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Restaurant Group PLC (RTN)

  Print          Annual reports

Wednesday 09 March, 2016

Restaurant Group PLC

Final Results

RNS Number : 4692R
Restaurant Group PLC
09 March 2016
 

The Restaurant Group plc

Final results for the 52 weeks ended 27 December 2015

·      2015 results

-       Group revenues £685m

up 7.9%

-       Like-for-like sales

up 1.5%

-       EBITDA £128.0m

up 9.4%

-       Operating profit £88.9m

up 10.5%

-       Profit before tax £86.8m

up 11.2%

-       EPS 33.8p

up 12.8%

-       Free cash flow £97.2m

up £11.7m

 

·      Record financial performance

·     Full year dividend 17.4p, up 13%

·      Good progress on new openings

-       44 new sites opened in the year

-       New sites generating consistently strong returns on investment

-      Strong pipeline of new sites

 

·      Business well positioned for further profitable growth in 2016 and beyond

Danny Breithaupt, Chief Executive commented:

 "TRG has made good progress in 2015 and, despite difficult trading conditions, delivered double digit growth in profits and earnings per share. Our strategy of improving the balance of the portfolio is starting to take shape. During the year we opened 44 new restaurants and pubs, taking us past 500 sites for the first time, an important milestone for the business. Our new sites are set to deliver strong returns.

In common with most consumer businesses we will again have some challenges to face in 2016. However, I am confident that the underlying strengths of our business will enable us to successfully navigate our way through this more challenging external environment.

TRG is a people business and these results could not have been achieved without the hard work, dedication and commitment of all our teams across the country. I would like to take this opportunity to thank all of our people for their contribution and I look forward to leading them through what I am sure will be another exciting year for TRG in 2016."

Enquiries:

The Restaurant Group

 

Danny Breithaupt, Chief Executive

 020 3117 5001

Stephen Critoph, Chief Financial Officer

020 3117 5001

Instinctif:

 

Matthew Smallwood

 

020 7457 2020

 

 

Notes:

1.   The Restaurant Group plc (the Group) operates over 500 restaurants and pub restaurants in the UK. Its principal trading brands are Frankie & Benny's, Chiquito and Coast to Coast. The Group also operates Pub restaurants and a Concessions business which trades principally at UK airports.

2.   Nothing in this announcement should be construed as a profit forecast.

 

Chairman's statement

I am pleased to report that the Group has delivered another record set of financial results in 2015, with double digit growth in profits and earnings per share and strong growth in cash flow generation. This has been achieved despite a more challenging trading backdrop.

We made good progress on our opening programme with a total of 44 new restaurants opened during the year, taking us past the 500 mark for the first time. The Group has a consistent and successful track record established over a number of years of opening new restaurants. We expect to open a similar number of restaurants during 2016.

During the year the Group created over 1,500 new jobs and at the end of the year, we employed over 16,000 people. Good people are the life blood of our business and the continued growth and success of the Group is the product of the hard work, experience and dedication of all our staff. On behalf of the Board, I would like to record our thanks and appreciation to all our colleagues across the country.

As a result of this record financial performance, the Board is recommending a final dividend of 10.6 pence per share to give a total for the year of 17.4 pence per share, an increase of 13% on the prior year. The dividend is covered 2x by earnings per share in line with our stated dividend policy. Subject to shareholder approval at the Annual General Meeting to be held on 12 May 2016, the final dividend will be paid on 6 July 2016 and the shares will be marked ex-dividend on 16 June 2016.

This is my last Chairman's statement. As announced earlier this year I will be retiring at the end of the AGM on 12 May 2016. This will be the end of a 15 year journey for me during which time we have transformed the Company from being loss making in 2001 to the successful business of today.

It has been a terrific journey but now is the time to hand over to my successor Debbie Hewitt. As I said earlier this year when Debbie's appointment was announced, I am delighted that she has agreed to succeed me. Debbie has strong business credentials and I know she will add insight and guidance to the Board as she leads the Company through the next stages of growth.

TRG has a great team of people led by Danny Breithaupt and a strong roster of market-leading brands and offerings, backed by the financial resources to maximise the opportunities over the coming years. I am therefore confident that TRG will continue to make strong and profitable progress.

Alan Jackson

Chairman

9 March 2016

 

Business review

Overview of the year

2015 has been another year of good progress with growth in turnover, profits and cash flow. Turnover was up 8% and profit before tax was up 11%, a strong result against the backdrop of a challenging market. Free cash flow increased by £11.7m to £97.2m. We have started to change the balance of the portfolio with the mix of the restaurants we opened during the year. These are performing well and are set to deliver returns on investment in line with our usual parameters.

