Restaurant Group PLC (LON:RTN) has today announced its interim results for the 26 weeks ended 30 June 2019.
Strategic highlights
· Wagamama plans on track and progressing well
o Market leading like-for-like1 sales performance continues
o Addressing strong pipeline of growth opportunities
o Site conversion and cost synergy programme on track
· Concessions leveraging market opportunities
o Like-for-like sales consistently ahead of passenger growth
o Further development of brand portfolio with partnerships
o Advanced discussions on adjacent market opportunities
· Pubs continue to drive growth
o Strong like-for-like sales outperformance vs market continues
o Customer ratings remain consistently high
o Healthy pipeline of new site opportunities
· Optimising Leisure2 business
o On-going initiatives to improve food offering, service standards and brand proposition
o Progress in brand perception and employee engagement
o Estate management discipline continues
Financial highlights
· Like-for-like sales up 4.0%, with total sales up 58.2% to £515.9m (2018: £326.1m)
· Adjusted1 profit before tax of £28.1m (20183: £20.7m)
· Exceptional pre-tax charge of £115.7m (2018: £8.4m) predominantly relating to a £100.2m impairment charge and a £10.7m onerous lease provision in our Leisure business
· Statutory loss before tax of £87.7m (2018 Statutory profit3: £12.2m)
· Adjusted EBITDA of £61.4m (20183: £38.4m)
· Adjusted EPS4 of 4.5p (20183: 5.9p). Statutory loss per share of 16.1p (2018 earnings per share3: 3.3p)
· Operating cash flow of £52.3m (2018: £25.6m)
· Net bank debt of £316.8m (2018: £24.2m) with pro-forma net debt/EBITDA at 2.3x
· Interim dividend of 2.1p per share, in line with policy
1 The Group’s adjusted performance metrics such as like-for-like sales and free cash flow are defined within the glossary at the end of this report
2 Leisure business refers primarily to our Frankie & Benny’s and Chiquito brands
3 As restated, refer to note 1 of the financial statements for details
4 Earnings per share adjusted for bonus element following the rights issue in both financial years
Current trading and outlook
· Group like-for-like sales up 3.7% for the first 34 weeks of the financial year benefiting from soft comparatives in the prior year
· Like-for-like sales in the most recent six weeks were up 0.2%, driven by the strong performance of our three growth businesses which have continued to outperform their respective markets, largely offset by our Leisure business reverting back to a trend of modest like-for-like sales decline
· In summary, trading remains broadly in line with our full year expectations
Debbie Hewitt MBE, Non-executive Chairman, commented:
“We have traded well throughout the first half of the year, delivering 4% like-for-like sales growth, driven by the market outperformance of Wagamama and our Concessions and Pubs businesses. Our Leisure business delivered a marginal decline in like-for-like sales despite benefitting from the weaker comparatives following last year’s extreme weather and football World Cup. We continue to focus on improving our brand offerings and delivering the best possible experience to our customers whilst optimising our Leisure business to enhance the overall Group performance.
We are mindful of the headwinds in the casual dining sector and the meaningful uncertainties created by the potential of a ‘no-deal Brexit’ and are planning with this in mind. However, our business is now better diversified and purposefully positioned to benefit from multiple opportunities for growth.
I am pleased to welcome Andy Hornby as our new CEO, who is bringing a strong consumer, brand and people focus to the business.”
Andy Hornby, Chief Executive Officer, commented:
“I am delighted to have joined The Restaurant Group in August. Our three growth businesses of Wagamama, Concessions and Pubs are all out-performing the market and have potential for further growth. At the same time, we have an acute focus on optimising our Leisure business, through targeted operational initiatives and disciplined estate management.
Despite the well documented challenges facing the casual dining sector, the Group’s diversified set of brands provides firm foundations.”
Notes
· The estate at 30 June 2019 comprised of 356 Leisure sites (240 Frankie & Benny’s, 80 Chiquito, 13 Coast-to-Coast, eight Garfunkel’s, six Filling Station, five Firejacks and four Joe’s Kitchen), 135 Wagamama sites, 70 Concessions and 82 Pub restaurants (all based in the UK). In addition the Wagamama business has five restaurants in the US and 57 franchise restaurants operating across a number of territories.
· There are a number of potential risks and uncertainties which could have an impact on the Group’s performance over the remaining six months of the financial year and which could cause actual results to differ materially from expected and historical results. These have not materially changed from those set out on page 57 of our latest Annual Report and Accounts which can be found on the Group website: https://www.trgplc.com/investors/reports-presentations/
· Statements contained in this interim report are based on the knowledge and information available to the Company’s Directors at the date it was prepared and therefore the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Company in this interim report involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this interim report contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Company undertakes no obligation to update these forward-looking statements.
· Restaurant Group’s adjusted performance metrics such as like-for-like sales and free cash flow are defined within the glossary at the end of this report.
