TIDMRTN
RNS Number : 7822L
Restaurant Group PLC
15 September 2021
The Restaurant Group plc ("TRG" or "The Group") Interim results
for the 27 weeks ended 4 July 2021 (H1)
Restructured and recapitalised Group outperforming the
market
Operational highlights
-- Strong like-for-like (LFL) sales outperformance versus the
market since indoor dining recommenced:
LFL sales (%) vs 2019 comparable for the 15 weeks from 17 May to
29 August 2021
TRG Division TRG LFL Market* LFL Outperformance
sales sales vs market*
Wagamama +21% +8% +13%
-------- ------------ ---------------
Pubs +12% (2)% +14%
-------- ------------ ---------------
Leisure +18% +8% +10%
-------- ------------ ---------------
Concessions** (53)% (74)% +21%
-------- ------------ ---------------
-- Trading performance since re-opening supports an increase in our FY21 EBITDA expectations
-- LFL sales supported by VAT reduction
-- Ongoing sector wide challenges to navigate through FY22,
including labour availability and increased inflationary cost
pressures
-- Progressing well on targeted organic growth avenues
-- Strengthened ESG Strategy established with clear targets
-- Lower net debt and substantial liquidity
Andy Hornby, Chief Executive Officer, commented:
"We have made good progress in the past six months, securing the
refinancing and recapitalisation of the Group in the first quarter
before focusing our attention on the re-opening of the business and
welcoming back dine-in customers as government restrictions
eased.
I am particularly proud of the way that our teams have pulled
together to support one another, ensuring a great experience for
our customers and delivering a strong LFL sales outperformance
versus the market.
Whilst there are some well documented sector challenges to
navigate in the short-term, particularly around labour availability
and supply chain, we believe the Group is well positioned for the
long- term."
* Market refers to Coffer Peach tracker for restaurants
(Wagamama and Leisure benchmark) and Coffer Peach tracker for pub
restaurants (TRG Pubs benchmark). Coffer peach LFL sales represent
the weighted average of weekly LFL sales reported (internal
calculation)
** UK air passenger growth used as market benchmark for
Concessions
Financial summary (for the 27 weeks ended 4 July 2021)
-- Total sales of GBP216.8m in the first half (2020: GBP227.2m)
-- Adjusted EBITDA profit of GBP11.2m on an IAS 17 basis,
despite the impact of significant trading restrictions in the
period (2020: Adjusted EBITDA Loss of GBP18.3m). Reported EBITDA
profit of GBP19.9m on an IFRS 16 basis (2020: Loss of GBP15.3m)
-- Statutory loss before tax of GBP58.8m on an IFRS 16 basis (2020: loss of GBP234.7m)
-- H1 Net debt of GBP200.3m on an IAS17 basis (2020: GBP308.3m)
with substantial liquidity (in excess of GBP235m of cash
headroom***). IFRS 16 net debt was GBP635.0m (2020:
GBP1,138.1m)
Enquiries:
The Restaurant Group plc
Andy Hornby, Chief Executive
Officer
Kirk Davis, Chief Financial
Officer
Umer Usman, Investor Relations 020 3117 5001
MHP Communications
Oliver Hughes
Simon Hockridge 07885 224 532 / 07709 496 125
Investor and analyst conference call facility
In conjunction with today's presentation to analysts, a live
conference call and webcast facility will be available starting at
9:00am (UK time). If you would like to register, please contact
Robert Clark at MHP Communications for details on 07710 117 517 or
email TRG@mhpc.com.
The presentation slides will be available to download from
8:00am (UK time) from the Company's website
https://www.trgplc.com/investors/reports-presentations
Notes:
1. The Restaurant Group plc had approximately 400 restaurants
and pub restaurants throughout the UK as at 14 September 2021 . Its
principal trading brands are Wagamama, Frankie & Benny's and
Brunning & Price. It also operates a multi-brand Concessions
business which trades principally in UK airports. In addition the
Wagamama business has a 20% stake in a JV operating six Wagamama
restaurants in the US and over 50 franchise restaurants operating
across a number of territories.
2. Statements made in this announcement that look forward in
time or that express management's beliefs, expectations or
estimates regarding future occurrences are "forward-looking
statements" statements and reflect the Group's current expectations
concerning future events. Actual results may differ materially from
current expectations or historical results.
3. The Group's Adjusted performance metrics ('APMs') such as
like-for-like sales, Adjusted measures, IAS 17 basis measures and
free cash flow are defined within the glossary at the end of this
report.
***Current facilities subject to minimum liquidity covenant of
GBP40m
Business review
Introduction
The first half of the financial year continued to be severely
disrupted by restrictions imposed on the hospitality sector. This
included being only able to trade for delivery and takeaway during
the first 15 weeks, followed by five weeks of "outdoor dining" and
finally the resumption of "indoor dining" from 17 May. The focus
during the first quarter was on securing the refinancing and
recapitalisation of the Group, with attention then shifting to a
rapid and profitable re-opening of the business in the second
quarter.
In March, we agreed new long-term debt facilities providing the
Group with more financial flexibility over the next four to five
years and we received excellent support from our shareholders in
raising net proceeds of GBP166.8 million of new capital.
This stronger long-term capital structure provides us with the
ability to make targeted investments in our existing estate whilst
opening new restaurants and pubs over the years ahead, generating
good sustainable returns for shareholders.
Since re-opening, our trading performance has been very strong,
which supports an increase in our FY21 EBITDA expectations and I am
particularly proud of the way that teams have pulled together to
support one another through another incredibly tough period.
However, there are some well documented sector challenges to
navigate in the short-term, particularly around the expected
normalisation of VAT, labour availability and increased
inflationary cost pressures.
We outline updates on four key areas, below:
1) Trading performance since the recommencement of dine-in
2) Evolving market dynamics
3) Progress on targeted organic growth avenues
4) Our strengthened ESG strategy
1. Trading performance since the recommencement of dine-in (LFL
sales % vs 2019 comparable for the 15 weeks from 17 May to 29
August 2021)
Wagamama
Since re-opening for dine-in, we have seen consistently strong
trading, with LFL sales growth of 21%, representing a 13%
outperformance versus the market.
The key customer initiatives driving the performance have
been:
- Veganuary: At the beginning of the year in support of
veganuary, we made a brand commitment to have a 50% plant-based
menu by the end of 2021, giving our guests more vegan and
vegetarian options, including the launch of 'Sticky Vegan Ribs'
which has had the best feedback of any vegan dish on the menu
- Summer menu launch: We successfully launched some new "lighter
options" dishes during the summer including three new hiyashi bowls
and two harusame salads. The menu has been received positively with
our harusame salads having sold better than any previous salad
range on the menu
- Delivery and takeaway: Given trading restrictions through H1
we have seen an acceleration of the structural shift of both new
and existing customers enjoying delivery and takeaway. LFL delivery
sales were up 146% and LFL takeaway sales up 90% in the last eight
weeks (period ending 29 August)
Pubs
We have seen continued strong trading with LFL sales growth of
12%, representing a 14% outperformance versus the market.
The key operational initiatives driving the performance have
been:
- Investment in external trading solutions: Development of more
than 30 covered outside areas using stretch tents and marquees to
facilitate external dining all year round
- Crew recruitment and retention: Introducing more flexible
contracted hours, a 4-day working week and clear development paths
through the business to provide a better work / life balance and
help to attract more talent into the business
- Introduction of a new online booking system: Maximises the
utilisation of covers within the pub up to the point of arrival
We are also looking at targeted investments in the existing
estate to increase turnover and build on our current accommodation
facilities, with four bedrooms being added to our "Haighton Manor"
pub and plans under review for further investment in accommodation
at three other pubs.
Leisure
The business has delivered a very encouraging trading
performance, achieving LFL sales growth of +18%, outperforming the
market by 10%.
The key customer initiatives driving the performance have
been:
- Investment in food quality: Our focus has been on improving
food quality with new menus launched across all of our brands in
May. Customer feedback has been very positive, in particular the
new and improved dishes added to the Frankie & Benny's menu
have been very well received
- Improved customer insight tools: Our partnership with Yumpingo
has provided greater customer insight on both customer service
standards and dish feedback. This allows us to target further
improvements on future menu launches in the autumn
- Delivery and takeaway: Delivery and takeaway performance has
been very strong with delivery & takeout sales accounting for
16% of sales compared to only 4% in 2019 (for the eight week period
ending 29 August). Our virtual brands continue to grow and now
account for c.50% of off-trade sales
Concessions
The international travel sector remains incredibly challenging
due to ongoing changes in Government restrictions and the
associated cost of PCR testing.
We continue to focus on a measured re-opening programme, only
opening in locations with sufficient passenger volumes to support
positive EBITDA delivery. We have achieved more flexible terms with
the vast majority of airport partners with regards to minimum
guaranteed rents (MGRs) and mothballing fees. In addition, we have
flexed our operating hours to match departing flight times to
minimise costs whilst ensuring we offer a great service.
