The Fulham Shore PLC
1st Floor 50-51 Berwick Street
London W1F 8SJ
Tel: 020 3026 8129
Email: info@fulhamshore.com
www.fulhamshore.com
REPORT & FINANCIAL STATEMENTS
Year ended 31 March 2019
Our Restaurants
www.francomanca.co.uk
www.therealgreek.com
Perivan 255383
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THE FULHAM SHORE PLC
TABLE OF CONTENTS
BACKGROUND AND HIGHLIGHTS
CHAIRMAN’S STATEMENT
FINANCIAL REVIEW
BOARD OF DIRECTORS
CORPORATE GOVERNANCE STATEMENT
REPORT ON DIRECTORS’ REMUNERATION
DIRECTORS’ REPORT
STATEMENT ON DIRECTORS’ RESPONSIBILITIES
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
11
13
15
19
23
24
29
30
32
33
34
35
46
83
84
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THE FULHAM SHORE PLC
BACKGROUND AND HIGHLIGHTS
for the year ended 31 March 2019
Background
The Fulham Shore PLC (the “Company” or “Fulham Shore”) was incorporated in March 2012 to make
investments in the UK restaurant and food service sector. The ordinary shares of the Company were admitted
to trading on AIM in October 2014.
Fulham Shore currently operates 63 restaurants in the UK: 16 The Real Greek (www.therealgreek.com) and
47 Franco Manca (www.francomanca.co.uk).
Highlights – Year ended 31 March 2019
l Revenue growth of 17% to £64.0m (2018: £54.7m) driven primarily by good trading in the Company’s
existing restaurant estate
Impairment charge on property, plant and equipment of £0.2m (2018: £0.9m)
EBITDA* of £7.1m (2018: £5.5m)
l Headline EBITDA* of £7.8m (2018: £7.4m)
l
l Headline Operating Profit of £3.5m (2018: £3.7m)
l
l Operating Profit of £1.8m (2018: £0.1m)
l
l
l Reduced net debt as at 31 March 2019 of £9.4m (2018: £12.0m)
l
Profit before tax of £1.4m (2018: loss of £0.1m)
Profit after tax of £0.7m (2018: loss of £0.2m)
l
4 new Franco Manca pizzeria were opened and 1 closed during the year ended 31 March 2019 in the UK
(2018: 9 Franco Manca pizzeria and 4 The Real Greek)
Since the year end:
l
l
3 further Franco Manca pizzeria opened in Greenwich, Birmingham and Exeter
2 further Franco Manca pizzeria being built in Leeds and Edinburgh
The above numbers are for continuing operations.
* as defined on pages 6 and 45.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Introduction
During the year ended 31 March 2019, Fulham Shore achieved a 17% increase in revenue to £64.0m (2018:
£54.7m), an increase in Headline EBITDA to £7.8m (2018: £7.4m) and a profit before taxation from continuing
operations of £1.4m (2018: loss of £0.1m).
These increases in revenue and Headline EBITDA, together with the improved PBT performance by the Group,
were achieved against a backdrop of political uncertainty impacting consumer sentiment and the
well-publicised issues being faced by other UK restaurant businesses.
Both The Real Greek and Franco Manca traded well over the year and we are pleased to report that the
number of customers visiting our existing restaurants increased during the year.
Market overview
Much of the capital invested in the UK restaurant sector over the past five years has not been spent wisely.
However, a number of restaurant businesses have succeeded and expanded over this period, The Real Greek
and Franco Manca amongst them.
Successful restaurant businesses continue to be those that offer consistent, delicious and reasonably priced
food made with quality ingredients. These businesses are likely to be operating from a well-chosen modern
estate, avoiding the demise of the old prime high street and instead favouring restored markets, destination
locations and unpretentious interiors.
As long as successful restaurant operators keep their menu pricing right and their financial structure stable,
they will continue to succeed where some larger operators have failed. There are many disrupters in the
casual dining market that are competing well with the incumbents.
A good restaurant can still open in a difficult, secondary or ‘brave’ tertiary location if the offer is good enough
and time is invested. Not only will the public find it but other restaurant operators will follow it and the location
can grow organically into a popular destination.
This is the natural evolution of a new area of restaurant excellence in a town, as opposed to an engineered
environment created by a planner or a developer which sometimes misses the mark.
Rising costs, such as goods purchased following the fall in the value of the pound, rent and labour will present
issues if sales cannot mitigate these increases. If sales are a problem because of a lack of demand for a
restaurant operator’s menu, or there is a resistance to the restaurant’s pricing policy, then that operator is in
trouble.
Against the background of the capital lavished on the UK restaurant sector over the last five years, we at
Fulham Shore have improved Headline EBITDA in every reporting period since our admission to AIM in 2014.
We are pleased to report the demand for both of our businesses continues to grow. We will continue to open
new restaurants in carefully chosen locations, conscious of the property pitfalls that others have fallen into.
Strategic vision and progress
Whilst the four new pizzeria we opened during the year contributed to our reported revenue increase, the
Group’s growth was primarily driven by improved trading and increased customer numbers within our existing
restaurant estate.
With this sound platform of continued sales growth and increasing customer numbers, the Board has taken
the decision to increase the Group’s restaurant opening programme with a target of between eight and ten
new restaurants in the financial year to March 2020. Each of these new sites will be as compact as possible,
with appropriate rent levels for its location.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Our mission to create delicious food at reasonable prices has been supported throughout the year by continued
menu innovation delivered through the hard work and dedication of both The Real Greek and Franco Manca
operating teams, who are constantly focussed on improving their menus whilst keeping prices affordable.
During the period we introduced highly popular new menu items including the seasonal pizza number 7 in
Franco Manca and the vegan menu in The Real Greek.
We aim to attract and retain the best and most committed staff in our industry and to offer them long and
rewarding careers. We have invested in our people ahead of our expansion plans and we pay the
government’s National Living Wage to all our staff, including those under the age of 25.
We do not interfere in any way with the tips our team members may receive from customers and many of our
staff are shareholders in Fulham Shore.
Franco Manca
As we predicted, the sales erosion in our London suburban branches that had been caused by opening new
Franco Manca pizzeria in close proximity has reduced.
During the year we opened four new Franco Manca pizzeria, in the cities of Bath and Cambridge and in
London, off the Aldwych and opposite St Paul’s Cathedral. All of these new restaurants have started brightly.
The two new openings in London had a negligible effect on our existing restaurants nearby.
We now have 36 Central London Franco Manca locations. We have queues at peak times in many of our
Central London pizzeria and in other major cities where we are located around the UK, reflecting the popularity
of our sourdough pizza. As a result, this year, we will continue to search for new sites both within London and
throughout the UK.
We continue to serve made to order sourdough pizza with dough freshly made every day at each location.
The Real Greek
The Real Greek is an established business that has been trading for 20 years. During that time, it has evolved
to be the successful and popular business that it is today. The average The Real Greek restaurant serves
more than 2,000 customers a week.
It is very popular with families, office lunches and evening candle-lit dinners. The vegan and vegetarian menu
innovations which we launched in Spring 2018 have proved extremely popular. The Real Greek has continued
to perform well especially with the good weather through the summer of 2018. We plan to open further
restaurants in the new financial year.
Property
Landlords are facing falling retail and restaurant demand for their sites, due in part to the continued move to
internet shopping, the contraction of some large restaurant chains, and the challenging economic backdrop
over the past three years.
Many of these landlords and their commercial agents continue to suggest we are at the bottom of the cycle.
However, we believe there is a way to go. Consequently, we feel the longer we wait for properties the better
value we can achieve.
Holding out for lower rents feeds through to continued low prices on our menus, which is excellent for our
customers. We have sometimes seen as much as a 30% fall in rent where an existing tenant ceases trading
and the landlord re-lets the property. We believe this decline will continue. This has happened only once before
in my 46 years of restaurant and property experience - during the 1989-93 UK recession.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
I believe we are due for a longer period of rental decline this time around. Commercial agents, who have
historically been aligned with institutional landlords’ interests, should realise the boot is now firmly on the other
foot. These agents should start to truly represent successful tenants’ interests as that is where the power and
their interest now lies.
Dividend policy
In parallel with our expansion programme, and subject to sufficient cash generation within the business, we
will consider a dividend policy over the current financial year, reflecting the Board’s continued confidence in
the outlook for Fulham Shore. No dividend is being proposed for the year ended 31 March 2019.
Current trading and outlook
The current financial year to March 2020 has started well in both Franco Manca and The Real Greek.
Since the year end, we have opened three new Franco Manca: in Greenwich in South East London,
Birmingham and Exeter, bringing our restaurant numbers to 47 Franco Manca and 16 The Real Greek. We
are currently building new Franco Manca in Leeds and Edinburgh, have committed to a further Franco Manca
in Manchester and are in final stages of negotiation on two new The Real Greek sites. This takes us well on
the way to our target of eight to ten new restaurants by the end of the financial year, which would result in a
group total of more than 68 restaurants by March 2020.
The opening of our Greenwich Franco Manca in April 2019 was one of our busiest yet, serving more than
3,000 customers a week in its opening weeks. Franco Manca also took £1m net revenue in a week for the
first time in early July 2019.
Both our businesses are building customer numbers and they both continue to have significant growth
potential. We are confident that the Group will perform well this year and we look forward to further financial
and operational progress.
DM Page
Chairman
15 July 2019
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Fulham Shore’s performance in the year ended 31 March 2019 is summarised in the table below:
For continuing operations
Revenue
Headline EBITDA*
Headline operating profit
Headline profit before tax
EBITDA
Operating profit
Profit/(loss) before taxation
Profit/(loss) for the year
Basic earnings per share
Diluted earnings per share
Headline basic 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
Year
ended
31 March
2019
£m
Year
ended
25 March
2018
£m
Change
%
64.0
54.7
+17.0%
7.8
3.5
3.1
7.1
1.8
1.4
0.7
0.1p
0.1p
0.4p
0.4p
7.4
3.7
3.5
5.5
0.1
(0.1)
(0.2)
(0.1p)
(0.0p)
0.6p
0.6p
+5.2%
-5.9%
-10.6%
+27.3%
1135%
-24.5%
6.1
3.5
9.4
––––––––––––
––––––––––––
4.5
10.0
12.0
––––––––––––
––––––––––––
+35.6%
-65.6%
-21.6%
––––––––––––
––––––––––––
No.
44
16
––––––––––––
60
––––––––––––
––––––––––––
No.
41
16
––––––––––––
57
––––––––––––
––––––––––––
+7.3%
+0.0%
––––––––––––
+5.3%
––––––––––––
––––––––––––
* Reconciliation of profit before taxation to Headline EBITDA for continuing operations:
Year
ended
31 March
2019
£m
Year
ended
25 March
2018
£m
Profit/(loss) before taxation
Finance costs
Depreciation and amortisation
Amortisation of brand
Exceptional costs – impairment of investments
Exceptional costs – impairment of property, plant and equipment
1.4
0.3
4.3
0.8
0.1
0.2
––––––––––––
7.1
0.1
0.4
0.2
––––––––––––
7.8
––––––––––––
––––––––––––
(0.1)
0.2
3.7
0.8
–
0.9
––––––––––––
5.5
0.6
1.2
0.1
––––––––––––
7.4
––––––––––––
––––––––––––
EBITDA
Share based payments
Pre-opening costs
Exceptional costs – loss on disposal
Headline EBITDA
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
This year ended 31 March 2019 comprised of 53 full weeks of trading compared to the previous financial year
ended 25 March 2018, which comprised 52 full weeks of trading.
Total Group revenue from continuing operations grew, for the year ended 31 March 2019, by 17.0%. This was
driven by full year revenues from restaurants opened in the previous year, new openings during the year, and
improved trading for many existing restaurants. During the year, we opened four new Franco Manca pizzeria
in the UK and closed our Franco Manca Brighton Marina restaurant which was handed back to the landlord
during the year. This takes the total restaurants operated by the Group in the UK to 60 (2018: 57) at year end.
