TIDMMEX
RNS Number : 8743H
Tortilla Mexican Grill PLC
11 April 2022
11 April 2022
Tortilla Mexican Grill plc
("Tortilla", the "Group" or the "Company")
Audited Annual Results for the 52 week period ended 2 January
2022
Publication of Annual Report & Accounts and Notice of Annual
General Meeting
Tortilla wraps up first year with record results
Tortilla Mexican Grill plc ("Tortilla"), the largest and most
successful fast-casual Mexican restaurant group in the UK, is
pleased to announce its Annual Results for the financial period
ended 2 January 2022 ("the Period").
Financial highlights
-- Transformational year: revenues increased 79.5 percent to a
record GBP48.1m (2020: GBP26.8m, 2019: GBP35.4m)
-- Achieved in spite of Covid-19 related site closures and
restrictions, and due to strong performance
across the existing estate and addition of new sites
-- Like-for-like (LFL) revenue increased 23.8% compared with 2019
-- Adjusted EBITDA (pre-IFRS 16) increased 262.5% to GBP8.7m (2020: GBP2.4m, 2019: GBP2.5m)
-- Strong balance sheet, with net cash of GBP6.7m at the period
end, supports ability to self-fund roll out plans
Operational highlights
-- Continued progress in the delivery of accelerated UK
restaurant roll out, with seven new sites added to the estate
during the Period, bringing the total number of sites at the period
end to 64
o Three company-run sites opened in Edinburgh, Windsor and
Exeter
o Three new delivery kitchens opened, supporting fast-growing
delivery proposition (bringing the total to five at the period
end)
o Launch of new partnership with Merlin Entertainments to open
at Chessington World of Adventures
-- Expansion of existing partnership with SSP to open two
further sites at Gatwick Airport and Leeds Skelton Services
Current trading & outlook
-- Strong trading momentum delivered in the Period has continued
into 2022, with LFL growth of 20.1% year to date, in line with
expectations
-- One new site opened in Q1 2022, one in April and at least
seven further site openings planned, underpinning the Board's
confidence in delivering the Group's target of 45 openings by the
end of 2026
-- Successful launch of franchise partnership with Compass Group
PLC - four locations now trading with plans to open at least 10
more over the next five years
-- Well-positioned to navigate macroeconomic pressures,
supported by strong brand, value-for-money proposition and flexible
operating model
-- Very strong platform for continued growth and strategic progress
Richard Morris, Chief Executive Officer of Tortilla,
commented:
"Capping off a transformational year for Tortilla, we are very
pleased to announce a record financial performance for the Group's
maiden Annual Results following its successful IPO in October
2021.
"During the year we made excellent progress in delivery of our
long-term growth strategy. We opened further sites in line with our
UK roll out plans, expanded our delivery kitchen estate to fulfil
growing customer demand, and both extended and launched franchise
partnerships which introduced the Tortilla brand to even more
customers across the UK. I would like to take this opportunity to
thank our teams both in the UK and internationally for their
commitment and hard work during the year.
"This strong financial and operational momentum has continued
into 2022 and underpinned by our flexible model, value-for-money
offer and clear long-term growth strategy, we are very excited to
capitalise on the growth opportunities presented by the
post-pandemic landscape. We remain confident of delivering our
exciting plans for Tortilla to the benefit of all
stakeholders."
Publication of Annual Report & Accounts and Notice of Annual
General Meeting
Tortilla Mexican Grill plc will publish later today its annual
report and accounts for the financial year ended 2 January 2022
(the "Annual Report"), including the Notice of Annual General
Meeting. These documents shall be available today on the Company's
website.
The Company's Annual General Meeting will be held on 15 June
2022 at 9:30am at the offices of Liberum Capital Limited, 25
Ropemaker Street, London, EC2Y 9LY.
ENQUIRIES
Tortilla Mexican Grill PLC Via Hudson Sandler
Emma Woods, Non-Executive Chair
Richard Morris, CEO
Andy Naylor, CFO
Liberum Capital Limited (Nominated Adviser, Tel: 020 3100 2222
Sole Broker)
Andrew Godber
Edward Thomas
Christopher Whitaker
Nikhil Varghese
Hudson Sandler (Public Relations) Tel: 020 7796 4133
Alex Brennan tortilla@hudsonsandler.com
Wendy Baker
Lucy Wollam
Charlotte Cobb
For further information , visit tortillagroup.co.uk
NOTES TO EDITORS
About Tortilla Mexican Grill plc
Tortilla is the largest and most successful fast-casual Mexican
restaurant group in the UK specialising in the sale of freshly made
Californian-inspired Mexican cuisine. The Group had 68 sites
worldwide as of 31 March 2022, comprising 52 sites in the UK
operated by the Group, three sites franchised to SSP Group in the
UK, four sites franchised to Compass Group UK & Ireland and
nine franchised sites in the Middle East.
The Group was founded in 2007 by Brandon Stephens, originally
from California who, upon his arrival in London in 2003, found it
difficult to satisfy his desire for quality burritos and tacos. As
a result, Brandon established Tortilla with a mission of offering
customers freshly prepared, customisable, and authentic
Californian-inspired Mexican food.
The brand is synonymous with an energetic, vibrant culture, and
with providing a great value-for-money proposition. It embraces
fast-growing sector trends (including eating out, healthy eating,
provenance, ethnic cuisine, delivery) across a variety of
locations, through a differentiated product offering which is
popular with a broad customer base, and a clearly defined
multi-channel marketing strategy. It benefits from flexible site
locations and formats, and a scalable central infrastructure.
CHAIR'S STATEMENT
I am delighted to be writing to you after six months of Tortilla
being a public company, through which time we have continued to
trade strongly.
Looking back at 2021, it was a year, like 2020, where the Group
showed its versatility and ability to be flexible during the
pandemic. It began with three months of national lockdown as the
country dealt with the new Delta variant. It then ended with the
arrival of yet another variant, Omicron, resulting in government
instructions to work from home and to think strongly about
socialising, which naturally suppressed eating out in the run up to
Christmas.
Covid-19 paradoxically became an opportunity for Tortilla. We
knew we had a strong delivery product and during the lockdown
periods we introduced the brand to new customers via delivery,
which in turn then saw them return to eat in our stores when we
were allowed to open fully.
Managing the stop-start nature of last year was also a test for
the ambition and resilience of the Tortilla Management team, a test
they passed with flying colours. The fact that, on top of this,
they also successfully managed the significant work of a listing
process (arriving on the Alternative Investment Market ("AIM") in
early October) is testament to the quality and ambition of the
Executive Directors Richard Morris, our CEO, and Andy Naylor, our
CFO. I have enjoyed getting to know them, and understanding this
great business better, over the last six months.
The Tortilla investment case - from 50 to 200, and creating a
national brand
The Tortilla brand was conceived by Brandon Stephens in 2007
when he arrived in London to study and struggled to find anywhere
to eat the freshly made burritos he ate when growing up in the
Mission District in San Francisco. At the time that he founded the
business, the UK consumer was a bit sceptical about the quality of
Mexican food and needed educating.
Fifteen years later we have a proven model, operating across 64
sites, and customers are increasingly favouring our food-type and
brand. We always have queues when opening new restaurants which
highlights the wide appeal of our offer. The current property
market is giving us access to a very strong pipeline of new sites
and we are confident of opening at least 45 locations over the next
five years.
The product is still made fresh and our central production
kitchen allows us to ensure the quality and consistency of sauces
and recipes. Given how well the product travels on delivery (not
all restaurant food does) this is now a major and growing sales
channel within the business. To date we have opened five
delivery-only kitchens and plan to open circa three to four more
per year going forward.
Finally, the business was early to test franchising, with ten
sites established across the Middle East in the United Arab
Emirates and Saudi Arabia, through a partnership with Eathos.
Tortilla has gained confidence in its franchising systems and has
extended its franchisee partners to SSP and then Compass, in the
UK. This ability to franchise clearly gives us further growth
opportunities in unchartered locations to supplement our own
expansion.
For me, as chair, what excites me about Tortilla is the headroom
for growth - with clear customer white space and the proven
flexibility of how the Tortilla brand can present itself to
customers.
Our new Board of Directors
Prior to the IPO, the Board benefitted from the experience of
Paul Campbell and Aarish Patel, both industry veterans and Tortilla
fans. I would like to thank them for all the advice they have given
me in taking the reins. However, I am very pleased to say that the
Board retains the institutional memory of the past and has both
Brandon Stephens, the founder, still playing an active role as
Founder Director and Loeïz Lagadec, a Quilvest partner, as Board
members. In terms of new experience, alongside myself (former CEO
of Wagamama) we are delighted to have Laurence Keen, CFO of
Hollywood Bowl plc; Laurence was part of the management team that
floated Hollywood Bowl over five years ago and, along with his
experience in the hospitality sector, has some invaluable insights
as we mature as a public company.
Challenges ahead
I anticipate you will have read about the set of challenges
facing our sector: from energy and cost of goods inflation to
labour shortages. Tortilla will not be immune to these, no business
will. However, I want to assure you that the calibre of the
Management team as well as the operational simplicity and
flexibility of the offer, mean that we are much better placed than
many to navigate these. We also suspect the ongoing economic
conditions will see customers turn to brands they trust which are
also great value for money, which should play into our Tortilla
sweet spot.
I expect 2022 to be an immensely exciting year in the evolution
of the business and the brand, with opportunities outweighing the
challenges. Expansion prospects arising from the favourable
property market alongside our partnerships with SSP and Compass,
provide a fantastic opportunity to take this business to the next
level.
Emma Woods
Chair
11 April 2022
CHIEF EXECUTIVE OFFICER'S STATEMENT
2021 was a year of great achievements for Tortilla, during which
we delivered record sales and profits, significant strategic
progress and celebrated the exciting milestone of becoming a public
company, which we believe will support our ability to further
capitalise on significant long-term growth opportunities in the
post-Covid-19 casual dining landscape.
The business has shown itself to be extraordinarily well
positioned throughout the pandemic. The Tortilla product
proposition is well-suited to the growing delivery market, and we
have proven the brand's flexibility to operate across a range of
locations and formats, including smaller sites and delivery-only
kitchens. As we continue to navigate Covid-19 and the current
inflationary context, I remain incredibly proud of the way Tortilla
has risen to the challenge. Our strong performance during this time
showcases the true value of the Group's flexibility, and our
ability to adapt, and indeed thrive, in difficult
circumstances.
In addition to delivering strong revenue growth of nearly 80%,
we were pleased to achieve progress on several strategic
objectives, including the launch and development of various
partnerships, and growing our estate of delivery kitchens and
traditional bricks and mortar locations.
Responding to Covid-19
Tortilla's success over the pandemic has been rooted in our
business model. By adjusting our operations several times during
this period, we were able to maximise sales across eat-in, takeaway
and delivery channels, resulting in only minimal temporary closures
- in great contrast to the numerous permanent closures across the
industry. Through our re-opening strategy, which optimised
locations in residential areas, we were able to flex according to
the changing trends, meeting new demand from those working from
home and turning this circumstance to our benefit.
