Final Results
Restaurant Group PLC
17 March 2004
The Restaurant Group plc
Preliminary results for the year to 31 December 2003
The Restaurant Group plc operated 249 branded restaurants across the UK and
Spain at 31 December 2003. Its portfolio of brands includes Frankie and
Benny's, Chiquito, Garfunkel's, Caffe Uno and Est Est Est.
Financial
• Progress continued in the second half of 2003 with adjusted pre-tax
profits* for the full year increasing 15% to £19.3 million (2002: £16.8
million)
• Adjusted earnings per share* rose by 14% to 6.5p (2002: 5.68p)
• Increased recommended final dividend of 2.9p (2002: 2.75p) giving a
total dividend for 2003 of 3.65p (2002: 3.5p)
• £38 million of cash generated from operations (2002: £31.4 million)
• Net debt reduced to £38 million at year end: current net debt £25
million
• Capex of £20.4 million (2002: £14.7 million)
• Annual like for like sales up 3%
* 2003 results are stated before exceptional items and 2002 results are stated
before exceptional items and a prior year tax credit of £2 million.
Trading
• Excellent progress has been made across all three of the key segments.
Leisure parks (111 units)
• Frankie and Benny's performed well with like for like sales up 7%
• 11 new Frankie & Benny's opened
The Concession Connection (28 units)
• Like for like sales +14%
• Successful opening of 7 new airport outlets following termination of 6
previous concessions
High Streets (110 units)
• Improvement of the position against background of significant restaurant
supply and an increasingly demanding customer base
• Like for like sales improved 0.2%
2004 and Current Trading
• Opening programme in excess of 20 units in our growth brands
• Current year started well with like for like sales growth of +2% for the
11 weeks to 14 March
Alan Jackson, Executive Chairman, said:
'Financially we are stronger than at any time in our recent history, well placed
to develop our core business and in a position to capitalise on other
opportunities to further maximise shareholder value. 2004 has started well and
we have an excellent pipeline of new sites. Overall, I am confident that 2004
will be a year of further good progress.'
17 March 2004
Enquiries:
The Restaurant Group plc
Alan Jackson, Executive Chairman 020 7457 2020 (today)
Andrew Page, Group Managing Director 020 7747 7750 (thereafter)
College Hill
Matthew Smallwood 020 7457 2020
Chairman's Statement
2003 saw The Restaurant Group plc ('TRG') make excellent progress with strong
growth in profits, improving cashflows and a significant enhancement in the
financial strength of the Group. Overall, like-for-like sales increased by 3 per
cent, a very satisfying improvement on 2002, and a very creditable performance
in a difficult marketplace.
As evidenced at the half year stage, the Group was successful in further
developing its core businesses and this progress has continued during the second
half. Against a relatively stable domestic economic background, with reasonable
GDP growth, the Group has achieved a significant improvement in adjusted pre-tax
profits which increased by almost 15 per cent to £19.3 million* (2002: £16.8
million), with turnover increasing by 5% to £227.4 million (2002: £216.4
million). Adjusted earnings per share* increased by 14% to 6.5 pence (2002: 5.68
pence).
In the light of these results the Board is recommending an increased final
dividend of 2.9 pence per share (2002: 2.75 pence) giving a total dividend for
2003 of 3.65 pence per share (2002: 3.5 pence). Subject to approval at the
Annual General Meeting, the final dividend will be payable on 8 July 2004 to
shareholders on the register on 11 June 2004 and shares will be marked
ex-dividend on 9 June 2004.
* 2003 results are stated before exceptional items and 2002 results are stated
before exceptional items and a prior year tax credit of £2 million.
During 2003 the Group continued to pursue its strategy for growth with new
restaurant developments concentrated in its Leisure Parks and Concessions
businesses. This strategy, first implemented during late 2001, has served the
Group well and has resulted in enhanced returns and a strengthening of the
Group's finances. The Group now occupies strong market positions in two of its
three key business segments, namely Leisure Parks and Concessions. Our spread of
businesses operating across three distinct segments, each with its own key
drivers and differing dynamics, affords the Group a measure of diversification
which is valuable in terms of balancing risk and reward.
