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 29 March 2020
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259801 The Fulham Shore AR pp01.qxp 30/10/2020 14:21 Page 1
THE FULHAM SHORE PLC
TABLE OF CONTENTS
BACKGROUND AND HIGHLIGHTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
FINANCIAL REVIEW
SECTION 172 STATEMENT
GOVERNANCE
BOARD OF DIRECTORS
CORPORATE GOVERNANCE STATEMENT
REPORT ON DIRECTORS’ REMUNERATION
DIRECTORS’ REPORT
STATEMENT ON DIRECTORS’ RESPONSIBILITIES
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED AND COMPANY BALANCE SHEETS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
ACCOUNTING POLICIES
NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
DIRECTORS, OFFICERS AND ADVISERS
NOTICE OF ANNUAL GENERAL MEETING
Page
2
4
8
16
18
20
23
27
32
33
41
42
44
45
46
47
58
98
99
1
259801 The Fulham Shore AR pp02-pp22.qxp 30/10/2020 14:21 Page 2
THE FULHAM SHORE PLC
BACKGROUND AND HIGHLIGHTS
for the year ended 29 March 2020
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 70 restaurants in the UK: 18 The Real Greek (www.therealgreek.com) and
52 Franco Manca (www.francomanca.co.uk).
Highlights – Year ended 29 March 2020
l Revenue growth of 7% to £68.6m (2019: £64.0m) driven by improved trading in the Company’s existing
restaurant estate and new openings
l Headline EBITDA* of £15.2m after adoption of IFRS 16 and £8.3m before adoption of IFRS 16**
(2019: £7.8m)
l
EBITDA* of £14.3m after adoption of IFRS 16 and £7.2m before adoption of IFRS 16** (2019: £7.1m)
l Headline Operating Profit of £4.4m after adoption of IFRS 16 and £3.6m before adoption of IFRS 16**
(2019: £3.5m)
l
Impairment charge on property, plant and equipment and change in fair value of investments of £0.5m
(2019: £0.2m)
l Operating Profit of £1.8m after adoption of IFRS 16 and £0.7m before adoption of IFRS 16**
(2019: £1.8m)
l
l
Loss before tax of £0.8m after adoption of IFRS 16 and profit before tax of £0.4m before adoption of
IFRS 16** (2019: profit before tax of £1.4m)
Loss after tax of £1.2m after adoption of IFRS 16 and £0m before adoption of IFRS 16** (2019: Profit
of £0.7m)
l Net debt before lease liabilities recognised under IFRS 16 as at 29 March 2020 of £9.5m (2019: £9.4m)
l
7 new Franco Manca pizzeria and 2 new The Real Greek restaurants were opened during the year ended
29 March 2020 in the UK (2019: 4 Franco Manca pizzeria)
2
259801 The Fulham Shore AR pp02-pp22.qxp 30/10/2020 14:21 Page 3
THE FULHAM SHORE PLC
BACKGROUND AND HIGHLIGHTS
for the year ended 29 March 2020
l
Since the year end:
l
l
l
l
As directed by the UK Government, the restaurant sector was ordered to close for dine-in customers
on 20 March 2020, before the Company’s year end. The Group’s restaurants then re-opened
gradually for takeaway and delivery from the end of April 2020 and for dining in from July 2020
68 of 70 restaurants now fully open and trading supported by additional safety precautions and
training instigated throughout the Group’s estate prior to re-opening
Thanks to the UK Government’s “Eat Out to Help Out” scheme, revenues for the days supported by
the scheme increased markedly compared to those of the previous year
1 further Franco Manca pizzeria opened in September on The Cut by Waterloo station making 52
Franco Manca operated by the Group
l Completion of an equity fundraise for £2.25m
l
The Group’s banking facilities were extended to £25.75m from £15.0m
l Net debt (before lease liabilities recognised under IFRS 16) as at 13 October 2020 was £3.4m
The above numbers are for continuing operations.
* Definition of Headline EBITDA and EBITDA can be found on pages 9 and 57.
** The Group adopted the IFRS 16 accounting standard for leases at the beginning of the financial year but, in line with
transition rules, the comparatives have not been restated. Further details on the impact of IFRS 16 can be found on
pages 93 to 96.
3
259801 The Fulham Shore AR pp02-pp22.qxp 30/10/2020 14:21 Page 4
THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Introduction
Coronavirus has had an unprecedented impact on communities across the UK and, in turn, the UK restaurant
sector. Your Chairman started his restaurant career as a student dishwasher during the ‘miners strikes’ of
1973/74. During those times of social and economic unrest restaurants remained open, albeit with limited
hours due to power shortages. However, even the significant challenges presented to our industry during that
period do not compare to what we have experienced in recent months as a result of the coronavirus pandemic,
including the complete shutdown of restaurants during the Spring.
I am pleased to report that the Company has emerged in robust shape from this critical period and in some
locations is now serving more daily customers than ever before, despite reduced seating capacity in our
restaurants. These customers are returning for our high quality, well sourced, ingredients, everyday day low
pricing and motivated and enthusiastic staff.
We traded profitably at Headline EBITDA level for the financial year ended 29 March 2020. I am pleased to
report, post lockdown, we have continued to trade profitably at the Headline EBITDA level.
Financial year ended 29 March 2020
During the year ended 29 March 2020, Fulham Shore had a successful year up until the final few weeks of
the financial year, achieving a 7% increase in revenue to £68.6m (2019: £64.0m).
This is the first financial year in which we are reporting our figures after adopting the new IFRS 16 accounting
standard for leases (“IFRS 16”). The main impact of this standard is to capitalise the Group’s property rental
leases as “right of use assets” within non-current assets, along with the corresponding lease liabilities
representing the leases’ cash flow obligations. The right of use assets are then depreciated over the life of
the lease and a notional interest charge is recorded on the lease liabilities.
Headline EBITDA* increased to £15.2m (2019: £7.8m) incorporating the application of IFRS 16. If we had
not adopted IFRS 16, our Headline EBITDA** for the year would have been £8.3m (2019: 7.8m), an increase
of 6%. Net debt before lease liabilities recognised under IFRS 16 as at 29 March 2020 was £9.5m (2019:
£9.4m).
Both The Real Greek and Franco Manca traded well throughout the year until March. The increase in revenue
and Headline EBITDA was achieved despite the enforced restaurant closures at the end of March that
impacted both revenue and Headline EBITDA for our two businesses.
The year’s figures closed slightly below the market expectations that were set before the impact of the
coronavirus was known. Without the closure of our restaurants in March, we would have slightly exceeded
those market expectations.
The figures for our full financial year were better than could have been hoped for given the events of February
and March when the closure of restaurants was first announced. However they are now truly historic in every
sense of the word. This report is therefore concentrating on the current trading environment and the long-
term growth prospects for the Company in the future.
Coronavirus effect, current trading and outlook
How the Company pivoted during the period 16 March 2020 to 2 August 2020
In line with UK government instructions, we closed all restaurants by 23 March 2020. Trade had been
diminishing over the previous few weeks as the public’s concern about coronavirus increased.
During April 2020, in a few locations, we gradually opened for delivery and click and collect. Within a few
weeks some of our sites were busier than the previous year. They were breaking trading records without any
dine-in customers.
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259801 The Fulham Shore AR pp02-pp22.qxp 30/10/2020 14:21 Page 5
THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Approximately half of our restaurants were operating profitably at Headline EBITDA level on this basis by
June 2020. The UK Government then announced the reopening of dine-in to commence on 4 July 2020. We
proceeded carefully throughout July 2020 and slowly the majority of our estate opened its doors. We have
two sites still closed, being Franco Manca Aldwych and The Real Greek Strand. These two locations rely on
offices, theatregoers and tourists, none of whom are around at present.
Due to the closure of our restaurants in accordance with UK Government instructions, the Group was loss
making both in March 2020 and in the first quarter of the financial year ending 28 March 2021 (April, May
and June 2020). We returned to profit in the second quarter at Headline EBITDA level, thanks to our customers
returning in great numbers.
Our colleagues in all parts of the business have worked tirelessly to get the Company back on its feet, our
waiting staff and kitchen brigades striving hard to satisfy the large volume of customers we serve wearing
uncomfortable PPE and observing different, strange, but safer working practices. The UK Government’s Job
Retention Bonus scheme will make £1000 available per eligible employee retained after furlough in February
2021. This will, if we qualify, contribute towards our own job retention actions and incentives that were put in
place back in March 2020.
It is thanks to the commitment of our people that we are back open and in certain instances able to serve
more customers than last year despite our reduced seating capacity. Head office staff were on both full and
flexi furlough, which for everyone has been a strange and novel experience. All the above deserve both praise
and thanks for their commitment to the Group.
We are ready to flex the business should the UK Government regulations change again. We believe that our
previous experience means we will be even better prepared for any significant future changes.
Market overview
We believe that the restaurant market in the UK was heading for a correction well before the Coronavirus
outbreak.
There were too many restaurant businesses with owners and managers convinced they could swim like Mark
Spitz, but which were actually being kept afloat by some badly made rubber rings and various leaky flotation
devices. They were driven to expand by historically cheap debt, supposed high exit multiples on sale of the
businesses and run by management teams who had never experienced either a downturn in the UK economy
or an oversupply in the restaurant sector.
Successful restaurant businesses will continue to be those offering reasonably priced food, made with quality
ingredients, served by motivated teams. At Fulham Shore we offer all these things. In addition, we operate
from a well-positioned, carefully chosen, fairly rented estate.
Before the onset of the coronavirus the busiest UK restaurants were those in the West End of London and
metropolitan areas such as central Manchester. The suburbs of these large cities together with regional towns
around the UK were very much distant cousins. Since 4 July 2020 this situation has completely reversed. We
believe this will remain the case for the foreseeable future.
Some of our regional and suburban restaurants are currently breaking trading records on a weekly basis.
This is unprecedented in my 47 years in the restaurant industry. Fulham Shore’s estate is well positioned to
benefit from these structural changes.
The medium term
Predicting the UK economy, and the restaurant sector within it, is probably more difficult now than at any time
since 1945. Our experience over the last six months has shown that the restaurants that provide what
customers want will thrive under the most difficult of circumstances.
5
259801 The Fulham Shore AR pp02-pp22.qxp 30/10/2020 14:21 Page 6
THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Ploughing the same old hackneyed furrow of formulaic me-too offerings won’t work anymore in the UK,
especially in times of societal turmoil and economic upheaval. We believe that the public want food sourcing
that is trustworthy; they want to know that the owner of a restaurant knows the farm or vineyard that the food
and wine on the menu comes from. Combine this with menu pricing that doesn’t leave them with bill shock
and servers who are seen to be having a good time while working makes for a great atmosphere and,
consequently, high customer numbers per site.
Purchasing directly from our growers and producers cuts out one, two or even three wholesalers, agents and
middlemen. This enables us to pass on these savings to our customers in the form of more affordable menu
prices. This results in the high numbers of customers visiting our restaurants per week and means that our
turnover per site continues to be strong.
This is the future - high quality ingredients combined with low prices, delivering high turnover per site. With
rents likely to be falling for the next few years and more sites becoming available, the future looks promising
for Fulham Shore. A post coronavirus era will, I believe, see less competition. We will go prospecting in areas
of the country where we can open more of our restaurants, in towns and cities such as Newcastle, Canterbury,
Cardiff and Glasgow.
Franco Manca
London suburbs and regional towns with a Franco Manca have been the stars of the restaurant sector over
the last few months. Our policy of opening in London villages has borne fruit, as many commuters are now
working from home. These Franco Manca sites are busier than they have ever been.
We have always felt that a Franco Manca pizzeria thrives better in a local neighbourhood where it can build a
loyal local following rather than rely on passing trade. Due to our reduced seating capacity and low prices we
have demand for tables at peak times. We have introduced our own virtual queuing system which enables us
to control the queue and also doubles as a track and trace system as per UK Government guidelines.
Franco Manca continues to serve made to order sourdough pizza, with dough freshly made every day at each
location.
The Real Greek
The absence of tourists in London, office workers in the City and theatregoers in the West End has impacted
our The Real Greek restaurants. These are normally bustling locations with queues and a great vibe. The
staff in these restaurants need special praise as it must be difficult when your site is serving half your normal
number of customers with social distancing.
The complete opposite has occurred in our The Real Greek locations around the country. Some of our regional
locations are twice as busy as they were last year. We have widened our use of our booking system which
enables us both to manage when customers dine and which acts as a track and trace system as required by
the government.
Property
Landlords prior to COVID-19 were facing falling retail and restaurant demand for their sites, due to the
continued shift to online shopping, the contraction of some large restaurant chains, and the challenging
economic backdrop over the past three years.
The bottom has now truly fallen out of their world. There is no safety net for landlords that relied on fee-based
agents who played naive prospective tenants against each other and then used this “evidence” at the next
rent review, to other operators, that this was the new ‘market rent’ for the street.
6
259801 The Fulham Shore AR pp02-pp22.qxp 30/10/2020 14:21 Page 7
THE FULHAM SHORE PLC
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
Many of these landlords and their commercial agents benefited from a constant and seemingly forever rising
rent roll. Some, over the last 40 years, were convinced that it was their financial acumen and ‘the property’
which was contributing to their increased wealth. It now turns out, and some have now realized, that it was
‘the tenant’ that was making them rich, not the building they owned. The building now may turn out to be a
liability rather than an asset over the next few years.
There are some positive stories about some of our landlords. More than 50% of our UK based landlords have
worked with us and we have come to an arrangement where we share the financial pain of the closure period.
We are still negotiating with the remainder but astonishingly there are around 5% who cannot admit their
world has changed and are demanding money with legal menaces.
The tribulations of distressed UK businesses and their landlords has resulted in the Group being offered more
new sites than we can possibly view. These are ex retail shops, ex ground floor offices, ex chain restaurants,
plus new build sites which were some years in the planning, but now have no tenants. We feel the longer we
wait for even the best of these sites the lower the rents we can achieve. We believe this situation may last at
least 5 years.
Dividend policy
Although we were considering a dividend policy, the impact of COVID-19 has meant that any plans for a
dividend policy will be delayed until the full effects of the pandemic are over. No dividend is therefore being
proposed for the year ended 29 March 2020.
Current outlook
As we write this report the UK government has once again imposed trading restrictions in some areas of the
country to combat the spread of COVID-19. We do not believe that a 10pm curfew will have a significant effect
on our business, as the majority of our customers eat before then. We can only react as and when these new
regulations come onto force in the areas where we have our restaurants. If, as before, delivery and collect
services are permitted and dine-in curtailed we will pivot the business in this direction once more.
Franco Manca and The Real Greek are popular with the public. Fulham Shore is well capitalised and we have
ample headroom in our borrowing facilities. We are confident that this, combined with our cash balances, will
see us emerge from this period as a successful survivor in an albeit reduced UK restaurant sector.
DM Page
Chairman
14 October 2020
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Fulham Shore’s performance in the year ended 29 March 2020 is summarised in the table below:
For continuing operations
Revenue
Headline EBITDA*
Headline operating profit
EBITDA*
Operating profit
(Loss)/profit before taxation
(Loss)/profit 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
29 March
2020
(IFRS 16)
£m
Year
ended
29 March
2020
(IAS 17)
£m
Year
ended
31 March
2019
(IAS 17)
£m
68.6
15.2
4.4
14.3
1.8
(0.8)
(1.2)
(0.2p)
(0.2p)
0.2p
0.2p
68.6
64.0
8.3
3.6
7.2
0.7
0.4
–
0.0p
0.0p
0.4p
0.4p
7.8
3.5
7.1
1.8
1.4
0.7
0.1p
0.1p
0.4p
0.4p
Change
(IAS 17)
%
+7.2%
+6.4%
+2.9%
+1.4%
-61.1%
-71.4%
-100%
14.8
7.2
77.7
––––––––––––
––––––––––––
8.2
7.2
9.5
––––––––––––
––––––––––––
6.1
3.5
9.4
––––––––––––
––––––––––––
+34.4%
+105.7%
+1.1%
––––––––––––
––––––––––––
No.
51
18
––––––––––––
69
––––––––––––
––––––––––––
No.
51
18
––––––––––––
69
––––––––––––
––––––––––––
No.
44
16
––––––––––––
60
––––––––––––
––––––––––––
+15.9%
+12.5%
––––––––––––
+15.0%
––––––––––––
––––––––––––
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
* Reconciliation of profit before taxation to EBITDA and Headline EBITDA for continuing operations:
(Loss)/profit before taxation
Finance costs
Depreciation and amortisation
Amortisation of brand
Exceptional costs:
– change in fair value of investments
– impairment of property, plant and equipment
– Loss on disposal of property, plant and equipment
– Covid-19
EBITDA
Share based payments
Pre-opening costs
Headline EBITDA
Year
ended
29 March
2020
(IFRS 16)
£m
(0.8)
2.6
10.8
0.8
Year
ended
29 March
2020
(IAS 17)
£m
Year
ended
31 March
2019
(IAS 17)
£m
0.4
0.3
4.8
0.8
1.4
0.3
4.3
0.8
0.2
0.3
–
0.4
––––––––––––
14.3
0.2
0.7
––––––––––––
15.2
––––––––––––
––––––––––––
0.2
0.3
–
0.4
––––––––––––
7.2
0.2
0.9
––––––––––––
8.3
––––––––––––
––––––––––––
0.1
0.2
0.2
–
––––––––––––
7.3
0.1
0.4
––––––––––––
7.8
––––––––––––
––––––––––––
This year ended 29 March 2020 comprised of 52 full weeks of trading compared to the previous financial
year ended 31 March 2019, which comprised 53 full weeks of trading.