Aware of the importance of consistent engagement with our
customers, we maintained our public presence through social media,
mirroring our customers' increased online activity and ensuring our
brand remained relevant and appealing. Equally critical was our
relationship with our employees. To counteract the uncertain
climate, we ensured regular communication and updates to support
and retain our team - crucial during the current staff shortages in
hospitality.
Alongside the wider hospitality industry and many other sectors,
the Group received financial government support which enabled us to
protect our financial position and avoid redundancies. However,
while many businesses restructured using company voluntary
arrangements ("CVAs") and other methods, Tortilla engaged in active
negotiations with landlords, maintaining our positive relationships
on a fair basis as the UK economy recovers.
Opportunities ahead
As we move forward, we're excited to capitalise on growth
opportunities the post-pandemic landscape presents. As rent levels
rebalance, we are accelerating our UK strategy, building on the
success of delivery-only kitchens and targeting further franchising
and licencing opportunities across a variety of venues looking to
add high street brands to their offer.
Our strategy comprises the following key growth pillars, against
each of which I am delighted to report that we delivered strong
progress during 2021:
UK roll-out
The primary objective of the Group's growth strategy is to
accelerate its UK presence, with 45 new sites targeted in the UK in
the next five years. We continue to believe that, due to the
Covid-19 pandemic and the consequent negative impact on the wider
hospitality industry and commercial property market, an exceptional
opportunity exists for the Group to secure favourable rental rates
and incentive packages and that the Group is well positioned to
capitalise on this.
In 2021, we opened three "bricks and mortar" stores (Edinburgh,
Windsor and Exeter) and we remain confident of opening ten sites in
2022 given our openings so far this year and upcoming pipeline.
Over the coming years we intend to expand further, seeking
opportunities of increased availability of former retail units and
lower post-pandemic rents.
Franchising and partnerships
To support our site expansion, we see exciting opportunities to
enter into franchise agreements that offer capital-light growth
opportunities into new areas for the brand. During 2021 we launched
a partnership with Merlin Entertainments to open at Chessington
World of Adventures, and we opened two further sites in partnership
with SSP at Gatwick Airport and Leeds Skelton Lakes motorway
services, taking our total number of sites with SSP to three.
We also commenced a trial with Compass to franchise the Tortilla
brand in higher education UK campuses and, as of the end of
February 2022, there are four locations trading (Brunel, Swansea,
Middlesex and Sussex). This is part of a partnership expected to
yield a further ten locations over a five-year period.
These additional partnerships, on top of our own store rollout,
are possible due to our flexible business model. The simplicity of
the fresh food and our simple kitchen setup enable the brand to
explore alternative locations which are out of reach of many of our
competitors.
Delivery-only kitchens
Tortilla's product proposition has been proven to be highly
suitable for home delivery. As well as leveraging our growing site
portfolio, we see an exciting opportunity to open selective
delivery-only kitchens. These enable us to extend the reach of our
delivery service, as well as enabling us to introduce the Tortilla
brand to new customers ahead of potentially opening a restaurant in
a new area.
During the year we opened three such kitchens (Balham,
Manchester and Brent Cross), taking the total to five and see the
opportunity to open a further three to four sites per year over the
medium term.
International
Tortilla is already the largest fast-casual Mexican chain in the
UK and Europe. With the popularity of burritos and tacos growing
worldwide with successful chains across Europe, Asia, the Middle
East and Australia, there is an opportunity for the Group to
establish a broader presence internationally. The Group is
exploring the opportunity to expand into Europe in the mid-term.
During the year, the Group successfully traded from 10 sites
operated in the Middle East by Eathos Ltd, as franchisees.
People, values, and culture
Past, present and future - Tortilla's people, values and culture
are the foundation of our success. By hiring the best people at all
levels, we maintain an inclusive culture where values such as
kindness, humility and integrity are of equal importance as
education, experience and skills.
We continue to embrace and encourage diversity throughout our
recruitment practice, and our workforce is now 48 percent
non-British national, with more than half management roles carried
out by women. With under 25-year-olds forming more than 50 percent
of our workforce, we believe in nurturing young talent through
training, career development and ongoing support of government
initiatives to help young people into work. Indeed, all staff
benefit from clear development plans including Manager in Training
programmes, accredited qualifications, industry specific
apprenticeships and online training, and we continue working to
fill at least half of our management roles with internal
candidates.
We understand that motivated and inspired staff do the best work
and have continued innovating to ensure our workforce is supported
and engaged. We encourage work-life balance for all our employees,
pay competitive salaries with hourly rates above the national
minimum and living wage thresholds, and promote health and
wellbeing through our free employee assistance programme. As well
as regular staff socials and recognition through awards, teams are
incentivised for outstanding sales performance and service. One
such incentive includes a team day out for the restaurant team with
the best customer feedback, for which our Head Office run the
restaurant for the day - quite a challenge for us...!
Our annual assessment of staff engagement gathers insight both
in-store and at our head office, and this year suggested that our
teams were happy with the way the company communicated and handled
the pandemic, leading to an overall score of 90 percent
satisfaction.
Moving forward
As we write this, the global economic and political situation
remains difficult, which will test us all, but we also know that
Tortilla is a resilient, dynamic enterprise, and generally in a
better place than most of our competitors to deal with economic
downturns. This report details the strategy and results achieved
against the odds and presents the Tortilla Group as a leading light
in the future of the hospitality sector.
We're very excited to capitalise on growth opportunities the
post-pandemic landscape presents. As rent levels rebalance, we are
accelerating our UK strategy, building on the success of
delivery-only kitchens and targeting further franchising and
licencing opportunities across a variety of venues.
Richard Morris
Chief Executive Officer
11 April 2022
KEY STRENGTHS
Through continuous innovation, we work hard to maintain high
standards in all aspects of business. Over the past few years, the
following elements have proven areas of particular strength.
Our products
Tortilla has developed a great reputation for its freshly
prepared, customisable, value-for-money product range of burritos,
tacos and salads. This has enabled us to appeal to a wide
demographic, maintaining our loyal customer base and generating
further customers as we grow. Our defining characteristics also
align with forecasted consumer trends and preferences, providing a
positive outlook for the future.
By offering great value-for-money, we have successfully expanded
operations across the UK, and are able to charge a minor delivery
premium (to address delivery commission costs) while remaining
highly competitive.
Embracing sector trends
The Tortilla Group observes and embraces key consumer trends,
flexing our products, services and formats to capitalise on growing
demand and maintain relevance in a rapidly changing market. Our
offering thus adheres to the dominant demands driving our sector,
which include:
-- Healthy eating - packed with rice, beans, vegetables and
plant-based options, our menu suits those seeking healthy
fast-casual food
-- Fresh and high provenance - our freshly prepared food is from
high quality, responsible sources communicated with full
transparency to the consumer
-- Convenience - Tortilla food is available in-store, via
takeaway or delivery, ensuring maximum options for optimum
convenience, and reaching more customers than ever before via our
widespread delivery-only kitchens
-- Customisation - a wide range of options enable customers to
tailor their Tortilla meal to their preferences and dietary
requirements
-- Ethnic food - Tortilla's authentic Mexican style food caters
to consumers' growing interest in ethnic food
Flexible business model
Much of the Group's success, during the pandemic and beyond, can
be attributed to our ability to adapt, flexing our business model
quickly and effectively to suit circumstances and locations.
Our flexibility is driven by three key factors of our business
model:
-- Trading strength over eat-in, takeaway and delivery channels
-- Ability to trade in small units and without extraction
-- Value-for-money offering that appeals to diverse customers
including students, local residents and office workers
In contrast to similar fast-casual restaurant businesses,
Tortilla has achieved significant geographical spread throughout
the UK - in terms of both presence and sales. Almost half our
estate and five of our top ten selling stores are located outside
of London, covering a wide range of sites including shopping
centres, high streets, residential areas, theme parks,
delivery-only kitchens and transport hubs. We are adept at scouting
and identifying the best format for new locations.
Moreover, our scalable central infrastructure, currently a 5,500
square foot Central Production Unit ("CPU") in Tottenham Hale,
provides cost advantages over our direct competitors, the
flexibility to increase its size in tandem with our growth strategy
and the assurance that product quality remains consistent across
all sites.
Marketing strategy
Through our clearly defined multi-channel marketing strategy,
the Group has built and maintained a loyal and diverse customer
base.
Our national campaigns run throughout the year with special
promotions for seasonal products and recipes across print, online
and social media, alongside targeted regional marketing for new
site launches.
With a large proportion of customers in the younger age
demographic (aged 16-34), we achieve significant engagement via
social media and our vast influencer network who drive widespread
engagement across the most popular social media platforms. Last
year saw the launch of our Tik Tok channel, sharing bite-size
videos reaching millions of views.
Strong leadership
Tortilla's senior Management team continues to excel in its
ability to deliver strong and sustainable growth. Under the
stewardship of an experienced Board of Directors, our team has
continued to execute Tortilla's growth strategy effectively, taking
full advantages of opportunities as they arose and conducting all
activity with kindness, integrity and ownership.
We focus on hiring the best people at all levels and work hard
to propagate our strong culture and values throughout the
organisation.
Our Board and senior Management team regularly visit stores and
speak with teams and guests to ensure a strong connection between
corporate objectives and on-the-ground practice.
Cost effective hiring model
The simplicity of Tortilla food means that recipes and methods
are straightforward, and managers can train those with limited
experience to high levels of competency within a short time period.
We can therefore focus on hiring those with the values and
behaviour we seek, enabling us to maintain our culture and avoid
the negative impact of the UK's chef shortage.
This also helps us to hire from within our stores' local
communities, reducing travel time and cost for employees. All
stores strive to get to know their customers on first name terms as
part of the 'Raving Fans' initiative, and by creating this
'independent' feel to each restaurant, we gain a further
competitive advantage.
Property portfolio and strategy
At the end of 2021, the Group had 64 sites worldwide: 51 UK
sites we operate ourselves, three UK sites franchised to SSP, and
ten franchised sites in the Middle East. The Group's property
portfolio is entirely leasehold.
Within the UK, the Group's portfolio of sites is well
diversified with respect to locations, with 29 sites within the M25
area and 22 sites outside of it. Five of Tortilla's top ten stores
(by profit) are located outside of the M25. As customers of
fast-casual operators tend to be primarily impulsive purchasers (65
percent of our customers visit on impulse), sourcing locations with
high footfall is a critical part of boosting brand awareness and
generating sales.
Tortilla's property portfolio
The Group's success is driven by our proven property strategy
with flexibility across site locations and formats. We generally
target locations ranging from 60 square metres to 200 square
metres, with the exception of our delivery-only kitchen sites,
which operate in typically 25-35 square metre sites. The estimated
capital expenditure per site (excluding delivery-only kitchens)
ranges from GBP250,000 to GBP425,000 depending on the size of the
unit, site condition and store front requirements.