We currently have 21 sites open with LFL sales declining by 53%,
21% ahead of the passenger volume decline. Sales have benefitted
from a higher average spend per passenger (due to longer dwell
times) and reduced competition as other food and beverage operators
manage their re-opening profile.
We are only planning on a gradual improvement in airport
passenger volumes through 2022 and 2023 and are managing our
re-opening profile accordingly.
2. Evolving market dynamics
The restructuring undertaken by TRG, primarily in our Leisure
division (with over a 60% reduction in sites) positions the Group
well to benefit from the material reduction in supply across the UK
hospitality market, presenting an opportunity to take carefully
targeted market share. In the Group's current trading estate of 355
sites (excluding 42 Concession sites) there has been a 21%
reduction in food and drink outlets in neighbouring locations
(defined as within 0.5 miles of each Wagamama and Leisure site
location, and within five miles of each TRG pub location).
The delivery market has grown rapidly over the last few years
and is forecast to be worth GBP10.5 billion in 2021, a 36% increase
versus 2019. It is projected to increase by a further 20% over the
next three years (according to Lumina Intelligence (MCA) Food
service delivery report 2021). TRG is well placed to benefit from
this growth through its Wagamama, Leisure and virtual brands, which
provide customers with a broad range of cuisine types.
Alongside these long-term opportunities, there are some sector
wide challenges, as outlined below:
- Dine-in customer volumes: LFL sales since re-opening has been
supported by reduced VAT and significant growth in the delivery
market, while dine-in covers remain behind 2019 volumes
- Labour market pressures: There are numerous well documented
issues leading to rising labour costs, which are likely to be
further exacerbated by an above inflationary increase in the
National Living Wage (NLW) from April 2022
- Increasing inflationary pressures: Includes food and drink
cost inflation from certain commodity markets, distribution cost
increases and material market driven increases in utility costs
- International travel experiencing a slow recovery: Airport
passenger volumes are currently running at c.25% of 2019 levels,
reflecting ongoing travel restrictions and the impact of quarantine
measures and testing requirements
The Group continues to navigate these short-term challenges
successfully but we expect increased inflationary cost pressures
through FY 2022.
3. Progressing well on targeted organic growth opportunities
Our Wagamama and Pubs businesses have a track record of
delivering strong returns on new site openings, with Wagamama
(excluding delivery kitchens) having delivered over 40% returns on
invested capital (based on new openings between 2015 and 2017) and
Pubs delivered returns on invested capital of over 25% (on an
adjusted leasehold basis). Additionally the five Wagamama delivery
kitchens (open for more than 12 months) have generated over 75%
returns on invested capital.
The strength of trading of these businesses since re-opening has
reinforced our belief on the roll-out potential and we have made
good progress on our expansion pipeline as follows:
-- Wagamama UK: (excluding delivery kitchens) On track to open
five new restaurants in FY21 including sites already trading at
Paddington and the West Midlands Designer outlet. The Group is
targeting a roll-out of five to seven new sites per annum from FY22
onwards. Our market analysis and insight gives us confidence that
we can expand the estate to between 180 and 200 Wagamama
restaurants (from 144 today)
-- Wagamama UK delivery kitchens: On track to open up to five
new delivery kitchens in FY21 including sites already trading at
Walthamstow and Forest Hill. The Group is targeting a roll-out of
five to seven new delivery kitchens per annum from FY22 onwards. We
continue to believe the roll-out potential for delivery kitchens is
in the region of 20 to 30 (from seven today)
-- Pubs: In FY22 we expect to open three new pubs and invest in
our existing pubs to develop accommodation opportunities. From FY23
we expect to open approximately five new pubs a year as we develop
our property pipeline. Our long-term ambition remains to double the
size of our existing estate to 140-160 pubs (from 78 today)
-- Wagamama International: We expect to open three to four new
US sites in FY22 under our JV partnership with the first two sites
expected to be in Atlanta and Tampa. We also expect to open
at-least five new international franchise sites in FY22
predominately in Italy and the Middle-East.
We remain disciplined in the way that we grow the estate,
focusing on delivering good sustainable returns for our
shareholders.
4. Our strengthened ESG strategy
'Preserving The Future' is The Restaurant Group's (TRG)
programme that shapes and drives our Environmental, Social and
Governance (ESG) agenda. We are committed to operating ethically
and sustainably and to continuously finding ways to reduce our
carbon footprint, to further contribute to our communities and to
improve the health and wellbeing of our colleagues and customers,
all of which are underpinned by a strong governance framework.
Building on the progress to date, TRG is accelerating its
business-wide ESG initiatives in a coordinated and target-driven
programme.
As founder members and co-chair of emission working groups (for
scopes 1 and 2) for the Zero Carbon Forum we play an active role in
developing sector wide plans to reduce emissions and are committed
to Net Zero carbon emissions by 2035. Supported by Science Based
Targets, in 2022, we will be outlining clear measurable milestones
to achieve this ambition.
From 1st October 2021, all(1) our directly controlled supplies
of electricity, gas and LPG used in our Wagamama, Pubs and Leisure
divisions will be from renewable sources and all residual emissions
from this particular scope will be offset by carbon removal
reforestation projects in FY22.
We recognise the significant challenge of reaching net-zero and
are focussed on a number of initiatives to reduce our impact,
including:
-- Reducing energy consumption through an ongoing initiative
that baselines usage per site, identifies best practice, sets
targets and drives ongoing consumption reduction
-- Reducing food waste through a partnership with the
Sustainable Restaurant Association on the 'Bad Taste' project that
targets specific constituents of a menu that contribute to waste
allowing us to adjust menu design and content. In another
partnership with the 'Too Good to Go' food waste initiative (across
135 restaurants) we have donated almost 4,000 food bags that would
have been wasted and we plan to roll the initiative out to more
sites
-- Reducing Plastic Packaging by working with specialist
packaging designers across the Group and we are launching a new,
lower plastic packaging content range in Q2 2022 for Wagamama with
the ambition of reducing plastic packaging by at least 30%
-- Trialling a 'Bowl Return Scheme' in Wagamama to encourage further recycling
We continuously evolve our food offer to increase sustainable
and healthy options for our customers and challenge ourselves to
source from ethical and sustainable suppliers. We are launching a
new children's menu in October within Frankie and Benny's that has
reduced calories per meal, less fried food, increased vegetable
content and that provides calories on the menu to support healthy
customer choices.
To ensure supply chain sustainability, our Responsible Sourcing
Policy requires suppliers to adhere to the Supplier Ethical Data
Exchange standards which assess operating practices against four
key areas: Labour Standards, Health & Safety, The Environment
and Business Ethics. We are also committed to supporting farming
communities and buy products which are certified as having been
produced in accordance with ethical and sustainable standards, such
as Fairtrade or the Rainforest Alliance.
Our charity partners are 'Mind' and 'Young Minds' (Mental Health
Charities) and 'Only a Pavement Away' (A Homelessness Charity). We
support our charities through a variety of fundraising activities
and are donating profits from our retail range in Wagamama and
other celebrity chef book launches. We are also supporting our
homelessness charity by providing employment opportunities and a
skills hub that offers hospitality training.
Our Apprenticeship programme currently provides practical
skills, experience and qualifications for over 175 apprentices
across front of house, back of house, management and commercial
roles and we are aiming to double the number of apprenticeships in
2022. This will equip our graduates from the Apprenticeship
programme with the equivalent qualifications ranging from 5 GCSEs
right up to degree level.
Our role to provide a diverse and inclusive environment with a
strong sense of purpose has never been more important. We have
launched a range of engagement initiatives, led by colleague
groups, which provide information, awareness and learning sessions
to promote an inclusive workplace with appropriate recruitment,
leadership and behaviours. Additionally, we partner with The Burnt
Chef Project, a not-for-profit organisation who specialise in
improving the wellbeing of those within the hospitality profession
and challenging the stigma of mental health. We work with them to
deliver mental health training to our managers and to put in place
effective practices which improve wellbeing.
We acknowledge the important role TRG plays in global climate
and societal change. Our "Preserving The Future" programme is a
continuous journey to establish environmental, social and
governance best practice in everything we do.
