TIDMRTN
RNS Number : 3591P
Restaurant Group PLC
31 August 2017
Interim results for the 26 weeks ended 2 July 2017
Good progress on strategic initiatives
Trading in line with expectations
Strategic highlights
-- Early signs of improved volume momentum in our Leisure business
-- Fundamentally improved value positioning and food offer in Frankie & Benny's
-- Restaurant technology roll-out complete to facilitate serving customers better
-- Healthy pipeline of opportunities to advance growth in Pubs and Concessions
-- Good progress on cost reduction
-- Team strengthened
Financial highlights*
-- Like-for-like sales down 2.2%
-- Total sales down 1.9% on a 26 week comparable basis; down 7.1% on a statutory basis
-- Adjusted(1) profit before tax of GBP25.5m (2016: GBP36.6m).
Statutory profit before tax of GBP2.8m (2016: loss of GBP22.5m)
-- Exceptional charge of GBP22.7m (2016: GBP59.1m)
-- Adjusted(1) EBITDA of GBP44.3m (2016: GBP59.6m)
-- Adjusted(1) EPS of 10.0p (2016: 14.3p). Statutory EPS of 0.6p (2016: loss per share 11.2p)
-- Continued strong free cash flow of GBP35.1m (2016: GBP35.8m)
-- Net bank debt of GBP19.3m (2016: GBP35.6m)
-- Interim dividend maintained at 6.8p per share, reflecting the
Board's confidence in the plan
-- Current trading in line with our expectations; we continue to
expect to deliver an adjusted PBT outcome for the full-year in line
with current market expectations
* The highlights reflect the statutory 26 week period in 2017
versus the statutory 27 week period in 2016 unless stated
otherwise
(1) Adjusted reflects pre-exceptional costs and is further
defined in the glossary at the end of this report
Andy McCue, Chief Executive Officer, commented:
"We have made good progress against our strategic initiatives
outlined in March. Our Leisure customers are enjoying a better
value, higher quality product; our growth plans for our Pubs and
Concessions businesses are advancing well and we have made good
progress in delivering cost efficiencies. I've been impressed with
our colleagues' receptiveness to change and thank them for their
contribution to stabilising the business."
Enquiries:
The Restaurant Group
Andy McCue, Chief Executive
Officer 020 3117 5001
Instinctif Partners
Matthew Smallwood
Guy Scarborough 020 7457 2020
Introduction
We have made good progress on the four key elements of our
strategy that we set out earlier in the year, to:
-- re-establish the competitiveness of our Leisure brands;
-- serve our customers better and more efficiently;
-- grow our Pubs and Concessions businesses; and
-- build a leaner, faster and more focused organisation.
Customers are enjoying better value and improved quality of
offer in our Leisure brands. As a result, we are beginning to see
some early signs of volume improvement.
As we have highlighted before, 2017 is a transitional year. As
we make the necessary investments in price to correct for our
previously weak value position, and in quality to ensure
consistency of our food offer, like-for-like sales and margins will
come under inevitable pressure in the short term.
We are on track to finish the year with a more competitive
offering, a strengthened team, and a more efficient business,
positioning us well for 2018 and beyond.
We continue to benefit from a strong balance sheet and free cash
flow generation and as a sign of confidence in our plan, the Board
is proposing to maintain the interim dividend of 6.8 pence per
share.
Business review
-- Re-establish the competitiveness of our Leisure brands
Frankie & Benny's (258 units)
We have focused on restoring our value credentials, deepening
the distinctiveness of our offer to families and marketing to
attract back lapsed customers.
In January, we trialled and then launched an improved, cheaper
fixed price menu (GBP9.95 for two courses) which continues to
perform well. We launched our new core menu in two waves in March
and May. The new menu is considerably more competitive than the
previous version, with entry prices reduced by 22%, and
like-for-like dishes, on average, 7% cheaper. As a consequence, our
prices on key value indicator dishes are now significantly lower
than our peer set.
We have invested in improved food quality to ensure we can
produce dishes consistently well, introduced new sharing dishes
which are proving popular among our target family audience, and
created new dishes which have shown encouraging early adoption.
In June we launched a new kids' menu taking on board feedback
from our younger customers and their parents. The menu is genuinely
differentiated in the sector, with a much more engaging food offer
and presentation, as well as being better value.
Our marketing is focused on attracting back lapsed customers, in
part with discounts, which are increasingly channelled through
affiliate partners, as well as seasonal campaigns such as our 'win
a holiday every day' promotion during the school summer holidays.
Later in the year, we plan a marketing re-launch, enabling us to
highlight the distinctive family appeal of the brand, delivered
with more relevance and consistency.
