29th Aug 2008 07:00
The Restaurant Group plc
Interim results for the 26 weeks ending 29 June 2008
The Restaurant Group plc operates 336 restaurants and pub restaurants predominantly in leisure locations and airports. Its primary offerings are Frankie and Benny's, Chiquito, Garfunkel's, Blubeckers and Brunning & Price.
The Group had a strong performance in the 1st half of 2008:
- +3% growth in like-for-like sales
- Revenue up 18% to £203m
- EBITDA increased by 16% to £35.3m
- Adjusted profit before tax increased by 20% to £21.1m
- Adjusted EPS rose 23% to 7.20p
- Declared interim dividend of 1.40p up 11%
- Statutory profit before tax increased by 29% to £22.1m
- Statutory EPS rose 25% to 7.60p
*Results marked as adjusted are stated excluding non-trading items (refer to note 2)
Leisure and Concessions divisions continued to grow revenues and operating profit demonstrating resilient market leading positions of our two business segments
Pipeline strong
- 17 new sites opened in the period
- 30-35 new sites targeted for 2008
- Excellent roll out potential
Good current trading with like-for-like sales +3% against strong comparatives
Remain confident of another year of progress in 2008
Andrew Page, Chief Executive, said:
"The TRG team has delivered another set of very satisfactory results with sales up 18% and profit up 20%. The market for consumer-facing businesses is tough and these results reflect the hard work of our people, the strength of our brands and our distinct market positions. Our new openings are performing strongly and we expect to have added more than thirty new restaurants by the end of 2008.
The second half has started well, with year to date like-for-like sales 3% ahead of last year, and our focus is firmly directed towards maintaining this progress."
29 August 2008
Enquiries:
|
The Restaurant Group |
|
|
Andrew Page, Chief Executive |
020 7457 2020 (today) |
|
Stephen Critoph, Group Finance Director |
0845 612 5001 (thereafter) |
|
College Hill |
|
|
Matthew Smallwood |
020 7457 2020 |
Chairman's Statement
The Restaurant Group has traded well during the first six months of the year, delivering a 3% growth in like-for-like sales, and increasing total revenues by 18% to produce growth in adjusted profit before tax of 20% and adjusted earnings per share growth of 23%. Both of our divisions increased revenues and profit; the Leisure division produced a 17% increase in operating profit and the Concessions division a 9% increase.
Against a deteriorating economic backdrop and challenging market conditions for consumer - facing businesses this represents a strong performance and is a reflection of the more resilient market positioning of the Group's businesses. Despite the "hurdle" being raised each year, this is the seventh successive set of interim accounts showing growth in profits and earnings per share.
We have again converted those increased profits into cash, with free cashflow increasing by 29% to £23.0m (2007: £17.9m). We have continued to invest in growing our site portfolio; during the first six months we opened 17 new restaurants and pub restaurants and these are performing well.
Results
Results marked as adjusted are stated excluding non-trading items (refer to note 2)
During the first half the Group made further good progress. Revenues grew by 18% to £203.2m (2007: £171.9m), EBITDA increased by 16% to £35.3m (2007: £30.3m), adjusted operating profit grew by 19% to £23.9m (2007: £20.1m), adjusted profit before tax increased by 20% to £21.1m (2007: £17.6m) and adjusted earnings per share increased by 23% to 7.20p (2007: 5.87p). In light of this solid performance the Board is declaring an interim dividend of 1.40p per share (2007: 1.26p) representing an increase of 11%. The dividend will be paid on 16 October 2008 to shareholders on the register on 19 September 2008 and the shares will be marked ex-dividend on 17 September 2008.
Leisure (284 units)
Total revenue: £161.3m Operating profit: £32.1m Operating margin: 19.9%
Frankie & Benny's (165 units)
Frankie & Benny's has traded well during the first half of 2008 with increases in both revenues and operating profits. During the first half we opened seven new restaurants - they are all trading well and are set to deliver high levels of return on investment. In total, we expect to open 16 to 21 new Frankie & Benny's restaurants this year and, going forward, the pipeline is strong.
Chiquito (53 units)
Chiquito has also performed well during the first half with significant increases in both revenues and operating profits. One new restaurant was opened during the first half and since the end of June we have opened a further two restaurants. These new openings are performing well and are set to deliver high returns. During 2008 we expect to open between five and eight new Chiquitos and the forward pipeline for this brand is also strong.
Pub Restaurants (43 units)
Overall, the performance of our Pub Restaurants business was solid, although this part of our Group has been more affected by the downturn in the economy and also through food cost inflation, as a result of a higher meat content in its menu offerings. We have been able to mitigate the impact of cost pressures through careful menu engineering (both content and price point) and cost management initiatives.
