TIDMRIC
RNS Number : 4632D
Richoux Group PLC
27 April 2017
Richoux Group plc
Final results for the 52 weeks ended 25 December 2016
Richoux Group plc, the owner and operator of 18 restaurants
under the Richoux, Dean's Diner, Villagio, and Friendly Phil's
brands, today announces its audited final results for the year
ended 25 December 2016.
Key points:
-- Turnover increased 2.2% to GBP13.32 million
(2015: GBP13.03 million).
-- Adjusted* EBITDA decreased to GBP0.20 million
(2015: GBP1.64 million).
-- Currently eighteen restaurants trading.
-- Cash of GBP3.86 million at year end
(2015: GBP4.40 million).
* excluding pre opening costs, impairment, reorganisation costs
and onerous lease provision.
This announcement contains inside information.
Enquiries:
Richoux Group plc (020) 7483 7000
Simon Morgan, Chairman
Cenkos Securities plc (020) 7397 8900
Bobbie Hilliam
Harry Pardoe
Chairman's Review
Results
Revenue for the 52 week period ended 25 December 2016 increased
2.2 per cent on the 52 week period ended 27 December 2015 to
GBP13.32 million (2015: GBP13.03 million). Adjusted EBITDA before
pre-opening costs, impairment, reorganisation costs and onerous
lease provision decreased to GBP0.20 million (2015: GBP1.64
million). Adjusted operating loss before pre-opening costs,
impairment, reorganisation costs and onerous lease provision was
GBP0.63 million (2015: profit GBP0.91 million). The net loss for
the period was GBP6.70 million (2015: profit GBP0.37 million). This
decrease largely reflects the impairment charge incurred in the
year of GBP5.04 million, up from GBP0.53 million in 2015,
reorganisation costs of GBP0.51 million, and pre-opening costs of
GBP0.10 million, down from GBP0.18 million in 2015.
The Board led by Jonathan Kaye, has undertaken a strategic
review of all restaurants and operations of the Group. As part of
this review certain restaurants have been rebranded and/or closed
which has led to the significant impairment charge and onerous
lease provision.
The Directors are not recommending the payment of a
dividend.
Operations
The Group currently has eighteen restaurants which operate under
the Richoux, Dean's Diner, Villagio, Friendly Phil's and Zintino
brands. Further details on each of the brands are set out
below.
Richoux
Richoux is an all day cafe and brasserie established in London
in 1909.
The Group currently has seven Richoux restaurants in
Knightsbridge, Mayfair, Piccadilly St John's Wood, Gloucester
Arcade, Port Solent, and Chislehurst. The Port Solent and
Chislehurst restaurants were previously Villagio restaurants, and
were converted into Richoux restaurants in February and March 2017
respectively.
Friendly Phil's
Friendly Phil's is a vintage American Diner.
The Group currently has two Friendly Phil's restaurants, in
Hempstead Valley which opened in March 2017 and Port Solent, which
opened in April 2017. These restaurants were previously Dean's
Diner restaurants.
The Group currently has three Dean's Diner restaurants; in
Chatham, Braintree and Fareham and the intention is to convert
these to Friendly Phil's restaurants in the coming months. The
Dean's Diner restaurant in Bicester was closed in November 2016 and
sold in January 2017. The Dean's Diner restaurants in Trowbridge
and Yate were closed in November 2016. The Dean's Diner restaurant
in Orpington was closed in March 2017 and the lease was surrendered
in April 2017 for a reverse premium of GBP220,000.
Italian Restaurants
The Group currently has four Villagio restaurants in Andover,
Basildon, Hammersmith, and Chatham. As noted above, the Villagio
restaurants in Chislehurst and Port Solent have been rebranded as
Richoux restaurants and the Villagio restaurant in Canterbury has
been rebranded as a Zintino restaurant. The Villagio restaurant in
High Wycombe was closed at the end of December 2016 and sold at the
end of January 2017.