While there remains a lot to do, there are early signs of
customer awareness of our changes, with recent data showing an
uptick in value for money ratings, net promoter scores and the
brand rankings for quality of ingredients and freshness of
food.
The pace of change in the business is accelerating and in the
second half of the year we will refine our menus, making changes
based on insights gathered to date, as well as trialling a series
of new product innovations which, if successful, will feature more
broadly in 2018. Towards the end of the year, we also plan on
piloting a low cost 'capital refresh' of some of our older
properties which will focus on improving the look and feel of
customer facing areas.
Chiquito (83 units)
In February this year, we re-introduced fixed price value menus
to Chiquito offering two courses for GBP10.95 and three courses for
GBP14.95, generating a significant improvement in the proportion of
sales channelled via fixed-price menus and highlighting the
value-conscious nature of our customer base.
Consistent with our intention to broaden the appeal of the
brand, we have been trialling a fundamentally changed menu in 20
sites, which has received encouraging feedback. This new menu
provides the customer with the ability to custom-build tortillas
and vary the spiciness of their sauce, all at a highly competitive
price point of GBP9.95. We will make some changes to that menu in
the coming weeks, extending the trial to a further 20 sites, with a
view to rolling out the proposition across the estate
thereafter.
Other Leisure brands (38 units)
Coast to Coast's like-for-like trading performance continues to
be challenging, albeit we have managed to improve the trading
trajectory in recent months through discounting.
Our focus has been on developing a new proposition, Firejacks,
which offers high quality flame-grilled steaks and burgers at
highly competitive prices. We have converted the Coast to Coast in
Northampton to Firejacks, and re-launched the restaurant earlier
this month. This pilot site will enable us to test and refine the
concept and determine the potential for roll-out via conversions of
further Coast to Coast sites.
Our remaining brands, Garfunkel's, Filling Station and Joe's
Kitchen are performing solidly. We don't consider these brands to
be strategic priorities that justify significant focus or resource
at this time.
-- Serve our customers better and more efficiently
In the first half of the year we completed the upgrade of our
technology in restaurants in our Leisure and Concessions
businesses, enabling:
-- improved labour forecasting and scheduling via a new labour management software solution;
-- increased frequency and accuracy of bookings via an
integrated system of online, telephone and in-restaurant
reservations;
-- quicker ordering and payment processing via use of hand-held terminals; and
-- increased attachment rates of, for example, side dishes, via automated prompts to servers.
We are investing in training our team to use the technology
optimally and will be introducing simplified service training to
ensure our service standards are consistently delivered. Where
possible, we are stripping out unnecessary back-of-house processes
and, in turn, increasing the proportion of time deployed which is
customer-facing.
New technologies may also help us to remove customer pain points
and/or improve the experience. Later this year we will trial mobile
order-and-pay and click-and-collect applications in a small sample
of test sites. Following that, we anticipate upgrading our
customer-facing digital assets in 2018.
-- Grow our Pubs and Concessions businesses
Our Pubs have performed well in the period, helped in part by
favourable weather but also driven by strong operational
delivery.
We have focused on improving the consistency of our execution,
which has contributed to an increase in our customer ratings to an
all-time high. We have also deepened our links with the communities
in which we operate by hosting popular beer and gin festivals.
We have committed increased resources to identifying sites to
enable us to increase the rate of openings, and consequently, the
pipeline of prospective sites is steadily growing.
Our Concessions business continues to perform strongly, driven
by both solid growth in passenger numbers and by strong execution
in maximising the throughput of customers. Our pipeline of new
opportunities has strengthened in recent months and we expect to
secure several new contract wins in the second half of the
year.
-- Build a leaner, faster and more focused organisation
We have made good progress reducing the cost base. We have
restructured head office roles and streamlined our field operations
team. We have also invested in strengthening the senior team, as
well as building our analytical capabilities, and will make
additional investments in our marketing team in the second
half.
We are looking forward to Kirk Davis joining next February as
Chief Financial Officer from Greene King where he holds the same
position, and Michael Healy joining in November as Chief Marketing
Officer from Paddy Power Betfair. We will end the year with a high
capability team at an overall lower cost.
We have centralised purchasing within the Group, reducing the
number of suppliers and, in turn, leveraging scale economies.
Similarly, our logistics is now channelled through fewer partners,
generating savings.
We have made reductions in overheads, both in better managing
demand and striking improved terms with suppliers.
Overall, we expect to save c.GBP10m in 2017 versus a 2016
baseline, which is ahead of plan, all of which is supporting our
reinvestment in price, product and marketing.