During the first half we opened one new Blubeckers pub restaurant and this is trading well. Our recent acquisition, Brunning & Price, continues to perform well and in line with our expectations. In July Brunning & Price opened at Sutton Hall near Macclesfield and the sales since opening have been excellent. In total, we expect to open two to three new Pub Restaurants in the full year.
Garfunkel's (23 units)
Garfunkel's had a strong first half delivering good growth in profits and cash flows. Following the conclusion of the refurbishment programme in early 2007 this business has delivered excellent results and it continues to produce high levels of return on investment.
Concessions (52 units)
Total revenue: £41.8m Operating profit: £6.0m Operating margin: 14.4%
During the first half revenues increased by 11% and profits increased by 9%. Cost pressures both in terms of input costs and other airport operating costs meant that margins were slightly down. However, this is a very satisfactory performance and ahead of our expectations.
2008 is likely to be one of the busiest years for our Concessions team with four new units opening in Heathrow T5 in March followed by the opening of four new units at Gatwick South in June. Overall, the performance of the new openings has been good and is set to improve further once the transfer of the remaining BA flights into T5 has been concluded later this year. Taking into account some closures (principally at Gatwick South and Heathrow) we expect to see a similar number of Concessions units at the end of the year compared to January 2008.
Rising fuel costs, slowing GDP growth and flight reductions at some UK airports may continue to impact passenger growth for the next 12-18 months. However, we believe that our business will continue to benefit from trading down to lower cost airlines.
We believe our heavier weighting towards airside operations has enabled our Concessions business to continue to grow market share and profits. We are market leaders in UK airport catering and we believe that our expertise, commitment to this specialised market segment and high reputation for delivering consistently strong results for our airport partners should enable us to continue to grow our Concessions business.
Cost pressures and margins
As previously disclosed there have been significant cost pressures impacting TRG's marketplace, including food, fuel and utility cost increases. During 2006 and 2007, where we were able, we took steps to remove or reduce inflationary cost risk for about one third of our major input costs by entering into fixed or capped price contracts with suppliers. That decision has served TRG well and we expect to continue to benefit during the remainder of 2008 and for much of 2009. To date we have seen only a small decline in our EBITDA operating margin which is a credit to the operating teams across the Group and our central purchasing team. Inflationary pressures look set to continue for at least the remainder of 2008 and into 2009; we will continue to take steps to mitigate the impact of these.
Cash flow and balance sheet
The Group continues to be strongly cash generative. During the first half cash flows from operations increased by 27% to £35.6m (2007: £28.1m) and free cash flow (cash flow from operating activities less interest, tax and maintenance capex payments) increased by 29% to £23.0m (2007: £17.9m). The Group continues to convert its increasing profits into cash at a very healthy rate and this reflects the disciplined manner in which we run the business.
During the first half of 2008, £21.1m (2007: £19.1m) of our cash was applied to capital expenditure of which £5.2m (2007: £5.9m) represented maintenance capital expenditure and £15.9m (2007: £13.2m) represented investment in opening new restaurants. For the full year we expect to spend between £34m and £38m on opening new restaurants and we are projecting to fund this from internally generated cashflows.
Our net debt was £71.3m at the half year and we have a committed facility of £120m in place until December 2012.
Board changes
David Richardson resigned from the Board of Directors on 8 August 2008. I would like to thank him for his contribution to the Group during his tenure as a non-executive Director.
Risks and uncertainties
There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. These have not materially changed from the information on the principal risks and uncertainties of the Group which are set out on page 16 of our latest Annual Report and Accounts. The key risks and uncertainties facing the Group in the second half of the year include adverse economic conditions, increased competitive supply and increased raw material and other costs.
Outlook
The second half has started well with good levels of trade in both divisions. Despite being up against a high hurdle in terms of like-for-like sales growth, the Group is currently 3% ahead of last year for the 34 weeks to 24 August 2008, a very creditable performance.
Our new restaurants continue to perform strongly and we have a solid pipeline for the remainder of this year, through 2009 and into 2010. In total, we expect to open 30-35 new restaurants and pub restaurants during 2008.
The deterioration in the UK economy over the past twelve months has been well documented. There are a number of key economic factors which are currently adversely impacting consumer-facing businesses including input cost inflation, increased pressure on disposable incomes and less security of employment.
Although TRG is not immune from these factors, we believe that we have positioned our business in a manner which has made it more resilient and enabled TRG to continue to grow sales and profits. Whilst the economic outlook remains challenging, I am confident that, absent a further significant deterioration in the UK economy, we will deliver another year of good progress.