The Group also has two Italian restaurants; one trading as
Zippers Bar, Restaurant and Grill in Chatham, and one trading as
Zintino in Canterbury.
Cash flow and capital expenditure
At 25 December 2016 the Group held cash of GBP3.86 million
(2015: GBP4.40 million).
Capital expenditure of GBP1.92 million was incurred in the
period.
Board Changes
In September 2016 Edward Standring resigned as a director of the
Company.
In October 2016 the Company announced its intention, subject to
shareholder approval, to appoint Jonathan Kaye, the founder and
former Chief Executive Officer of Prezzo plc, as Chief Executive
Officer of the Company. Over the previous 12 month period the
Directors had reviewed the Group's growth strategy going forward
and had concluded that the Company would benefit from new
leadership. Following shareholder approval, Jonathan Kaye became
Chief Executive Officer on 15 November 2016.
On 24 November 2016 the Company announced the appointment of
Mehdi Gashi as Executive Director. Mehdi Gashi was previously a
director of Prezzo plc. On the same date, Salvatore Diliberto moved
from an executive to a non-executive director role.
Following the end of the year, on 20 February 2017 Philip
Shotter stood down as director and Chairman of the Company and I
was appointed Chairman in his place. I would like to record the
Company's thanks to Mr Shotter for his services as Chairman of the
Company.
Team
As noted above, and in line with the Group's revised growth
strategy, during 2016 we began to reposition a number of our
restaurants by converting then to Richoux or Friendly Phil's
restaurants, as well as disposing of or closing certain other
restaurants and this process currently continues. The successful
delivery of our plans depends upon our team and I wold like to take
the opportunity to thank all of them for the continued commitment
and enthusiasm during what, for many of them, has been a period of
significant change.
Outlook
Like many restaurant groups in the casual dining sector, trading
in the first quarter of this year has been difficult. In addition,
during this period trading in some of our restaurants was
interrupted whilst we converted or refurbished them. The impact of
temporary closures will continue during the second quarter. Whilst
our new Richoux and Friendly Phil's restaurants have only been
trading for a brief period, the early signs from them are
encouraging.
The cost of converting or refurbishing restaurants and of
closing underperforming restaurants, the reduction of income due to
temporary closures and the current trading climate have led the
Board to conclude that it will need to approach shareholders for
further funds in due course. The Board has had informal discussions
with a number of the Company's key stakeholders, who have indicated
that it would be their intention to support such a fund raising. We
propose to seek the necessary authorities to allot shares in
connection with such a fundraising at our 2017 Annual General
Meeting.
Simon Morgan
Chairman
26 April 2017
Strategic Report
Business review and key performance indicators
Revenue has continued to grow and adjusted EBITDA has decreased
to GBP0.20 million (2015: GBP1.64 million). Loss after tax is
GBP6.70 million (2015: profit GBP0.37 million). This decrease
largely reflects the impairment charge incurred in the year of
GBP5.04 million, up from GBP0.53 million in 2015, reorganisation
costs of GBP0.51 million, and pre-opening costs of GBP0.10 million,
down from GBP0.18 million in 2015.
The Directors utilise a number of detailed performance
indicators to manage the business. The focus in the Income
Statement is on sales and operating profit compared to budget and
the prior year. In the Statement of Financial Position the focus is
on managing working capital.
The Directors recognise the importance of customer relations and
food quality, and the team are trained extensively in this regard.
Performance is monitored by our area managers as well as by regular
mystery diner visits and food quality audits. Restaurant managers
are bonused on a combination of achieving standards as well as
sales growth and costs control.
Principal uncertainties and risks
Economic conditions
Deterioration in consumer confidence due to future economic
conditions could have a detrimental impact on the Group in terms of
sales and footfall. This risk is mitigated by the positioning the
Group's brands in the affordable casual dining market, constantly
reviewing pricing to ensure it is competitive, and continued focus
on customers with targeted and adaptable marketing. There is also
uncertainty following the EU referendum in June 2016 and the
decision to leave the EU.