(1) Includes electricity, gas & LPG. Where we control the
specific supply point for contracting. Excludes landlord
supplies
Summary and outlook
The Group is well-positioned following the restructuring and
recapitalisation:
-- Strong LFL sales outperformance versus the market
-- Trading performance since re-opening supports an increase in our FY21 EBITDA expectations
-- Ongoing sector challenges to navigate through FY22
-- ESG Strategy established with clear targets
-- Lower net debt and substantial liquidity provides ability for
targeted organic growth opportunities
Financial review
The Group adopted IFRS 16 'Leases' on 30 December 2019 using the
modified retrospective approach to transition. Following the year
of transition, we have decided to maintain the reporting of our
profit and other key KPIs like net debt on a pre-IFRS 16 basis
referred to as 'IAS 17'. This is because the pre-IFRS 16 profit is
consistent with the financial information used in the management
accounts to inform business decisions and investment appraisals. It
is our view that presenting the information on a pre-IFRS 16 basis
will provide a useful and necessary basis for understanding the
Group's results to all stakeholders. As such, commentary has also
been included in the Business Review, Financial Review and other
sections with reference to underlying profit measures computed on a
pre-IFRS 16 basis.
Note 3 to the financial statements provides a reconciliation to
allow readers to understand the differences between our current
period results on an IAS 17 basis and those under IFRS 16, as well
as the differences between adjusted and total results.
The adjusted measures (as shown on the face of the Income
Statement) are summarised below:
27 weeks 26 weeks 27 weeks 26 weeks
ended ended ended ended
4 July 2021 28 June 4 July 2021 28 June
IFRS 16 2020 IAS 17 2020
GBPm IFRS 16 GBPm IAS 17
GBPm GBPm
------------------------------ ------------- --------- ------------- ---------
Revenue 216.8 227.2 216.8 227.2
Adjusted(1) EBITDAR 28.1 21.2 30.1 16.7
Adjusted(1) EBITDA 23.6 18.9 11.2 (18.3)
Adjusted(1) operating loss (18.6) (41.3) (8.6) (38.9)
Adjusted(1) operating margin (8.6%) (18.2%) (4.0%) (17.1%)
Adjusted(1) loss before
tax (39.5) (62.6) (19.9) (47.5)
------------------------------ ------------- --------- ------------- ---------
Exceptional items before
tax (19.3) (172.2) n/a n/a
Statutory loss before tax (58.8) (234.7) n/a n/a
Statutory loss after tax (56.0) (207.5) n/a n/a
------------------------------ ------------- --------- ------------- ---------
Adjusted(1) EPS (pence) (4.7)p (11.2)p n/a n/a
Statutory EPS (pence) (8.0)p (38.8)p n/a n/a
------------------------------ ------------- --------- ------------- ---------
(1) The Group's adjusted performance metrics such as Adjusted
EBITDA are defined within the glossary at the end of this report.
Adjusted performance such as Adjusted EBITDA excludes exceptional
items.
Covid-19 continued to impact our ability to trade in the first
half of 2021 with restaurants and pubs only re-opening for dine-in
customers from 17 May, with all restrictions being lifted on 19
July. As a result, this set of results only includes seven weeks of
full trading with the initial twenty weeks operating under varying
trade restrictions. The Concessions business, was effectively
closed during the period under review with the ongoing restrictions
on international travel meaning that the restaurants could not be
run profitably and only some returning to trade in late July, and
at much reduced passenger levels.
Turnover for the 27 weeks to 4 July 2021 was GBP216.8m (2020: 26
weeks GBP227.2m) with GBP60.1m generated during the first quarter
of the year whilst in lockdown. The comparison between the two
periods is complicated by the impacts of the pandemic and
significant changes in the estate, therefore like-for-like
comparisons are being made to 2019. I am delighted to report that
we have outperformed the market in terms of LFL sales performance
across all divisions as outlined in the business review
section.
Since re-opening, it has been operationally challenging to
operate our pubs and restaurants given the impact of
self-isolations caused by the 'Pingdemic' coupled with the well
documented food and drink supply chain issues whilst delivering a
fantastic customer experience to our guests.
Against this backdrop, it is therefore very pleasing to report
an Adjusted(1) EBITDA profit (on an IAS 17 basis) of GBP11.2m
(2020: loss of GBP18.3m), driven by strong trading within the first
half, disciplined cost control and the benefit of Government
assistance. Excluding the benefits from the business rates relief
and property grants, the H1 Adjusted(1) EBITDA loss (on an IAS 17
basis) was GBP6.5m. The Group generated an Adjusted(1) EBITDA loss
(on an IAS 17 basis) of GBP18.1m in the first quarter, whilst in
lockdown, with positive EBITDA being delivered in the second
quarter as the Group was able to welcome back guests to its
restaurants for dine-in. Adjusted(1) operating loss (on an IAS 17
basis) was GBP8.6m (2020: loss of GBP38.9m).
Including the impact of IFRS 16, the Adjusted(1) loss before tax
was GBP39.5m (2020: loss of GBP62.6m) and on a statutory basis the
loss before tax was GBP58.8m (2020: loss of GBP234.7m). The
significant increase in the statutory loss under IFRS16 compared to
IAS 17 is due to the depreciation and interest expense under IFRS
16 being much greater than the rent expense added back. The current
year rent expense under IAS 17 is lower than normal due to rent
concessions achieved with our landlords whilst under IFRS 16 the
equivalent benefit in depreciation and interest cost is recognised
over the life of the lease. When the impact of Covid-19 related
rent deals end and onerous lease provision unwinds, we expect that
the PBT outcome under IFRS 16 and IAS 17 will be broadly
similar.
Adjusted(1) loss per share ('EPS') was 4.7p (2020: loss per
share of 11.2p) and on a statutory basis the loss per share was
8.0p (2020: loss of 38.8p). The improvement in statutory EPS is
driven primarily by the reduction in exceptional costs
year-on-year.
Refinancing and equity raise
As outlined in the 2020 Annual Report, the Group completed a
GBP500m refinancing in March 2021 consisting of a GBP380m term loan
expiring in May 2026, and a GBP120m super senior revolving credit
facility expiring in March 2025. This represents a significant
achievement for the Group and secures a strong long-term capital
structure with funding in place for the next four-five years.
Following the refinancing, the Group drew down GBP330m of the
term loan and used the proceeds to repay the Wagamama bond, CLBILS,
and RCF debts under the previous facilities. The term loan was only
available for a single draw down and so this facility is now set at
GBP330m. The revolving credit facility of GBP120m remains available
but has not been drawn since inception.
On 29 March, the Group also completed an equity raise with net
proceeds of GBP166.8m being raised by a Firm Placing and Placing
and Open Offer. The success of this equity raise was a testament to
our supportive investor base and gives us the liquidity needed to
withstand further trading restrictions, to invest in growing the
business over the medium term and to deliver good sustainable
shareholder returns.
Cash flow and net debt
The Group ended the first half with IAS 17 net debt of GBP200.3m
(2020: GBP308.3m). We therefore have in excess of GBP235m of
available debt facilities (2020: GBP127.1m), with a minimum
liquidity covenant of GBP40.0m. This strengthened balance sheet
provides the Group with substantial liquidity to invest in targeted
organic growth opportunities, and moves us towards a targeted Net
Debt to Adjusted(1) EBITDA (pre-IFRS 16) below 1.5 times in the
medium term. Post-IFRS 16, net debt was GBP635.0m (2020:
GBP1,138.1m) with a significant part of the reduction coming from
exiting a number of leases in our Leisure business and the
restructuring of our Concessions agreements.
Since refinancing, the capital expenditure programmes for the
Group have recommenced with opportunities for new Wagamama and Pub
sites being actively explored, following a period of reduced
expenditure as a result of the Covid-19 pandemic. The first half
capital expenditure of GBP12.0m (2020: GBP25.0m) largely relates to
the completion of new Concession sites in Manchester Airport, two
Wagamama restaurants and two new delivery kitchens.
Summary cash flow for the period is set out below:
2021 2020
GBPm GBPm
----------------------------------------------- -------- ----------
Adjusted EBITDA (IAS17) (1) 11.2 (18.3)
Working capital and non-cash adjustments 2.6 (10.1)
Operating cash flow** 13.8 (28.4)
Net interest paid (14.3) (7.7)
Tax paid (0.2) (2.8)
Refurbishment and maintenance expenditure (6.7) (10.6)
----------------------------------------------- -------- ----------
Free cash flow (7.4) (49.5)
Development expenditure (5.3) (14.4)
Utilisation of onerous lease provisions (3.4) (10.2)
Exceptional costs (7.6) (6.5)
Proceeds from issue of share capital 166.8 54.6
Other items - 2.4
----------------------------------------------- -------- ----------
Cash movement 143.2 (23.6)
----------------------------------------------- -------- ----------
Net Debt (IAS 17 basis)
Group net debt brought forward (340.4) (286.6)
Derecognition of finance lease liability(IFRS
16 transition) - 2.6
Non-cash movements in net debt (3.1) (0.7)
----------------------------------------------- -------- ----------
Group net debt carried forward (IAS
17 basis) (200.3) (308.3)
----------------------------------------------- -------- ----------
Incremental lease liabilities (IFRS
16) (434.7) (829.8)
----------------------------------------------- -------- ----------
Group net debt carried forward (IFRS
16 basis) (635.0) (1,138.1)
----------------------------------------------- -------- ----------
(1) T he Group's adjusted performance metrics such as
like-for-like sales and Adjusted EBITDA are defined within the
glossary at the end of this report.