Alan Jackson
Non-executive Chairman
29 August 2008
|
The Restaurant Group plc - Condensed Interim Financial Statements |
|||||||||
|
Consolidated income statement |
|||||||||
|
Six months to 29 June 2008 |
Six months to 1 July 2007 |
||||||||
|
(unaudited) |
(unaudited) |
||||||||
|
Non- |
Non- |
||||||||
|
Trading |
trading |
Trading |
trading |
||||||
|
business |
(note 4) |
Total |
business |
(note 4) |
Total |
||||
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
Revenue |
203,197 |
- |
203,197 |
171,935 |
- |
171,935 |
|||
|
Cost of sales: |
|||||||||
|
Excluding pre-opening costs |
(165,817) |
- |
(165,817) |
(139,750) |
- |
(139,750) |
|||
|
Pre-opening costs |
(899) |
- |
(899) |
(945) |
- |
(945) |
|||
|
(166,716) |
- |
(166,716) |
(140,695) |
- |
(140,695) |
||||
|
Gross profit |
36,481 |
- |
36,481 |
31,240 |
- |
31,240 |
|||
|
Administration costs |
(12,599) |
- |
(12,599) |
(11,118) |
- |
(11,118) |
|||
|
Trading profit |
23,882 |
- |
23,882 |
20,122 |
- |
20,122 |
|||
|
Release / (charge) of provision against carrying value of associate |
- |
39 |
39 |
- |
(1,656) |
(1,656) |
|||
|
Profit on disposal of fixed assets |
- |
305 |
305 |
- |
- |
- |
|||
|
Operating profit / (loss) |
23,882 |
344 |
24,226 |
20,122 |
(1,656) |
18,466 |
|||
|
Interest payable |
(2,802) |
- |
(2,802) |
(1,800) |
- |
(1,800) |
|||
|
Interest receivable |
55 |
638 |
693 |
16 |
1,245 |
1,261 |
|||
|
Profit / (loss) before share of associate and tax |
21,135 |
982 |
22,117 |
18,338 |
(411) |
17,927 |
|||
|
Share of post-tax result in associated undertaking |
- |
- |
- |
(749) |
- |
(749) |
|||
|
Profit / (loss) on ordinary activities before tax |
21,135 |
982 |
22,117 |
17,589 |
(411) |
17,178 |
|||
|
Tax on profit / (loss) from ordinary activities |
5 |
(6,985) |
(179) |
(7,164) |
(6,102) |
865 |
(5,237) |
||
|
Profit for the period |
14,150 |
803 |
14,953 |
11,487 |
454 |
11,941 |
|||
|
Earnings per share (pence) |
|||||||||
|
Basic |
6 |
7.20 |
7.60 |
5.87 |
6.10 |
||||
|
Diluted |
6 |
7.17 |
7.57 |
5.86 |
6.09 |
||||
|
|
|||||||||
|
Dividend per share (pence) |
7 |
1.40 |
1.26 |
||||||
|
The Restaurant Group plc - Condensed Interim Financial Statements |
||||||||
|
Consolidated income statement (continued) |
||||||||
|
Year ended 30 December 2007 (audited) |
||||||||
|
Non- |
||||||||
|
Trading |
trading |
|||||||
|
business |
(note 4) |
Total |
||||||
|
Note |
£'000 |
£'000 |
£'000 |
|||||
|
Revenue |
366,710 |
- |
366,710 |
|||||
|
Cost of sales: |
||||||||
|
Excluding pre-opening costs |
(294,102) |
- |
(294,102) |
|||||
|
Pre-opening costs |
(2,567) |
- |
(2,567) |
|||||
|
(296,669) |
- |
(296,669) |
||||||
|
Gross profit |
70,041 |
- |
70,041 |
|||||
|
Administration costs |
(21,834) |
- |
(21,834) |
|||||
|
Trading profit |
48,207 |
- |
48,207 |
|||||
|
Release / (charge) of provision against carrying value of associate |
- |
(1,656) |
(1,656) |
|||||
|
Profit on disposal of fixed assets |
- |
247 |
247 |
|||||
|
Operating profit / (loss) |
48,207 |
(1,409) |
46,798 |
|||||
|
Interest payable |
(4,017) |
(237) |
(4,254) |
|||||
|
Interest receivable |
39 |
986 |
1,025 |
|||||
|
Profit / (loss) before share of associate and tax |
44,229 |
(660) |
43,569 |
|||||
|
Share of post-tax result in associated undertaking |
(749) |
- |
(749) |
|||||
|
Profit / (loss) on ordinary activities before tax |
43,480 |
(660) |
42,820 |
|||||
|
Tax on profit / (loss) from ordinary activities |
5 |
(14,802) |
1,158 |
(13,644) |
||||
|
Profit for the period |
28,678 |
498 |
29,176 |
|||||
|
Earnings per share (pence) |
||||||||
|
Basic |
6 |
14.64 |
14.90 |
|||||
|
Diluted |
6 |
14.56 |
14.82 |
|||||
|
Dividend per share (pence) |
7 |
7.25 |
||||||
|
The Restaurant Group plc - Condensed Interim Financial Statements |
|||||||||||
|
Consolidated statement of changes in equity |
|||||||||||
|
Six months to 29 June 2008 |
Six months to 1 July 2007 |
Year ended 30 December 2007 |
|||||||||