Trading patterns during the year were at times volatile, with weekends generally being strong, but midweek trading continuing to be softer. We had some strong trading periods, particularly in the first half of the year. There were also some more challenging periods, particularly towards the end of the year, when we saw weaker consumer demand exacerbated by floods in the North of the country and lower retail footfall. Against this backdrop the full year like-for-like sales performance of 1.5%, which was in line with the wider market, represents a creditable performance.

 

Brands

Frankie & Benny's (261 units)

Frankie & Benny's delivered growth in turnover, margins and profits. The new menu launched during the year included some rationalisation to reduce the total number of items, while at the same time introducing a greater element of freshness. Breakfast continues to be a growing and successful part of the business and further improvements to this are being introduced during 2016. A new App for the brand was launched towards the end of the year which is proving popular with our guests and enables us to collect much more granular information about our customers, their spending patterns and preferences. Of all our brands, Frankie & Benny's is the most exposed to some of the underlying challenges around retail footfall and the increased number of competitor openings and we have certainly seen the impact of this, particularly in the more retail focused locations. During the year we opened 14 new restaurants in this brand and we expect to open a similar number in 2016. The breadth of appeal of Frankie & Benny's, particularly to families, combined with high levels of customer recognition both contribute to its enduring success. This is evidenced by strong performances from our new openings and continuing high levels of individual site profitability.

Chiquito (86 units)

Chiquito had another good year with strong growth in turnover, margins and profits. The major changes introduced into this brand some years ago continue to generate significant improvements in trading performance. During the year we opened nine Chiquito restaurants, which are trading extremely well. We expect to open a similar number during 2016 and we see this as a key growth engine for the Group over the next few years. The core target market for this brand is young adults, a distinct market segment to both Frankie & Benny's and Coast to Coast.

Coast to Coast (21 units)

Coast to Coast also had a good year with growth in turnover and profits. Having opened our first Coast to Coast in Brighton at the end of 2011, this brand has carved out a distinctive market position for itself as a brand very much focused on the adult market looking for a more premium offering in a more sophisticated environment. During the year we opened eight Coast to Coast restaurants and we are very pleased with how these are performing.  Stand out new openings for this brand during the year were at the Trafford Centre and the Aberdeen Union Square development. We expect to open between five and seven sites in 2016. As with Chiquito, this brand will become an increasingly important driver of growth for the Group going forward.

Pub restaurants (54 units)

Our Pub restaurant business performed extremely well in 2015. There is a growing market for this traditional, quality, food-led pub offering. Our pubs have broad appeal and in particular attract the affluent grey market. During the year we opened three new Pub restaurants. We are broadening the geography of this business, which has historically been focused on the North West and South East. In particular we are now opening sites in the Midlands. The pipeline for 2016 is well developed and we expect to open between five and seven new pubs during the year.

Concessions (61 units)

Concessions had a year of strong growth in turnover and profit. During the year we opened seven new units, notable among which were three prominent units at the redeveloped Stansted Airport, including the first Coast to Coast in an airport environment. During 2016 we expect to open two to four new concession outlets.  We have a market-leading position in this sector, which continues to have strong underlying fundamentals in terms of passenger growth and dwell times.

 

Business model, strategy and market developments

Operating in the growing UK eating out market, our core objective is to grow shareholder value by building a business which delivers long-term, sustainable and growing cash flows. Within this market our strategy is to focus on areas where there are meaningful barriers to entry, good growth prospects and strong returns. Our growth model is primarily based on organic roll out of new sites across our portfolio of brands.

Our various different brands and offerings, most of which have been internally developed, address differing occasions and segments of the market. This means that, depending on market size, we can often open multiple brands alongside each other in the same location and each will deliver strong financial returns. Whilst most of our new sites are leasehold, we also acquire freehold premises where these give a satisfactory level of return.  Although not a core part of our development plans, we will consider acquisitions of existing businesses where there is a clear strategic rationale and where this would enhance shareholder returns.

Our market continues to develop to meet changing tastes and trends in consumer behaviour. The growth of online shopping, resulting in lower footfall at some of the retail schemes where we operate has clearly had an impact. In addition, a greater range and number of branded restaurant offerings and food-led pubs run by a number of operators are providing a higher level of competition. We are very much alive to these changes, which we monitor closely. We will continue to adapt and evolve our business as necessary in order to navigate our way through this changing environment and to ensure that we continue to deliver strong returns for shareholders.