**Operating cash flow excludes certain exceptional costs and
includes payments made against lease obligations
Exceptional Costs
Exceptional costs before tax in the first half reduced
significantly to GBP19.3m, from GBP172.2m in the first half of
2020.
The most significant reduction in exceptional costs related to
those incurred in the restructuring of our Leisure and Concessions
business with a cost of GBP14.2m (2020: GBP132.4m). The majority of
this charge related to the impairment of sites that we no longer
intend to re-open in Concessions, and Central London Leisure
sites.
In addition, the impairment charge relating to our trading sites
has fallen from GBP13.5m in the prior year to only GBP1.3m. In the
current year, a small number of sites were impaired due to trading
in certain locations totalling GBP11.3m, partially offset by the
improved trading in a number of sites which has led the Group to
reverse previously booked impairment charges of GBP10.0m.
Included within exceptional interest costs, is a charge of
GBP1.9m (2020: GBPnil) relating to the write off of unamortised
loan fees on the previous debt facilities. The fees relating to the
new facilities totalled GBP14.6m and will be amortised over the
term of the facilities.
The final significant balance within exceptional items relates
to professional fees of GBP1.6m (2020: GBP2.2m) relating to
corporate activity.
Tax
The tax credit for the period was GBP2.8m (2020: tax credit of
GBP7.7m), summarised as follows:
2021 2020
-------------------- ------------------------------- --------
Trading Exceptional Total Total
(1) GBPm GBPm GBPm
GBPm
-------------------- -------- ------------ ------- --------
Loss before tax (39.5) (19.3) (58.8) (127.6)
Tax on loss 6.1 (3.3) 2.8 7.7
-------------------- -------- ------------ ------- --------
Effective tax rate 15.4% n/a 4.7% 6.0%
(1) The Group's adjusted performance metrics such as
like-for-like sales and Adjusted EBITDA are defined within the
glossary at the end of this report.
The effective Corporation tax rate on the adjusted loss (before
exceptional items) is 15.4%. The tax rate is below the corporation
tax rate of 19% due to the loss made in the period, partially
offset by non-deductible costs such as share based incentives, and
foreign losses.
Included in the exceptional tax charge of GBP3.3m is a charge of
GBP9.9m relating to the change in corporation tax rate which is due
to come into effect from April 2023 and increases our deferred tax
liability. This has been partially offset by a GBP6.6m credit
relating to exceptional costs that are deductible for tax
purposes.
Selected FY21 Guidance
2021 P&L benefits from one-off government support
-- GBP12.4m in business rates relief and GBP10.7m in government grants
P&L Depreciation expected to be c.GBP42m (IAS 17 basis)
P&L Interest expected to be c.GBP27m (IAS 17 basis)
Total capital expenditure for the FY expected to be up to
GBP45m:
-- 5 new Wagamama restaurants,
-- 5 new delivery kitchens in the UK
-- 2 new Wagamama sites in the US as part of the JV (20% capex contribution to the sites)
-- 1 new freehold Pub
-- Maintenance and IT investment of GBP20m and Refurbishment capex of GBP8m
11 Leisure sites closed since March 21, which contributed
GBP2.5m of annualised EBITDA (based on 2019 outlet EBITDA)
IFRS 16
The Group adopted IFRS 16 'Leases' in its accounts from 30
December 2019. The accounts for this interim period are therefore
comparable with the prior year interim period.
Compared to the previous lease accounting standard IAS 17, IFRS
16 sees the Group report:
-- a higher level of adjusted EBITDA. EBITDA no longer includes
the IAS 17 minimum rent cost and rises by GBP12.4m (2020: GBP37.3m)
in the first half. The variable elements of rent are still charged
within EBITDA and total GBP4.5m;
-- a higher adjusted operating loss. The depreciation on the
right-of-use asset of GBP22.4m (2020: GBP39.6m) is higher than the
IAS 17 rent charge. This is due to gains associated with Covid-19
rent waivers being recognised in the P&L immediately under IAS
17 while they are spread over the life of the lease under IFRS
16;
-- a higher level of loss before tax. The combined IFRS 16
charges for depreciation of the right of use asset and interest on
the lease liability exceed the IAS 17 rent charge by GBP19.5m
(2020: GBP15.1m); and
-- a higher level of net debt, reflecting the inclusion of an
additional GBP434.7m (2020: GBP827.2m) of capitalised lease
liabilities within net debt. The completion of the CVA in the
second half of 2020, along with the introduction of variable,
passenger volume linked rent agreements at the majority of our
airport sites has driven a significant reduction in our lease
liabilities.
Going concern
The directors have adopted the going concern basis in preparing
these interim accounts after assessing the Group's principal risks
including the continuing risks arising from Covid-19.
Whilst the trading restrictions placed on the Group by the UK
Government and the Devolved Administrations were largely removed in
July 2021, the Group is still dealing with the ongoing impacts of
the pandemic. Specifically, these include the restrictions on
international travel which have reduced sales in our airport sites,
the impact of self-isolations on the availability of our
colleagues, and the well documented challenges within the supply
chain. However, following the refinancing of the Group in March
2021 which provided GBP450m of committed facilities through to
March 2025 (being GBP330m Term Loan and GBP120m of revolving credit
facilities), and the equity raise in March 2021 which provided net
proceeds of GBP166.8m, the Group now has sufficient liquidity and
covenant headroom to continue in operation for the going concern
review period to 31 December 2022.
The Principal Risks and Uncertainties are disclosed in the Risk
Committee report, which have been considered by the Directors in
forming their opinion. The Directors have approved financial
projections to 31 December 2022 (the review period), containing a
base case forecast and a severe but plausible sensitised case,
reducing sales by approximately 10%. In the base case forecast,
there is a cash headroom of at least GBP180m over the required
GBP40m of liquidity and a covenant leverage ratio as at 31 December
2022 of below 2.0 times (against a limit of 5.0 times). By
comparison under the sensitised case the cash headroom reduces to
at least GBP142m over the required GBP40m of liquidity, and a
leverage ratio of below 3.5 times, before any mitigations.
Mitigating actions include reducing capital and operating
expenditure, or capitalising interest payments, none of which have
not been included in the forecast scenarios. In both scenarios, the
Government is expected to continue to offer the furlough scheme
until the end of September 2021, to continue with the 5%
VAT rate until the end of September 2021 and then 12.5% VAT rate
until the end of March 2022. All these Government policies are as
announced.
In addition, the Group has assumed that the option to repay up
to 27% of the Term Loan in the period of 18 months from drawdown
will not be exercised in the review period, but if it became
appropriate to do so the Board would exercise appropriate
governance to maintain sufficient headroom for liquidity and
covenant purposes.
Based on the above assumptions, in both scenarios the Group has
sufficient liquidity to finance operations within the covenant
structure for the going concern review period.
The Board has a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
period to 31 December 2022, being at least the next twelve months
from the date of approval of the interim accounts. On this basis,
the Directors continue to adopt the going concern basis in
preparing these accounts.