Current trading and outlook
Current trading is in line with our expectations, with year to
date like-for-like sales for the 34 weeks to 27 August down
2.5%.
2017 is a transitional year as we continue to address the
competitiveness of our Leisure businesses and focus on achieving a
sustainable volume-led turnaround. Where opportunities to
accelerate our progress present themselves, we will invest
appropriately. As a result of the investments we have made in our
new menus and promotional activity in the year, our full year 2017
cost of goods sold margin is expected to be between 1.5 and 1.8
percentage points higher than 2016.
Accordingly, we continue to expect to deliver an adjusted profit
before tax outcome for the full year in-line with current market
expectations.
We expect to open between 18 and 20 units in 2017 with
associated capital expenditure of between GBP18m and GBP20m.
Refurbishment and maintenance capital expenditure, including
technology investment, in 2017 is expected to be c.GBP20m.
We anticipate opening between 10 and 20 units in 2018.
Financial review
Trading results
2017 is a 52 week year and the first half contained 26 weeks (H1
2016: 27 weeks). The growth figures and comparatives set out in
this section reflect the performance versus the statutory 27 week
period in 2016 unless otherwise stated.
Like-for-like sales declined by 2.2% versus the comparable 26
week period with total turnover down 1.9%. On a statutory basis,
turnover declined by 7.1% to GBP333.1m (2016: GBP358.7m). The
like-for-like sales decline reflected the investments we have made
in price and proposition across our Leisure brands, partially
offset by a good performance from our Pubs and Concessions
businesses.
With declining like-for-like sales, the well-known sector
specific inflationary cost pressures and investments made in price,
product and marketing, adjusted operating profit (EBIT) fell by
29.5% to GBP26.5m (2016: GBP37.5m) with the adjusted operating
margin falling by 2.6 percentage points to 7.9%. On a statutory
basis operating profit was GBP3.8m (2016: operating loss of
GBP21.6m).
Adjusted profit before tax for the period was GBP25.5m (2016:
GBP36.6m), with adjusted profit after tax of GBP20.0m (2016:
GBP28.5m). Adjusted earnings per share was 10.0p (2016: 14.3p). On
a statutory basis, our profit before tax was GBP2.8m (2016: loss
before tax of GBP22.5m) and statutory earnings per share was 0.6p
(2016: loss per share of 11.2p).
The Group recognises that we are facing continued headwinds on
labour costs, food and drink input costs, utilities and occupancy
costs. These inflationary cost pressures are anticipated to
continue through the second half of the year and into next year at
a similar level. We will continue to be vigilant on cost and to
drive efficiencies in order to mitigate these increases.
The Group remains highly cash generative with free cash flow of
GBP35.1m in the period (2016: GBP35.8m); reflecting lower operating
profit offset by lower maintenance capital expenditure and tax
payments in the period, the latter as a result of the statutory
loss for the year ended 2016. Net bank debt at the end of the
period was GBP19.3m (2016: GBP35.6m).
In the period we opened 12 new restaurants and pubs and expect
to open 18 to 20 sites for 2017 as a whole (2016: 24 sites).
Restructuring and exceptional charge
An exceptional charge of GBP22.7m has been recorded in the
period (2016: GBP59.1m), which comprises:
-- property provisions of GBP4.4m (2016: GBP16.8m) recognising
the successful exit of 12 sites, the reassessment of the remaining
disposal sites and further review of our existing estate;
-- a charge of GBP9.8m relating to a change in the discount rate
applied to the onerous lease provisions;
-- impairment charge of GBP4.3m (2016: GBP40.3m) made against
the carrying value of some restaurant assets given recent changes
in certain markets; and
-- GBP4.2m (2016: GBP2.0m) relating to costs incurred in the
restructuring projects that were initiated in 2017 to implement the
new strategy and cost saving initiatives.
Interim dividend
Given the Board's confidence in the plan and the strength of our
balance sheet, we are declaring an interim dividend of 6.8 pence
per share, unchanged from last year. The interim dividend will be
paid on 12 October 2017 to shareholders on the register on 15
September 2017 and shares will be marked ex-dividend on 14
September 2017. During this transitional period the Board will
continue to assess the dividend based on progress against the
plan.
Notes
1. The estate at 2 July 2017 comprised 258 Frankie &
Benny's, 83 Chiquito, 19 Coast to Coast, 8 Garfunkel's, 7 Filling
Station, 4 Joe's Kitchen, 59 Pub restaurants and 56
Concessions.
2. There are a number of potential risks and uncertainties which
could have an impact on the Group's performance over the remaining
six months of the financial year and which could cause actual
results to differ materially from expected and historical results.
