1 December 2021

Loungers plc

Results for the 24 weeks ended 3 October 2021

Another strong resumption in trading post lockdown that supports Loungers' ability to out-perform profitably in a post Covid-19 environment

Loungers (the "Group") is pleased to announce its unaudited results for the 24 weeks ended 3 October 2021 ("the period").  Loungers operates a total of 184 sites, comprising 153 Lounge café-bars and 31 Cosy Cub restaurant-bars.  The Group's sites offer something for everyone regardless of age, demographic or gender and the Group operates successfully in a diverse range of different sites and locations across England and Wales.

The 24 week period being reported on includes four weeks to 16 May where the Group's sites were restricted to external trading only, and a further nine weeks to 18 July before the removal of the remaining Covid restrictions.  Accordingly, only 11 weeks of the period were absent from any Covid restrictions.

Financial Highlights

·      Revenue growth of 91.4% to £102.4m reflects the very successful resumption of trading from 17 May

·      Adjusted EBITDA of £27.1m, up 105.1% (H1 2021: £13.2m), driven by strong sales and margin growth

·      IAS17 Adjusted EBITDA of £22.0m, up 152.1% (H1 2021: £8.7m)

·      Underlying IAS17 EBITDA margin growth of 40bps against 2019 over the 20 weeks from 17 May, excluding the beneficial impact of the VAT reduction and other government support measures

Operational Highlights

·      Significant market out-performance post re-opening to 3 October

-       Headline LFL sales growth of +26.6% in the period from 17 May to 3 October (compared to 2019) is testimony to the strength of our brands and our teams

·      Uniquely well-placed post Covid

-       Suburban / market town focus protects against longer-term behavioural changes brought about by Covid

-       Increased sales, efficiency and margin being delivered through the order at table app and the reduction in the number of dishes on the menu

·      Resumption of new site roll-out

-       12 new sites opened in the period, comprising 11 Lounges and one Cosy Club.  A further four sites have been opened post the 3 October half year end in Ringwood, Reigate, Colchester and St Neots

-       Further investment in the build and property teams to provide the capacity to accelerate the roll-out

-       Pipeline strength and depth reflected in the quality of the period's new site openings

·      Managing the inflationary environment

-       Introduction of differential pricing in July 2021 allows additional pricing flexibility whilst we retain our critical focus on value for money

-       Continued control of labour and supply costs, where we continue to benefit from our increasing scale

-       Utility costs hedged in May 2020 through to September 2024

·      Continued reduction in non-property net debt to £11.9m

-       The Group's balance sheet strength has enabled the early resumption of its roll-out strategy, allowing it to benefit from a tenant friendly property market, where prime pitch properties in strong target locations are available at attractive rents

Current Trading and Outlook

·      Since the end of the period the business has continued to consistently out-perform the sector and achieve strong like for like sales growth post 3 October, headline LFL sales across the 28 weeks to 28 November of +23.4%

·      Whilst mindful of the news of the Omicron variant, we are optimistic looking ahead to trading over the Christmas period and beyond. The Lounge business is very balanced seasonally, whilst Christmas trading is more important for Cosy Club and we are encouraged by the level of bookings.

·      We anticipate 25 new site openings during the financial year ending 17 April 2022 and have the infrastructure in place to accelerate that pace as circumstances permit

Nick Collins, Chief Executive Officer of Loungers said:

"Our value for money, all day offer appeals to a very broad demographic, and this underpins our market-leading performance in towns and suburbs across England and Wales.  We will open 25 sites this year as we continue to benefit from the changing dynamics of the high street and our pipeline of new sites has never looked so strong.  Our sustained growth alongside our operational discipline are enabling us to manage and mitigate most inflationary pressure.

"As we move into the Christmas trading period any potential impact of Omicron remains to be seen, but as we look ahead to 2022, I am very optimistic with regards to our prospects and the continuing roll-out of both Lounge and Cosy Club."

Use of Alternative Performance Measures

The Half Year Results include both statutory and alternative performance measures ("APMs").  Further background to the use of APM's and reconciliations between statutory measures and APM's are presented on page 17.