During the year, our franchisee in Italy again opened the Franco Manca pizzeria on the island of Salina to
trade through the busy summer season.
Summer of 2018 was much stronger than the previous summer especially with a significant number of days
benefiting from warm weather and sunshine. Some of our pre-2017 restaurants, particularly in the London
suburbs, that experienced tougher trading the year before, have seen improvements and have benefited from
no cannibalisation from our new restaurants in nearby locations.
Group Headline EBITDA (as defined in page 45 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 £7.8m (2018: £7.4m), an increase of 5.2% on the prior year while the Group’s EBITDA increased 27.3%
to £7.1m (2018: £5.5m). During the year, with fewer openings, the management teams of each of our two
businesses focussed on a number of projects that contributed towards the improved trading in the businesses.
Group depreciation and amortisation, excluding amortisation of the Franco Manca brand, increased 16.4% to
£4.3m (2018: £3.7m) following the number of new restaurants opened during the year and the previous year.
The Group incurred one off costs in the year of £0.2m (2018: £0.9m) from impairment charges for 3 restaurants
(2018: 3) which are underperforming management’s expectations. All three restaurants continue to trade.
Together with the improved EBITDA, these have led to an increase of operating profit by 1135% to £1.8m
(2018: £0.1m).
With our new openings, we have invested £0.4m (2018: £1.2m) in pre-opening costs. Finance costs have
increased 28.7% to £0.3m as the Group had higher drawn down balances on its revolving credit facilities
brought forward at the beginning of the financial year. As net debt levels reduce, the finance costs should
stabilise. Overall this has resulted in a profit before taxation of £1.4m (2018: £0.1m loss before tax).
The Group’s tax rate has increased to 46.5% (2018: 36.4% of loss before tax) of profit before tax due to a
number of factors including the increase of £0.1m in the deferred tax charge on share based payments. The
Group’s profit after tax from continuing and discontinued operations was £0.7m (2018: £0.6m loss after tax).
Our basic and diluted earnings per share from continuing operations increased from 0.0p to 0.1p while
Headline diluted earnings per share reduced by 24.5% to 0.4p, mainly as a result of increased depreciation
from new shorter leases or concessions during the year.
Cost inflation
During the year, weakness of Sterling against both the Euro and the US Dollar from uncertainty over Brexit
has continued to put pressure on food cost inflation. Where possible, we have benefited from additional volume
discounts due to our opening programme and changes in suppliers which have helped to mitigate some of
the cost pressures.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
We also saw 4.4% (2018: 4.2%) increase in the Government’s National Living Wage at the beginning of the
financial year for employees over 25 years old. Both of our businesses have chosen to treat all staff members
the same irrespective of age and have therefore paid at least the National Living Wage to all employees.
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 increased 35.6% to £6.1m (2018: £4.5m) as the benefit
from improved cash generation from restaurants and better cash management flowed through. This was also
after an additional £0.2m (2018: £Nil) in operating cash flow being applied to increased stock holding at year
end as part of risk mitigation planning for Brexit.
We invested £3.5m (2018: £10.0m) in development capital primarily in new restaurants but also including
investment in IT systems to introduce advanced customer relationship management facilities to both
businesses. The Group will continue to invest in technology in the new financial year to bring further efficiencies
in operations and further improved customer experiences, including the launch of a new loyalty programme
for Franco Manca in the autumn of 2019.
Resultant net debt from our activities at 31 March 2019 was £9.4m (2018: £12.0m). This is financed by our
facilities with HSBC Bank PLC, made up of a £14.25m revolving credit facility and a £0.75m overdraft.
At the beginning of the financial year, the Group reduced its opening programme to take account of market
uncertainty. As a result, the Group funded its openings largely through existing operational cash flow. The
excess operational cash flow has reduced the Group’s net debt during the year. It is the Group’s intention, in
the new financial year, to ensure its openings continue to be largely funded through operational cash flow.
People
During the year, the Group’s key operations were within the UK. With our opening programme, the Group
continued to create more new jobs in its new restaurants. We continue to invest in our staff through training,
incentives and personal development as well as investing in a stronger people and human resource team.
Post balance sheet event
On 15 July 2019, the Company entered into a conditional sale and purchase agreement for the purchase of
the approximately 1% minority interests in its two subsidiaries: Kefi Limited (“Kefi”), which owns the subsidiary
that owns and operates The Real Greek; and Franco Manca Holdings Limited (formerly Rocca Limited) (“FM
Holdings”), which owns the subsidiary that owns and operates Franco Manca, for a maximum total
consideration of up to £650,658, payable in cash. The purchase of the minority interests is subject to the
approval of shareholders at the Company’s 2019 annual general meeting. Further details are contained in
the Company’s announcement dated 16 July 2019.
Accounting standards update
The Group will be required to adopt IFRS16, a new lease accounting standard, for the year ending 29 March
2020. The new standard will have no material economic impact on the business and will not change the way
the business is run. It will, however, have a significant impact on the presentation of the financial statements
including reported Headline EBITDA, reported profit before and after taxation, balance sheet treatment of
leasehold obligations and cash flow from operating activities as well as from financing activities. As at 1 April
2019, the initial application date, fixed assets representing right in use relating leasehold obligations will
increase by approximately £71.2m while liabilities representing the discounted value of future committed lease
payments will increase by £70.3m. Further details of expected changes can be found in the Accounting Policies
on pages 36 to 37.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
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 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.
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. To help mitigate potential
delays as a result of Brexit, the Group is building up stock, where possible, to allow for longer transit times.
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 team and has implemented a number of incentive
schemes designed to retain key individuals.
Brexit
Brexit may have an adverse impact on the wider economic environment in the UK and across the EU, resulting
in weaker consumer spending in the travel food and beverage markets. The potential further depreciation of
Sterling could lead to cost inflation pressures, particularly in the food commodity markets. Any interruption to
cross border trading with the EU could lead to delays in deliveries of some raw ingredients. Potential
restrictions on mobility of EU nationals post-Brexit may limit the availability of labour resource in the UK. These
risks are discussed separately above.
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 Group’s existing restaurant brands, value offer
and constant strive towards delivering the best product and service will help the business to mitigate
competitive risk.
Landlords
The Group operates four restaurants within the Debenhams estate. The existing restaurants may be at risk
from any possible future structural changes in Debenhams, including financial restructures. The Directors
have therefore not committed the Group to further restaurants with Debenhams in the short term and to
mitigate the risk, in part, have ensured that the four restaurants have separate street entrances.
Cyber security
The Group has been operating an online “click and collect” service and various customer relationship
management tools which rely 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.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Regulatory compliance
The Group is growing quickly and the government is increasing the number of areas requiring additional
regulatory compliance including GDPR. This may increase the Group’s 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 are 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.
NCW Wong
Finance Director
15 July 2019
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THE FULHAM SHORE PLC
BOARD OF DIRECTORS
The Directors of The Fulham Shore PLC are:
David Page – Executive 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 – Independent 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.
11
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THE FULHAM SHORE PLC
BOARD OF DIRECTORS
Desmond Gunewardena – Independent 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 40 venues in London,
Leeds, Manchester, Paris and New York. 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.
12
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THE FULHAM SHORE PLC
CORPORATE GOVERNANCE STATEMENT
I have pleasure in introducing the Company’s Corporate Governance Statement. As an AIM quoted company
the Board of The Fulham Shore PLC recognises the importance of sound corporate governance. In line with
updated AIM Rules, the Company adopted the QCA Guidelines during the year. As Chairman I am responsible
for ensuring that the Board operates effectively and that a high standard of corporate governance is upheld
throughout the Group. The Board is accountable to the Company’s shareholders for good governance. We
believe that our corporate culture is consistent with the Company’s objectives, its strategy and business model.
We work hard to ensure that the whole Fulham Shore team is properly engaged with our business, including
our risks and opportunities. Through our in-house training systems and through visiting our restaurants ‘ad
hoc’ and speaking to the staff there, we believe that we have a good understanding of the mood and the
aspirations of the Fulham Shore team. We believe that, currently, our corporate culture and the enthusiasm
to grow the business are strong.
The Board
The Board is the body responsible for the Group’s objectives, its policies and the stewardship of its resources.
The Board comprises four executive directors and two non-executive directors. The profiles of the Board
members appear on pages 11 and 12 of this report. These indicate the high level and range of business
experience held by the directors which enables the Group to be managed effectively. Details of the Directors’
shareholdings in the Company are given on page 20.
The Board has a schedule of matters reserved for its decision which includes material capital commitments,
business acquisitions and disposals and Board appointments. Directors are given appropriate information for
each Board meeting, including reports on the current financial and trading position.
Board Committees
The Board has delegated authority to the following Committees and there are written terms of reference for
each committee outlining its authority and duties:
The Audit Committee
The Audit Committee comprises DAL Gunewardena, who acts 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.
Remuneration Committee
The Remuneration Committee comprises MA Chapman, who acts 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.
Board appointments
The Company does not have a Nomination Committee. Any Board appointments are dealt with by the Board
itself. Any Director appointed during the year is required to retire and seek election by shareholders at the
next Annual General Meeting following their appointment. The Articles of Association of the Company provide
that any Directors who were not appointed or re-appointed at one of the two preceding Annual General
Meetings must retire and may offer themselves for re-appointment.
13
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THE FULHAM SHORE PLC
CORPORATE GOVERNANCE STATEMENT
Board attendance
Directors are expected to attend all of the meetings of the Board and the Committees on which they sit, and
to devote sufficient time to the Group’s affairs to enable them to fulfil their duties as Directors. In the event
that Directors are unable to attend a meeting their comments on board papers to be considered at the meeting
are discussed in advance with the Chairman or the Finance Director so that their contribution can be included
in the wider Board discussions.
Attendance of each board member during the financial year ended 31 March 2019:
Board
Meetings
% of
Meetings
Attended
100%
100%
91%
100%
100%
100%
Audit
Committee
% of
Meetings
Attended
Remuneration
Committee
% of
Meetings
Attended
Attended
Meetings
N/A
N/A
100%
100%
100%
100%
2
N/A
N/A
N/A
2
2
100%
N/A
N/A
N/A
100%
100%
Attended
Meetings
N/A
N/A
2
2
2
2
Attended
Meetings
11
11
10
11
11
11
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
MA Chapman
DAL Gunewardena
External appointments
Executive Directors are permitted to accept external appointments with the prior approval of the Board, where
there is no adverse impact on their role with the Group. Such appointments should broaden their experience.
Any fees arising from such roles may be retained by the Director.
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.
Board performance evaluation
During the year, the Board undertook performance evaluation of the Directors and the Board Committees.
The Board believes that the Company has a well-balanced Board with a good range of skills. Succession
planning continues to be a key area of focus to support the Company’s long-term plans. The Board believes
that the Board and its Committees continue to work well together with the right balance of skills and expertise.
The Board is satisfied that the Non-Executive Directors continue to be effective and remain independent.
Annual General Meeting
Shareholders are encouraged to attend and vote at the Company’s General Meetings so that they can discuss
strategy and governance with the Board. The full Board usually attends the Annual General Meeting and is
available to answer shareholders’ questions.
DM Page
Chairman
15 July 2019
14
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THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
Remuneration Committee
The Remuneration Committee is authorised by the Board to determine the Company’s remuneration policy
on executive and non-executive Directors’ service contracts and remuneration including share based incentive
awards. The Remuneration Committee is chaired by MA Chapman, non-executive director. DM Page and
DAL Gunewardena also served on the committee during the year.
The Company has chosen to apply the Corporate Governance Code published by the Quoted Companies
Alliance. This report has been prepared taking account of this Corporate Governance Code.
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’ remuneration
Below is a summary of the pay packages awarded to the Directors including bonuses earned in respect of
the financial year (which will be paid in cash in the following year).