Total Group revenue from continuing operations for the year ended 29 March 2020 grew by 7.2% to £68.6m
from £64.0m last year. 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. However the Group lost
almost two weeks of revenue at the year end as a result of the UK Governments COVID-19 lockdown.
During the year, we opened seven new Franco Manca pizzeria across the UK and two new The Real Greek
restaurants in London. This takes the total restaurants operated by the Group in the UK to 69 (2019: 60) 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.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
This is the first year in which we are reporting our figures after adopting the new IFRS 16 accounting standard
for leases (“IFRS 16”). IFRS 16 came into effect for accounting periods commencing on or after 1 January
2019.
The main impact of the standard is to capitalise the Group’s property rental leases as “right-of-use assets”
within non-current assets along with corresponding lease liabilities representing the leases’ cash flow
obligations. The right-of-use assets are then depreciated over the life of the lease and a notional interest
charge is recorded on the lease liabilities.
The standard allows for different transition options and the Group has adopted the modified retrospective
approach where the cumulative effect of initially applying IFRS 16 is recognised at the date of initial application
(1 April 2019) and the right of use asset is calculated based on the corresponding lease liability. Therefore,
the Group has not restated the comparatives. The impact of IFRS 16 on the financial year is summarised on
page 10 (further information can also be found in note 23):
Reconciliation between IAS 17 and IFRS 16 for the year ended 29 March 2020:
Year
ended
29 March
2020
(IFRS 16)
£m
For continuing operations
Revenue
Headline EBITDA
Headline operating profit
68.6
15.2
4.4
14.3
EBITDA
Operating profit
1.8
(Loss)/profit before taxation (0.8)
(1.2)
(Loss)/profit for the year
(0.2p)
(0.2p)
0.2p
0.2p
14.8
Basic eps
Diluted eps
Headline basic eps
Headline diluted eps
Cash flow from operating
activities
Development capital
expenditure
Net Debt
7.2
77.7
––––––––––––
––––––––––––
IFRS 16
Removal
of rent
expenses
IFRS 16
Depr-
eciation
IFRS 16
Interest
expense
IFRS 16
Other
Movement
£m
–
6.9
6.9
7.1
7.1
7.1
7.1
1.2p
1.2p
1.2p
1.2p
7.1
£m
–
–
(6.0)
–
(6.0)
(6.0)
(6.0)
(1.0p)
(1.0p)
(1.0p)
(1.0p)
£m
–
–
–
–
–
(2.3)
(2.3)
(0.4p)
(0.4p)
(0.4p)
(0.4p)
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.5)
Year
ended
29 March
2020
(IAS 17)
£m
68.6
8.3
3.6
7.2
0.7
0.4
–
-p
-p
0.4p
0.4p
8.2
–
–
––––––––––––
––––––––––––
–
–
––––––––––––
––––––––––––
–
–
––––––––––––
––––––––––––
–
68.2
––––––––––––
––––––––––––
7.2
9.5
––––––––––––
––––––––––––
Although IFRS 16 depreciation is on a straight line basis, IFRS 16 interest expense is higher during the first
years of recognition than later in the lease as the lease liability balance is the greatest at the beginning.
Therefore reported profitability improves over time under IFRS 16, all things being equal.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Group Headline EBITDA (as defined in page 57 of the financial statements and reconciled on page 9)
continues to be a key measure for the Group as well as industry analysts as it is indicative of ongoing EBITDA
of the businesses.
For the following narrative over the following five paragraphs on Group performance for the year ended 29
March 2020, in order to compare like with like, the comparisons take the numbers from the financial year
ended 29 March 2020 as if IAS 17 has applied.
Headline EBITDA for the year was £8.3m (2019: £7.8m), an increase of 6.4% on the prior year while the
Group’s EBITDA increased 1.4% to £7.2m (2019: £7.1m).
Group depreciation and amortisation, excluding amortisation of the Franco Manca brand, increased 9.4% to
£4.7m (2019: £4.3m) following the number of new restaurants opened during the year and the previous year.
The Group incurred one off costs in the year of £0.3m (2019: £0.2m) from impairment charges for 4
restaurants (2019: 3) which are, this year, impacted by COVID-19 and therefore underperforming
management’s expectations and £0.4m (2019: £Nil) of exceptional costs relating to the temporary closure of
the restaurants from middle of March 2020 following instructions received from the UK Government as part
of the COVID-19 lockdown. These one off costs, even though partially offset by the improved EBITDA, have
led to a decrease in operating profit by 61.1% to £0.7m (2019: £1.8m).
With our new openings, we have invested £0.9m (2019: £0.4m) in pre-opening costs. Finance costs have
remained static at £0.3m (2019: £0.3m) as the Group maintained the same level of net debt. Overall this has
resulted in a profit before taxation of £0.4m (2019: £1.4m).
The Group’s tax charge has decreased to £0.4m (2019: £0.7m). Although the Group reported a loss before
tax, much of the exceptional costs incurred in the year do not benefit from corporation tax relief. The Group’s
loss after tax was £0.0m (2019: profit after tax of £0.7m).
Our basic and diluted earnings per share from continuing operations was 0.0p (2019: 0.1p) while Headline
diluted earnings per share also remained at 0.4p (2019: 0.4p).
Cost inflation
During the year, weakness of Sterling against both the Euro and the US Dollar from uncertainty over Brexit
and the need to increase stock levels in case of a hard 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.
We also saw 4.9% (2019: 4.4%) 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.
Employer’s pension auto-enrolment contribution rate also increased at the beginning of the financial year
from 2% to 3% (effectively a 50% increase in this cost).
Our other two material cost items are rent and utility costs. Rental inflation of our estate continues to increase
modestly. However this is likely to be impacted by COVID-19 effects going forward as we enter more short
term rent deals with landlords following the year end. 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.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Cash flows and balance sheets
The Group’s cash flow from operating activities has increased significantly to £14.8m as a result of the
adoption of IFRS 16 but by a more modest 34.4% to £8.2m (2019: £6.1m) under IAS 17 as the benefit from
improved cash generation from restaurants and better cash management flowed through. This was also after
an additional £0.1m (2019: £0.2m) in operating cash flow being applied to increased stock holding at year
end as part of risk mitigation planning for Brexit.
We invested £7.4m (2019: £3.6m), before right of use assets additions, in development capital. This was
primarily in new restaurants but also included investment in IT systems to introduce advanced customer
relationship management facilities to both businesses including the launch of a new loyalty programme for
Franco Manca in October 2019. In addition we recognised £9.2m (2019: £Nil) right-of-use assets in relation
to the short term leasehold properties acquired during the year for new restaurant openings. At the same
time an equal and opposite additional lease liabilities were recognised on the balance sheet for £9.2m (2019:
£Nil).
During the year we acquired approximately 1% minority interests in the Group’s 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 consideration of £628,026 in cash. Following these transactions Fulham Shore now owns 100%
of each subsidiary.
Resultant net debt from our activities before lease liabilities recognised under IFRS 16 as at 29 March 2020
was £9.5m (2019: £9.4m). This is financed by our facilities with HSBC Bank PLC, made up of a £14.25m
revolving credit facility (“RCF”) and a £0.75m overdraft.
Despite the reduced trading as a result of COVID-19 at the end of the financial year, the Group funded its
nine restaurant openings during the year largely through existing operational cash flow.
Post balance sheet events
On 20 March 2020, the UK Government issued direct instructions to temporarily close all restaurants to dine-
in trade as part of wider efforts in the fight against Covid-19. Following the year end, costs were reduced to
a minimum and all but essential or committed capital expenditures were halted in order to manage cash flow,
including halting the build of a new Franco Manca in Glasgow. To conserve further the Group’s cash resources,
all Directors of the Company and certain members of the senior management team agreed to waive 20 per
cent of remuneration due to them with effect from 1 April 2020 and until such time as the majority of the
Company’s restaurants were back open and trading.
Since 4 July 2020, the date from which the UK Government determined that restaurants could reopen to serve
dine-in customers if safe to do so, the Group has undertaken a gradual reopening of its restaurants, serving
customers through a combination of dine-in, takeaway, click and collect and delivery services. By the first
weeks of August 2020, 67 of the 69 restaurants at the time had reopened to trading.
On 9 April 2020, Debenhams Retail Limited (formerly Debenhams Retail PLC) (“Debenhams”), with whom
the Group has concession agreements for four restaurants, appointed Administrators. The Group has been
in contact with Debenhams, its Administrators and the superior landlords of the various locations to ensure
the four restaurants were able to reopen at an appropriate time after the COVID-19 lockdown. The Group has
not had full clarity on the status of the four concessions but it is expected that three of them may have been
terminated by Debenhams. Therefore for these three locations, the associated right-of-use asset and
recognised lease under IFRS 16 will be disposed of when a new lease is entered into with the superior
landlord.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
On 20 August 2020, the Company completed a facility agreement for an increase in the amount available
under its debt facilities with HSBC Bank plc and the waiver of certain banking covenants. Under the new
arrangements, the term of the Company’s existing £14.25m revolving credit facility was extended by 12 months
from March 2021 to March 2022 and the Company increased its banking facilities with HSBC to a total of
£25.75m including the existing £0.75m overdraft facility (from £15m). This increase of £10.75m is provided
under the government backed Coronavirus Large Business Interruption Loan Scheme, which has a term of
three years, with repayments due over the second and third years of the term.
On 20 August 2020, the Company raised £2,250,000 (before expenses) from the issue of 36,000,000 new
ordinary shares in the Company. These new funds, together with the new banking facilities, will give the Group
substantial headroom over its net debt at a time of uncertainty of impact from COVID-19.
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.
As the sector closed during the final weeks of March 2020, the Group joined the UK Government’s
Coronavirus Jobs Retention Scheme and furloughed nearly all operational staff across the Group when the
restaurants temporarily closed for the lockdown. Nearly all our restaurant staff were brought back from full
time furlough as we reopened our restaurants following lock down.
Principal risks and uncertainties
The Directors consider the following to be the principal risks faced by the Group:
COVID-19
The macro economic impact of the COVID-19 pandemic is uncertain, and continues to evolve, with potential
disruption to financial markets including currencies, interest rates, borrowing costs and the availability of debt
financing. However, the Group’s financial risk management strategies seek to reduce our potential exposure
in relation to these risks. Following the year end, the Group, as described above:
l
l
l
raised further funds of £2.25m from an equity placing and subscription;
extended the maturity date of the RCF facility by 12 months to March 2022; and
completed a new loan facility of £10.75m under the UK Government’s CLBIL scheme for a three year
term.
The combined effect of these actions have added an additional £13m of headroom to the Group’s capital
structure. Overall the headroom will provide a good buffer if another lockdown is introduced by the UK
Government. The impact of further lockdowns or different restrictions may affect the carrying values of
goodwill and/or property, plant and equipment including right of use assets. However the Group, through its
learnings over the last six months, and investment in personal protective equipment, additional training and
innovative systems, is prepared to respond to changing situations quickly.
Development programme
The Group’s development programme is dependent on securing the requisite number of new properties at
sensible rents. Despite the impact on the restaurant sector from COVID-19 and a general trend downwards
on 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.
13
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
Supply chain
The Group focuses on the freshness and quality of the produce used in its restaurants. It is exposed to
potential supply chain disruptions due to the delay or losses of inventory in transit. The Group seeks to mitigate
this risk through effective supplier selection and an appropriate back-up supply chain. To help mitigate potential
delays as a result of Brexit, the Group is building up stock, where possible, to allow for longer transit times
and have changed some of its ingredients to UK grown ingredients.
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 and 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 as it entered administration in April 2020. The
Directors have therefore not committed the Group to further restaurants with Debenhams in the short term,
have opened up discussions with the ultimate landlord 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, an online loyalty programme 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.
Regulatory compliance
The Group is growing and the UK 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 regularly and appropriate processes are put in place to monitor and
mitigate them.
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THE FULHAM SHORE PLC
STRATEGIC REPORT – FINANCIAL REVIEW
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
14 October 2020
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THE FULHAM SHORE PLC
STRATEGIC REPORT – SECTION 172 STATEMENT
New legislation became effective in the UK during the financial year, aimed at helping shareholders better
understand how directors discharged their duty to promote the success of companies under Section 172 of
the Companies Act 2006 (“S172 Matters”). Throughout the year, in performance of its duties, the Board has
had regard to the interests of the Group’s key stakeholders and taken account of the potential impact on
these stakeholders of the decisions it has made. Details of how the Board had regard to the following S172
Matters are as follows:
S172 Matters
Specific examples
(a) The likely consequences of any decision in the
long term
l Our corporate governance framework as
described in this annual report
l Communications with our shareholders
through our website, circulars, AGM and
investor meetings
(b) The interests of the company’s employees
l Protecting our teams in the COVID-19
pandemic
l Employee engagement through newsletters,
communication tools, surveys and career
development opportunities
l Ongoing training and development
l Established whistleblowing procedures
(c) The need to foster the Groups business
l Partnering and regular communications with
relationships with suppliers, customers and
others
suppliers
l Protecting our customers and suppliers
during the COVID-19 pandemic
l Encouraging and responding to customer
feedback through websites, social media and
our feedback management system
l Launch of the loyalty application in Franco
Manca
(d) The impact of the Group’s operations on the
l Local community action working with food
community and the environment
banks
stronger bonds with the local community
l Ongoing focus on environmentally friendly
operating procedures
l Recruitment undertaken locally
l Local sourcing of some products to establish
16
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THE FULHAM SHORE PLC
STRATEGIC REPORT – SECTION 172 STATEMENT
S172 Matters
Specific examples
(e) The desirability of the Group maintaining a
l Upholding ethical standards in HR practices
reputation for high standards of business
and ingredients sourcing
l Regular compliance updates at Board
meetings
l Ongoing staff training and communication
l Regular restaurant visits and audit processes
(f) The need to act fairly between members of the
company
l Stakeholder engagement
l Maintaining an open dialogue with our
shareholders
l One class of share capital ensures all
shareholders are treated equally
Approved on behalf of the Board.
DM Page
Chairman
14 October 2020
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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 and MEATliquor.
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 large 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.
18
259801 The Fulham Shore AR pp02-pp22.qxp 30/10/2020 14:21 Page 19
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.
19
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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 our 2019 Financial 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, regular
communications to staff members 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, thanks to these processes and despite COVID-19, we have a consistent, strong
corporate culture. The enthusiasm to grow the business remains 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 18 and 19 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 28. All members of the Board have access to the services
and advice of the company secretary.
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. The Board is required to
act in the way it considers would be most likely to promote the success of the Company for the benefit of its
members as a whole, and in so doing, have regard to the interests of certain stakeholders and the other
matters set out in section 172 of the Companies Act 2006.
As noted in the section headed “Principal risks and uncertainties” in the “Strategic Report – Financial Review”
on page 14 of this report, the Board has in place effective procedures for identifying and addressing risks
which might affect the business of the Group.
Board Committees
The Board considers its governance framework to be appropriate for the Group at the present time. 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, and MA
Chapman. During the year, in support of better corporate governance, NJ Donaldson and NCW Wong
resigned from the Audit Committee. 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, and DAL Gunewardena. During the year, in support of better corporate governance, DM Page
resigned from the Remuneration Committee. 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.
20
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THE FULHAM SHORE PLC
CORPORATE GOVERNANCE STATEMENT
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.
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 29 March 2020 was as follows:
Board
Meetings
% of
Meetings
Attended
100%
92%
92%
100%
100%
100%
Attended
Meetings
12
11
11
12
12
12
Audit
Committee
% of
Meetings
Attended
Remuneration
Committee
% of
Meetings
Attended
Attended
Meetings
Attended
Meetings
N/A
N/A
1*
1*
2
2
N/A
N/A
100%
100%
100%
100%
1*
N/A
N/A
N/A
2
2
100%
N/A
N/A
N/A
100%
100%
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
MA Chapman
DAL Gunewardena
* The director resigned from the committee during the year
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 internal performance evaluation of the Directors and the Board
Committees addressing, above all, the effectiveness and continuing commitment of the Directors. The Board
continues to believe 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.
21
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THE FULHAM SHORE PLC
CORPORATE GOVERNANCE STATEMENT
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.
Annual General Meeting
Throughout the ongoing COVID-19 pandemic, the health and safety of our staff, customers and shareholders
has remained our priority. With this in mind and following the UK Government’s guidelines, we regret that it
will not be possible for shareholders to attend our AGM this year. The AGM will be run as a closed meeting
and shareholders will not be permitted to attend in person. The AGM will be attended only by two directors
who hold shares in the Company such that they can form a quorate meeting and duly record the proxy votes.
The chairman of each of the Audit Committee and the Remuneration Committee will answer any emailed
questions from shareholders, as detailed in the notice of meeting. Separate resolutions are proposed for
substantially separate issues at the meeting and the chairman will declare the number of proxy votes received
both for and against each resolution.
DM Page
Chairman
14 October 2020
22
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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 although DM Page resigned from the
Remuneration Committee in August 2019 as part of the Company’s process of improving corporate
governance.