The Group increased operating profits in all three of its key segments and was
also successful in maintaining or improving profit margins. This is a highly
creditable performance and bodes well for the future success of the Group.
Leisure Parks enjoyed another good year recording a 13% increase in turnover and
a 14% increase in operating profit. Eleven new Frankie & Benny's sites were
opened during 2003 and these are producing excellent returns. We anticipate
opening 15-20 new Frankie & Benny's restaurants in 2004. During the second half
of 2003 we concluded a comprehensive restructuring of the management of Chiquito
and have since initiated a number of initiatives to improve top line performance
and tighten cost controls. The results of these actions are now becoming
apparent.
Our Concessions business also made good progress, recording a 9% increase in
turnover and a 10% increase in operating profit. During the year, six of our
airport concessions ended and we secured seven new concession agreements.
High Streets experienced another challenging year and I am delighted that the
Group has been able to improve its position against a background of significant
restaurant supply and an increasingly demanding customer base. Despite suffering
a 1% fall in turnover, our High Street business recorded a modest improvement in
operating profit. During 2003, we continued to invest in our High Street units
in order to improve their competitive position. Our focus on consistent and high
standards of service and an ongoing programme of re-investment has enabled us to
continue to enjoy further, albeit modest, profit growth and to protect our
market position.
During the final quarter of 2003 the Group was engaged in merger discussions
with ASK Central plc ('ASK') and in December 2003 an offer was made to ASK's
shareholders, the acceptance of which was recommended by the Board of ASK.
Subsequently, a competing offer was made for ASK, by a third party, which valued
ASK at the equivalent of £1.3 million per restaurant. Your Board determined that
it would not be in shareholders' best interests to increase further TRG's offer
and accordingly our offer lapsed. Whilst we firmly believed that a combination
of TRG and ASK would have produced a formidable national restaurant group, we
were not prepared to jeopardise the excellent progress made over the past two
and half years by increasing our offer price.
In January 2004 we successfully completed a placing of TRG shares which raised
£13.4 million, net of expenses, and our year end net debt (on a pro-forma,
post-placing basis) was approximately £25 million. We now have an even stronger
financial position, providing a platform from which to develop the Group.
During 2003 we have strengthened the Board with the appointment of Andrew Page
as Group Managing Director. Andrew, who joined the Group as Finance Director in
2001, has played a major role in restoring the business to a sound financial
position, devising and implementing a strategy for profitable growth and
building a strong team. We have further strengthened the Board through the
appointment of Kevin Bacon and Trish Corzine who have successfully developed the
Leisure Parks and Concessions business, respectively.
In February 2004, Ian Hannah retired as a Non-Executive Director and the Board
would like to place on record its thanks for his contribution over the past two
and a half years. In March 2004, Bob Ivell, who was until recently Executive
Chairman of Scottish and Newcastle Retail, was appointed to the Board as a
Non-Executive Director. We are confident that the strategy which the Group has
been pursuing during the past two and a half years can continue to deliver
further profitable growth and, going forward, we will continue to monitor
opportunities which could add further value to the Group. This year has started
well with like-for-like sales growth 2% ahead for the 11 weeks to 14 March 2004.
We have an excellent business, strong brands operating across our chosen
segments, a good pipeline of new sites and a well motivated team. Our most
important asset is our people and I am very encouraged by the continuing
progress that we have made in building strong teams across our Group. The
success which we have enjoyed during 2003 is testament to their hard work and
efforts and on behalf of the Board I would like to thank them. I am confident
that 2004 will be a year of further good progress for our business.
Alan Jackson
Executive Chairman
17 March 2004
Group Managing Director's Review of Operations and Finance
Review of Operations*
2003 was a year of further progress for the Group building on the foundations
laid during the previous eighteen months. Throughout the year we stuck to our
strategy for profitable growth and focused on new restaurant development
initiatives in the Leisure Parks and Concessions areas. We also invested in our
existing units and in particular concluded a refurbishment programme throughout
most of our Caffe Uno estate.