These have not materially changed from those set out on page 11 of
our latest Annual Report and Accounts which can be found on the
Group website:
http://www.trgplc.com/investors/regulatory-announcements.
3. Statements contained in this interim report are based on the
knowledge and information available to the Company's Directors at
the date it was prepared and therefore the facts stated and views
expressed may change after that date. By their nature, the
statements concerning the risks and uncertainties facing the
Company in this interim report involve uncertainty since future
events and circumstances can cause results and developments to
differ materially from those anticipated. To the extent that this
interim report contains any statement dealing with any time after
the date of its preparation such statement is merely predictive and
speculative as it relates to events and circumstances which are yet
to occur. The Company undertakes no obligation to update these
forward looking statements.
4. Summary adjusted trading income statement (26 weeks vs 27 weeks*):
26 weeks 27 weeks
ended ended
2 July 3 July
2017 2016
GBPm GBPm % change
--------------------------- --------- --------- ---------
Revenue 333.1 358.7 (7.1%)
Adjusted EBITDA 44.3 59.6 (25.7%)
Adjusted operating profit 26.5 37.5 (29.5%)
Adjusted operating margin 7.9% 10.5%
Adjusted profit before
tax 25.5 36.6 (30.4%)
Tax (5.5) (8.1)
Adjusted profit after
tax 20.0 28.5 (29.9%)
Adjusted EPS (pence) 9.98 14.26 (30.0%)
--------------------------- --------- --------- ---------
* Reflects the statutory 26 week period in 2017 versus the 27
week 2016 comparatives.
5. Summary cash flow statement
26 weeks 27 weeks
ended ended
2 July 3 July
2017 2016
GBPm GBPm
Adjusted operating profit 26.5 37.5
Working capital and non-cash
adjustments 1.5 1.3
Depreciation 17.8 22.1
Net cash flow from operations 45.8 60.9
Net interest paid (0.3) (0.4)
Tax
paid (1.7) (9.0)
Maintenance capital expenditure (8.7) (15.7)
Free cash flow 35.1 35.8
Development capital expenditure (11.2) (12.8)
Movement in capital creditor (2.2) (10.5)
Utilisation of property
provisions (7.0) -
Restructuring costs (5.5) -
Other items (0.2) 1.6
----------------------------------- --------- ---------
Change in net bank debt 9.0 14.1
----------------------------------- --------- ---------
Net bank debt at start
of period (28.3) (28.4)
Comparable net bank debt
at end of period (19.3) (14.3)
----------------------------------- --------- ---------
Dividend paid - (21.3)
Net bank debt at end
of period (19.3) (35.6)
----------------------- ------- -------
The Restaurant Group plc Interim report 2017
Condensed financial statements
Consolidated income statement 26 weeks ended 2 July 2017
Trading Exceptional
business (see note 3) Total
(unaudited) (unaudited) (unaudited)
Note GBP'000 GBP'000 GBP'000
------------ ------------- ------------
Revenue 333,107 - 333,107
Cost of sales 2 (289,505) (18,439) (307,944)
------------ ------------- ------------
Gross profit/(loss) 43,602 (18,439) 25,163
Administration costs (17,136) (4,238) (21,374)
------------ ------------- ------------
Operating profit/(loss) 26,466 (22,677) 3,789
Interest payable (968) - (968)
Interest receivable 2 - 2
------------ ------------- ------------
Profit/(loss) on ordinary activities before tax 25,500 (22,677) 2,823
Tax on profit/(loss) from ordinary activities 4 (5,496) 3,908 (1,588)
------------ ------------- ------------
Profit/(loss) for the period 20,004 (18,769) 1,235
------------ ------------- ------------
Earnings/(loss) per share (pence)
Basic 5 9.98 0.62
Diluted 5 9.94 0.61
------------ ------------
The table below is provided to give additional information to
shareholders on a key performance indicator:
Earnings before interest, tax, depreciation and amortisation: 44,257 (18,398) 25,859
Depreciation and impairment (17,791) (4,279) (22,070)
Operating profit 26,466 (22,677) 3,789
---------------------------------------------------------------- --------- --------- ---------
Consolidated income statement 27 weeks ended 3 July 2016
Trading Exceptional
business (see note 3) Total
(unaudited) (unaudited) (unaudited)
Note GBP'000 GBP'000 GBP'000
------------ ------------- ------------
Revenue 358,667 - 358,667
Cost of sales 2 (302,762) (57,131) (359,893)
------------ ------------- ------------
Gross profit/(loss) 55,905 (57,131) (1,226)
Administration costs (18,381) (2,009) (20,390)
------------ ------------- ------------
Operating profit/(loss) 37,524 (59,140) (21,616)
Interest payable (923) - (923)
Interest receivable 40 - 40
------------ ------------- ------------
Profit/(loss) on ordinary activities before tax 36,641 (59,140) (22,499)
Tax on profit/(loss) from ordinary activities 4 (8,099) 8,178 79