Cost inflation
The Group's key variable costs are the costs of food and labour
both of which face inflationary pressures in the medium term. The
Group monitors its food supply chain closely, regularly reviewing
food costs and implementing a variety of strategies to mitigate the
impact of price increases. The Group closely monitors labour costs
and uses a number of initiatives to control costs. There are also
labour cost pressures which are outside the control of the Group
such as the recently introduced living wage and minimum wage
increases which are suffered by both the Group and its
competitors.
Strategic risks
There are a number of inherent risks in developing new brands.
However, the Group has a strong team with a proven track record in
developing new brands.
Future development
The Group is putting expansion on hold while we work to repair
the existing estate. This involves closing and disposing of
underperforming restaurants as well as refurbishing or rebranding
others. To that end, we have closed five restaurants of which we
have already disposed of three. We have also rebranded an
additional five restaurants. In the immediate future, we intend to
concentrate on our Friendly Phil's and Richoux formats.
The motivation and engagement of the team will remain a
priority. We have so far replaced all of the multi-unit restaurant
managers in the business and introduced a team of area chefs who
continually monitor food standards across the estate. This process
of internal auditing will only be strengthened as the new brands
continue to develop.
On behalf of the Board
Jonathan Kaye
Chief Executive Officer
26 April 2017
Consolidated statement of comprehensive income
for the 52 week period ended 25 December 2016
52 week 52 week
period ended period ended
25 December 2016 27 December 2015
Notes
GBP000 GBP000
Revenue 13,320 13,027
Cost of sales:
------------------ ------------------
Excluding pre-opening costs (13,367) (11,612)
Pre-opening costs (103) (181)
------------------ ------------------
Total cost of sales (13,470) (11,793)
Gross (loss)/profit (150) 1,234
Administrative expenses (582) (506)
Other operating income 3 3
Operating (loss)/profit before impairment, reorganisation and
provisions (729) 731
Impairment of intangible assets 6 (4) (1)
Impairment of property, plant and equipment 7 (5,039) (526)
Reorganisation costs (511) -
Onerous lease provision (420) 150
Operating (loss)/profit (6,703) 354
Finance income 7 11
(Loss)/profit before taxation 3 (6,696) 365
Taxation - -
(Loss)/profit and total comprehensive (loss)/profit for the
period (6,696) 365
(Loss)/profit and total comprehensive (loss)/profit attributable
to equity holders of the
parent (6,696) 365
(Loss)/profit and total comprehensive (loss)/profit per share:
(Loss)/profit per share 4 (7.3)p 0.4p
Diluted (loss)/profit per share 4 (7.1)p 0.4p
Consolidated statement of changes in equity
For the 52 week period ended 25 December 2016
Share premium account Profit and loss account
Share capital
Total
GBP000 GBP000 GBP000 GBP000
At 28 December 2014 3,681 12,242 (7,483) 8,440
Profit for the period - - 365 365
Total comprehensive profit - - 365 365
Credit to equity for equity settled
share based payments - - 46 46
New share capital subscribed 3 7 - 10
Total contributions by owners of the
Company, recognised directly in equity 3 7 46 56
At 27 December 2015 3,684 12,249 (7,072) 8,861
Loss for the period - - (6,696) (6,696)
Total comprehensive loss - - (6,696) (6,696)
Credit to equity for equity settled
share based payments - - 32 32
New share capital subscribed 291 1,447 - 1,738
Total contributions by owners of the
Company, recognised directly in equity 291 1,447 32 1,770
At 25 December 2016 3,975 13,696 (13,736) 3,935
Consolidated statement of financial position
at 25 December 2016
Notes 2016 2015
GBP000 GBP000
Assets
Non-current assets
Goodwill 6 234 234
Other intangible assets 6 57 70
Property, plant and equipment 7 2,358 6,367
Total non-current assets 2,649 6,671
Current assets
Inventories 198 215
Trade and other receivables 927 893
Cash and cash equivalents 3,857 4,402