Year ended 31 March 2019:
Salary
£’000
Fees
£’000
Bonus
£’000
Benefits
£’000
Pensions
£’000
Total
£’000
Executive Directors
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
123
201
–
179
––––––––––––
503
–
–
56
–
––––––––––––
56
54
88
25
79
––––––––––––
246
4
2
4
1
––––––––––––
11
–
1
–
1
––––––––––––
2
181
292
85
260
––––––––––––
818
Non-executive Director
MA Chapman
DAL Gunewardena
45
36
––––––––––––
584
––––––––––––
––––––––––––
Year ended 25 March 2018
–
–
––––––––––––
56
––––––––––––
––––––––––––
–
–
––––––––––––
246
––––––––––––
––––––––––––
–
–
––––––––––––
11
––––––––––––
––––––––––––
1
–
––––––––––––
3
––––––––––––
––––––––––––
46
36
––––––––––––
900
––––––––––––
––––––––––––
Salary
£’000
Fees
£’000
Bonus*
£’000
Benefits
£’000
Pensions
£’000
Total
£’000
Executive Directors
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
123
201
–
179
––––––––––––
503
–
–
56
–
––––––––––––
56
–
–
–
–
––––––––––––
–
–
–
2
1
––––––––––––
3
–
1
–
1
––––––––––––
2
123
202
58
181
––––––––––––
564
Non-executive Director
MA Chapman
DAL Gunewardena
45
36
––––––––––––
584
––––––––––––
––––––––––––
–
–
––––––––––––
56
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
3
––––––––––––
––––––––––––
–
–
––––––––––––
2
––––––––––––
––––––––––––
45
36
––––––––––––
645
––––––––––––
––––––––––––
15
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THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
* The comparative year ended 25 March 2018 above differs from note 3 of the financial statements as bonuses of £278,000
earned for the financial year ended 26 March 2017 but paid in the year ended 25 March 2018 were included in note 3 for
the year ended 25 March 2018. No bonuses were earned in respect of the year ended 25 March 2018 and none was paid
during the year ended 31 March 2019.
The fees, bonus and benefits in respect of NJ Donaldson were paid to London Bridge Capital Partners LLP
for his services as a Director of the Company for both financial years.
Base salaries for the year ended 31 March 2019 were not increased following a review undertaken at the
beginning of the financial year.
During the year ended 31 March 2019, the Company made pension contributions for eligible directors into a
defined contribution scheme at a rate of 3% of basic salary.
Incentive arrangements
The Directors and employees of the Group also participate in incentive arrangements to reward individuals if
shareholder value is created.
Under these arrangements, certain Directors are entitled to performance related bonuses and participation in
share based incentive schemes. The performance related bonuses are based on achieving and overdelivering
on the Group’s budgeted Headline EBITDA for the financial year. The details of the share based incentive
schemes are given in note 18 to the Financial Statements.
Directors’ interests in Group share based incentive schemes
The interests of the Directors under the Group’s share based incentive schemes as at 31 March 2019 were
as follows:
Options outstanding
as at 31 March 2019
and 25 March 2018
No.
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
16
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
––––––––––––
––––––––––––
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
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
––––––––––––
––––––––––––
0.06
0.11
––––––––––––
––––––––––––
20/10/2017
21/04/2018
––––––––––––
––––––––––––
20/10/2021
21/04/2022
––––––––––––
––––––––––––
255383 The Fulham Shore AR pp02-pp45.qxp_251067 Fulham Shore R&A pp02-pp40.qxp 02/08/2019 09:53 Page 17
THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
No options were exercised by Directors during the year ended 31 March 2019 (2018: Nil).
All share options above have been issued at the market price of the ordinary shares at the date of grant.
During the year ended 31 March 2019, the market price of ordinary shares in the Company ranged from
£0.0910 (2018: £0.0900) to £0.1288 (2018: £0.2238). The share price as at 31 March 2019 was £0.1125
(2018: £0.0935). There are no performance conditions attached to vesting of the share options.
The total share based payments charge in relation to the Directors’ interest in share options recognised in the
Group during the year was £31,000 (2018: £448,000).
Details of the Directors’ shareholdings are given in the Directors’ Report on page 20.
Arrangements for 2020
Board remuneration is reviewed annually for 1 April each year. For the financial year ending 29 March 2020,
the Remuneration Committee has engaged independent remuneration advisers, FIT Remuneration
Consultants (“FIT”), following a selection process led by the Chairman of the Remuneration Committee, to
benchmark the Company’s remuneration packages for executive directors (“2020 Review”) and advise the
Remuneration Committee. FIT is a member of the Remuneration Consultants Group and the voluntary code
of conduct of that body is designed to ensure objective and independent advice is given to remuneration
committees.
Salary, bonus scheme, benefits and pension contributions have been reviewed and recommended
adjustments have been approved. The base salary/fees effective from 1 April 2019 are as follows (with
comparatives from the year ended 31 March 2019):
Executive Directors
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
Non-executive Director
MA Chapman
DAL Gunewardena
Salary
2020
£’000
Fees
2020
£’000
Salary
2019
£’000
Fees
2019
£’000
195
212
–
189
––––––––––––
596
–
–
59
–
––––––––––––
59
123
201
–
179
––––––––––––
503
–
–
56
–
––––––––––––
56
48
38
––––––––––––
682
––––––––––––
–
–
––––––––––––
59
––––––––––––
45
36
––––––––––––
584
––––––––––––
–
–
––––––––––––
56
––––––––––––
Following the 2020 Review, the maximum bonus payable for executive directors have been reduced from
150% to 100%. The pension contribution rate for those eligible executive directors will be increased to 5% of
basic salary and remain at 3% for non-executive directors. Both of these changes are with effect from 1 April
2019.
Further work is currently being undertaken to review long term incentive schemes for the Directors as there
has been no grants under the Company’s share incentive schemes since April 2015.
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.
17
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THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
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 of 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.
As part of the 2020 review, employment contracts are currently being reviewed and updated given the age of
the existing contracts.
Approval
This report was approved by the Board of Directors on 15 July 2019 and signed on its behalf by:
MA Chapman
Chairman of the Remuneration Committee
18
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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 31 March 2019.
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 10.
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 31 March 2019 from continuing operations was £63,985,000 (2018: £54,695,000),
Headline Operating Profit for the same period was £3,495,000 (2018: £3,716,000) and Operating Profit for
the same period was £1,753,000 (2018: £142,000).
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 26 March 2018:
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 11 and 12.
At the 2019 Annual General Meeting, in accordance with the Company’s Articles of Association, Mr DM Page
and Mr NJ Donaldson will retire. Being eligible, and with the Board’s recommendation, both will offer
themselves for re-election.
19
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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 31 March 2019
Ordinary
shares
of 1p each
%
As at 25 March 2018
Ordinary
shares
of 1p each
%
81,267,120
113,927,434
13,044,337
8,909,093
766,818
454,545
14.22%
19.94%
2.28%
1.56%
0.13%
0.08%
81,182,331
113,800,434
13,044,337
8,831,093
766,818
454,545
14.21%
19.92%
2.28%
1.55%
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 15 to 18.
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 14 July 2019, 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 14 July 2019
Ordinary shares
of 1p each
113,927,434
84,870,414
81,267,120
24,887,246
22,670,250
19,912,732
17,230,209
17,223,494
%
19.94%
14.85%
14.22%
4.36%
3.97%
3.49%
3.01%
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.
20
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THE FULHAM SHORE PLC
DIRECTORS’ REPORT
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.
Political and charitable contributions
During the year ended 31 March 2019 the Group made no political contributions (2018: £Nil). The Group
made charitable donations during the year ended 31 March 2019 by contributing following:
Action Against Hunger
Other local charities and good causes
Year
ended
31 March
2019
£’000
Year
ended
25 March
2018
£’000
–
5
––––––––––––
5
––––––––––––
––––––––––––
1
5
––––––––––––
6
––––––––––––
––––––––––––
In addition, Franco Manca donated over 4,000 pizzas to local food banks and homeless shelters throughout
the year.
Annual general meeting
On pages 84 to 86 is a notice convening the annual general meeting of the Company for 28 August 2019 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 28 August 2019 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 10 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.
21
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THE FULHAM SHORE PLC
DIRECTORS’ REPORT
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.
Subsequent Events
On 15 July 2019, the Company entered into a conditional sale and purchase agreement for the purchase of
the approximately 1% minority interests in its two subsidiaries: Kefi Limited (“Kefi”), which owns the subsidiary
that owns and operates The Real Greek; and Franco Manca Holdings Limited (formerly Rocca Limited) (“FM
Holdings”), which owns the subsidiary that owns and operates Franco Manca, for a maximum total
consideration of up to £650,658, payable in cash. The purchase of the minority interests is subject to the
approval of shareholders at the Company’s 2019 annual general meeting. Further details are contained in
the Company’s announcement dated 16 July 2019.
Auditors
RSM UK Audit LLP has indicated its willingness to continue in office.
Approved on behalf of the Board.
DM Page
Chairman
15 July 2019
22
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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
15 July 2019
23
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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 31 March 2019 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 statements 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 31 March 2019 and of the group’s profit 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 group 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 group 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 43 (Accounting Estimates - Assessment of the recoverable amounts in respect of assets tested
for impairment) and pages 54 and 55 (Notes to the financial statements - Intangible assets)
24
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THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
Risk of Material Misstatement
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 without an arbitrary allocation. Management are 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 31 March 2019 a pre-tax discount
rate based on a weighted average cost of capital (WACC) and comparisons to the Group’s peers of 12.4%
(2018: 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 and
was therefore determined to be a key audit matter.
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 used 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 discount rate and consider its suitability.
l We compared the forecast cash flows to actual results observed to date.
l We considered management bias in assumptions used in the annual impairment reviews.
Impairment of property, plant and equipment
Refer to page 43 (Accounting Estimates - Assessment of the recoverable amounts in respect of assets tested
for impairment), page 48 (Notes to the financial statements - Operating profit) and pages 56 and 58 (Notes to
the financial statements - Property, plant and equipment)
Risk of material misstatement
The total carrying value of property, plant and equipment (PPE) at the year-end date was £30.8m (2018:
£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. For those
individual sites which showed indications of impairment, management carried out detailed impairment testing
to consider whether assets attributable to the underperforming restaurants were impaired at the year end.
During the year ended 31 March 2019, management have recognised a total impairment charge of £0.13m
(2018: £0.87m) in respect of three (2018: three) underperforming sites. For the impairment testing at 31 March
2019 a pre-tax discount rate based on a weighted average cost of capital (WACC) and comparisons to the
Group’s peers of 12.4% (2018: 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
and therefore determined to be a key audit matter.
25
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THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
Audit approach adopted:
l We reviewed management’s assessment of indicators of impairment for the CGUs and challenged
l
management on those sites not identified but showing possible signs of impairment.
For those sites identified and triggers for impairment were noted, we audited management’s impairment
reviews comparing their discounted cash flow forecasts to the carrying value of property, plant and
equipment of each CGU.
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.
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 and explanations for underperformance.
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. When evaluating whether the effects of misstatements, both
individually and on the financial statements as a whole, could reasonably influence the economic decisions of
the users we take into account the qualitative nature and the size of the misstatements. During planning
materiality for the group financial statements as a whole was calculated as £310,000, which was not significantly
changed during the course of our audit. Materiality for the parent company financial statements as a whole
was calculated as £310,000, which was not significantly 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 £15,500, as well
as differences below that threshold 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
those of the parent company 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.
26
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THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
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
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 23 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.