The Group aims for a 35 percent minimum target investment hurdle
for its return on capital employed. Our sites are primarily located
in high street areas, residential locations, shopping centres and
transport hubs as these high footfall locations provide seven-day
trade with lunch and dinner availability, helping the brand appeal
to a wider range of consumers and trade throughout the day.
New sites
New sites have historically been a core driver of Tortilla's
development. Tortilla opened eight sites in 2014, and five/six
sites per year in 2015, 2016 and 2019, but slowed this rollout in
2017 and 2018 as rents did not provide the necessary value at that
time. Understandably, site openings slowed in 2020 but we
accelerated our pipeline by opening seven sites in 2021 (four
bricks and mortar and three delivery kitchens) along with two new
SSP franchise units.
New sites will continue to play a key role in our targeted
growth trajectory. Tortilla has a specialised property team that
supports our growth with a rigorous new site process including site
selection, assessment, contract negotiation and fitting. By opening
new sites on a regular basis, we have a well-established, reliable
infrastructure in place to manage the roll-out as required. We also
have a dedicated operations team that relocates to new sites to
ensure that new staff are adequately trained and are supervised
appropriately before they manage the site themselves.
As the number of sites within the Group's portfolio increases,
Tortilla will benefit from an expanding base of senior employees
familiar with these processes, and a larger regional management
infrastructure to support new site openings. The Group aims to open
a further 45 sites in the next five years including traditional
sites, delivery-only kitchens and smaller sites which focus more on
delivery/takeaway. In 2019 a Deloitte Whitespace Report confirmed
over 120 additional UK sites met the Group's ideal location
criteria.
CHIEF FINANCIAL OFFICER'S REVIEW
Group financial KPI summary
2021 2020 Change
--------- ---------- ------------
Revenue GBP48.1m GBP26.8m + 79.5%
Gross profit margin 79.6% 77.4% + 2.2% pts
Administrative expenses GBP36.5m GBP24.7m + 47.8%
Net profit/(loss) after tax GBP1.4m (GBP1.7m) + 182.4%
Cash generated from operations GBP11.7m GBP4.2m + 178.6%
Alternative performance measures ("APMs")
LFL revenue growth (vs 2019)(1) 23.8% 0.0% + 23.8% pts
Adjusted
EBITDA
(pre
-IFRS +
16)(2) GBP8.7m GBP2.4m 262.5%
Net
cash/(debt) +
(pre-IFRS-16)(3) GBP6.7m (GBP2.3m) 391.3%
--------- ---------- ------------
(1) defined as the percentage change in like-for-like sales
compared to 2019 and so it excludes periods of non-trading
(2) defined as statutory operating profit before interest, tax,
depreciation and amortisation (before application of IFRS 16 and
excluding exceptional costs) and reflects the underlying trade of
the Group. The reconciliation to profit from operations is set out
below in this section of the report.
(3) defined as cash and cash equivalents less gross debt.
Calculated on a pre-IFRS 16 basis and so does not include lease
liabilities.
Last year was transformational for the Group, with record
profits and a successful admission to AIM on Friday 8(th) October.
To say we are pleased with our year, considering the backdrop of
the pandemic, would be an understatement and we remain excited
about our future.
Revenues
Much like the prior year, 2021 was defined by the pandemic with
revenues in Q1 2021 particularly impacted by the lockdowns imposed
by the UK Government. Despite this challenge, revenue increased to
GBP48.1m which represents an increase of 79.5 percent compared to
2020. This was achieved through strong performance of the existing
estate and the addition of seven new restaurants (three of which
were delivery-only kitchens). The existing estate performed very
strongly, achieving LFL sales growth of 23.8 percent compared to
the pre-pandemic levels of 2019 (excluding Q1, this LFL sales
growth increases to 30.3 percent).
In 2021, 285 trading weeks (11% of the total possible) were lost
across the estate due to store closures arising because of the
pandemic. We remain optimistic that the trading conditions in 2022
will be better due to the easing of restrictions and improved
immunity from the pandemic.
The Group performs well across all store formats and throughout
the UK. Incredibly, in spite of the challenges the pandemic
presented us with, 73 percent of stores achieved a record sales
week in 2021 and the profitability levels inside and outside of the
M25 remain comparable (average Store Adjusted EBITDA of GBP350k and
GBP300k respectively). This provides us with confidence over the
ability of the Group to continue the rollout to all corners of the
UK.
Gross profit margin
The Group achieved a record gross profit margin in 2021 of 79.6
percent (2020: 77.4 percent). This increase was driven by several
factors:
(1) an increased proportion of sales via the delivery channel
(delivered products are charged at a slightly higher price to cover
commission costs and these are reported as administrative
expenses);
(2) effective pricing negotiations with suppliers;
(3) improved efficiency at a store level to minimise waste and other losses; and
(4) the benefit of a reduction rate of VAT on some of the
Group's products (reduced from 20 percent to 5 percent until 30
September 2021 and then 12.5 percent for the remainder of the
year).
Administrative expenses
Under application of IFRS 16, administrative expenses exclude
property rents (except for turnover rent) but incorporate the
depreciation of right-of-use assets however in both 2020 and 2021,
these two factors largely offset.
Administrative costs increased by 47.8 percent year-on-year to
GBP36.5m with this being driven by the increased level of trade in
2021 as the restaurants were closed for a longer period during 2020
than 2021. In both years, the Group utilised the available
government support during periods of closure via the Coronavirus
Job Retention Scheme ("CJRS").
Administrative expenses also incorporate exceptional items which
increased to GBP1.9m in 2021 (2020: 0.3m). The GBP1.6m increase is
attributable to costs incurred for the Group's IPO with a further
GBP0.5m of IPO cost incurred relating to the issuing of new shares
(recorded as a deduction in share premium). This apportionment
between exceptional items and share premium has been undertaken in
accordance with IAS 32.
As a percentage of revenue, administrative expenses decreased
from 92.2 percent (2020) to 75.9 percent (2021) due to the improved
nature of trading in 2021 as a substantial portion of the Group's
property costs are fixed in nature.
Adjusted EBITDA (pre-IFRS 16)
The Group utilises Adjusted EBITDA (pre-IFRS 16) as the primary
assessment metric of profitability. A reconciliation of this
measure compared to profit from operations is below.
52 weeks 53 weeks ended
ended
2 January 3 January
2022 2021
GBP GBP
------------ ---------------
Profit/(loss) from operations 3,634,155 (469,275)
------------ ---------------
Pre-opening costs 126,753 78,778
Share option expense 90,507 -
Depreciation and amortisation 6,255,038 5,796,178
Exceptional items 1,856,268 272,182
Non-trading costs 244,639 60,100
IFRS 16 adjustment (3,466,784) (3,376,630)
Adjusted EBITDA (pre-IFRS 16) 8,740,576 2,361,333
------------ ---------------
The Group generated GBP8.7m of Adjusted EBITDA (pre-IFRS 16), an
improvement of GBP6.3m compared to 2020. The improved performance
was largely generated by the strong sales performance of the
business as we were able to introduce the brand to new customers
during the pandemic. This customer acquisition arose due to the
Group generally re-opening ahead of competitors and heavily
engaging with both new and existing customers during this
period.
When other businesses re-opened, despite the increased
competition, the newly acquired customers remained loyal and the
Group's sales went from strength to strength as 2021
progressed.
Operational cost controls were well controlled in the period and
along with utilisation of Government support, resulted in Adjusted
EBITDA (pre-IFRS 16) (as a percentage of sales) improving to 18
percent (2020: 9 percent).
Cash flow
Cash generated from operations increased in line with the
improvement in Adjusted EBITDA, save for the settlement of a number
of 2020 working capital related cash flows (namely leasehold
payments) that were deferred to early 2021.
Cash expenditure on property, plant and equipment increased due
to both the addition of more new sites in 2021 compared to 2020 and
higher maintenance capital costs arising from numerous
refurbishments when the Group re-opened the estate in the early
part of the year.
A significant cash outflow arose from the restructuring of the
Group's banking facilities prior to the IPO as the previous debt
facilities were fully repaid (GBP12.6m). The following cash inflows
partially offset this: (1) a GBP3.0m drawdown on a new debt
facility as outlined further below; and (2) a primary raise of
GBP5.0m from the IPO less GBP2.2m of fees (GBP1.6m recorded as
exceptional costs and the remainder recorded in equity).
Financing and net debt
The Group's net debt position has been materially reversed
during the course of 2021 to a net cash position of GBP6.7m at 2
January 2022 (3 January 2021: net debt of GBP2.3m). The business is
highly cash generative, benefits from a negative working capital
cycle and is accordingly able to fund the new store openings from
own cash.
The Group's GBP10.0m revolving credit facility (RCF) is held
with Santander UK plc and comprises of a drawn balance of GBP3.0m
at 2 January 2022 with a further GBP7.0m of undrawn facility
available to the Group.
The financing facility attracts interest at a rate of 2.75
percent above SONIA, subject to an upward-only ratchet based on
increased net leverage levels and is secured until 14 September
2026.
Share based payments
As part of the Group's admission to AIM, a Long Term Incentive
Plan ("LTIP") was created for senior Management. The detail of this
scheme for the Executive Directors is noted in the remuneration
report. These options vest subject to continuous employment over a
three and four year period, and attainment of certain performance
conditions relating to Adjusted EBITDA (pre IFRS-16). The Group
recognised a total charge of GBP0.1m in 2021 in relation to the
Group's share-based payment arrangements.
Dividend
The Board did not recommend a dividend for 2021. The Group's
capital over the coming years will be deployed to growth with the
dividend policy subject to re-assessment going forward.
Going concern
In assessing the going concern position of the Group for the
consolidated financial statements for the year ending 2 January
2022, the Directors have considered the Group's cash flow,
liquidity and business activities, as well as the ongoing
uncertainty caused by the Covid-19 pandemic.
The hospitality sector has been particularly impacted by
Covid-19 and the Group has taken a number of actions to improve
liquidity to ensure it is well placed to operate through the
pandemic and to achieve its strategic goals.
During 2021, the Group successfully listed on the AIM market
which gave the Group access to additional capital and combined with
the strong cash generation of the business, enabled the Group to
reduce the borrowing facilities from GBP11.9m to GBP3.0m. The Group
has access to a further GBP7.0m of financing and this remained
undrawn on 2(nd) January 2022. The Group had cash balances of
GBP9.7m on 2 January 2022 which translate to a net cash position of
GBP6.7m.
The Group has prepared forecasts for the next twelve months,
including a base case and a severe downside case. Refer to note 2.6
of the financial statements for details of the assumptions and
methodology applied.