Total current assets 4,982 5.510
Total assets 7,631 12,181
Liabilities
Current liabilities
Trade and other payables (2,817) (2,894)
Provisions (420) -
Total current liabilities (3,237) (2,894)
Non-current liabilities
Trade and other payables (459) (426)
Total non-current liabilities (459) (426)
Total liabilities (3,696) (3,320)
Net assets 3,935 8,861
Capital and reserves
Share capital 3,975 3,684
Share premium account 13,696 12,249
Retained earnings (13,736) (7.072)
Total equity 3,935 8,861
Consolidated statement of cash flows
for the 52 week period ended 25 December 2016
Notes 52 week 52 week
period ended period ended
25 December 27 December
2016 2015
GBP000 GBP000
Operating activities
Cash generated from operations 8 6 1,767
Interest paid - -
Net cash from operating activities 6 1,767
Investing activities
Purchase of property, plant and equipment (2,271) (1,307)
Purchase of intangible fixed assets (29) (26)
Net proceeds from sale of property, plant and equipment 4 -
Interest received 7 11
Net cash used in investing activities (2,289) (1,322)
Financing activities
Proceeds from issue of ordinary shares 1,738 10
Net cash from financing activities 1,738 10
Net (decrease)/increase in cash and cash equivalents (545) 455
Cash and cash equivalents at the beginning of the period 4,402 3,947
Cash and cash equivalents at the end of the period 3,857 4,402
Notes
1. The consolidated financial statements have been prepared in
compliance with International Financial Reporting Standards
("IFRS") as adopted by the European Union. The financial statements
have been prepared on the historical cost basis.
2. The financial information set out above does not constitute
the Company's statutory accounts for the periods ended 27 December
2015 or 25 December 2016 but it is derived from those accounts.
Statutory accounts for 27 December 2015 have been delivered to the
Registrar of Companies and those for 25 December 2016 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts; their reports were
unqualified and did not contain statements under section 498(2) or
(3) of the Companies Act 2006.
3. Business segments
Based on the financial information which is monitored by the
board, which comprises the chief operating decision maker as
defined in IFRS 8, the Group has three reportable business segments
based around its core restaurant brands, Dean's Diner, Villagio and
Richoux. All brands are engaged in the restaurant trade so derive
their revenues and results from similar products and services.
There are no geographical segments and there are no major
customers.
Occasionally the Group also receives franchise income, however
this is not considered to be a significant business segment and the
Group has no control over the timing of this income. Franchise
income is reported under other operating income.
The Group sublet part of one and the whole of another of its
leased properties and receives sublease payments from third
parties.
For the 52 week period ended 25 December 2016
Dean's Diner Un-allocated
Villagio Richoux Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 3,858 4,627 4,835 - 13,320
Segment gross (loss)/profit (222) (23) 379 (284) (150)
Administrative expenses - - - (582) (582)
Other operating income - - - 3 3
Impairment of intangible assets (3) (1) - - (4)
Impairment of property, plant and equipment (2,866) (1,504) (669) - (5,039)
Reorganisation costs - - - (511) (511)
Onerous lease provision (420) - - - (420)
Finance income - - - 7 7
Loss before taxation (3,511) (1,528) (290) (1,367) (6,696)
Non current assets as at 27 December 2015
Additions 2,638 2,319 1,640 74 6,671
Transfers 933 865 85 35 1,918
Depreciation and amortisation (318) (305) (175) (32) (830)
Impairment of intangible assets (3) (1) - - (4)
Impairment of property, plant and equipment (2,866) (1,504) (669) - (5,039)
Disposals (46) (9) (8) (4) (67)
Non current assets as at 25 December 2016 338 1,365 873 73 2,649
The unallocated segment loss includes the costs of the
restaurant area management; unallocated administrative expenses
include the costs of the Group's head office.