------------ ------------- ------------
Profit/(loss) for the period 28,542 (50,962) (22,420)
------------ ------------- ------------
Earnings/(loss) per share (pence)
Basic 5 14.26 (11.20)
Diluted 5 14.20 (11.15)
------------ ------------
The table below is provided to give additional information to
shareholders on a key performance indicator:
Earnings before interest, tax, depreciation and amortisation: 59,595 (18,860) 40,735
Depreciation and impairment (22,071) (40,280) (62,351)
Operating profit 37,524 (59,140) (21,616)
---------------------------------------------------------------- --------- --------- ---------
Consolidated income statement 53 weeks ended 1 January 2017
Trading Exceptional
business (see note 3) Total
(audited) (audited) (audited)
Note GBP'000 GBP'000 GBP'000
---------- ------------- ----------
Revenue 710,712 - 710,712
Cost of sales 2 (598,136) (109,732) (707,868)
---------- ------------- ----------
Gross profit/(loss) 112,576 (109,732) 2,844
Administration costs (33,420) (6,944) (40,364)
---------- ------------- ----------
Operating profit/(loss) 79,156 (116,676) (37,520)
Interest payable (2,073) - (2,073)
Interest receivable 66 - 66
---------- ------------- ----------
Profit/(loss) on ordinary activities before tax 77,149 (116,676) (39,527)
Tax on profit/(loss) from ordinary activities 4 (17,043) 16,405 (638)
---------- ------------- ----------
Profit/(loss) for the period 60,106 (100,271) (40,165)
---------- ------------- ----------
Earnings/(loss) per share (pence)
Basic 5 30.02 (20.06)
Diluted 5 29.84 (20.06)
---------- ----------
The table below is provided to give additional information to
shareholders on a key performance indicator:
Earnings before interest, tax, depreciation and amortisation: 120,965 (48,626) 72,339
Depreciation and impairment (41,809) (68,050) (109,859)
Operating profit 79,156 (116,676) (37,520)
---------------------------------------------------------------- --------- ---------- ----------
Consolidated balance sheet
At 2 July 2017 At 3 July 2016 At 1 January 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------- --------------- ------------------
Non-current assets
Intangible assets 26,433 26,433 26,433
Property, plant and equipment 343,304 368,377 345,952
369,737 394,810 372,385
--------------- --------------- ------------------
Current assets
Stock 5,750 5,329 5,632
Trade and other receivables 12,719 9,601 18,782
Prepayments 17,064 14,327 15,824
Cash and cash equivalents 8,734 6,132 9,568
44,267 35,389 49,806
--------------- --------------- ------------------
Total assets 414,004 430,199 422,191
--------------- --------------- ------------------
Current liabilities
Corporation tax liabilities (2,015) (3,647) (1,275)
Trade and other payables (136,810) (110,938) (121,850)
Other payables - finance lease obligations (330) (343) (393)
Provisions (13,252) (6,313) (16,391)
(152,407) (121,241) (139,909)
--------------- --------------- ------------------
Net current liabilities (108,140) (85,852) (90,103)
--------------- --------------- ------------------
Non-current liabilities
Long-term borrowings (28,039) (41,697) (37,882)
Other payables - finance lease obligations (3,013) (2,984) (2,950)
Deferred tax liabilities (3,490) (8,519) (4,434)
Provisions (36,574) (16,498) (27,579)
(71,116) (69,698) (72,845)
--------------- --------------- ------------------
Total liabilities (223,523) (190,939) (212,754)
--------------- --------------- ------------------
Net assets 190,481 239,260 209,437
--------------- --------------- ------------------
Equity
Share capital 56,550 56,550 56,550
Share premium 25,542 25,542 25,542
Other reserves (8,938) (11,562) (9,987)
Retained earnings 117,327 168,730 137,332
Total equity 190,481 239,260 209,437
--------------- --------------- ------------------
Consolidated statement of changes in equity
Share Share Other Retained Total
capital premium reserves earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- --------- --------- ---------
Balance at 27 December 2015 (audited) 56,518 25,255 (11,080) 212,867 283,560
Loss for the year - - - (40,165) (40,165)
Issue of new shares 32 287 - - 319
Dividends - - - (34,862) (34,862)
Share-based payments - - 1,323 - 1,323
Other reserve movements - - (230) - (230)
Current tax on share-based payments taken directly to equity - - - 73 73
Deferred tax on share-based payments taken directly to equity - - - (581) (581)
Balance at 1 January 2017 (audited) 56,550 25,542 (9,987) 137,332 209,437
-------- -------- --------- --------- ---------
Balance at 2 January 2017 (audited) 56,550 25,542 (9,987) 137,332 209,437
Profit for the period - - - 1,235 1,235
Dividends - - - (21,240) (21,240)
Share-based payments - - 980 - 980
