Loungers (LGRS) — Preliminary Results

0:01 Good afternoon, and welcome to the LOUNGERS PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Nick Collins and CFO, CFO, Gregor Grant. Good morning. Good afternoon to you. Good afternoon, everyone. Thank you very much for joining the LOUNGERS results presentation for our year ending April 2023. I'm gonna start with some highlights, then I'll hand over to Gregor. He's gonna go through the financial performance, and he'll then hand back to me, and I'll talk through the strategic and operational review.

0:56 But just to start with the highlights, I think it'd be fair to say we're delighted with our performance over the year. We've achieved record revenue of GBP 283,500,000, industry leading like for likes of 7.4%, and we've opened what is for us a record number of sites opening 29 new sites. Importantly, margin pressures have been largely mitigated, and we are experiencing inflationary pressures diminishing, and Gregor will cover that in more depth. Our new site openings continue to perform very well, and we expect to open 34 sites in the current financial year. And we now believe that the scale potential scale of the lounge business in The UK is at least 600 sites, and we've carried out detailed network planning exercise with our property team to get to that number. We've launched BrightSide during the year, our new roadside dining brand, with two sites open in Exeter and Soltaz.

1:48 And we really believe our value for money focus means that we're well positioned if there is a consumer downturn. But importantly, we're really pleased with the start to FY 2024. In the last twelve weeks, we've seen no change in consumer behavior, and current trading remains very strong. Over to you, Gregor. Thank you, Nick, and good afternoon, everybody. I'd like to take you through the numbers, if I may. It's a reasonably well trodden path. This will... We'll have some highlights.

2:14 I'll then take you through to look at our like for like sales performance and bring you up to date there. We'll touch a little more in terms of margin, our current thoughts on inflationary pressures, and then I'd like to wrap up with cash flow, little bit of a deeper look at CapEx, in particular, in the lounge estate, and then finally, looking at net debt and updating you on banking amendments, we completed in June. First slide, slide four. What I'm doing here is reporting on the f I twenty three financial performance. I'm putting that into context against our results in f y nineteen. And the reason for f y nineteen is twofold. Firstly, that was the last full year pre COVID. So it... It's a clean comparative, and I think it helps to make more sensible comparisons in terms of margin and so forth.

3:01 But equally, it was the the year running up to our IPO in April in April 2019, so it finished just a couple of weeks pre the IPO. And I think in respect, what it shows is a really strong progress that the business has made over its four years as a public company with revenue up 85%. And when you look at that, what's driven it is the fact that we've added 76 sites to our estate. So we've gone up from a 146 to 222 over those over those four years. But that's been accompanied by a really strong four year like for like sales performance of just under 23%. As we look down the the chart on the left hand side, so revenue at 283,500,000 plus 85% on a four year basis. Gross profit, a 113.2, showing growth of just over 78.

3:48 And what you see there over the four year period is some margin erosion of a 160 basis points, and that's something we'll come back to in more detail in a few slides time. In terms of adjusted EBITDA on the old IES 17 metric, very much how we measure performance internally within the business. So that's post a traditional full rent charge. EBITDA is 34,200,000. That's up 66% over the three... Over the four years, and you'll see you've got a 140 basis points of margin erosion there. So less margin erosion on the IS 17 basis, testimony to our continuing strong property discipline in We We strong

4:32 strong in the business. Business. Performance performance in Moving on to slide five, and this where... This is where it gets a little bit complicated, I'm afraid. What I'm looking to do here is to compare our performance in FY twenty three against our performance in FY twenty two. And the FY twenty two year was impacted both positively and negatively in quite some... In in some quite significant ways. So for example, in FY '22, the first four weeks of that year, the business could only trade externally after the end of the third lockdown. And then in Christmas twenty one, the business was impacted by the the Omicron variant and the damage that did to Christmas trading.

5:20 More significantly, though, on the plus side, the business really benefited f I... Benefited in f I twenty two from the government's support measures in terms of the reduced VAT rate, which was worth 15,100,000, and from the reduction in business rates. So what I look to do in this chart is at the top half when we're looking at revenue, so that 283,500,000 on a headline basis at 19.5%. When I take out the eight weeks of trading in both years, which were impacted in f y twenty two, and I take out the VAT benefit, underlying revenue of 237,500,000 is still up 19% year on year. In terms of adjusted EBITDA under IFRS 16, so we're down to 47,300,000 this year from 53.6 and with a headline margin erosion of 590 basis points. But when you take out those eight weeks of impacted trading in the prior year, which clearly negative... Negatively impacted FY '22, and you take out the VAT benefit, which was a really big benefit in FY '22, and you strike EBITDA ahead of business rates where we had benefit in FY '22, you'll see that our underlying IFRS 16 EBITDA is up from 38,700,000 to 44,400,000.

6:30 So an increase of 15% there, and the margin erosion is reduced to just 70 basis points. And within that 70 basis points, you'll see labor cost as 40 basis points and higher energy costs for 30 basis points. Moving on to slide six, then like for like sales performance. There's nothing new being reported here in the the the top two the top two thirds of the chart as as a very strong three year like for like of plus 17.6%, and it's important to to remember that one when you're looking at one year like for likes at the moment. That 17.6% testimony to a really strong performance from the business throughout the entire COVID period and immediate post COVID recovery period.

7:16 On a one year basis, our like for likes are plus 7.4%. And then more recently, over twelve weeks to the July 9 up to last Sunday, we reported like for likes of plus 5.7%. That was modestly impacted in the first week by the timing of the Easter school holidays, and school holidays are very important for trading and lounge. If you exclude that first week over the eleven weeks to the July 9, the business was plus 6.5% on a like for like basis. On slide seven, what I look to do is to show how that plus seven point four one year like for like splits out across the different age cohorts within the estate. It's a slightly bumpier pattern than I've maybe shown in in previous years, but the really... The most important point remains very much the same. If you look at the 55 sites that we opened pre April 2015, so the three three row... The three columns to the left hand side of the chart, you'll see they're displaying like for like sales, which are as strong as any other cohort in the business.

8:16 And I think that's really testament to the fact that we continue to evolve in the lounge business. And secondly, it's testament to the very high standards of maintenance in those older sites. It's not a like for like sales performance, which is driven by the rollout program and by the opening of new sites.

