Tasty : Final Results – 23rd March 2022

23 March 2022

Tasty plc

("Tasty" or the "Company")

Final results for the 52 weeks ended 26 December 2021

Tasty (AIM: TAST), the owner and operator of restaurants in the casual dining sector, announces its annual results for the 52 week period ended 26 December 2021.

Key Highlights

• Revenue £34.9m (2020: £24.2m); an increase of 44% year-on-year with 33 weeks dine-in trading, driven by strong sales post re-opening despite weaker trading for the peak December period than anticipated, due to the onset of the Omicron variant
• Adjusted EBITDA1 (post IFRS 16) of £8.0m (2020: £2.7m)
• Adjusted EBITDA1 (pre IFRS 16) of £3.9m (2020: loss £1.5m)
• Profit after tax for the period of £1.2m (2020: loss of £12.7m)
• Bank loan as at 26 December 2021 of £1.3m (27 December 2020: £nil)
• Cash at the year-end was £11.0m. After allowing for deferred HMRC payments, creditors and bank loan the Group's net cash position was approximately £6.8m
• Currently trading from 50 of 54 restaurants

1 Adjusted for depreciation, amortisation and highlighted items including share-based payments and impairments. Adjusted EBITDA figure includes £1.9m of exceptional Government grant income

The report and accounts for the 52 week period ended 26 December 2021 will be available on the Company's website at https://dimt.co.uk/investor-relations/shortly.

For further information, please contact:

Tasty plc

Tel: [phone]

Jonny Plant, Chief Executive

Cenkos Securities plc (Nominated adviser and broker)

Mark Connelly / Katy Birkin

Tel: [phone]

Chairman's statement

I am pleased to be reporting on the Group's annual results for the 52 week period ended 26 December 2021 and the comparative 52 week period ended 27 December 2020. The Group currently comprises 54 restaurants: five dim t and 49 Wildwood restaurants.

We are currently trading from 50 of those restaurants out of a total estate of 54. The four restaurants that remain closed due to predicted poor trading conditions in their locality or labour shortages but are at different stages of re-opening planning. However, the Group will continue to consider selling two or three of those restaurants or re-gearing their leases to reflect current market conditions.

During the two years of the Covid-19 pandemic we have had to deal with and adapt to unexpected challenges. It has been a test of endurance, strength and resilience and our success has been testament to our dedicated teams and management, and our customers. The Board would like to thank our much valued loyal staff, suppliers, customers, landlords and other trade creditors who have assisted and supported us throughout this unprecedented period.

The support we have received from creditors, landlords, and the Government has seen us through the difficulties we have faced. In addition, the bank facility of £1.25m drawn in January 2021 and not yet utilised, has provided additional headroom and confidence to our creditors of sufficient liquidity. At year-end, our cash balance reflects our cash preservation strategy and a deferral of payments due to creditors and HMRC. When these outstanding payments and bank debt are deducted, our net cash at year-end was approximately £6.8m.

Trading was highly encouraging when dine-in was permitted from May 2021, but impacted in December 2021 as the Omicron variant took hold and spread amongst the UK population. Subsequent Government advice meant that Christmas trade, traditionally our most profitable period, and specifically December 2021, was much weaker than we had anticipated.

In response to the experience of the last two years we have strengthened our operating model. We have increased our delivery offering and avenues of delivery. Having survived the pandemic and, now that the restrictions have been lifted, we are cautiously optimistic that we will be able to expand the estate and are rebuilding our operational and head-office structure to support this anticipated growth and property pipeline. During 2022 we expect to facilitate a measured expansion plan for a pipeline of five to six new units, however, any expansion will be at a steady pace as 2022 will not be without its challenges with labour shortages, food inflation, the ending of Government support in terms of reduced VAT and business rates and utility price volatility, impacting profitability.

Dividend

The Board does not propose to recommend a dividend (2020: £nil).

Future Trading

Trading prior to Christmas was strong and the start of 2022 is encouraging, but this must be tempered by the challenges which the Group expects following the end of Government support including VAT and business rates, the risk of a reduction in pent-up demand, disposable income and staycations as well as a steep rise in inflation in relation to wages, utilities and input supplier costs as the UK adjusts to Brexit, the aftermath of the pandemic and the current war in Ukraine. Accordingly, the Board views the future with cautious optimism.

Keith Lassman

Chairman

22 March 2022

Strategic report for the 52 weeks ended 26 December 2021

Tasty operates two concepts in the casual dining market: Wildwood and dim t.

Wildwood

Aimed at a broad market, our 'Pizza, Pasta, Grill' restaurant remains the Group's main focus. Our sites are primarily based on the high street. However, our estate comprises a number of leisure, retail and tourist locations that have historically traded well, highlighting the broad appeal of the offering. Located nationally, mainly outside of London, Wildwood is currently open for business from 45 of the 49 Wildwood branded restaurants.

dim t

Our pan-Asian restaurant now trades from five sites, serving a wide range of dishes, including dim sum, noodles, soup and curry. This cuisine has fared particularly well over the last two years due to a rise in its popularity and increased demand for takeaway.

Introduction

The second half pre-Omicron was better than we anticipated. With staycation, pent-up demand, and increased disposable income, which was to be spent in the UK, the majority of our restaurants benefited from changing eating habits and working patterns. However, some of the sites, mainly those in city centres, that historically performed well and benefitted from work commuters, tourists and theatregoers have not performed as well. Fortunately, most of Tasty's estate is located in residential areas, and outside of the larger cities which has meant we have benefitted from this change in consumer habits.