 

Business strengths

TRG is well placed to continue performing strongly in the current market environment and will continue to benefit from the core strengths and competencies of the Group.

1.   Range of brands and offerings

TRG has a well segmented range of brands and offerings appealing to different audiences and occasions. We believe this is a unique attribute of our business. In our Leisure portfolio, Frankie & Benny's main focus is the family market where it continues to enjoy huge loyalty and success. Our Chiquito business is focused on the young adult market, people looking for a higher tempo occasion. Coast to Coast is designed to appeal to a more affluent adult market with a more sophisticated menu and environment. The fact that these three brands all have their own specific market segments means that they can be co-located and operate successfully in the same geographical location. Our Pub business appeals to another type of occasion and has broad appeal across a range of age groups, also attracting the affluent grey market. Finally, in our Concessions business we have a market-leading position providing food and beverage offerings in UK airports, where we continue to benefit from growing passenger numbers and dwell times.

2.   Roll out capability

All of the brands described above have substantial roll out scalability in the UK. We are confident that we can expand the Group to 850+ restaurants, all financed out of internally generated cash flow. As we have clearly demonstrated in the past the Company has the financial and operational capability to deliver this scale of roll out successfully while maintaining consistently high levels of return.

3.   Infrastructure and people

The Company has strong infrastructure in terms of people, processes and systems to successfully manage a growing business of this size and scale. We have strengthened our teams and other elements of infrastructure in recent years to support the continued growth of the Group.

4.   Financial strength

The Group's financial strength and disciplined focus on return on investment and cash flow means that we have the financial capacity to deliver on our long-term growth objectives. This financial strength also means that we can continue to invest in maintaining our existing sites and infrastructure to a high standard and at the same time pay a growing level of dividend.

 

Business priorities

During 2016 our priorities will be:

·      Continued focus on improving levels of customer service and food quality to ensure that our guests always have a great experience when they visit one of our restaurants or pubs. We are implementing new guest experience measurement processes during 2016 to ensure we are able to properly monitor and respond to the feedback appropriately.

·      Ongoing evolution and development of our brands and offerings to ensure they remain relevant to the changing tastes of UK consumers. During 2016, building on the work undertaken in Frankie & Benny's during 2015, we will continue to evolve our menus to ensure that they stay relevant. These developments include a new breakfast menu in Frankie & Benny's, introduction of a street food section on the Chiquito menu and a new menu in Coast to Coast including some fresher and lighter options.

·      Continuing to exploit new technology to improve our business, whether this be improved back of house systems or leveraging the new Frankie & Benny's App referred to earlier, to improve guest communication and experience.

·      Managing our cost base to ensure we continue to run the business efficiently. In 2016 this will include initiatives to mitigate the impact of the National Living Wage, such as better rostering and improved labour productivity. We will also be maintaining our relentless focus on driving efficiencies in our supply chain, whilst at the same time closely managing all other areas of our cost base.

·      Open new restaurants which continue to provide good returns on investment. At the same time we will continue to develop our pipeline of future openings to secure the continued successful roll out of our brands in future years.

 

Current trading and outlook

After 10 weeks trading in 2016 total sales are up by 6% and like-for-like sales are down by 1.5%. The more challenging trading conditions we saw at the end of last year have continued into the early part of 2016, reflecting a softening in consumer demand and weaker overall consumer confidence. Whilst still early in the year, our assessment is that this more challenging environment and recent trading patterns are likely to persist.  Although total sales will continue to increase as our new restaurants open and deliver good returns, in the current environment consistent like-for-like sales increases are likely to be difficult to generate.

However, notwithstanding this backdrop, we are confident that the underlying strengths of our business and brands, combined with the mitigating actions we are taking, will ensure that TRG continues to making profitable progress in 2016 and the years ahead.