8:36 Moving on to margin. On slide eight, what I look to do is just to show the bridge between our FY nineteen margin on an IS 17 basis of 13.5% and the margin of 12.1% reported in FY twenty three. And that 140 basis points of of of damage is effectively done on the cost of sales line. And that's cost of sales, meaning cost of goods sold, food and drink purchases, and also site labor. And you'll see that we're ahead a 120 basis points in terms of cost of goods sold food and drink purchases, and I think that's something which we'll see continuing in the years ahead. And we're 260 basis points to the negative in respect of labor. And I think when you look at that, that's a function firstly of a very tight labor market coming out of COVID. It's a function of the cost of living pressures over the last twelve to eighteen months, and that's in part reflected by two years of very strong national living wage increases.

9:32 Further down the p and l, you'll see a standout there in terms of energy costs, negative 50 basis points over the over the four years. The business continues to be very well protected through its May 2020 hedge. But if you think at the end of f y twenty three, that was by then only covering effectively 75% of of the the estate. Estate. So the 25% of the estate which we've opened post May 20, all their energy costs were effectively hedged through to the end of September twenty four at market rates at the time of their opening. Then the final point here, a 100 basis points of benefit in terms of site rent rates and service charge. So continuing, as I say, to display very strong property discipline. And over that four year period, you'll see our rent to revenue ratio has improved from 5.2% to 4.6%.

10:20 Slide nine, in terms of our thoughts on margin outlook. I think our view at the moment is we're definitely seeing inflation moderating. Those expectations in the chart there for July FY twenty four, they've certainly come down some way from the last time we reported at the back end of twenty twenty two in terms of inflationary expectations. What I've got in the chart there is an expectation of food inflation over the year of 6%, drink inflation at 3% to 4%, labor inflation at 8%, and then the impact of those higher utility costs in respect of our newer sites leading to 20% inflation on utilities over the year. Bear in mind that utilities last year were 2.8 of revenue, so a much lower percentage of our total sales and either cost of goods sold, food and drink, or labor.

11:09 And in terms of moderating and offsetting that, we probably expect that we'll need to take selling price of 5% or 6% over the course of the year. And effectively, we took 4% of that in our April venue launches in lounge and cozy club. Looking in a little more detail at food inflation, which has clearly got a lot of press coverage over the last few months with reports of inflation levels of 19 or 20%. In our business, when we look at the top 20 ingredients, which cover approximately 45% of our food purchases, we saw inflation of just over 13% year on year, April 22 to April 23. And within that, cooking oil and eggs accounted for nearly half of that inflation. When we look at those same top 20 products over the last quarter, quarter one of our FY twenty four financial year, we've actually seen marginal deflation, wholly driven really by reductions in the oil price.

12:02 If we look at drink inflation, that has been more modest over April over 04/08/2022 to April 23 at 6.8%. And then looking forwards in terms of national living wage, our expectation for next year is that we'll probably see an increase in the 7%, 7% plus range. So we're expecting to see that reducing from the nine or 10% rates which we've seen over the last two years. And coming back to the sort of levels where pre COVID, the business could manage those those increases in terms of maintaining its margin.

12:37 Over the medium term, the goal within the business is very much to restore its margins to those pre EBIT... Pre COVID levels of 13.5%. I think the biggest area of opportunity will remain in terms of food and drink margins. We've recently renegotiated major elements of our food supply as well as our drink contracts. We're looking to enjoy the benefit of that from the second quarter onwards. And there remain further opportunities to consolidate our buying within the supply chain, most notably in respect of fresh fresh food supplies with a produce, meat, dairy. In terms of site labor, I mean, that'll continue, I think, to exert pressure on margins through national living wage increases. But as I said in a couple of minutes ago, we expect that to revert to levels of annual increase, which were more like those seen pre COVID and which were manageable within the business.

13:29 Labor control remains an area of very significant focus within the business. We're currently reviewing all of our flex labor budgets across all of our sites within the estate to ensure that we're maintaining that level of control. In terms of site variable costs, there's no silver bullet here, but there are a large number of individual projects underway, be they covering laundry, seller gas, print, refuse collection as a few examples. And all of these offer us opportunity, which cumulatively will be very worthwhile. In terms of fixed costs, I expect us to continue to benefit from that tenant friendly property market where we've seen that through our property discipline, a continuing decline in our rent to revenue ratio. Equally, we had a new rateable value list coming on the April 1, and that sees us benefit immediately in the current FY '24 year. But in the years ahead, I expect us to see some favorable challenges to some of those new rateable values as well.

14:23 And as the estate continues to grow, so we continue to have the benefit of our leverage of our central cost base across a wider estate. I think the only really significant headwind which sits out in front of us over the next few years will be in respect of energy costs as we come out of our May 20 hedge in September 24. My expectation is the mow... At the moment is that there's probably another 100 to a 150 basis points of potential margin impact as a result of energy costs, albeit that is before any positive impact of the efforts we're making within the business to reduce our consumption.

15:00 Moving on to cash flow and CapEx. On slide 11, we've got a cash flow statement there. That's under IAS 17, so it's old style in that that adjusted EBITDA is after a full rent rent charge and rent cash outflow. So adjusted EBITDA of 34,200,000 converts into cash generated from operations of 36,100,000, benefiting from a cash inflow from working capital of 5,600,000 in the year. And that's the sort of annual in... Inflow from working capital that I'd expect to see on the basis of continuing positive like for like sales performance and the continuation of our new roll... New site rollout program. From that 36,100,000 of cash generated from operations, I deduct I deduct £7,900,000 of maintenance CapEx, and I include in the definition of maintenance CapEx there basically all CapEx, which is not specifically new site CapEx related.

15:54 So for example, that £7,900,000 includes £2,700,000 on getting pretty close to completing the lounge kitchen reset program. Also got interest paid in the year of 1,100,000, and you come down to free cash flow in the year of twenty six point nine million, which very... Comes very close to completely funding the new site CapEx in the year of twenty seven point nine. We then have 1,200,000 in terms of freehold acquisition and then £2,700,000 on the Root Respons acquisition, which was effectively to fund the acquisition of two two further freeholds. Cash outflow in the year of 4,900,000,000. In terms of capital expenditure, bottom of this chart shows a £37,000,000 of CapEx spend, which we see in the cash flow on the previous slide.