The Restaurant Group plc
Consolidated income statement
27 weeks ended 4 July 2021
Trading Exceptional items
business (Note 4) Total
(Unaudited) (Unaudited) (Unaudited)
Note GBP'000 GBP'000 GBP'000
Revenue 2 216,825 - 216,825
Cost of sales (213,582) (15,783) (229,365)
------------- ------------------ -------------
Gross loss 3,243 (15,783) (12,540)
Share of results of associate (63) - (63)
Administration costs (21,795) (1,639) (23,434)
------------- ------------------ -------------
Operating loss (18,615) (17,422) (36,037)
Interest payable 5 (20,920) (1,894) (22,814)
Interest receivable 5 67 - 67
------------- ------------------ -------------
Loss on ordinary activities before tax (39,468) (19,316) (58,784)
Tax on (loss)/profit from ordinary activities 6 6,091 (3,316) 2,775
------------- ------------------ -------------
Loss for the period (33,377) (22,632) (56,009)
------------- ------------------ -------------
Other comprehensive loss:
Foreign exchange differences arising on consolidation 133 - 133
------------- ------------------ -------------
Total comprehensive loss for the period (33,244) (22,632) (55,876)
------------- ------------------ -------------
Earnings per share (pence)
Rights adjusted basic 7 (4.7) (8.0)
Rights adjusted diluted 7 (4.7) (8.0)
-------------------------------------------------- ----- ------------- ------------------ -------------
EBITDA 23,615 (3,731) 19,884
Depreciation, amortisation and impairment (42,230) (13,691) (55,921)
-------------------------------------------------- ----- ------------- ------------------ -------------
Operating loss (18,615) (17,422) (36,037)
-------------------------------------------------- ----- ------------- ------------------ -------------
Consolidated income statement
52 weeks ended
26 weeks ended 28 June 2020 27 December 2020
Trading Exceptional items
business (Note 4) Total Total
(Unaudited) (Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2 227,194 - 227,194 459,773
Cost of sales (248,103) (165,634) (413,737) (503,115)
------------- ------------------ ------------- ------------------
Gross (loss)/profit (20,909) (165,634) (186,543) (43,342)
Share of results of associate (634) - (634) (623)
Administration costs (19,715) (6,535) (26,250) (45,878)
------------- ------------------ ------------- ------------------
Operating loss (41,258) (172,169) (213,427) (89,843)
Interest payable 5 (21,490) - (21,490) (38,145)
Interest receivable 5 186 - 186 400
------------- ------------------ ------------- ------------------
Loss on ordinary activities before tax (62,562) (172,169) (234,731) (127,588)
Tax on loss from ordinary activities 6 2,756 24,480 27,236 7,700
------------- ------------------ ------------- ------------------
Loss for the period (59,806) (147,689) (207,495) (119,888)
------------- ------------------ ------------- ------------------
Other comprehensive income:
Foreign exchange differences arising on
consolidation (448) - (448) 91
------------- ------------------ ------------- ------------------
Total comprehensive loss for the period (60,254) (147,689) (207,943) (119,797)
------------- ------------------ ------------- ------------------
Earnings per share (pence)
Rights adjusted basic 7 (11.2) (38.8) (21.3)
Rights adjusted diluted 7 (11.2) (38.8) (21.3)
----------------------------------------- ----- ------------- ------------------ ------------- ------------------
EBITDA 18,918 (34,248) (15,330) 156,238
Depreciation, amortisation and
impairment (60,176) (137,921) (198,097) (246,081)
----------------------------------------- ----- ------------- ------------------ ------------- ------------------
Operating profit/(loss) (41,258) (172,169) (213,427) (89,843)
----------------------------------------- ----- ------------- ------------------ ------------- ------------------
Consolidated balance sheet
As at 4 July At 28 June At 27 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
=============================== ===== ============= ============= ===============
Non-current assets
Intangible assets 8 599,006 601,732 599,493
Right of use assets 9 302,412 575,462 368,888
Property, plant and equipment 10 296,266 313,533 305,614
Net investments in subleases 2,892 3,950 3,022
1,200,576 1,494,677 1,277,017
------------- ------------- ---------------
Current assets
Inventory 5,099 7,375 5,124
Other receivables 12,053 23,982 15,544
Net investments in subleases 675 1,287 600
Prepayments 4,034 11,378 8,795
Corporation tax debtor 12,633 - 89
Cash and cash equivalents 115,783 132,853 40,724
150,277 176,875 70,876
------------- ------------- ---------------
Total assets 1,350,853 1,671,552 1,347,893
------------- ------------- ---------------
Current liabilities
Trade and other payables (110,769) (144,643) (116,727)
Corporation tax liabilities - (4,016) -
Provisions (5,089) (9,570) (4,258)
Lease liabilities 9 (75,388) (99,106) (91,478)
(191,246) (257,335) (212,463)
------------- ------------- ---------------
Net current liabilities (40,969) (80,460) (141,587)
------------- ------------- ---------------
Long-term borrowings 14 (316,047) (441,132) (381,118)
Other payables - (3,043) (1,321)
Deferred tax liabilities (50,261) (9,233) (40,704)
Lease liabilities 9 (359,350) (730,729) (392,310)
Provisions (9,875) (5,484) (8,347)
(735,533) (1,189,621) (823,800)
------------- ------------- ---------------
Total liabilities (926,779) (1,446,956) (1,036,263)
------------- ------------- ---------------
Net assets 424,074 224,596 311,630
=============================== ===== ============= ============= ===============
Equity
Share capital 12 215,158 165,880 165,880
Share premium 394,186 276,633 276,634
Other reserves (2,273) (5,794) (3,896)
Retained earnings (182,997) (212,123) (126,988)
Total equity 424,074 224,596 311,630
=============================== ===== ============= ============= ===============
Consolidated statement of
changes in equity
Share Share Other Retained Total
capital premium reserves earnings
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----- -------- -------- --------- ---------- ----------
Balance at 29 December 2019
(audited) 138,234 249,686 (5,921) 19,900 401,899
Adjustment for IFRS 16 transition - - - (24,528) (24,528)
-------- -------- --------- ---------- ----------
Balance at 30 December 2019 138,234 249,686 (5,921) (4,628) 377,371
Total comprehensive loss for
the period - - (448) (207,495) (207,943)
Share issue 12 27,646 26,947 - - 54,593
Share-based payments - - 686 - 686
Deferred tax on share-based
payments - - (111) - (111)
Balance at 28 June 2020 (unaudited) 165,880 276,633 (5,794) (212,123) 224,596
-------- -------- --------- ---------- ----------
Balance at 29 December 2019
(audited) 138,234 249,686 (5,921) 19,900 401,899
Adjustment for IFRS 16 transition - - - (27,000) (27,000)
Balance at 30 December 2019 138,234 249,686 (5,921) (7,100) 374,899
Total comprehensive (loss)/income
for the period - - 91 (119,888) (119,797)
Share issue 12 27,646 26,948 - - 54,594
Share-based payments 2,016 - 2,016
Deferred tax on share-based
payments - - (82) - (82)
Balance at 27 December 2020
(audited) 165,880 276,634 (3,896) (126,988) 311,630
-------- -------- --------- ---------- ----------
Balance at 27 December 2020
(audited) 165,880 276,634 (3,896) (126,988) 311,630
Total comprehensive (loss)/income
for the period - - 133 (56,009) (55,876)
Share issue 12 49,278 117,552 - - 166,830
Share-based payments - - 1,493 - 1,493
Deferred tax on share-based
payments - - (3) - (3)
Balance at 4 July 2021 (unaudited) 215,158 394,186 (2,273) (182,997) 424,074
------------------------------------- ----- -------- -------- --------- ---------- ----------
The Restaurant Group plc
Consolidated cash flow statement
27 weeks ended 26 weeks ended 52 weeks ended
4 July 2021 28 June 2020 27 December 2020
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
Operating activities
Cash generated from operations 13 28,432 (33,901) 3,216
Interest received - 43 173
Interest paid (14,287) (7,734) (15,679)
Corporation tax (repayment)/paid (215) (2,839) 5,111
Payment on exceptionals (7,568) - (34,860)
Net cash flows from operating activities 6,362 (44,431) (42,039)
----------------- ----------------- -------------------
Investing activities
Purchase of property, plant and equipment (11,223) (24,176) (37,387)
Purchase of intangible assets (719) (205) (1,883)
Proceeds from disposal of property, plant and
equipment - 2,500 3,343
Investment in associate (63) (634) (623)
Net cash flows from investing activities (12,005) (22,515) (36,550)
----------------- ----------------- -------------------
Financing activities
Net proceeds from issue of ordinary share capital 166,830 54,593 54,593
Repayment of obligations under leases (17,957) (11,225) (30,777)
Repayments of overdraft - (9,950) (9,950)
Repayments of borrowings 14 (383,611) - (24,000)
Drawdown of borrowings 14 330,000 116,611 80,611
Upfront loan facility fee paid 14 (14,560) - (934)
----------------- ----------------- -------------------
Net cash flows used in financing activities 80,702 150,029 69,543
----------------- ----------------- -------------------
Net increase/(decrease) in cash and cash
equivalents 75,059 83,083 (9,046)
Cash and cash equivalents at the beginning of the
period 40,724 49,756 49,756
Foreign exchange movement in cash - 14 14
Cash and cash equivalents at the end of the period 115,783 132,853 40,724
---------------------------------------------------- ----- ----------------- ----------------- -------------------
Responsibility statement
---------------------------------------------------- ------ --------------------------------------------------------
We confirm that to the best of our knowledge:
a)
the condensed set of financial statements has been prepared in accordance
with international
Accounting Standard (IAS) 34 'Interim Financial Reporting';
b)
the interim management report includes a fair review of the information
required by DTR 4.2.7R
(indication of important events during the first 27 weeks and description of
principal risks
and uncertainties for the remaining 26 weeks of the year); and
c)
the interim management report includes a fair review of the information
required by DTR 4.2.8R
(disclosure of related parties' transactions and changes therein).
By order of the Board,
Andy Hornby Kirk Davis
Chief Executive Officer Chief Financial Officer
14 September 2021 14 September 2021
1 Accounting policies
Basis of preparation
The interim condensed consolidated set of financial statements
included in this interim financial report has been prepared in
accordance with IAS 34 'Interim Financial Reporting'. The
accounting policies and methods of computation used are consistent
with those used in the Group's latest annual audited financial
statements, except as disclosed below. The interim condensed
consolidated financial statements do not include all the
information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's
latest annual consolidated financial statements as at 27 December
2020.