|
(unaudited) |
(unaudited) |
(audited) |
|||||||||
|
Note |
£'000 |
£'000 |
£'000 |
||||||||
|
Opening equity |
77,154 |
65,204 |
65,204 |
||||||||
|
Profit for the period |
14,953 |
11,941 |
29,176 |
||||||||
|
Foreign exchange translation differences |
165 |
(51) |
40 |
||||||||
|
Tax on share-based payments taken directly to equity |
(454) |
(103) |
(712) |
||||||||
|
Total recognised income and expense for the period |
14,664 |
11,787 |
28,504 |
||||||||
|
Dividends |
7 |
(11,504) |
(9,702) |
(12,173) |
|||||||
|
Issue of new shares |
41 |
593 |
1,090 |
||||||||
|
Share-based payments - credit to equity |
1,080 |
950 |
1,738 |
||||||||
|
Employee benefit trust - purchase of shares |
(3,597) |
(4,955) |
(7,209) |
||||||||
|
Total changes in equity in the period |
684 |
(1,327) |
11,950 |
||||||||
|
|
|
|
|||||||||
|
Closing equity |
77,838 |
63,877 |
77,154 |
||||||||
|
The Restaurant Group plc - Condensed Interim Financial Statements |
||||
|
Consolidated balance sheet |
||||
|
At 29 June 2008 |
At 1 July 2007 |
At 30 December 2007 |
||
|
(unaudited) |
(unaudited) |
(audited) |
||
|
£'000 |
£'000 |
£'000 |
||
|
Non-current assets |
||||
|
Intangible assets |
26,241 |
11,275 |
26,516 |
|
|
Property, plant and equipment |
236,783 |
182,537 |
228,757 |
|
|
263,024 |
193,812 |
255,273 |
||
|
Current assets |
||||
|
Stock |
3,107 |
2,349 |
3,349 |
|
|
Financial assets - derivative financial instruments |
1,053 |
911 |
415 |
|
|
Trade and other receivables |
5,089 |
1,876 |
7,027 |
|
|
Prepayments |
17,849 |
17,477 |
12,830 |
|
|
Cash and cash equivalents |
1,366 |
6,387 |
1,692 |
|
|
28,464 |
29,000 |
25,313 |
||
|
Total assets |
291,488 |
222,812 |
280,586 |
|
|
Current liabilities |
||||
|
Short-term borrowings |
(913) |
(42,000) |
- |
|
|
Income tax liabilities |
(7,368) |
(6,021) |
(6,842) |
|
|
Trade and other payables |
(99,426) |
(88,552) |
(85,191) |
|
|
Other payables - finance lease debt |
(272) |
(271) |
(271) |
|
|
(107,979) |
(136,844) |
(92,304) |
||
|
Net current liabilities |
(79,515) |
(107,844) |
(66,991) |
|
|
Non-current liabilities |
||||
|
Long-term borrowings |
(71,777) |
- |
(78,265) |
|
|
Other payables - finance lease debt |
(2,602) |
(2,512) |
(2,558) |
|
|
Deferred tax liabilities |
(26,063) |
(16,185) |
(25,388) |
|
|
Provisions |
(5,229) |
(3,394) |
(4,917) |
|
|
(105,671) |
(22,091) |
(111,128) |
||
|
Total liabilities |
(213,650) |
(158,935) |
(203,432) |
|
|
Net assets |
77,838 |
63,877 |
77,154 |
|
|
Equity |
||||
|
Share capital |
55,310 |
55,129 |
55,295 |
|
|
Share premium |
21,030 |
20,673 |
21,004 |
|
|
Foreign currency reserve |
286 |
30 |
121 |
|
|
Other reserves |
(6,165) |
(2,182) |
(3,648) |
|
|
Retained earnings |
7,377 |
(9,773) |
4,382 |
|
|
Total equity shareholders' interests |
77,838 |
63,877 |
77,154 |
|
|
The Restaurant Group plc - Condensed Interim Financial Statements |
||||
|
Consolidated cash flow statement |
||||
|
Six months to 29 June 2008 |
Six months to 1 July 2007 |
Year ended 30 December 2007 |
||
|
(unaudited) |
(unaudited) |
(audited) |
||
|
Note |
£'000 |
£'000 |
£'000 |
|
|
Cash flows from operating activities |
||||
|
Cash generated from operations |
3 |
35,612 |
28,092 |
73,812 |
|
Interest received |
55 |
1,524 |
1,546 |
|
|
Interest paid |
(1,143) |
(1,559) |
(3,468) |
|
|
Tax paid |
(6,329) |
(4,328) |
(10,228) |
|
|
Net cash flows from operating activities |
28,195 |
23,729 |
61,662 |
|
|
Cash flows from investing activities |
||||
|
Acquisition of subsidiary, net of cash acquired |
- |
- |
(32,884) |
|
|
Net proceeds from disposal of business by associate |
39 |
6,449 |
6,280 |
|
|
Purchase of property, plant and equipment |
(21,159) |
(19,051) |
(47,407) |
|
|
Proceeds from sale of property, plant and equipment |
1,742 |
149 |
815 |
|
|
Net cash flows used in investing activities |
(19,378) |
(12,453) |
(73,196) |
|
|
Cash flows from financing activities |
||||
|
Net proceeds from issue of ordinary share capital |