4. Earnings per share
The calculation of the basic and diluted (loss)/profit per share
is based on the following data:
25 December 2016 27 December 2015
GBP000 GBP000
(Loss)/profit
(Loss)/profit for the purposes of basic (loss)/profit per share being the net
(loss)/profit
attributable to equity holders of the parent (6,696) 365
Number of shares
Weighted average number of ordinary shares for the purposes of the basic profit
per share 92,356,891 92,037,661
Effect of dilutive potential ordinary shares:
Share options and incentive shares 1,883,224 2,042,134
Weighted average number of ordinary shares for the purposes of diluted profit
per share 94,240,115 94,079,795
Share options and incentive shares not included in the diluted calculations as
per the requirements
of IAS 33 (as they are anti-dilutive) 26,053,182 3,416,869
Basic (loss)/profit per share:
From total operations (7.3)p 0.4p
Diluted (loss)/profit per share:
From total operations (7.1)p 0.4p
5. No dividend is proposed.
6. Intangible fixed assets
Goodwill Trademarks Software Total
GBP000 GBP000 GBP000 GBP000
Cost
At 27 December 2015 269 24 170 463
Additions - 1 28 29
Disposals - - (51) (51)
At 25 December 2016 269 25 147 441
Accumulated amortisation and impairment
At 27 December 2015 35 10 114 159
Charge for the period - 2 19 21
Impairment - - 4 4
Disposal - - (34) (34)
At 25 December 2016 35 12 103 150
Carrying amount
At 25 December 2016 234 13 44 291
At 27 December 2015 234 14 56 304
Impairment testing of goodwill and intangible fixed assets
Goodwill of GBP269,000 (2015: GBP269,000) relates to the
acquisition of Richoux Limited in August 2000 and is allocated to
the group of cash generating units (CGUs) that comprise the
business acquired with each restaurant site being treated as a
single CGU.
The Group tests annually for impairment or more frequently if
there are indications that the goodwill and intangible assets may
be impaired. The recoverable amounts of the restaurants are
calculated from value in use calculations based on cash flow
projections from formally approved budgets to December 2017, and
forecasts to December 2021 based on a sales growth rate of 2 per
cent for established sites. The discount rate applied to cash flow
projections is 10 per cent (2015: 10 per cent).
An impairment charge of GBP4,000 has been recognised; GBP3,000
in relation to the unrecoverable elements of the assets of six
Dean's Diner restaurants and GBP1,000 in relation to the
unrecoverable elements of the assets of three Villagio restaurants
(2015: GBP1,000 was recognised in relation to the unrecoverable
elements of the assets of one Villagio restaurant). The value in
use of the remaining restaurants is higher than the carrying
value.
7. Property, plant and equipment
Short leasehold land and buildings Fixtures, fittings and equipment
Total
GBP000 GBP000 GBP000
Cost
At 27 December 2015 8,665 3,743 12,408
Additions 1,233 656 1,889
Disposals (40) (94) (134)
At 25 December 2016 9,858 4,305 14,163
Accumulated depreciation and impairment
At 27 December 2015 3,791 2,250 6,041
Charge for period 345 464 809
Impairment 3,762 1,277 5,039
Disposals (2) (82) (84)
At 25 December 2016 7,896 3,909 11,805
Carrying amount
At 25 December 2016 1,962 396 2,358
At 27 December 2015 4,874 1,493 6,367
Impairment testing of property, plant and equipment
The Group considers each trading restaurant to be a
cash-generating unit (CGU) and each CGU is reviewed when there are
indications of impairment.
The recoverable amounts of the restaurants are calculated from
value in use calculations based on cash flow projections from
formally approved budgets to December 2017, and forecasts to
December 2021 based on a sales growth rate of 2 per cent for
established sites. The discount rate applied to cash flow
projections is 10 per cent (2015: 10 per cent).