All of our key performance metrics showed improvement on the previous year with
a 5.1% increase in turnover yielding a 9.6% increase in EBITDA and an 8.4%
increase in operating profit. Strong cash generation, a healthy conversion of
profits into cash combined with good cash management resulted in our interest
costs falling by 22.7%.
Operating profit margins were improved in our Leisure Parks and High Streets
businesses and held in our Concessions business.
* Results are stated excluding exceptional items.
Leisure Parks
Total turnover: £104.1m Profit: £20.0m Operating Margin: 19.2%
Frankie & Benny's
Turnover: £78.2m Like-for-like sales: +6.6%
Frankie & Benny's enjoyed another very successful year and delivered strong
growth in turnover, EBITDA and profit. Both EBITDA and profit margins showed
further improvement on 2002, an excellent performance. During the year we opened
eleven new sites and these are trading well. At the end of 2003, we had a total
of 86 Frankie & Benny's restaurants trading.
Frankie & Benny's is the market leader in leisure site dining out and it has
also proved a highly successful operation on a number of sites with a leisure or
retail theme. Over the past two years we have opened a number of such sites and
they have produced highly satisfactory returns.
This brand continues to produce consistently good returns and recent openings
demonstrate to us that there remains considerable further UK roll-out potential
for this brand. We are aiming to open between 15 and 20 new units during 2004.
Chiquito
Turnover: £25.9m Like-for-like sales: -5.4%
As highlighted at the interim stage, 2003 has proved a difficult year for
Chiquito and this is reflected in the disappointing financial results of this
business. However, we concluded a comprehensive management restructuring of
Chiquito during the second half of 2003 and the results of this have already
become apparent. We are optimistic that 2004 will be a year of good progress for
this brand, with a refreshed format in a number of units and a more attractive
menu offering. In addition to these 'top-line' initiatives, the new management
team has also been focusing on service standards and margins. At the end of 2003
Chiquito had 25 sites.
The Concessions Connection
Total turnover: £39.2m Like-for-like sales: +14.0% Profit: £5.8m
Operating Margin: 14.7%
Our Concessions business enjoyed a very successful 2003. Notwithstanding the
international upheaval resulting from war in Iraq and the SARS outbreak this
business delivered a strong set of results. Against a background of increasing
operational complexity and significant cost pressure we maintained our profit
margins and increased operating profit by almost 10%.
We trade out of 28 units of which 26 are in UK airports, the cornerstone of this
business. During 2003, six of our airport concessions came to an end and we
successfully won seven new concessions.
We have considerable airport catering 'intellectual property' within TRG and
this is becoming increasingly important as the structuring and operating of
airport catering becomes more complex and demanding. We believe that we are the
restaurant operator of choice within UK airports and building on this we have
successfully developed new offerings with emphasis away from the more
traditional 'full service concept' with quicker and lighter offerings. Our 'grab
and go' operation at Stansted and our bar concepts at Heathrow, Gatwick and
Stansted reflect the versatility of offering which TRG is capable of delivering
to its customers.
During 2004 we will be seeking to further develop and grow our Concessions
business, seeking opportunities in UK airports and elsewhere.
High Street Restaurants
Total Turnover: £83.2m Profit: £12.0m Operating Margin: 14.4%
Garfunkel's
Turnover: £24.9m Like-for-like sales: +2.1%
Garfunkel's operates 30 restaurants throughout the UK. During 2003 it delivered
a strongly improved performance and it continues to be highly popular with both
domestic and overseas diners. This business is well represented in areas that
are popular with both domestic and overseas visitors (London, Edinburgh,
Cambridge, Bath etc.) and we believe that it is benefiting from an increasing
number of domestic and European visitors to these cities.