For further information please contact:

Notes to Editors

Loungers operates through its two complementary brands - Lounge and Cosy Club - in the UK hospitality sector.  A Lounge is a neighbourhood café-bar combining elements of coffee shop culture, the British pub and dining.  There are 153 Lounges nationwide. Lounges are principally located in secondary suburban high streets and small town centres. The sites are characterised by informal, unique interiors with an emphasis on a warm, comfortable atmosphere, often described as a "home from home".  Cosy Clubs are more formal restaurant-bars offering reservations and table service but share many similarities with the Lounges in terms of their broad, all-day offering and their focus on hospitality and culture.  Cosy Clubs are typically located in city centres and large market towns. Interiors tend to be larger and more theatrical than for a Lounge, and heritage buildings or first-floor spaces are often employed to create a sense of occasion.  There are 31 Cosy Clubs nationwide.

CHIEF EXECUTIVE REVIEW

Highlights

·      Market-leading sales performance of +26.6% LFL since re-opening the entire estate on 17 May;

·      Consistently strong sales performance across the business;

·      Our suburban, market-town locations aligned with our best-in-class rent to revenue ratio of 5.4% mean we are very well placed to continue to generate strong returns;

·      The broad demographic appeal of our flexible, community-based offer together with our unique hospitality and culture resonates now more than ever;

·      Significant evolution of the Cosy Club food offer;

·      Introduction of price banding throughout the estate;

·      Roll-out resumed and we anticipate opening 25 new sites in the current financial year; and

·      We are seeing excellent property opportunities in very strong locations and have the opportunity, infrastructure and capability to further scale up the roll-out.

Operating review

Trading

The entire estate re-opened on 17 May once Government Covid-related restrictions on indoor trading were lifted. Based on our very strong performance in the summer of 2020, we expected both Lounge and Cosy Club to open very strongly again and carried out our re-opening planning on that basis. As anticipated, immediately on re-opening we saw a return to growth, in contrast to 2020 when it took two to three weeks for the sites to return to a normal level of sales. Our sales growth and market out-performance have been largely consistent across both brands since re-opening, both during the summer and as we now head into the winter months.

All categories and day parts across both Lounge and Cosy Club are in growth and there is no one stand-out contributing factor to the sustained sales growth we are experiencing. In terms of trends, we continue to see strong performance in the brunch day part and shoulder periods either side of lunch and continued excellent like for like performance in respect of cocktails, puddings and premium drinks. We have always traded well from coastal locations and in the summer months we benefitted in these sites from the staycation boom in the UK.

This consistent out-performance of the market is in part attributed to how both Lounge and Cosy Club are positioned and located. In Lounge our concentration in market towns and suburban high streets has meant the business has benefited from the behavioral changes we have seen as a result of Covid. At the city centre Cosy Clubs, where our pitches usually benefit from both leisure and retail footfall, we have found ourselves protected against the worst aspects of Covid. In addition, I believe the continued emphasis on community which has become increasingly forefront of mind throughout the pandemic suits the Lounges, which are driven by a desire to improve communities and high streets across the UK. The informality and flexibility of trading all-day in both businesses also really suits consumers who might be adapting to new working routines or looking to eat outside traditional meal times and avoid the crowds.

I do believe our actions during the lockdowns and our broader approach to how we wanted to emerge from Covid have had a material impact on our sales. We were determined Covid would not interfere with our standards of hospitality nor the atmosphere and warmth within our sites and our customers have recognised this by coming back again and again. Equally the innovation and evolution in the business during the various periods of lockdown, particularly in respect of our order at table app and menu development have been significant contributing factors to our sales success.

Evolution

The most significant development during the period was in respect of the Cosy Club food menu and its broader brand positioning. Since the start of the financial year we have been evolving and trialling a major re-work of the Cosy Club menu, introducing a new structure and layout, with the inclusion of small plates, and a material reduction in the number of dishes available at each mealtime. The new menu is more elevated, introducing a number of less mainstream, more aspirational dishes, with a slightly higher price point. Alongside this we have introduced new furniture across the Cosy Clubs and changed our steps of service to place more emphasis on providing great hospitality. It has been one of the most significant development projects we have ever undertaken.  Following a successful trial over the summer months the new menu has now been rolled out across the entire Cosy Club estate and whilst it is too early to assess its impact, we are pleased with the initial reaction from our customers.