41 |
593 |
1,090 |
|
|
Employee benefit trust - purchase of shares |
(3,597) |
- |
(7,209) |
|
|
Net (repayments of) / proceeds from issue of bank loans |
(6,500) |
(5,000) |
32,000 |
|
|
Dividends paid to shareholders |
- |
- |
(12,173) |
|
|
Net cash flows (used in) / from financing activities |
(10,056) |
(4,407) |
13,708 |
|
|
Net (decrease) / increase in cash and cash equivalents |
(1,239) |
6,869 |
2,174 |
|
|
Cash and cash equivalents at start of period |
1,692 |
(482) |
(482) |
|
|
Cash and cash equivalents at end of period |
453 |
6,387 |
1,692 |
|
|
The Restaurant Group plc |
|||||||||||
|
Notes to the condensed interim financial statements |
|||||||||||
|
1 Segmental analysis |
|||||||||||
|
Six months to 29 June 2008 |
Six months to 1 July 2007 |
||||||||||
|
Operating |
Operating |
||||||||||
|
Turnover |
EBITDA |
EBITDA |
Operating |
profit |
Turnover |
EBITDA |
EBITDA |
Operating |
profit |
||
|
margin |
profit |
margin |
margin |
profit |
margin |
||||||
|
£'000 |
£'000 |
% |
£'000 |
% |
£'000 |
£'000 |
% |
£'000 |
% |
||
|
Leisure |
161,279 |
40,925 |
25.4% |
32,078 |
19.9% |
133,928 |
34,779 |
26.0% |
27,465 |
20.5% |
|
|
Concessions |
41,789 |
8,008 |
19.2% |
6,029 |
14.4% |
37,722 |
7,831 |
20.8% |
5,552 |
14.7% |
|
|
Principal trading brands |
203,068 |
48,933 |
24.1% |
38,107 |
18.8% |
171,650 |
42,610 |
24.8% |
33,017 |
19.2% |
|
|
Non-core brands |
129 |
(502) |
(388.4%) |
(727) |
(562.3%) |
285 |
(681) |
(239.2%) |
(832) |
(292.3%) |
|
|
Total all brands |
203,197 |
48,431 |
23.8% |
37,380 |
18.4% |
171,935 |
41,929 |
24.4% |
32,185 |
18.7% |
|
|
Pre-opening costs |
(899) |
(0.4%) |
(899) |
(0.4%) |
(945) |
(0.5%) |
(945) |
(0.5%) |
|||
|
Administration |
(11,170) |
(5.5%) |
(11,519) |
(5.7%) |
(9,720) |
(5.7%) |
(10,168) |
(5.9%) |
|||
|
Share-based payments |
(1,080) |
(0.5%) |
(1,080) |
(0.5%) |
(950) |
(0.6%) |
(950) |
(0.6%) |
|||
|
Total before non-trading items |
35,282 |
17.4% |
23,882 |
11.8% |
30,314 |
17.6% |
20,122 |
11.7% |
|||
|
Release / (charge) of provision against carrying value of associate |
39 |
(1,656) |
|||||||||
|
Profit on disposal of fixed assets |
305 |
- |
|||||||||
|
Operating profit |
24,226 |
18,466 |
|||||||||
|
Year ended 30 December 2007 |
||||||||||||||||||||||||||||
|
Operating |
||||||||||||||||||||||||||||
|
Turnover |
EBITDA |
EBITDA |
Operating |
profit |
||||||||||||||||||||||||
|
margin |
profit |
margin |
||||||||||||||||||||||||||
|
£'000 |
£'000 |
% |
£'000 |
% |
||||||||||||||||||||||||
|
Leisure |
285,226 |
76,161 |
26.7% |
61,572 |
21.6% |
|||||||||||||||||||||||
|
Concessions |
81,199 |
16,567 |
20.4% |
12,485 |
15.4% |
|||||||||||||||||||||||
|
Principal trading brands |
366,425 |
92,728 |
25.3% |
74,057 |
20.2% |
|||||||||||||||||||||||
|
Non-core brands |
285 |
(1,134) |
(398.0%) |
(1,449) |
(508.5%) |
|||||||||||||||||||||||
|
Total all brands |
366,710 |
91,594 |
25.0% |
72,608 |
19.8% |
|||||||||||||||||||||||
|
Pre-opening costs |
(2,567) |
(0.7%) |
(2,567) |
(0.7%) |
||||||||||||||||||||||||
|
Administration |
(19,483) |
(5.3%) |
(20,096) |
(5.5%) |
||||||||||||||||||||||||
|
Share-based payments |
(1,738) |
(0.5%) |
(1,738) |
(0.5%) |
||||||||||||||||||||||||
|
Total before non-trading items |
67,806 |
18.5% |
48,207 |
13.1% |
||||||||||||||||||||||||
|
Release / (charge) of provision against carrying value of associate |
(1,656) |
|||||||||||||||||||||||||||
|
Profit on disposal of fixed assets |
247 |
|||||||||||||||||||||||||||
|
Operating profit |
46,798 |
|||||||||||||||||||||||||||
|
No geographical segment analysis has been provided as the Directors do not consider there to be materially significant geographical segments. The Group currently operates three restaurants outside of the United Kingdom. |
||||||||||||||||||||||||||||
|
EBITDA is operating profit before depreciation, amortisation and non-trading items. |
||||||||||||||||||||||||||||
|