Caffe Uno
Turnover: £39.8m Like-for-like sales: +0.6%
During 2003 we refurbished most of the 61 restaurants within the Caffe Uno
estate. We also successfully converted two former Est Est Est restaurants into
the Caffe Uno format. This has resulted in the brand maintaining or improving
its market share in many of its trading locations. We recognise that the
competitive landscape within which Caffe Uno (and also Est Est Est) operates is
a difficult trading environment. In addition to maintaining our restaurants to a
high standard we have continued to focus on improving service standards. We have
also continued to reduce costs within this business through more flexible
staffing structures and improved purchasing.
Est Est Est
Turnover: £18.5m Like-for-like sales: -3.0%
We currently operate 19 restaurants under the Est Est Est brand. Whilst we saw
some successful trading improvement in a significant number of these
restaurants, disappointing results in a handful of locations served to adversely
impact the results for this brand. We are continuing to address the issues
within this brand with the objective of producing growth in turnover and
profits.
Non-Core Brands
Total Turnover: £0.9m Loss: (£1.1m)
During 2003 non-core losses fell by 37% to £1.1 million and we continue to take
active steps to mitigate losses arising in the non-core units.
Results *
Turnover for the year increased by 5.1% to £227.4m (2002: £216.4m). EBITDA
increased by 9.6% to £36.8m and operating profit increased from £20.1m to
£21.8m, an increase of 8.4%. Given the tough trading conditions experienced
during the year, it is pleasing to note that the group's operating margin has
increased from 9.3% to 9.6%. The group's interest costs fell 22.7% to £2.5m
(2002: £3.3m) and adjusted pre-tax profits increased by 14.5% to £19.3m (2002:
£16.8m). Adjusted earnings per share increased by 14% to 6.5 pence (2002: 5.68
pence).
* Results are stated excluding exceptional items.
Exceptional Items
During the year the group made a number of property disposals which resulted in
a loss on disposal of £0.98m (2002: £0.05m). The Group also incurred an
exceptional charge of £0.45m (2002: Nil) in respect of compensation for loss of
office and associated termination costs relating to the departure of the former
Chief Executive. Net costs incurred in connection with the aborted acquisition
of ASK Central plc amounted to £1.2 million.
Properties
The group regularly reviews its property portfolio to ensure it is maximising
opportunities in all locations. During the year three branches were converted
into other brands within the portfolio and a number of underperforming units
were sold or closed. Eleven new Frankie & Benny's were opened during 2003 at a
total cost of £7.1m, and seven new Concession units opened to replace six units
where our concession agreements expired.
Cashflow
2003 was another year of strong cash flows. The group generated operating cash
flows of £38.0m (2002: £31.4m), an increase of 21% on the prior year and
interest payments were reduced by £0.88m to £2.5m (2002: £3.3m). The Group also
benefited from a repayment of tax from the Inland Revenue of £2.1m. Capital
expenditure increased 39% to £20.4m (2002: £14.7m) with an increased roll-out of
Frankie & Benny's, the successful development of seven new Concession sites and
a conclusion to the comprehensive refurbishment programme for Caffe Uno.
Net debt reduced by £6.4m in 2003, following a reduction of £8.7m in 2002. At
31 December 2003 net debt was £38.2m (2002: £44.6m). The Group's ability to
sustain and service debt can be measured by the number of times its interest
charge is covered by profits before interest and tax. In 2003 the interest
charge of £2.5m (2002: £3.3m) was covered 7.9 times (2002: 6.1 times) by profits
before interest and tax.
Capital Expenditure and Investment Appraisal
During 2003, the Group invested £20.4m (2003: £14.7m) in opening eighteen new
units and maintaining the existing estate to a high standard. The Group has an
on-going process for assessing capital expenditure, focusing on maintaining and
enhancing cash flows from existing assets and from investment in new
restaurants. All material capital expenditure is subject to a review, appraisal
and approval process. All new restaurants are reviewed by the Board.
Our appraisal consists of a review of the financial viability of each project by
reference to a financial model which relates the expected return on investment
to the Group's cost of capital. Projects are also assessed to ensure
consistency with our strategy for growth. The Group also conducts
post-investment appraisals on new sites and these have indicated continuing
strong performance.