27
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THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
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
15 July 2019
28
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THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Headline operating profit
Share based payments
Pre-opening costs
Amortisation of brand
Exceptional costs – impairment of property, plant and equipment
Exceptional costs – impairment of investment
Exceptional costs – loss on disposal of property, plant and equipment
Operating profit
Finance income
Finance costs
Profit/(loss) before taxation
Income tax expense – current year
Income tax expense – prior year
Profit/(loss) for the year from continuing operations
Loss for the year from discontinued operations
Profit/(loss) for the year
Profit/(loss) 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
Notes
1
18
2
7
2
4
5
23
6
6
6
6
6
6
Year
ended
31 March
2019
£’000
63,985
(38,237)
––––––––––––
25,748
(22,253)
––––––––––––
3,495
(138)
(386)
(821)
(130)
(80)
(187)
––––––––––––
1,753
8
(327)
––––––––––––
1,434
(714)
–
––––––––––––
720
–
––––––––––––
720
––––––––––––
––––––––––––
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)
––––––––––––
––––––––––––
698
22
––––––––––––
720
––––––––––––
––––––––––––
(576)
11
––––––––––––
(565)
––––––––––––
––––––––––––
0.1p
0.1p
0.1p
0.1p
0.4p
0.4p
(0.1p)
(0.1p)
(0.0p)
(0.0p)
0.6p
0.6p
29
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THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY BALANCE SHEETS
31 MARCH 2019
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
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
31 March
2019
£’000
Notes
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
7
8
9
11
16
10
11
12
23
13
13
14
16
17
25,767
30,806
201
1,020
301
––––––––––––
58,095
––––––––––––
1,764
3,597
1,835
–
––––––––––––
7,196
––––––––––––
65,291
––––––––––––
26,550
31,768
281
943
193
––––––––––––
59,735
––––––––––––
1,490
3,325
359
329
––––––––––––
5,503
––––––––––––
65,238
––––––––––––
–
173
43,563
11,863
287
––––––––––––
55,886
––––––––––––
–
118
22
–
––––––––––––
140
––––––––––––
56,026
––––––––––––
–
203
43,439
11,724
185
––––––––––––
55,551
––––––––––––
–
135
7
–
––––––––––––
142
––––––––––––
55,693
––––––––––––
(11,881)
(93)
––––––––––––
(11,974)
––––––––––––
(4,778)
(11,521)
(486)
––––––––––––
(12,007)
––––––––––––
(6,504)
(1,312)
–
––––––––––––
(1,312)
––––––––––––
(1,172)
(888)
–
––––––––––––
(888)
––––––––––––
(746)
(1,601)
(11,240)
(1,733)
––––––––––––
(14,574)
––––––––––––
(26,548)
––––––––––––
38,743
––––––––––––
––––––––––––
5,714
6,889
30,459
(9,469)
5,025
––––––––––––
(1,470)
(12,350)
(1,779)
––––––––––––
(15,599)
––––––––––––
(27,606)
––––––––––––
37,632
––––––––––––
––––––––––––
5,714
6,889
30,459
(9,469)
3,936
––––––––––––
–
(13,721)
–
––––––––––––
(13,721)
––––––––––––
(15,033)
––––––––––––
40,993
––––––––––––
––––––––––––
5,714
6,889
30,459
–
(2,069)
––––––––––––
–
(13,325)
–
––––––––––––
(13,325)
––––––––––––
(14,213)
––––––––––––
41,480
––––––––––––
––––––––––––
5,714
6,889
30,459
–
(1,582)
––––––––––––
38,618
125
––––––––––––
38,743
––––––––––––
––––––––––––
37,529
103
––––––––––––
37,632
––––––––––––
––––––––––––
40,993
–
––––––––––––
40,993
––––––––––––
––––––––––––
41,480
–
––––––––––––
41,480
––––––––––––
––––––––––––
30
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THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY BALANCE SHEETS
31 MARCH 2019
The loss for the financial year dealt with in the financial statements of the Company is £878,000 (2018:
£1,566,000). The financial statements on pages 29 to 82 were approved by the board of Directors and
authorised for issue on 15 July 2019 and are signed on its behalf by:
DM Page
Chairman
Company registration number: 07973930
31
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THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Attributable to owners of the Company
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
5,714
–
38,648
(565)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
38,556
(576)
(9,469)
–
30,459
–
4,963
(576)
6,889
–
92
11
–
–
–
–
–
–
–
–
(576)
(576)
11
(565)
616
616
–
616
(1,067)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(1,067)
(1,067)
–
–
–
–
–
–
(451)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
37,632
(9,469)
37,529
30,459
5,714
6,889
3,936
(451)
(451)
103
–
–
–
–
720
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
698
698
22
–
–
–
–
–
–
–
–
–
–
–
–
698
138
698
138
22
–
720
138
253
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
253
253
–
–
–
–
–
–
391
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
38,743
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(9,469)
30,459
38,618
5,714
6,889
5,025
391
391
125
–
–
–
–
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
Profit for the year
Total comprehensive
income
Transactions with owners
Share based payments
Deferred tax on share
based payments
Total transactions
with owners
At 31 March 2019
32
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THE FULHAM SHORE PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
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
Loss for the year
Share
Capital
£’000
5,714
Share
Premium
£’000
Merger
Relief
Reserve
£’000
Retained
Earnings
£’000
Total
Equity
£’000
6,889
30,459
359
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
–
––––––––––––
–
––––––––––––
–
––––––––––––
(878)
––––––––––––
(878)
––––––––––––
Total comprehensive income
for the year
Transactions with owners
Share based payments
Deferred tax on
share based payments
Total transactions
with owners
At 31 March 2019
–
–
–
–
–
–
(878)
(878)
138
138
–
––––––––––––
–
––––––––––––
–
––––––––––––
253
––––––––––––
253
––––––––––––
–
––––––––––––
5,714
––––––––––––
––––––––––––
–
––––––––––––
6,889
––––––––––––
––––––––––––
–
––––––––––––
30,459
––––––––––––
––––––––––––
391
––––––––––––
(2,069)
––––––––––––
––––––––––––
391
––––––––––––
40,993
––––––––––––
––––––––––––
33
255383 The Fulham Shore AR pp02-pp45.qxp_251067 Fulham Shore R&A pp02-pp40.qxp 02/08/2019 09:53 Page 34
THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
for the year ended 31 March 2019
Year
ended
31 March
2019
£’000
Group
Year
ended
25 March
2018
£’000
Year
ended
31 March
2019
£’000
Parent
Year
ended
25 March
2018
£’000
Notes
Net cash flow from/(used in)
operating activities
Investing activities
Acquisition of property, plant
and equipment
Acquisition of intangible assets
Acquisition of investments
Disposal of discontinued operations
Loan to subsidiary undertakings
Loan repaid by
subsidiary undertakings
Net cash flow (used in)/from
investing activities
Financing activities
Capital received from bank borrowings
Capital repaid on bank borrowings
Interest received
Interest paid
Net cash flow (used in)/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
19
6,132
4,522
(313)
(509)
(3,457)
(99)
–
329
–
(10,044)
(27)
(281)
–
–
(4)
–
–
–
–
(7)
–
–
–
(5,969)
–
––––––––––––
–
––––––––––––
1,366
––––––––––––
–
––––––––––––
(3,227)
––––––––––––
(10,352)
––––––––––––
1,362
––––––––––––
(5,976)
––––––––––––
–
(1,110)
8
(327)
––––––––––––
6,350
–
2
(254)
––––––––––––
–
(1,110)
468
(392)
––––––––––––
6,350
–
465
(311)
––––––––––––
(1,429)
––––––––––––
6,098
––––––––––––
(1,034)
––––––––––––
6,504
––––––––––––
1,476
268
15
19
12
12
359
––––––––––––
91
––––––––––––
7
––––––––––––
(12)
––––––––––––
1,835
––––––––––––
––––––––––––
359
––––––––––––
––––––––––––
22
––––––––––––
––––––––––––
7
––––––––––––
––––––––––––
34
255383 The Fulham Shore AR pp02-pp45.qxp_251067 Fulham Shore R&A pp02-pp40.qxp 02/08/2019 09:53 Page 35
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
GENERAL INFORMATION
The Fulham Shore PLC is a public company limited by shares 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 31 March
2019. The comparative period presented is audited financial statements for the year ended 25 March 2018.
The accounting year runs to a Sunday within seven days of 31 March each year which will be a 52 or 53 week
period. The year ended 31 March 2019 was a 53 week period, with the comparative year to 25 March 2018
being a 52 week period.
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 31 March 2019 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.
NEW STANDARDS
The following new accounting standards are effective for the year ended 31 March 2019 and have been
adopted in these financial statements:
IFRS 9
IFRS 15
Financial instruments
Revenue from contracts with customers
Both standards were adopted on 26 March 2018.
The Group adopted IFRS 9 on 26 March 2018, the date of initial application. The Group has applied IFRS 9
retrospectively. IFRS 9 has not had a material impact on the Group.
The Group adopted IFRS 15 using the cumulative effect method, with the effect of adopting this standard, if
any, recognised on 26 March 2018, the date of initial application. Accordingly, the information presented for
the financial year ended 25 March 2018 has not been restated. The adoption of IFRS 15 has not had a material
impact on the Group.
35
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
NEW STANDARDS THAT ARE NOT YET EFFECTIVE
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:
IFRS 16
IFRIC 23
IAS 28 (Amendment)
Annual Improvements to
Leases
Uncertainty over income tax treatments
Investments in Associates and Joint Ventures
IFRS Standards 2015-2017 Cycle
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 but will not change the way the business is run.
IFRS 16 will materially increase the Group’s recognised assets and liabilities in the Consolidated Balance
Sheet introducing right-of-use assets and lease liabilities calculated based on discounted future committed
lease payments. It will also materially change the presentation and timing of recognition of charges in the
Consolidated Income Statement. The operating lease expense currently reported under IAS17, typically on a
straight line basis, within Headline EBITDA and EBITDA, will be replaced by depreciation of the right-of-use
asset and notional financing costs on the lease liability. This will result in increased “lease-related expenses”
being charged to the Consolidated Income Statement in the early years of a lease due to the front- loaded
notional financing costs, significantly reducing reported profit or loss before taxation.
The presentation of the Consolidated Cash Flow Statement will also be affected. Actual rent payments, which
are currently part of the net cash flow from operating activities will now be split into a notional repayment of
principal lease liability and a notional interest payment within financing activities. This increases the net cash
flow from operating activities and increases the cash outflow from financing activities by the same amount.
Actual net increase in cash and cash equivalents will not be affected.
In adopting IFRS 16, the Group is permitted to follow one of two approaches: the full retrospective approach
or the modified retrospective approach. This is a choice that must be made at transition and applied to all
leases within the group at the initial application date. The Group has chosen to adopt the modified retrospective
approach, which does not require restatement of comparative periods. Instead the cumulative impact of
applying IFRS16 is accounted for as an adjustment to equity at the start of the accounting period in which it
is first applied. Discount rates applicable at the time of initial application and estimates of future rent review
adjustments to future committed lease payments are areas of significant judgement and estimation in
calculating the lease liability, particularly given the term of the Group’s leases.
The likely estimated balance sheet impact is analysed below:
Right-of-use asset
Lease liability in respect of leases previously classified as operating leases
Deferred tax asset/(liability)
Adjustment for prepayments and accruals
Adjustment to deferred income
£’000
71,177
(70,256)
157
(921)
1,993
––––––––––––
2,150
––––––––––––
––––––––––––
36
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
The above estimate is based on property leases in existence as at 1 April 2019, with a calculated weighted
average discount rate of 3.3% and an assumed rent increase of an equivalent annual rate of 2.4% at each
future rent review. The Group estimates that the reported profit before tax for the year ending 29 March 2020
will be reduced by between £1,500,000 and £2,000,000 as a result of adopting the new rules.
The group generates rent receivable from sub-leases of some of its properties. Its activities as a sub-lessor
are predominantly based on leases with terms under 12 months and therefore is not material.
GOING CONCERN
The consolidated financial statements have been prepared on a going concern basis. Given the risk analysis
set out in the Strategic Report on pages 9 to 10 and after reviewing the Group’s net current liabilities position
as at 31 March 2019, 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 licences
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.
37
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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 on a straight line basis 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.
38
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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 comprising debt and equity instruments 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 and are initially measured at fair value, including transaction costs and subsequently
measured at fair value through profit and loss.
Debt securities that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost using the effective interest method, less
any impairment. Debt securities that do not meet the criteria for amortised cost are measured at fair value
through profit and loss.