 

Financial review

Results

TRG performed strongly again in 2015 with good growth in turnover and profits, summarised in the table below:

2015

2014

%

 

£m

£m

change

Revenue

Site EBITDA                                           

685.4

170.5

635.2

154.4

+7.9%

+10.4%

 

132.3

118.6

+11.5%

19.3%

18.7%

 

 

Administration

(38.0)

(33.4)

 

Underlying operating profit

94.3

85.2

+10.7%

13.8%

13.4%

 

Pre-opening costs

 

(5.4)

 

(4.7)

 

 

 

EBITDA

%

128.0

18.7%

117.0

18.4%

+9.4%

 

 

 

 

 

Operating profit

88.9

80.5

+10.5%

13.0%

12.7%

 

Interest

(2.1)

(2.4)

 

PBT

86.8

78.1

+11.2%

 

 

 

 

Total revenue increased by 7.9%, a product of 1.5% like-for-like sales growth and the impact of new openings. Total EBITDA for the year was £128m, an increase of 9.4% on the prior year and operating profits increased by 10.5% to £88.9m. Group operating margin for the year was 13.0%, an increase of 30 basis points on the prior year. Within this, our administration cost base increased as a percentage of turnover by 30 basis points, reflecting the increase in resource in many of our central support functions during the latter part of 2014. This was more than offset by efficiencies elsewhere and the benefit of minimal food cost inflation, resulting in the overall 30 basis point improvement in margin.
 

Interest costs were a little lower this year, partly due to a lower level of average net debt during the year and partly due to improved terms under the new financing arrangements which were completed in June. This resulted in total profit before tax of £86.85m, an 11.2% increase on the prior year. The average tax rate in the year was 22.4%, a little lower than the prior year, resulting in earnings per share of 33.8p, an increase of 13% on the prior year.

 

Cash flow

Cash generation was again strong. Free cash flow increased by over 13% to £97.2m. After development capital expenditure of £55.1m, £32.1m of dividend payments and other non-trading items, net debt reduced by £10.2m in the year to £28.4m at year end. Set out below is a summary cash flow for the year:

 

2015

2014

 

       £m

       £m

 

 

 

Operating profit

88.9

80.5

Working capital and non-cash adjustments

7.5

8.0

Depreciation

39.1

36.5

Operating cash flow

135.5

125.0

Net interest paid

(1.0)

(1.3)

Tax paid

(17.6)

(18.2)

Maintenance capital expenditure

(19.7)

(20.0)

Free cash flow

97.2

85.5

Development capital expenditure

(55.1)

(50.1)

Dividends (ordinary)

(32.1)

(29.5)

Purchase of shares for EBT

(1.7)

(5.3)

Other items

1.9

2.7

Net cash flow

10.2

3.3

Net bank debt brought forward

(38.6)

(41.9)

Net bank debt carried forward

(28.4)

(38.6)

 

Cost inflation

Food cost inflation continued to be negligible during 2015. This was due to a number of factors including the relative strength of sterling against the Euro, generally good harvests in recent years and a slowdown in demand from China and other emerging markets. In addition, we have continued to focus on the rationalisation of our supply chain as part of our continuous drive to improve efficiency in this area. We expect the outlook for food and beverage inflation in 2016 to continue to be benign.

During 2015 we saw a significant increase in underlying wage cost inflation above and beyond the minimum wage increases. We expect this to be a continuing trend for the time being, particularly given the introduction of the National Living Wage in April, which will add some £2m of incremental direct cost in 2016. The most recent data suggests that the pace of wage inflation may be abating, however any benefit from this is likely to be offset by the National Living Wage impact.

Our other two largest costs items are rent and utility costs. Rental inflation continues to increase modestly, driven by better underlying economic fundamentals. Utility cost inflation on the other hand continues to be negligible, with reductions in the wholesale cost of energy being offset by increases in regulatory and infrastructure levies.

 

Capital expenditure

During the year the Group invested a total of £74.8m in capital expenditure compared to £70.1m in the prior year. We invested £19.7m in maintenance and refurbishment expenditure and £55.1m in development expenditure. During the year we opened a total of 44 new sites. 10 sites closed in the year including a number of marginal end of life leases which we declined to renew. In addition we closed a number of airport concessions which had reached the end of their contractual life, although in a number of cases these have been replaced with new sites (e.g. Stansted Airport). The table below summarises openings and closures during the year:

 

Year end 2014

Opened

Closed

Transfers

Year end 2015

 

 

 

 

 

 

Frankie & Benny's

247

14

(1)

1

261

Coast to Coast/Filling Station

20

8

-

-

28

Chiquito

80

9

(3)

-

86

Garfunkel's

15

-

-

(2)

13

Joes Kitchen

-

3

-

-

3

Pub restaurants

52

3

(1)

-

54

Concessions

58

7

(5)

1

61

 

 

 

 

 

 

Total

472

44

(10)

-

506

 