16:41 Over the course of the year, our CapEx creditor increased by 2,200,000, so you got a net total CapEx spend in the year of 39,200,000. 29.6 of that was in respect of new sites, And within that 29,600,000, we spent 26.9 on 29 new sites that were built and opened in the period. Those 29 new sites being 24 lounges, four cozy clubs, and our first bright side. The maintenance CapEx in the year of £3,900,000 represents 1.3 of revenue. And on top of that, we had a P and L maintenance spend of 1.6% of revenue, very consistent with previous years in terms of a total repair and maintenance CapEx spend of 3% of revenue. And as I mentioned earlier, the other major element of CapEx in the year was a £2,700,000, which we spent on 61 kitchen resets in the lounge business. That's a project which was commenced pre COVID.

17:36 It was halted during COVID and now has been completed with the project finally finishing in early May of this year.

17:50 On Slide 13, what I do is just compare the lounge new site rollout, comparing it in FY 'twenty three to FY 'nineteen. And you'll see the first point there. We opened 24 new lounges in f y twenty three. We opened 23 new lounges in f y nineteen. So whilst the rollout program has accelerated and we'll look to accelerate it further in f y twenty four, it's important to remember that we've been opening 25 plus new sites for a number of years now. Second row on the chart looks at the average landlord incentives that we've received. So back in f y nineteen on those 23 lounges, we received an average of thirteen months of incentive from our landlords. And those thirteen months were a combination of landlord contribution and rent free periods. Those thirteen months, when you roll forward to FY '23, have increased to twenty four months with the major increase being seen on the capital contribution line.

18:42 What's really important though is those capital contributions haven't been bought by offering our landlords longer lease terms or higher rent. You'll see the average lease length in FY twenty three was fifteen years, so actually modestly down on f y nineteen. Whilst average rents have increased slightly from 62 to 67, I think that's very much a function, firstly, of us taking on slightly larger sites, and secondly, absolutely getting prime pitch with our new site openings in FY twenty three. And most importantly, the rent to revenue ratio forecast for year one of those new site openings at 4.9% is consistent with the rent to revenue ratio of our FY nineteen sites. And what we'd expect to see over the next two or three years as the revenue in those FY twenty three sites increases and the rent remains the same, that that rent to revenue ratio will reduce. So for example, if those sites increase their revenue by 10% over the next two or three years, then that rent to revenue ratio would decline to 4.4, 4.5% or so.

19:41 In terms of average CapEx per site, net of landlord contributions, that's up from 649 to 835. Important though, we opened one exceptionally large lounge in the year, Martello Lounge in Clackton Upon Sea. If we exclude that, the average spend was 785 k. So still a significant increase over that four year period. And three major factors driving that. First, as I say, the larger average size. So typically, you've got a 12% increase in covers, but also greater external areas. Secondly, enhanced design and build. And that's both in terms of design and look and feel of the sites, which I think most people would say has never been better. But secondly, in terms of some of the equipment which is going into sites on day one and some of the build techniques which are being used to reduce future maintenance charges.

20:28 And then the third bucket, not surprisingly, relates to the elements of inflation which we've seen in new site openings. So labor costs have clearly increased. We've seen inflation in some of the kitchen equipment, and we we do our best to mitigate that by buying in bulk and beating increases. And thirdly, probably elements such as the steel, which is involved in extract and so forth. Final points to make there, those FY twenty three openings in their first year to date, average weekly sales of just under £31,000 per week. That compares to just under 23 k per week in their first year of opening for the FY nineteen cohorts. And when you look at how that FY nineteen cohort has grown post opening in FY nineteen, you'll see our FY twenty three openings are still some 13% ahead of the FY 'nineteen cohort.

21:13 And most importantly, that 30% plus crockie is being maintained in our new site opening program. Final slide from me is just an update in terms of our non property net debt. So we finished the year with underlying net debt of GBP 6,100,000,000. That's GBP 3,400,000 higher than our underlying net debt at the end of FY 'twenty two and worth bearing in mind that that is after GBP 37,000,000 of cash outflow in respect to CapEx and also GBP 2,700,000 to fund the REIT acquisition of those two freeholds. We refinanced our bank facilities in June of this year. We reduced our term loan to 20,000,000 from 32,500,000 by prepaying 12,500,000 of it. And at the same time, we increased our RCF by 12,500,000 to 22,500,000.

22:01 So we've got no change in our total liquidity, but clearly a more efficient structure in terms of mitigating higher interest rates. There's been no change to covenants. The margin is 1.75% on that borrowing, and the facility runs for three years to June 2026. So we finished FY '23 with a very strong balance sheet and funding position ready to go into FY '24. And with that, I'll hand back to Nick, if I may. Thank you, Gregor. So first slide for me, slide 16, just like to look at our our our sales performance and and highlight the degree to which it's outperformed the sector. I think we're fairly unique in looking at over the last ten years as that chart shows, our our positive like for likes, and and then we've accelerated that growth post COVID.

22:50 And whilst accelerating the rollout, we've consistently achieved like for like sales growth, and I think that reflects both the innovation and evolution within the business. And looking at that 17.6% that Greg will mention earlier, FY 2023 sales being 17.6% higher than FY 2020. If you take the 142 sites that were open in FY 2020, they were achieving average sales of GBP 25,900. And they're now achieving sales of GBP 30,500. So it really, I think, demonstrates the growth. And I think that's far stronger than the vast majority of our competitors, and it reflects both volume growth as well as price. We're often asked about in the last three days over the road show, asked a lot of questions about what we're seeing from The UK consumer. What's our... How's our customer behaving?

23:38 It's really clear. We've seen no change whatsoever in their behavior or sentiment. And based on our ex... Experience, The UK consumer remains very positive. And that's... You know, we look at the data a lot. So look at sales patterns, day... Days of the week, category sales, regionality, no shift whatsoever. Couple of things that we have seen. Brunch daytime sales continue to dominate growth, but evening growth has been really encouraging, and that's something that's improved over the last twelve months. And then some of the changes that we saw immediately post COVID are starting to slow down a bit. So increased cocktail sales, increased pudding sales, they're not as extensive as they were immediately after COVID. So as I said, looking at the next slide, Slide 17, it's evolution alongside value for money that continues to drive our sales growth.