Equity securities are classified and measured at fair value through other comprehensive income, there is no
subsequent reclassification of fair value gains and losses to profit or loss following derecognition of the
investment.
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
Trade receivables represent amounts owed by customers where the right to payment is conditional only on
the passage of time and are recorded at amortised cost. The carrying value of all trade receivables recorded
at amortised cost is reduced by allowances for lifetime estimated credit losses. Estimated future credit losses
are first recorded on the initial recognition of a receivable and are based on the ageing of the receivable
balances, historical experience and forward looking considerations. Individual balances are written off when
management deems them not to be collectible.
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.
39
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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.
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.
NON-CONTROLLING INTERESTS
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the
Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the
original business combination and the non-controlling shareholder’s share of changes in equity since the date
of the combination. Total comprehensive income is attributed to non-controlling interests even if this results in
the non-controlling interests having a deficit balance.
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.
40
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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.
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.
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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.
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 31 March 2019 with the comparative
year to 25 March 2018.
The Company accounts have been prepared for the same periods as the Group.
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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.
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.
43
255383 The Fulham Shore AR pp02-pp45.qxp_251067 Fulham Shore R&A pp02-pp40.qxp 02/08/2019 09:53 Page 44
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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.
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 47.2% (2018: 48.7%) 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.
44
255383 The Fulham Shore AR pp02-pp45.qxp_251067 Fulham Shore R&A pp02-pp40.qxp 02/08/2019 09:53 Page 45
THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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, impairment of investments, 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, impairment of investments,
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 basic EPS and Headline diluted EPS are defined in note 6.
45
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 46
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
1
SEGMENT INFORMATION
For management purposes, the Group was organised into two operating divisions during the year ended
31 March 2019. 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 31 March 2019:
The Real
Greek
segment
£’000
Franco
Manca
segment
£’000
Other
unallocated
£’000
Total
£’000
Revenue
21,950
43,285
–
65,235
Headline EBITDA
Depreciation and amortisation
Headline operating profit
Pre-opening costs
Impairment investments
Impairment property, plant and
equipment
Operating profit
Finance income
Finance costs
Segment profit/(loss) before taxation
Income tax expense
Profit for the year from continuing
operations
Assets
Liabilities
Net assets
Capital expenditure
2,746
(1,048)
––––––––––––
1,698
–
–
(29)
1,617
3
–
––––––––––––
1,620
5,814
(3,242)
––––––––––––
2,572
(386)
(80)
(101)
924
5
–
––––––––––––
929
11,408
(3,814)
––––––––––––
7,594
––––––––––––
––––––––––––
407
––––––––––––
––––––––––––
53,281
(10,177)
––––––––––––
43,104
––––––––––––
––––––––––––
3,046
––––––––––––
––––––––––––
(742)
(33)
––––––––––––
(775)
–
–
–
(788)
–
(327)
––––––––––––
(1,115)
(714)
––––––––––––
(1,829)
––––––––––––
––––––––––––
602
(12,557)
––––––––––––
(11,955)
––––––––––––
––––––––––––
4
––––––––––––
––––––––––––
7,818
(4,323)
––––––––––––
3,495
(386)
(80)
(130)
1,753
8
(327)
––––––––––––
1,434
(714)
––––––––––––
720
––––––––––––
––––––––––––
65,291
(26,548)
––––––––––––
38,743
––––––––––––
––––––––––––
3,457
––––––––––––
––––––––––––
Head office costs 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. The Group’s two business segments primarily
operate in one geographical area which is the United Kingdom.
Segmental revenue shown above is higher than Consolidated Group revenue shown in the
Consolidated Statement of Comprehensive Income as included in The Real Greek segment is revenue
of £1,250,000 (2018: £Nil) that has been eliminated on consolidation. The Real Greek revenue from
external customers would have been £20,700,000 (2018: £18,139,000).
46
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 47
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
1
SEGMENT INFORMATION (continued)
For the year ended 25 March 2018:
The Real
Greek
segment
£’000
Franco
Manca
segment
£’000
Other
unallocated
£’000
Total
£’000
Revenue
18,139
36,556
–
54,695
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
Profit for the year from continuing
operations
Assets
Liabilities
Net assets
Capital expenditure
2,436
(931)
––––––––––––
1,505
5,427
(2,751)
––––––––––––
2,676
(433)
(32)
––––––––––––
(465)
7,430
(3,714)
––––––––––––
3,716
(375)
(834)
–
(1,209)
(214)
718
–
–
––––––––––––
718
(653)
78
2
–
––––––––––––
80
11,585
(3,969)
––––––––––––
7,616
––––––––––––
––––––––––––
2,874
––––––––––––
––––––––––––
52,757
(10,208)
––––––––––––
42,549
––––––––––––
––––––––––––
6,741
––––––––––––
––––––––––––
–
(654)
–
(254)
––––––––––––
(908)
(40)
––––––––––––
(948)
––––––––––––
––––––––––––
896
(13,429)
––––––––––––
(12,533)
––––––––––––
––––––––––––
26
––––––––––––
––––––––––––
(897)
142
2
(254)
––––––––––––
(110)
(40)
––––––––––––
(150)
––––––––––––
––––––––––––
65,238
(27,606)
––––––––––––
37,632
––––––––––––
––––––––––––
9,641
––––––––––––
––––––––––––
Head office and PLC costs 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. The Group’s two business
segments primarily operate in one geographical area which is the United Kingdom.
47
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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 – impairment of investments
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
31 March
2019
£’000
Year
ended
25 March
2018
£’000
23,956
4,261
882
6,361
12,371
20,882
3,684
851
5,514
10,489
111
13
24
11
138
386
80
130
187
––––––––––––
––––––––––––
83
20
33
–
616
1,209
–
867
61
––––––––––––
––––––––––––
Year
ended
31 March
2019
No.
Year
ended
25 March
2018
No.
26
1,075
––––––––––––
1,101
––––––––––––
––––––––––––
29
1,086
––––––––––––
1,115
––––––––––––
––––––––––––
6
––––––––––––
6
––––––––––––
––––––––––––
6
––––––––––––
6
––––––––––––
––––––––––––
48
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 49
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
31 March
2019
£’000
Year
ended
25 March
2018
£’000
21,959
1,734
138
263
––––––––––––
24,094
––––––––––––
––––––––––––
19,317
1,453
616
112
––––––––––––
21,498
––––––––––––
––––––––––––
The remuneration of Directors, who are the key management personnel of the company, is set out in
aggregate and on a paid basis below. Further details of directors’ emoluments can be found in the
tables of directors’ remuneration on pages 15 to 18.
Salaries, fees and other short term employee benefits
Social security costs
Share based payments
Defined contribution pension costs
Year
ended
31 March
2019
£’000
Year
ended
25 March
2018
£’000
897
116
31
3
––––––––––––
1,047
––––––––––––
––––––––––––
918*
72*
448
3
––––––––––––
1,441
––––––––––––
––––––––––––
* Salaries, fees and other short-term employee benefits for the year ended 25 March 2018 included
£278,000 bonuses and £38,000 social security costs paid in relation to bonuses earned from the bonus scheme
for the year ended 26 March 2017. No bonuses and related social security costs were earnt or paid for the year
ended 25 March 2018.
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 represents
the only staff costs for the Company.
3 Directors received pension contributions during the year (2018: 3).
No Directors serving during the year exercised share options in the year ended 31 March 2019
(2018: Nil).
49
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 50
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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% (2018: 19%)
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
31 March
2019
£’000
Year
ended
25 March
2018
£’000
327
––––––––––––
327
––––––––––––
––––––––––––
254
––––––––––––
254
––––––––––––
––––––––––––
Year
ended
31 March
2019
£’000
Year
ended
25 March
2018
£’000
669
(54)
––––––––––––
615
432
(65)
––––––––––––
367
99
–
––––––––––––
99
––––––––––––
714
––––––––––––
––––––––––––
(109)
(218)
––––––––––––
(327)
––––––––––––
40
––––––––––––
––––––––––––
714
–
––––––––––––
714
––––––––––––
––––––––––––
258
(218)
––––––––––––
40
––––––––––––
––––––––––––
50
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 51
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
5
INCOME TAX EXPENSE (continued)
Income tax expense on discontinued operations
Deferred taxation:
Total tax expense on profit on discontinued operations
Year
ended
31 March
2019
£’000
Year
ended
25 March
2018
£’000
–
––––––––––––
–
––––––––––––
––––––––––––
(13)
––––––––––––
(13)
––––––––––––
––––––––––––
Further information on the movement on deferred taxation is given in note 16.
Factors affecting tax charge for year:
Profit/(loss) before taxation from continuing operations
Taxation at UK corporation tax rate of 19% (2018: 19%)
Expenses not deductible for tax purposes
Depreciation/impairment on non-qualifying fixed assets
Share based payments
Rate change on deferred tax liability
Tax effect of utilisation of tax losses not previously recognised
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
31 March
2019
£’000
1,434
––––––––––––
272
31
290
171
–
4
–
(54)
––––––––––––
714
––––––––––––
––––––––––––
Year
ended
25 March
2018
£’000
(110)
––––––––––––
(21)
6
214
162
(38)
–
(218)
(65)
––––––––––––
40
––––––––––––
––––––––––––
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
as well as the aggregate current and deferred tax relating to items that are charged or credited directly
to equity.
51
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
6
EARNINGS PER SHARE
Profit/(loss) 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):
Profit/(loss) 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 – impairment of investment
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
31 March
2019
£’000
Year
ended
25 March
2018
£’000
698
(576)
–
––––––––––––
415
––––––––––––
698
(161)
138
146
386
821
(137)
80
130
–
187
––––––––––––
616
146
1,209
821
(137)
–
867
(98)
61
––––––––––––
2,449
––––––––––––
––––––––––––
3,324
––––––––––––
––––––––––––
Year
ended
31 March
2019
No. ‘000
Year
ended
25 March
2018
No. ‘000
571,385
10,230
––––––––––––
571,385
24,495
––––––––––––
581,615
––––––––––––
––––––––––––
595,880
––––––––––––
––––––––––––
52
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 53
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
31 March
2019
Year
ended
25 March
2018
0.1p
0.0p
––––––––––––
0.1p
––––––––––––
––––––––––––
(0.0p)
(0.1p)
––––––––––––
(0.1p)
––––––––––––
––––––––––––
0.1p
0.0p
––––––––––––
0.1p
––––––––––––
––––––––––––
(0.0p)
(0.1p)
––––––––––––
(0.1p)
––––––––––––
––––––––––––
0.4p
0.4p
0.6p
0.6p
53
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 54
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
7
INTANGIBLE ASSETS
Group
Cost
26 March 2017
Additions
25 March 2018
Additions
31 March 2019
Accumulated amortisation
26 March 2017
Charge in the year
25 March 2018
Charge in the year
31 March 2019
Net book value
31 March 2019
Trademarks,
License and
franchises
£’000
Software
£’000
Brand
£’000
Goodwill
£’000
Total
£’000
58
76
8,211
20,705
29,050
–
––––––––––––
58
27
––––––––––––
103
–
––––––––––––
8,211
–
––––––––––––
20,705
27
––––––––––––
29,077
5
––––––––––––
63
––––––––––––
94
––––––––––––
197
––––––––––––
–
––––––––––––
8,211
––––––––––––
–
––––––––––––
20,705
––––––––––––
99
––––––––––––
29,176
––––––––––––
23
11
1,642
–
1,676
8
––––––––––––
31
22
––––––––––––
33
821
––––––––––––
2,463
–
––––––––––––
–
851
––––––––––––
2,527
6
––––––––––––
37
––––––––––––
55
––––––––––––
88
––––––––––––
821
––––––––––––
3,284
––––––––––––
–
––––––––––––
–
––––––––––––
882
––––––––––––
3,409
––––––––––––
26
––––––––––––
––––––––––––
109
––––––––––––
––––––––––––
4,927
––––––––––––
––––––––––––
20,705
––––––––––––
––––––––––––
25,767
––––––––––––
––––––––––––
25 March 2018
27
––––––––––––
––––––––––––
70
––––––––––––
––––––––––––
5,748
––––––––––––
––––––––––––
20,705
––––––––––––
––––––––––––
26,550
––––––––––––
––––––––––––
The amortisation charges for trademarks, license and franchises and software for the year are
recognised within administrative expenses.