On the Lounge side we have continued to improve the App in terms of customer journey, performance and offering, alongside a new menu launch in October with a more typical 10% change in the number of dishes. This summer we also accelerated the roll-out of our kitchen management system across the Lounge estate, with all Lounges now benefitting from electronic tickets and the fantastic insight that gives us into our operational delivery. The final elements of the kitchen reset project, largely relating to new equipment and revised ergonomics, are currently being scheduled to take place in 2022.

This summer also saw us launch banded pricing across both Lounge and Cosy Club estates. We now have three different tiers of pricing in each brand, with each site allocated a tier based on our understanding of the level of affluence and earnings in that location. As our geography has expanded across the UK, it has become more apparent that we can take advantage of price elasticity in some areas, consistent with how some of our peers approach pricing. Our initial approach has seen all locations benefit from price increases, but we have been relatively conservative, wanting to ensure that we understand any customer reaction.

Roll-out and pipeline

Over the period we have opened 11 Lounges and one Cosy Club, and since the period end we have opened a further four Lounges. Our four build-teams are fully operational once again and we are back opening sites at a rate of 25 per annum, delivering on the strategy we set out at the IPO in 2019. The sites we have opened this year have further increased average unit sales and EBITDA reflecting both the strength of our pipeline and our operational performance. Highlights have included Lounges in Pontypridd and Blackpool and Cosy Club in Chelmsford.

From a pipeline perspective it has never looked so good. Our property team continued to look at opportunities throughout the lockdowns and as a result we reopened in May with a strong pipeline in place, now stretching into FY24. We are seeing a continuation and exaggeration of trends we were seeing pre-Covid with strong-pitch opportunities in high priority target towns becoming available, principally as a result of retail CVA's and administrations. These opportunities are allowing us to open sites generating higher levels of sales. Our rent to revenue ratio continues to hold firm at sub 6% and we are seeing improving landlord packages in terms of rent free periods and capital contributions helping to protect our returns on capital.

In the period we restructured the property and build teams with a view to future-proofing this side of the business and ensuring we are well positioned to both continue opening sites at a rate of 25 per year or accelerate beyond that rate should we feel it appropriate. We have brought both build and property under the leadership of Tom Trenchard, Property Director and created a new position of Head of Construction. With the new structure now in place we are well positioned to achieve efficiencies in our capex spend whilst ensuring our site design is as fresh and innovative as ever.

People

Trading over the summer months, in particular, wasn't easy. Our teams had to deal with staff shortages in some locations, unpredictably high demand at times and occasional interruptions to the supply chain. Our teams at all levels across the business performed astonishingly well in what were at times incredibly challenging circumstances and I would like to thank them enormously for all their efforts and contribution. As a provider of hospitality, we are only ever as good as our team, and we have one of the best teams in the UK today.

Recruitment and retention within the sector remains tough at the moment. Covid has caused a minority of people working in the hospitality sector to think twice about their careers as they consider their life choices and work/life balance. We have managed this well to date, however, as a large employer it is critical that we address this, in terms of both understanding where we can be better, alongside promoting what we are very good at. Despite recruitment being tough, we have opened 16 sites in the financial year to date, recruiting 16 teams and we continue to trade well. There are undoubtedly things that we can do better, but through our strong culture and as a result of the progression opportunities we can offer to our team, we are emerging from this in a strong position.

We continue to reward our loyal team members through our share plans and are very proud of the shared ownership within the business. Over 1,000 of our 5,000 employees are currently shareholders in the Group.

Financial review

Financial Performance

Whilst the impact of Covid (both the negatives of trading restrictions and the positives of government support measures) once again runs through the reported financial results, it cannot mask a very strong performance, with revenue up 91% to £102.4m and Adjusted EBITDA up 105% to £27.1m.