Financing
During the year the Group negotiated and agreed a refinancing of its bank
facilities. A new five year, £70 million revolving credit facility has been
secured. The terms and conditions for the new facility are similar to those
which it replaced.
In addition, following the Extraordinary General Meeting held on 14 January
2004, the Company placed 19,430,000 shares (representing approximately 10% of
the existing share capital) on 15 January 2004, at a price of 71p per share.
This represented a discount of 1.4% to the closing mid-market price on 17
December 2003, the last dealing day prior to the announcement of the Placing.
The Placing raised £13.4m, net of expenses, and will be used to fund the
continued roll-out of the Group's successful branded restaurant concepts. On a
proforma basis, as at 31 December 2003, the Group's net debt would have been
£24.8m.
Taxation
The taxation charge for the year amounted to £5.6m (2002: £3.8m). This
comprises a mainstream corporation tax charge of £5.1m and a deferred tax charge
of £0.5m. An analysis of the current year corporation tax charge is set out in
note 3 of the preliminary announcement. The tax charge in 2002 is stated after
a write back of taxation overprovision in respect of earlier years of £2.0m.
Excluding the impact of write backs in respect of prior years, the underlying
tax charge under Financial Reporting Standard 19 is 34% for 2003 and 2002.
Future prospects
Financially, The Restaurant Group is stronger than it has been at any point in
its recent history and is well placed to further develop its core business. We
have some excellent brands and we occupy leading positions in two of our three
key business segments and we will continue to invest in the third segment, High
Streets, to ensure that we are able to continue to generate good returns. 2003
saw a significant amount of corporate activity in our sector, which served to
highlight the inherent strength and value of our business. We are confident
that the Group is well positioned to secure profitable growth from its current
portfolio and is well placed to capitalise on other opportunities to further
enhance shareholder value.
Andrew Page
Group Managing Director
17 March 2004
Segmental Analysis
Year ended 31 December Year ended 31 December
2003 2002
Turnover EBITDA EBITDA Profit Profit Turnover EBITDA EBITDA Profit Profit
Margin Margin Margin Margin
£'000 £'000 % £'000 % £'000 £'000 % £'000 %
Leisure Parks 104,102 25,127 24.1% 19,962 19.2% 92,330 22,000 23.8% 17,464 18.9%
The Concession 39,152 8,586 21.9% 5,754 14.7% 35,796 7,627 21.3% 5,253 14.7%
Connection
High Street 83,247 17,517 21.0% 12,013 14.4% 84,366 17,347 20.6% 12,001 14.2%
Restaurants
Principal Trading 226,501 51,230 22.6% 37,729 16.7% 212,492 46,974 22.1% 34,718 16.3%
Brands
Non-core Brands 937 (746) (79.6%) (1,140) (121.7%) 3,894 (1,408) (36.2%) (1,806) (46.4%)
Total all Brands 227,438 50,484 22.2% 36,589 16.1% 216,386 45,566 21.1% 32,912 15.2%
Pre opening Costs (403) (0.2%) (403) (0.2%) (211) (0.1%) (211) (0.1%)
Administration (13,327) (5.9%) (14,393) (6.3%) (11,822) (5.5%) (12,602) (5.8%)
EBITDA / Operating 36,754 16.2% 21,793 9.6% 33,533 15.5% 20,099 9.3%
Profit*
Interest Charges (2,539) (3,284)
Profit before 19,254 16,815
Taxation and
Exceptional Items
Exceptional Items (2,613) (53)
Profit on ordinary 16,641 16,762
activities before
taxation
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. No
segmental analysis for net assets has been provided as the Directors consider
this would be prejudicial to the Group.