Financing and key financial ratios

During the year the Group renewed its £140m credit facility, which now runs until June 2020. The new facility is on generally more favourable terms than the previous facility and this has contributed to a modest reduction in our interest costs. The key covenant tests are the same as under the previous arrangement. These are summarised in the table below with other key financial ratios:

Banking covenant

 

2015

 

2014

 

 

 

>4x

63x

49x

<3x

0.24x

0.34x

 

 

 

n/a

2.7x

2.7x

n/a

10%

16%

 

Tax

The total trading tax charge for the year was £19.4m, summarised as follows:

 

2015

2014

 

£m

£m

 

 

 

Corporation tax

19.1

18.1

Deferred tax

0.3

(0.1)

Total

19.4

18.0

Effective tax rate

22.4%

23.0%

 

The effective trading tax rate for the year was 22.4% compared to 23.0% in the prior year. The lower tax rate reflects the ongoing reduction in the mainstream corporation tax rate and we would expect to see a further small reduction in 2016. As noted in previous reports the Group's effective tax rate will continue to be higher than the headline UK tax rate primarily due to our capital expenditure programme and the significant levels of disallowable capital expenditure therein.

Definitions

Fixed charge cover - calculated by dividing EBITDAR (operating profit before depreciation and rent) by the sum of interest and rent.

Free cash flow - operating cash flow less tax, interest and maintenance capital expenditure, before new development capital expenditure, dividends and other non-trading items.

Like-for-like performance - calculated by comparing the performance of all mature sites in the current period vs. the comparable period in the prior year.

 

The Restaurant Group plc

 

 

 

 

Consolidated income statement

 

 

 

 

 

 

52 weeks ended 27 December 2015

 

 

Trading

Non-

 

 

 

business

trading

Total

 

Note

£'000

£'000

£'000

 

 

 

 

 

Revenue

2

685,381

-

685,381

 

 

 

 

 

Cost of sales:

 

 

 

 

Excluding pre-opening costs

3

(553,106)

-

(553,106)

Pre-opening costs

3

(5,385)

-

(5,385)

 

 

(558,491)

-

(558,491)

 

 

 

 

 

Gross profit

 

126,890

-

126,890

 

 

 

 

 

Administration costs

 

(37,999)

-

(37,999)

 

 

 

 

 

Trading profit

 

88,891

-

88,891

 

 

 

 

 

Disposal of investment in associate

4

-

-

-

 

 

 

 

 

Earnings before interest, tax, depreciation and amortisation

 

127,991

-

127,991

 

 

 

 

 

Depreciation

 

(39,100)

-

(39,100)

 

 

 

 

 

Operating profit

 

88,891

-

88,891

 

 

 

 

 

Interest payable

5

(2,128)

-

(2,128)

Interest receivable

5

82

-

82

 

 

 

 

 

Profit on ordinary activities before tax

 

86,845

-

86,845

 

 

 

 

 

Tax on profit from ordinary activities

6

(19,447)

1,488

(17,959)

 

 

 

 

 

Profit for the year

 

67,398

1,488

68,886

 

 

 

 

 

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

Basic

7

33.80

 

34.55

Diluted

7

33.50

 

34.24

 

The Restaurant Group plc

 

 

 

 

Consolidated income statement

 

 

 

 

 

 

52 weeks ended 28 December 2014

 

 

Trading

Non-

 

 

 

business

trading

Total

 

Note

£'000

£'000

£'000

 

 

 

 

 

Revenue

2

635,225

-

635,225

 

 

 

 

 

Cost of sales:

 

 

 

 

Excluding pre-opening costs

3

(516,623)

-

(516,623)

Pre-opening costs

3

(4,702)

-

(4,702)

 

 

(521,325)

-

(521,325)

 

 

 

 

 

Gross profit

 

113,900

-

113,900

 

 

 

 

 

Administration costs

 

(33,450)

(138)

(33,588)

 

 

 

 

 

Trading profit

 

80,450

(138)

80,312

 

 

 

 

 

Disposal of investment in associate

4

-

7,000

7,000

 

 

 

 

 

Earnings before interest, tax, depreciation and amortisation

 

116,972

6,862

123,834

 

 

 

 

 

Depreciation

 

(36,522)

-

(36,522)

 

 

 

 

 

Operating profit

 

80,450

6,862

87,312

 

 

 

 

 

Interest payable

5

(2,488)

-

(2,488)

Interest receivable

5

103

-

103

 

 

 

 

 

Profit on ordinary activities before tax

 

78,065

6,862

84,927

 

 

 

 

 