General information
The comparatives for the full year ended 27 December 2020 do not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on these accounts was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
The accounting period runs to a Sunday each half year which will
be a 26 or 27 week period. The Directors present their report and
consolidated financial statements for the 27 week period ended 4
July 2021, with the comparative period to 28 June 2020 being a 26
week period.
Going concern basis
The directors have adopted the going concern basis in preparing
these interim accounts after assessing the Group's principal risks
including the continuing risks arising from Covid-19.
Whilst the trading restrictions placed on the Group by the UK
Government and the Devolved Administrations were largely removed in
July 2021, the Group is still dealing with the ongoing impacts of
the pandemic. Specifically, these include the restrictions on
international travel which have reduced sales in our airport sites,
the impact of self-isolations on the availability of our
colleagues, and the well documented challenges within the supply
chain. However, following the refinancing of the Group in March
2021 which provided GBP450.0m of committed facilities through to
March 2025 (being GBP330.0m Term Loan and GBP120.0m of revolving
credit facilities), and the equity raise in March 2021 which
provided net proceeds of GBP166.8m, the Group now has sufficient
liquidity and covenant headroom to continue in operation for the
going concern review period to 31 December 2022.
The Principal Risks and Uncertainties are disclosed in the Risk
Committee report, which have been considered by the Directors in
forming their opinion. The Directors have approved financial
projections to 31 December 2022 (the review period), containing a
base case forecast and a severe but plausible sensitised case,
reducing sales by approximately 10%. In the base case forecast,
there is a cash headroom of at least GBP180.0m over the required
GBP40.0m of liquidity and a covenant leverage ratio as at 31
December 2022 of below 2.0 times (against a limit of 5.0 times). By
comparison under the sensitised case the cash headroom reduces to
at least GBP142.0m over the required GBP40.0m of liquidity, and a
leverage ratio of below 3.5 times, before any mitigations.
Mitigating actions include reducing capital and operating
expenditure, or capitalising interest payments, none of which have
been included in the forecast scenarios. In both scenarios, the
Government is expected to continue to offer the furlough scheme
until the end of September 2021, to continue with the 5% VAT rate
until the end of September 2021 and then 12.5% VAT rate until the
end of March 2022. All these Government policies are as
announced.
In addition, the Group has assumed that the option to repay up
to 27% of the Term Loan in the period of 18 months from drawdown
will not be exercised in the review period, but if it became
appropriate to do so the Board would exercise appropriate
governance to maintain sufficient headroom for liquidity and
covenant purposes.
Based on the above assumptions, in both scenarios the Group has
sufficient liquidity to finance operations within the covenant
structure for the going concern review period.
The Board has a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
period to 31 December 2022, being at least the next twelve months
from the date of approval of the interim accounts. On this basis,
the Directors continue to adopt the going concern basis in
preparing these accounts.
Changes in accounting policies
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial statements.
2 Segment analysis
Operating segments
IFRS 8 Operating segments requires operating segments to be
based on the Group's internal reporting to its Chief Operating
Decision Maker (CODM). The CODM is regarded as the combined
Executive team of the Chief Executive Officer, and the Chief
Financial Officer.
The Group has four segments:
-- Wagamama
-- Pubs
-- Leisure; and
-- Concessions
The economic characteristics of these businesses, including
Gross Margin, Net Margin, EBITDA and Sales trajectory, have been
reviewed by the Directors along with the non-financial criteria of
IFRS 8. It is the Directors' judgement that whilst there is some
short term variability during the Covid-19 recovery, all segments
have similar economic characteristics in the medium to long-term
and so meet the standard's criteria for aggregation. Consequently,
no segmental analysis is provided.
Geographical segments
The Group trades primarily within the United Kingdom. The Group
has an interest in restaurants in the United States through its
associate and generates revenue from franchise royalties primarily
in Europe and the Middle East. The segmentation between
geographical location does not meet the quantitative thresholds and
so has not been disclosed.
3 Reconciliation to underlying trading profit
The results used by the Directors to monitor and review the
performance of the Group continue to reflect the IAS 17 approach to
accounting and a number of the key metrics used in this report are
prepared on that basis. A reconciliation is provided below of the
key differences between results under IFRS 16 and the basis used
for management reporting.
H1 2021 Exceptional
Trading Adjustments for H1 2021 Trading items H1 2021 Total H1 2020 Total
IAS 17 IFRS 16 IFRS 16 (Note 4) IFRS 16 IFRS 16
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 216,825 - 216,825 - 216,825 227,194
Cost of sales (203,519) (10,063) (213,582) (15,783) (229,365) (413,737)
---------- ----------------- ---------------- ----------------- -------------- --------------
Gross
(loss)/profit 13,306 (10,063) 3,243 (15,783) (12,540) (186,543)
Share of results
of associate (63) - (63) - (63) (634)
Administration
costs (21,887) 92 (21,795) (1,639) (23,434) (26,250)
---------- ----------------- ---------------- ----------------- -------------- --------------
Operating loss (8,644) (9,971) (18,615) (17,422) (36,037) (213,427)
Interest payable (11,303) (9,617) (20,920) (1,894) (22,814) (21,490)
Interest
receivable - 67 67 - 67 186
---------- ----------------- ---------------- ----------------- -------------- --------------
Loss before tax (19,947) (19,521) (39,468) (19,316) (58,784) (234,731)
------------------ ---------- ----------------- ---------------- ----------------- -------------- --------------
EBITDA 11,236 12,379 23,615 (3,731) 19,884 (15,330)
Depreciation,
amortisation and
impairment (19,880) (22,350) (42,230) (13,691) (55,921) (198,097)
---------- ----------------- ---------------- ----------------- -------------- --------------
Operating loss (8,644) (9,971) (18,615) (17,422) (36,037) (213,427)
------------------ ---------- ----------------- ---------------- ----------------- -------------- --------------
The "Adjustments for IFRS 16" summarised above can be seen in
the below reconciliation of trading profit before tax (excluding
exceptional items) from the IAS 17 basis to the IFRS 16 basis of
accounting:
H1 2021 H1 2020
GBP000 GBP000
Underlying trading loss
before tax (19,947) (47,479)
Removal of rent expenses 12,379 37,254
Net change in depreciation (22,350) (39,616)
Net change in interest
payable (9,617) (12,864)
Interest receivable on net investments
in subleases 67 143
------------------------------------------- --------- ---------
Trading loss before tax
under IFRS 16 (39,468) (62,562)
------------------------------------------ --------- ---------
4 Exceptional items
27 weeks
ended 26 weeks ended 52 weeks ended
27 December
4 July 2021 28 June 2020 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------
Included within cost of
sales:
- Impairment charges
relating
to trading sites 1,323 18,613 37,065
- Estate closure 242 4,882 5,508
- Disposal of assets in
administration - 9,692 9,877
- Estate restructuring 14,218 132,447 (18,997)
- Release of other
provision - - (935)
---------------------------- ------------ --------------------------------- ---------------------------------
15,783 165,634 32,518
Included within
administration
costs:
- Integration costs - 3,281 3,198
- Professional fees 1,639 2,198 3,178
- Disposal of US operation - 1,056 1,238
1,639 6,535 7,614
Included within interest
payable
:
- Refinancing costs 1,894 - -
Exceptional items before
tax 19,316 172,169 40,132
---------------------------- ------------ --------------------------------- ---------------------------------
Tax effect of exceptional
Items 3,316 (24,480) 4,304
---------------------------- ------------ --------------------------------- ---------------------------------
3,316 (24,480) 4,304
Net exceptional items for
the
period 22,632 147,689 44,436
---------------------------- ------------ --------------------------------- ---------------------------------
Impairment charges
An impairment charge has been recorded against certain assets to
reflect forecast results at several of our trading sites, which is
deemed as material and not relating to underlying trade.
This charge comprises the below adjustments:
-- An impairment charge of right of use assets of GBP2.7m (Note
11)
-- An impairment reversal of property, plant and equipment of
GBP1.1m (Note 11)
-- Credit gains of GBP0.3m in net investment assets relating to
sublet properties, to reflect changes in estimated recoverability
of amounts receivable from tenants
Further details on the impairment of non-current assets are
given in Note 11.
Estate restructuring
The Group has permanently closed a significant number of sites
during the period, following the impact of the coronavirus
pandemic. As a result of these closures, the Group has recognised a
number of material and non-recurring charges and credits as noted
below:
-- GBP10.0m of right of use assets have been impaired on sites
that are permanently closed
-- GBP2.1m of property, plant and equipment have been impaired
in those same closed sites
-- A provision charge of GBP5.0m relates to the recognition of
fixed costs associated to sites that have been specifically closed.