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 29 March 2020:
Salary
£’000
Fees
£’000
Bonus
£’000
Benefits
£’000
Pensions
£’000
Total
£’000
Executive Directors
DM Page
NAG Mankarious
NJ Donaldson
NCW Wong
195
212
–
189
––––––––––––
596
–
–
59
–
––––––––––––
59
57
61
17
55
––––––––––––
190
5
2
4
1
––––––––––––
12
–
11
–
9
––––––––––––
20
257
286
80
254
––––––––––––
877
Non-executive Director
MA Chapman
DAL Gunewardena
47
38
––––––––––––
681
––––––––––––
––––––––––––
Year ended 31 March 2019
–
–
––––––––––––
59
––––––––––––
––––––––––––
–
–
––––––––––––
190
––––––––––––
––––––––––––
–
–
––––––––––––
12
––––––––––––
––––––––––––
1
1
––––––––––––
22
––––––––––––
––––––––––––
48
39
––––––––––––
964
––––––––––––
––––––––––––
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
––––––––––––
––––––––––––
–
–
––––––––––––
56
––––––––––––
––––––––––––
–
–
––––––––––––
246
––––––––––––
––––––––––––
–
–
––––––––––––
11
––––––––––––
––––––––––––
1
–
––––––––––––
3
––––––––––––
––––––––––––
46
36
––––––––––––
900
––––––––––––
––––––––––––
23
259801 The Fulham Shore AR pp23-pp40.qxp 30/10/2020 14:22 Page 24
THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
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.
Retirement benefits
During the year ended 29 March 2020, the Company made pension contributions for eligible directors into a
defined contribution scheme at a rate of 5% of basic salary (2019: up to 3% of basic salary based on the
limits of auto-enrolment). The Company also provided death in service benefits to all Directors and certain
members of the senior management team.
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 for Executive Directors are based 70%
on achieving and overdelivering on the Group’s budgeted Headline EBITDA for the financial year and 30% on
non-financial performance (board effectiveness, successful restaurant openings and customer satisfaction).
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 29 March 2020 were
as follows:
Options
outstanding
as at
31 March
2019
No.
Options
exercised
during
the year
No.
Options
outstanding
as at
29 March
2020
No.
Exercise
Price
£
Exercisable
Date
Expiry
Date
Enterprise Management
Incentives
DM Page
1,115,917
554,200
3,332,842
NAG Mankarious
NCW Wong
Unapproved
DM Page
NAG Mankarious
NCW Wong
NJ Donaldson
(1,115,917)
–
–
(1,115,917)
–
–
–
554,200
3,332,842
–
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
1,115,917
554,200
3,332,842
1,670,172
2,774,856
––––––––––––
––––––––––––
–
–
––––––––––––
––––––––––––
1,670,172
2,774,856
––––––––––––
––––––––––––
0.05
0.06
––––––––––––
––––––––––––
25/02/2017
20/10/2017
––––––––––––
––––––––––––
25/02/2021
20/10/2021
––––––––––––
––––––––––––
1,647,256
4,732,795
1,647,256
4,732,795
2,205,242
4,732,795
554,200
4,980,098
4,732,795
–
–
–
–
–
–
–
–
–
1,647,256
4,732,795
1,647,256
4,732,795
2,205,242
4,732,795
554,200
4,980,098
4,732,795
0.06
0.11
0.06
0.11
0.06
0.11
0.05
0.06
0.11
20/10/2017
21/04/2018
20/10/2021
21/04/2022
20/10/2017
21/04/2018
20/10/2021
21/04/2022
20/10/2017
21/04/2018
20/10/2021
21/04/2022
25/02/2017
20/10/2017
21/04/2018
25/02/2021
20/10/2021
21/04/2022
MA Chapman
3,325,135
2,366,397
––––––––––––
––––––––––––
–
–
––––––––––––
––––––––––––
3,325,135
2,366,397
––––––––––––
––––––––––––
0.06
0.11
––––––––––––
––––––––––––
20/10/2017
21/04/2018
––––––––––––
––––––––––––
20/10/2021
21/04/2022
––––––––––––
––––––––––––
24
259801 The Fulham Shore AR pp23-pp40.qxp 30/10/2020 14:22 Page 25
THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
All share options above have been issued at the market price of the ordinary shares at the date of grant.
During the year ended 29 March 2020, the market price of ordinary shares in the Company ranged from
£0.0450 (2019: £0.0910) to £0.1290 (2019: £0.1288). The share price as at 29 March 2020 was £0.0550
(2019: £0.1125). There are no performance conditions attached to vesting of the share options.
DM Page and NAG Mankarious exercised options over 1,115,972 ordinary shares each during the year ended
29 March 2020 (2019: Nil). The aggregate gains made on the exercise of options during the year was
£223,194 (2019: £Nil).
The total share based payments charge in relation to the Directors’ interest in share options recognised in
the Group during the year was £Nil (2019: £31,000).
Details of the Directors’ shareholdings are given in the Directors’ Report on page 28.
Arrangements for 2021
Board remuneration is reviewed annually for 1 April each year. For the financial year ended 29 March 2020,
the Remuneration Committee had engaged independent remuneration advisers, FIT Remuneration
Consultants ("FIT") 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. In light of current trading impacted by the coronavirus, the 2020/2021
annual review of salary, bonus scheme, benefits and pension contributions for the Board and for the whole
Group have been deferred until later in the year.
In addition all Directors of the Company and certain members of the senior management team agreed to
waive 20 per cent of remuneration due to them with effect from 1 April 2020 and until such time as the majority
of the Company's restaurants were back open and trading. This waiver is expected to last until the end of
October 2020.
Similarly the completion of the review of the Company’s long term incentive schemes for the Directors, which
commenced during the year as there has been no grants under the Company’s share incentive schemes to
Directors since April 2015, will also be deferred to later in the year.
Directors’ service agreements
DM Page was appointed as a Director and Executive Chairman on 2 March 2012. On 30 September 2014
DM Page entered into a service agreement with the Company under the terms of which he agreed to act as
Executive Chairman of the Company. The agreement is terminable on 12 months’ notice to be given by either
party.
NAG Mankarious was appointed as a Director on 2 March 2012. On 30 September 2014 NAG Mankarious
entered into a service agreement with the Company under the terms of which he agreed to act as Managing
Director of the Company. The agreement is terminable on 12 months’ notice to be given by either party.
NJ Donaldson was appointed as a Director on 2 March 2012. On 30 September 2014 London Bridge Capital
Limited entered into a consultancy agreement with the Company under the terms of which London Bridge
Capital Limited has agreed to provide the services of NJ Donaldson to act as a Director 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.
25
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THE FULHAM SHORE PLC
REPORT ON DIRECTORS’ REMUNERATION
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.
Although the review of existing contracts commenced during 2020, this has also been deferred until later in
the year.
Approval
This report was approved by the Board of Directors on 14 October 2020 and signed on its behalf by:
MA Chapman
Chairman of the Remuneration Committee
26
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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 29 March 2020.
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 4 to 7 and the Financial Review on pages 8 to 15.
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 29 March 2020 was £68,565,000 (2019: £63,985,000), Headline Operating Profit
for the same period was £4,437,000 (2019: £3,495,000) and Operating Profit for the same period was
£1,832,000 (2019: £1,753,000).
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 31 March 2019:
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 18 and 19.
At the 2020 Annual General Meeting, in accordance with the Company’s Articles of Association, MA
Chapman, DAL Gunewardena and NCW Wong will retire from the Board. Being eligible, and with the Board’s
recommendation, they will offer themselves for re-election.
27
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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 29 March 2020
Ordinary
shares
of 1p each
%
As at 31 March 2019
Ordinary
shares
of 1p each
%
81,267,120
113,927,434
13,190,573
8,995,593
766,818
454,545
81,267,120
14.17%
19.86% 113,927,434
13,190,573
8,909,093
766,818
454,545
2.30%
1.57%
0.13%
0.08%
14.22%
19.94%
2.31%
1.56%
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 23 to 26.
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 October 2020, the
Company had been notified of the following interests in the ordinary share capital of the Company:
NAG Mankarious
S Wasif
DM Page
P Solari
G Mascoli
Canaccord Genuity Group Inc
As at 14 October 2020
Ordinary shares
of 1p each
116,879,434
84,870,414
83,515,120
22,670,250
21,677,246
19,912,732
%
19.17%
13.92%
13.70%
3.72%
3.56%
3.27%
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.
These systems include:
Line manager briefings and weekly bulletins;
l
l Communication forums and roadshows held by functions or brands across the Group;
l
l
A dedicated intranet system and e-mail news alerts; and
Focus groups and staff surveys.
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.
28
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THE FULHAM SHORE PLC
DIRECTORS’ REPORT
Political and charitable contributions
During the year ended 29 March 2020 the Group made no political contributions (2019: £Nil). The Group
made charitable donations during the year ended 29 March 2020 by contributing £5,000 (2019: £5,000) to
local charities and good causes.
In addition, Franco Manca donated over 15,000 (2019: 4,000) pizzas to local food banks and homeless shelters
throughout the year.
Energy Consumption
The Group presents its greenhouse gases (“GHG”) emissions and energy use data for the first time under
Streamlined Energy and Carbon Reporting (“SECR”) for the year ended 29 March 2020:
Energy consumption used to calculate emissions:
Scope 1 – Natural Gas
Scope 2 – Electricity
Scope 3
Total
Energy Intensity (Tonnes CO2e per £1,000 of Revenue)
Year
ended
29 March
2020
UK Only
tCO2(e)
607
1,696
20
––––––––––––
2,323
––––––––––––
––––––––––––
0.03
––––––––––––
––––––––––––
The Group’s total energy consumption for the year ended 29 March 2020 was 10,259,526 kWh.
As the Group only controls operations within the UK, no data is presented for non-UK consumption.
Annual general meeting
On pages 99 to 100 is a notice convening the annual general meeting of the Company for 25 November 2020
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 25 November 2020 are in the best interests
of shareholders and, accordingly, recommends that shareholders vote in favour of the resolutions.
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THE FULHAM SHORE PLC
DIRECTORS’ REPORT
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 4 to 17. 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.
At the end of financial year ended 29 March 2020, the Group was trading significantly within its banking
covenants and debt facilities.
The Group’s net current liabilities position at the year end is due to the first time recognition of short term
lease liabilities from adoption of IFRS 16 and an increase of short term trade creditors and accruals as the
UK went into lockdown as a result of COVID-19. Net current liabilities can be covered by day to day operational
cash flow, where revenues are normally received within 7 days of recognition, short term overdraft facilities
and utilising undrawn long term borrowing facilities. The main long term borrowing facilities do not require
repayment before March 2022. Additionally following the year end, as described below under subsequent
events, the Group increased its headroom during these volatile trading times by raising further capital by way
of an equity placing and an additional government backed £10.75m bank facility.
COVID-19 and government action from 20 March 2020 has a significant impact on forecasts used for going
concern analysis. The Directors have reviewed the rapidly evolving situation relating to COVID-19 and have
modelled a series of downside case scenarios including the closure of all restaurants for a prolonged period
time. These downside cases, whilst being considered by the Board to be extremely prudent, as to date the
Government has not fully closed restaurants to takeaway and delivery sales, have a significant adverse impact
on sales, margin and cash flow. As detailed in the Strategic report, various mitigating actions were taken by
the Board during and after the first national lockdown. Such mitigating actions and other additional actions
have been factored into the scenarios. Even in the most severe scenario where restaurants are closed for
26 weeks, the Group has adequate liquidity to cover the losses and recommence trading as we have done
following the initial lockdown. In any other scenario where the Group is only closing restaurants to dine-in and
allowed to be open for takeaway and delivery service, the impact on cash flow is significantly lower.
The Directors have reviewed the Group’s net current liabilities position, forecasts, sensitivity from further
impact of COVID-19, 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. The Group had net debt, before
lease liabilities recognised under IFRS 16, as at 13 October 2020 of £3,378,000 thus having headroom of
£22,350,000. 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.
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THE FULHAM SHORE PLC
DIRECTORS’ REPORT
Subsequent Events
Impact of Covid-19
On 20 March 2020, the UK Government issued direct instructions to temporarily close all restaurants to dine-in
trade as part of wider efforts in the fight against Covid-19. Following the year end, costs were reduced to a
minimum and all but essential or committed capital expenditures were halted in order to manage cash flow.
To conserve further the Group's cash resources, all Directors of the Company and certain members of the
senior management team agreed to waive 20 per cent of remuneration due to them with effect from 1 April
2020 and until such time as the majority of the Company's restaurants were back open and trading.
Since 4 July 2020, the date from which the UK Government determined that restaurants could reopen to serve
dine-in customers if safe to do so, the Group has undertaken a gradual reopening of its restaurants, serving
customers through a combination of dine-in, takeaway, click and collect and delivery services.
New banking facilities
Following the year end, on 20 August 2020 the Company completed a facility agreement for an increase in
the amount available under its debt facilities with HSBC Bank plc and the waiver of certain banking covenants.
Under the new arrangements, the term of the Company's existing £14.25 million revolving credit facility was
extended by 12 months from March 2021 to March 2022 and the Company increased its banking facilities
with HSBC to a total of £25.75 million including the existing £0.75 million overdraft facility (from £15 million).
This increase of £10.75 million is provided under the government backed Coronavirus Large Business
Interruption Loan Scheme, which has a term of three years, with repayments due over the second and third
years of the term.
Equity fundraise
On 20 August 2020, the Company raised £2,250,000 (before expenses) from the issue of 36,000,000 new
ordinary shares in the Company.
Debenhams
On 9 April 2020, Debenhams Retail Limited (formerly Debenhams Retail PLC) (“Debenhams”), with whom
the Group has concession agreements for four restaurants, appointed Administrators. The Group has been
in contact with Debenhams, its Administrators and the superior landlords of the various locations to ensure
the four restaurants were able to reopen at an appropriate time after the COVID-19 lockdown. The Group has
not had full clarify on the status of the four concessions but it is expected that three of them may have been
terminated by Debenhams. For these three locations, therefore, the associated right-of-use asset and
recognised lease under IFRS 16 will be disposed when a new lease is entered into with the superior landlord.
Auditors
RSM UK Audit LLP has indicated its willingness to continue in office.
Approved on behalf of the Board.
DM Page
Chairman
14 October 2020
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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
14 October 2020
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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 29 March 2020 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 29 March 2020 and of the group's loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in accordance with the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are independent of the group and parent
company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to SME listed entities and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
l
l
the directors' use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the group's or the parent company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
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THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
Summary of our audit approach
Key audit matters Group
l Goodwill impairment
l Impairment of property, plant and equipment
l Adoption and implementation of IFRS 16
Key audit matters Group and Parent Company
l Impact of Covid-19, including on going concern
Materiality Group
l Overall materiality: £289,000 (2019: £310,000)
l Performance materiality: £217,000 (2019: £232,500)
Parent Company
l Overall materiality: £264,700 (2019: £310,000)
l Performance materiality: £198,000 (2019: £232,500)
Scope Our audit procedures covered 100% of revenue, 100% of total assets and 100% of
profit before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the group and parent company 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 and
parent company financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Goodwill and intangibles impairment
Key audit matter
description
Refer to pages 54-55 (Accounting Estimates – Assessment of the recoverable
amounts in respect of assets tested for impairment) and note 7 on intangible
assets)
At the year-end date, the Group had a total Goodwill balance of £20.7m arising
from past acquisitions. The balance is attributable as follows:
l Franco Manca cash generating unit (“CGU”) – £18.9m
l The Real Greek CGU - £1.8m
Management considers that these are the smallest groups of CGUs to which
goodwill can be allocated without making an arbitrary allocation. In addition, at
the year-end date the brand intangible in relation to Franco Manca had a
carrying value of £4.1m and remaining useful life of five years.
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 29 March 2020 management prepared discounted
cash flow forecasts using a pre-tax discount rate based on a weighted average
cost of capital (WACC) and comparisons to the Group’s peers of 6.9% (2019:
12.4%). Management have stated in the Accounting Policies note that this
discount rate is the rate considered 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 along with the impact the Coronavirus pandemic
(“Covid-19”) is having, 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.
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THE FULHAM SHORE PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
Our audit approach included:
l Auditing management’s annual impairment reviews by comparing the
value in use to the carrying value of the goodwill and attributable
operating assets of each group of CGUs
l Agreeing the mathematical accuracy and integrity of the calculations
l Considering the reasonableness of management’s key assumptions and
judgements in preparing the discounted cash flow forecasts, and
challenging them where appropriate using our knowledge of comparable
businesses and market data
l Reviewing management’s sensitivity analysis and considering the
headroom on both CGUs shown by management’s value in use
calculations
How the matter was
addressed in the audit
l Considering the sensitivity analysis performed by management and the
reasonableness and likelihood of changes in key assumptions that would
result in an impairment
l Consulting internal valuations experts over the inputs to the calculation
of the discount rate
l Challenging the discount rate used by management, the assumptions
used and whether it was appropriate for there to be no change in the
rate from the prior year
l Comparing forecast cash flows to actual results observed to date
l Discussing with management the impact of Covid-19 on the forecast and
actual results post-year end
l Considering any evidence of management bias in assumptions used in
the annual impairment review
l Reviewing disclosures in the financial statements
Key observations Based on the headroom shown by management’s calculations and the work
performed we did not identify any significant matters requiring adjustment in
the impairment models used.
Impairment of property, plant and equipment
Key audit matter
description
Refer to page 54-55 (Accounting Estimates – Assessment of the recoverable
amounts in respect of assets tested for impairment) and note 2 – Operating
profit, note 8 – Property, plant and equipment
The total carrying value of property, plant and equipment (PPE) at the year-end
was £33.3m (2019: £30.8m) excluding the Right of Use assets, and £100.9m
including Right of Use assets. Given the challenging conditions at the year end
and that the restaurant industry is currently facing, and with the added impact
of Covid-19, management considered the carrying value of PPE on an
individual restaurant basis, each of which is a CGU for testing impairment of
PPE and Right of Use assets, 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. In addition, it was noted that as a result of the Covid-19 pandemic
all sites were closed at the year-end.