Tax on profit from ordinary activities

6

(17,958)

30

(17,928)

 

 

 

 

 

Profit for the year

 

60,107

6,892

66,999

 

 

 

 

 

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

Basic

7

29.96

 

33.39

Diluted

7

29.92

 

33.35

 

 

The Restaurant Group plc

 

 

 

 

 

Consolidated statement of changes in equity

 

 

 

 

 

 

 

 

 

 

 

Share

Share

Other

Retained

Total

 

capital

premium

reserves

earnings

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Balance at 29 December 2014

56,433

24,495

(11,971)

175,567

244,524

 

 

 

 

 

 

Profit for the year

-

-

-

68,886

68,886

Issue of new shares

85

760

-

-

845

Dividends

-

-

-

(32,115)

(32,115)

Share-based payments - credit to equity

-

-

2,900

-

2,900

Employee benefit trust - purchase of shares

-

-

(1,746)

-

(1,746)

Other reserve movements

-

-

(263)

-

(263)

Current tax on share-based payments taken directly to equity

-

-

-

818

818

Deferred tax on share-based payments taken directly to equity

-

-

-

(289)

(289)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 27 December 2015

56,518

25,255

(11,080)

212,867

283,560

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 December 2013

56,432

24,491

(8,940)

143,982

215,965

 

 

 

 

 

 

Profit for the year

-

-

-

66,999

66,999

Issue of new shares

1

4

-

-

5

Dividends

-

-

-

(36,367)

(36,367)

Share-based payments - credit to equity

-

-

2,795

-

2,795

Employee benefit trust - purchase of shares

-

-

(5,272)

-

(5,272)

Other reserve movements

-

-

(554)

-

(554)

Current tax on share-based payments taken directly to equity

-

-

-

1,474

1,474

Deferred tax on share-based payments taken directly to equity

-

-

-

(521)

(521)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 28 December 2014

56,433

24,495

(11,971)

175,567

244,524

 

There is no comprehensive income other than the profit for the year in the year ended 27 December 2015 or the year ended 28 December 2014.

 

The Restaurant Group plc

 

 

 

 

Consolidated balance sheet

 

 

 

 

 

 

At 27 December 2015

At 28 December     2014

 

 

Note

£'000

£'000

 

 

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

 

26,433

26,433

 

Property, plant and equipment

 

403,640

368,576

 

 

 

430,073

395,009

 

 

 

 

 

 

Current assets

 

 

 

 

Stock

 

6,389

5,530

 

Trade and other receivables

 

13,366

8,991

 

Prepayments

 

15,267

14,009

 

Cash and cash equivalents

10

2,983

880

 

 

 

38,005

29,410

 

 

 

 

 

 

Total assets

 

468,078

424,419

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Overdraft

10

(838)

-

 

Corporation tax liabilities

 

(8,692)

(8,055)

 

Trade and other payables

 

(125,388)

(112,254)

 

Other payables - finance lease obligations

 

(355)

(332)

 

Provisions

 

(1,130)

(993)

 

 

 

(136,403)

(121,634)

 

 

 

 

 

 

Net current liabilities

 

(98,398)

(92,224)

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Long-term borrowings

10

(30,527)

(39,458)

 

Other payables - finance lease obligations

 

(2,956)

(2,930)

 

Deferred tax liabilities

 

(12,096)

(12,947)

 

Provisions

 

(2,536)

(2,926)

 

 

 

(48,115)

(58,261)

 

 

 

 

 

 

Total liabilities

 

(184,518)

(179,895)

 

 

 

 

 

 

Net assets

 

283,560

244,524

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

56,518

56,433

 

Share premium

 

25,255

24,495

 

Other reserves

 

(11,080)

(11,971)

 

Retained earnings

 

212,867

175,567

 

Total equity

 

283,560

244,524

 

 

 

 

The Restaurant Group plc

 

 

 

Consolidated cash flow statement

 

 

 

 

 

52 weeks ended 27 December 2015

52 weeks ended             28 December   2014

 

Note

£'000

£'000

 

 

 

 

 

 

 

 

Operating activities

 

 

 

Cash generated from operations

9

135,535

124,992

Interest received

 

82

103

Interest paid

 

(1,125)

(1,424)

Tax paid

 

(17,644)

(18,222)

Net cash flows from operating activities

 

116,848

105,449

 

 

 

 

Investing activities

 

 

 

Purchase of property, plant and equipment

 

(74,817)

(70,070)

Disposal of fixed assets

 