Upon consideration of this analysis and the principal risks
faced by the Group, the Directors are satisfied that the Group has
adequate resources to continue in operation for the foreseeable
future, a period of at least twelve months from the date of this
report. Accordingly, the Directors have concluded that it is
appropriate to prepare these financial statements on a going
concern basis.
Approved by the Board on 11 April 2022 and signed on its behalf
by:
Andy Naylor
Chief Financial Officer
FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
52 weeks 53 weeks
ended ended
2 January 3 January
2022 2021
Note GBP GBP
------------- -------------
Revenue 4 48,075,399 26,832,846
Cost of sales (9,797,235) (6,054,932)
------------- -------------
Gross profit 38,278,164 20,777,914
Other operating income 5 1,877,806 3,489,162
Administrative expenses (36,521,815) (24,736,351)
------------- -------------
Profit/(loss) from operations 6 3,634,155 (469,275)
Finance income 9 613 111,791
Finance expense 9 (1,372,504) (1,335,748)
------------- -------------
Profit/(loss) before tax 2,262,264 (1,693,232)
Tax charge 10 (900,690) -
------------- -------------
Profit/(loss) for the period and comprehensive
income attributable to equity holders
of the parent company 1,361,574 (1,693,232)
Earnings/(loss) per share for profit
attributable to the owners of the
parent during the period
Basic and diluted (pence) 11 3.5 (471.6)
------------- -------------
The accompanying notes within this announcement form an integral
part of these Financial Statements.
Consolidated statement of financial position
At At
2 January 3 January
2022 2021
Note GBP GBP
------------ ------------
Non-current assets
Right-of-use assets 12 24,939,614 25,324,841
Property, plant and equipment 13 9,264,167 9,112,143
------------ ------------
Total non-current assets 34,203,781 34,436,984
Current assets
Inventories 14 326,108 239,782
Trade and other receivables 15 1,888,702 1,898,295
Cash and cash equivalents 16 9,653,172 10,086,759
------------ ------------
Total current assets 11,867,982 12,224,836
Total assets 46,071,763 46,661,820
------------ ------------
Current liabilities
Trade and other payables 17 6,729,865 4,909,704
Lease liabilities 12 5,830,987 7,176,104
Loans and borrowings 18 - 1,000,000
Corporation tax liability 10 900,690 -
------------ ------------
Total current liabilities 13,461,542 13,085,808
Non-current liabilities
Lease liabilities 12 25,831,103 24,195,555
Loans and borrowings 18 2,911,941 11,426,235
------------ ------------
Total non-current liabilities 28,743,044 35,621,790
Total liabilities 42,204,586 48,707,598
------------ ------------
Net assets / (liabilities) 3,867,177 (2,045,778)
------------ ------------
Equity attributable to equity holders
of the company
Called up share capital 19 386,640 359,016
Share premium account 20 4,433,250 -
Merger reserve 20 4,793,170 4,793,170
Share based payment reserve 20 90,507 -
Retained earnings 20 (5,836,390) (7,197,964)
------------ ------------
Total equity 3,867,177 (2,045,778)
The accompanying notes within this announcement form an integral
part of these Financial Statements. The financial statements of
Tortilla Mexican Grill plc (registration number 13511888) were
approved by the Board and authorised for issue on 11 April 2022.
They were signed on its behalf by:
Andy Naylor
Chief Financial Officer
11 April 2022
Consolidated statement of changes in equity
Share-based
Share Share Merger payment Retained
capital premium reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
--------- ---------- ---------- ------------ ------------ ------------
Balance as at 29
December 2019 359,016 - 4,793,170 - (5,504,732) (352,546)
Loss for the period - - - - (1,693,232) (1,693,232)
Balance as at 3
January 2021 359,016 - 4,793,170 - (7,197,964) (2,045,778)
--------- ---------- ---------- ------------ ------------ ------------
Profit for the period - - - - 1,361,574 1,361,574
Newly issued equity
shares 27,624 4,972,376 - - - 5,000,000
Cost of issue of
equity shares - (539,126) - - - (539,126)
Share-based payments - - - 90,507 - 90,507
Balance as at 2
January 2022 386,640 4,433,250 4,793,170 90,507 (5,836,390) 3,867,177
--------- ---------- ---------- ------------ ------------ ------------
The accompanying notes within this announcement form an integral
part of these Financial Statements.
Consolidated statement of cash flows
52 weeks ended 53 weeks ended
2 January 2022 3 January 2021
Note GBP GBP
--------------- ---------------
Operating activities
Profit/(loss) after tax 1,361,574 (1,693,232)
Adjustments for:
Share based payments 8 90,507 -
Net finance expense 9 377,144 228,168
Finance cost on lease liabilities 9 994,747 995,789
Corporation tax charge 10 900,690 -
Depreciation of right to use assets 12 3,514,015 3,495,701
Impairment of right to use assets 12 99,868 (66,584)
Depreciation of property, plant
and equipment 13 2,634,304 2,033,690
Impairment of property, plant and
equipment 13 - 333,371
Loss on disposal of property, plant
and equipment 13 6,852 -
Increase in inventories 14 (86,326) (3,739)
Decrease in trade and other receivables 15 9,593 56,064
Increase/(decrease) in trade and
other payables 17 1,820,161 (1,197,011)
Cash generated from operations 11,723,129 4,182,217
--------------- ---------------
Investing activities
Interest received 9 613 1,964
Purchase of property, plant and
equipment 13 (2,793,181) (1,404,116)
Net cash used by investing activities (2,792,568) (1,402,152)
--------------- ---------------
Financing activities
Proceeds from issue of shares 5,000,000 -
Cost of issue of shares (539,126) -
Payments made in respect of lease
liabilities 12 (3,932,971) (655,652)
Interest paid (203,303) (284,549)
New loans secured 18 2,907,306 3,846,600
Repayment of loans 18 (12,596,054) (1,200,000)
Net cash (used by)/generated from financing
activities (9,364,148) 1,706,399
--------------- ---------------
Net (decrease)/increase in cash
and cash equivalents (433,587) 4,486,464
--------------- ---------------
Cash and cash equivalents at the
beginning of period 16 10,086,759 5,600,295
Cash and cash equivalents at the
end of period 9,653,172 10,086,759
--------------- ---------------
Notes to the consolidated financial information
1. General information
Tortilla Mexican Grill plc, the "Company" together with its
subsidiaries, "the Group", is a public limited company whose shares
are publicly traded on the Alternative Investment Market("AIM") and
is incorporated and domiciled in the United Kingdom and registered
in England and Wales.
The registered address of Tortilla Mexican Grill plc and all
subsidiaries is 142-144 New Cavendish Street, London, W1W 6YF,
United Kingdom. A list of the Company's subsidiaries is presented
in note 22.
The Group's principal activity is the operation and management
of restaurants trading under the Tortilla brand both within the
United Kingdom and the Middle East.
2. Accounting policies
2.1 Statement of Compliance
The consolidated financial statements have been prepared in
accordance with International Account Standards in conformity with
the requirements of the Companies Act 2006 and in accordance with
International Financial Reporting Standards.
2.2 Basis of preparation
The consolidated financial information contained in this
document includes the consolidated statement of comprehensive
income, the consolidated statement of financial position, the
consolidated statement of changes in equity, the consolidated
statement of cash flows and related notes for the companies which
comprise the Group.
2.3 New standards, amendments and interpretations adopted
In May 2020 the IASB issued COVID-Related Rent Concessions
(Amendments to IFRS 16) that provided a practical expedient
permitting lessees not to assess COVID-related rent concessions as
a lease modification. The Group has opted not to apply this
amendment.
Other amendments applied for the first time for the 52 weeks
ending 2 January 2022 were:
-- Definition of material - amendments to IAS 1 and IAS 8;
-- Definition of a business - amendment to IFRS 3;
-- Revised conceptual framework for financial reporting; and
-- Interest rate benchmark reform - amendments to IFRS 9, IAS 39 and IFRS 7.
The application of these did not have a material impact on the
Group's accounting treatment and has therefore not resulted in any
material changes.
2.4 Standards issued not yet effective
Standard/Amendments Applicable
for financial
periods beginning
on/after
------------------------------------------------------ -------------------
IAS 37 Onerous contracts - Cost of fulfilling 1 January
a contract 2022
Annual improvements to IFRS standards 2018-2020 1 January
2022
IAS 16 Property, plant and equipment: proceeds 1 January
before intended use 2022
IFRS 3 Reference to the conceptual framework 1 January
2022
IFRS 17 Insurance contracts 1 January
2023
IFRS 17 Amendments 1 January
2023
IAS 1 Classification of liabilities as current 1 January
or non-current 2023
IAS 1 Disclosure of accounting policies 1 January
2023
IAS 8 Definition of accounting estimates 1 January
2023
IAS 12 Deferred tax related to assets and liabilities 1 January
arising from a single transaction 2023
When applied, none of these amendments are expected to have a
material impact on the Group.
2.5 Basis of consolidation
The consolidated financial information incorporates the
financial statements of the Group and all of its subsidiary
undertakings. The financial statements of all Group companies are
adjusted, where necessary, to ensure the use of consistent
accounting policies. Where the Group has power, either directly or
indirectly, to govern the financial and operating policies of an
entity to obtain benefits from its activities, it is classified as
a subsidiary.
The consolidated financial information incorporates the results
of a business combination using the predecessor method.
Specifically, this is the acquisition of Mexican Grill Ltd, which
meets the definition of a common control business combination and
is therefore outside the scope of IFRS 3. In the consolidated
statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their carrying values at the acquisition date.
The comparative figures for share capital are restated as if the
entities had been combined at the earliest reporting date
presented. The consolidated share capital at 29 December 2019 and 3
January 2021 therefore represents the share capital of Mexican
Grill Ltd adjusted for the share capital issued for the purposes of
the business combination.
The consolidated statement of financial position as at 2 January
2022 incorporates the results of Tortilla Mexican Grill plc and its
subsidiaries for all periods.
2.6 Going concern
In assessing the going concern position of the Group for the
consolidated financial statements for the 52 weeks ended 2 January
2022, the Directors have considered the Group's cash flow,
liquidity and business activities, as well as the ongoing
uncertainty caused by the COVID-19 pandemic.
The hospitality sector has been particularly impacted by
COVID-19 and the Group has taken a number of actions to improve
liquidity to ensure it is well placed to operate through the
pandemic and to achieve its strategic goals.
During 2021, the Group successfully listed on AIM which gave the
Group access to additional capital and combined with the strong
cash generation of the business, enabled the Group to reduce the
borrowing facilities to a principal amount of GBP3.0m. The Group
has access to a further GBP7.0m of financing and this remained
undrawn as at 2 January 2022. The Group had cash balances of
GBP9.7m as at 2 January 2022 which translate to a net cash position
of GBP6.7m.
The Group has prepared forecasts for the next twelve months,
including a base case and a severe downside case.
The base case assumes that there are no further lockdowns or
restrictions and assumes no further government financial support.
