for shareholders. There are three components to the executive
Directors’ remuneration, being basic salary and benefits, annual bonus scheme and share based incentive
schemes. The performance measurement of the executive Directors and key members of senior management
and the determination of their annual remuneration packages is undertaken by the remuneration committee.
Directors’ service agreements
DM Page was appointed as a Director and Executive Chairman on 2 March 2012. On 30 September 2014 DM
Page entered into a service agreement with the Company under the terms of which he agreed to act as
Executive Chairman of the Company. The agreement is terminable on 12 months’ notice to be given by either
party.
NAG Mankarious was appointed as a Director on 2 March 2012. On 30 September 2014 NAG Mankarious
entered into a service agreement with the Company under the terms of which he agreed to act as Managing
Director of the Company. The agreement is terminable on 12 months’ notice to be given by either party.
NJ Donaldson was appointed as a Director on 2 March 2012. On 30 September 2014 London Bridge Capital
Limited entered into a consultancy agreement with the Company under the terms of which London Bridge
Capital Limited has agreed to provide the services of NJ Donaldson to act as a Director the Company. The
agreement (which was novated by deed to London Bridge Capital Partners LLP in April 2016) is terminable
on 12 months’ notice to be given by either party.
NCW Wong was appointed as the Finance Director on 13 January 2014. On 30 September 2014 NCW Wong
entered into a service agreement with the Company under the terms of which he agreed to act as Finance
Director of the Company. The agreement is terminable on 12 months’ notice to be given by either party.
MA Chapman was appointed as a Director on 1 July 2014. On 11 June 2014 MA Chapman entered into a
letter of appointment with the Company under the terms of which he agreed to act as a non-executive director.
The agreement is terminable on 3 months’ notice to be given by either party.
DAL Gunewardena was appointed as a Director on 26 September 2016. On the same day DAL Gunewardena
entered into a letter of appointment with the Company under the terms of which he agreed to act as a non-
executive director. The agreement is terminable on 3 months’ notice to be given by either party.
Incentive arrangements
The Directors and employees of the Group also participate in incentive arrangements to reward individuals if
shareholder value is created.
18
THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
Under these arrangements, certain Directors are entitled to performance related bonuses and participation
in share based incentive schemes. The details of the share based incentive schemes are given in note 18.
Directors’ remuneration
Year ended 25 March 2018:
Salary
£’000
Fees
£’000
Bonus
£’000
Benefits
£’000
Share
Options
£’000
Total
£’000
Executive Directors
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
123
201
–
179
––––––––––––
503
–
–
56
–
––––––––––––
56
61
100
28
89
––––––––––––
278
–
–
2
1
––––––––––––
3
–
–
–
–
––––––––––––
–
184
301
86
269
––––––––––––
840
Non-executive Director
MA Chapman
DAL Gunewardena
45
36
––––––––––––
584
––––––––––––
––––––––––––
Year ended 26 March 2017
–
–
––––––––––––
56
––––––––––––
––––––––––––
–
–
––––––––––––
278
––––––––––––
––––––––––––
–
–
––––––––––––
3
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
45
36
––––––––––––
921
––––––––––––
––––––––––––
Salary
£’000
Fees
£’000
Bonus
£’000
Benefits
£’000
Share
Options
£’000
Total
£’000
Executive Directors
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
120
196
–
174
––––––––––––
490
–
–
55
–
––––––––––––
55
57
103
29
92
––––––––––––
281
–
–
4
–
––––––––––––
4
–
–
184
–
––––––––––––
184
177
299
272
266
––––––––––––
1,014
Non-executive Director
MA Chapman
DAL Gunewardena
44
18
––––––––––––
552
––––––––––––
––––––––––––
–
–
––––––––––––
55
––––––––––––
––––––––––––
–
–
––––––––––––
281
––––––––––––
––––––––––––
–
–
––––––––––––
4
––––––––––––
––––––––––––
–
–
––––––––––––
184
––––––––––––
––––––––––––
44
18
––––––––––––
1,076
––––––––––––
––––––––––––
No pension contributions were payable for any of the Directors during the year.
The fees, bonus and benefits in respect of NJ Donaldson were paid to London Bridge Capital Partners LLP
for his services as a Director for both financial years.
19
THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
Directors’ interests in Group share based incentive schemes
The interests of the Directors under the Group’s share based incentive schemes as at 25 March 2018 were
as follows:
Options
outstanding
26 March
2017
Options
exercised
during
year
Options
outstanding
25 March
2018
Exercise
Price
£
Exercisable
Date
Expiry
Date
Enterprise
Management
Incentives
DM Page
NAG Mankarious
NCW Wong
Unapproved
DM Page
NAG Mankarious
NCW Wong
NJ Donaldson
MA Chapman
1,115,972
554,200
3,332,842
1,115,972
554,200
3,332,842
–
–
–
–
–
–
1,115,972
554,200
3,332,842
1,115,972
554,200
3,332,842
0.02
0.05
0.06
0.02
0.05
0.06
01/03/2016
25/02/2017
20/10/2017
01/03/2016
25/02/2017
20/10/2017
01/03/2020
25/02/2021
20/10/2021
01/03/2020
25/02/2021
20/10/2021
1,670,172
2,774,856
––––––––––––
––––––––––––
–
–
––––––––––––
––––––––––––
1,670,172
2,774,856
––––––––––––
––––––––––––
0.05
0.06
––––––––––––
––––––––––––
25/02/2017
20/10/2017
––––––––––––
––––––––––––
25/02/2021
20/10/2021
––––––––––––
––––––––––––
1,647,256
4,732,795
1,647,256
4,732,795
2,205,242
4,732,795
554,200
4,980,098
4,732,795
–
–
–
–
–
–
–
–
–
1,647,256
4,732,795
1,647,256
4,732,795
2,205,242
4,732,795
554,200
4,980,098
4,732,795
0.06
0.11
0.06
0.11
0.06
0.11
0.05
0.06
0.11
20/10/2017
21/04/2018
20/10/2021
21/04/2022
20/10/2017
21/04/2018
20/10/2021
21/04/2022
20/10/2017
21/04/2018
20/10/2021
21/04/2022
25/02/2017
20/10/2017
21/04/2018
25/02/2021
20/10/2021
21/04/2022
3,325,135
2,366,397
––––––––––––
––––––––––––
–
–
––––––––––––
––––––––––––
3,325,135
2,366,397
––––––––––––
––––––––––––
0.06
0.11
––––––––––––
––––––––––––
20/10/2017
21/04/2018
––––––––––––
––––––––––––
20/10/2021
21/04/2022
––––––––––––
––––––––––––
All share options above have been issued at the market price of the ordinary shares at the date of grant.
During the year ended 25 March 2018, the market price of ordinary shares in the Company ranged from
£0.0900 (2017: £0.1525) to £0.2238 (2017: £0.2235). The share price as at 25 March 2018 was £0.0935
(2017: £0.1788).
The total share based payments charge in relation to the Directors’ interest in share options recognised in the
Group during the year was £448,000 (2017: £473,000)
20
THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
Details of the Directors’ shareholdings are given in the Directors’ Report on page 13.
Approval
This report was approved by the Board of Directors on 23 July 2018 and signed on its behalf by:
MA Chapman
Chairman of the Remuneration Committee
21
THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
Opinion
We have audited the financial statements of The Fulham Shore Plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 25 March 2018 which comprise the consolidated statement of comprehensive
income, consolidated and company balance sheets, consolidated and company statement of changes in
equity, consolidated and company cash flow statement, and notes to the financial statements, including a
summary of significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and, as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
l
l
l
l
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 25 March 2018 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in accordance with the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are independent of the group and parent
company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to SME listed entities and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
l
l
the directors’ use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the group’s or the parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the
overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of Goodwill
Refer to page 39 (Accounting Estimates – Assessment of the recoverable amounts in respect of assets tested
for impairment) and pages 49 and 50 (Notes to the financial statements – Intangible assets).
22
THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
At the year-end date, the Group had a total Goodwill balance of £20.7m arising from past acquisitions, of
which, £1.8m is attributable to The Real Greek group of Cash Generating units (CGU) and £18.9m to Franco
Manca group of CGUs, as management considers that these are the smallest groups of CGUs that Goodwill
can be allocated to. Management is required by IAS 36 to test for impairment of Goodwill on an annual basis.
Management carefully considered the carrying value of Goodwill and whether any impairment existed at the
year-end date. For the impairment testing at 25th March 2018 a pre-tax discount rate based on a weighted
average cost of capital (WACC) of 12.4% was used. Management have stated in the Accounting Policies note
that this discount rate used is the rate believed by the Board to reflect the risk associated with each group of
CGUs.
Given the value of the balances, the challenging conditions the restaurant industry is currently facing, and
the significant management judgements involved in forecasting the cash flows and in determining the
assumptions used, assessing whether goodwill is impaired could have a material impact on the financial
statements.
Audit approach adopted:
l We audited management’s annual impairment reviews, comparing their discounted cash flow forecasts
to the carrying value of the Goodwill and attributable operating assets of each group of CGUs.
l We obtained management’s key assumptions and audited their sensitivity analysis.
l We challenged management in their key judgements and assumptions in their assessment and sensitivity
analysis, including using our knowledge of comparable companies and market data to challenge
management’s assumptions, in particular the discount rate and revenue growth rate assumptions.
l We consulted with our valuations experts to challenge the impairment model and consider its suitability.
l We compared the forecast cash flows to actual results observed to date.
Impairment of property, plant and equipment
Refer to page 39 (Accounting Estimates – Assessment of the recoverable amounts in respect of assets tested
for impairment), page 43 (Notes to the financial statements – Operating profit) and pages 51 and 52 (Notes
to the financial statements – Property, plant and equipment)
The total carrying value of property, plant and equipment (PPE) at the year-end date was £31.8m. Given the
challenging conditions the restaurant industry is currently facing, management carefully considered the
carrying value of PPE on an individual restaurant basis, each of which is a CGU for testing impairment of
PPE, and whether any individual restaurant showed indications of impairment. Management carried out
impairment testing to assess whether those assets attributable to underperforming restaurants were impaired
at the year end. During the year ended 25 March 2018, management have recognised a total impairment
charge of £0.9m (2017: £nil) in respect of three underperforming sites. For the impairment testing at 25th
March 2018 a pre-tax discount rate based on a weighted average cost of capital (WACC) of 12.4% was used.
Management have stated in the Accounting Policies note that this discount rate used is the rate believed by
the Board to reflect the risk associated with each CGU.
Because of the significant management judgement in forecasting the cash flows and in the assumptions used
a change in the total impairment charge recognised could have a material impact on the financial statements.
Audit approach adopted:
l We audited management’s impairment review comparing their discounted cash flow forecasts to the
carrying value of property, plant and equipment for sites where triggers for impairment were noted.
l We obtained and challenged management’s key assumptions used in their assessment, including using
our knowledge of comparable companies and market data to challenge in particular the discount rate
and revenue growth rate assumptions.
23
THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
l We audited management’s impairment calculations for those sites for which a charge was recognised
and considered management’s sensitivity analysis and conclusions for sites where no impairment was
recognised, and challenged the assumptions used.