The Restaurant Group plc |
|||
|
Notes to the condensed interim financial statements (continued) |
|||
|
2 Additional non-statutory information |
|||
|
Additional non-statutory information is provided as a useful guide to underlying trading performance. The 2008 and 2007 half year results and 2007 full year results include a number of items which are of a one-off nature or are unrelated to the period's result and hence are not representative of the underlying trading performance of the business. The additional information set out below excludes these items (as described in note 4), and are to aid understanding of the income statement and segmental analysis and should be read in conjunction with, rather than as a substitute for, the reported information. |
|||
|
The Restaurant Group plc |
||||||||||||||||||||||
|
Notes to the condensed interim financial statements (continued) |
||||||||||||||||||||||
|
2 Additional non-statutory information * |
||||||||||||||||||||||
|
* Results are stated excluding non-trading items |
||||||||||||||||||||||
|
Six months to 29 June 2008 |
Six months to 1 July 2007 |
|||||||||||||||||||||
|
Operating |
Operating |
|||||||||||||||||||||
|
Turnover |
EBITDA |
EBITDA |
Operating |
profit |
Turnover |
EBITDA |
EBITDA |
Operating |
profit |
|||||||||||||
|
margin |
profit |
margin |
margin |
profit |
margin |
|||||||||||||||||
|
£'000 |
£'000 |
% |
£'000 |
% |
£'000 |
£'000 |
% |
£'000 |
% |
|||||||||||||
|
Leisure |
161,279 |
40,925 |
25.4% |
32,078 |
19.9% |
133,928 |
34,779 |
26.0% |
27,465 |
20.5% |
||||||||||||
|
Concessions |
41,789 |
8,008 |
19.2% |
6,029 |
14.4% |
37,722 |
7,831 |
20.8% |
5,552 |
14.7% |
||||||||||||
|
Principal trading brands |
203,068 |
48,933 |
24.1% |
38,107 |
18.8% |
171,650 |
42,610 |
24.8% |
33,017 |
19.2% |
||||||||||||
|
Non-core brands |
129 |
(502) |
(388.4%) |
(727) |
(562.3%) |
285 |
(681) |
(239.2%) |
(832) |
(292.3%) |
||||||||||||
|
Total all brands |
203,197 |
48,431 |
23.8% |
37,380 |
18.4% |
171,935 |
41,929 |
24.4% |
32,185 |
18.7% |
||||||||||||
|
Pre-opening costs |
(899) |
(0.4%) |
(899) |
(0.4%) |
(945) |
(0.5%) |
(945) |
(0.5%) |
||||||||||||||
|
Administration |
(11,170) |
(5.5%) |
(11,519) |
(5.7%) |
(9,720) |
(5.7%) |
(10,168) |
(5.9%) |
||||||||||||||
|
Share-based payments |
(1,080) |
(0.5%) |
(1,080) |
(0.5%) |
(950) |
(0.6%) |
(950) |
(0.6%) |
||||||||||||||
|
EBITDA / adjusted operating profit |
35,282 |
17.4% |
23,882 |
11.8% |
30,314 |
17.6% |
20,122 |
11.7% |
||||||||||||||
|
Total net interest charges |
(2,747) |
(1,784) |
||||||||||||||||||||
|
Adjusted profit before share of associate and tax |
21,135 |
18,338 |
||||||||||||||||||||
|
Share of post-tax result in associated undertaking |
- |
(749) |
||||||||||||||||||||
|
Adjusted profit before taxation |
21,135 |
17,589 |
||||||||||||||||||||
|
Taxation |
(6,985) |
(6,102) |
||||||||||||||||||||
|
Adjusted profit after taxation |
14,150 |
11,487 |
||||||||||||||||||||
|
Earnings per share (pence) - trading business |
||||||||||||||||||||||
|
Basic |
7.20 |
5.87 |
||||||||||||||||||||
|
Diluted |
7.17 |
5.86 |
||||||||||||||||||||
|
Year ended 30 December 2007 |
||||||||||||||||||
|
Operating |
||||||||||||||||||
|
Turnover |
EBITDA |
EBITDA |
Operating |
profit |
||||||||||||||
|
margin |
profit |
margin |
||||||||||||||||
|
£'000 |
£'000 |
% |
£'000 |
% |
||||||||||||||
|
Leisure |
285,226 |
76,161 |
26.7% |
61,572 |
21.6% |
|||||||||||||
|
Concessions |
81,199 |
16,567 |
20.4% |
12,485 |
15.4% |
|||||||||||||
|
Principal trading brands |
366,425 |
92,728 |
25.3% |
74,057 |
20.2% |
|||||||||||||
|
Non-core brands |
285 |
(1,134) |
(398.0%) |
(1,449) |
(508.5%) |
|||||||||||||
|
Total all brands |
366,710 |
91,594 |
25.0% |
72,608 |
19.8% |
|||||||||||||
|
Pre-opening costs |
(2,567) |
(0.7%) |
(2,567) |
(0.7%) |
||||||||||||||
|
Administration |
(19,483) |
(5.3%) |
(20,096) |
(5.5%) |
||||||||||||||
|
Share-based payments |