24:29 And if we think about menu innovation, immediately post COVID, we were a little bit more timid in terms of the way we developed our food just because we wanted to protect our kitchens and protect the teams working in our kitchens when when labor was harder to harder to find, it's harder to recruit people. And what we're saying here is that our menu innovation is no longer being constrained by labor concerns. And some examples of that, in lounge, we've seen flatbread sales overtake sandwich sales at around GBP 16,000 per week, which is a really significant change. Also, the importance of Asian dishes. We introduced nasi goreng back in April, and that's alongside Bang Bang Chicken, means Asian dishes now represent 15% of our mains in lounge. Then just thinking about Cozy Club, which is the Sea Bass dish quite recently, and that alongside the salmon and the fish cake dishes that we serve means that fish dishes now represent 18% of our mains in Cozy Club.

25:21 And what these points... I think what they really help highlight is the fact that because in in all of our brands, we're not wedded to any particular specific cuisine. It gives us real flexibility to deliver what the customer wants. And then we said significant changes coming in the draft lineup across lounge and cozy club. And so in in a few months' time, we're refreshing our draft range, and we're gonna introduce Hofmeister, Cruz Campo, Menabrea, and Henry Westons. And they'll be replacing Ampstel, Astraea Dam, Punk IPA, and Stouffer Press. And the second bullet there, this is driven by desire to stand apart from high street brands. I think this is, again, it's really important. When we introduced Australia Dam, probably twelve years ago, we were just about the only people stocking it in The UK. And it's now really common great... Commonplace across bars in in in The UK. And we want we want to be different. We want to introduce new people to new brands. And I think Hofmeister, Menabrea, in particular, really exciting additions to our bar. And of course, because we're a bigger business and because we have that benefit of scale, we're gonna see a cash margin benefit from the the new deals as a result of our state growth.

26:34 But as I said, value for money, really important, and we represent excellent value for money in both lounge and cozy club. And our competitors... Competitiveness has improved. Right? And we've taken more price than we have historically, but our competitors have taken even more price than we have. And just looking at those prices there, a burger and fries and lounge, £10.95 and then £14.50 in Cozy Club. They represent really keen prices. We think they're very competitive.

27:03 Next slide talks about the continued investment and innovation in in operational support, and it's a really important theme within the business in this financial year. It's all about making life easier for our site teams. At the end of the day, we just want them to deliver great food and drinks and amazing hospitality, and these are the sum of some of the steps that we're taking to allow them to do that. So we've introduced regional community managers in in the lounges. So that's... We have six regions. There's one in each region, and they're there to encourage sharing best practice and to drive community involvement. It's really important. The lounges are a community based business. We talk about having to earn our place on each of the high streets where we trade across The UK. And these community managers, they're there... That you can't be prescriptive. They're they're there to nudge, share best practice.

27:51 We've also introduced a head of brand on the Cozy Club side on the marketing on the Cozy Club side. I think there's an opportunity there for us to drive awareness through social media and online presence, and I think importantly, improving our content alongside using our customer database better. We've also introduced a new online booking facility in lounge, and this is the only really used at Christmas. Typically, you can't book tables in the lounge, but whereas previously, they were having to write it down using pen and paper, this new booking system makes it easier for our teams. And then the fourth point, we've introduced regional recruitment and talent managers. Again, six across the regions. And, yeah, people is everything in our business, and we're giving our operations team more support, more resource here to help them find and keep the best people.

28:43 As Gregor noted earlier, our medium term goal is to restore EBITDA margins to pre COVID levels. And there's an ongoing focus in the business on improving conversion. And we talk a lot about our regional operating structure and the fact that we have low site to ops ratios, and that ratio of around about 4.5 sites to every one of our operators. And one of the real benefits of that is it allows us to deliver improved financial performance. And that's typically seen in two areas. First one, in in driving improvement in gross margin consistency, and secondly, in reducing the costs associated with staff turnover. By us having our operators having fewer sites to look after means they can be in their business more often, talking to their teams more often.

29:29 Labor is constant challenge in our business, but it... I think importantly, it remains one of our best, best attributes. It's a real strength of ours. We're also... We're targeting cost savings from smaller lines, and we've got specific projects. Greg will touch on them earlier around cooking oil, cellar gas, prints, laundry. None of these are really gonna move the dial, but but there's lots that we can go for. And equally, there are longer term longer term initiatives taking place in the business focused on energy consumption and waste to landfill. I think energy in particular, it's a really sizable opportunity. It's something that we haven't focused on before. It's not gonna happen overnight, but there's a lot for us to go for there.

30:10 Again, Slide 20, and it absolutely remains the case that our people and culture drive our continued success. And we're really proud we've supported our team through the cost of living crisis through increasing their pay. And for our HODs, that's our general managers, assistant managers, head chefs, and sous chefs, we've done... We've provided 11% salary increases, and we funded that through buying out half of their bonus potential alongside giving an an average 6% uplift. And we did that after lots of consultation in the business. And we also continue to support through some of the benefits you have in in working in our trade, so free food and drink when you're working alongside our staff discount. We continue to invest in learning and development, and a statistic that we're really proud of, 60%...

30:55 67% of our operations team have been promoted internally from site roles. That's a statistic we're very proud of, and there's lots that we're doing in terms of training for new joiners, for our supervisors, and for our managers, and indeed leadership training for more senior people within the business. We continue to work hard to be an even better employer. We launched the commitments in FY twenty two, and that... Those remain at the heart of everything that we do. Talking a lot about fairness, about paying competitively, and about work life balance and mental health. Alright. We have an annual staff engagement survey to make sure we we understand how our team feel about working at lounges, And that's a really it's a really honest way that we we can understand how we're doing. We did one a few months ago, and and the scores are better, but it's really clear that there's still more that we can do.

31:43 And then we have LoungeFest. It's... We closed the business down for a day. We have a big party, our annual staff party in a field in the Cotswolds. It remains the biggest and most important investment on the cultural side of the business. It's an amazing day, and it's really, really key in terms of look at our staff retention.

32:06 We've also strengthened the leadership team further during the year. As you can see on slide 21, three people here that we talk about. Guy has joined us as our chief p... People officer back in November. First time we've ever had someone that senior just entirely focused on our teams. And he's challenging all aspects of recruitment, learning, development, HR. I think really importantly, making sure... I just spoke about engagement, driving better engagement, and providing our operators, our senior operators with more strategic advice. Kate Lister joined us in October as marketing director. First time we've ever had a marketing director, and she's really pushing and challenging the exec to invest time and cash in marketing. Marketing. And it's interesting. On the Cozy Club and the bright side side of the business, they're both brands, traditional brands. And then Kate's also in charge of the lounge community team.