l We obtained management’s assessment of post year end performance along with post year end
management accounts and compared the forecast cash flow to actual results observed to date.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature,
timing and extent of our audit procedures and to evaluate the effects of misstatements, both individually and
on the financial statements as a whole. During planning we determined a magnitude of uncorrected
misstatements that we judge would be material for the financial statements as a whole (FSM). During planning
FSM was calculated as £696,000 which was not changed during the course of our audit. We agreed with the
Audit Committee that we would report to them all unadjusted differences in excess of £5,000, as well as
differences below those thresholds that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
The audit was scoped to ensure that we obtained sufficient and appropriate audit evidence in respect of:
l
l
l
the significant business operations of the group
other operations which, irrespective of size, are perceived as carrying a significant level of audit risk
whether through susceptibility to fraud, or for other reasons
the appropriateness of the going concern assumption used in the preparation of the financial statements
The audit was scoped to support our audit opinion on group financial statements of The Fulham Shore Plc
and was based on group materiality and an assessment of risk at group level.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is
a material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
l
l
the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or
the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
l
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
24
THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
l
the parent company financial statements are not in agreement with the accounting records and returns;
or
l
certain disclosures of directors’ remuneration specified by law are not made; or
l we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 17, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or
the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company
and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
EUAN BANKS (Senior Statutory Auditor)
For and on behalf of RSM UK AUDIT LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
23 July 2018
25
THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 25 March 2018
Revenue
Cost of sales
Gross profit
Administrative expenses
Headline operating profit
Share based payments
Pre-opening costs
Amortisation of brand
Exceptional costs – cost of acquisition
Exceptional costs – impairment of property, plant and equipment
Exceptional costs – loss on disposal of property, plant and equipment
Operating profit
Finance income
Finance costs
(Loss)/profit before taxation
Income tax expense – current year
Income tax expense – prior year
(Loss)/profit for the year from continuing operations
Loss for the year from discontinued operations
(Loss)/profit for the year
(Loss)/profit for the year attributable to:
Owners of the company
Non-controlling interests
Earnings per share
Continuing and discontinued operations
Basic
Diluted
Continuing operations
Basic
Diluted
Headline Basic
Headline Diluted
26
Year
ended
25 March
2018
£’000
54,695
(32,039)
––––––––––––
22,656
(18,940)
––––––––––––
3,716
(616)
(1,209)
(821)
–
(867)
(61)
––––––––––––
142
2
(254)
––––––––––––
(110)
(258)
218
––––––––––––
(150)
(415)
––––––––––––
(565)
––––––––––––
––––––––––––
Year
ended
26 March
2017
£’000
40,441
(22,553)
––––––––––––
17,888
(12,989)
––––––––––––
4,899
(631)
(1,914)
(821)
(26)
–
–
––––––––––––
1,507
1
(135)
––––––––––––
1,373
(164)
–
––––––––––––
1,209
(240)
––––––––––––
969
––––––––––––
––––––––––––
(576)
11
––––––––––––
(565)
––––––––––––
––––––––––––
947
22
––––––––––––
969
––––––––––––
––––––––––––
(0.1p)
(0.1p)
(0.0p)
(0.0p)
0.6p
0.6p
0.2p
0.2p
0.2p
0.2p
0.7p
0.7p
Notes
1
18
7
2
4
5
24
6
6
6
6
6
6
THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY BALANCE SHEETS
25 March 2018
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Trade and other receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Total assets
Current liabilities
Trade and other payables
Income tax payable
Borrowings
Net current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger relief reserve
Reverse acquisition reserve
Retained earnings
Equity attributable to owners
of the company
Non-controlling interest
Total Equity
25 March
2018
£’000
Notes
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
7
8
9
11
16
10
11
12
24
13
14
13
14
16
17
26,550
31,768
281
943
193
––––––––––––
59,735
––––––––––––
1,490
3,325
359
329
––––––––––––
5,503
––––––––––––
65,238
––––––––––––
27,374
27,306
–
947
1,406
––––––––––––
57,033
––––––––––––
1,052
2,602
271
–
––––––––––––
3,925
––––––––––––
60,958
––––––––––––
–
203
43,439
11,724
185
––––––––––––
55,551
––––––––––––
–
135
7
–
––––––––––––
142
––––––––––––
55,693
––––––––––––
–
227
43,011
7,974
1,238
––––––––––––
52,450
––––––––––––
–
184
–
–
––––––––––––
184
––––––––––––
52,634
––––––––––––
(11,521)
(486)
–
––––––––––––
(12,007)
––––––––––––
(6,504)
(13,332)
(533)
(180)
––––––––––––
(14,045)
––––––––––––
(10,120)
(888)
–
–
––––––––––––
(888)
––––––––––––
(746)
(1,011)
–
(12)
––––––––––––
(1,023)
––––––––––––
(839)
(1,470)
(12,350)
(1,779)
––––––––––––
(15,599)
––––––––––––
(27,606)
––––––––––––
37,632
––––––––––––
––––––––––––
5,714
6,889
30,459
(9,469)
3,936
––––––––––––
–
(6,000)
(2,265)
––––––––––––
(8,265)
––––––––––––
(22,310)
––––––––––––
38,648
––––––––––––
––––––––––––
5,714
6,889
30,459
(9,469)
4,963
––––––––––––
–
(13,325)
–
––––––––––––
(13,325)
––––––––––––
(14,213)
––––––––––––
41,480
––––––––––––
––––––––––––
5,714
6,889
30,459
–
(1,582)
––––––––––––
37,529
103
––––––––––––
37,632
––––––––––––
––––––––––––
38,556
92
––––––––––––
38,648
––––––––––––
––––––––––––
41,480
–
––––––––––––
41,480
––––––––––––
––––––––––––
–
(8,190)
–
––––––––––––
(8,190)
––––––––––––
(9,213)
––––––––––––
43,421
––––––––––––
––––––––––––
5,714
6,889
30,459
–
359
––––––––––––
43,421
–
––––––––––––
43,421
––––––––––––
––––––––––––
27
THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY BALANCE SHEETS
25 March 2018
The loss for the financial year dealt with in the financial statements of the Company is £1,566,000 (2017:
£436,000). The financial statements on pages 24 to 75 were approved by the board of Directors and
authorised for issue on 23 July 2018 and are signed on its behalf by:
DM Page
Chairman
Company registration number: 07973930
28
THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 25 March 2018
Attributable to owners of the Company
At 27 March 2016
Profit for the year
Total comprehensive
income
Transactions with
owners
Ordinary shares issued
(net of expenses)
Share based
payments
Deferred tax on share
based payments
Total transactions
with owners
At 26 March 2017
(Loss)/profit for the year
Total comprehensive
income
Transactions with owners
Share based payments
Deferred tax on share
based payments
Total transactions
with owners
At 25 March 2018
Share
Capital
£’000
Share
Premium
£’000
Merger
Reverse
Relief Acquisition
Reserve
£’000
Reserve
£’000
Equity
Share-
Non-
holders’ Controlling
Interests
£’000
Funds
£’000
Retained
Earnings
£’000
Total
Equity
£’000
5,692
–
36,696
969
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(9,469)
–
30,459
–
36,626
947
6,866
–
3,078
947
70
22
–
–
22
–
23
–
–
–
–
–
–
–
947
947
22
969
–
631
45
631
–
–
45
631
307
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
307
307
–
–
–
–
–
22
983
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
38,648
(9,469)
30,459
38,556
5,714
6,889
4,963
938
983
23
92
–
–
–
(565)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(576)
(576)
11
–
–
–
–
–
–
–
–
–
–
–
–
(576)
(576)
616
616
11
–
(565)
616
(1,067)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(1,067)
(1,067)
–
–
–
–
–
–
(451)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
37,632
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(9,469)
30,459
37,529
6,889
3,936
5,714
(451)
(451)
103
–
–
–
–
29
THE FULHAM SHORE PLC
COMPANY STATEMENT OF CHANGE IN EQUITY
for the year ended 25 March 2018
At 27 March 2016
Loss for the year
Total comprehensive
income for the year
Transactions with owners
Ordinary shares issued
(net of expenses)
Share based payments
Deferred tax on share
based payments
Total transactions
with owners
At 26 March 2017
Loss for the year
Total comprehensive income
for the year
Transactions with owners
Share based payments
Deferred tax on share
based payments
Total transactions
with owners
At 25 March 2018
Share
Capital
£’000
5,692
Share
Premium
£’000
Merger
Relief
Reserve
£’000
Retained
Earnings
£’000
Total
Equity
£’000
6,866
30,459
(94)
42,923
–
––––––––––––
–
––––––––––––
–
––––––––––––
(436)
––––––––––––
(436)
––––––––––––
–
22
–
–
23
–
–
–
–
(436)
(436)
–
631
45
631
–
––––––––––––
–
––––––––––––
–
––––––––––––
258
––––––––––––
258
––––––––––––
22
––––––––––––
5,714
23
––––––––––––
6,889
–
––––––––––––
30,459
889
––––––––––––
359
934
––––––––––––
43,421
–
––––––––––––
–
––––––––––––
–
––––––––––––
(1,566)
––––––––––––
(1,566)
––––––––––––
–
–
–
–
–
–
(1,566)
(1,566)
616
616
–
––––––––––––
–
––––––––––––
–
––––––––––––
(991)
––––––––––––
(991)
––––––––––––
–
––––––––––––
5,714
––––––––––––
––––––––––––
–
––––––––––––
6,889
––––––––––––
––––––––––––
–
––––––––––––
30,459
––––––––––––
––––––––––––
(375)
––––––––––––
(1,582)
––––––––––––
––––––––––––
(375)
––––––––––––
41,480
––––––––––––
––––––––––––
30
THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
for the year ended 25 March 2018
Year
ended
25 March
2018
£’000
Group
Year
ended
26 March
2017
£’000
Year
ended
25 March
2018
£’000
Parent
Year
ended
26 March
2017
£’000
Notes
19
4,522
10,273
(509)
(209)
(10,044)
(27)
(281)
(12,358)
(76)
–
(7)
–
–
(236)
–
–
19
–
–
––––––––––––
(376)
–
––––––––––––
–
(5,969)
––––––––––––
–
(2,553)
––––––––––––
(10,352)
––––––––––––
(12,810)
––––––––––––
(5,976)
––––––––––––
(2,789)
––––––––––––
Net cash flow from/(used
in) operating activities
Investing activities
Acquisition of property, plant
and equipment
Acquisition of intangible assets
Acquisition of investments
Cash flow from acquisition of
subsidiaries
Loan to subsidiary undertakings
Net cash flow used in
investing activities
Financing activities
Proceeds from issuance of new
ordinary shares (net of expenses)
Capital received from bank borrowings
Interest received
Interest paid
Net cash flow from financing activities
Net increase in cash and
cash equivalents
Cash and cash equivalents at the
beginning of the year
Cash and cash equivalents at the
end of the year
12
12
–
6,350
2
(254)
––––––––––––
6,098
––––––––––––
45
3,090
1
(135)
––––––––––––
3,001
––––––––––––
–
6,350
465
(311)
––––––––––––
6,504
––––––––––––
45
3,090
261
(210)
––––––––––––
3,186
––––––––––––
268
464
19
188
91
––––––––––––
(373)
––––––––––––
(12)
––––––––––––
(200)
––––––––––––
359
––––––––––––
––––––––––––
91
––––––––––––
––––––––––––
7
––––––––––––
––––––––––––
(12)
––––––––––––
––––––––––––
31
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
GENERAL INFORMATION
The Fulham Shore PLC is a public limited company incorporated and domiciled in England and Wales with
registration number 07973930 and registered office at 1st Floor, 50-51 Berwick Street, London, W1F 8SJ,
United Kingdom. The Company’s ordinary shares are traded on the AIM Market.
BASIS OF PREPARATION
On 20 October 2014, The Fulham Shore PLC acquired 99.04% of the issued share capital of Kefi Limited.
The combination has been accounted for as a reverse acquisition as if Kefi Limited had issued new shares in
exchange for The Fulham Shore PLC’s net assets.
The Fulham Shore PLC is presenting audited consolidated financial statements for the year ended 25 March
2018. The comparative period presented is audited financial statements for the year ended 26 March 2017.
The financial statements have been prepared under the historical cost convention and, as permitted by EU
Law, the Financial Statements have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards as adopted by the EU (“IFRS”).
The financial statements for the year ended 25 March 2018 are presented in Sterling because that is the
primary currency of the primary economic environment in which the Group operates. All values are rounded
to the nearest thousand pounds (£’000) except when otherwise indicated.
The parent company has not presented its own income statement, statement of total comprehensive income
and related notes as permitted by section 408 of the Companies Act 2006.
At the date of authorisation of these financial statements, the following Standards and Interpretations relevant
to the Group operations that have not been applied in these financial statements were in issue but not yet
effective:
Classification and Measurement of Share Based Payment Transactions
Financial instruments
IFRS 2 (Amendment)
IFRS 9
IFRS 12 (Amendment) Disclosure of interest in Other Entities
IFRS 15
IFRS 16
IFRIC 22
IFRIC 23
IAS 28 (Amendment)
Revenue from contracts with customers
Leases
Foreign Currency Transactions and Advance Considerations
Uncertainty over income tax treatments (not yet endorsed)
Investments in Associates and Joint Ventures
32
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
The Directors anticipate that the adoption of these Standards and Interpretations as appropriate in future
years will have no material impact on the financial statements of the Group other than the new IFRS 16 Leases
which will be mandatory for accounting periods beginning on or after 1 January 2019. This new standard will
significantly change how restaurant leases will be accounted for. The Group is preparing its assessment project
to identify the impact of the new lease accounting standard on the Group’s existing and future restaurant
leases.
GOING CONCERN
The consolidated financial statements have been prepared on a going concern basis. Given the risk analysis
set out in the Director’s Report on pages 12 to 16 and after reviewing the Group’s net current liabilities position
as at 25 March 2018, the budget for the next financial year, other longer term plans and financial resources
including undrawn but available short term and long term facilities described in note 14 and operational cash
flow where cash from revenues are received within 3 days, the Board has a reasonable expectation that the
Group has adequate resources to continue in operational existence for the foreseeable future. Therefore the
Board is satisfied that, at the time of approving the financial statements, it is appropriate to adopt the going
concern basis in preparing the financial statements.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate those of The Fulham Shore PLC and all of its subsidiary
undertakings for the period. Subsidiaries acquired are consolidated from the date that the Group has the
power to control, exposure or rights to variable returns, and the ability to use its power over the returns and
will continue to be consolidated until the date that such control ceases.
Although the legal form of the transaction during the period ended 29 June 2015 was an acquisition of Kefi
Limited by The Fulham Shore PLC, the substance is the reverse of this. Accordingly the business combination
has been prepared using reverse acquisition accounting.
The acquisition of other subsidiaries is accounted for using the acquisition method. The cost of the acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred
or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Any costs
directly attributable to the business combination are expensed to the Statement of Comprehensive Income.
The acquiree’s identifiable assets and liabilities are recognised at their fair values at the acquisition date.
All intra-group transactions, balances and unrealised gains on transactions between group companies are
eliminated on consolidation.
INTANGIBLE ASSETS
Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of an acquisition over the
Group’s interest in the fair value attributed to the net assets at acquisition. Goodwill is not subject to
amortisation but is tested for impairment at least annually. After initial recognition, goodwill is stated at cost
less any accumulated impairment losses. Any impairment is recognised immediately in the income statement
and is not subsequently reversed. Goodwill is allocated to an associated operating segment made up of a
group of cash generating units for the purpose of impairment testing. Each of these groups of cash generating
units represents the Group’s investment in a subsidiary which is equivalent to an operating segment of the
Group. On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the
profit or loss on disposal.