We are conscious that performance was assisted by VAT and business rate support, staycations, pent- up demand and unusually high level of disposable income. We are expecting that most of the support and peaks in consumer trends will follow a more normalised path during 2022 and we have planned for rising costs and labour shortages. However, we are cautiously optimistic about 2022 and our ability to expand.

With an increased appetite for delivery and takeaway, we have seen strong sales growth. We plan to capitalise on this by expanding our virtual brands and different formats in new locations to optimise growth. Dim t has been rejuvenated through its successful takeaway and delivery sales growth.

Customers

It was great to welcome customers back in for dine-in, and our focus remains that we offer better value and an improved experience. We are constantly reviewing our menu and increasing the choice of vegetarian, vegan, gluten-free and lighter options. We use our guest feedback system to improve the menu and the offering. Our customer engagement has significantly improved due to the segmentation of our database into relevant and specific groups.

People

We are pleased to report that on 26 December 2021, we employed just under 1,000 people across the business: an increase of 330 from the previous year. Like many competitors and other industries, we have been impacted by labour shortages and are currently 5% short of the full employment levels required. Targeted wage increases have been applied, which should help us retain our teams in the long-run. Since Brexit and the pandemic, we found that flexible working has helped to attract a different demographic. This change provides us with new opportunities as we grow our talent pool. Whilst 2021 was challenging in retention levels due to the pandemic and Brexit, more recent data suggests our team is more stable, and there are encouraging signs that the length of service is growing. Even though we are operating with a shortfall in staff numbers, overall we have managed to keep the "open" sites trading. Occasionally, positive Covid cases have resulted in short-term closures but overall

those instances have been kept to a minimum. We understand that at times this has stretched the existing teams and we thank and appreciate all of them for their hard work.

With the increase in National Insurance of 1.25%, National Living Wage and wage increases, there will inevitably be wage inflation, which will be impossible to completely absorb.

We believe in rewarding our loyal staff and nurturing talent and we remain committed to training and this continued last year despite the challenging environment. Ten apprentices completed their training programme, six with distinction and 18 functional skill exams were passed.

In anticipation of expansion, we are strengthening our management structure and senior teams across all areas but our initial focus is on food, marketing, people and the learning and development team.

An in-depth review into the people aspects of Tasty has been completed and a two-year strategy developed with the focus on becoming a market-leading employer with a diverse and inclusive team, creating a learning culture, using data to support decision making and growing our apprenticeship programmes. New HR and recruitment systems have been established and proposed to provide consistent and swift support to all colleagues.

Government support

The Government initiatives, including the Job Retention Scheme ("CJRS"), business rates relief, deferral of HMRC payments, Eat Out To Help Out ("EOTHO") and VAT reduction, have proved invaluable in supporting the Group over the last two years. With business rates and VAT reductions ending at the end of March 2022 and an additional National Insurance contribution of 1.25% we expect greater pressure on business performance and cash generation, but with the planned improvements to operations and the structural changes proposed, we should be able to adapt our business model to these additional costs.

Suppliers

Our suppliers have suffered from rising fuel costs, lack of drivers, workers and general shortages. This inevitably has impacted our costs, and while there have been some shortages, on the whole, these have been manageable. We are thankful to our suppliers that continue to work through the challenges and support us.

Rent negotiations

The Group has successfully achieved consensual lease concessions and rent reductions for the lockdown period for most of the estate. There remain a few sites for which negotiations are ongoing. Through the pragmatic approach and support of our landlords we have managed to avoid a formal procedure such as a company voluntary arrangement ("CVA"). We are extremely grateful for all the assistance received.

Financial stability

Over the last few years, we have focussed on cost reduction and reduced outgoings, including salary reductions, reduced services, and ensuring only necessary expenditure was incurred. As we come out of the pandemic, we are gearing towards investment in our existing sites, new sites, people and development.

The Group drew down a bank loan of £1.25m in January 2021 which is unutilised and is currently reviewing options to refinance or repay this loan.

Board Changes

As previously announced, Sam Kaye stepped down from the Board on 14 May 2021 to allow him to focus on his other commercial interests. The Board would once again like to thank Sam for the enormous support and invaluable experience that he has provided to the Group from inception. Sam remains a supportive shareholder.

Harald Samúelsson was appointed as a Non-Executive Director in May 2021. Harald has over 20 years of experience in the UK restaurant industry, including as joint managing director of Côte Restaurants, and we are delighted to have him on our Board.

Current trading and outlook for the coming year

As we are coming out of the pandemic we are optimistic about sales performance compared to 2019 though this is tempered by rising costs. In particular the end of the rates relief, reduced VAT rates and the introduction of 1.25% additional National Insurance will all impact profitability.

Having built strong foundations over lockdown we are quietly confident about our prudent expansion plans and we expect to take on another five to six units in the current year.

Financial review

Highlighted Items

The Group recognises a number of charges in the financial statements which arise under accounting rules and have no cash impact. These charges include share-based payments and impairments to fixed assets. The above items are included under 'highlighted items' in the statement of comprehensive income and further detailed in Note 5. These items, due to their nature, will fluctuate significantly year on year and are, therefore, highlighted to give more detail on the Group's trading performance.

Full year results and key performance indicators

The Directors continue to use a number of performance metrics to manage the business but, as with most businesses, the focus on the income statement at the top level is on sales, EBITDA before highlighted items and operating profit before highlighted items compared to the previous year. All key performance indicators that adjust for highlighted items do not constitute Statutory or GAAP measures.