As at 31 March 2019 brand intangible assets which relates to Franco Manca has a remaining
amortisation period of 6 years (2018: 7 years).
Goodwill of £1,774,000 relates to the The Real Greek and is attributable to its group of cash generating
units.
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.
54
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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 is 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 2020 financial
year for the sites open at the end of March 2019;
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% (2018: 12.4%) 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 reduced portion of debt than the year ended 25 March 2018.
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 £30,388,000 and £21,118,000 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 31 March 2019:
Reduction in long term growth rate
Increase in pre-tax discount rate
The
Real Greek
%
(4.7%)
32.2%
Franco
Manca
%
(3.2%)
8.8%
55
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
8
PROPERTY, PLANT AND EQUIPMENT
Group
Leasehold
improvements
£’000
Plant and
equipment
£’000
25,161
6,908
1,168
(552)
–
–––––––––––
32,685
2,020
24
(438)
–––––––––––
34,291
–––––––––––
4,223
1,694
51
(75)
(6)
–––––––––––
5,887
605
8
(139)
–––––––––––
6,361
–––––––––––
Furniture,
fixtures
and
fittings
£’000
1,591
660
189
(17)
–
–––––––––––
2,423
166
65
(40)
–––––––––––
2,614
–––––––––––
Assets
under
construction
£’000
1,310
379
(1,408)
–
(61)
–––––––––––
220
666
(97)
(5)
–––––––––––
784
–––––––––––
Total
£’000
32,285
9,641
–
(644)
(67)
–––––––––––
41,215
3,457
–
(622)
–––––––––––
44,050
–––––––––––
3,356
2,339
1,196
1,052
427
334
–
–
4,979
3,725
(264)
949
–
–––––––––––
6,380
2,656
130
(438)
–––––––––––
8,728
–––––––––––
25,563
–––––––––––
–––––––––––
26,305
–––––––––––
–––––––––––
(41)
83
(4)
–––––––––––
2,286
1,198
–
(120)
–––––––––––
3,364
–––––––––––
2,997
–––––––––––
–––––––––––
3,601
–––––––––––
–––––––––––
(10)
30
–
–––––––––––
781
407
–
(36)
–––––––––––
1,152
–––––––––––
–
–
–
–––––––––––
–
–
–
–
–––––––––––
–
–––––––––––
(315)
1,062
(4)
–––––––––––
9,447
4,261
130
(594)
–––––––––––
13,244
–––––––––––
1,462
–––––––––––
–––––––––––
1,642
–––––––––––
–––––––––––
784
–––––––––––
–––––––––––
220
–––––––––––
–––––––––––
30,806
–––––––––––
–––––––––––
31,768
–––––––––––
–––––––––––
Cost
26 March 2017
Additions
Reclassification
Reclassification as
held for sale
Disposals
25 March 2018
Additions
Reclassification
Disposals
31 March 2019
Accumulated
depreciation
and impairment
26 March 2017
Charge in the year
Reclassification as
held for sale
Impairment
Disposals
25 March 2018
Charge in the year
Impairment
Disposals
31 March 2019
Net book value
31 March 2019
25 March 2018
56
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 57
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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 2020 financial
year for the sites open at the end of March 2019;
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% (2018: 12.4%) 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 other than in relation to The Real Greek
restaurant 1 where an additional impairment charge of £43,000 may be necessary. This has not been
recognised as plans to improve trading in this restaurant is being implemented.
The following impairment charges have been recognised in the Statement of Comprehensive Income
as exceptional costs – impairment of property, plant and equipment.
31 March 31 March
2019 2019
£’000 £’000
25 March 25 March
2018 2018
£’000 £’000
Impairment Recoverable
charge amount
Impairment Recoverable
charge amount
For continuing operations
Franco Manca Brighton Marina – –
Franco Manca restaurant 1 – –
Franco Manca restaurant 2 75 487
Franco Manca restaurant 3 26 838
–––––––––––– ––––––––––––
Total for Franco Manca operating
segment 101 1,325
The Real Greek restaurant 1 – –
The Real Greek restaurant 2 29 87
–––––––––––– ––––––––––––
Total for The Real Greek operating
segment 29 87
–––––––––––– ––––––––––––
Total for the Group 130 1,412
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
For discontinued operations
Bukowski Soho – –
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
505 –
148 437
– –
– –
–––––––––––– ––––––––––––
653 437
214 299
– –
–––––––––––– ––––––––––––
214 299
–––––––––––– ––––––––––––
867 736
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
195 –
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
57
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 58
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
8
PROPERTY, PLANT AND EQUIPMENT (continued)
During the year ended 31 March 2019, the Group impaired the short term leasehold improvements in
relation to two properties trading as Franco Manca, which are trading financially below management
expectations, and one property trading as The Real Greek, which has just over two years left on the
lease and the lease has not yet been extended or renewed. During the year ended 25 March 2018, the
Group impaired the short term leasehold improvements in relation to the property at D’Arblay Street,
Soho, London which was sold during the year ended 31 March 2019 (see Note 23 as the recoverable
amount was reclassified to Asset held for sale) and a further two properties trading as Franco Manca
and one property trading as The Real Greek which are trading financially below management
expectation. The trading of Franco Manca restaurant 1 has improved in the year ended 31 March 2019.
Parent Company
Cost
26 March 2017
Additions
25 March 2018
Additions
31 March 2019
Accumulated depreciation
26 March 2017
Charge in the year
25 March 2018
Charge in the year
31 March 2019
Net book value
31 March 2019
25 March 2018
Leasehold
improvements
£’000
Plant and
equipment
£’000
Furniture,
fixtures
and
fittings
£’000
Total
£’000
205
48
25
278
–
–––––––––––
205
–
–––––––––––
205
–––––––––––
7
–––––––––––
55
4
–––––––––––
59
–––––––––––
–
–––––––––––
25
–
–––––––––––
25
–––––––––––
7
–––––––––––
285
4
–––––––––––
289
–––––––––––
16
30
5
51
21
–––––––––––
37
22
–––––––––––
59
–––––––––––
146
–––––––––––
–––––––––––
168
–––––––––––
–––––––––––
8
–––––––––––
38
9
–––––––––––
47
–––––––––––
12
–––––––––––
–––––––––––
17
–––––––––––
–––––––––––
2
–––––––––––
7
3
–––––––––––
10
–––––––––––
15
–––––––––––
–––––––––––
18
–––––––––––
–––––––––––
31
–––––––––––
82
34
–––––––––––
116
–––––––––––
173
–––––––––––
–––––––––––
203
–––––––––––
–––––––––––
All depreciation charges have been recognised in administrative expenses in the income statement.
All non-current assets are located in the United Kingdom.
58
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 59
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
9
INVESTMENTS
Group
Unlisted shares at cost
Loans at cost
Impairment of loans
Carrying amount
31 March
2019
£’000
25 March
2018
£’000
201
80
(80)
––––––––––––
201
––––––––––––
––––––––––––
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 ended 25 March 2018 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 finance assets are stated at amortised cost using the effective interest
method, less any impairment. During the year ended 31 March 2019, the Group recognised impairment
of the loan investment based on estimated future credit loss.
Parent Company
Cost and net book value
Opening position
Investment in subsidiaries
Closing position
31 March
2019
£’000
25 March
2018
£’000
43,439
43,011
124
––––––––––––
43,563
––––––––––––
––––––––––––
428
––––––––––––
43,439
––––––––––––
––––––––––––
59
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 60
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
9
INVESTMENTS (continued)
As at 31 March 2019, 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*
FM Catherine The Great Limited*
Franco Manca International Limited*
* Held by subsidiary undertaking
Ordinary
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%
99%
Operation of restaurants
Operation of restaurants
Dormant
Dormant
Operation of restaurants
Dormant
Dormant
Dormant
Dormant
Dormant
Operation of restaurants
Restaurant property
Restaurant property
Restaurant property
Dormant
60
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 61
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
10
INVENTORIES
Raw materials and consumables
Consumables
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
656
1,108
––––––––––––
1,764
––––––––––––
––––––––––––
449
1,041
––––––––––––
1,490
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
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
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
–
1,020
––––––––––––
1,020
––––––––––––
–
943
––––––––––––
943
––––––––––––
11,863
–
––––––––––––
11,863
––––––––––––
11,724
–
––––––––––––
11,724
––––––––––––
1,470
176
–
1,951
––––––––––––
3,597
––––––––––––
4,617
––––––––––––
––––––––––––
1,095
319
–
1,911
––––––––––––
3,325
––––––––––––
4,268
––––––––––––
––––––––––––
–
–
–
118
––––––––––––
118
––––––––––––
11,981
––––––––––––
––––––––––––
3
–
–
132
––––––––––––
135
––––––––––––
11,859
––––––––––––
––––––––––––
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.
61
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 62
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
12
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash and cash equivalents as
presented in the balance sheet
Bank overdraft
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
1,835
––––––––––––
359
––––––––––––
22
––––––––––––
7
––––––––––––
1,835
–
––––––––––––
1,835
––––––––––––
––––––––––––
359
–
––––––––––––
359
––––––––––––
––––––––––––
22
–
––––––––––––
22
––––––––––––
––––––––––––
7
–
––––––––––––
7
––––––––––––
––––––––––––
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
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
Included in current liabilities:
Trade payables
Other taxation and social security payable
Other payables
Accruals
Deferred income
4,202
1,600
843
4,844
392
––––––––––––
11,881
––––––––––––
––––––––––––
5,622
1,350
208
4,206
135
––––––––––––
11,521
––––––––––––
––––––––––––
67
88
1
1,156
–
––––––––––––
1,312
––––––––––––
––––––––––––
113
117
29
629
–
––––––––––––
888
––––––––––––
––––––––––––
Included in non-current liabilities:
Deferred income
1,601
––––––––––––
1,601
––––––––––––
––––––––––––
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.
62
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 63
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
14
BORROWINGS
Short term borrowings:
Bank overdraft
Long term borrowings:
Bank loans
Amounts owed to subsidiary
undertakings
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
–
––––––––––––
–
––––––––––––
–
––––––––––––
–
––––––––––––
11,240
12,350
11,240
12,350
–
––––––––––––
11,240
––––––––––––
11,240
––––––––––––
––––––––––––
–
––––––––––––
12,350
––––––––––––
12,350
––––––––––––
––––––––––––
2,481
––––––––––––
13,721
––––––––––––
13,721
––––––––––––
––––––––––––
975
––––––––––––
13,325
––––––––––––
13,325
––––––––––––
––––––––––––
As at 31 March 2019, the Group’s committed Sterling borrowing facilities comprises a revolving credit
facility of £14,250,000 (2018: £14,250,000) 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 31 March 2021. The interest rate applicable
on the amounts owed to subsidiary undertakings is 3.5%.
63
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 64
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
15
CAPITAL AND FINANCIAL MANAGEMENT
The Group is exposed to financial risks which could affect the Group’s future financial performance.
This note describes the objectives, policies and processes of the Group for managing those risks and
the methods used to measure them.
The Group finances its operations through equity, borrowings and cash generated from operations. For
borrowings, the Group’s policy is to borrow centrally using a mixture of long-term and short-term
borrowing facilities to meet anticipated funding requirements. These borrowings, together with cash
generated from operations, are loaned internally or contributed as equity to certain subsidiaries.