The provision is substantially made up of rates, service charge,
utilities and insurance
-- Payments to exit sites of GBP3.0m
-- Staff restructuring costs of GBP2.0m
-- Other restructuring costs of GBP0.4m
-- Partially offset by rent concessions achieved following the
impact of Covid-19 amounting to a credit of GBP8.3m (Note 9)
Professional fees
During the period, the Group incurred material one-off costs
relating to corporate financing and restructuring activity. Since
these costs are material, irregular and unrelated to underlying or
ongoing trading, they are presented as exceptional items.
Refinancing costs
An exceptional charge of GBP1.9m has been recognised during the
period as a result of the write off of capitalised loan fees on the
extinguished facilities.
Tax Rate Change
The 2021 Budget in March this year announced an increase in the
UK corporation tax rate to 25% with effect from 1 April 2023. This
was substantively enacted on 24 May 2021. The UK corporation tax
rate increase has resulted in an increase of GBP9.9m in the
deferred tax asset associated with Intangibles on the Wagamama
trademark. This has been recognised as an exceptional item in the
tax charge for the period as it is unrelated to underlying
trading.
5 Net finance charges
27 weeks
ended 26 weeks ended 52 weeks ended
27 December
4 July 2020 28 June 2020 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------------------- ----------------------------- ---------------------------- ----------------------------
Bank interest payable 9,782 7,673 15,497
Unwinding of discount on
lease
liabilities 9,912 12,935 20,977
Amortisation of facility
fees 1,206 699 1,620
Other interest payable 20 183 51
Exceptional refinancing
costs 1,894 - -
--------------------------- ----------------------------- ---------------------------- ----------------------------
Interest payable 22,814 21,490 38,145
--------------------------- ----------------------------- ---------------------------- ----------------------------
Unwinding of discounts on
investments in subleases (67) (143) (227)
Other interest receivable - (43) (173)
--------------------------- ----------------------------- ---------------------------- ----------------------------
Interest receivable (67) (186) (400)
--------------------------- ----------------------------- ---------------------------- ----------------------------
Total net finance charges 22,747 21,304 37,745
--------------------------- ----------------------------- ---------------------------- ----------------------------
6 Tax
The tax net credit of GBP2.8m is composed of a trading current
tax credit of GBP8.6m, offset by a trading deferred tax charge of
GBP2.5m; and, for exceptional items, there is a current tax credit
of GBP3.7m, offset by a deferred tax charge of GBP7.0m. The
effective Corporation tax rate on the adjusted loss (before
exceptional items) is 15.4%. The tax credit is below the
corporation tax rate of 19% due principally to non-deductible share
based incentive costs, and foreign losses not being available for
relief.
Included in the exceptional tax charge of GBP3.3m is a charge of
GBP9.9m relating to the change in corporation tax rate announced
from 19% to 25% in April 2023 and so increasing the deferred tax
liability, which management have treated as exceptional due to its
non-recurring nature. This has been offset by GBP6.6m of credits
relating to both exceptional costs that are deductible for tax
purposes, and adjustments to prior year taxable profits against
which losses are to be carried back.
7 Earnings per share
27 weeks 26 weeks 52 weeks
ended ended ended
27 December
4 July 2021 28 June 2020 2020
(Unaudited) (Unaudited) (Audited)
a) Basic
earnings per
share:
Weighted
average
ordinary
shares for the
purposes of
basic earnings
per share 702,705,253 534,652,991 562,652,429
Loss for the
period
(GBP'000) (56,009) (207,495) (119,888)
Basic earnings
per share
for the period
(pence) (8.0) (38.8) (21.3)
---------------- ------------------------------ ------------------------------- --------------------------------
Loss for the
period
(GBP'000) (56,009) (207,495) (119,888)
Effect of
exceptional
items
on earnings
for the
period
(GBP'000) 22,632 147,689 44,436
Loss excluding
exceptional
items
(GBP'000) (33,377) (59,806) (75,452)
---------------- ------------------------------ ------------------------------- --------------------------------
Adjusted
earnings per
share (pence) (4.7) (11.2) (13.4)
---------------- ------------------------------ ------------------------------- --------------------------------
b) Diluted
earnings per
share:
Weighted
average
ordinary
shares for the
purposes of
basic earnings
per share 702,705,253 534,652,991 562,652,429
Effect of
dilutive
potential
ordinary
shares:
Dilutive shares
to be issued
in respect
of options
granted under
the share
option
schemes 448,586 - 84,176
------------------------------
703,153,839 534,652,991 562,736,605
------------- ------------------------------ ------------------------------- --------------------------------
Diluted
earnings per
share
(pence) (8.0) (38.8) (21.3)
Adjusted
diluted
earnings
per share
(pence) (4.7) (11.2) (13.4)
---------------- ------------------------------ ------------------------------- --------------------------------
Diluted earnings per share information is based on adjusting the
weighted average number of shares for this purpose of basic
earnings per share in respect of notional share awards made to
employees in regards of share option schemes.
The calculation of diluted earning per share does not assume
conversion, exercise or other issue of potential ordinary shares
that would have an antidilutive effect on earnings per share.
8 Intangible assets
Total
GBP'000
Net book value as at 27 December
2020 (audited) 599,493
Additions to software assets 719
Amortisation of intangible
assets (1,206)
Net book value as at 4 July
2021 (unaudited) 599,006
----------------------------------- --------
9 Right-of-use assets and lease liabilities
Movements in the right of use assets during the period are shown
below:
27 weeks ended 26 weeks ended 52 weeks ended
4 July 2021 28 June 2020 27 December
2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------- --------------- ---------------
Brought forward right of
use assets 368,888 819,499 819,499
------------------------------- --------------- --------------- ---------------
Additions 12,191 3,055 17,961
Disposals (3,360) (90,308) (167,821)
Depreciation (22,436) (44,952) (73,527)
Remeasurements (40,175) 3,719 (105,526)
Impairment (Note
11) (12,696) (115,551) (121,698)
Carry forward right of use
assets 302,412 575,462 368,888
------------------------------- --------------- --------------- ---------------
When indicators of impairment exist, right of use assets may be
assessed for impairment. As described in Note 11, all non-current
assets were assessed at 4 July 2021.
Movements in lease liabilities during the period are shown
below:
GBP'000 GBP'000 GBP'000
--------- ---------- ----------
Brought forward lease
liabilities 483,788 933,447 933,447
---------------------------------------------------- ----- --------- ---------- ----------
Additions 12,191 3,055 17,961
Unwinding of discount on lease liabilities 9,912 12,864 20,977
Cash payments
made (17,957) (11,225) (30,777)
Liabilities extinguished
on disposals (6,217) (112,025) (335,717)
Remeasurements* (46,979) 3,719 (122,103)
--------------------------------------------- ---- ----- --------- ---------- ----------
Carry forward lease
liabilities 434,738 829,835 483,788
----------------------------------------------- ---- ---- --------- ---------- ----------
Analysed as:
Amount due for settlement
within one year 75,388 99,106 91,478
Amount due for settlement
after one year 359,350 730,729 392,310
-------- -------- --------
Total lease liability 434,738 829,835 483,788
-------- -------- --------
*Remeasurements include leases that were renegotiated as a
result of Covid-19 to variable terms and therefore the liability is
remeasured to nil (Note 4).
10 Property, plant and equipment
GBP'000
------------------------------------ ---------
Net book value at 27 December 2020
(Audited) 305,614
------------------------------------- ---------
Additions 12,958
Disposals (2,723)
Depreciation (18,588)
Impairment (Note 11) (995)
Net book value at 4 July 2021
(Unaudited) 296,266
---------------------------------------- ---------
11 Impairment reviews
The significant trading disruption in the period is judged to be
an indicator of potential impairment of assets and, accordingly,
the Directors have chosen to assess all non-current assets for
impairment in accordance with IAS 36.
Approach and assumptions
Our approach to impairment reviews is unchanged from that
applied in previous periods and relies primarily upon "value in
use" tests, although for freehold sites an independent estimate of
market value by site has also been obtained and, where this is
higher than the value in use, we rely on freehold values in our
impairment reviews.
Discount rates used in the value in use calculations are
estimated with reference to our Group weighted average cost of
capital. For 2021, we have applied the discount rate of 10.27% to
all assets (2020: 8.70%) that reflects the risk of these
assets.
For the current period, value in use estimates have been
prepared on the basis of the forecast described above in Note 1
under the heading "Going concern basis". The most significant
assumptions and estimates relate to revenue recovery forecast on
site-by-site cash flows. It is assumed that our businesses, with
the exception of Concessions, maintain a steady recovery in
revenues, with Wagamama being the quickest to recover. Concessions
is assumed to recover more slowly, remaining below 2019 levels in
2023.
