15th Mar 2019 08:02
LONDON (Alliance News) - Restaurant Group PLC on Friday reported a significant fall in its annual profit despite describing the year of 2018 as "pivotal".
Restaurant Group owns dining brands such as Frankie & Benny's, Chiquito, Garfunkel's and only recently acquired Asian food chain Wagamama. At year-end it operated 650 restaurant and pubs across the UK.
For the year to December 30, the restaurant franchise operator posted pretax profit of GBP13.9 million, more than halved from GBP28.2 million a year ago. This included a GBP39.2 million exceptional charge due to an onerous lease review and a GBP14.8 million charge related to the Wagamama acquisition.
On an adjusted basis, excluding exceptional items, pretax profit came in 8.1% lower at GBP53.2 million from GBP57.8 million.
Revenue meanwhile was up 1.0% to GBP686.0 million from GBP679.3 million a year prior, while total sales increase 1.0%. On a like-for-like basis, annual sales were down 2.0%.
Higher administration costs rising to GBP42.1 million from GBP36.0 million and increased interests payable of GBP2.7 million from GBP1.7 million contributed to the profit fall.
Chief Executive Officer Andy McCue said: "We have made significant progress in 2018, acquiring a differentiated, high growth business in Wagamama, opening a record number of new sites in both our Pubs and Concessions businesses, and driving improved like-for-like sales momentum in the Leisure business throughout 2018.
"We now have a business that is orientated strongly towards growth and we continue to focus on delivering shareholder value."
At the year end, net debt stood at GBP291.1 million, significantly increased from GBP23.1 million following the Wagamama deal. The Asian food chain was acquired last November in a GBP357 million deal, formally completed on December 24.
Shareholders' views on the acquisition were mixed, with the deal gaining their approval by a mere 60% to 40%. Among investors concerns was the fact that the deal included debt valuing Wagamama at an enterprise value of GBP559 million.
Restaurant Group proposed a final 1.47 pence per share dividend,
Furthermore, Restaurant Group is continuing a process to appoint a new chief executive officer after in mid-February, CEO McCue decided to leave due to "extenuating personal circumstances".
McCue will remain in position while his successor is being recruited.
Furthermore, the company said that Senior Independent Director Simon Cloke will step down from his role in May after nine years. He will be replaced by Non-Executive Director Allan Leighton.
Leighton is currently chair of Co-op Group Ltd and Entertainment One Ltd. He has previously been CEO of ASDA Group Ltd and Pandora AS and chair of Pace PLC and Royal Mail PLC.
In the ten weeks to March 10, Restaurant Group's like-for-like sales are up 2.8%, in line with management expectations.
The company said the enlarged group is "strongly orientated towards growth" as it remains focused on optimising its portfolio.
"2018 was a pivotal year for the group. The acquisition of Wagamama and the development of our Pubs and Concessions businesses have accelerated our progress into growth sectors and we continue to make improvements to the customer proposition and our execution across our Leisure business," Chair Debbie Hewitt said.
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