Trademarks and licenses
The fair value of the intangible assets acquired through the reverse acquisition was determined using
discounted cash flow models. The key assumptions for the valuation method are those regarding future cash
flows, tax rates and discount rates. The cash flow projections were based on management forecasts for the
subsequent four years period. The estimated useful lives range from 4 to 20 years on a straight-line basis.
33
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
Brand
The fair value of the brand intangible assets acquired through an acquisition of a subsidiary was determined
using discounted royalty relief models. The key assumptions for the valuation method are those regarding
future cash flows, tax rates and discount rates. The cash flow projections were based on management
forecasts for the subsequent ten year period.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of
brand from the beginning of the financial year that they are available for use. The estimated useful lives are
10 years on a straight-line basis.
Computer Software
Computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use
the specific software. These costs are amortised over their estimated useful lives, being between 3 and 5
years. Costs that are directly associated with the production of identifiable and unique software products
controlled by the Group, and that are expected to generate economic benefits exceeding costs beyond one
year, are recognised as intangible assets. Direct costs include software development, employee costs and
directly attributable overheads. Software integral to a related item of hardware equipment is accounted for as
property, plant and equipment. Costs associated with maintaining computer software programmes are
recognised as an expense when they are incurred.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less depreciation and any recognised impairment
loss. The cost of property, plant and equipment includes directly attributable incremental costs incurred in
their acquisition and installation.
Depreciation is provided on property, plant and equipment at rates calculated to write each asset down to its
estimated residual value evenly over its expected useful life, as follows:-
Leasehold properties and improvements
Plant and equipment
Furniture, fixtures and fittings
over lease term or renewal term
20% to 33% straight line
10% to 20% straight line
Assets in the course of construction are carried at cost, less any recognised impairment loss. Depreciation
of these assets commences when the assets are ready for their intended use.
Residual values, useful lives and methods of depreciation are reviewed and adjusted if appropriate on an
annual basis. An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. The gain or loss arising on the disposal or retirement
of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognised in the income statement.
IMPAIRMENT OF ASSETS
Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is an indication
that the asset may be impaired. For the purpose of impairment testing, assets which have separately
identifiable cash flows, known as cash generating units, are grouped into their operating segment. If the
recoverable amount of a group of cash generating units is less than the carrying amount of that group’s
assets, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the
group of cash generating units and then to the other assets of the group pro-rata on the basis of the carrying
amount of each asset in the group. Impairment losses recognised for goodwill are not reversed in a
subsequent period. 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.
34
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment
and intangible assets with finite useful lives 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, if any, of the impairment loss. 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, predominantly an individual restaurant for the purposes of property, plant and equipment, to
which the asset belongs. 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 the income statement. 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, not to 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 the income statement.
OTHER INVESTMENTS
Other investments are recognised and derecognised on a trade date where a purchase or sale of an
investment is under a contract whose terms require delivery of the investment within the relevant timeframe,
and are initially measured at fair value, including transaction costs.
Other investments classified as loans and receivables are stated at amortised cost using the effective interest
method, less any impairment.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the balance
sheet when the Group becomes a party to the contractual provisions of the instrument.
INVENTORIES
Inventories are valued at the lower of cost and net realisable value. Cost is determined on a first in, first out
basis. Net realisable value is based upon estimated selling price less further costs expected to be incurred to
completion and disposal. Provision is made for obsolete and slow-moving items.
TRADE AND OTHER RECEIVABLES
Receivables are classified as loans and receivables and are initially recognised at fair value. They are
subsequently measured at their amortised cost using the effective interest method less any provision for
impairment. A provision for impairment is made where there is objective evidence (including customers with
financial difficulties or in default on payments), that amounts will not be recovered in accordance with original
terms of the agreement. A provision for impairment is established when the carrying value of the receivable
exceeds the present value of the future cash flow, discounted using the original effective interest rate. The
carrying value of the receivable is reduced through the use of an allowance account and any impairment loss
is recognised in the income statement.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and call deposits and other short term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of
changes in value.
TRADE AND OTHER PAYABLES
Payables are initially recognised at fair value and subsequently at amortised cost using the effective interest
method.
SHARE CAPITAL
Share capital represents the nominal value of ordinary shares issued.
SHARE PREMIUM
Share premium represents the amounts subscribed for share capital in excess of nominal value less the
related costs of share issue.
35
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
MERGER RELIEF RESERVE
In accordance with Companies Act 2006 S.612 ‘Merger Relief’, the company issuing shares as consideration
for a business combination, accounted at fair value, is obliged, once the necessary conditions are satisfied,
to record the excess of the consideration received over the nominal value of the shares issued to the merger
relief reserve.
REVERSE ACQUISITION RESERVE
Reverse accounting under IFRS 3 ‘Business Combinations’ requires the difference between the equity of the
legal parent and the issued equity instruments of the legal subsidiary pre-combination to be recognised as a
separate component of equity.
RETAINED EARNINGS
Retained earnings represents the cumulative profit and loss net of distributions.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are translated into sterling, the presentational and
functional currency of the Group, at the rate of exchange ruling at the balance sheet date. Transactions in
foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to
the income statement.
FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Financial liabilities and equity instruments issued by the Group are classified according to the substance of
the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. Interest bearing
loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are
subsequently measured at amortised cost, using the effective interest rate method. Any difference between
the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over
the term of the borrowing. Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
TAXATION
Income tax expense represents the sum of the current tax payable and deferred tax.
Current tax payable or recoverable is based on taxable profit for the year. Taxable profit differs from profit as
reported in the income statement because some items of income or expense are taxable or deductible in
different years or may not be taxable or deductible. The Group’s liability for current tax is calculated using tax
rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary 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. It is accounted for using the balance sheet liability method.
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 tax profit or 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 year when the liability is settled or
the asset realised, based on tax rates that have been enacted or substantively enacted by the balance sheet
date. 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 either relate to income taxes levied by the same taxation authority
on either the same taxable entity or on different taxable entities which intend to settle the current tax assets
and liabilities on a net basis.
36
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
Tax is charged or credited to the income statement, except when it relates to items charged or credited directly
to equity, in which case the tax is also recognised directly in equity.
LEASES
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership of the asset to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of
the lease or, if lower, at the present value of the minimum lease payments as determined at the inception of
the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease
obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation
so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognised in the income statement.
Rentals payable under operating leases are charged to the income statement on a straight line basis or other
systematic basis if representative of the time pattern of the user’s benefit over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight
line basis over the lease term.
PROVISIONS
Provisions are recognised when the Group has a present obligation as a result of a past event and it is
probable that the Group will be required to settle that obligation and a reliable estimate can be made of the
amount of the obligation. Provisions are measured at the Directors’ best estimate of the expenditure required
to settle the obligation at the balance sheet date and are discounted to present value where the effect is
material.
RETIREMENT BENEFITS
The amount charged to the income statement in respect of pension costs is the contributions payable to
money purchase schemes in the year. Differences between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the balance sheet.
REVENUE RECOGNITION
Revenue represents the fair value of the consideration received or receivable, net of Value Added Tax, for
goods sold and services provided to customers outside the Group after deducting discounts. Revenue is
recognised when the significant risks and rewards of ownership are transferred.
INTEREST INCOME
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount.
SHARE BASED PAYMENTS
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based
payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date
of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the Company’s estimate of the shares that will
eventually vest and adjusted for the effect of non market-based vesting conditions.
Fair value is measured using a Black-Scholes valuation model. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions
and behavioural considerations.
37
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
Non-current assets (disposal groups comprising assets and liabilities) that are expected to be recovered
primarily through sale rather than through continuing use are classified as held for sale.
A discontinued operation is a component of an entity that either has been disposed of, or that is classified as
held for sale, and (a) represents a separate line of business or geographical area of operations; and (b) is a
part of a single coordinated plan to dispose of a separate line of business or geographical area of operations;
or (c) is a subsidiary acquired exclusively with a view to sell.
Non-current assets held for sale and discontinued operations are carried at the lower of carrying amount or
fair value less cost to sell. Any gain or loss from disposal, together with the results of these operations until
the date of disposal, is reported separately as discontinued operations. The financial information of
discontinued operations is excluded from the respective captions in the Consolidated financial statements
and related notes for all periods presented. Comparatives in the balance sheet are not re-presented when a
non-current asset or disposal group is classified as held for sale. Comparatives are re-presented for
presentation of discontinued operations in the Statement of cash flow and Statement of comprehensive
income.
Adjustments in the current period to amounts previously presented in discontinued operations that are directly
related to the disposal of a discontinued operation in a prior period are classified separately in discontinued
operations. Circumstances to which these adjustments may relate include resolution of uncertainties that
arise from the terms of the disposal transaction, such as the resolution of purchase price adjustments and
indemnifications, resolution of uncertainties that arise from and are directly related to the operations of the
component before its disposal, such as environmental and product warranty obligations retained by the
Company, or the settlement of employee benefit plan obligations provided that the settlement is directly related
to the disposal transaction.
ACCOUNTING PERIOD
The consolidated group accounts have been prepared for the year to 25 March 2018 with the comparative
year to 26 March 2017.
The Company accounts have been prepared for the same periods as the Group.
ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of the Group’s accounting policies, described above,
with respect to the carrying amounts of assets and liabilities at the date of the financial statements, the
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of income and expenses during the reporting year. These judgements, estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, including current and expected economic conditions. Although these judgements, estimates
and associated assumptions are based on management’s best knowledge of current events and
circumstances, the actual results may differ. Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised
and in any future years affected.
The judgements, estimates and assumptions which are of most significance to the Group are detailed below:
Assessment of the recoverable amounts in respect of assets tested for impairment
The Group tests goodwill for impairment on an annual basis or more frequently if there are indications that
amounts may be impaired. For property, plant and equipment and intangible assets, other than goodwill, the
Group tests for impairment when there is an indication of impairment.
38
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
The impairment analysis for such assets is principally based upon discounted estimated future cash flows
from the use and eventual disposal of the assets (see notes 7 and 8). Such an analysis includes an estimation
of the future anticipated results and cash flows, annual growth rates, whether short term or long term, future
capital expenditures and the appropriate discount rates (see notes 7 and 8 for key assumptions). Changes in
the estimates which underpin the Group’s forecasts and selection of appropriate discount rate could have an
impact on the value in use of the cash generating units and group of cash generating units being tested.
Valuation of share based payments
The charge for share based payments is calculated in accordance with the methodology described in note
18. The model requires highly subjective assumptions to be made including the future volatility of the
Company’s share price, expected dividend yield, risk-free interest rates, expected time of exercise and
employee attrition rates. Changes in such estimates may have a significant impact on the original fair value
calculation at the date of grant and the employee attrition rate will impact the judgement relating to the number
of share based incentives that would vest and therefore the share based payments charge.
Deferred taxation
The recognition of deferred taxation assets or liabilities are further described in note 16.
Recognition of deferred tax assets on tax losses, is based upon whether management judge that it is probable
that there will be sufficient and suitable taxable profits in the relevant legal entity or tax group against which
to utilise the assets in the future. Judgement is required when determining probable future taxable profits. The
Group assesses the availability of future taxable profits using the same cash flow forecasts for the Group’s
operations as are used in the Group’s value in use calculations for impairment testing purposes. Where tax
losses are forecast to be recovered beyond the five year period, the availability of taxable profits is assessed
using the cash flows and long‑term growth rates used for the value in use calculations.
Changes in the estimates which underpin the Group’s forecasts could have an impact on the amount of future
taxable profits and could have a significant impact on the period over which the deferred tax asset would be
recovered and whether the deferred tax assets should have been recognised.
Deferred taxation assets on share based payments are calculated based on the intrinsic value of the share
based incentives at the year end, Company’s share price, availability of tax deduction on exercise of the share
based incentives and employee leave rates. Changes in the number of share based incentives that are
expected to vest (as described above), availability of tax deduction and other assumptions will have an impact
on the value of deferred taxation assets.
Deferred tax liabilities on capital allowances are calculated using estimates of the proportion of property, plant
and equipment acquired during the year that qualifies for capital allowances and the appropriate rates of
allowances and estimates of tax rates applicable in the future. Management make such estimates based on
experience with similar historic property, plant and equipment acquired. Changes in the make-up of the building
components in one of these assets may have an impact on capital allowances claimable and therefore the
quantum of the deferred tax liabilities.
The Group only considers substantively enacted tax laws when assessing the amount and availability of tax
losses to offset against the future taxable profits and availability of capital allowances.
Finite lived intangible assets
Intangible assets include amounts spent by the Group acquiring brands and the costs of purchasing and/or
developing computer software.
Where intangible assets are acquired through business combinations and no active market for the assets
exists, the fair value of these assets is determined by discounting estimated future net cash flows generated
by the asset. Estimates relating to the future cash flows and discount rates used may have a material effect
on the reported amounts of finite lived intangible assets.
39
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
The useful life over which intangible assets are amortised depends on management’s estimate of the period
over which economic benefit will be derived from the asset. Reducing the useful life will increase the
amortisation charge in the consolidated income statement. Useful lives are periodically reviewed to ensure
that they remain appropriate.
Property, plant and equipment
Property, plant and equipment represents 48.7% (2017: 44.8%) of the Group’s total assets; estimates and
assumptions made may have a material impact on their carrying value and related depreciation charge. The
depreciation charge for an asset is derived using estimates of its expected useful life and expected residual
value, which are reviewed periodically. Increasing an asset’s expected life or residual value would result in a
reduced depreciation charge in the consolidated income statement. Management determines the useful lives
and residual values for assets when they are acquired, based on experience with similar assets and taking
into account other relevant factors such as any expected changes in technology. The useful life of equipment
is assumed not to exceed the duration of restaurant property lease unless there is a reasonable expectation
of renewal or ability for the equipment to be transferred for use in another restaurant.