32:57 And finally, Jono became our commercial director in January. Great example of an internal promotion. He was previously lounge head of food, and he heads up purchasing risk compliance maintenance. And... But I think the really important part of his role is all about improving processes and efficiency as the business grows.

33:20 So next few slides, I want to talk a bit about property and the rollout in the pipeline. It we're continuing to open new sites that are performing really, really well, as Greg will demonstrate in the numbers, increasing the average level of EBITDA. And we have real growth and confidence about the types of locations where LOUNGERS can work. We we are bread and butters opening in secondary suburban high street, small market towns and those continue to dominate our rollout. But we're also seeing really strong performance in mixed use leisure and retail schemes. And I'll come and talk about an example of that in a minute. The pipeline's in a great place. We've got 34 sites planned for this current year, 31 lounges, one cozy club, two bright sides. And we now see scope for at least 600 lounges across The UK.

34:07 We've talked a lot historically about how we thought the the number that we were using of 400 was very conservative, and we're now happy to kind of look at that in a little bit more detail and update, and and we believe at least 600. And the way we've come about that figure are our uniquely experienced in house property team have produced an in-depth model based on our detailed knowledge of The UK. And we've worked on this for over twelve months, and it is literally a case of five people going across The UK and and challenging each location saying yes, maybe, or no. And we haven't included the maybes in there, so we believe it's a it's a conservative number. And if you think about that 600 and you put that alongside some of our competitors and reference how that

34:53 compares, I think that really helps demonstrate that it's still a conservative target. Cozy Club remains an integral part of the business and is fundamental to our growth plans. Cozy, it represents 22% of our sales, and it's one of the leading bar restaurant operations in The UK. We get off... Often get asked about Cozy Club from investors. I think it's less understood. It operates in a more competitive marketplace. But it's a business that we're very proud of, and there's still scope to almost double the size of the estate. And it performs just as well as lounge, I think, importantly, from a return on capital perspective. As I said, we now believe there's potential scale of the Cozy Clubs to get between fifty and sixty five sites, and that's in the the city centers and the large market towns where it really performs best.

35:42 We opened Oxford in September, and that's a great site that we're really excited about. And we'll continue to put new Cozy Club opportunities into the pipeline. But I think it's natural that as the the ratio of Cozy Club to lounge openings is gonna reduce as the number of opportunities of opportunities reduces within Cozy Club. I want to look at a few case studies now. I'll go through them quite quickly, but... Obviously, ask questions at the end if you have any. First, this slide just looks at Bristol. And and we still believe there's an opportunity to double the size of the estate in Bristol. And when we think back to that number of 600, I think this is a great example of of of highlighting that scale opportunity. We currently have five lounges and one cozy club trading in Bristol.

36:30 We... During the year, we relocated one site, Porto Lounge. I'll talk about that in the next slide. We also opened a new lounge, Barranco Lounge in the Abbeywood Retail Park, and I'll go through that in a little bit more detail. Three other lounges all trade really strongly. Cozy Bristol, right in the center there, just around the corner from our office, is one of the best EBITDA sites in the business.

36:52 Yet even here in Bristol, which is our heartland, we've been here for twenty two, twenty three years, we still believe there's opportunity for open... For us to open five new sites in those locations listed there. I it helps demonstrate there's still lots to go for. So looking, mentioned the Porto Lounge and its relocation, and this slide just looks at that in a little bit more detail. Porto is in fish ponds and in relocating it, one of our oldest sites, Porto, it's allowed us to more than double sales and EBITDA. And you can see on the left there, the old portal is a tiny site, had 45 covers. It was... I mean, it's astonishing that it achieved those sales of just over £18,000. But in... Not representative of the type or size of sites that we open now. So we were relocated.

37:40 So as you can see on the right, this was previously two shops under the same landlord. One was a card shop and the other was a pharmacy. We've joined them together paying a higher rent at £57,500, but you can see their gross average weekly sales of over 43,000 and a fantastic forecast return on capital of 43%. Looking at the next slide, the other Bristol site that I mentioned that we'd opened during the year was Barranco Lounge, which is a great example of how well lounges work in in the right retail schemes. And and we believe these types of locations have have undeserved poor reputation that's come at... Come about over recent years. And we certainly find that the right scheme is... Gives us a really good opportunity to open a site that will generate high levels of sales, high levels of EBITDA.

38:33 Barranca Lounge here was previously in a in a... The unit was previously a Frankie and Benny's. And if you look at that that chart there, the the the plan there that you can see on the slide, you can see the retail that's around it. What you can't see is on the left is there's a big ministry of defense office with lots of workers, and there's loads of residential surrounding it. So we... This scheme generates really high footfall from local shoppers, local office workers, people who are going there for the gym, and that's just the kind of environment where we want to trade. Rent of 75,000, just above average. A great average weekly sales of 42,000. Net CapEx was good, and and the forecast return on capital of 38%.

39:19 The next study looks at the the Caddo Lounge in Neath, again, one that we opened this year, and we've included this one because, again, I think it helps highlight the scale opportunity. There are a lot of towns in The UK that are not dissimilar to NEETH. Similar size in terms of population, similar demographics. And if you look at the competitive landscape in that chart there on the right hand side, this is just the kind of competitive landscape where land typically trades. So from a food and drink perspect... Perspective, there's a Costa, there's a Greggs, there's JD Weatherspoon, Subway, a Pizza Hut. And from a retail point of view, there's an Argos, Marks and Spencer's, Boots, couple of banks, etcetera. This is our kind of territory. The scheme here was a new build scheme that was that was built by the local authority.

40:05 We trade alongside a pool, a library, great for our for our community credentials, and a really competitive rent here, £37,500 and a decent landlord package of thirty two months. They wanted us in this scheme because we're... They knew what we'd bring to that local community. And indeed, the business has traded really well. Average weekly sales of 40,000. Great return on capital of 33%. And not too far away from other lounges, Zinko Lounge in Swansea, six miles away, and Croyso Lounge in in Mumbles on the on the coast is is 12 miles away. And last one, I promise in terms of of case studies, Cozy Club Canterbury. Again, we opened there in August, and are delighted with the way it's performed.