Financial Assets and Liabilities
The Group and Company had the following financial assets and liabilities:
31 March
2019
£’000
Group Parent company
25 March
2018
£’000
25 March 31 March
2018 2019
£’000 £’000
Non-current financial assets
Other investments
Amounts owed by subsidiary undertakings
Other receivables
201
–
1,020
281
–
943
–
11,863
–
–
11,724
–
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
1,835
1,646
––––––––––––
4,702
––––––––––––
––––––––––––
359
1,414
––––––––––––
2,997
––––––––––––
––––––––––––
22
–
––––––––––––
11,885
––––––––––––
––––––––––––
7
3
––––––––––––
11,734
––––––––––––
––––––––––––
–
9,889
–
10,036
–
1,224
–
771
11,240
–
––––––––––––
21,129
––––––––––––
––––––––––––
12,350
–
––––––––––––
22,386
––––––––––––
––––––––––––
11,240
2,481
––––––––––––
14,945
––––––––––––
––––––––––––
12,350
975
––––––––––––
14,096
––––––––––––
––––––––––––
* 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.
64
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 65
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
15
CAPITAL AND FINANCIAL MANAGEMENT (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 31 March 2019
Other investments
Cash at bank and in hand
Trade and other receivables
Bank loans and overdrafts
Trade and other payables
For the year ended 25 March 2018
Other investments
Cash at bank and in hand
Trade and other receivables
Bank loans
Trade and other payables
Less than
1 year
£’000
–
1,835
1,646
–
(9,889)
––––––––––––
(6,408)
––––––––––––
––––––––––––
Less than
1 year
£’000
–
359
1,414
–
(10,036)
––––––––––––
(8,263)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
More
than
5 years
£’000
Total
£’000
–
–
57
(11,240)
–
––––––––––––
(11,183)
––––––––––––
––––––––––––
201
–
963
–
–
––––––––––––
1,164
––––––––––––
––––––––––––
201
1,835
2,666
(11,240)
(9,889)
––––––––––––
(16,427)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
More
than
5 years
£’000
Total
£’000
80
–
43
(12,350)
–
––––––––––––
(12,227)
––––––––––––
––––––––––––
201
–
900
–
–
––––––––––––
1,101
––––––––––––
––––––––––––
281
359
2,357
(12,350)
(10,036)
––––––––––––
(19,389)
––––––––––––
––––––––––––
The financial instruments recognised on the balance sheets and shown above are all loans and
receivables and financial liabilities at amortised cost.
65
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 66
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
15
CAPITAL AND FINANCIAL MANAGEMENT (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 31 March 2019
Trade and other receivables
Bank loans and overdrafts
Trade and other payables
For the year ended 25 March 2018
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
–
–
(1,224)
––––––––––––
(1,224)
––––––––––––
––––––––––––
11,863
(11,240)
(2,481)
––––––––––––
(1,858)
––––––––––––
––––––––––––
11,863
(11,240)
(3,705)
––––––––––––
(3,082)
––––––––––––
––––––––––––
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)
––––––––––––
––––––––––––
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
(2018: £14,250,000) and short term bank overdraft facilities available to manage its liquidity as at
31 March 2019 of £750,000 (2018: £750,000).
66
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 67
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
15
CAPITAL AND FINANCIAL MANAGEMENT (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:
31 March
2019
£’000
Group Parent company
25 March
2018
£’000
31 March
2019
£’000
25 March
2018
£’000
Floating rate
Other investments
Cash at bank and in hand
Bank overdraft
Bank loans
–
1,835
–
(11,240)
––––––––––––
(9,405)
––––––––––––
––––––––––––
80
359
–
(12,350)
––––––––––––
(11,911)
––––––––––––
––––––––––––
–
22
–
(11,240)
––––––––––––
(11,218)
––––––––––––
––––––––––––
–
7
–
(12,350)
––––––––––––
(12,343)
––––––––––––
––––––––––––
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 31 March 2019 were 1.9%
and year ended 25 March 2018 were 1.9% and the weighted average interest rates paid for bank
overdrafts during the year ended 31 March 2019 were 2.5% and year ended 25 March 2018 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 £56,200 (2018: £61,750).
Foreign Exchange Risks
During the years ended 31 March 2019 and 25 March 2018, 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.
67
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
15
CAPITAL AND FINANCIAL MANAGEMENT (continued)
Credit Risks
The Group’s exposure to credit risk arises mainly from as follows:
31 March
2019
£’000
Group Parent company
25 March
2018
£’000
31 March
2019
£’000
25 March
2018
£’000
Other investments
Cash at bank and in hand
Trade receivables and other receivables
–
1,835
1,646
––––––––––––
3,481
––––––––––––
––––––––––––
80
359
1,414
––––––––––––
1,853
––––––––––––
––––––––––––
–
22
11,863
––––––––––––
11,885
––––––––––––
––––––––––––
–
7
11,727
––––––––––––
11,734
––––––––––––
––––––––––––
The Group estimated that a future credit loss was likely in relation to the other investments held by the
Group. Therefore the Group has recognised impairment of £80,000 during the year ended 31 March
2019. The carrying amounts of the other financial assets above are considered to be recoverable in full
and approximate to their fair value. They are neither past due nor impaired:
The majority of the Group’s cash balances have been held in current accounts at HSBC Bank PLC
during the years ended 31 March 2019 and 25 March 2018 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. As the Group has no material credit
facilities granted to customers no credit losses have been estimated.
The Company’s trade and other receivables are made up of loans to its subsidiary undertaking, Franco
Manca 2 UK Limited. The Company has undertaken to determine whether there has been a significant
increase in credit risk. Where these procedures identify a significant increase in credit risk, the loss
allowance is measured based on the risk of a default occurring over the expected life of the instrument.
No increase in credit risk has been identified.
Fair Values of Financial Assets and Financial Liabilities
The fair value amounts of the Group’s and Company’s financial assets and liabilities as at 31 March
2019 and 25 March 2018 did not materially vary from the carrying value amounts.
68
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 69
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
16
DEFERRED TAXATION
Analysis of movements in net deferred tax balance during the period:
31 March
2019
£’000
Group Parent company
25 March
2018
£’000
31 March
2019
£’000
25 March
2018
£’000
Opening position
(1,586)
(859)
185
1,238
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
–
253
––––––––––––
253
(484)
(583)
––––––––––––
(1,067)
–
253
––––––––––––
253
(498)
(493)
––––––––––––
(991)
–
218
–
–
(90)
–
(146)
137
––––––––––––
(99)
––––––––––––
(1,432)
––––––––––––
––––––––––––
17
13
(45)
137
––––––––––––
340
––––––––––––
(1,586)
––––––––––––
––––––––––––
–
–
(151)
–
––––––––––––
(151)
––––––––––––
287
––––––––––––
––––––––––––
–
–
(62)
–
––––––––––––
(62)
––––––––––––
185
––––––––––––
––––––––––––
During the year ended 31 March 2019, the Group transferred £253,000 deferred tax charge from
reserves (2018: £1,067,000 to reserves) in relation to deferred tax on share based payments which
included £Nil (2018: £484,000) error relating to the year ended 26 March 2017 and before.
69
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 70
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
16
DEFERRED TAXATION (continued)
The Group’s deferred taxation liability disclosed above relates to the following:
31 March
2019
£’000
Group Parent company
25 March
2018
£’000
31 March
2019
£’000
25 March
2018
£’000
Deferred tax assets
Share options
Deferred taxation assets
Deferred tax liabilities
Accelerated capital allowances
Intangible assets
Deferred taxation liabilities
301
––––––––––––
301
––––––––––––
––––––––––––
193
––––––––––––
193
––––––––––––
––––––––––––
287
––––––––––––
287
––––––––––––
––––––––––––
185
––––––––––––
185
––––––––––––
––––––––––––
912
821
––––––––––––
1,733
––––––––––––
––––––––––––
829
950
––––––––––––
1,779
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
The Company has losses of £283,000 (2018: £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 (2018: £51,000) 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
31 March
2019
£’000
Group Parent company
25 March
2018
£’000
31 March
2019
£’000
25 March
2018
£’000
Allotted, issued called up and fully paid:
571,385,237 (2018: 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.
70
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 71
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
£138,000 (2018: £616,000).
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 31 March 2019
are as follows:
At the beginning of the year
Granted during the year
Lapsed during the year
At the end of the year
Year
ended
31 March
2019
‘000
Year
ended
25 March
2018
‘000
62,633
60,608
3,800
(2,625)
––––––––––––
63,808
––––––––––––
––––––––––––
2,950
(925)
––––––––––––
62,633
––––––––––––
––––––––––––
71
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 72
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
18
SHARE BASED PAYMENTS (continued)
Weighted average exercise price
At the beginning of the year
Granted during the year
Lapsed during the year
At the end of the year
Year
ended
31 March
2019
£
Year
ended
25 March
2018
£
0.10
0.09
0.10
(0.16)
––––––––––––
0.09
––––––––––––
––––––––––––
0.18
(0.18)
––––––––––––
0.10
––––––––––––
––––––––––––
Outstanding and exercisable share options to acquire ordinary shares of 1 pence each as at 31 March
2019 under various Group share plans are as follows:
For the year ended 31 March 2019
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
£0.1015
£0.11
£0.17625
£0.1775
£0.1825
CSOP
£0.1015
£0.17625
£0.1775
£0.1825
2,232
2,779
9,440
––––––––––––
14,451
––––––––––––
––––––––––––
0.0200
0.0500
0.0600
––––––––––––
0.0519
––––––––––––
––––––––––––
11
23
31
––––––––––––
26
––––––––––––
––––––––––––
2,232
2,779
9,440
––––––––––––
5,011
––––––––––––
––––––––––––
0.0200
0.0500
0.0600
––––––––––––
0.0519
––––––––––––
––––––––––––
11
23
31
––––––––––––
26
––––––––––––
––––––––––––
554
13,805
1,792
24,023
1,185
162
1,692
––––––––––––
43,213
––––––––––––
––––––––––––
0.0500
0.0600
0.1015
0.1100
0.1763
0.1775
0.1825
––––––––––––
0.0988
––––––––––––
––––––––––––
23
31
111
37
99
95
87
––––––––––––
42
––––––––––––
––––––––––––
554
13,805
–
24,023
–
–
–
––––––––––––
38,382
––––––––––––
––––––––––––
0.0500
0.0600
–
0.1100
–
–
–
––––––––––––
0.0596
––––––––––––
––––––––––––
23
31
–
37
–
–
–
––––––––––––
35
––––––––––––
––––––––––––
1,808
1,065
638
2,633
––––––––––––
6,144
––––––––––––
––––––––––––
0.1015
0.1763
0.1775
0.1825
––––––––––––
0.1802
––––––––––––
––––––––––––
111
99
95
87
––––––––––––
97
––––––––––––
––––––––––––
–
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
72
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 73
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
18
SHARE BASED PAYMENTS (continued)
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
–
–
–
–
––––––––––––
14,359
––––––––––––
––––––––––––
0.0500
0.0600
–
–
–
–
––––––––––––
0.0596
––––––––––––
––––––––––––
35
43
–
–
–
–
––––––––––––
35
––––––––––––
––––––––––––
1,465
738
3,436
––––––––––––
5,639
––––––––––––
––––––––––––
0.1763
0.1775
0.1825
––––––––––––
0.1802
––––––––––––
––––––––––––
111
107
99
––––––––––––
103
––––––––––––
––––––––––––
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
During the year ended 31 March 2019, the market price of ordinary shares in the Company ranged
from £0.0910 (2018: £0.0900) to £0.1288 (2018: £0.2238). The share price as at 31 March 2019 was
£0.1125 (2018: £0.0935).
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.
73
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 74
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
31 March
2019
Year
ended
25 March
2018
Weighted average expected life
Weighted average exercise price
Risk free rate
Expected volatility
Expected dividends
3 years
3 years
10.15 pence 17.625 pence
0.50%
34.1%
–
––––––––––––
––––––––––––
0.50%
69.8%
–
––––––––––––
––––––––––––
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 31 March 2019 are as follows:
At the beginning and end of the year
For the year ended 31 March 2019
Year
ended
31 March
2019
‘000
Year
ended
25 March
2018
‘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
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
73
––––––––––––
73
––––––––––––
––––––––––––
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
73
––––––––––––
73
––––––––––––
––––––––––––
74
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 75
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
18
SHARE BASED PAYMENTS (continued)
For the year ended 25 March 2018
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
––––––––––––
––––––––––––
The fair value of the SIP shares is estimated at the date of grant using a Black-Scholes valuation model.