Accounting treatment of other investments
Investments are recognised at fair value at the time of acquisition. Management judgement is used to
determine whether the Group has significant influence or control over the investment which would give rise to
different accounting methodology being applied as an associate or subsidiary.
OPERATING SEGMENTS
The Group considers itself to have two key operating segments, being the management and operation of The
Real Greek restaurants and the management and operation of Franco Manca restaurants. The Group operates
in only one geographical segment, being the United Kingdom.
DEFINITIONS
OPERATING PROFIT
Operating profit is defined as profit before taxation, finance income and finance costs.
HEADLINE OPERATING PROFIT
Headline operating profit is defined as operating profit before amortisation of brand, impairment of property,
plant and equipment, impairment of goodwill and intangible assets, onerous lease costs, restructuring costs,
costs of reverse acquisition, cost of acquisition, share based payments, loss on disposal of property, plant
and equipment and pre-opening costs.
HEADLINE PROFIT BEFORE TAXATION
Headline profit before taxation is defined as profit/loss before taxation before amortisation of brand, impairment
of property, plant and equipment, impairment of goodwill and intangible assets, onerous lease costs,
restructuring costs, costs of reverse acquisition, costs of acquisition, share based payments, loss on disposal
of property, plant and equipment and pre-opening costs.
PRE-OPENING COSTS
The restaurant pre-opening costs represent costs incurred up to the date of opening a new restaurant that
are written off to the profit and loss account in the period in which they are incurred.
EBITDA
EBITDA is defined as operating profit before depreciation, amortisation and impairment.
HEADLINE EBITDA
Headline EBITDA is defined as EBITDA before onerous lease costs, restructuring costs, costs of reverse
acquisition, cost of acquisition, share based payments, loss on disposal of property, plant and equipment and
pre-opening costs.
HEADLINE EPS
Headline EPS is defined in note 6.
40
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
1
SEGMENT INFORMATION
For management purposes, the Group was organised into two operating divisions during the year ended
25 March 2018. These divisions, The Real Greek and Franco Manca, are the basis on which the Group
reports its primary segment information as identified by the chief operating decision maker which is
the Group’s board of directors.
For the year ended 25 March 2018:
External revenue
Headline EBITDA
Depreciation and amortisation
Headline operating profit
Pre-opening costs
Impairment property, plant and
equipment
Operating profit
Finance income
Finance costs
Segment profit/(loss) before taxation
Income tax expense
Loss for the year from continuing
operations
Assets
Liabilities
Net assets
Capital expenditure
The Real
Greek
segment
£’000
18,139
2,436
(931)
––––––––––––
1,505
(375)
(214)
718
–
–
––––––––––––
718
Franco
Manca
segment
£’000
Other
unallocated
£’000
36,556
5,427
(2,751)
––––––––––––
2,676
(834)
–
(433)
(32)
––––––––––––
(465)
–
(653)
78
2
–
––––––––––––
80
Total
£’000
54,695
7,430
(3,714)
––––––––––––
3,716
(1,209)
(897)
142
2
(254)
––––––––––––
(110)
(40)
––––––––––––
(150)
––––––––––––
––––––––––––
65,238
(27,606)
––––––––––––
37,632
––––––––––––
––––––––––––
9,641
––––––––––––
––––––––––––
–
(654)
–
(254)
––––––––––––
(908)
(40)
––––––––––––
(948)
––––––––––––
––––––––––––
896
(13,429)
––––––––––––
(12,533)
––––––––––––
––––––––––––
26
––––––––––––
––––––––––––
11,585
(3,969)
––––––––––––
7,616
––––––––––––
––––––––––––
2,874
––––––––––––
––––––––––––
52,757
(10,208)
––––––––––––
42,549
––––––––––––
––––––––––––
6,741
––––––––––––
––––––––––––
Head office and PLC costs, previously treated as an operating segment, are not related to the Group’s
two business segments and are therefore included in other unallocated and are not part of a business
segment.
41
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
1
SEGMENT INFORMATION (continued)
For the year ended 26 March 2017:
The Real
Greek
segment
£’000
Franco
Manca
segment
£’000
Other
unallocated
£’000
Total
£’000
External revenue
13,675
26,766
–
40,441
Headline EBITDA
Depreciation and amortisation
Headline operating profit
2,284
(649)
––––––––––––
1,635
5,415
(1,707)
––––––––––––
3,708
(425)
(19)
––––––––––––
(444)
7,274
(2,375)
––––––––––––
4,899
Pre-opening costs
Operating profit
Finance income
Finance costs
Segment profit/(loss) before taxation
Income tax expense
(Loss)/profit for the year from continuing
operations
Assets
Liabilities
Net assets
Capital expenditure
(388)
(1,526)
–
(1,914)
1,049
1
–
––––––––––––
1,050
1,100
–
(1)
––––––––––––
1,099
7,979
(4,073)
––––––––––––
3,906
––––––––––––
––––––––––––
2,185
––––––––––––
––––––––––––
48,914
(10,872)
––––––––––––
38,042
––––––––––––
––––––––––––
10,716
––––––––––––
––––––––––––
(642)
–
(134)
––––––––––––
(776)
(164)
––––––––––––
(939)
––––––––––––
––––––––––––
4,065
(7,365)
––––––––––––
(3,300)
––––––––––––
––––––––––––
246
––––––––––––
––––––––––––
1,507
1
(135)
––––––––––––
1,373
(164)
––––––––––––
1,209
––––––––––––
––––––––––––
60,958
(22,310)
––––––––––––
38,648
––––––––––––
––––––––––––
13,147
––––––––––––
––––––––––––
The Group’s two business segments primarily operate in one geographical area which is the United
Kingdom.
42
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
2
OPERATING PROFIT
Operating profit is stated after charging:
Staff costs (note 3)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals:
Land and buildings
Inventories – amounts charged as an expense
Auditor’s remuneration:
– for statutory audit services
– for other assurance services
– for tax services
– for transactional services
Share based payments
Pre-opening costs
Exceptional costs – cost of acquisition
Exceptional costs – impairment of property, plant and equipment
Exceptional costs – loss on disposal
3
EMPLOYEES
The average monthly number of persons (including Directors)
employed by the Group during the year was:
Administration and management
Restaurants
The average monthly number of persons (including Directors)
employed by the Company during the year was:
Administration and management
Year
ended
25 March
2018
£’000
Year
ended
26 March
2017
£’000
20,882
3,684
851
5,514
10,489
14,786
2,432
837
3,936
8,196
83
20
33
–
616
1,209
–
867
61
––––––––––––
––––––––––––
75
7
27
5
631
1,914
26
–
–
––––––––––––
––––––––––––
Year
ended
25 March
2018
No.
Year
ended
26 March
2017
No.
29
1,086
––––––––––––
1,115
––––––––––––
––––––––––––
23
800
––––––––––––
823
––––––––––––
––––––––––––
6
––––––––––––
6
––––––––––––
––––––––––––
6
––––––––––––
6
––––––––––––
––––––––––––
43
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
3
EMPLOYEES (continued)
Staff costs for above persons
Salaries and fees
Social security costs
Share based payments
Defined contribution pension costs
DIRECTORS’ REMUNERATION
Year
ended
25 March
2018
£’000
Year
ended
26 March
2017
£’000
19,317
1,453
616
112
––––––––––––
21,498
––––––––––––
––––––––––––
13,808
912
631
73
––––––––––––
15,424
––––––––––––
––––––––––––
The remuneration of Directors, who are the key management personnel of the company, is set out in
aggregate below. Further details of directors’ emoluments can be found in the tables of directors’
remuneration on pages 18 to 21.
Salaries, fees and other short term employee benefits
Social security costs
Share based payments
Defined contribution pension costs
Year
ended
25 March
2018
£’000
918
72
448
3
––––––––––––
1,441
––––––––––––
––––––––––––
Year
ended
26 March
2017
£’000
899
59
473
––––––––––––
1,431
––––––––––––
––––––––––––
NJ Donaldson exercised Nil share options in the year ended 25 March 2018 (2017: 1,115,972) realising
a gain of £Nil (2017: £184,000).
Included above are fees paid to related parties for the provision of directors’ services which are further
described in note 22.
The Directors are the only employees of the Company. The Directors’ remuneration above is the only
staff costs for the Company.
44
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
4
FINANCE COSTS
Interest expenses on bank loans and overdrafts
5
INCOME TAX EXPENSE
Income tax expense on continuing operations
Based on the result for the year:
UK corporation tax at 19% (2017: 20%)
Adjustment in respect of prior periods
Total current taxation
Deferred taxation:
Origination and reversal of temporary timing differences
Current year
Prior year
Total deferred tax
Total tax expense on profit on continuing operations
The above is disclosed as
Income tax expense – current year
Income tax expense – prior year
Year
ended
25 March
2018
£’000
Year
ended
26 March
2017
£’000
254
––––––––––––
254
––––––––––––
––––––––––––
135
––––––––––––
135
––––––––––––
––––––––––––
Year
ended
25 March
2018
£’000
Year
ended
26 March
2017
£’000
432
(65)
––––––––––––
367
463
(302)
––––––––––––
161
(109)
(218)
––––––––––––
(327)
––––––––––––
40
––––––––––––
––––––––––––
258
(218)
––––––––––––
40
––––––––––––
––––––––––––
3
–
––––––––––––
3
––––––––––––
164
––––––––––––
––––––––––––
164
–
––––––––––––
164
––––––––––––
––––––––––––
45
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
5
INCOME TAX EXPENSE (continued)
Income tax expense on discontinued operations
Deferred taxation:
Total tax expense on profit on discontinued operations
Year
ended
25 March
2018
£’000
Year
ended
26 March
2017
£’000
(13)
––––––––––––
(13)
––––––––––––
––––––––––––
11
––––––––––––
11
––––––––––––
––––––––––––
Further information on the movement on deferred taxation is given in note 16.
Factors affecting tax charge for year:
(Loss)/profit before taxation from continuing operations
Taxation at UK corporation tax rate of 19% (2017: 20%)
Expenses not deductible for tax purposes
Depreciation/impairment on non-qualifying fixed assets
Share based payments
Rate change on deferred tax liability
Adjustment to previously recognised deferred tax
Adjustment to tax charge in respect of previous periods
Total income tax expense in the income statement
Year
ended
25 March
2018
£’000
(110)
––––––––––––
(21)
6
214
162
(38)
(218)
(65)
––––––––––––
40
––––––––––––
––––––––––––
Year
ended
26 March
2017
£’000
1,373
––––––––––––
275
14
315
(87)
–
(23)
(303)
––––––––––––
164
––––––––––––
––––––––––––
Factors that may affect deferred tax charges are disclosed in note 16 including a breakdown of the
adjustment to previously recognised deferred tax.
Note 23 provides additional details with regards to current and deferred tax on discontinued operations.
46
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
6
EARNINGS PER SHARE
(Loss)/profit for the purposes of basic and diluted earnings per share:
Add back loss for the purposes of basic and diluted earnings
per share (discontinued operations):
(Loss)/profit for the purposes of basic and diluted earnings
per share (continuing operations):
Share based payments
Deferred tax on share based payments
Pre-opening costs
Amortisation of brand
Deferred tax on amortisation of brand
Exceptional costs – cost of acquisition
Exceptional costs – impairment of property, plant and equipment
Deferred tax on impairment of property, plant and equipment
Exceptional costs – loss on disposal
Headline profit for the year for the purposes of headline basic and
diluted earnings per share:
Weighted average number of ordinary shares in issue for the
purposes of basic earnings per share
Effect of dilutive potential ordinary shares from share options
Weighted average number of ordinary shares in issue for the
purposes of diluted earnings per share
Year
ended
25 March
2018
£’000
Year
ended
26 March
2017
£’000
(576)
947
415
––––––––––––
240
––––––––––––
(161)
1,187
616
146
1,209
821
(137)
–
867
(98)
61
––––––––––––
631
(236)
1,915
821
(137)
26
–
–
–
––––––––––––
3,324
––––––––––––
––––––––––––
4,207
––––––––––––
––––––––––––
Year
ended
25 March
2018
No. ‘000
Year
ended
26 March
2017
No. ‘000
571,385
24,495
––––––––––––
570,371
30,855
––––––––––––
595,880
––––––––––––
––––––––––––
601,226
––––––––––––
––––––––––––
47
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
6
EARNINGS PER SHARE (continued)
Further details of the share options that could potentially dilute basic earnings per share in the future
are provided in note 18.