During the year ended 29 March 2020, management has recognised a total
impairment charge of £0.26m (2019: £0.13m) in respect of four (2019: three)
sites which are forecast to underperform in the short to medium term either
partly or wholly as a result of the Covid-19 pandemic.
For the impairment testing at 29 March 2020 a pre-tax discount rate based on
a weighted average cost of capital (WACC) and comparisons to the Group’s
peers of 6.9% (2019: 12.4%) was used. Management has stated in the
Accounting Policies note that this discount rate used is the rate considered by
the Board to reflect the risk associated with each CGU.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
Because of the significant management judgement involved in forecasting the
cash flows, in considering when sites would recommence generating 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 this
was therefore determined to be a key audit matter.
Our audit approach included:
l Reviewing management’s initial assessment of indicators of impairment
for the CGUs and challenging management on those sites not identified
but showing possible signs of impairment.
l For those sites for which triggers for impairment were noted, we obtained
and audited management’s detailed impairment reviews, comparing their
discounted cash flow forecasts to the carrying value of property, plant and
equipment and Right of Use Asset of each CGU.
the matter was
How
addressed in the audit
l Agreeing the mathematical accuracy and integrity of calculations
l For those sites where detailed impairment calculations were not carried
out, we obtained and challenged management’s explanations as to why
they were not considered to be showing indicators of impairment, and
tested the explanations to supporting documentation where possible.
l Obtaining and challenging management’s key assumptions and discussing
with management the impacts of Covid-19 on individual sites.
l Comparing forecast cash flows with actual results observed post year end
to assess the reasonableness of management’s assumptions and the
accuracy of forecasting
l Reviewing disclosures in the financial statements.
Key observations
As a result of our work, management identified additional impairments of
certain sites which have been recognised in the financial statements.
Adoption and implementation of IFRS 16
Key audit matter
description
Refer to page 47 (Accounting Policies – New Standards), page 56 (Accounting
Estimates – Incremental Borrowing Rate), note 8 – Property, plant and
equipment, note 14 – Borrowings and note 23 – Adoption of IFRS 16
Accounting Standards for Leases
During the year ended 29 March 2020, the Group applied IFRS 16 Leases for
the first time, utilising the modified retrospective approach to transition.
Adoption of the standard results in recognition of significant new Right of Use
(“RoU”) assets and associated lease liabilities on the balance sheet and as at
the year-end the Group had RoU assets and lease liabilities of £67.5m and
£68.2m respectively.
The implementation of IFRS 16 Leases involves a significant level of
judgement in respect of key assumptions including lease terms and the
incremental borrowing rates, where the rate implicit in the lease cannot be
determined.
Because of the materiality of the figures and the degree of management
estimation and judgement required we have determined the adoption and
implementation of IFRS 16 to be a key audit matter.
Our audit approach included:
l Obtaining management’s calculation and schedule of leases at the
transition and year-end dates, and reviewing the mechanics and
mathematical integrity of management’s model.
the matter was
How
addressed in the audit
l Agreeing lease terms and annual lease amounts from management’s
schedule to the respective lease agreements.
l Testing for completeness to ensure all leases in the Group’s portfolio were
included in management’s calculations by checking against a list of all sites
operated by the Group
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
l Reviewing the treatment of related items including lease incentives, rent
accruals and prepayments, and variable rents to confirm these items had
been appropriately treated in the transition adjustments.
l Critically assessing the key assumptions utilised by management in
determining transition adjustments, including the incremental borrowing
rate used and consideration of their use of the portfolio expedient.
l Auditing lease movements during the year, including recognition of new
leases, lease modifications, depreciation on RoU assets and recognition
of interest and capital payments in respect of lease liabilities.
l Performing sensitivity analysis and considering the impact of changes to
the incremental borrowing rate.
l Assessing the disclosures within the financial statements.
Key observations
We noted that management had included variable rent payments in the initial
IFRS 16 model and that there were some errors in the calculations. These were
subsequently amended.
Impact of Covid-19 including on going concern
Key audit matter
description
The effects on the Group, and on the hospitality sector, of the outbreak and
escalation of the Coronavirus pandemic (“Covid-19”) are set out in the Group’s
strategic report on pages 4 to 17. The Directors need to exercise judgements
and make estimates in respect of future trading, cash flows and financing in
determining whether the preparation of the financial statements on a going
concern basis is appropriate for the Group.
Covid-19 resulted in a national lockdown and the temporary closure of
restaurants just before the year-end. While the Group was able to trade
takeaway sales subsequent to the year-end, and the Group has benefitted from
the Government’s furlough scheme, loan guarantee scheme and the “Eat Out
to Help Out” (“EOTHO”) initiative, the longer-term impacts of eating out habits
and risks of global recession are very difficult to predict.
Subsequent to the year-end, the Group has successfully raised £2.25m in
additional equity and increased its banking facilities to £25.75m, of which
£10.75m is under the Government backed Coronavirus Large Business
Interruption Scheme (“CLBILS”) with a term of three years. Given the above,
and the successful re-opening of restaurants boosted by EOTHO and the
Group’s own continuation of the scheme, management considers that the
Group has sufficient resources available to enable the Group and Company to
meet their liabilities as they fall due for a period of at least 12 months from the
date of approval of the financial statements and that there are no material
uncertainties that cast significant doubt on the Group’s or the Company’s ability
to continue as a going concern.
Given the uncertainty in the trading environment and the judgements and
estimates required by management we have determined going concern to be
a key audit matter.
Our audit approach included:
l Obtaining and reviewing the extended banking facility agreement, including
details of repayments and covenants.
How the matter was
addressed in the audit
l Obtaining an understanding of management’s going concern models and
cash flow forecasts for a period of at least 12 months from approval date,
discussing key assumptions used.
l Checking the mathematical accuracy of management’s cashflow models
and burn rate.
l Checking management’s covenant compliance to determine whether there
is a risk of breach in the forecast period.
l Comparing forecasts to post year-end trading results and cash position.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
l Challenging management’s forecasts and consideration of a second
lockdown scenario.
l Reviewing the sensitivity analyses prepared by management to understand
the likelihood of the occurrence of the alternative scenarios, and checking
the mathematical accuracy of the sensitivity calculations.
l Reviewing disclosures in the financial statements.
Key observations
In response to our challenges, management considered a scenario in which
there is a further extended nationwide closure of the hospitality sector and
whether the Group has sufficient cash resources to withstand a prolonged
period with little or no revenue. In addition, as a result of our review,
management enhanced the disclosures in the financial statements on page 48,
including to explain the uncertainties over the future impact the coronavirus
pandemic might have on the group.
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.
Group Parent company
Overall materiality
£264,700 (2019: £310,000)
£289,000 (2019: £310,000)
Basis for determining
overall materiality
3.5% of Headline EBITDA
(pre-IFRS 16)
1% of net assets
Rationale for benchmark
applied
Headline EBITDA is
considered to be the primary
measure used by shareholders
and management in assessing
the performance of the Group.
The parent company does not trade
and therefore net assets is
considered to be the most
appropriate benchmark.
Performance materiality
£217,000 (2019: £232,500)
£198,000 (2019: £232,500)
Basis for determining
performance materiality
Reporting of misstatements
to the Audit Committee
75% of overall materiality
75% of overall materiality
Misstatements in excess of
£14,400 and misstatements
below that threshold that, in
our view, warranted reporting
on qualitative grounds.
Misstatements in excess of £13,200
and misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our audit
The group consists of six components, all of which are based in the UK.
The coverage achieved by our audit procedures was:
Full scope audit
Specific audit procedures
Total
Number of
components
6
–
6
Revenue
Total assets
100%
–
100%
100%
–
100%
Loss
before tax
100%
–
100%
Full scope audits were performed for all components in the Group.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is
a material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
l
l
the information given in the Strategic Report and the Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or
the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
l
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
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 32 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.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE FULHAM SHORE PLC
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company
and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
GEOFF WIGHTWICK (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory
Auditor Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
14 October 2020
40
259801 The Fulham Shore AR pp41-pp57.qxp 30/10/2020 14:22 Page 41
THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 29 March 2020
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
– Change in fair value of investment
– loss on disposal of property, plant and equipment
– cost of acquisition
– COVID-19 temporary closure costs
– COVID-19 grants received against temporary closure costs
Operating profit
Finance income
Finance costs
(Loss)/profit before taxation
Income tax expense
(Loss)/profit for the year
Other comprehensive income
Total comprehensive (loss)/income
(Loss)/profit for the year attributable to:
Owners of the company
Non-controlling interests
Earnings per share
Basic
Diluted
Year
ended
29 March
2020
£’000
68,565
(40,628)
––––––––––––
27,937
(23,500)
––––––––––––
4,437
(157)
(683)
(821)
(260)
(248)
–
(3)
(718)
285
––––––––––––
1,832
10
(2,596)
––––––––––––
(754)
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
(421)
––––––––––––
(1,175)
(714)
––––––––––––
720
–
––––––––––––
(1,175)
––––––––––––
––––––––––––
–
––––––––––––
720
––––––––––––
––––––––––––
(1,193)
18
––––––––––––
(1,175)
––––––––––––
––––––––––––
698
22
––––––––––––
720
––––––––––––
––––––––––––
(0.2p)
(0.2p)
0.1p
0.1p
Notes
1
18
2
7
8
9
2
4
5
6
6
41
259801 The Fulham Shore AR pp41-pp57.qxp 30/10/2020 14:22 Page 42
THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY BALANCE SHEETS
29 MARCH 2020
29 March
2020
£’000
Notes
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
7
8
9
11
16
10
11
12
13
14
13
14
16
17
25,017
100,606
–
1,081
9
––––––––––––
126,713
––––––––––––
1,906
2,342
2,056
––––––––––––
6,304
––––––––––––
133,017
––––––––––––
25,767
30,806
201
1,020
301
––––––––––––
58,095
––––––––––––
1,764
3,597
1,835
––––––––––––
7,196
––––––––––––
65,291
––––––––––––
–
151
44,347
10,567
3
––––––––––––
55,068
––––––––––––
–
150
1,030
––––––––––––
1,180
––––––––––––
56,248
––––––––––––
–
173
43,563
11,863
287
––––––––––––
55,886
––––––––––––
–
118
22
––––––––––––
140
––––––––––––
56,026
––––––––––––
(12,480)
(5,163)
(135)
––––––––––––
(17,778)
––––––––––––
(11,474)
(11,881)
–
(93)
––––––––––––
(11,974)
––––––––––––
(4,778)
(1,309)
–
–
––––––––––––
(1,309)
––––––––––––
(129)
(1,312)
–
–
––––––––––––
(1,312)
––––––––––––
(1,172)
–
(74,591)
(1,888)
––––––––––––
(76,479)
––––––––––––
(94,257)
––––––––––––
38,760
––––––––––––
––––––––––––
5,736
6,911
30,459
(9,469)
5,123
––––––––––––
(1,601)
(11,240)
(1,733)
––––––––––––
(14,574)
––––––––––––
(26,548)
––––––––––––
38,743
––––––––––––
––––––––––––
5,714
6,889
30,459
(9,469)
5,025
––––––––––––
–
(14,737)
–
––––––––––––
(14,737)
––––––––––––
(16,046)
––––––––––––
40,202
––––––––––––
––––––––––––
5,736
6,911
30,459
–
(2,904)
––––––––––––
38,760
–
––––––––––––
38,760
––––––––––––
––––––––––––
38,618
125
––––––––––––
38,743
––––––––––––
––––––––––––
40,202
–
––––––––––––
40,202
––––––––––––
––––––––––––
–
(13,721)
–
––––––––––––
(13,721)
––––––––––––
(15,033)
––––––––––––
40,993
––––––––––––
––––––––––––
5,714
6,889
30,459
–
(2,069)
––––––––––––
40,993
–
––––––––––––
40,993
––––––––––––
––––––––––––
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
Total assets
Current liabilities
Trade and other payables
Borrowings
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
42
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THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY BALANCE SHEETS
29 MARCH 2020
The loss for the financial year dealt with in the financial statements of the Company is £739,000 (2019:
£878,000). The financial statements on pages 41 to 97 were approved by the board of Directors and
authorised for issue on 14 October 2020 and are signed on its behalf by:
DM Page
Chairman
Company registration number: 07973930
43
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THE FULHAM SHORE PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 29 March 2020
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
–
37,632
720
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(9,469)
–
30,459
–
37,529
698
6,889
–
3,936
698
103
22
–
–
–
–
–
–
–
–
698
138
698
138
22
–
720
138
253
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
253
253
–
–
–
–
–
–
391
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
38,743
(9,469)
38,618
30,459
5,714
5,025
6,889
391
125
391
–
–
–
–
–
1,872
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
40,615
(9,469)
40,490
30,459
1,872
5,714
6,897
6,889
1,872
125
–
–
–
–
(1,175)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(1,193)
(1,193)
18
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,193)
(1,193)
18
(1,175)
157
157
(253)
(253)
–
–
157
(253)
(628)
44
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(143)
–
(485)
–
(485)
44
–
22
–
22
–
–
–
–
22
(680)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
38,760
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(9,469)
30,459
38,760
5,123
6,911
5,736
(581)
(143)
(537)
22
–
–
–
At 26 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
Adjustment on
adoption of IFRS
16 (note 23)
At 1 April 2019
Loss for the year
Total comprehensive
income
Transactions with owners
Share based payments
Deferred tax on share
based payments
Acquisition of non-
controlling interests
Exercise of share options
Total transactions
with owners
At 29 March 2020
44
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THE FULHAM SHORE PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 29 March 2020
At 26 March 2018
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 31 March 2019
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
(1,582)
41,480
–
––––––––––––
–
––––––––––––
–
––––––––––––
(878)
––––––––––––
(878)
––––––––––––
–
–
–
–
–
–
(878)
138
(878)
138
–
––––––––––––
–
––––––––––––
–
––––––––––––
253
––––––––––––
253
––––––––––––
–
––––––––––––
5,714
–
––––––––––––
6,889
–
––––––––––––
30,459
391
––––––––––––
(2,069)
391
––––––––––––
40,993
–
––––––––––––
–
––––––––––––
–
––––––––––––
(739)
––––––––––––
(739)
––––––––––––
Total comprehensive income
for the year
Transactions with owners
Share based payments
Deferred tax on share
based payments
Exercise of share options
Total transactions
with owners
At 29 March 2020
–
–
–
–
–
–
(739)
(739)
157
157
–
22
––––––––––––
–
22
––––––––––––
–
–
––––––––––––
(253)
–
––––––––––––
(253)
44
––––––––––––
22
––––––––––––
5,736
––––––––––––
––––––––––––
22
––––––––––––
6,911
––––––––––––
––––––––––––
–
––––––––––––
30,459
––––––––––––
––––––––––––
(96)
––––––––––––
(2,904)
––––––––––––
––––––––––––
(52)
––––––––––––
40,202
––––––––––––
––––––––––––
45
259801 The Fulham Shore AR pp41-pp57.qxp 30/10/2020 14:22 Page 46
THE FULHAM SHORE PLC
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
for the year ended 29 March 2020
Year
ended
29 March
2020
£’000
Group
Year
ended
31 March
2019
£’000
Year
ended
29 March
2020
£’000
Parent company
Year
ended
31 March
2019
£’000
Notes
19
14,842
6,132
(724)
(313)
(7,214)
(145)
(47)
(641)
–
–
––––––––––––
(3,457)
(99)
–
–
329
–
––––––––––––
(10)
–
–
(641)
–
2,012
––––––––––––
(4)
–
–
–
–
1,366
––––––––––––
(8,047)
––––––––––––
(3,227)
––––––––––––
1,361
––––––––––––
1,362
––––––––––––
44
1,000
(700)
(4,332)
10
(2,596)
––––––––––––
–
–
(1,110)
–
8
(327)
––––––––––––
44
1,000
(700)
–
466
(439)
––––––––––––
–
–
(1,110)
–
468
(392)
––––––––––––
(6,574)
––––––––––––
(1,429)
––––––––––––
371
––––––––––––
(1,034)
––––––––––––
221
1,476
1,008
15
1,835
––––––––––––
359
––––––––––––
22
––––––––––––
7
––––––––––––
2,056
––––––––––––
––––––––––––
1,835
––––––––––––
––––––––––––
1,030
––––––––––––
––––––––––––
22
––––––––––––
––––––––––––
Net cash flow from/(used in)
operating activities
Investing activities
Acquisition of property,
plant and equipment
Acquisition of intangible assets
Acquisition of investments
Acquisition of non-controlling interests
Disposal of discontinued operations
Loan repaid by subsidiary undertakings
Net cash flow (used in)/from
investing activities
Financing activities
Proceeds from issuance of new
ordinary shares (net of expenses)
Capital received from bank borrowings
Capital repaid on bank borrowings
Principal element of lease payments
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
12
12
46
259801 The Fulham Shore AR pp41-pp57.qxp 30/10/2020 14:22 Page 47
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. During the year, the Company acquired the remaining
0.96% of the issued share capital of Kefi Limited.
The Fulham Shore PLC is presenting audited consolidated financial statements for the year ended 29 March
2020. The comparative period presented is audited financial statements for the year ended 31 March 2019.
The accounting year for the Group runs to a Sunday within seven days of 31 March each year which will be
a 52 or 53 week period. The year ended 29 March 2020 was a 52 week period, with the comparative year to
31 March 2019 being a 53 week period.
The Company accounts have been prepared for the same periods as the Group.
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 29 March 2020 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 29 March 2020 and have been
adopted in these financial statements:
IFRIC Interpretation 23 Uncertainty over Income Tax Treatments (became effective for accounting periods
commencing on or after 1 January 2019)
This standard clarifies how to apply the recognition and measurement requirements in IAS12 when there is
uncertainty over income tax treatments. The Group has adopted this accounting standard during the year and
the implementation has not had a material impact on the Group.