In this forecast there are no loan drawdowns and the Group remains
in compliance with its covenant obligations.
Under the severe downside case the following adjustments are
made:
-- Sales reduced by 20 percent in the second quarter of 2022 to
model a further prolonged lockdown;
-- Sales reduced by 10 percent in the third quarter and 5
percent for the remainder of the year to incorporate the impact of
increased restrictions throughout 2022; and
-- No further government support, such as reduced VAT, the
reintroduction of the Coronavirus Job Retention Scheme or business
rates relief, has been assumed.
Whilst this scenario would reduce Adjusted EBITDA by 29 percent,
the Group would still have sufficient liquidity and remain in a net
cash position. Consequently, the Group would not need to make a
further drawdown and would remain in compliance with its covenant
obligations. The Directors have also performed reverse stress
testing to assess the conditions that would lead to a covenant
breach. The Directors are comfortable with the outcome of this
exercise.
Upon consideration of this analysis and the principal risks
faced by the Group, the Directors are satisfied that the Group has
adequate resources to continue in operation for the foreseeable
future, a period of at least twelve months from the date of this
report. Accordingly, the Directors have concluded that it is
appropriate to prepare these financial statements on a going
concern basis.
2.7 Revenue recognition
Revenue represents the amount receivable from customers for
goods and services, exclusive of VAT and discounts.
The Group has recognised revenue in accordance with IFRS 15. The
standard requires revenue to be recognised when goods or services
are transferred to customers and the entity has satisfied its
performance obligations under the contract, and at an amount that
reflects the consideration to which an entity expects to be
entitled in exchange for those goods or services.
The Group's revenue comprises of:
-- Food and beverage sales at restaurants with one performance
obligation that is satisfied when control is transferred to the
customer at the point of sale, which is usually when payment is
received, and no contract assets or contract liabilities are
created. The Group also generates revenue with a third-party
delivery partner, which is payable the week after the revenue was
recorded. The delivery partner charges a commission on these sales,
which are recognised within administrative expenses. Revenue
comprises the fair value of the consideration received or
receivable for the sale of goods and provision of services in the
ordinary course of the Group's activities. Revenue is shown net of
sales/value added tax, returns and discounts; and
-- Franchise fees from the Group's role as franchisor in the UK
and Middle East. Revenue comprises ongoing royalties based on the
sales results of the franchisee and up-front initial site fees.
Royalty revenue is accrued in line with reported sales performance
once revenue can be reliably measured. Upfront initial site fees
are recognised on opening of the associated franchisee
restaurant.
The Group operates a loyalty scheme for customers which entitles
the customer to free products after a specified number of
purchases. IFRS 15 requires entities to recognise a liability for
the provision of these products as the customer, in effect, pays
the Group in advance for future goods. The Group has not recognised
this liability as the value is not material.
2.8 Alternative Performance Measures ("APM's")
The Group has identified certain measures that it believes will
assist the understanding of the performance of the business. These
APM's are not defined or specified under the requirements of IFRS.
The Group believes that these APM's, which are not considered to be
a substitute for, or superior to, IFRS measures, provide
stakeholders with additional useful information on the underlying
trends, performance and position of the Group and are consistent
with how business performance is measured internally.
The Group's APM's are: like for like ("LFL") revenue
growth/(decline), Adjusted EBITDA (Pre-IFRS), Operating cash flow
and net cash/(debt).
The Directors use Adjusted EBITDA as a primary KPI in managing
the business. This measure excludes exceptional items, share option
expenses and site pre-opening costs and applies pre-IFRS 16
treatment of leases. The Directors believe this measure gives a
more relevant indication of the underlying trading performance of
the Group and is also the measure used by the banks for the
purposes of assessing covenant compliance.
2.9 Employee benefits
i. Short-term benefits
Salaries, wages, paid annual leave and sick leave, bonuses and
non-monetary benefits are accrued in the period in which the
associated services are provided by employees of the Group.
ii. Defined contribution plan
Contributions to defined contribution schemes are charged to the
consolidated statement of comprehensive income in the financial
period to which they relate.
2.10 Leased assets
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include lease
payments less any lease incentives receivable. In calculating the
present value of lease payments, the Group uses its incremental
borrowing rate at the lease commencement date because the interest
rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, for example a
rent review or a change in the lease term.
2.11 Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs.
Depreciation is provided on all items of property, plant and
equipment so as to write off their carrying value over the expected
useful economic lives. It is provided at the following rates:
Short term leasehold property - over the lease term
Plant and machinery - over 5 years
Fixtures and fittings - over 3 years
Office equipment - over 3 years
Computer equipment - over 3 years
2.12 Impairment
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from
other assets or groups of assets (cash-generating units).
Other assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable
amount.
2.13 Inventories
Inventories are initially recognised at cost, and subsequently
at the lower of the cost and net realisable value. Cost comprises
all costs of purchase, costs of conversion and other costs incurred
in bringing the inventories to their present location and
condition.
2.14 Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial
institutions repayable without penalty on notice of not more than
24 hours. Cash equivalents are highly liquid investments that
mature in no more than three months from the date of acquisition
and that are readily convertible to known amounts of cash with
insignificant risk of change in value. Payments taken from
customers on debit and credit cards are recognised as cash.
2.15 Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantially enacted by the
balance sheet date and are expected to apply when the deferred tax
liabilities or assets are settled or recovered. Deferred tax
balances are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable group company; or
-- different company entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
and liabilities are expected to be settled or recovered.
2.16 Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision-Maker
(CODM). The CODM has been identified as the Management team
including the Chief Executive Officer, Chief Operating Officer and
Chief Financial Officer.
The Directors have taken a judgement that individual sites meet
the aggregation criteria in IFRS 8, constituting one operating and
one reporting segment and hence have concluded that the Group only
has a single reporting segment, as discussed in note 4.
2.17 Financial assets
Financial assets held at amortised cost are trade and other
receivables and cash.
Trade receivables are all due for settlement within one year.
Due to their short-term nature, the Directors consider the carrying
amount of trade and other receivables to equal their fair
value.
Fees paid on the establishment of loan facilities are recognised
as transactional costs of the loan and the fee is netted against
the loan balance and amortised on a straight line basis over the
period of the facility to which it relates.
Financial assets that are measured at cost and amortised cost
are assessed at the end of each reporting year for objective
evidence of impairment. If objective evidence of impairment is
found, an impairment loss is recognised in the consolidated
statement of comprehensive income.
2.18 Financial liabilities
Financial liabilities held at amortised cost include trade and
other payables, lease liabilities and borrowings.
There are no material differences between the carrying values of
financial assets and liabilities held at amortised cost and their
fair values.
Financial assets and liabilities are offset and the net amount
reported in the consolidated statement of financial position when
there is an enforceable right to set off the recognised amounts and
there is an intention to settle on a net basis or to realise the
asset and settle the liability simultaneously.
2.19 Financial risk
The Group's activities expose it to a variety of financial
instrument risks. The risk management policies employed by the
Group to manage these risks are detailed below. The primary
objectives of the financial instrument risk management function are
to establish risk limits and then ensure exposure to risks remains
within these limits.
i. Interest rate risk
The Group is exposed to interest rate risk as the Group's
borrowings have an interest rate of SONIA plus a margin. Given the
quantum of the borrowings and the current low interest environment,
the risk is not considered material and therefore the Directors
have accepted this risk with the position being regularly
re-assessed based on wider macro-economic conditions.
ii. Commodity price risk
The Group is exposed to movements in wholesale prices of food
and drinks. The Group sources the majority of its products in the
UK, however there is the risk of disruption to supply caused by
COVID-19 or Brexit. The Group always benchmarks any cost changes
and typically fixes prices for periods of between three and six
months.
iii. Liquidity risk
Liquidity risk is the risk that the Group may encounter
difficulties in meeting its financial obligations as they fall due.
They may arise from the Group's management of working capital,
finance charges and principal repayments on its debt.
The Directors regularly review cash flow forecasts to determine
whether the Group has sufficient reserves to meet obligations and
take advantage of opportunities.
iv. Capital risk
The Group manages the capital structure to ensure it will be
able to operate as a going concern, whilst maximising the return to
shareholders. The Directors look to optimise the debt-to-equity
balance and may adjust the capital structure by paying dividends to
shareholders, returning capital to shareholders, issue new shares
or sell assets to reduce debt. The Directors intend to maintain low
net leverage levels as the Group's operating cash flows are
sufficient to fund the addition of new restaurants to the
portfolio.
v. Credit risk
The Group's credit risk is attributable to trade and other
receivables and cash with the carrying amount best representing the
maximum exposure to credit risk. The Group places its cash only
with banks with high-quality credit standings. Trade and other
receivables relate to day-to-day activities which are entered into
with creditworthy counterparties.
vi. Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall
due.
Management review cash flow forecasts regularly to determine
whether the Group has sufficient cash reserves to meet future
working capital requirements.
Maturity analysis
The table below analyses the Group's contractual undiscounted
cash flows for the Group's financial liabilities.
Within 1 More than
year 1 to 2 years 2 to 5 years 5 years Total
GBP GBP GBP GBP GBP
----------- ------------- ------------- ----------- -----------
2 January 2022
Trade and other
payables 6,729,865 - - - 6,729,865
Lease liabilities 5,830,987 4,225,074 10,085,891 11,520,138 31,662,090
Borrowings - - 2,911,941 - 2,911,941
----------- ------------- ------------- ----------- -----------
12,560,852 4,225,074 12,997,832 11,520,138 41,303,896
----------- ------------- ------------- ----------- -----------
3 January 2021
Trade and other
payables 4,909,704 - - - 4,909,704
Lease liabilities 7,176,104 3,864,422 9,140,207 11,190,926 31,371,659
Borrowings 1,000,000 1,300,000 10,126,235 - 12,426,235
=========== ============= ============= =========== ===========
13,085,808 5,164,422 19,266,442 11,190,926 48,707,598
----------- ------------- ------------- ----------- -----------
2.20 Equity instruments
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's ordinary shares are classified as
equity instruments.
2.21 Government grants
Coronavirus job retention scheme grants (CJRS) and other
government grants are recognised under the accruals model with any
deferred element included in creditors as deferred income. Grants
of a revenue nature are recognised in the consolidated statement of
comprehensive income in the same period as the related
expenditure.
3. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including the expectations
of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and judgements that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
3.1 Determining the discount rate for IFRS 16
At the commencement date of property leases the lease liability
is calculated by discounting the lease payments. The discount rate
used should be the interest rate implicit in the lease. However, if
that rate cannot be readily determined, which is generally the case
for property leases, the lessee's incremental borrowing rate is
used. This is the rate that the individual lessee would have to
pay, to borrow the funds necessary, to obtain an asset of similar
value to the right-of-use asset in a similar economic environment
with similar terms, security and conditions. The weighted average
discount rate applied to the Group's leases is 3.4 percent, there
has been a judgement applied that the portfolio has the same
discount rate. For the lease liabilities at 2 January 2022 a 0.5
percent increase in the discount rate would reduce the total
liabilities by GBP136,000, which is not considered material.