Earnings per share:
Basic
From continuing operations
From discontinued operations
Total basic earnings per share
Diluted
From continuing operations
From discontinued operations
Total basic earnings per share
Headline Basic
Headline Diluted
Year
ended
25 March
2018
Year
ended
26 March
2017
(0.0p)
(0.1p)
––––––––––––
(0.1p)
––––––––––––
––––––––––––
0.2p
0.0p
––––––––––––
0.2p
––––––––––––
––––––––––––
(0.0p)
(0.1p)
––––––––––––
(0.1p)
––––––––––––
––––––––––––
0.2p
0.0p
––––––––––––
0.2p
––––––––––––
––––––––––––
0.6p
0.6p
0.7p
0.7p
48
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
7
INTANGIBLE ASSETS
Group
Cost
27 March 2016
Additions
Reclassification
26 March 2017
Additions
25 March 2018
Accumulated amortisation
27 March 2016
Charge in the year
Reclassification
26 March 2017
Charge in the year
25 March 2018
Net book value
25 March 2018
Trademarks,
License and
franchises
£’000
Software
£’000
Brand
£’000
Goodwill
£’000
Total
£’000
1,739
–
8,211
19,632
29,582
–
(1,681)
––––––––––––
58
76
–
––––––––––––
76
–
–
––––––––––––
8,211
–
1,073
––––––––––––
20,705
76
(608)
––––––––––––
29,050
–
––––––––––––
58
––––––––––––
27
––––––––––––
103
––––––––––––
–
––––––––––––
8,211
––––––––––––
–
––––––––––––
20,705
––––––––––––
27
––––––––––––
29,077
––––––––––––
626
–
821
–
1,447
5
(608)
––––––––––––
23
11
–
––––––––––––
11
821
–
––––––––––––
1,642
–
–
––––––––––––
–
837
(608)
––––––––––––
1,676
8
––––––––––––
31
––––––––––––
22
––––––––––––
33
––––––––––––
821
––––––––––––
2,463
––––––––––––
–
––––––––––––
–
––––––––––––
851
––––––––––––
2,527
––––––––––––
27
––––––––––––
––––––––––––
70
––––––––––––
––––––––––––
5,748
––––––––––––
––––––––––––
20,705
––––––––––––
––––––––––––
26,550
––––––––––––
––––––––––––
26 March 2017
35
––––––––––––
––––––––––––
65
––––––––––––
––––––––––––
6,569
––––––––––––
––––––––––––
20,705
––––––––––––
––––––––––––
27,374
––––––––––––
––––––––––––
The amortisation charges for trademarks, license and franchises for the year are recognised within
administrative expenses.
As at 25 March 2018 brand intangible assets which relates to Franco Manca has a remaining
amortisation period of 7 years (2017: 8 years).
Goodwill of £1,774,000 relates to the The Real Greek and is attributable to its group of cash generating
units. This includes goodwill of £1,667,000 which was recognised on the reverse acquisition of The
Fulham Shore PLC by Kefi Limited that has been reallocated in the year ended 26 March 2017 to The
Real Greek cash generating unit as it related to the original acquisition of The Real Greek by the
Company.
Goodwill of £18,931,000 relates to the acquisition of Franco Manca Holdings Limited (“Franco Manca
Holdings”). The goodwill is attributable to the cash generating units held within Franco Manca 2 UK
Limited. Included in this goodwill is £1,073,000 which was reclassified in the prior year from franchise
intangible asset following the reacquisition of the rights when Franco Manca Holdings was acquired.
49
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
7
INTANGIBLE ASSETS (continued)
For the purposes of impairment testing, the Directors consider each of Franco Manca and The Real
Greek, operating segments of the Group, as the lowest level within the Group at which the goodwill is
monitored for internal management purposes. Each of these segments are made up of a group of
separate restaurants which are cash generating units (CGUs) in their own right.
The recoverable amount for each segment and group of CGUs was determined using a value in use
calculation based upon management forecasts for the trading results for that segment. Value in use
calculations are based on:
l cash flow forecasts derived from the most recent approved financial budgets for the 2019 financial
year for the sites open at the end of March 2018;
l extrapolated cash flow over twenty five years, an appropriate timeframe for branded restaurant
businesses, using forecast growth rates based on past and current run-rates for the initial five
years that then reduce to the industry growth rate of 2%;
l less estimated annual capital expenditure required to maintain the existing restaurants’ look and
feel in each segment based on historic refurbishment programmes and investments in IT systems;
l applied pre-tax discount rate to cash flow projections of 12.4% (2017: 14.3%) which is the rate
believed by the Directors to reflect the risks associated with the group of CGUs using a WACC
model with comparison to other available restaurant businesses. During the year, the Group’s
capital structure had a greater portion of debt, at a lower cost of capital, than the year ended 26
March 2017 leading to a reduced discount rate.
Other than as disclosed below, management believes that no reasonably possible change in any of the
above key assumptions would cause the carrying value of any segment to materially exceed its
recoverable amount. The estimated recoverable amount of The Real Greek and Franco Manca
segments exceed their carrying values by £20,674,000 and £14,764,000 respectively. The changes in
the following table to assumptions used in the impairment review would, in isolation, lead to an
impairment loss being recognised for the year ended 25 March 2018:
Reduction in long term growth rate
Increase in pre-tax discount rate
The
Real Greek
%
(4.7%)
30.2%
Franco
Manca
%
(1.9%)
4.2%
50
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
8
PROPERTY, PLANT AND EQUIPMENT
Group
Leasehold
improvements
£’000
Plant and
equipment
£’000
Furniture,
fixtures
and
fittings
£’000
Assets
under
construction
£’000
Total
£’000
Cost
27 March 2016
Additions
Reclassification
Disposals
26 March 2017
Additions
Reclassification
Reclassification as
held for sale
Disposals
25 March 2018
Accumulated
depreciation
27 March 2016
Charge in the year
Disposals
26 March 2017
Charge in the year
Reclassification as
held for sale
Impairment
Disposals
25 March 2018
Net book value
25 March 2018
26 March 2017
14,835
2,097
818
1,543
19,293
9,020
1,452
(146)
–––––––––––
25,161
6,908
1,168
2,111
24
(9)
–––––––––––
4,223
768
5
–
–––––––––––
1,591
1,248
(1,481)
–
–––––––––––
1,310
13,147
–
(155)
–––––––––––
32,285
1,694
51
660
189
379
(1,408)
9,641
–
(552)
–
–––––––––––
32,685
–––––––––––
(75)
(6)
–––––––––––
5,887
–––––––––––
(17)
–
–––––––––––
2,423
–––––––––––
–
(61)
–––––––––––
220
–––––––––––
(644)
(67)
–––––––––––
41,215
–––––––––––
1,781
548
231
–
2,560
1,587
(12)
–––––––––––
3,356
649
(1)
–––––––––––
1,196
196
–
–––––––––––
427
–
–
–––––––––––
–
2,432
(13)
–––––––––––
4,979
2,339
1,052
334
–
3,725
(264)
949
–
–––––––––––
6,380
–––––––––––
26,305
–––––––––––
–––––––––––
21,805
–––––––––––
–––––––––––
(41)
83
(4)
–––––––––––
2,286
–––––––––––
3,601
–––––––––––
–––––––––––
3,027
–––––––––––
–––––––––––
(10)
30
–
–––––––––––
781
–––––––––––
1,642
–––––––––––
–––––––––––
1,164
–––––––––––
–––––––––––
–
–
–––––––––––
–
–––––––––––
220
–––––––––––
–––––––––––
1,310
–––––––––––
–––––––––––
(315)
1,062
(4)
–––––––––––
9,447
–––––––––––
31,768
–––––––––––
–––––––––––
27,306
–––––––––––
–––––––––––
During the year, the Group impaired the short term leasehold improvements in relation to the property
at D’Arblay Street, Soho, London which was sold after the year end (see Note 23) and a further two
properties trading as Franco Manca and one property trading as The Real Greek which are trading
financially below management expectation.
51
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
8
PROPERTY, PLANT AND EQUIPMENT (continued)
Impairment review of property, plant and equipment is reviewed when there is indication of impairment.
For the purposes of impairment testing of property, plant and equipment, the Directors consider each
restaurant unit as a separate cash generating units (CGUs). The recoverable amount for each CGU
was determined using a value in use calculation based upon management forecasts for the trading
results for those restaurants. Value in use calculations are based on:
l cash flow forecasts derived from the most recent approved financial budgets for the 2019 financial
year for the sites open at the end of March 2018;
l extrapolated cash flow over the remaining unexpired length of the lease years using forecast
growth rates based on run rate expectations for the initial five years that then reduce to the industry
growth rate of 2%;
l less estimated annual capital expenditure required to maintain the existing restaurants’ look and
feel in each segment based on historic refurbishment programmes;
l applied pre-tax discount rate to cash flow projections of 12.4% (2017: 14.3%) which is the rate
believed by the Directors to reflect the risks associated with the CGU using a WACC model with
comparison to other available restaurant businesses.
The Group has also conducted a sensitivity analysis on the impairment test of the CGU carrying value
including reducing sales level by reducing long term growth rate by 1 % and there is no reasonably
expected change that would give rise to an impairment charge.
The following impairment charges have been recognised in the Statement of Comprehensive Income
as exceptional costs – impairment of property, plant and equipment.
For continuing operations
Franco Manca Brighton Marina
Franco Manca restaurant 1
Total for Franco Manca operating segment
The Real Greek restaurant 1
Total for The Real Greek operating segment
Total for the Group
For discontinued operations
Bukowski Soho
25 March
2018
£’000
25 March
2018
£’000
Impairment
charge
Recoverable
amount
505
148
––––––––––––
653
214
––––––––––––
214
––––––––––––
867
––––––––––––
––––––––––––
–
437
––––––––––––
437
299
––––––––––––
299
––––––––––––
736
––––––––––––
––––––––––––
195
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
The recoverable amount for Bukowski Soho has been reclassified to Asset held for sale (see note 23).
52
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
8
PROPERTY, PLANT AND EQUIPMENT (continued)
Parent Company
Cost
27 March 2016
Additions
26 March 2017
Additions
25 March 2018
Accumulated depreciation
27 March 2016
Charge in the year
26 March 2017
Charge in the year
25 March 2018
Net book value
25 March 2018
26 March 2017
Leasehold
improvements
£’000
Plant and
equipment
£’000
Furniture,
fixtures
and
fittings
£’000
Total
£’000
3
29
10
42
202
–––––––––––
205
–
–––––––––––
205
–––––––––––
19
–––––––––––
48
7
–––––––––––
55
–––––––––––
15
–––––––––––
25
–
–––––––––––
25
–––––––––––
236
–––––––––––
278
7
–––––––––––
285
–––––––––––
3
25
3
31
13
–––––––––––
16
21
–––––––––––
37
–––––––––––
168
–––––––––––
–––––––––––
189
–––––––––––
–––––––––––
5
–––––––––––
30
8
–––––––––––
38
–––––––––––
17
–––––––––––
–––––––––––
18
–––––––––––
–––––––––––
2
–––––––––––
5
2
–––––––––––
7
–––––––––––
18
–––––––––––
–––––––––––
20
–––––––––––
–––––––––––
20
–––––––––––
51
31
–––––––––––
82
–––––––––––
203
–––––––––––
–––––––––––
227
–––––––––––
–––––––––––
All depreciation charges have been recognised in administrative expenses in the income statement.
All non-current assets are located in the United Kingdom.
53
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
9
INVESTMENTS
Group
Unlisted shares at cost
Loans
Carrying amount and cost
25 March
2018
£’000
26 March
2017
£’000
201
80
––––––––––––
281
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
Investments are recognised and derecognised on a trade date where a purchase or sale of an
investment is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, including transaction
costs and subsequently measured.
During the year the Group made an investment in Made of Dough Limited subscribing for 25% of the
equity. Although the investment is for more than 20% of the investee and includes one board
representation, the structure of the investee board, the shareholder agreement and the start up nature
of the business operations has led the Group to conclude that the Group does not have significant
influence over its operations and therefore not an associate.
Other investments classified as loans and receivables are stated at amortised cost using the effective
interest method, less any impairment.
Parent Company
Cost and net book value
Opening position
Investment in subsidiaries
Closing position
25 March
2018
£’000
26 March
2017
£’000
43,011
42,579
428
––––––––––––
43,439
––––––––––––
––––––––––––
432
––––––––––––
43,011
––––––––––––
––––––––––––
54
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
9
INVESTMENTS (continued)
As at 25 March 2018, the Company had the following subsidiary undertakings which are all registered
at 1st Floor, 50-51 Berwick Street, London W1F 8SJ:
Name of subsidiary
Class of
Holding
Proportion
of shares
held,
ownership
interest and
voting power
Nature of business
Incorporated in England and Wales
FM98 LTD Limited*
10DAS Limited
Café Pitfield Limited
Kefi Limited
The Real Greek Food Company Limited*
The Real Greek Wine Company Limited*
Souvlaki & Bar Limited*
CHG Brands Limited*
The Real Greek International Limited*
Franco Manca Holdings Limited
Franco Manca 2 UK Limited*
FM6 Limited*
FM111 Limited*
Franco Manca International Limited*
* Held by subsidiary undertaking
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
99%
100%
100%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
Operation of restaurants
Operation of restaurants
Dormant
Dormant
Operation of restaurants
Dormant
Dormant
Dormant
Dormant
Dormant
Operation of restaurants
Restaurant property
Restaurant property
Dormant
55
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
10
INVENTORIES
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
Raw materials and consumables
1,490
––––––––––––
––––––––––––
1,052
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
Inventories are charged to cost of sales in the consolidated comprehensive statement of income.
11
TRADE AND OTHER RECEIVABLES
Included within non-current assets:
Amounts receivable from subsidiaries
Other receivables
Included within current assets:
Trade receivables
Other receivables
Other taxation and social security costs
Prepayments and accrued income
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
–
943
––––––––––––
943
––––––––––––
–
947
––––––––––––
947
––––––––––––
11,724
–
––––––––––––
11,724
––––––––––––
7,974
–
––––––––––––
7,974
––––––––––––
1,095
319
–
1,911
––––––––––––
3,325
––––––––––––
4,268
––––––––––––
––––––––––––
847
179
–
1,576
––––––––––––
2,602
––––––––––––
3,549
––––––––––––
––––––––––––
3
–
–
132
––––––––––––
135
––––––––––––
11,859
––––––––––––
––––––––––––
53
–
11
120
––––––––––––
184
––––––––––––
8,158
––––––––––––
––––––––––––
Other receivables due after more than one year relate to rent deposits.