IFRS 16 Leases (became effective for accounting periods commencing on or after 1 January 2019)
The Group has adopted the standard for the first time using the modified retrospective approach. In doing so,
the Group initially applied the standard at the date of the initial application on 1 April 2019 where the cumulative
effect of initially applying IFRS 16 is recognised at this date of initial application.
47
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
On transition to IFRS 16, the Group has elected to apply the following practical expedients permitted by the
standard:
Applying a single discount rate to a portfolio of leases with reasonably similar characteristics;
Excluding initial direct costs from measuring the right-of-use assets at the transition date;
l
l
l Using hindsight when determining the lease term where the contract contains options to break or renew;
l
and
For leases determined to be onerous before the transition date, relying on this assessment as an indicator
of impairment as an alternative to performing an impairment review.
Further disclosures on such contracts can be found in Note 23.
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:
IAS 1 (Amendment)
IAS 8 (Amendment)
IFRS 3 (Amendment)
IFRS 9 (Amendment)
IAS 39 (Amendment)
IFRS 7 (Amendment)
Definition of Material
Definition of Material
Definition of Business in Business Combinations
Interest rate benchmark reform
Interest rate benchmark reform
Interest rate benchmark reform
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 interest rate benchmark
reforms which are due to take place in 2021. As the replacement to Libor has not yet been agreed, the impact
cannot be assessed until the new benchmark is available.
GOING CONCERN
The consolidated financial statements have been prepared on a going concern basis. The Board has reviewed
the risk analysis set out in the Strategic Report on pages 13 to 14, the Group’s net current liabilities position
as at 29 March 2020, the forecasts for the next financial year, other longer term plans, financial resources
including undrawn but available short term and long term facilities described in note 14, the subsequent
renewal and increase in facilities post year end and operational cash flow where cash from revenues are
received within 7 days.
COVID-19 and government action from 20 March 2020 has significant impact on forecasts used for going
concern analysis. The Directors have reviewed the rapidly evolving situation relating to COVID-19 and have
modelled a series of downside case scenarios. These downside cases represent increasingly severe but
plausible scenarios and include assumptions relating to the estimates of the impact of:
l
l
The closure of all restaurants to dine-in, takeaway and delivery for a period of 13 weeks and then a
reopening programme over 2 months;
The closure of all restaurants to dine-in, takeaway and delivery for a period of 26 weeks and then a
reopening programme over 2 months;
These downside cases, whilst considered by the Directors to be extremely prudent, as to date the Government
has not fully closed restaurants to takeaway and delivery sales, have a significant adverse impact on sales,
margin and cash flow. In response, the Directors have taken immediate and significant actions, all within
management’s control, to reduce costs and optimise the Group’s cash flow and liquidity. Amongst these are
the following mitigating actions: reducing capital and investment expenditure through postponing or pausing
projects and change activity; deferring or cancelling discretionary spend; freezing non-essential recruitment
and reducing marketing spend; and reducing indirect costs and central costs. Even in the most severe scenario
where restaurants are closed for 26 weeks, the Group has adequate liquidity to cover the losses and
recommence trading as we have done following the initial lockdown. Any other scenario where the Group is
only closing restaurants to dine-in and allowed to be open for takeaway and delivery service, the impact on
cash flow is significantly lower.
48
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
Taking the reviews and analysis, 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 identifiable 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, amortised on a straight-line
basis.
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.
49
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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.
Right-of-use assets arising from the Group’s lease arrangements are depreciated over their reasonably certain
lease term, as determined under the Group’s leases policy.
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.
50
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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. Other investments are initially measured at fair value, including transaction costs and
subsequently remeasured less any impairment.
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. Other receivables represent amounts owed by third
parties and intra group balances in the parent company where the right to payment is conditional on the
passage of time and the occurrence of certain event. The carrying value of all trade and other receivables
recorded at amortised cost is reduced by allowances for lifetime estimated credit losses other than expected
credit losses on group balances which are based on expected 12 month 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.
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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.
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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
When the Group leases an asset, a right of use asset is recognised for the leased item and a lease liability
is recognised for any lease payments to be paid over the lease term at the lease commencement date. The
right of use asset is initially measured at cost, being the present value of the lease payments paid or payable,
plus any initial direct costs incurred in entering the lease and less any lease incentives received. Right of use
assets are depreciated on a straight-line basis from the commencement date to the earlier of the end of the
asset’s useful life or the end of the lease term. The lease term is the non-cancellable period of the lease plus
any periods for which the Group is reasonably certain to exercise any extension options. The useful life of the
asset is determined in a manner consistent to that for owned property, plant and equipment. If right of use
assets are considered to be impaired, the carrying value is reduced accordingly. Lease liabilities are initially
measured at the value of the lease payments over the lease term that are not paid at the commencement
date and are discounted for the portfolio of leases using the incremental borrowing rate of the Group as the
rate implicit in individual leases is not readily ascertainable. After initial recognition, the lease liability is
recorded at amortised cost using the effective interest method. It is remeasured when there is a change in
future lease payments arising from a change in an index or rate or if the Group’s assessment of the lease
term changes; any changes in the lease liability as a result of these changes also results in a corresponding
change in the recorded right-of-use asset.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of
machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment.
The Group recognises the lease payments associated with these leases as an expense 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.
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
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
The Group’s revenue is derived from the sale of food and drink in its restaurants, or as deliveries or takeaways.
The performance obligation is fulfilled when control is transferred to the customer at the point of sale. All
sales are settled at the point of sale and the group does not, therefore, have any contract assets or liabilities.
Revenue is recognised net of VAT, discounts and returns.
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.
GOVERNMENT GRANTS
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received and the group will comply with all attached conditions. Government grants relating to
costs are deferred and recognised in the statement of comprehensive income over the period necessary to
match them with the costs that they are intended to compensate.
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.
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, including right of use assets and intangible
assets, other than goodwill, the Group tests for impairment when there is an indication of impairment.
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
The impairment analysis for such assets is principally based upon discounted estimated future cash flows
from the use and eventual disposal of the assets (see notes 7 and 8). Such an analysis includes an estimation
of the future anticipated results and cash flows, annual growth rates, whether short term or long term, future
capital expenditures and the appropriate discount rates (see notes 7 and 8 for key assumptions). Changes in
the estimates which underpin the Group’s forecasts and selection of appropriate discount rate could have an
impact on the value in use of the cash generating units and group of cash generating units being tested.
Valuation of share based payments
The charge for share based payments is calculated in accordance with the methodology described in note
18. The model requires highly subjective assumptions to be made including the future volatility of the
Company’s share price, expected dividend yield, risk-free interest rates, expected time of exercise and
employee attrition rates. Changes in such estimates may have a significant impact on the original fair value
calculation at the date of grant and the employee attrition rate will impact the judgement relating to the number
of share based incentives that would vest and therefore the share based payments charge.
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. For an one year reduction in useful life of the brand, an additional £91,000 of
amortisation would be charged to the income statement.
Property, plant and equipment
Property, plant and equipment represents 75.6% (2019: 47.1%) of the Group’s total assets; estimates and
assumptions made may have a material impact on their carrying value and related depreciation charge. The
percentage has increased during the year following adoption of IFRS 16 and recognition of right of use
assets. 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, other than right of use 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.
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
Lease accounting
Lease accounting under IFRS 16 is significantly more complex than under previous reporting requirements
under IAS 17 and necessitates the collation and processing of very large amounts of data and the increased
use of management judgements and estimates to produce financial information. The most significant
accounting judgements are disclosed below:
l
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by a break clause to terminate the lease, if it is reasonably certain not to be exercised.
l When the interest rate implicit in the lease is not readily determinable, the Group estimates the
incremental borrowing rate (“IBR”) based on a risk-free rate adjusted for the effect of the Group’s
theoretical credit risk. As the Group has external borrowings, judgement is required to compute an
appropriate discount rate which was calculated based on UK bank borrowings and adjusted by an
indicative credit premium that reflects the credit risk of the Group. This has resulted in a weighted average
IBR of 3.3% applied to the leases.
Loyalty programme
The Group operates a loyalty programme in its Franco Manca business. The scheme enables members to
earn stamps from each qualifying purchase from a Franco Manca restaurant. Rewards that can be used
against future purchases are earnt on collection of a number of stamps. The Group recognises deferred
revenue in an amount that reflects the scheme’s unsatisfied performance obligations, valued at the stand-alone
selling price of the future benefit to the member. The amount of revenue recognised and deferred is impacted
by ‘breakage’. On an annual basis the Group estimate the number of rewards that will never be consumed
(‘breakage’). Significant estimation uncertainty exists in projecting members’ future consumption activity.
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.
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THE FULHAM SHORE PLC
ACCOUNTING POLICIES
DEFINITIONS OF ALTERNATIVE PERFORMANCE MEASURES
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 and changes in fair value of
investments, temporary closure costs relating to COVID-19, 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 and
changes in fair value of investments, temporary closure costs relating to COVID-19, 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.
HEADLINE EBITDA
Headline EBITDA is defined as EBITDA before temporary closure costs relating to COVID-19, restructuring
costs, costs of reverse acquisition, cost of acquisition, share based payments, loss on disposal of property,
plant and equipment and pre-opening costs.
EBITDA
EBITDA is defined as Headline EBITDA less share based payments and pre-opening costs.
HEADLINE EPS
Headline basic EPS and Headline diluted EPS are defined in note 6.
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
1
SEGMENT INFORMATION
For management purposes, the Group was organised into two operating divisions during the year ended
29 March 2020. 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 29 March 2020:
Revenue from:
External customers
Headline EBITDA
Depreciation and amortisation
Headline operating profit
Pre-opening costs
Impairment of investments
Operating profit
Finance income
Finance costs
Segment profit/(loss) before taxation
Income tax expense
Loss for the year from
continuing operations
Assets
Liabilities
Net assets
Capital expenditure
Capital expenditure excluding
right of use assets
The Real
Greek
segment
£’000
Franco
Manca
segment
£’000
Other
unallocated
£’000
Total
£’000
20,004
48,525
36
68,565
3,655
(2,898)
––––––––––––
757
(120)
–
275
4
(724)
––––––––––––
(445)
12,229
(7,828)
––––––––––––
4,401
(563)
(248)
2,292
6
(1,564)
––––––––––––
734
(690)
(31)
––––––––––––
(721)
–
–
(735)
–
(308)
––––––––––––
(1,043)
32,712
(25,254)
––––––––––––
7,458
––––––––––––
––––––––––––
5,678
––––––––––––
––––––––––––
98,972
(55,982)
––––––––––––
42,990
––––––––––––
––––––––––––
10,698
––––––––––––
––––––––––––
1,333
(12,021)
––––––––––––
(10,688)
––––––––––––
––––––––––––
9
––––––––––––
––––––––––––
15,194
(10,757)
––––––––––––
4,437
(683)
(248)
1,832
10
(2,596)
––––––––––––
(754)
(421)
––––––––––––
(1,175)
––––––––––––
––––––––––––
133,017
(94,257)
––––––––––––
36,760
––––––––––––
––––––––––––
16,385
––––––––––––
––––––––––––
1,650
––––––––––––
––––––––––––
5,555
––––––––––––
––––––––––––
9
––––––––––––
––––––––––––
7,214
––––––––––––
––––––––––––
In addition to the revenues generated from external customers, The Real Greek segment also generated
internal revenues from another segment to the value of £643,000 (2019: £1,250,000).
58
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
1
SEGMENT INFORMATION (continued)
For the year ended 31 March 2019:
Revenue from:
External customers
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 excluding
right of use assets
The Real
Greek
segment
£’000
Franco
Manca
segment
£’000
Other
unallocated
£’000
Total
£’000
20,700
43,285
–
63,985
2,746
(1,048)
––––––––––––
1,698
5,814
(3,242)
––––––––––––
2,572
(742)
(33)
––––––––––––
(775)
7,818
(4,323)
––––––––––––
3,495
–
–
(386)
(80)
–
–
(386)
(80)
(29)
1,617
3
–
––––––––––––
1,620
(101)
924
5
–
––––––––––––
929
–
(788)
–
(327)
––––––––––––
(1,115)
11,408
(3,814)
––––––––––––
7,594
––––––––––––
––––––––––––
53,281
(10,177)
––––––––––––
43,104
––––––––––––
––––––––––––
602
(12,557)
––––––––––––
(11,955)
––––––––––––
––––––––––––
(130)
1,753
8
(327)
––––––––––––
1,434
(714)
––––––––––––
720
––––––––––––
––––––––––––
65,291
(26,548)
––––––––––––
38,743
––––––––––––
––––––––––––
407
––––––––––––
––––––––––––
3,046
––––––––––––
––––––––––––
4
––––––––––––
––––––––––––
3,457
––––––––––––
––––––––––––
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.
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
2
OPERATING PROFIT
Operating profit is stated after charging:
Staff costs (note 3)
Share based payments
Depreciation of property, plant and equipment
– Owned assets
– Leased assets
Amortisation of intangible assets:
– Trademarks, licenses and franchises
– Brand
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
Pre-opening costs
Exceptional costs:
– change in fair value of investments
– impairment of property, plant and equipment
– loss on disposal of property, plant and equipment
– COVID-19 temporary closure costs
– COVID-19 grants received against closure costs
Year
ended
29 March
2020
£’000
Year
ended
31 March
2019
£’000
25,524
157
4,657
6,025
74
821
–
12,710
169
–
42
–
683
23,956
138
4,261
–
61
821
6,361
12,371
111
13
24
11
386
248
260
–
718
(285)
––––––––––––
––––––––––––
80
130
187
–
–
––––––––––––
––––––––––––
COVID-19 temporary closure costs of £718,000 (2019: £Nil) relates to the one off cost of temporarily
closing of all restaurants following UK government instructions and includes staff costs (which were
partly covered by grants received), stock wastage and other costs.
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
29 March
2020
No.
Year
ended
31 March
2019
No.
32
1,243
––––––––––––
1,275
––––––––––––
––––––––––––
26
1,075
––––––––––––
1,101
––––––––––––
––––––––––––
7
––––––––––––
––––––––––––
6
––––––––––––
––––––––––––
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
3
EMPLOYEES (continued)
Staff costs for above persons
Salaries and fees
Defined contribution pension costs
Social security costs
Share based payments
DIRECTORS’ REMUNERATION
Year
ended
29 March
2020
£’000
Year
ended
31 March
2019
£’000
23,379
407
1,738
––––––––––––
25,524
157
––––––––––––
25,681
––––––––––––
––––––––––––
21,959
263
1,734
––––––––––––
23,956
138
––––––––––––
24,094
––––––––––––
––––––––––––
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 23 to 26.
Salaries, fees and other short term employee benefits
Defined contribution pension costs
Social security costs
Share based payments
Year
ended
29 March
2020
£’000
Year
ended
31 March
2019
£’000
942
22
115
–
––––––––––––
1,079
––––––––––––
––––––––––––
897
3
116
31
––––––––––––
1,047
––––––––––––
––––––––––––
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.
4 Directors received pension contributions during the year (2019: 4).
During the year two directors (2019: Nil) exercised share options over a total of 2,231,944 ordinary
shares of the Company.
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
4
FINANCE COSTS
Interest expenses on bank loans and overdrafts
Interest on lease liabilities recognised under IFRS 16
5
INCOME TAX EXPENSE
Income tax expense on continuing operations
Based on the result for the year:
UK corporation tax at 19% (2019: 19%)
Adjustment in respect of prior periods
Total current taxation
Deferred taxation:
Origination and reversal of temporary timing differences
Current year
Total deferred tax
Total tax expense on (loss)/profit on continuing operations
Year
ended
29 March
2020
£’000
Year
ended
31 March
2019
£’000
309
2,287
––––––––––––
2,596
––––––––––––
––––––––––––
327
–
––––––––––––
327
––––––––––––
––––––––––––
Year
ended
29 March
2020
£’000
Year
ended
31 March
2019
£’000
446
(28)
––––––––––––
418
669
(54)
––––––––––––
615
3
––––––––––––
3
––––––––––––
421
––––––––––––
––––––––––––
99
––––––––––––
99
––––––––––––
714
––––––––––––
––––––––––––
Further information on the movement on deferred taxation is given in note 16.
62
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
5
INCOME TAX EXPENSE (continued)
Factors affecting tax charge for year:
(Loss)/profit before taxation from continuing operations
Taxation at UK corporation tax rate of 19% (2019: 19%)
Expenses not deductible for tax purposes
Depreciation/impairment on non-qualifying fixed assets
Tax effect from right of use asset accounting
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
29 March
2020
£’000
Year
ended
31 March
2019
£’000
(754)
––––––––––––
(143)
1,434
––––––––––––
272
56
231
205
70
30
–
–
(28)
––––––––––––
421
––––––––––––
––––––––––––
31
290
–
171
–
4
–
(54)
––––––––––––
714
––––––––––––
––––––––––––
Factors that may affect deferred tax charges are disclosed in note 16 including a breakdown of the
adjustment to previously recognised deferred tax.