40:52 It's in a it's in a lovely heritage building. It was previously a Clausenhamblin department store, and we're trading over four floors here. And if you look on the right hand side, this this helps kind of demonstrate, I think, the the different environment that Cozy Club trades within. So lots of brand names that I'm sure you'll be familiar here with from a food and drink perspective. Wagamama's, Coke, Bill's, Tortilla, Frankamanca, Las Iguanas. Lots of operators in Canterbury. It's a great, great city. And we trade really well here. Average weekly sales of 48,600. And you can see... So the Cozy Club's higher sales, higher levels of EBITDA, higher CapEx, but, again, yeah, great returns on capital. And an oddity, we bought the freehold here at 850,000.

41:38 We did that. It was just a really good opportunity. We'll do a sale and leaseback on that. Our model isn't owning freeholds. And so last slide before I sum up, talks about Brightside, our new roadside dining brand. And we opened the first one in Exeter in February. We opened the second one in Solta, actually, June, and we're due to open third one in in Honiton in a few weeks' time. It's early days, but we are relatively pleased with the sales performance. What does that mean? I think when we opened Exeter, was a little bit quieter than we expected. And we also... We received quite a lot of negative feedback in the very early days. And one of the things we've learned... So Root restaurants was the the previous occupier of this site.

42:23 And when we bought the three sites, we bought them from a trading business called Root Restaurants. They were an American diner, much lower price points and a very different offer. And I think when we first opened and some of the former Root customers came and visited us, and we're disappointed that we weren't like Root. And the Bright side model is quite different. It's a higher price point. All freshly cooked food, etcetera. And that was quite dispiriting for our team, but but what we've seen subsequently after an initial flurry of negativity, the feedback's been really strong. The sales are building an X, and we're pleased with how we're doing there. And then we've opened in Saltash, and Saltash has opened really strongly. Really great sales that we've seen there over the last six or seven weeks. And we're excited about opening in Honolson in a few weeks' time.

43:09 And we expect to learn a lot more over the next six weeks. So this business is more seasonal than than the... Either the lounges or the cozy clubs, and we're expected to see around a 40% uplift in sales over the coming weeks. And I think we'll learn a lot more about the business then and how we deliver at that really busy time. So key observations so far, local customer base is really important, just as important as the passing motorist. I think that's particularly the case for Exeter, and that site's quite hard to find, particularly if you're going southbound on the A 38. More legacy loyalty than we expected, and that's the point I just mentioned about the disappointed route customers who were looking for their more value led US diner style operation. Speed of service is so important. I mean, we're good in Lounge and Cozy Club. We're quick, but we need to be quicker in

43:58 Bright Side. Recruitment hasn't been too challenging. We were worried about it, and it hasn't been quite as hard as we expected. And it's the first time that we've we've sold pizzas. And so that's been a great experiment. Got pizza ovens in each of the bright side kitchens. And one of the things we've learned is they're they're not as they're not as as taking up as much in the sales mix at lunchtime as we might have expected, but they are still very popular in the evening. And then our final point, everyone loves an avocado bathroom suite. The the look and feel and the design of the Brightsides is amazing, and I really thoroughly recommend you to go and visit. One of the most talked about points is the the avocado sinks and loos that have received quite a lot of attention on social media. So that's BrightSide.

44:44 So just some final thoughts really and and and just just summarizing kind of factors and themes that we've already talked about during the presentation. We have once again delivered a sector leading performance. So I think, you know, we've shown over the last ten years that despite accelerating that rollout, constantly opening sites through our evolution, innovation, focus on value for money, we're delivering consistent like for like sales growth. Our new site's performing very well. Rollout has accelerated to 34 sites, but it's not really an acceleration. We opened 29 last year. It's a level that we're very comfortable with. I think really importantly, our rollout is self funded from consistently strong cash generation. This is through internally generated cash flow that we opened these sites. And we now believe there's a potential for at least 600 lounges in The UK.

45:34 We've got a best in class senior team. We continue to invest in our people at all levels across the business. And inflationary pressures are diminishing, and I think there's a really clear medium term goal to return margins to pre COVID levels. So that's it for me. We are obviously very happy to answer any questions. Nick, Greg, well, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed for our investor dashboard. I'm Nick, Gregor. As you can see, we have received a number of questions throughout today's presentation.

46:21 And if I may hand back to you and kindly ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. And I think I'll take the first one, Nick. Okay. This is this is from Mark Gordon James. Reasonably multifaceted question. I think the first element is is addressing free cash flow. Hopefully, you find that that element of the of the presentation useful. It's something we have been talking about specifically in presentations really since coming out of COVID and and and once we restarted a full new site opening program. Last year, FY '23, free cash flow of 26,900,000 was pretty much wholly funding that £27,900,000 of new site opening CapEx.

47:08 Next year, with the 34 new sites that we're expecting to open, we'll be fully self funding, then we'd typically expect to be generating some excess cash from FY '25 onwards, subject, of course, to any decisions we make about further acceleration of the rollout given that we've got 600 plus lounges to go for. Dividends, I mean, they they are a topic which is is is very much, you know, up for discussion amongst the board. It's something we think about, review regularly. Clearly, the focus within the business has been on on its its rollout program and the acceleration of that. And I think it's fair to say that, you know, when we discuss topics of dividends or share buybacks, for example, with with investors, the overwhelming enthusiasm is that we we focus on our rollout. We reinvest our cash in that rollout and in generating that 30% plus property return.

48:01 I think the the final element then relates to to EPS and the impacts on EPS, in particular, IFRS 16. I mean, it... It's fair to say that in some respects, the business may look expensive on a p ratio basis. I mean, that's clearly not untypical for growth companies like ourselves. IFRS 16 doesn't help us in that... In the early years of a lease, you tend to see your profits depressed due to the higher interest charge, which is allocated to to that lease in the early years. At the moment, we're probably generating something like, you know, £2,000,000 lower pretax profit under IFRS 16 than we would under the old accounting standard IAS 17. Clearly, over the life life of the lease, that that reverses. And so in the coming years, we'd expect to see, as I say, that that underperformance under IFRS 16 switch around and reverse.