By way of context the period under review incorporates:

·      A four week period where our sites were able to trade externally only.  Over the course of these four weeks, we increased the number of sites trading external areas only from 44 sites to 88 sites, ahead of the whole estate reopening for internal and external trade on 17 May;

·      A further nine week period to 18 July during which social distancing rules remained in place, including the "Rule of 6" and order at table requirements;

·      The beneficial impact on EBITDA margins of government initiatives including the temporary reduction in the VAT rate charged on food and non-alcoholic drinks, the business rates holiday; and the Restart Grants.

In the period post reopening for internal trade on 17 May headline LFL sales were +26.6%.  Excluding the positive impact of the VAT reduction the underlying LFL result was +13.6%.  This sales performance was remarkably consistent across the period under review, with headline LFL sales of +23.7% over the nine weeks to 18 July increasing to +28.8% over the 11 weeks to 3 October post the ending of Covid restrictions.

This strong sales performance helped to drive IFRS16 Adjusted EBITDA margin growth of 1.8% to 26.5%, whilst the IAS17 Adjusted EBITDA margin, which was relatively more impacted by the greater lockdown period in the prior year, grew by 5.2% to 21.5%.  As in the prior year the Adjusted EBITDA margin continues to reflect the benefit of government support measures, with the VAT reduction, for example, adding 7.5% to the reported Adjusted EBITDA margin in the period under review.  Most importantly however, if we exclude the period of external trading and look at just the 20 weeks from 17 May to 3 October and remove the positive impacts of government support and the costs of re-opening post lockdown three, the business has delivered IAS17 Adjusted EBITDA margin growth of 0.4%.  This margin growth reflects the continuing positive benefits of cost of goods margin growth and improving operational leverage offsetting labour cost pressure that was particularly notable during the early weeks post reopening.

Impact of UK Government Initiatives

The Group continued to benefit from a number of UK Government initiatives introduced to mitigate the impact of Covid-19, notably:

·      The Coronavirus Job Retention Scheme ("CJRS") - During the period under the review the Group received a total of £4.1m of funding under the CJRS.  A total of £2.1m was recognised in the statement of comprehensive income in the period, offsetting site payroll costs on the costs of sales line and head office payroll costs on the administrative expenses line.  Cash receipts included £2.0m that was recognised in the FY21 results. 

·      Business Rates Relief - The Group's sites have benefitted from the 100% business rates holiday that ran from 1 April 2021 to 30 June 2021 and have continued to benefit from the 66% reduction (capped at £2.0m) that runs to 31 March 2022.  During the period Group has benefitted by £2.3m.

·      Support Grant Funding - In the period under review the Group has recognised £2.5m of grant funding received under the Restart Grant scheme.  This income has been recognised under other income.

Net debt

Non property net debt (gross of arrangement fees) reduced to £11.9m at period end, an improvement of £22.7m from the FY21 year end.  Reported net debt continues to benefit from deferred liabilities to landlords and HMRC totaling £5.6m.  Adjusting to reflect these deferred liabilities as if they had been paid, net debt at 3 October 2021 would have been £17.5m.  This represents a reduction of £30.0m relative to the FY21 year end.  The timing of the half year results does not flatter the reporting of net debt, coming as it does immediately after the September rent quarter and month end payment runs.  In the week prior to the half year end payments totaling £9.0m were made to suppliers, landlords and HMRC.

Finance costs for the period have reduced to £3.2m (2021: £3.3m) reflecting the repayment of the £7m RCF draw in the period.  Finance costs include £2.6m (2021: £2.6m) of IFRS16 lease interest charges.

Cash flow

Net cash generated from operating activities grew by 71.5% to £35.9m (2021: £20.9m).  The performance in the period was boosted by a positive swing of £9.9m (2021 £7.4m) in the working capital position post reopening.

The resumption of the new site roll-out programme saw a significant uplift in capital expenditure, with outflows in the period rising to £6.5m (2021 £1.4m).  Capital expenditure incurred in the period (excluding IFRS16 ROUA investment) was £10.0m (2021 £1.4m), of which £8.4m related to new sites.