63
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
6
EARNINGS PER SHARE
Profit/(loss) for the purposes of basic and diluted earnings per share:
Share based payments
Deferred tax on share based payments
Pre-opening costs
Amortisation of brand
Deferred tax on amortisation of brand
Exceptional costs
– change in fair value of investment
– impairment of property, plant and equipment
– loss on disposal
– cost of acquisition
– COVID-19 closure costs (net)
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
29 March
2020
£’000
Year
ended
31 March
2019
£’000
(1,193)
157
39
683
821
(137)
698
138
146
386
821
(137)
248
260
–
3
433
––––––––––––
80
130
187
–
–
––––––––––––
1,314
––––––––––––
––––––––––––
2,449
––––––––––––
––––––––––––
Year
ended
29 March
2020
No. ‘000
Year
ended
31 March
2019
No. ‘000
572,885
1,030
––––––––––––
571,385
10,230
––––––––––––
573,915
––––––––––––
––––––––––––
581,615
––––––––––––
––––––––––––
64
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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
Diluted
Headline Basic
Headline Diluted
Year
ended
29 March
2020
Year
ended
31 March
2019
(0.2p)
––––––––––––
––––––––––––
(0.2p)
––––––––––––
––––––––––––
0.1p
––––––––––––
––––––––––––
0.1p
––––––––––––
––––––––––––
0.2p
0.2p
0.4p
0.4p
65
259801 The Fulham Shore AR pp58-pp75.qxp 30/10/2020 14:22 Page 66
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
7
INTANGIBLE ASSETS
Group
Cost
25 March 2018
Additions
31 March 2019
Additions
29 March 2020
Accumulated amortisation
25 March 2018
Charge in the year
31 March 2019
Charge in the year
29 March 2020
Net book value
29 March 2020
Trademarks,
License and
franchises
£’000
Software
£’000
Brand
£’000
Goodwill
£’000
Total
£’000
58
103
8,211
20,705
29,077
5
––––––––––––
63
94
––––––––––––
197
–
––––––––––––
8,211
–
––––––––––––
20,705
99
––––––––––––
29,176
–
––––––––––––
63
––––––––––––
145
––––––––––––
342
––––––––––––
–
––––––––––––
8,211
––––––––––––
–
––––––––––––
20,705
––––––––––––
145
––––––––––––
29,321
––––––––––––
31
33
2,463
–
2,527
6
––––––––––––
37
55
––––––––––––
88
821
––––––––––––
3,284
–
––––––––––––
–
882
––––––––––––
3,409
5
––––––––––––
42
––––––––––––
69
––––––––––––
157
––––––––––––
821
––––––––––––
4,105
––––––––––––
–
––––––––––––
–
––––––––––––
895
––––––––––––
4,304
––––––––––––
21
––––––––––––
––––––––––––
185
––––––––––––
––––––––––––
4,106
––––––––––––
––––––––––––
20,705
––––––––––––
––––––––––––
25,017
––––––––––––
––––––––––––
31 March 2019
26
––––––––––––
––––––––––––
109
––––––––––––
––––––––––––
4,927
––––––––––––
––––––––––––
20,705
––––––––––––
––––––––––––
25,767
––––––––––––
––––––––––––
The amortisation charges for trademarks, license and franchises and software for the year are
recognised within administrative expenses. The amortisation charges for brand for the year are
recognised within exceptional costs.
As at 29 March 2020 brand intangible assets which relates to Franco Manca has a remaining
amortisation period of 5 years (2019: 6 years).
Goodwill of £1,774,000 relates to 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.
66
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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 financial forecasts for the 2021 financial year for
the sites open at the end of March 2020;
l extrapolated cash flow forecasts 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 long term 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 a pre-tax discount rate of 6.9% (2019: 12.4%) which is the rate believed by the Directors to reflect
the risks associated with the group of CGUs using a WACC model, and comparison to other
available restaurant businesses. During the year, the Group’s capital structure had a significant
increase in debt from the recognition of lease liabilities on adopting IFRS 16 compared to the year
ended 31 March 2019.
Other than as disclosed below and any further impact on trade from COVID-19, 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 £46,149,000 and
£96,845,000 respectively. If assumptions used in the impairment review are to change as below, each
change would, in isolation, lead to an impairment loss being recognised for the year ended 29 March
2020:
Percentage point change:
Reduction in long term growth rate
Increase in pre-tax discount rate
The
Real Greek
%
5.3%
12.3%
Franco
Manca
%
4.7%
8.7%
Similarly, given the impact of COVID-19 on trading, if, in the unlikely event, all restaurants in each CGU
had to close temporarily to trading, the closure period will need to be, in isolation, over 3 years to lead
to an impairment loss being recognised.
67
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
8
PROPERTY, PLANT AND EQUIPMENT
Group
Leasehold Right of
improvements use assets
£’000 £’000
Cost
25 March 2018 32,685 –
Furniture,
fixtures
and
Assets
under
fittings construction
£’000
£’000
Plant and
equipment
£’000
Total
£’000
5,887
2,423
220
41,215
Additions 2,020 –
Reclassification 24 –
Disposals (438) –
–––––––––– ––––––––––
31 March 2019 34,291 –
605
8
(139)
––––––––––
6,361
166
65
(40)
––––––––––
2,614
666
(97)
(5)
3,457
–
(622)
–––––––––– ––––––––––
44,050
784
Recognition on
adoption of
IFRS 16 – 64,388
–––––––––– ––––––––––
1 April 2019 34,291 64,388
Additions 4,879 9,171
Reclassification 551 –
Disposals – –
–––––––––– ––––––––––
29 March 2020 39,721 73,559
–––––––––– ––––––––––
Accumulated
depreciation and
impairment
25 March 2018 6,380 –
–
––––––––––
6,361
1,366
36
(8)
––––––––––
7,755
––––––––––
–
––––––––––
2,614
656
97
–
––––––––––
3,367
––––––––––
–
64,388
–––––––––– ––––––––––
108,438
784
313
(684)
(26)
16,385
–
(34)
–––––––––– ––––––––––
124,789
–––––––––– ––––––––––
387
2,286
781
–
9,447
Charge in the year 2,656 –
Impairment 130 –
Disposals (438) –
–––––––––– ––––––––––
31 March 2019 8,728 –
1,198
–
(120)
––––––––––
3,364
407
–
(36)
––––––––––
1,152
Charge in the year 2,892 6,025
Impairment 260 –
Disposals – –
–––––––––– ––––––––––
29 March 2020 11,880 6,025
–––––––––– ––––––––––
Net book value
29 March 2020 27,841 67,534
–––––––––– ––––––––––
–––––––––– ––––––––––
31 March 2019 25,563 –
–––––––––– ––––––––––
–––––––––– ––––––––––
1,300
–
(3)
––––––––––
4,661
––––––––––
465
–
–
––––––––––
1,617
––––––––––
3,094
––––––––––
––––––––––
2,997
––––––––––
––––––––––
1,750
––––––––––
––––––––––
1,462
––––––––––
––––––––––
–
–
–
4,261
130
(594)
–––––––––– ––––––––––
13,244
–
–
–
–
10,682
260
(3)
–––––––––– ––––––––––
24,183
–––––––––– ––––––––––
–
387
100,606
–––––––––– ––––––––––
–––––––––– ––––––––––
30,806
–––––––––– ––––––––––
–––––––––– ––––––––––
784
The net book value of right of use assets include £67,534,000 (2019: £Nil) in relation to assets held
under finance leases.
68
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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 financial forecasts for the 2021 financial year for
the sites open at the end of March 2020;
l extrapolated cash flow forecasts 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 long term industry growth rate of 2%;
l incorporate any expected trading or cash flow impact from COVID-19;
l less estimated annual capital expenditure required to maintain the existing restaurants’ look and
feel in each segment based on historic refurbishment programmes;
l a pre-tax discount rate to cash flow projections of 6.9% (2019: 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 the CGUs listed below, where
the overall impairment charge would increase by £387,000.
The following impairment charges have been recognised in the Statement of Comprehensive Income
as exceptional costs – impairment of property, plant and equipment.
29 March 29 March
2020 2020
£’000 £’000
31 March 31 March
2019 2019
£’000 £’000
Impairment Recoverable
charge amount
Impairment Recoverable
charge amount
For continuing operations
Franco Manca restaurant 1 71 1,869
Franco Manca restaurant 2 – –
Franco Manca restaurant 3 – –
–––––––––––– ––––––––––––
Total for Franco Manca operating
segment 71 1,869
The Real Greek restaurant 1 20 1,278
The Real Greek restaurant 2 10 110
The Real Greek restaurant 3 159 1,383
–––––––––––– ––––––––––––
Total for The Real Greek operating
segment 189 2,771
–––––––––––– ––––––––––––
Total for the Group 260 4,640
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
– –
75 487
26 838
–––––––––––– ––––––––––––
101 1,325
– –
29 87
–––––––––––– ––––––––––––
29 87
–––––––––––– ––––––––––––
130 1,412
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
The recoverable amounts shown above include the right of use assets recognised under IFRS 16
relating to the relevant CGU.
69
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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.
Parent Company
Cost
25 March 2018
Additions
31 March 2019
Additions
Disposals
29 March 2020
Accumulated depreciation
25 March 2018
Charge in the year
31 March 2019
Charge in the year
29 March 2020
Net book value
29 March 2020
31 March 2019
Leasehold
improvements
£’000
Plant and
equipment
£’000
Furniture,
fixtures
and
fittings
£’000
Total
£’000
205
55
25
285
–
–––––––––––
205
1
–
–––––––––––
206
–––––––––––
4
–––––––––––
59
8
(1)
–––––––––––
66
–––––––––––
–
–––––––––––
25
1
–
–––––––––––
26
–––––––––––
4
–––––––––––
289
10
(1)
–––––––––––
298
–––––––––––
37
38
7
82
22
–––––––––––
59
21
–––––––––––
80
–––––––––––
126
–––––––––––
–––––––––––
146
–––––––––––
–––––––––––
9
–––––––––––
47
7
–––––––––––
54
–––––––––––
12
–––––––––––
–––––––––––
12
–––––––––––
–––––––––––
3
–––––––––––
10
3
–––––––––––
13
–––––––––––
13
–––––––––––
–––––––––––
15
–––––––––––
–––––––––––
34
–––––––––––
116
31
–––––––––––
147
–––––––––––
151
–––––––––––
–––––––––––
173
–––––––––––
–––––––––––
All depreciation charges have been recognised in administrative expenses in the income statement.
All non-current assets are located in the United Kingdom.
70
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
9
INVESTMENTS
Group
Unlisted shares
Change in fair value
Loans at cost
Impairment of investments and loans
Carrying amount
29 March
2020
£’000
31 March
2019
£’000
245
(245)
83
(83)
––––––––––––
–
––––––––––––
––––––––––––
201
80
(80)
––––––––––––
201
––––––––––––
––––––––––––
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 31 March 2019 the Group made an investment in Made of Dough Limited
subscribing for 25% of the equity. Following a further funding round during the year ended 29 March
2020, the Group holds 24% of the equity of Made of Dough Limited. 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 it is not
an associate.
Other investments classified as financial assets are stated at amortised cost using the effective interest
method, less any impairment. During the year ended 29 March 2020, the Group recognised a movement
in fair value of the unlisted shares in Made of Dough Limited given the uncertainty in valuation given
the ongoing impact of COVID-19 on the sector. Also during the year, the Group recognised an
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
29 March
2020
£’000
31 March
2019
£’000
43,563
43,439
784
––––––––––––
44,347
––––––––––––
––––––––––––
124
––––––––––––
43,563
––––––––––––
––––––––––––
71
259801 The Fulham Shore AR pp58-pp75.qxp 30/10/2020 14:22 Page 72
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
9
INVESTMENTS (continued)
As at 29 March 2020, 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
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Operation of restaurants
Operation of restaurants
Dormant
Dormant
Operation of restaurants
Restaurant property
Dormant
Dormant
Dormant
Dormant
Operation of restaurants
Restaurant property
Restaurant property
Restaurant property
Dormant
72
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
10
INVENTORIES
Raw materials
Consumables
29 March
2020
£’000
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
528
1,378
––––––––––––
1,906
––––––––––––
––––––––––––
656
1,108
––––––––––––
1,764
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
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
Prepayments and accrued income
29 March
2020
£’000
–
1,081
––––––––––––
1,081
––––––––––––
606
235
1,501
––––––––––––
2,342
––––––––––––
3,423
––––––––––––
––––––––––––
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
–
1,020
––––––––––––
1,020
––––––––––––
1,470
176
1,951
––––––––––––
3,597
––––––––––––
4,617
––––––––––––
––––––––––––
10,567
–
––––––––––––
10,567
––––––––––––
–
61
89
––––––––––––
150
––––––––––––
10,717
––––––––––––
––––––––––––
11,863
–
––––––––––––
11,863
––––––––––––
–
–
118
––––––––––––
118
––––––––––––
11,981
––––––––––––
––––––––––––
Other receivables due after more than one year relate to rent deposits.
Amounts receivable from subsidiaries in the Company due after more than one year are unsecured
and earn interest at 3.5% above LIBOR.
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. As the risk of a credit loss is low there is no material ECL adjustment required.
73
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
12
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash and cash equivalents as
presented in the balance sheet
29 March
2020
£’000
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
2,056
––––––––––––
1,835
––––––––––––
1,030
––––––––––––
22
––––––––––––
2,056
––––––––––––
2,056
––––––––––––
––––––––––––
1,835
––––––––––––
1,835
––––––––––––
––––––––––––
1,030
––––––––––––
1,030
––––––––––––
––––––––––––
22
––––––––––––
22
––––––––––––
––––––––––––
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
29 March
2020
£’000
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
Included in current liabilities:
Trade payables
Other taxation and social security payable
Other payables
Accruals
Deferred income
5,386
1,661
808
4,625
–
––––––––––––
12,480
––––––––––––
––––––––––––
4,202
1,600
843
4,844
392
––––––––––––
11,881
––––––––––––
––––––––––––
83
86
–
1,140
–
––––––––––––
1,309
––––––––––––
––––––––––––
67
88
1
1,156
–
––––––––––––
1,312
––––––––––––
––––––––––––
Included in non-current liabilities:
Deferred income
–
––––––––––––
–
––––––––––––
––––––––––––
1,601
––––––––––––
1,601
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
Trade payables are 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.
Following the adoption of IFRS 16 this is no longer recognised.
74
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
14
BORROWINGS
Short term borrowings:
Lease liabilities
Long term borrowings:
Bank loans
Lease liabilities
Amounts owed to subsidiary
undertakings
29 March
2020
£’000
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
5,163
––––––––––––
–
––––––––––––
–
––––––––––––
–
––––––––––––
11,540
63,051
11,240
–
11,540
–
11,240
–
–
––––––––––––
74,591
––––––––––––
79,754
––––––––––––
––––––––––––
–
––––––––––––
11,240
––––––––––––
11,240
––––––––––––
––––––––––––
3,197
––––––––––––
14,737
––––––––––––
14,737
––––––––––––
––––––––––––
2,481
––––––––––––
13,721
––––––––––––
13,721
––––––––––––
––––––––––––
As at 29 March 2020, the Group’s committed Sterling borrowing facilities comprises a revolving credit
facility of £14,250,000 (2019: £14,250,000) expiring between two and five years and a bank overdraft
facility of £750,000 (2019: £750,000) from HSBC Bank PLC, repayable on demand, which are 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 the revolving credit facility is 2.50% above LIBOR. The interest rate
applicable on the bank overdraft is 2.5% over base rate. The overdraft facility was undrawn as at
29 March 2020.
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%.
The maturity profile of the Group’s lease liabilities as at 29 March 2020 was as follows:
Within one year
In more than one year but less than two years
In more than two years but less than three years
In more than three years but less than four years
In more than four years but less than five years
In more than five years
Effect of discounting
Lease liabilities
29 March
2020
£‘000
5,163
5,354
5,270
5,085
4,778
44,899
––––––––––––
70,549
2,335
––––––––––––
68,214
––––––––––––
––––––––––––
75
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
14
BORROWINGS (continued)
There are no committed lease liabilities not yet commenced at 29 March 2020.
Interest expense on borrowings for the year is disclosed in Note 4 finance costs.
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 other than lease liabilities, 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:
Group
29 March
2020
£’000
31 March 29 March
2019 2020
£’000 £’000
Parent company
31 March
2019
£’000
Non-current financial assets
Other investments
Amounts owed by subsidiary undertakings
Other receivables
–
–
1,081
201 –
– 10,567
1,020 –
–
11,863
–
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
2,056
841
––––––––––––
3,978
––––––––––––
––––––––––––
1,835
1,646
––––––––––––
4,702
––––––––––––
––––––––––––
1,030
–
––––––––––––
11,597
––––––––––––
––––––––––––
22
–
––––––––––––
11,885
––––––––––––
––––––––––––
5,163
10,819
–
9,889
–
1,223
–
1,224
74,591
–
––––––––––––
90,573
––––––––––––
––––––––––––
11,240
–
––––––––––––
21,129
––––––––––––
––––––––––––
11,540
3,197
––––––––––––
15,960
––––––––––––
––––––––––––
11,240
2,481
––––––––––––
14,945
––––––––––––
––––––––––––
* 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.
76
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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 29 March 2020
Cash at bank and in hand
Trade and other receivables
Bank loans and overdrafts
Lease liabilities
Trade and other payables
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
Less than
1 year
£’000
2,056
841
–
(30)
(10,819)
––––––––––––
(7,952)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
More
than
5 years
£’000
Total
£’000
–
93
(11,540)
(4,056)
–
––––––––––––
(15,503)
––––––––––––
––––––––––––
–
988
–
(64,128)
–
––––––––––––
(63,140)
––––––––––––
––––––––––––
2,056
1,922
(11,540)
(68,214)
(10,819)
––––––––––––
(86,595)
––––––––––––
––––––––––––
Less than
1 year
£’000
–
1,835
1,646
–
(9,889)
––––––––––––
(6,408)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
More
than
5 years
£’000
–
–
57
(11,240)
–
––––––––––––
(11,183)
––––––––––––
––––––––––––
201
–
963
–
–
––––––––––––
1,164
––––––––––––
––––––––––––
Total
£’000
201
1,835
2,666
(11,240)
(9,889)
––––––––––––
(16,427)
––––––––––––
––––––––––––
The financial instruments recognised on the balance sheets and shown above are all loans and
receivables and financial liabilities at amortised cost.