An impairment charge of GBP5,039,000 has been recognised;
GBP2,866,000 in relation to the unrecoverable elements of the
assets of nine Dean's Diners restaurants, GBP1,504,000 in relation
to the unrecoverable elements of the assets of five Villagio
restaurants and GBP669,000 in relation to the unrecoverable
elements of the assets of one Richoux restaurant (2015: GBP526,000
was recognised GBP257,000 in relation to the unrecoverable elements
of the assets of two Dean's Diner restaurants, and GBP269,000 in
relation to the unrecoverable elements of the assets of two
Villagio restaurants). The value in use of the remaining
restaurants is higher than the carrying value.
The Board has conducted a sensitivity analysis taking into
consideration the impact on impairment test assumptions where there
is a decrease of 10% on the forecast cash flows. The sensitivity
analysis shows that an additional impairment charge of GBP144,000
(2015: GBP235,000) would result from this scenario.
8. Reconciliation of operating profit to operating cash flows
52 week 52 week
period ended period ended
25 December 27 December
2016 2015
GBP000 GBP000
Operating (loss)/profit (6,703) 354
Loss on disposal of intangible assets 17 5
Loss on disposal of property, plant and equipment 46 18
Depreciation charge 809 707
Amortisation charge 21 22
Impairment of intangible fixed assets 4 1
Impairment of property, plant and equipment 5,039 526
Decrease/(increase) in stocks 17 (17)
Increase in debtors (34) (162)
Increase in creditors 758 267
Equity settled share based payments 32 46
Net cash inflow from operating activities 6 1,767
9. Post balance sheet events
On 9 January 2017 the Group disposed of its Dean's Diner
restaurant in Bicester for GBP50,000 (before costs) to Tasty plc, a
Company in which Adam Kaye and Samuel Kaye, Jonathan Kaye's cousins
are directors. On 31 January 2017 the Group disposed of its
Villagio restaurant in High Wycombe for GBP50,000 (before costs).
On 13 April 2017 the Group surrendered the lease for its Dean's
Diner restaurant in Orpington for a reverse premium of GBP220,000
(before costs).
10. Related party transactions
During the period the Group paid professional fees for legal
services of GBP29,000 (2015: GBP45,000) to Glovers Solicitors LLP
of which Philip Shotter is a member. As at the end of the period
GBPnil (2014: GBP5,000) was outstanding. This is in addition to
fees included as Directors' emoluments.
The Group has a group VAT registration and the representative
Company, Richoux Group plc, pays the net VAT for the Group.
The Group has a group insurance policy which is paid by Richoux
Group plc.
Transactions with Directors
Directors' emoluments
2016 GBP2015
GBP000 GBP000
Short term employee benefits 293 280
Share based payments 17 25
310 305
During the period Salvatore Diliberto subscribed for 1,054,394
ordinary shares (2015: nil), the Hon. Robert Rayne subscribed for
1,054,394 ordinary shares (2015: nil), Jonathan Kaye subscribed for
1,354,395 ordinary shares (2015: nil) and Mehdi Gashi subscribed
for 400,000 ordinary shares (2015: nil) as part of the subscription
that took place during the period. The price paid per share was 25
pence.
Transactions with substantial shareholders
During the period Phillip Kaye subscribed for 451,465 ordinary
shares (2015: nil), Samuel Kaye subscribed for 451,465 ordinary
shares (2015: nil), Adam Kaye subscribed for 451,465 ordinary
shares (2015: nil), and Michinoko Limited subscribed for 1,054,394
ordinary shares (2015: nil) as part of the subscription that took
place during the period. The price paid per share was 25 pence.
11. Report and accounts
Copies of the annual report and accounts will be posted to the
shareholders shortly and will be available at
www.richouxgroup.co.uk.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
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