250

2,828

Net proceeds from repayment of loan note

 

-

7,000

Net cash flows used in investing activities

 

(74,567)

(60,242)

 

 

 

 

Financing activities

 

 

 

Net proceeds from issue of ordinary share capital

 

845

5

Employee benefit trust - purchase of shares

 

(1,746)

(5,272)

Net repayments of loan draw downs

 

(8,000)

(10,000)

Dividends paid to shareholders

8

(32,115)

(36,367)

Net cash flows used in financing activities

 

(41,016)

(51,634)

 

 

 

 

Net decrease in cash and cash equivalents

 

1,265

(6,427)

 

 

 

 

Cash and cash equivalents at the beginning of the year

10

880

7,307

 

 

 

 

Cash and cash equivalents at the end of the year

10

2,145

880

               

 

The Restaurant Group plc

Notes to the accounts

For the year ended 27 December 2015

 

 

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 report the business as one reportable segment.

2 Revenue

2015

2014

 

£'000

£'000

Income for the year consists of the following:

 

 

 

 

 

Revenue from continuing operations

685,381

635,225

 

 

 

Other income not included within revenue in the income statement:

 

 

Rental income

2,688

2,950

Interest income

82

103

 

 

 

Total income for the year

688,151

638,278

 

3 Profit for the year

2015

2014

 

£'000

£'000

Cost of sales consists of the following:

 

 

 

 

 

Continuing business excluding pre-opening costs

553,106

516,623

Pre-opening costs

5,385

4,702

 

 

 

Total cost of sales for the year

558,491

521,325

 

 

 

 

 

 

 

2015

2014

Profit for the year has been arrived at after charging / (crediting):

£'000

£'000

 

 

 

Depreciation

39,100

36,522

Purchases

142,325

139,141

Staff costs

225,642

205,197

 

 

 

Minimum lease payments

67,009

62,028

Contingent rents

9,607

8,278

Total operating lease rentals of land and buildings

76,616

70,306

Rental income

(2,688)

(2,950)

Net rental costs

73,928

67,356

 

4 Non-trading items

During the 52 weeks ended 27 December 2015, the Group has recognised a non-trading tax credit of £1.5m (further details are provided in note 6).

On 17 April 2014 the Group disposed of part of its interest in the Living Ventures group following the sale of the Gusto business.

The Group received £7m of cash proceeds in respect of this disposal and the resulting profit on disposal of £6.9m, net of costs, was reported as a non-trading item in the 52 weeks ended 28 December 2014. The net proceeds of the disposal were distributed by way of a special dividend of 3.45 pence per share on 9 July 2014.  Following the disposal, the Group's only remaining interest in the residual business is a £3.7m loan note which has been fully provided against as a result of a detailed review of the trading performance of the business. In the 52 weeks ended 27 December 2015, the Group received £0.1m of loan note interest, all of which was recognised in the income statement (2014: £0.1m of which the Group recognised £0.1m).

5 Net finance charges

2015

2014

 

£'000

£'000

 

 

 

Bank interest payable

1,075

1,378

Other interest payable

334

420

Facility fees

338

314

Interest on obligations under finance leases

381

376

Total borrowing costs

2,128

2,488

 

 

 

Bank interest receivable

(9)

(11)

Other interest receivable

(13)

(1)

Loan note interest receivable

(60)

(91)

Total interest receivable

(82)

(103)

 

 

 

Net finance charges

2,046

2,385

 

6 Tax

 

 

 

2015

2014

The tax charge comprises:

£'000

£'000

 

 

 

Current tax

 

 

UK corporation tax at 20.25% (2014: 21.5%)

19,624

18,668

Adjustments in respect of previous years

(525)

(642)

 

19,099

18,026

 

 

 

 

 

 

Deferred tax

 

 

Origination and reversal of temporary differences

24

(161)

Adjustments in respect of previous years

324

63

Credit in respect of rate change

(1,488)

-

 

(1,140)

(98)

 

 

 

Total tax charge for the year

17,959

17,928

 

The Finance Act 2012 introduced a reduction in the main rate of corporation tax from April 2015 from 21% to 20% resulting in a blended rate of 20.25% being used to calculate the tax liability for the 52 weeks ended 27 December 2015.

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 substantially enacted on 24 October 2015 therefore the deferred tax provision at the balance sheet date has been calculated using a blended rate, resulting in a £1.5m tax credit.