77
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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 29 March 2020
Cash at bank and in hand
Trade and other receivables
Bank loans and overdrafts
Trade and other payables
For the year ended 31 March 2019
Cash at bank and in hand
Trade and other receivables
Bank loans and overdrafts
Trade and other payables
Less than
1 year
£’000
1,030
–
–
(1,223)
––––––––––––
(193)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
Total
£’000
–
10,567
(11,540)
(3,197)
––––––––––––
(4,170)
––––––––––––
––––––––––––
1,030
10,567
(11,540)
(4,420)
––––––––––––
(4,363)
––––––––––––
––––––––––––
Less than
1 year
£’000
22
–
–
(1,224)
––––––––––––
(1,202)
––––––––––––
––––––––––––
Between
1 and
5 years
£’000
Total
£’000
–
11,863
(11,240)
(2,481)
––––––––––––
(1,858)
––––––––––––
––––––––––––
22
11,863
(11,240)
(3,705)
––––––––––––
(3,060)
––––––––––––
––––––––––––
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
(2019: £14,250,000) and short term bank overdraft facilities available to manage its liquidity as at
29 March 2020 of £750,000 (2019: £750,000).
78
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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:
29 March
2020
£’000
Group Parent company
31 March
2019
£’000
29 March
2020
£’000
31 March
2019
£’000
Floating rate
Cash at bank and in hand
Bank loans
2,056
(11,540)
––––––––––––
(9,484)
––––––––––––
––––––––––––
1,835
(11,240)
––––––––––––
(9,405)
––––––––––––
––––––––––––
1,030
(11,540)
––––––––––––
(10,510)
––––––––––––
––––––––––––
22
(11,240)
––––––––––––
(11,218)
––––––––––––
––––––––––––
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 29 March 2020 were 1.9%
and year ended 31 March 2019 were 1.9% and the weighted average interest rates paid for bank
overdrafts during the year ended 29 March 2020 were 2.5% and year ended 31 March 2019 were 2.5%.
The Group has performed 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 result in increased finance costs of £57,700 (2019: £56,200).
Foreign Exchange Risks
During the years ended 29 March 2020 and 31 March 2019, 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.
79
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
15
CAPITAL AND FINANCIAL MANAGEMENT (continued)
Credit Risks
The Group’s exposure to credit risk arises mainly from as follows:
29 March
2020
£’000
Group Parent company
31 March
2019
£’000
29 March
2020
£’000
31 March
2019
£’000
Cash at bank and in hand
Trade receivables and other receivables
2,056
841
––––––––––––
2,897
––––––––––––
––––––––––––
1,835
1,646
––––––––––––
3,481
––––––––––––
––––––––––––
1,030
10,567
––––––––––––
11,597
––––––––––––
––––––––––––
22
11,863
––––––––––––
11,885
––––––––––––
––––––––––––
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 an impairment of £3,000 during the year ended 29 March
2020 (2019: £80,000). 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 and the
expected credit loss is not considered to be material.
The majority of the Group’s cash balances have been held in current accounts savings accounts at
HSBC Bank PLC during the years ended 29 March 2020 and 31 March 2019 and did not earn any
significant interest. The Group estimates that there is no material expected credit loss.
The majority of the Group’s trade receivables are due for settlement 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 procedures 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 and given the nature of the balances held,
there is no additional credit risk expected from the impact of COVID-19.
COVID-19 risks
The macro economic impact of the COVID-19 pandemic is uncertain, and continues to evolve, with
potential disruption to financial markets including to currencies, interest rates, borrowing costs and the
availability of debt financing. However, the Group’s financial risk management strategies seek to reduce
our potential exposure in relation to these risks. Following the year end, the Group, as described in
Note 24:
l raised further funds from an equity placing and subscription;
l extended the maturity date of the RCF facility by 12 months to March 2022; and
l completed a new loan facility under the UK Government’s CLBIL scheme for a three year term.
The combined effect of these actions have added an additional £13m of headroom to the Group’s
capital structure.
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 29 March
2020 and 31 March 2019 did not materially vary from the carrying value amounts.
80
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
16
DEFERRED TAXATION
Analysis of movements in net deferred tax balance during the period:
Opening position
Effect of adoption of IFRS 16
As at 1 April 2019
Tax on share based payments
Transfer from/(to) reserves
Movement in accelerated capital
Allowances
Tax on share based payments
Tax on intangible assets
Transfer from/(to) profit and loss
Net deferred tax (liability)/asset
29 March
2020
£’000
(1,432)
(191)
––––––––––––
(1,623)
(253)
––––––––––––
(253)
(100)
(39)
137
––––––––––––
(2)
––––––––––––
(1,878)
––––––––––––
––––––––––––
Group Parent company
31 March
2019
£’000
29 March
2020
£’000
31 March
2019
£’000
(1,586)
–
––––––––––––
(1,586)
253
––––––––––––
253
(90)
(146)
137
––––––––––––
(99)
––––––––––––
(1,432)
––––––––––––
––––––––––––
287
–
––––––––––––
287
(253)
––––––––––––
(253)
–
(31)
–
––––––––––––
(31)
––––––––––––
3
––––––––––––
––––––––––––
185
–
––––––––––––
185
253
––––––––––––
253
–
(151)
–
––––––––––––
(151)
––––––––––––
287
––––––––––––
––––––––––––
During the year ended 29 March 2020, the Group transferred £253,000 deferred tax charge to reserves
(2019: £253,000 from reserves) in relation to deferred tax on share based payments.
81
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
16
DEFERRED TAXATION (continued)
The Group’s deferred taxation liability disclosed above relates to the following:
29 March
2020
£’000
Group Parent company
31 March
2019
£’000
29 March
2020
£’000
31 March
2019
£’000
Deferred tax assets
Share options
Deferred taxation assets
Deferred tax liabilities
Accelerated capital allowances
Intangible assets
Deferred taxation liabilities
9
––––––––––––
9
––––––––––––
––––––––––––
301
––––––––––––
301
––––––––––––
––––––––––––
3
––––––––––––
3
––––––––––––
––––––––––––
287
––––––––––––
287
––––––––––––
––––––––––––
1,203
684
––––––––––––
1,887
––––––––––––
––––––––––––
912
821
––––––––––––
1,733
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
––––––––––––
–
––––––––––––
––––––––––––
The Company has losses of £285,000 (2019: £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 £54,000 (2019: £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
29 March
2020
£’000
Group Parent company
31 March
2019
£’000
29 March
2020
£’000
31 March
2019
£’000
Allotted, issued called up and fully paid:
573,617,181 (2019: 571,385,237)
ordinary shares of 1p each
5,736
––––––––––––
––––––––––––
5,714
––––––––––––
––––––––––––
5,736
––––––––––––
––––––––––––
5,714
––––––––––––
––––––––––––
The Company has one class of ordinary share which carries no rights to fixed income.
During the year the Company issued 2,231,944 ordinary shares of 1p each for proceeds of 2p each
following the exercise of share options.
82
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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
£157,000 (2019: £138,000).
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 29 March 2020
are as follows:
At the beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
At the end of the year
Year
ended
29 March
2020
‘000
Year
ended
31 March
2019
‘000
63,808
62,633
4,225
(2,232)
(950)
––––––––––––
64,851
––––––––––––
––––––––––––
3,800
–
(2,625)
––––––––––––
63,808
––––––––––––
––––––––––––
83
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
18
SHARE BASED PAYMENTS (continued)
Weighted average exercise price
At the beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
At the end of the year
Year
ended
29 March
2020
£
Year
ended
31 March
2019
£
0.09
0.10
0.11
(0.02)
(0.15)
––––––––––––
0.10
––––––––––––
––––––––––––
0.10
–
(0.16)
––––––––––––
0.09
––––––––––––
––––––––––––
Outstanding and exercisable share options to acquire ordinary shares of 1 pence each as at 29 March
2020 under various Group share plans are as follows:
For the year ended 29 March 2020
Range of
exercise prices
Options outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Options exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
‘000
Number
of
shares
‘000
EMI
£0.05
£0.06
Unapproved
£0.05
£0.06
£0.1015
£0.11
£0.1125
£0.17625
£0.1775
£0.1825
CSOP
£0.1015
£0.1125
£0.17625
£0.1775
£0.1825
2,779
9,440
––––––––––––
14,451
––––––––––––
––––––––––––
0.0500
0.0600
––––––––––––
0.0519
––––––––––––
––––––––––––
11
19
––––––––––––
14
––––––––––––
––––––––––––
2,779
9,440
––––––––––––
5,011
––––––––––––
––––––––––––
0.0500
0.0600
––––––––––––
0.0519
––––––––––––
––––––––––––
11
19
––––––––––––
14
––––––––––––
––––––––––––
554
13,805
1,692
23,873
1,695
1,085
162
1,557
––––––––––––
44,423
––––––––––––
––––––––––––
0.0500
0.0600
0.1015
0.1100
0.1125
0.1763
0.1775
0.1825
––––––––––––
0.0979
––––––––––––
––––––––––––
11
19
99
25
112
87
83
75
––––––––––––
33
––––––––––––
––––––––––––
554
13,805
–
23,873
–
–
162
1,557
––––––––––––
39,951
––––––––––––
––––––––––––
0.0500
0.0600
–
0.1100
–
–
0.1775
0.1825
––––––––––––
0.0950
––––––––––––
––––––––––––
11
19
–
25
–
–
83
75
––––––––––––
25
––––––––––––
––––––––––––
1,733
2,530
915
638
2,393
––––––––––––
8,309
––––––––––––
––––––––––––
0.1015
0.1125
0.1763
0.1775
0.1825
––––––––––––
0.1427
––––––––––––
––––––––––––
99
112
87
83
75
––––––––––––
93
––––––––––––
––––––––––––
–
–
–
638
2,393
––––––––––––
3,031
––––––––––––
––––––––––––
–
–
–
0.1775
0.1825
––––––––––––
0.1814
––––––––––––
––––––––––––
–
–
–
83
75
––––––––––––
77
––––––––––––
––––––––––––
84
259801 The Fulham Shore AR pp76-pp92.qxp 30/10/2020 14:23 Page 85
THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
18
SHARE BASED PAYMENTS (continued)
For the year ended 31 March 2019
Range of
exercise prices
Options outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Options exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
‘000
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
––––––––––––
––––––––––––
–
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
–
–
–
–
––––––––––––
–
––––––––––––
––––––––––––
During the year ended 29 March 2020, the market price of ordinary shares in the Company ranged
from £0.0450 (2019: £0.0910) to £0.1290 (2019: £0.1288). The share price as at 29 March 2020 was
£0.055 (2019: £0.1125).
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.
85
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
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:
Weighted average expected life
Weighted average exercise price
Risk free rate
Expected volatility
Expected dividends
Year
ended
29 March
2020
Year
ended
31 March
2019
3 years
11.25 pence
0.75%
52.5%
–
––––––––––––
––––––––––––
3 years
10.15 pence
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 29 March 2020 are as follows:
At the beginning and end of the year
For the year ended 29 March 2020
Year
ended
29 March
2020
‘000
Year
ended
31 March
2019
‘000
591
––––––––––––
––––––––––––
591
––––––––––––
––––––––––––
Range of
exercise prices
SIP shares outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
SIP shares exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
‘000
Number
of
shares
‘000
Nil
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
61
––––––––––––
61
––––––––––––
––––––––––––
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
61
––––––––––––
61
––––––––––––
––––––––––––
86
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
18
SHARE BASED PAYMENTS (continued)
For the year ended 31 March 2019
Range of
exercise prices
SIP shares outstanding
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
SIP shares exercisable
Weighted
average
remaining
contractual
life
months
Weighted
average
exercise
price
£
Number
of
shares
‘000
Number
of
shares
‘000
Nil
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
73
––––––––––––
73
––––––––––––
––––––––––––
591
––––––––––––
591
––––––––––––
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
73
––––––––––––
73
––––––––––––
––––––––––––
The fair value of the SIP shares is estimated at the date of grant using a Black-Scholes valuation
model.
87
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
19
NOTE TO CASH FLOW STATEMENTS
Reconciliation of net cash flows from operating activities
Year
ended
29 March
2020
£’000
Group
Year
ended
31 March
2019
£’000
Year
ended
29 March
2020
£’000
Parent company
Year
ended
31 March
2019
£’000
(1,175)
421
––––––––––––
(754)
(10)
2,596
––––––––––––
1,832
720
714
––––––––––––
1,434
(8)
327
––––––––––––
1,753
(739)
31
––––––––––––
(708)
(466)
439
––––––––––––
(735)
(878)
150
––––––––––––
(728)
(468)
392
––––––––––––
(804)
11,577
263
245
23
157
14
––––––––––––
5,144
210
–
27
138
–
––––––––––––
31
–
–
1
4
10
––––––––––––
34
–
–
–
14
–
––––––––––––
14,111
7,272
(689)
(756)
(142)
(59)
(274)
(349)
–
(32)
–
18
1,307
––––––––––––
15,217
491
––––––––––––
7,140
(3)
––––––––––––
(724)
425
––––––––––––
(313)
(Loss)/profit for the year
Income tax expense
(Loss)/profit before tax
Finance income
Finance costs
Operating profit/(loss) for the year
Adjustments
Depreciation and amortisation
Impairment
Change in fair value
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
(375)
––––––––––––
14,842
––––––––––––
––––––––––––
(1,008)
––––––––––––
6,132
––––––––––––
––––––––––––
–
––––––––––––
(724)
––––––––––––
––––––––––––
–
––––––––––––
(313)
––––––––––––
––––––––––––
88
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
19
NOTE TO CASH FLOW STATEMENTS (continued)
Changes in liabilities from financing activities
Lease Lease
Cash liabilities liabilities
and due due
Cash within after
Equivalents 1 year 1 year
£’000 £’000 £’000
Bank
loans
due
after
1 year
£’000
Total
£’000
Net debt as at
25 March 2018 359 – –
Cash flows 1,476 – –
–––––––––––– –––––––––––– ––––––––––––
Net debt as at
31 March 2019 1,835 – –
IFRS 16 transitional
adjustment – (4,668) (58,715)
–––––––––––– –––––––––––– ––––––––––––
Net debt as at
1 April 2019 1,835 (4,668) (58,715)
Cash flows 221 4,332 –
Addition to lease
liabilities – (4,827) (4,336)
–––––––––––– –––––––––––– ––––––––––––
Net debt as at
29 March 2020 2,056 (5,163) (63,051)
–––––––––––– –––––––––––– ––––––––––––
–––––––––––– –––––––––––– ––––––––––––
(12,350)
1,110
––––––––––––
(11,991)
2,586
––––––––––––
(11,240)
(9,405)
–
––––––––––––
(63,383)
––––––––––––
(11,240)
(300)
(72,788)
4,253
–
––––––––––––
(9,163)
––––––––––––
(11,540)
––––––––––––
––––––––––––
(77,698)
––––––––––––
––––––––––––
Net debt before lease liabilities recognised under IFRS 16 as at 29 March 2020 was £9,484,000
(2019: £9,405,000).
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
29 March
2020
£’000
6
–
–
––––––––––––
6
––––––––––––
–
––––––––––––
–
––––––––––––
6
––––––––––––
––––––––––––
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
6,697
24,246
47,271
––––––––––––
78,214
––––––––––––
60
––––––––––––
60
––––––––––––
78,274
––––––––––––
––––––––––––
–
–
–
––––––––––––
–
––––––––––––
–
––––––––––––
–
––––––––––––
–
––––––––––––
––––––––––––
136
123
–
––––––––––––
259
––––––––––––
–
––––––––––––
–
––––––––––––
259
––––––––––––
––––––––––––
Included above are certain annual lease commitments relating to a subsidiary company that have been
guaranteed by the parent company.
Following adoption of IFRS 16, leases for land and buildings are disclosed under borrowings.
89
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
21
CAPITAL COMMITMENTS
The Group capital expenditure contracted for but not provided in the financial statements as follows:
29 March
2020
£’000
Group
31 March
2019
£’000
29 March
2020
£’000
Parent company
31 March
2019
£’000
Committed new restaurant builds
503
––––––––––––
––––––––––––
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 23 to 26, and in note 3. Details of share options
granted to Directors are also shown in the Report on Directors’ Remuneration.
Transactions with Directors other than compensation
During the year ended 29 March 2020, the Group acquired 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 consideration of £628,026 in cash from
DM Page and NAG Mankarious, both directors of the Company.
During the year ended 29 March 2020, DM Page and NAG Mankarious, both directors of the Company,
each exercised options over 1,115,972 ordinary shares (2019: Nil). The aggregate gains made on the
exercise of the options during the year was £223,000 (2019: £Nil).
Other related party transactions
During the year, the Group was invoiced £101,000 (2019: £84,000) 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 29 March 2020 was £18,000 (2019: £17,000).
During the year, the Group was invoiced £Nil (2019: £6,000) 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 29 March 2020 was £Nil (2019: £Nil).
During the year, Room 307 Limited and Restaurants IT Limited, previously identified as a related party,
no longer is a related party with effect from 31 March 2019.
During the year, the Group invoiced £Nil (2019: credited £2,000) 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 29 March 2020 owed to Fixed Restaurants Limited was £Nil (2019: £37,000).