* EBITDA and Operating Profit are stated before exceptional costs
Profit and Loss Account
Unaudited preliminary results for the year ended 31 December 2003
2003 2002
Before
Exceptional Exceptional
Items Items Total Total
Note £'000 £'000 £'000 £'000
Turnover 227,438 - 227,438 216,386
Cost of sales:
Excluding pre-opening costs (190,849) - (190,849) (183,474)
Pre-opening costs (403) - (403) (211)
(191,252) - (191,252) (183,685)
Gross profit 36,186 - 36,186 32,701
Administrative expenses:
Excluding exceptional items (14,393) - (14,393) (12,602)
Exceptional items 2 - (1,630) (1,630) -
(14,393) (1,630) (16,023) (12,602)
Operating profit 21,793 (1,630) 20,163 20,099
Loss and provision for loss on disposal 2 - (983) (983) (53)
of tangible fixed assets
Net interest payable (2,539) - (2,539) (3,284)
Profit on ordinary activities before 19,254 (2,613) 16,641 16,762
taxation
Tax on profit on ordinary activities 3 (6,320) 714 (5,606) (3,771)
Profit on ordinary activities after 12,934 (1,899) 11,035 12,991
taxation
Dividends 4 (7,655) (6,801)
Retained profit for the year 3,380 6,190
All amounts relate to continuing
activities.
Earnings per share 5
Basic earnings per share, in pence 5.68 6.69
Basic earnings per share, excluding 6.66 6.71
exceptional items, in pence
Diluted earnings per share, in pence 5.64 6.65
Basic earnings per share, excluding 6.50 5.68
exceptional items and taxation over
provision from prior years, in pence
Statement of total recognised gains and losses
Unaudited preliminary results for the year ended 31 December 2003
2003 2002
Note £'000 £'000
Profit for the financial year 11,035 12,991
Currency translation differences on foreign currency investments 204 73
Total recognised gains and losses relating to the year 11,239 13,064
Reconciliation of movements in shareholders' funds
2003 2002
£'000 £'000
Total recognised gains and losses for the year 11,239 13,064
Dividends 4 (7,655) (6,801)
Total movements during the year 3,584 6,263
Shareholders' funds at 1 January 46,560 40,297
Shareholders' funds at 31 December 50,144 46,560
Balance sheet
Unaudited preliminary results for the year ended 31 December 2003
As at 31 December Group
2003 2002
£'000 £'000
Fixed assets
Tangible assets 146,220 143,799
Current assets
Stocks 2,508 2,266
Debtors 15,999 13,479
Cash at bank and in hand 526 1,057
19,033 16,802
Creditors
Amounts falling due within one year (62,650) (96,555)
Net current liabilities (43,617) (79,753)
Total assets less current liabilities 102,603 64,046
Creditors
Amounts falling due after one year (35,000) -
Provisions for liabilities and charges
Property provision (687) (1,208)
Deferred tax (16,772) (16,278)
Net assets 50,144 46,560
Capital and reserves
Called up share capital 48,576 48,576
Share premium account 10,192 10,192
Profit and loss account (8,624) (12,208)
Shareholders' funds - equity 50,144 46,560
Group statement of cash flows
Unaudited preliminary results for the year ended 31 December 2003
2003 2002
Note £'000 £'000
Net cash flow from operating activities 6 37,955 31,366
Returns on investments and servicing of finance
Interest received 221 137
Interest paid (2,683) (3,483)
Net cash outflow from returns on investments and servicing (2,462) (3,346)
of finance
Taxation
Corporation tax paid (3,295) (5,007)
Capital expenditure
Payments to acquire tangible fixed assets (20,375) (14,660)
Receipts from sales of tangible fixed assets 988 5,825
Net cash outflow for capital expenditure (19,387) (8,835)
Acquisitions and disposals
Net proceeds received from the disposal of Deep Pan Pizza 427 1,109
Net cash inflow from acquisitions and disposals 427 1,109
Equity dividends paid 4 (6,801) (6,626)
Cash inflow before financing 6,437 8,661
Financing
Loans taken out 7 43,000 -
Loans repaid 7 (53,657) (8,656)
(10,657) (8,656)
(Decrease)/ increase in cash in the period 7 (4,220) 5
Notes to the accounts
For the year ended 31 December 2003
1) Post balance sheet events
a) Change of name to 'The Restaurant Group plc'
At the Extraordinary General Meeting of the Company on 14 January 2004, a
resolution was adopted to change the name of the Company from 'City Centre
Restaurants plc' to 'The Restaurant Group plc'. This name change was registered
with the London Stock Exchange on 14 January 2004. The London Stock Exchange
mnemonic of the Company has now changed from CTC to RTN.