48:55 I mean, other relevant... There's a there's a reference, I think, to the Shore Capital report, which was interesting because it it made many of the points that as a business we were making at the time of our IPO in terms of encouraging investors to look at us not on... Not necessarily on that EPS measure and to understand what was in the EPS measure.

49:14 Because other elements in addition to IFRS 16 would be, you know, a relatively high depreciation charge relative to many of our competitors. Depreciation, typically about 4.7% of revenue, and again, driven by the number of new sites we've got and the fact that they suffer a higher depreciation in the early years as we depreciate elements of fixtures and fittings technology and the like. And probably the final element in terms of EPS to just draw on is is the fact our share based payment charge, again, which is reasonably substantial. We have we have broad ranging share plans across the entire business. Over a thousand employees are benefiting from that. But again, there's an element of double whammy in your EPS when you think you're you're using a profit after tax number, which reflects share based payment charge. And then you're using a fully diluted number of shares as well, which clearly incorporates in it the shares which will be issued under those schemes.

50:05 Hopefully, that's... That addresses all the all the elements of that question, Mark. Thank you, Greg. Next question says, do you think there is an overhang in the shares? Where might it be coming from?

50:18 I mean, Lion Capital are... Who invested in the business 2016 when we were a private business. I still own 25% of the shares. And they are a, you know, they are a very supportive holder and investor. And and Robert, who's a representative of Lion Capital sits on sits on the board. So, hopefully, that answers that question. The the next question, would you be looking to grow inorganically at all? Do you feel you might be a good takeover target, especially at this share price?

50:57 Inorganically, I think it's unlikely. One of the great things about this business is that we're returning... It was that we're investing the cash that the company generates and achieving fantastic returns on capital. And I think it would be really hard to achieve similar returns on capital through acquisition. Might we be a good takeover target, especially at this share price? It's very difficult for me to comment on that. I mean, I think we've made our kind of views clear on our kind of how we feel about the share price. And clearly, we're doing everything we can in terms with the investor community to try and demonstrate why we believe it should be valued higher. Next question asks who we're taking market share from and what does well, I'll answer that bit first. So it's really hard to answer that question. I mean, clearly, supply is coming out of the market. I think that's calmed down a bit then. I don't think there are many kind of large scale restaurant, pub operator closures still to come.

52:03 We must be taking share from someone. I think one of the great things about LOUNGERS and Cozy Club for that matter is we we we service so many dayparts, so many occasions, so many broad demographics that that we nick a little bit of trade off everyone. But, clearly, when we open in Neatham, we're achieving sales of maybe 4... Over £40,000 a week, there must be other businesses in Neath which which have been receiving that money. But I think it's quite it's quite spread out. The next part of that question asks, what does the road map look like for site rollouts? Any preference for locations? And are you finding good deals on new sites?

52:42 So I mean, when we think about rollouts, we see huge opportunity across The UK as hopefully we've talked about. One thing that's really important is that we don't have too much bias towards specific areas or regions within one... In a short period of time. Otherwise, it puts too much pressure on our operators. And that that leads to a kind of a dilution of culture and and higher risk of us not delivering well when we open a site. So, yes, we are nudging further into the Northwest, into the Northeast, but but then equally, we're opening lots of sites in Central England, Wales, and in and in the South. In terms of preference for locations, we... We're equally kind of... Whether that be secondary suburban or might be small towns or might be coastal locations or indeed retail schemes.

53:31 We're we're we're kind of happy with all of those. And in terms of good deals, yes, Greg will hopefully demonstrate it. Rent levels have been very consistently excellent. I think what... What's great is that what, hopefully, we're showing is that we're finding better sites in terms of their pitch, in terms of their prominence, and and and and that's helping us generate higher levels of sales.

54:01 Next question asks, you've had wonderful growth in new sites and like for likes. What specific steps have management discussed to try and get the share price to be more reflective of your success? Is it getting on the dividend less... List increased retail investor focus, etcetera?

54:20 I think Greg has talked about dividends, and we've we're we're... At the moment, we had both sets of brokers and indeed our our financial PR advisers talk to the board just last month about what we need to do to allow the share... Or to get the share price to be more reflective of of our success. And I think it'd be fair to say, you know, in... Increased retail investor focus is indeed something that we've discussed. And, hopefully, shortly, you'll see that we'll be making... We'll be paying for some analyst research to be made available to retail investors, which will hopefully help in that regard.

55:02 Would you be able to give us a feel for the per site economics of BrightSide so far? No. I think it'd be fair to say. I... One of the things that we talked about when we... Lot... When we first introduced BrightSide was that we saw the metrics being somewhere in between a lounge and a cozy club. And I think broadly speaking, that's still our intention. But I wouldn't really want to go into any more detail than that. Next question. Will the new headcount additions to operational community and recruitment detailed in the slides add materially to central costs or still sensible to think as 7% of revenue? Gregor, I might.

55:43 Well, I don't think I'd use the word materially. Clearly, we continue to invest in the business to fund our... To to to meet our growth targets. That's something we've always been really good at as a business in terms of investing, you know, twelve, eighteen months ahead so that we can support that 34 new site openings growth, for example. You know, 7% of revenue has typically been where we are in central costs, and that's that's very much where, you know, we'd expect to be in the coming year. Next question asks, given the growth, how are you finding recruitment and staff retention? We're finding it's fine. It's it's it's it's not easy, but recruitments in our industry has never been easy. It's certainly nowhere near as difficult as it was eighteen, twenty four months ago. And the... And and, yeah, if you think about it in the context of us opening 29 sites last year, we've we've created 900 and something jobs, and we filled those jobs. So we're we're we're we're comfortable with where we are. We have the benefits of being a bigger business and fantastic opportunities for people who want a career in hospitality.

56:47 And that's something that we've shattered a lot about and are very proud of. Next one says, please, can you give a view as to what your major competitors have done and how the competitive environment has developed over the last year? I mean, first thing I'd point is we don't have, particularly in lounge, a major competitor when we compete, as I said earlier, with coffee shops, sandwich shops, pubs, restaurants, and and and a bit of everything. In terms of how the competitive environment's developed over the last year, like, the first point I'd make is everyone's taken a lot of price.