Dividend policy

In the short term, the Board intends to retain the Group's earnings to bolster liquidity and balance sheet strength and for re-investment in the roll-out of new Lounge and Cosy Club sites.  It is the Board's ultimate intention to pursue a progressive dividend policy, subject to the need to retain sufficient earnings for the future growth of the Group.

Current trading and prospects

The business has continued to consistently out-perform the sector and achieve strong like for like sales growth post the 3 October half year end, with headline LFL sales across the 28 weeks to 28 November of +23.4%.  Whilst mindful of the news of the Omicron variant, we remain optimistic looking ahead to trading over the Christmas period and beyond.  We anticipate 25 new site openings during the course of the financial year ending 17 April 2022 and have the infrastructure in place to accelerate that pace as circumstances permit.

Nick Collins

Chief Executive Officer

30 November 2021

Condensed Consolidated Statement of Comprehensive Income

For the 24 Week Period Ended 3 October 2021

Earnings per share (pence)

Condensed Consolidated Statement of Financial Position

As at 3 October 2021

Condensed Consolidated Statement of Changes in Equity

For the 24 Week Period Ended 3 October 2021

Condensed Consolidated Statement of Cash Flows

For the 24 Week Period Ended 3 October 2021

Notes to the Condensed Consolidated Interim Financial Statements

1. General information

The Directors of Loungers plc (the "Company") and its subsidiaries (the "Group") present their interim report and the unaudited condensed financial statements for the 24 weeks ended 3 October 2021 ("Interim Financial Statements").

The Company is a public limited company, incorporated and domiciled in England and Wales, under the company registration number 11910770.  The registered office of the company is 26 Baldwin Street, Bristol BS1 1SE.

The Interim Financial Statements were approved by the Board of Directors on 30 November 2021.

The Interim Financial Statements have not been audited or reviewed by the auditors.  The financial information shown for the 24 weeks ended 3 October 2021 does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006.

The information shown for the year ended 18 April 2021 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and has been extracted from the Group's Annual Report and Financial Statements for that year.

The Interim Financial Statements should be read in conjunction with the Group's Annual Report and Financial Statements for the year ended 18 April 2021, which were prepared in accordance with International Financial Reporting Standards ('IFRS') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  The Group's Annual Report and Financial Statements for the year ended 18 April 2021 have been filed with the Registrar of Companies.  The Independent Auditors' Report on the Group's Annual Report and Financial Statements for the year ended 18 April 2021 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

2. Basis of preparation

The Interim Financial Statements have been prepared in accordance with IAS34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.  They do not include all of the information required for a complete set of IFRS financial statements.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last financial statements.

The Interim Financial Statements are presented in Pounds Sterling, rounded to the nearest thousand Pounds, except where otherwise indicated; and under the historical cost convention as modified through the recognition of financial liabilities at fair value through the profit and loss.

The Directors consider that the principal risks and uncertainties faced by the Group are as set out in the Group's Annual Report and Financial Statements for the year ended 18 April 2021.

The accounting policies adopted in the preparation of the Interim Financial Statements are consistent with those applied in the preparation of the Group's consolidated financial statements for the year ended 18 April 2021. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Going concern

In concluding that it is appropriate to prepare these interim results on the going concern basis the Directors have considered the Group's cash flows, liquidity and business activities.  Particular attention has been paid to the impact of Covid-19 on the business, both experienced to date and potentially foreseeable in the future. This has included:

·      Measures put in place during lockdowns to preserve and to increase liquidity and the Group's ability to comply with revised covenants, including the extension of the £15m RCF facility to October 2022

·      The impact of Government measures to support industry, and in particular the hospitality industry. While the impact of these will diminish during H2, following the end of the Coronavirus Jobs Retention Scheme and the increase in VAT for food and soft drinks to 12.5%, they have played a significant role in enabling Loungers to retain significant liquidity throughout the pandemic

·      Initial trading during the period post the resumption of full trading on 17 May 2021

·      The repayment of rent and HMRC liabilities deferred during FY21 and FY22

As reported in the Group Annual Report and Financial Statements for the year ended 18 April 2021 the Group had cash balances of £4.9m and undrawn facilities of £18m, providing total liquidity of £22.9m at that date.  As a result of the strong trading performance post re-opening for full trading on 17 May 2021 as at 3^rd October 2021 the Group had cash balances of £20.6m and undrawn facilities of £25m, providing total liquidity of £45.6m.