(1,738) |
(0.5%) |
(1,738) |
(0.5%) |
||||||||||||||
|
EBITDA / adjusted operating profit |
67,806 |
18.5% |
48,207 |
13.1% |
||||||||||||||
|
Total net interest charges |
(3,978) |
|||||||||||||||||
|
Adjusted profit before share of associate and tax |
44,229 |
|||||||||||||||||
|
Share of post-tax result in associated undertaking |
(749) |
|||||||||||||||||
|
Adjusted profit before taxation |
43,480 |
|||||||||||||||||
|
Taxation |
(14,802) |
|||||||||||||||||
|
Adjusted profit after taxation |
28,678 |
|||||||||||||||||
|
Earnings per share (pence) - trading business |
||||||||||||||||||
|
Basic |
14.64 |
|||||||||||||||||
|
Diluted |
14.56 |
|||||||||||||||||
|
No geographical segment analysis has been provided as the Directors do not consider there to be materially significant geographical segments. The Group currently operates three restaurants outside of the United Kingdom. |
||||||||||||||||||
|
EBITDA is operating profit before depreciation, amortisation and non-trading items. |
||||||||||||||||||
|
|
|||||||
|
The Restaurant Group plc Notes to the condensed interim financial statements (continued) |
|||||||
|
3 Reconciliation of profit before tax to net cash flows from operating activities |
|||||||
|
Six months to 29 June 2008 |
Six months to 1 July 2007 |
Year ended 30 December 2007 |
|||||
|
(unaudited) |
(unaudited) |
(audited) |
|||||
|
£'000 |
£'000 |
£'000 |
|||||
|
Profit before tax |
22,117 |
17,178 |
42,820 |
||||
|
Net finance charges |
2,109 |
539 |
3,229 |
||||
|
Profit on disposal of fixed assets |
(305) |
- |
(247) |
||||
|
(Release) / charge of provision of carrying value of associate |
(39) |
1,656 |
1,656 |
||||
|
Share of loss made by associate |
- |
749 |
749 |
||||
|
Share-based payment charge |
1,080 |
950 |
1,738 |
||||
|
Depreciation |
11,400 |
10,192 |
19,599 |
||||
|
Decrease / (increase) in stocks |
242 |
643 |
(121) |
||||
|
Increase in debtors |
(3,395) |
(3,201) |
(3,043) |
||||
|
Increase / (decrease) in creditors |
2,403 |
(614) |
7,432 |
||||
|
Cash flows from operating activities |
35,612 |
28,092 |
73,812 |
||||
|
4 Non-trading items |
|||||||
|
During the period the Group disposed of fixed assets and realised a net profit of £0.3m (6 months to 1 July 2007: £nil; 12 months to 30 December 2007: £0.2m profit). |
|||||||
|
The Group has taken a credit of £0.6m in respect of the remeasurement of its interest rate swap (6 months to 1 July 2007: credit of £0.3m; 12 months to 30 December 2007: £0.2m charge). |
|||||||
|
On 22 June 2007, the Group's associate company Pimco 2637 Limited (formerly known as Living Ventures Limited) disposed of the Living Rooms business. Following this transaction, a £1.7m provision was made against the residual carrying value of both the investment in Pimco 2637 Limited and the loan note receivable. In 2008, £0.039m cash has been received in relation to the disposal. In addition, a credit of £1.0m was recorded in 2007 in respect of accrued loan note interest received and not previously recognised. |
|||||||
|
A non-trading taxation credit of £1.4m was recognised in the income statement in for the year to 30 December 2007 (6 months to 30 June 2007: £1.2m credit) due to the impact of the rate change on the deferred tax liability (see note 5). |
|||||||
|
5 Taxation |
|||||||
|
The taxation charge has been calculated by reference to the expected effective corporation and deferred tax rates for the full financial year to 29 December 2008 applied against the profit before tax for the period ending 29 June 2008. The full year effective tax charge on the underlying trading profit is estimated to be 32% (2007: 33%). The Finance Act 2007 reduced the rate of corporation tax from 30% to 28% from 1 April 2008 and this reduction has been reflected when calculating the tax charge. |
|||||||
|
6 Earnings per share |
|||||||||||||||||||||||||
|
Six months to 29 June 2008 |
Six months to 1 July 2007 |
Year ended 30 December 2007 |