90
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
22
RELATED PARTY DISCLOSURES (continued)
During the year, the Group and Company invoiced £Nil (2019: £12,000) for desk space provided to
Meatailer Limited, a company in which DM Page and NAG Mankarious are directors and shareholders
and NJ Donaldson and NCW Wong are shareholders. Further, during the year the Group invoiced and
£71,000 (2019: £76,000) in rent relating to a property leased to Meatailer Limited. The balance
outstanding as at 29 March 2020 owed by Meatailer was £1,000 (2019: £21,000). During the year
Meatailer Limited invoiced the Group and Company £30,000 (2019: £Nil) for a volume rebate on a joint
purchasing deal earned from a third party supplier and the Group £2,000 (2019: £Nil) for a staff
Christmas Party. The balance outstanding as at 29 March 2020 owed to Meatailer was £2,000
(2019: £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)
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
Year
ended
29 March
2020
£’000
–
636
845
––––––––––––
1,481
––––––––––––
––––––––––––
Parent company
Year
ended
31 March
2019
£’000
9
615
791
––––––––––––
1,415
––––––––––––
––––––––––––
91
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
22
RELATED PARTY DISCLOSURES (continued)
During the year the Company also loaned amounts to the following subsidiaries:
Amounts loaned/(repaid) Parent company
Year
ended
31 March
2019
£’000
Year
ended
29 March
2020
£’000
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
(1)
(716)
(1,296)
––––––––––––
(2,013)
––––––––––––
––––––––––––
(245)
(1,489)
368
––––––––––––
(1,366)
––––––––––––
––––––––––––
Amounts outstanding at year end Parent company
31 March
2019
£’000
29 March
2020
£’000
10DAS Limited
The Real Greek Food Company Limited
Franco Manca 2 UK Limited
(16)
(3,180)
10,567
––––––––––––
7,371
––––––––––––
––––––––––––
(16)
(2,464)
11,863
––––––––––––
9,383
––––––––––––
––––––––––––
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 that has been called under this guarantee at the end of the year were £Nil
(2019: £Nil).
92
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
23
ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES
During the year ended 29 March 2020, the Group has adopted and applied IFRS 16 using the modified
retrospective approach, and therefore comparative information has not been restated and continues to
be reported under IAS 17 'Leases'.
Under IFRS 16, on commencement of a contract that gives the Group the right to use an asset for a
period of time in exchange for consideration, the Group recognises a right-of-use asset and a lease
liability except for low value leases (for assets that are of value less than £5,000 that do not highly
depend on other assets) and those with a term of less than 12 months. Such contracts were previously
treated as operating leases under IAS17 Leases.
A right-of-use asset is recognised at commencement of the lease and is initially measured at the
amount of the lease liability, plus any incremental costs of obtaining the lease, any lease payments
made at or before the leased asset is available for use by the Group less any lease incentives received,
plus any estimate of costs to be incurred in respect of dismantling or restoring the underlying asset to
its original condition.
The right-of-use asset is subsequently measured at cost less accumulated depreciation and any
accumulated impairment losses. Right-of-use assets are depreciated straight line over the shorter of
the period of the lease term or the remaining useful life of the underlying asset. Termination, extension
and purchase options are considered in determining the appropriate remaining lease term. The
right-of-use asset is depreciated from the date it is 'available for use' even if the entity does not use it
until a later date.
Thus right of use assets are measured at cost comprising the following:
l
l
l
The amount of the initial measurement of the lease liability;
Any lease payments made at or before the commencement date less any lease incentives
received;
Any initial direct costs; and
l Restoration costs.
Impairment losses are determined and accounted for in accordance with IAS 36 'Impairment of Assets'
An estimate of costs to be incurred in restoring the right-of-use asset to the condition required under
the terms and conditions of the lease is recognised as part of the cost of the right-of-use asset when
the Group incurs the obligation for these costs. The provision is measured at the best estimate of the
expenditure required to settle the obligation.
93
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
23
ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES (continued)
The Group has applied this approach subject to the transition provisions set out below:
l A single discount rate has been applied to portfolios of leases with similar characteristics;
l The right-of-use assets have not been assessed for impairment at 1 April 2019 but have been
reduced by the amount of any onerous lease provisions at that date, if any;
l Initial direct costs have been excluded from the measurement of the right-of-use assets at the
date of initial application;
l Hindsight has been applied in determining the lease term for contracts that contain lease extension
or termination options; and
l Right-of-use assets and lease liabilities for short term leases that have a lease term of less than
12 months have not been recognised.
As at the date of initial application, for all contracts, the Group assessed whether the contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for consideration. The Group identified 70 open
contracts at the date of initial application that are, or contain, a lease. On adoption of IFRS 16, the
Group recognised lease liabilities in relation to leases which had previously been classified as 'operating
leases' under the principles of IAS 17 'Leases'. These liabilities were measured at the present value
of the remaining lease payments, discounted using applicable discount rate as of 31 March 2019
estimated using the Group’s Incremental Borrowing Cost as a single rate for the whole portfolio, given
the similarity between all leases.. Corresponding right of use assets were recognised based on these
calculated lease liabilities.
Variable lease payments are initially measured using the index or rate when the right-of-use asset is
available for use. Turnover rents on property leases are not included in the above calculation and are
therefore recognised to the Statement of Comprehensive Income as they are incurred.
In determining the lease liability, management considered any lease extension option or break clauses
that management is reasonably certain to exercise or not to exercise. In doing so, the Group considered
all relevant factors that create an economic incentive to do so. At the date of initial application,
management was of the view that break clauses for 4 leases would not be exercised.
The lease liability is subsequently increased for a constant periodic rate of interest on the remaining
balance of the lease liability and reduced for lease payments.
Interest on the lease liability is recognised in profit or loss, and variable lease payments not included in
the measurement of the lease liability are also recognised in profit or loss in the period in which the
event or condition that triggers those payments occurs.
94
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
23
ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES (continued)
The impact on the Consolidated Balance Sheet on adoption of IFRS 16 is summarised below:
Right-of-use assets
Current trade and other receivables
Current trade and other payables
Non-current trade and other payables
Current lease liability
Non-current lease liability
Non-current deferred tax liability
As at
31 March
2019
£’000
IFRS 16
Adjustments
On adoption
£’000
–
3,597
(11,881)
(1,601)
–
–
–
––––––––––––
(9,885)
––––––––––––
––––––––––––
64,388
(1,252)
709
1,601
(4,668)
(58,715)
(191)
––––––––––––
1,872
––––––––––––
––––––––––––
Post IFRS 16
As at
1 April
2019
£’000
64,388
2,345
(11,172)
–
(4,668)
(58,715)
(191)
––––––––––––
(8,013)
––––––––––––
––––––––––––
The impact on the Group’s retained earnings reserves on adoption of IFRS 16 is summarised below:
Lease incentives previously recognised
Rent review liabilities previously recognised
Deferred tax recognition
Adjustment to reserves on adoption of IFRS 16
Reconciliation of the Group’s operating lease liabilities on transition:
Operating lease commitments at 31 March 2019
Add lease liabilities in respect of lease breaks unlikely to be taken
Additional leases identified
Less effect of discounting payments included in the operating lease commitment
Lease liability opening balance reported at 1 April 2019
Post IFRS 16
As at
1 April
2019
£’000
1,891
172
(191)
––––––––––––
1,872
––––––––––––
––––––––––––
£’000
78,274
688
1,587
(17,166)
––––––––––––
63,383
––––––––––––
––––––––––––
95
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
23
ADOPTION OF IFRS 16 ACCOUNTING STANDARD FOR LEASES (continued)
The impact on the Consolidated Statement of Comprehensive Income on adoption of IFRS 16 is
summarised below for the year ended 29 March 2020:
Year
ended
29 March
2020
£’000
(IFRS 16)
IFRS 16
Remove
rent
expense
£’000
IFRS 16
Deprec-
iation
£’000
IFRS 16
Interest
and tax
Expense
£’000
Year
ended
29 March
2020
£’000
(IAS 17)
Year
ended
31 March
2019
£’000
(IAS 17)
68,565
(40,628)
––––––––––––
27,937
–
–
––––––––––––
–
–
–
––––––––––––
–
–
–
––––––––––––
–
68,565
(40,628)
––––––––––––
27,937
63,985
(38,237)
––––––––––––
25,748
(12,743)
––––––––––––
(6,909)
––––––––––––
–
––––––––––––
–
––––––––––––
(19,652)
––––––––––––
(17,930)
––––––––––––
Revenue
Cost of sales
Gross profit
Administrative
expenses
(before
depreciation
and
amortisation)
Headline
EBITDA
Depreciation
and amortisation
Headline
operating profit
Share based
payments
Pre-opening costs
Amortisation
of brand
Exceptional
costs:
Operating profit
Finance income
Finance costs
(Loss)/profit
before taxation
Income tax
expense
15,194
(6,909)
–
–
8,285
7,818
(10,757)
––––––––––––
–
––––––––––––
6,025
––––––––––––
–
––––––––––––
(4,732)
––––––––––––
(4,323)
––––––––––––
4,437
(6,909)
6,025
(157)
(683)
(821)
–
(215)
–
–
–
–
–
–
–
–
3,553
3,495
(157)
(898)
(821)
(138)
(386)
(821)
(944)
––––––––––––
1,832
10
(2,596)
––––––––––––
–
––––––––––––
(7,124)
–
–
––––––––––––
–
––––––––––––
6,025
–
–
––––––––––––
–
––––––––––––
–
–
2,287
––––––––––––
(944)
––––––––––––
733
10
(309)
––––––––––––
(397)
––––––––––––
1,753
8
(327)
––––––––––––
(754)
(7,124)
6,025
2,287
434
1,434
(421)
––––––––––––
–
––––––––––––
–
––––––––––––
(21)
––––––––––––
(442)
––––––––––––
(714)
––––––––––––
(Loss)/profit
for the year
(1,175)
––––––––––––
––––––––––––
(7,124)
––––––––––––
––––––––––––
6,025
––––––––––––
––––––––––––
2,266
––––––––––––
––––––––––––
(8)
––––––––––––
––––––––––––
720
––––––––––––
––––––––––––
Earnings
per share
Basic
Diluted
Headline Basic
Headline Diluted
(0.2p)
(0.2p)
0.2p
0.2p
0.0p
0.0p
0.4p
0.4p
0.1p
0.1p
0.4p
0.4p
There are no committed lease liabilities not yet commenced at 29 March 2020.
96
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THE FULHAM SHORE PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 29 March 2020
24
SUBSEQUENT EVENTS
Impact of Covid-19
On 20 March 2020, the UK Government issued direct instructions to temporarily close all restaurants
to dine-in trade as part of wider efforts in the fight against Covid-19. Following the year end, costs were
reduced to a minimum and all but essential or committed capital expenditures were halted in order to
manage cash flow. To conserve further the Group's cash resources, all Directors of the Company and
certain members of the senior management team agreed to waive 20 per cent of remuneration due to
them with effect from 1 April 2020 and until such time as the majority of the Company's restaurants
were back open and trading.
Since 4 July 2020, the date from which the UK Government determined that restaurants could reopen
to serve dine-in customers if safe to do so, the Group has undertaken a gradual reopening of its
restaurants, serving customers through a combination of dine-in, takeaway, click and collect and
delivery services.
Debenhams Concessions
On 9 April 2020, Debenhams Retail Limited (formerly Debenhams Retail PLC) (“Debenhams”), with
whom the Group has concession agreements for four restaurants, appointed Administrators. The Group
has been in contact with Debenhams, its Administrators and the superior landlords of the various
locations to ensure the four restaurants were able to reopen at an appropriate time after the COVID-19
lockdown. The Group has not had full clarify on the status of the four concessions but it is expected
that three of them may have been terminated by Debenhams. Therefore for these three locations, the
associated right-of-use asset and recognised lease under IFRS 16 will be disposed when a new lease
is entered into with the superior landlord.
New banking facilities
Following the year end, on 20 August 2020 the Company completed a facility agreement for an increase
in the amount available under its debt facilities with HSBC Bank plc and the waiver of certain banking
covenants. Under the new arrangements, the term of the Company's existing £14.25 million revolving
credit facility was extended by 12 months from March 2021 to March 2022 and the Company increased
its banking facilities with HSBC to a total of £25.75 million including the existing £0.75 million overdraft
facility (from £15 million). This increase of £10.75 million is provided under the government backed
Coronavirus Large Business Interruption Loan Scheme, which has a term of three years, with
repayments due over the second and third years of the term.
Equity fundraise
On 20 August 2020, the Company raised £2,250,000 (before expenses) from the issue of 36,000,000
new ordinary shares in the Company.
97
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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
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
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
98
259801 The Fulham Shore AR pp93-end.qxp 30/10/2020 14:23 Page 99
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
25 November 2020 at 50-51 Berwick Street, London, W1F 8SJ 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 and adopt the Report of the Directors, the financial statements and the report of the auditors
for the period ended 29 March 2020.
2.
to receive and approve the Report on Directors’ Remuneration for the period ended 29 March 2020.
3.
4.
5.
6.
7.
to re-appoint Mr Martin Chapman, who retires by rotation under the Company’s Articles of Association,
as a director of the Company.
to re-appoint Mr Desmond Gunewardena, who retires by rotation under the Company’s Articles of
Association, as a director of the Company.
to re-appoint Mr Nicholas Wong, who retires by rotation under the Company’s Articles of Association,
as a director of the Company.
to re-appoint RSM UK Audit LLP as auditors of the Company to hold office from the conclusion of this
meeting until the conclusion of the next general meeting at which financial statements are laid before
the Company and to authorise the Directors to determine their remuneration.
in accordance with section 551 of the Companies Act 2006, the directors of the Company (the
“Directors”) be generally and unconditionally authorised to allot shares in the Company or grant rights
to subscribe for or convert any security into shares in the Company with the meaning of that section on
and subject to such terms as the Directors may determine up to an aggregate nominal amount of
£3,048,085 provided that this authority shall, unless renewed, varied or revoked by the Company, expire
at the conclusion of the Company’s next annual general meeting, save that the Company may, before
such expiry, make an offer or agreement which would or might require shares to be allotted and the
Directors may allot shares in pursuance of such offer or agreement notwithstanding that the authority
conferred by this resolution has expired. This resolution revokes and replaces all unexercised authorities
previously granted to the Directors to allot shares in the Company or grant rights to subscribe for or
convert any security into shares in the Company but without prejudice to any allotment of shares or
grant of rights already made, offered or agreed to be made pursuant to such authorities.
SPECIAL RESOLUTION
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 £914,425. This resolution revokes
and replaces all unexercised powers previously granted to the Directors to allot equity securities as if
section 561(1) of the Act did not apply but without prejudice to any allotment of equity securities already
made or agreed to be made pursuant to such authorities.
BY ORDER OF THE BOARD
DM Page
Chairman
1st Floor
50-51 Berwick Street
London W1F 8SJ
29 October 2020
99
259801 The Fulham Shore AR pp93-end.qxp 30/10/2020 14:23 Page 100
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. However, in light of the Covid-19
pandemic situation, unless both the COVID-19 situation and the applicable guidance and law have
changed substantially prior the date of the meeting, no shareholders, proxies or corporate
representatives will be permitted to attend the AGM in person. The Company will notify shareholders
if this position changes. Shareholders are therefore urged to appoint the Chair of the AGM, and only
the Chair, as their proxy.
2.
Investors who hold their shares through a nominee may wish to appoint a proxy, in which case they
should discuss this with their nominee or stockbroker.
3. To be effective, a form of proxy 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 November 2020 or, in the case of an adjournment,
48 hours prior to the time of the adjourned AGM (Saturdays and Public Holidays excluded).
4. 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 (London time) on 23 November 2020 or, in the case of an
adjournment, at close of business on the date which is two days before the day of the adjourned
general meeting, shall be entitled to attend and vote at the AGM in respect of such number of shares
registered in their name at that time. In each case, changes to entries in the register of members after
such time shall be disregarded in determining the rights of any person to attend or vote at the AGM.
5. Details of those Directors seeking re-election are given on page 27 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 23 to 26 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.
6. At the date of the notice of AGM, due to the restrictions imposed by Government guidance to address
the COVID-19 outbreak and to protect the health and well-being of shareholders, the Company’s
Directors, employees and advisers, the Directors have reluctantly decided that the AGM cannot follow
the usual format which enables face to face discussion in person. The Corporate Insolvency and
Governance Act 2020 (as amended), introduced as a response to the COVID-19 situation, sets out that
companies may hold closed general meetings up to 30 December 2020. Therefore, together with the
continuing potential risk of localised restrictions, the Company has taken the decision that a
conventional AGM is not practical. Unless, in the unlikely event, Shareholders are notified otherwise by
the Company prior to the date of the AGM, the AGM will be held with only the minimum number of
shareholders present as required to form a quorum under the Company’s Articles of Association and
only to conduct the formal business of the AGM. To ensure everyone’s safety, no other shareholders
or proxies or corporate representatives will be permitted entry to the AGM. Shareholders are strongly
encouraged to appoint the Chairman of the AGM as their proxy in order that the Chairman can vote
according to the shareholder’s wishes at the AGM to ensure their votes on the resolutions are counted.
Other named proxies will not be allowed to attend the AGM and therefore votes of such proxies will not
be counted at the AGM. Shareholders can vote ahead of the AGM by completing and returning a form
of proxy as described above. All resolutions for consideration at the AGM will be voted on a poll, rather
than a show of hands, and all valid proxy votes cast will count towards the poll votes. The results will
be announced via a regulatory announcement and will be posted on the Company’s website as soon
as practicable after the AGM has concluded.
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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 29 March 2020