Results of impairment review
Impairment has been recorded in a number of specific CGUs, as
well as impairment reversals. A total net impairment charge of
GBP13.7m (2020: GBP142.9m) was recognised which is a total
impairment charge of GBP23.4m and impairment reversal of GBP9.7m.
Of the net impairment charge of GBP13.7m, GBP12.1m related to
non-trading sites.
No impairment was recorded against the Group's intangible assets
(including goodwill).
Sensitivity to further impairment charges
The key assumptions used in the recoverable amount estimates are
the discount rates applied and the forecast cash flows. The Group
has conducted a sensitivity analysis taking into consideration the
impact on key impairment test assumptions arising from a range of
possible trading and economic scenarios as outlined in the stress
case scenario as well as discount rates used.
The sensitivity analysis of forecast cash flows with a 10%
reduction in sales would give rise to an additional impairment of
approximately GBP30.7m across PPE and right of use assets, made up
of an increase in impairment of GBP23.3m and a reduction in
impairment reversals of GBP7.4m. Furthermore, this reduction in
sales would also give rise to an impairment to the investments in
Blubeckers Limited and Ribble Valley Inns Limited of GBP3.2m and
GBP0.9m respectively.
An increase in discount rate of 2% would give rise to additional
impairment of approximately GBP5.2m, made up of an increase in the
impairment expense of GBP3.7m and a reduction in the impairment
reversals of GBP1.5m. While a 2% decrease would give rise to a
reduction in impairment of GBP4.5m, made up of a GBP2.8m reduction
in impairment expense and an increase in impairment reversals of
GBP1.7m.
A decrease in terminal growth rates of 1% would lead to a
decrease in impairment expense of GBP1.2m, made up of an increase
in the impairment expense of GBP0.9m and a decrease in the
impairment reversals of GBP0.3m. While a 1% increase would lead to
a decrease in impairment expense of GBP1.4m, made up of a GBP0.9m
reduction in impairment expense and an increase in impairment
reversals of GBP0.5m.
12 Share capital
Share capital at 4 July 2021 amounted to GBP215.2m (2020:
GBP165.9m). The number of shares authorised, used and fully paid
was 765,036,713 (2020: 589,795,475). The shares have a par value of
28.125p (2020: 28.125p).
On 10 March 2021, the Company issued 175,241,238 shares for an
offer price of 100.0p, generating gross proceeds of GBP175.2m.
Expenses of GBP8.4m were incurred and have been offset in the share
premium account leaving net proceeds of GBP166.8m.
13 Reconciliation of profit before tax to cash generated from
operations
26 weeks
27 weeks ended ended 52 weeks ended
27 December
4 July 2021 28 June 2020 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------
Loss on ordinary activities
before tax (58,784) (234,731) (127,588)
Net interest charges 20,853 21,304 37,745
Exceptional items (Note
4) 19,316 159,258 40,132
Share of loss of associate 63 634 623
Share-based payments 1,493 686 2,016
Depreciation and amortisation 42,230 60,176 103,161
Decrease/(increase)
in inventory 25 1,899 3,527
Decrease/(increase)
in receivables 8,415 (38) 15,897
(Decrease)/increase
in creditors (5,179) (43,089) (72,297)
Cash generated from
operations 28,432 (33,901) 3,216
-------------------------------------- --------------- ------------- ---------------
14 Long-term borrowings
At 27 December
At 4 July 2021 As at 28 June 2020 2020
(Unaudited) (Unaudited) (Audited)
-------------------------- ------------------------- -------------------------
Drawn Total facility Drawn Total facility Drawn Total facility
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Term loan 330,000 330,000 - - - -
High yield bond - - 225,000 225,000 225,000 225,000
Revolving credit
facilities - 120,000 218,611 245,000 108,611 195,000
CLBILS - - - - 50,000 50,000
Total banking
facilities 330,000 450,000 443,611 470,000 383,611 470,000
---------------------- --------- --------------- -------- --------------- -------- ---------------
Unamortised loan
fees (13,953) (2,479) (2,493)
Long-term borrowings 316,047 441,132 381,118
====================== ========= =============== ======== =============== ======== ===============
The term loan matures in May 2026, and the revolving credit
facility (RCF) matures in March 2025.
Refinancing
On 1 March 2021, the Group announced that it had successfully
signed commitments in relation to GBP500.0m of new debt facilities,
which comprises a GBP380.0m Term Loan Facility, and a GBP120.0m
Super Senior Revolving Credit Facility. These facilities provide
the Group with enhanced liquidity and long-term financing with the
maturities of the Term Loan and the RCF being in 2026 and 2025,
respectively.
An amount of GBP330.0m was drawn down on the 17 May 2021 and, as
required, was used to repay and refinance in full all of the
Group's existing debt facilities. This refinancing provides the TRG
plc Group with a much simpler capital structure as all debt is
consolidated into one finance group which will provide a more
efficient funding structure to support the Group's strategic
initiatives.
INDEPENT REVIEW REPORT TO THE MEMBERS OF THE RESTAURANT GROUP
PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
27 weeks ended 4 July 2021 which comprises a Condensed Consolidated
Income Statement, a Condensed Consolidated Statement of
Comprehensive Income, a Condensed Consolidated Balance Sheet, a
Condensed Consolidated Statement of Changes in Equity and a
Condensed Consolidated Cash Flow Statement, and explanatory notes.
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
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our 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 Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
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 enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 27 weeks ended 4 July
2021 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
14 September 2021
Glossary
Adjusted diluted Calculated by taking the profit after tax of the
EPS business pre-exceptional items divided by the weighted
average number of shares in issue during the year,
including the effect of dilutive potential ordinary
shares.
Adjusted EBITDA Earnings before interest, tax, depreciation, amortisation
and exceptional items. Calculated by taking the
Trading business operating profit and adding back
depreciation and amortisation.
Adjusted EPS Calculated by taking the profit after tax of the
business pre-exceptional items divided by the weighted
average number of shares in issue during the year.
Adjusted operating Earnings before interest, tax and exceptional items.
profit
Adjusted profit Calculated by taking the profit before tax of the
before tax business pre-exceptional items.
Adjusted tax Calculated by taking the tax of the business pre-exceptional
items.
EBITDA Earnings before interest, tax, depreciation, amortisation
and impairment. Please refer to note 1 for an understanding
of how this metric has been affected by the implementation
EBITDAR of IFRS 16.
Earnings before interest, tax, depreciation, amortisation
and rental costs.
Exceptional items Those items that, by virtue of their unusual nature
or size, warrant separate additional disclosure
in the financial statements in order to fully understand
the performance of the Group.
Free cash flow EBITDA less working capital and non-cash movements
(excluding exceptional items), tax payments, interest
payments and maintenance capital expenditure.
Like-for-like This measure provides an indicator of the underlying
sales performance of our existing restaurants. There is
no accounting standard or consistent definition
of 'like-for-like sales' across the industry. Group
like-for-like sales are calculated by comparing
the performance of all mature sites in the current
period versus the comparable period in the prior
year. Sites that are closed, disposed or disrupted
during a financial year are excluded from the like-for-like
sales calculation.
Outlet EBITDA EBITDA directly attributable to individual sites
and therefore excluding corporate and central costs.
Net debt (IAS Net debt on an IAS 17 basis is calculated as the
17) basis net of the long-term borrowings, less cash and cash
equivalents, and unamortised loan fees
Net debt (IFRS Net debt on an IFRS 16 basis is calculated as the
16) basis net debt (IAS 17 basis) plus the IFRS 16 lease liabilities
Trading business Represents the performance of the business before
exceptional items and is considered as a key metric
for shareholders to evaluate and compare the performance
of the business from period to period.
Shareholder information
Directors Registrar
Debbie Hewitt MBE Equiniti Limited
Non-executive Chairman Aspect House
Spencer Road
Andy Hornby Lancing
Chief Executive Officer West Sussex BN99 6DA
Kirk Davis Auditor
Chief Financial Officer Ernst & Young LLP
1 More London Place
Graham Clemett London SE1 2AF
Senior Independent non-executive Director
Solicitors
Alison Digges Slaughter and May
Independent non-executive Director One Bunhill Row
London EC1Y 8YY
Alex Gersh
Independent non-executive Director Goodman Derrick LLP
10 St Bride Street
Zoe Morgan London EC4A 4AD
Independent non-executive Director
Brokers
Company Secretary Citibank
Jean-Paul Rabin Citigroup Centre
33 Canada Square
Head office London E14 5LB
(and address for all correspondence)
5-7 Marshalsea Road Investec Bank plc
London SE1 1EP 30 Gresham Street
London EC2V 7QP
Telephone number
020 3117 5001
Company number
SC030343
Registered office
1 George Square
Glasgow G2 1AL
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR KZLFFFKLFBBQ
(END) Dow Jones Newswires
September 15, 2021 02:00 ET (06:00 GMT)
Restaurant (LSE:RTN)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Restaurant (LSE:RTN)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