b) Placing of 19,430,000 shares
Following approval at the Extraordinary General Meeting of the Company on 14
January 2004, The Restaurant Group plc placed 19,430,000 shares representing
approximately 10% of the previous existing share capital of the Company. These
shares were placed on 15 January 2004 at an issue price of 71p per share which
represented a discount of 1.4% per cent to the closing mid-market price on 17
December 2003 (the last Dealing Day prior to the announcement of the Placing).
The Placing raised £13.4 million, net of expenses. The total number of shares
in issue, following the Placing, was 213,731,733 shares, and pro forma net debt
at 31 December 2003 (after deducting expenses from the Placing proceeds) would
have been £24.8 million.
c) Aborted acquisition of ASK Central plc
On 18 December 2003 the Company announced a recommended cash and share offer for
ASK Central plc ('ASK Central'). On 14 January 2004, the shareholders of The
Restaurant Group plc voted in favour of the proposed acquisition at an
Extraordinary General Meeting. However on 13 February 2004 a higher offer for
ASK Central was made by a third party, which was recommended by the board of ASK
Central. The Restaurant Group plc's offer for ASK Central subsequently lapsed.
The net cost to the Company of the aborted acquisition was £1.183 million.
Under the terms of an agreement dated 17 December 2003, an inducement fee of
£1.7 million became payable by ASK Central to The Restaurant Group plc upon the
board of ASK Central recommending an alternative offer. This fee was triggered
by the announcement of 13 February 2004 when the board of ASK Central withdrew
their recommendation for the offer from The Restaurant Group plc. The
exceptional item is shown net of the inducement fee due to the Company under the
above agreement.
2) Exceptional items
2003 2002
£'000 £'000
a) Payments in respect of termination of employment contract 447 -
b) Net costs incurred in respect of the aborted bid for ASK Central plc 1,183 -
Net exceptional costs included in operating profit 1,630 -
c) Loss and provision for loss on disposal of properties 983 53
Total exceptional items 2,613 53
Impact on taxation of exceptional items (714) -
Net impact on earnings of exceptional items 1,899 53
Following the departure of Andrew Guy (former Chief Executive of The Restaurant
Group plc), costs amounting to £447,000 were incurred in respect of compensation
for loss of office and associated termination costs.
As detailed in note 1c, the Group incurred net costs of £1,183,000 following the
aborted bid for ASK Central plc.
3) Taxation
2003 2002
£'000 £'000
a) The taxation charge comprises:
Current taxation
UK Corporation tax at 30% (2002: 30%) 5,425 4,919
Adjustments in respect of previous periods (313) (406)
5,112 4,513
Deferred taxation
Origination and reversal of timing differences 494 851
Adjustments in respect of previous periods - (1,593)
494 (742)
5,606 3,771
The taxation charge for the prior year of £3,771,000 is stated after a
write-back of taxation overprovision in respect of earlier years. The aggregate
write-back of £1,999,000, in respect of 2002, comprised a write-back of deferred
tax provision amounting to £1,593,000 in respect of capital allowances available
to the Group and a write-back of £406,000 in respect of corporation tax.