3.2 Impairment of right-of-use assets and property, plant and equipment
Right-of-use assets and property, plant and equipment are
reviewed for impairment when there is an indication that the assets
might be impaired by comparing the carrying value of the assets
with their recoverable amounts. The recoverable amount of an asset
or cash generating unit (CGU) is determined based on value-in-use
calculations prepared on the basis of the Directors' estimates and
assumptions. Individual sites are viewed as separate CGUs.
The main assumptions in the value-in-use calculations include
the growth rates of revenue and expenses, together with the Group's
weighted average cost of capital (WACC), which is used as a
discount rate.
An independent external consultancy was engaged to calculate the
Group's WACC and reasonable changes in the key assumptions were
assessed, which did not lead to a material impairment.
3.3 Useful economic lives of property, plant and equipment
The depreciation charge is dependent upon the assumptions used
regarding the useful economic lives of assets. A 10 percent
increase in average useful economic lives would result in a
GBP239,000 decrease in depreciation in 2021.
3.4 Share-based payments
The charge for share-based payments is calculated according to
the methodology described in note 8. The Black-Scholes model
requires subjective assumptions to be made including the volatility
of the Company's share price, fair value of the shares and the risk
free interest rates.
4. Revenue
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
--------------- ---------------
Sale of goods 47,769,278 26,821,338
Franchise income 306,121 11,508
--------------- ---------------
48,075,399 26,832,846
--------------- ---------------
IFRS 8 Operating Segments requires operating segments to be
based on the Group's internal reporting to its Chief Operating
Decision Maker (CODM). The CODM is regarded as the Management team
of the Chief Executive Officer, the Chief Financial Officer and the
Chief Operating Officer.
The Group has three segments:
-- UK sales from Group-operated restaurants
-- UK franchise sales from franchised restaurants
-- Middle East franchise sales from franchised restaurants
There are similar economic characteristics between these
businesses with each following a similar sales and EBITDA
trajectory. These have been reviewed by the Directors along with
the non-financial criteria of IFRS 8. It is the Directors'
judgement that despite some short-term variability, all segments
have similar economic characteristics in the medium and long-term
and meet the criteria for aggregation into a single reporting
segment. Therefore, no segmental analysis is provided.
5. Other operating income
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
--------------- ---------------
Eat Out to Help Out income - 473,401
CJRS income(1) 491,825 3,015,761
Other government grants(2) 1,385,981 -
1,877,806 3,489,162
--------------- ---------------
(1) Coronavirus Job Retention scheme
(2) I ncludes Retail Leisure Hospitality Grant, Local
Restriction Support Grants and Restart Grants
6. Profit/(loss) from operations
Profit/(loss) from operations is stated after charging:
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
--------------- ---------------
Depreciation & amortisation 6,148,319 5,529,391
Impairment of ROU assets 99,868 (66,584)
Loss on disposal of fixed assets 6,852 -
Impairment of fixed assets - 638,668
Reversal of impairment of fixed
assets - (305,297)
variable lease payments 615,613 113,619
Inventories - amounts charged as
an expense 9,797,235 6,054,932
Staff costs 14,333,277 11,268,458
Share option expense 90,507 -
Pre-opening costs 126,753 78,778
Exceptional items(1) 1,856,268 272,182
Quilvest monitoring fees(2) 70,185 38,089
Bank arrangement fee amortisation 174,454 22,011
Auditors' remuneration :
Audit fees 77,000 36,000
Tax compliance services 14,000 35,000
Other assurance services 95,000 -
--------------- ---------------
(1) Exceptional items in 2021 includes GBP1,634,070 of costs
incurred in relation to the sale by existing shareholders of their
shares in the Group's IPO. A further GBP539,126 was incurred in
relation to the issuing of new shares and this has been recorded as
a deduction in share premium. This apportioning between exceptional
items and share premium has been undertaken in accordance with IAS
32.
(2) Quilvest monitoring fees were payable prior to the Group's
admission to AIM.
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
--------------- ---------------
Pre-opening costs 126,753 78,778
Number of site openings in period 7 4
--------------- ---------------
The Group reports costs incurred prior to the opening of a site
as a separate expense and excludes these from the calculation of
adjusted EBITDA. This approach is in line with the standard
industry practice and the methodology used by the Group's bank for
the purposes of assessing covenant compliance. The Directors view
this as a better way to analyse the underlying performance of the
Group since it excludes costs which are not trading related.
7. Staff costs
The average monthly number of employees, including the
Directors, during the period was as follows:
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
--------------- ---------------
Operations staff` 749 644
Head office staff 36 31
785 675
--------------- ---------------
Staff costs, including Directors' remuneration, were as
follows:
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
--------------- ---------------
Wages and salaries 13,315,004 10,527,999
Social security costs 779,134 611,249
Pension costs 148,632 129,210
Share based payments (note 8) 90,507 -
--------------- ---------------
14,333,277 11,268,458
--------------- ---------------
Directors' remuneration, included in staff costs, was as
follows:
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
Short-term employee benefits 718,900 362,995
Post-employment benefits 3,300 2,679
722,200 365,674
--------------- ---------------
The highest paid Director received remuneration of GBP367,900 in
the 52 weeks ended 2 January 2022 (3 January 2021: GBP182,512).
The number of Directors receiving pension contributions was 4 in
the 52 weeks ended 2 January 2022 (3 January 2021: 4).
The share based payment expense arising from the Directors
participation in the Group's LTIP scheme in the 52 weeks ended 2
January 2022 was GBP60,246 (3 January 2021: GBPnil).
There are no Key Management Personnel other than the Directors.
Further information about the remuneration of individual Directors
is provided in the Remuneration report within the Group's 2021
Annual Report.
8. Share based payments
A transaction is accounted for as a share-based payment when
services are paid for in shares or similar equity instruments.
The Group issues equity-settled share-based payments to
Directors and certain members of staff. Equity-settled share-based
schemes are measured at fair value at the date of grant, using the
Black Scholes valuation model. The expected life used in the model
is adjusted, based on Management's best estimate, for the effects
of non-transferability, exercise restrictions and behavioural
considerations.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the period to exercise, based on the Group's estimate of
shares that will eventually vest.
The Group is liable for employer's National Insurance on the
difference between the market value at date of exercise and
exercise price and therefore this expense is also calculated based
on the intrinsic value at the balance sheet date.
The Tortilla Mexican Grill plc Long-Term Incentive Plan 2021
("LTIP")
Under the LTIP, options were awarded to Directors and members of
the senior Management team. 50 percent vests after three years and
the remaining 50 percent vests after the fourth year. The vesting
is dependent on achievement of specific Adjusted EBITDA targets for
the 2023 and 2024 financial years.
Awards are forfeited if the employee leaves the Group before the
awards vest, except under circumstances where the employee is
considered a 'Good Leaver'.
Details of the share awards outstanding are as follows:
2 January 2022 3 January 2021
--------------------------- ---------------------------
Weighted Weighted
average average
Number of exercise Number of exercise
share options price share options price
# GBP # GBP
--------------- ---------- --------------- ----------
Outstanding at beginning
of the period - - - -
Granted during the period 1,809,393 1.81 - -
Exercised during the
period - - - -
Forfeited during the
period - - - -
Outstanding at the end
of the period 1,809,393 1.81 - -
Exercisable at the end
of the period - 1.81 - -
=============== ========== =============== ==========
The awards outstanding at the end of 2 January 2022 have a
remaining weighted average contractual life of three years (3
January 2021: GBPnil) and an exercise price of GBP1.81 (3 January
2021: GBPnil).
The Group recognised total expenses related to the above
equity-settled share-based payment transactions in the form of
options during the 52 weeks ended 2 January 2022 of GBP90,507 (3
January 2021: GBPnil) and related employer National Insurance of
GBP9,988 (3 January 2021: GBPnil).
The fair values were calculated using a Black Scholes model. The
inputs used for fair valuing awards granted during the period was
as follows:
2 January 2022 3 January 2021
--------------- ---------------
Weighted average share price 1.81
(pence) -
Exercise price (pence) 1.81 -
Expected volatility (%) 43% -
Option life (years) 5.0 -
Risk free interest rate (%) 0.63% -
--------------- ---------------
In the absence of any historical volatility data for Tortilla
Mexican Grill plc, the expected volatility was determined by
reviewing the volatility of the share price of similar entities
which are currently traded on AIM.
9. Finance income and expenses
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
--------------- ---------------
Finance income
Bank interest income 613 111,791
--------------- ---------------
Finance expense
Bank loan interest expense (377,757) (339,959)
Finance cost on lease liabilities (994,747) (995,789)
--------------- ---------------
(1,372,504) (1,335,748)
On 14(th) September 2020, the Group obtained a Coronavirus
Business Interruption Loan Scheme ("CBILS") which carries zero
interest costs for the first twelve months. The loan was initially
recognised at the present value of the future payments with the
discount of GBP109,827 being recognised as finance income in the 53
weeks ended 3 January 2021. Subsequently, in October 2021, the loan
was paid off in full, there was an unwinding of interest of
GBP76,427 in the financial period.
10. Taxation
52 weeks ended 53 weeks ended
2 January
2022 3 Jan 2021
GBP GBP
--------------- ---------------
Current tax expense
Current tax on profits for the period 900,690 -
900,690 -
--------------- ---------------
The reasons for the difference between the actual tax charge for
the financial period and the standard rate of corporation tax in
the United Kingdom applied to profit for the financial period as
follows:
52 weeks ended 53 weeks ended
2 January 3 Jan 2021
2022
GBP GBP
--------------- ---------------
Profit/(loss) for the period 2,262,264 (1,693,232)
Expected tax charge based on corporation
tax rate of 19% in 2021 (19% in
2020) 429,830 (321,714)
Effects of:
Expenses not deductible for tax
purposes 344,578 96,217
Depreciation in excess of capital
allowances 319,969 54,735
Movement in tax losses (202,473) (5,022)
Other timing differences, primarily
arising from operating lease accounting 8,786 175,784
Other adjustments - -
Deferred tax - -
Total tax charge for the period 900,690 -
--------------- ---------------
In the 53 weeks ended 3 January 2021, the Group had a brought
forward tax loss of GBP1,065,646, which has been fully utilised in
the 52 weeks ending 2 January 2022.
The Group has had unprovided deferred tax assets as shown
below:
52 weeks ended 53 weeks ended
2 January
2022 3 Jan 2021
GBP GBP
Unprovided deferred tax asset (535,863) (415,628)
--------------- ---------------
The deferred tax assets arise from tax losses, timing
differences on fixed assets and timing differences arising from the
differences in the deductions available under UK GAAP and IFRS in
relation to leases. No asset has been recorded in the financial
statements for these amounts on the grounds that the timing and
extent of any recovery is subject to a number of uncertainties.