75
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 76
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
19
NOTE TO CASH FLOWS STATEMENTS
Reconciliation of net cash flows from operating activities
Year
ended
31 March
2019
£’000
720
–
––––––––––––
720
714
––––––––––––
1,434
(8)
327
––––––––––––
1,753
Group
Year
ended
25 March
2018
£’000
(150)
(415)
––––––––––––
(565)
27
––––––––––––
(538)
(2)
254
––––––––––––
(286)
Year
ended
31 March
2019
£’000
(878)
–
––––––––––––
(878)
150
––––––––––––
(728)
(468)
392
––––––––––––
(804)
Parent
Year
ended
25 March
2018
£’000
(1,566)
–
––––––––––––
(1,566)
61
––––––––––––
(1,505)
(465)
312
––––––––––––
(1,658)
5,144
210
27
138
–
––––––––––––
4,575
1,062
63
616
–
––––––––––––
34
–
–
14
–
––––––––––––
31
1,004
–
188
–
––––––––––––
7,272
(274)
(349)
6,030
(438)
(719)
(756)
(435)
–
18
–
49
491
––––––––––––
7,140
63
––––––––––––
4,936
425
––––––––––––
(313)
(123)
––––––––––––
(509)
Profit/(loss) from continuing operations
Loss from discontinued operations
Profit/(loss) for the year
Income tax expense
Profit/(loss) before tax
Finance income
Finance costs
Operating profit/(loss) 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/(decrease) in trade and other
payables
Cash generated from/(used in) operations
Income taxes paid
Net cash flow from operating activities
(1,008)
––––––––––––
6,132
––––––––––––
––––––––––––
(414)
––––––––––––
4,522
––––––––––––
––––––––––––
–
––––––––––––
(313)
––––––––––––
––––––––––––
–
––––––––––––
(509)
––––––––––––
––––––––––––
76
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 77
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
19
NOTE TO CASH FLOWS STATEMENTS (continued)
Changes in liabilities from financing activities
Net debt as at 26 March 2017
Cash flows
Net debt as at 25 March 2018
Cash flows
Net debt as at 31 March 2019
Cash
and
Cash
Equivalents
£’000
271
88
––––––––––––
359
1,476
––––––––––––
1,835
––––––––––––
––––––––––––
Borrowings
due
within
1 year
£’000
(180)
180
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
Borrowings
due
after
1 year
£’000
(6,000)
(6,350)
––––––––––––
(12,350)
1,110
––––––––––––
(11,240)
––––––––––––
––––––––––––
Total
£’000
(5,909)
(6,082)
––––––––––––
(11,991)
2,586
––––––––––––
(9,405)
––––––––––––
––––––––––––
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
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
6,697
24,246
47,271
––––––––––––
78,214
––––––––––––
60
––––––––––––
60
––––––––––––
78,274
––––––––––––
––––––––––––
6,043
22,652
48,711
––––––––––––
77,406
––––––––––––
21
––––––––––––
21
––––––––––––
77,427
––––––––––––
––––––––––––
136
123
–
––––––––––––
259
––––––––––––
–
––––––––––––
–
––––––––––––
259
––––––––––––
––––––––––––
136
261
–
––––––––––––
397
––––––––––––
–
––––––––––––
–
––––––––––––
397
––––––––––––
––––––––––––
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.
77
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 78
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
21
CAPITAL COMMITMENTS
The Group capital expenditure contracted for but not provided in the financial statements as follows:
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
Committed new restaurant builds
1,040
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
––––––––––––
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 15 to 18, 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)
Wild Food Ideas Limited
Amounts outstanding at
year end
Wild Food Ideas Limited
Year
ended
31 March
2019
£’000
Group
Year
ended
25 March
2018
£’000
Year
ended
31 March
2019
£’000
Parent company
Year
ended
25 March
2018
£’000
1
––––––––––––
1
––––––––––––
––––––––––––
4
––––––––––––
4
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
31 March
2019
£’000
Group
25 March
2018
£’000
31 March
2019
£’000
Parent company
25 March
2018
£’000
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
78
255383 The Fulham Shore AR pp46-end.qxp_251067 Fulham Shore R&A pp41-end.qxp 02/08/2019 09:53 Page 79
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
22
RELATED PARTY DISCLOSURES (continued)
During the year, the Group was invoiced £84,000 (2018: £83,000) 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 31 March 2019 was £17,000 (2018: £33,000).
During the year, the Group was invoiced £6,000 (2018: £146,000) 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 31 March 2019 was £Nil (2018: £19,000).
The Group also acquired equipment of £Nil (2018: £18,000) from Bukowski Limited and the balance
owed by the Group outstanding at 31 March 2019 was £Nil (2018: £18,000)
During the year, the Group was invoiced £857,000 (2018: £936,000) 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
31 March 2019 was £249,000 (2018: £266,000).
During the year, the Group was invoiced £132,000 (2018: £171,000) 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 31 March 2019 was £49,000
(2018: £61,000).
During the year, the Group credited £2,000 (2018: invoiced £86,000) 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 and MA Chapman is an indirect shareholder. The
balance outstanding as at 31 March 2019 owed to Fixed Restaurants Limited was £37,000 (2018: £Nil).
During the year, the Group and Company invoiced £12,000 (2018: £3,000) for desk space provided to
and £76,000 (2018: £Nil) in rent relating to a property leased 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 31 March 2019 was £21,000 (2018: £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
25 March
2018
£’000
Year
ended
31 March
2019
£’000
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
9
615
791
––––––––––––
1,415
––––––––––––
––––––––––––
57
603
806
––––––––––––
1,466
––––––––––––
––––––––––––
79
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
22
RELATED PARTY DISCLOSURES (continued)
During the year the Company also loaned amounts to the following subsidiaries:
Amounts loaned/(repaid) Parent company
Year
ended
25 March
2018
£’000
Year
ended
31 March
2019
£’000
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
(245)
(1,489)
368
––––––––––––
(1,366)
––––––––––––
––––––––––––
331
1,215
4,423
––––––––––––
5,969
––––––––––––
––––––––––––
Amounts outstanding at year end Parent company
25 March
2018
£’000
31 March
2019
£’000
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
(16)
(2,464)
11,863
––––––––––––
9,383
––––––––––––
––––––––––––
1,233
(975)
11,494
––––––––––––
11,752
––––––––––––
––––––––––––
The Company was a legal guarantor and a party to an agreement in which 10DAS Limited during the
year, 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 £Nil (2018: £1,462,000).
This commitment is included in the Group disclosure in note 20. Following the year end, the guarantee
was released.
80
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
23
DISCONTINUED OPERATION AND NON-CURRENT ASSETS CLASSED AS HELD FOR SALE
During the period, the Group disposed of the property and business of the Bukowski franchise at
D’Arblay Street, Soho, London. An impairment loss was recognised in the year ended 25 March 2018
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)
––––––––––––
(415)
––––––––––––
––––––––––––
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
––––––––––––
––––––––––––
Property, plant and equipment held for sale
The impairment charge above related to the impairment of the property, plant and equipment for the
D’Arblay Street restaurant business. The Group expected the fair value less costs to be approximately
£329,000. There were no liabilities expected to be held for sale. The cash received from the sale during
the year was £329,000.
81
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
24
SUBSEQUENT EVENTS
On 15 July 2019, the Company entered into a conditional sale and purchase agreement for the purchase
of the approximately 1% minority interests in its two subsidiaries: Kefi Limited (“Kefi”), which owns the
subsidiary that owns and operates The Real Greek; and Franco Manca Holdings Limited (formerly
Rocca Limited) (“FM Holdings”), which owns the subsidiary that owns and operates Franco Manca, for
a total maximum consideration of up to £650,658, payable in cash. The purchase of the minority
interests is subject to the approval of shareholders at the Company’s 2019 annual general meeting.
82
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THE FULHAM SHORE PLC
DIRECTORS, OFFICERS AND ADVISERS
COMPANY SECRETARY
NJ Donaldson
Executive Chairman
Managing Director
Director
Finance Director
Independent Non-executive Director
Independent Non-executive Director
DIRECTORS
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
MA Chapman
DAL Gunewardena
REGISTERED OFFICE
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)
Elder House,
St. Georges Business Park,
Brooklands Road,
Weybridge,
Surrey, KT13 0TS
REGISTERED IN ENGLAND
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
83
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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 28 August
2019 at Franco Manca, 19 Bennetts Hill, Birmingham B2 5QJ to consider, and if thought fit, pass the following
resolutions. Resolutions 1, 2, 3, 4, 5, 6 and 7 shall be proposed as ordinary resolutions and resolution 8 as a
special resolution:
ORDINARY RESOLUTIONS
1. To receive the Report of the Directors, the financial statements and the report of the auditors for the
period ended 31 March 2019.
2. To receive and approve the Report on Directors’ Remuneration for the period ended 31 March 2019.
3. To re-appoint Mr David Page, who retires by rotation under the Company’s Articles of Association, as
a director of the Company.
4. To re-appoint Mr Nicholas Donaldson, who retires by rotation under the Company’s Articles of
Association, as a director of the Company.
5. 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.
6. The acquisition by the Company of:
a. 50,000 Ordinary Shares of £0.00001 each in the capital of Kefi Ltd from Nabil Mankarious, a director
of the Company, for a consideration of up to £105,203;
b. 50,000 Ordinary Shares of £0.00001 each in the capital of Kefi Ltd from David Page, a director of
the Company, for a consideration of up to £105,203;
c. 371,040 Ordinary Shares of £0.000003 each in the capital of Franco Manca Holdings Limited from
Nabil Mankarious, a director of the Company, for a consideration of up to £220,126; and
d. 371,040 Ordinary Shares of £0.000003 each in the capital of Franco Manca Holdings Limited from
David Page, a director of the Company, for a consideration of up to £220,126,
(together, the “Acquisitions”), in each case the stated consideration being subject to a downwards
(pro rata) adjustment if the Company’s share price decreases between 15 July 2019 and 28 August
2019, further details of which are set out in the Company’s announcement dated 16 July 2019 be
and are hereby approved for the purposes of section 190 of the Companies Act 2006 and the
directors of the Company other than David Page and Nabil Mankarious be and are hereby authorised
to do all such things as any of them may consider necessary or desirable to implement the
Acquisitions.
7.
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 on the earlier of the conclusion of the annual general meeting of the Company held
in 2020 and the date falling 15 months after the date of the passing of this resolution, 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.
84
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THE FULHAM SHORE PLC
NOTICE OF ANNUAL GENERAL MEETING
SPECIAL RESOLUTION
8. Subject to and conditional upon the passing of resolution 7 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 7, 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 and shall expire on the earlier of the conclusion of
the annual general meeting of the Company held in 2020 and the date falling 15 months after the date
of the passing of this resolution, unless such power is renewed or extended prior to such expiry.
BY ORDER OF THE BOARD
DM Page
Chairman
1st Floor
50-51 Berwick Street
London W1F 8SJ
31 July 2019
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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 SLC
Registrars (trading name of Equiniti David Venus Limited), Elder House, St. Georges Business Park,
Brooklands Road, Weybridge, Surrey, KT13 0TS by not later than 09:00am on 23 August 2019 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 23 August 2019 (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 23 August
2019 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 19 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 15 to 18 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.
8. These notes are qualified by and are subject to the contents of the Company’s articles of association
which may be viewed at www.fulhamshore.com.
86
Our Restaurants
www.francomanca.co.uk
www.therealgreek.com
Perivan 255383
The Fulham Shore PLC
1st Floor 50-51 Berwick Street
London W1F 8SJ
Tel: 020 3026 8129
Email: info@fulhamshore.com
www.fulhamshore.com
REPORT & FINANCIAL STATEMENTS
Year ended 31 March 2019