57:22 And going back to the points I made over at the start of my section, you know, we think we're in a competitively better place because, yes, we've taken price, but we haven't taken anywhere near as much as anyone else as everyone else. And so we think that, you know, from a value for money perspective, that looks as puts us in a good good good position. I think more broadly, you know, supplies come out of the market. Everyone's had to up their game a bit. And and I think for the consumer, that's that's a really good thing. And I think it's important to note that we're not the only people doing well out there. I think if you look at our listed peers, there's lots of older, quite mature, very, very big businesses there. But if you look at to the to the... In... On the on the private ownership side, there's some fantastic businesses doing really, really well.

58:09 And so I think it's important that the the the kind of the sector is not all kind of covered in in in in doom and gloom. And indeed, it's a really good environment for small start ups and people, entrepreneurs who want to give it a go. There's lots of property available and landlords are having to realize that they need to be more flexible in terms of their approach. Do we feel that Bright Side margins will be similar to those at cozy clubs and lounges in due course? I think that that's a great question and one that we don't know the answer to.

58:43 I... You know, we're really hoping that in November, December, when we're doing our interims, we'll be in a better position to talk about BrightSide in terms of financial metrics. The way we think of it is it's in the lab. You know, we'll have five BrightSides in in twelve, eighteen months' time, And we're not... We haven't got any more in the pipeline. And what we need to understand is is... But, ultimately, will they generate a cap... Return on capital that's similar to or better than LOUNGERS and Cozy Cup? And and if that's the case, is it a good use of our of our cash? We don't know the answer to that question. We think there's a big revenue opportunity. We're pretty confident about that. From a conversion point of view, we know the margins will be good, but labor is an unknown. And that's something that we're going to continue to work on.

59:32 Next question. What was the most pressing and important learning from the staff survey, and what are you doing to tackle it? Great question. I think the one that that probably most frustrates me is is, you know, I think we're really good as a business at listening and and being in the business. I visit between five or 10 sites every week. And if I go on a site, I'll ask everyone a question and, you know, you are... Generally, if you ask our team lots of open questions, they're pretty quick to tell us what we're going... What we're doing wrong. And that clearly gives us the opportunity to to resolve it. I think what's what surprised me, upset me, and was probably the most important learning from the staff survey was that there's still pockets. We've got people who are really unhappy about the way that they're being managed and and and and the way that they're kind of... Their experience as an employee of LOUNGERS.

1:00:24 And we don't always get it right. And the best thing about engagement surveys is they tell you exactly where those locations are, and that gives us the opportunity to go and address it. And so, you know, when we when we hear that, we'll immediately focus a lot of attention there and figure out what what we're doing wrong or most importantly, who who is doing something wrong because, yeah, we're a people business. And if we have the wrong people in leadership positions, then then that affects our customers. What's the geographical spread of the estate now? Are there areas of the country you feel are underexposed to the brands? For us, for instance, I'm in the Southeast, Kent, Sussex. You know? Well, I mean, we are... The business started in Bristol and has and has gradually spread from there. So we we have an amazing... We have 20 sites in Wales. We're very strong in in Devon and Cornwall, and we're very strong in the Midlands.

1:01:17 But as you probably rightly point out, we're we're less strong in the Southeast. So while there is lots of opportunity for us up in the Northwest and the Northeast, and we are spending a lot of time there, equally, we're we're in Kent a lot. We're in East Anglia a lot because there are loads, loads more sites for us to open in those locations. Next question. I've previously asked about the risk of competition from other operators opening similar outlets, and you explained the factors that you believe give LOUNGERS a unique competitive advantage. Have you looked at Titanic Brewery's bod concept, I think that's it, which looks to me like a lounges with a competitive age gains by... Gained by offering an attractive range of traditional cask scales?

1:02:04 I... I'm not actually familiar with that one. I I... I'd love to know where it is. So so we can... I'm guessing I'm guessing it must be in the Northwest somewhere, but but I don't know. So... But, listen, we we... We're pretty good. I mean, one of the best things about being in London doing our results roadshow for three days is that we get to try everything in London, which is a really good use of our time. I mean, there are... Then we've got... There are other people who who do an all day offer, and and we we try to stay quite close to it. No one of scale has has has has copied what we do, and quite a few have tried. There's businesses like Megan's, for those of you who operate... Who live in London. And it's it's it's... Some of what they do is not dissimilar to a large. It's it's it's probably aimed at a more affluent demographic than what we do. And it's interesting. Like, we...

1:02:58 I'd love it if we could sell traditional caskail because I personally am a big fan, but there's no way that we can sell traditional caskail because BSLs form a a a not a low, relatively low proportion of our sales. And then... And if cask scale would be a small subsection of that, then there's no way we'd get through the volume to get through proper casks without kind of... Without the quality being being being damaged. So, you know, I think from a... In terms of the risk of competition, it's always there. But you have to, you know, you have to be able to look at yourself and say we're the best out there. And, you know, there are there are always things that we can do better. Food, drink, coffee is an area of real focus now. So, yeah, there's there's no, what's the word, kind of complacency.

1:03:47 I think, yeah, we're always looking and challenging what we can do better. Did I miss your time frame, RE 600 outlets? Is that a question? No. Because we we haven't we haven't put a time frame on it. You know, at the moment, we're opening, or, you know, we we we expect to open around 30 lounges a year, and we're at a 195 at the moment. So just doing the math, that's that's a lot more than ten years. There's there's lots just to go for. Clearly, a a decision that we might have to take at some stage in the future is is that we might accelerate that, but we're very happy at the current rate as things stand.

1:04:27 Nick, Gregor, that's great. And thank you for being so generous with your time and for addressing all the questions that came in from investors today. And of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet company platform. But perhaps before we direct investors to provide you with their feedback, which I know is particularly important to the company, Nick, could I please ask you for a few closing comments? Yes. I think as I just say, we're delighted with our performance during the year ending April 23, and it's consistent with the performance that we've delivered for the last ten years. We believe there's enormous scale for LOUNGERS, in particular, across The UK with... For at least 600 sites. And from a performance perspective, our margin pressures have largely been mitigated, and the inflationary pressure is diminishing.

1:05:16 Our customers are behaving just as they always have. There's no change in consumer behavior, and we're really positive and optimistic as we look

1:05:23 ahead. Thank you very much. Thank you. Nick, Gregor, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be redirected to provide a feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of LOUNGERS PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.