In March 2021, the government confirmed that the corporation tax
main rate would increase to 25 percent from 1 April 2023.
Accordingly, the rate used to calculate the deferred tax balances
at 2 January 2022 has increased from 19 percent to 25 percent as
the timing of the release of this asset is materially expected to
be after this date.
11. Earnings/(loss) per share
Basic earnings/(losses) per share is calculated by dividing the
profit/(loss) attributable to equity shareholders by the weighted
average number of shares outstanding during the period.
52 weeks ended 53 weeks ended
2 January 3 January
2022 2021
GBP GBP
--------------- ---------------
Profit/(loss)
Profit/(loss) used in calculating basic
and diluted profit 1,361,574 (1,693,232)
Number of shares
Weighted average number of shares
for the purpose of basic and diluted
earnings per share 38,664,031 359,016
Basic and diluted earnings/(loss)
per share (p) 3.5 (471.6)
--------------- ---------------
Due to the nature of the options granted under the long-term
incentive plan, they are considered to be contingently issuable
shares and therefore have no dilutive effect.
12. Leases
The Group leases all properties with typical lease lengths of
10-15 years. All leases are non-cancellable with various terms:
payments of a fixed/variable nature, rent reviews and differing
renewal terms.
Application of IFRS 16 requires that leases are recognised as a
right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by the Group. For
adjustments recognised as a consequence of IFRS 16, please refer to
note 27.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of fixed payments (including in-substance fixed
payments), less any lease incentives receivable, and variable lease
payment that are based on an index or a rate, initially measured
using the index or rate as at the commencement date. It excludes
variable lease payments that are turnover linked, which are outside
the scope of IFRS 16 and are charged to the consolidated statement
of comprehensive income as they are incurred.
At the commencement date of property leases the lease liability
is calculated by discounting the lease payments. Lease payments to
be made under reasonably certain extension options are also
included in the measurement of the liability. The lease payments
are discounted using the interest rate implicit in the lease. If
that rate cannot be readily determined, which is generally the case
for leases in the Group, the lessee's incremental borrowing rate is
used, being the rate that the Group would have to pay to borrow the
funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar
terms, security and conditions.
The Directors carried out a review of the historic borrowing
rates of the Group and historic bond rates together with an
analysis of the lease terms. They concluded that the use of a
single discount rate applied to all leases signed prior to 2
January 2022 is a reasonable approach. Based on this analysis a
discount rate of 3.4 percent has been applied.
Right-of-use assets GBP
------------
At 30 December 2019 27,845,165
============
Additions 1,863,541
Depreciation (3,495,701)
Impairment 66,584
Disposals (954,748)
At 3 January 2021 25,324,841
============
Additions 4,385,093
Depreciation (3,514,015)
Impairment (99,868)
Disposals (1,156,437)
At 2 January 2022 24,939,614
============
Lease liabilities GBP
At 30 December 2019 (30,122,727)
=============
Additions (1,863,541)
Interest expense (995,789)
Lease payments 655,652
Disposals 954,746
At 3 January 2021 (31,371,659)
=============
Additions (4,385,093)
Interest expense (994,747)
Lease payments 3,932,971
Disposals 1,156,438
At 2 January 2022 (31,662,090)
=============
Carrying amount by maturity of the Groups lease liabilities
Less than 1 to 2 2 to 5 Over 5 More than
1 year years years years 1 year Total
---------- ---------- ----------- ----------- ----------- -----------
2 Jan 2022 5,830,987 4,225,074 10,085,891 11,520,138 25,831,103 31,662,090
3 Jan 2021 7,176,104 3,864,422 9,140,207 11,190,926 24,195,555 31,371,659
---------- ---------- ----------- ----------- ----------- -----------
13. Property, plant and equipment
Furniture,
Leasehold Plant and fittings
improvements machinery and equipment Total
GBP GBP GBP GBP
Net book value
At 29 December 2019 7,896,056 1,474,005 705,027 10,075,088
Cost
At 29 December 2019 13,007,215 4,229,945 3,736,455 20,973,615
Additions 400,434 275,695 727,987 1,404,116
Disposals 2,303 (785,404) (1,384,479) (2,167,580)
At 3 January 2021 13,409,952 3,720,236 3,079,963 20,210,151
Accumulated Depreciation
At 29 December 2019 (5,111,159) (2,755,940) (3,031,428) (10,898,527)
Charge for year (859,053) (720,817) (453,820) (2,033,690)
On disposals (2,303) 785,404 1,384,479 2,167,580
Impairment charge (638,668) - - (638,668)
Impairment losses written
back 305,297 - - 305,297
At 3 January 2021 (6,305,886) (2,691,353) (2,100,769) (11,098,008)
-------------- ------------ --------------- -------------
Net book value
At 3 January 2021 7,104,066 1,028,883 979,194 9,112,143
-------------- ------------ --------------- -------------
Cost
-------------- ------------ --------------- -------------
At 3 January 2021 13,409,951 3,720,236 3,079,963 20,210,150
-------------- ------------ --------------- -------------
Additions 886,575 463,522 1,443,084 2,793,181
Disposals (1,097) (562,202) (851,467) (1,414,766)
At 2 January 2022 14,295,429 3,621,556 3,671,580 21,588,565
-------------- ------------ --------------- -------------
Accumulated Depreciation
-------------- ------------ --------------- -------------
At 3 January 2021 (6,305,886) (2,691,353) (2,100,769) (11,098,008)
-------------- ------------ --------------- -------------
Charge for year (1,230,421) (646,518) (757,365) (2,634,304)
On disposals (157) 560,408 847,663 1,407,914
At 2 January 2022 (7,536,464) (2,777,463) (2,010,471) (12,324,398)
-------------- ------------ --------------- -------------
Net book value
At 2 January 2022 6,758,965 844,093 1,661,109 9,264,167
============== ============ =============== =============
14. Inventories
At At
2 January 2022 3 January 2021
GBP GBP
--------------- ---------------
Food and beverages for resale 326,108 239,782
326,108 239,782
--------------- ---------------
There is no material difference between the replacement cost of
inventories and the amounts stated above.
Total inventory recognised as an expense in the consolidated
statement of comprehensive income during the period was
GBP9,797,235 (53 weeks ended 3 January 2021: GBP6,054,932).
15. Trade and other receivables
At At
2 January 2022 3 January 2021
GBP GBP
--------------- ---------------
Trade debtors 298,334 332,155
Other debtors 735,324 761,377
Prepayments and accrued income 855,044 804,763
1,888,702 1,898,295
--------------- ---------------
Trade debtors primarily relate to sales due from third party
delivery providers and these are settled the week immediately
following the week in which the sale was recorded. There are also
amounts owed by the Group's franchise partners, which are due
within 30 days of the end of the period.
Other debtors consists of deposits held by third parties,
generally landlords, and amounts accrued but not yet invoiced to
third parties. These amounts not invoiced are franchise income and
produce from the Group's central kitchen which is sold and bought
back to the Group's main food supplier, who provides the
distribution across the Group's estate.
The Group held no collateral against these receivables at the
balance sheet dates. The Directors consider that the carrying
amount of receivables are recoverable in full and that any expected
credit losses are immaterial.
16. Cash and cash equivalents
At At
2 January 3 January
2022 2021
GBP GBP
---------- -----------
Cash at bank and in hand 9,653,172 10,086,759
9,653,172 10,086,759
---------- -----------
Cash and cash equivalents comprise cash at bank, in hand and
cash in transit. Cash in transit comprises card payment receipts,
which are received on the next working day. The fair value of cash
and cash equivalents is the same as their carrying value.
17. Trade and other payables
At At
2 January 3 January
2022 2021
GBP GBP
Trade payables 2,331,636 2,346,463
Other taxation and social security 508,850 606,152
Other payables 456,830 343,327
Accruals and deferred income 3,432,549 1,613,762
6,729,865 4,909,704
---------- ----------
The carrying value of trade and other payables classified as
financial liabilities measured at amortised, which the Directors
consider equal to fair value.
18. Borrowings
At At
2 January 2022 3 January 2021
GBP GBP
Bank loans - falling due within
one year - 1,000,000
Bank loans - falling due after one
year 3,000,000 11,596,054
--------------- ---------------
Subtotal 3,000,000 12,596,054
Amortised issue costs (88,059) (169,819)
2,911,941 12,426,235
=============== ===============
Prior to the Group's IPO on 8 October 2021, the following
facilities were held with Santander UK plc:
-- Term loan: repayable in instalments until 14 November 2025.
The balance on this loan at 3 January 2021 was GBP9,672,482 with
GBP1,000,000 due within one year;
-- CBILS loan: repayable in full on 14 November 2025. The total
size of this facility was GBP4,000,000 with a drawn balance on this
loan at 3 January 2021 of GBP3,000,000. The additional GBP1,000,000
of undrawn funds were not utilised as the financial position of the
business was strong enough to not require the additional support.
This loan was subject to an initial one-year interest holiday was
recognised at the present value of the future cash flows, being
GBP2,923,572 at 3 January 2021; and
-- CBILS overdraft: this facility was not utilised by the Group.
The total quantum of undrawn funds was GBP1,000,000.
The term loan accrued interest at rates of 3.25% - 4.50% plus
base rate and the CBILS loan attracted interest at a rate of 3.8%
plus base rate, although was subject to an initial one-year
interest holiday and hence was recognised at the present value of
the future cash flows. These loans were all secured by fixed and
floating charges over the assets of the Group.
As part of the Group's IPO, the existing facilities were repaid
and a new financing arrangement was signed, once more with
Santander UK plc. This is a GBP10m senior facility, repayable in
full on 14 September 2026, with a drawn balance at 2 January 2022
of GBP3.0m. The Group has allocated GBP2.5m of the remaining
undrawn amount to an ancillary facility, an overdraft, which was
not utilised at 2 January 2022. Arrangement fees of GBP93,000 were
incurred as part of the refinancing and this is being amortised to
the Group consolidated statement of comprehensive income of the
term of the facility.
The facility accrues interest at rates of 2.75% - 3.25% plus
SONIA and the overdraft attracts interest at a rate of 2.75% plus
SONIA when utilised. These loans are secured by a debenture over
the assets of the Group and are presented net of capitalised
amortised issue costs.
19. Called up share capital
The consolidated share capital at 3 January 2021 has been
restated as if the entities had been combined at the earliest
reporting date presented and therefore represents the share capital
of Mexican Grill Limited adjusted for the share capital issued for
the purposes of the business combination.