Receivables are denominated in sterling.
The Group and Company hold no collateral against these receivables at the balance sheet date. The
Directors consider that the carrying amount of receivables are recoverable in full and approximates to
their fair value.
56
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
12
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash and cash equivalents as
presented in the balance sheet
Bank overdraft
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
359
––––––––––––
271
––––––––––––
7
––––––––––––
–
––––––––––––
359
–
––––––––––––
359
––––––––––––
––––––––––––
271
(180)
––––––––––––
91
––––––––––––
––––––––––––
7
–
––––––––––––
7
––––––––––––
––––––––––––
–
(12)
––––––––––––
(12)
––––––––––––
––––––––––––
Bank balances comprise cash held by the company on a short term basis with maturity of three months
or less. The carrying amount of these assets approximates to their fair value.
13
TRADE AND OTHER PAYABLES
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
Included in current liabilities:
Trade payables
Other taxation and social security payable
Other payables
Accruals
Deferred income
5,622
1,350
208
4,206
135
––––––––––––
11,521
––––––––––––
––––––––––––
7,375
1,012
95
3,788
1,062
––––––––––––
13,332
––––––––––––
––––––––––––
113
117
29
629
–
––––––––––––
888
––––––––––––
––––––––––––
266
30
28
687
–
––––––––––––
1,011
––––––––––––
––––––––––––
Included in non-current liabilities:
Deferred income
1,470
––––––––––––
1,470
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
Trade payables were all denominated in sterling and comprise amounts outstanding for trade purchases
and ongoing costs and are non-interest bearing.
The Directors consider that the carrying amount of trade payables approximate to their fair value.
Deferred income relates to lease incentives received by the Group on restaurant leases acquired. For
the year ended 26 March 2017, included in current liabilities is £915,000 relating to non-current liabilities.
57
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
14
BORROWINGS
Short term borrowings:
Bank overdraft
Long term borrowings:
Bank loans
Amounts owed to subsidiary
undertakings
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
–
––––––––––––
180
––––––––––––
–
––––––––––––
12
––––––––––––
12,350
6,000
12,350
6,000
–
––––––––––––
12,350
––––––––––––
12,350
––––––––––––
––––––––––––
–
––––––––––––
6,000
––––––––––––
6,180
––––––––––––
––––––––––––
975
––––––––––––
13,325
––––––––––––
13,325
––––––––––––
––––––––––––
2,190
––––––––––––
8,190
––––––––––––
8,202
––––––––––––
––––––––––––
As at 25 March 2018, the Group’s committed Sterling borrowing facilities comprises a revolving credit
facility of £14,250,000 (2017: £6,000,000) expiring between two and five years and a bank overdraft
facility from HSBC Bank PLC which is secured by a mortgage debenture in favour of HSBC Bank PLC
representing fixed or floating charges over all assets of the Group. The interest rate applicable on this
bank loan is 2.50% above LIBOR.
The bank overdraft is repayable on demand with interest being charged at 2.5% over base rate and is
secured by a debenture giving fixed and floating charges over all assets of the Group.
Amounts owed to subsidiary undertakings are amounts borrowed from The Real Greek Food Company
Limited, a subsidiary of the Company and are repayable on 26 March 2020. The interest rate applicable
on the amounts owed to subsidiary undertakings is 3.5%.
58
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
15
FINANCIAL INSTRUMENTS
The Group is exposed to the risks that arise from its use of financial instruments. The Group’s finance
function provides a centralised service to all Group businesses for funding, foreign exchange and
interest rates management. Derivative instruments may be transacted solely for risk management
purposes. The management consider that the key financial risk factors of the business are liquidity
risks, market risk, foreign exchange risk and credit risk.
This note describes the objectives, policies and processes of the Group for managing those risks and
the methods used to measure them.
Financial Assets and Liabilities
The Group and Company had the following financial assets and liabilities:
25 March
2018
£’000
Group Parent company
26 March
2017
£’000
26 March 25 March
2017 2018
£’000 £’000
Non-current financial assets
Other investments
Amounts owed by subsidiary undertakings
Other receivables
281
–
943
–
–
947
–
11,724
–
–
7,974
–
Current financial assets
Cash at bank and in hand
Trade and other receivables*
Current financial liabilities
At amortised cost – borrowings
At amortised cost – payables**
Non-current financial liabilities
At amortised cost – borrowings
At amortised cost – payables
359
1,414
––––––––––––
2,997
––––––––––––
––––––––––––
271
1,026
––––––––––––
2,244
––––––––––––
––––––––––––
7
3
––––––––––––
11,734
––––––––––––
––––––––––––
–
53
––––––––––––
8,027
––––––––––––
––––––––––––
–
10,036
180
11,258
–
771
12
981
12,350
–
––––––––––––
22,386
––––––––––––
––––––––––––
6,000
–
––––––––––––
17,438
––––––––––––
––––––––––––
12,350
975
––––––––––––
14,096
––––––––––––
––––––––––––
6,000
2,190
––––––––––––
9,183
––––––––––––
––––––––––––
* excludes other taxation and social security receivable and prepayments included in trade and other receivables
in note 11.
** excludes other taxation and social security and deferred income included in trade and other payables in note 13.
59
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
15
FINANCIAL INSTRUMENTS (continued)
The maturity analysis table below analyses the Group’s financial assets and liabilities into relevant
maturity groupings based on the remaining period at the balance sheet to the contractual maturity date.
The amounts disclosed in the table are contractual undiscounted cash flows.
For the year ended 25 March 2018
Other investments
Cash at bank and in hand
Trade and other receivables
Bank loans and overdrafts
Trade and other payables
For the year ended 26 March 2017
Cash at bank and in hand
Trade and other receivables
Bank loans
Trade and other payables
Less than
1 year
£’000
–
359
1,414
–
(10,036)
––––––––––––
(8,263)
––––––––––––
––––––––––––
Less than
1 year
£’000
271
1,026
(180)
(11,258)
––––––––––––
(10,108)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
More
than
5 years
£’000
Total
£’000
80
–
43
(12,350)
–
––––––––––––
(12,224)
––––––––––––
––––––––––––
201
–
900
–
–
––––––––––––
1,101
––––––––––––
––––––––––––
281
359
2,357
(12,350)
(10,036)
––––––––––––
(19,389)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
More
than
5 years
£’000
Total
£’000
–
47
(6,000)
–
––––––––––––
(5,953)
––––––––––––
––––––––––––
–
900
–
–
––––––––––––
900
––––––––––––
––––––––––––
271
1,973
(6,180)
(11,258)
––––––––––––
(15,194)
––––––––––––
––––––––––––
The financial instruments recognised on the balance sheets and shown above are all loans and
receivables and financial liabilities at amortised cost.
60
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
15
FINANCIAL INSTRUMENTS (continued)
The maturity analysis table below analyses the Company’s financial assets and liabilities into relevant
maturity groupings based on the remaining period at the balance sheet to the contractual maturity date.
The amounts disclosed in the table are contractual undiscounted cash flows.
For the year ended 25 March 2018
Trade and other receivables
Bank loans and overdrafts
Trade and other payables
For the year ended 26 March 2017
Trade and other receivables
Bank loans and overdrafts
Trade and other payables
Less than
1 year
£’000
Between
1 and
5 years
£’000
Total
£’000
3
–
(771)
––––––––––––
(768)
––––––––––––
––––––––––––
11,724
(12,350)
(975)
––––––––––––
(1,601)
––––––––––––
––––––––––––
11,727
(12,350)
(1,746)
––––––––––––
(2,369)
––––––––––––
––––––––––––
Less than
1 year
£’000
Between
1 and
5 years
£’000
Total
£’000
53
(12)
(983)
––––––––––––
(942)
––––––––––––
––––––––––––
7,974
(6,000)
(2,190)
––––––––––––
(216)
––––––––––––
––––––––––––
8,027
(6,012)
(3,173)
––––––––––––
(1,158)
––––––––––––
––––––––––––
The financial instruments recognised on the balance sheets and shown above are all loans and
receivables and financial liabilities at amortised cost.
Liquidity Risks
The Group and Company had a committed long term revolving credit facility of £14,250,000 (2017:
£6,000,000) and short term bank overdraft facilities available to manage its liquidity as at 25 March
2018 of £750,000 (2017: £500,000).
61
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
15
FINANCIAL INSTRUMENTS (continued)
Market Risks
The Group’s market risk exposure arises mainly from its floating interest rate interest bearing
borrowings. Only the following financial assets and liabilities were interest bearing:
25 March
2018
£’000
Group Parent company
26 March
2017
£’000
25 March
2018
£’000
26 March
2017
£’000
Floating rate
Other investments
Cash at bank and in hand
Bank overdraft
Bank loans
80
359
–
(12,350)
––––––––––––
(11,911)
––––––––––––
––––––––––––
–
271
(180)
(6,000)
––––––––––––
(5,909)
––––––––––––
––––––––––––
–
–
–
(12,350)
––––––––––––
(12,350)
––––––––––––
––––––––––––
–
–
(12)
(6,000)
––––––––––––
(6,012)
––––––––––––
––––––––––––
Trade and other receivables and trade and other payables are all non-interest bearing.
Weighted average interest rates paid for bank loans during the year ended 25 March 2018 were 1.9%
and year ended 26 March 2017 were 1.9% and the weighted average interest rates paid for bank
overdrafts during the year ended 25 March 2018 were 2.5% and year ended 26 March 2017 were 2.5%.
The Group has derived a sensitivity analysis based on a 0.5% variance in LIBOR element of floating
interest rates. The annualised impact of an increase in LIBOR by 0.5% applied to the balance of floating
rate bank loans at the year end would be £61,750 (2017: £30,000).
Foreign Exchange Risks
During the years ended 25 March 2018 and 26 March 2017, the Group did not receive or pay significant
amounts denominated in foreign currencies. As purchasing from foreign franchised territories that is
not denominated or agreed in Sterling increase to a significant level, the Group will implement a foreign
exchange management policy.
Credit Risks
The Group’s exposure to credit risk arises mainly from as follows:
25 March
2018
£’000
Group Parent company
26 March
2017
£’000
25 March
2018
£’000
26 March
2017
£’000
Other investments
Cash at bank and in hand
Trade receivables and other receivables
80
359
1,414
––––––––––––
1,853
––––––––––––
––––––––––––
–
271
1,026
––––––––––––
1,297
––––––––––––
––––––––––––
–
–
11,734
––––––––––––
11,734
––––––––––––
––––––––––––
–
–
8,027
––––––––––––
8,027
––––––––––––
––––––––––––
The carrying amounts of the above assets are considered to be recoverable in full and approximate to
their fair value. They are neither past due nor impaired:
62
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
15
FINANCIAL INSTRUMENTS (continued)
The majority of the Group’s cash balances have been held in current accounts at HSBC Bank PLC
during the years ended 25 March 2018 and 26 March 2017 and did not earn any significant interest.
The majority of the Group’s trade receivables are due for maturity within 7 days and largely comprise
amounts receivable from credit and debit card clearing houses.
Fair Values of Financial Assets and Financial Liabilities
The fair value amounts of the Group’s financial assets and liabilities as at 25 March 2018 and 26 March
2017 did not materially vary from the carrying value amounts.
16
DEFERRED TAXATION
Analysis of movements in net deferred tax balance during the period:
25 March
2018
£’000
Group Parent company
26 March
2017
£’000
25 March
2018
£’000
26 March
2017
£’000
Opening position
(859)
(1,163)
1,238
825
Adjustment in relation to prior year
cumulative deferred tax on share based
payments error
Tax on share based payments
Transfer from/(to) reserves
Adjustment in relation to brought
forward deferred tax errors*
Movement in accelerated capital
Allowances – continuing
– discontinued
Tax on share based payments
Tax on intangible assets
Transfer from/(to) profit and loss
Net deferred tax (liability)/asset
(484)
(583)
––––––––––––
(1,067)
–
–
––––––––––––
307
(498)
(484)
––––––––––––
(992)
–
–
––––––––––––
258
218
–
–
–
17
13
–
(45)
137
––––––––––––
340
––––––––––––
(1,586)
––––––––––––
––––––––––––
(476)
(11)
–
212
271
––––––––––––
(3)
––––––––––––
(859)
––––––––––––
––––––––––––
–
–
–
(50)
–
––––––––––––
(50)
––––––––––––
196
––––––––––––
––––––––––––
–
–
–
155
–
––––––––––––
155
––––––––––––
1,238
––––––––––––
––––––––––––
During the year ended 25 March 2018, the Group transferred £1,067,000 deferred tax charge to
reserves (2017: £307,000 credit to reserves) in relation to deferred tax on share based payments which
included £484,000 error relating to the year ended 26 March 2017 and before. The remaining £583,000
deferred tax charge to reserves is a result of the change in share price during the financial year.
* Included above is an adjustment for brought forward deferred taxation which has been credited to the Statement
of Comprehensive Income as follows:
o £211,000 reduction in deferred tax liability on capital allowances in relation to capital allowances
incorrectly estimated on assets treated as revenue items for tax purposes in the year ended
27 March 2016 and before;
63
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
16
DEFERRED TAXATION (continued)
o £108,000 reduction in deferred tax liability from a reduction of tax rate to 17%, being the
substantially enacted tax rate for future periods rather than 19% and 20% rates previously applying
in the previous years; and
o £101,000 reduction in deferred tax asset on share based payments relating to a correction to the
methodology used to calculate deferred tax assets.