Deferred tax on share-based payments taken directly to equity - - 69 - 69
Balance at 2 July 2017 (unaudited) 56,550 25,542 (8,938) 117,327 190,481
------- ------- -------- --------- ---------
Consolidated statement of
changes in equity
Share Share Other Retained Total
capital premium reserves earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- --------- --------- ---------
Balance at 27 December
2015 (audited) 56,518 25,255 (11,080) 212,867 283,560
Loss for the period - - - (22,420) (22,420)
Issue of new shares 32 287 - - 319
Dividends - - - (21,237) (21,237)
Share-based payments - - (265) - (265)
Other reserve movements - - (217) - (217)
Current tax on share-based
payments taken directly
to equity - - - 105 105
Deferred tax on share-based
payments taken directly
to equity - - - (585) (585)
Balance at 3 July
2016 (unaudited) 56,550 25,542 (11,562) 168,730 239,260
-------- -------- --------- --------- ---------
Consolidated cash flow
statement
26 weeks ended 2 July 27 weeks ended 3 July 53 weeks ended 1 January
2017 2016 2017
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
-------------------------- -------------------------- --------------------------
Operating activities
Cash generated from
operations 7 45,843 60,890 122,148
Interest received 3 40 41
Interest paid (320) (454) (865)
Tax paid (1,724) (9,023) (16,223)
Net cash flows from
operating activities 43,802 51,453 105,101
-------------------------- -------------------------- --------------------------
Investing activities
Purchase of property,
plant and equipment (22,095) (38,972) (65,280)
Disposal of fixed assets - 1,424 2,219
Utilisation of property
provisions (6,970) - (3,315)
Cash outflows from
exceptional restructuring
costs (5,571) - (3,759)
Net cash flows used in
investing activities (34,636) (37,548) (70,135)
-------------------------- -------------------------- --------------------------
Financing activities
Net proceeds from issue of
ordinary share capital - 319 319
Net (repayments
of)/proceeds from loan 8 (10,000) 11,000 7,000
Dividends paid to
shareholders - (21,237) (34,862)
Net cash flows used in
financing activities (10,000) (9,918) (27,543)
-------------------------- -------------------------- --------------------------
Net (decrease)/increase in
cash and cash equivalents (834) 3,987 7,423
-------------------------- -------------------------- --------------------------
Cash and cash equivalents
at the beginning of the
period/year 9,568 2,145 2,145
Cash and cash equivalents
at the end of the
period/year 8,734 6,132 9,568
-------------------------- -------------------------- --------------------------
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with International Accounting Standard (IAS) 34
'Interim Financial Reporting';
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first 26 weeks and description of principal risks and
uncertainties for the remaining 26 weeks of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
Debbie Hewitt Andrew McCue
Chief Executive
Non-executive Chairman Officer
31 August 2017 31 August 2017
Accounting policies
Basis of preparation
The annual financial statements of The Restaurant Group plc are
prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The condensed
set of financial statements included in this interim financial
report has been prepared in accordance with IAS 34 'Interim
Financial Reporting', as adopted by the European Union. The
accounting policies and methods of computation used are consistent
with those used in the Group's latest annual audited financial
statements.
General information
The comparatives for the full year ended 1 January 2017 do not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on these accounts was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
Going concern
Despite the Group's challenging trading performance in the first
half of the year, the Company is profitable, highly cash generative
and retains a strong balance sheet. The Group has a debt facility
of GBP140m which was renewed on 8 June 2015 and now matures in June
2020. As at 2 July 2017 the Group had drawn down GBP29m of this
facility and had net bank debt of GBP19.3m. Based on the Group's
plans for the next 12 months and after making enquiries (including
preparation of reasonable trading forecasts, consideration of
current financing arrangements and current headroom for liquidity
and covenant compliance), the Directors have a reasonable
expectation that the Group has adequate resources to continue
operations for the foreseeable future. For this reason they
continue to adopt the going concern basis in preparing the
condensed financial statements.
Changes in accounting policies
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial statements.