The issued share capital of the Company on incorporation was one
ordinary share of GBP0.01 (the "Subscriber Share"). There have been
the following changes in the Company share capital since
incorporation:
-- on 10 September 2021: (i) 6,462,600 ordinary shares of
nominal value GBP0.01 each, (ii) 2,196,000 A ordinary shares of
nominal value GBP0.01 each, (iii) 10,799,400 A preference shares of
nominal value GBP0.01 each and (iv) 16,443,600 B preference shares
of nominal value of GBP0.01 each were allotted;
-- also on 10 September 2021 simultaneously with the allotment
of the shares referred to above, the Subscriber Share was
cancelled. Immediately following this, the total statement of
capital of the Company was 6,462,600 ordinary shares, 2,196,000 A
ordinary shares, 10,799,400 A preference shares and 16,443,600 B
preference shares with an aggregate nominal value of
GBP359,016;
-- on 29 September 2021 the 2,196,000 A ordinary shares,
10,799,400 A preference shares and the 16,443,600 B preference
shares were re-designated as 29,439,000 ordinary shares of nominal
value GBP0.01 each, with the resulting total share capital being
35,901,600 ordinary shares with an aggregate nominal value of
GBP359,016; and
-- on 8 October 2021 (immediately following admission to AIM), a
further 2,762,431 shares were allotted, bringing the total number
of ordinary shares to 38,664,031.
Ordinary shares entitle the holder to participate in dividends
and the process on the winding up of the Company in proportion to
the number of and amounts paid on the shares held. The fully paid
ordinary shares have a par value of GBP0.01 and the Company does
not have a limited amount of authorised capital.
20. Reserves
Share premium account
The share premium account records the amount above the nominal
value received for shares sold.
Merger reserve
The merger reserve represents the excess over nominal value of
the fair value consideration for the business combination of
Tortilla Mexican Grill plc and Mexican Grill Ltd during the Group's
IPO. This was satisfied by the issue of shares in accordance with
Section 612 of the Companies Act 2006.
Share based payment reserve
The Group presents employee share options as an adjustment to
own equity through this reserve until the point that the shares are
awarded and cease to be conditional awards.
Retained earnings
The accumulated net profits and losses of the Group.
21. Analysis of changes in net debt
The movements in net debt are presented below along with a
reconciliation to the financing activities in the consolidated cash
flow statement.
Total financing Cash and
Bank loans Lease liabilities liabilities cash equivalents Net debt
GBP GBP GBP GBP GBP
------------ ------------------ ---------------- ------------------ -------------
At 3 January 2021 12,426,235 31,371,657 43,797,894 (10,086,759) 33,711,135
Cash flow (9,688,748) (3,932,971) (13,621,719) 433,587 (13,188,132)
Additions to lease
liabilities - 3,228,655 3,228,655 - 3,228,655
Finance expense 377,757 994,747 1,372,504 - 1,372,504
At 2 January 2022 2,911,941 31,662,090 34,574,031 (9,653,172) 24,920,859
22. Investments in subsidiaries
The subsidiaries of the Tortilla Mexican Grill plc, all of which
have been included in the consolidated financial information and
comprise the Group, are as follows:
Proportion of
ownership interest
Country of and voting rights
Name of subsidiary incorporation held by the Group Principal activity
---------------------------- --------------- -------------------- -------------------
Mexican Grill Ltd United Kingdom 100% Operation of
restaurants
Mexican Grill International United Kingdom 100% International
Franchise Ltd franchising
California Grill Ltd United Kingdom 100% Holding leases
---------------------------- --------------- -------------------- -------------------
The registered address for all three subsidiaries is 1st Floor
Evelyn House, 142 New Cavendish Street, London, United Kingdom, W1W
6YF.
23. Related party transactions
At At
2 January 3 January
2022 2021
GBP GBP
----------- ----------
Richard Morris - 68,400
Andy Naylor - 28,500
- 96,900
---------------------------- ----------
During the 52 weeks ending 2 January 2022, loans owed by
Directors Richard Morris and Andy Naylor were repaid in full. No
interest was charged on this loan during this period.
Mexican Grill Ltd was charged monitoring fees of GBP35,000 for
the 52 weeks ended 2 January 2022 (53 weeks ended 3 January 2021:
GBP6,250) by QS Direct SI 2 S.à.r.l, in its capacity as General
Partner of the Group's shareholder QS Direct SI 2 SCA SICAR. This
is set at GBP30,000 for 2022 onwards.
24. Ultimate controlling party
The Directors believe that there is no ultimate controlling
party of the Group.
25. Capital commitments: Group and Company
The Group had capital commitments of GBP65,050 at 2 January 2022
( 3 January 2021 : GBPnil).
26. Post-balance sheet events: Group and Company
The Directors consider that there are no material post balance
sheet effects affecting the Group or the Company that have occurred
between the end of the period and the date of publication of this
report.
27. IFRS comparison to UK GAAP
The Group applied IFRS for the first time in the 52-week period
ending 2 January 2022. The Group applied IFRS 16 using the modified
retrospective approach, with the date of initial application of 1
January 2018 and has restated its results for comparative period as
if the Group had always applied the new standard.
Pre-IFRS Pre-IFRS
16 IFRS 16 IFRS 16 IFRS 16 IFRS
52 weeks 52 weeks 53 weeks 53 weeks
ended adjustments ended ended adjustments ended
2 January 2 January 3 January 3 January
2022 2022 2021 2021
GBP GBP GBP GBP GBP GBP
------------- ------------ ------------- ------------- ------------ -------------
Revenue 48,075,399 - 48,075,399 26,832,846 - 26,832,846
Cost of sales (9,797,235) - (9,797,235) (6,054,932) - (6,054,932)
Gross profit 38,278,164 - 38,278,164 20,777,914 - 20,777,914
Other Operating
Income 1,877,806 - 1,877,806 3,489,162 - 3,489,162
Administrative
expenses (36,461,586) (60,229) (36,521,815) (24,806,958) 70,607 (24,736,351)
Profit/(loss)
from operations 3,694,384 (60,229) 3,634,155 (539,882) 70,607 (469,275)
Adjusted EBITDA 8,740,576 3,466,784 12,207,360 2,361,333 3,376,630 5,737,963
Pre-opening costs (165,850) 39,097 (126,753) (171,063) 92,285 (78,778)
Share based payments (90,507) - (90,507) - - -
Depreciation
and amortisation (2,688,928) (3,566,110) (6,255,038) (2,397,870) (3,398,308) (5,796,178)
Exceptional items (1,856,268) - (1,856,268) (272,182) - (272,182)
Non-trading costs (244,639) - (244,639) (60,100) - (60,100)
3,694,384 (60,229) 3,634,155 (539,882) 70,607 (469,275)
Finance income 613 - 613 111,791 - 111,791
Finance expense (377,757) (994,747) (1,372,504) (339,959) (995,789) (1,335,748)
------------- ------------ ------------- ------------- ------------ -------------
Profit/(loss)
before tax 3,317,240 (1,054,976) 2,262,264 (768,050) (925,182) (1,693,232)
Tax charge (900,690) - (900,690) - - -
Profit/(loss)
for the period
and comprehensive
income attributable
to equity holders
of the parent
company 2,416,550 (1,054,976) 1,361,574 (768,050) (925,182) (1,693,232)
------------- ------------ ------------- ------------- ------------ -------------
Pre-IFRS 16 IFRS 16 IFRS Pre-IFRS 16 IFRS 16 IFRS
52 weeks 52 weeks 53 weeks
ended adjustments ended ended adjustments 53 weeks ended
2 January 2 January 3 January
2022 2022 2021 3 January 2021
GBP GBP GBP GBP GBP GBP
-------------- ------------ -------------- -------------- ------------ ---------------
Non-current
assets
Right-of-use assets - 24,939,614 24,939,614 - 25,324,841 25,324,841
Property, plant and
equipment 8,719,167 545,000 9,264,167 9,189,916 (77,773) 9,112,143
-------------- ------------ -------------- -------------- ------------ ---------------
Total non-current
assets 8,719,167 25,484,614 34,203,781 9,189,916 25,247,068 34,436,984
Current assets
Inventories 326,108 - 326,108 239,782 - 239,782
Trade and other
receivables 2,308,070 (419,368) 1,888,702 2,496,137 (597,842) 1,898,295
Cash and cash
equivalents 9,653,172 - 9,653,172 10,086,759 - 10,086,759
Total current assets 12,287,350 (419,368) 11,867,982 12,822,678 (597,842) 12,224,836
-------------- ------------ -------------- -------------- ------------ ---------------
Total assets 21,006,517 25,065,246 46,071,763 22,012,594 24,649,226 46,661,820
-------------- ------------ -------------- -------------- ------------ ---------------
Current
liabilities
Trade and other
payables 9,220,394 (2,490,529) 6,729,865 8,580,798 (3,671,094) 4,909,704
Lease liabilities - 5,830,987 5,830,987 - 7,176,104 7,176,104
Loans and borrowings - - - 1,000,000 - 1,000,000
Corporation tax
liability 900,690 - 900,690 - - -
-------------- ------------ -------------- -------------- ------------ ---------------
Total current
liabilities 10,121,084 3,340,458 13,461,542 9,580,798 3,505,010 13,085,808
-------------- ------------ -------------- -------------- ------------ ---------------
Non-current
liabilities
Lease liabilities - 25,831,103 25,831,103 - 24,195,555 24,195,555
Loans and borrowings 2,911,941 - 2,911,941 11,426,235 - 11,426,235
Total non-current
liabilities 2,911,941 25,831,103 28,743,044 11,426,235 24,195,555 35,621,790
-------------- ------------ -------------- -------------- ------------ ---------------
Total liabilities 13,033,025 29,171,561 42,204,586 21,007,033 27,700,565 48,707,598
-------------- ------------ -------------- -------------- ------------ ---------------
Net assets /
(liabilities) 7,973,492 (4,106,315) 3,867,177 1,005,561 (3,051,339) (2,045,778)
-------------- ------------ -------------- -------------- ------------ ---------------
Equity
attributable to
equity holders
of the company
Called up share
capital 386,640 - 386,640 359,016 - 359,016
Share premium
account 4,433,250 - 4,433,250 - - -
Share merger reserve 4,793,170 - 4,793,170 4,793,170 - 4,793,170
Share based payment
reserve 90,507 - 90,507 - - -
Retained earnings (1,730,075) (4,106,315) (5,836,390) (4,146,625) (3,051,339) (7,197,964)
-------------- ------------ -------------- -------------- ------------ ---------------
Total equity 7,973,492 (4,106,315) 3,867,177 1,005,561 (3,051,339) (2,045,778)
-------------- ------------ -------------- -------------- ------------ ---------------
, the news service of the London Stock Exchange. RNS is approved by
the Financial Conduct Authority to act as a Primary Information
Provider in the United Kingdom. Terms and conditions relating to
the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FLFSSSFIILIF
(END) Dow Jones Newswires
April 11, 2022 02:01 ET (06:01 GMT)
Tortilla Mexican Grill (LSE:MEX)
Graphique Historique de l'Action
De Mar 2024 à Avr 2024
Tortilla Mexican Grill (LSE:MEX)
Graphique Historique de l'Action
De Avr 2023 à Avr 2024