The Directors believe that these adjustments are not material to the comparative year’s results.
The Group’s deferred taxation liability disclosed above relates to the following:
25 March
2018
£’000
Group Parent company
26 March
2017
£’000
25 March
2018
£’000
26 March
2017
£’000
Deferred tax assets
Share options
Deferred taxation assets
Deferred tax liabilities
Accelerated capital allowances
Intangible assets
Deferred taxation liabilities
193
––––––––––––
193
––––––––––––
––––––––––––
1,406
––––––––––––
1,406
––––––––––––
––––––––––––
185
––––––––––––
185
––––––––––––
––––––––––––
1,238
––––––––––––
1,238
––––––––––––
––––––––––––
829
950
––––––––––––
1,779
––––––––––––
––––––––––––
1,178
1,087
––––––––––––
2,265
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
The Company has losses of £283,000 (2017: £283,000) which, subject to agreement with HM Revenue
& Customs, are available to offset against the Company’s future profits. A deferred taxation asset in
respect of these losses of £51,000 (2017: £57,000) has not been recognised in the financial statements.
Although the directors are confident that the Company will achieve future profitability in line with current
expectations, the timing of such profits is uncertain and therefore the directors have not recognised
the entire deferred tax asset. The Directors have recognised deferred tax assets in relation to the share
based payment charge recognised in the year as such deferred tax asset may be used against future
group tax relief.
17
SHARE CAPITAL
25 March
2018
£’000
Group Parent company
26 March
2017
£’000
25 March
2018
£’000
26 March
2017
£’000
Allotted, issued called up and fully paid:
571,385,237 (2017: 571,385,237)
ordinary shares of 1p each
5,714
––––––––––––
––––––––––––
5,714
––––––––––––
––––––––––––
5,714
––––––––––––
––––––––––––
5,714
––––––––––––
––––––––––––
The Company has one class of ordinary share which carries no rights to fixed income.
64
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
18
SHARE BASED PAYMENTS
The Group currently uses a number of equity settled share plans to incentivise to its Directors and
employees.
The Group operates four share plans:
l The Fulham Shore Enterprise Management Incentive (“EMI”) Share Option Plan;
l The Fulham Shore Unapproved Share Option Plan (“Unapproved Plan”);
l The Fulham Shore Company Share Option Plan (“CSOP”); and
l The Fulham Shore Share Incentive Plan (“SIP”)
The Group’s Share Plans provide for a grant price equal to the market price of the Company shares on
the date of grant. The vesting period on all Share Plans except the SIP is 3 years with an expiration
date 7 to 10 years from the date of grant. Furthermore, share options are forfeited if the employee
leaves the Group before the options vest unless forfeiture is waived at the discretion of the
Remuneration Committee. For the SIP, the vesting period ranges from 1 day to 3 years with an expiration
date 10 years from the date of grant. For the initial grant under the SIP, the shares are not forfeited if
the employee leaves the Group before vesting. On all schemes, there are no other material vesting
conditions.
The charge recorded in the financial statements of the Group in respect of share-based payments is
£616,000 (2017: £631,000).
The Fulham Shore EMI, Unapproved Plan and CSOP
Outstanding share options under The Fulham Shore EMI, The Fulham Shore Unapproved Share Option
Plan and The Fulham Shore CSOP to acquire ordinary shares of 1 pence each as at 25 March 2018
are as follows:
At the beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
At the end of the year
Year
ended
25 March
2018
‘000
Year
ended
26 March
2017
‘000
60,608
55,625
2,950
–
(925)
––––––––––––
62,633
––––––––––––
––––––––––––
7,200
(1,116)
(1,101)
––––––––––––
60,608
––––––––––––
––––––––––––
65
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
18
SHARE BASED PAYMENTS (continued)
Weighted average exercise price
At the beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
At the end of the year
Year
ended
25 March
2018
£’000
Year
ended
26 March
2017
£’000
0.09
0.08
0.18
–
(0.18)
––––––––––––
0.10
––––––––––––
––––––––––––
0.18
(0.02)
(0.11)
––––––––––––
0.09
––––––––––––
––––––––––––
Outstanding and exercisable share options to acquire ordinary shares of 1 pence each as at 25 March
2018 under various Group share plans are as follows:
For the year ended 25 March 2018
Range of
exercise prices
Options outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
Options exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
EMI
£0.02
£0.05
£0.06
Unapproved
£0.05
£0.06
£0.11
£0.17625
£0.1775
£0.1825
CSOP
£0.17625
£0.1775
£0.1825
2,232
2,779
9,440
––––––––––––
14,451
––––––––––––
––––––––––––
0.0200
0.0500
0.0600
––––––––––––
0.0519
––––––––––––
––––––––––––
23
35
43
––––––––––––
38
––––––––––––
––––––––––––
2,232
2,779
9,440
––––––––––––
5,011
––––––––––––
––––––––––––
0.0200
0.0500
0.0600
––––––––––––
0.0519
––––––––––––
––––––––––––
23
35
43
––––––––––––
38
––––––––––––
––––––––––––
554
13,805
24,673
1,285
162
2,064
––––––––––––
42,543
––––––––––––
––––––––––––
0.0500
0.0600
0.1100
0.1763
0.1775
0.1825
––––––––––––
0.0988
––––––––––––
––––––––––––
35
43
49
111
107
99
––––––––––––
50
––––––––––––
––––––––––––
554
13,805
–
0.0500
0.0600
–
35
43
–
–
–
––––––––––––
14,359
––––––––––––
––––––––––––
–
–
––––––––––––
0.0596
––––––––––––
––––––––––––
–
–
––––––––––––
35
––––––––––––
––––––––––––
1,465
738
3,436
––––––––––––
5,639
––––––––––––
––––––––––––
0.1763
0.1775
0.1825
––––––––––––
0.1802
––––––––––––
––––––––––––
111
107
99
––––––––––––
103
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
66
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
18
SHARE BASED PAYMENTS (continued)
Range of
exercise prices
Options outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
Options exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
EMI
£0.02
£0.05
£0.06
Unapproved
£0.05
£0.06
£0.11
£0.1775
£0.1825
CSOP
£0.1775
£0.1825
2,232
2,779
9,440
––––––––––––
14,451
––––––––––––
––––––––––––
0.0200
0.0500
0.0600
––––––––––––
0.0519
––––––––––––
––––––––––––
35
47
55
––––––––––––
50
––––––––––––
––––––––––––
2,232
2,779
–
––––––––––––
5,011
––––––––––––
––––––––––––
0.0200
0.0500
–
––––––––––––
0.0366
––––––––––––
––––––––––––
35
47
–
––––––––––––
42
––––––––––––
––––––––––––
554
13,805
24,673
293
2,114
0.0500
0.0600
0.1100
0.1775
0.1825
47
55
61
119
111
554
–
–
–
–
0.0500
–
–
–
–
47
–
–
–
–
––––––––––––
41,439
––––––––––––
––––––––––––
––––––––––––
0.0967
––––––––––––
––––––––––––
––––––––––––
62
––––––––––––
––––––––––––
––––––––––––
554
––––––––––––
––––––––––––
––––––––––––
0.0500
––––––––––––
––––––––––––
––––––––––––
47
––––––––––––
––––––––––––
907
3,811
––––––––––––
4,718
––––––––––––
––––––––––––
0.1775
0.1825
––––––––––––
0.1815
––––––––––––
––––––––––––
119
111
––––––––––––
113
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
During the year ended 25 March 2018, the market price of ordinary shares in the Company ranged
from £0.0900 (2017: £0.1525) to £0.2238 (2017: £0.2235). The share price as at 25 March 2018 was
£0.0935 (2017: £0.1788).
The fair value of the options is estimated at the date of grant using a Black-Scholes valuation model.
Expected life of options used in the model is based on management’s best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
67
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
18
SHARE BASED PAYMENTS (continued)
Expected volatility was determined by calculating the historical 90 days volatility of the Group’s share
price over the previous 180 days. The inputs to the Black Scholes model were as follows:
Year
ended
25 March
2018
Year
ended
26 March
2017
Weighted average expected life
Weighted average exercise price
Risk free rate
Expected volatility
3 years
3 years
17.625 pence 17.75 to 18.25
pence
0.50%
32.1% to
40.0%
––––––––––––
––––––––––––
0.50%
34.1%
––––––––––––
––––––––––––
The Fulham Shore SIP
The Fulham Shore SIP was introduced during the year ended 27 March 2015. Outstanding ordinary
shares of 1 pence each granted under The Fulham Shore SIP as at 25 March 2018 are as follows:
At the beginning and end of the year
For the year ended 25 March 2018
Year
ended
25 March
2018
’000
Year
ended
26 March
2017
’000
591
––––––––––––
––––––––––––
591
––––––––––––
––––––––––––
Range of
exercise prices
SIP shares outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
SIP shares exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
Nil
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
85
––––––––––––
85
––––––––––––
––––––––––––
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
85
––––––––––––
85
––––––––––––
––––––––––––
68
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
18
SHARE BASED PAYMENTS (continued)
For the year ended 26 March 2017
Range of
exercise prices
SIP shares outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
SIP shares exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
’000
Nil
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
97
––––––––––––
97
––––––––––––
––––––––––––
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
97
––––––––––––
97
––––––––––––
––––––––––––
The fair value of the SIP shares is estimated at the date of grant using a Black-Scholes valuation
model.
Warrants
Outstanding share warrants in the Company to acquire ordinary shares of 1 pence each as at 25 March
2018 are as follows:
At the beginning of the year
Exercised during the year
At the end of the year
25 March
2018
’000
26 March
2017
’000
–
–
––––––––––––
–
––––––––––––
––––––––––––
1,116
(1,116)
––––––––––––
–
––––––––––––
––––––––––––
69
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
19
NOTE TO CASH FLOWS STATEMENTS
Reconciliation of net cash flows from operating activities
(Loss)/profit from continuing operations
Loss from discontinued operations
(Loss)/profit for the year
Income tax expense
(Loss)/profit before tax
Finance income
Finance costs
Operating profit for the year
Adjustments
Depreciation and amortisation
Impairment
Loss on disposal of fixed assets
Share based payments expense
Cost of acquisition
Operating cash flows before movements
in working capital
Increase in inventories
(Increase)/decrease in trade and other
receivables
Increase in trade and other payables
Cash generated from/(used in) operations
Year
ended
25 March
2018
£’000
(150)
(415)
––––––––––––
(565)
27
––––––––––––
(538)
(2)
254
––––––––––––
(286)
Group
Year
ended
26 March
2017
£’000
1,209
(240)
––––––––––––
969
175
––––––––––––
1,144
(1)
135
––––––––––––
1,278
Year
ended
25 March
2018
£’000
(1,566)
–
––––––––––––
(1,566)
61
––––––––––––
(1,505)
(465)
312
––––––––––––
(1,658)
Parent
Year
ended
267 March
2017
£’000
(436)
–
––––––––––––
(436)
(147)
––––––––––––
(583)
(261)
209
––––––––––––
(635)
4,575
1,062
63
616
–
––––––––––––
3,269
–
2
631
26
––––––––––––
31
1,004
–
188
–
––––––––––––
20
–
–
199
–
––––––––––––
6,030
(438)
5,206
(365)
(435)
–
(416)
–
(719)
63
––––––––––––
4,936
(1,166)
6,866
––––––––––––
10,541
(268)
––––––––––––
10,273
––––––––––––
––––––––––––
49
(123)
––––––––––––
(509)
–
––––––––––––
(509)
––––––––––––
––––––––––––
19
188
––––––––––––
(209)
–
––––––––––––
(209)
––––––––––––
––––––––––––
Income taxes paid
Net cash flow from operating activities
(414)
––––––––––––
4,522
––––––––––––
––––––––––––
70
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
19
NOTE TO CASH FLOWS STATEMENTS (continued)
Year
ended
25 March
2018
£’000
Group
Year
ended
26 March
2017
£’000
Year
ended
25 March
2018
£’000
Parent
Year
ended
267 March
2017
£’000
Cash flow from acquisition of subsidiaries
Consideration paid on acquisition
Cost of acquisition of subsidiary
Net cash flow from acquisition of
subsidiaries
–
–
––––––––––––
(350)
(26)
––––––––––––
–
–
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
(376)
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
20
COMMITMENTS UNDER OPERATING LEASES
The Group had aggregate minimum lease payments under non-cancellable operating leases which fall
due as follows:
Land and buildings
within one year
in two to five years
after five years
Others
within one year
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
6,043
22,652
48,711
––––––––––––
77,406
––––––––––––
21
––––––––––––
21
––––––––––––
77,427
––––––––––––
––––––––––––
4,685
17,779
41,478
––––––––––––
63,942
––––––––––––
21
––––––––––––
21
––––––––––––
63,963
––––––––––––
––––––––––––
136
261
–
––––––––––––
397
––––––––––––
–
––––––––––––
–
––––––––––––
397
––––––––––––
––––––––––––
136
397
–
––––––––––––
533
––––––––––––
–
––––––––––––
–
––––––––––––
533
––––––––––––
––––––––––––
Included above are certain annual lease commitments relating to a subsidiary company that have been
guaranteed by the parent company.
Operating lease payments for land and buildings represent rent payable by the Group for a restaurant
property. Leases either negotiated as a new lease or acquired through lease assignment have an
average term of 20 years and rentals are fixed for an average of 5 years.