In reaching their conclusion the Directors have assessed both a base case scenario and a more severe downside set of LFL sales assumptions. The Group's base forecasts assume a level of flat LFL sales for the remainder of FY22, which is more prudent than the positive LFL sales growth experienced in the period post re-opening. The more severe downside scenario assumes a significant increase in infection rates over the winter leading to:

·      Significant LFL sales decline over Christmas, followed by lockdown in January and February

·      Flat like for like sales in the last two months of FY22, followed by a return to modest LFL sales growth in FY23

·      Mitigation through the scaling back of new site openings

In the revised severe downside scenario the Group is forecast to remain within its borrowing facilities and to be in compliance with its covenant obligations, and accordingly the Directors have concluded that it is appropriate to prepare the Interim Financial Statements on the going concern basis.

Accounting estimates and judgements

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the Group's consolidated financial statements for the year ended 18 April 2021.

3. Exceptional items

The Covid-19 related costs included in administrative expenses include the costs of the removal and storage of furniture and soft furnishings and the professional fees incurred in respect of the amendments made to the Group's banking facilities.

4. Other income

5. Finance costs

6. Tax on profit / (loss)

The income tax expense was recognised based on management's best estimate of the effective income tax rate expected for the full financial year, applied to the profit before tax for the 24 weeks ended 3 October 2021.

The 2021 Budget announced an increase in the corporation tax rate from 19% to 25% with effect from 1 April 2023.  This was substantively enacted on 24 May 2021.  Accordingly, the deferred tax assets and liabilities at the balance sheet date are calculated at the substantively enacted rate of 25%, to the extent they are not expected to reverse before 1 April 2023.

7. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of shares outstanding during the period, excluding unvested shares held pursuant to the following long-term incentive plans:

·      Loungers plc Employee Share Plan

·      Loungers plc Senior Management Restricted Share Plan

·      Loungers plc Value Creation Plan

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.  During the period ended 3 October 2021 the Group had potentially dilutive shares in the form of unvested shares pursuant to the above long-term incentive plans.

8. Share based payments

The Group had the following share-based payment arrangement in operation during the period:

-       Loungers plc Employee Share Plan

-       Loungers plc Senior Management Restricted Share Plan

-       Loungers plc Value Creation Plan

The Group recognised a total charge of £1,554,000 in respect of the Group's three share-based payment plans.

9. Fixed assets

10. Borrowings

The Group's bank borrowings are secured by way of fixed and floating charges over the Group's assets.

The facilities entered into at the time of the IPO in April 2019 provide for a term loan of £32,500,000 and a revolving credit facility of £10,000,000.  The term loan is a five-year non-amortising facility with a margin of 2% above LIBOR.  A three-year interest rate swap through to July 2022 has been entered into that fixes LIBOR on this facility at 0.7%.

On 22 April 2020, in response to the Covid-19 lockdown, the Group agreed an incremental £15,000,000 revolving credit facility for the 18-month period to October 2021.  On 16 April 2021 this incremental facility was extended to October 2022.  In addition, the covenant tests scheduled for 11 July 2021, 3 October 2021 and 26 December 2021 were amended.

At 3 October 2021 the term loan was fully drawn and £nil was drawn down under the revolving credit facility.

11 Share capital

The table below summarises the movements in share capital for Loungers plc during the period ended 3 October 2021:

On 30 April 2021 the Group issued 338,664 ordinary shares of 1 pence each to 673 employees pursuant to the Group's share plans.

12. Note to the cash flow statement

Reconciliation of Statutory Results to Alternative Performance Measures

The Interim Results include both statutory and alternative performance measures ("APMs").  APM's are included for the following reasons:

·      They reflect the way in which management report and monitor the financial performance of the Group internally;

·      They improve the comparability of information between reporting periods by adjusting for one-off factors;

·      The IAS17 presentation reflects the way in which the financial performance of the Group has been presented historically and the basis on which the Group's financial covenants are tested.