There have been no changes to the accounting standards in the
current year that have materially impacted the Group financial
statements.
Notes to the condensed financial statements
1 Segmental analysis
The Group trades in one business segment (that of operating
restaurants) and one geographical segment (being the United
Kingdom). The Group's brands meet the aggregation criteria set out
in paragraph 22 of IFRS 8 'Operating Segments' and as such the
Group reports the business as one reportable segment.
2 Cost of sales
26 weeks 27 weeks 53 weeks
ended ended ended
2 July 3 July 1 January
2017 2016 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Cost of sales consists
of the following:
Continuing business
excluding pre-opening
costs (287,936) (301,672) (594,756)
Pre-opening costs (1,569) (1,090) (3,380)
Trading cost of sales (289,505) (302,762) (598,136)
Exceptional charge (18,439) (57,131) (109,732)
Cost of sales for
the period/year (307,944) (359,893) (707,868)
------------ ------------ -----------
3 Exceptional items
27 weeks 53 weeks
26 weeks ended ended
ended 2 3 July 1 January
July 2017 2016 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Provision for onerous
leases and other costs (4,346) (16,851) (41,682)
Change in assumption
of discount rate (9,814) - -
Impairment of fixed
assets (4,279) (40,280) (68,050)
Restructuring and
strategic review costs (4,238) (2,009) (6,944)
Exceptional cost before
tax (22,677) (59,140) (116,676)
Tax 3,908 8,178 16,405
Net exceptional cost
for the period/year (18,769) (50,962) (100,271)
------------ ------------ -----------
An exceptional charge of GBP22.7m has been recorded in the
period (2016: GBP59.1m), which comprises:
- Property provisions of GBP4.4m (2016: GBP16.8m) recognising
the successful exit of 12 sites, the reassessment of the remaining
disposal sites and further review of our existing estate;
- A charge of GBP9.8m relating to a change in the discount rate
applied to the onerous lease provisions;
- Impairment charge of GBP4.3m (2016: GBP40.3m) made against the
carrying value of some restaurant assets given recent changes in
certain local markets; and
- GBP4.2m (2016: GBP2.0m) relating to costs incurred in the
restructuring projects that were initiated in 2017 to implement the
new strategy and cost saving initiatives.
- A GBP3.9m tax credit in relation to exceptional items (27
weeks ended 3 July 2016: GBP8.2m, 53 weeks ended 1 January 2017:
GBP16.4m)
4 Tax
The underlying tax charge has been calculated by reference to
the expected effective current and deferred tax rates for the full
financial year to 31 December 2017 applied against the trading
profit before tax for the period ended 2 July 2017.
The full year effective tax rate on the underlying profit
(before exceptional items) is estimated to be 21.6% (2016:
22.1%).
The Finance (No.2) Act 2015 introduced a reduction in the main
rate of the corporation tax from 20% to 19% from April 2017 and
from 19% to 18% from April 2020. These reductions were
substantively enacted on 24 October 2015.
The Finance Act 2016 introduced a further reduction in the main
rate of corporation tax to 17% from April 2020. This was
substantively enacted on 6 September 2016. The deferred tax
provision at the balance sheet date has been calculated at this
rate.
5 Earnings/(loss) per share
26 weeks ended 27 weeks ended 53 weeks ended
2 July 2017 3 July 2016 1 January 2017
Weighted
Weighted Weighted average
average average number
number Per-share number Per-share of Per-share
Earnings of shares amount Earnings/(loss) of shares amount Earnings/(loss) shares amount
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
GBP'000 millions pence GBP'000 millions pence GBP'000 millions pence
------------ ------------ ------------ ---------------- ------------ ------------ ---------------- ---------- ----------
Basic earnings
per share 1,235 200.4 0.62 (22,420) 200.1 (11.20) (40,165) 200.2 (20.06)
Effect of
dilutive
options - 0.1 - - - - - 0.4 0.04
Shares held
by employee
benefit
trust - 0.7 - - 0.9 0.05 - 0.8 0.08
Diluted
earnings
per share 1,235 201.2 0.61 (22,420) 201.0 (11.15) (40,165) 201.4 (20.06)
Basic
earnings/(loss)
per share 1,235 200.4 0.62 (22,420) 200.1 (11.20) (40,165) 200.2 (20.06)
Effect of
exceptional
items 18,769 - 9.37 50,962 - 25.46 100,271 - 50.08
Adjusted
earnings
per share 20,003 200.4 9.98 28,542 200.1 14.26 60,106 200.2 30.02
------------ ------------ ------------ ---------------- ------------ ------------ ---------------- ---------- ----------
6 Dividends
Following approval at the Annual General Meeting on 26 May 2017,
the final dividend in respect of 2016 of 10.60p per share,
totalling GBP21.2m, was paid to shareholders on 5 July 2017.