71
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
21
CAPITAL COMMITMENTS
The Group capital expenditure contracted for but not provided in the financial statements as follows:
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
Committed new restaurant builds
–
––––––––––––
––––––––––––
3,692
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
22
RELATED PARTY DISCLOSURES
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Group is provided
in the Report on Directors Remuneration on pages 18 to 21, and in note 3. Details of share options
granted to Directors are also shown in the Report on Directors Remuneration.
Other related party transactions
During the year, the Group provided restaurant management or operation services to the following
companies in which DM Page and NAG Mankarious are directors and shareholders:
Amounts invoiced
(including VAT)
Bukowski Limited
Wild Food Ideas Limited
Amounts outstanding at
year end
Bukowski Limited
Wild Food Ideas Limited
Year
ended
25 March
2018
£’000
Group
Year
ended
26 March
2017
£’000
Year
ended
25 March
2018
£’000
Parent company
Year
ended
26 March
2017
£’000
–
4
––––––––––––
4
––––––––––––
––––––––––––
(3)
12
––––––––––––
9
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
25 March
2018
£’000
Group
26 March
2017
£’000
25 March
2018
£’000
Parent company
26 March
2017
£’000
–
–
––––––––––––
–
––––––––––––
––––––––––––
1
1
––––––––––––
2
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
72
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
22
RELATED PARTY DISCLOSURES (continued)
During the year, the Group was invoiced £83,000 (2017: £98,000) for the services of NJ Donaldson by
London Bridge Capital Partners LLP, a company in which NJ Donaldson is a director, and the balance
outstanding at 25 March 2018 was £33,000 (2017: £33,000).
During the year, the Group was invoiced £146,000 (2017: £161,000) for franchise fees and products by
Bukowski Limited, a company in which NAG Mankarious is a director and DM Page and NAG
Mankarious are shareholders. The balance outstanding at 25 March 2018 was £19,000 (2017: £21,000).
The Group also acquired equipment of £18,000 (2017: £Nil) from Bukowski Limited and the balance
owed by the Group outstanding at 25 March 2018 was £18,000 (2017: £Nil)
During the year, the Group was invoiced £936,000 (2016: £643,000) for restaurant management
services by Room 307 Limited, a company in which NAG Mankarious and NCW Wong are directors
and DM Page, NAG Mankarious and NCW Wong are shareholders. The balance outstanding at
25 March 2018 was £266,000 (2017: £299,000).
During the year, the Group was invoiced £171,000 (2017: £128,000) for information technology services
by Restaurants IT Limited, a company in which NCW Wong is a director and DM Page, NAG Mankarious
and NCW Wong are shareholders. The balance outstanding at 25 March 2018 was £61,000 (2017:
£63,000).
During the year, the Group invoiced £86,000 (2017: £Nil) in rent relating to a property leased to Fixed
Restaurants Limited, a company in which DM Page, NAG Mankarious, NJ Donaldson and NCW Wong
are directors and indirect shareholders. The balance outstanding as at 25 March 2018 was £Nil (2017:
£Nil).
During the year, the Group and Company invoice £3,000 (2017: £Nil) for desk space provided to
Meatailer Limited, a company in which DM Page and NAG Mankarious are directors and shareholders
and NJ Donaldson and NCW Wong are shareholders. The balance outstanding as at 25 March 2018
was £3,000 (2017: £Nil).
Transactions between the Company and its subsidiaries
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated
on consolidation. During the year, the Company provided restaurant management services to the
following subsidiaries:
Amounts invoiced
(including VAT) Parent company
Year
ended
26 March
2017
£’000
Year
ended
25 March
2018
£’000
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
57
603
806
––––––––––––
1,466
––––––––––––
––––––––––––
49
624
794
––––––––––––
1,467
––––––––––––
––––––––––––
73
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
22
RELATED PARTY DISCLOSURES (continued)
During the year the Company also loaned amounts to the following subsidiaries:
Amounts loaned/(repaid Parent company
Year
ended
26 March
2017
£’000
Year
ended
25 March
2018
£’000
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
331
1,215
4,423
––––––––––––
5,969
––––––––––––
––––––––––––
324
(1,098)
3,326
––––––––––––
2,552
––––––––––––
––––––––––––
Amounts outstanding at
year end Parent company
26 March
2017
£’000
25 March
2018
£’000
FM98 LTD Limited
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
–
1,233
(975)
11,494
––––––––––––
11,752
––––––––––––
––––––––––––
–
902
(2,190)
7,072
––––––––––––
5,784
––––––––––––
––––––––––––
The Company is a legal guarantor and a party to an agreement in which 10DAS Limited, a subsidiary
company, entered into a lease of a restaurant space. The total potential aggregate minimum lease
payments under this guarantee at the end of the year were £1,462,000 (2017: £1,587,000). This
commitment is included in the Group disclosure in note 20. Following the year end, the guarantee was
released.
74
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
23
DISCONTINUED OPERATION AND NON-CURRENT ASSETS CLASSED AS HELD FOR SALE
During the period, the Group committed to the disposal of the property and business of the Bukowski
franchise at D’Arblay Street, Soho, London within the next 6 months. The sale completed following the
year end in April 2018. An impairment loss was recognised on reclassification of the property, plant
and equipment as held for sale.
Revenue
Expenses
Operating loss
Net finance costs
Loss before taxation
Income taxation expense
Impairment
Loss from discontinued operations attributable to the owners
of the company
Year
ended
25 March
2018
£’000
617
(850)
––––––––––––
(233)
–
––––––––––––
(233)
13
––––––––––––
(220)
(195)
––––––––––––
Year
ended
26 March
2017
£’000
833
(1,062)
––––––––––––
(229)
–
––––––––––––
(229)
(11)
––––––––––––
(240)
–
––––––––––––
(415)
––––––––––––
––––––––––––
(240)
––––––––––––
––––––––––––
Cash flows from discontinued operations included in the consolidated cash flow statement are as
follows:
Net cash used in operating activities
Net cash used in investing activities
(301)
18
––––––––––––
(283)
––––––––––––
––––––––––––
329
––––––––––––
––––––––––––
(163)
(114)
––––––––––––
(277)
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
Property, plant and equipment held for sale
The impairment charge above relates to the impairment of the property, plant and equipment for the
D’Arblay Street restaurant business. The Group expect the fair value (estimated based on final offer
from the buyer of the property following the year end) less costs to be approximately £329,000. There
are no liabilities expected to be held for sale.
75
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 25 March 2018
24
SUBSEQUENT EVENTS
See Note 23 for details of the disposal of the D’Arblay Street restaurant site following year end.
In July 2018, the Group agreed terms to terminate the outstanding lease for the Franco Manca Brighton
Marina restaurant.
76
THE FULHAM SHORE PLC
DIRECTORS, OFFICERS AND ADVISERS
DIRECTORS
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
MA Chapman
DAL Gunewardena
Chairman
Managing Director
Director
Finance Director
Non-executive Director
Non-executive Director
COMPANY SECRETARY
NJ Donaldson
REGISTERED OFFICE
REGISTERED IN ENGLAND
1st Floor
50-51 Berwick Street
London W1F 8SJ
AUDITOR
RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
NOMINATED ADVISER, JOINT
FINANCIAL ADVISER AND BROKER
Allenby Capital Limited
5 St. Helen’s Place
London EC3A 6AB
REGISTRARS
Equiniti David Venus Limited
(trading as SLC Registrars)
Ashley Park House,
42 – 50 Hersham Road
Walton-on-Thames
Surrey, KT12 1RZ
Number 07973930
SOLICITORS
Marriott Harrison LLP
11 Staple Inn
London WC1V 7QH
JOINT FINANCIAL ADVISER
London Bridge Capital Partners LLP
No.4, 81 Alderney Street
London SW1V 4HF
BANKERS
HSBC Bank PLC
71 Queen Victoria Street
London, EC4V 4AY
77
THE FULHAM SHORE PLC
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of the Company will be held at 09.00am on 23 August
2018 at Franco Manca, 7 Sir Simon Milton Square, Victoria Street, London, SW1E 5DJ to consider, and if
thought fit, pass the following resolutions. Resolutions 1, 2, 3, 4, 5, and 6 shall be proposed as ordinary
resolutions and resolution 8 as a special resolution:
ORDINARY RESOLUTIONS
1.
to receive and adopt the Report of the Directors, the financial statements and the report of the auditors
for the period ended 25 March 2018.
2.
to receive and approve the Report on Directors’ Remuneration for the period ended 25 March 2018.
3.
4.
5.
to re-appoint Mr Nabil Ayad Gerges Mankarious, who retires by rotation under the Company’s Articles
of Association as a director of the Company.
to re-appoint RSM UK Audit LLP as auditors of the Company to hold office from the conclusion of this
meeting until the conclusion of the next general meeting at which financial statements are laid before
the Company and to authorise the Directors to determine their remuneration.
in accordance with section 551 of the Companies Act 2006, the directors of the Company (the
“Directors”) be generally and unconditionally authorised to allot shares in the Company or grant rights
to subscribe for or convert any security into shares in the Company with the meaning of that section on
and subject to such terms as the Directors may determine up to an aggregate nominal amount of
£2,856,926.00 provided that this authority shall, unless renewed, varied or revoked by the Company,
expire at the conclusion of the Company’s next annual general meeting, save that the Company may,
before such expiry, make an offer or agreement which would or might require shares to be allotted and
the Directors may allot shares in pursuance of such offer or agreement notwithstanding that the
authority conferred by this resolution has expired. This resolution revokes and replaces all unexercised
authorities previously granted to the Directors to allot shares in the Company or grant rights to subscribe
for or convert any security into shares in the Company but without prejudice to any allotment of shares
or grant of rights already made, offered or agreed to be made pursuant to such authorities.
SPECIAL RESOLUTION
6. subject to and conditional upon the passing of resolution 5 and in accordance with section 570 of the
Companies Act 2006 (the “Act”), the Directors be generally empowered to allot equity securities (as
defined in section 560 of the Act) pursuant to the authority conferred by resolution 6, as if section 561(1)
of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment
of equity securities up to an aggregate nominal value of £857,078.00. This resolution revokes and
replaces all unexercised powers previously granted to the Directors to allot equity securities as if section
561(1) of the Act did not apply but without prejudice to any allotment of equity securities already made
or agreed to be made pursuant to such authorities.
BY ORDER OF THE BOARD
DM Page
Chairman
1st Floor
50-51 Berwick Street
London W1F 8SJ
23 July 2018
78
THE FULHAM SHORE PLC
NOTICE OF ANNUAL GENERAL MEETING
Notes
1. Shareholders entitled to attend and vote at the AGM may appoint a proxy or proxies to attend and speak
on their behalf. A shareholder may appoint more than one proxy in relation to the AGM provided that
each proxy is appointed to exercise the rights attached to a different share or shares held by that
shareholder. A proxy need not be a member of the Company.
2. To appoint more than one proxy you may photocopy the proxy form which accompanies this notice.
Investors who hold their shares through a nominee may wish to attend the AGM as a proxy, or to arrange
for someone else to do so for them, in which case they should discuss this with their nominee or
stockbroker.
3. Completion of the proxy form will not prevent a shareholder from attending and voting at the AGM if
subsequently he/she finds they are able to do so. To be effective, it must be deposited at Equiniti David
Venus Limited (trading as SLC Registrars), 42-50 Hersham Road, Walton-on-Thames, Surrey,
KT12 1RZ by not later than 09:00am on 21 August 2017 or, in the case of an adjournment, 48 hours
prior to the time of the adjourned AGM (Saturdays and Public Holidays excluded).
4. Representatives of shareholders which are corporations attending the AGM should produce evidence
of their appointment by an instrument executed in accordance with section 44 of the Companies Act
2006 or signed on behalf of the corporation by a duly authorised officer or agent and in accordance
with article 83 of the Company’s Articles of Association.
5.
In order to facilitate voting by corporate representatives at the AGM, arrangements will be put in place
at the AGM so that (i) if a corporate shareholder has appointed the chairman of the AGM as its
corporate representative to vote on a poll in accordance with the directions of all the other corporate
representatives for that shareholder at the AGM, then on a poll those corporate representatives will
give voting directions to the chairman and the chairman will vote (or withhold a vote) as corporate
representative with those directions; and (ii) if more than one corporate representative for the same
corporate shareholder attends the AGM but the corporate shareholder has not appointed the chairman
of the AGM as its corporate representative, a designated corporate representative will be nominated,
from those corporate representatives who attend, who will vote on a poll and the other corporate
representatives will give voting directions to that designated corporate representative. Corporate
shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and
Administrators on proxies and corporate representatives (www.icsa.org.uk) for further details of this
procedure.
6. The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies
that only those holders of ordinary shares in the capital of the Company registered in the register of
members of the Company at 6:30pm on 21 August 2018 (being 48 hours prior to the time fixed for the
AGM) shall be entitled to attend and vote at the AGM in respect of such number of shares registered
in their name at that time. Changes to entries in the register of members after 6:30pm on 21 August
2018 shall be disregarded in determining the rights of any person to attend or vote at the AGM.
7. Details of those Directors seeking re-election are given on page 10 of the Report and Financial
Statements. The details of the service contracts for the Executive Directors are set out in the Report
on Directors’ Remuneration on pages 18 to 21 of the Report and Financial Statements. The Register
of Directors’ Interests and the Directors’ service agreements will be available for inspection during usual
business hours on any weekday (Saturdays and Public Holidays excluded) at the registered office of
the Company until the date of the Annual General Meeting and at the place of the meeting for
15 minutes prior to and until the termination of the meeting.
79
Perivan Financial Print 251067
REPORT & FINANCIAL STATEMENTS
Year ended 25 March 2018