|||||||||||||||||||||||
|
Earnings |
Weighted average number of shares |
Per-share amount |
Earnings |
Weighted average number of shares |
Per-share amount |
Earnings |
Weighted average number of shares |
Per-share amount |
|||||||||||||||||
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(audited) |
(audited) |
(audited) |
|||||||||||||||||
|
£'000 |
millions |
pence |
£'000 |
millions |
pence |
£'000 |
millions |
pence |
|||||||||||||||||
|
Basic earnings per share |
14,953 |
196.6 |
7.60 |
11,941 |
195.6 |
6.10 |
29,176 |
195.9 |
14.90 |
||||||||||||||||
|
Effect of dilutive options |
- |
0.8 |
(0.03) |
- |
0.4 |
(0.01) |
- |
1.0 |
(0.08) |
||||||||||||||||
|
Diluted earnings per share |
14,953 |
197.4 |
7.57 |
11,941 |
196.0 |
6.09 |
29,176 |
196.9 |
14.82 |
||||||||||||||||
|
Basic earnings per share |
14,953 |
196.6 |
7.60 |
11,941 |
195.6 |
6.10 |
29,176 |
195.9 |
14.90 |
||||||||||||||||
|
Effect of non-trading items |
(803) |
- |
(0.40) |
(454) |
- |
(0.23) |
(498) |
- |
(0.26) |
||||||||||||||||
|
Earnings per share - trading business |
14,150 |
196.6 |
7.20 |
11,487 |
195.6 |
5.87 |
28,678 |
195.9 |
14.64 |
||||||||||||||||
|
7 Dividends |
|||
|
Following approval at the Annual General Meeting on 7 May 2008, the proposed dividend in respect of 2007 of 5.99p per share, totalling £11.5m, is to be recognised through the interim and final financial statements of 2008. This is in accordance with IAS 10 'Events after the Balance Sheet Date'. This dividend was paid to shareholders on 9 July 2008. |
|||
|
The Directors have declared an interim dividend of 1.40p per share, amounting to £2.8m, which will be paid on 16 October 2008 to ordinary shareholders on the register at close of business on 19 September 2008. In accordance with IAS 10, this will be recognised in the reserves of the Group in the second half of the year. |
|||
|
8 Basis of preparation |
||||
|
The condensed set of interim financial statements have been prepared in accordance with the accounting policies and presentation required by those International Financial Reporting Standards, incorporating International Accounting Standards ('IASs') and Interpretations (collectively 'IFRSs'), as adopted by the European Union which are to be used in the Group's annual financial statements for the year ended 29 December 2008. The accounting policies and method of computation used are consistent with those used in the financial statements for the year ended 30 December 2007. |
||||
|
The comparatives for the full year ended 30 December 2007 do not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors report on these accounts was unqualified and did not contain a statement under section 237(2)-(3) of the Companies Act 1985. |
||||
|
Statement of Directors' Responsibilities |
||||
|
The Directors confirm to the best of their knowledge that this condensed set of financial statements has been prepared in accordance with IAS 34, as adopted by the European Union, and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8. |
||||
|
On behalf of the Board |
||||
|
Alan Jackson |
||||
|
Stephen Critoph ACA |
||||
|
29 August 2008 |
||||
INDEPENDENT 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 six months ended 29 June 2008 which comprises the consolidated income statement, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 8. 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 2410 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 them 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 Services Authority.
As disclosed in note 8, 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 Ireland) 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 six months ended 29 June 2008 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 Services Authority.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditor
29 August 2008
London, UK
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