The Directors have declared an interim dividend of 6.8p per
share which will be paid on 12 October 2017 to shareholders on the
register on 15 September 2017 and shares will be marked ex-dividend
on 14 September 2017. In accordance with IAS 10, this will be
recognised in the reserves of the Group in the second half of the
year.
7 Reconciliation of profit before tax to cash generated from
operations
27 weeks
ended
3 July
2016 27 weeks ended 3 July 2016 53 weeks ended 1 January 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ --------------------------- ------------------------------
Profit/(loss) before tax 2,823 (22,499) (39,527)
Net finance charges 967 883 2,007
Impairment of property, plant and
equipment 4,279 40,280 68,050
Increase in provision for onerous leases
and other costs 18,397 18,860 46,860
Share-based payments 980 (265) 1,323
Depreciation 17,790 22,071 41,809
(Increase) / decrease in stocks (118) 1,060 757
Decrease / (increase) in debtors 4,824 4,705 (5,973)
(Decrease) / increase in creditors (4,099) (4,205) 6,842
Cash generated from operations 45,843 60,890 122,148
------------ --------------------------- ------------------------------
8 Bank loans
The Group has a committed bank facility of GBP140m in place
until June 2020. During the 26 weeks ended 2 July 2017, the Group
reduced the amount drawn down under this facility by GBP10.0m to
GBP29.0m (27 weeks ended 3 July 2016: increase of GBP11.0m, 53
weeks ended 1 January 2017: increase of GBP7.0m).
9 Share capital
Share capital at 2 July 2017 amounted to GBP56.5m. The number of
shares authorised, issued and fully paid increased from 201,063,045
to 201,063,167 in the period following the exercise of share
options by employees, amounting to 122 shares.
10 Related party transactions
There were no related party transactions in the 26 weeks ended 2
July 2017.
11 Contingent liabilities
There were no significant changes in the nature and size of
contingent liabilities at 2 July 2017 to those reported in the
Annual Report and Accounts for the 53 weeks ended 1 January
2017.
12 Events occurring after the reporting date
No material events have arisen since the end of the period which
have significantly affected or may significantly affect the
operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial periods.
INDEPENT REVIEW REPORT TO THE RESTAURANT GROUP PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 2 July 2017 which comprises the consolidated income
statement, the consolidated balance sheet, the consolidated
statement of changes in equity, the consolidated cash flow
statement and related notes 1 to 12. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in the accounting policies, the annual financial
statements of the group are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks ended 2 July
2017 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, UK
31 August 2017
Glossary
The directors believe the alternative performance metrics used
within this report, and defined below, provide additional useful
information for shareholders to evaluate and compare the
performance of the business from period to period. The adjusted
metrics are reconciled to the statutory results for the period
within the income statement and the supporting notes.
Trading Represents the performance of the business
business before exceptional costs and is considered
as the key metrics for shareholders to
evaluate and compare the performance of
the business from period to period.
-------------- -------------------------------------------------
Like-for-like This measure provides an indicator of
("LFL") the underlying performance of our existing
sales restaurants. There is no accounting standard
or consistent definition of 'like-for-like
sales' across the industry. Group like-for-like
sales are calculated by comparing the
performance of all mature sites in the
current period vs. the comparable period
in the prior year.
-------------- -------------------------------------------------
Adjusted Earnings before interest, tax, depreciation,
EBITDA amortisation and exceptional items. Calculated
by taking the Trading business operating
profit and adding back depreciation.
-------------- -------------------------------------------------
Net bank Net bank debt is calculated as the net
debt of the long-term borrowings less cash
and cash equivalents.
-------------- -------------------------------------------------
Free EBITDA less working capital and non-cash
cash movements (excluding exceptional items),
flow tax payments, interest payments and maintenance
capital expenditure.
-------------- -------------------------------------------------
Adjusted Profit before interest, tax and exceptional
operating items.
profit
-------------- -------------------------------------------------
Adjusted Calculated by taking the earnings per
EPS share of the business pre-exceptional
items.
-------------- -------------------------------------------------
Adjusted Calculated by taking the profit before
profit tax of the business pre-exceptional items.
before
tax
-------------- -------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QBLFXDVFLBBV
(END) Dow Jones Newswires
August 31, 2017 02:00 ET (06:00 GMT)
Restaurant (LSE:RTN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Restaurant (LSE:RTN)
Historical Stock Chart
From Apr 2023 to Apr 2024