Excluding the impact of these write-backs, the underlying FRS19 tax charge was
34% for 2002. The underlying tax charge for 2003 was 34%.
b) Factors affecting the corporation tax charge for the year
The tax assessed for the year is higher than the standard UK corporation tax
rate of 30% due to the following factors:
2003 2002
£'000 £'000
Profit on ordinary activities before taxation 16,641 16,762
Profit on ordinary activities before taxation multiplied 4,992 5,029
by the standard UK corporation tax rate of 30% (2002: 30%)
Effects of:
Capital allowances for period in excess of depreciation (466) (851)
Net expenses not deductible for tax purposes 899 741
Movement in respect of prior years (313) (406)
5,112 4,513
4) Dividend
2003 2002
£'000 £'000
Interim paid of 0.75p per share (2002: 0.75p) 1,457 1,457
Final proposed of 2.90 per share (2002: 2.75p) 6,198 5,344
7,655 6,801
The 19.43 million shares issued on 14 January 2004 from the Placing are eligible
for the final proposed dividend, and are included in the provision for the
dividend, to be paid on 8 July 2004.
5) Earnings per share
2003 2002
a) Basic earnings per share:
Weighted average ordinary shares in issue during the year: 194,301,733 194,301,733
Total basic profit for the year (£'000): 11,035 12,991
Basic earnings per share for the year (pence) 5.68 6.69
Effect of exceptional items on earnings for the year (£'000) 1,899 53
Earnings excluding exceptional items (£'000) 12,934 13,044
Adjusted earnings per share (pence) 6.66 6.71
Taxation over provision from prior years (313) (1,999)
Earnings excluding exceptional items and taxation over
provision from prior years 12,621 11,045
Basic earnings per share excluding exceptional items and 6.50 5.68
taxation over provision from prior years (pence)
b) Diluted earnings per share:
Weighted average ordinary shares in issue during the year: 194,301,733 194,301,733
Dilutive shares to be issued in respect of options granted under the
Share Option Scheme: 1,418,767 1,090,292
195,720,500 195,392,025
Diluted earnings per share (pence) 5.64 6.65
Diluted earnings per share excluding exceptional items (pence) 6.61 6.68
Diluted earnings per share excluding exceptional items and
taxation over provision from prior years (pence) 6.45 5.65
The additional Earnings Per Share information (where exceptional items and the
taxation over-provision release relating to prior years have been added back)
has been provided as the Directors believe they provide a useful indication as
to the underlying performance of the Group.
6) Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
£'000 £'000
Operating profit 20,163 20,099
Depreciation 14,961 13,434
(Increase) in stocks (242) (49)
(Increase) in debtors (3,090) (2,649)
Increase in creditors 6,163 531
Net cash inflow from operating activities 37,955 31,366
Of the net costs of £1,183,000 payable in respect of the aborted bid for ASK
Central, £688,000 has been paid in 2003. All costs in respect of the departure
of the former Chief Executive have been paid in 2003. All costs and cash
inflows in respect of the Placing occurred in 2004.
7) Reconciliation of changes in cash to the movement in net debt
2003 2002
£'000 £'000
At the beginning of the period (44,600) (53,261)
Movements during the period:
Loans taken out (43,000) -
Loans repaid 53,657 8,656
Cash (outflow)/ inflow (4,220) 5
At the end of the period (38,163) (44,600)
Represented by: Cash flow Other At
At movements movements 31 December
1 January 2003 in the year in the year 2003
£'000 £'000 £'000 £'000
Cash at bank and in hand 1,057 (531) - 526
Overdrafts - (3,689) - (3,689)
(4,220)
Bank loan due within one year (45,657) 45,657 - -
Bank loans due after one year - (35,000) - (35,000)
10,657
(44,600) 6,437 - (38,163)
During the year the Group negotiated and agreed a refinancing of its bank
facilities. A new five year, £70 million revolving credit facility has been
secured. The terms and conditions for the new facility are similar to those
which it replaced.
8) Basis of preliminary statement
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2003 or 2002, but is derived
from those accounts. Statutory accounts for 2002 have been delivered to the
Registrar of Companies and those for 2003 will be delivered following the
company's annual general meeting.
The auditors have not yet reported on the 2003 accounts but do not expect their
report to be qualified. Their report on the 2002 accounts was unqualified and
did not contain statements under the Companies Act 1985, s237(2) or (3).
This information is provided by RNS
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