7 Earnings per share

2015

2014

 

 

 

 

 

 

a) Basic earnings per share:

 

 

Weighted average ordinary shares for the purposes of basic earnings per share

199,408,183

200,647,834

 

 

 

Total profit for the year (£'000)

68,886

66,999

 

 

 

Basic earnings per share for the year (pence)

34.55

33.39

 

 

 

Total profit for the year (£'000)

68,886

66,999

Effect of non-trading items on earnings for the year (£'000)

(1,488)

(6,892)

Earnings excluding non-trading items (£'000)

67,398

60,107

 

 

 

Adjusted earnings per share (pence)

33.80

29.96

 

 

 

 

 

 

b) Diluted earnings per share:

 

 

 

 

 

Weighted average ordinary shares for the purposes of basic earnings per share

199,408,183

200,647,834

 

 

 

Effect of dilutive potential ordinary shares:

 

 

Dilutive shares to be issued in respect of options granted under the share option schemes

488,349

275,381

Shares held by employee benefit trust

1,262,608

-

 

 

 

 

201,159,140

200,923,215

 

 

 

Diluted earnings per share (pence)

34.24

33.35

Adjusted diluted earnings per share (pence)

33.50

29.92

 

8 Dividend

 

 

 

2015

2014

 

£'000

£'000

Amounts recognised as distributions to equity holders during the year:

 

 

 

 

Final dividend for the 52 weeks ended 28 December 2014 of 9.30p (2013: 8.75p) per share

18,550

17,373

Interim dividend for the 52 weeks ended 27 December 2015 of 6.80p (2014: 6.10p) per share

13,565

12,145

 

32,115

29,518

Special dividend of 3.45p per share paid on 9 July 2014

-

6,849

Total dividends paid in the year

32,115

36,367

 

 

 

Proposed final dividend for the 52 weeks ended 27 December 2015 of 10.60p (2014 actual proposed and paid: 9.30p) per share

21,176

18,550

 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting to be held on 12 May 2016 and is not recognised as a liability in these financial statements.  The proposed final dividend payable reflects the number of shares in issue on 27 December 2015, adjusted for the 1.2m shares owned by the employee benefit trust for which dividends have been waived.

9  Reconciliation of profit before tax to cash generated from operations

 

 

 

 

 

 

2015

2014

 

 

 

£'000

£'000

 

 

 

 

 

 

 

Profit before tax

86,845

84,927

 

 

Net finance charges

2,046

2,385

 

 

Disposal of investment in associate

-

(6,862)

 

 

Share-based payments

2,900

2,795

 

 

Depreciation

39,100

36,522

 

 

Increase in stocks

(859)

(445)

 

 

Increase in debtors

(5,633)

(605)

 

 

Increase in creditors

11,136

6,275

 

 

 

 

 

 

 

Cash generated from operations

135,535

124,992

 

 

 

10 Reconciliation of changes in cash to the movement in net debt

 

 

 

 

 

2015

2014

 

 

 

 

 

£'000

£'000

 

 

Net debt:

 

 

 

 

 

 

At the beginning of the year

 

 

(38,578)

(41,857)

 

 

Movements in the year:

 

 

 

 

 

 

Repayments of loan draw downs

 

 

8,000

10,000

 

 

Non-cash movements in the year

 

 

931

(294)

 

 

Cash inflow / (outflow)

 

 

1,265

(6,427)

 

 

 

 

 

 

 

 

 

At the end of the year

 

 

(28,382)

(38,578)

 

 

 

 

Represented by:

At 30

Cash flow

Non-cash

At 28 and 29

Cash flow

Non-cash

At 27

 

December

movements

movements

December

movements

movements

December

 

2013

in the year

in the year

2014

in the year

in the year

2015

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Cash and cash equivalents

7,307

(6,427)

-

880

2,103

-

2,983

Overdraft

-

-

-

-

(838)

-

(838)

Bank loans falling due after one year

(49,164)

10,000

(294)

(39,458)

8,000

931

(30,527)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,857)

3,573

(294)

(38,578)

9,265

931

(28,382)

 

11 Basis of preparation

 

 

The Group's preliminary announcement and statutory accounts in respect of 2015 have been prepared on the going concern basis. The financial information set out above does not constitute the Group's statutory accounts for the years ended 27 December 2015 or 28 December 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The 2015 statutory accounts are prepared on the basis of the accounting policies stated in the 2014 statutory accounts. The auditor has reported on those accounts; their reports were unqualified and unmodified and did not contain statements under s498 (2) or (3) of the Companies Act 2006.


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